UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

                                  FORM 10-Q

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
       For the quarterly period ended December 31, 1997

                             OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
        For the Transition Period From _____ to _____.

               Commission file number 0-23333

                        TIMBERLAND BANCORP, INC.
       (Exact name of registrant as specified in its charter)

             Washington                      91-1863696
      (State of Incorporation)     (IRS Employer Identification No.)

               624 Simpson Avenue, Hoquiam, Washington
               (Address of principal executive office)

                                 98550
                               (Zip Code)

                             (360) 533-4747
            (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes   X    No
                                                    -----     -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

       CLASS                       SHARES OUTSTANDING AT FEBRUARY 9, 1998
       -----                       --------------------------------------
common stock, $.01 par value                    6,612,500

<PAGE>
<PAGE>
INDEX

                                                                     Page
                                                                     ----
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Consolidated Balance Sheets                                  3

         Consolidated Statements of Income                            4

         Consolidated Statements of Cash Flows                        5-6

         Notes to Consolidated Financial Statements (unaudited)       7

Item 2.  Management's Discussion and Analysis of Financial Condition  8-11
         and Results of Operations

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.  11


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                            12

Item 2.  Changes in Securities and Use of Proceeds                    12

Item 3.  Defaults Upon Senior Securities                              12

Item 4.  Submission of Matters to a Vote of Security Holders          12

Item 5.  Other Information                                            12

Item 6.  Exhibits and Reports on Form 8-K                             13

SIGNATURES                                                            14

                                   2
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PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
-----------------------------

                       TIMBERLAND SAVINGS BANK, S.S.B
                        CONSOLIDATED BALANCE SHEETS
                  September 30, 1997 and December 31, 1997
                                (unaudited)

                                  ASSETS
                                              September 30,      December 31,
                                                       1997             1997
                                              ------------------------------

Cash and due from financial institutions:
Noninterest bearing deposits                  $  4,996,116     $   5,097,812
Interest bearing deposits                        6,450,339        84,698,447
                                              ------------------------------
                                                11,446,455        89,796,259
                                              ------------------------------
Investments and mortgage-backed securities:
Held to maturity                                 3,990,229         3,577,642
Available for sale                               1,586,400         1,618,300
                                              ------------------------------
                                                 5,576,629         5,195,942
                                              ------------------------------
Loans receivable - net                         183,171,027       183,392,977
Loans held for sale - at market value            3,856,293         3,897,879
                                              ------------------------------
                                               187,027,320       187,290,856
                                              ------------------------------
Accrued interest receivable                      1,137,052         1,269,933
Premises and fixed assets - net                  5,431,187         5,446,001
Other real estate owned - net                      433,715         3,482,158
Other assets                                       500,740           796,947
                                              ------------------------------
TOTAL ASSETS                                 $ 211,553,098     $ 293,278,096
                                              ------------------------------
                          LIABILITIES AND CAPITAL

LIABILITIES
Deposits                                     $ 173,003,403     $  254,062,095
Federal Home Loan Bank advances                 12,241,304         12,212,028
Other liabilities and accrued expenses           1,663,506          1,555,138
                                              ------------------------------
TOTAL LIABILITIES                              186,908,213        267,829,261
                                              ------------------------------
CAPITAL
Retained Earnings                               24,644,885         25,448,835
                                              -------------------------------
TOTAL CAPITAL                                   24,644,885         25,448,835
                                              -------------------------------
TOTAL LIABILITIES AND CAPITAL                $ 211,553,098     $  293,278,096
                                              -------------------------------
See notes to unaudited consolidated financial statements

                                   3
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<PAGE>
                      TIMBERLAND SAVINGS BANK, S.S.B.
                     CONSOLIDATED STATEMENTS OF INCOME
          For the three months ended December 31, 1996 and 1997 
                               (unaudited)

                                               Three Months Ended December 31,
                                                    1996              1997
                                                    ----------------------
 
INTEREST AND DIVIDEND INCOME
Loans receivable                               $  4,298,102     $  4,331,706
Investments and mortgage-backed securities           76,817           58,304
F.H.L.B. Dividends                                   29,567           31,989
Financials institutions                              36,372          232,519
                                                 ---------------------------
TOTAL INTEREST INCOME                             4,440,858        4,654,518
                                                 ---------------------------
INTEREST EXPENSE
Deposits                                          1,801,626        2,066,508
Federal Home Loan Bank advances                     265,184          174,142
                                                 ---------------------------
TOTAL INTEREST EXPENSE                            2,066,810        2,240,650
                                                 ---------------------------
NET INTEREST INCOME                               2,374,048        2,413,868

PROVISION FOR LOAN LOSSES                            87,500           60,000
Net interest income after provision for          ---------------------------
 loan losses                                      2,286,548        2,353,868
                                                 ---------------------------
NONINTEREST INCOME
Service charges on deposits                          71,714           87,310
Gain on sale of loans - net                          75,914           80,188
Other fees                                           40,731           52,111
Income (loss) on operations of real estate - net      2,634           (1,859)
Escrow and annuity fees                              22,342           41,159
Servicing income on loans sold                         --             46,444
Other                                                19,600           18,943
                                                 ---------------------------
TOTAL NONINTEREST INCOME                            232,935          324,296
                                                 ---------------------------
NONINTEREST EXPENSE
Salaries and employee benefits                      692,537          838,663
Premises and fixed assets                           162,963          182,927
Deposit insurance premiums                             --             25,991
Advertising                                          43,942           72,287
Other                                               288,028          370,999
                                                 ---------------------------
TOTAL NONINTEREST EXPENSE                         1,187,470        1,490,867
                                                 ---------------------------
INCOME BEFORE INCOME TAXES                        1,332,013        1,187,297

PROVISION FOR INCOME TAXES                          484,984          383,347
                                                 ---------------------------
NET INCOME                                       $  847,029       $  803,950
                                                 ---------------------------

See notes to unaudited consolidated financial statements

                                   4
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<PAGE>
                  TIMBERLAND SAVINGS BANK, S.S.B.
               CONSOLIDATED STATEMENTS OF CASH FLOWS
        For the three months ended December 31, 1996 and 1997 
                           (unaudited)
                                                       Three Months Ended
                                                         December 31,
                                                      1996              1997
                                                      ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                           $   847,029 $   803,950
Noncash revenues, expenses, gains and losses
  included in income:
Depreciation                                              62,067      84,910
Federal Home Loan Bank stock dividends                   (29,500)    (31,900)
Market value adjustment - loans held for sale            (39,741)    (12,439)
Gain on sale of other real estate owned, net              (1,413)          0
Provision for loan and other real estate owned losses     87,500      59,526
Net increase in loans originated for sale               (648,103)    (29,147)
Increase in other assets, net                            (15,260)   (429,088)
Decrease in other liabilities and accrued expenses, net (611,350)   (108,368)
                                                    ------------------------
                                                      (1,195,800)   (466,506)
                                                    ------------------------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES        (348,771)    337,444
                                                    ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal repayments on mortgage-backed securities       175,401     412,587
Increase in loans receivable, net                     (7,004,426)   (281,950)
Additions to premises and fixed assets, net             (222,184)    (99,724)
Additions to other real estate owned                    (183,235) (3,049,693)
Dispositions of other real estate owned                   41,375        1724
                                                    ------------------------
NET CASH USED BY INVESTING ACTIVITIES                 (7,193,069) (3,017,056)
                                                    ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in certificates of deposit, net    6,266,772  (5,113,226)
Increase (decrease) in other deposits, net            (2,981,750) 86,171,918
Increase (decrease) in Federal Home Loan Bank
 advances, net                                         5,473,139     (29,276)
                                                    ------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES              8,758,161  81,029,416
                                                    ------------------------
NET INCREASE IN CASH                                   1,216,321  78,349,804

Cash and due from financial institutions, Beginning    5,055,325  11,446,455
                                                    ------------------------
Cash and due from financial institutions, Ending     $ 6,271,646 $89,796,259
                                                    ------------------------

See notes to unaudited consolidated financial statements         (continued)

                                   5
<PAGE>
<PAGE>
                                                       Three Months Ended
                                                         December 31,
                                                      1996              1997
                                                      ----------------------

Supplemental Disclosure of Cash Flow Information
Income taxes paid                                    $    25,000 $   252,289
Interest paid                                        $ 2,035,837 $ 2,192,717

Supplemental Disclosure of Noncash Investing Activities
Loans transferred to other real estate owned         $ 2,964,261 $   161,598


See notes to unaudited consolidated financial statements

                                   6
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<PAGE>
Timberland Savings Bank, S.S.B.
Notes to Consolidated Financial Statements (unaudited)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)  Basis of Presentation:

The unaudited consolidated financial statements for Timberland Savings Bank,
S.S.B. ("Bank"), which is the predecessor of Timberland Bancorp, Inc.
("Company") prior to January 12, 1998, were prepared in accordance with the
instructions for Form 10-Q and therefore, do not include all disclosures
necessary for a complete presentation of financial condition, results of
operations, and cash flows in conformity with generally accepted accounting
principles.  However, all adjustments which are, in the opinion of management,
necessary for a fair presentation of the interim financial statements have
been included.  All such adjustments are of a normal recurring nature. The
results of operations for the interim periods disclosed herein are not
necessarily indicative of the results that may be expected for the full fiscal
year.

(b)  Principles of Consolidation:
The interim consolidated financial statements of the Bank include the accounts
of Timberland Savings Bank, S.S.B. and its wholly-owned subsidiary, Timberland
Service Corp.  All significant intercompany balances have been eliminated in
consolidation.

(2)  STOCK CONVERSION
On January 12, 1998, the Bank converted from a Washington-chartered mutual
savings bank to a Washington-chartered capital stock savings bank and became a
wholly-owned subsidiary of the Company.  The stock conversion resulted in the
sale and issuance of 6,612,500 shares of $.01 par value common stock at a
price of $10.00 per share which resulted in gross proceeds of $66,125,000. 
After reducing gross proceeds for estimated conversion costs of $1,045,000,
net proceeds totaled $65,080,000.  In conjunction with the conversion, the
Company loaned $7,930,307  to the Bank's employee stock ownership plan for the
purchase of 529,000 shares of common stock in the open market immediately
following the completion of the stock conversion.

(3) EARNINGS PER SHARE
The 6,612,500 shares of common stock were issued on January 12, 1998;
accordingly, earnings per share for the three months ended December 31, 1996
and 1997 are not presented.

(4) ACCOUNTING CHANGES
Accounting for Employee Stock Ownership Plans.  In November 1993 the American
Institute of Certified Public Accountants issued SOP 93-6, which requires an
employer to record compensation expense in an amount equal to the fair value
of shares committed to be released to employees from an employee stock
ownership plan and to exclude unallocated shares from earnings per share
computations.  The effect of SOP 93-6 on net income and book value per share
in future periods cannot be predicted due to the uncertainty of the fair value
of the shares at the time they will be committed to be released.  Subsequent
to the Bank's conversion to stock ownership on January 12, 1998, the Company
acquired 529,000 shares for its employee stock ownership plan.

Earnings Per Share.  SFAS No. 128, "Earnings Per Share," issued in February
1997, establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly-held common stock or potential
common stock.  It replaces the presentation of primary EPS with a presentation
of basic EPS and requires the dual presentation of basic and diluted EPS on
the face of the income statement.  SFAS No. 128 is effective for the financial
statements for the periods ending after December 15, 1997.  SFAS No. 128
requires restatement of all prior period EPS data presented.  Subsequent to
its conversion to stock ownership on January 12, 1998, the Company adopted
SFAS No. 128 for all future periods.

                                   7
<PAGE>
<PAGE>
PART I.  FINANCIAL INFORMATION (cont.)

Item 2.   Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------
          Results of Operation
          --------------------

The following analysis discusses the material changes in the financial
condition and results of operations of the Bank at and for the three months
ended December 31, 1997.

Comparison of Financial Condition at September 30, 1997 and December 31, 1997

Total Assets: Total assets increased 38.6% from $211.6 million at September
30, 1997 to $293.3 million at December 31, 1997, primarily as a result of
funds received for stock orders for the conversion stock offering. Stock
subscription orders were received through December 17, 1997; however the stock
was not issued until January 12, 1998.

Cash and Due from Financial Institutions:   Cash and due from financial
institutions increased by 684.5% from $11.4 million at September 30, 1997 to
$89.8 million at December 31, 1997, primarily as a result of funds received
for conversion stock orders.

Investments and Mortgage-backed Securities: Investments and mortgage-backed
securities decreased by 6.8% from $5.6 million at September 30, 1997 to $5.2
million at December 31, 1997.  This decrease was attributable primarily to
prepayments.

Loans Receivable, including Loans Held-for-sale, net: Loans receivable,
including loans held-for-sale, net, increased by .1% from $187.0 million at
September 30, 1997 to $187.3 million at December 31, 1997.

Other Real Estate Owned, net: Other real estate owned, net, increased by
702.9% from $434,000 at September 30, 1997 to $3.5 million at December 31,
1997.  This increase is primarily attributable to the Bank accepting a deed in
lieu of foreclosure on two related condominium loans (with balances totaling
$2.9 million) in Southern King County, Washington.  These two loans were
classified as "substandard assets" at September 30, 1997.  The Bank expects no
material loss on the disposition of these assets.

Deposits: Deposits increased by 46.9% from $173.0 million at September 30,
1997 to $254.1 million at December 31, 1997.   This increase was primarily
attributable to funds deposited for stock orders.

Capital: Total capital increased 3.3% from $24.6 million at September 30, 1997
to $25.4 million at December 31, 1997, primarily as a result of retained net
income for the three months ended December 31, 1997.

                                   8
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<PAGE>
Non Performing Assets
---------------------

     The following table sets forth information with respect to the Bank's non
performing assets at September 30, 1997 and December 31, 1997.

                                          At September 30,    At December 31,
                                               1997                 1997
                                          ----------------    ---------------
                                                 (Dollars in thousands)

Loans accounted for on a nonaccrual basis:
Mortgage loans:
One-to-four family                         $     776         $      925
Commercial                                     2,886                 18
Construction and land development              3,891              4,011
Consumer loans                                     2                 12
                                           ---------          ---------
Total                                          7,555              4,966

Accruing loans which are contractually
past due 90 days or more:
Mortgage loans:
Construction and land development                109                109
Total                                            109                109
                                           ---------          ---------
Total of nonaccrual and 
90 days past due loans                     $   7,664          $   5,075

Real estate owned and other
repossessed assets                               434              3,482
                                           ---------          ---------
Total nonperforming assets                 $   8,098          $   8,557

Restructured loans                                70                451

Nonaccrual and 90 days or more past
due loans as a percentage of loans
receivable, net                                 4.10%              2.71%

Nonaccrual and 90 days or more past
due loans as a percentage of total assets       3.62%              1.73%

Nonperforming assets as a percentage
of total assets                                 3.83%              2.92%

Loans receivable, net (including loans
held for sale)                             $ 187,027          $ 187,291
                                           ---------          ---------
Total assets                               $ 211,553          $ 293,278
                                           ---------          ---------
The following is a discussion of the Bank's major problem assets at December
31, 1997:

Convenience store/retail space and mini-storage, Kitsap County, Washington. 
The Bank has two loans that were originated in 1996 on two separate
properties: a convenience store combined with retail space and a 436 unit

                                   9
PAGE
<PAGE>
mini storage facility.  These two loans had a combined balance of $2.9 million
at December 31, 1997.  These loans became delinquent primarily because of a
dispute between the two borrowers.  These loans were classified as
"substandard" at December 31, 1997.  The Bank initiated foreclosure
proceedings which were stayed due to a bankruptcy filing by the borrowers in
January of 1998.  At the time of stay, an earnest money agreement had been
accepted on the retail/convenience store portion of the property.  The
execution of this sale is now subject to approval by the bankruptcy court. The
Bank has also accepted an offer to purchase the note secured by the mini-
storage facility.  The sale of the note is also subject to bankruptcy court
approval.  The Bank does not expect to incur any material loss on these two
loans.

Real Estate Owned:  Condominiums, Southern King County, Washington.  The Bank
accepted a deed in lieu of foreclosure on two delinquent loans for the
construction and sale of a 61-unit condominium complex.  These loans were
classified as "substandard" at September 30, 1997 and had a balance of $2.9
million.  They were classified by the Bank as "Real Estate Owned" of $2.9
million at December 31, 1997.  The Bank has placed the condominium units for
sale with a broker specializing in the marketing of condominium properties. 
Sixteen of the remaining condominium units are in the final finishing stage. 
The Bank has now accepted earnest money agreements on 7 of the 30 condominium
units owned by the Bank.  Taking into the account the anticipated costs to
finish these units, the Bank does not expect to incur any material losses in
connection with the disposition of the property based on a recent assessment
of the property that indicated a market value of approximately $3.6 million on
a finished basis.

Comparison of Operating Results for the Three Months Ended December 31, 1996
and 1997

Net Income: Net income decreased 5.1% from $847,000 for the three months ended
December 31, 1996 to $804,000 for the three months ended December 31, 1997.
This decrease resulted primarily from an increase in noninterest expense and
was offset partially by increases in net interest income and noninterest
income.  The largest portion of the increase in noninterest expense was
increased salary and benefit expenses ($146,000) due to additional employees
being hired and normal cost of living increases to current employees. The
number of full-time equivalent employees increased 15.4% from 78 at December
31, 1996 to 90 at December 31, 1997 due to the opening of the Lacey branch,
the restaffing of the Port Orchard loan center, the hiring of a marketing
supervisor, and hiring several other employees associated with becoming a
public company.

Net Interest Income: Net interest income increased 1.7% from $2.3 million for
the three months ended December 31, 1996 to $2.4 million for the three months
ended December 31, 1997.

Total interest income increased 4.8% from $4.4 million for the three months
ended December 31, 1996 to $4.7 million for the three months ended December
31, 1997, primarily as a result of an increase in the average balance of
interest bearing balances due from financial institutions from $5.3 million to
$24.2 million as a result of funds received for stock subscription orders. 

Total interest expense increased 8.4% from $2.1 million for the three months
ended December 31, 1996 to $2.2 million for the three months ended December
31, 1997, primarily as a result of an increase in the average balance of
deposit accounts from $140.4 million to $183.1 million.  The increased deposit
balances were a result of funds received from stock orders in December of
1997, normal growth, and promotions associated with the opening of the Lacey
branch office.  The increase in interest expense associated with deposits was
partially offset by a decrease in interest expense associated with Federal
Home Loan Bank advances due to lower average balances.

Provision for Loan Losses:  The provision for loan losses decreased from
$88,000 for the three months ended December 31,1996 to $60,000 for the three
months ended December 31, 1997.  Management decreased the provision for loan
losses because it deemed the general loan loss reserves of $1.8 million at
December 31, 1997

                                   10
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(.95% of loans receivable, net and 20.8% of non-performing assets) were
adequate to provide for estimated losses based on an evaluation of known and
inherent risks in the loan portfolio at that date.

Noninterest Income:  Total noninterest income increased 39.2% from $233,000
for the three months ended December 31, 1996 to $324,000 for the three months
ended December 31, 1997.  The largest portion of this increase resulted from
the recognition of mortgage loan servicing income of $46,000 in accordance
with SFAS No. 125, which was adopted in January 1997.  Increased escrow fees
of $19,000 as a result of increased activity and normal increases in other
categories accounted for the other portion of the increase.

Noninterest Expense:  Total noninterest expense increased 25.5% from $1.2
million for the three months ended December 31, 1996 to $1.5 million for the
three months ended December 31, 1997.  The largest portion of this increase is
a result of increased salary and employee benefit expense.  Salary and
employee benefit expense increased 21.1% from $693,000 for the three months
ended December 31, 1996 to $839,000 for the three months ended December 31,
1997.  This increase in salary and benefit expense was a result of adding
additional employees and normal cost of living increases to current employees. 
The number of full-time equivalent employee increased from 78 at December 31,
1996 to 90 at December 31, 1997 as a result of opening the Lacey branch,
restaffing the Port Orchard loan center, hiring a marketing supervisor and
several other individuals  associated with being a public company.  The other
portion of increased noninterest expense resulted from a $28,000 increase in
advertising expense due to a increased television commercials and other
promotions and normal increases in other categories.

Provision for Income Taxes:  The provision for income taxes decreased from
$485,000 for the three months ended December 31, 1996 to $383,000 for the
three months ended December 31, 1997 primarily as a result of lower income
before income taxes.

Year 2000 Issues
----------------
The Bank has an in-house data processing department which maintains the Bank's
main system, an IBM AS400.  The Bank also uses software purchased from third
party vendors for applications such as accounts payable and fixed assets.  As
with other organizations, many of the data processing programs were originally
designed to recognize calendar years by their last two digits.  Calculations
performed using these truncated fields will not work properly with dates
beyond 1999.  The Bank has established a committee to address "Year 2000"
issues.  The data processing department also submits monthly progress reports
on Year 2000 issues to the Board of Directors.  As of December 31, 1997, the
Bank's data processing department had completed approximately 50% of the total
Year 2000 compliance issues.  The Company believes that the Year 2000 problem
will not pose significant operational problems and is not anticipated to be
material to its financial position or results of operations in any given year. 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------
There were no material changes in information about market risk that was
provided in the Company's  Form 10-K for the Fiscal Year Ended September 30,
1997. 

                                   11
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PART II.   OTHER INFORMATION

Item 1.       Legal Proceedings
-------------------------------
Neither the Company nor the Bank is a party to any material legal proceedings
at this time.  Further, neither the Company nor the Bank is aware of the
threat of any such proceedings.  From time to time, the Bank is involved in
various claims and legal actions arising in the ordinary course of business.

Item 2.      Changes in Securities and Use of Proceeds
------------------------------------------------------
Change in Securities -- None to report.
Use of Proceeds -- As discussed in Note 2 to Notes to Consolidated Financial
Statements under Item 1 of this Quarterly Report, the Conversion was completed
on January 12, 1998.  In connection therewith:

1.  The effective date of the Registration Statement on Form S-1, as amended   
    (File No. 333-35817)("Registration Statement"), was November 13, 1997.

2.  The offering terminated on January 12, 1998 with the sale of all           
    securities registered pursuant to the Registration Statement.

3.  Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc. acted  
    as marketing agent for the Company.

4.  The class of securities registered pursuant to the Registration Statement  
    was common stock, par value $0.01 per share.  The aggregate amount of such 
    securities registered and sold was 6,612,500 shares for an aggregate       
    dollar amount of $66,125,000.

5.  The total conversion offering expenses incurred by the Company were        
    approximately $1,045,000, none of which were paid directly or indirectly   
    to directors of officers of the Company or their associates.

6.  The net proceeds of the conversion offering were $65,080,000, which were   
    used as follows:  $7,930,307 to fund a loan to the Bank's employee stock   
    ownership plan ("ESOP") to permit the ESOP to purchase 529,000 shares in   
    the open market following the completion of the Conversion; $32,540,000 to 
    acquire all of the issued and outstanding common stock of the Bank; and    
    the remaining $24,609,603 as of February 9, 1998 was invested by the       
    Company as follows:  $20,585,504 at other institutions and $4,024,189 in   
    investment securities.

Such use of proceeds did not represent a material change in the use of
proceeds described in the Company's Prospectus dated November 13, 1997.

Item 3.     Defaults Upon Senior Securities
-------------------------------------------
None to be reported.

Item 4.    Submission of Matters to a Vote of Security Holders
--------------------------------------------------------------
None to be reported.

Item 5.     Other Information
-----------------------------
None to be reported.

                                   12
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Item 6.     Exhibits and Reports on Form 8-K
--------------------------------------------
      (a)   Exhibits
            3(a)  Articles of Incorporation of the Registrant*
            3(b)  Bylaws of the Registrant*
           10(a)  Employee Severance Compensation Plan
           10(b)  Timberland Savings Bank, S.S.B. Employee Stock Ownership     
                  Plan
           27     Financial Data Schedule

           *      Incorporated by reference to the Registrant's Registration   
                  Statement on Form S-1 (333-35817).

      (b)   Reports on Form 8-K

            No Reports on Form 8-K were filed during the quarter ended         
            December 31, 1997.

                                   13
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                             SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  Timberland Bancorp, Inc.

Date: February 9, 1998            By:  /s/ Clarence E. Hamre
                                       -------------------------------------
                                       Clarence E. Hamre
                                       President and Chief Executive Officer
                                       (Principal Executive Officer)



Date: February 9, 1998            By:   /s/ Michael R. Sand
                                        ------------------------------------
                                        Michael R. Sand
                                        Executive Vice President and Chief
                                        Financial Officer
                                        (Principal Financial Officer) 

                                   14       
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<PAGE>
                                                               EXHIBIT 10(a)

                       TIMBERLAND SAVINGS BANK, SSB
                   EMPLOYEE SEVERANCE COMPENSATION PLAN

                               PLAN PURPOSE

     The purpose of this Timberland Savings Bank, SSB Employee Severance
Compensation Plan is to assure the services of Employees of the Savings Bank
in the event of a Change in Control.  The benefits contemplated by the Plan
recognize the value to the Savings Bank of the services and contributions of
the Employees of the Savings Bank and the effect upon the Savings Bank
resulting from the uncertainties of continued employment, reduced employee
benefits, management changes and relocations that may arise in the event of a
Change in Control.  The Board believes that the Plan will also aid the Savings
Bank in attracting and retaining the highly qualified individuals who are
essential to its success and that the Plan's assurance of fair treatment of
the Savings Bank's Employees will reduce the distractions and other adverse
effects on Employees' performance in the event of a Change in Control.

                                 ARTICLE I
                           ESTABLISHMENT OF PLAN

     1.1   Establishment of Plan

     As of the Effective Date of the Plan as defined herein, the Savings Bank
hereby establishes an employee severance compensation plan to be known as the
Timberland Savings Bank, SSB Employee Severance Compensation Plan."  The
purposes of the Plan are as set forth above.

     1.2   Application of Plan

     The benefits provided by this Plan shall be available to all Employees of
the Savings Bank, who, at or after the Effective Date, meet the eligibility
requirements of Article III, except for those officers of the Savings Bank who
have entered into, or who enter into in the future, and continue to be subject
to, an employment or change in control agreement with the Employer.

     1.3   Contractual Right to Benefits

     This plan establishes and vests in each Participant a contractual right
to the benefits to which each Participant is entitled hereunder in the event
of a Change in Control, enforceable by the Participant against the Employer,
the Savings Bank, or both.  The Plan does not provide, and should not be
construed as providing, benefits of any kind to any Employee, except in the
event of a Change in Control and, in the event of a Change in Control, only
upon the involuntary or voluntary termination of an Employee in the manner
contemplated herein.

<PAGE>
<PAGE>
                                ARTICLE II
                       DEFINITIONS AND CONSTRUCTION

     2.1   Definitions

     Whenever used in the Plan, the following terms shall have the meanings
set forth below.

     "Annual Compensation" of a Participant means and includes all wages,
salary, bonus, and cash compensation, if any, paid (including accrued amounts)
by an Employer as consideration for the Participant's service during the
12-month period ending on the last day of the month preceding the date of a
Participant's termination pursuant to Section 4.2.  For purposes of this Plan,
a Participant's "Monthly Compensation" shall equal one-twelfth of a
Participant's Annual Compensation as determined in accordance with this
paragraph.

     "Board" means the Board of Directors of the Savings Bank.

     CHANGE IN CONTROL shall mean an event deemed to occur if and when (a) an
offeror other than the Company purchases shares of the common stock of the
Company or the Savings Bank pursuant to a tender or exchange offer for such
shares, (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company or Savings Bank representing twenty-five percent
(25%) or more of the combined voting power of the Company's or the Savings
Bank's then outstanding securities, (c) the membership of the board of
directors of the Company or the Savings Bank changes as the result of a
contested election, such that individuals who were directors at the beginning
of any twenty-four (24) month period (whether commencing before or after the
date of adoption of this Plan) do not constitute a majority of the Board at
the end of such period, or (d) shareholders of the Company or the Savings Bank
approve a merger, consolidation, sale or disposition of all or substantially
all of the Company's or the Savings Bank's assets or a plan of partial or
complete liquidation.  If any of the events enumerated in clauses (a) - (d)
occur, the Board shall determine the effective date of the change in control
resulting therefrom.

     "Company" means Timberland Bancorp, Inc., a Washington corporation, the
holding company of the Savings Bank.

     "Disability" means the permanent and total inability by reason of mental
or physical infirmity, or both, of an Employee to perform the work customarily
assigned to him.  Additionally, a medical doctor selected or approved by the
Board must advise the Board that it is either not possible to determine if or
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said Employee's lifetime.

     "Effective Date" means the date the Plan is approved by the Board of the
Savings Bank, or such other date as the Board shall designate in its
resolution approving the Plan.

                                   2
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     "Employee" means any employee of the Savings Bank or another Employer.

     "Employer" means (i) the Savings Bank or (ii) a subsidiary of the Savings
Bank or a parent company of the Savings Bank which has adopted the plan
pursuant to Article VI hereof.

     "Expiration Date" means a date ten (10) years from the Effective Date
unless earlier terminated pursuant to Section 8.2 or extended pursuant to
Section 8.1.
     
     "Just Cause" shall means termination because of Participant's personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic
violations or other similar offenses) or any final cease-and desist order.

     "Payment" means the payment of severance compensation as provided in
Article IV hereof.

     "Participant" means an Employee who meets the eligibility requirements of
Article III.

     "Plan"  means this Timberland Savings Bank, SSB Employee Severance
Compensation Plan.

     "Savings Bank" means Timberland Savings Bank, SSB or any successor as
provided for in Article VII hereof.

     2.2   Applicable Law

     The laws of the State of Washington shall be controlling law in all
matters relating to the Plan to the extent not preempted by Federal law.
     
     2.3   Severability

     If a provision of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of the Plan and
the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

                                   3
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<PAGE>
                                ARTICLE III
                                ELIGIBILITY

     3.1   Participation

     The term "Participant" shall include all Employees of an Employer who
have completed at least two (2) years of service with the Employer at the time
of any termination pursuant to Section 4.2 herein.  Notwithstanding the
foregoing, persons who have entered into and continue to be covered by an
individual employment contract or change in control agreement with an Employer
shall not be entitled to participate in this Plan.

     3.2   Duration of Participation

     A Participant shall cease to be a Participant in the Plan when the
Participant ceases to be an Employee of an Employer, unless such Participant
is entitled to a Payment as provided in the Plan.  A Participant entitled to
receipt of a Payment shall remain a Participant in this Plan until the full
amount of such Payment has been paid to the Participant.

                                ARTICLE IV
                                 PAYMENTS

     4.1   Right to Payment

     A Participant shall be entitled to receive from his or her Employer a
Payment in the amount provided in Section 4.3 if a Change in Control occurs
and if, within one (1) year thereafter, the Participant's employment by an
Employer shall terminate for any reason specified in Section 4.2.  A
Participant shall not be entitled to a Payment if termination occurs by reason
of death, voluntary retirement, voluntary termination other than for the
reasons specified in Section 4.2, Disability or for Just Cause.

     4.2   Reasons for Termination

     Following a Change in Control, a Participant shall be entitled to a
Payment in accordance with Section 4.3 if employment by an Employer is
terminated, voluntary or involuntary, for any one or more of the following
reasons:

           (a)   The Employer reduces the Participant's base salary or rate of
compensation as in effect immediately prior to the Change in Control, or as
the same may have been increased thereafter.

           (b)   The Employer materially changes Participant's function,
duties or responsibilities which would cause the Participant's position to be
one of lesser responsibility, importance or scope with the Employer than
immediately prior to the Change in Control.

                                   4
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<PAGE>
           (c)   The Employer requires the Participant to change the location
of the Participant's job or office, so that such Participant will be based at
a location more than thirty-five (35) miles from the location of the
Participant's job or office immediately prior to the Change in Control
provided that such new location is not closer to Participant's home.

           (d)   The Employer materially reduces the benefits and perquisites
available to the Participant immediately prior to the Change in Control;
provided, however, that a material reduction in benefits and perquisites
generally provided to all Employees of the Savings Bank on a nondiscriminatory
basis shall not trigger a Payment pursuant to this Plan.

           (e)   A successor to the Employer fails or refuses to assume the
Employer's obligations under this Plan, as required by Article VII.

           (f)   The Employer, or any successor to the Employer, breaches any
other provisions of this Plan.

           (g)   The Employer terminates the employment of a Participant at or
after a Change in Control other than for Just Cause.

     4.3   Amount of Payment

           Each Participant entitled to a Payment under this Plan shall
receive from the Employer a lump sum cash payment equal to the product of the
Participant's Monthly Compensation and the Participant's years of service
(including partial years rounded up to the nearest full month) from the
Employee's date of hire through the date of termination.  Notwithstanding
anything herein to the contrary, the maximum payment to a Participant under
the Plan shall not exceed two hundred percent (200%) of the Participant's
Annual Compensation.
  
     The Participant shall not be required to mitigate damages on the amount
of the Payment by seeking other employment or otherwise, nor shall the amount
of such Payment be reduced by any compensation earned by the Participant as a
result of employment after termination of employment hereunder.

     4.4   Time of Payment

     The Payment to which a Participant is entitled shall be paid to the
Participant by the Employer or the successor to the Employer, in cash and in
full, not later than thirty (30) business days after the termination of the
Participant's employment.  If any Participant should die after termination of
the employment but before all amounts have been paid, such unpaid amounts
shall be paid to the Participant's named beneficiary, if living, otherwise to
the personal representative of behalf of or for the benefit of the
Participant's estate.

                                   5
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     4.5   Suspension of Payment

     Notwithstanding the foregoing, no payments or portions thereof shall be
made under this Plan, if such payment or portion would result in the Savings
Bank failing to meet its minimum regulatory capital requirements.  Any
payments or portions thereof not paid shall be suspended until such time as
their payment would not result in a failure to meet the Savings Bank's minimum
regulatory capital requirements.  Any portion of benefit payments which have
not been suspended will be paid on an equitable basis, pro rata based upon
amounts due each Participant, among all eligible Participants.

                                 ARTICLE V
                  OTHER RIGHTS AND BENEFITS NOT AFFECTED

     5.1   Other Benefits

     Neither the provisions of this Plan nor the Payment provided for
hereunder shall reduce any amounts otherwise payable, or in any way diminish
the Participant's rights as an Employee of an Employer, whether existing now
or hereafter, under any benefit, incentive, retirement, stock option, stock
bonus, stock ownership or any employment agreement or other plan or
arrangement.

     5.2   Employment Status

     This Plan does not constitute a contract of employment or impose on the
Participant's Employer any obligation to retain the Participant, to maintain
the status of the Participant's employment, or to change the Employer's
policies regarding termination of employment.

                                ARTICLE VI
                          PARTICIPATING EMPLOYERS

     6.1   Upon approval by the Board of the Savings Bank, this Plan may be
adopted by any subsidiary of the Savings Bank or by the Company.  Upon such
adoption, the subsidiary or the Company shall become an Employer hereunder and
the provisions of the Plan shall be fully applicable to the Employees of that
subsidiary or the Company.  The term "subsidiary" means any corporation in
which the Savings Bank, directly or indirectly, holds a majority of the voting
power of its outstanding shares of capital stock.

                                ARTICLE VII
                       SUCCESSOR TO THE SAVINGS BANK

     7.1   The Savings Bank shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Savings Bank, expressly and
unconditionally to assume and agree to perform the Savings Bank's obligations
under this plan, in the same manner and to the same extent that the Savings
Bank would be required to perform if no such succession or assignment had
taken place.

                                   6
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                               ARTICLE VIII
                    DURATION, AMENDMENT AND TERMINATION

     8.1   Duration

     If a Change in Control has not occurred, this Plan shall expire as of the
Expiration Date, unless sooner terminated as provided in Section 8.2, or
unless extended for an additional period or periods by resolution adopted by
the Board of the Savings Bank.

     Notwithstanding the foregoing, if a Change in Control occurs this Plan
shall continue in full force and effect, and shall not terminate or expire
until such date as all Participants who become entitled to Payments hereunder
shall have received such Payments in full.

     8.2   Amendment and Termination

     The Plan may be terminated or amended in any respect by resolution
adopted by a majority of the Board of the Savings Bank, unless a Change in
Control has previously occurred.  If a Change in Control occurs, the Plan no
longer shall be subject to amendment, change, substitution, deletion,
revocation or termination in any respect whatsoever.

     8.3   Form of Amendment

     The form of any proper amendment or termination of the Plan shall be a
written instrument signed by a duly authorized officer or officers of the
Savings Bank, certifying that the amendment or termination has been approved
by the Board.  A proper termination of the Plan automatically shall effect a
termination of all Participants' rights and benefits hereunder.

     8.4   No Attachment

     (a)   Except as required by law, no right to receive payments under this
Plan shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and
any attempt, voluntary or involuntary, to affect such action shall be null,
void, and of no effect.

     (b)   This Plan shall be binding upon, and inure to the benefit of, each
Employee, the Employer and their respective successors and assigns.

                                   7
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                                ARTICLE IX
                          LEGAL FEES AND EXPENSES

     9.1   All reasonable legal fees and other expenses paid or incurred by a
party hereto pursuant to any dispute or question of interpretation relating to
this Plan shall be paid or reimbursed by the prevailing party in any legal
judgment, arbitration or settlement.

                                 ARTICLE X
                        ADMINISTRATION OF THE PLAN

     10.1  The Plan shall be administered by the Board (or, by a committee of
non-employee directors designated by the Board).  Subject to the other
provisions of the Plan, the Board shall have authority to adopt, amend, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, to
interpret the provisions of the Plan and to decide all disputes arising in
connection with the Plan.  The Board may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole
and absolute discretion.  The Board's decision and interpretations shall be
final and binding.  Any action of the Board with respect to the administration
of the Plan shall be taken pursuant to a majority vote or by the unanimous
written consent of its members.

     Having been adopted by its Board on December 23, 1997, this Plan is
executed by duly authorized officer of the Savings Bank this 12th day of
January, 1998.

Attest


/s/Michael R. Sand                /s/Clarence E. Hamre
-------------------------         --------------------------------------
Secretary                         Clarence E. Hamre
                                  President and Chief Executive Officer

                                   8
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<PAGE>
                                                             EXHIBIT 10(b)

                  TIMBERLAND SAVINGS BANK, SSB

                 EMPLOYEE STOCK OWNERSHIP PLAN 

                Effective as of October 1, 1997
<PAGE>
<PAGE>
                  TIMBERLAND SAVINGS BANK, SSB

                 EMPLOYEE STOCK OWNERSHIP PLAN 

                       TABLE OF CONTENTS 

                                                                          Page

     PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1

                            ARTICLE I
              DEFINITION OF TERMS AND CONSTRUCTION 

     1.1   Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .   2
     1.2   Plurals and Gender . . . . . . . . . . . . . . . . . . . . . .   7
     1.3   Incorporation of Trust Agreement . . . . . . . . . . . . . . .   7
     1.4   Headings . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
     1.5   Severability . . . . . . . . . . . . . . . . . . . . . . . . .   8
     1.6   References to Governmental Regulations . . . . . . . . . . . .   8

                           ARTICLE II
                          PARTICIPATION

     2.1   Commencement of Participation. . . . . . . . . . . . . . . . .   9
     2.2   Termination of Participation . . . . . . . . . . . . . . . . .   9
     2.3   Resumption of Participation. . . . . . . . . . . . . . . . . .   9
     2.4   Determination of Eligibility . . . . . . . . . . . . . . . . .  10

                           ARTICLE III
                        CREDITED SERVICE

     3.1   Service Counted for Eligibility Purposes . . . . . . . . . . .  11
     3.2   Service Counted for Vesting Purposes . . . . . . . . . . . . .  11
     3.3   Credit for Pre-Break Service . . . . . . . . . . . . . . . . .  11
     3.4   Service Credit During Authorized Leaves. . . . . . . . . . . .  11
     3.5   Service Credit During Maternity or Paternity Leave . . . . . .  12
     3.6   Ineligible Employees . . . . . . . . . . . . . . . . . . . . .  12

                           ARTICLE IV
                          CONTRIBUTIONS

     4.1   Employee Stock Ownership Contributions . . . . . . . . . . . .  13
     4.2   Time and Manner of Employee Stock Ownership Contributions. . .  13

                                   i
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     4.3   Records of Contributions . . . . . . . . . . . . . . . . . . .  14
     4.4   Erroneous Contributions. . . . . . . . . . . . . . . . . . . .  14

                            ARTICLE V
              ACCOUNTS, ALLOCATIONS AND INVESTMENTS

     5.1   Establishment of Separate Participant Accounts . . . . . . . .  15
     5.2   Establishment of Suspense Account. . . . . . . . . . . . . . .  15
     5.3   Allocation of Earnings, Losses and Expenses. . . . . . . . . .  16
     5.4   Allocation of Forfeitures. . . . . . . . . . . . . . . . . . .  16
     5.5   Allocation of Annual Employee Stock Ownership Contributions. .  16
     5.6   Limitation on Annual Additions . . . . . . . . . . . . . . . .  17
     5.7   Erroneous Allocations. . . . . . . . . . . . . . . . . . . . .  20
     5.8   Value of Participant's Interest in Fund. . . . . . . . . . . .  21
     5.9   Investment of Account Balances . . . . . . . . . . . . . . . .  21

                           ARTICLE VI
        RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY
 
     6.1   Normal Retirement. . . . . . . . . . . . . . . . . . . . . . .  22
     6.2   Early Retirement . . . . . . . . . . . . . . . . . . . . . . .  22
     6.3   Disability Retirement. . . . . . . . . . . . . . . . . . . . .  22
     6.4   Death Benefits . . . . . . . . . . . . . . . . . . . . . . . .  22
     6.5   Designation of Death Beneficiary and Manner of Payment . . . .  23

                           ARTICLE VII
                     VESTING AND FORFEITURES

     7.1   Vesting on Death, Disability, Retirement, Change in Control. .  24
     7.2   Vesting on Termination of Participation. . . . . . . . . . . .  24
     7.3   Disposition of Forfeitures . . . . . . . . . . . . . . . . . .  25

                          ARTICLE VIII
                 EMPLOYEE STOCK OWNERSHIP RULES

     8.1   Right to Demand Employer Securities. . . . . . . . . . . . . .  26
     8.2   Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . .  26
     8.3   Nondiscrimination in Employee Stock Ownership Contributions. .  26
     8.4   Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . .  27
     8.5   Exempt Loans . . . . . . . . . . . . . . . . . . . . . . . . .  27
     8.6   Exempt Loan Payments . . . . . . . . . . . . . . . . . . . . .  28
     8.7   Put Option . . . . . . . . . . . . . . . . . . . . . . . . . .  29
     8.8   Diversification Requirements . . . . . . . . . . . . . . . . .  30

                                   ii
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     8.9   Independent Appraiser. . . . . . . . . . . . . . . . . . . . .  30
     8.10  Limitation on Allocation . . . . . . . . . . . . . . . . . . .  30

                           ARTICLE IX
                   PAYMENTS AND DISTRIBUTIONS

     9.1   Payments on Termination of Service -- In General . . . . . . .  32
     9.2   Commencement of Payments . . . . . . . . . . . . . . . . . . .  32
     9.3   Mandatory Commencement of Benefits . . . . . . . . . . . . . .  32
     9.4   Required Beginning Date. . . . . . . . . . . . . . . . . . . .  35
     9.5   Form of Payment. . . . . . . . . . . . . . . . . . . . . . . .  35
     9.6   Payments Upon Termination of Plan. . . . . . . . . . . . . . .  35
     9.7   Distribution Pursuant to Qualified Domestic Relations Orders .  36
     9.8   Cash-Out Distributions . . . . . . . . . . . . . . . . . . . .  36
     9.9   ESOP Distribution Rule . . . . . . . . . . . . . . . . . . . .  37
     9.10  Withholding. . . . . . . . . . . . . . . . . . . . . . . . . .  37
     9.11  Waiver of 30-day Notice. . . . . . . . . . . . . . . . . . . .  38

                            ARTICLE X
             PROVISIONS RELATING TO TOP-HEAVY PLANS

     10.1  Top-Heavy Rules to Control . . . . . . . . . . . . . . . . . .  39
     10.2  Top-Heavy Plan Definitions . . . . . . . . . . . . . . . . . .  39
     10.3  Calculation of Accrued Benefits. . . . . . . . . . . . . . . .  41
     10.4  Determination of Top-Heavy Status. . . . . . . . . . . . . . .  42
     10.5  Determination of Super Top-Heavy Status. . . . . . . . . . . .  43
     10.6  Minimum Contribution . . . . . . . . . . . . . . . . . . . . .  43
     10.7  Maximum Benefit Limitation . . . . . . . . . . . . . . . . . .  44
     10.8  Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . .  44

                           ARTICLE XI
                         ADMINISTRATION

     11.1  Appointment of Administrator . . . . . . . . . . . . . . . . .  45
     11.2  Resignation or Removal of Administrator. . . . . . . . . . . .  45
     11.3  Appointment of Successors: Terms of Office, Etc. . . . . . . .  45
     11.4  Powers and Duties of Administrator . . . . . . . . . . . . . .  45
     11.5  Action by Administrator. . . . . . . . . . . . . . . . . . . .  46
     11.6  Participation by Administrators. . . . . . . . . . . . . . . .  47
     11.7  Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
     11.8  Allocation of Duties . . . . . . . . . . . . . . . . . . . . .  47
     11.9  Delegation of Duties . . . . . . . . . . . . . . . . . . . . .  47
     11.10 Administrator's Action Conclusive. . . . . . . . . . . . . . .  47
     11.11 Compensation and Expenses of Administrator . . . . . . . . . .  47

                                   iii
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     11.12 Records and Reports. . . . . . . . . . . . . . . . . . . . . .  48
     11.13 Reports of Fund Open to Participants . . . . . . . . . . . . .  48
     11.14 Named Fiduciary. . . . . . . . . . . . . . . . . . . . . . . .  48
     11.15 Information from Employer. . . . . . . . . . . . . . . . . . .  48
     11.16 Reservation of Rights by Employer. . . . . . . . . . . . . . .  48
     11.17 Liability and Indemnification. . . . . . . . . . . . . . . . .  49
     11.18 Service as Trustee and Administrator . . . . . . . . . . . . .  49

                           ARTICLE XII
                        CLAIMS PROCEDURE

     12.1  Notice of Denial . . . . . . . . . . . . . . . . . . . . . . .  50
     12.2  Right to Reconsideration . . . . . . . . . . . . . . . . . . .  50
     12.3  Review of Documents. . . . . . . . . . . . . . . . . . . . . .  50
     12.4  Decision by Administrator. . . . . . . . . . . . . . . . . . .  50
     12.5  Notice by Administrator. . . . . . . . . . . . . . . . . . . .  50


                          ARTICLE XIII
               AMENDMENTS, TERMINATION AND MERGER

     13.1  Amendments . . . . . . . . . . . . . . . . . . . . . . . . . .  51
     13.2  Consolidation, Merger or Other Transactions of Employer. . . .  51
     13.3  Consolidation or Merger of Trust . . . . . . . . . . . . . . .  52
     13.4  Bankruptcy or Insolvency of Employer . . . . . . . . . . . . .  52
     13.5  Voluntary Termination. . . . . . . . . . . . . . . . . . . . .  53
     13.6  Partial Termination of Plan or Permanent Discontinuance of          
            Contributions . . . . . . . . . . . . . . . . . . . . . . . .  53

                           ARTICLE XIV
                          MISCELLANEOUS

     14.1  No Diversion of Funds. . . . . . . . . . . . . . . . . . . . .  54
     14.2  Liability Limited. . . . . . . . . . . . . . . . . . . . . . .  54
     14.3  Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . .  54
     14.4  Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . .  54
     14.5  Benefits Limited to Fund . . . . . . . . . . . . . . . . . . .  55
     14.6  Cooperation of Parties . . . . . . . . . . . . . . . . . . . .  55
     14.7  Payments Due Missing Persons . . . . . . . . . . . . . . . . .  55
     14.8  Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .  55
     14.9  Nonguarantee of Employment . . . . . . . . . . . . . . . . . .  55
     14.10 Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

                                   iv
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                  TIMBERLAND SAVINGS BANK, SSB
                  EMPLOYEE STOCK OWNERSHIP PLAN

                            PREAMBLE 

     Effective as of October 1, 1997, Timberland Savings Bank, SSB (the
"Sponsor"), a Washington chartered stock savings bank (the "Sponsor"), has
adopted the Timberland Savings Bank, SSB Employee Stock Ownership Plan in
order to enable Participants to share in the growth and prosperity of the
Sponsor, and to provide Participants with an opportunity to accumulate capital
for their future economic security by accumulating funds to provide
retirement, death and disability benefits.  The Plan is a stock bonus plan
designed to meet the requirements of an employee stock ownership plan as
described at Section 4975(e)(7) of the Code and Section 407(d)(6) of ERISA. 
The primary purpose of the employee stock ownership plan is to invest in
employer securities.  The Sponsor intends that the Plan will qualify under
Sections 401(a) and 501(a) of  the Code and will comply with the provisions of
ERISA.

     The terms of this Plan shall apply only with respect to Employees of the
Employer on and after October 1, 1997.

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                            ARTICLE I

              DEFINITION OF TERMS AND CONSTRUCTION

     1.1  Definitions.

     Unless a different meaning is plainly implied by the context, the
following terms as used in this Plan shall have the following meanings:
 
     (a) "Act" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor statute. 

     (b) "Administrator" shall mean the administrative committee provided for
in Article XI. 

     (c) "Annual Additions" shall mean, with respect to each Participant, the
sum of those amounts allocated to the Participant's accounts under this Plan
and under any other qualified defined contribution plan to which the Employer
contributes for any Limitation Year, consisting of the following:

          (1) Employer contributions;

          (2) Forfeitures; and

          (3) Voluntary contributions (if any).

     (d) "Authorized Leave of Absence" shall mean an absence from Service with
respect to which the Employee may or may not be entitled to Compensation and
which meets any one of the following requirements:

          (1)  Service in any of the armed forces of the United States for up  
               to 36 months, provided that the Employee resumes Service within 
               90 days after discharge, or such longer period of time during   
               which such Employee's rights are protected by law; or

          (2)  Any other absence or leave expressly approved and granted by    
               the Employer which does not exceed 24 months, provided that the 
               Employee resumes Service at or before the end of such approved  
               leave period.  In approving such leaves of absence, the         
               Employer shall treat all Employees on a uniform and non-        
               discriminatory basis.

     (e) "Beneficiary" shall mean such persons as may be designated by the
Participant to receive benefits after the death of the Participant, or such
persons designated by the Administrator to receive benefits after the death of
the Participant, all as provided in Section 6.5.

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     (f) "Board of Directors" shall mean the Board of Directors of the
Sponsor.

     (g) "Break" shall mean a Plan Year during which an Employee fails to
complete more than 500 Hours of Service.

     (h) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute. 

     (i) "Compensation" shall mean the amount of remuneration paid to an
Employee by the Employer, after the date on which the Employee becomes a
Participant, for services rendered to the Employer during a Plan Year,
including base salary, bonuses, overtime and commissions, and any amount of
compensation contributed pursuant to a salary reduction election under Code
Section 401(k) and any amount of compensation contributed to a cafeteria plan
described at Section 125 of the Code, but excluding amounts paid by the
Employer or accrued with respect to this Plan or any other qualified or
non-qualified unfunded plan of deferred compensation or other employee welfare
plan to which the Employer contributes, payments for group insurance, medical
benefits, reimbursement for expenses, and other forms of extraordinary pay,
and excluding amounts accrued for a prior year.

     Notwithstanding the foregoing, for purposes of complying with Code
Section 415, a Participant's contributions to a 401(k) Plan and cafeteria plan
shall not be included in the Participant's compensation.  Notwithstanding
anything herein to the contrary, the annual Compensation of each Participant
taken into account under the Plan for any Plan Year shall not exceed $150,000,
as adjusted from time to time in accordance with Section 417 of the Code.
 
     (j) "Date of Hire" shall mean the date on which a person shall perform
his first Hour of Service.  Notwithstanding the foregoing, in the event a
person incurs one or more consecutive Breaks after his initial Date of Hire
which results in the forfeiture of his pre-Break Service pursuant to Section
3.3, his "Date of Hire" shall thereafter be the date on which he completes his
first Hour of Service after such Break or Breaks.

     (k) "Disability" shall mean a physical or mental impairment which
prohibits a Participant from engaging in any occupation for wages or profit
and which has caused the Social Security Administration to classify the
individual as "disabled" for purposes of Social Security.

     (l) "Disability Retirement Date" shall mean the first day of the month
after which a Participant incurs a Disability.

     (m) "Early Retirement Date" shall mean the first day of the month
coincident with or next following the date on which a Participant attains age
55 and completes ten (10) Years of Service.

     (n) "Effective Date" shall mean October 1, 1997.

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     (o) "Eligibility Period" shall mean the period of 12 consecutive months
commencing on an Employee's Date of Hire.

     (p) "Employee" shall mean any person employed by the Employer, including
officers but excluding directors in their capacity as such; provided, however,
that the term "Employee" shall not include leased employees, employees
regularly employed outside the employer's own offices in connection with the
operation and maintenance of buildings or other properties acquired through
foreclosure or deed, and any employee included in a unit of employees covered
by a collective-bargaining agreement with the Employer that does not expressly
provide for participation of such employees in this Plan, where there has been
good-faith bargaining between the Employer and employees' representatives on
the subject of retirement benefits.

     (q) "Employer" shall mean Timberland Savings Bank, SSB, a Washington
chartered stock savings bank, or any successors to the aforesaid by merger,
consolidation or otherwise, which may agree to continue this Plan, or any
affiliated or subsidiary corporation or business organization of any Employer
which, with the consent of the Sponsor, shall agree to become a party to this
Plan.

     (r) "Employer Securities" shall mean the common stock issued by
Timberland Bancorp, Inc., a Washington corporation, or any employer security
within the meaning of Section 4975(c)(8) of the Code and Section 407(d)(1) of
ERISA.

     (s) "Entry Date" shall mean the first day of each quarter during the Plan
Year.

     (t) "Exempt Loan" shall mean a loan described at Section 4975(d)(1) of
the Code to the Trustee to purchase Employer Securities for the Plan, made or
guaranteed by a disqualified person, as defined at Section 4975(e)(2) of the
Code, including, but not limited to, a direct loan of cash, a purchase money
transaction, an assumption of an obligation of the Trustee, an unsecured
guarantee or the use of assets of such disqualified person as collateral for
such a loan.

     (u) "Former Participant" shall mean any previous Participant whose
participation has terminated but who has a vested interest in the Plan which
has not been distributed in full.

     (v) "Fund" shall mean the Fund maintained by the Trustee pursuant to the
Trust Agreement in order to provide for the payment of the benefits specified
in the Plan.

     (w) "Hour of Service" shall mean each hour for which an Employee is
directly or indirectly paid or entitled to payment by an Employer for the
performance of duties or for reasons other than the performance of duties
(such as vacation time, holidays, sickness, disability, paid lay-offs, jury
duty and similar periods of paid nonworking time).  To the extent not
otherwise included, Hours of Service shall also include each hour for which
back pay, irrespective of mitigation of damages, is either awarded or agreed
to by the Employer.  Hours of working time shall be credited on the basis of
actual hours worked, even though compensated at a premium rate for overtime or
other reasons.  In computing and crediting Hours of Service for an

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Employee under this Plan, the rules set forth in Sections 2530.200b-2(b) and
(c) of the Department of Labor Regulations shall apply, said Sections being
herein incorporated by reference.  Hours of Service shall be credited to the
Plan Year or other relevant period during which the services were performed or
the nonworking time occurred, regardless of the time when Compensation
therefor may be paid.  Any Employee for whom no hourly employment records are
kept by the Employer shall be credited with 45 Hours of Service for each
calendar week in which he would have been credited with a least one Hour or
Service under the foregoing provisions, if hourly records were available. 
Solely for purposes of determining whether a Break for participation and
vesting purposes has occurred in an Eligibility Period or Plan Year, an
individual who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have been
credited to such individual but for such absence, or in any case in which such
hours cannot be determined, eight Hours of Service per day of such absence. 
For purposes of this Section 1.1(w), an absence from work for maternity or
paternity reasons means an absence (1) by reason of the pregnancy of the
individual, (2) by reason of a birth of a child of the individual, (3) by
reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (4) for purposes of caring for
such child for a period beginning immediately following such birth or
placement.  The Hours of Service credited under this provision shall be
credited (1) in the computation period in which the absence begins if the
crediting is necessary to prevent a Break in that period, or (2) in all other
cases, in the following computation period.

     (x) "Investment Adjustments" shall mean the increases and/or decreases in
the value of a Participant's accounts attributable to earnings, gains, losses
and expenses of the Fund, as set forth in Section 5.3.

     (y) "Limitation Year" shall mean the Plan Year.

     (z) "Normal Retirement Date" shall mean the first day of the month
coincident with or during which a Participant attains age 65.

     (aa) "Participant" shall mean an Employee who has met all of the
eligibility requirements of the Plan and who is currently included in the Plan
as provided in Article II hereof.

     (bb) "Plan" shall mean the Timberland Savings Bank, SSB Employee Stock
Ownership Plan, as described herein or as hereafter amended from time to time.

     (cc) "Plan Year" shall mean any 12 consecutive month period commencing on
October 1 and ending on September 30.

     (dd) "Qualified Domestic Relations Order" shall mean any judgment, decree
or order (including approval of a property settlement agreement) that relates
to the provision of child support, alimony, marital property rights to a
spouse, former spouse, child or other dependent of the Participant (all such
persons hereinafter termed "alternate payee") and is made pursuant to a State
domestic relations law (including community property law) and, further, that
creates or

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recognizes the existence of an alternate payee's right to, or assigns to an
alternate payee the right to receive all or a portion of the benefits payable
with respect to a Participant and that clearly specifies the following:

     (1)  the name and last known mailing address (if available) of the        
          Participant and the name and mailing address of each alternate payee 
          to which the order relates;

     (2)  the amount or percentage of the Participant's benefits to be paid to 
          an alternate payee or the manner in which the amount is to be        
          determined; and

     (3)  the number of payments or period for which payments are required.

     A domestic relations order is not a Qualified Domestic Relations Order if
it: 

     (1)  requires the Plan to provide any type or form of benefit or any      
          option not otherwise provided under the Plan; or,

     (2)  requires the Plan to provide increased benefits; or

     (3)  requires payment of benefits to an alternate payee that is required  
          to be paid to another alternate payee under a previously existing    
          Qualified Domestic Relations Order.

     (ee) "Retirement" shall mean termination of employment which qualifies as
early, normal or Disability retirement as described in Article VI.

     (ff) "Service" shall mean employment with the Employer.

     (gg) "Sponsor" shall mean Timberland Savings Bank, SSB, a Washington
chartered stock savings bank.

     (hh) "Trust Agreement" shall mean the agreement, the Sponsor and the
Trustee (or any successor Trustee governing the administration of the Trust as
it may be amended from time to time.

     (ii) "Trustee" shall mean the Trustee or Trustees by whom the assets of
the Plan are held, as provided in the Trust Agreement, or his or their
successors.

     (jj) "Valuation Date" shall mean the last day of each Plan Year.  The
Trustee may make additional valuations, at the instruction of the
Administrator, but in no event may the Administrator request additional
valuations by the Trustee more frequently than quarterly.

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Whenever such date falls on a Saturday, Sunday or holiday, the preceding
business day shall be the Valuation Date.

     (kk) "Year of Service" shall mean any Plan Year during which an Employee
has completed at least 1,000 Hours of Service.  Except as otherwise specified
in Article III, in the determination of Years of Service for eligibility and
vesting purposes under this Plan, the term "Year of Service" shall also mean
any Plan Year during which an Employee has completed at least 1,000 Hours of
Service with an entity that is:

     (1)  a member of a controlled group including the Employer, while it is a 
          member of such controlled group (within the meaning of Section       
          414(b) of the Code);

     (2)  in a group of trades or businesses under common control with the     
          Employer, while it is under common control (within the meaning of    
          Section 414(c) of the Code);

     (3)  a member of an affiliated service group including the Employer,      
          while it is a member of such affiliated service group (within the    
          meaning of Section 414(m) of the Code); or

     (4)  a leasing organization, under the circumstances described in Section 
          414(n) of the Code.

     1.2  Plurals and Gender.

     Where appearing in the Plan and the Trust Agreement, the masculine gender
shall include the feminine and neuter genders, and the singular shall include
the plural, and vice versa, unless the context clearly indicates a different
meaning.

     1.3  Incorporation of Trust Agreement.

     The Trust Agreement, as the same may be amended from time to time, is
intended to be and hereby is incorporated by reference into this Plan and for
all purposes shall be deemed a part of the Plan.

     1.4  Headings.

     The headings and sub-headings in this Plan are inserted for the
convenience of reference only and are to be ignored in any construction of the
provisions hereof.

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     1.5  Severability.

     In case any provision of this Plan shall be held illegal or void, such
illegality or invalidity shall not affect the remaining provisions of this
Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.

     1.6  References to Governmental Regulations.

     References in this Plan to regulations issued by the Internal Revenue
Service, the Department of Labor, or other governmental agencies shall include
all regulations, rulings, procedures, releases and other position statements
issued by any such agency.

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                           ARTICLE II

                          PARTICIPATION

     2.1  Commencement of Participation.

     (a) Any Employee who completes at least 1,000 Hours of Service during his
Eligibility Period or during any Plan Year beginning after his Date of Hire
shall initially become a Participant on the Entry Date coincident with or next
following the later of the following dates, provided he is employed by the
Employer on that Entry Date: 

     (1)  The date which is 12 months after his Date of Hire; and

     (2)  The date on which he attains age 21.

     (b) Any Employee who had satisfied the requirements set forth in Section
2.1(a) during the 12-month period prior to the Effective Date shall become a
Participant on the Effective Date, provided he is still employed by the
Employer on the Effective Date.

     2.2  Termination of Participation.

     After commencement or resumption of his participation, an Employee shall
remain a Participant during each consecutive Plan Year thereafter until the
earliest of the following dates:

     (a) His actual Retirement date;

     (b) His date of death; or

     (c) The last day of a Plan Year during which he incurs a Break.

     2.3  Resumption of Participation

     (a) Any Participant whose employment terminates and who resumes Service
before he incurs a Break shall resume participation immediately on the date he
is reemployed.

     (b) Except as otherwise provided in Section 2.3(c), any Participant who
incurs one or more Breaks and resumes Service shall resume participation
retroactively as of the first day of the first Plan Year in which he completes
a Year of Service after such Break(s).

     (c) Any Participant who incurs one or more Breaks and resumes Service,
but whose pre-Break Service is not reinstated to his credit pursuant to
Section 3.3, shall be treated as a new Employee and shall again be required to
satisfy the eligibility requirements contained in Section 2.1 before resuming
participation on the appropriate Entry Date, as specified in Section 2.1.

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     2.4  Determination of Eligibility.

     The Administrator shall determine the eligibility of Employees in
accordance with the provisions of this Article.  For each Plan Year, the
Employer shall furnish the Administrator a list of all Employees, indicating
the original date of their reemployment with the Employer and any Breaks they 
may have incurred.

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                           ARTICLE III

                        CREDITED SERVICE

     3.1  Service Counted for Eligibility Purposes.

     Except as provided in Section 3.3, all Service completed by an Employee
shall be counted in determining his eligibility to become a Participant on and
after the Effective Date, whether such Service was completed before or after
the Effective Date.

     3.2  Service Counted for Vesting Purposes.

     All Years of Service completed by an Employee (including Years of Service
completed prior to the Effective Date) shall be counted in determining his
vested interest in this Plan, except the following:

     (a) Service which is disregarded under the provisions of Section 3.3; and

     (b) Service prior to the Effective Date of this Plan if such Service
would have been disregarded under the "break in service" rules (within the
meaning of Section 1.411(a)-5(b)(6) of the Treasury Regulations).

     3.3  Credit for Pre-Break Service.

     Upon his resumption of participation following one or a series of
consecutive Breaks, an Employee's pre-Break Service shall be reinstated to his
credit for all purposes of this Plan only if either:

     (a) He was vested in any portion of his accrued benefit at the time the
Break(s) began; or

     (b) The number of his consecutive Breaks does not equal or exceed the
greater of five or the number of his Years of Service credited to him before
the Breaks began.

     Except as provided in the foregoing, none of an Employee's Service prior
to one or a series of consecutive Breaks shall be counted for any purpose in
connection with his participation in this Plan thereafter.

     3.4  Service Credit During Authorized Leaves.

     An Employee shall receive no Service credit under Section 3.1 or 3.2
during any Authorized Leave of Absence.  However, solely for the purpose of
determining whether he has incurred a Break during any Plan Year in which he
is absent from Service for one or more Authorized Leaves of Absence, he shall
be credited with 45 Hours of Service for each week

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during any such leave period.  Notwithstanding the foregoing, if an Employee
fails to return to Service on or before the end of a leave period, he shall be
deemed to have terminated Service as of the first day of such leave period and
his credit for Hours of Service, determined under this Section 3.4, shall be
revoked.  Notwithstanding anything contained herein to the contrary, an
Employee who is absent by reason of military service as set forth in Section
1.1(d)(1) shall be given Service credit under this Plan for such military
leave period to the extent, and for all purposes, required by law.

     3.5  Service Credit During Maternity or Paternity Leave.

     For purposes of determining whether a Break has occurred for
participation and vesting purposes, an individual who is on maternity or
paternity leave as described in Section 1.1(w), shall be deemed to have
completed Hours of Service during such period of absence, all in accordance
with Section 1.1(w).  Notwithstanding the foregoing, no credit shall be given
for such Hours of Service unless the individual furnishes to the Administrator
such timely information as the Administrator may reasonably require to
determine:

     (a) that the absence from Service was attributable to one of the
maternity or paternity reasons enumerated in Section 1.1(w); and

     (b) the number of days for which such absence lasted.

     In no event, however, shall any credit be given for such leave other than
for determining whether a Break has occurred.

     3.6  Ineligible Employees.

     Notwithstanding any provisions of this Plan to the contrary, any person
who is employed by the Employer, but who is ineligible to participate in this
Plan, either because of his failure:

     (a) To meet the eligibility requirements contained in Article II; or

     (b) To be an Employee, as defined in Section 1.1(p), shall, nevertheless,
earn Years of Service for eligibility and vesting purposes pursuant to the
rules contained in this Article III.  However, such a person shall not be
entitled to receive any contributions hereunder unless and until he becomes a
Participant in this Plan, and then, only during his period of participation.

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                           ARTICLE IV
                          CONTRIBUTIONS

     4.1  Employee Stock Ownership Contributions.

     (a) Subject to all of the provisions of this Article IV, for each Plan
Year commencing on or after the Effective Date, the Employer shall make an
Employee Stock Ownership contribution to the Fund, in such amount as may be
determined by the Board of Directors in its discretion.  Such contribution
shall be in the form of cash or Employer Securities.  In determining the value
of Employer Securities transferred to the Fund as an Employee Stock Ownership
contribution, the Administrator may determine the average of closing prices of
such securities for a period of up to 90 consecutive days immediately
preceding the date on which the securities are contributed to the Fund.  In
the event that the Employer Securities are not readily tradable on an
established securities market, the value of the Employer Securities
transferred to the Fund shall be determined by an independent appraiser in
accordance with Section 8.9.

     (b) In no event shall such contribution by the Employer exceed for any
Plan Year the maximum amount that may be deducted by the Employer under
Section 404 of the Code, nor shall such contribution cause the Employer to
violate its regulatory capital requirements.  Each Employee Stock Ownership
contribution by the Employer shall be deemed to be made on the express
condition that the Plan, as then in effect, shall be qualified under Sections
401 and 501 of the Code and that the amount of such contribution shall be
deductible from the Employer's income under Section 404 of the Code.

     4.2  Time and Manner of Employee Stock Ownership Contributions.

     (a) The Employee Stock Ownership contribution (if any) for each Plan Year
shall be paid to the Trustee in one lump sum or installments at any time on or
before the expiration of the time prescribed by law (including any extensions)
for filing of the Employer's federal income tax return for its fiscal year
ending concurrent with or during such Plan Year.  Any portion of the Employee
Stock Ownership contribution for each Plan Year that may be made prior to the
last day of the Plan Year shall be maintained by the Trustee in the Employee
Stock Ownership suspense account described in Section 5.2 until the last day
of such Plan Year.

     (b) If an Employee Stock Ownership contribution for a Plan Year is paid
after the close of the Employer's fiscal year which ends concurrent with or
during such Plan Year but on or prior to the due date (including any
extensions) for filing of the Employer's federal income tax return for such
fiscal year, it shall be considered, for allocation purposes, as an Employee
Stock Ownership contribution to the Fund for the Plan Year for which it was
computed and accrued, unless such contribution is accompanied by a statement
to the Trustee, signed by a representative of the Employer, which specifies
that the Employee Stock Ownership contribution is made with respect to the
Plan Year in which it is received by the Trustee.  Any Employee Stock
Ownership contribution paid by the Employer during any Plan Year but after the
due date (including any extensions) for filing of its federal income tax
return for the fiscal year of the Employer ending

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on or before the last day of the preceding Plan Year shall be treated, for
allocation purposes, as an Employee Stock Ownership contribution to the Fund
for the Plan Year in which the contribution is paid to the Trustee.

     (c) Notwithstanding anything contained herein to the contrary, no
Employee Stock Ownership contribution shall be made for any year during which
a "limitations account" created pursuant to Section 5.6(c)(2) is in existence
until the balance of such limitations account has been reallocated in
accordance with Section 5.6(c)(2).

     4.3  Records of Contributions.

     The Employer shall deliver at least annually to the Trustee, with respect
to the contributions contemplated in Section 4.1, a certificate of the
Administrator, in such form as the Trustee shall approve, setting forth:

     (a) The aggregate amount of contributions, if any, to the Fund for such
Plan Year;

     (b) The names, Internal Revenue Service identifying numbers and current
residential addresses of all Participants in the Plan;

     (c) The amount and category of contributions to be allocated to each such
Participant; and

     (d) Any other information reasonably required for the proper operation of
the Plan.

     4.4  Erroneous Contributions.

     (a) Notwithstanding anything herein to the contrary, upon the Employer's
request, a contribution which was made by a mistake of fact, or conditioned
upon the initial qualification of the Plan, under Code Section 401, or upon
the deductibility of the contribution under Section 404 of the Code, shall be
returned to the Employer by the Trustee within one year after the payment of
the contribution, the denial of the qualification or the disallowance of the
deduction (to the extent disallowed), whichever is applicable; provided,
however, that in the case of denial of the initial qualification of the Plan,
a contribution shall not be returned unless an Application for Determination
has been timely filed with the Internal Revenue Service.  Any portion of a
contribution returned pursuant to this Section 4.4 shall be adjusted to
reflect its proportionate share of the losses of the fund, but shall not be
adjusted to reflect any earnings or gains. Notwithstanding any provisions of
this Plan to the contrary, the right or claim of any Participant or
Beneficiary to any asset of the Fund or any benefit under this Plan shall be
subject to and limited by this Section 4.4.

     (b) In no event shall voluntary Employee contributions be accepted.  Any
such voluntary Employee contributions (and any earnings attributable thereto)
mistakenly received by the Trustee shall promptly be returned to the
Participant.

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                            ARTICLE V

              ACCOUNTS, ALLOCATIONS AND INVESTMENTS

     5.1  Establishment of Separate Participant Accounts.

     The Administrator shall establish and maintain separate individual
accounts for Participants in the Plan and for each Former Participant in
accordance with the provisions of this Article V.  Such separate accounts
shall be for accounting purposes only and shall not require a segregation of
the Fund, and no Participant, Former Participant or Beneficiary shall acquire
any right to or interest in any specific assets of the Fund as a result of the
allocations provided for under this Plan, except where segregation is
expressly provided for in this Plan.

     (a) Employee Stock Ownership Accounts.

     The Administrator shall establish a separate Employee Stock Ownership
Account in the Fund for each Participant.  The account shall be credited as of
the last day of each Plan Year with the amounts allocated to the Participant
under Sections 5.4 and 5.5.  The Administrator may establish subaccounts
hereunder, including an Employer Stock Account reflecting a Participant's
interest in Employer Securities held by the Trust and an Other Investments
Account reflecting the Participant's interest in his Employee Stock Ownership
Account other than Employer Securities.

     (b) Distribution Accounts.

     In any case where distribution of a terminated Participant's vested
interest in the Plan is to be deferred, the Administrator shall establish a
separate, nonforfeitable account in the Fund to which the balance in his
Employee Stock Ownership Account in the Plan shall be transferred after such
Participant incurs a Break.  Unless the Former Participant's distribution
accounts are segregated for investment purposes pursuant to section 9.4, they
shall share in Investment Adjustments.

     (c) Other Accounts.

     The Administrator shall establish such other separate accounts for each
Participant as may be necessary or desirable for the convenient administration
of the Fund.

     5.2  Establishment of Suspense Accounts.

     The Administrator shall establish separate accounts to be known as
"suspense accounts."  There shall be credited to such appropriate suspense
accounts any Employee Stock Ownership contributions that may be made prior to
the last day of the Plan Year, as provided in Section 4.2.  The suspense
accounts shall share proportionately as to time and amount in any Investment
Adjustments.  As of the last day of each Plan Year, the balance of the
Employee Stock

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Ownership suspense account shall be added to the Employee Stock Ownership
contribution and allocated to the Employee Stock Ownership Accounts of
Participants as provided in Section 5.5, except as provided herein.  In the
event that the Plan takes an Exempt Loan, the Employer Securities purchased
thereby shall be allocated to a separate Exempt Loan Suspense Account, from
which allocations shall be made in accordance with Section 8.5.
 
     5.3  Allocation of Earnings, Losses and Expenses.

     As of each Valuation Date, any increase or decrease in the net worth of
the aggregate Employee Stock Ownership Accounts held in the Fund attributable
to earnings, losses, expenses and unrealized appreciation or depreciation in
each such aggregate Account, as determined by the Trustee pursuant to the
Trust Agreement, shall be credited to or deducted from the appropriate
suspense accounts and all Participants' Employee Stock Ownership Accounts
(except segregated distribution accounts described in Section 5.1(b) and the
"limitations account" described in Section 5.6(c)(4)) in the proportion that
the value of each such Account (determined immediately prior to such
allocation and before crediting any Employee Stock Ownership contributions and
forfeitures for the current Plan Year but after adjustment for any transfer to
or from such Accounts and for the time such funds were in such Accounts) bears
to the value of all Employee Stock Ownership Accounts.

     5.4  Allocation of Forfeitures.

     As of the last day of each Plan Year, all forfeitures attributable to the
Employee Stock Ownership Accounts which are then available for reallocation
shall be, as appropriate, added to the Employee Stock Ownership contribution
(if any) for such year and allocated among the Participants' Employee Stock
Ownership Accounts, as appropriate, in the manner provided in Sections 5.5 and
5.6.

     5.5  Allocation of Annual Employee Stock Ownership Contributions.

     As of the last day of each Plan Year for which the Employer shall make an
Employee Stock Ownership contribution, the Administrator shall allocate the
Employee Stock Ownership contribution (including reallocable forfeitures) for
such Plan Year to the Employee Stock Ownership account of each Participant who
completed at least 1,000 Hours of Service during that Plan Year, provided that
he is still employed by the Employer on the last day of the Plan Year.  Such
allocation shall be made in the same proportion that each such Participant's
Compensation for such Plan Year bears to the total Compensation of all such
Participants for such Plan Year, subject to Section 5.6; provided, however,
that for purposes of this Section 5.5, Compensation shall not be considered
for any part of a Plan Year prior to the date an Employee becomes a
Participant.  Notwithstanding the foregoing, if a Participant attains his
Normal Retirement Date and terminates Service prior to the last day of the
Plan Year, or terminates Service by reason of is death or Disability, he shall
be entitled to an allocation based on his Compensation earned prior to his
termination and during the Plan Year.  Furthermore, if a Participant completes
1,000 Hours of Service and is on a Leave of Absence on the last day of the
Plan Year because of pregnancy

                                   16
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or other medical reason, such a Participant shall be entitled to an allocation
based on his Compensation earned during such Plan Year.

     5.6  Limitation on Annual Additions.

     (a) Notwithstanding any provisions of this Plan to the contrary, the
total Annual Additions credited to a Participant's accounts under this Plan
(and under any other defined contribution plan to which the Employer
contributes) for any Limitation Year shall not exceed the lesser of:

     (1)  25% of the Participant's compensation for such Limitation Year; or

     (2)  $30,000 (or, if greater, one-fourth of the defined benefit dollar    
          limitation set forth in Section 415(b)(1)(A) of the Code).  Whenever 
          otherwise allowed by law, the maximum amount of $30,000 shall be     
          automatically adjusted annually for cost-of-living increases in      
          accordance with Section 415(d) of the Code and the highest such      
          increase effective at any time during the Limitation Year shall be   
          effective for the entire Limitation Year, without any amendment to   
          this Plan.

     (b) Solely for the purpose of this Section 5.6, the term "compensation"
is defined as wages, salaries, and fees for professional services and other
amounts received (without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are includable in
gross income (including, but not limited to, commissions paid to salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as described in Treas.
Regs. Section 1.62-2(c)), and excluding the following:

     (1)  Employer contributions to a plan of deferred compensation which are  
          not includable in the Employee's gross income for the taxable year   
          in which contributed, or Employer contributions under a simplified   
          employee pension plan to the extent such contributions are           
          deductible by the Employee, or any distributions from a plan of      
          deferred compensation;

     (2)  Amounts realized from the exercise of a non-qualified stock option,  
          or when restricted stock (or property) held by the employee either   
          becomes freely transferable or is no longer subject to a substantial 
          risk of forfeiture;

     (3)  Amounts realized from the sale, exchange or other disposition of     
          stock acquired under a qualified stock option; and

     (4)  Other amounts which received special tax benefits, or contributions  
          made by the employer (whether or not under a salary reduction        
          agreement)

                                   17
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          towards the purchase of an annuity contract described in section     
          403(b) of the Code (whether or not the contributions are actually    
          excludable from the gross income of the Employee).

     (c) In the event that the limitations on Annual Additions described in
this Section 5.6(a) above are exceeded with respect to any Participant in any
Limitation Year, then the contributions allocable to the Participant for such
year shall be reduced to the minimum extent required by such limitations in
the following order of priority:

     (1)  If any further reductions in Annual Additions are necessary, then    
          the Employee Stock Ownership contributions and forfeitures allocated 
          during such Limitation Year to the Participant's Employee Stock      
          Ownership Account shall be reduced.  The amount of any such          
          reductions in the Employee Stock Ownership contributions and         
          forfeitures shall be reallocated to all other Participants in the    
          same manner as set forth under Sections 5.4 and 5.5.

     (2)  Any amounts which cannot be reallocated to other Participants in a   
          current Limitation Year in accordance with Section 5.6(c)(1) above   
          because of the limitations contained in Sections 5.6(a) and (d)      
          shall be credited to an account designated as the "limitations       
          account" and carried forward to the next and subsequent Limitation   
          Years until it can be reallocated to all Participants as set forth   
          in Sections 5.4, and 5.5, as appropriate.  No Investment Adjustments 
          shall be allocated to this limitations account.  In the next and     
          subsequent Limitation Years, all amounts in the limitations account  
          must be allocated in the manner described in Sections 5.4 and 5.5,   
          as appropriate, before any Employee Stock Ownership contributions    
          may be made to this Plan for that Limitation Year.

     (3)  The Administrator shall determine to what extent the Annual          
          Additions to any Participant's Employee Stock Ownership Account must 
          be reduced in each Limitation Year.  The Administrator shall reduce  
          the Annual Additions to all other tax-qualified retirement plans     
          maintained by the Employer in accordance with the terms contained    
          therein for required reductions or reallocations mandated by Section 
          415 of the Code before reducing any Annual Additions in this Plan.

     (4)  In the event this Plan is voluntarily terminated by the Employer     
          under Section 13.5, any amounts credited to the limitations account  
          described in Section 5.6(c)(2) above which have not be reallocated   
          as set forth herein shall be distributed to the Participants who are 
          still employed by the Employer on the date of termination, in the    
          proportion that each Participant's Compensation bears to the         
          Compensation of all Participants.

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     (d) The Annual Additions credited to a Participant's accounts for each
Limitation Year are further limited so that in the case of an Employee who is
a Participant in both this Plan and any qualified defined benefit plan
(hereinafter referred to as a "pension plan") of the Employer, the sum of (1)
and (2) below will not exceed 1.0:

     (1)  (A) The projected annual normal retirement benefit of a Participant  
          under the pension plan, divided by

          (B) The lesser of:

               (i)  The product of 1.25 multiplied by the dollar limitation in 
                    effect under Section 415(b)(1)(A) of the Code for such     
                    Limitation Year; or

               (ii) The product of 1.4 multiplied by the amount of             
                    compensation which may be taken into account under Section 
                    415(b)(1)(B) of the Code for the Participant for such      
                    Limitation Year; plus

     (2)  (A) The sum of Annual Additions credited to the Participant under    
          this Plan for all Limitation Years, divided by:

          (B) The sum of the lesser of the following amounts determined for    
              such Limitation Year and for each prior year of service with the 
              Employer:

               (i)  The product of 1.25 multiplied by the dollar limitation in 
                    effect under Section 415(b)(1)(A) of the Code for such     
                    Limitation Year, or

               (ii) The product of 1.4 multiplied by  the amount of            
                    compensation which may be taken into account under Section 
                    415(b)(1)(B) of the Code for the Participant for such      
                    Limitation Year.  The Administrator may, in calculating    
                    the defined contribution plan fraction described in        
                    Section 5.6(d)(2), elect to use the transitional rule      
                    pursuant to Section 415(e)(6) of the Code, if applicable.  
                    If the sum of the fractions produced above will exceed     
                    1.0, even after the use of the

                                   19
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<PAGE>
                    "fresh start" rule contained in Section 235 of the Tax     
                    Equity and Fiscal Responsibility Act of 1982 ("TEFRA"), if 
                    applicable, then the same provisions as stated in Section  
                    5.6(c) above shall apply.  If, even after the reductions   
                    provided for in Section 5.6(c), the sum of the fractions   
                    still exceed 1.0, then the benefits of the Participant     
                    provided under the pension plan shall be reduced to the    
                    extent necessary, in accordance with Treasury Regulations  
                    issued under the Code.  Solely for the purposes of this    
                    Section 5.6(d), the term "years of service" shall mean all 
                    years of service defined by Treasury Regulations issued    
                    under Section 415 of the Code.

     (e) In the event that the Employer is a member of (1) a controlled group
of corporations or a group of trades or businesses under common control (as
described in Section 414(b) or (c) of the Code, as modified by Section 415(h)
thereof), or (2) an affiliated service group (as described in Section 414(m)
of the Code), the Annual Additions credited to any Participant's accounts in
any such Limitation Year shall be further limited by reason of the existence
of all other qualified retirement plans maintained by such affiliated
corporations, other entities under common control or other members of the
affiliated service group, to the extent such reduction is required by Section
415 of the Code and the regulations promulgated thereunder.  The Administrator
shall determine if any such reduction in the Annual Additions to a
Participant's accounts is required for this reason, and if so, the same
provisions as stated in 5.6(c) and (d) above shall apply.

     (f) Annual Additions shall not include any Employer contributions which
are used by the Trust to pay interest on an Exempt Loan nor any forfeitures of
Employer Securities purchased with the proceeds of an Exempt Loan, provided
that not more than one-third of the Employer contributions are allocated to
Participants who are among the group of employees deemed "highly compensated
employees" within the meaning of Code Section 414(q).

     5.7  Erroneous Allocations.

     No Participant shall be entitled to any Annual Additions or other
allocations to his accounts in excess of those permitted under Sections 5.3,
5.4, 5.5, and 5.6.  If it is determined at anytime that the Administrator
and/or Trustees have erred in accepting and allocating any contributions or
forfeitures under this Plan, or in allocating Investment Adjustments, or in
excluding or including any person as a Participant, then the Administrator, in
a uniform and nondiscriminatory manner, shall determine the manner in which
such error shall be corrected and shall promptly advise the Trustee in writing
of such error and of the method for correcting such

                                   20
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error.  The accounts of any or all Participants may be revised, if necessary,
in order to correct such error.

     5.8  Value of Participant's Interest in Fund

     At any time, the value of a Participant's interest in the Fund shall
consist of the aggregate value of his Employee Stock Ownership Account and his
distribution account, if any, determined as of the next-preceding Valuation
Date.  The Administrator shall maintain adequate records of the cost basis of
Employer Securities allocated to each Participant's Employer Stock Ownership
Account.

     5.9  Investment of Account Balances.

     The Employee Stock Ownership Accounts shall be invested primarily in
Employer Securities.  All sales of Employer Securities by the Trustee
attributable to the Employee Stock Ownership Accounts of all Participants
shall be charged pro rata to the Employee Stock Ownership Accounts of all
Participants.

                                   21
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                           ARTICLE VI

        RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY

     6.1  Normal Retirement.

     A Participant who reaches his Normal Retirement Date and who shall retire
at that time shall thereupon be entitled to retirement benefits based on the
value of his interest in the Fund, payable pursuant to the provisions of
Section 9.1.  A Participant who remains in Service after his Normal Retirement
Date shall not be entitled to any retirement benefits until his actual
termination of Service thereafter (except as provided in Section 9.3(g)) and
he shall meanwhile continue to participate in this Plan.

     6.2  Early Retirement.

     A Participant who reaches his Early Retirement Date may retire at such
time (or, at his election, as of the first day of any month thereafter prior
to his Normal Retirement Date) and shall thereupon be entitled to retirement
benefits based on the value of his interest in the Fund, payable pursuant to
the provisions of Section 9.1.

     6.3  Disability Retirement.

     In the event a Participant incurs a Disability, he may retire on his
Disability Retirement Date and shall thereupon be entitled to retirement
benefits based on the value of his interest in the Fund, payable pursuant to
the provisions of Section 9.1.

     6.4  Death Benefits.

     (a) Upon the death of a Participant before his Retirement or other
termination of Service, the value of his interest in the Fund shall be payable
pursuant to the provisions of Section 9.1.  The Administrator shall direct the
Trustee to distribute his interest in the Fund to any surviving Beneficiary
designated by the Participant or, if none, to such persons designated by the
Administrator pursuant to Section 6.5.

     (b) Upon the death of a Former Participant, the Administrator shall
direct the Trustee to distribute any undistributed balance of his interest in
the Fund to any surviving Beneficiary designated by him or, if none, to such
persons designated by the Administrator pursuant to Section 6.5.

     (c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive the interest in the Fund of a
deceased Participant or Former Participant as the Administrator may deem
desirable. The Administrator's determination of death and of the right of any
person to receive payment shall be conclusive.

                                   22
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<PAGE>
     6.5  Designation of Death Beneficiary and Manner of Payment.

     (a) Each Participant shall have the right to designate a Beneficiary or
Beneficiaries to receive the sum or sums to which he may be entitled upon his
death.  The Participant may also designate the manner in which any death
benefits under this Plan shall be payable to his Beneficiary, provided that
such designation is in accordance with Section 9.4.  Such designation of
Beneficiary and manner of payment shall be in writing and delivered to the
Administrator, and shall be effective when received by the Administrator.  The
Participant shall have the right to change such designation by notice in
writing to the Administrator.  Such change of Beneficiary or the manner of
payment shall become effective upon its receipt by the Administrator.  Any
such change shall be deemed to revoke all prior designations.

     (b) If a Participant shall fail to designate validly a Beneficiary or if
no designated Beneficiary survives the Participant, his interest in the Fund
shall be paid to the person or persons in the first of the following classes
of successive preference Beneficiaries surviving at the death of the
Participant:  the Participant's (1) widow or widower, (2) children, (3)
parents, and (4) estate.  The Administrator shall decide what Beneficiaries,
if any, shall have been validly designated, and its decision shall be binding
and conclusive on all persons.

     (c) Notwithstanding the foregoing, if a Participant has been married
throughout the 12 month period preceding the date of his death, the sum or
sums to which he may be entitled under this Plan upon his death shall be paid
to his spouse, unless the Participant's spouse shall have consented to the
election of another Beneficiary.  Such a spousal consent shall be in writing
and shall be witnessed either by a representative of the Plan or a notary
public.  If it is established to the satisfaction of the Administrator that
such spousal consent cannot be obtained because there is no spouse, because
the spouse cannot be located, or other reasons prescribed by governmental
regulations, the consent of the spouse may be waived, and the Participant may
designate a Beneficiary or Beneficiaries other than his spouse.

                                   23
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                           ARTICLE VII

                     VESTING AND FORFEITURES

     7.1  Vesting on Death, Disability, Retirement and Change in Control.

     Unless his participation in this Plan shall have terminated prior
thereto, upon a Participant's death, Disability, Early Retirement, or upon his
attainment of Normal Retirement Date (whether or not he actually retires at
that time) while he is still employed by the Employer, the Participant's
entire interest in the Fund shall be fully vested and nonforfeitable.  In
addition, a Participant's interest shall be fully vested and nonforfeitable
upon a Change in Control.  For purposes of this Plan, a "Change in Control"
shall mean an event deemed to occur if and when (1) an offeror other than the
Timberland Bancorp, Inc. purchases shares of the stock of Timberland Bancorp,
Inc. or the Sponsor pursuant to a tender or exchange offer for such shares,
(2) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of Timberland Bancorp, Inc. or the Sponsor representing 25% or more
of the combined voting power of Timberland Bancorp, Inc.'s or the Sponsor's
then outstanding securities, (3) the membership of the board of directors of
Timberland Bancorp, Inc. or the Sponsor changes as the result of a contested
election, such that individuals who were directors at the beginning of any 24
month period (whether commencing before or after the date of adoption of this
Plan) do not constitute a majority of the Board at the end of such period, or
(4) shareholders of Timberland Bancorp, Inc. or the Sponsor approve a merger,
consolidation, sale or disposition of all or substantially all of Timberland
Bancorp, Inc.'s or the Sponsor's assets, or a plan of partial or complete
liquidation.  If any of the events enumerated in clauses (1) - (4) occur, the
Board of Directors shall determine the effective date of the change in control
resulting therefrom.

     7.2  Vesting on Termination of Participation.

     Upon termination of his participation in this Plan for any reason other
than death, Disability, or Normal Retirement, a Participant shall be vested in
a percentage of his Employee Stock Ownership Account, such vested percentages
to be determined under the following table, based on the Years of Service
(including Years of Service prior to the Effective Date) credited to him for
vesting purposes at the time of his termination of participation:

          Years of Service Completed   Percentage Vested
            Less than 1                       0%
                  1                          10%
                  2                          20%
                  3                          40%
                  4                          60%
                  5                          80%
             6 or more                      100%

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     Any portion of the Participant's Employee Stock Ownership Account which
is not vested at the time he incurs a Break shall thereupon be forfeited and
disposed of pursuant to Section 7.3.  Distribution of the vested portion of a
terminated Participant's interest in the Plan may be authorized by the
Administrator in any manner permitted under Section 9.1.

     7.3  Disposition of Forfeitures.

     (a) In the event a Participant incurs a Break and subsequently resumes
both his Service and his participation in the Plan prior to incurring at least
five Breaks, the forfeitable portion of his Employee Stock Ownership Account
shall be reinstated to the credit of the Participant as of the date he resumes
participation.

     (b) In the event a Participant terminates Service and subsequently incurs
a Break and receives a distribution, or in the event a Participant does not
terminate Service, but incurs at least five Breaks, or in the event that a
Participant terminates Service and incurs at least five Breaks but has not
received a distribution, then the forfeitable portion of his Employer Account,
including Investment Adjustments, shall be reallocated to other Participants,
pursuant to Section 5.4 as of the date the Participant incurs such Break or
Breaks, as the case may be.

     (c) In the event a former Participant who had received a distribution
from the Plan is rehired, he shall repay the amount of his distribution before
the earlier of five years after the date of his rehire by the Employer, or the
close of the first period of five consecutive Breaks commencing after the
withdrawal in order for any forfeited amounts to be restored to him.

                                   25
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                          ARTICLE VIII

               EMPLOYEE STOCK OWNERSHIP PROVISIONS

     8.1  Right to Demand Employer Securities.

     A Participant entitled to a distribution from his Employee Stock
Ownership Account shall be entitled to demand that his interest in the Account
be distributed to him in the form of Employer Securities, all subject to
Section 9.9.  In the event that the Employer Securities are not readily
tradable on an established market, the Participant shall be entitled to
require that the Employer repurchase the Employer Securities under a fair
valuation formula, as provided by governmental regulations.  The Participant
or Beneficiary shall be entitled to exercise the put option described in the
preceding sentence for a period of not more than 60 days following the date of
distribution of Employer Securities to him.  If the put option is not
exercised within such 60-day period, the Participant or Beneficiary may
exercise the put option during an additional period of not more than 60 days
after the beginning of the first day of the first Plan Year following the Plan
Year in which the first put option period occurred, all as provided in
regulations promulgated by the Secretary of the Treasury.

     8.2  Voting Rights.

     Each Participant with an Employee Stock Ownership Account shall be
entitled to direct the Trustee as to the manner in which the Employer
Securities in such Account are to be voted.  Employer Securities held in the
Employee Stock Ownership Suspense Account or the Exempt Loan Suspense Account
shall be voted by the Trustee on each issue with respect to which shareholders
are entitled to vote in the manner directed by the majority of the
Participants who directed the Trustee as to the manner of voting their shares
in the Employee Stock Ownership Accounts with respect to such issue.  Prior to
the initial allocation of shares, the Trustee shall be entitled to vote the
shares in the Suspense Account without prior direction from the Participants
or the Administrator.  In the event that a Participant fails to give timely
voting instructions to the Trustee with respect to the voting of his allocated
Employer Securities, the Trustee shall be entitled to vote such shares in its
discretion.

     8.3  Nondiscrimination in Employee Stock Ownership Contributions.

     In the event that the amount of the Employee Stock Ownership
contributions that would be required in any Plan Year to make the scheduled
payments on an Exempt Loan would exceed the amount that would otherwise be
deductible by the Employer for such Plan Year under Code Section 404, then no
more than one-third of the Employee Stock Ownership contributions for the Plan
Year, which is also the Employer's taxable year, shall be allocated to the
group of Employees who during the Plan Year or the preceding Plan Year:

     (a) During the Plan Year or the preceding Plan Year was at any time a 5%
owner of the Employer; or

                                   26
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     (b) During the preceding Plan Year, received compensation from the
Employer in excess of $80,000, as adjusted under Code Section 414(q) and, if
elected by the Employer, was in the top paid group of Employees for such Plan
Year.

     8.4  Dividends.

     Any cash dividends or other cash contributions received by the Trustee of
Employer Securities allocated to the Employee Stock Account of Participants
shall be credited to the applicable Participants' Ownership Accounts unless
the Sponsor, in its sole discretion, elects to pay the cash dividends directly
to the applicable Participants or directs the Trustee to pay the cash
dividends to the Participants (or, if applicable, their Beneficiaries) within
90 calendar days of the close of the Plan Year in which the cash dividend were
paid to the Fund.  Notwithstanding anything contained in this Section to the
contrary, the Sponsor may direct cash dividends, including dividends on
non-allocated shares, be applied to repay an Exempt Loan, but only to the
extent shares of Employer Securities with an aggregate fair market value equal
to the amount of dividends so applied are allocated to the Employee Stock
Ownership Account of the applicable Participants and to the extent the cash
dividends are deductible under Section 404(k) of the Code.  To the extent cash
dividends on allocated shares are applied to repay an Exempt Loan, shares
released from encumbrance the value equal to the amount of the dividends
which, but for the repayment of the Exempt Loan, would have been allocated to
Participants' Employee Stock Ownership Accounts shall be allocated to the
Employee Stock Ownership Accounts of the affected Participants, and the
remaining shares to be allocated shall be allocated among the Participants in
accordance with Section 5.5.  Dividends on Employer Securities obtained
pursuant to an Exempt Loan and not yet allocated may be used to make payments
on an Exempt Loan, as described in Section 8.5.

     8.5  Exempt Loans.

     (a) The Sponsor may direct the Trustee to obtain Exempt Loans.  The
Exempt Loan may take the form of (i) a loan from a bank or other commercial
lender to purchase Employer Securities (ii) a loan from the Employer or
affiliated corporation, to the Plan; or (iii) an installment sale of Employer
Securities to the Plan.  The proceeds of any such Exempt Loan shall be used,
within a reasonable time after the Exempt Loan is obtained, only to purchase
Employer Securities, repay the Exempt Loan, or repay any prior Exempt Loan. 
Any such Exempt Loan shall provide for no more than a reasonable rate of
interest and shall be without recourse against the Plan.  The number of years
to maturity under the Exempt Loan must be definitely ascertainable at all
times.  The only assets of the Plan that may be given as collateral for an
Exempt Loan are Employer Securities acquired with the proceeds of the Exempt
Loan and Employer Securities that were used as collateral for a prior Exempt
Loan repaid with the proceeds of the current Exempt Loan.  Such Employer
Securities so pledged shall be placed in an Exempt Loan Suspense Account.  No
person or institution entitled to payment under an Exempt Loan shall have
recourse against Trust assets other than the aforesaid collateral, Employer
Stock Ownership contributions (other than contributions of Employer
Securities) that are available under the Plan to meet obligations under the
Exempt Loan and earnings attributable to such

                                   27
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collateral and the investment of such contributions.  All Employee Stock
Ownership contributions paid during the Plan Year in which an Exempt Loan is
made (whether before or after the date the proceeds of the Exempt Loan are
received), all Employee Stock Ownership contributions paid thereafter until
the Exempt Loan has been repaid in full, and all earnings from investment of
such Employee Stock Ownership contributions, without regard to whether any
such Employee Stock Ownership contributions and earnings have been allocated
to Participants' Employee Stock Ownership Accounts, shall be available to meet
obligations under the Exempt Loan as such obligations accrue, or prior to the
time such obligations accrue, unless otherwise provided by the Employer at the
time any such contribution is made.  Any pledge of Employer Securities shall
provide for the release of shares so pledged upon the payment of any portion
of the Exempt Loan.

     (b) For each Plan Year during the duration of the Exempt Loan, the number
of shares of Employer Securities released from such pledge shall equal the
number of encumbered shares held immediately before release for the current
Plan Year multiplied by a fraction.  The numerator of the fraction is the sum
of principal and interest paid in such Plan Year.  The denominator of the
fraction is the sum of the numerator plus the principal and interest to be
paid for all future years.  Such years will be determined without taking into
account any possible extension or renewal periods.  If interest on any Exempt
Loan is variable, the interest to be paid in future years under the Exempt
Loan shall be computed by using the interest rate applicable as of the end of
the Plan Year.

     (c) Notwithstanding the foregoing, the Trustee may obtain an Exempt Loan
pursuant to the terms of which the number of Employer Securities to be
released from encumbrance shall be determined solely with reference to
principal payments.  In the event that such an Exempt Loan is obtained, annual
payments of principal and interest shall be at a cumulative rate that is not
less rapid at any time than level payments of such amounts for not more than
10 years.  The amount of interest in any such annual loan repayment shall be
disregarded only to the extent that it would be determined to be interest
under standard loan amortization tables.  The requirement set forth in the
preceding sentence shall not be applicable from the time that, by reason of a
renewal, extension, or refinancing, the sum of the expired duration of the
Exempt Loan, the renewal period, the extension period, and the duration of a
new Exempt Loan exceeds 10 years.

     8.6  Exempt Loan Payments.

     (a) Payments of principal and interest on any Exempt Loan during a Plan
Year shall be made by the Trustee (as directed by the Administrator) only from
(1) Employee Stock Ownership contributions to the Trust made to meet the
Plan's obligation under an Exempt Loan (other than contributions of Employer
Securities) and from any earnings attributable to Employer Securities  held as
collateral for an Exempt Loan and investments of such contributions (both
received during or prior to the Plan Year); (2) the proceeds of a subsequent
Exempt Loan made to repay a prior Exempt Loan; and (3) the proceeds of the
sale of any Employer Securities held as collateral for an Exempt Loan.  Such
contribution and earnings shall be accounted for separately by the Plan until
the Exempt Loan is repaid.

                                   28
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     (b) Employer Securities released by reason of the payment of principal or
interest on an Exempt Loan from amounts allocated to Participants' Employee
Stock Ownership Accounts shall be allocated as set forth in Section 5.5.

     (c) The Employer shall contribute to the Trust sufficient amounts to
enable the Trust to pay principal and interest on any such Exempt Loans as
they are due, provided however that no such contribution shall exceed the
limitations in Section 5.6.  In the event that such contributions by reason of
the limitations in Section 5.6 are insufficient to enable the Trust to pay
principal and interest on such Exempt Loan as it is due, then upon the
Trustee's request the Employer or an affiliated corporation shall:

     (1)  Make an Exempt Loan to the Trust in sufficient amounts to meet such  
          principal and interest payments.  Such new Exempt Loan shall be      
          subordinated to the prior Exempt Loan.  Securities released from the 
          pledge of the prior Exempt Loan shall be pledged as collateral to    
          secure the new Exempt Loan. Such Employer Securities will be         
          released from this new pledge and allocated to the Employee Stock    
          Ownership Accounts of the Participants in accordance with applicable 
          provisions of the Plan;

     (2)  Purchase any Employer Securities pledged as collateral in an amount  
          necessary to provide the Trustee with sufficient funds to meet the   
          principal and interest repayments.  Any such sale by the Plan shall  
          meet the requirements of Section 408(e) of ERISA; or

     (3)  Any combination of the foregoing.  However, the Employer shall not,  
          pursuant to the provisions of this subsection, do, fail to do or     
          cause to be done any act or thing which would result in a            
          disqualification of the Plan as an Employee Stock Ownership Plan     
          under the Code.

     (d) Except as provided in Section 8.1 above and notwithstanding any
amendment to or termination of the Plan which causes it to cease to qualify as
an Employee Stock Ownership plan within the meaning of Section 4975(e)(7) of
the Code, or any repayment of an Exempt Loan, no shares of Employer Securities
acquired with the proceeds of an Exempt Loan obtained by the Trust to purchase
Employer Securities may be subject to a put, call or other option, or buy-sell
or similar arrangement while such shares are held by the Plan or when such
Shares are distributed from the Plan.

     8.7  Put Option.

     If a Participant exercises a put option (as set forth in Section 8.1)
with respect to Employer Securities that were distributed as part of a total
distribution pursuant to which a Participant's Employee Stock Ownership
Account is distributed to him in a single taxable year, the Employer or the
Plan may elect to pay the purchase price of the Employer Securities over a
period not to exceed five years.  Such payments shall be made in substantially
equal

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installments not less frequently than annually over a period beginning not
later than 30 days after the exercise of the put option.  Reasonable interest
shall be paid to the Participant with respect to the unpaid balance of the
purchase price and adequate security shall be provided with respect thereto. 
In the event that a Participant exercises a put option with respect to
Employer Securities that are distributed as part of an installment
distribution, the amount to be paid for such securities shall be paid not
later than 30 days after the exercise of the put option.

     8.8  Diversification Requirements

     Each Participant who has completed at least 10 years of participation in
the Plan and has attained age 55 may elect within 90 days after the close of
each Plan Year during his "qualified election period" to direct the Plan as to
the investment of at least 25% of his Employee Stock Ownership Account (to the
extent such percentage exceeds the amount to which a prior election under this
Section 8.8 had been made).  For purposes of this Section 8.8, the term
"qualified election period" shall mean the five-Plan Year period beginning
with the Plan Year after the Plan Year in which the Participant attains age 55
(or, if later, beginning with the Plan Year after the first Plan Year in which
the Employee first completes at least 10 years of participation in the Plan). 
In the case of the Employee who has attained age 60 and completed 10 years of
participation in the prior Plan Year and in the case of the election year in
which any other Participant who has met the minimum age and service
requirements for diversification can make his last election hereunder, he
shall be entitled to direct the Plan as to the investment of at least 50% of
his Employee Stock Ownership Account (to the extent such percentage exceeds
the amount to which a prior election under this Section 8.8 had been made). 
The Plan shall make available at least three investment options (not
inconsistent with regulations prescribed by the Department of Treasury) to
each Participant making an election hereunder.  The Plan shall be deemed to
have met the requirements of this Section if the portion of the Participant's
Employee Stock Ownership Account covered by the election hereunder is
distributed to the Participant or his designated Beneficiary within 90 days
after the period during which the election may be made.  In the absence of
such a distribution, the Trustee shall implement the Participant's election
within 90 days following the expiration of the qualified election period.

     8.9  Independent Appraiser.

     An independent appraiser meeting the requirements of Code 170(a)(1) shall
value the Employer Securities in those Plan Years when such securities are not
readily tradable on an established securities market.

     8.10 Limitation on Allocations.

     In the event that the Trustee acquires shares of Employer Securities in a
transaction to which section 1042 of the Code applies, such Shares shall not
be allocated, directly or indirectly, to any Participant described in Section
409(n)(1) of the Code for the duration of the "nonallocation period" (as
defined in Section 409(n)(3)(C) of the Code).  Where any shares of Employer
Securities are prevented from being allocated due to he prohibition contained
in this

                                   30
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section the allocation of contributions otherwise provided under Section 5.5
shall be adjusted to reflect such result.

                                   31
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                           ARTICLE IX

                   PAYMENTS AND DISTRIBUTIONS

     9.1  Payments on Termination of Service -- In General.

     All benefits provided under this Plan shall be funded by the value of a
Participant's vested interest in the Fund.  As soon as practicable after a
Participant's Retirement, death or termination of Service, the Administrator
shall ascertain the value of his vested interest in the Fund, as provided in
Article V, and the Administrator shall hold or dispose of the same in
accordance with the following provisions of this Article IX.

     9.2  Commencement of Payments.

     (a) Distributions upon Retirement or Death.  Upon a Participant's
Retirement or Death, payment of benefits under this Plan shall, unless the
Participant otherwise elects (in accordance with Section 9.3), commence no
later than six months after the close of the Plan Year in which occurs the
date of the Participant's Retirement or death.

     (b) Distribution following Termination of Service.  Unless a Participant
elects otherwise, if a Participant terminates Service prior to Retirement or
death, he shall be accorded an opportunity to commence receipt of
distributions from his Accounts within six months after the Valuation Date
next following the date of his termination of service.  A Participant who
terminates Service with a deferred vested benefit shall be entitled to receive
from the Administrator a statement of his benefits.  In the event that a
Participant elects not to commence receipt of distributions from his Accounts
in accordance with this Section 9.2(b), after the Participant incurs a Break,
the Administrator shall transfer his deferred vested interest to a
distribution account.  If a Participant's vested Employer Account does not
exceed (or at the time of any prior distribution did not exceed) $5,000, the
Plan Administrator may distribute the vested portion of his Employer Account
as soon as administratively feasible without the consent of the Participant or
his spouse.

     (c) Distribution of Accounts Greater Than $5,000.  If the value of a
Participant's vested Account balance exceeds (or at the time of any prior
distribution exceeded) $5,000, and the Account balance is immediately
distributable, the Participant must consent to any distribution of such
Account balance.  The Plan Administrator shall notify the Participant of the
right to defer any distribution until the Participant's Account balance is no
longer immediately distributable.  The consent of the Participant shall not be
required to the extent that a distribution is required to satisfy Code Section
401(a)(9) or Code Section 415.

     9.3  Mandatory Commencement of Benefits.

     (a) Unless a Participant elects otherwise, in writing, distribution of
benefits will begin no later than the 60th day after the latest of the close
of the Plan Year in which (i) the Participant

                                   32
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<PAGE>
attains age 65, (ii) occurs the tenth anniversary of the year in which the
Participant commenced participation in the Plan Year, or (iii) the Participant
terminates Service with the Employer.

     (b) In the event that the Plan shall be subsequently amended to provide
for a form of distribution other than a lump sum, as of the first distribution
calendar year, distributions, if not made in a lump sum, may be made only over
one of the following periods (or a combination thereof):

     (i)   the life of the Participant,

     (ii)  the life of the Participant and the designated beneficiary,

     (iii) a period certain not extending beyond the life expectancy of the    
           Participant, or

     (iv)  a period certain not extending beyond the joint and last survivor   
           expectancy of the Participant and a designated beneficiary.

     (c) In the event that the Plan shall be subsequently amended to provide
for a form of distribution other than a lump sum, if the participant's
interest is to be distributed in other than a lump sum, the following minimum
distribution rules shall apply on or after the required beginning date:

     (i)  If a Participant's benefit is to be distributed over (1) a period    
          not extending beyond the life expectancy of the Participant or the   
          joint life and last survivor expectancy of the Participant and the   
          Participant's designated beneficiary or (2) a period not extending   
          beyond the life expectancy of the designated beneficiary, the amount 
          required to be distributed for each calendar year, beginning with    
          distributions for the first distribution calendar year, must at      
          least equal the quotient obtained by dividing the Participant's      
          benefit by the applicable life expectancy.

    (ii)  The amount to be distributed each year, beginning with distributions 
          for the first distribution calendar year shall not be less than the  
          quotient obtained by dividing the Participant's benefit by the       
          lesser of (1) the applicable life expectancy or (2) if the           
          Participant's spouse is not the designated beneficiary, the          
          applicable divisor determined from the table set forth in Q&A-4 of   
          section 1.401(a)(9)-2 of the Proposed Regulations.  Distributions    
          after the death of the participant shall be distributed using the    
          applicable life expectancy in sub-section (iii) above as the         
          relevant divisor without regard to Proposed Regulations              
          1.401(a)(9)-2.

    (iii) The minimum distribution required for the Participant's first        
          distribution calendar year must be made on or before the             
          Participant's required

                                   33
<PAGE>
<PAGE>
          beginning date.  The minimum distribution for other calendar years,  
          including the minimum distribution for the distribution calendar     
          year in which the employee's required beginning date occurs, must be 
          made on or before December 31 of the distribution calendar year.

     (d) If a Participant dies after a distribution has commenced in
accordance with Section 8.3(b) but before his entire interest has been
distributed to him, the remaining portion of such interest shall be
distributed to his Beneficiary at least as rapidly as under the method of
distribution in effect as of the date of his death.

     (e) If a Participant shall die before the distribution of his interest in
the Plan has begun, the entire interest of the Participant shall be
distributed by December 31 of the calendar year containing the fifth
anniversary of the death of the Participant, except in the following events:

     (i)  If any portion of the Participant's interest is payable to (or for   
          the benefit of) a designated beneficiary over a period not extending 
          beyond the life expectancy of such beneficiary and such              
          distributions begin not later than December 31 of the calendar year  
          immediately following the calendar year in which the Participant     
          died.

     (ii) If any portion of the Participant's interest is payable to (or for   
          the benefit of) the Participant's spouse over a period not extending 
          beyond the life expectancy of such spouse and such distributions     
          begin no later than December 31 of the calendar year in which the    
          Participant would have attained age 70-1/2.

          If the Participant has not made a distribution election by the time  
          of his death, the Participant's designated beneficiary shall elect   
          the method of distribution no later than the earlier of (1) December 
          31 of the calendar year in which distributions would be required to  
          begin under this Article or (2) December 31 of the calendar year     
          which contains the fifth anniversary of the date of death of the     
          Participant.  If the Participant has no designated beneficiary, or   
          if the designated beneficiary does not elect a method of             
          distribution, distribution of the Participant's entire interest      
          shall be completed by December 31 of the calendar year containing    
          the fifth anniversary of the Participant's death.

     (f) For purposes of this Article, the life expectancy of a Participant
and his spouse may be redetermined but not more frequently than annually.  The
life expectancy (or joint and last survivor expectancy) shall be calculated
using the attained age of the Participant (or designated beneficiary) as of
the Participant's (or designated beneficiary's) birthday in the applicable
calendar year reduced by one for each calendar year which has elapsed since
the date life expectancy was first calculated.  If life expectancy is being
recalculated, the applicable life expectancy shall be the life expectancy as
so recalculated.  The applicable calendar year shall be

                                   34
<PAGE>
<PAGE>
the first distribution calendar year, and if life expectancy is being
recalculated, such succeeding calendar year.  Unless otherwise elected by the
Participant (or his spouse, if applicable) by the time distributions are
required to begin, life expectancies shall be recalculated annually.  Any such
election not to recalculate shall be irrevocable and shall apply to all
subsequent years.  The life expectancy of a nonspouse beneficiary may not be
recalculated.

     (g) For purposes of Section 9.3(b) and 9.3(e), any amount paid to a child
shall be treated as if it had been paid to a surviving spouse if such amount
will become payable to the surviving spouse upon such child reaching majority
(or other designated event permitted under regulations).

     (h) For distributions beginning before the Participant's death, the first
distribution calendar year is the calendar year immediately preceding the
calendar year which contains the Participant's required beginning date.  For
distributions beginning after the Participant's death, the first distribution
calendar year is the calendar year in which distributions are required to
begin pursuant to this Article.

     9.4  Required Beginning Dates.

     The required beginning date of a Participant is the first day of April of
the calendar year following the later of (1) calendar year in which the
participant attains age 70-1/2 or (2) the calendar year in which the
Participant terminated his employment, unless he is a 5% owner (as defined in
Section 416) with respect to the Plan Year ending in the calendar year in
which he attains age 70-1/2, in which case clause (2) shall not apply.

     9.5  Form of Payment.

     Each Participant's vested interest shall be distributed in a lump sum
payment. Notwithstanding the preceding sentence, but subject to Section 9.3,
the Administrator may not distribute a lump sum when the present value of a
Participant's total Account balances is in excess of $5,000 without the
Participant's consent.  This form of payment shall be the normal form of
distribution provided, however, that in the event that the Administrator must
commence distributions with respect to an Employee who has attained age 70-1/2
and is still employed by the Employer, if the Employee does not elect a lump
sum distribution, payments shall be made in installments in such amounts as
shall satisfy the minimum distribution rules of Section 9.3.

     9.6  Payments Upon Termination of Plan.

     Upon termination of this Plan pursuant to Sections 13.2, 13.4, 13.5 or
13.6, the Administrator shall continue to perform its duties and the Trustee
shall make all payments upon the following terms, conditions and provisions:
All interests of Participants shall immediately become fully vested; the value
of the interests of all Participants shall be determined within 60 days after
such termination, and the Administrator shall have the same powers to direct
the Trustee in making payments as contained in Sections 9.1 and 13.5. 

                                   35
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     9.7  Distributions Pursuant to Qualified Domestic Relations Orders.

     Upon receipt of a domestic relations order, the Administrator shall
notify promptly the Participant and any alternate payee of receipt of the
order and the Plan's procedure for determining whether the order is a
Qualified Domestic Relations Order.  While the issue of whether a domestic
relations order is a Qualified Domestic Relations Order is being determined,
if the benefits would otherwise be paid, the Administrator shall segregate in
a separate account in the Plan the amounts that would be payable to the
alternate payee during such period if the order were a Qualified Domestic
Relations Order.  If within 18 months the order is determined to be a
Qualified Domestic Relations Order, the amounts so segregated, along with the
interest or investment earnings attributable thereto shall be paid to the
alternate payee.  Alternatively, if within 18 months, it is determined that
the order is not a Qualified Domestic Relations Order or if the issue is still
unresolved, the amounts segregated under this Section 9.6, with the earnings
attributable thereto, shall be paid to the Participant or Beneficiary who
would have been entitled to such amounts if there had been no order.  The
determination as to whether the order is qualified shall be applied
prospectively.  Thus, if the Administrator determines that the order is a
Qualified Domestic Relations Order after the 18-month period, the Plan shall
not be liable for payments to the alternative payee for the period before the
order is determined to be a Qualified Domestic Relations Order.

     9.8  Cash-Out Distributions

     If a Participant receives a distribution of the entire present value of
his vested Account balances under this Plan because of the termination of his
participation in the Plan, the Plan shall disregard a Participant's Service
with respect to which such cash-out distribution shall have been made, in
computing his accrued benefit under the Plan in the event that a Former
Participant shall again become an Employee and become eligible to participate
in the Plan.  Such a distribution shall be deemed to be made on termination of
participation in the Plan if it is made not later than the close of the second
Plan Year following the Plan Year in which such termination occurs.  The
forfeitable portion of a Participant's accrued benefit shall be restored upon
repayment to the Plan by such former Participant of the full amount of the
cash-out distribution, provided that the former Participant again becomes an
Employee.  Such repayment must be made by the Employee not later than the end
of the five-year period beginning with the date of the distribution. 
Forfeitures required to be restored by virtue of such repayment shall be
restored from the following sources in the following order of preference: (i)
current forfeitures; (ii) additional employee stock ownership contributions,
as appropriate and as subject to Section 5.6; and (iii) investment earnings of
the Fund.  In the event that a Participant's interest in the Plan is totally
forfeitable, a Participant shall be deemed to have received a distribution of
zero upon his termination of Service.  In the event of a return to Service
within five years of the date of his deemed distribution, the Participant
shall be deemed to have repaid his distribution in accordance with the rules
of this Section 9.8.

                                   36
<PAGE>
<PAGE>
      9.9  ESOP Distribution Rules.

     Notwithstanding any provision of this Article IX to the contrary, the
distribution of a Participant's Employee Stock Ownership Account (unless the
Participant elects otherwise in writing), shall commence as soon as
administratively feasible as of the first Valuation Date coincident with or
next following his death, disability or termination of Service, but not later
than one year after the close of the Plan Year in which the Participant
separates from Service by reason of the attainment of his Normal Retirement
Date, disability, death or separation from Service.  In addition, all
distributions hereunder shall, to the extent that the Participant's Account is
invested in Employer Securities, be made in the form of Employer Securities. 
Fractional shares, however, may be distributed in the form of cash.

     9.10 Withholding.

     (a) Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article IX, a distributee
may elect, at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an "eligible rollover distribution" paid directly to an
"eligible retirement plan" specified by the distributee in a "direct
rollover."

     (b) For purposes of this Section 9.10, an "eligible rollover
distribution" is any distribution of all or any portion of the balance to the
credit of the distributee, except that an "eligible rollover distribution"
does not include:  any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of 10 years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and the
portion of any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect
to Employer Securities).

     (c) For purposes of this Section 9.10, an "eligible retirement plan" is
an individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution.  However, in the case of an "eligible rollover
distribution" to the surviving spouse, an "eligible retirement plan" is an
individual retirement account or individual retirement annuity.

     (d) For purposes of this Section 9.10, a distributee includes a
Participant or former Participant.  In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former Participant's
spouse or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are "distributees"
with regard to the interest of the spouse or former spouse.

                                   37
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     (e) For purposes of this Section 9.10, a "direct rollover" is a payment
by the Plan to the "eligible retirement plan" specified by the distributee.

     9.11 Waiver of 30-day Notice.

     If a distribution is one to which sections 401(a)(11) and 417 of the Code
do not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is
given, provided that:  (1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option), and (2)
the Participant, after receiving the notice, affirmatively elects a
distribution.

                                   38
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                             ARTICLE X

             PROVISIONS RELATING TO TOP-HEAVY PLANS

     10.1 Top-Heavy Rules to Control.

     Anything contained in this Plan to the contrary notwithstanding, if for
any Plan Year the Plan is a top-heavy plan, as determined pursuant to Section
416 of the Code, then the Plan must meet the requirements of this Article X
for such Plan Year.

     10.2 Top-Heavy Plan Definitions.

     Unless a different meaning is plainly implied by the context, the
following terms as used in this Article X shall have the following meanings:

     (a) "Accrued Benefit" shall mean the account balances or accrued benefits
of an Employee, calculated pursuant to Section 10.3.

     (b) "Determination Date" shall mean, with respect to any particular Plan
Year of this Plan, the last day of the preceding Plan Year (or, in the case of
the first Plan Year of the Plan, the last day of the first Plan Year).  In
addition, the term "Determination Date" shall mean, with respect to any
particular plan year of any plan (other than this Plan) in a Required
Aggregation Group or a Permissive Aggregation Group, the last day of the plan
year of such plan which falls within the same calendar year as the
Determination Date for this Plan.

     (c) "Employer" shall mean the Employer (as defined in Section 1.1(q)) and
any entity which is (1) a member of a controlled group including such
Employer, while it is a member of such controlled group (within the meaning of
Section 414(b) of the Code), (2) in a group of trades or businesses under
common control with such Employer, while it is under common control (within
the meaning of Section 414(c) of the Code), and (3) a member of an affiliated
service group including such Employer, while it is a member of such affiliated
service group (within the meaning of Section 414(m) of the Code).

     (d) "Key Employee" shall mean any Employee or former Employee (or any
Beneficiary of such Employee or former Employee, as the case may be) who, at
any time during the Plan Year or during the four immediately preceding Plan
Years is one of the following:

     (1)  An officer of the Employer who has compensation greater than 50% of  
          the amount in effect under Code 415(b)(1)(A) for the Plan Year;      
          provided, however, that no more than 50 Employees (or, if lesser,    
          the greater of three or 10% of the Employees) shall be deemed        
          officers;

     (2)  One of the 10 Employees having annual compensation (as defined in    
          Section 415 of the Code) in excess of the limitation in effect under 
          Section

                                   39
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<PAGE>
          415(c)(1)(A) of the Code, and owning (or considered as owning,       
          within the meaning of Section 318 of the Code) the largest interests 
          in the Employer;

     (3)  Any Employee owning (or considered as owning, within the meaning of  
          Section 318 of the Code) more than 5% of the outstanding stock of    
          the Employer or stock possessing more than 5% of the total combined  
          voting power of all stock of the Employer; or

     (4)  Any Employee having annual compensation (as defined in Section 415   
          of the Code) of more than $150,000 and who would be described in     
          Section 10.2(d)(3) if "1%" were substituted for "5%" wherever the    
          latter percentage appears.

          For purposes of applying Section 318 of the Code to the provisions   
          of this Section 10.2(d), Section 318(a)(2)(C) of the Code shall be   
          applied by substituting "5%" for "50%" wherever the latter           
          percentage appears.  In addition, for purposes of this Section       
          10.2(d), the provisions of Section 414(b), (c) and (m) shall not     
          apply in determining ownership interests in the Employer.  However,  
          for purposes of determining whether an individual has compensation   
          in excess of $150,000, or whether an individual is a Key Employee    
          under Section 10.2(d)(1) and (2), compensation from each entity      
          required to be aggregated under Sections 414(b), (c) and (m) of the  
          Code shall be taken into account.  Notwithstanding anything          
          contained herein to the contrary, all determinations as to whether a 
          person is or is not a Key Employee shall be resolved by reference to 
          Section 416 of the Code and any rules and regulations promulgated    
          thereunder.

     (e) "Non-Key Employee" shall mean any Employee or former Employee (or any
Beneficiary of such Employee or former Employee, as the case may be) who is
not considered to be a Key Employee with respect to this Plan.

     (f) "Permissive Aggregation Group" shall mean all plans in the Required
Aggregation Group and any other plans maintained by the Employer which satisfy
Sections 401(a)(4) and 410 of the Code when considered together with the
Required Aggregation Group.

     (g) "Required Aggregation Group" shall mean each plan (including any
terminated plan) of the Employer in which a Key Employee is (or in the case of
a terminated plan, had been) a Participant in the Plan Year containing the
Determination Date or any of the four preceding Plan Years, and each other
plan of the Employer which enables any plan of the Employer in which a Key
Employee is a Participant to meet the requirement of Sections 401(a)(4) and
410 of the Code.

                                   40
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     10.3 Calculation of Accrued Benefits.

     (a) An Employee's Accrued Benefit shall be equal to:

     (1)  With respect to this Plan or any other defined contribution plan     
          (other than a defined contribution pension plan) in a Required       
          Aggregation Group or a Permissive Aggregation Group, the Employee's  
          account balances under the respective plan, determined as of the     
          most recent plan valuation date within a 12-month period ending on   
          the Determination Date, including contributions actually made after  
          the valuation date but before the Determination Date (and, in the    
          first plan year of a plan, also including any contributions made     
          after the Determination Date which are allocated as of a date in the 
          first plan year).

     (2)  With respect to any defined contribution pension plan in a Required  
          Aggregation Group or a Permissive Aggregation Group, the Employee's  
          account balances under the plan, determined as of the most recent    
          plan valuation date within a 12-month period ending on the           
          Determination Date, including contributions which have not actually  
          been made, but which are due to be made as of the Determination      
          Date.

     (3)  With respect to any defined benefit plan in a Required Aggregation   
          Group a Permissive Aggregation Group, the present value of the       
          Employee's accrued benefits under the plan, determined as of the     
          most recent plan valuation date within a 12-month period ending on   
          the Determination Date, pursuant to the actuarial assumptions used   
          by such plan, and calculated as if the Employee terminated Service   
          under such plan as of the valuation date (except that, in the first  
          plan year of a plan, a current Participant's estimated Accrued       
          Benefit Plan as of the Determination Date shall be taken into        
          account).

     (4)  If any individual has not performed services for the Employer        
          maintaining the Plan at any time during the five-year period ending  
          on the Determination Date, any Accrued Benefit for such individual   
          shall not be taken into account.

     (b) The Accrued Benefit of any Employee shall be further adjusted as
follows:

     (1)  The Accrued Benefit shall be calculated to include all amounts       
          attributable to both Employer and Employee contributions, but shall  
          exclude amounts attributable to voluntary deductible Employee        
          contributions, if any.

                                   41
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     (2)  The Accrued Benefit shall be increased by the aggregate              
          distributions made with respect to an Employee under the plan or     
          plans, as the case may be, during the five-year period ending on the 
          Determination Date.

     (3)  Rollover and direct plan-to-plan transfers shall be taken into       
          account as follows:

          (A)  If the transfer is initiated by the Employee and made from a    
               plan maintained by one employer to a plan maintained by another 
               unrelated employer, the transferring plan shall continue to     
               count the amount transferred; the receiving plan shall not      
               count the amount transferred.

          (B)  If the transfer is not initiated by the Employee or is made     
               between plans maintained by related employers, the transferring 
               plan shall no longer count the amount transferred; the          
               receiving plan shall count the amount transferred.

     (c) If any individual has not performed services for the Employer at any
time during the five-year period ending on the Determination Date, any accrued
benefit for such individual (and the account of such individual) shall not be
taken into account.

     10.4 Determination of Top-Heavy Status.

     This Plan shall be considered to be a top-heavy plan for any Plan Year
if, as of the Determination Date, the value of the Accrued Benefits of Key
Employees exceeds 60% of the value of the Accrued Benefits of all eligible
Employees under the Plan.  Notwithstanding the foregoing, if the Employer
maintains any other qualified plan, the determination of whether this Plan is
top-heavy shall be made after aggregating all other plans of the Employer in
the Required Aggregation Group and, if desired by the Employer as a means of
avoiding top-heavy status, after aggregating any other plan of the Employer in
the Permissive Aggregation Group.  If the required Aggregation Group is
top-heavy, then each plan contained in such group shall be deemed to be
top-heavy, notwithstanding that any particular plan in such group would not
otherwise be deemed to be top-heavy.  Conversely, if the Permissive
Aggregation Group is not top-heavy, then no plan contained in such group shall
be deemed to be top-heavy, notwithstanding that any particular plan in such
group would otherwise be deemed to be top-heavy.  In no event shall a plan
included in a top-heavy Permissive Aggregation Group be deemed a top-heavy
plan unless such plan is also included in a top-heavy Required Aggregation
Group.

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     10.5 Determination of Super Top-Heavy Status.

     The Plan shall be considered to be a super top-heavy plan if, as of the
Determination Date, the Plan would meet the test specified in Section 10.4
above for classification as a top-heavy plan, except that "90%" shall be
substituted for "60%" whenever the latter percentage appears.

     10.6 Minimum Contribution.

     (a) For any year in which the Plan is top-heavy, each Non-Key Employee
who has met the age and service requirements, if any, contained in the Plan,
shall be entitled to a minimum contribution (which may include forfeitures
otherwise allocable) equal to a percentage of such Non-Key Employee's
compensation (as defined in Section 415 of the Code) as follows:

     (1)  If the Non-Key Employee is not covered by a defined benefit plan     
          maintained by the Employer, then the minimum contribution under this 
          Plan shall be 3% of such Non-Key Employee's compensation.

     (2)  If the Non-Key Employee is covered by a defined benefit plan         
          maintained by the Employer, then the minimum contribution under this 
          Plan shall be 5% of such Non-Key Employee's compensation.

     (b) Notwithstanding the foregoing, the minimum contribution otherwise
allocable to a Non-Key Employee under this Plan shall be reduced in the
following circumstances:

     (1)  The percentage minimum contribution required under this Plan shall   
          in no event exceed the percentage contribution made for the Key      
          Employee for whom such percentage is the highest for the Plan Year   
          after taking into account contributions under other defined          
          contribution plans in this Plan's Required Aggregation Group;        
          provided, however, that this Section 10.7(b)(1) shall not apply if   
          this Plan is included in a Required Aggregation Group and this Plan  
          enables a defined benefit plan in such Required Aggregation Group to 
          meet the requirements of Section 401(a)(4) or 410 of the Code.

     (2)  No minimum contribution shall be required (or the minimum            
          contribution shall be reduced, as the case may be) for a Non-Key     
          Employee under this Plan for any Plan Year if the Employer maintains 
          another qualified plan under which a minimum benefit or contribution 
          is being accrued or made on account of such Plan Year, in whole or   
          in part, on behalf of the Non-Key Employee, in accordance with       
          Section 416(c) of the Code.

     (c) For purposes of this Section 10.6, there shall be disregarded (1) any
Employer contributions attributable to a salary reduction or similar
arrangement, or (2) any Employer

                                   43
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contributions to or any benefits under Chapter 21 of the Code (relating to the
Federal Insurance Contributions Act), Title II of the Social Security Act, or
any other federal or state law.

     (d) For purposes of this Section 10.6, minimum contributions shall be
required to be made on behalf of only those Non-Key Employees, as described in
Section 10.7(a), who have not terminated Service as of the last day of the
Plan Year.  If a Non-Key Employee is otherwise entitled to receive a minimum
contribution pursuant to this Section 10.6(d), the fact that such Non-Key
Employee failed to complete 1,000 Hours of Service or failed to make any
mandatory or elective contributions under this Plan, if any are so required,
shall not preclude him from receiving such minimum contribution.

     10.7 Maximum Benefit Limitation.

     For any Plan Year in which the Plan is a top-heavy plan, Section
5.6(d)(1)(B)(i) and Section 5.6(d)(2)(B)(i)shall be read by substituting "1.0"
for "1.25" wherever the latter figure appears; provided, however, that such
substitution shall not have the effect of reducing any benefit accrued under a
defined benefit plan prior to the first day of the plan year in which this
Section 10.8 becomes applicable.

     10.8 Vesting.

     (a) For any Plan Year in which the Plan is a top-heavy plan, a
Participant's Employer account shall continue to vest according to the
schedule set forth in Section 7.2.

     (b) For purposes of Section 10.8(a), the term "year of service" shall
have the same meaning as set forth in Section 1.1(kk), as modified by Section
3.2.

     (c) If for any Plan Year the Plan becomes top-heavy and the vesting
schedule set forth in Section 10.8(a) becomes effective, then, even if the
Plan ceases to be top-heavy in any subsequent Plan Year, the vesting schedule
set forth in Section 10.8(a) shall remain applicable with respect to any
Participant who has completed 3 Years of Service.

                                   44
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                           ARTICLE XI

                         ADMINISTRATION

     11.1 Appointment of Administrator.

     This Plan shall be administered by a committee consisting of up to five
persons, whether or not Employees or Participants, who shall be appointed from
time to time by the Board of Directors to serve at its pleasure.  The Sponsor
may require that each person appointed as an Administrator shall signify his
acceptance by filing an acceptance with the Sponsor.  The term "Administrator"
as used in this Plan shall refer to the members of the committee, either
individually or collectively, as appropriate.  In the event that the Sponsor
shall elect not to appoint any individuals to constitute a committee to
administer the Plan, the Sponsor shall serve as the Administrator hereunder.

     11.2 Resignation or Removal of Administrator.

     An Administrator shall have the right to resign at any time by giving
notice in writing, mailed or delivered to the Employer and to the Trustee. 
Any Administrator who was an employee of the Employer at the time of his
appointment shall be deemed to have resigned as an Administrator upon his
termination of Service.  The Board of Directors may, in its discretion, remove
any Administrator with or without cause, by giving notice in writing, mailed
or delivered to the Administrator and to the Trustee.

     11.3 Appointment of Successors:  Terms of Office, Etc.

     Upon the death, resignation or removal of an Administrator, the Employer
may appoint, by Board of Directors' resolution, a successor or successors. 
Notice of termination of an Administrator and notice of appointment of a
successor shall be made by the Employer in writing, with copies mailed or
delivered to the Trustee, and the successor shall have all the rights and
privileges and all of the duties and obligations of the predecessor.

     11.4 Powers and Duties of Administrator.

     The Administrator shall have the following duties and responsibilities in
connection with the administration of this Plan:

     (a) To promulgate and enforce such rules, regulations and procedures as
shall be proper for the efficient administration of the Plan, such rules,
regulations and procedures to apply uniformly to all Employees, Participants
and Beneficiaries;

     (b) To determine all questions arising in the administration,
interpretation and application of the Plan, including questions of eligibility
and of the status and rights of Participants, Beneficiaries and any other
persons hereunder;

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<PAGE>
     (c) To decide any dispute arising hereunder strictly in accordance with
the terms of the Plan; provided, however, that no Administrator shall
participate in any matter involving any questions relating solely to his own
participation or benefits under this Plan;

     (d) To advise the Employer and the Trustee regarding the known future
needs for funds to be available for distribution in order that the Trustee may
establish investments accordingly;

     (e) To correct defects, supply omissions and reconcile inconsistencies to
the extent necessary to effectuate the Plan;

     (f) To advise the Employer of the maximum deductible contribution to the
Plan for each fiscal year;

     (g) To direct the Trustee concerning all payments which shall be made out
of the Fund pursuant to the provisions of this Plan;

     (h) To advise the Trustee on all terminations of Service by Participants,
unless the Employer has so notified the Trustee;

     (i) To confer with the Trustee on the settling of any claims against the
Fund;

     (j) To make recommendations to the Board of Directors with respect to
proposed amendments to the Plan and the Trust Agreement;

     (k) To file all reports with government agencies, Employees and other
parties as may be required by law, whether such reports are initially the
obligation of the Employer, the Plan or the Trustee; and

     (l) To have all such other powers as may be necessary to discharge its
duties hereunder.

     Reasonable discretion is granted to the Administrator to affect the
benefits, rights and privileges of Participants, Beneficiaries or other
persons affected by this Plan.  The Administrator shall exercise reasonable
discretion under the terms of this Plan and shall administer the Plan strictly
in accordance with its terms, such administration to be exercised uniformly so
that all persons similarly situated shall be similarly treated.

     11.5 Action by Administrator.

     The Administrator may elect a Chairman and Secretary from among its
members and may adopt rules for the conduct of its business.  A majority of
the members then serving shall constitute a quorum for the transaction of
business.  All resolutions or other action taken by the Administrator shall be
by vote of a majority of those present at such meeting and entitled to vote.
Resolutions may be adopted or other action taken without a meeting upon
written consent signed by at least a majority of the members.  All documents,
instruments, orders, requests, directions,

                                   46
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<PAGE>
instructions and other papers shall be executed on behalf of the Administrator
by either the Chairman or the Secretary of the Administrator, if any, or by
any member or agent of the Administrator duly authorized to act on the
Administrator's behalf.

     11.6 Participation by Administrators.

     No Administrator shall be precluded from becoming a Participant in the
Plan if he would be otherwise eligible, but he shall not be entitled to vote
or act upon matters or to sign any documents relating specifically to his own
participation under the Plan, except when such matters or documents relate to
benefits generally.  If this disqualification results in the lack of a quorum,
then the Board of Directors shall appoint a sufficient number of temporary
Administrators who shall serve for the sole purpose of determining such a
question.

     11.7 Agents.

     The Administrator may employ agents and provide for such clerical, legal,
actuarial, accounting, medical, advisory or other services as it deems
necessary to perform its duties under this Plan.  The cost of such services
and all other expenses incurred by the Administrator in connection with the
administration of the Plan shall be paid from the Fund, unless paid by the
Employer.

     11.8 Allocation of Duties.

     The duties, powers and responsibilities reserved to the Administrator may
be allocated among its members so long as such allocation is pursuant to
written procedures adopted by the Administrator, in which case, except as may
be required by the Act, no Administrator shall have any liability, with
respect to any duties, powers or responsibilities not allocated to him, for
the acts of omissions of any other Administrator.

     11.9 Delegation of Duties.

     The Administrator may delegate any of its duties to other employees of
the Employer, to the Trustee with its consent, or to any other person or firm,
provided that the Administrator shall prudently choose such agents and rely in
good faith on their actions.

    11.10 Administrator's Action Conclusive.

     Any action on matters within the authority of the Administrator shall be
final and conclusive except as provided in Article XII.

    11.11 Compensation and Expenses of Administrator.

     No Administrator who is receiving compensation from the Employer as a
full-time employee, as a director or agent, shall be entitled to receive any
compensation or fee for his

                                   47
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<PAGE>
services hereunder.  Any other Administrator shall be entitled to receive such
reasonable compensation for his services as an Administrator hereunder as may
be mutually agreed upon between the Employer and such Administrator.  Any such
compensation shall be paid from the Fund, unless paid by the Employer.  Each
Administrator shall be entitled to reimbursement by the Employer for any
reasonable and necessary expenditures incurred in the discharge of his duties.

    11.12 Records and Reports.

     The Administrator shall maintain adequate records of its actions and
proceedings in administering this Plan and shall file all reports and take all
other actions as it deems appropriate in order to comply with the Act, the
Code and governmental regulations issued thereunder.

    11.13 Reports of Fund Open to Participants.
  
     The Administrator shall keep on file, in such form as it shall deem
convenient and proper, all annual reports of the Fund received by the
Administrator from the Trustee, and a statement of each Participant's interest
in the Fund as from time to time determined.  The annual reports of the Fund
and the statement of his own interest in the Fund, as well as a complete copy
of the Plan and the Trust Agreement and copies of annual reports to the
Internal Revenue Service, shall be made available by the Administrator to the
Employer for examination by each Participant during reasonable hours at the
office of the Employer, provided, however, that the statement of a
Participant's interest shall not be made available for examination by any
other Participant.

    11.14 Named Fiduciary.

     The Administrator is the named fiduciary for purposes of the Act and
shall be the designated agent for receipt of service of process on behalf of
the Plan.  It shall use ordinary care and diligence in the performance of its
duties under this Plan.  Nothing in this Plan shall preclude the Employer from
indemnifying the Administrator for all actions under this Plan, or from
purchasing liability insurance to protect it with respect to its duties under
this Plan.

    11.15 Information from Employer.

     The Employer shall promptly furnish all necessary information to the
Administrator to permit it to perform its duties under this Plan.  The
Administrator shall be entitled to rely upon the accuracy and completeness of 
all information furnished to it by the Employer, unless it knows or should
have known that such information is erroneous.

    11.16 Reservation of Rights by Employer.

     Where rights are reserved in this Plan to the Employer, such rights shall
be exercised only by action of the Board of Directors, except where the Board
of Directors, by written resolution, delegates any such rights to one or more
officers of the Employer or to the Administrator.

                                   48
<PAGE>
<PAGE>
Subject to the rights reserved to the Board of Directors acting on behalf of
the Employer as set forth in this Plan, no member of the Board of Directors
shall have any duties or responsibilities under this Plan, except to the
extent he shall be acting in the capacity of an Administrator or Trustee.

    11.17 Liability and Indemnification.

     (a) The Administrator shall perform all duties required of it under this
Plan in a prudent manner.  To the extent not prohibited by the Act, the
Administrator shall not be responsible in any way for any action or omission
of the Employer, the Trustee or any other fiduciaries in the performance of
their duties and obligations set forth in this Plan and in the Trust
Agreement.  To the extent not prohibited by the Act, the Administrator shall
also not be responsible for any act or omission of any of its agents, or with
respect to reliance upon advice of its counsel (whether or not such counsel is
also counsel to the Employer or the Trustee), provided that such agents or
counsel were prudently chosen by the Administrator and that the Administrator
relied in good faith upon the action of such agent or the advice of such
counsel.

     (b) The Administrator shall not be relieved from responsibility or
liability for any responsibility, obligation or duty imposed upon it under
this Plan or under the Act.  Except for its own gross negligence, willful
misconduct or willful breach of the terms of this Plan, the Administrator
shall be indemnified and held harmless by the Employer against liability or
losses occurring by reason of any act or omission of the Administrator to the
extent that such indemnification does not violate the Act or any other federal
or state laws.

    11.18 Service as Trustee and Administrator.

     Nothing in this Plan shall prevent one or more Trustees from serving as
Administrator under this Plan.

                                   49
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                           ARTICLE XII

                        CLAIMS PROCEDURE

     12.1 Notice of Denial.

     If a Participant or his Beneficiary is denied any benefits under this
Plan, either in whole or in part, the Administrator shall advise the claimant
in writing of the amount of his benefit, if any, and the specific reasons for
the denial.  The Administrator shall also furnish the claimant at that time
with a written notice containing:

     (a) A specific reference to pertinent Plan provisions;

     (b) A description of any additional material or information necessary for
the claimant to perfect his claim, if possible, and an explanation of why such
material or information is needed; and

     (c) An explanation of the Plan's claim review procedure.

     12.2 Right to Reconsideration.

     Within 60 days of receipt of the information described in 12.1 above, the
claimant shall, if he desires further review, file a written request for
reconsideration with the Administrator.

     12.3 Review of Documents.

     So long as the claimant's request for review is pending (including the
60-day period described in Section 12.2 above), the claimant or his duly
authorized representative may review pertinent Plan documents and the Trust
Agreement (and any pertinent related documents) and may submit issues and
comments in writing to the Administrator.

     12.4 Decision by Administrator.

     A final and binding decision shall be made by the Administrator within 60
days of the filing by the claimant of his request for reconsideration;
provided, however, that if the Administrator feels that a hearing with the
claimant or his representative present is necessary or desirable, this period
shall be extended an additional 60 days.

     12.5 Notice by Administrator.

     The Administrator's decision shall be conveyed to the claimant in writing
and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, with specific references to the
pertinent Plan provisions on which the decision is based.

                                   50
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                          ARTICLE XIII

               AMENDMENTS, TERMINATION AND MERGER

     13.1 Amendments.

     The Employer reserves the right at any time and from time to time, and
retroactively if deemed necessary or appropriate by it, to the extent
permissible under law, to conform with governmental regulations or other
policies, to amend in whole or in part any or all of the provisions of this
Plan, provided that:

     (a) No amendment shall make it possible for any part of the Fund to be
used for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries under the Trust Agreement, except to the
extent provided in Section 4.4;

     (b) No amendment may, directly or indirectly, reduce the vested portion
of any Participant's interest as of the effective date of the amendment or
change the vesting schedule with respect to the future accrual of Employer
contributions for any Participants unless each Participant with three or more
Years of Service with the Employer is permitted to elect to have the vesting
schedule in effect before the amendment used to determine his vested benefit;

     (c) No amendment may eliminate an optional form of benefit;

     (d) No amendment may increase the duties of the Trustee without its
consent; and

     (e) No amendment that shall change any of the following types of
provisions shall be made more than once every six months, other than to
comport with changes in the Code, the Act or the regulations thereunder:  (i) 
any provision stating the amount and price of Employer Securities to be
awarded to designated officers and directors or categories of officers and
directors; (ii) any provisions specifying the timing of awards or allocations
to officers and directors; (iii) any provision setting forth a formula that
determines the amount, price and timing of allocations or awards, using
objective criteria such as earnings of the issuer, value of the Employer
Securities, Years of Service, job classification and Compensation levels.

     Amendments may be made in the form of Board of Directors' resolutions or
separate written document.  Copies of all amendments shall be delivered to the
Trustee.

     13.2 Consolidation, Merger or Other Transactions of Employer.

     Nothing in this Plan shall prevent the consolidation, merger,
reorganization or liquidation of the Employer, or prevent the sale by Employer
of any or all of its property.  Any successor corporation or other entity
formed and resulting from any such transaction shall have the right to become
a party to this Plan by adopting the same by resolution and by appointing a
new Trustee as though the Trustee had resigned in accordance with the Trust
Agreement, and by

                                   51
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executing a proper supplemental agreement with the Trustee.  If, within 180
days from the effective date of such transaction, such new entity does not
become a party to this Plan as above provided, this Plan shall automatically
be terminated and the Trustee shall make payments to the persons entitled
thereto in accordance with Section 9.5.

     13.3 Consolidation or Merger of Trust.

     In the event of any merger or consolidation of the Fund with, or transfer
in whole or in part of the assets and liabilities of the Fund to, another
trust fund held under any other plan of deferred compensation maintained or to
be established for the benefit of all or some of the Participants of this
Plan, the assets of the Fund applicable to such Participants shall be
transferred to the other trust fund only if:

     (a) Each Participant would receive a benefit under such successor trust
fund immediately after the merger, consolidation or transfer which is equal to
or greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (determined as if this Plan and
such transferee trust fund had then terminated);

     (b) Resolutions of the Board of Directors under this Plan, or of any new
or successor employer of the affected Participants, shall authorize such
transfer of assets, and, in the case of the new or successor employer of the
affected Participants, its resolutions shall include an assumption of
liabilities with respect to such Participants' inclusion in the new employer's
plan; and

     (c) Such other plan and trust are qualified under Sections 401(a) and
501(a) of the Code.

     13.4 Bankruptcy or Insolvency of Employer.

     In the event of (a) the Employer's legal dissolution or liquidation by
any procedure other than a consolidation or merger, (b) the Employer's
receivership, insolvency, or cessation of its business as a going concern, or
(c) the commencement of any proceeding by or against the Employer under the
federal bankruptcy laws, and similar federal or state statute, or any federal
or state statute or rule providing for the relief of debtors, compensation of
creditors, arrangement, receivership, liquidation or any similar event which
is not dismissed within 30 days, this Plan shall terminate automatically on
such date (provided, however, that if a proceeding is brought against the
Employer for reorganization under Chapter 11 of the United States Bankruptcy
Code or any similar federal or state statute, then this Plan shall terminate
automatically if and when said proceeding results in a liquidation of the
Employer, or the approval of any Plan providing therefor, or the proceeding is
converted to a case under Chapter 7 of the Bankruptcy Code or any similar
conversion to a liquidation proceeding under federal or state law including,
but not limited to, a receivership proceeding).  In the event of any such
termination as provided in the foregoing sentence, the Trustee shall make
payments to the persons entitled thereto in accordance with Section 9.5
hereof.

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     13.5 Voluntary Termination.

The Board of Directors reserves the right to terminate this Plan at any time
by giving to the Trustee and the Administrator notice in writing of such
desire to terminate.  The Plan shall terminate upon the date of receipt of
such notice, the interests of all Participants shall become fully vested, and
the Trustee shall make payments to each Participant or Beneficiary in
accordance with Section 9.5.  Alternatively, the Employer, in its discretion,
may determine to continue the Trust Agreement and to continue the maintenance
of the Fund, in which event distributions shall be made upon the contingencies
and in all the circumstances which would have been entitled such distributions
on a fully vested basis, had there been no termination of the Plan.

     13.6 Partial Termination of Plan or Permanent Discontinuance of           
          Contributions.

     In the event that a partial termination of the Plan shall be deemed to
have occurred, or if the Employer shall discontinue completely its
contributions hereunder, the right of each affected Participant to his
interest in the Fund shall be fully vested.  The Employer, in its discretion,
shall decide whether to direct the Trustee to make immediate distribution of
such portion of the Fund assets to the persons entitled thereto or to make
distribution in the circumstances and contingencies which would have
controlled such distributions if there had been no partial termination or
discontinuance of contributions.

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                           ARTICLE XIV

                          MISCELLANEOUS

     14.1 No Diversion of Funds.

     It is the intention of the Employer that it shall be impossible for any
part of the corpus or income of the Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of the Participants or their
Beneficiaries, except to extent that a return of the Employer's contribution
is permitted under Section 4.4.

     14.2 Liability Limited.

     Neither the Employer nor the Administrator, nor any agents, employees,
officers, directors or shareholders of any of them, nor the Trustee, nor any
other person shall have any liability or responsibility with respect to this
Plan, except as expressly provided herein.

     14.3 Incapacity.

     If the Administrator shall receive evidence satisfactory to it that a
Participant or Beneficiary entitled to receive any benefit under the Plan is,
at the time when such benefit becomes payable, a minor, or is physically or
mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or has 
custody of such Participant or Beneficiary, and that no guardian, committee or
other representative of the estate of such Participant or Beneficiary shall
have been duly appointed, the Administrator may direct the Trustee to make
payment of such benefit otherwise payable to such Participant or Beneficiary,
to such other person or institution, including a custodian under a Uniform
Gifts to Minor Act, or corresponding legislation (who shall be an adult, a
guardian of the minor or a trust company), and the release of such other
person or institution shall be a valid and complete discharge for the payment
of such benefit.

     14.4 Spendthrift Clause.

     Except as permitted by the Act or the Code, no benefits or other amounts
payable under the Plan shall be subject in any manner to anticipation, sale,
transfer, assignment, pledge, encumbrance, charge or alienation.  If the
Administrator determines that any person entitled to any payments under the
Plan has become insolvent or bankrupt or has attempted to anticipate, sell,
transfer, assign, pledge, encumber, charge or otherwise in any manner alienate
any benefit or other amount payable to him under the Plan or that there is any
danger of any levy or attachment or other court process or encumbrance on the
part of any creditor of such person entitled to payments under the Plan
against any benefit or other accounts payable to such person, the
Administrator may, at any time, in its discretion, direct the Trustee to
withhold any or all payments to such person under the Plan and apply the same
for the benefit of such person, in such manner and in such proportion as the
Administrator may deem proper.

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      14.5 Benefits Limited to Fund.

     All contributions by the Employer to the Fund shall be voluntary, and the
Employer shall be under no legal liability to make any such contributions. The
benefits of this Plan shall be only as can be provided by the assets of the
Fund, and no liability for the payment of benefits under the Plan or for any
loss of assets due to any action or inaction of the Trustee shall be imposed
upon the Employer.

     14.6 Cooperation of Parties.

     All parties to this Plan and any party claiming interest hereunder agree
to perform any and all acts and execute any and all documents and papers which
are necessary and desirable for carrying out this Plan or any of its
provisions.

     14.7 Payments Due Missing Persons.

     The Administrator shall direct the Trustee to make a reasonable effort to
locate all persons entitled to benefits under the Plan; however,
notwithstanding any provision in the Plan to the contrary, if, after a period
of five years from the date such benefit shall be due, any such persons 
entitled to benefits have not been located, their rights under the Plan shall
stand suspended.  Before this provision becomes operative, the Trustee shall
send a certified letter to all such persons at their last known address
advising them that their interest in benefits under the Plan shall be
suspended.  Any such suspended amounts shall be held by the Trustee for a
period of three additional years (or a total of eight years from the time the
benefits first became payable), and thereafter such amounts shall be
reallocated among current Participants in the same manner that a current
contribution would be allocated.  However, if a person subsequently makes a
valid claim with respect to such reallocated amounts and any earnings thereon,
the Plan earnings or the Employer's contribution to be allocated for the year 
in which the claim shall be paid shall be reduced by the amount of such
payment.  Any such suspended amounts shall be handled in a manner not
inconsistent with regulations issued by the Internal Revenue Service and
Department of Labor.

     14.8 Governing Law.

     This Plan has been executed in the State of Washington and all questions
pertaining to its validity, construction and administration shall be
determined in accordance with the laws of that State, except to the extent
superseded by the Act.

     14.9 Nonguarantee of Employment.
 
     Nothing contained in this Plan shall be construed as a contract of
employment between the Employer and any Employee, or as a right of any
Employee to be continued in the employment of the Employer, or as a limitation
of the right of the Employer to discharge any of its Employees, with or
without cause.

                                   55
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    14.10 Counsel.

     The Trustee and the Administrator may consult with legal counsel, who may
be counsel for the Employer and for the Administrator or the Trustee (as the
case may be), with respect to the meaning or construction of this Plan and the
Trust Agreement, their respective obligations or duties hereunder or with
respect to any action or proceeding or any question of law, and they shall be
fully protected with respect to any action taken or omitted by them in good
faith pursuant to the advice of legal counsel.

     IN WITNESS WHEREOF, the Sponsor has caused this Plan to be executed by
its duly authorized officer and its corporate seal to be affixed on this 12th
day of January, 1998.


Attest:                       TIMBERLAND SAVINGS BANK, SSB


/s/Michael R. Sand            By: /s/Clarence E. Hamre
------------------------          ----------------------------------------- 
Secretary                         Clarence E. Hamre
                                  President and Chief Executive Officer


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