EXHIBIT 99
<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                SEPTEMBER 30, 1997 (UNAUDITED) AND JUNE 30, 1997

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                               September 30,          June 30,
                                                                   1997                 1997
                                                               ------------        ------------
<S>                                                          <C>                 <C>           
Cash                                                         $      498,085      $      417,485
Interest-bearing deposits in other financial institutions         7,112,759           3,399,866
                                                               ------------        ------------
         Cash and cash equivalents                                7,610,844           3,817,351

Available-for-sale securities                                     3,384,000           3,360,000
Held-to-maturity securities                                       6,493,137           8,585,753
Mortgage-backed securities, held-to-maturity                     15,017,762          15,813,890
Loans held for sale                                               5,141,247           5,903,002
Loans receivable, net                                           162,705,674         152,232,295
Accrued interest receivable
         Loans                                                    1,038,505             996,014
         Investments                                                105,339             165,949
         Mortgage-backed securities                                 143,320             149,598
Prepaid expenses and other assets                                 2,051,905           1,963,875
Foreclosed assets held for sale                                     210,155             210,155
Premises and equipment                                            6,236,696           6,267,157
                                                               ------------        ------------
                                                             $  210,138,584      $  199,465,039
                                                               ============        ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
LIABILITIES
Deposits                                                     $  147,078,478      $  151,246,482
Federal Home Loan Bank advances                                  32,140,970          18,150,844
Advances from borrowers for taxes and insurance                     864,780             674,618
Accrued expenses and other liabilities                            1,215,292             666,427
Accrued interest payable                                            197,728             131,245
Income taxes payable                                                455,181             289,268
Deferred income taxes                                               826,000             816,000
                                                               ------------        ------------
                  Total Liabilities                             182,778,429         171,974,884
                                                               ------------        ------------

STOCKHOLDERS' EQUITY
Capital Stock
      Common stock, $1 par value; authorized 8,000,000 
      shares; issued and outstanding 3,125,000 shares             3,125,000           3,125,000
Additional paid-in capital                                        3,713,233           3,687,356
Retained earnings, substantially restricted`                     18,449,222          18,620,219
                                                               ------------        ------------
                                                                 25,287,455          25,432,575
Unrealized appreciation on available-for-sale securities,
     net of tax                                                   2,072,700           2,057,580
                                                               ------------        ------------
                                                                 27,360,155          27,490,155
                                                               ------------        ------------
                                                             $  210,138,584      $  199,465,039
                                                               ============        ============
</TABLE>

See Notes to Consolidated Financial Statements

                                       

<PAGE>



                          GUARANTY FEDERAL SAVINGS BANK

                      CONSOLIDATED STATEMENTS OF OPERATIONS

           THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                     Three Months Ending
                                                                     -------------------
                                                                  9/30/97            9/30/96
                                                                  -------            -------

<S>                                                           <C>             <C>              
INTEREST INCOME
Loans                                                         $   3,451,331   $       2,876,848
Investment securities                                                97,250             144,744
Mortgage-backed securities                                          297,898             392,196
Other                                                                93,023              84,303
                                                              -------------     ---------------
       Total Interest Income                                      3,939,502           3,498,091
                                                              -------------     ---------------

INTEREST EXPENSE
Deposits                                                          1,830,713           1,913,929
Federal Home Loan Bank advances                                     357,445              51,899
                                                              -------------     ---------------
       Total Interest Expense                                     2,188,158           1,965,828
                                                              -------------     ---------------

NET INTEREST INCOME                                               1,751,344           1,532,263

PROVISION FOR LOAN LOSSES                                            33,352                   0
                                                              -------------     ---------------

NET INTEREST INCOME AFTER
       PROVISION FOR LOAN LOSSES                                  1,717,992           1,532,263
                                                              -------------     ---------------

NONINTEREST INCOME (LOSS)
Service charges                                                     120,895              42,188
Late charges and other fees                                          25,262              19,307
Gain on loans, investment
    securities and mortgage-backed securities                        38,131              25,178
Income (expense) on foreclosed assets                                   (92)               (591)
Other income                                                         27,270              23,524
                                                              -------------     ---------------
       Total Noninterest Income                                     211,466             109,606
                                                              -------------     ---------------

NONINTEREST EXPENSE
Salaries and employee benefits                                      581,274             628,795
Occupancy                                                           163,256             164,171
SAIF deposit insurance premiums                                      22,970           1,022,492
Data processing fees                                                 87,312              89,737
Advertising                                                          87,042              43,066
Other expense                                                       178,909             112,339
                                                              -------------     ---------------
       Total Noninterest Expense                                  1,120,763           2,060,600
                                                              -------------     ---------------

INCOME (LOSS)  BEFORE INCOME TAXES                                  808,695            (418,731)
PROVISION (CREDIT) FOR INCOME TAXES                                 292,192            (169,331)
                                                              -------------     ---------------
NET INCOME (LOSS)                                             $     516,503     $      (249,400)
                                                              =============     ===============

EARNINGS (LOSS) PER SHARE                                     $        0.17     $         (0.08)
                                                              =============     ===============
</TABLE>

See Notes to Consolidated Financial Statements

                                      

<PAGE>



                          GUARANTY FEDERAL SAVINGS BANK

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

           THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                1997              1996
                                                                                ----              ----
<S>                                                                       <C>              <C>          
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                       $   516,503      $   (249,400)
   Items not requiring (providing) cash:
       Deferred income taxes                                                     1,192           (22,602)
       Depreciation                                                            109,435           113,320
       Gain on loans, investment securities
         and mortgage-backed securities                                        (38,130)          (25,178)
       Amortization of deferred income, premiums and discounts                  (2,318)           (4,398)
       Provision for loan losses                                                33,352                --
   Origination of loans held for sale                                       (1,832,623)         (582,489)
   Proceeds from sale of loans held for sale                                 2,632,508           919,377
   RRP expense                                                                  22,247            41,754
   Changes in:
       Accrued interest receivable                                              24,397           109,064
       Prepaid expenses and other assets                                       (88,030)          (52,112)
       Accounts payable and accrued expenses                                   615,276         1,062,937
       Income taxes payable                                                    165,913           (75,429)
                                                                           -------------    ------------
         Net cash provided by operating activities                           2,159,722         1,234,844
                                                                           -----------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net increase in loans                                                   (10,502,891)       (5,785,223)
   Principal payments on mortgage-backed securities,
       held-to-maturity                                                        796,912         1,000,948
   Purchase of premises and equipment                                          (78,974)          (87,168)
   Proceeds from sale of available-for-sale securities                              --         5,277,109
   Proceeds from maturities or calls of
       held-to-maturity investments                                          2,090,310         1,716,393
   Capitalized costs on foreclosed assets                                           --           (41,498)
                                                                            ----------      ------------
         Net cash used in investing activities                              (7,694,643)       (2,080,561)
                                                                            -----------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Cash dividends paid                                                        (687,500)               --
   Cash dividends refunded  from non-vested RRP stock                            1,842             1,781
   Net increase (decrease) in demand deposits,
       NOW accounts and savings accounts                                     3,878,115            78,494
   Net increase (decrease) in certificates of deposit                       (8,046,119)      (10,288,400)
   Proceeds from FHLB advances                                              18,000,000         7,000,000
   Repayments of FHLB advances                                              (4,009,874)               --
   Advances from borrowers for taxes and insurance                             190,162           184,780
   Stock options exercised                                                       1,788                --
                                                                            ----------       -----------
         Net cash provided by (used in) financing activities                 9,328,414        (3,023,345)
                                                                            ----------       -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                        3,793,493           292,060

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                 3,817,351         2,674,557
                                                                            ----------       -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                   $ 7,610,844      $  2,966,617
                                                                           ===========      ============
</TABLE>

                                      


<PAGE>



                          GUARANTY FEDERAL SAVINGS BANK

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1:  Reorganization and Stock Issuance
         ---------------------------------

         In April  1995  Guaranty  Federal  Savings  and Loan  Association  (the
"Association")  reorganized  from a federally  chartered mutual savings and loan
association into a federal mutual holding company,  Guaranty Federal Bancshares,
M.  H.  C.  (the  "MHC").  As  part  of  the  reorganization,   the  Association
incorporated a de novo federally  chartered stock savings bank, Guaranty Federal
Savings Bank (the "Savings Bank") and transferred most of its assets and all its
liabilities  to the Bank. The Bank issued  3,125,000  shares of its common stock
(par value $1.00) of which  972,365  shares were sold to parties  other than the
MHC, thus creating a minority  ownership interest in the Bank. The shares had an
initial public offering price of $8 per share, resulting in gross sales proceeds
of $7,778,920.  Costs related to the stock issuance,  which have been applied to
reduce the gross proceeds,  were $654,388.  Also $100,000 was transferred to the
MHC for the initial capitalization in connection with reorganization.

         In May 1997,  the  Boards of  Directors  of the Bank and of the  M.H.C.
announced a plan  whereby the Bank would be wholly owned by a newly formed stock
holding  company.  Each share of Bank  common  stock  currently  owned by public
stockholders shall be automatically converted into shares of the Holding Company
common stock based upon an exchange ratio.  Subscription  rights to purchase the
remainder of the conversion stock will be granted to certain eligible depositors
and other members of the Bank and Mutual Holding Company. Any shares not sold in
the  subscription  offering  will be offered to certain  persons in a  community
offering.   The   Conversion   and   Reorganization   are   subject  to  several
contingencies, including the receipt of regulatory approval, the approval of the
depositors of the Bank and the approval of the stockholders of the Bank.

Note 2:  Basis of Presentation
         ---------------------

         The accompanying  unaudited interim  consolidated  financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information and with the instructions to Form 10-QSB and
Rule  10-01 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals)  considered  necessary for a fair
presentation have been included.  Operating results for the three-month  periods
ended September 30, 1997 and 1996, are not necessarily indicative of the results
that may be expected  for the full year.  For further  information  refer to the
Bank's  June 30,  1997,  Form  10-KSB  which was filed with the Office of Thrift
Supervision and includes a complete set of audited financial  statements through
June 30, 1997.

                                      
<PAGE>



                          GUARANTY FEDERAL SAVINGS BANK

Note 3:  Principles of Consolidation
         ---------------------------

         The consolidated  financial statements include the accounts of Guaranty
Federal  Savings  Bank  and  its  wholly-owned  subsidiary,  Guaranty  Financial
Services of Springfield, Inc. Significant intercompany accounts and transactions
have been eliminated in consolidation.

Note 4:  Earnings Per Share
         ------------------

         Earnings per share of common stock have been determined by dividing net
income  for  the  period  by  the  weighted  average  number  of  common  shares
outstanding.  Earnings per share for the three months ended  September  30, 1997
and 1996, have been computed on weighted average shares outstanding of 3,163,011
and 3,125,000, respectively.

Note 5:  Benefit Plans
         -------------

         On October 18, 1995,  The Bank's  stockholders  voted to approve both a
Recognition and Retention Plan ("RRP") and a Stock Option Plan ("SOP").  The RRP
authorized  38,895 shares to be issued to  directors,  officers and employees of
the Bank..  As of September 30, 1997,  all of the RRP shares have been purchased
and awarded.  As of September 30, 1997, 4,425 shares,  net, have been forfeited.
The Bank is amortizing  the RRP expense over each  participant's  vesting period
and the  financial  statements  reflect  $22,247 RRP expense for the three month
period ending  September 30, 1997.  The SOP  authorized  97,237 stock options on
shares to be issued to officers  and  employees  of the Bank,  all of which have
been granted at prices ranging from $11.25 to $11.75 per share. Both the RRP and
SOP vest over a five year period.

Note 6:  New Accounting Pronouncements
         -----------------------------

     The FASB recently  adopted SFAS 128,  "Earnings Per Share." This  statement
replaces the  presentation of primary  earnings per share with a presentation of
basic earnings per share. The statement also requires dual presentation of basic
and diluted  earnings per share by entities with complex capital  structures and
requires a  reconciliation  of the numerators and  denominators  between the two
calculations.  SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997,  including  interim periods.  Management has not
estimated  the  impact,  if any, of  adopting  SFAS 128 on the Bank's  financial
statements.

                                       


<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

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

General
-------

         The accompanying Consolidated Financial Statements include the accounts
of  Guaranty  Federal  Savings  Bank  (the  "Bank")  and  all  accounts  of  its
wholly-owned  subsidiary,  Guaranty Financial Services of Springfield,  Inc. The
consolidation eliminates all significant intercompany transactions and balances.
The Bank's results of operations are primarily dependent on net interest margin,
which is the difference between interest income on  interest-earning  assets and
interest  expense on  interest-bearing  liabilities.  The Bank's  income is also
affected by the level of its noninterest  expenses,  such as employee salary and
benefits,  occupancy  expenses  and other  expenses.  The  following  discussion
reviews the  financial  condition  at  September  30,  1997,  and the results of
operations for the three months ended September 30, 1997 and 1996.

Financial Condition
-------------------

         The  Bank's  total  assets   increased   $10,673,545,   or  5.4%,  from
$199,465,039 as of June 30, 1997, to $210,138,584 as of September 30, 1997.

         Interest-bearing  deposits in other  financial  institutions  increased
$3,712,893,  or 109.2% from  $3,399,866 as of June 30, 1997, to $7,112,759 as of
September  30,  1997.  The  increase  is  attributable  to the Bank  temporarily
depositing cash until the funds can be redeployed into loans.

         Securities   available-for-sale   increased   $24,000,   or  0.7%  from
$3,360,000 as of June 30, 1997,  to  $3,384,000  as of September  30, 1997,  and
securities  held-to-maturity  decreased due to called securities, by $2,092,616,
or 24.4%,  from $8,585,753 as of June 30, 1997 to $6,493,137 as of September 30,
1997. The Bank deployed these funds to higher yielding loans. The Bank continues
to hold 96,000 shares of Federal Home Loan Mortgage Corporation ("FHLMC")  stock
with a  amortized  cost of $94,000  in the  available-for-sale  category.  As of
September 30, 1997,  the gross  unrealized  gain on the stock was  $3,290,000 an
increase from $3,266,000 as of June 30, 1997.

         Mortgage-backed  securities,  held-to-maturity,  decreased  $796,128 or
5.0%, from $15,813,890 as of June 30, 1997, to $15,017,762,  as of September 30,
1997. The decrease is attributable  to prepayments  received on various pools of
mortgage-backed securities during the three months ending September 30, 1997. As
of  September  30,  1997,  and  June 30,  1997,  there  were no  mortgage-backed
securities classified as available for sale.

                                      


<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

         Net  loans   receivable   increased  by  $10,473,379,   or  6.9%,  from
$152,232,295,  as of June 30, 1997, to  $162,705,674,  as of September 30, 1997,
and loans  held-for-sale  decreased by $791,755,  or 12.9% from $5,903,002 as of
June 30, 1997 to $5,141,247 as of September 30, 1997.  Growth consisted of loans
secured by both owner and  non-owner  occupied  residential  real estate,  which
increased by $3,139,000. In addition construction loans increased by $2,179,000,
this  was  primarily  due  to  an  increase  of  $1,508,000  on  loans  for  the
construction of multi-family  units.  Also, the Bank is  participating in a loan
secured by three motels located in the Kansas City, Mo area.  This resulted in a
$3,294,000  increase  in  nonresidential  real  estate  loans.  Growth  in loans
receivable is  anticipated to continue and represents a major part of the Bank's
planned assets growth.

         Allowance for loan losses increased  $12,991 or 0.6% from $2,177,009 as
of June 30,  1997,  to  $2,190,000  as of  September  30,  1997.  The  allowance
increased  due to an  increase  in the  provision  for loan  losses in excess of
charge-offs  for the period.  The  allowance for loan losses as of September 30,
1997  and June  30,  1997  was  1.2%,  and  1.3%  respectively,  of total  loans
outstanding.  As of September 30, 1997, the allowance for loan losses was 321.4%
of loans past due 90 days or more versus 262.8% as of June 30, 1997.

         Fair value of foreclosed  assets  held-for-sale as of June 30, 1997 and
September 30, 1997,  was  $210,155.  The  properties in this category  include a
duplex  acquired in July 1996,  and a single family  residence  acquired in June
1997. Management believes that these units will sell with no further loss to the
Bank.

         Premises and equipment  decreased $30,461,  or 0.5%, from $6,267,157 as
of June 30, 1997, to $6,236,696 as of September 30, 1997.

         The Bank intends to open a new branch  office  location in the southern
section  of  Springfield  during the second  quarter of fiscal  year 1998.  This
branch,  located  on a site of land  purchased  for a  permanent  branch  office
facility,  will  be a  modular  building  leased  for a two  year  period,  thus
requiring  only  moderate  investment  in fixed assets and  equipment.  The Bank
estimates the  investment  will be  approximately  $50,000.  During the two year
lease,  the Bank  intends to examine  whether to extend the lease of the modular
office, or commence construction of a permanent branch office facility.

                                      

<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

         Deposits decreased $4,168,004 or 2.8%, from $151,246,482 as of June 30,
1997,  to  $147,078,478  as of September  30, 1997.  For the three months ending
September 30, 1997,  checking and passbook accounts increased by $3,878,115,  or
13.5% while  certificates  of deposits  decreased by  $8,046,119,  or 6.6%.  The
majority of this increase in checking and passbook accounts can be attributed to
an  aggressive  marketing  campaign  initiated in early 1997 designed to attract
checking  deposit  customers.  The  decrease in  certificate  of deposits can be
attributed to  management's  decision to allow high cost  certificate of deposit
accounts  to run off and replace  these  funds with FHLB  advances at an overall
lower marginal cost.

         As a result of the decrease in deposits,  and the continued increase in
loan demand,  FHLB advances increased  $13,990,126 or 77.1%, from $18,150,844 as
of June 30, 1997, to  $32,140,970  as of September 30, 1997. As of September 30,
1997,  the Bank had the ability to borrow an  additional  $60.0 million from the
FHLB.

         Accrued expenses and other liabilities increased $548,865 or 82.4% from
$666,427 as of June 30,  1997,  to  $1,215,292  as of September  30,  1997.  The
majority  of this  increase  is due to a $0.22 per  share  dividend  payable  to
stockholders of record September 12, 1997, totaling $687,500.

         Stockholders' equity (including  unrealized  appreciation on securities
available-for-sale, net of tax) decreased $130,000, or 0.5%, from $27,490,155 as
of June 30, 1997, to $27,360,155 as of September 30, 1997. On a per share basis,
stockholders'  equity  decreased  from $8.80 as of June 30,  1997 to $8.75 as of
September  30,  1997.  This  decrease is primarily  due to a dividends  totaling
$687,500 declared. Stockholders' equity includes no contributed capital from the
issuance of 2,152,635 shares of common stock to Guaranty Federal Bancshares,  M.
H. C..

Results of Operations - Comparison of Three Month Periods
Ended September 30, 1997 and 1996

         Net income for the three months ended  September 30, 1997 was $516,503,
as compared to net loss of $249,400  for the three months  ended  September  30,
1996 which  represents  a increase in  earnings of $765,903  for the three month
period. This increase is primarily due to the one-time assessment by the Federal
Deposit Insurance  Corporation  ("FDIC") on Savings  Association  Insurance Fund
("SAIF") assessable  deposits.  Legislation was signed into law on September 30,
1996,  requiring  all  SAIF-insured  institutions  to  pay  a  one-time  special
assessment  of 65.7 cents for every $100 of deposits.  This  special  assessment
decreased net income for the quarter ended  September 30, 1996 by  approximately
$559,000.



                                       

<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

Interest Income
---------------

         Total  interest  income for the three months ended  September 30, 1997,
increased  $441,411 or 12.6% as compared to the three months ended September 30,
1996. For the three month period,  the average yield on interest  earning assets
increased 16 basis points to 8.23% and the average balance outstanding increased
$18,050,000.

Interest Expense
----------------

         Total interest  expense for the three months ended  September 30, 1997,
increased  $222,330 or 11.3% when  compared to the three months ended  September
30,  1996.  For the three month  period,  the average  cost of interest  bearing
liabilities  increased  6 basis  points  to  5.22%  while  the  average  balance
outstanding increased $16,926,000.

Net Interest Income
-------------------

         Net  interest  income for the three  months  ended  September  30,1997,
increased  $219,081,  or 14.3% when compared to the three months ended September
30, 1996. The increase in net interest  income was the result of the increase in
interest rate spread from 2.91 basis points for the quarter  ending of September
30, 1996 to 3.01 basis points for the quarter ending September 30, 1997

Provision for Loan Losses
-------------------------

          Based  primarily  on  the  continued  growth  of  the  loan  portfolio
management  decided to increase  the loan loss reserve  through a provision  for
loan loss of $33,352.  There were no provisions  for loan losses made during the
three months ended  September  30, 1996.  The Bank will  continue to monitor its
allowance  for loan  losses and make  future  additions  based on  economic  and
regulatory conditions. Although the Bank maintains its allowance for loan losses
at a level which it considers to be sufficient to provide for potential  losses,
there can be no assurance that future losses will not exceed internal estimates.
In addition, the amount of the allowance for loan losses is subject to review by
regulatory  agencies  which can  order  the  establishment  of  additional  loss
provisions.

Noninterest Income
------------------

         Noninterest  income  increased  $101,860  for the  three  months  ended
September  30, 1997, or 92.9%  compared to the three months ended  September 30,
1996.  The  increase  was  primarily  due to the  increase in  checking  account
customers  which has resulted in more service charge income.  Service charges on
checking  accounts  increased  $78,707 for the three months ended  September 30,
1997, or 186.6% compared to the three months ended September 30, 1996.

                                       
<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

Noninterest Expense
-------------------

         Noninterest  expense  decreased  $939,837  for the three  months  ended
September 30, 1997 or 45.6% as compared to the three months ended  September 30,
1996.  The primary  cause for this  decrease was the one-time  assessment by the
Federal Deposit Insurance  Corporation  ("FDIC") on all SAIF assessable deposits
as of March 31, 1995.  This assessment  resulted in a $931,989  addition to SAIF
premiums  during the three month period ended September 30, 1996. The total SAIF
premiums for the three month period ending  September 30, 1996, was  $1,022,492,
as compared to $22,970 for the three month period ending September 30, 1997.

          Advertising  expense  increased  $43,976  for the three  months  ended
September  30,  1997,  or 102.1% when  compared to the same period in 1996.  The
primarily reason for this increase was the additional expense in connection with
the marketing campaign designed to attract checking accounts which was initiated
in early 1997.

         Total noninterest expenses excluding SAIF premiums increased $59,685 or
5.7% over the same period in 1996.

Provision for Income Taxes
--------------------------

         There was a $461,523 increase in the provision for income taxes for the
three months ended  September  30, 1997, as compared to the same period in 1996.
This  increase was primarily due to the decrease in before tax income due to the
FDIC assessment for the three month period ended September 30, 1996.

Nonperforming Assets
--------------------

         The allowance for loan losses is calculated based upon an evaluation of
pertinent  factors  underlying  the  various  types and  quality  of the  loans.
Management  considers  such  factors  as the  repayment  status  of a loan,  the
estimated net  realizable  value of the  underlying  collateral,  the borrower's
intent and ability to repay the loan,  local economic  conditions and the Bank's
historical loss ratios. The Bank's allowance for loan losses as of September 30,
1997, was  $2,190,000 or 1.4% of loans  receivable.  Total assets  classified as
substandard, doubtful, or loss as of September 30, 1997, were $1,813,000 or 0.9%
of total assets.  Management has considered  nonperforming  and total classified
assets in evaluating the adequacy of the Bank's allowance for loan losses.

         The ratio of  nonperforming  assets to total  assets is another  useful
tool in  evaluating  exposure to credit risk.  Nonperforming  assets of the Bank
include  nonperforming  loans  (nonaccruing  loans) and  assets  which have been
acquired as a result of foreclosure or deed-in-lieu of foreclosure.

                                       

<PAGE>

                          GUARANTY FEDERAL SAVINGS BANK

Nonperforming Assets continued 
------------------------------
<TABLE>
<CAPTION>

                                                  9/30/97           6/30/97            6/30/96
                                                  -------           -------            -------
                                                            (Dollars In Thousands)
<S>                                            <C>               <C>                   <C>      
   Nonperforming loans                         $      1,138      $     1,257           $     393
   Real estate acquired in
   settlement of loans                                  210              210                   2
                                                 ----------      -----------            --------

   Total Nonperforming Assets                   $     1,348      $     1,467            $    395
                                                 ==========       ==========             =======
   Total Nonperforming Assets
   as a Percentage of Total
   Assets                                              0.64%            0.74%                .21%
   Allowance for loan losses                        $ 2,190          $ 2,177             $ 2,108
   Allowance for loan losses as a
   Percentage of average loans, net                    1.35%            1.49%               1.60%
</TABLE>

Liquidity and Capital Resources
-------------------------------

         The  Bank's  primary  sources  of funds  are  deposits,  principal  and
interest  payments on loans,  and  securities  and extensions of credit from the
Federal  Home  Loan  Bank of Des  Moines.  While  scheduled  loan  and  security
repayments and the maturity of short-term  investments are somewhat  predictable
sources of funding,  deposit  flows are  influenced  by many factors  which make
their  cash  flows  difficult  to  anticipate.   Office  of  Thrift  Supervision
regulations  require the Bank to maintain  cash and eligible  investments  in an
amount equal to at least 5% of customer  accounts and  short-term  borrowings to
assure its ability to meet demands for  withdrawals  and repayment of short-term
borrowings. As of September 30, 1997, the Bank's liquidity ratio was 8.4%, which
exceeded the minimum regulatory requirement.

         The Bank  uses its  liquidity  resources  principally  to  satisfy  its
ongoing  commitments  which include funding loan  commitments,  funding maturing
certificates of deposit as well as deposit withdrawals,  maintaining  liquidity,
purchasing  investments,  and meeting operating expenses. At September 30, 1997,
the Bank had approximately $3,500,000 in commitments to originate mortgage loans
and $10,560,000 in loans-in-process on mortgage loans. These commitments will be
funded through cash flow from operations and FHLB advances..

         The Board of Directors  has  announced a  semi-annual  cash dividend of
$0.22 per share to be paid on October 18, 1997, to  stockholders of record as of
September 12, 1997.