MISSISSIPPI VIEW HOLDING COMPANY
                               1997 ANNUAL REPORT

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TABLE OF CONTENTS
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<S>                                                                               <C>
    Selected Financial and Other Data...........................................  2


    Letter to Shareholders......................................................  3


    Corporate Profile and Stock Market Information..............................  4


    Management's Discussion and Analysis of
       Financial Condition and Results of Operations............................  6


    Selected Quarterly Financial Data........................................... 17


    Report of Independent Auditors.............................................. 18


    Consolidated Financial Statements........................................... 19


    Notes to Consolidated Financial Statements.................................. 24


    Office Locations............................................................ 40


    Other Corporate Information................................................. 40
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<TABLE>
<CAPTION>
==============================================================================================================
SELECTED FINANCIAL AND OTHER DATA
Financial Condition (Dollars in Thousands)
==============================================================================================================
September 30,                                              1997       1996       1995       1994       1993
==============================================================================================================

<S>                                                      <C>        <C>        <C>        <C>        <C>    
Total assets (1)                                         $68,546    $70,011    $69,443    $62,865    $64,995
Loans receivable, net                                     44,475     43,070     42,989     44,226     44,712
Loans held for sale                                          136        179         58         93        241
Mortgage-backed securities                                 5,064      4,857      4,750      3,123      4,248
Investment securities (1)                                 15,956     17,323     16,745     11,549     10,383
Cash and cash equivalents (1)                              1,105      2,584      2,837      1,732      3,950
Deposits                                                  55,184     56,531     54,920     56,402     58,873
Other borrowings                                              --         --         --         --         --
Net retained earnings (substantially restricted) (2)       8,848      7,320      6,832      5,869      5,495
Total stockholders equity (1)                             12,068     12,440     13,783        n/a        n/a

Summary of Operations (Dollars in Thousands)
==============================================================================================================
Year Ended September 30,                                   1997       1996       1995        1994       1993
==============================================================================================================

Interest income                                          $ 5,165    $ 5,173      4,860      4,233      4,803
Interest expense                                           2,502      2,531      2,234      2,065      2,577
Net interest income                                        2,663      2,642      2,626      2,168      2,226
Provision for credit losses                                 --            4         26        144         90
Non-interest income                                          202        351        215        155        303
Non-interest expense (3)                                   1,667      2,056      1,468      1,502      1,325
Income before income taxes and cumulative effect of
  change in accounting principle                           1,198        933      1,347        677      1,114
Income tax expense                                           458        374        519        302        309
Income before cumulative effect of change in
  accounting principle                                       740        559        828        375        805
Cumulative effect of change in accounting principle           --         --         --         --         --
Net income                                                   740        559        828        375        805

Other Selected Data
==============================================================================================================
Year Ended September 30,                                    1997       1996       1995       1994       1993
==============================================================================================================
Return on average assets                                    1.08%      0.80%      1.25%      0.59%      1.22%
Return on average equity                                    6.18       4.23       8.02       6.47      15.81
Average interest earning assets to average interest      
  bearing liabilities (1)                                 123.24     124.24     118.99     109.87     108.23
Average equity to average assets (1)                       17.53      19.01      15.52       9.05       7.73
Net interest rate spread                                    3.10       2.98       3.38       3.10       3.09
Net interest income after provision for loan losses to
  total other expenses (1)                                159.70     128.32     177.04     134.74     161.16
Earnings per share (4)                                   $  0.96    $  0.66    $  0.89        n/a        n/a
Book value per share (4)                                 $ 16.30    $ 14.17     413.67        n/a        n/a
Stockholders equity to assets at period end (1)            17.61%     17.77%     19.85%      9.34       8.45
Non-performing assets to total assets                       0.34       0.07       0.11       0.18       0.35
Non-performing loans to total loans                         0.52       0.11       0.11       0.21       0.16
Allowance for loan losses to total loans                    1.93       2.03       2.23       2.27       1.88

</TABLE>

--------------------------------------------------------------------------------
(1)   The change is  primarily  due to the  conversion  from a mutual to a stock
      company in fiscal year 1995.
(2)   Composed of  appropriated  and  unappropriated  retained  earnings and net
      unrealized gains/losses on marketable equity securities.
(3)   Includes a one time assessment in fiscal year 1996 of $362 to recapitalize
      the SAIF.
(4)   There  were  no  shares  outstanding  prior  to  the  consummation  of the
      Company's initial public offering on March 23, 1995.

                                       2
<PAGE>




                        Mississippi View Holding Company


To Our Shareholders:

I am pleased to present  the year ended  September  30,  1997  Annual  Report of
Mississippi View Holding Company reflecting our second full year of operation as
a stock company.

Fiscal 1997  earnings  were  significantly  greater  than  fiscal 1996  earnings
resulting  mainly from the payment of a one time Savings  Association  Insurance
Fund ("SAIF") special  assessment  charged to Community Federal Savings and Loan
Association  in  fiscal  1996.  In  addition,  the  interest  rate  spread,  the
difference between the average yield on interest-earning  assets and the average
cost of  interest-bearing  liabilities,  increased  in fiscal 1997 to 3.10% from
2.98% in fiscal 1996.

As of September  30, 1997,  Mississippi  View  Holding  Company had  repurchased
approximately 27% of the stock it sold in its initial offering and over the past
year the company's  asset size was reduced  resulting  from these  expenditures.
Stock repurchases have been made to move toward a capital level which provides a
more  adequate  return to  shareholders.  Future  repurchases,  if any,  will be
subject  to  the  availability  of  stock,  market  conditions,  trading  price,
financial  performance and other considerations.  In addition,  the company paid
two semi-annual  dividends of $0.08 per share in fiscal 1997.  Future dividends,
if any,  will be based on the  continued  successful  operation  of the company.
Community  Federal  continues  to  significantly   exceed  all  minimum  federal
regulatory capital requirements.

Mississippi View Holding Company's board of directors and staff are dedicated to
providing  quality  service  to our  customers.  Our focus will  continue  to be
filling  the  financial   needs  of  our  customers  by  marketing  and  selling
competitively  priced  products and  services.  We are well  positioned  to meet
tomorrow's challenges and look forward to an optimistic future.

Sincerely,


/s/ Thomas J. Leiferman
Thomas J. Leiferman
President & Chief Executive Officer


                                       3
<PAGE>


                 Business of the Corporation and the Association

Mississippi View Holding Company

Mississippi  View  Holding  Company  (the  "Company)  is the parent  company for
Community  Federal  Savings and Loan  Association  of Little  Falls  ("Community
Federal"  or  the  "Association").   The  Company  was  formed  as  a  Minnesota
corporation in November 1994 at the direction of the  Association to acquire all
of the capital stock that Community  Federal issued upon its conversion from the
mutual to stock form of ownership  (the  "Conversion").  On March 23, 1995,  the
Company became a unitary savings and loan holding company when it purchased 100%
of  the  Association's   newly-issued   common  stock  in  connection  with  the
"Conversion".

Under existing laws,  the Company  generally is not restricted  from engaging in
any type of business activity provided that the Association  retains a specified
amount of its assets in housing-related loans and investments.

The Company's  business  activities to date have been limited to its investments
in and loans to the Association and a loan made to the Community Federal Savings
and Loan  Association  Employee Stock  Ownership Plan (the "ESOP") to enable the
ESOP to purchase shares of the Company's common stock.


Community Federal Savings and Loan Association

The Association is a federally chartered stock savings and loan association. The
Association's  only  office  is  located  in  Little  Falls,   Morrison  County,
Minnesota.  The  Association  was  founded in 1934 under the name  Little  Falls
Federal  Savings  and  Loan  Association  of  Little  Falls.  The  name  of  the
Association  was changed to Community  Federal  Savings and Loan  Association of
Little  Falls in July  1977.  The  Association  is subject  to  examination  and
comprehensive  regulation  by the Office of Thrift  Supervision  ("OTS") and its
deposits have been federally insured by the Savings  Association  Insurance Fund
("SAIF").  The  Association is a member of and owns capital stock in the Federal
Home Loan Bank ("FHLB") of Des Moines,  which is one of the 12 regional banks in
the FHLB System.

The  Association's  primary market area consists of Morrison County,  Minnesota,
which  encounters  strong  competition  both in the  attraction  of deposits and
origination of real estate and other loans. Competition comes primarily from the
eight banks and two credit  unions with offices in its market area. In addition,
the  Association  competes with investment and mortgage  banking  companies that
operate in the area.  Due to their size and  holding  company or branch  network
structure,  some of the Association's  competitors possess greater financial and
marketing  resources.  Based on published  figures,  the Association is the only
thrift institution headquartered in Morrison County, Minnesota.

The Association  competes for saving accounts by offering  competitive  interest
rates and a high level of personal  service.  The Association  attracts deposits
from the general public and uses such deposits primarily to invest in investment
securities and to originate loans secured by first mortgages on  owner-occupied,
one-to  four-family  residences  in its  market  area.  The  Association's  loan
portfolio predominantly consists of both adjustable-rate and fixed-rate mortgage
loans  secured  by  single  family  residences  and,  to a much  lesser  extent,
commercial  mortgage and construction 


                                       4

<PAGE>


loans. The Association also makes consumer loans,  consisting of savings account
loans,  home improvement  loans,  home equity line of credit loans, new and used
auto loans, recreational vehicle loans, and unsecured loans. As of September 30,
1997, the Association's total net portfolio of loans was $44.6 million, of which
$36.1 million, or 81%, was secured by residential real estate.

The principal  sources of funds for the  Association's  lending  activities  are
deposits and the amortization,  repayment,  and maturity of loans and investment
securities.  Principal  sources of income are  interest on loans and  investment
securities. The Association's principal expense is interest paid on deposits.

Stock Market Information

Since its issuance in March 1995, the Company's  common stock has been traded on
the Nasdaq  "Small Cap" Market  under the  trading  symbol of "MIVI".  The daily
stock  quotation for  Mississippi  View Holding Company is published in The Wall
                                                                        --------
Street  Journal under the trading  symbols of "MIVI" or "MissVw".  The following
---------------
table  reflects the stock price  trading range as published by the Nasdaq "Small
Cap" Market  statistical  report.  The stock price in the initial  offering  was
$8.00 per share.
                                                   HIGH           LOW
                                                   ----           ---
                Third Quarter - 6/30/95           10 1/4         8 1/2
                Fourth Quarter - 9/30/95          11 5/8         9 1/2
                First Quarter - 12/31/95            12             11
                Second Quarter - 3/31/96           12 1/4        11 1/4
                Third Quarter - 6/30/96             12             11
                Fourth Quarter - 9/30/96          12 3/4         10 3/4
                First Quarter - 12/31/96          12 3/4         11 3/4
                Second Quarter - 3/31/97          15 1/2         12 1/4
                Third Quarter - 6/30/97           15 5/8           14
                Fourth Quarter - 9/30/97          17 1/2         14 1/2
 
The number of  shareholders  of record of common  stock as of the record date of
December 1, 1997,  was  approximately  199.  This does not reflect the number of
persons or entities who held stock in nominee or "street"  name through  various
brokerage firms. At September 30, 1997,  there were 740,243 shares  outstanding.
Semi-annual  cash dividends of  $0.08/share  were paid on February 17, 1997, and
August 15,  1997,  to the  shareholders  of common  stock on the record dates of
February 3, 1997, and August 1, 1997, respectively.

The  Company's  ability to pay  dividends  to  shareholders  is  dependent  upon
earnings from  investments and dividends it receives from the  Association.  The
Association  may not  declare or pay a cash  dividend on any of its stock if the
effect thereof would cause Community Federal's  regulatory capital to be reduced
below  (1) the  amount  required  for the  liquidation  account  established  in
connection with the  Association's  conversion from mutual to stock form, or (2)
the regulatory capital requirements imposed by the OTS.


                                       5
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

General

The Company's  consolidated results of operations are primarily dependent on the
Association's net interest income, or the difference between the interest income
earned  on  its  loan,  mortgage-backed  securities  and  investment  securities
portfolios,  and the  interest  expense  paid on its savings  deposits and other
borrowings.  Net interest income is affected not only by the difference  between
the  yields  earned  on  interest-earning  assets  and  the  costs  incurred  on
interest-bearing   liabilities,  but  also  by  the  relative  amounts  of  such
interest-earning assets and interest-bearing liabilities.

Other components of net income include: provisions for losses on loans and other
assets;  noninterest income  (primarily,  miscellaneous loan fees; service fees;
gain on the sale of  loans;  and gain on sale of real  estate  owned  property);
noninterest  expense  (primarily,  compensation and employee  benefits;  federal
insurance premiums;  data processing costs; office occupancy expense; and gains,
losses and expenses associated with foreclosed real estate); and income taxes.

Earnings of the Company also are affected  significantly by general economic and
competitive   conditions,   particularly   changes  in  market  interest  rates,
government policies, and actions of regulatory authorities.

Asset/Liability Management Strategy

Management's  strategy  has  been to  enhance  earnings  and  profitability  and
increase capital while  maintaining  asset quality.  The  Association's  current
lending  strategy  focuses  on  the  origination  of  consumer  lending  and  on
traditional one-to four-family  residential  mortgages with the primary emphasis
on single family  residences in the Association's  primary market area.  Because
deposits exceed loan demand, the Association also invests a significant  portion
of its assets in investment securities.  This focus, along with the adherence to
strict  underwriting  standards,  is  designed to reduce the risk of loss on the
Association's loan portfolio.  However,  the lack of diversification in its loan
portfolio structure does increase the Association's portfolio concentration risk
by making the value of the portfolio more susceptible to declines in real estate
values in its market area.  This risk has been mitigated in recent years through
the acquisition of investment  securities,  as well as the Association's efforts
to maintain  quality  loans,  consistent  collection  procedures,  and  adequate
reserves for loss on loans. The Association's  policy of pricing its deposits in
accordance with  management's  determination of its lending and investment needs
has caused  assets to  decrease  this past  fiscal  year.  Disintermediation  of
deposits continues to be a constant challenge.  Disintermediation is the flow of
funds away from  savings  institutions  into  direct  investments,  such as U.S.
Government and corporate securities and other investment vehicles which, because
of the absence of federal insurance premiums and reserve requirements, generally
pay higher rates of return than savings  institutions.  Management  continues to
invest in U.S. Government and federal agency securities.  When needed,  proceeds
from maturing  securities or sold  securities  will be used to fund mortgage and
consumer loan originations.

                                       6
<PAGE>


Management  has  increased the interest rate  sensitivity  of the  Association's
assets and decreased  the interest rate  sensitivity  of it  liabilities,  while
maintaining high asset quality.  This has been  accomplished by: (1) originating
adjustable-rate  mortgage loans, 15 year fixed mortgage loans,  and shorter term
consumer loans for its portfolio, (2) emphasizing the solicitation and retention
of core  deposits  from within the primary  market,  (3)  investing in short and
intermediate term investments, (4) adhering to sound underwriting and investment
standards,  and (5) managing interest rates paid for deposits. In addition,  the
Association's  conventional  mortgage loans are  underwritten to standards which
would  enable it to sell  such  loans in the  secondary  market,  if  management
decided to do so.

Market Risk Management

Market risk is the risk of loss arising from  adverse  changes in market  prices
and rates. The Association's market risk is comprised primarily of interest rate
risk resulting from its core banking  activities of lending and deposit  taking.
Interest  rate risk is the risk that  changes  in market  interest  rates  might
adversely affect the  Association's net interest income or the economic value of
its portfolio of assets, liabilities and off-balance sheet contracts. Management
continually  develops and applies  strategies to mitigate this risk.  Management
does not believe that the  Association's  primary  market risk exposures and how
those  exposures are managed in fiscal 1997 have changed when compared to fiscal
1996.  Market risk limits have been  established by the Board of Directors based
on the Association's tolerance for risk.

The  Association  primarily  relies on the OTS Net  Portfolio  Value  Model (the
Model) to measure its  susceptibility  to interest rate  changes.  Net portfolio
value (NPV) is defined as the present value of expected cash flows from existing
assets  minus  the  present  value of  expected  net cash  flows  from  existing
liabilities  plus or minus the  present  value of net  expected  cash flows from
existing off-balance sheet contracts. The Association does not currently own any
derivative  financial  instruments  whose values are determined  from underlying
instruments or market  indices and whose  notional or contractual  amounts would
not be recognized in the financial  statements.  The Model estimates the current
economic value of each type of asset, liability,  and off-balance sheet contract
after various assumed instantaneous, parallel shifts in the Treasury yield curve
both upward and downward.

The NPV Model uses an option-based  pricing approach to value one-to four-family
mortgages,  mortgages  serviced by others, and firm commitments to buy, sell, or
originate  mortgages.  This approach  makes use of an interest  rate  simulation
program to generate  numerous  random  interest rate paths that, in  conjunction
with a prepayment  model, are used to estimate  mortgage cash flows.  Prepayment
options  and  interest   rate  caps  and  floors   contained  in  mortgages  and
mortgage-related  securities introduce significant uncertainty in estimating the
timing  of cash  flows  for  these  instruments  that  warrants  the use of this
sophisticated  methodology.  All other financial  instruments are valued using a
static  discounted cash flow method.  Under this approach,  the present value is
determined by discounting  the cash flows the instrument is expected to generate
by the yields currently  available to investors from an instrument of comparable
risk and duration.

The following table sets forth the present value estimates of the Association at
September 30, 1997,  as calculated by its NPV Model.  The table shows the NPV of
the  Association  under rate shock  

                                       7

<PAGE>

scenarios of -400 basis points to +400 basis points in  increments  of 100 basis
points. As market rates increase,  the market value of the  Association's  large
portfolio  of  mortgage  loans  and  securities   declines   significantly   and
prepayments are slow. As rates decrease,  the market value of mortgage loans and
securities  increase only modestly due to prepayment  risk,  periodic rate caps,
and other  embedded  options.  Actual  changes in market  value will differ from
estimated   changes   set  forth  in  this  table  due  to  various   risks  and
uncertainties.

<TABLE>
<CAPTION>

    Change                                      Percent of                  Change in
Interest Rates    Estimated      Amount of      Estimated         NPV     NPV Ratio (4)
(basis points)      NPV          Change (1)       NPV (2)      Ratio (3)  (basis points)
--------------    ---------     -----------     ---------      ---------  --------------
<S>               <C>           <C>               <C>         <C>            <C>
    + 400         $11,684       $(2,722)          - 19%         17.46%       -299
    + 300          12,563        (1,843)          - 13%         18.48%       -197
    + 200          13,347        (1,059)           - 7%         19.35%       -110
    + 100          13,983          (423)           - 3%         20.03%       - 42
        -          14,406            --              --         20.45%         --
    - 100          14,608           203            + 1%         20.61%       + 16
    - 200          14,896           491            + 3%         20.86%       + 41
    - 300          15,304           898            + 6%         21.24%       + 79
    - 400          15,859         1,453           + 10%         21.76%       +131

</TABLE>

---------------------
(1)   Represents  the excess  (deficiency)  of the  estimated  NPV  assuming the
      indicated  change in interest  rates minus the  estimated  NPV assuming no
      change in interest rates.
(2)   Calculated  as the amount of change in the  estimated  NPV  divided by the
      estimated NPV assuming no change in interest rates.
(3)   Calculated as the estimated NPV divided by average total assets.
(4)   Calculated  as the  excess  (deficiency)  of the NPV  ratio  assuming  the
      indicated  change in interest  rates over the estimated NPV ratio assuming
      no change in interest rates.

Savings  associations are subject to an interest rate risk ("IRR")  component in
calculating their required  regulatory capital. An institution's IRR is measured
as the change to its NPV as a result of a hypothetical 200 basis point change in
market  interest  rates.  A  resulting  change  in NPV of  more  than  2% of the
estimated market value of its assets will require the institution to deduct from
its capital 50% of that excess  change.  The following  table as computed by the
OTS determined  that the  Association  had no IRR  modification  required to its
regulatory capital requirement.

<TABLE>
<CAPTION>
                                                   At September 30, 1997    At September 30, 1996
                                                   ---------------------    ---------------------

<S>                                                     <C>                       <C>   
Risk Measures: 200 bp rate shock
  Pre-Shock NPV Ratio: NPV as % of PV of Assets          20.45%                    17.24%
  Exposure Measure:  Post-Shock NPV Ratio                19.35%                    16.15%
  Sensitivity Measure:  Change in NPV Ratio              - 110  bp                  -109  bp 
Calculation of Capital Component
  Change in NPV as % of PV of Assets                    - 1.50%                   - 1.43%
  Interest Rate Risk Capital Component ($000)             - --                    -   -- 
</TABLE>
                                        8

<PAGE>



Computations of prospective  effects of  hypothetical  interest rate changes are
based on numerous  assumptions,  including  relative  levels of market  interest
rates, loan prepayments and deposit  run-offs,  and should not be relied upon as
indicative of actual results.  Further,  the computations do not contemplate any
actions the Association may undertake in response to changes in interest rates.

Although the Association is not subject to the IRR component reduction discussed
above,  the  Association  is still  subject to interest rate risk and, as can be
seen above, rising interest rates will reduce the Association's NPV. The OTS has
the authority to require  otherwise exempt  institutions to comply with the rule
concerning interest rate risk.

The Association  attempts to manage the interest rates it pays on deposits while
maintaining a stable deposit base and provide quality services to its customers.
The Association has limited its borrowings and relied primarily upon deposits as
its source of funds.  To the extent the  Association  is unable to invest  these
funds in loans originated in the Association's  market area, it will continue to
purchase shorter, high quality investment securities.

Changes in Financial Condition from September 30, 1996 to September 30, 1997

General.  The Company decreased assets by $1,464,369 from September 30, 1996, to
September  30, 1997.  The asset  decrease was  primarily the net result of using
liquidity from maturing,  held to maturity securities of $1,888,626 and cash and
cash  equivalents  of  $1,479,060  to fund the increase in loans  receivable  of
$1,404,528 and to purchase treasury stock of $2,068,422.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing  deposits,  decreased  $1,479,060  or
57.25%. This decrease was primarily due to the purchase of treasury stock during
the fiscal year ended September 30, 1997.

Securities available-for-sale. Securities available-for-sale increased $728,199,
or 5.95%,  from  $12,235,145  on September 30, 1996, to $12,963,344 on September
30, 1997.  Maturities and principal receipts of $6,074,554 exceeded purchases of
$5,311,916  reducing the  portfolio by $762,638.  This decrease in the portfolio
was offset by an increase in the net  unrealizable  gain on these  securities of
$1,512,110  of which  $995,958  was due to an error in the  recorded  number  of
shares of stock of the Federal Home Loan Mortgage  Corporation  (FHLMC) owned by
the Association. The additional shares issued in a 3-for-1 stock split in fiscal
1992  were not  recorded  which  resulted  in the  amount of stock  owned  being
understated  by 8,792 shares.  The market value  adjustment had no effect on net
income or  earnings  per share but did have an effect on certain  balance  sheet
items and their  corresponding  ratios.  Any  increase or decrease in the market
value of such securities  will have a corresponding  positive or negative effect
on stockholders' equity.

Securities    held-to-maturity.     Debt    and    mortgage-backed    securities
held-to-maturity  decreased $1,888,626,  or 20.32%, from $9,294,092 on September
30, 1996, to $7,405,466 on September 30, 1997. The decrease was primarily due to
maturities  and  principal  receipts  of  $6,641,854   exceeding   purchases  of
$4,755,000.

                                       9

<PAGE>


Loans Held for Sale.  Loans held for sale  decreased  $43,113  from  $178,663 (3
loans) at September 30, 1996, to $135,550 (2 loans) at September 30, 1997.  This
decrease  was the result of  management's  decision  to sell,  in the  secondary
market,  lower-yielding  fixed rate mortgage loans rather than  maintaining them
for portfolio.  Held for sale loans are presold in the secondary market prior to
origination. The balance is the amount sold, yet unfunded as of the period end.

Loans Receivable,  Net. Loans receivable  increased  $1,404,528,  or 3.26%, from
$43,070,281  on September 30, 1996, to  $44,474,809  on September 30, 1997.  The
increase was due from new originations exceeding principal amortization and loan
payoffs.

Premises and Equipment.  Premises and equipment, net of depreciation,  increased
$18,054 due to purchases of new assets exceeding normal  depreciation  amortized
on fixed assets.

Deferred Tax Asset.  Deferred tax asset, net of valuation  allowance,  decreased
$163,903 during this twelve month period as a result of a tax deferred liability
being  incurred due to the increase in the mark to market value of available for
sale securities.

Other Assets.  Other assets  decreased  $27,669,  or 4.65%,  from $595,208 as of
September  30, 1996,  to $567,539 as of September  30, 1997,  due to the reduced
Federal Deposit Insurance Corporation (FDIC) prepaid assessment of $23,467.

Deposits.  Deposits, after interest credited,  decreased by $1,347,607, or 2.38%
to  $55,183,587 at September 30, 1997,  from  $56,531,194 at September 30, 1996.
The decrease was due, in part, to management's deposit pricing strategy.

Advances from  Borrowers for Taxes and  Insurance.  Advances from  borrowers for
taxes and insurance  decreased  $31,492 from $138,530 on September 30, 1996 , to
$107,038 on  September  30,  1997,  due to a change in  calculating  the maximum
allowed advances from borrowers for taxes and insurance.

Accrued Income Tax. The income tax accrual  increased by $66,352 between the two
periods due to an accrued  income tax amount  calculated for September 30, 1997.
The  September 30, 1996,  balance was  classified as a prepaid asset because the
estimated tax payments exceeded the accrual

Deferred Tax Liability. Deferred tax liability increased from $0.00 at September
30, 1996,  to $525,353 on September  30, 1997,  due primarily to the increase in
net  unrealized  gains on available for sale  securities.  See also  "Securities
Available-for-Sale."

Other  Liabilities.  Other liabilities  decreased by $304,634,  or 33.82%,  from
$900,850 on September 30, 1996,  to $596,216 on September 30, 1997.  The primary
reason for the  decrease  was the payment of the Savings  Association  Insurance
Fund (SAIF)  assessment of $362,557 during the first quarter offset by increases
in accounts payable of $33,110, and a five year pledge/commitment of $26,250, of
which   $20,250  is   outstanding   at  September  30,  1997,  to  Unity  Family
Healthcare/St.  Gabriel's Hospital, a local  healthcare/hospital  facility,  for
renovation and expansion.

                                       10

<PAGE>


Shareholders' Equity. Shareholders' equity decreased by $372,341, or 2.99%, from
$12,440,245 on September 30, 1996, to  $12,067,904  on September 30, 1997.  This
decrease is the net effect of the following changes in equity: a paid in capital
increase of $29,821  resulting  from the fair market value  adjustment to earned
and committed to be released Employee Stock Ownership Plan ("ESOP") shares,  net
of taxes;  an  increase  of $68,724 as a result of  accounting  for earned  ESOP
shares; an increase of $907,266  resulting from market valuation  adjustments on
available  for sale  securities;  an increase of $739,715  from net  operational
income for the twelve  month  period  just  ended;  an  increase of $69,458 as a
result of accounting for earned  Management  Stock Bonus Plan ("MSBP") shares; a
decrease of  $2,068,422  resulting  from open market  purchases of the Company's
common  stock  pursuant  to two stock  repurchase  programs,  and a decrease  to
retained earnings due to dividends declared and paid of $118,903.


Average Balance Sheet

The following table sets forth certain  information  relating to average balance
sheets and reflects the average yield on assets and average cost of  liabilities
for the periods  indicated and the average  yields  earned and rates paid.  Such
yields and costs are  derived  by  dividing  income or  expense  by the  average
balance  of assets or  liabilities,  respectively,  for the  periods  presented.
Average  balances  are derived  from  month-end  balances.  Management  does not
believe that the use of month-end  instead of daily average  balances has caused
any material difference in the information presented.


                                       11

<PAGE>



<TABLE>
<CAPTION>
Average Balance Sheet
                                                       For the Year Ended September 30, 
                                   ------------------------------------------------------------------------
                                                   1997                                1996
                                   --------------------------------------  --------------------------------
                                    Average                     Average    Average                 Average
                                    Balance       Interest     Yield/Cost  Balance   Interest    Yield/Cost
                                                              (Dollars in Thousands)
<S>                                 <C>            <C>          <C>        <C>        <C>         <C>  
Interest-earning assets:
 Loans receivable (1)               $45,267        $ 3,817        8.43%    $43,435    $3,704         8.53%
 Investment securities                                                     
   available-for-sale                12,082            741        6.13%     10,050       576         5.73%
 Investment securities                                                     
    held-to-maturity (2)              7,779            521        6.70%     11,005       731         6.64%
 Other interest-earning assets        1,922             86        4.47%      3,497       162         4.63%
                                    -------        -------                 -------     -----         
    Total interest-earning assets    67,050          5,165        7.70%     67,987     5,173         7.61%
                                                                           
Non interest-earning assets           1,205                                  1,426                 
                                    -------                                -------                 
    Total assets                    $68,255                                $69,413                 
                                    =======                                =======                 
                                                                           
Interest-bearing liabilities:                                              
  Savings deposits                  $14,382            395        2.75%    $13,922       330         2.37%
  Transaction accounts                3,040             37        1.22%      3,251        37         1.14%
  Time Deposit                       36,985          2,070        5.60%     37,551     2,164         5.76%
                                    -------        -------                 -------     -----         
     Total interest-bearing                                                
      liabilities                    54,407          2,502        4.60%     54,724     2,531         4.63%
                                                   -------                             -----
Non interest-bearing liabilities:                                          
  Demand Deposits                     1,173                                    827                 
  Other non interest-bearing                                               
    liabilities                         708                                    665                 
                                    -------                                -------                 
     Total liabilities               56,288                                 56,216
  Shareholders equity                11,967                                 13,197                 
                                    -------                                -------                 
  Total liabilities and                                                    
    shareholders equity             $68,255                             $   69,413
                                    =======                             ==========
  Net interest income                              $ 2,663                            $2,642                 
                                                   =======                             =====                 
  Interest rate spread (3)                                       3.10%                               2.98%
  Net yield on interest-earning                                            
    assets (4)                                                   3.97%                               3.89%
                                                                           
  Ratio of average                                                         
   interest-earning assets to                                              
   average interest-bearing                                                
   liabilities                                                 123.24%                             124.24%
                                                                   
</TABLE>


---------------------
(1)   Average  balances  include  non-accrual  loans and are net of  undisbursed
      commitments.
(2)   Includes interest-bearing deposits in other financial institutions.
(3)   Interest rate spread  represents the difference  between the average yield
      on  interest-earning  assets  and the  average  cost  of  interest-bearing
      liabilities.
(4)   Net yield on  interest-earning  assets represents net interest income as a
      percentage of average interest-earning assets.

                                       12

<PAGE>


Rate / Volume Analysis. The table below sets forth certain information regarding
changes in  interest  income and  interest  expense of the  Association  for the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (changes in average volume  multiplied by old rate);  (ii)
changes in rates  (changes  in rate  multiplied  by old average  volume);  (iii)
changes in  rate-volume  (changes  in rate  multiplied  by the change in average
volume).

<TABLE>
<CAPTION>
                                                      Year Ended September 30, 
                                ---------------------------------------------------------------------
                                          1997 vs. 1996                     1996 vs. 1995       
                                ---------------------------------    --------------------------------
                                    Increase (Decrease) Due to         Increase (Decrease) Due to    
                                ---------------------------------    --------------------------------
                                                    Rate/                               Rate/
                                 Volume    Rate     Volume    Net     Volume    Rate    Volume   Net
                                --------  ------  ---------  ----    --------  ------  -------- ------
                                                        (Dollars in Thousands)
<S>                              <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>  
Interest income:
  Loans receivable (1)           $  156    $ (45)   $  (2)   $ 109    $ (76)   $ 173    $  (4)   $  93
  Securities available-
    for- sale                       116       40        8      164      235       64       74      373
  Securities held-to-
    maturity                       (214)       5       (2)    (211)    (154)     (11)       2     (163)
  Other interest-earning
    assets                          (73)      (6)       3      (76)      32      (19)      (4)       9
                                  -----    -----    -----    -----    -----    -----    -----    -----
  Total interest-earning assets     (15)      (6)       7       (14)     37      207       68      312 
 
Interest Expense:
  Savings accounts                  (15)     (22)       0      (37)      (3)     301       (0)     298
  Other liabilities                  --       --       --       --       --       --       --       --
                                  -----    -----    -----    -----    -----    -----    -----    -----
    Total interest-
      bearing liabilities           (15)     (22)       0      (37)      (3)     301       (0)     298
                                  -----    -----    -----    -----    -----    -----    -----    -----
  Net change in interest income   $   0    $  16    $   7    $  23    $  40    $ (94)   $  68    $  14
                                  =====    =====    =====    =====    =====    =====    =====    =====

</TABLE>

(1) Loans are net of undisbursed commitments.


Comparison of Operating Results for the Years Ended September 30, 1996, and 1997

Net Income. Net income increased $180,947,  or 32.38% from $558,768 on September
30,  1996 to $739,715 on  September  30,  1997.  Noninterest  expense  decreased
$388,428  and was  offset  by  decreased  noninterest  income  of  $148,618  and
increased income tax expense of $83,762. The decrease in noninterest expense was
primarily due to a $362,557 charge connected with a one time special  assessment
from the SAIF resulting from  legislation  that was signed into law on September
30, 1996, for the purpose of recapitalizing the SAIF.

Interest Income.  Interest income decreased $8,503, or .16%, in the twelve month
period ended  September 30, 1997, as compared to the same period ended September
30, 1996.  Interest income from 

                                       13

<PAGE>


loans  receivable  increased  $113,560  due to the  increase in the average loan
balances  offset  somewhat by lower rates paid on such  balances over the period
due  to  decreased  market  rates  of  interest.  Available-  for-sale  security
investment  income  increased  $211,869  due to  the  increase  in  the  average
investment  balance along with  increased  rate of return on these  investments.
Held-to-maturity investment security income decreased $333,932 due to a decrease
in the average  balance of such  securities as maturities were not reinvested in
such investments.

Interest  Expense:  Interest  expense,  which is comprised  of interest  paid on
deposits,  decreased $29,677,  or 1.17%, for the twelve month comparative period
for September 30, 1996 and 1997.  This decrease was primarily due to lower rates
paid on a lower average balance of certificate deposits during this period.

Net Interest  Income.  Net interest income  increased  $21,174,  or 0.80%,  from
$2,641,886  for the twelve month period ended  September 30, 1996, to $2,663,060
for the same period  ended  September  30, 1997.  This was due to the  decreased
deposit  interest expense  ($29,677)  offset by decreased  revenue from interest
earned on the interest  earning  assets  ($8,503).  The Company's  interest rate
spread  improved  from 2.98% to 3.10% as the yield  earned on  interest  earning
assets increased while the cost of interest bearing deposits decreased.

Provisions for Loan Losses. The Association currently maintains an allowance for
loan losses based upon  management's  periodic  evaluation of known and inherent
risks in the loan portfolio,  the  Association's  past loss experience,  adverse
situations  that may affect the  borrowers'  ability to repay  loans,  estimated
value of the underlying collateral,  and current and expected market conditions.
Provisions  for loan losses  decreased  from $3,725 at September 30, 1996, to no
provisions  made for the twelve month period ending  September  30, 1997.  While
management  maintains  its allowance for losses at a level which it considers to
be adequate to provide for potential  losses,  there can be no  assurances  that
further  additions will not be made to the loss  allowances and that such losses
will not exceed the estimated amounts.

Noninterest  Income.  Noninterest  income decreased  $148,618,  or 42.38%,  from
$350,678 at September 30, 1996, to $202,060 at September 30, 1997. This decrease
was primarily the result of a $81,023 contingency  recovery in the first quarter
of fiscal  1996,  a decrease  of  $56,770  in gains on the sale of loans,  and a
payment for $11,900  received from the  Association's  previous  data  processor
recorded  during the twelve  months ended  September 30, 1996.  The  contingency
recovery  was due to a  $65,000  settlement  paid by the  Association  to settle
litigation  for  which it had  established  a  $146,023  loss  reserve.  In this
litigation the  bankruptcy  trustee was seeking the return of loan payments made
to the  Association by the servicer  based on theories of fraudulent  conveyance
and  preference.  On October 30,  1995,  the Court  issued an order  approving a
settlement in the amount of $65,000 between the trustee and the Association.

Noninterest Expense.  Noninterest expense decreased by $388,428, or 18.89%, from
$2,055,971  to $1,667,543  during the twelve month  periods ended  September 30,
1996 and  1997,  respectively.  Compensation  and  employee  benefits  increased
$44,125 due primarily to director and employee compensation increases of $32,667
and ESOP expense increase of $11,124.

Pursuant to the Economic Growth and Paperwork Reduction Act of 1996 (the "Act"),
the FDIC imposed a special  assessment on SAIF members to capitalize the SAIF at
the  designated  reserve  level of 1.25% as of  October  1,  1996.  Based on the
Association's  deposits as of March 31, 1995,  the date for measuring 

                                       14

<PAGE>

the amount of the special assessment pursuant to the Act, the Association paid a
special  assessment of $362,557 to recapitalize  the SAIF in September 1996. The
Act, also, reduced the ongoing FDIC premium for deposit insurance by $74,018 for
the twelve month period.

Other  increases  in  noninterest   expenses  were  occupancy  of  $6,973,  data
processing  of $7,258,  offset by a decrease in  advertising  for  $3,586,  real
estate owned expense for $3,638, and other noninterest expenses for $2,985.

Historically,  date fields in computer  software  programs were programmed using
two digit characters to represent the year. Due to this practice, these software
applications,  if not corrected  prior to the year 2000, will interpret the year
as 1900 and not 2000.  As a result,  many  calculations  which  rely on the date
field  information,  such as interest,  payment or due dates and other operating
functions, will generate results which will be significantly misstated.

To  prepare  for this  event  and to  minimize  its  potential  adverse  impact,
management  has begun a process to identify  areas that will be affected by this
issue,  assess their  potential  impact on the  operations  of the  Association,
monitor the progress of third party software  vendors in addressing this matter,
testing changes provided by these vendors, and developing  contingency plans for
any critical systems which are not effectively reprogrammed.

The  Association's  material  data  processing  functions  are  performed  using
software  provided by a third party  vendor.  This company has advised its users
that it expects to resolve any  potential  problems  prior to the year 2000.  In
addition, this company will provide ongoing communication to its users to assist
them in implementing tests of the vendor's  software.  If this company is unable
to correct  potential  problems in time,  or if tests  should prove the proposed
corrections  to be  insufficient,  it  is  likely  that  the  Association  would
experience significant data processing delays, errors or failures.  Such delays,
errors or failures  could have a  significant  adverse  impact on the  financial
condition and results of operations of the Association. In addition,  monitoring
and managing the year 2000 project will result in additional direct and indirect
costs to the Association.  Direct costs include potential charges by third party
software  vendors for product  enhancements,  costs involved in testing software
products for year 2000  compliance,  and any resulting  costs for developing and
implementing  contingency  plans for critical  software  products  which are not
enhanced.  Indirect  costs  will  principally  consist  of the time  devoted  by
existing  employees  in managing  software  vendor  progress,  testing  enhanced
software products and implementing any necessary  contingency  plans. While such
direct costs cannot yet be  reasonably  estimated,  these  expenditures  will be
charged to expense as incurred.

Income Tax  Expense.  Income tax  expense  increased  $83,762,  or 22.39%,  from
$374,100 for the twelve  months ended  September  30, 1996,  to $457,862 for the
twelve month period ended September 30, 1997, due to increased earnings.

Liquidity and Capital Resources.

The  Association is required to maintain  minimum levels of "liquid  assets," as
defined by OTS regulations.  This requirement,  which may be varied from time to
time  depending  upon economic  conditions  and deposit  flows,  is based upon a
percentage of deposits and short-term borrowings. The required OTS minimum ratio
is currently 5%. The  Association's  average  liquidity  ratio was 20.93% during
September  1997.  The OTS required  short term liquidity is 1%; at September 30,
1997, the Association's short term liquidity was 16.17%. The Association manages
its liquidity  ratio to meet its 

                                       15

<PAGE>


funding needs, including: deposit outflows;  disbursements of payments collected
from borrowers for taxes and insurance; repayment of borrowings, when applicable
and loan principal  disbursements.  The Association  also monitors its liquidity
position in accordance with its asset/liability objectives.

In addition to funds provided from operations, the Association's primary sources
of  funds   are:   savings   deposits;   principal   repayments   on  loans  and
mortgage-backed  securities;  and matured or called investment securities. As an
alternative to supplement  liquidity  needs,  the Association has the ability to
borrow from the FHLB of Des Moines.

Scheduled loan  repayments and maturing  investment  securities are a relatively
predictable source of funds.  However,  savings deposit flows and prepayments on
loans and mortgage-backed  securities are significantly influenced by changes in
market interest rates,  economic  conditions,  and competition.  The Association
strives to manage the pricing of its  deposits to maintain a balanced  stream of
cash flow commensurate  with its loan commitments and other predictable  funding
needs.

The  Association's  most  liquid  assets  are cash and cash  equivalents,  which
include  highly  liquid  short-term  investments.  The level of these  assets is
dependent on the Association's  operating,  financing,  and investing activities
during any given  period.  At  September  30,  1997,  cash and cash  equivalents
totaled $1.105 million.

The Association anticipates that it will have sufficient funds available to meet
its  current  commitments.  As  of  September  30,  1997,  the  Association  had
commitments to fund loans of $660,750, unused lines of credit of $1,292,196, and
loans in process of $309,781. Certificates of deposit scheduled to mature within
one year totaled  $27.6  million at  September  30,  1997.  Based on  historical
deposit  withdrawals  and  outflows,  and on internal  monthly  deposit  reports
monitored by  management,  management  believes that a majority of such deposits
will remain in the Association.

The  Association  is  required  by OTS to maintain  various  regulatory  capital
requirements.  At September 30, 1997, the Association  exceeded these regulatory
capital  requirements.  See  Note  14 to the  Notes  to  Consolidated  Financial
Statements included herein.

Impact of Inflation and Changing Prices

The Consolidated  Financial  Statements and Notes thereto  presented herein have
been prepared in accordance with generally accepted accounting  principles which
require the measurement of financial  position and operating results in terms of
historical dollars, without consideration for changes in the relative purchasing
power of money over time caused by inflation.

Unlike  industrial  companies,  nearly all of the assets  and  liabilities  of a
financial institution are monetary in nature. As a result, interest rates have a
more significant  impact on a financial  institution's  performance than general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction  or in the same  magnitude as the price of goods and  services,  since
such goods and services are affected by inflation.  In the current interest rate
environment,  liquidity and the maturity  structure of the Association's  assets
and  liabilities  are  critical to the  maintenance  of  acceptable  performance
levels.

                                       16

<PAGE>


Impact of New Accounting Standards

The  Financial  Accounting  Standards  Board  ("FASB")  has issued  several  new
accounting  standards  which may affect the accounting for  transactions  of the
Association.  The new  standards are discussed in detail at Note 15 to the Notes
to Consolidated Financial Statements included herein.


Selected Quarterly Financial Data (unaudited)
(Dollars in thousands except earnings per share)


                             First    Second    Third     Fourth
                            Quarter   Quarter   Quarter   Quarter
                            -------   -------   -------   -------
          Fiscal 1997
-------------------------

Total interest income       $ 1,293   $ 1,285   $ 1,292   $ 1,295
Total interest expense          635       621       621       625
Net interest income             658       664       671       670
Provision for loan losses        --        --        --        --
Net Income                      173       174       208       185
Earnings per share          $  0.22   $  0.22   $  0.26   $  0.24

          Fiscal 1996
-------------------------

Total interest income       $ 1,307   $ 1,300   $ 1,281   $ 1,286
Total interest expense          622       637       634       639
Net interest income             685       663       647       647
Provision for loan losses         2        --         2        --
Net Income                      258       174       196       (69)
Earnings per share          $  0.29   $  0.19   $  0.24   $ (0.09)


                                      -17-

<PAGE>





                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Mississippi View Holding Company and Subsidiary
Little Falls, Minnesota 56345

We have audited the accompanying  consolidated statements of financial condition
of Mississippi View Holding Company and Subsidiary (the Company) as of September
30, 1997 and 1996, and the related consolidated  statements of income,changes in
shareholders'  equity,  and cash  flows  for the two  years  then  ended.  These
financial statements are the responsibility of management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conduced our audits in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements   are free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Mississippi View
Holding  Company and  Subsidiary  as of  September  30,  1997 and 1996,  and the
consolidated  results of their operations and their cash flows for the two years
then ended, in conformity with generally accepted accounting principles.



Bertram Cooper & Co., LLP
Waseca, Minnesota
October 29, 1997



                                       18

<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
                                                                                                September 30,
                                                                                ----------------------------------------------
                                  ASSETS                                                    1997                     1996
                                  ------                                        ---------------------    ---------------------
<S>                                                                             <C>                      <C>                 
       Cash and cash equivalents:
          Cash and due from banks                                               $            214,934     $            317,777
          Interest bearing deposits with banks                                               889,660                2,265,877
       Securities available-for-sale, at fair value                                       12,963,344               12,235,145
       Securities held-to-maturity, at amortized cost (fair value of
          $7,470,314 for 1997 and $9,320,741 for 1996)                                     7,405,466                9,294,092
       FHLB stock, at cost                                                                   650,700                  650,700
       Loans held for sale                                                                   135,550                  178,663
       Loans receivable, net of allowance for loan losses of
          $861,170 in 1997 and $877,094 in 1996                                           44,474,809               43,070,281
       Accrued interest receivable                                                           437,548                  450,327
       Premises and equipment                                                                806,900                  788,846
       Deferred tax asset (net of valuation allowance)                                       -                        163,903
       Other assets                                                                          567,539                  595,208
                                                                                ---------------------    ---------------------

              Total Assets                                                      $         68,546,450     $         70,010,819
                                                                                =====================    =====================

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

       Liabilities:
          Demand deposits                                                       $          4,408,558     $          4,471,137
          Savings deposits                                                                14,525,018               14,087,832
          Time deposits                                                                   36,250,011               37,972,225
                                                                                ---------------------    ---------------------

              Total deposits                                                              55,183,587               56,531,194
                                                                                                             
       Advances from borrowers for taxes and insurance                                       107,038                  138,530
       Accrued income taxes                                                                   66,352                  -
       Deferred tax liability                                                                525,353                  -
       Other liabilities                                                                     596,216                  900,850
                                                                                ---------------------    ---------------------

              Total Liabilities                                                           56,478,546               57,570,574
                                                                                ---------------------    ---------------------

       Shareholders' equity:
       Serial preferred stock, no par value, 5,000,000 shares                                                
         authorized, no shares issued                                                      -                        -
       Common stock, $.10 par value, 10,000,000 shares authorized;
         1,007,992 shares issued, 653,151 and 776,713 outstanding                            100,799                  100,799
       Paid in capital                                                                     7,540,218                7,510,397
       Treasury stock (267,749 and 130,278 shares), at cost                               (3,605,111)              (1,536,689)
       Retained earnings, substantially restricted                                         7,737,458                7,116,646
       Unearned ESOP shares (58,463 and 66,527 shares) at cost                              (498,012)                (566,736)
       Unearned MSBP shares (28,629 and 34,474 shares) at cost                              (317,954)                (387,412)
       Net unrealized gain on available-for-sale securities, net                     
         of tax of $740,337 in 1997 and $135,494 in 1996                                   1,110,506                  203,240
                                                                                ---------------------    ---------------------

              Total shareholders' equity                                                  12,067,904               12,440,245
                                                                                ---------------------    ---------------------

              Total liabilities and shareholders' equity                        $         68,546,450     $         70,010,819
                                                                                =====================    =====================
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                       19
<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                                          For the Year ended
                                                                                             September 30,
                                                                                ----------------------------------------

                                                                                       1997                 1996
                                                                                -------------------  -------------------
       Interest income:
<S>                                                                             <C>                  <C>               
            Loans receivable                                                    $        3,817,212   $        3,703,652
            Securities available-for-sale                                                  740,781              528,912 
            Securities held-to-maturity                                                    606,933              940,865 
                                                                                -------------------  -------------------

                 Total interest income                                                   5,164,926            5,173,429 
                                                                                -------------------  -------------------
                                                                                                                        
       Interest expense:
            Demand deposits                                                                 36,963               37,345
            Savings deposits                                                               394,811              330,357
            Time deposits                                                                2,070,092            2,163,841
                                                                                -------------------  -------------------

                 Total interest expense                                                  2,501,866            2,531,543
                                                                                -------------------  -------------------

            Net interest income                                                          2,663,060            2,641,886
            Provision for loan losses                                                            -                3,725
                                                                                -------------------  -------------------

                 Net interest income after provision for loan losses                     2,663,060            2,638,161
                                                                                -------------------  -------------------

       Noninterest income:
            Other fees and service charges                                                  79,022               70,603
            Gain on sale of loans                                                           17,372               74,142
            Net gain on sale of foreclosed real estate                                      12,848               17,394
            Contingency recovery                                                                 -               81,023
            Other                                                                           92,818              107,516
                                                                                -------------------  -------------------

                 Total noninterest income                                                  202,060              350,678
                                                                                -------------------  -------------------

       Noninterest expenses:
            Compensation and employee benefits                                             963,690              919,565
            Occupancy                                                                       94,829               87,856
            Deposit insurance assessment                                                         -              362,557
            Deposit insurance premiums                                                      76,073              150,091
            Data processing                                                                 83,254               75,996
            Advertising                                                                     27,201               30,787
            Foreclosed real estate expense, net                                              1,415                5,053
            Other                                                                          421,081              424,066
                                                                                -------------------  -------------------

                 Total noninterest expense                                               1,667,543            2,055,971
                                                                                -------------------  -------------------

       Income before income taxes                                                        1,197,577              932,868

       Income tax expense                                                                  457,862              374,100
                                                                                -------------------  -------------------

       Net income                                                               $          739,715   $          558,768
                                                                                ===================  ===================

       Earnings per share of common stock                                       $             0.96   $             0.66
                                                                                ===================  ===================

       Weighted averages common shares outstanding                                         746,484              851,025
                                                                                ===================  ===================
</TABLE>
                                                                
                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                       20

<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                                              Unrealized
                                                                          Retained    Unallocated Unallocated  Gain on
                                                  Additional              Earnings       Common     Common    Securities
                                          Common    Paid-in    Treasury Substantially  Stock Held Stock Held  Available
                                          Stock     Capital     Stock     Restricted    By ESOP    For MSBP   For Sale     Total
                                         -------- ----------- ----------  ----------- ----------- ---------  ---------- ------------

<S>                                      <C>      <C>        <C>          <C>         <C>        <C>         <C>        <C>        
Balance, September 30, 1995              $100,799 $7,494,971 $      --    $6,697,907  $(644,441) $    --     $  133,763 $13,782,999

  Treasury stock acquired                   --         --    (1,536,689)       --            --      --           --    (1,536,689)

  Net earnings for the year
  ended September 30, 1996                  --         --          --       558,768          --      --           --       558,768

  Dividend paid $0.16/share                 --         --          --      (140,029)         --      --           --      (140,029)

  Fair value adjustment of ESOP
  shares net of taxes of $10,284            --       15,426        --          --            --      --           --        15,426

  Allocated ESOP shares                     --         --          --          --          77,705    --           --        77,705

  MSBP shares acquired, net of earned
  shares in the amount of $71,217           --         --          --          --            --  (387,412)        --      (387,412)

  Net change in unrealized gain on
  available-for-sale securities, net
  of taxes of $46,318                       --         --          --          --            --      --         69,477      69,477
                                        -------- ---------- -----------  ----------  --------------------   ---------- -----------

Balance, September 30, 1996             $100,799 $7,510,397 $(1,536,689) $7,116,646  $(566,736) $(387,412)  $  203,240 $12,440,245
                                         -------  --------- -----------  ----------  ---------   --------    ---------  ---------

  Treasury stock acquired                   --         --    (2,068,422)       --            --      --           --    (2,068,422)

  Net earnings for the year
  ended September 30, 1997                  --         --          --       739,715          --      --           --       739,715

  Dividend paid $0.16/share                 --         --          --      (118,903)         --      --           --      (118,903)

  Fair value adjustment of ESOP
  shares net of taxes of $17,846            --       26,769        --          --            --      --           --        26,769

  Allocated ESOP shares                     --         --          --          --          68,724    --           --        68,724

  MSBP shares earned                        --         --          --          --            --    69,458         --        69,458

  Effect of tax adjustment for vested
  MSBP shares                               --        3,052        --          --            --      --           --         3,052

  Net change in unrealized gain on
  available-for-sale securities, net
  of taxes of $740,337                      --         --          --          --            --      --        907,266     907,266
                                        -------- ---------- -----------  ----------  ---------- ---------   ----------  ----------

Balance, September 30, 1997             $100,799 $7,540,218 $(3,605,111) $7,737,458  $(498,012) $(317,954)  $1,110,506 $12,067,904
                                        ======== ========== ============  ==========  ========== =========   =========  ==========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                       21

<PAGE>

                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                      For the Year Ended
                                                                         September 30,
                                                                   -----------    ------------
                                                                      1997           1996
                                                                   -----------    ------------
<S>                                                                <C>            <C>
Cash flows from operating activities:
       Interest received on loans and investments                  $ 5,146,533    $ 5,212,957
       Interest paid                                                (2,499,878)    (2,532,101)
       Other fees, commissions, and income received                    285,085        299,433
       Cash paid to suppliers, employees and others                 (1,704,523)    (1,350,252)
       Contributions to charities                                      (29,482)        (7,869)
       Income taxes paid                                              (298,000)      (643,219)
       Loans originated for sale                                    (1,744,089)    (2,455,977)
       Proceeds from sale of loans                                   1,742,622      4,487,415
                                                                   -----------    -----------

            Net cash provided by operating activities                  898,268      3,010,387
                                                                   -----------    -----------

Cash flows from investing activities:
       Purchases of available-for-sale securities                   (5,311,916)    (6,547,147)
       Proceeds from maturities of available-for-sale securities     6,074,554      1,356,285
       Purchases of held-to-maturity securities                     (4,755,000)    (4,694,532)
       Proceeds from maturities of held-to-maturity securities       6,641,854      9,295,315
       Loan originations and principal payments on loans, net       (1,375,500)    (2,123,430)
       Purchases of property and equipment                            (109,049)       (10,936)
       Proceeds from sale of foreclosed real estate                     12,848         17,394
                                                                   -----------    -----------

            Net cash provided by (used in) investing activities      1,177,791     (2,707,051)
                                                                   -----------    -----------

Cash flows from financing activities:
       Net increase in non-interest bearing demand
         and savings deposit accounts                                  375,500        398,025
       Net (decrease) increase in time deposits                     (1,722,125)     1,213,396
       Net (decrease) in mortgage escrow funds                         (31,492)       (49,168)
       Dividend on unallocated ESOP shares                              10,322         11,612
       Acquisition of treasury stock                                (2,068,422)    (1,536,689)
       Acquistion of unearned MSBP shares                                   --       (453,899)
       Dividends paid                                                 (118,902)      (140,029)
                                                                   -----------    -----------

            Net cash used by financing activities                   (3,555,119)      (556,752)
                                                                   -----------    -----------

Net (decrease) in cash and cash equivalents                         (1,479,060)      (253,416)

Cash and cash equivalents at beginning of year                       2,583,654      2,837,070
                                                                   -----------    -----------

Cash and cash equivalents at end of year                           $ 1,104,594    $ 2,583,654
                                                                   ===========    ===========
</TABLE>


       The accompanying notes are an integral part of these consolidated
                              financial statements

                                       22
<PAGE>

                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>

                                                                          For the Year Ended
                                                                             September 30,
                                                                      -----------    ------------
                                                                         1997            1996
                                                                      -----------    ------------
<S>                                                                   <C>            <C>
RECONCILIATION OF NET INCOME TO NET CASH
   PROVIDED BY OPERATING ACTIVITIES
     Net income                                                       $   739,715    $   558,768
     Adjustments:
          Provision for losses on loans and real estate                        --          3,725
          Depreciation                                                     90,995         83,771
          Federal Home Loan Bank stock dividends                               --        (12,800)
          Reinvested dividends                                             (5,421)        (5,071)
          ESOP fair value adjustment                                       26,768         15,426
          Amortization of ESOP compensation                                58,403         66,092
          Amortization of MSBP compensation                                66,487         66,487
          Tax benefit of MSBP vesting activities                            3,052             --
          Net amortization and accretion of premiums and
            discounts on securities                                        28,466         38,211
          Net (gains) on sales of foreclosed real estate                  (12,848)       (17,393)
          Net loan fees deferred and amortized                             32,924         14,291
          Net mortgage loan servicing fees deferred                         2,112        (11,611)
          Net increase in unearned MSBP shares                              2,971             --
          Contingency recovery                                                 --        (81,023)
          (Increase) decrease in:
                Loans held for sale                                       (18,839)     2,014,650
                Accrued interest receivable                                12,780         78,598
                Prepaid income tax                                         23,892        (23,892)
                Deferred tax asset                                        163,903       (119,721)
                Other assets                                                1,664         (6,639)
          Increase (decrease) in:
                Accrued interest payable                                     (983)          (558)
                Accrued income tax                                        (13,139)      (115,222)
                Other liabilities                                        (304,634)       464,298
                                                                      -----------    -----------

                Net cash provided by operating activities             $   898,268    $ 3,010,387
                                                                      ===========    ===========
</TABLE>

<TABLE>
<CAPTION>


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

<S>                                                                   <C>            <C>
     Federal Home Loan Bank stock dividends                           $        --    $    12,800

     Refinancings of sales of foreclosed real estate                           --         37,200

     Transfers from loans to real estate acquired
        through foreclosure                                                    --          4,989

     Reinvested dividends                                                   5,421          5,071

     Transfer of debt securities to available-for-sale from
        securities held-to-maturity                                            --      2,449,446

     Transfers of loans held for investment to loans held for sale             --      2,135,339

</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements

                                       23
<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           September 30, 1997 and 1996

Note 1.          Summary of Significant Accounting Policies

                 The following  summarizes the significant  accounting  policies
                 Mississippi  View  Holding  Company  (the  Company)  follows in
                 presenting its financial statements.

                 Principles  of  Consolidation  -  The  consolidated   financial
                 statements  include the  accounts of the Company and its wholly
                 owned subsidiary Community Federal Savings and Loan Association
                 (the Association).  All significant  intercompany  transactions
                 and balances are eliminated in  consolidation.  Certain amounts
                 in the  financial  statements  for the  prior  year  have  been
                 reclassified   to  conform  to  current   financial   statement
                 presentation.

                 Nature of  Business - The Company is a unitary  thrift  holding
                 company  whose  subsidiary  provides  financial  services.  The
                 Association's  business is that of a financial intermediary and
                 consists  primarily  of  attracting  deposits  from the general
                 public and using such  deposits,  together with  borrowings and
                 other funds, to make mortgage loans secured by residential real
                 estate and other  consumer  loans.  At September 30, 1997,  the
                 Association  operated one retail  banking  office in Minnesota.
                 The  Association  is subject to  significant  competition  from
                 other financial institutions, and is also subject to regulation
                 by certain federal  regulatory  agencies and undergoes periodic
                 examinations by those regulatory agencies.

                 Use of  Estimates - In  preparing  the  consolidated  financial
                 statements,  management  is  required  to  make  estimates  and
                 assumptions  that  affect  the  reported  amounts of assets and
                 liabilities  as of the date of the balance  sheets,  and income
                 and expenses for the period.  Actual  results could differ from
                 those  estimates.  Material  estimates  that  are  particularly
                 susceptible to significant  change relate to the  determination
                 of the  allowance for losses on loans and the valuation of real
                 estate   acquired  in  connection   with   foreclosures  or  in
                 satisfaction of loans. In connection with the  determination of
                 the allowance for losses on loans and  foreclosed  real estate,
                 management  obtains  independent   appraisals  for  significant
                 properties.

                 A   substantial   portion  of  the   Association's   loans  are
                 collateralized  by real estate in local  markets (see Note 13).
                 In  addition,  foreclosed  real  estate is  located in the same
                 market  area.  Accordingly,  the ultimate  collectibility  of a
                 substantial portion of the Association's loan portfolio and the
                 recovery of a  substantial  portion of the  carrying  amount of
                 foreclosed  real  estate  are  susceptible  to changes in local
                 market conditions.

                 While management uses available information to recognize losses
                 on loans and foreclosed  real estate,  future  additions to the
                 allowances may be necessary  based on changes in local economic
                 conditions.  In addition,  regulatory agencies,  as an integral
                 part of their  examination  process,  periodically  review  the
                 Association's allowance for losses on loans and foreclosed real
                 estate. These agencies may require the Association to recognize
                 additions  to the  allowance  based  on their  judgments  about
                 information available to them at the time of their examination.

                 Cash  Equivalents - Cash equivalents of $300,000 and $1,000,000
                 at  September  30,  1997 and  1996,  respectively,  consist  of
                 certificates of deposit, and funds due from banks. For purposes
                 of the statements of cash flows, the Association  considers all
                 highly  liquid debt  instruments  with  original  maturities of
                 three months or less to be cash equivalents.

                 Investment Securities - The Company classifies its investments,
                 including  debt  securities,   marketable  equity   securities,
                 mortgage-backed  securities, and mortgage related securities in
                 one  of  three   catagories:   held-to-maturity,   trading  and
                 available-for-sale.  Debt  securities  that the Company has the
                 positive  intent and ability to hold to maturity are classified
                 as held-to-maturity and reported at amortized cost. The Company
                 does not engage in securities trading,  therefore,  the balance
                 of its debt securities and all equity securities are classified
                 as  available-for-sale.  The Company classifies debt securities
                 as  available-for-sale  when it determines that such securities
                 may be  sold  at a  future  date or if  there  are  foreseeable
                 circumstances   under  which  the   Company   would  sell  such
                 securities.
                                       24
<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 1.          Summary of Significant Accounting Policies - (continued)

                 Securities  designated  as  available-for-sale  are recorded at
                 fair   value.   Changes  in  the  fair   value  of   securities
                 available-for-sale  are  included  in  shareholders'  equity as
                 unrealized  holding  gains or  losses  net of the  related  tax
                 effect.  Unrealized losses on available-for-sale  securities or
                 held-to-maturity  securities  reflecting  a  decline  in  value
                 judged  to be other  than  temporary  are  charged  to  income.
                 Realized gains or losses on  available-for-sale  securities are
                 computed on a specific identification basis.

                 Premiums and discounts on debt and  mortgage-backed  securities
                 are  amortized  to  expense  or  accreted  to  income  over the
                 estimated life of the  respective  security using a method that
                 approximates the level yield method.

                 The  Association,  as a member  of the  Federal  Home Loan Bank
                 System,  is required to maintain an investment in capital stock
                 of the Federal  Home Loan Bank of Des Moines.  Because no ready
                 market  exists  for this  stock,  and it has no  quoted  market
                 value, the Association's investment in this stock is carried at
                 cost.

                 Loans Held for Sale - Mortgage loans originated and intended
                 for sale in the secondary market are carried at the lower of
                 cost or estimated market value in the aggregate. Net unrealized
                 losses are recognized through a valuation  allowance by charges
                 to income.

                 Loans  Receivable - Loans  receivable  that  management has the
                 intent and ability to hold for the  forseeable  future or until
                 maturity or pay-off are reported at their outstanding principal
                 balance  adjusted for any  charge-offs,  the allowance for loan
                 losses,  and any deferred fees or costs on originated loans and
                 unamortized premiums or discounts on purchased loans. Discounts
                 and  premiums on  purchased  residential  real estate loans are
                 amortized  to  income  using  the  interest   method  over  the
                 remaining   period  to  contractual   maturity,   adjusted  for
                 anticipated  prepayments.  Discounts  and premiums on purchased
                 consumer  loans are  recognized  over the expected lives of the
                 loans using the level yield method.

                 The allowance for loan losses is increased by charges to income
                 and decreased by charge-offs (net of recoveries).  Management's
                 periodic  evaluation  of the adequacy of the allowance is based
                 on the  Association's  past  loan  loss  experience,  known and
                 inherent risks in the portfolio,  adverse  situations  that may
                 affect the borrower's ability to repay,  estimated value of any
                 underlying collateral,  and current economic conditions.  Loans
                 are considered impaired if full principal and interest payments
                 are  not   anticipated  to  be  made  in  accordance  with  the
                 contractual  terms.  Impaired  loans are carried at the present
                 value of expected  future cash flows  discounted  at the loan's
                 effective  interest rate or at the fair value of the collateral
                 if the loan is collateral dependent. A portion of the allowance
                 for loan losses is allocated to impaired  loans if the value of
                 such  loans is deemed to be less than the  unpaid  balance.  If
                 these  allocations  cause  the  allowance  for loan  losses  to
                 require  an  increase,  such  an  increase  is  reported  as  a
                 component of the provision for loan losses.

                 Uncollectible  interest  on  loans  contractually  past due for
                 three  months is charged  off or an  allowance  is  established
                 based on  management's  periodic  evaluation.  The allowance is
                 established  by a  charge  to  interest  income  equal  to  all
                 interest   previously   accrued  and  income  is   subsequently
                 recognized only to the extent cash payments are received until,
                 in  management's  judgment,  the  borrower's  ability  to  make
                 periodic interest and principal  payments returns to normal, in
                 which case the loan is returned to accrual status.

                 Loan origination fees and certain direct  origination costs are
                 capitalized   with  the  net  fee  or  cost  recognized  as  an
                 adjustment to interest income using the interest method.

                 Mortgage  Servicing Rights - The Association  adopted Statement
                 of Financial  Accounting  Standards (SFAS) No. 125, "Accounting
                 for   Transfers   and   Servicing  of   Financial   Assets  and
                 Extinguishments  of Liabilities" for transactions  entered into
                 after December 31, 1996.  SFAS No. 125  established  accounting
                 and   reporting   standards  for  transfers  and  servicing  of
                 financial assets and  extinguishments  of liabilities  based on
                 the   consistent   application   of  the   financial-components
                 approach. This approach requires
                                       25
<PAGE>

                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 1.          Summary of Significant Accounting Policies - (continued)

                 the recognition of financial  assets and servicing  assets that
                 are controlled by the reporting  entity,  and the derecognition
                 of   financial   assets  and   liabilities   when   control  is
                 extinguished.  Liabilities and derivatives incurred or obtained
                 by transferors  in  conjunction  with the transfer of financial
                 assets are measured at fair value,  if  practicable.  Servicing
                 assets and other retained  interests in transferred  assets are
                 measured by allocating  the carrying  amount between the assets
                 sold and the interest  retained,  based on their  relative fair
                 value.  The  adoption  of SFAS No.  125 did not have a material
                 effect  on the  Association's  operations  for the  year  ended
                 September 30, 1997.

                 Foreclosed  Real  Estate  -  Real  estate  properties  acquired
                 through, or in lieu of, loan foreclosure are initially recorded
                 at the lower of the related  unpaid loan  balance or fair value
                 of the property,  less estimated  costs to sell, at the date of
                 foreclosure.  Costs relating to development  and improvement of
                 property are capitalized, whereas costs relating to the holding
                 of property are expensed. Valuations are periodically performed
                 by management  and an allowance for losses is  established by a
                 charge  to  operations  if the  carrying  value  of a  property
                 exceeds its estimated fair value less estimated costs to sell.

                 Premises  and  Equipment  - Land is carried at cost.  Building,
                 furniture and  equipment  are carried at cost less  accumulated
                 depreciation.  Depreciation  is computed  by the  straight-line
                 method over the  estimated  useful  lives of the assets,  which
                 range from five to forty years.

                 Income Taxes - Deferred income taxes are recognized for the tax
                 consequences  of  temporary  differences  by  applying  enacted
                 statutory tax rates  applicable to future years to  differences
                 between the financial  statement  carrying  amounts and the tax
                 basis  of  existing  assets  and  liabilities.  The  effect  on
                 deferred taxes of a change in tax rates is recognized in income
                 in the period that includes the enactment date. The measurement
                 of deferred tax assets is reduced, if necessary,  by the amount
                 of any tax benefits that, based on available evidence,  are not
                 expected  to  be  realized.  The  effect  of a  change  in  the
                 beginning-of-the-year  balance of  a  valuation  allowance that
                 results from a change in judgment  about the  realizability  of
                 deferred tax assets is included in income.

                 The Company  files  consolidated  income tax  returns  with the
                 Association and they have entered into a tax sharing  agreement
                 which provides that the Association will pay to the Company, or
                 receive  a refund  from  the  Company, as if the  Association's
                 portion  of income tax  liability  or  benefit  was  separately
                 determined based on the Association's taxable income or loss.

                 Earnings  Per Share -  Earnings  per share of common  stock has
                 been determined by dividing net income by the weighted  average
                 number of shares of common stock and common  stock  equivalents
                 outstanding  during the year.  Stock  options  are  regarded as
                 common stock  equivalents  computed  using the  treasury  stock
                 method.  Shares  acquired by the employee stock  ownership plan
                 are not considered in the weighted  average shares  outstanding
                 until  shares are  committed  to be released  to an  employee's
                 individual  account or have been earned. The difference between
                 primary and fully diluted earnings per share is not material.

                 Treasury  Stock - Treasury  stock is recorded  at cost.  In the
                 event of a subsequent reissue,  the treasury stock account will
                 be reduced by the cost of such stock on the average  cost basis
                 with any excess proceeds  credited to addional paid-in capital.
                 Treasury stock is available for general corporate purposes.

                 Stock-Based  Compensation  -  SFAS  No.  123,  "Accounting  for
                 Stock-Based  Compensation,"  establishes a new fair value-based
                 accounting  method  for  stock-based   compensation  plans.  As
                 permitted by SFAS No. 123,  management  has elected to continue
                 measuring  compensation  costs  based  on the  intrinsic  value
                 method as  prescribed  by APB Opinion No. 25,  "Accounting  for
                 Stock  Issued to  Employees."  See Footnote No. 10 for proforma
                 disclosure  of net income and earnings per share as if the fair
                 value method had been adopted.

                                       26

<PAGE>

                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 1.          Summary of Significant Accounting Policies - (continued)

                 Fair  Values  of   Financial   Instruments   -  SFAS  No.  107,
                 "Disclosures  about  Fair  Value  of  Financial   Instruments,"
                 requires  disclosure of fair value  information about financial
                 instruments,  whether or not  recognized  in the  statement  of
                 financial  condition.  In cases where quoted  market prices are
                 not available, fair values are based on estimates using present
                 value or  other  valuation  techniques.  Those  techniques  are
                 significantly  affected by the assumptions used,  including the
                 discount  rate and  estimates  of future  cash  flows.  In that
                 regard,   the   derived   fair   value   estimated   cannot  be
                 substantiated  by  comparison  to  independent  markets and, in
                 many cases,  could not be realized in immediate  settlement  of
                 the  instruments.  SFAS  No.  107  excludes  certain  financial
                 instruments and all  nonfinancial  assets and liabilities  from
                 its disclosure  requirements.  Accordingly,  the aggregate fair
                 value amounts  presented do not represent the underlying  value
                 of the Company.

                 The following  methods and assumptions were used by the Company
                 in estimating its fair value disclosures,  as presented in Note
                 12:

                 Cash and cash  equivalents:  The  carrying  amounts of cash and
                 cash equivalents approximates fair value.

                 Debt and  equity  securities:  Fair  values for debt and equity
                 securities are based on quoted market prices,  where available.
                 If quoted  market  prices are not  available,  fair  values are
                 based on quoted market prices of comparable instruments.

                 FHLB stock: The carrying amount of FHLB stock approximates fair
                 value.

                 Loans: For variable-rate  loans that reprice frequently with no
                 significant  change in credit  risk,  fair  values are based on
                 carrying amounts. The fair values for other loans (for example,
                 fixed rate  commercial real estate,  rental  property  mortgage
                 loans, and commercial and industrial loans) are estimated using
                 discounted   cash  flow  analyses,   based  on  interest  rates
                 currently  being  offered  for  loans  with  similar  terms  to
                 borrowers of similar  credit quality  giving  consideration  to
                 estimated  prepayment and credit loss factors.  Loan fair value
                 estimates  include  judgments  regarding  future  expected loss
                 experience and risk  characteristics.  Fair values for impaired
                 loans are  estimated  using  discounted  cash flow  analysis or
                 underlying collateral values, where applicable.

                 Accrued  interest  receivable:  The carrying  amount of accrued
                 interest receivable approximates fair value.

                 Deposits: The fair values disclosed for demand deposits are, by
                 definition,  equal  to the  amount  payable  on  demand  at the
                 reporting date (that is, their carrying  amounts).  Fair values
                 for time  deposits are estimated  using a discounted  cash flow
                 calculation  that applies  interest rates currently  offered on
                 certificates  to a  schedule  of  aggregated  expected  monthly
                 maturities  on time  deposits.  The carrying  amount of accrued
                 interest payable approximates fair value.

                 Advance  payments by borrowers for taxes and insurance  (escrow
                 accounts):  The carrying amount of escrow accounts  approximate
                 fair value.

                 Loan  commitments:  Commitments to extend credit were evaluated
                 and fair value was estimated  using the fees currently  charged
                 to enter into  similar  agreements,  taking  into  account  the
                 remaining   terms   of   the   agreements   and   the   present
                 creditworthiness  of the  counterparties.  For fixed-rate  loan
                 commitments,  fair value also considers the difference  between
                 current levels of interest rates and the committed  rates.  The
                 carrying  value and fair value of  commitments to extend credit
                 are not considered material for disclosure.


                                       27

<PAGE>
                                                                             
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 2.          Debt and Equity Securities

     The  amortized  costs and fair  values of debt and  equity  securities  are
summarized as follows:

<TABLE>
<CAPTION>
                                                              Gross         Gross
                                              Amortized     Unrealized    Unrealized        Fair
                                                Cost          Gains         Losses          Value
                                             -----------   ------------  ------------   -----------

September 30, 1997:
------------------
<S>                                          <C>           <C>           <C>            <C>        
Securities available-for-sale:
  Debt securities:
    U.S. Government and agency obligations   $ 8,566,851   $    36,481   $   (12,322)   $ 8,591,010
    Mortgage-backed securities                 2,401,673        11,657           (19)     2,413,311
                                             -----------   -----------   -----------    -----------

                              Subtotal        10,968,524        48,138       (12,341)    11,004,321
                                             -----------   -----------   -----------    -----------
  Equity securities:
    Mutual fund                                   92,325           596            --         92,921
    Stock in FHLMC                                51,653     1,814,449            --      1,866,102
                                             -----------   -----------   -----------    -----------

                              Subtotal           143,978     1,815,045            --      1,959,023
                                             -----------   -----------   -----------    -----------

    Total                                    $11,112,502   $ 1,863,183   $   (12,341)   $12,963,344
                                             ===========   ===========   ===========    ===========

Securities held-to-maturity:

    Certificates of deposit                  $ 4,755,000   $        --   $        --    $ 4,755,000
    Mortgage-backed securities                 2,650,466        87,715       (22,867)     2,715,314
                                             -----------   -----------   -----------    -----------

    Total                                    $ 7,405,466   $    87,715   $   (22,867)   $ 7,470,314
                                             ===========   ===========   ===========    ===========
September 30, 1996:
-------------------

Securities available-for-sale:

  Debt securities:
    U.S. Government and agency obligations   $10,361,165   $    21,133   $   (47,513)   $10,334,785
    Mortgage-backed securities                 1,396,690            --       (19,107)     1,377,583
                                             -----------   -----------   -----------    -----------

                              Subtotal        11,757,855        21,133       (66,620)    11,712,368
                                             -----------   -----------   -----------    -----------
  Equity securities:
    Mutual fund                                   86,903            --           (33)        86,870
    Stock in FHLMC                                51,653       384,254            --        435,907
                                             -----------   -----------   -----------    -----------

                              Subtotal           138,556       384,254           (33)       522,777
                                             -----------   -----------   -----------    -----------

    Total                                    $11,896,411   $   405,387   $   (66,653)   $12,235,145
                                             ===========   ===========   ===========    ===========
Securities held-to-maturity:

    U.S. Government and agency obligations   $ 1,749,672   $       172   $    (2,031)   $ 1,747,813
    Certificates of deposit                    4,065,000            --            --      4,065,000
    Mortgage-backed securities                 3,479,420        75,648       (47,140)     3,507,928
                                             -----------   -----------   -----------    -----------

    Total                                    $ 9,294,092   $    75,820   $   (49,171)   $ 9,320,741
                                             ===========   ===========   ===========    ===========

</TABLE>


     There were no sales of securities  during the two years ended September 30,
1997 and 1996.

                                       28
<PAGE>
                                                                      
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 2.          Debt and Equity Securities - (continued)

                 The  amortized   cost  and  estimated   market  value  of  debt
                 securities at September 30, 1997, by contractual maturity,  are
                 shown below.  Mortgage-backed  securities  have been aggregated
                 and disclosed  separately,  rather than  allocated over several
                 maturity groupings,  since they lack a single maturity date and
                 because borrowers retain the right to prepay the obligation.

<TABLE>
<CAPTION>
                                                  Held-to-Maturity           Available-for-Sale
                                              -------------------------   -------------------------
                                               Estimated                    Estimated
                                               Amortized      Fair         Amortized       Fair
                                                  Cost        Value           Cost         Value
                                              -----------   -----------   -----------   -----------

                 <S>                          <C>           <C>           <C>           <C>        
                 Due in one year or less      $        --   $        --   $ 5,200,006   $ 5,214,434
                 Due from one to five years            --            --     2,510,207     2,528,845
                 Due from five to ten years            --            --       501,291       501,961
                 Due after ten years                   --            --       355,347       345,770
                                              -----------   -----------   -----------   -----------
                 
                     Subtotal                          --            --     8,566,851     8,591,010
                 
                 Mortgage-backed securities     2,650,466     2,715,314     2,401,673     2,413,311
                                              -----------   -----------   -----------   -----------
                 
                     Total                    $ 2,650,466   $ 2,715,314   $10,968,524   $11,004,321
                                              ===========   ===========   ===========   ===========
                 
</TABLE>
                 

Note 3.          Loans Receivable

                 Loans  receivable at September 30, 1997 and 1996 consist of the
                 following:

<TABLE>
<CAPTION>
                                                                 1997            1996
                                                             ------------    ------------

               <S>                                           <C>             <C>         
                 Secured by 1-4 family residences            $ 39,863,763    $ 37,623,209
                 Secured by other real estate                   2,831,392       3,964,195
                 Construction                                     953,265         626,900
                 Consumer and other                             2,053,921       1,916,165
                 Loans secured by deposits                        212,790         281,115
                                                             ------------    ------------
                 
                     Total loans receivable                    45,915,131      44,411,584
                 
                 Less:
                     Undisbursed portion of mortgage loans       (309,781)       (227,762)
                     Allowance for loan losses                   (861,170)       (877,094)
                     Deferred loan fees                          (269,371)       (236,447)
                                                             ------------    ------------
                 
                     Loans receivable,  net                  $ 44,474,809    $ 43,070,281
                                                             ============    ============
</TABLE>

                 A summary of the activity in the  allowance  for loan losses is
as follows:

                                                       Years ended September 30,
                                                     ---------------------------
                                                           1997        1996
                                                     ------------  -------------

                 Balance, beginning of period        $    877,094  $    962,086
                 Provision for losses                          --         3,725
                 Charge offs                              (17,017)      (92,213)
                 Recoveries                                 1,093         3,496
                                                     ------------- -------------

                 Balance, end of period              $    861,170  $    877,094
                                                     ============= =============


                 In the ordinary course of business, the Association has granted
                 loans  to  certain  executive  officers,  directors  and  their
                 related   interests.   Related   party   loans   are   made  on
                 substantially  the same terms as those  prevailing  at the time
                 for comparable  transactions  with unrelated persons and do not
                 involve  more  than  the  normal  risk of  collectibility.  The
                 aggregate  dollar  amount  of  these  loans  was  approximately
                 $124,000  and   $140,000  at  September   30,  1997  and  1996,
                 respectively.


                                       29

<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 4.          Foreclosed Real Estate

                 Foreclosed real estate acquired in settlement of loans consists
of the following:
                                                         September 30,
                                                       ------------------
                                                        1997       1996
                                                       -------   --------
                 Real estate acquired by foreclosure   $15,700   $15,700
                 Less allowance for losses              15,700    15,700
                                                       -------   -------
                 Foreclosed real estate, net           $    --   $    --
                                                       =======   =======

                 Activity in the allowance for losses on foreclosed  real 
estate is as follows:
                                               Years ended September 30,
                                               -------------------------
                                                 1997            1996
                                               --------      -----------
                 Beginning balance             $ 15,700       $ 25,187
                 Provision charged to income         --             --
                 Charge-offs                         --         (9,487)
                 Recoveries                          --             --
                                               --------       --------
                 Ending balance                $ 15,700       $ 15,700
                                               ========       ========
                 
Note 5.          Loan Servicing

                 Mortgage  loans  serviced  for others are not  included  in the
                 accompanying  consolidated  statements of financial  condition.
                 The unpaid  principal  balance of loans serviced for others was
                 $2,351,000  and  $2,823,000  at  September  30,  1997 and 1996,
                 respectively.

                 Custodial  escrow  balances  maintained in connection  with the
                 foregoing loan servicing,  and included in demand deposits were
                 approximately  $4,700 and  $13,300 at  September  30,  1997 and
                 1996, respectively.

                 Capitalized  mortgage servicing rights included in other assets
                 are summarized as follows:
<TABLE>
<CAPTION>
                                                                     Years Ended September 30,
                                                                     -------------------------
                                                                        1997         1996
                                                                     ----------    -----------
                 <S>                                                  <C>           <C>    
                 Beginning balance, net of accumulated amortization   $11,600       $    --
                 Amounts capitalized                                       --        12,700
                 Amortization                                           2,100         1,100
                 Valuation adjustments                                     --            --
                                                                      -------       -------
                 Balance, end of period                               $ 9,500       $11,600
                                                                      =======       =======
</TABLE>
Note 6.          Accrued Interest Receivable

                 Accrued  interest  receivable at September 30, 1997 and 1996 is
                 summarized as follows:
                                               1997        1996
                                              --------   --------
                 Investment securities        $152,279   $164,382
                 Mortgage-backed securities     38,569     41,500
                 Loans receivable              246,700    244,445
                                              --------   --------
                   Total                      $437,548   $450,327
                                              ========   ========
                                       30
<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
  
Note 7.          Premises and Equipment

                 Premises and  equipment at September 30, 1997 and 1996 consists
                 of the following:

                                                      1997           1996
                                                  -----------    ------------
                 Land                             $    98,840    $    98,840
                 Office building                      797,008        790,702
                 Furniture and equipment              541,618        463,914
                                                  -----------    -----------
                    Total                           1,437,466      1,353,456
                 Less accumulated depreciation       (630,566)      (564,610)
                                                  -----------    -----------
                 Premises and equipment, net      $   806,900    $   788,846
                                                  ===========    ===========

Note 8.          Deposits

                 The aggregate  amount of certificates of deposit with a minimum
                 denomination  of  $100,000  was  approximately  $2,489,000  and
                 $2,434,000  at  September  30,  1997  and  1996,  respectively.
                 Deposited  amounts in excess of  $100,000  per  account are not
                 insured by the Savings Association Insurance Fund.

                 At  September  30,  1997,  the  scheduled  maturities  of  time
                 deposits, for the fiscal years ended, are as follows:

                       1998               $27,624,960
                       1999                 8,424,248
                       2000                    99,744
                       2001                   101,059
                 Thereafter                        --
                                          -----------
                 Total                    $36,250,011
                                          ===========

                 Deposits by related parties were  approximately  $1,014,000 and
                 $803,000 at September 30, 1997 and 1996, respectively.

                 The   Association   provides   collateral   to  various   local
                 governmental  units as required by State statute on savings and
                 certificate  accounts with balances greater than $100,000.  The
                 collateral   pledged   against  these  deposits   consisted  of
                 mortgage-backed  securities totaling $961,363 and $1,101,623 as
                 of September 30, 1997 and 1996, respectively.

Note 9.          Income Taxes

                 Income tax expense (benefit)  applicable to operations  include
                 current and deferred taxes as follows:

                                             Years ended September 30,
                                             -------------------------
                                                 1997       1996
                                             ----------   ------------
                 CURRENT
                    Federal                   $ 279,700   $ 367,539
                    State                        93,750     126,283
                                              ---------   ---------
                       Subtotal                 373,450     493,822
                                              ---------   ---------
                 DEFERRED
                     Federal                     63,310     (89,790)
                     State                       21,102     (29,932)
                                              ---------   ---------
                     Subtotal                    84,412    (119,722)
                                              ---------   ---------
               Total income tax provision     $ 457,862   $ 374,100
                                              =========   =========

                 The State of Minnesota  follows the  Internal  Revenue Code for
                 the   determination   of  taxable  income  in  connection  with
                 temporary differences. The State portion of deferred tax assets
                 and liabilities is approximately 25%.

                                       31
<PAGE>
                                                                     
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 9.          Income Taxes - (continued)

                 Temporary  differences  between  financial  statement  carrying
                 amounts and the tax basis of assets and liabilities that create
                 deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                               September 30,
                                                        ---------------------------
                                                            1997           1996
                                                        -----------    ------------
<S>                                                     <C>            <C>        
Deferred tax assets:
    General loan loss allowance                         $   278,044    $   350,838
    Deferred loan fees                                      107,748         94,579
    Deferred compensation                                   140,875        129,278
    Accrual adjustments                                      16,847             --
    SAIF assessment                                              --        145,023
                                                        -----------    -----------
                                                            543,514        719,718
    Less valuation allowance                                (68,679)      (162,000)
                                                        -----------    -----------

    Subtotal                                                474,835        557,718
                                                        -----------    -----------

Deferred tax liabilities:
    Excess tax reserves                                     115,768        115,768
    Unrealized gains on available-for-sale securities       740,337        135,494
    FHLB stock dividends                                     99,680         99,680
    Mortgage servicing assets                                 3,800          4,644
    Depreciation and basis adjustment                        40,604         38,229
                                                        -----------    -----------

    Subtotal                                              1,000,189        393,815
                                                        -----------    -----------

Net deferred tax (liability) asset                      $  (525,354)   $   163,903
                                                        ===========    ===========
</TABLE>

                 The  Association  has  paid  sufficient  income  taxes in prior
                 carryback years which would enable it to recover the balance of
                 the net deferred tax assets, therefore, no additional valuation
                 allowance was required at September 30, 1997 and 1996.

                 Actual income tax expense  varied from  "expected"  tax expense
                 (computed  by  applying  the United  States  federal  corporate
                 income  tax rate of 34  percent to  earnings  before  taxes) as
                 follows:

<TABLE>
<CAPTION>

                                                                      Years ended September 30,
                                                                      -------------------------
                                                                        1997            1996
                                                                      ---------       ---------
                 
                <S>                                                  <C>             <C>      
                 Computed "expected" tax expense:                     $ 407,000       $ 317,200
                 Increase (reduction) in income tax resulting from:
                    State income taxes, net of federal tax benefit       76,000          63,600
                    Other (net)                                         (25,138)         (6,700)
                                                                      ---------       ---------
                 
                 Total income tax expense                             $ 457,862       $ 374,100
                                                                      =========       =========
</TABLE>
                 
                 Savings  and  loan   associations   were  allowed  a  bad  debt
                 deduction, in determining income tax for tax purposes, based on
                 specified experience formulas or a percentage of taxable income
                 before  such  deduction.  On August 21,  1996  legislation  was
                 signed into law which repealed the percentage of taxable income
                 method for the tax bad debt deduction.  The repeal is effective
                 for the  Association's  taxable year beginning October 1, 1996.
                 In  addition,  the  legislation  requires  the  Association  to
                 include in taxable  income its tax bad debt  reserves in excess
                 of its  base  year  reserves  (pre-1988  reserves)  over a six,
                 seven,  or eight year period  depending  upon the attainment of
                 certain  loan  origination  levels.  Since  the  percentage  of
                 taxable  income  method for the tax bad debt  deduction and the
                 corresponding increase in the tax bad debt reserve in excess of
                 base year have been  recorded as  temporary  differences,  this
                 change in the tax law will not effect the  Company's  statement
                 of operations.

                 Retained earnings at September 30, 1996, includes approximately
                 $1,459,000 of pre-1988  reserves,  for which no deferred income
                 tax liability,  approximately  $584,000,  has been  recognized.
                 This  amount  represents  an  allocation  of income to bad debt
                 deductions  for tax  purposes  only.  Reduction  of  amounts so
                 allocated  for  purposes  other  than  tax bad debt  losses  or
                 adjustments from carryback of net operating losses would create
                 income for tax  purposes  only,  which  would be subject to the
                 then current corporate income tax rate.

                                       32

<PAGE>

                                                                
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 10.         Employee Benefit Plans

                 Salary Continuation Plan
                 The  Association  has  adopted a  directors'  consultation  and
                 retirement  plan.  Benefits  related to services  are  expensed
                 under the plan vesting  schedule.  The  Association  adopted an
                 insured   executive   supplemental   retirement  plan  and  the
                 estimated  benefits will be accrued over the expected remaining
                 years of employment.  The compensation expense related to these
                 plans  amounted  to $31,663  and  $29,892  for the years  ended
                 September 30, 1997 and 1996, respectively.

                 Salary Reduction Plan
                 The Association maintains a salary reduction plan (401(k) Plan)
                 which  covers  qualifying  all  full  time  employees.  Company
                 contributions are determined anually by the Board of Directors.
                 The Company's  expense related to this plan was $-0- and $1,042
                 for the years ended September 30, 1997 and 1996, respectively.

                 Employee Stock Ownership Plan
                 The  Association  established an Employee Stock  Ownership Plan
                 (ESOP) covering all employees over the age of 21, with at least
                 one year of service who work at least  1,000  hours  during the
                 plan year. The ESOP borrowed funds from the Company to purchase
                 a total of 80,639  shares of the Company's  common  stock.  The
                 loan is  collateralized  by the common stock.  Contributions by
                 the  Association  are used to repay the loan with shares  being
                 released  from  the  Company's  lien  proportional  to the loan
                 repayment.  Annually,  on December 31, the released  shares are
                 allocated to the  participants  in the same proportion as their
                 wages   bear  to  the   total   compensation   of  all  of  the
                 participants.

                 The Company  presents these financial  statements in accordance
                 with  the  AICPA   Statement   of  Position   (SOP)  No.  93-6,
                 "Employers' Accounting for Employee Stock Ownership Plans." The
                 price of the  shares  issued  and  unreleased  are  charged  to
                 unearned  compensation,  a  contra-equity  account,  and shares
                 released  are  reported as  compensation  expense  equal to the
                 current  market value price of the released  shares.  Dividends
                 paid on allocated  shares are charged to retained  earnings and
                 those on unallocated shares are charged to expense.

                 The following table presents the components of the ESOP shares:



                                                     September 30,
                                                  -------------------
                                                    1997       1996
                                                  --------   --------
                 
                 Allocated shares                   16,128      8,064
                 Commited to be released shares      6,048      6,048
                 Unreleased shares                  58,463     66,527
                                                  --------   --------
                 Total ESOP shares                  80,639     80,639
                                                  ========   ========
                 Fair value of unreleased shares  $993,871   $848,219
                                                  ========   ========
                 Compensation expense recorded    $105,127   $ 94,003
                                                  ========   ========


                 Management  Stock Bonus Plan (MSBP)
                 The Company has adopted a MSBP for directors and  management to
                 enable the  Association to attract and retain  experienced  and
                 capable personnel in key positions of  responsibility.  A total
                 of 29,224 shares were awarded in the form of  restricted  stock
                 payable over a five year vesting  period and 11,095 shares were
                 reserved  for future  awards.  The  Company  acquired  the MSBP
                 shares in fiscal 1996 in an open  market  purchase at a cost of
                 $458,629, which was initially recorded as unearned compensation
                 in  a  contra   shareholders'   equity  account.   The  Company
                 recognizes  compensation  expense  pro rata  over  the  vesting
                 period  which  amounted  to $66,663 and $66,487 for fiscal 1997
                 and 1996, respectively.


                                       33

<PAGE>                                                              
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 10.         Employee Benefit Plans - (continued)

                 Stock Option Plan
                 In September, 1995 the Company adopted a stock option plan, the
                 1995  Stock  Option  Plan  (the  SOP).  During  1995,   options
                 exercisable  for 73,072  shares of the  Company's  common stock
                 were granted to certain  officers and  directors at an exercise
                 price of $11.375 per share.  The options  vest over a five year
                 period and may be exercised  within 10 years of the grant date.
                 In January  1997, a second  option plan,  the 1997 Stock Option
                 and Incentive Plan was adopted.  In 1997,  options  exercisable
                 for 63,636 shares of the Company's common stock were granted to
                 certain  officers and directors at an exercise  price of $13.00
                 per share.  The options  vest over a two year period and may be
                 exercised  within  10  years of the  grant  date.  All  options
                 granted in the 1997 Stock Option Plan have dividend  equivalent
                 rights associated with such options.

                 The Company uses the intrinsic value method as described in APB
                 Opinion No. 25 and related  interpretations  to account for its
                 stock incentive plans.  Accordingly,  no compensation  cost has
                 been recognized for the fixed option plan. There are no charges
                 or credits to expense  with respect to the granting or exercise
                 of options  since the options  were issued at fair value on the
                 respective grant dates. Had compensation cost for the Company's
                 stock-based  plans been  determined in accordance with the fair
                 value method  recommended  by SFAS No. 123, the  Company's  net
                 income and  earnings  per share would have been  reduced to the
                 proforma amounts indicated below:
<TABLE>
<CAPTION>
                                                                            1997       1996
                                                                          --------   -------- 
                <S>                                                      <C>        <C>     
                 Net income:
                       As reported                                        $739,715   $558,768
                       Pro forma                                           614,602    519,471
                 Earnings per common share and common share equivalent:
                       As reported                                        $   0.96   $   0.66
                       Pro forma                                              0.82       0.61
</TABLE>
                 The above disclosed pro forma effects of applying SFAS No. 123,
                 to compensation costs, may not be representative of the effects
                 on reported pro forma net income for future years.

                 The fair value for each option  grant is  estimated on the date
                 of  the  grant  using  the  Black  Scholes  Model.   The  model
                 incorporates the following assumptions:

                                               1997          1996
                                              ------        ------
                 Risk-free interest rate       5.60%         6.08%
                 Expected life                10 Yrs.       10 Yrs.
                 Expected volatility          19.00%        20.00%
                 Expected dividends            2.00%         None

                 The fair value of the granted 1995 options  granted in 1995 was
                 $4.48 per option. The fair value of the options granted in 1997
                 was $3.51 per options. A summary of stock option activity under
                 the SOP's are detailed below:
                                                                       Weighted 
                                              Options                   Average 
                                              Available   Options      Exercise
                                              For Grant  Outstanding    Price
                                              ---------  ----------- -----------
                 September 30, 1994               None        None            --
                 Plan adopted                  100,799          --   $    11.375
                 Granted September 27, 1995    (73,072)     73,072        11.375
                                                -------    -------   -----------
                 September 30, 1995             27,727      73,072        11.375
                 Exercised                          --          --            --
                 Forfeited                          --          --            --
                                                -------    -------   -----------
                 September 30, 1996             27,727      73,072        11.375
                 Plan adopted                   87,771          --        13.000
                 Granted January 22, 1997      (63,636)     63,636        13.000
                 Exercised                          --          --            --
                 Forfeited                          --          --            --
                                               -------     -------   -----------
                 September 30, 1997             51,862     136,708   $    12.131
                                                ======     =======   ===========
                                       34
<PAGE>
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 10.         Employee Benefit Plans - (continued)

                 The following table summarizes  information about stock options
outstanding at September 30, 1997:
<TABLE>
<CAPTION>
                                        Options Outstanding                                  Options Exercisable
                     ----------------------------------------------------------     ---------------------------------------
                                                               Weighted Avg.
                                                                 Remaining
                              Number            Exercise        Contractual
                            Outstanding           Price        Life In Years             Number                 Price
                     ----------------------------------------------------------     ---------------------------------------
<S>                           <C>                <C>             <C>                     <C>                   <C>    
                               73,072            $11.375         8.0 Yrs.                29,224                $11.375
                               63,636            $13.000         9.1 Yrs.                31,813                $13.000
                              -------                                                    ------
                              136,708                                                    61,037
                              =======                                                    ======
</TABLE>

Note 11.         Commitments

                 Loans serviced for FNMA, in the amount of $480,474 at September
                 30,  1997,  were sold  subject  to  recourse  provisions  which
                 require  the   Association  to  buy  back  any  loan  which  is
                 delinquent  more than ninety days.  The  Association  also sold
                 loans and  related  servicing  subject to  recourse  provisions
                 which  expire  in  March  1998 in the  amount  of  $910,350  at
                 September 30, 1997. The Association has not incurred any losses
                 on loans sold with recourse provisions.

Note 12.         Financial Instruments

                 The  Association  is a  party  to  financial  instruments  with
                 off-balance sheet risk in the normal course of business to meet
                 the  financing   needs  of  its  customers.   These   financial
                 instruments  are  commitments to extend credit and involve,  to
                 varying  degrees,  elements  of  credit  risk in  excess of the
                 amount recognized on the balance sheet.

                 The  Association's  exposure  to  credit  loss in the  event of
                 nonperformance  by the other party to the financial  instrument
                 for   commitments  to  extend  credit  is  represented  by  the
                 contractual amount of those  instruments.  The Association uses
                 the same credit  policies in making  commitments as it does for
                 on-balance sheet instruments.

                 Commitments  to  extend  credit  are  agreements  to  lend to a
                 customer  as long as there  is no  violation  of any  condition
                 established in the contract.  Commitments  generally have fixed
                 expiration dates or other  termination  clauses and may require
                 payment of a fee.  Commitments to extend credit which represent
                 credit risk totaled $660,750 for loans ($481,650 at fixed rates
                 and $179,100 at adjustable  rates) and $1,292,196  unused lines
                 of credit at September 30, 1997.

                 Commitments to sell loans amounted to $237,300 at September 30,
1997.

                 The   estimated   fair  values  of  the   Company's   financial
                 instruments are as follows:
<TABLE>
<CAPTION>
                                                       September 30, 1997           September 30, 1996
                                                  --------------------------     --------------------------
                                                    Carrying         Fair         Carrying          Fair
                 Financial assets:                   Amount          Value         Amount           Value
                                                  -----------    -----------     -----------   ------------  
                 <S>                              <C>            <C>             <C>           <C>        
                     Cash and cash equivalents    $ 1,104,594    $ 1,104,594     $ 2,583,654   $42,583,654
                     Investment securities         20,368,810     20,433,657      21,529,237    21,555,886
                     FHLB stock                       650,700        650,700         650,700       650,700
                     Loans receivable              44,610,359     46,246,918      43,248,944    44,201,216
                     Accrued interest receivable      437,548        437,548         450,327       450,327
                 Financial liabilities:
                     Deposits                      55,183,587     55,209,196      56,531,194    56,538,374
                     Advance payments
                       by borrowers (escrows)         107,038        107,038         138,530       138,530
</TABLE>
                                       35
<PAGE>
                                                               
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)


Note 13.         Significant Geographic Concentration of Credit Risk

                 A significant portion of the Association's loans receivable are
                 to  borrowers  located  in  Little  Falls,  Minnesota,  and the
                 surrounding counties. This geographic concentration amounted to
                 approximately 95% of the total loans receivable balance for the
                 years ended September 30, 1997 and 1996.

Note 14.         Stockholders Equity and Regulatory Matters

                 On March 23,  1995,  the  Association  converted  from a mutual
                 association  to a  stock  association  pursuant  to a  Plan  of
                 Conversion,  (the Conversion) via the issuance of common stock.
                 In conjunction with the Conversion,  the Company sold 1,007,992
                 shares of common stock which,  after giving  effect to offering
                 expenses of $471,714,  resulted in net proceeds of $7.6 million
                 which  included  an order  for  20,159  shares  of stock in the
                 amount of  $161,272  from the  Employee  Stock  Ownership  Plan
                 (ESOP). Pursuant to the Conversion, the Association transferred
                 all of its outstanding  shares to its newly  organized  holding
                 company.  On March 24, 1995 the Association's ESOP purchased an
                 additional  60,480 shares in the open market,  in the amount of
                 $529,200.  The ESOP's purchases were funded through a loan from
                 the Company.

                 Upon the Conversion,  the preexisting liquidation rights of the
                 mutual stock  association  members were unchanged.  Such rights
                 will be  accounted  for by the  Company for the benefit of such
                 depositors in proportion to their  liquidation  interests as of
                 either  the  Eligibility   Record  Date  or  the   Supplemental
                 Eligibility Record Date as defined in the Conversion.

                 Subsequent  to the  Conversion,  neither  the  Company  nor the
                 Association  may declare or pay cash  dividends on any of their
                 shares  of  common  stock  if the  effect  would  be to  reduce
                 shareholders'   equity  below  applicable   regulatory  capital
                 requirements or if such  declaration of payment would otherwise
                 violate regulatory requirements.

                 The  Association  is  subject  to  various  regulatory  capital
                 requirements  administered by the Office of Thrift  Supervision
                 (OTS).   Failure  to  meet  minimum  capital  requirements  can
                 initiate   certain   mandatory   -  and   possible   additional
                 discretionary  - actions by  regulators  that,  if  undertaken,
                 could  have a  direct  material  effect  on  the  Association's
                 financial statements. Under capital adequacy guidelines and the
                 regulatory   framework  for  prompt  corrective   action,   the
                 Association must meet specific capital  guidelines that involve
                 quantitative measures of the Association's assets,  liabilities
                 and  certain   off-balance  sheet  items  as  calculated  under
                 regulatory  accounting  practices.  The  Association's  capital
                 amounts  and  classification  are also  subject to  qualitative
                 judgements by the regulators about components,  risk weightings
                 and other factors.

                 Quantitative  measures  established  by  regulation  to  ensure
                 capital  adequacy  require the Association to maintain  minimum
                 amounts and ratios (set forth in the following  table) of total
                 and  Tier  1  capital  (as  defined  in  the  regulation),   to
                 risk-weighted assests (as defined),  and of tangible and Tier 1
                 capital (as  defined) to adjusted  total  assets (as  defined).
                 Management  believes,  as  of  September  30,  1997,  that  the
                 Association meets all of capital adequacy requirements to which
                 it is subject.

                 As of September 30, 1997 and 1996, the most recent notification
                 from the OTS categorized  the Association as "well capitalized"
                 under the regulatory framework for prompt corrective action. To
                 be  categorized  as  well   capitalized  the  Association  must
                 maintain minimum total  risk-based,  Tier 1 risk-based,  Tier 1
                 leverage  ratios  as set  forth  in  the  table.  There  are no
                 conditions or events since that  notification  that  management
                 believes have changed the Association's category.



                                       36

<PAGE>





                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 14.        Stockholders Equity and Regulatory Matters - (continued)

                The  Association's  actual  regulatory  capital  amounts,   with
                reconcilation  to  the  Company's  capital   investment  in  the
                Association  determined in accordance  with  generally  accepted
                accounting  principles  (GAAP),  and ratios as of September  30,
                1997 and 1996,  are also  presented in the following  tables (in
                thousands):
<TABLE>
<CAPTION>
                                                                                                                   To Be Well
                                                                                                                Capitalized Under
                                                                                          For Capital           Prompt Corrective
                                                              Actual                    Adequacy Purposes        Action Provision
                                                        -------------------------    ----------------------  -----------------------
                                                           Amount      Percent        Amount      Percent       Amount       Percent
                                                        ------------  -----------    ----------  ----------  ------------  ---------
<S>                                                     <C>                  <C>     <C>           <C>       <C>           <C>  
                GAAP capital,
                     September 30, 1997                  $   11,998
                Less: Unrealized gains on
                   securities available-for-sale             (1,111)
                Excess mortgage servicing rights                 (1)
                                                        ------------
                Tangible capital and ratio
                   to adjusted total assets             $    10,886          16.3%   $   1,000     1.50%
                                                        ------------  -----------    ----------  ----------  
                Tier 1 (Core) capital and ratio                                      
                  to adjusted total assets              $    10,886          16.3%   $   2,000     3.0%      $     3,335       5.0%
                                                        ------------  -----------    ----------  ----------  ------------  ---------
                Tier 1 capital and ratio                                             
                  to risk-weighted assets               $    10,886          31.9%   $   1,365     4.0%      $     2,047       6.0%
                                                        ------------  -----------    ----------  ----------  ------------  ---------
                Tier 2 capital, allowance                                            
                  for loan losses                               432                  
                                                        ------------ 
                Total risk-based capital and                                         
                  ratio to risk-weighted                                             
                  assets, September 30, 1997            $    11,318          33.2%   $   2,730     8.0%      $     3,412      10.0%
                                                        ============  ===========    ==========  ==========  ============  =========
</TABLE>
                                                                      
                                                                       
<TABLE>
<CAPTION>
                                                                                                                  To Be Well
                                                                                                                Capitalized Under
                                                                                           For Capital          Prompt Corrective
                                                              Actual                    Adequacy Purposes        Action Provision
                                                        -------------------------    ----------------------  -----------------------
                                                           Amount      Percent        Amount      Percent       Amount       Percent
                                                        ------------  -----------    ----------  ----------  ------------  ---------
<S>                                                     <C>                  <C>     <C>           <C>       <C>           <C>      
                GAAP capital,                                                        
                     September 30, 1996                  $   10,643                  
                Less: Unrealized gains on                                            
                   securities available-for-sale               (238)                 
                Excess mortgage servicing rights                 (1)                 
                                                        ------------                 
                Tangible capital and ratio                                           
                   to adjusted total assets             $    10,404          14.9%   $   1,046     1.50%
                                                        ------------  -----------    ----------  ----------  
                Tier 1 (Core) capital and ratio                                      
                  to adjusted total assets              $    10,404          14.9%   $   2,092     3.0%      $     3,487       5.0%
                                                        ------------  -----------    ----------  ----------  ------------  ---------
                Tier 1 capital and ratio                                             
                  to risk-weighted assets               $    10,404          30.5%   $   1,366     4.0%      $     2,049       6.0%
                                                        ------------  -----------    ----------  ----------  ------------  ---------
                Tier 2 capital, allowance                                            
                  for loan losses                               430                  
                                                        ------------ 
                Total risk-based capital and                                         
                  ratio to risk-weighted                                             
                  assets, September 30, 1996            $    10,834          31.7%   $   2,733     8.0%      $     3,416      10.0%
                                                        ============  ===========    ==========  ==========  ============  =========
</TABLE>
                                                                   
                                       37
<PAGE>                                                        
                                                       
                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY       
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)   
                                                                    
Note 15.        Effects of New Financial Accounting Standards      
                                                                     
                SFAS  No. 128,  "Earnings  Per  Share" - issued  February  1997,
                establishes  standards for computing and presenting earnings per
                share (EPS). It simplifies prior standards by replacing  primary
                earnings per share with basic earnings per share and by altering
                the  calculation  of diluted EPS,  which  replaces fully diluted
                EPS. SFAS No. 128 is effective for financial  statements  issued
                after December 15, 1997, including interim periods.

                SFAS No. 130,  "Reporting  Comprehensive Income" - issued   June
                1997,   establishes   standards  for  reporting  and  displaying
                comprehensive  income  and  its  components  in  general-purpose
                financial  statements.  Comprehensive income includes net income
                and  several  other  items  that  current  accounting  standards
                require to be recognized  outside of net income.  This statement
                requires  entities  to  display  comprehensive  income  and  its
                components in the financial  statements with presentation of the
                accumulated  balances of other comprehensive  income reported in
                stockholders'  equity  separately  from  retained  earnings  and
                additional paid-in capital. SFAS No. 130 is effective for fiscal
                years  beginning  after December 15, 1997.  Reclassification  of
                financial  statements for earlier periods that are presented for
                comparative purposes is required.

                SFAS No. 131,  "Disclosures  about  Segments of  Enterprise  and
                Related  Information"  -  issued  June  1997,  requires   public
                business enterprises to report information about their operating
                segments  in  a  complete   set  of  financial   statements   to
                shareholders.  This statement  also requires  entities to report
                enterprise-wide  information  about their products and services,
                their  activities  in  different  geographic  areas,  and  their
                reliance on major customers. Certain segment information is also
                to be reported in interim  financial  statements.  The basis for
                determining an enterprise's  operating segments is the manner in
                which management operates the business. Specifically,  financial
                information  is  required to be reported on the basis that it is
                used internally by the  enterprise's  chief  operating  decision
                maker in making  decisions  related to resource  allocation  and
                segment  performance.  SFAS No. 131 is effective  for  financial
                statements for years beginning after December 31, 1997.

                Management believes adoption of the  above-described  Statements
                will not have a material  effect on  financial  position and the
                results of  operations,  nor will  adoption  require  additional
                capital resources.

Note 16.        Parent Only Condensed Financial Information

                This  information  should be read in conjunction  with the other
                Notes to Consolidated  Financial  Statements.  On March 23, 1995
                the Company issued $7.6 million of common stock and  contributed
                one-half  of the  net  proceeds  to the  Association  as  equity
                capital.  Shareholders'  equity  differs  from the  consolidated
                statements   primarily  by  the  amount  of  consolidating  ESOP
                adjustments.

                        STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>

                                                                        September 30,
                                                           -------------------------------
                                                                  1997             1996
                                                            ------------       -----------
                       ASSETS
<S>                                                          <C>               <C>        
Cash and cash equivalents                                    $    24,203       $    61,525
Investment in Association subsidiary                          11,998,136        10,642,889
Loan to Association subsidiary                                    65,000         1,725,000
Loan to Association ESOP                                         542,056           609,813
Tax benefit due from subsidiary                                   40,781            33,235
                                                             -----------       -----------

Total                                                        $12,670,176       $13,072,462
                                                             ===========       ===========

             LIABILITIES AND SHAREHOLDERS EQUITY

Other liabilities                                            $   111,961       $    70,210

Shareholders' equity                                          12,558,215        13,002,252
                                                             -----------       -----------

Total                                                        $12,670,176       $13,072,462
                                                             ===========       ===========
</TABLE>


                                       38
<PAGE>

                 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Note 16.        Parent Only Condensed Financial Information - (continued)

                               STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                                 For the Year Ended September 30,
                                                                  -----------------------------
Interest from:                                                         1997           1996
                                                                  -------------   -------------
<S>                                                                <C>            <C>        
  Association's subsidiary loan                                    $    80,148    $   151,949
  Association's ESOP loan                                               47,137         54,101
  Dividends from Association subsidiary                                450,000        200,000
                                                                   -----------    -----------

  Total income                                                         577,285        406,050
Expenses:

  Non-interest expenses                                                272,672        234,402
  Income tax (benefit)                                                 (58,435)       (11,679)
                                                                   -----------    -----------

  Total expenses                                                       214,237        222,723
                                                                   -----------    -----------

Income before equity in undistributed net income of
  Association subsidiary                                               363,048        183,327

Equity in undistributed net income of
  Association subsidiary                                               828,442        577,217
                                                                   -----------    -----------

Net income                                                         $ 1,191,490    $   760,544
                                                                   ===========    ===========
</TABLE>


               STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                For the Year Ended September 30,
                                                                --------------------------------
                                                                      1997           1996
                                                                   -----------    ------------
<S>                                                                <C>            <C>        
  Net income                                                       $ 1,191,490    $   760,544
  Adjustments:
      Equity in undistributed net income of subsidiary                (828,442)      (577,217)
      ESOP fair value adjustment, net of taxes                          26,768         15,426
      Increase in income tax benefit due from subsidiary                (3,499)       (33,235)
      Increase in deferred income taxes                                 (4,047)            --    
      (Decrease) in accrued income taxes                                  --             (160)
      Increase in other liabilities                                     41,750         70,210
                                                                     -----------  ----------- 
  Net cash provided by operations                                      424,020        235,568
                                                                     -----------  -----------

  Cash flows from investing activities:
      Subsidiary loan proceeds                                       1,660,000      1,375,000
      Purchase of treasury stock                                    (2,068,422)    (1,536,689)
                                                                     -----------  -----------
  Net cash used in investing activities                               (408,422)      (161,689)
                                                                     -----------  -----------

  Cash flows from financing activities:
      Payment of cash dividend                                        (120,677)      (141,804)
      Principal received on ESOP loan                                   67,757         80,660
                                                                     -----------  -----------
  Net cash used in financing activities                                (52,920)       (61,144)
                                                                     -----------  -----------
  (Decrease) increase in cash and cash equivalents                     (37,322)       (12,735)

  Cash and cash equivalents
      Beginning of year                                                 61,525         48,790
                                                                     -----------  -----------
      End of year                                                  $    24,203    $    61,525
                                                                   ===========    ===========
</TABLE>

                                       39



<PAGE>

                                OFFICE LOCATIONS

                        MISSISSIPPI VIEW HOLDING COMPANY
                                35 East Broadway
                          Little Falls, Minnesota 56345
                                 (320) 632-5461

                 COMMUNITY FEDERAL SAVINGS AND LOAN ASSOCIATION
                                 OF LITTLE FALLS
                                35 East Broadway
                          Little Falls, Minnesota 56345
                                 (320) 632-5461

             Board of Directors of Mississippi View Holding Company
                                       and
         Community Federal Savings and Loan Association of Little Falls

                               Wallace R. Mattock
                              Chairman of the Board
                               (rotated annually)

              Neil Adamek                         Thomas J. Leiferman

              Gerald Peterson                     Peter Vogel


             Executive Officers of Mississippi View Holding Company
                                       and
          Community Federal Savings & Loan Association of Little Falls

                               Thomas J. Leiferman
                      President and Chief Executive Officer

    Larry D. Hartwig                       Mary Ann Karnowski
    Vice President                         Vice President

                             -----------------------
    Corporate Counsel                      Independent Auditors
    Rosenmeier Anderson & Vogel            Bertram Cooper & Co., LLP
    210 Second Street, N.E.                110 Second Avenue, S.E.
    Little Falls, Minnesota   56345        Waseca, Minnesota  56093

    Special Counsel                        Transfer Agent and Registrar Company
    Malizia, Spidi, Sloane & Fisch,P.C.    Registrar and Transfer
    One Franklin Square                    10 Commerce Drive
    1301 K Street, N.W., Suite 700 East    Cranford, New Jersey  07016
    Washington D.C.  20005                 (908) 272-8511

                            ------------------------

The Company's  Annual Report for the year ended  September 30, 1997,  filed with
the  Securities  and Exchange  Commission  on Form 10-KSB is  available  without
charge upon written request. For a copy of the Form 10-KSB or any other investor
information,  please  write or call  Larry D.  Hartwig,  Vice  President  at the
Company's Office in Little Falls, Minnesota.  The Annual Meeting of Shareholders
will be held on January 21, 1998, at 10:00 a.m. at the office of the Company.


                                       40