Table of Contents
--------------------------------------------------------------------------------

Section 1

   Letter to Shareholders .........................................          1

   Selected Consolidated Financial Data ...........................          2

   Management's Discussion and Analysis of Financial
      Condition and Results of Operations..........................          3

Section 2

   Report of Independent Auditors .................................         15

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

   Consolidated Balance Sheets ....................................         16

   Consolidated Statements of Income ..............................         17

   Consolidated Statements of Changes
       in Shareholders' Equity ....................................         18

   Consolidated Statements of Cash Flows ..........................         20

   Notes to Consolidated Financial Statements .....................         22


Annual Meeting

   The Annual Meeting of  Shareholders  is scheduled for Wednesday,  October 28,
   1998 at 10:00 a.m.,  at the Grand Rapids Elks Lodge,  located at 2715 Leonard
   Street, N.W., Grand Rapids, Michigan.


[GRAPHIC-LOGO FOR BANK WEST FINANCIAL CORPORATION]
<PAGE>
   Letter to Shareholders
--------------------------------------------------------------------------------

   In this report to our  shareholders  I will attempt to clarify  where we have
been, where we are and where we are going.

   Since March of 1995 we have been attempting to change this  organization from
a  traditional  savings and loan to a full  service  community  bank which would
offer new products and services for our  customers  and provide for the greatest
possible  return to our  shareholders.  Our plan calls for a highly  skilled and
dedicated staff with a strong emphasis on customer service.  To accomplish this,
we formed a five-year  strategic  plan utilizing a building block strategy which
has been  implemented.  The strategy calls for a shift from total  dependence on
single-family loans to one of diversification which is reflected by consumer and
commercial loan growth,  with balances of  approximately  $19.7 million and $9.7
million,  respectively,  at June 30, 1998. Our current  strategy also produced a
30% increase in total assets since 1995,  which currently stand at approximately
$181 million.

   The confidence  exhibited by our customers and our  stockholders is reflected
in our growth in assets and our improving  franchise  value.  That confidence is
much  appreciated  and the  appreciation is manifested in the fact that at every
level of the company we are committed to generating  and  maintaining  long-term
relationships.  We are also  committed  to providing  profitability  by offering
premier services and programs and at the same time managing our resources in the
most efficient manner possible.

   On the deposit  side,  our  concentration  has  shifted  from  dependence  on
certificates of deposits to more reasonably priced funds.  Since 1995,  checking
account  balances have increased  from $4.1 million to $11.4 million,  and total
deposits increased from $85.2 million to $120 million.

   In the past year total assets increased nearly 17%, loan volume increased 49%
and our deposit base increased 17%. The profitability  generated from the record
loan production  volume has been offset by the fact that nearly 50% of the loans
we produced in the last fiscal year were refinances.  Pre-payment  penalties are
now part of the  adjustable  loan  instrument  (ARM) and should  help us control
future refinancing of these loans.

   In the  next  year our  primary  goal  will be to  improve  the  value of our
franchise  through market  expansion and full utilization of the products we now
offer, relying on our building block strategy.  We intend to concentrate on cost
control and improve our  significant  ratios by attaining the goals we have set.
We have completed the majority of human resource  additions which were necessary
to support the continued growth of the franchise.

   One  significant  event  which will have an impact on all  businesses  is the
coming of the new  millennium.  Making  sure  that the Bank is Year  2000  (Y2K)
compliant is an assignment  no financial  institution  can ignore.  Adherence to
regulatory requirements,  internal training and testing,  external testing and a
customer information program are all elements of Bank West's Y2K program.

   Our  directors,  management  and staff want to thank you for your  continuing
confidence.  We will always remain mindful of our mission to enhance shareholder
value and to provide quality service that will meet your expectations. With this
in mind, we look forward to fiscal year 1999.

                                                              Sincerely,



                                                             /s/Paul W. Sydloski
                                                             -------------------
                                                                Paul W. Sydloski
                                                                President/CEO

                                                                               1
<PAGE>
<TABLE>
<CAPTION>
Selected Consolidated Financial Data
--------------------------------------------------------------------------------
                  (Dollars in thousands except per share data)



                                                    1998          1997          1996          1995          1994
----------------------------------------------------------------------------------------------------------------- 
<S>                                              <C>           <C>           <C>           <C>           <C>     
Summary of Operations

Net interest income                              $  4,937      $  4,279      $  4,158      $  3,185      $  2,861
Provision for loan losses                              81            60            60            21            25
Other income                                        1,012         1,554         1,202           270           226
One-time special SAIF assessment                     --             551          --            --            --
Other expenses                                      4,585         3,821         3,469         2,352         2,045
Income taxes                                          453           478           622           366           337
Net income                                            830           923         1,208           716           680

Balance Sheet Data

Total assets                                     $181,469      $155,675      $137,982      $139,648      $106,594
Cash and cash equivalents                           4,206         3,673         6,694         4,595         4,923
Securities                                          6,745         3,978         7,422        11,405         4,029
Mortgage collateralized securities                 36,507        25,578        17,341        18,335         3,440
Loans, net                                        118,906       111,530        95,737        95,836        91,329
Loans held for sale                                 8,157         2,231         4,297         2,746         1,282
Deposits                                          119,979       102,862        91,028        85,180        89,960
FHLB advances                                      37,000        29,000        19,000        24,922         5,000
Equity                                             23,275        22,592        26,810        28,171        10,844

Per Share Data(1)

Basic earnings per share(2)                      $    .35      $    .36      $    .39      $    .07          --
Diluted earnings per share(2)                         .33           .36           .39           .07          --
Dividends per share                                   .22           .19           .19          --            --
Book value per share                                 8.87          8.59          8.13          8.11          --

Ratios

Average yield on interest-earning assets             7.74%         7.61%         7.52%         6.97%         6.55%
Average rate on interest-bearing liabilities         5.26          5.15          5.37          4.76          4.12
Average interest spread                              2.48          2.46          2.15          2.21          2.43
Net interest margin                                  3.04          3.12          3.10          2.83          2.86
Return on average assets(3)                           .49           .64           .87           .62           .67
Return on average equity(3)                          3.58          3.89          4.38          4.34          6.38
Efficiency ratio                                    76.34         74.89         68.56         69.56         63.85
Dividend pay-out ratio                              64.96         54.94         49.93          --            --
Average equity to average assets                    13.60         16.42         19.77         14.46         10.57
Non-performing loans as a % of loans, net             .71           .37           .04           .15           .04
</TABLE>
<PAGE>

(1) All per share data has been adjusted for stock splits.

(2) Earnings per share for the year ended June 30, 1995 was computed by dividing
net  income  subsequent  to the  conversion  on March 30,  1995 by the  weighted
average number of shares outstanding subsequent to March 30, 1995.

(3) When  excluding  the  impact of the  government  mandated  one-time  Savings
Association  Insurance  Fund  assessment  of  $364,000,net  of tax, or $0.14 per
share, Return on Average Assets (ROA) equalled .89% and Return on Average Equity
(ROE) equalled 5.43% for fiscal 1997.


2
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
--------------------------------------------------------------------------------

   The following sections are designed to provide a more detailed  discussion of
Bank West  Financial  Corporation's  (the  "Company's")  consolidated  financial
condition and results of operations as well as provide additional information on
the Company's  asset/liability  management strategies,  sources of liquidity and
capital  resources.  Management's  Discussion  and  Analysis  should  be read in
conjunction with the consolidated  financial  statements  contained herein. This
discussion provides  information about the consolidated  financial condition and
results of operations of the Company and its wholly owned subsidiary,  Bank West
("Bank").

   This Annual Report includes  statements  that may constitute  forward-looking
statements,  usually  containing  the words  "believe,"  "estimate,"  "project,"
"expect," "intend" or similar expressions. These statements are made pursuant to
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995. Forward-looking statements inherently involve risks and uncertainties that
could cause  actual  results to differ  materially  from those  reflected in the
forward-looking statements. Factors that could cause future results to vary from
current expectations include, but are not limited to, the following:  changes in
economic  conditions  (both  generally and more  specifically  in the markets in
which Bank West  operates);  changes in  interest  rates,  deposit  flows,  loan
demand,  real estate values and competition;  changes in accounting  principles,
policies or  guidelines  and in government  legislation  and  regulation  (which
change  from time to time and over  which Bank West has no  control);  and other
risks detailed in this Annual Report and in the Company's  other  Securities and
Exchange Commission  filings.  Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's analysis only as
of the date hereof.  The Company  undertakes no  obligation  to publicly  revise
these  forward-looking  statements to reflect events or circumstances that arise
after the date hereof.

General

   Bank  West  Financial  Corporation  is the  holding  company  for Bank  West.
Effective  December 29, 1997,  Bank West  completed its conversion to a Michigan
chartered savings bank.  Substantially all of the Company's assets are currently
held in, and its  operations are conducted  through,  its sole  subsidiary  Bank
West. The Company's business consists primarily of attracting  deposits from the
general  public and using such  deposits,  together  with Federal Home Loan Bank
("FHLB")  advances,   to  make  loans  for  the  purchase  and  construction  of
residential  properties.  To a lesser extent,  the Company also makes commercial
loans and consumer loans.

   The Company's operations and profitability are subject to changes in interest
rates, applicable regulations and general economic conditions,  as well as other
factors beyond the Company's  control.  The  profitability  of Bank West depends
primarily on its net interest income,  which is the difference  between interest
and  dividend  income  on   interest-earning   assets,   principally  loans  and
securities,   and  interest  expense  on  interest-bearing   deposits  and  FHLB
borrowings.  Net interest  income is dependent  upon the level of interest rates
and the extent to which such rates are  changing.  The  Company's  profitability
also is dependent on the level of its other income,  including  gains on sale of
loans in connection  with its mortgage  banking  activities and fees and service
charges.
<PAGE>
   During  December  1997,  the Bank  formed  Sunrise  Mortgage  Corporation,  a
wholly-owned   subsidiary  engaged  to  originate  and  purchase  non-conforming
mortgage loans including  sub-prime  mortgage loans for resale. All of the loans
originated  and purchased have a commitment to sell in place to an investor on a
servicing released basis. Sunrise Mortgage Corporation is expected to break-even
in twelve to eighteen months.

   The  Company's net income was $830,000,  $923,000 and  $1,208,000  for fiscal
1998,  1997 and  1996,  respectively.  Fiscal  1998 net  income  was  positively
impacted  by an  increase  in net  interest  income  through  continued  capital
leveraging  efforts.  This  increase  was  offset  by a  decrease  in  gains  on
securities  and higher  general and  administrative  expenses.  See  "Results of
Operations  for the Year Ended June 30, 1998 Compared to the Year Ended June 30,
1997" section for additional information.  Fiscal 1997 net income was negatively
impacted  by a  $364,000,  net of tax,  or $0.14 per share  government  mandated
special  assessment  to  recapitalize  the Savings  Association

                                                                               3
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

Insurance Fund ("SAIF"),  which is administered by the Federal Deposit Insurance
Corporation  ("FDIC").  See  Note 6 to  consolidated  financial  statements  for
additional information.

Changes in Financial Condition

   Assets.  Total assets  increased by $25.8 million or 16.6% from June 30, 1997
to June 30,  1998.  The increase is  primarily  due to a $10.8  million or 33.2%
increase in  securities as additional  adjustable-rate  collateralized  mortgage
obligations were purchased to partially offset the decline in one-to four-family
adjustable-rate  loans. In addition,  loans increased by $7.4 million or 6.6% as
greater  emphasis was placed on  originating  commercial  and consumer loans for
portfolio  instead of  concentrating  primarily on residential  mortgage banking
activities.  The additional  emphasis on adding the aforementioned loan types to
portfolio  during  fiscal  1998 was in an effort to  diversify  the Bank's  loan
portfolio from its traditional first residential  mortgage business and to react
to increased competitiveness in the residential mortgage banking business. Total
commercial and consumer  loans  increased as a percent of total loans from 14.0%
at the end of fiscal 1997 to 23.1% at the end of fiscal 1998. Management expects
continued  growth in the commercial and consumer loan  portfolios  during fiscal
1999.

   The Bank's mortgage  banking  activities  consist of selling newly originated
and  purchased  loans into the  secondary  market.  Total loans sold amounted to
$45.0  million,  $32.9 million and $45.8 million in fiscal 1998,  1997 and 1996,
respectively.  Loans held for sale  amounted to $8.2  million,  $2.2 million and
$4.3 million at June 30, 1998, 1997 and 1996, respectively. The dollar amount of
loans  sold and  loans  held for sale  increased  in  fiscal  1998 due to higher
refinancing  volume  as a  result  of lower  prevailing  market  interest  rates
compared  to the  prior  fiscal  year  as  well as  increased  loan  origination
personnel.  The majority of loans  originated and purchased for resale have been
30-year fixed-rate loans.

   Mortgage-backed  securities and collateralized mortgage obligations increased
from $25.6  million at June 30, 1997 to $36.5  million at June 30, 1998.  During
fiscal  1998,  the  Bank  purchased  additional  adjustable-rate  collateralized
mortgage  obligations which is consistent with the Bank's strategy of increasing
the  ratio  of  interest-sensitive  assets  to  interest-sensitive  liabilities.
Collateralized  mortgage obligations also were purchased to partially offset the
decline in one-to four-family adjustable-rate mortgage loans. The collateralized
mortgage  obligations  earn  interest  based on either  the prime or the  London
Interbank Offered Rate ("LIBOR")  indexes and reprice monthly.  These securities
were generally  purchased with relatively low weighted average  collateral rates
as compared to current market rates in an effort to minimize prepayment risk.

   Other  securities  classified  as  available  for  sale or held to  maturity,
primarily consisting of U.S. agency securities and equity securities,  increased
from  $4.0  million  at June 30,  1997 to $6.7  million  at June 30,  1998.  The
increase is primarily due to the purchase of equity securities.  In addition, on
May 31, 1998, the Company reclassified securities with a carrying and fair value
of $1.2  million  from the  trading  classification  to the  available  for sale
classification,   to  reflect  management's  intent  to  realize  the  long-term
potential  underlying  such  securities  rather than to benefit from  short-term
changes  in market  values.  The recent  downturn  in the U.S.  equity  markets,
especially  in small cap  stocks,  has had a  negative  impact on the  Company's
remaining  equity  investments.  As a  result,  management  determined  than  an
<PAGE>
other-than-temporary  decline in the market value of certain  equity  securities
occurred totaling $260,000 as of June 30, 1998. Over time,  management  believes
the  market  price of the  Company's  remaining  equity  investments  will reach
estimated values based on underlying fundamentals. At June 30, 1998, the Company
had no remaining trading securities.
 
   Liabilities.  Deposits increased $17.1 million or 16.6% from June 30, 1997 to
June 30, 1998.  The increase in total  deposits was  primarily  attributable  to
growth in  certificates  of deposit of $11.5  million,  or 14.9%,  and growth in
non-interest bearing deposits of $3.0 million or 76.8%.  Certificates of deposit
accounted  for  approxi-

4
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

mately 74% of total  deposits  at June 30, 1998 and  approximately  76% of total
deposits at June 30,  1997.  At June 30, 1998,  $65.4  million or 73.4% of total
certificates  of deposit  mature in one year or less, and $17.2 million or 19.3%
of the total  certificates  of deposit had  balances  of  $100,000 or more.  The
increase in deposits was achieved primarily through continued development of new
and existing commercial and retail account relationships.  In addition, the Bank
has attracted and retained certificates of deposit including  out-of-state jumbo
accounts by offering competitive interest rates.

   Because the growth in deposits has not matched the growth in assets in recent
years,  the Bank began  utilizing  FHLB  advances.  During fiscal 1998, the Bank
increased FHLB advances by $8.0 million. The proceeds of these advances, as well
as  deposit  growth  discussed  above,  were  primarily  used to fund  loan  and
securities growth as well as mortgage banking activities.

   Shareholders' Equity. Shareholders' equity amounted to $23.3 million or 12.8%
of total  assets at June 30, 1998  compared  to $22.6  million or 14.5% of total
assets at June 30,  1997.  The  Company's  trend of  profitability  continued in
fiscal  1998 with the Company  earning  $830,000.  The  primary  change in total
shareholders'  equity  relates  to net  income  offset  by  dividends  and stock
repurchases.

   The cost of shares  issued to the Company's  Employee  Stock  Ownership  Plan
("ESOP") but not yet  allocated to  participants  totaling  $875,000 at June 30,
1998  is  presented  in  the  consolidated  balance  sheet  as  a  reduction  of
shareholders'  equity. The unearned  compensation value of the Company's MRPs at
June 30, 1998 totaling  $361,000  also is shown as a reduction of  shareholders'
equity.

   The  Company's  securities  classified  as available  for sale are carried at
market value,  with unrealized gains or losses reported as a separate  component
of shareholders'  equity, net of federal income taxes. At June 30, 1998, the net
unrealized gain was $5,000,  while at June 30, 1997, the net unrealized gain was
$13,000.

Results of  Operations  for the Year Ended June 30,  1998,  Compared to the Year
Ended June 30, 1997

   Net Income.  Net income for fiscal 1998 was $830,000 or $.35 per basic share,
compared to $923,000 or $.36 per basic share for fiscal 1997.  The Company's net
income  decreased  by  $93,000 or 10.1% in fiscal  1998 from  fiscal  1997.  The
results of operations for fiscal 1997 include a one-time assessment of $364,000,
net of taxes,  or $.14 per share  relating  to  legislation  signed  into law on
September 30, 1996 to recapitalize  the SAIF. Net income for fiscal 1997 without
the SAIF  assessment  would have been $1.3 million or $.50 per share.  On a SAIF
adjusted basis, net income  decreased  $457,000 or 35.5% for the year ended June
30,  1998  compared  to June 30,  1997.  The  decrease  was  primarily  due to a
reduction  of other  income of  $542,000 as a result of less  successful  equity
securities  trading  activities  by $531,000 a write-down  of available for sale
equity securities of $260,000 relating to an other-than-temporary market decline
and an increase in other expenses  (excluding  the one-time SAIF  assessment) of
$764,000,  primarily  due to an increase in  compensation  and  benefits.  These
decreases were partially  offset by growth in net interest income and in gain on
sale of loans of $658,000 and $163,000, respectively.
<PAGE>
   Net income for fiscal 1998  represents a return on average  equity ("ROE") of
3.58%,  a decrease  from 3.89% for fiscal 1997,  and a return on average  assets
("ROA") of .49%, a decrease from .64% for fiscal 1997.
 
   Net Interest Income.  The Company's net income is largely  dependent upon net
interest income. Net interest income is the difference between the average yield
earned on loans,  securities and other earning assets, and the average rate paid
on deposits and FHLB  advances.  Net  interest  income is affected by changes in
volume and  composition  of earning  assets  and  interest-bearing  liabilities,
market rates of interest,  the level of nonperforming  assets,  demand for loans
and other market forces.


                                                                               5
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

   Net interest  income  increased  $658,000 for the year ended June 30, 1998 as
compared to the year ended June 30, 1997.  The  increase in net interest  income
was primarily  attributable  to a $17.5 million or 17.0% increase in the average
loan  portfolio  (including  loans  held for sale) and a $9.1  million  or 39.7%
increase  in the  average  mortgage  collateralized  securities  portfolio.  The
Company's  average interest spread improved  slightly from 2.46% to 2.48%,  with
improvements in yield on total  interest-earning  assets substantially offset by
an increase in the cost of interest-bearing liabilities.

   The yield on total  interest-earning  assets  improved  from 7.61% for fiscal
1997 to 7.74% for fiscal 1998. The yield improved primarily due to the growth in
the commercial and consumer loan  portfolios,  which in total represent 23.1% of
total loans at the end of fiscal 1998  compared to 14% of total loans at the end
of fiscal 1997.  Management  expects the continued  growth in the commercial and
consumer loan portfolios  during fiscal 1999 will positively impact the yield on
loans.

   The cost of interest-bearing liabilities increased from 5.15% for fiscal 1997
to 5.26% for fiscal 1998.  The cost of  interest-bearing  liabilities  increased
primarily   due  to  an  increase  in  FHLB  advances  as  a  percent  of  total
interest-bearing  liabilities and, to a lesser extent, a shift in mix from lower
costing demand  deposit and savings  accounts to higher costing money market and
certificate accounts.

   Net interest margin  decreased from 3.12% for fiscal 1997 to 3.04% for fiscal
1998.  The reduction in net interest  margin was primarily  attributable  to the
Company  becoming  more  leveraged  through  internal  growth.  This increase in
leverage is reflected in the ratio of average interest-earning assets to average
interest-bearing  liabilities,  which  declined to 1.12x for the year ended June
30,1998 compared to 1.15x for the same period in 1997.

   The future trend of the Company's net interest income and net interest margin
may be  impacted  by the  level  of loan  originations,  purchases,  repayments,
refinances,  and sales, and a resulting  change in the Company's  composition of
interest-earning  assets. The relatively flat yield curve during the second half
of the fiscal  year  resulted in a shift in borrower  preference  to  fixed-rate
mortgage loans. This resulted in borrowers converting  adjustable-rate  mortgage
loans to 30-year  fixed-rate  loans,  which are generally  sold in the secondary
market. A continued high level of refinances and conversions of  adjustable-rate
mortgages to  fixed-rate  mortgages  could have a negative  impact on future net
interest income.  Additional  factors that may affect the Company's net interest
income are changes in interest  rates,  slope of the yield curve,  asset growth,
maturity and repricing activity and competition.


6
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

   Average Balances, Interest Rates and Yields. The following table presents for
the periods  indicated the total dollar  amount of interest  income from average
interest-earning  assets  and the  resultant  yields,  as  well as the  interest
expense on average interest-bearing  liabilities,  expressed both in dollars and
rates, and the net interest margin.  All average balances are based on month end
balances.
<TABLE>
<CAPTION>
                                             Year Ended June 30,              Year Ended June 30,           Year Ended June 30,
                                                    1998                             1997                          1996
------------------------------------------------------------------------------------------------------------------------------------
                                                            Average                          Average                        Average
                                       Average               Yield/       Average             Yield/    Average              Yield/
                                       Balance    Interest   Rate(1)      Balance   Interest   Rate     Balance    Interest   Rate
------------------------------------------------------------------------------------------------------------------------------------
                                                                         (Dollars in Thousands)
<S>                                   <C>          <C>        <C>         <C>         <C>      <C>       <C>         <C>       <C>  
Interest-earning assets:
  Loans receivable(2)                 $120,844     $9,795     8.11%       $103,324    $8,206   7.94%     $100,350    $7,902    7.87%
  Securities                             4,461        326     7.31           5,540       387   6.99        7,987       509     6.37
  Mortgage-backed securities(3)         32,208      2,120     6.58          23,061     1,520   6.59       18,790     1,231     6.55
  Interest-bearing deposits              2,738        152     5.55           3,633       199   5.48        5,476       326     5.95
  FHLB stock                             1,958        156     7.97           1,483       116   7.81        1,475       120     8.14
------------------------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets      162,209     12,549     7.74         137,041    10,428   7.61      134,078    10,088     7.52
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets               8,522                             7,419                           5,410
------------------------------------------------------------------------------------------------------------------------------------
    Total assets                      $170,731                          $144,460                        $139,488
====================================================================================================================================

Interest-bearing liabilities:
  Savings, checking and MMDA's         $25,821        794     3.08         $23,507       729   3.10      $21,641       721     3.33
  Certificates of deposit               83,032      4,808     5.79          73,465     4,195   5.71       66,532     3,884     5.84
  FHLB advances                         35,803      2,010     5.61          22,433     1,225   5.46       22,236     1,325     5.96
------------------------------------------------------------------------------------------------------------------------------------
   Total interest-bearing liabilities  144,656      7,612     5.26         119,405     6,149   5.15      110,409     5,930     5.37
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities          2,853                             1,340                           1,504
------------------------------------------------------------------------------------------------------------------------------------
    Total liabilities                  147,509                           120,745                         111,913
Stockholders' equity                    23,222                            23,715                          27,575
------------------------------------------------------------------------------------------------------------------------------------
    Total liabilities and
      stockholders' equity            $170,731                          $144,460                        $139,488
====================================================================================================================================
Net interest income; average
  interest rate spread                            $ 4,937     2.48%                   $4,279  2.46%                 $4,158     2.15%
====================================================================================================================================
Net interest margin(4)                                        3.04%                           3.12%                            3.10%
====================================================================================================================================
Average interest-earning assets to
  average interest-bearing liabilities                        1.12x                           1.15x                            1.21x
====================================================================================================================================
</TABLE>
<PAGE>

(1) At June 30, 1998, the weighted  average yields earned and rates paid were as
follows: loans receivable, 7.92%; securities, 6.28%; mortgage-backed securities,
6.68%;    interest-bearing   deposits,   5.50%;   FHLB   stock,   8.00%;   total
interest-earning   assets,   7.60%;   savings,   checking  and  MMDA's,   3.26%;
certificates of deposits,  5.74%; FHLB advances,  5.48%; total  interest-bearing
liabilities, 5.24%; and interest spread, 2.36%.

(2)  Includes  nonaccrual  loans and loans held for sale  during the  respective
periods. Calculated net of deferred fees and discounts and loans in process.

(3) Includes collateralized mortgage obligations.

(4)  Net  interest   margin  equals  net  interest  income  divided  by  average
interest-earning assets.

                                                                               7
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

Rate/Volume Analysis.  The following table describes the extent to which changes
in  interest  rates  and  changes  in  volume  of  interest-related  assets  and
liabilities  have affected the Company's  interest income and expense during the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in rate (change in rate  multiplied by prior year volume),  and (ii)
changes in volume (change in volume multiplied by prior year rate). The combined
effect of changes in both rate and volume has been allocated  proportionately to
the change due to rate and the change due to volume.
<TABLE>
<CAPTION>
                                                Year Ended                          Year Ended
                                               June 30, 1998                       June 30, 1997
                                                    vs.                                 vs.
                                                Year Ended                          Year Ended
                                               June 30, 1997                       June 30, 1996
------------------------------------------------------------------------------------------------------------
                                                 Increase                            Increase
                                                (Decrease)                          (Decrease)
                                                  Due to                              Due to
------------------------------------------------------------------------------------------------------------
                                                               Total                                 Total
                                                             Increase                              Increase
                                       Rate      Volume     (Decrease)        Rate     Volume     (Decrease)
------------------------------------------------------------------------------------------------------------
                                                                 (In Thousands)
<S>                                   <C>       <C>           <C>            <C>        <C>          <C>  
Interest income:
  Loans receivable                    $178      $1,411        $1,589         $  70      $  234       $ 304
  Securities                            17         (78)          (61)           46        (168)       (122)
  Mortgage-backed securities            (2)        602           600             8         281         289
  Interest-bearing deposits              3         (50)          (47)          (24)       (103)       (127)
  FHLB stock                             2          38            40            (5)          1          (4)
------------------------------------------------------------------------------------------------------------

   Total interest income               198       1,923         2,121            95         245         340
------------------------------------------------------------------------------------------------------------

Interest expense:
  Savings, checking and MMDA's          (5)         70            65           (52)         60           8
  Certificates of deposit               60         553           613           (87)        398         311
  FHLB advances                         35         750           785          (112)         12        (100)
------------------------------------------------------------------------------------------------------------

  Total interest expense                90       1,373         1,463          (251)        470         219
------------------------------------------------------------------------------------------------------------

Increase (decrease) in net
   interest income                    $108      $  550         $ 658         $ 346       $(225)      $ 121
============================================================================================================
</TABLE>
   Provision for Loan Losses. The provision for loan losses increased by $21,000
or 35% when  comparing  fiscal 1998 and 1997. The provision for loan losses is a
result of management's periodic analysis of the allowance for loan losses.
<PAGE>
   The allowance is maintained by management at a level  considered  adequate to
cover  possible  losses  that  are  currently  anticipated  based  on past  loss
experience,  general economic  conditions,  information  about specific borrower
situations,  and other  factors and  estimates  which are subject to change over
time.

   Management  believes  that the allowance is adequate to provide for potential
losses; however, there can be no assurance the related allowance may not have to
be increased in the future.  Management expects the 


8
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------
 
provision  for loan losses to increase in the next fiscal year to keep pace with
the  growth in the loan  portfolio  and to prepare  for the higher  risk of loss
associated with  management's  intention to increase the commercial and consumer
loan portfolios.

   The Company's ratio of nonperforming  assets,  consisting of loans 90 days or
more delinquent and foreclosed  assets,  to total assets was .57% as of June 30,
1998  compared to .28% as of June 30, 1997.  The  allowance for loan losses as a
percentage of total loans at June 30, 1998 increased to .21% compared to .19% at
June 30, 1997.  The allowance for loan losses  equalled  34.5% of  nonperforming
loans at June 30,  1998.  Nonperforming  loans  consisted  primarily  of one- to
four-family   properties.   The  ratio  of  net  charge-offs  to  average  loans
outstanding was .01% for fiscal 1998 compared to none for fiscal 1997.

   Total Other  Income.  Total other  income  decreased  by $542,000 or 34.9% in
fiscal 1998 from fiscal 1997,  primarily due to a $531,000 or 72.6%  decrease in
the net gains on trading equity  securities and a $201,000  increase in net loss
on securities available for sale. This amount was partially offset by a $163,000
or 32.7% increase in gain on sale of loans.  The decrease in net gain on trading
equity  securities  was primarily due to the Company's  decision to stop trading
equity  securities in light of recent stock market  volatility.  The increase in
net loss in  securities  available  for sale was due to an  other-than-temporary
decline in certain equity securities resulting in a write-down of $260,000.  The
increase in gain on sale of loans is a result of higher  refinancing volume from
lower  prevailing  market  interest rates compared to the prior fiscal year. The
Company expects that the formation of Sunrise Mortgage Corporation and continued
expansion of its retail and wholesale  mortgage  banking  business will increase
core mortgage banking volume in fiscal 1999 compared to fiscal 1998.

   Total Other Expenses.  Total other expenses  increased by $213,000 or 4.9% in
fiscal  1998  from  fiscal  1997.  The  increase  was  primarily  due to  higher
compensation and benefits expense of $576,000 or 25.8%, and higher  professional
fees of $74,000 or 39.2%. In addition,  fiscal 1997 total other expenses include
a one-time  assessment of $551,000  relating to  legislation  signed into law on
September 30, 1996 to  recapitalize  the SAIF. On a SAIF adjusted  basis,  total
other  expenses  increased  $764,000  or 20.0% for the year ended June 30,  1998
compared to June 30, 1997.

   The increase in compensation  and benefits is due in part to a greater number
of full-time equivalent employees to support the growth in the mortgage banking,
consumer  and  commercial  loan  departments,  and a $157,000  increase  in ESOP
expense attributable to the higher market price of the Company's stock in fiscal
1998  compared to fiscal 1997.  The Bank has completed the majority of personnel
additions  necessary  to  support  continued  growth  in its  lending  areas and
branches.  Management  expects that additional loan and deposit growth given the
current staffing level should result in an improvement to the Bank's  efficiency
ratio for fiscal 1999. Professional fees increased due to higher consulting fees
and out-sourcing the human resources function.

   Federal Income Tax Expense.  Federal income tax expense  decreased by $26,000
or 5.4% in fiscal 1998 from fiscal 1997, due to a decrease in pretax income.
<PAGE>
Results of  Operations  for the Year Ended June 30,  1997,  Compared to the Year
Ended June 30, 1996

   Net Income. The Company's net income decreased by $285,000 or 23.6% in fiscal
1997 from  fiscal  1996.  The  decrease in fiscal  1997 was  primarily  due to a
$364,000  or  $0.14  per  share  government   mandated  special   assessment  to
recapitalize  the SAIF,  which is administered  by the FDIC. In addition,  other
expenses  (excluding the  SAIFassessment)  increased by $351,000.  These amounts
were  partially  offset by increases in net interest  income and other income of
$121,000 and $352,000, respectively.


                                                                               9
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

   Net Interest Income.  The $121,000 or 2.9% increase in net interest income in
fiscal 1997 was  primarily due to a $3.0 million or 3.0% increase in the average
loan  portfolio  and a $4.3  million or 22.7%  increase in the average  mortgage
collaterized  securities portfolio.  In addition, the Company's average interest
spread increased from 2.15% to 2.46%. The average interest spread increased as a
result of an increase in the average yield on interest-earning assets, primarily
loans, as well as a decline in the average cost of interest-bearing  liabilities
both in deposits and FHLB  advances.  These amounts were  partially  offset by a
$9.0 million or 8.1% increase in average interest-bearing liabilities.

   Interest  Income.  Total  interest  income  increased  by $340,000 or 3.4% in
fiscal 1997  compared to fiscal 1996.  The increase was  primarily due to a $3.0
million or 3.0%  increase in the average  loan  portfolio  and a $4.3 million or
22.7% increase in the average mortgage collateralized  securities portfolio. The
interest on loans also increased due to the average yield  increasing from 7.87%
in fiscal 1996 to 7.94% in fiscal 1997 resulting in a $70,000 or .9% increase in
interest on loans (before giving effect to the increase in the average  balance)
as adjustable-rate loans repriced higher to reflect the higher prevailing market
interest  rates during fiscal 1997 as well as the growth in the  commercial  and
consumer loan  portfolios.  These amounts were partially  offset by a decline in
interest on  securities  and other  interest-earning  deposits  of $122,000  and
$127,000, respectively, as the proceeds from sold or called securities and other
available  liquidity  were utilized to fund loans  instead of being  invested in
securities.

   Interest  Expense.  Total interest  expense  increased by $219,000 or 3.7% in
fiscal 1997 compared to fiscal 1996, primarily due to an increase in the average
deposit balance of $8.8 million.  This amount was partially offset by a decrease
in the  average  cost of  deposits  from 5.22% in fiscal 1996 to 5.08% in fiscal
1997.

   Interest on FHLB advances decreased $100,000 in fiscal 1997 from fiscal 1996,
as the average rate paid  decreased to 5.46% in fiscal 1997 from 5.96% in fiscal
1996.  FHLB  advances have  primarily  been used in addition to deposits to fund
loan  originations  for  the  Bank's  loan  portfolio  as  well  as to  purchase
adjustable-rate collateralized mortgage obligations.

   Provision for Loan Losses.  The provision for loan losses did not change when
comparing  fiscal 1996 to fiscal 1997.  The allowance  for loan losses  totalled
$226,000,  which  represented  .19% of the  total  loan  portfolio  and 54.2% of
nonperforming  loans at June 30, 1997. The nonperforming  loans at June 30, 1997
were comprised of one- to four-family mortgage loans.

   Total Other  Income.  Total other  income  increased  by $352,000 or 29.3% in
fiscal 1997 from fiscal 1996,  primarily  due to a $365,000  improvement  in the
results of trading equity securities and a $117,000 increase in fees and service
charges.  These amounts were partially offset by a $118,000  decrease in gain on
sale of loans. The equity  securities  trading portfolio was comprised of equity
investments  in  financial  institutions.  The  unrealized  gain  recognized  on
securities classified as trading was $131,000 at June 30, 1997.

   Gain on the sale of loans  decreased by $118,000 or 19.1% due to a decline in
loans sold of $12.9 million as a result of lower refinancing  volume from higher
prevailing  market  interest  rates compared to the prior fiscal year as well as
increased market competition.  However, the decline in gain on the sale of loans
<PAGE>
was offset by an increase in fee and service  charge income of $117,000 or 58.4%
which was  primarily  related to new loan  programs both at the retail level and
with correspondent financial institutions.  In an effort to offset the financial
statement  impact of lower mortgage  banking volume,  management  placed greater
emphasis on originating commercial and consumer loans for portfolio.

   Total Other Expenses.  Total other expenses increased by $903,000 or 26.0% in
fiscal 1997 from fiscal 1996,  primarily  due to a government  mandated  special
assessment to recapitalize the SAIF, which is administered by the FDIC. The FDIC
notified the Bank that the Bank's  special  assessment  was $551,000 on a pretax
basis.  


10
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

Compensation  and benefits  increased by $407,000 or 22.3%,  which was primarily
due to  hiring  individuals  to  support  the  growth in the  mortgage  banking,
consumer  and  commercial  loan  departments.  In addition,  the Employee  Stock
Ownership Plan and Management  Recognition Plans expenses were higher by $26,000
and $51,000  for fiscal  1997,  respectively,  compared  to fiscal  1996.  Also,
occupancy  expense was $60,000 higher during fiscal 1997 compared to fiscal 1996
due to the opening of the Bank's  third  branch  location.  These  amounts  were
partially offset by a decrease in professional fees of $83,000 or 30.5% due to a
reduction in consulting fees related to one-time projects.

   Federal Income Tax Expense.  Federal income tax expense decreased by $143,000
or 23.0% in fiscal 1997 from fiscal 1996, due to a decline in pretax income.

Market Risk

   Derivative  financial  instruments include futures,  forwards,  interest rate
swaps,   option   contracts  and  other  financial   instruments   with  similar
characteristics.  The Company  currently  does not enter into futures,  swaps or
options.   However,   the  Company  is  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  include  commitments to
extend  credit  and  standby  letters of credit.  These  instruments  involve to
varying  degrees  elements  of credit  and  interest  rate risk in excess of the
amount  recognized in the  consolidated  balance  sheets.  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.  Standby letters of credit are conditional  commitments issued
by the Bank to guarantee the  performance of a customer to a third party up to a
stipulated amount and with specified terms and conditions. Commitments to extend
credit and standby  letters of credit are not  recorded as an asset or liability
by the Bank until the instrument is exercised.

   The Bank's  exposure to market  risk is  reviewed  on a regular  basis by the
Asset/Liability  Committee.  See "Asset and  Liability  Management"  section for
additional information.  Interest rate risk is the potential for economic losses
due to future interest rate changes. These economic losses can be reflected as a
loss of future net interest  income and/or a loss of current fair market values.
Management  realizes that certain risks are inherent and the goal is to identify
and minimize the risks. The Bank has no market risk sensitivity instruments held
for trading purposes.

Asset and Liability Management

   Consistent net interest income is largely dependent upon the achievement of a
positive  interest  rate spread that can be  sustained  during  fluctuations  in
prevailing  interest  rates.  Interest  rate  sensitivity  is a  measure  of the
difference  between  amounts of  interest-earning  assets  and  interest-bearing
liabilities  which either  reprice or mature within a given period of time.  The
difference,  or the interest rate repricing "gap," provides an indication of the
extent to which an  institution's  interest  rate  spread  will be  affected  by
changes in interest rates.
<PAGE>
   The Bank  attempts to manage its  interest  rate risk by  maintaining  a high
percentage  of its assets in  adjustable-rate  mortgage  loans  ("ARMs"),  other
adjustable-rate loans and mortgage collateralized  securities. The interest rate
on its ARMs,  however,  adjusts no more  frequently  than once a year,  with the
amount of the change subject to annual  limitations,  whereas the interest rates
on most  deposits  can  change  more  frequently  and are not  subject to annual
limitations. Significant effort has been made to reduce the duration and average
life of the Bank's interest-earning assets. During fiscal 1998, the Bank's ratio
of  interest-sensitive   assets  to  interest-sensitive   liabilities  increased
primarily due to purchasing additional  adjustable-rate  collateralized mortgage
obligations.  These  efforts  were  partially  offset  by a  decline  in the ARM
portfolio  by  $17.1  million  or 34.5%  resulting  from  borrowers  refinancing
primarily to fixed-rate loans in the current low interest rate environment.

                                                                              11
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

   Another way the Bank has managed interest rate risk is by selling most of the
newly originated or purchased,  fixed-rate mortgages with terms of fifteen years
or greater,  while originating  adjustable-rate loans and balloon mortgage loans
for  retention  in the  loan  portfolio.  In  addition,  the Bank  continues  to
emphasize  consumer,  home equity and commercial loans which are shorter term in
nature than the mortgage portfolio. At June 30, 1998, the Bank's adjustable-rate
and balloon  mortgage  loans amounted to $57.0 million or 31.4% of total assets.
Although the Bank  experienced  a high level of ARM  prepayments  during  fiscal
1998, it is anticipated  that the Bank will retain a sufficient  amount of newly
originated  balloons  and  other  loan  types to  offset  loan  prepayments  and
repayments in the next fiscal year.

   With its funding  sources,  management  has attempted to reduce the impact of
interest rate changes by emphasizing  non-interest  bearing  products,  and term
advances from the FHLB.

   Management  presently  measures  the Bank's  interest  rate risk by computing
estimated  changes in net interest  income  ("NII") and the net portfolio  value
("NPV") of equity in the event of a range of assumed  changes in market interest
rates.  The Bank's  exposure to interest  rates is reviewed  quarterly by senior
management  and the  Board of  Directors.  Exposure  to  interest  rate  risk is
measured  with the use of interest  rate  sensitivity  analysis to determine the
change  in NPV in the  event of  hypothetical  changes  in  interest  rates.  If
estimated  changes  to NPV and net  interest  income  are not  within the limits
established by the Board,  the Board may direct  management to adjust the Bank's
asset and  liability  mix to bring  interest  rate risk  within  Board  approved
limits.

   Net  Portfolio  Value is equal to the market value of assets minus the market
value of liabilities,  with adjustments made for off-balance  sheet items.  This
analysis assesses the risk of loss in market sensitive  instruments in the event
of sudden and  sustained 1% to 4%  increases  and  decreases in market  interest
rates.  The following table presents the Bank's  projected change in NPV and NII
for the various rate shock levels at June 30, 1998:
<TABLE>
<CAPTION>
                               Net Portfolio Value                     Net Interest Income
------------------------------------------------------------------------------------------------ 
Change in Interest          $ Amount         % Change           $ Amount               % Change
Rate (Basis Points)           of NPV          in NPV             of NII                  in NII
------------------------------------------------------------------------------------------------ 
                                                (Dollars in Thousands)
<S>                          <C>              <C>                <C>                      <C>   
      +400                   $17,428          (14.98)%           $6,488                   24.38%
      +300                    18,356          (10.46)             6,291                    20.61
      +200                    19,129           (6.68)             5,992                    14.88
      +100                    19,771           (3.55)             5,625                     7.84
      Static                  20,499              --              5,216                     --
      (100)                   19,546           (4.65)             4,703                    (9.84)
      (200)                   17,857          (12.89)             4,110                   (21.21)
      (300)                   16,506          (19.48)             3,539                   (32.16)
      (400)                   15,211          (25.80)             2,996                   (42.57)
</TABLE>
<PAGE>
   As  illustrated  in the table,  a decrease in  interest  rates will result in
larger net  decreases  in the Bank's NPV as  compared to an increase in interest
rates. This occurs principally  because,  when rates decline,  the Bank does not
experience a significant  rise in market value for its loans  because  borrowers
prepay at  relatively  high  rates.  Also when rates  decline,  the yield on the
Bank's  adjustable-rate  loans and  collateralized  mortgage  obligations  would
reprice  downward faster than the average cost of funds on its deposits and FHLB
advances.


12
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

   As with any method of measuring interest rate risk, certain  shortcomings are
inherent  in the  method of  analysis  presented  in the  foregoing  table.  For
example,  although certain assets and liabilities may have similar maturities or
periods to repricing,  they may react  differently to changes in market interest
rates.  The  interest  rates on  certain  types of assets  and  liabilities  may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  In  addition,  certain
assets,  such as  adjustable-rate  mortgage loans,  have features which restrict
changes in interest rates on a short-term  basis and over the life of the asset.
In the event of a change in interest  rates,  expected  rates of  prepayments on
loans,  decay rates of deposits and early  withdrawals from  certificates  could
likely deviate significantly from those assumed in calculating the table.

Liquidity and Capital Resources

   The Bank has no regulatory mandated minimum liquidity requirements.  The Bank
maintains  a level of  liquidity  consistent  with  management's  assessment  of
expected  loan  demand,  proceeds  from loan  sales,  deposit  flows and  yields
available on interest-earning deposits and investment securities. When overnight
deposits fall below management's  targeted level,  management  generally borrows
FHLB advances instead of selling securities.

   The Bank's  principal  sources  of  liquidity  are  deposits,  principal  and
interest payments on loans, proceeds from loan sales,  maturities of securities,
sales of securities  available for sale and FHLB advances.  While scheduled loan
repayments and maturing securities are relatively predictable, deposit flows and
loan  prepayments  are more  influenced  by  interest  rates,  general  economic
conditions and competition.

   The Bank routinely borrows FHLB advances when overnight deposits are drawn to
low  levels.  These  borrowings  are made  pursuant  to the  blanket  collateral
agreement  with the  FHLB.  At June 30,  1998,  the Bank has  approximately  $35
million of excess borrowing capacity under the blanket collateral agreement with
the FHLB.

   The  Company  (excluding  the Bank)  also has a need  for,  and  sources  of,
liquidity.  Dividends from the Bank and interest income and gains on investments
are its primary  sources.  The Company also has modest  operating  costs and has
paid a regular quarterly cash dividend.

   The Bank is subject to three capital to asset requirements in accordance with
banking  regulations.  Bank West's  capital ratios are well in excess of minimum
capital requirements  specified by federal banking  regulations.  See Note 13 to
consolidated  financial  statements  for more  information on the Bank's capital
requirements.

Year 2000

   Management  and a committee of the Board of Directors have developed a formal
action plan which outlines the Bank's process for preparing itself for Year 2000
issues.  The Bank's  core data  processing  software  is  provided by an outside
vendor.  The outside vendor projects the software they provide will be Year 2000
<PAGE>
compliant,  including  testing,  during  the fourth  quarter  of 1998.  The Bank
anticipates testing the software and integration with other third party software
during the fourth  quarter of 1998.  Management  also  anticipates  testing  its
remaining systems for Year 2000 compliance during the fourth quarter of 1998 and
first quarter of 1999.

   Management  presently  anticipates that the costs of addressing the Year 2000
will  approximate  $200,000 to $250,000.  These costs will be primarily  for the
replacement of depreciable assets. The costs associated with Year 2000 readiness
are based on management's  best estimates.  There can be no guarantee that these
estimates  will be achieved  and actual  results  that might  cause  differences
include,  but are not limited to, the  ability of other 

                                                                              13
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
--------------------------------------------------------------------------------

companies on which the Company's systems rely to modify or convert their systems
to be Year 2000  compliant,  the  ability to locate  and  correct  all  relevant
computer  codes,  and  similar  uncertainties.  As  testing  continues  and more
progress is made,  management will  continuously be assessing the estimated Year
2000 costs.  As of June 30,  1998,  the Bank has not  incurred  any direct costs
relating to Year 2000 readiness, except for staff personnel time.

Impact of Inflation and Changing Prices

   The consolidated  financial  statements and related  financial data presented
herein have been  prepared in  accordance  with  generally  accepted  accounting
principles,  which generally  require the measurement of financial  position and
operating results in terms of historical dollars, without considering changes in
relative  purchasing  power over time due to inflation.  Unlike most  industrial
companies, virtually all of the Company's assets and liabilities are monetary in
nature. As a result,  interest rates generally have a more significant impact on
the Company's  performance than does the effect of inflation.  Interest rates do
not  necessarily  move in the same  direction  or in the same  magnitude  as the
prices of goods and  services,  since such prices are affected by inflation to a
larger extent than interest rates.

Impact of New Accounting Standards

   Information  pertaining to this topic appears at the  conclusion of Note 1 to
the  consolidated  financial  statements,  which  are  included  as part of this
report.

14
<PAGE>
   Report of Independent Auditors


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

                        [GRAPHIC-LOGO FOR CROWE CHIZEK]

Shareholders and Board of Directors
Bank West Financial Corporation
Grand Rapids, Michigan

   We have audited the  accompanying  consolidated  balance  sheets of Bank West
Financial  Corporation  (the  "Company")  as of June  30,  1998 and 1997 and the
related consolidated  statements of income,  changes in shareholders' equity and
cash flows for each of the three years in the period ended June 30, 1998.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

   We  conducted  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  consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Bank West
Financial  Corporation  as of June 30,  1998 and 1997,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 1998 in conformity with generally accepted accounting principles.



                                                /s/Crowe, Chizek and Company LLP
                                                --------------------------------
                                                   Crowe, Chizek and Company LLP

Grand Rapids, Michigan
August 21, 1998, except for Note 2,
  for which the date is September 18, 1998

                                                                              15
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
June 30, 1998 and 1997
--------------------------------------------------------------------------------------------------
                                                                        1998               1997
ASSETS
<S>                                                               <C>                <C>          
  Cash and due from financial institutions                        $   2,408,476      $   1,722,734
  Interestbearing deposits in financial institutions                  1,797,063          1,950,522
                                                                  -------------      -------------
      Total cash and cash equivalents                                 4,205,539          3,673,256
  Interest-bearing time deposits                                           --               99,000
  Trading securities                                                       --            2,921,251
  Securities available for sale                                      32,167,697         25,550,974
  Securities held to maturity (fair value:
    1998 - $11,079,178; 1997 - $4,001,875)                           11,084,361          4,003,575
  Loans held for sale                                                 8,156,572          2,231,151
  Loans, net                                                        118,905,611        111,530,092
  Federal Home Loan Bank (FHLB) stock                                 2,100,000          1,550,000
  Premises and equipment - net                                        3,164,905          3,128,158
  Accrued interest receivable                                           879,082            762,990
  Mortgage servicing rights                                             280,869            148,569
  Real estate owned                                                     192,080             19,912
  Other assets                                                          332,136             56,263
                                                                  -------------      -------------
                                                                  $ 181,468,852      $ 155,675,191
                                                                  =============      =============
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
  Deposits                                                        $ 119,979,379      $ 102,862,152
  FHLB borrowings                                                    37,000,000         29,000,000
  Accrued interest payable                                              253,037            202,217
  Advanced payments by borrowers for taxes and insurance                512,538            491,710
  Deferred federal income tax                                           335,182            287,635
  Other liabilities                                                     114,029            239,168
                                                                  -------------      -------------
      Total liabilities                                             158,194,165        133,082,882

Commitments and contingencies

Shareholders' equity
  Preferred stock, 5,000,000 shares authorized, none issued                --                 --
  Common stock, $.01 par value; 10,000,000 shares authorized;
    2,623,629 and 1,753,475 issued at June 30, 1998 and 1997             26,237             17,535
  Additional paid-in capital                                         11,551,136         11,432,798
  Retained earnings, substantially restricted                        12,928,028         12,647,112
  Net unrealized gain on securities available for sale,
    net of tax of ($2,644) in 1998 and ($6,548) in 1997                   5,132             12,710
  Management Recognition Plan (unearned shares)                        (360,998)          (513,398)
  Employee Stock Ownership Plan (unallocated shares)                   (874,848)        (1,004,448)
                                                                  -------------      -------------
                                                                     23,274,687         22,592,309
                                                                  -------------      -------------
                                                                  $ 181,468,852      $ 155,675,191
                                                                  =============      =============
</TABLE>
          See accompanying notes to consolidated financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
Years ended June 30, 1998, 1997 and 1996
-------------------------------------------------------------------------------------------------------------
                                                                   1998              1997             1996
<S>                                                            <C>               <C>              <C>        
Interest and dividend income
  Loans                                                        $ 9,795,291       $ 8,206,364      $ 7,901,948
  Securities                                                     2,446,042         1,907,129        1,739,792
  Other interest-earning deposits                                  152,152           199,210          325,796
  Dividends on FHLB stock                                          155,825           115,838          120,467
-------------------------------------------------------------------------------------------------------------
                                                                12,549,310        10,428,541       10,088,003
Interest expense
  Deposits                                                       5,601,870         4,924,144        4,605,347
  FHLB borrowings                                                2,010,465         1,224,959        1,324,732
-------------------------------------------------------------------------------------------------------------
                                                                 7,612,335         6,149,103        5,930,079
-------------------------------------------------------------------------------------------------------------

Net interest income                                              4,936,975         4,279,438        4,157,924

Provision for loan losses                                           81,000            60,000           60,000
-------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses              4,855,975         4,219,438        4,097,924

Other income
  Net gain on sales of loans                                       662,203           498,666          617,286
  Fees and service charges                                         340,967           317,286          200,330
  Net gain on trading securities                                   200,148           731,156          366,465
  Net gain (loss) on securities
    available for sale                                            (201,890)             (285)          10,529
  Other income                                                      10,911             7,050            7,402
-------------------------------------------------------------------------------------------------------------
                                                                 1,012,339         1,553,873        1,202,012
Other expenses
  Compensation and benefits                                      2,809,557         2,234,337        1,827,177
  Federal deposit insurance expense                                 64,306           121,246          196,397
  FDIC special assessment                                               --           550,556               --
  Professional fees                                                263,374           188,561          272,163
  Data processing expense                                          197,487           177,878          172,596
  Occupancy expense                                                301,185           266,457          206,058
  Furniture, fixtures and equipment expense                        153,899           137,249          124,366
  Advertising                                                      111,351           119,993           87,770
  Provision to adjust loans held for sale
    to lower of cost or market                                          --                --           22,039
  Other expense                                                    683,532           575,481          560,482
-------------------------------------------------------------------------------------------------------------
                                                                 4,584,691         4,371,758        3,469,048
-------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                            <C>               <C>              <C>        
Income before federal income tax expense                         1,283,623         1,401,553        1,830,888

Federal income tax expense                                         453,255           478,724          622,400
-------------------------------------------------------------------------------------------------------------

Net income                                                      $  830,368        $  922,829      $ 1,208,488
=============================================================================================================

Basic earnings per share                                            $  .35            $  .36           $  .39
=============================================================================================================

Diluted earnings per share                                          $  .33            $  .36           $  .39
=============================================================================================================

Dividends per share                                                 $  .22            $  .19           $  .19
=============================================================================================================

</TABLE>
          See accompanying notes to consolidated financial statements.


                                                                              17
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Years ended June 30, 1998, 1997 and 1996
-----------------------------------------------------------------------------------------------------------------------
                                                                  Net Unrealized
                                                                    Gain (Loss)
                                        Additional                 on Securities  Unearned   Unallocated      Total
                              Common      Paid-in      Retained    Available for     MRP        ESOP      Shareholders'
                               Stock      Capital      Earnings  Sale (Net of Tax) Shares      Shares        Equity
----------------------------------------------------------------------------------------------------------------------- 
<S>                           <C>       <C>          <C>             <C>         <C>        <C>           <C>        
Balance at July 1, 1995       $23,144   $17,812,757  $11,626,136     $(27,295)              $(1,263,648)  $28,171,094

Net income for the year
  ended June 30, 1996                                  1,208,488                                            1,208,488

Issuance of 92,575 shares
  of common stock for
  Management Recognition
  Plan (MRP)                      926       741,658                              $(742,584)

Shares earned under MRP                                                             99,120                     99,120

Cash dividends of
  $.19 per share                                        (603,382)                                            (603,382)

Repurchase of 207,375
  shares of stock              (2,074)   (2,046,987)                                                       (2,049,061)

Shares committed to
  be released under
  Employee Stock
  Ownership Plan                             34,679                                             129,600       164,279

Change in net unrealized
  gain (loss) on securities
  available for sale, net
  of tax of $92,775                                                  (180,092)                               (180,092)
---------------------------------------------------------------------------------------------------------------------- 

Balance at June 30, 1996       21,996    16,542,107   12,231,242     (207,387)    (643,464)  (1,134,048)   26,810,446

Net income for the year
  ended June 30, 1997                                    922,829                                              922,829

Net grant of 1,742 shares of
  common stock for MRP                       19,852                                (19,852)

Shares earned under MRP                                                            149,918                    149,918

Cash dividends of
  $.19 per share                                        (506,959)                                            (506,959)

Repurchase of 446,100 shares
  of stock                     (4,461)   (5,189,405)                                                       (5,193,866)

</TABLE>
          See accompanying notes to consolidated financial statements.

18
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity (Continued)
Years ended June 30, 1998, 1997 and 1996
-----------------------------------------------------------------------------------------------------------------------
                                                                  Net Unrealized
                                                                    Gain (Loss)
                                        Additional                 on Securities  Unearned   Unallocated      Total
                              Common      Paid-in      Retained    Available for     MRP        ESOP      Shareholders'
                               Stock      Capital      Earnings  Sale (Net of Tax) Shares      Shares        Equity
----------------------------------------------------------------------------------------------------------------------- 
<S>                           <C>        <C>         <C>               <C>       <C>         <C>           <C>       
Shares committed to be
  released under Employee
  Stock Ownership Plan                     $ 60,244                                          $  129,600   $   189,844

Change in net unrealized
  gain (loss) on securities
  available for sale, net
  of tax of $113,383                                                 $220,097                                 220,097
------------------------------------------------------------------------------------------------------------------------ 

Balance at June 30, 1997      $17,535    11,432,798  $12,647,112       12,710    $(513,398)  (1,004,448)   22,592,309

Net income for the year
  ended June 30, 1998                                    830,368                                              830,368

Shares earned under MRP                                                            152,400                    152,400

Cash dividends of
  $.22 per share                                        (539,433)                                            (539,433)

Issuance of 876,654 shares
  of common stock for 
  three-for-two stock split, 
  net of cash paid on
  fractional shares             8,767                    (10,019)                                              (1,252)

Repurchase of 7,500 shares
  of stock                        (75)     (105,863)                                                         (105,938)

Shares committed to be
  released under Employee
  Stock Ownership Plan                      216,928                                             129,600       346,528

Shares issued upon exercise
  of stock options                 10         7,273                                                             7,283

Change in net unrealized
  gain (loss) on securities
  available for sale, net of
  tax benefit of $3,904                                                (7,578)                                 (7,578)
------------------------------------------------------------------------------------------------------------------------ 

Balance at June 30, 1998      $26,237   $11,551,136  $12,928,028      $ 5,132    $(360,998)   $(874,848)  $23,274,687
======================================================================================================================== 
</TABLE>
          See accompanying notes to consolidated financial statements.

                                                                              19
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Years ended June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------------------------------------
                                                                   1998             1997              1996
-------------------------------------------------------------------------------------------------------------- 
<S>                                                             <C>               <C>             <C>        
Cash flows from operating activities
  Net income                                                    $  830,368        $  922,829      $ 1,208,488
  Adjustments to reconcile net income to
    net cash from operating activities
      Purchase of trading securities                            (2,530,635)       (5,428,775)      (2,224,537)
      Proceeds from sales of trading securities                  4,486,385         3,947,118        1,882,564
      Origination and purchase of mortgage
         loans for sale                                        (50,245,577)      (30,350,557)     (48,488,782)
      Proceeds from sales of mortgage loans                     44,982,359        32,915,164       45,798,332
      Net (gain) loss on sales of:
          Loans                                                   (662,203)         (498,666)        (617,286)
          Securities                                                 1,742          (730,871)        (376,994)
          Real estate owned                                         (2,241)             (210)          (4,806)
      Depreciation                                                 213,787           192,495          179,742
      Amortization of premium, net                                  79,741            13,848          103,072
      ESOP expense                                                 346,528           189,844          164,279
      MRP expense                                                  152,400           149,918           99,120
      Loss on disposal of fixed assets                                  --                --            2,662
      Provision for loan losses                                     81,000            60,000           60,000
      Provision to adjust loans held for sale
        to lower of cost or market                                      --                --           22,039
      Change in:
          Deferred loan fees                                      (180,698)          (77,301)         (47,292)
          Other assets and accrued interest receivable            (541,027)          (85,866)         (15,373)
          Other liabilities and accrued interest payable            (2,039)          (36,442)        (144,282)
-------------------------------------------------------------------------------------------------------------- 
              Net cash from operating activities                (2,990,110)        1,182,528       (2,399,054)

Cash flows from investing activities
  Purchase of FHLB stock                                          (550,000)          (75,000)              --
  Net decrease in interest-bearing time deposits                    99,000           199,000          989,000
  Loan originations, net of repayments                          (4,296,879)      (13,664,118)       3,696,997
  Loans purchased for portfolio                                 (3,295,025)       (2,156,750)      (1,921,400)
  Purchase of securities available for sale                    (24,143,884)      (14,725,895)     (21,217,480)
  Proceeds from sales of securities available for sale          15,634,260        10,731,577       14,077,014
  Purchase of securities held to maturity                      (11,102,747)       (3,002,813)              --
  Proceeds from maturities, calls and principal
    payments of securities available for sale                    2,786,772         1,545,498        8,874,974
  Proceeds from maturities, calls and principal
    payments of securities held to maturity                      4,000,625         1,000,000        2,877,708
  Property and equipment expenditures                             (250,534)         (213,681)        (202,205)
  Proceeds from sale of real estate owned                          162,918            25,566           50,181
-------------------------------------------------------------------------------------------------------------- 
              Net cash from investing activities               (20,955,494)      (20,336,616)       7,224,789
</TABLE>
          See accompanying notes to consolidated financial statements.

20
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
Years ended June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------------------------------------
                                                                   1998              1997             1996
-------------------------------------------------------------------------------------------------------------- 
<S>                                                           <C>               <C>              <C>         
Cash flows from operating activities
  Net increase in deposits                                    $ 17,117,227      $ 11,834,080     $  5,847,822
  Repayment of FHLB borrowings                                 (43,000,000)      (11,000,000)     (11,922,256)
  Proceeds from FHLB borrowings                                 51,000,000        21,000,000        6,000,000
  Repurchase of common stock                                      (105,938)       (5,193,866)      (2,049,061)
  Issuance of shares upon exercise of
    stock options                                                    7,283                --               --
  Dividends paid on common stock                                  (540,685)         (506,959)        (603,382)
--------------------------------------------------------------------------------------------------------------
        Net cash from financing activities                      24,477,887        16,133,255       (2,726,877)
--------------------------------------------------------------------------------------------------------------

Net change in cash and cash equivalents                            532,283        (3,020,833)       2,098,858

Cash and cash equivalents at beginning of period                 3,673,256         6,694,089        4,595,231
--------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                    $  4,205,539      $  3,673,256     $  6,694,089
==============================================================================================================

Supplemental disclosures of cash flow information:
  Cash paid during the period for
    Interest                                                  $  7,561,515      $  6,103,832     $  5,954,870
    Income taxes                                                   768,119           456,050          520,000

Supplemental disclosure of noncash investing activities:
  Transfer of loans from held for sale
    to held to maturity                                                 --                --        1,756,663
  Transfer from loans to real estate owned                         316,083            45,268           45,375 
</TABLE>

   During  May of 1998,  securities  with a  carrying  value  and fair  value of
$1,165,649 were transferred from trading securities to securities  available for
sale.

   During November of 1995,  securities with a carrying value of $15,008,666 and
a fair value of $14,964,245 were transferred from securities held to maturity to
securities available for sale.


          See accompanying notes to consolidated financial statements.


                                                                              21
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Nature of Operations:  Bank West Financial  Corporation  (the  "Company") was
organized  as  a  thrift  holding   company  for  Bank  West  (the  "Bank"),   a
state-chartered  stock  savings  bank.  The  consolidated  financial  statements
include the accounts of the Company and the Bank. All  significant  intercompany
transactions  and balances  have been  eliminated in  consolidation.  The Bank's
primary services include accepting  deposits and making mortgage and installment
loans in Kent County and Eastern Ottawa County,  Michigan. The Bank also engages
in mortgage banking  activities  consisting of selling  originated and purchased
loans into the secondary  market.  The Bank has formed a  wholly-owned  mortgage
company for the purpose of selling non-conforming originated and purchased loans
into the secondary market.

   Use of Estimates:  The preparation of financial statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions based on available information.  These estimates and assumptions
affect the amounts  reported in the  financial  statements  and the  disclosures
provided,  and future results could differ.  The primary estimates  incorporated
into the Company's  consolidated  financial  statements which are susceptible to
change  in  the  near  term  include  the   allowance   for  loan  losses,   the
classification and carrying value of securities,  mortgage servicing rights, and
loans  held for sale and the fair  value of stock  options  and other  financial
instruments.

   Concentrations  of Credit Risk:  The Bank grants  mortgage loans to customers
primarily in Kent County and Eastern  Ottawa  County,  Michigan.  No significant
number of the Bank's customers are employed at any one specific entity or in any
one specific industry. The Bank grants primarily one-to four-family  residential
real estate  loans.  Substantially  all loans are  secured by specific  items of
collateral, primarily single-family residences.

   Cash Flow  Reporting:  Cash and cash  equivalents are defined as cash and due
from banks and other  investments  with  original  maturities of three months or
less.  Net cash flows are  reported  for  customer  loan  transactions,  deposit
transactions, and deposits made with other financial institutions.

   Trading  Securities:  Securities  that are  bought and held  principally  for
resale  in the  near  term  (thus  held  for only a short  period  of time)  are
classified as trading securities and recorded at their fair values. Realized and
unrealized  gains and losses on trading  securities are included  immediately in
other income.

   Securities:  Securities which the Company has the positive intent and ability
to hold to maturity are  classified as held to maturity and carried at amortized
cost.  Securities,  other than trading  securities,  that might be sold prior to
maturity  are  classified  as  available  for  sale.  Securities  classified  as
available  for sale are reported at their fair value and the related  unrealized
holding  gain or loss is  reported,  net of  related  income tax  effects,  as a
separate  component of  shareholders'  equity,  until  realized.  Securities are
written down to fair value when a decline in fair value is not temporary.
<PAGE>
   Gains and losses on the sale of securities  available for sale are determined
using the specific  identification method.  Premiums and discounts on securities
are  recognized in interest  income using the level yield method over the period
to maturity.

   Loans Held for Sale:  Mortgage loans originated and purchased for sale in the
secondary  market are carried at the lower of cost or estimated  market value on
an individual  loan basis.  Net unrealized  losses are recognized in a valuation
allowance  by  charges to income.  Gains on sales of loans are  recognized  when
proceeds from the loan sales are received by the Bank.


22
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Loans: Loans are stated at unpaid principal balances,  less the allowance for
loan losses, net deferred loan fees and costs, and charge-offs.  Interest income
on  loans  is  accrued  over  the term of the  loans  based  upon the  principal
outstanding.  Interest  income is not  reported  when full loan  repayment is in
doubt,  typically when payments are past due 90 days or more.  Payments received
on such loans are reported as principal reductions.

   Loan fees, net of certain direct loan origination  costs,  are deferred.  The
net amount  deferred is reported as part of loans and is  recognized as interest
income over the term of the loan using the level yield method.

   Allowance  for Loan Losses:  Because some loans may not be repaid in full, an
allowance  for loan losses is recorded.  Increases to the allowance are recorded
by a provision for loan losses  charged to expense.  Estimating the risk of loss
and the amount of loss on any loan is necessarily subjective.  Accordingly,  the
allowance is maintained by  management at a level  considered  adequate to cover
possible losses that are currently  anticipated  based on past loss  experience,
general economic  conditions,  information  about specific  borrower  situations
including their financial  position and collateral  values and other factors and
estimates  which  are  subject  to  change  over  time.   While  management  may
periodically  allocate  portions of the  allowance  for  specific  problem  loan
situations,  the whole  allowance is  available  for any loan  charge-offs  that
occur.  A loan is  charged-off  against the allowance by management  when deemed
uncollectible,  although  collection  efforts continue and future recoveries may
occur.

   Loan  impairment  is reported  when full payment  under the loan terms is not
expected.  Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage,  consumer, and credit card loans, and on an
individual loan basis for other loans.  If a loan is impaired,  a portion of the
allowance is allocated so that the loan is reported,  net, at the present  value
of  estimated  future  cash flows  using the  loan's  existing  rate.  Loans are
evaluated for impairment  when payments are delayed,  typically 90 days or more,
or when it is probable  that all  principal  and  interest  amounts  will not be
collected according to the original terms of the loan.

   Mortgage Loan Servicing  Rights:  Servicing  rights  represent both purchased
rights and the  allocated  value of  servicing  rights  retained  on loans sold.
Servicing  rights  are  expensed  in  proportion  to,  and over the  period  of,
estimated net  servicing  revenues.  Impairment  is evaluated  based on the fair
value of the rights,  using  groupings  of the  underlying  loans as to interest
rates and then,  secondarily,  as to geographic and prepayment  characteristics.
Any impairment of a grouping is reported as a valuation allowance.

   Premises  and  Equipment:  Premises  and  equipment  are  stated at cost less
accumulated depreciation.  Premises and related components are depreciated using
the  straight-line  method  with  useful  lives  ranging  from  31 to 40  years.
Furniture and  equipment are  depreciated  using the  straight-line  method with
useful  lives  ranging  from three to ten years.  Maintenance  and  repairs  are
charged to expense and improvements  are capitalized.  These assets are reviewed
for impairment when events indicate the carrying amount may not be recoverable.
<PAGE>
   Real Estate Owned:  Real estate properties  acquired through,  or in lieu of,
loan foreclosure are to be sold and are initially  recorded at fair value at the
date of acquisition,  establishing a new cost basis. Any reduction to fair value
from the  carrying  value of the  related  loan at the  time of  acquisition  is
accounted for as a loan loss and charged  against the allowance for loan losses.
After  acquisition,  the property is carried at the lower of cost or fair value,
less estimated costs to sell. A valuation allowance is recorded through a charge
to income for the amount of selling costs. Valuations are periodically performed
by management and valuation  allowances are adjusted  through a charge to income
for  changes  in fair  value or  estimated  selling  costs.  Costs  relating  to
improvement of property are capitalized,  whereas costs and revenues relating to
the holding of property are expensed.

                                                                              23
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   Income  Taxes:  Income tax expense is based on the amount of taxes due on the
Company's tax return plus changes in the deferred  taxes  computed  based on the
expected future tax consequences of temporary  differences  between the carrying
amounts and tax bases of assets and liabilities, using enacted tax rates.

   Employee Stock  Ownership Plan (ESOP):  The cost of shares issued to the ESOP
but  not  yet  allocated  to   participants  is  presented  as  a  reduction  of
shareholders' equity. Compensation expense is recorded based on the market price
of the shares as they are committed to be released for allocation to participant
accounts.  The  difference  between  the  market  price  and the cost of  shares
committed  to be released is recorded as an  adjustment  to  additional  paid-in
capital.  Dividends  on  allocated  ESOP shares are  recorded as a reduction  of
retained  earnings while dividends on unallocated ESOP shares are reflected as a
reduction of debt and accrued interest.

   Management  Recognition  Plan (MRP):  The MRP is a stock award plan for which
the measurement of total  compensation  cost is based upon the fair value of the
shares on the date of grant.  MRP awards vest in five equal annual  installments
from the date of grant,  subject to the continuous  employment of the recipients
as defined under such plans.  Compensation expense for the MRPs is recognized on
a prorata basis over the vesting period of the awards. The unearned compensation
value of the MRPs is shown as a reduction of shareholders' equity.

   Stock  Option Plan (SOP):  Expense for  employee  compensation  under SOPs is
recognized only if options are granted below the market price at the grant date.
As shown in a separate  note,  pro forma  disclosures of net income and earnings
per share are  provided as if the fair value  method  were used for  stock-based
compensation.

   Preferred  Stock:  The Company is  authorized  to issue  5,000,000  shares of
preferred stock. Such stock may be issued with such preferences and designations
as the Board of Directors may  determine.  The Board of Directors  can,  without
stockholder approval, issue preferred stock with voting,  dividend,  liquidation
and conversion  rights which could dilute the voting  strength of the holders of
the Common Stock and may have the effect of impeding an  unfriendly  takeover or
attempted change in control.

   Fair Values of Financial  Instruments:  Fair values of financial  instruments
are estimated using relevant market information and other  assumptions,  as more
fully disclosed in a separate note. Fair value estimates  involve  uncertainties
and matters of  significant  judgment  regarding  interest  rates,  credit risk,
prepayments,  and other factors,  especially in the absence of broad markets for
particular  items.   Changes  in  assumptions  or  in  market  conditions  could
significantly affect the estimates. The fair value estimates of existing on- and
off-balance-sheet   financial   instruments   does  not  include  the  value  of
anticipated  future  business  or the  values  of  assets  and  liabilities  not
considered financial instruments.

   Earnings and  Dividends  Per Share:  The  accounting  standard for  computing
earnings per share was revised for fiscal 1998,  and all earnings per share data
previously  reported  have been  restated  to  follow  the new  standard.  Basic
earnings per share is based on weighted average common shares outstanding.  ESOP
<PAGE>
shares are considered outstanding as they are committed to be released; unearned
shares are not considered outstanding.  MRP shares are considered outstanding as
they vest.  Diluted  earnings  per share  further  assumes  issuance of dilutive
potential  common shares relating to outstanding  stock options and unvested MRP
shares.  All earnings and dividends  per share  amounts have been  retroactively
adjusted for a three-for-two stock split paid in December, 1997.

   Issued But Not Yet  Adopted  Accounting  Standards:  Statement  of  Financial
Accounting  Standards (SFAS) No. 125,  Accounting for Transfers and Servicing of
Financial Assets and  Extinguishments of Liabilities,  was issued by the FASB in
1996. It revised the accounting for transfers of financial assets, such as loans
and securities,  and for distinguishing between sales and secured borrowings. It
was  effective  for some  transactions  in fiscal 1997 and will be effective for
others in fiscal 1998. The effect on the consolidated  financial  statements was
not material.


24
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   A new accounting standard,  SFAS No. 130, Reporting Comprehensive Income, has
been  issued  which  will  require  future  reporting  of  comprehensive  income
beginning with the quarter ended September 30, 1998. Comprehensive income is net
income plus changes in the  unrealized  gain (loss) on securities  available for
sale, net of tax.

   A new accounting  standard,  SFAS No. 131,  Disclosures  About Segments of an
Enterprise and Related Information,  will require future reporting of additional
information  related to material business segments beginning with the year ended
June 30,  1999.  The  Company is in the process of  determining  whether the new
standard would result in the  identification of additional  reportable  business
segments.

   A  new  accounting   standard,   SFAS  No.  133,  Accounting  for  Derivative
Instruments  and  Hedging  Activities,   will  require  all  derivatives  to  be
recognized at fair value as either  assets or  liabilities  in the  Consolidated
Balance Sheets  beginning with the quarter ended September 30, 1999.  Changes in
the fair value of derivatives  not designated as hedging  instruments  are to be
recognized currently in earnings.  Gains or losses on derivatives  designated as
hedging instruments are either to be recognized  currently in earnings or are to
be recognized  as a component of other  comprehensive  income,  depending on the
intended use of the derivatives and the resulting designations. The Company does
not believe  adoption of this new  standard  will have a material  impact on its
consolidated financial position or results of operations.

   Reclassifications:  Certain  prior year  amounts  have been  reclassified  to
conform to the current year presentation.
<PAGE>
NOTE 2 - SECURITIES

   The amortized cost and estimated  market values of securities at June 30, are
as follows:
<TABLE>
<CAPTION>
Available for Sale
                                                                   Gross           Gross
                                               Amortized        Unrealized      Unrealized           Fair
                                                 Cost              Gains          Losses             Value
--------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>            <C>               <C>        
1998
  U.S. agencies                               $ 3,995,488              --       $   (3,613)       $ 3,991,875
  Mortgage-backed securities                      817,236              --           (9,916)           807,320
  Collateralized mortgage obligations          24,596,237        $230,029         (210,089)        24,616,177
  Equity securities                             2,750,960          61,250          (59,885)         2,752,325
--------------------------------------------------------------------------------------------------------------
                                              $32,159,921        $291,279       $ (283,503)       $32,167,697
==============================================================================================================

1997
  U.S. agencies                               $ 2,998,182              --       $  (21,544)        $2,976,638
  Mortgage-backed securities                    1,579,891         $ 4,016           (1,212)         1,582,695
  Collateralized mortgage obligations          20,953,643          88,217          (50,219)        20,991,641
--------------------------------------------------------------------------------------------------------------
                                              $25,531,716        $ 92,233       $  (72,975)       $25,550,974
==============================================================================================================
</TABLE>


                                                                              25
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 2 - SECURITIES (Continued)

<TABLE>
<CAPTION>

Held to Maturity                                                   Gross           Gross
                                               Amortized        Unrealized      Unrealized           Fair
                                                 Cost              Gains          Losses             Value
-------------------------------------------------------------------------------------------------------------
<S>                                           <C>                 <C>             <C>             <C>        
1998
  Collateralized mortgage obligations         $11,084,361         $42,498         $(47,681)       $11,079,178
=============================================================================================================

1997
  U.S. agencies                               $ 1,000,762         $ 1,113               --        $ 1,001,875
  Collateralized mortgage obligations           3,002,813              --         $ (2,813)         3,000,000
-------------------------------------------------------------------------------------------------------------
                                              $ 4,003,575         $ 1,113         $ (2,813)       $ 4,001,875
=============================================================================================================
</TABLE>

   The scheduled maturities of securities available for sale and securities held
to  maturity at June 30, 1998 are shown  below.  Securities  not due at a single
maturity  date  are  shown  separately.  Expected  maturities  may  differ  from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                -- Available for Sale --            -- Held to Maturity --
                                               Amortized          Fair            Amortized          Fair
                                                 Cost             Value             Cost             Value
--------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>               <C>        
  Due after one year through
    five years                                $ 3,995,488      $ 3,991,875               --                --
  Mortgage-backed securities
    and collateralized mortgage
    obligations                                25,413,473       25,423,497      $11,084,361       $11,079,178
  Equity securities                             2,750,960        2,752,325
--------------------------------------------------------------------------------------------------------------
                                              $32,159,921      $32,167,967      $11,084,361       $11,079,178
==============================================================================================================
</TABLE>

   Proceeds  from sales of  securities  amounted to  approximately  $20,121,000,
$14,679,000  and  $15,969,000  for the years ended June 30, 1998, 1997 and 1996,
respectively,  including approximately  $4,486,000,  $3,947,000,  and $1,883,000
relative to trading securities for the years ended June 30, 1998, 1997 and 1996.

   Gains (losses) on  securities,  reflected in the  consolidated  statements of
income, were as follows for the years ended June 30:


26
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 2 - SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                   1998             1997              1996
---------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>     
Gross realized gains on sales of:
  Securities available for sale                  $ 59,447         $ 17,075          $ 27,965
  Trading securities                              667,238          602,570           372,278
---------------------------------------------------------------------------------------------

                                                  726,685          619,645           400,243
Gross realized losses on sales of:
  Securities available for sale                    (1,059)         (17,360)          (17,436)
  Trading securities                                   --           (1,977)               --
---------------------------------------------------------------------------------------------

                                                   (1,059)         (19,337)          (17,436)
---------------------------------------------------------------------------------------------

Net realized gains                                725,626          600,308           382,807
Net unrealized gain (loss) on trading securities (467,070)         130,563            (5,813)
Other-than-temporary market decline of
  available for sale securities                  (260,278)              --                --
---------------------------------------------------------------------------------------------

                                                 $ (1,742)        $730,871          $376,994
=============================================================================================
</TABLE>



   During  May of 1998,  securities  with a  carrying  value  and fair  value of
$1,165,649 were transferred from trading securities to securities  available for
sale  to  reflect   management's  intent  to  realize  the  long-term  potential
underlying  such securities  rather than to benefit from  short-term  changes in
market values.

   As of  September  18,  1998,  the fair  value of  certain  equity  securities
included in the available for sale classification have declined by $269,000 from
June 30, 1998.
<PAGE>
NOTE 3 - SECONDARY MARKET MORTGAGE ACTIVITIES

   The following  summarizes the Bank's  secondary  market mortgage  activities,
which consist solely of one-to four-family real estate loans:
<TABLE>
<CAPTION>
                                                  1998              1997            1996
---------------------------------------------------------------------------------------------
<S>                                           <C>               <C>             <C>         
Loans held for sale - beginning of period     $ 2,231,151       $ 4,297,092     $  2,746,019
Activity during the periods:
  Loans originated and purchased for sale      50,245,577        30,350,557       48,488,782
  Proceeds from sale of mortgage loans        (44,982,359)      (32,915,164)     (45,798,332)
  Transfer of loans from held for sale to
    held to maturity                                   --                --       (1,756,663)
  Gain on sale of loans                           662,203           498,666          617,286
---------------------------------------------------------------------------------------------

Loans held for sale - end of period           $ 8,156,572       $ 2,231,151     $  4,297,092
=============================================================================================
</TABLE>

   Mortgage  loans  serviced  for others are not  included  in the  accompanying
consolidated  balance sheets.  The unpaid  principal  balances of these loans at
June 30 are summarized as follows:
<TABLE>
<CAPTION>

                                                  1998             1997             1996
---------------------------------------------------------------------------------------------
<S>                                           <C>               <C>              <C>        
Mortgage loan portfolios serviced for
  FHLMC                                       $33,201,177       $26,980,056      $28,590,578
=============================================================================================

Loan servicing fee income                      $   78,433         $  70,661       $   66,725
=============================================================================================
</TABLE>

                                                                              27
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------
 
NOTE 3 - SECONDARY MARKET MORTGAGE ACTIVITIES (Continued)

   Custodial  escrow  balances  maintained in connection with the foregoing loan
servicing were $192,262 and $116,813 at June 30, 1998 and 1997.

   Following is the activity for mortgage  servicing  rights for the years ended
June 30:
<TABLE>
<CAPTION>

                                                   1998             1997             1996
---------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>     
  Balance at July 1                              $148,569         $142,697          $ 68,196
    Additions                                     190,800           16,372           124,501
    Amortization                                  (58,500)         (10,500)          (50,000)
---------------------------------------------------------------------------------------------

  Balance at June 30                             $280,869         $148,569          $142,697
=============================================================================================
</TABLE>

NOTE 4 - LOANS
   Loans are classified as follows at June 30:
<TABLE>
<CAPTION>
                                                                    1998            1997
---------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>         
  Real estate loans:
    One-to four-family residential - fixed rate                $ 15,383,013     $ 18,595,586
    One-to four-family residential - balloon                     24,413,846       12,493,524
    One-to four-family residential - adjustable                  32,599,924       49,743,799
    Construction                                                 24,730,805       21,500,849
    Commercial mortgages                                          6,485,449        2,764,314
    Home equity lines of credit                                   9,877,359        6,370,698
    Second mortgages                                              8,148,412        4,252,996
    Land development                                                675,498           59,764
---------------------------------------------------------------------------------------------

          Total mortgage loans                                  122,314,306      115,781,530
  Consumer loans                                                  1,665,606        1,081,391
  Commercial non-mortgage                                         3,253,091        2,032,190
---------------------------------------------------------------------------------------------

          Total                                                 127,233,003      118,895,111
  Less:
    Loans in process                                              8,248,310        7,169,073
    Net deferred fees (costs)                                      (210,614)         (29,916)
    Allowance for loan losses                                       289,696          225,862
---------------------------------------------------------------------------------------------

                                                               $118,905,611     $111,530,092
=============================================================================================
</TABLE>
<PAGE>
   An analysis of the  allowance  for loan losses for the years ended June 30 is
follows:
<TABLE>
<CAPTION>
                                                   1998             1997             1996
----------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>     
  Beginning balance                              $225,862         $165,862          $108,000
    Provision charged to operations                81,000           60,000            60,000
    Charge-offs, net of recoveries                (17,166)              --            (2,138)
----------------------------------------------------------------------------------------------

  Ending balance                                 $289,696         $225,862          $165,862
==============================================================================================
</TABLE>


28
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 4 - LOANS (Continued)

   During the years ended June 30, 1998, 1997 and 1996, the Company had no loans
which were considered impaired.

   Certain  directors  and  executive  officers  of the  Company  and  the  Bank
(including family members, affiliates, and companies in which they are principal
owners) had loans  outstanding with the Bank in the ordinary course of business.
The amounts were not material for the years ended June 30, 1998 and 1997.


NOTE 5 - PREMISES AND EQUIPMENT - NET

   A summary of premises and equipment is as follows at June 30:
<TABLE>
<CAPTION>

                                                                  1998              1997
--------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>       
  Land                                                         $  529,300        $  529,300
  Bank building and improvements                                2,399,476         2,361,987
  Furniture and equipment                                       1,180,697           967,652
--------------------------------------------------------------------------------------------

                                                                4,109,473         3,858,939
  Accumulated depreciation                                       (944,568)         (730,781)
--------------------------------------------------------------------------------------------

                                                               $3,164,905        $3,128,158
============================================================================================
</TABLE>


NOTE 6 - DEPOSITS

   Deposits at June 30 are summarized as follows:
<TABLE>
<CAPTION>
                                                         1998                               1997
------------------------------------------------------------------------------------------------------------ 
                                               Amount             %                Amount               %
------------------------------------------------------------------------------------------------------------ 
<S>                                          <C>                <C>            <C>                    <C>  
  Noninterest-bearing                        $ 7,010,473        5.84%          $ 3,965,790            3.86%
  Now accounts and MMDAs                       4,434,858         3.70            3,848,395             3.74
  Passbook and statement savings              19,334,577        16.11           17,387,602            16.90
  Certificates of deposit                     89,199,471        74.35           77,660,365            75.50
-----------------------------------------------------------------------------------------------------------
                                                                                                           
                                            $119,979,379      100.00%         $102,862,152          100.00%
===========================================================================================================
</TABLE>
<PAGE>
   At June 30, 1998, the scheduled maturities of all certificates of deposit are
as follows by fiscal year-end:
<TABLE>
<CAPTION>

<S>                                                          <C>    

                                  1999                       $65,436,775
                                  2000                        17,718,016
                                  2001                         1,944,699
                                  2002                         1,953,959
                                  2003                         2,096,984
                                  Thereafter                      49,038
--------------------------------------------------------------------------------
                                                             $89,199,471
================================================================================
</TABLE>
                                                                              29
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 6 - DEPOSITS (Continued)

   As of June 30,  1998 and  1997,  the Bank  had  time  deposit  accounts  with
balances of $100,000  or more of  $17,183,000  and  $14,120,000.  Related  party
deposits were $2,095,000 and $974,000 at June 30, 1998 and 1997.

   On September 30, 1996, as part of the omnibus  appropriations  package signed
by  President  Clinton,   the  government   mandated  a  special  assessment  to
recapitalize  the  Savings  Association   Insurance  Fund  ("SAIF"),   which  is
administered  by  the  Federal  Deposit  Insurance  Corporation  ("FDIC").   The
one-time,   special  SAIF  assessment  amounted  to  $.657  for  every  $100  of
SAIF-insured  deposits as of March 31, 1995. The FDIC notified the Bank that the
Bank's special assessment was $551,000 which, after taxes, reduced the Company's
net income by $364,000 or $.14 per share for the year ended June 30,  1997.  The
Bank's deposit premiums,  which were $.23 for every $100 of assessable  deposits
in 1996, were reduced to $.064 for every $100 of assessable  deposits  beginning
January 1, 1997.

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

   Advances   from  the  Federal   Home  Loan  Bank   (FHLB)  of   Indianapolis,
collateralized  by  mortgage  loans and  securities  under a blanket  collateral
agreement, consist of the following at June 30:
<TABLE>
<CAPTION>
                                                       Rate at
              Date Due                              June 30, 1998                1998                1997
-------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                  <C>                 <C>      
   Putable advances:
     January 29, 2003                                   5.23%                $10,000,000                  --
     January 16, 2008                                    5.33                 10,000,000                  --
     April 30, 2008                                      5.23                  2,000,000                  --

   Adjustable rate advances:
     August 4, 1997 - reprices quarterly                                              --         $ 3,000,000
     September 22, 1997 - reprices quarterly                                          --           1,000,000
     October 27, 1997 - reprices daily                                                --           1,000,000
     October 30, 1997 - reprices monthly                                              --           2,000,000
     November 3, 1997 - reprices daily                                                --           1,000,000
     December 15, 1997 - reprices quarterly                                           --           1,000,000
     December 18, 1997 - reprices quarterly                                           --           1,000,000
     December 22, 1997 - reprices daily                                               --           3,000,000
     December 24, 1997 - reprices quarterly                                           --           2,000,000
     March 27, 1998 - reprices quarterly                                              --           2,000,000
     April 30, 1998 - reprices quarterly                                              --           1,000,000
     September 14, 1998 - reprices daily                 5.75                  1,000,000                  --
     September 16, 1998 - reprices daily                 5.75                  1,000,000                  --
     October 13, 1998 - reprices daily                   5.75                  1,000,000                  --
     October 30, 1998 - reprices monthly                 5.81                  4,000,000           4,000,000
     November 16, 1998 - reprices daily                  5.75                  1,000,000                  --
     December 28, 1998 - reprices daily                  5.75                  1,000,000                  --
     April 30, 1999 - reprices quarterly                 5.69                  1,000,000                  --
     October 30, 1999 - reprices monthly                 5.81                  5,000,000           5,000,000
     August 26, 2001 - reprices monthly                                               --           2,000,000
-------------------------------------------------------------------------------------------------------------
                                                                             $37,000,000         $29,000,000
=============================================================================================================
</TABLE>
30
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS (Continued)

   For the putable  advances,  the FHLB has the option to convert the advance to
an adjustable  rate  beginning  one, two or five years after the purchase  date,
depending on the advance, and quarterly thereafter.

   Maturities of borrowings  outstanding at June 30, 1998 are as follows for the
next 5 years:

                                    1999                     $10,000,000
                                    2000                       5,000,000
                                    2001                              --
                                    2002                              --
                                    2003                      10,000,000
                                    Thereafter                12,000,000
--------------------------------------------------------------------------------

                                                             $37,000,000
================================================================================

   Prepayment of certain  remaining  advances is permitted  only upon the Bank's
termination  of its FHLB  membership,  while  others are  subject to  prepayment
penalties  under the provisions and conditions of the credit policy of the FHLB.
The Bank did not incur  prepayment  penalties  for the years ended June 30, 1998
and 1997.


NOTE 8 - FEDERAL INCOME TAXES

   The provision  for federal  income taxes for the years ended June 30 consists
of the following:
<TABLE>
<CAPTION>
                                                   1998             1997             1996
---------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>     
Current income tax expense                       $401,804         $530,231          $496,158
Deferred income tax expense (benefit)              51,451          (51,507)          126,242
---------------------------------------------------------------------------------------------

                                                 $453,255         $478,724          $622,400
=============================================================================================
</TABLE>
<PAGE>
   Deferred tax assets and liabilities at June 30 consist of the following:
<TABLE>
<CAPTION>
                                                                  1998               1997
---------------------------------------------------------------------------------------------
<S>                                                              <C>              <C>   
Deferred tax assets:
  Loan fees                                                            --         $   20,120
  Accrued expenses                                               $ 15,300             16,116
  Management Recognition Plan                                      34,054             34,200
  Loans marked-to-market                                           89,422             27,736
  Other                                                            31,084              3,067
---------------------------------------------------------------------------------------------

                                                                  169,860            101,239
Deferred tax liabilities
  Loan fees                                                        81,172                 --
  Bad debt allowance                                              162,555            188,779
  FHLB stock dividend                                              49,116             49,116
  Fixed assets                                                    114,060             93,917
  Mortgage servicing rights                                        95,495             50,514
  Unrealized gain on securities available for sale                  2,644              6,548
---------------------------------------------------------------------------------------------

                                                                  505,042            388,874
---------------------------------------------------------------------------------------------

Net deferred tax liability                                      $(335,182)         $(287,635)
=============================================================================================
</TABLE>


                                                                              31
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 8 - FEDERAL INCOME TAXES (Continued)

   No valuation allowance was provided on deferred tax assets.

   The  provision  for federal  income taxes  differs from that  computed at the
statutory corporate tax rate as follows:
<TABLE>
<CAPTION>
                                                                Years ended
                                                 ---------------- June 30, ------------------

                                                   1998             1997             1996
---------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>     
   Statutory rate                                      34%              34%               34%
   Tax expense at statutory rate                 $436,432         $476,528          $622,502
   Tax exempt interest                                 --               --              (639)
   Stock compensation plans                        16,982            3,150             2,669
   Other                                             (159)            (954)           (2,132)
---------------------------------------------------------------------------------------------

                                                 $453,255         $478,724          $622,400
=============================================================================================

   Effective rate                                      35%              34%               34%
</TABLE>

   Differences  in the deduction  for bad debts for tax and financial  statement
purposes after 1988 are included in deferred taxes. For years prior to 1988, the
Bank had determined  taxable income after deducting a provision for bad debts in
excess of such  provisions  recorded in the financial  statements.  Accordingly,
retained earnings at June 30, 1998 and 1997 includes approximately $3,364,000 on
which no  provision  for  federal  income  taxes has been  made.  The  amount of
unrecorded deferred taxes is $1,144,000. If this portion of retained earnings is
used for any  purpose  other than to absorb bad debts,  the amount  used will be
added to future taxable income.

   The Company files  consolidated  federal  income tax returns on a fiscal year
basis.  Prior to July 1, 1997,  if certain  conditions  were met in  determining
taxable  income,  the Bank was allowed a special bad debt  deduction  based on a
percentage of taxable income. Tax legislation passed in August 1996 now requires
the Bank to deduct a provision  for bad debts for tax  purposes  based on actual
loss  experience  and recapture the excess bad debt reserve  accumulated  in tax
years after 1987.  The related  amount of deferred tax  liability  which must be
recaptured  is  approximately  $265,572  and is payable  over a six-year  period
beginning no later than the year ending June 30, 1999.

<PAGE>

NOTE 9 - EARNINGS PER SHARE

   A  reconciliation  of the  numerators and  denominators  of basic and diluted
earnings per share for the years ended June 30
are as follows:
<TABLE>
<CAPTION>
                                                                   1998             1997             1996
-------------------------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>               <C>       
   Basic earnings per share
     Net income available to common shareholders                $  830,368       $  922,829        $1,208,488
-------------------------------------------------------------------------------------------------------------

     Weighted average common shares outstanding                  2,370,243        2,572,335         3,096,934
-------------------------------------------------------------------------------------------------------------

     Basic earnings per share                                       $  .35           $  .36          $    .39
=============================================================================================================
</TABLE>

32
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 9 - EARNINGS PER SHARE (Continued)

<TABLE>
<CAPTION>
                                                                   1998              1997             1996
--------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                 <C>             <C>       
Diluted earnings per share
   Net income available to common shareholders                 $   830,368         $ 922,829       $1,208,488
--------------------------------------------------------------------------------------------------------------

   Weighted average common shares outstanding                    2,370,243         2,572,335        3,096,934

   Add:  dilutive effects of assumed exercise of
  stock options and unvested MRP's
       Stock options                                               107,670            10,827              269
       MRP shares                                                   10,413                --               --
--------------------------------------------------------------------------------------------------------------

   Weighted average common and dilutive
     potential common shares outstanding                         2,488,326         2,583,162        3,097,203
--------------------------------------------------------------------------------------------------------------

   Diluted earnings per share                                      $   .33           $   .36          $   .39
==============================================================================================================
</TABLE>

   Stock  options  for  26,026  and  78,113  shares  of  common  stock  were not
considered in the computation of diluted  earnings per share for the years ended
June 30, 1997 and 1996, respectively,  as they were antidilutive.  All share and
per share amounts have been retroactively adjusted for stock splits.


NOTE 10 - COMMITMENTS, CONTINGENCIES AND FINANCIAL
   INSTRUMENTS WITH OFF-BALANCE-SHEET RISK 

   The Company 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  include commitments to make loans, unused lines of
credit, loans in process and letters of credit. The Company's exposure to credit
loss  in the  event  of  nonperformance  by the  other  party  to the  financial
instrument is represented by the contractual  amount of those  instruments.  The
Company  follows the same credit policy to make such  commitments as is followed
for those loans recorded in the financial statements.

   The contract  amounts of these  financial  instruments are as follows at June
30:
<TABLE>
<CAPTION>
                                                      1998               1997
-------------------------------------------------------------------------------- 
<S>                                                <C>                <C>       
   Commitments to make loans                       $7,035,000         $3,201,000
   Unused lines of credit                          11,172,000          6,208,000
   Loans in process                                 8,248,000          7,169,000
   Letters of credit                                  278,000                 --
</TABLE>
<PAGE>
   Approximately  61% and 33% of  commitments to make loans and to fund loans in
process  were made at fixed rates as of June 30, 1998 and 1997.  Rate ranges for
these fixed rate commitments were 7.0% to 9.125% and 7.625% to 12.25% as of June
30, 1998 and 1997. Lines of credit are issued at current market rates.

   The Company does not anticipate any losses as a result of these  commitments.
Collateral  obtained  upon exercise of the  commitment  is determined  using the
Bank's credit evaluation of the borrower, and may include real estate,  business
assets and other items.  Since many  commitments  to make loans  expire  without
being used, the amount does not necessarily represent future cash commitments.


                                                                              33
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 10 - COMMITMENTS, CONTINGENCIES AND FINANCIAL
   INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Continued)

   The Company is a  defendant  in a lawsuit.  The  complaint  alleges  that the
Company has been  engaged in the  unauthorized  practice of law as the result of
charging a fee for preparing loan  documents.  The complaint  seeks class action
certification,  restitution  of all fees paid for the last six years,  interest,
attorney fees and other costs. Management believes after consultation with legal
counsel,  that the complaint is wholly without merit,  and intends to vigorously
defend  against  this  suit and has  filed a motion  for  summary  judgment  and
dismissal.

   The Company  and the Bank are also  subject to certain  other  legal  actions
arising in the ordinary course of business. In the opinion of management,  after
consultation  with legal counsel,  the ultimate  disposition of these matters is
not expected to have a material  adverse  effect on the  consolidated  financial
position of the Company.

   The Company has entered into employment agreements with four of its officers.
Under the terms of those  agreements,  certain events leading to separation from
the  Company  could  result in cash  payments  aggregating  up to  approximately
$728,000 if termination occurred in calendar 1999.


NOTE 11 - EMPLOYEE BENEFIT PLANS

   The Company  participates in the Financial  Institutions  Retirement  Fund, a
multi-employer  defined  benefit pension plan.  Substantially  all employees are
eligible for  participation  in the Plan. The benefits are based on a percentage
of the participant's career average salary for each year of service. An employee
becomes fully vested upon  completion of five years of qualifying  service.  The
plan is  currently  overfunded  and did not  require  contributions  or  charges
against income for the years ended June 30, 1998,  1997 and 1996.  Specific plan
assets and accumulated benefit information for the Company's portion of the Fund
is not available.  Under the Employee  Retirement Income Security Act (ERISA), a
contributor  to a  multi-employer  pension  plan may be  liable  in the event of
complete or partial withdrawal for the benefit payments  guaranteed under ERISA.
Since the plan is overfunded, no liability for contributions is necessary.

   The Company  maintains a qualified  401(k) plan  covering  substantially  all
employees.  Employees  who are 18 years and older and who have  completed  1,000
hours of service in a 12  consecutive-month  period are eligible.  Employees may
elect to  contribute  to the  plan  from 1% to 15% of their  salary  subject  to
statutory limitations.  The Company makes matching contributions equal to 25% of
the first 3% of employee contributions.  Although not required, the Company also
has the  option to make an  additional,  nonelective  contribution  to the plan.
Beginning  after 2 years of service,  employees  become  vested in the Company's
contributions  at the rate of 20% per year, with 100% vesting  occurring after 6
years of service. The Company's  contribution for fiscal 1998, 1997 and 1996 was
approximately $9,600, $5,200 and $3,000, respectively.
<PAGE>
NOTE 12 - STOCK-BASED COMPENSATION PLANS

Employee Stock Ownership Plan (ESOP)

   An ESOP was established for the benefit of substantially  all employees.  The
ESOP  borrowed  $1,296,048  from the  Company  and used  those  funds to acquire
243,009 shares of the Company's stock at $5.33 per share.

   Shares issued to the ESOP are committed to be released based on the number of
unallocated  shares held  immediately  before  release for the current plan year
multiplied  by a  fraction.  The  numerator  of the  fraction  is the  amount of
quarterly  principal and interest paid.  The  denominator of the fraction is the
sum of the  numerator  plus the principal and interest to be paid for all future
periods. The loan is secured by shares purchased with the loan 

34
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 12 - STOCK-BASED COMPENSATION PLANS (Contiued)

proceeds  and  will  be  repaid  by the  ESOP  with  funds  from  the  Company's
contributions  to the ESOP and earnings on ESOP assets.  Principal  and interest
payments are scheduled to occur in quarterly  amounts of $45,326 over a ten-year
period.  The  balance of the loan was  $968,684  at June 30,  1998.  An employee
becomes fully vested upon completion of seven years of qualifying service.  Upon
withdrawal from the plan, participants are entitled to a distribution in cash or
Company stock, or both.

   During 1998, 1997 and 1996, 24,300 shares of stock with an average fair value
of $14.26 per share in 1998, $7.81 per share in 1997 and $6.76 per share in 1996
were committed to be released. Distributions of 4,802 and 1,295 shares were made
to participants during the years ended June 30, 1998 and 1997. ESOP compensation
expense for the years ended June 30, 1998, 1997 and 1996 was $346,528, $189,844,
and $164,279. Shares held by the ESOP at June 30 are as follows:
<TABLE>
<CAPTION>
                                                     1998               1997
------------------------------------------------------------------------------
<S>                                                 <C>                <C>   
   Allocated to participants                        72,878             53,380
   Unallocated                                     164,034            188,334
------------------------------------------------------------------------------

   Total ESOP shares                               236,912            241,714
------------------------------------------------------------------------------

   Fair value of unallocated shares             $2,316,980         $1,695,006
==============================================================================
</TABLE>


All share and per share  amounts  have  been  retroactively  adjusted  for stock
splits.

Stock Option Plan (SOP) and Management Recognition Plan (MRP)

   Employee  and  director  Stock  Option  Plans (SOPs) and officer and director
Management  Recognition  Plans (MRPs) were authorized by the shareholders at the
October 25, 1995 annual meeting.  The MRPs are restricted stock award plans. The
employee SOP and the officers' MRP are  administered by a committee of directors
of the Company, while grants under the directors' SOP and the directors' MRP are
pursuant  to  formulas  set forth in the plans.  MRP  shares are  granted at the
closing  market  price of the  Company's  stock on the date of grant and vest in
five equal annual  installments  from the date of grant. SOP options are granted
at the average of the high and low market prices of the  Company's  stock on the
date of grant and vest in five equal  annual  installments  and expire ten years
from the date of grant.


                                                                              35
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 12 - STOCK-BASED COMPENSATION PLANS (Contiued)

<TABLE>
<CAPTION>
                                     Directors' SOP    Employees' SOP     Directors' MRP      Employees' MRP
                                            Weighted           Weighted          Weighted            Weighted
                                             Average            Average           Average             Average
                                            Exercise           Exercise         Grant Date          Grant Date
                                    Options   Price    Options   Price   Shares Fair Value  Shares  Fair Value
--------------------------------------------------------------------------------------------------------------
<S>                                 <C>      <C>      <C>       <C>      <C>       <C>       <C>      <C> 
Total options/shares available      104,146           243,009            41,657              97,206
Balance outstanding
  July 1, 1995
    Grant 10/25/95                   78,113  $ 6.96                      37,488     $6.67
    Grant 10/26/95                                                                           73,875    $6.67
    Grant 11/1/95                                      36,000    $6.63
--------------------------------------------------------------------------------------------------------------

Balance outstanding
  June 30, 1996                      78,113    6.96    36,000     6.63   37,488      6.67    73,875     6.67
    Granted 7/8/96                                     21,450     7.33
    Granted 10/25/96                 26,026    7.25                       4,169      7.25
    Granted 12/20/96                                   88,350     7.17
    Forfeited                                          (6,150)    7.08                      (1,555)     6.67
--------------------------------------------------------------------------------------------------------------

Balance outstanding
  June 30, 1997                     104,139    7.03   139,650     7.06   41,657      6.73    72,320     6.67
    Granted 9/2/97                                     69,000   11.375
    Exercised                                          (1,000)    7.28
    Forfeited                                          (3,150)    7.36
--------------------------------------------------------------------------------------------------------------

Balance outstanding
  June 30, 1998                     104,139    7.03   204,500     8.51   41,657      6.73    72,320     6.67
==============================================================================================================

    Options/shares exercisable
      (vested)                       36,450            34,450            15,827              28,928
==============================================================================================================
    Options/shares available for
      future grant                        7            37,509                 0              24,886
==============================================================================================================
</TABLE>
   During the years ended June 30, 1998, 1997 and 1996, $152,400,  $149,918, and
$99,120 was charged to compensation expense for the MRPs.

   The  following  pro forma  information  presents  net income and earnings per
share had the fair value method of Statement of Financial  Accounting  Standards
No. 123 (SFAS No. 123) been used to measure  compensation cost for stock options
granted  during fiscal 1998,  1997 and 1996. No  compensation  cost was actually
recognized for stock options for the years ended June 30, 1998, 1997 and 1996.


36
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 12 - STOCK-BASED COMPENSATION PLANS (Contiued)
<TABLE>
<CAPTION>
                                                                                 Years ending
                                                                  ---------------- June 30, ----------------

                                                                    1998             1997            1996
------------------------------------------------------------------------------------------------------------- 
<S>                                                               <C>              <C>             <C>       
       Net income as reported                                     $  830,368       $922,829        $1,208,488
       Pro forma net income                                          716,649        885,286         1,175,228

       Basic earnings per share as reported                              .35            .36               .39
       Pro forma basic earnings per share                                .30            .33               .38

       Diluted earnings per share as reported                            .33            .36               .39
       Pro forma diluted earnings per share                              .29            .33               .38

       Weighted-average grant-date fair value per option                2.07            .96               .92
</TABLE>

   In  future  years,  the pro  forma  effect of not  applying  SFAS No.  123 is
expected to increase as additional options are granted.

   The fair value of options  granted during the years ended June 30, 1998, 1997
and  1996,  respectively,  is  estimated  using the  following  weighted-average
information: risk-free interest rate of 6.22%, 6%, and 5.75%, expected life of 5
years,  expected  monthly  volatility of stock price of 7.1%, 6.3% and 6.3%, and
expected dividends of 1.90%, 3% and 2.49% per year.

   At June 30, 1998, options outstanding were as follows:

       Number of options                                             308,639
       Range of exercise price                               $6.63 - $11.375
       Weighted-average exercise price                                 $8.00
       Weighted-average remaining option life                     8.13 years
       For options now exercisable:  number                           70,900
       Weighted-average exercise price                                 $6.98

   All share and per share  amounts have been  retroactively  adjusted for stock
splits.


NOTE 13 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

   Effective   December  29,  1997,   Bank  West,  the  Company's   wholly-owned
subsidiary,  completed its conversion to a Michigan chartered savings bank. As a
state chartered  savings bank, Bank West's primary  regulatory  agencies are the
Financial  Institutions  Bureau of the State of Michigan and the Federal Deposit
Insurance Corporation.
<PAGE>
   The Bank is subject to regulatory capital requirements  administered by these
federal regulatory  agencies.  Capital adequacy guidelines and prompt corrective
action regulations involve  quantitative  measures of assets,  liabilities,  and
certain   off-balance-sheet   items  calculated   under  regulatory   accounting
practices.  Capital amounts and  classifications are also subject to qualitative
judgments by regulators about  components,  risk weightings,  and other factors,
and the regulators can lower  classifications in certain cases.  Failure to meet
various capital  requirements can initiate  regulatory  action that could have a
direct material effect on the financial statements.


                                                                              37
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 13 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (Continued)

   The  prompt  corrective  action  regulations  provide  five  classifications,
including   well   capitalized,   adequately   capitalized,    undercapitalized,
significantly undercapitalized, and critically undercapitalized,  although these
terms are not used to  represent  overall  financial  condition.  If  adequately
capitalized,  regulatory  approval is required to accept brokered  deposits.  If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion,   and  plans  for  capital  restoration  are  required.  The  minimum
requirements are:
<TABLE>
<CAPTION>
                                     Capital to Risk-
                                     Weighted Assets            Tier 1 Capital
--------------------------------------------------------------------------------
                                  Total          Tier 1       to Adjusted Assets
--------------------------------------------------------------------------------
<S>                               <C>              <C>               <C>
   Well capitalized               10%              6%                5%
   Adequately capitalized           8               4                 4
   Undercapitalized                 6               3                 3
</TABLE>

   As a  result  of the  Bank's  charter  change,  the  June  30,  1998 and 1997
regulatory   capital  levels  are  based  upon  the  Federal  Deposit  Insurance
Corporation and Office of Thrift Supervision guidelines, respectively.

   At year end, actual capital levels (dollars in millions) and minimum required
levels were:
<TABLE>
<CAPTION>
                                                                                                Minimum Required
                                                                                                    to be Well
                                                                         Minimum Required        Capitalized Under
                                                                            for Capital          Prompt Corrective
                                                      Actual             Adequacy Purposes      Action Regulations
---------------------------------------------------------------------------------------------------------------------------
                                                Amount      Ratio       Amount      Ratio       Amount      Ratio
---------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>        <C>          <C>       <C>           <C>       <C>   
1998
  Total capital (to risk weighted assets)        $20.1      20.9%        $7.7      8.0%          $ 9.6     10.0% 
  Tier 1 capital (to risk weighted assets)        19.8       20.6         3.9       4.0            5.8       6.0 
  Tier 1 capital (to average total assets)        19.8       11.3         7.0       4.0            8.8       5.0 
                                                                                                                 
1997                                                                                                             
  Total capital (to risk weighted assets)        $18.7      23.4%        $6.4      8.0%          $ 8.0     10.0% 
  Tier 1 (core) capital (to risk weighted                                                                        
    assets)                                       18.4       23.1         3.2       4.0            4.8       6.0 
  Tier 1 (core) capital (to adjusted total                                                                       
    assets)                                       18.4       12.2         4.5       3.0            7.6       5.0 
  Tangible capital (to adjusted total                                                                            
    assets)                                       18.4       12.2         2.3       1.5              N/A         
</TABLE>                                         
<PAGE>
   At June 30, 1998 and 1997, the Bank was categorized as well capitalized.

   During fiscal 1997,  the Bank made a capital  distribution  to the Company in
the amount of  $2,500,000.  This  distribution  was made  primarily to allow the
Company to make stock repurchase transactions discussed in Note 14.


38
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 13 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (Continued)
 
   At the time of  conversion  to a stock  association,  the Bank  established a
liquidation  account with an initial balance of  $11,150,000,  which is equal to
its total net worth as of the date of the latest balance sheet  appearing in the
final  conversion  prospectus.  The  liquidation  account is maintained  for the
benefit of eligible  depositors  who continue to maintain  their accounts at the
Bank after the conversion.  The liquidation  account is reduced  annually to the
extent  that  eligible  depositors  have  reduced  their  qualifying   deposits.
Subsequent  increases will not restore an eligible account holder's  interest in
the liquidation account. In the event of a complete  liquidation,  each eligible
depositor  will be  entitled  to  receive a  distribution  from the  liquidation
account in an amount  proportionate to the current adjusted  qualifying balances
for  accounts  then  held.  The Bank may not pay  dividends  that  would  reduce
shareholders' equity below the required liquidation account balance.

   Federal and state banking laws and regulations place certain  restrictions on
the amount of  dividends a bank can pay to its holding  company.  Under the most
restrictive  of these  dividend  limitations,  at June 30,  1998,  approximately
$10,963,000  was  available  to the Bank for the  payment  of  dividends  to the
holding company without prior regulatory approval.


NOTE 14 - STOCK REPURCHASE PROGRAMS

   During fiscal 1998, the Company  repurchased 7,500 shares of its common stock
after receiving  approval from its federal  regulator to repurchase up to 5%, or
133,500 shares of the Company's  common stock. The shares were repurchased at an
average price of $14.125 and remain  available for general  corporate  purposes,
including issuance in connection with stock-based compensation plans.


                                                                              39
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

   Condensed  financial  information  of Bank West  Financial  Corporation is as
follows at June 30:
<TABLE>
<CAPTION>
                                 CONDENSED BALANCE SHEETS

                                                                    1998              1997
---------------------------------------------------------------------------------------------
<S>                                                              <C>                <C>      
   ASSETS

        Cash and cash equivalents                                $  284,085         $  70,523
        Interest-bearing time deposits                                   --            99,000
        Trading securities                                               --         2,921,251
        Securities available for sale                             2,752,325                --
        Federal income tax receivable                               149,171                --
        Loan receivable from Employee
           Stock Ownership Plan                                     968,684         1,077,382
        Investment in subsidiary bank                            19,857,357        18,451,967
        Accrued interest receivable                                     894             1,122
        Other assets                                                 12,670             5,540
---------------------------------------------------------------------------------------------

                Total assets                                    $24,025,186       $22,626,785
=============================================================================================

   LIABILITIES

        Note payable to subsidiary                               $  750,000                --
        Deferred taxes                                                  464                --
        Other liabilities                                                35         $  34,476


   SHAREHOLDERS' EQUITY                                          23,274,687        22,592,309
---------------------------------------------------------------------------------------------

        Total liabilities and shareholders' equity              $24,025,186       $22,626,785
=============================================================================================

</TABLE>

40
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
                                     CONDENSED STATEMENTS OF INCOME,
                                              for the years:

                                                       ------------------ June 30, --------------------

                                                          1998              1997                 1996
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>                <C>                <C>       
      Interest and dividend income
          Securities                                   $  150,447         $   55,455         $  253,122
          Loan to Employee Stock Ownership Plan            72,605             79,892             86,691
          Other interest-bearing deposits                  18,595             53,732            164,328
          Dividends from subsidiary bank                       --          2,500,000                 --
--------------------------------------------------------------------------------------------------------
                                                          241,647          2,689,079            504,141

      Interest expense                                     99,850             11,794                 --
--------------------------------------------------------------------------------------------------------

      Net interest income                                 141,797          2,677,285            504,141

      Other income
          Net gain on trading securities                  200,148            731,156            366,465
          Net gain (loss) on securities
            available for sale                           (259,730)           (14,995)            (7,725)
--------------------------------------------------------------------------------------------------------
                                                          (59,582)           716,161            358,740

      Operating expenses                                  152,108             88,468             90,521
--------------------------------------------------------------------------------------------------------

      Income before federal income taxes and
        equity in undistributed earnings of
        subsidiary bank                                   (69,893)         3,304,978            772,360

      Federal income tax expense (benefit)                (23,745)           273,700            262,500
--------------------------------------------------------------------------------------------------------

      Income before equity in undistributed
        earnings of subsidiary bank                       (46,148)         3,031,278            509,860

      Equity in undistributed (excess distributed)
        earnings of subsidiary Bank                       876,516         (2,108,449)           698,628
--------------------------------------------------------------------------------------------------------

      Net income                                       $  830,368         $  922,829         $1,208,488
========================================================================================================
</TABLE>
                                                                              41

<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
                                    CONDENSED STATEMENTS OF CASHFLOWS,
                                              for the years:

                                                       -------------------- June 30, --------------------

                                                          1998                1997                 1996
----------------------------------------------------------------------------------------------------------
<S>                                                    <C>                 <C>                <C>        
Cash flows from operating activities
    Net income                                         $  830,368          $  922,829         $ 1,208,488
    Adjustments to reconcile net income to
      cash provided by operations
        Equity in undistributed (excess distributed)
           earnings of subsidiary Bank                   (876,516)          2,108,449            (698,628)
        Purchase of trading securities                 (2,530,635)         (5,428,775)         (2,224,537)
        Proceeds from sale of trading securities        4,486,385           3,947,118           1,882,564
        (Gain) loss on securities                          59,582            (716,161)           (358,740)
        Net accretion of securities                            --                  --              (1,411)
        Change in
            Accrued interest receivable                       228              18,611              64,357
            Other assets                                 (156,302)             30,089              21,884
            Other liabilities                             (34,441)             22,495             (55,739)
----------------------------------------------------------------------------------------------------------

                 Net cash provided by operating
                   activities                           1,778,669             904,655            (161,762)

Cash flows from investing activities
    Purchases of securities available for sale         (1,904,438)                 --          (2,000,000)
    Proceeds from sales of securities available
      for sale                                             59,399           2,481,875           1,091,200
    Proceeds from maturities and calls of
      securities available for sale                            --                  --           3,782,408
    Principal reduction on ESOP note receivable           108,698             101,410              94,611
    Contribution to subsidiary Bank                       (38,426)            (37,921)            (42,527)
    Net (increase) decrease in interest-bearing
      time deposits                                        99,000              99,000           1,089,000
----------------------------------------------------------------------------------------------------------

                 Net cash used in investing activities (1,675,767)          2,644,364           4,014,692

Cash flows from financing activities
    Proceeds of loan from subsidiary Bank               2,450,000           1,300,000                  --
    Repayment of loan to subsidiary Bank               (1,700,000)         (1,300,000)                 --
    Dividends paid on common stock                       (540,685)           (506,959)           (603,382)
    Repurchase of common stock                           (105,938)         (5,193,866)         (2,049,061)
  Issuance of shares upon exercise of
    stock options                                           7,283                  --                  --
----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>                <C>        
                 Net cash from financing activities       110,660          (5,700,825)         (2,652,443)
----------------------------------------------------------------------------------------------------------

Net change in cash and cash equivalents                   213,562          (2,151,806)          1,200,487
Cash and cash equivalents at beginning
  of period                                                70,523           2,222,329           1,021,842
----------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period             $  284,085          $   70,523         $ 2,222,329
==========================================================================================================
</TABLE>

42
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1998, 1997 and 1996
--------------------------------------------------------------------------------

NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

   Supplemental disclosure of cash flow information:

   During  May of 1998,  securities  with a  carrying  value  and fair  value of
$1,165,649 were transferred from trading securities to securities  available for
sale.


NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS

   The following  methods and assumptions  were used to estimate fair values for
financial instruments.  The carrying amount is considered to estimate fair value
for cash and cash equivalents, Federal Home Loan Bank stock, demand, savings and
money market  deposits,  accrued  interest,  the allowance for loan losses,  and
variable rate loans or deposits that reprice  frequently  and fully.  Securities
fair values are based on quoted market prices or, if no quotes are available, on
the rate and term of the security and on information about the issuer. For fixed
rate loans or deposits and for variable rate loans or deposits  with  infrequent
repricing or repricing  limits,  the fair value is estimated by discounted  cash
flow analysis using current market rates for the estimated life and credit risk.
Fair value of loans held for sale is based on market  estimates.  The fair value
of Federal Home Loan Bank  borrowings is based on currently  available rates for
similar  financing.  The fair value of  off-balance-sheet  items is based on the
fees or costs that would  currently be charged to enter into or  terminate  such
arrangements.  The fair value of  off-balance-sheet  items was not  material for
this presentation.

   The  estimated  fair  values  of  the  Company's  financial  instruments  (in
thousands) are as follows at June 30:
<TABLE>
<CAPTION>
                                                            1998                               1997
--------------------------------------------------------------------------------------------------------------
                                                  Carrying           Fair            Carrying          Fair
                                                    Value            Value             Value           Value
--------------------------------------------------------------------------------------------------------------
<S>                                                <C>             <C>               <C>              <C>   
          Financial assets
                Cash and cash equivalents           $4,206           $4,206            $3,673           $3,673
                Interest-bearing time deposits          --               --                99               99
                Securities                          43,252           43,247            32,476           32,474
                Loans, net                         118,906          119,380           111,530          113,366
                Loans held for sale                  8,157            8,298             2,231            2,265
                Mortgage servicing rights              281              281               149              149
                Federal Home Loan Bank stock         2,100            2,100             1,550            1,550
                Accrued interest receivable            879              879               763              763

          Financial liabilities
                Deposits                           119,979          120,229           102,862          102,733
                Federal Home Loan Bank borrowings   37,000           36,802            29,000           29,000
                Accrued interest payable               253              253               202              202
                Advance payments by borrowers
                  for taxes and insurance              513              513               492              492
</TABLE>


                                                                              43
<PAGE>
Your Partners in Bank West Financial Corporation
--------------------------------------------------------------------------------

DIRECTORS

George A. Jackoboice, Chairman of the Board;
   President of Monarch Hydraulics, Inc.
   Hydraulics, Inc.

Carl A. Rossi, Treasurer; President of
   Kentwater Land Co.

Paul W. Sydloski, President, Chief Executive Officer

Jacob Haisma, Owner of Jacob Haisma Builders, Inc.

Thomas D. DeYoung, Owner and President
   of DeYoung &Associates

Robert J. Stephan, Vice Chairman of the Board;
   President, Chief Executive Officer of
   SecureOne Benefit Administrators, Inc.

Richard L. Bishop, President of Jurgens &
   Holtvluwer Men's Store, Inc.

John H. Zwarensteyn, President, Chief Executive Officer
   and owner of Gemini Corporation

Harry E. Mika, Retired, formerly Director and Senior
   Vice President of Ameribank in Muskegon,
   Michigan from 1989 to 1996.


LEGAL COUNSEL

Elias, Matz, Tiernan & Herrick L.L.P.
Suite 1200
734 15th Street, N.W.
Washington, D.C.  20005
<PAGE>
EXECUTIVE OFFICERS

Paul W. Sydloski, President,
  Chief Executive Officer

Kevin A. Twardy, Vice President,
  Chief Financial Officer

James A. Koessel, Vice President,
  Chief Lending Officer

Laurie S.Adams, Vice President,
  Director of RetailBanking


TRANSFER AGENT

Registrar and Transfer Company
10 Commerce Drive
Cranford, N.J.  07016


INDEPENDENT AUDITORS

Crowe, Chizek and Company LLP
400 Riverfront Plaza Building
55 Campau, N.W.
Grand Rapids, Michigan 49502

44
<PAGE>
CORPORATE HEADQUARTERS 2185 Three Mile Rd., N.W.
Grand Rapids, Michgian 49544-1451


STOCK INFORMATION

Bank West Financial  Corporation is traded on the Nasdaq  National  Market under
the  symbol  of  "BWFC."  Total  shares  outstanding  as of June 30,  1998  were
2,623,629.  As  of  September  26,  1998,  the  Company  had  approximately  631
shareholders of record.  The high and low bid quotations for the common stock as
reported  on the  Nasdaq,  as well as  dividends  declared  per  share,  were as
follows:

Quarter Ended              High         Low       Dividends
--------------------------------------------------------------------------------

September 30, 1996       $ 8.500      $ 7.000        $.04  
December 31, 1996          7.667        6.833         .05  
March 31, 1997             8.083        7.000         .05  
June 30, 1997              9.500        7.417         .05  
September 30, 1997        12.667        9.000         .05  
December 31, 1997         17.625       12.583         .05  
March 31, 1998            16.250       12.750         .06  
June 30, 1998             14.750       13.500         .06  
                         
The  information  set forth in the table above was  provided by The Nasdaq Stock
Market. Such information  reflects  interdealer prices,  without retail mark-up,
mark-down or commission and may not represent actual transactions.
All per share amounts have been adjusted for stock splits.


INVESTOR INFORMATION

A copy of Bank West  Financial  Corporation's  Annual  Report on Form 10-K and a
list of the  exhibits  thereto,  as  filed  with  the  Securities  and  Exchange
Commission,  may be obtained  without  charge upon  written  request to Kevin A.
Twardy,  Chief Financial Officer,  Bank West Financial  Corporation,  2185 Three
Mile Road, N.W., Grand Rapids, MI 49544, or by calling (616) 785-3400.