SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [ NO FEE REQUIRED]

                     For the fiscal year ended June 30, 1998

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

          For the transition period from __________ to _______________

                          Commission File No.: 0-25666

                         Bank West Financial Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                Michigan                                      38-3203447
    ---------------------------------                   ---------------------
      (State or other jurisdiction                         (I.R.S. Employer
    of incorporation or organization)                   Identification Number)

        2185 Three Mile Road N.W.
         Grand Rapids, Michigan                                 49544
        -------------------------                             ----------
(Address of principal executive offices)                      (Zip code)


       Registrant's telephone number, including area code: (616) 785-3400

   Securities registered pursuant to Section 12(b) of the Act: Not Applicable

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value $.01 per share)
                    ---------------------------------------
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ X ]
<PAGE>
Based upon the $11.00 per share closing price of the  Registrant's  common stock
as of September 21, 1998, the aggregate  market value of the 1,919,804 shares of
the  Registrant's  common  stock  deemed  to be  held by  non-affiliates  of the
Registrant was $21.1 million.  Although  directors and executive officers of the
Registrant  and  certain  of its  employee  benefit  plans  were  assumed  to be
"affiliates"   of  the  Registrant  for  purposes  of  this   calculation,   the
classification is not to be interpreted as an admission of such status.

Number of shares of Common Stock outstanding as of September 21, 1998: 2,623,629

                       DOCUMENTS INCORPORATED BY REFERENCE

        Listed below are the documents incorporated by reference and the Part of
the Form 10-K into which the  document  is  incorporated:  (1)  portions  of the
Annual Report to Stockholders  for the year ended June 30, 1998 are incorporated
into  Part II,  Items 5 through 8 of this Form  10-K;  and (2)  portions  of the
definitive  proxy  statement  for the 1998 Annual  Meeting of  Stockholders  are
incorporated into Part III, Items 10 through 13 of this Form 10-K.
<PAGE>
PART I.

Item 1.  Business.

General

        Bank  West  Financial   Corporation   (the   "Company")  is  a  Michigan
corporation  organized in December 1994 by Bank West ("Bank West" or the "Bank")
for the  purpose of  becoming a unitary  holding  company of the Bank.  The only
significant  assets  of the  Company  are the  capital  stock of the  Bank,  the
Company's loan to the Company's Employee Stock Ownership Plan (the "ESOP"),  and
the portion of the net proceeds  retained by the Company in connection  with the
conversion  of the Bank from the mutual to stock form of  organization  in March
1995 (the "Conversion").  The business and management of the Company consists of
the business and management of the Bank.

        Bank West is a Michigan-chartered stock savings bank that was originally
formed in 1887 as a Michigan-chartered mutual savings and loan association known
as West Side Building and Loan. In 1938, the Bank converted to a federal savings
association  known as West Side Federal Savings and Loan  Association.  The Bank
changed its name and became a  federally-chartered  mutual savings bank in 1993.
In March 1995, the Bank converted from a federally-chartered mutual savings bank
to a  federally-chartered  stock  savings  bank,  and in December  1997 the Bank
converted to a Michigan-chartered bank.

        Bank West conducts  business from three offices located in Grand Rapids,
Michigan.  At June 30,  1998,  the Company had $181.5  million of total  assets,
$158.2 million of total liabilities,  including $120.0 million of deposits,  and
$23.3 million of total stockholders' equity.

        Bank West is primarily  engaged in attracting  deposits from the general
public through its offices and using those and other available  sources of funds
to originate loans secured primarily by one- to four-family  residences  located
in  the  western  Michigan  area.  Bank  West  is a  community-oriented  savings
institution  which  emphasizes  customer  service.  It  generally  has sought to
enhance its net income by, among other things, maintaining strong asset quality.
In pursuit  of these  goals,  Bank West has  adopted a  business  strategy  that
emphasizes  lending and deposit products and services  traditionally  offered by
savings  institutions.  In addition,  since April 1993,  the Bank has engaged in
mortgage  banking  activities by originating  (and since fiscal 1994 purchasing)
one- to four-family  residential loans for sale into the secondary  market.  The
implementation  of such  strategy has enabled the Bank to be  profitable  and to
exceed regulatory  capital  requirements.  At June 30, 1998, the Bank's ratio of
Tier 1 capital to average total assets was 11.3%, its ratio of Tier 1 capital to
risk-weighted  assets was 20.6% and its ratio of total capital to  risk-weighted
assets was 20.9%. See "Regulation - The Bank - Regulatory Capital Requirements."

        Beginning  in  fiscal  1995,  the Bank  expanded  its loan  products  by
offering commercial loans and various types of consumer loans. At June 30, 1998,
there were $29.4 million in loans receivable outstanding for these loan products
compared to $16.5 million and $7.0 million outstanding for such loan products at
June 30, 1997 and 1996,  respectively.  Of the $29.4  million at June 30,  1998,
$18.0 million consisted of home equity lines of credit and second mortgages. The
Bank expects its  commercial  and consumer  loan  products  will improve its net
interest margin and make the Bank more competitive in the marketplace.
<PAGE>
        The Company's total nonperforming  assets,  which consist of $841,000 of
non-accruing  loans 90 days or more  delinquent  and $192,000 of net real estate
owned,  totalled  $1,033,000 or .87% of the net loan portfolio at June 30, 1998.
At the  end  of  each  of the  last  five  fiscal  years,  the  Company's  total
nonperforming  assets did not exceed fiscal 1998 levels.  At June 30, 1998,  the
Company's  allowance for loan losses amounted to $290,000,  representing .21% of
the total loan portfolio and .34% of total nonperforming loans at such date. See
"Asset Quality."

        The Bank is subject to examination and  comprehensive  regulation by the
Commissioner  of the  Financial  Institutions  Bureau of the  State of  Michigan
("Commissioner"  or  "Financial  Institutions  Bureau"),  which  is  the  Bank's
chartering  authority and primary  regulator.  The Bank is also regulated by the
Federal Deposit Insurance Corporation ("FDIC"), the administrator of the Savings
Association Insurance Fund ("SAIF"). The Bank also is subject to certain reserve
requirements established by the Board of Governors of the Federal Reserve System
("Federal Reserve Board" or "FRB") and is a member of the Federal Home Loan Bank
("FHLB") of  Indianapolis,  which is one of the 12 regional banks comprising the
FHLB System.

        This Form 10-K 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 Form 10-K 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.

        The Company's  executive office is located at 2185 Three Mile Road N.W.,
Grand Rapids, Michigan 49544, and its telephone number is (616) 785-3400.

Market Area

        The Company's market area consists of western Michigan, with its primary
market  area   consisting  of  Grand  Rapids,   Michigan  and  the   surrounding
metropolitan  statistical area. Grand Rapids is located in west central Michigan
on the Grand River,  the state's longest river.  With a population of 189,000 as
of 1990,  the city is the 83rd  largest  in the  United  States  and the  second
largest in Michigan  after  Detroit.  Grand  Rapids is part of the Grand  Rapids
Metropolitan  Statistical Area with a population of 1,024,000 people as of 1997,
a 48.8%  increase from the 1990 census.  Per capita  income has increased  10.3%
from  $18,000 in 1990 to $19,851 in 1997.  Major  industries  include  furniture
manufacture, metal fabrication,  medical supplies, plastics, footwear, processed
foods,  agricultural  products,  mining of gypsum  (for  which  Michigan  is the
leading  supplier  in  the  nation),  appliance  manufacture,  and  health  care
services.  Major employers in the area include Meijer, Inc., Steelcase,  General
Motors Corp., Amway Corporation and Spectrum Health.
<PAGE>
Lending Activities

        Loan Portfolio  Composition.  At June 30, 1998, the Company's total loan
portfolio,  including  loans held for sale but before  net  items,  amounted  to
$135.4 million. The net loan portfolio,  excluding loans held for sale, amounted
to $118.9  million at June 30,  1998,  representing  approximately  65.5% of the
Company's  $181.5 million of total assets at that date.  The lending  activities
are conducted through Bank West, and the principal lending activity of Bank West
is the origination of one- to four-family  residential  loans. The Bank has also
purchased such loans to supplement its loan originations. At June 30, 1998, one-
to four-family residential loans amounted to $80.6 million or 59.5% of the total
loan  portfolio,  including  loans held for sale. To a lesser  extent,  the Bank
originates construction and land development loans, home equity lines of credit,
second  mortgages,   commercial  and  consumer  loans.   Construction  and  land
development  loans  amounted to $25.4  million or 18.8% of the Bank's total loan
portfolio,  home equity lines of credit  amounted to $9.9 million or 7.3% of the
total loan portfolio,  and second mortgages amounted to $8.1 million or 6.0%, of
the total  loan  portfolio,  including  loans held for sale.  At June 30,  1998,
commercial mortgages amounted to $6.5 million or 4.8%, commercial  non-mortgages
amounted to $3.3 million or 2.4%, and consumer loans amounted to $1.7 million or
1.2%, of the total loan portfolio, including loans held for sale.
<PAGE>
        The  following  table sets forth the  composition  of Bank  West's  loan
portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
                                                                                   June 30,
                                      ----------------------------------------------------------------------------------------------
                                             1998                1997               1996                1995              1994
                                      ----------------------------------------------------------------------------------------------

                                       Amount      %       Amount      %      Amount      %       Amount      %      Amount      %
                                      --------   -----    --------   -----    -------   -----    -------    -----    ------   ----- 
                                                                            (Dollars In Thousands)
<S>                                    <C>        <C>      <C>        <C>     <C>        <C>     <C>         <C>    <C>        <C>  
Real estate loans:(1)
  One- to four-family residential      $80,554    59.5%    $83,065    68.6%   $85,034    80.2%   $92,673     91.7%  $87,177    91.1%
  Construction and land development     25,407    18.8      21,560    17.8     14,074    13.3      6,146      6.1     7,412     7.8
  Commercial mortgages                   6,485     4.8       2,764     2.3      1,194     1.1         90       .1       159      .2
  Home equity lines of credit            9,877     7.3       6,371     5.2      2,214     2.1       1453      1.4       545      .5
  Second mortgages                       8,148     6.0       4,253     3.5      1,927     1.8        683      0.7       363      .4
Consumer loans                           1,666     1.2       1,081      .9        622     0.6         30       --        --      --
Commercial non-mortgage                  3,253     2.4       2,032     1.7      1,010     0.9         --       --        --      --
                                      --------   -----    --------   -----    -------   -----    -------    -----    ------   ----- 
    Total loans                        135,390   100.0%    121,126   100.0%   106,075   100.0%   101,075    100.0%   95,656   100.0%
                                                 =====               =====              =====               =====             =====
Less:
  Loans held for sale                    8,157               2,231              4,297              2,746              1,282
  Loans in process                       8,248               7,169              5,828              2,290              2,888
  Deferred fees and discounts            (211)                (30)                 47                 95                159
  Allowance for loan losses                290                 226                166                108                 88
                                      --------            --------            -------           --------
    Net loans                         $118,906            $111,530            $95,737            $95,836            $91,239
                                       =======             =======             ======           ========             ======
</TABLE>
-------------------------

(1)  Includes loans held for sale.

<PAGE>
        Contractual  Maturities.  The  following  table sets forth the scheduled
contractual  maturities  of Bank West's  loans at June 30, 1998.  Demand  loans,
loans  having no stated  schedule  of  repayments  and no stated  maturity,  and
overdraft  loans are reported as due in one year or less.  The amounts shown for
each period do not take into  account  loan  prepayments  but do reflect  normal
amortization.
<TABLE>
<CAPTION>
                                                 One- to      Construction
                                               Four-Family      and Land      Commercial          Home          Second       
                                               Residential    Development       Mortgages        Equity        Mortgages     
                                               -----------    -----------       ---------        ------        ---------     
                                                                              (In Thousands)
<S>                                             <C>             <C>             <C>             <C>             <C>     
Amounts due after June 30, 1998 in:
   One year or less                             $    675        $ 14,346        $  2,226        $     12        $    422
   After one year through two years                  374              99             433            --                 8
   After two years through three years            12,027           3,902             707             375              57
   After three years through five years            2,789             410           3,119             960           1,341
   After five years through ten years             12,366           4,422            --             8,530           2,825
   After ten years through fifteen years          10,616            --              --              --             2,771
   After fifteen years                            41,707           2,228            --              --               724
                                                --------        --------        --------        --------        --------
    Total(1)                                    $ 80,554        $ 25,407        $  6,485        $  9,877        $  8,148
                                                ========        ========        ========        ========        ========


<CAPTION>
                                                                Commercial                    
                                                Consumer       Non-Mortgage      Total  
                                                --------       ------------      -----  
<S>                                             <C>             <C>             <C>     
Amounts due after June 30, 1998 in:
   One year or less                             $     59        $  2,076        $ 19,816
   After one year through two years                  112             127           1,153
   After two years through three years               380             368          17,816
   After three years through five years            1,110             682          10,411
   After five years through ten years                  5            --            28,148
   After ten years through fifteen years            --              --            13,387
   After fifteen years                              --              --            44,659
                                                --------        --------        --------
    Total(1)                                    $  1,666        $  3,253        $135,390
                                                ========        ========        ========

</TABLE>
------------------------------------
(1)  Gross of loans in process,  deferred fees and discounts,  and allowance for
     loan losses.
<PAGE>
    The following  table sets forth the dollar  amount of all loans,  before net
items, due after one year from June 30, 1998, based on the scheduled contractual
maturities  shown in the preceding  table,  which have fixed  interest  rates or
which have floating or adjustable interest rates.
<TABLE>
<CAPTION>
                                                       Floating or
                                        Fixed-Rate   Adjustable-Rate      Total
                                        ----------   ---------------      -----
                                                     (In Thousands)
<S>                                       <C>            <C>            <C>     
One- to four-family residential           $47,310        $32,569        $ 79,879
Construction and land development          10,135            926          11,061
Commercial mortgages                        2,294          1,965           4,259
Home equity                                  --            9,865           9,865
Second mortgages                            7,726           --             7,726
Consumer                                    1,607           --             1,607
Commercial non-mortgage                       522            655           1,177
                                          -------        -------        --------
  Total                                   $69,594        $45,980        $115,574
                                          =======        =======        ========
</TABLE>

    Scheduled  contractual  maturities of loans do not  necessarily  reflect the
actual term of Bank West's  portfolio.  The  average  life of mortgage  loans is
substantially  less  than  their  average  contractual  terms  because  of  loan
prepayments  and  enforcement of due-on-sale  clauses,  which give Bank West the
right to declare a loan  immediately  due and payable in the event,  among other
things,  that the borrower  sells the real property  subject to the mortgage and
the loan is not repaid.  The average  life of mortgage  loans tends to increase,
however, when current mortgage loan rates substantially exceed rates on existing
mortgage loans and,  conversely,  decrease when rates on existing mortgage loans
substantially exceed current mortgage loan rates.

    Origination, Purchase and Sale of Loans. The lending activities of Bank West
are subject to the written,  non-discriminatory  underwriting standards and loan
origination  procedures  established  by Bank  West's  Board  of  Directors  and
management.  Loan  originations  are  obtained  through  a variety  of  sources,
including referrals from real estate brokers, developers,  builders and existing
customers.  Written loan  applications are taken by lending  personnel,  and the
loan department  supervises the  procurement of credit  reports,  appraisals and
other  documentation  involved with a loan. Property valuations are performed by
independent  outside  appraisers.  Except for second  mortgages  and home equity
lines of credit,  as to which  only  title  searches  are  performed,  Bank West
generally  requires title insurance with respect to residential and construction
loans.  Hazard insurance is also required on all secured  property,  as is flood
insurance if the property is located within a designated flood zone.

    Bank West's  loan  approval  process is  intended  to assess the  borrower's
ability to repay the loan,  the  viability  of the loan and the  adequacy of the
value of the  property  that will secure the loan.  If the loan is to be sold to
one of the investors with which the Bank has an agreement,  as discussed  below,
the Bank's loan  underwriter  may approve the loan if the investor has delegated
such  authority  to  the  Bank.  If the  investor  requires  that  the  loan  be
underwritten  by it, the loan is submitted to the investor for its approval.  If
the loan is to be held in the  Bank's  portfolio,  it must also be  approved  by
individuals  granted  loan  approval  authority  if the  loan  does  not  exceed
$275,000.  If the loan is to be held in the portfolio  and exceeds  $275,000 but
does not exceed  $500,000,  it must be approved by the Loan Committee.  Loans in
excess of $500,000 must be approved by the Board of Directors.
<PAGE>
    The Bank has entered into  agreements  with the Federal  Home Loan  Mortgage
Corporation  ("FHLMC") and several private investors.  The Bank sells loans with
servicing  retained  to FHLMC on a  mandatory  commitment  basis.  Each  private
investor has agreed to purchase loans, together with servicing thereof, from the
Bank on a  loan-by-loan  best  efforts  basis,  provided  that the  investor  is
satisfied  after  its  review  of the  loan  that  the  loan  complies  with its
established underwriting guidelines and lending requirements.  The Bank does not
approve  a loan to be  originated  for  sale  unless  either  the  loan has been
satisfactorily  reviewed by one of the investors or the loan is to be sold to an
investor that has delegated the approval  authority to the Bank.  The Bank makes
certain  representations and warranties regarding the loans it sells pursuant to
the above  agreements,  primarily with respect to the  origination of the loans,
the loan documents and the existence of valid liens and insurance policies.  Any
violation of these representations and warranties or, with respect to certain of
the  agreements,  the  existence of certain  deficiencies  in the loans during a
specified  period  may  result in the Bank  being  required  to  repurchase  the
affected  loans  that  were  sold.  As of June 30,  1998,  the Bank has not been
required to repurchase any of the loans it has sold. The above agreements may be
terminated by either party at any time with respect to future loan  commitments,
with varying amounts of termination notice required.

    To supplement its loan  originations,  the Bank has entered into third-party
origination agreements with a number of mortgage banking companies and financial
institutions.  Pursuant to such  agreements,  the third-party  originators  sell
first and second mortgage  loans,  together with the servicing  thereof,  to the
Bank on a loan-by-loan basis. The Bank is under no obligation to purchase any of
such loans,  and the Bank agrees to  purchase  specific  loans only after it has
determined  that  such loan  meets its  underwriting  standards  and,  for first
mortgages,  the standards of the secondary  market.  The third-party  originator
makes certain representations and warranties regarding the loans it sells to the
Bank. If there is a violation of the  representations  and warranties,  then the
Bank may require the  third-party  originator to repurchase the affected  loans.
The above  agreements may be terminated by either party at any time with respect
to future loan commitments.  Pursuant to the third-party origination agreements,
the Bank  purchased  $33.1  million of loans in the year ended June 30, 1998. Of
the loans purchased in fiscal 1998, $14.8 million consisted of fixed-rate,  one-
to four-family  residential  loans,  $448,000  consisted of mortgage loans which
provide for periodic interest rate adjustments ("ARMs"),  $5.5 million consisted
of balloon  mortgages,  $8.9 million  consisted of construction  loans,  part of
which were included in loans in process at June 30, 1998, $2.8 million consisted
of fixed-rate  second  mortgages and $617,000  consisted of  variable-rate  home
equity loans.  Most of the one- to four-family  loans purchased by the Bank were
for resale, whereas the purchased construction,  home equity and second mortgage
loans were for portfolio.

    The Bank sold $45.0  million,  $32.9  million and $45.8  million of loans in
fiscal 1998, 1997 and 1996,  respectively,  representing 39.1%, 42.5% and 66.2%,
respectively,  of total loans  originated  and purchased in such  periods.  Loan
originations  and  purchases  were at record  levels in fiscal 1998,  as greater
emphasis was placed on  originating  residential  construction,  commercial  and
various types of consumer loans for portfolio instead of concentrating primarily
on residential mortgage banking activities. In addition, lower prevailing market
interest  rates during fiscal 1998  compared to the prior fiscal year  increased
the dollar amount of  refinances.  Total loan  originations  and purchases  were
$115.0  million in fiscal 1998  compared to $77.4  million and $69.2  million in
fiscal 1997 and 1996, respectively.

    At June 30, 1998,  Bank West was  servicing  $33.2  million of loans for the
FHLMC.
<PAGE>
    The following table shows total loans originated, purchased, sold and repaid
during the periods indicated, including in each case loans held for sale.
<TABLE>
<CAPTION>
                                                      Year Ended June 30,
                                            ------------------------------------ 
                                              1998           1997        1996
                                            ---------      -------     --------
                                                        (In Thousands)
<S>                                         <C>            <C>         <C>     
Loan originations:
  One- to four-family residential:
    Adjustable-rate                         $   1,054      $ 9,290     $  6,201
    Fixed-rate                                 44,655       14,890       26,524
  Construction:
    Adjustable-rate                             9,565       14,758        7,693
    Fixed-rate                                  8,737        1,470        4,078
  Commercial mortgages                          5,433        2,002        1,212
  Consumer loans                                2,078        1,006          768
  Home equity loans                             3,383        5,565        1,039
  Second mortgages                              5,043        4,194        1,645
  Commercial non-mortgage                       1,919        2,315        1,139
                                            ---------      -------     --------
      Total loan originations                  81,867       55,490       50,299
Loans purchased:
   Second mortgages                             2,776         --           --
   Home equity loans                              617         --           --
   One- to four-family residential             29,717       21,892       18,919
                                            ---------      -------     --------
     Total loans originated
      and purchased                           114,977       77,382       69,218
                                            ---------      -------     --------

Sales and loan principal repayments:
  Carrying value of loans sold                 44,320       32,416       45,181
  Loan principal repayments                    56,393       29,915       19,037
                                            ---------      -------     --------
    Total loans sold and
      principal repayments                    100,713       62,331       64,218
                                            ---------      -------     --------
Increase (decrease) due to other
  items, net (1)                               (6,888)         742       (5,099)
                                            ---------     -------     --------
Net increase (decrease) in
  loan portfolio, net                       $   7,376      $15,793     $    (99)
                                            =========      =======     ========
</TABLE>
----------------------

(1)  Other  items  consist of loans in  process,  deferred  fees and  discounts,
     allowance for loan losses and loans held for sale.

<PAGE>
    Real Estate Lending Standards and Underwriting Policies. Effective March 19,
1993,   all  financial   institutions   were  required  to  adopt  and  maintain
comprehensive written real estate lending policies that are consistent with safe
and sound banking practices.  These lending policies must reflect  consideration
of the Interagency  Guidelines for Real Estate Lending  Policies  adopted by the
federal  banking  agencies in December 1992  ("Guidelines").  The Guidelines set
forth uniform regulations  prescribing  standards for real estate lending.  Real
estate  lending is defined as extensions of credit secured by liens on interests
in real  estate or made for the  purpose of  financing  the  constructions  of a
building or other improvements to real estate,  regardless of whether a lien has
been taken on the property.

    The policies must address  certain lending  considerations  set forth in the
Guidelines,   including   loan-to-value   ("LTV")  limits,  loan  administration
procedures,  underwriting  standards,  portfolio  diversification  standards and
requirements for documentation, approval and reporting. These policies must also
be  appropriate to the size of the  institution  and the nature and scope of its
operations,  and must be reviewed  and  approved by the  institution's  board of
directors at least annually.  The LTV ratio framework,  with the LTV ratio being
the total  amount of credit to be  extended  divided by the  appraised  value or
purchase  price of the  property at the time the credit is  originated,  must be
established  for each  category of real estate loans.  If not a first lien,  the
lender must combine all senior liens when calculating this ratio.

    Certain institutions can make real estate loans that do not conform with the
established  LTV ratio  limits up to 100% of the  institution's  total  capital.
Within  this  aggregate  limit,  total loans for all  commercial,  agricultural,
multi-family and other non-one-to-four  family residential properties should not
exceed  30%  of  total  capital.   An  institution  will  come  under  increased
supervisory scrutiny as the total of such loans approaches these levels. Certain
loans are exempt from the LTV ratios  (e.g.,  those  guaranteed  by a government
agency,  loans to  facilitate  the sale of real  estate  owned,  loans  renewed,
refinanced or  restructured  by the original  lender(s) to the same  borrower(s)
where there is no advancement of new funds, etc.).

    Bank West is in compliance with the above standards.

    Although  Michigan-chartered  savings  institutions,  such as Bank West, are
permitted  to  originate  and  purchase  loans  secured by real  estate  located
throughout  the United  States,  Bank West's  present  lending is primarily done
within  western  Michigan.   Subject  to  Bank  West's   loans-to-one   borrower
limitation,  Bank West is permitted to invest without  limitation in residential
mortgage loans and up to 400% of its capital in loans secured by non-residential
or  commercial  real estate.  Bank West may also invest in secured and unsecured
consumer loans in an amount not exceeding 35% of Bank West's total assets.  This
35% limitation may be exceeded for certain types of consumer loans, such as home
equity and property  improvement loans secured by residential real property.  In
addition,  Bank West may  invest up to 10% of its total  assets in  secured  and
unsecured loans for commercial, corporate, business or agricultural purposes. At
June 30, 1998, Bank West was well within each of the above lending limits.
<PAGE>
    Bank West  requires  title  insurance  insuring the priority of its lien, as
well as fire and extended coverage casualty  insurance,  in order to protect the
properties  securing  its real estate  loans.  Borrowers  must also obtain flood
insurance  policies when the property is in a flood hazard area as designated by
the Federal Emergency  Management  Agency.  Borrowers may be required to advance
funds on a monthly basis together with each payment of principal and interest to
a mortgage loan account from which Bank West makes  disbursements for items such
as real estate taxes,  hazard insurance  premiums and private mortgage insurance
premiums as they become due.

    Loans on Existing  Residential  Properties.  The primary real estate lending
activity  of Bank West is the  origination  of loans  secured by first  mortgage
liens on one- to  four-family  residences.  At June 30, 1998,  $80.6  million or
59.5% of Bank West's  total loan  portfolio,  including  loans held for sale but
before net items, consisted of one- to four-family residential loans.

    The LTV ratio,  maturity and other provisions of the loans made by Bank West
generally  have  reflected  the  policy of making  less  than the  maximum  loan
permissible  under  applicable  regulations,  in  accordance  with sound lending
practices,  market  conditions and  underwriting  standards  established by Bank
West. Bank West's lending policies on one- to four-family  residential  mortgage
loans  generally  limit  the  maximum  LTV  ratio  to 97% of the  lesser  of the
appraised  value  or  purchase  price of the  property,  and  generally  one- to
four-family  residential  loans in excess of an 80% LTV  ratio  require  private
mortgage insurance.  Prior to November 1992, the Bank had required a minimum 25%
down payment  with respect to such loans.  For 95% loans,  the  borrower's  down
payment must come from the  borrower's  own funds and cannot be in the form of a
gift. A borrower's total debt-to-income ratio generally may not exceed 41%.

    Bank West offers fixed-rate one- to four-family residential loans with terms
up to 30 years.  Such loans are amortized on a monthly basis with  principal and
interest due each month and customarily include "due-on-sale" clauses, which are
provisions  giving  Bank West the right to  declare a loan  immediately  due and
payable  in the event  the  borrower  sells or  otherwise  disposes  of the real
property  subject to the mortgage or the loan is not repaid.  Bank West enforces
due-on-sale clauses to the extent permitted under applicable laws.

    Various  legislative  and  regulatory  changes  have  given  Bank  West  the
authority to originate and purchase  ARMs,  subject to certain  limitations.  At
June 30, 1998, one- to four-family residential ARMs represented $32.6 million or
24.1% of the total loan portfolio, including loans held for sale.

    Bank West's one- to four-family  residential ARMs are fully amortizing loans
with contractual  maturities of up to 30 years.  These loans have interest rates
which are  scheduled to adjust  annually in accordance  with a designated  index
(which,  at present,  is the one-year Treasury security index, plus a range from
2.75% to 2.875%). Bank West currently offers a one-year adjustable-rate mortgage
with a 2% cap on the rate  adjustment  per period  and a 6% cap rate  adjustment
over  the life of the  loan.  The  adjustable-rate  loans  in Bank  West's  loan
portfolio  are not  convertible  by their terms into  fixed-rate  loans,  may be
assumable and do not produce negative amortization.  Bank West also offers 3, 5,
7 and 10  year  balloon  mortgages.  During  the  past  fiscal  year,  the  Bank
experienced a higher  dollar amount of ARM  prepayments  and  refinancings  than
anticipated.  As a result,  in fiscal 1998 the Bank  instituted a 1%  prepayment
penalty  on  newly  originated  or  purchased  ARMs  for  portfolio.  ARM  loans
originated or purchased for sale do not contain such prepayment penalties.
<PAGE>
    The demand for adjustable-rate  loans in Bank West's primary market area has
been a function of several  factors,  including the level of interest rates, and
the  difference  between the interest  rates  offered for  fixed-rate  loans and
adjustable-rate  loans.  Due to the generally lower interest rates prevailing in
recent  periods,  the market demand for  adjustable-rate  loans has decreased as
consumer preference for fixed-rate loans has increased.  As a result, for fiscal
1998, ARMs represented  only 2.3% of total one- to four-family  residential loan
originations  as  compared  to  38.4%  and  18.9%  for  fiscal  1997  and  1996,
respectively.  To offset ARM prepayments,  the Bank originated  various types of
balloon mortgages for portfolio.

    Construction and Land  Development  Loans. The Bank originates and purchases
loans to finance the  construction  of one- to  four-family  dwellings.  It also
originates  loans for acquisition  and development of unimproved  property to be
used for residential purposes. Construction loans represent loans to individuals
who have a contract with a builder for the  construction  of their  residence as
well as loans to builders of  residential  real  estate  property.  This type of
lending has  significantly  increased in recent years and  represents the second
most  significant type of loan for the Bank. At the end of fiscal 1998, 1997 and
1996,  construction and land development loans amounted to $25.4 million,  $21.6
million and $14.1 million,  respectively, or 18.8%, 17.8% and 13.3% of the total
loan portfolio (including loans held for sale), respectively. The Bank purchased
$8.9  million  of  construction  loans in fiscal  1998,  a portion of which were
included  in loans in  process at June 30,  1998.  The Bank  expects  additional
growth in its construction loan portfolio in fiscal 1999.

    Construction  loans extended  pursuant to a builder's line of credit are for
up to the Bank's  regulatory  lending  limit at the prime rate plus a  specified
percentage.  A first  mortgage on each home  constructed is given as collateral.
Interest payments only are due for six months,  after which the balance extended
is due. The Board of Directors has adopted a policy limiting  builder's lines of
credit to four mortgages  outstanding at any one time, for an aggregate  balance
not to exceed the Bank's  regulatory  lending  limit.  Loans to builders under a
line of credit are limited to 75% of appraised  value.  The maximum term for any
loan pursuant to a builder's line of credit is one year. Pursuant to Bank West's
Construction Loan Policy,  construction  loans to individuals are limited to 95%
of the appraised  value, or purchase  price,  whichever is less, of the security
property. Construction loans are offered with both fixed and adjustable interest
rates.  Appropriate  documentation  related to the construction  process must be
submitted by applicants  for  construction  loans.  Bank West has also adopted a
policy for "spec  loans" to builders for  construction  of homes not under sales
contract.  For these loans,  the  permissible LTV limit is 75%. A maximum of two
"spec  loans" is  permitted  to any one builder to be  outstanding  at one time,
unless an exception is made based upon the financial stability of the builder.

    Construction  lending is generally  considered to involve a higher degree of
risk  than one- to  four-family  residential  lending.  Such  lending  typically
involves  large loan  balances  concentrated  in a single  borrower or groups of
related  borrowers for properties that are dependent upon sale of the home being
constructed.  Construction  financing also is generally  considered to involve a
higher   degree  of  risk  of  loss  than   long-term   financing  on  improved,
owner-occupied  real  estate  because  of  the  uncertainties  of  construction,
including the possibility of costs exceeding the initial  estimates and the need
to obtain a tenant or purchaser if the property will not be owner-occupied. Bank
West  generally  attempts to mitigate  the risks  associated  with  construction
lending by, among other  things,  lending  primarily  in its market area,  using
conservative  underwriting  guidelines,  and closely monitoring the construction
process.
<PAGE>
    Home Equity Lines of Credit. Bank West established a Home Equity Credit Line
Program in November 1993 to further  develop its second  mortgage  lending.  The
lines of credit are secured by one- to four-family  residences and are available
for any purpose.  Loans are offered at the prime rate up to prime plus 1.5%. The
minimum  credit line is $1,000,  and the maximum  line of credit is equal to (a)
either  95%  of  the  property's  appraised  value  or two  times  its  assessed
valuation, minus (b) any existing indebtedness secured by the property. The term
of the line of credit is seven  years,  with a minimum  monthly  payment  of the
greater of 1% of the unpaid  balance,  $100 or the  interest  due on the line of
credit.  At June  30,  1998,  $9.9  million  or 7.3% of the  Bank's  total  loan
portfolio, including loans held for sale but before net items, consisted of home
equity loans.  During fiscal 1998,  the Bank  purchased  $617,000 of home equity
lines of credit from various correspondent financial institutions.  The Bank had
unused  commitments  of  $7.1million  of home equity lines of credit at June 30,
1998. Management expects additional growth in its home equity lines of credit in
fiscal 1999.

    Second Mortgages. At June 30, 1998, $8.1 million or 6.0% of the Bank's total
loan portfolio, including loans held for sale but before net items, consisted of
second  mortgages.  The second  mortgages  are  secured  by one- to  four-family
residences, are for a fixed amount and a fixed term, and are made to individuals
for a variety of purposes.  During fiscal 1998,  the Bank purchased $2.8 million
of  second  mortgages  from  various   correspondent   financial   institutions.
Management  expects  additional  growth in its second mortgage loan portfolio in
fiscal 1999.

    Commercial   Lending.   Bank  West's  commercial   mortgage  and  commercial
non-mortgage  loans  amounted to $6.5  million and $3.3  million,  respectively,
representing 4.8% and 2.4% of the total loan portfolio, including loans held for
sale but  before  net items at June 30,  1998.  The  origination  of  commercial
mortgages  significantly  increased  to $5.4  million  in fiscal  1998 from $2.0
million in fiscal  1997,  as the Bank placed  greater  emphasis on these  loans.
Management   expects   additional   growth  both  in  commercial   mortgage  and
non-mortgage loans in fiscal 1999.

    Commercial  real estate  lending  and  commercial  non-mortgage  lending are
generally considered to involve a higher degree of risk than one- to four-family
residential  lending.  Such  lending  typically  involves  large  loan  balances
concentrated in a single  borrower or groups of related  borrowers for rental or
business properties or for the operation of businesses. In addition, the payment
experience  on  loans  secured  by  income-producing   properties  is  typically
dependent  on the success of the  operation  of the related  project and thus is
typically  affected by adverse  conditions  in the real estate market and in the
economy.  The Bank  generally  attempts to mitigate  the risks  associated  with
commercial lending by, among other things,  lending primarily in its market area
and using low LTV ratios in the underwriting process.

    Consumer  Lending.  At June 30, 1998,  Bank West's  consumer loan  portfolio
amounted to $1.6 million or 1.2% of the total loan  portfolio,  including  loans
held for sale but before net items.  The  consumer  loan  portfolio  consists of
automobile,  boat,  home  improvement  and unsecured  loans.  The origination of
consumer  loans  increased  to $2.1  million in fiscal 1998 from $1.0 million in
fiscal 1997,  as the Bank placed  greater  emphasis on these  loans.  Management
expects additional growth in its consumer loan portfolio during fiscal 1999.
<PAGE>
    Consumer loans  generally have shorter terms and higher  interest rates than
mortgage  loans but  generally  involve  more  credit risk than  mortgage  loans
because of the type and nature of the  collateral  and,  in certain  cases,  the
absence of collateral.  In addition,  consumer lending collections are dependent
on the borrower's continuing financial stability, and thus are more likely to be
adversely affected by job loss,  divorce,  illness and personal  bankruptcy.  In
many cases,  any repossessed  collateral for a defaulted  consumer loan will not
provide an adequate source of repayment of the outstanding  loan balance because
of its  depreciated  value or improper  repair and maintenance of the underlying
collateral.  The remaining deficiency often does not warrant further substantial
collection  efforts  against the borrower.  The Bank believes that the generally
higher yields earned on consumer loans  compensate for the increased credit risk
associated  with such loans and that consumer loans are important to its efforts
to increase rate sensitivity, shorten the average maturity of its loan portfolio
and provide a full range of services to its customers.

    Loan Fees and  Servicing  Income.  In addition to interest  earned on loans,
Bank West  receives  income  through the  servicing  of loans sold and loan fees
charged in connection with loan originations and  modifications,  late payments,
prepayments,  changes  of  property  ownership  and for  miscellaneous  services
related to its loans. Income from these activities varies from  period-to-period
with the volume and type of loans made.

    Loan  origination  fees or "points" are a percentage of the principal amount
of the  mortgage  loan and are charged to the  borrower in  connection  with the
origination of the loan. Bank West's loan  origination  fees and certain related
direct  loan  origination  costs are  offset,  and the  resulting  net amount is
deferred and amortized  against interest income over the contractual life of the
related  loans as an  adjustment  to the yield of such loans.  At June 30, 1998,
Bank West had  approximately  $211,000 of net loan costs which had been deferred
and are being recognized as income over the lives of the related loans.

Asset Quality

    Delinquent  Loans.  The following  table sets forth  information  concerning
delinquent  loans at June 30, 1998, in dollar amounts and as a percentage of the
Company's  total loan  portfolio.  The  amounts  presented  represent  the total
outstanding  principal  balances  of the related  loans,  rather than the actual
payment amounts which are past due.
<TABLE>
<CAPTION>
                                                                            June 30, 1998
                                         -----------------------------------------------------------------------------------
                                                 30-59                         60-89                    90 or More Days
                                              Days Overdue                  Days Overdue                    Overdue
                                          -----------------------     -------------------------       ---------------------- 
                                                          Percent                       Percent                      Percent
                                                         of Total                      of Total                     of Total
                                          Amount           Loans       Amount            Loans         Amount         Loans
                                          ------           -----       ------            -----         ------         -----
                                                                        (Dollars in Thousands)
<S>                                       <C>                <C>        <C>                <C>          <C>             <C> 
One- to four-family
  residential real estate loans           $1,135             .84%       $     --            --%         $ 682           .50%
Second mortgages                              88              .06             --            --            127           .09
Consumer loans                                34              .03             --            --             --            --
Commercial loans                             245              .18             --            --             32           .03
</TABLE>
<PAGE>
    Non-Performing  Assets.  When a  borrower  fails  to  make a  required  loan
payment,  Bank West attempts to cause the default to be cured by contacting  the
borrower.  In  general,  contacts  are made after a payment is more than 15 days
past due, at which time a late charge is  assessed.  In most cases  defaults are
cured promptly. If the delinquency on a mortgage loan exceeds 90 days and is not
cured  through  Bank  West's  normal  collection  procedures,  or an  acceptable
arrangement  is not  worked  out with the  borrower,  Bank West  will  institute
measures to remedy the default, including commencing a foreclosure action or, in
special  circumstances,  accepting  from the  borrower a  voluntary  deed of the
secured  property in lieu of foreclosure with respect to mortgage loans or title
and possession of collateral in the case of consumer loans.

    If  foreclosure  is effected,  the property is sold at a sheriff's  sale. If
Bank West is the successful  bidder,  the acquired real estate  property is then
included in Bank West's  "real estate  owned"  account  until it is sold.  Under
Michigan law, there is generally a six-month  redemption  period with respect to
one- to four- family  residential  properties  during which the borrower has the
right  to  repurchase  the  property.  Bank  West  is  permitted  under  federal
regulations to finance sales of real estate owned by "loans to facilitate" which
may involve more  favorable  interest  rates and terms than  generally  would be
granted under Bank West's underwriting  guidelines.  At June 30, 1998 and at the
end of each of the prior four fiscal years, Bank West had no loans to facilitate
real estate owned.

    All  loans  are  reviewed  on  a  regular   basis  under  the  Bank's  asset
classification  policy.  Loans are placed on a non-accrual  status when the loan
becomes  90  days  delinquent,   in  which  case  the  accrual  of  interest  is
discontinued.  At June 30, 1998,  the Bank had $841,000 of loans on  non-accrual
status.

    The following  table sets forth the amounts of the  Company's  nonperforming
assets at the dates indicated,  all of which consisted of non-accruing,  one- to
four-family  residential loans 90 days or more delinquent and real estate owned.
At such dates, there were no troubled debt restructurings.
<TABLE>
<CAPTION>
                                                       June 30,
                                   ------------------------------------------------- 

                                    1998       1997      1996       1995        1994
                                    ----       ----      ----       ----        ----
                                                 (Dollars in Thousands)
<S>                                <C>         <C>       <C>        <C>        <C>   
Total nonperforming assets:
  Non-accruing loans 90 days
   or more delinquent              $  841      $417      $  43      $ 145      $   35
  Real estate owned                   192        20       --         --          --
                                   ------      ----      -----      -----      ------
    Total                          $1,033      $437      $  43      $ 145      $   35
                                   ======      ====      =====      =====      ======
Total nonperforming loans as
  a percentage of loans, net          .71%      .37%       .04%       .15%        .04%
                                   ======      ====      =====      =====      ======
Total nonperforming assets as
  a percentage of total assets        .57%      .28%       .03%       .10%        .03%
                                   ======      ====      =====      =====      ======
</TABLE>
<PAGE>
    The  $1.0  million  nonperforming  assets  at June  30,  1998  consisted  of
primarily one- to four-family residential loans and construction mortgage loans.
The increase in  nonperforming  assets at June 30, 1998 was attributable to spec
construction  mortgage loans.  However, due to the Bank's low LTV ratio required
for each of these  loans,  no  portion  of the  allowance  for loan  losses  was
allocated to any specific loans at June 30, 1998.

    The  Bank's  total  classified  assets  at June 30,  1998  amounted  to $1.0
million, which was classified as substandard.

    At June 30,  1998,  management  was not aware of any  additional  loans with
possible credit problems which caused it to have doubts as to the ability of the
borrowers to comply with present loan repayment  terms and which in management's
view may result in the  future  inclusion  of such  items in the  non-performing
asset categories.

    Allowance for Loan Losses.  At June 30, 1998, Bank West's allowance for loan
losses amounted to $290,000 or .21% of the total loan portfolio, including loans
held  for  sale.  Bank  West's  loan  portfolio  consists  primarily  of one- to
four-family  residential  loans and, to a lesser extent,  construction  and land
development  loans,  home  equity  lines  of  credit,   second  mortgage  loans,
commercial mortgage and non-mortgage loans and consumer loans. The Bank believes
that there are no  material  elements of risk in its loan  portfolio,  and total
nonperforming  assets have remained at low levels.  The classification of assets
policy is reviewed quarterly by the Board of Directors.  The loan loss 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. Although management
believes   that  it  uses  the  best   information   available   to  make   such
determinations,  future  adjustments  to allowances  may be  necessary,  and net
income could be significantly  affected,  if circumstances  differ substantially
from the assumptions used in making the initial determinations.
<PAGE>
    The following table summarizes  changes in the allowance for loan losses and
other selected statistics for the periods presented.
<TABLE>
<CAPTION>
                                                               At or For the
                                                              Year Ended June 30,
                                      ---------------------------------------------------------------

                                        1998          1997          1996          1995         1994
                                      --------      --------      --------      --------      -------
                                                           (Dollars in Thousands)
<S>                                   <C>           <C>           <C>           <C>           <C>    
Total loans outstanding(1)            $135,390      $121,126      $106,075      $101,075      $95,656
                                      ========      ========      ========      ========      =======

Allowance for loan losses,
  beginning of period                 $    226      $    166      $    108      $     88      $    63
Provision for loan losses                   81            60            60            20           25
Charge-offs, net of recoveries(2)           17             2          --            --           --
                                      --------      --------      --------      --------      -------
Allowance for loan losses,
  end of period                       $    290      $    226      $    166      $    108      $    88
                                      ========      ========      ========      ========      =======

Allowance for loan losses
  as a percent of total loans
  outstanding                            .21 %           .19%          .16%          .11%         .09%
                                      ========      ========      ========      ========      =======
One- to four-family residential
  loans as a percent of total
  loans outstanding
                                          59.5%         68.6%         80.2%         91.7%        91.1%
                                      ========      ========      ========      ========      =======
</TABLE>
---------------------------


(1)  Includes loans held for sale.

(2)  Of  the  $17,000  in  charge-offs  in  fiscal  1998,   $13,000  related  to
     construction  loans and $4,000  related to  consumer  loans.  The $2,000 in
     charge-offs  in fiscal 1997  related to  residential  loans.  There were no
     recoveries in fiscal 1998 and 1997.
<PAGE>
    The following table presents the allocation of the allowance for loan losses
by type of loan at each of the dates indicated.

<TABLE>
<CAPTION>
                                                             June 30,
                                         ----------------------------------------------
                                                1998                      1997
                                         ---------------------------------------------- 
                                                       Loan                     Loan
                                                     Category                 Category
                                          Amount       as a %       Amount      as a %
                                            of        of Total        of       of Total
                                         Allowance      Loans      Allowance     Loans
                                         ---------      -----      ---------     -----
                                                     (Dollars in Thousands)

<S>                                          <C>         <C>         <C>         <C>  
Single-family residential                    $ 38        59.5%       $ 43        80.2%
Construction and land development              19        18.8          16        13.3
Commercial(1)                                 110         7.2          48         2.0
Consumer(2)                                    89        14.5          44         4.5
Unallocated                                    34          --          75          --
                                             ----       -----        ----       -----
Total                                        $290       100.0%       $226       100.0%
                                             ====       =====        ====       =====
</TABLE>

(1)  Includes commercial mortgages and commercial non-mortgage loans.

(2)  Includes home equity lines of credit,  second  mortgages and other consumer
     loans.


Mortgage-Backed Securities

    The Company has invested in a portfolio of  mortgage-backed  securities  and
related securities. Mortgage-backed securities (which also are known as mortgage
participation   certificates   or   pass-through   certificates)   represent   a
participation  interest  in a  pool  of  one-  to  four-family  or  multi-family
residential  mortgages,  the principal and interest payments on which are passed
from the mortgage originators, through intermediaries (generally U.S. government
agencies and  government  sponsored  enterprises)  that pool and  repackage  the
participation  interests in the form of  securities,  to  investors  such as the
Company. The Company's  mortgage-backed  securities are insured or guaranteed by
the Federal National Mortgage  Association ("FNMA") or the FHLMC. FNMA and FHLMC
are public  corporations  chartered by the U.S.  government.  These institutions
guarantee the timely  payment of interest and the ultimate  return of principal.
FNMA and FHLMC  mortgage-backed  securities are not backed by the full faith and
credit  of  the   United   States,   but   because   FNMA  and  FHLMC  are  U.S.
government-sponsored  enterprises,  these securities are considered high quality
investments with minimal credit risks.

    During  fiscal 1998,  1997 and 1996,  the Company  purchased $ 28.3 million,
$15.7 million and $13.7 million, respectively, of adjustable-rate collateralized
mortgage  obligations  ("CMOs").  The  CMOs  are not  classified  as  "high-risk
mortgage  securities" under OTS Thrift Bulletin 52 ("TB 52"). CMOs are a special
type of pass-through debt in which the stream of principal and interest payments
<PAGE>
on the  underlying  mortgages or  mortgage-backed  securities  is used to create
classes with different  maturities  and, in some cases,  amortization  schedules
with each such class possessing different risk characteristics. The CMOs reprice
monthly  based on either the prime rate  index or the London  Interbank  Offered
Rate ("LIBOR") index.

    At June 30, 1998,  the Company's  mortgage-backed  securities  classified as
available  for  sale had a  market  value  of  $807,000  (gross  of  $10,000  in
unrealized  losses),  while CMOs  classified  as available for sale had a market
value of $24.6  million  (gross of $20,000 in net  unrealized  gains).  The book
value and market value of CMOs  classified  as held to maturity at June 30, 1998
totalled $11.1 million. In accordance with SFAS No. 115, "Accounting for Certain
Investments  in  Debt  and  Equity  Securities,"   mortgage-backed  and  related
securities  classified  as  available  for sale are  reported  at fair value and
mortgage-backed  and related  securities  classified as held for  investment are
reported at amortized cost. For additional information relating to the Company's
mortgage-backed  and related  securities held to maturity or available for sale,
see Note 2 to the Consolidated Financial Statements in the 1998 Annual Report to
Stockholders, filed as Exhibit 13.1 hereto (the "1998 Annual Report").

    Mortgage-backed securities and CMOs generally yield less than the loans that
underlie such  securities,  because of the cost of payment  guarantees or credit
enhancements  that result in nominal  credit risk. In addition,  mortgage-backed
securities  are more liquid than  individual  mortgage  loans and may be used to
collateralize   obligations   of  the  Company.   In  general,   mortgage-backed
pass-through  securities are weighted at no more than 20% for risk-based capital
purposes,  compared  to an  assigned  risk  weighting  of 50% to 100% for  whole
residential  mortgage  loans. As a result,  these types of securities  allow the
Company to optimize regulatory capital to a greater extent than  non-securitized
whole loans.

    While mortgage-backed  securities carry a reduced credit risk as compared to
whole  loans,  such  securities  remain  subject to the risk that a  fluctuating
interest  rate  environment,  along with other  factors  such as the  geographic
distribution of the underlying  mortgage loans, may alter the prepayment rate of
such mortgage loans and so affect both the prepayment  speed, and value, of such
securities.  In contrast  to  mortgage-backed  securities  in which cash flow is
received  (and,  hence,  prepayment  risk is shared) pro rata by all  securities
holders,  the  cash  flows  from the  mortgages  or  mortgage-backed  securities
underlying  CMOs are  segmented  and  paid in  accordance  with a  predetermined
priority  to  investors   holding   various   tranches  of  such  securities  or
obligations.  A particular  tranche of CMOs may therefore carry  prepayment risk
that differs from that of both the underlying collateral and other tranches.
<PAGE>
    The   following   table  sets  forth  the   composition   of  the  Company's
mortgage-backed and CMO securities portfolio at each of the dates indicated.
<TABLE>
<CAPTION>
                                                             June 30,
                                                 ------------------------------- 
                                                  1998         1997        1996
                                                 -------     -------     -------
                                                          (In Thousands)
<S>                                              <C>         <C>         <C>    
Mortgage-backed and related securities:
  Mortgage-backed securities                     $   807     $ 1,583     $ 2,308
  Collateralized mortgage obligations             35,700      23,995      15,034
                                                 -------     -------     -------
    Total mortgage-backed securities             $36,507     $25,578     $17,342
                                                 =======     =======     =======
</TABLE>

    Information regarding the contractual  maturities and weighted average yield
of the  Company's  mortgage-backed  securities  portfolio  at June  30,  1998 is
presented  below.  Due  to  repayments  of  the  underlying  loans,  the  actual
maturities of mortgage-backed  securities  generally are substantially less than
the scheduled maturities.
<TABLE>
<CAPTION>
                                           Amounts at June 30, 1998 Which Mature In
                            ------------------------------------------------------------------------- 
                                                             After Five
                            One Year      After One to           to            Over 10
                             or Less        Five Years        10 Years          Years           Total
                             -------        ----------        --------          -----           -----
                                                        (Dollars in Thousands)
<S>                           <C>             <C>               <C>           <C>              <C>            
Mortgage-backed
 securities                   $  --           $  --             $  --         $   807          $   807        
Collateralized mortgage                                                                                    
  obligations                    --              --                --          35,700           35,700     
                              -----           -----             -----         -------          -------     
     Total                    $  --           $  --             $  --         $36,507          $36,507     
                              =====           =====             =====         =======          =======     
Weighted average yield           --%             --%               --%           6.68%            6.68%    
                                                                                       
</TABLE>
<PAGE>
    The following table sets forth the purchases, sales and principal repayments
of  the  Company's  mortgage-backed  securities  and  CMOs  during  the  periods
indicated.
<TABLE>
<CAPTION>
                                                       At or For the
                                                    Year Ended June 30,
                                         --------------------------------------- 
                                           1998           1997          1996
                                         --------       --------       --------
                                                (Dollars In Thousands)
<S>                                      <C>            <C>   <C>      <C>     
Mortgage-backed securities
 and CMOs at beginning of period         $ 25,578       $ 17, 342      $ 18,355
Purchases                                  28,348         15,729         14,721
Repayment                                    (787)          (545)        (2,970)
Sales and calls                           (16,576)        (7,247)       (12,485)
Gain on sales                                  55             12             17
Amortization of premiums, net                 (80)           (11)           (90)
Change in net unrealized gain (loss)
   on securities available for sale           (31)           298           (206)
                                         --------       --------       --------
Mortgage-backed securities
  and CMOs at end of period              $ 36,507       $ 25,578       $ 17,342
                                         ========       ========       ========
Weighted average yield at
  end of period                              6.68%          7.09%          6.52%
                                         ========       ========       ========
</TABLE>

Securities

    The investment policy of the Company, which is established by the Investment
Committee  and  approved by the Board of  Directors,  is designed  primarily  to
provide a portfolio of high quality,  diversified  instruments  while seeking to
optimize net interest  income  within  acceptable  limits of interest rate risk,
credit risk and liquidity.

    Securities  (excluding  FHLB stock,  mortgage-backed  securities  and CMO's)
totalled $6.7 million or 3.7% of total assets at June 30, 1998.  Such securities
consist of U.S.  government agency and equity securities.  At June 30, 1998, all
of the securities are classified as available for sale.

    On May 31, 1998, the Company  reclassified equity 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  that  an
other-than-temporary  market  decline  in the  market  value of  certain  equity
securities occurred totaling $260,000 as of June 30, 1998 based on market prices
at that date. 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.
<PAGE>
    The following table sets forth certain information relating to the Company's
securities  portfolio  (excluding  mortgage-backed  securities  and CMOs) at the
dates indicated.
<TABLE>
<CAPTION>
                                                                                    June 30,
                                             ---------------------------------------------------------------------------------------
                                                      1998                            1997                            1996
                                             -----------------------          ---------------------          -----------------------
                                               Book           Market           Book          Market           Book            Market
                                               Value          Value            Value          Value           Value           Value
                                               -----          -----            -----          -----           -----           -----
                                                                                (In Thousands)
<S>                                          <C>              <C>              <C>           <C>             <C>              <C>   
U.S. Government agency securities            $   3,995        $3,992           $3,999        $3,979          $6,949           $6,951
Corporate bonds                                     --            --                -            --             493              493
Equity securities                                3,011         3,011                -            --              --               --
FHLB stock                                       2,100         2,100           1,550          1,550           1,475            1,475
                                                ------       -------           ------         -----          ------           ------
  Total                                      $   9,106       $ 9,103           $5,549        $5,529          $8,917           $8,919
                                              ========        ======            =====         =====           =====            =====
</TABLE>

    The following table sets forth the amount of securities  which mature during
each of the periods  indicated and the weighted average yields for each range of
maturities at June 30, 1998.
<TABLE>
<CAPTION>
                                                           Amounts at June 30, 1998 Which Mature In
                                   -------------------------------------------------------------------------------
                                                                     Over One                      Over Five
                                                    Weighted           Year         Weighted         Years       Weighted
                                     One Year        Average         Through         Average        Through       Average
                                      or Less         Yield         Five Years        Yield        Ten Years       Yield
                                   ----------    -------------    ------------   ------------    -----------    ---------
                                                                    (Dollars in Thousands)
<S>                                   <C>             <C>                 <C>              <C>          <C>           <C>
 Bonds and other debt securities:
      U.S. Government agency          $       --         --    %          $3,992           6.28%        $   --        --  %
securities
 Equity securities(1)
 FHLB stock(1)

</TABLE>
---------------------------

(1)  As a  member  of the FHLB of  Indianapolis,  the  Company  is  required  to
     maintain its  investment  in FHLB stock which has no stated  maturity.  The
     average  yield on the  FHLB  stock  was  8.0% in  fiscal  1998.  Also,  the
     Company's equity securities have no stated maturity.

    At June 30,  1998,  the  Company did not have  securities  in any one issuer
which exceeded 10% of the Company's stockholders' equity.
<PAGE>
Interest-Bearing Deposits

    At June 30,  1998,  the Company had  interest-bearing  deposits in financial
institutions  of $1.8 million,  as compared to $2.0 million at June 30, 1997 and
1996, respectively. The $200,000 decrease in interest-bearing deposits from June
30, 1998 to June 30, 1998 is due to excess liquidity being utilized to fund loan
originations.

Sources of Funds

    General.  Deposits  are the primary  source of Bank West's funds for lending
and other investment purposes. In addition to deposits,  Bank West derives funds
from  principal  repayments  on  loans  and  mortgage-backed   securities.  Loan
repayments are a relatively  stable source of funds,  while deposit  inflows and
outflows are significantly influenced by general interest rates and money market
conditions.  FHLB  advances  may be used to  compensate  for  reductions  in the
availability of funds from other sources. They may also be used on a longer-term
basis for general business purposes.

    Deposits.  Bank West's deposits are attracted  principally  from within Bank
West's primary market area through the offering of a broad  selection of deposit
instruments,  including NOW accounts,  money market  accounts,  regular  savings
accounts,  and term certificate accounts.  Included among these deposit products
are individual  retirement account certificates of approximately $9.1 million or
7.6% of total deposits at June 30, 1998.  Deposit  account terms vary,  with the
principal  differences being the minimum balance required,  the time periods the
funds must remain on deposit and the interest rate.

    The large  variety of deposit  accounts  offered by Bank West has  increased
Bank West's ability to retain deposits and has allowed it to be more competitive
in obtaining new funds,  but has not eliminated the threat of  disintermediation
(the  flow of funds  away  from  savings  institutions  into  direct  investment
vehicles such as government  and corporate  securities).  During periods of high
interest rates,  deposit accounts that have adjustable  interest rates have been
more costly than  traditional  passbook  accounts.  In  addition,  Bank West has
become  increasingly  subject to short-term  fluctuations in deposit flows. Bank
West's  ability  to  attract  and  maintain  deposits  is  affected  by the rate
consciousness  of its  customers  and  their  willingness  to  move  funds  into
higher-yielding  accounts. Bank West's cost of funds has been, and will continue
to be, affected by money market conditions.
<PAGE>
    The following table shows the distribution of, and certain other information
relating to, Bank West's deposits by type of deposit, as of the dates indicated.
<TABLE>
<CAPTION>
                                                                          June 30,
                                           ----------------------------------------------------------------------- 

                                                    1998                    1997                      1996
                                           -------------------     --------------------       ------------------- 

                                             Amount         %        Amount          %         Amount         %
                                           --------      -----     --------       -----       -------       -----
                                                                   (Dollars in Thousands)
Certificate accounts:
<S>                                        <C>          <C>         <C>           <C>         <C>           <C>               
  2.00% - 3.99%                            $   --           --%     $   --           --%      $  --            --%
  4.00% - 5.99%                              61,575       51.3       45,409        44.2        51,043        56.1
  6.00% - 7.99%                              27,601       23.0       32,230        31.3        17,351        19.1
  8.00% - 9.99%                                  23         --           21          --            21          --
                                           --------      -----     --------       -----       -------       -----
    Total certificate accounts               89,199       74.3       77,660        75.5        68,415        75.2
                                           --------      -----     --------       -----       -------       -----
Transaction accounts:
  Passbook and statement savings             19,335       16.1       17,388        16.9        16,572        18.2
  Money market accounts                         572         .5          786          .8         1,031         1.1
  NOW and noninterest-bearing accounts       10,873        9.1        7,028         6.8         5,010         5.5
                                           --------      -----     --------       -----       -------       -----
    Total transaction accounts               30,780       25.7       25,202        24.5        22,613        24.8
                                           --------      -----     --------       -----       -------       -----
    Total deposits                         $119,979      100.0%    $102,862       100.0%      $91,028       100.0%
                                           ========      =====     ========       =====       =======       =====
</TABLE>
    The following table presents the average balance of each type of deposit and
the average rate paid on each type of deposit for the periods indicated.
<TABLE>
<CAPTION>
                                                                       Year Ended June 30,
                                 -----------------------------------------------------------------------------------------
                                            1998                              1997                           1996
                                 ---------------------------         -----------------------         --------------------- 

                                                     Average                         Average                       Average
                                  Average              Rate          Average           Rate          Average         Rate
                                  Balance              Paid          Balance           Paid          Balance         Paid
                                  -------              ----          -------           ----          -------         ----
                                                                      (Dollars in Thousands)
<S>                              <C>                   <C>             <C>              <C>          <C>              <C>  
Passbook and statement
  savings accounts               $ 18,808              3.61%           $17,247          3.61%        $16,930          3.64%
Money market accounts
  and NOW accounts                  7,013              1.65              6,260           1.69          4,711           2.21
Certificates of deposit            83,032              5.79             73,465           5.71         66,532           5.84
                                 --------             -----            -------          -----         ------           ----

        Total                    $108,853              5.15%           $96,972          5.08%        $88,173          5.22%
                                 ========              =====           =======        =====         =======          ====
</TABLE>
<PAGE>
    The  following  table sets forth the  savings  flows of Bank West during the
periods indicated.
<TABLE>
<CAPTION>
                                                      Year Ended June 30,
                                           -------------------------------------
                                              1998           1997           1996
                                           -------------------------------------
                                                        (In Thousands)
<S>                                         <C>            <C>            <C>   
Increase before
   interest credited(1)                     $11,546        $ 6,945        $1,234
Interest credited                             5,571          4,889         4,614
                                            -------        -------        ------
  Net increase in deposits                  $17,117        $11,834        $5,848
                                            =======        =======        ======
</TABLE>
-----------------

(1)  Information  provided is net because  information  necessary to present the
     gross amounts of deposits and withdrawals is not readily available.

    Bank West  attempts to control the flow of deposits by pricing its  accounts
to remain generally competitive with other financial  institutions in its market
area, but does not necessarily seek to match the highest rates paid by competing
institutions.  Bank West has generally not taken a position of price  leadership
in its  markets  unless  there has been an  opportunity  to  market  longer-term
deposits.

    The  principal  methods  used by Bank West to attract  deposits  include the
offering of a wide variety of services and accounts, competitive interest rates,
convenient  office locations and cards that access deposits at Bank West through
automatic teller machines ("ATMs")  established by other banking  organizations.
Bank West uses  traditional  marketing  methods to  attract  new  customers  and
deposits, including mass media advertising and direct mailings.

    The following table sets forth the maturities of Bank West's certificates of
deposit having principal amounts of $100,000 or more at June 30, 1998.


Quarter Ending:                                                    Amounts
---------------                                                    -------
                                                               (In Thousands)

September 30, 1998                                                 $ 5,683
December 31, 1998                                                    2,330
March 31, 1999                                                       2,095
June 30, 1999                                                        2,248
After June 30, 1999                                                  4,827
                                                                   -------
  Total certificates of deposit with
    balances of $100,000 or more                                   $17,183
                                                                   =======
<PAGE>
    Borrowings.  Bank West may  obtain  advances  from the FHLB of  Indianapolis
based upon the  security of the common stock it owns in that bank and certain of
its  residential  mortgage  loans,  investment  securities  and  mortgage-backed
securities,  provided certain  standards  related to credit worthiness have been
met. See  "Regulation - The Bank - Federal Home Loan Bank System." Such advances
are made pursuant to several credit programs, each of which has its own interest
rate and range of  maturities.  Such  advances are  generally  available to meet
seasonal  and other  withdrawals  of deposit  accounts  and to permit  increased
lending.  At June 30, 1998,  Bank West had $37 million of advances from the FHLB
of Indianapolis, $22 million of which represent putable advances which gives the
FHLB 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.  In addition, $10 million of adjustable-rate  advances mature during
fiscal 1999 and $5 million of  adjustable-rate  advances  mature in fiscal 2000.
See Note 7 to the  Consolidated  Financial  Statements in the 1998 Annual Report
for  additional  information.  During  fiscal 1998 and 1997,  the Bank  utilized
additional FHLB advances to fund loans and securities growth as well as mortgage
banking  activities.  During  fiscal  1996,  the Bank  reduced  advances by $5.9
million with excess liquidity generated from deposit growth.

    The following table sets forth certain information  regarding  borrowings at
or for the dates indicated:
<TABLE>
<CAPTION>
                                              At or for the Year Ended June 30,
                                           -------------------------------------
                                             1998           1997          1996
                                            -------       -------       -------
                                                  (Dollars in Thousands)
<S>                                         <C>           <C>           <C>    
FHLB advances:
  Average balance outstanding               $35,803       $22,433       $22,236
  Maximum amount outstanding
    at any month-end during
    the period                              $38,000       $29,000       $22,500
  Balance outstanding at end
    of period                               $37,000       $29,000       $19,000
  Average interest rate
    during the period                          5.61%         5.46%         5.96%
  Weighted average interest rate
    at end of period                           5.48%         5.84%         5.52%
</TABLE>

Subsidiaries

         At June 30, 1998,  the Bank had one  wholly-owned  subsidiary,  Sunrise
Mortgage  Corporation,  which was  formed in  December  1997.  Sunrise  Mortgage
Corporation  originates and purchases  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  other  than Bank West on a
servicing released basis.

Competition

         Bank West faces significant competition both in attracting deposits and
in making loans. Some of the Bank's major competitors include Bank One, Comerica
Bank, Michigan National Bank, Old Kent Bank, Huntington Bank, and National City.
Its most direct  competition for deposits  historically has come from commercial
banks, credit unions and other savings institutions located in
<PAGE>
its primary market area, including many large financial  institutions which have
greater financial and marketing resources  available to them. In addition,  Bank
West faces  significant  competition for investors'  funds from short-term money
market mutual funds and issuers of corporate  and  government  securities.  Bank
West  competes  for  deposits  principally  by offering  depositors a variety of
deposit  programs.  Bank West does not rely upon any individual  group or entity
for a material portion of its deposits. The Bank estimates that its market share
of total deposits in Kent County, Michigan is approximately 1%.

         Bank West's  competition for real estate loans comes  principally  from
mortgage banking  companies,  commercial  banks and other savings  institutions.
Bank West competes for loan  originations  primarily  through the interest rates
and loan fees it charges, and the efficiency and quality of services it provides
borrowers  and real estate  brokers.  Factors which affect  competition  include
general  and  local  economic  conditions,  current  interest  rate  levels  and
volatility in the mortgage markets.  The Bank estimates that its market share of
total mortgage loans secured by properties  located in Kent County,  Michigan is
approximately 3%.

Employees

         Bank  West  and its  subsidiaries  had 61  full-time  employees  and 10
part-time  employees at June 30, 1998. None of these employees is represented by
a  collective  bargaining  agent,  and Bank West  believes  that it enjoys  good
relations with its personnel.


                                   REGULATION

         The  following  is  a  summary  of  certain  statutes  and  regulations
affecting the Company and the Bank. This summary is qualified in its entirety by
such statutes and  regulations.  A change in applicable  laws or regulations may
have a material effect on the Company,  the Bank and the business of the Company
and the Bank.

General

         Financial  institutions  and their holding  companies  are  extensively
regulated  under  federal and state law.  Consequently,  the growth and earnings
performance  of the Company and the Bank can be affected not only by  management
decisions and general economic conditions, but also by the statutes administered
by,  and the  regulations  and  policies  of,  various  governmental  regulatory
authorities.  Those  authorities  include,  but are not  limited to, the Federal
Reserve Board, the FDIC, the  Commissioner,  the Internal  Revenue Service,  and
state taxing authorities. The effect of such statutes,  regulations and policies
can be significant, and cannot be predicted with a high degree of certainty.

         Federal  and  state  laws  and  regulations   generally  applicable  to
financial institutions and their holding companies regulate, among other things,
the scope of business,  investments,  reserves against deposits,  capital levels
relative to operations,  lending activities and practices, the nature and amount
of collateral for loans, the establishment of branches, mergers,  consolidations
and  dividends.  The system of  supervision  and  regulation  applicable  to the
Company and the Bank establishes a comprehensive  framework for their respective
operations  and is intended  primarily for the  protection of the FDIC's deposit
insurance  funds,  the  depositors  of the  Bank  and the  public,  rather  than
shareholders of the Bank or the Company.
<PAGE>
         Federal law and regulations  establish supervisory standards applicable
to the lending  activities  of the Bank,  including  internal  controls,  credit
underwriting,  loan documentation and loan-to-value  ratios for loans secured by
real property.

The Company

         General.  The Company, as a registered savings and loan holding company
within the meaning of the Home Owners' Loan Act  ("HOLA"),  is subject to Office
of  Thrift  Supervision  ("OTS")  regulations,   examinations,  supervision  and
reporting  requirements.  As a subsidiary of a savings and loan holding company,
Bank West is subject to certain  restrictions  in its dealings  with the Company
and affiliates thereof.

         Activities  Restrictions.  There are generally no  restrictions  on the
activities of a savings and loan holding company which holds only one subsidiary
savings  institution.  However, if the Director of the OTS determines that there
is  reasonable  cause to believe  that the  continuation  by a savings  and loan
holding  company of an  activity  constitutes  a serious  risk to the  financial
safety,  soundness or  stability  of its  subsidiary  savings  institution,  the
Director may impose such  restrictions as deemed necessary to address such risk,
including  limiting (i) payment of dividends  by the savings  institution;  (ii)
transactions  between the savings institution and its affiliates;  and (iii) any
activities of the savings  institution that might create a serious risk that the
liabilities  of the  holding  company and its  affiliates  may be imposed on the
savings institution.  Notwithstanding the above rules as to permissible business
activities  of  unitary  savings  and loan  holding  companies,  if the  savings
institution  subsidiary  of such a holding  company  fails to meet the qualified
thrift lender ("QTL") test set forth in HOLA,  then such unitary holding company
also shall become subject to the activities  restrictions applicable to multiple
savings  and  loan  holding  companies  and,  unless  the  savings   institution
requalifies as a QTL within one year  thereafter,  shall register as, and become
subject to the restrictions  applicable to, a bank holding company.  At June 30,
1998, the Bank satisfied the QTL test.

         If the Company were to acquire control of another savings  institution,
other than through  merger or other  business  combination  with Bank West,  the
Company  would  thereupon  become a multiple  savings and loan holding  company.
Except where such acquisition is pursuant to the authority to approve  emergency
thrift  acquisitions and where each subsidiary savings institution meets the QTL
test, the activities of the Company and any of its subsidiaries (other than Bank
West or other subsidiary  savings  institutions)  would thereafter be subject to
further  restrictions.  Among other things, no multiple savings and loan holding
company or subsidiary thereof which is not a savings  institution shall commence
or continue for a limited period of time after  becoming a multiple  savings and
loan holding  company or subsidiary  thereof any business  activity,  upon prior
notice to, and no objection by the OTS, other than: (i) furnishing or performing
management  services for a subsidiary  savings  institution;  (ii) conducting an
insurance agency or escrow  business;  (iii) holding,  managing,  or liquidating
assets owned by or acquired from a subsidiary savings institution;  (iv) holding
or managing properties used or occupied by a subsidiary savings institution; (v)
acting as trustee  under deeds of trust;  (vi) those  activities  authorized  by
regulation  as of March 5, 1987 to be engaged in by  multiple  savings  and loan
holding  companies;  or  (vii)  unless  the  Director  of the OTS by  regulation
prohibits  or limits such  activities  for savings and loan  holding  companies,
those  activities  authorized  by  the  FRB  as  permissible  for  bank  holding
companies.  Those  activities  described in (vii) above also must be approved by
the Director of the OTS prior to being engaged in by a multiple savings and loan
holding company.
<PAGE>
         Legislation has been recently  introduced into the U.S.  Congress which
would  subject  all  unitary  holding  companies  to the  same  restrictions  on
activities  as are  currently  applied to multiple  holding  companies.  If such
legislation is enacted in its current form, the ability of the Company to engage
in  certain  activities  that are  currently  permitted  to the  Company  may be
restricted.  The Company,  however, does not believe that it will be required to
discontinue any current activity.  In addition,  such legislation would preclude
companies that are engaged in activities  not permitted to multiple  savings and
loan holding companies from acquiring control of the Company.  No prediction can
be made at this time as to whether such  legislation  will be enacted or whether
it will be enacted in its current form.

         Limitations  on  Transactions  with  Affiliates.  Transactions  between
savings  institutions  and any affiliate are governed by Sections 23A and 23B of
the  Federal  Reserve  Act  and  OTS  regulations.  An  affiliate  of a  savings
institution  is any company or entity which  controls,  is  controlled  by or is
under common control with the savings institution. In a holding company context,
the parent holding  company of a savings  institution  (such as the Company) and
any companies which are controlled by such parent holding company are affiliates
of the savings institution.  Generally,  such provisions (i) limit the extent to
which the  savings  institution  or its  subsidiaries  may  engage  in  "covered
transactions"  with  any  one  affiliate  to an  amount  equal  to 10%  of  such
institution's  capital stock and surplus,  and contain an aggregate limit on all
such  transactions with all affiliates to an amount equal to 20% of such capital
stock  and  surplus  and (ii)  require  that all such  transactions  be on terms
substantially  the  same,  or at  least  as  favorable,  to the  institution  or
subsidiary as those provided to a non-affiliate.  The term "covered transaction"
includes the making of loans,  purchase of assets,  issuance of a guarantee  and
other  similar  transactions.  In addition to the  restrictions  imposed by such
provisions, no savings institution may (i) loan or otherwise extend credit to an
affiliate,  except for any affiliate which engages only in activities  which are
permissible  for bank  holding  companies,  or (ii)  purchase  or  invest in any
stocks, bonds, debentures, notes or similar obligations of any affiliate, except
for affiliates which are subsidiaries of the savings institution.

         In addition,  Sections  22(h) and (g) of the Federal  Reserve Act place
restrictions   on  loans  to  executive   officers,   directors   and  principal
stockholders. Under Section 22(h), loans to a director, an executive officer and
to a  greater  than  10%  stockholder  of a  savings  institution,  and  certain
affiliated  interests  of  either,  may not  exceed,  together  with  all  other
outstanding  loans  to  such  person  and  affiliated  interests,   the  savings
institution's  loans  to  one  borrower  limit  (generally  equal  to 15% of the
institution's unimpaired capital and surplus).  Section 22(h) also requires that
loans to directors,  executive  officers and principal  stockholders  be made on
terms  substantially  the same as offered in  comparable  transactions  to other
persons and also requires prior board  approval for certain loans.  In addition,
the aggregate  amount of extensions  of credit by a savings  institution  to all
insiders  cannot  exceed  the  institution's  unimpaired  capital  and  surplus.
Furthermore,  Section 22(g) places additional restrictions on loans to executive
officers. Savings institutions also are subject to the restrictions of 12 U.S.C.
ss.1972,  which prohibits (i) a depository institution from extending credit, or
offering  any other  services  or fixing or varying the  consideration  for such
extension of credit or service,  on the condition that the customer  obtain some
additional  service from the  institution or certain of its affiliates or not to
obtain  services  of  a  competitor  of  the  institution,  subject  to  certain
<PAGE>
exceptions,  and (ii) extensions of credit to executive officers,  directors and
greater  than  10%  stockholders  of  a  depository  institution  by  any  other
institution that has a correspondent  banking relationship with the institution,
unless  such  extension  of credit is on  substantially  the same terms as those
prevailing at the time for comparable  transactions  with other persons and does
not involve more than the normal risk of repayment or present other  unfavorable
features.  At June  30,  1998,  Bank  West  was in  compliance  with  the  above
restrictions.

         Restrictions  on  Acquisitions.  Except  under  limited  circumstances,
savings and loan holding companies are prohibited from acquiring,  without prior
approval  of  the  Director  of the  OTS,  (i)  control  of  any  other  savings
institution or savings and loan holding company or substantially  all the assets
thereof or (ii) more than 5% of the voting  shares of a savings  institution  or
holding  company  thereof  which is not a  subsidiary.  Except  with  the  prior
approval  of the  Director  of the OTS,  no director or officer of a savings and
loan holding  company or person owning or controlling by proxy or otherwise more
than  25%  of  such  company's   stock,  may  acquire  control  of  any  savings
institution,  other  than a  subsidiary  savings  institution,  or of any  other
savings and loan holding company.

         The Director of the OTS may only approve acquisitions  resulting in the
formation of a multiple  savings and loan holding company which controls savings
institutions in more than one state if (i) the multiple savings and loan holding
company involved controls a savings  institution which operated a home or branch
office  located in the state of the  institution  to be  acquired as of March 5,
1987;  (ii) the  acquiror  is  authorized  to  acquire  control  of the  savings
institution  pursuant to the  emergency  acquisition  provisions  of the Federal
Deposit Insurance Act ("FDIA");  or (iii) the statutes of the state in which the
institution to be acquired is located  specifically  permit  institutions  to be
acquired  by the  state-chartered  institutions  or  savings  and  loan  holding
companies  located in the state where the  acquiring  entity is located (or by a
holding company that controls such state-chartered savings institutions).

         Under the Bank Holding  Company Act of 1956,  the FRB is  authorized to
approve an application by a bank holding company to acquire control of a savings
institution.  In  addition,  a bank  holding  company  that  controls  a savings
institution  may merge or consolidate  the assets and liabilities of the savings
institution  with, or transfer  assets and  liabilities  to, any subsidiary bank
which is a member of the Bank  Insurance  Fund  ("BIF") with the approval of the
appropriate federal banking agency and the FRB. As a result of these provisions,
there have been a number of acquisitions of savings institutions by bank holding
companies in recent years.

The Bank

         General.  As a  Michigan-chartered  state  savings  bank with  deposits
insured  by the SAIF,  Bank  West is  subject  to  extensive  regulation  by the
Financial  Institutions  Bureau and the FDIC.  The lending  activities and other
investments  of the Bank must comply with various  federal and state  regulatory
requirements.  The Financial  Institutions Bureau periodically examines the Bank
for  compliance  with  various  regulatory  requirements.  The FDIC also has the
authority to conduct special  examinations  of SAIF members.  The Bank must file
reports  with the  Financial  Institutions  Bureau and the FDIC  describing  its
activities and financial condition. Bank West also is subject to certain reserve
requirements promulgated by the Board of Governors of the Federal Reserve System
(the "Federal  Reserve  Board").  This  supervision  and  regulation is intended
primarily for the protection of depositors.
<PAGE>
         Regulatory Capital Requirements. The FDIC has established the following
minimum capital standards for  state-chartered,  FDIC-insured  non-member banks,
such as the Bank: a leverage requirement consisting of a minimum ratio of Tier 1
capital  to total  assets of 3% for the most  highly-rated  banks  with  minimum
requirements of 4% to 5% for all others,  and a risk-based  capital  requirement
consisting of a minimum ratio of total capital to total risk-weighted  assets of
8%, at least one-half of which must be Tier 1 capital.  Tier 1 capital  consists
principally of  shareholders'  equity.  These capital  requirements  are minimum
requirements.  Higher  capital  levels  will be  required  if  warranted  by the
particular  circumstances  or risk  profiles  of  individual  institutions.  For
example,  FDIC  regulations  provide that higher capital may be required to take
adequate account of, among other things,  interest rate risk and the risks posed
by concentrations  of credit,  nontraditional  activities or securities  trading
activities.

         Federal law provides the federal banking regulators with broad power to
take  prompt  corrective  action to resolve  the  problems  of  undercapitalized
institutions.  The extent of the  regulators'  powers  depends  on  whether  the
institution  in  question  is  "well  capitalized,"   "adequately  capitalized,"
"undercapitalized,"    "significantly    undercapitalized,"    or    "critically
undercapitalized."  Federal  regulations  define  these  capital  categories  as
follows:
<TABLE>
<CAPTION>

                                              Total                Tier 1
                                            Risk-Based          Risk-Based
                                           Capital Ratio       Capital Ratio          Leverage Ratio
                                           -------------       -------------          --------------
<S>                                         <C>                <C>                    <C>        
Well capitalized                            10% or above       6% or above            5% or above
Adequately capitalized                       8% or above       4% or above            4% or above
Undercapitalized                            Less than 8%       Less than 4%           Less than 4%
Significantly undercapitalized              Less than 6%       Less than 3%           Less than 3%
Critically undercapitalized                       --                    --            A ratio of tangible
                                                                                      equity to total assets
                                                                                         of 2% or less
</TABLE>

         As of  June  30,  1998,  each of the  Bank's  ratios  exceeded  minimum
requirements for the well capitalized category.  See Note 13 to the Consolidated
Financial Statements in the 1998 Annual Report.

         Depending  upon  the  capital  category  to  which  an  institution  is
assigned,  the regulators' corrective powers include requiring the submission of
a capital  restoration plan;  placing limits on asset growth and restrictions on
activities;   requiring  the  institution  to  issue  additional  capital  stock
(including additional voting stock) or to be acquired;  restricting transactions
with  affiliates;  restricting  the  interest  rate the  institution  may pay on
deposits;  ordering a new election of directors  of the  institution;  requiring
that senior  executive  officers or  directors  be  dismissed;  prohibiting  the
institution  from accepting  deposits from  correspondent  banks;  requiring the
institution to divest certain subsidiaries; prohibiting the payment of principal
or interest on subordinated debt; and ultimately,  appointing a receiver for the
institution.
<PAGE>
         In general,  a depository  institution  may be  reclassified to a lower
category  than is indicated  by its capital  levels if the  appropriate  federal
depository  institution  regulatory  agency  determines  the  institution  to be
otherwise  in an unsafe or  unsound  condition  or to be engaged in an unsafe or
unsound  practice.  This could include a failure by the  institution,  following
receipt  of a  less-than-satisfactory  rating  on its  most  recent  examination
report, to correct the deficiency.

         Dividends. Under Michigan law, the Bank is restricted as to the maximum
amount  of  dividends  it may pay on its  common  stock.  The  Bank  may not pay
dividends  except out of net profits after deducting its losses and bad debts. A
Michigan-chartered  state savings bank may not declare or pay a dividend  unless
the bank will have a surplus  amounting to at least 20% of its capital after the
payment of the  dividend.  If the Bank has a surplus less than the amount of its
capital,  it may not  declare or pay any  dividend  until an amount  equal to at
least  10% of net  profits  for the  preceding  one-half  year  (in the  case of
quarterly  or  semi-annual  dividends)  or  full-year  (in the  case  of  annual
dividends) has been transferred to surplus.  A Michigan state bank may, with the
approval of the Commissioner,  by vote of shareholders  owning two-thirds of the
stock  eligible to vote,  increase its capital stock by a declaration of a stock
dividend,  provided that after the increase the bank's  surplus  equals at least
20% of its  capital  stock,  as  increased.  The Bank may not declare or pay any
dividend  until the  cumulative  dividends on preferred  stock  (should any such
stock be issued and outstanding) have been paid in full.

         Federal law generally  prohibits a depository  institution  from making
any  capital  distribution  (including  payment  of a  dividend)  or paying  any
management  fee to its  holding  company  if the  depository  institution  would
thereafter be undercapitalized. The FDIC may prevent an insured bank from paying
dividends  if the bank is in default of  payment  of any  assessment  due to the
FDIC.  In addition,  the FDIC may prohibit the payment of dividends by the Bank,
if such payment is determined, by reason of the financial condition of the Bank,
to be an unsafe and unsound banking practice.

         Safety and  Soundness  Standards.  The federal  banking  agencies  have
adopted  guidelines  to promote the safety and  soundness of  federally  insured
depository  institutions.  These  guidelines  establish  standards  for internal
controls,  information  systems,  internal  audit systems,  loan  documentation,
credit underwriting,  interest rate exposure, asset growth,  compensation,  fees
and benefits,  asset quality and earnings.  In general, the guidelines prescribe
the goals to be achieved in each area, and each  institution will be responsible
for  establishing  its own procedures to achieve those goals.  If an institution
fails to  comply  with any of the  standards  set forth in the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving and  maintaining  compliance.  The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose  failure to meet one or more of the  standards is of such severity that it
could  threaten  the safe and sound  operation  of the  institution.  Failure to
submit an acceptable  compliance plan, or failure to adhere to a compliance plan
that has been accepted by the appropriate  regulator,  would constitute  grounds
for further enforcement action.

         Federal  Home  Loan Bank  System.  Bank West is a member of the FHLB of
Indianapolis,  which  is one of 12  regional  FHLBs  that  administers  the home
financing credit function of savings institutions. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
<PAGE>
FHLB  System.  It makes loans to members  (i.e.,  advances) in  accordance  with
policies and  procedures  established by the Board of Directors of the FHLB. The
FHLB borrowings are  collateralized by a blanket collateral loan agreement under
which  the  Bank  must  maintain  minimum  eligible  collateral  of  160% of the
outstanding  advances.  Under  this  agreement,  the  limit on the  Bank's  FHLB
borrowings  was $74 million at June 30, 1998.  At June 30, 1998,  the Bank had $
37.0 million of FHLB  advances and a $2.0 million line of credit.  See Note 7 to
the Consolidated Financial Statements in the 1998 Annual Report.

         As a member,  Bank West is required to purchase and  maintain  stock in
the FHLB of  Indianapolis  in an  amount  equal to at least 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations at the beginning of each year. At June 30, 1998, Bank West had $ 2.1
million in FHLB stock, which was in compliance with this requirement.

         The FHLBs are required to provide funds for the  resolution of troubled
savings  institutions  and to contribute to affordable  housing programs through
direct loans or interest subsidies on advances targeted for community investment
and  low-  and  moderate-income  housing  projects.   These  contributions  have
adversely  affected the level of FHLB dividends paid and could continue to do so
in the  future.  These  contributions  also could have an adverse  effect on the
value of FHLB stock in the future.

         Deposit Insurance. The deposits of Bank West are insured to the maximum
extent  permitted by the SAIF, which is administered by the FDIC, and are backed
by the full faith and credit of the U.S.  Government.  As  insurer,  the FDIC is
authorized to conduct examinations of, and to require reporting by, FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from engaging in
any activity the FDIC determines by regulation or order to pose a serious threat
to the FDIC.  The FDIC also has the  authority to initiate  enforcement  actions
against savings  institutions,  after giving the  Commissioner an opportunity to
take such action.

         Under current FDIC regulations,  SAIF-insured institutions are assigned
to one of three  capital  groups  which  are  based  solely  on the  level of an
institution's   capital--"well   capitalized,"   "adequately  capitalized,"  and
"undercapitalized"--which  are defined as  discussed  above under "-  Regulatory
Capital  Requirements." These three groups are then divided into three subgroups
which  reflect  varying  levels of  supervisory  concern,  from those  which are
considered  to be healthy to those  which are  considered  to be of  substantial
supervisory  concern.  The matrix so created  results  in nine  assessment  risk
classifications,  with rates  ranging  prior to September 30, 1996 from .23% for
well capitalized, healthy institutions to .31% for undercapitalized institutions
with substantial  supervisory concerns. The insurance premiums for Bank West for
the two semi-annual periods in each of calendar 1994, calendar 1995 and calendar
1996 were .23% (per annum) of insured deposits.

         The deposits of the Bank are  currently  insured by the SAIF.  Both the
SAIF and the BIF are required by law to attain and thereafter maintain a reserve
ratio of 1.25% of insured deposits.  The BIF has achieved a fully funded status,
and therefore as discussed below, in fiscal 1996 the FDIC substantially  reduced
the average  deposit  insurance  premium  paid by  BIF-insured  banks to a level
approximately 75% below the average premium then paid by savings institutions.
<PAGE>
         On November 14, 1995, the FDIC approved a final rule regarding  deposit
insurance  premiums.  The final rule reduced deposit insurance  premiums for BIF
member  institutions  to zero basis  points  (subject to a $2,000  minimum)  for
institutions  in the lowest  risk  category,  while  holding  deposit  insurance
premiums  for SAIF  members at their then  current  levels (23 basis  points for
institutions  in the lowest risk  category).  The reduction  was effective  with
respect to the semiannual premium assessment beginning January 1, 1996.

         On September 30, 1996,  President  Clinton signed into law  legislation
which eliminated the premium differential between SAIF-insured  institutions and
BIF-insured  institutions by recapitalizing  the SAIF's reserves to the required
ratio. The legislation  required all SAIF member  institutions to pay a one-time
special  assessment to recapitalize  the SAIF,  with the aggregate  amount to be
sufficient  to  bring  the  reserve  ratio to 1.25%  of  insured  deposits.  The
legislation  also  provides  for the  merger of the BIF and the SAIF,  with such
merger being conditioned upon the prior elimination of the thrift charter.

         Implementing  FDIC regulations  imposed a one-time  special  assessment
equal to 65.7 basis  points  for all  SAIF-assessable  deposits  as of March 31,
1995, which was accrued as an expense on September 30, 1996. The Bank's one-time
special  assessment  amounted  to  $551,000.  Net of related tax  benefits,  the
one-time special assessment amounted to $364,000 or $0.14 per share. The payment
of the special  assessment  had the effect of  immediately  reducing  the Bank's
capital by such amount. However,  management does not believe that this one-time
special  assessment had a material adverse effect on the Company's  consolidated
financial condition.

         In the fourth quarter of 1996,  the FDIC lowered the  assessment  rates
for SAIF members to reduce the disparity in the assessment rates paid by BIF and
SAIF members.  Beginning  October 1, 1996,  effective SAIF rates generally range
from zero basis points to 27 basis points, except that during the fourth quarter
of 1996,  the rates for SAIF members  ranged from 18 to 27 basis points in order
to include  assessments paid to the Financing  Corporation  ("FICO").  From 1997
through 1999, SAIF members will pay 6.4 basis points to fund the FICO, while BIF
member  institutions  will  pay  approximately  1.3  basis  points.  The  Bank's
insurance premiums,  which had amounted to 23 basis points, were thus reduced to
6.4 basis points effective January 1, 1997.

         The FDIC may terminate the deposit insurance of any insured  depository
institution,  including  Bank West,  if it  determines  after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices,  is in an
unsafe  or  unsound  condition  to  continue  operations,  or has  violated  any
applicable law, regulation,  order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance  temporarily  during the hearing
process for the permanent  termination of insurance,  if the  institution has no
tangible  capital.  If insurance of accounts is terminated,  the accounts at the
institution at the time of the termination,  less subsequent withdrawals,  shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Bank's deposit insurance.

         Restrictions on Certain Activities. Under FDICIA, state-chartered banks
with deposits  insured by the FDIC are generally  prohibited  from  acquiring or
retaining  any  equity  investment  of a  type  or  in an  amount  that  is  not
permissible  for a national bank. The foregoing  limitation,  however,  does not
prohibit  FDIC-insured  state  banks  from  acquiring  or  retaining  an  equity
investment   in  a   subsidiary   in  which  the  bank  is  a  majority   owner.
<PAGE>
State-chartered banks are also prohibited from engaging as principal in any type
of activity  that is not  permissible  for a national bank and  subsidiaries  of
state-chartered,  FDIC-insured  state banks may not engage as  principal  in any
type of activity  that is not  permissible  for a subsidiary  of a national bank
unless  in either  case the FDIC  determines  that the  activity  would  pose no
significant risk to the appropriate  deposit insurance fund and the bank is, and
continues to be, in compliance with applicable capital standard.

         The FDIC has adopted regulations to clarify the foregoing  restrictions
on activities of  FDIC-insured,  state-chartered  banks and their  subsidiaries.
Under the  regulations,  the term activity  refers to the authorized  conduct of
business  by an insured  state bank and  includes  acquiring  or  retaining  any
investment other than an equity  investment.  A bank or subsidiary is considered
acting as principal  when  conducted  other than as an agent for a customer,  as
trustee, or in a brokerage,  custodial,  advisory or administrative capacity. An
activity  permissible  for  a  national  bank  includes  an  activity  expressly
authorized  for  national  banks by  statute or  recognized  as  permissible  in
regulations,  official  circulars  or  bulletins  or in  any  order  or  written
interpretation  issued by the Office of the Comptroller of the Currency ("OCC").
In its  regulations,  the FDIC  indicated that it will not permit state banks to
directly engage in commercial  ventures or directly or indirectly  engage in any
insurance  underwriting  activity  other than to the extent such  activities are
permissible  for a national  bank or a national  bank  subsidiary  or except for
certain  other  limited  forms of  insurance  underwriting  permitted  under the
regulations.  Under the  regulations,  the FDIC  permits  state  banks that meet
applicable  minimum  capital  requirements  to engage as  principal  in  certain
activities  that are not  permissible to national banks  including  guaranteeing
obligations of others,  activities  which the Federal Reserve Board has found by
regulation  or order to be closely  related to banking  and  certain  securities
activities conducted through subsidiaries.

         Uniform Lending Standards.  Federal  regulations require banks to adopt
and maintain written policies establishing  appropriate limits and standards for
extensions  of credit that are secured by liens or  interests  in real estate or
are made for the purpose of  financing  permanent  improvements  to real estate.
These policies must establish loan portfolio diversification standards,  prudent
underwriting  standards,  including  loan-to-value  limits,  that are  clear and
measurable,  loan  administration  procedures  and  documentation,  approval and
reporting  requirements.  A bank's  real  estate  lending  policy  must  reflect
consideration of the guidelines that have been adopted by the banking  agencies.
The Bank does not believe  that such  guidelines  materially  affect its lending
activities.

         Limits on Loans to One Borrower. The permissible amount of loans-to-one
borrower now generally  follows the national bank standard for all loans made by
savings  institutions.  The  standard  generally  does not  permit  loans-to-one
borrower  to exceed the greater of  $500,000  or 15% of  unimpaired  capital and
surplus. At June 30, 1998, the 15% limit for the Bank was $1.5 million,  and the
Bank did not have any loans to one borrower in excess of such  amount.  Loans in
an amount equal to an additional 10% of unimpaired  capital and surplus also may
be made to a  borrower  if the loans are fully  secured  by  readily  marketable
collateral.

         Consumer Protection Laws. The Bank's business includes making a variety
of types of loans to individuals.  In making these loans, the Bank is subject to
state usury and regulatory  laws and to various  federal  statutes,  such as the
Equal  Credit  Opportunity  Act,  the Fair Credit  Reporting  Act,  the Truth in
Lending Act, the Real Estate  Settlement  Procedures  Act, and the Home Mortgage
<PAGE>
Disclosure  Act, and the  regulations  promulgated  thereunder,  which  prohibit
discrimination, specify disclosures to be made to borrowers regarding credit and
settlement  costs,  and regulate the mortgage loan  servicing  activities of the
Bank,  including  the  maintenance  and  operation  of escrow  accounts  and the
transfer of mortgage loan servicing.  In receiving deposits, the Bank is subject
to extensive  regulation under state and federal law and regulations,  including
the Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy
Act, the Electronic  Funds Transfer Act, and the Federal Deposit  Insurance Act.
Violation of these laws could result in the  imposition of  significant  damages
and fines upon the Bank and its directors and officers.

         Commissioner   Assessments.   Michigan   banks  are   required  to  pay
supervisory fees to the Commissioner to fund the operations of the Commissioner.
The amount of  supervisory  fees paid by a bank is based  upon the bank's  total
assets, as reported to the Commissioner.

         Branching  Authority.  Michigan  banks,  such  as the  Bank,  have  the
authority  under  Michigan  law to establish  branches  anywhere in the State of
Michigan, subject to receipt of all required regulatory approvals (including the
approval of the Commissioner and the FDIC).

         Effective  June  1,  1997,  the  Riegle-Neal   Interstate  Banking  and
Branching  Efficiency  Act of 1994  (the  "IBBEA")  allows  banks  to  establish
interstate  branch  networks  through  acquisitions  of other banks,  subject to
certain  conditions,  including  certain  limitations on the aggregate amount of
deposits  that  may be  held  by  the  surviving  bank  and  all of its  insured
depository  institution  affiliates.  The  establishment  of de novo  interstate
branches or the  acquisition  of individual  branches of a bank in another state
(rather than the acquisition of an out-of-state bank in its entirety) is allowed
by IBBEA only if specifically  authorized by state law. The legislation  allowed
individual  states to "opt-out" of  interstate  branching  authority by enacting
appropriate legislation prior to June 1, 1997.

         Michigan  did not opt out of  IBBEA,  and now  permits  both  U.S.  and
non-U.S.  banks to establish  branch offices in Michigan.  The Michigan  Banking
Code  permits,  in  appropriate  circumstances  and  with  the  approval  of the
Commissioner, (i) the acquisition of all or substantially all of the assets of a
Michigan-chartered  bank by an FDIC-insured  bank,  savings bank, or savings and
loan  association   located  in  another  state,   (ii)  the  acquisition  by  a
Michigan-chartered  bank  of  all or  substantially  all  of  the  assets  of an
FDIC-insured  bank,  savings  bank or savings  and loan  association  located in
another state, (iii) the consolidation of one or more  Michigan-chartered  banks
and FDIC-insured banks,  savings banks or savings and loan associations  located
in other states having laws  permitting such  consolidation,  with the resulting
organization  chartered by Michigan,  (iv) the  establishment by a foreign bank,
which has not previously  designated any other state as its home state under the
International Banking Act of 1978, of branches located in Michigan,  and (v) the
establishment  or  acquisition  of branches in  Michigan by  FDIC-insured  banks
located in other  states,  the  District  of  Columbia  or U.S.  territories  or
protectorates  having  laws  permitting  Michigan-chartered  banks to  establish
branches in such jurisdiction.  Further, the Michigan Banking Code permits, upon
written notice to the Commissioner,  (i) the acquisition by a Michigan-chartered
bank of one or more branches (not  comprising  all or  substantially  all of the
assets) of an FDIC-insured  bank,  savings bank or savings and loan  association
located in another  state,  the  District of  Columbia,  or a U.S.  territory or
protectorate,  (ii) the  establishment by  Michigan-chartered  banks of branches
located in other  states,  the  District of  Columbia,  or U.S.  territories  or
protectorates,  and (iii) the  consolidation  of one or more  Michigan-chartered
banks and  FDIC-insured  banks,  savings banks or savings and loan  associations
located in other  states,  with the resulting  organization  chartered by one of
such other states.
<PAGE>
                                    TAXATION

Federal Taxation

         General.  The  Company  and Bank  West  are  subject  to the  generally
applicable  corporate tax  provisions  of the Code,  and Bank West is subject to
certain additional  provisions of the Code which apply to thrift and other types
of financial  institutions.  The  following  discussion  of federal  taxation is
intended only to summarize  certain  pertinent federal income tax matters and is
not a  comprehensive  discussion of the tax rules  applicable to the Company and
Bank West.

         Fiscal  Year.  The  Company and Bank West file a  consolidated  federal
income tax return on the basis of a fiscal year ending June 30.

         Bad Debt Reserves. Savings institutions,  such as Bank West, which meet
certain  definitional tests primarily relating to their assets and the nature of
their businesses, are permitted to establish a reserve for bad debts and to make
annual additions to the reserve.  These additions may, within specified  formula
limits, be deducted in arriving at the institution's taxable income.

         In August 1996, legislation was enacted that repeals the reserve method
of accounting  (including the  percentage of taxable  income method)  previously
used by many  savings  institutions  to  calculate  their bad debt  reserve  for
federal income tax purposes.  Savings  institutions with $500 million or less in
assets may, however,  continue to use the experience  method.  As a result,  the
Bank must  recapture  that portion of its reserve  which exceeds the amount that
could have been taken under the  experience  method for post-1987 tax years.  At
June 30, 1996, the Bank's  post-1987  excess reserves  amounted to approximately
$781,000.  The recapture will occur over a six-year period,  the commencement of
which will begin in fiscal  1999,  provided the Bank meets  certain  residential
lending  requirements.  No recapture  took place in fiscal 1998 because the Bank
met its  residential  loan  requirement  under the Code.  The  legislation  also
requires  savings  institutions  to account for bad debts for federal income tax
purposes on the same basis as  commercial  banks for tax years  beginning  after
December 31, 1995.

         At June 30, 1998, the federal income tax reserves of Bank West included
$3.4 million for which no federal income tax has been provided. Because of these
federal  income tax reserves and the  liquidation  account  established  for the
benefit of certain  depositors of Bank West in connection with the conversion of
the Bank to stock form,  the  retained  earnings of Bank West are  substantially
restricted.

         Distributions.  If Bank West were to distribute cash or property to its
sole stockholder, and the distribution was treated as being from its accumulated
bad debt  reserves,  the  distribution  will cause Bank West to have  additional
taxable income.  A distribution is deemed to have been made from accumulated bad
debt  reserves to the extent that (a) the reserves  exceed the amount that would
have  been  accumulated  on the  basis of actual  loss  experience,  and (b) the
distribution is a "non-qualified  distribution." A distribution  with respect to
stock is a non-qualified distribution to the extent that, for federal income tax
purposes,  (i)  it is  in  redemption  of  shares,  (ii)  it  is  pursuant  to a
liquidation of the institution,  or (iii) in the case of a current distribution,
together with all other such  distributions  during the taxable year, it exceeds
the institution's  current and post-1951  accumulated  earnings and profits. The
amount of additional  taxable income created by a non-qualified  distribution is
an amount that when reduced by the tax attributable to it is equal to the amount
of the distribution.
<PAGE>
         Minimum Tax. The Code imposes an  alternative  minimum tax at a rate of
20%. The alternative  minimum tax generally applies to a base of regular taxable
income plus certain tax  preferences  ("alternative  minimum  taxable income" or
"AMTI")  and is  payable to the  extent  such AMTI is in excess of an  exemption
amount.  The Code provides  that an item of tax  preference is the excess of the
bad debt  deduction  allowable for a taxable year pursuant to the  percentage of
taxable income method over the amount  allowable  under the  experience  method.
Other items of tax preference that constitute AMTI include (a)  depreciation and
(b) 75% of the excess (if any) of (i)  adjusted  current  earnings as defined in
the Code, over (ii) AMTI (determined without regard to this preference and prior
to reduction by net operating losses).

         Net Operating Loss Carryovers.  A financial  institution may carry back
net operating  losses  ("NOLs") to the preceding three taxable years and forward
to the succeeding 15 taxable years. This provision applies to losses incurred in
taxable  years  beginning  after 1986.  At June 30,  1998,  Bank West had no NOL
carryforwards for federal income tax purposes.

         Capital Gains and Corporate Dividends-Received Deduction. Corporate net
capital gains are currently taxed at a maximum rate of 35%.  Corporations  which
own 20% or more of the stock of a corporation distributing a dividend may deduct
80% of the dividends received. Corporations which own less than 20% of the stock
of a  corporation  distributing  a  dividend  may  deduct  70% of the  dividends
received.  However,  a corporation that receives  dividends from a member of the
same affiliated group of corporations may deduct 100% of the dividends received.

         Other Matters. Federal legislation is introduced from time to time that
would  limit the  ability of  individuals  to deduct  interest  paid on mortgage
loans.  Individuals  are currently not permitted to deduct  interest on consumer
loans.  Significant  increases  in tax  rates  or  further  restrictions  on the
deductibility of mortgage interest could adversely affect Bank West.

         Bank West's federal income tax returns for the tax years ended June 30,
1995 forward are open under the statute of limitations and are subject to review
by the IRS.

State Taxation

         The State of Michigan imposes a tax on intangible  personal property in
the amount of $0.20 per $1,000 of  deposits  of a savings  bank or a savings and
loan  institution,   less  deposits  owed  to  the  federal  or  Michigan  state
governments,  their agencies or certain other financial  institutions.  In 1996,
the State of Michigan  repealed  this tax over a phase-out  period  beginning in
calendar 1995 and ending in calendar  1998.  For calendar  years 1997,  1996 and
1995, the amount of the tax calculated  pursuant to the above formula is reduced
by 75%, 50% and 25%, respectively.  The State of Michigan also imposes a "Single
Business  Tax," which is a  value-added  type of tax and is for the privilege of
doing  business in the State of  Michigan.  The major  components  of the Single
Business Tax base are  compensation,  depreciation  and federal  taxable income,
increased by NOLs, if any,  utilized in arriving at federal taxable income,  and
decreased by the cost of acquisition of depreciable  tangible  assets during the
year. The tax rate through September 30, 1994 was 2.35% of the Michigan adjusted
tax base. Beginning October 1, 1994, the rate decreased to 2.30% of the Michigan
adjusted tax base.
<PAGE>
Item 2.  Properties.

         At June 30, 1998, Bank West conducted its business from its main office
in Walker,  Michigan  and two  branch  offices in Grand  Rapids,  Michigan.  The
following table sets forth the net book value (including leasehold  improvement,
furnishings  and  equipment) and certain other  information  with respect to the
offices and other properties of Bank West at June 30, 1998.
 

                                                   Net Book
                                                   Value of           Amount of
   Description/Address       Leased/Owned         Property            Deposits
   -------------------       ------------         --------            --------

                                                            (In Thousands)

2185 Three Mile Road N.W.
Grand Rapids, MI  49544          Owned              $ 2,364             $39,223

910 Bridge Street
Grand Rapids, MI  49504          Owned                  661              74,761

6740 Cascade Road S.E.
Grand Rapids, MI  49546          Leased                 140               5,995
                                                    -------             -------
  Total                                             $ 3,165           $ 119,979
                                                    =======           =========


Item 3.  Legal Proceedings.

         On July 1, 1998,  Kristine Cowles filed a complaint against the Bank in
the  Circuit  Court for the County of Kent,  State of  Michigan.  The  complaint
alleges  that the Bank 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 judgement
and dismissal. A hearing has been scheduled for mid-October 1998.

         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.

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

         Not applicable.

<PAGE>
PART II.

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

         The  information   required  herein,  to  the  extent  applicable,   is
incorporated  by reference from the inside back cover page of the Company's 1998
Annual Report.

Item 6.  Selected Financial Data.

         The information  required herein is incorporated by reference from page
2 of the 1998 Annual Report.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
            of Operations.

         The information required herein is incorporated by reference from pages
3 to 14 of the 1998 Annual Report.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

         Not applicable since the Company  qualifies as a small business issuer.
See Item 305(e) of Regulation S-K.


Item 8.  Financial Statements and Supplementary Data.

         The information required herein is incorporated by reference from pages
15  to 43 of the 1998 Annual Report.

Item 9.  Changes in and Disagreements With Accountants on Accounting and
            Financial Disclosure.

         Not applicable.

PART III.

Item 10.  Directors and Executive Officers of the Registrant.

         The information required herein is incorporated by reference from pages
3, 4, 7 and 11 of the definitive  proxy  statement of the Company for the Annual
Meeting of  Stockholders  to be held on October  28,  1998,  which will be filed
within 120 days of June 30, 1998 ("Definitive Proxy Statement").

Item 11.  Executive Compensation.

         The information required herein is incorporated by reference from pages
12 to 18 of the Definitive Proxy Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

         The information required herein is incorporated by reference from pages
8 to 11 of the Definitive Proxy Statement.

Item 13.  Certain Relationships and Related Transactions.

         The information  required herein is incorporated by reference from page
18 of the Definitive Proxy Statement.
<PAGE>
PART IV.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

         (a)  Documents Filed as Part of this Report

         (1) The following  financial  statements are  incorporated by reference
from Item 8 hereof (see Exhibit 13):

                  Report of Independent Auditors

                  Consolidated  Balance  Sheets  as of June  30,  1998  and 1997

                  Consolidated Statements of Income for the Years Ended
                     June 30, 1998, 1997 and 1996

                  Consolidated Statements of Changes in Shareholders' Equity for
                     the Years Ended June 30, 1998, 1997 and 1996

                  Consolidated Statements of Cash Flows for the Years
                     ended June 30, 1998, 1997 and 1996

                  Notes to Consolidated Financial Statements

         (2) All  schedules  for  which  provision  is  made  in the  applicable
accounting  regulation  of  the  SEC  are  omitted  because  of the  absence  of
conditions under which they are required or because the required  information is
included in the consolidated financial statements and related notes thereto.

         (3) The  following  exhibits  are filed as part of this Form 10-K,  and
this list includes the Exhibit Index.

                                            Exhibit Index


 2.1*          Plan of Conversion
 3.1*          Articles of Incorporation of Bank West Financial Corporation
 3.2**         Bylaws of Bank West Financial Corporation
 4.1***        Stock Certificate of Bank West Financial Corporation
10.1*          Employee Stock Ownership Plan
10.2***        Employment Agreement among Bank West
                   Financial Corporation, Bank West, F.S.B. and Paul W. Sydloski
                   dated March 30, 1995
10.3*          Form of Employment Security Agreement among
                   Bank West Financial Corporation, Bank West, F.S.B. and
                   certain executive officers
10.4****       1995 Key Employee Stock Compensation Program
10.5****       1995 Directors' Stock Option Plan
10.6****       1995 Management Recognition Plan for Officers
10.7****       1995 Management Recognition Plan for Directors
13.1           1998 Annual Report to Stockholders
21.1           Subsidiaries of the Registrant - Reference is made to "Item 2.
                   Business" for the required information
23.1           Consent of Crowe, Chizek and Company LLP
27.1           Financial Data Schedule
<PAGE>

(*)      Incorporated  herein  by  reference  from  the  Company's  Registration
         Statement on Form S-1 (Registration No. 33-87620) filed with the SEC on
         December 21, 1994, as subsequently amended.

(**)     Incorporated  herein by reference  from the  Company's  Form 10-Q filed
         with the SEC on November 14, 1997.

(***)    Incorporated  herein by reference  from the Company's  Annual Report on
         Form 10-K filed with the SEC on September 28, 1995.

(****)   Incorporated  herein by reference  from the Company's  Annual Report on
         Form 10-K filed with the SEC on September 26, 1996.

         (b) The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1998.

         (c) See (a)(3)  above for all exhibits  filed  herewith and the Exhibit
Index.

         (d) There are no financial  statements or schedules which were excluded
from Item 8 which are required to be reported herein.
<PAGE>


                                   SIGNATURES



         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                              BANK WEST FINANCIAL CORPORATION



Date:  September 22, 1998                 By: /s/ Paul W. Sydloski
                                              --------------------
                                              Paul W. Sydloski
                                              President, Chief Executive Officer
                                                  and Director


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.





/s/ Paul W. Sydloski                                          September 22, 1998
--------------------------
Paul W. Sydloski
President, Chief Executive
 Officer and Director


/s/ George A. Jackoboice                                      September 22, 1998
--------------------------
George A. Jackoboice
Chairman of the Board and
 Director


/s/ Richard L. Bishop                                         September 22, 1998
--------------------------
Richard L. Bishop
Director

<PAGE>

/s/ Thomas D. DeYoung                                         September 22, 1998
--------------------------
Thomas D. DeYoung
Director

/s/ Jacob Haisma                                              September 22, 1998
Jacob Haisma
Director

/s/ Harry E. Mika                                             September 22, 1998
--------------------------
Harry E. Mika
Director

/s/ Carl A. Rossi                                             September 22, 1998
--------------------------
Carl A. Rossi
Director


/s/ Robert J. Stephan                                         September 22, 1998
--------------------------
Robert J. Stephan
Director


/s/ John H. Zwarensteyn                                       September 22, 1998
--------------------------
John H. Zwarensteyn
Director


/s/ Kevin A. Twardy                                           September 22, 1998
--------------------------
Kevin A. Twardy
Chief Financial Officer
 (also principal accounting
 officer)