BANK WEST FINANCIAL CORPORATION

                               1997 ANNUAL REPORT

<PAGE>
Table of Contents


Section 1

   Letter to Shareholders                                                    1
   Selected Consolidated Financial Data                                      2
   Management's Discussion and Analysis of Financial
      Condition and Results of Operations.                                   3

Section 2

   Report of Independent Auditors                                           15

   Consolidated Financial Statements
   Consolidated Balance Sheets                                              16
   Consolidated Statements of Income                                        17
   Consolidated Statements of Changes
       in Shareholders' Equity                                              18
   Consolidated Statements of Cash Flows                                    20
   Notes to Consolidated Financial Statements                               22


Annual Meeting

   The Annual Meeting of  Stockholders  is scheduled for Wednesday,  October 29,
   1997 at 10:00 a.m.,  at the Grand Rapids Elks Lodge,  located at 2715 Leonard
   Street, N.W., Grand Rapids, Michigan.


<PAGE>
Letter to Shareholders

Dear Fellow Shareholders:

   It is with pride,  satisfaction  and optimism that I present the third annual
report of Bank West Financial Corporation, for your review.

   Fiscal  '97 was a year of  putting in place  additional  building  blocks and
keeping us focused  on  accomplishing  our  strategic  goals.  We have built the
foundation  for the future by expanding our Consumer  Lending,  Retail  Banking,
Small Business Services and Mortgage Lending departments. The addition of highly
skilled  staff  members  has  strengthened  these  core  businesses,  and we are
optimistic about the future.  In addition,  we overcame the government  mandated
Savings  Association  Insurance Fund ("SAIF") one-time assessment and once again
proved that Bank West's long-range plan is working.

   In order for a  building  block  strategy  to work,  a  successful  strategic
planning process must be utilized. Last year we included the entire staff in the
planning.  This  provided  experience  and  understanding.  This year the entire
process was modified and improved,  bringing staff involvement to a higher level
and giving management the ability to better  communicate the process  throughout
the Bank.  The  results of these  efforts  are  reflected  in the net income for
fiscal '97 which was $1.3 million  (without the  one-time  $364,000,  net of tax
SAIF  assessment).  This compared  favorably to $1.2 million for fiscal '96. The
same criteria  shows  earnings per share of $.73 for fiscal '97 compared to $.57
for fiscal '96.

   The  earnings  per  share  has  also  been  enhanced  due to  our  continuing
aggressive stock repurchase program. During fiscal 1997, we repurchased over 20%
of our  outstanding  common stock at an average cost of $11.64 per share.  These
repurchases are consistent with our ongoing capital management  strategy and had
the  effect of  increasing  both our book value per share and our  earnings  per
share.  We will  continue to use this  option as long as it makes good  economic
sense.

   Your Board of  Directors  is  committed  to  enhancing  shareholder  value by
continuing to grow the Bank, increase our net income and increase our returns to
shareholders.  Counting dividends, our original shareholders have seen the value
of their investment  increase by over 130% in less than 2 1/2 years. We recently
increased our quarterly dividends,  and we continue to make substantial progress
toward our strategic  goals.  In addition,  we opened our third branch office in
fiscal 1997, and our deposits increased by 13.0% during the year. We continue to
take steps to leverage our capital and meet our strategic goals.

   Each member of your Board of Directors has a substantial  financial  stake in
the Company's future and a strong incentive to maximize  stockholder  value. The
interests  of  our  Board  of  Directors  are  similar  to  those  of all of our
stockholders,  and the Board of Directors is well aware of its fiduciary  duties
to stockholders.

   We are proud to have Harry E. Mika, who is the largest individual shareholder
in the  Company,  join our slate of nominees  for  election  as a  director.  As
described  in more  detail in our proxy  materials,  Mr. Mika was  previously  a
director and senior  officer of other local  financial  institutions,  including
MetroBank in Grand Rapids and  Ameribank  in Muskegon,  Michigan,  prior to such
companies being sold. Mr. Mika remains active in the local community and is very
familiar with the Company's  market area. We believe Mr. Mika will be a valuable
addition to the Board of Directors if elected.

   Fiscal '98 promises to be another exciting and challenging  year. One project
involves the charter  conversion to a State Savings Bank,  which will reduce our
costs.  Michigan currently has 26 Savings Banks with over $20 billion in assets.
With Bank West being  structured as a community  bank, a state charter option is
most appropriate.  We will also create a non-conforming mortgage loan company to
allow us to meet the needs of  mortgage  customers  who do not fit  exactly  the
conforming market guidelines. This will provide additional products for both our
customers and our correspondent financial institution relationships.  We will be
able  to  offer  these  services  without  the  risk  normally  associated  with
non-conforming loans, since these loans will be sold to institutional investors.
These two projects should provide positive  contributions to earnings per share,
keep us focused on our long range  strategic  plan,  help expand our market area
and allow us to continue to refine our financial service products.

   Finally,  I want to thank all of you for your support and  confidence and for
once again making the past year a successful one for all Bank West shareholders,
customers, employees, directors and officers.

            Sincerely,

         /s/Paul W. Sydloski

            Paul W. Sydloski
            President/CEO

                                       1
<PAGE>
Selected Consolidated Financial Data

                  (Dollars in thousands except per share data)
<TABLE>
<CAPTION>
                                                      1997       1996        1995         1994       1993
---------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>         <C>         <C>    
Summary of Operations
Net interest income                                  $ 4,279     $ 4,158     $ 3,185     $ 2,861    $ 2,187
Provision for loan losses                                 60          60          21          25         13
Other income                                           1,554       1,202         270         226        260
One-time special SAIF assessment                         551        --          --          --         --
Other expenses                                         3,821       3,469       2,352       2,045      1,181
Income taxes                                             478         622         366         337        413
Cumulative effect of change in
   accounting for income taxes                          --          --          --          --         (151)
Net income                                               923       1,208         716         680        689

Balance Sheet Data
Total assets                                        $155,675    $137,982    $139,648    $106,594    $96,761
Cash and cash equivalents                              3,673       6,694       4,595       4,923      3,388
Securities                                             3,978       7,422      11,405       4,029      4,042
Mortgage collateralized securities                    25,578      17,341      18,355       3,440      2,378
Loans, net                                           111,530      95,737      95,836      91,329     78,610
Loans held for sale                                    2,231       4,297       2,746       1,282      3,250
Deposits                                             102,862      91,028      85,180      89,960     84,127
FHLB advances                                         29,000      19,000      24,922       5,000      2,000
Equity                                                22,592      26,810      28,171      10,844     10,541

Per Share Data
Earnings per share(1)                                  $ .52       $ .57       $ .10        --         --
Dividends per share                                      .28         .28        --          --         --
Book value per share                                   12.88       12.19       12.17        --         --

Ratios
Average yield on interest-earning assets                7.61%      7.52%        6.97%       6.55%      7.24%
Average rate on interest-bearing liabilities            5.15       5.37         4.76        4.12       4.48
Average interest spread                                 2.46       2.15         2.21        2.43       2.76
Net interest margin                                     3.12       3.10         2.83        2.86       3.24
Return on average assets(2)                              .64        .87          .62         .67        .76
Return on average equity(2)                             3.89       4.38         4.34        6.38       6.90
Efficiency ratio                                       74.89      68.56        69.56       63.85      50.76
Dividend pay-out ratio                                 53.85      49.12          --          --          --
Average equity to average assets                       16.42      19.77        14.46       10.57      11.01
Non-performing loans as a % of loans, net                .37        .04          .15         .04        .33
</TABLE>

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

(2) When  excluding  the  impact of the  government  mandated  one-time  Savings
Association  Insurance  Fund  assessment  of $364,000,  net of tax, or $0.21 per
share, Return on Average Assets (ROA) equalled .89% and Return on Average Equity
(ROE) equalled 5.43%.

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

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

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

General

   Bank West Financial Corporation is the holding company for Bank West, F.S.B.,
a federal savings bank.  Substantially all of the Company's assets are currently
held in, and its  operations are conducted  through,  its sole  subsidiary  Bank
West. In addition,  equity securities trading portfolio activities are conducted
at the holding company.  The Company's business consists primarily of attracting
deposits from the general public and using such deposits,  together with Federal
Home Loan Bank (FHLB) advances,  to make loans for the purchase and construction
of residential  properties.  The Company also originates  commercial loans, home
equity loans and various types of consumer loans.

   The Company's operations and profitability are subject to changes in interest
rates, applicable regulations and general economic conditions,  as well as other
factors beyond the Company's  control.  The  profitability  of Bank West depends
primarily on its net interest income,  which is the difference  between interest
and  dividend  income  on   interest-earning   assets,   principally  loans  and
securities,   and  interest  expense  on  interest-bearing   deposits  and  FHLB
borrowings.  Net interest  income is dependent  upon the level of interest rates
and the extent to which such rates are changing.  The Bank's  profitability also
is dependent on the level of its other income,  including gains on sale of loans
in connection with its mortgage banking  activities,  gains (losses) on the sale
or trading of securities, and fees and service charges. During fiscal 1997, 1996
and 1995,  the sum of net interest  income after  provisions for loan losses and
total other income  amounted to $5.8 million,  $5.3  million,  and $3.4 million,
respectively.

   The  Company's net income was  $923,000,  $1,208,000  and $680,000 for fiscal
1997, 1996 and 1995, respectively. The decrease in fiscal 1997 was primarily due
to a  $364,000,  net of tax or $0.21  per  share  government  mandated  one-time
special  assessment  to  recapitalize  the Savings  Association  Insurance  Fund
("SAIF"),  which is administered by the Federal  Deposit  Insurance  Corporation
("FDIC").  See  Note  7 to  consolidated  financial  statements  for  additional
information.  In addition,  net interest income  increased by $121,000 and other
income increased by $352,000. These amounts were partially offset by an increase
in other

                                       3
<PAGE>
expenses  (excluding the SAIF  assessment) by $351,000.  See "Comparison of Year
Ended  June 30,  1997 and Year  Ended  June 30,  1996"  section  for  additional
information.

Asset and Liability Management

   Consistent net interest income is largely dependent upon the achievement of a
positive  interest  rate spread that can be  sustained  during  fluctuations  in
prevailing  interest  rates.  Interest  rate  sensitivity  is a  measure  of the
difference  between  amounts of  interest-earning  assets  and  interest-bearing
liabilities  which either  reprice or mature within a given period of time.  The
difference,  or the interest rate repricing "gap," provides an indication of the
extent to which an  institution's  interest  rate  spread  will be  affected  by
changes in interest rates.

   The Bank  attempts to manage its  interest  rate risk by  maintaining  a high
percentage of its assets in  adjustable-rate  loans and mortgage  collateralized
securities.  The interest rate on its adjustable  rate mortgage loans  ("ARMs"),
however,  adjusts no more  frequently  than once a year,  with the amount of the
change  subject  to  annual  limitations,  whereas  the  interest  rates on most
deposits can change more  frequently and are not subject to annual  limitations.
During fiscal 1997, the Bank increased the ratio of interest-sensitive assets to
interest-sensitive  liabilities  by increasing its percentage of assets in prime
rate-based commercial, home equity and residential construction loans.

   Another way the Bank has increased the ratio of interest-sensitive  assets to
interest-sensitive  liabilities  is by  selling  most of the  newly  originated,
fixed-rate  mortgages,  while originating various types of adjustable-rate loans
for retention in the loan portfolio.  At June 30, 1997, the Bank's ARMs amounted
to $49.7 million or 32.0% of total assets while adjustable-rate  mortgage-backed
securities  (including  collateralized  mortgage  obligations) amounted to $24.8
million or 15.9% of total assets.  It is anticipated that the Bank will retain a
sufficient  amount of newly originated ARMs and other  adjustable-rate  loans to
offset loan prepayments and repayments.

   On the  liability  side of the balance  sheet,  management  has  continued to
pursue increasing its non-interest  bearing or low-interest deposit products and
has maintained  competitive pricing on longer-term  certificates of deposit. The
Bank also uses FHLB advances as a funding  source when it is more cost effective
than alternative funding sources.

   Management  presently monitors and evaluates the potential impact of interest
rate  changes  upon the market  value of the Bank's  equity and the level of net
interest income on a quarterly basis, in an attempt to ensure that interest rate
risk is maintained  within  limits  established  by the Board of Directors.  The
Office of  Thrift  Supervision  ("OTS")  adopted  a final  rule in  August  1993
incorporating an interest rate risk component into the risk-based capital rules.
Under the rule, an  institution  with a greater than "normal"  level of interest
rate risk will be subject to a deduction of its  interest  rate  component  from
total capital for purposes of calculating the risk-based capital requirement. An
institution  with a greater than  "normal"  interest  rate risk is defined as an
institution  that would suffer a loss of net portfolio  value ("NPV")  exceeding
2.0% of the  estimated  market  value of its  assets in the event of a 200 basis
point  increase or decrease in interest  rates.  NPV is the  difference  between
incoming  and  outgoing  discounted  cash flows from  assets,  liabilities,  and
off-balance  sheet  contracts.  A resulting change in NPV of more than 2% of the
estimated market value of an  institution's  assets will require the institution
to deduct from its capital 50% of that excess change when calculating regulatory
capital ratios.  The rule provides that the OTS will calculate the interest rate
risk component  quarterly for each  institution.  The effective date of the rule
has been postponed by the OTS until further notice. The following table presents
effects of changes in interest  rates on the Bank's NPV as of June 30, 1997,  as
calculated by the OTS, based on information provided to the OTS by the Bank.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                                                                                                Change in
       Change in                                                             NPV as % of       NPV as % of
    Interest Rates                                                            Portfolio         Portfolio
    in Basis Points                   Net Portfolio Value                       Value             Value
------------------------------------------------------------------------------------------------------------
     (Rate Shock)          Amount          $Change           %Change          of Assets        of Assets(1)
------------------------------------------------------------------------------------------------------------
                                    (Dollars in Thousands)
<S>                       <C>              <C>                 <C>              <C>               <C>
          400             $14,706          $(7,969)            (35)%            10.2%             (5.1)%
          300              17,073           (5,602)            (25)             11.6              (3.6)
          200              19,286           (3,389)            (15)             12.9              (2.2)
          100              21,190           (1,485)             (7)             13.9              (1.0)
       Static              22,675             --                --              14.6                --
         (100)             23,360              685               3              14.9                .4
         (200)             23,753            1,078               5              15.0                .7
         (300)             24,333            1,657               7              15.3               1.1
         (400)             25,189            2,513              11              15.6               1.6
</TABLE>

(1)      Based on the portfolio value of the Bank's assets assuming no change in
         interest rates.
<PAGE>
   The  following  table shows the  effects of changes in interest  rates on the
Bank's NPV as of June 30, 1996, as calculated by the OTS:
<TABLE>
<CAPTION>
       Change in                                                             NPV as % of       NPV as % of
    Interest Rates                                                            Portfolio         Portfolio
    in Basis Points                   Net Portfolio Value                       Value             Value
------------------------------------------------------------------------------------------------------------
     (Rate Shock)          Amount          $Change           %Change          of Assets        of Assets(1)
------------------------------------------------------------------------------------------------------------
                                    (Dollars in Thousands)
<S>                       <C>              <C>                 <C>              <C>               <C>
          400             $14,738          $(8,046)            (35)%            12.1%             (6.0)%
          300              16,876           (5,907)            (26)             13.5              (4.4)
          200              18,881           (3,903)            (17)             14.8              (2.9)
          100              20,584           (2,200)            (10)             15.8              (1.6)
       Static              22,784             --                --              17.1              --
         (100)             23,677              893               4              17.5                .7
         (200)             24,115            1,331               6              17.7               1.0
         (300)             24,627            1,843               8              17.9               1.4
         (400)             25,384            2,600              11              18.2               1.9
</TABLE>

(1)      Based on the portfolio value of the Bank's assets assuming no change in
         interest rates.

   As shown by the tables above,  increases in interest rates will result in net
decreases in the Bank's net portfolio  value,  while decreases in interest rates
will result in smaller net  increases  in the Bank's net  portfolio  value.  The
tables reflect the Bank's net portfolio value  decreasing by 2.2% and 2.9% as of
June 30, 1997 and June 30, 1996, respectively, if interest rates increase by 200
basis points. As a result,  the Bank would have been required to make a $155,000
and  $600,000  deduction  from  total  capital  as of June 30,  1997  and  1996,
respectively,   for  purposes  of  calculating  the  Bank's  risk-based  capital
requirement if such capital deduction was currently required.

   Management continually works to achieve a neutral position regarding interest
rate risk.  During fiscal 1997, the Bank placed greater emphasis on reducing the
duration of its  interest-earning  assets by  originating  short-term  balloons,
consumer and commercial loans. In addition, the Bank has placed greater emphasis
on increasing the percentage of adjustable-rate assets to total interest-earning
assets to better match its interest-bearing liabilities.

                                       5
<PAGE>
   As with any method of measuring interest rate risk, certain  shortcomings are
inherent  in the method of  analysis  presented  in the  foregoing  tables.  For
example,  although certain assets and liabilities may have similar maturities or
periods to repricing,  they may react  differently to changes in market interest
rates.  The  interest  rates on  certain  types of assets  and  liabilities  may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind changes in market rates.

Changes in Financial Condition

   Assets.  Total assets  increased by $17.7 million or 12.8% from June 30, 1996
to June 30, 1997.  The increase is primarily due to a $15.8 million  increase in
loans as greater  emphasis was placed on originating  residential  construction,
home  equity,   commercial   and  consumer   loans  for  portfolio   instead  of
concentrating   primarily  on  residential  mortgage  banking  activities.   The
additional  emphasis on adding the aforementioned loan types to portfolio during
fiscal 1997 was due to increased  competitiveness  in the  residential  mortgage
banking business  resulting in lower volume of residential loan originations and
reduced gains on the sale of loans.  Management  expects continued growth in the
construction, home equity, commercial and consumer loan portfolios during fiscal
1998.

   The Bank's mortgage  banking  activities  consist of selling newly originated
and  purchased  loans into the  secondary  market.  Total loans sold amounted to
$32.9  million,  $45.8 million and $14.4 million in fiscal 1997,  1996 and 1995,
respectively.  Loans held for sale  amounted to $2.2  million,  $4.3 million and
$2.7 million at June 30, 1997, 1996 and 1995, respectively. The dollar amount of
loans  sold and  loans  held  for sale  decreased  in  fiscal  1997 due to lower
refinancing  volume as a result  of  higher  prevailing  market  interest  rates
compared to the prior fiscal year as well as increased market  competition.  The
majority of loans  originated  and  purchased for resale have been 30-year fixed
rate  loans.  The Bank is  continuing  to search for ways to  increase  mortgage
banking volume in fiscal 1998.

   Mortgage-backed  securities and collateralized mortgage obligations increased
from $17.3  million at June 30, 1996 to $25.6  million at June 30, 1997.  During
fiscal  1997,  the  Bank  purchased   adjustable-rate   collateralized  mortgage
obligations which is consistent with the Bank's strategy of increasing the ratio
of interest-sensitive  assets to interest-sensitive  liabilities.  During fiscal
1996,  mortgage-backed securities and collateralized mortgage obligations with a
carrying value and fair value of $14.5 million were  transferred from securities
classified   as  held  to  maturity   to  a   securities   available   for  sale
classification.

   Other securities primarily consisting of U.S. agency securities and corporate
bonds  decreased  from $7.4 million at June 30, 1996 to $4.0 million at June 30,
1997.  The decrease is primarily  due to the use of proceeds from sold or called
securities to fund higher  yielding  loans for portfolio  instead of reinvesting
the  proceeds in other  securities.  The Bank expects  additional  growth in its
consumer and commercial loan  portfolios  during fiscal 1998 which may be funded
by the sale of securities.

   Cash and cash  equivalents  decreased  from $6.7  million at June 30, 1996 to
$3.7 million at June 30, 1997.  Current OTS  regulations  require that a savings
institution  maintain  liquid  assets of not less than 5% of its  average  daily
balance of net withdrawable  deposit accounts and borrowings payable in one year
or less.  The Bank's  regulatory  liquidity  ratio  amounted to 9.0% at June 30,
1997.

   The Bank's  nonperforming assets totalled $437,000 or .28% of total assets at
June 30, 1997, compared to $43,000 or .03% of total assets at June 30, 1996. The
Bank sold real estate owned at a net gain of $210 and $4,800  during fiscal 1997
and 1996,  respectively.  The Bank had no net charge-offs during fiscal 1997 and
net


                                       6
<PAGE>
charge-offs  totaling  $2,138 during fiscal 1996.  The Bank's low  nonperforming
assets are primarily due to the Bank's conservative  underwriting  criteria. The
recent  increase  in  nonperforming  assets  was  attributable  to  construction
mortgage  loans  with  two  home  builders.  However,  due  to  the  Bank's  low
loan-to-value  ratio of these loans, no portion of the allowance for loan losses
was allocated to these loans as well as to any other  specific loan. At June 30,
1997,  $102.3  million or 86.1% of the Bank's  total loan  portfolio  (excluding
loans held for sale) was  collateralized  by first  liens on one-to  four-family
residences.

   Liabilities.  Total deposits  increased  $11.8 million or 13.0% from June 30,
1996 to June 30, 1997. The increase in total deposits was primarily attributable
to growth in certificates of deposit of $9.2 million, or 13.5%, and to growth in
non-interest bearing deposits of $1.6 million or 69.6%.  Certificates of deposit
accounted  for  approximately  75% of total  deposits  both at June 30, 1997 and
1996.  At June 30, 1997,  $55.0  million or 70.8% of the total  certificates  of
deposit  mature  in one year or less,  and $14.1  million  or 18.2% of the total
certificates  of deposit  had  balances of  $100,000  or more.  The  increase in
deposits was achieved  through the opening of the Bank's new main  office/branch
and third  branch  office as well as  increased  efforts to  attract  commercial
deposit accounts.  In addition,  the Bank has attracted and retained certificate
of deposit accounts by offering competitive interest rates.

   When  deposit  growth  does not match the  growth of  assets,  other  funding
sources  such as FHLB  advances  are  utilized.  During  fiscal  1997,  the Bank
increased  FHLB  advances  by $10  million  since loan  growth and the  proceeds
utilized for the Company's stock  repurchase  program  exceeded  deposit growth.
During  fiscal 1996 the Bank reduced  FHLB  advances by $5.9 million with excess
liquidity  generated from deposit growth.  The advances have generally been used
to fund the Bank's mortgage banking activities.

   Shareholders' Equity. Shareholders' equity amounted to $22.6 million or 14.5%
of total  assets at June 30, 1997  compared  to $26.8  million or 19.4% of total
assets at June 30,  1996.  The  Company's  trend of  profitability  continued in
fiscal 1997 with the Company earning  $923,000.  During fiscal 1997, the Company
repurchased  446,100  shares,  or  20.3% of its  common  stock at a cost of $5.2
million and paid cash dividends of $507,000.  The repurchased shares contributed
to the increase in book value per share and earnings per share.

   The cost of shares  issued to the Company's  Employee  Stock  Ownership  Plan
("ESOP")  but not  yet  allocated  to  participants  totaling  $1.0  million  is
presented in the  consolidated  balance  sheet as a reduction  of  shareholders'
equity. The unamortized  unearned  compensation value of the Company's MRPs also
is shown as a reduction of shareholders' equity.

   In accordance  with SFAS No. 115,  which the Bank adopted  effective June 30,
1994, the Company's  securities  classified as available for sale are carried at
market value,  with unrealized gains or losses reported as a separate  component
of shareholders'  equity, net of federal income taxes. At June 30, 1997, the net
unrealized gain was $13,000, while at June 30, 1996, the net unrealized loss was
$207,000.

Results of Operations

   While the Company's net income  continues to be primarily  dependent upon net
interest  income and fee income,  the  Company's  net income in recent years has
been  affected  by gains on the sale of loans in  connection  with its  mortgage
banking  activities,  gains  (losses) on the sale or trading of  securities  and
other  miscellaneous  other  income.  Other than the gains on  mortgage  banking
activities,  the  Company  does not  consider  these  items to be of a recurring
nature or part of the Company's "core" earnings.

                                       7
<PAGE>
   Average Balances,  Net Interest Income, and Yields Earned and Rates Paid. The
following  table  presents for the periods  indicated the total dollar amount of
interest from average  interest-earning assets and the resultant yields, as well
as the interest expense on average interest-bearing liabilities,  expressed both
in dollars and rates, and the net interest margin.  Tax-exempt income and yields
have not been adjusted to a tax-equivalent  basis because the Bank's holdings of
tax-exempt securities were not material. All average balances are based on month
end balances.
<TABLE>
<CAPTION>
                                             Year Ended June 30,            Year Ended June 30,           Year Ended June 30,
                                                    1997                           1996                          1995
------------------------------------------------------------------------------------------------------------------------------------
                                                            Average                       Average                       Average
                                       Average              Yield/    Average             Yield/     Average            Yield/
                                       Balance   Interest   Rate(1)   Balance   Interest   Rate      Balance   Interest  Rate
------------------------------------------------------------------------------------------------------------------------------------
                                                                     (Dollars in Thousands)
<S>                                   <C>         <C>      <C>       <C>        <C>       <C>       <C>         <C>     <C>  
Interest-earning assets:
  Loans receivable(2)                 $103,324    $ 8,206    7.94%   $100,350   $ 7,902     7.87%   $ 97,031    $6,882    7.09%
  Securities                             5,540        387    6.99       7,987       509     6.37       6,006       356    5.93
  Mortgage-backed securities(3)         23,061      1,520    6.59      18,790     1,231     6.55       4,621       316    6.84
  Interest-bearing deposits              3,633        199    5.48       5,476       326     5.95       3,910       229    5.86
  FHLB stock                             1,483        116    7.81       1,475       120     8.14         954        65    6.81
------------------------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets      137,041     10,428    7.61     134,078    10,088     7.52     112,522     7,848    6.97
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets               7,419                          5,410                          3,287
------------------------------------------------------------------------------------------------------------------------------------
    Total assets                      $144,460                       $139,488                       $115,809
====================================================================================================================================
Interest-bearing liabilities:
  NOWaccounts and MMDAs              $   6,260        106    1.69    $  4,711       104     2.21    $  4,511       162    3.59
  Passbook and statement savings        17,247        623    3.61      16,930       617     3.64      17,700       606    3.42
  Certificates of deposit               73,465      4,195    5.71      66,532     3,884     5.84      64,968     3,298    5.08
  Short-term FHLB advances              11,433        620    5.42       7,361       438     5.95       9,109       500    5.49
  Long-term FHLB advances               11,000        605    5.50      14,875       887     5.96       1,650        97    5.88
------------------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing
      liabilities                      119,405      6,149    5.15     110,409     5,930     5.37      97,938     4,663    4.76
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities          1,340                          1,504                          1,125
------------------------------------------------------------------------------------------------------------------------------------
    Total liabilities                  120,745                        111,913                         99,063
Stockholders' equity                    23,715                         27,575                         16,746
------------------------------------------------------------------------------------------------------------------------------------
    Total liabilities and
      stockholders' equity            $144,460                       $139,488                       $115,809
====================================================================================================================================
Net interest income; average
  interest rate spread                            $ 4,279    2.46%               $4,158     2.15%               $3,185    2.21%
====================================================================================================================================
Net interest margin(4)                                       3.12%                          3.10%                         2.83%
====================================================================================================================================
Average interest-earning assets to
  average interest-bearing liabilities                     114.77%                        121.44%                       114.89%
====================================================================================================================================
</TABLE>
<PAGE>
(1)      At June 30, 1997,  the weighted  average  yields  earned and rates paid
         were  as  follows:   loans  receivable,   8.12%;   securities,   6.34%;
         mortgage-backed  securities,  7.09%;  interest-bearing deposits, 5.51%;
         FHLB stock,  7.85%; total  interest-earning  assets,  7.84%;  deposits,
         5.15%; FHLB advances, 5.84%; total interest-bearing liabilities, 5.30%;
         and interest spread,  2.54%.

(2)      Includes nonaccrual loans during the respective periods. Calculated net
         of deferred fees and discounts, loans in process and allowance for loan
         losses.

(3)      Includes collateralized mortgage obligations.

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

                                       8
<PAGE>

<PAGE>


Rate/Volume Analysis.  The following table describes the extent to which changes
in  interest  rates  and  changes  in  volume  of  interest-related  assets  and
liabilities  have affected the Company's  interest income and expense during the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in rate (change in rate  multiplied by prior year volume),  and (ii)
changes in volume (change in volume multiplied by prior year rate). The combined
effect of changes in both rate and volume has been allocated  proportionately to
the change due to rate and the change due to volume.
<TABLE>
<CAPTION>
                                                Year Ended                              Year Ended
                                               June 30, 1997                           June 30, 1996
                                                    vs.                                     vs.
                                                Year Ended                          Twelve Months Ended
                                               June 30, 1996                           June 30, 1995
---------------------------------------------------------------------------------------------------------------------------
                                                 Increase                                Increase
                                                (Decrease)                              (Decrease)
                                                  Due to                                  Due to
---------------------------------------------------------------------------------------------------------------------------
                                                               Total                                 Total
                                                             Increase                              Increase
                                       Rate      Volume     (Decrease)        Rate     Volume     (Decrease)
---------------------------------------------------------------------------------------------------------------------------
                                                                         (In Thousands)
<S>                                   <C>        <C>            <C>           <C>        <C>        <C>   
Interest income:
  Loans receivable                     $70        $234          $304          $778       $ 242      $1,020
  Securities                            46        (168)         (122)           28         125         153
  Mortgage-backed securities             8         281           289           (14)        929         915
  Interest-bearing deposits            (24)       (103)         (127)            4          93          97
  FHLB stock                            (5)          1            (4)           13          42          55
---------------------------------------------------------------------------------------------------------------------------

   Total interest income                95         245           340           809       1,431       2,240
---------------------------------------------------------------------------------------------------------------------------

Interest expense:
  Deposits                            (127)        446           319           492          47         539
  FHLB advances                       (112)         12          (100)           47         681         728
---------------------------------------------------------------------------------------------------------------------------

  Total interest expense              (239)        458           219           539         728       1,267
---------------------------------------------------------------------------------------------------------------------------

Increase (decrease) in net
   interest income                    $334       $(213)         $121          $270       $ 703      $  973
===========================================================================================================================
</TABLE>

Comparison of Year Ended June 30, 1997 and Year Ended June 30, 1996

   Net Income. The Company's net income decreased by $285,000 or 23.6% in fiscal
1997 from  fiscal  1996.  The  decrease in fiscal  1997 was  primarily  due to a
$364,000,  net of tax or $0.21 per share  government  mandated  one-time special
assessment to  recapitalize  the Savings  Association  Insurance  Fund ("SAIF"),
which is administered by the Federal Deposit Insurance Corporation ("FDIC"). See
Note 7 to  consolidated  financial  statements  for additional  information.  In
addition,  net interest income  increased by $121,000 and other income increased
by $352,000.  These amounts were largely offset by an increase in other expenses
(excluding the SAIF assessment) by $351,000.

   Net Interest Income.  The $121,000 or 2.9% increase in net interest income in
fiscal 1997 was  primarily due to a $3.0 million or 3.0% increase in the average
loan   portfolio   and  a  $4.3  million  or  22.7%   increase  in  the


                                       9
<PAGE>
average collateralized mortgage obligation portfolio. In addition, the Company's
average  interest  spread  increased from 2.15% to 2.46%.  The average  interest
spread   increased  as  a  result  of  an  increase  in  the  average  yield  on
interest-earning  assets,  primarily  loans as well as a decline in the  average
cost of interest-bearing  liabilities both in deposits and FHLB advances.  These
amounts  were  partially  offset by a $9.0  million or 8.1%  increase in average
interest-bearing  liabilities.  During fiscal 1998,  the Bank expects a positive
impact on its average  interest spread as a result of the anticipated  growth of
its loan  portfolio.  In  addition,  the Bank intends to continue its efforts in
attracting lower costing deposits.

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

   Interest  Expense.  Total interest  expense  increased by $219,000 or 3.7% in
fiscal 1997 compared to fiscal 1996, primarily due to an increase in the average
deposit balance by $8.8 million or 10.0%.  This amount was partially offset by a
decrease in the average  cost of deposits  from 5.22% in fiscal 1996 to 5.08% in
fiscal 1997.

   Interest on FHLB  advances  decreased by $100,000 or 7.5% in fiscal 1997 from
fiscal  1996,  as the average  rate paid  decreased to 5.46% in fiscal 1997 from
5.96% in fiscal 1996.  FHLB  advances  have  primarily  been used in addition to
deposits to fund loan  originations  for the Bank's loan portfolio as well as to
purchase adjustable-rate collateralized mortgage obligations.

   Provision for Loan Losses.  The provision for loan losses did not change when
comparing  fiscal 1996 to fiscal 1997.  The allowance  for loan losses  totalled
$226,000,  which  represented  .19% of the  total  loan  portfolio  and 54.2% of
nonperforming  loans at June 30, 1997. The nonperforming  loans at June 30, 1997
were comprised of one- to four-family  mortgage  loans and  construction  loans.
Management believes these loans are adequately collateralized.  Accordingly,  no
specific reserves have been assigned to these loans.

   Because of the stability of the loan portfolio's  credit quality,  management
budgets a provision for the entire year, and, on a quarterly basis, reviews this
amount to determine if any change in the amount of the  provision is  necessary.
For  fiscal  1997,  management  determined  that no change in the  amount of the
quarterly  provision was necessary as a result of the dollar amount and types of
loans added to the portfolio  during the fiscal year.  Management  believes that
the  allowance  is adequate to cover  losses that are  probable  and  reasonably
estimable  based  on  past  loss  experience,   general   economic   conditions,
information about specific borrower situations,  and other factors and estimates
which are subject to change over time. Management expects the provision for loan
losses to increase in the next  fiscal year as general  reserves  continue to be
provided to correspond  with the  anticipated  growth in commercial and consumer
loans.

   Total Other  Income.  Total other  income  increased  by $352,000 or 29.3% in
fiscal 1997 from fiscal 1996,  primarily  due to a $365,000  improvement  in the
results of trading equity securities and a $117,000 increase in fees and service
charges.  These amounts were partially offset by a $118,000  decrease in gain on
sale of loans. The equity  securities  trading  portfolio is comprised of equity
investments  in financial  institutions.  Although to date the Company's  equity
trading strategy has been successful,  there is no guarantee that future results
will equal the


                                       10
<PAGE>
current fiscal year's performance.  The unrealized gain recognized on securities
classified as trading was $131,000 at June 30, 1997.

   Gain on the sale of loans  decreased by $118,000 or 19.1% due to a decline in
loans sold by $12.9 million as a result of lower refinancing  volume from higher
prevailing  market  interest  rates compared to the prior fiscal year as well as
increased market competition.  However, the decline in gain on the sale of loans
was offset by an increase in fee and service charge income by $117,000 or 58.4%,
which was  primarily  related to new loan  programs both at the retail level and
with correspondent financial institutions.  In an effort to offset the financial
statement  impact of lower mortgage  banking volume,  management  placed greater
emphasis on originating residential  construction,  home equity,  commercial and
consumer loans for portfolio. The Company expects to continue to search for ways
to expand its  mortgage  banking  activities  during  fiscal  1998 as well as to
continue to add non-mortgage loans to the loan portfolio.

   Total Other Expenses.  Total other expenses increased by $903,000 or 26.0% in
fiscal 1997 from fiscal 1996,  primarily  due to a government  mandated  special
assessment to recapitalize the SAIF, which is administered by the FDIC. The FDIC
notified the Bank that the Bank's  special  assessment  was $551,000 on a pretax
basis.  See  Note  7  to  consolidated   financial   statements  for  additional
information.  In addition,  compensation  and benefits  increased by $407,000 or
22.3% which was primarily due to hiring individuals to support the growth in the
mortgage banking,  consumer and commercial loans departments.  In addition,  the
Employee Stock  Ownership Plan and  Management  Recognition  Plans expenses were
higher by $26,000 and $51,000 for fiscal 1997,  respectively  compared to fiscal
1996. Also,  occupancy expense was $60,000 higher during fiscal 1997 compared to
fiscal  1996 due to the  opening  of the Bank's  third  branch  location.  These
amounts were partially  offset by a decrease in professional  fees of $83,000 or
30.5% due to a reduction in consulting fees related to one-time projects.

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

Comparison of Year Ended June 30, 1996 and Year Ended June 30, 1995

   Net Income. The Company's net income increased by $492,000 or 68.7% in fiscal
1996 from  fiscal  1995.  The  increase in fiscal  1996 was  primarily  due to a
$973,000  increase in net interest  income,  a $480,000  increase in gain on the
sale of loans and a $358,000  increase on the sale of securities.  These factors
were  partially  offset  by a $1.1  million  or 47.5%  increase  in total  other
expenses.

   Net Interest Income. The $973,000 or 30.5% increase in net interest income in
fiscal 1996 was  primarily due to a $3.3 million or 3.4% increase in the average
loan  portfolio  and  a  $14.2  million  or  306.6%   increase  in  the  average
mortgage-backed   securities  (including   collateralized  mortgage  obligation)
portfolio.  These  amounts  were  partially  offset by a $12.5  million or 12.7%
increase in average  interest-bearing  liabilities  and a decline in the average
interest  rate  spread from 2.21% in fiscal  1995 to 2.15% in fiscal  1996.  The
average  spread  declined as a result of the increases in interest  rates during
the second half of fiscal  1996 which  caused  deposits  to reprice  faster than
adjustable-rate assets.

   Interest Income.  Total interest income increased by $2.2 million or 28.5% in
fiscal 1996  compared to fiscal  1995.  The  increase  was  primarily  due to an
increase  in  the  average   mortgage-backed   securities  portfolio  (including
collateralized  mortgage  obligations) of $14.2 million or 306.6% resulting in a
$929,000 or 294.0% increase in interest income (before giving effect to a slight
decrease  in the  average  yield).  In  addition,  the  average  loan  portfolio
increased  $3.3  million or 3.4%  resulting  in a $242,000  or 3.5%  increase in
interest on loans (before  giving  effect to an increase in the average  yield).
The increase in the average mortgage-backed securities


                                       11
<PAGE>
portfolio was due to the purchase of adjustable-rate  mortgage-backed securities
and collateralized  mortgage obligations which were funded by variable-rate FHLB
advances.  The increase in the average loan  portfolio  was primarily due to the
total loan  originations  exceeding  total loans sold and repaid  during  fiscal
1996. Loan  originations  also were supplemented by the purchase of $1.9 million
of one- to four-family  residential  loans. The interest on loans also increased
due to the average yield increasing from 7.09% in fiscal 1995 to 7.87% in fiscal
1996  resulting  in a $778,000 or 11.3%  increase  in interest on loans  (before
giving effect to the increase in the average balance) as  adjustable-rate  loans
repriced  higher to reflect the higher  prevailing  market interest rates during
fiscal  1996  as  well  as  the  growth  in the  commercial  and  consumer  loan
portfolios.

   Interest  on  securities  increased  by $153,000 or 43.0% in fiscal 1996 over
fiscal 1995 as the average  balance  increased by $2.0 million due to additional
purchases of securities  during the fiscal year with part of the proceeds of the
common stock offering.  The higher  interest income also was  attributable to an
increase in the average yield from 5.93% in fiscal 1995 to 6.37% in fiscal 1996.
Dividends  on FHLB stock  increased  by $55,000 or 84.6% due an  increase in the
average  yield from 6.81% in fiscal  1995 to 8.14% in fiscal  1996 as well as an
increase   in  the  average   balance  of   $521,000   or  54.6%.   Interest  on
interest-bearing deposits increased by $97,000 or 42.4% in fiscal 1996 primarily
due to higher average  balances from an increase in loan  refinances and deposit
growth.

   Interest  Expense.  Total interest expense increased by $1.3 million or 27.2%
in fiscal 1996 compared to fiscal 1995,  primarily due to an increase in average
FHLB advances and higher  average rates paid on both deposits and FHLB advances.
The average rate paid on deposits  increased  from 4.66% in fiscal 1995 to 5.22%
in fiscal  1996.  The increase in the average rate paid is due to an increase in
the prevailing market interest rates compared to the prior fiscal year.

   Interest on FHLB advances increased $728,000 in fiscal 1996 from fiscal 1995,
as the  average  balance  increased  $11.5  million  and the  average  rate paid
increased  to 5.96% in fiscal 1996 from 5.55% in fiscal 1995.  The  increases in
FHLB advances have primarily been used to fund increased loan  originations  for
the Bank's loan portfolio as well as to purchase adjustable-rate mortgage-backed
securities and collateralized mortgage obligations.

   Provision for Loan Losses. The provision for loan losses increased by $39,500
or 192.7% in fiscal 1996 compared to fiscal 1995.  The allowance for loan losses
totalled  $166,000,  which  represented .16% of the total loan portfolio at June
30, 1996.  However,  the allowance for loan losses  represented  386.0% of total
nonperforming  loans  at  such  date.  Because  of the  stability  of  the  loan
portfolio's credit quality,  management budgets a provision for the entire year,
and, on a quarterly basis, reviews this amount to determine if any change in the
amount of the  provision  is  necessary.  For the  second  half of fiscal  1996,
management  determined that an increase in the amount of the quarterly provision
was necessary to provide  general  reserves for the growth in the commercial and
consumer loan portfolios.  Management of the Company believes that the allowance
is adequate to cover losses that are probable and reasonably  estimable 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.

   Total Other  Income.  Total other  income  increased by $932,000 or 345.2% in
fiscal 1996 from fiscal 1995,  primarily  due to a $480,000  increase in gain on
the sale of loans and a $366,000 increase in gain on the sale of securities. The
increase  in the gain on the sale of loans is due to an  increase  in sold loans
from $14.4 million in fiscal 1995 to $45.8  million in fiscal 1996.  Total loans
serviced for FHLMC increased by $4.9 million or 20.6% from fiscal 1995 to fiscal
1996. The Bank sold the majority of its loans held for sale  servicing  released
to private  investors.  The  increase in the gain on the sale of  securities  is
primarily the result of trading gains on its equity securities  portfolio.  This
portfolio is  comprised of equity  investments  in financial  institutions.  The
unrealized  loss  recognized on  securities  classified as trading was $5,813 at
June 30, 1996.

                                       12
<PAGE>
   Total Other Expenses. Total other expenses increased by $1.1 million or 47.5%
in fiscal 1996 from fiscal 1995, primarily due to increases of $626,000 or 52.1%
in  compensation  and  benefits,  $120,000  or  78.9% in  professional  fees and
$190,000 or 135.7% in occupancy and furniture,  fixtures and equipment expenses.
The higher  compensation  expense was  primarily  due to hiring  individuals  to
support  the growth in the  mortgage  banking,  consumer  and  commercial  loans
departments as well as hiring  individuals to staff the new branch location.  In
addition,  the Employee Stock  Ownership Plan and Management  Recognition  Plans
expenses  were $164,000 and $99,000 for fiscal 1996,  respectively,  compared to
$37,000 and none for fiscal 1995,  respectively.  The  increase in  professional
fees was primarily due to  additional  consulting,  legal and audit fees and the
outsourcing of the internal  audit and certain human  resources  functions.  The
increase in occupancy and furniture, fixtures and equipment expense is primarily
due to the opening of the new main office building/branch during fiscal 1996.

   Federal Income Tax Expense.  Federal income tax expense increased by $256,000
or 69.9% in fiscal  1996 from  fiscal  1995,  due to a 69.2%  increase in pretax
income.

Liquidity and Capital Resources

   The  Bank is  required  under  applicable  federal  regulations  to  maintain
specified levels of "liquid" investments in qualifying types of U.S. Government,
federal agency and other  investments  having  maturities of five years or less.
Current OTS  regulations  require  that a savings  institution  maintain  liquid
assets of not less than 5% of its  average  daily  balance  of net  withdrawable
deposit  accounts and borrowings  payable in one year or less. At June 30, 1997,
the Bank's liquidity ratio was 9.0% or $5.5 million in excess of the minimum OTS
requirement.

   Cash was  generated by the Bank's  operating  activities  during fiscal 1997,
primarily  as the result of net income and the  proceeds  from the sale of loans
held for sale  exceeded the amount of new loan  originations  and  purchased for
resale.  During  fiscal  1996 and  1995,  net cash was  utilized  by the  Bank's
operating activities since loans originated and purchase for resale exceeded the
proceeds received on loans held for sale. These amounts were partially offset by
net income during each period.

   The primary investing  activities of the Company are the origination of loans
and  the  purchase  of  investment  and  mortgage-backed  securities  (including
collateralized  mortgage  obligations),  which are primarily funded by deposits,
FHLB advances,  the proceeds from  repayments and  prepayments on existing loans
and the maturity or sale of investment and mortgage-backed  securities. Net cash
was utilized by investing  activities  in fiscal 1997 as loan  originations  and
purchases  exceeded loan  repayments  and  purchases of securities  exceeded the
proceeds  from the sale or  maturity  of  securities.  Net cash was  provided by
investing  activities in fiscal 1996 primarily because loan repayments  exceeded
loan originations,  the maturity of interest-bearing time deposits and principal
payments on mortgage-backed  securities.  Investing  activities used net cash in
fiscal 1995 primarily  because loan  originations  exceeded loan repayments.  In
addition,   in  fiscal  1995,  the  amount  of  investment  and  mortgage-backed
securities purchased exceeded the amount sold by $22.7 million.  These purchases
were  primarily  funded by a  combination  of proceeds  from the initial  public
offering  and  FHLB  advances.  Also in  fiscal  1995,  property  and  equipment
expenditures  totaled  $2.7 million as a result of the  construction  of the new
corporate headquarters and the remodeling of its branch facility.

   The primary  financing  activity  consists of  deposits,  which  increased in
fiscal 1997 and 1996 and  decreased in fiscal 1995.  The decrease in fiscal 1995
was primarily due to depositors utilizing their deposits at the Bank to purchase
common stock of the Company in the initial public offering. Financing activities
also include FHLB advances,  which increased in fiscal 1997 and 1995 in order to
fund loan growth and security purchases.  FHLB advances decreased in fiscal 1996
as deposit growth reduced the need for higher costing wholesale funds.

                                       13
<PAGE>
   At June 30, 1997,  the Company had  outstanding  commitments  to originate or
purchase  $2.8 million of loans.  In  addition,  the Company had unused lines of
credit totaling $6.2 million. At the same date, the total amount of certificates
of deposit  which were  scheduled to mature in the  following  twelve months was
$55.0 million.  The Company believes that it has adequate  resources to fund all
of its commitments and that it can adjust the rate on certificates of deposit to
retain deposits to the extent desired.  If the Company requires funds beyond its
internal  funding  capabilities,  advances  from  the FHLB of  Indianapolis  are
available as an additional source of funds.

   The Bank is  required  to  maintain  regulatory  capital  sufficient  to meet
tangible,   core  and  risk-based   capital  ratios  of  1.5%,  3.0%  and  8.0%,
respectively.  At  June  30,  1997,  the  Bank  exceeded  each  of  its  capital
requirements,  with tangible, core and risk-based capital ratios of 12.2%, 12.2%
and 23.4%, respectively.

Impact of Inflation and Changing Prices

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

Recent Accounting and Regulatory Standards

   Statement  of  Financial   Accounting  Standards  No.  125,  "Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishment of Liabilities,"
provides authoritative guidance as to the accounting and financial reporting for
transfers and servicing of financial assets and  extinguishment  of liabilities.
Example  transactions  covered by SFAS No.  125  include  asset  securitization,
repurchase agreements, wash sales, loan participations,  transfers of loans with
recourse and servicing of loans. The Statement provides consistent standards for
distinguishing  transfers of financial assets that are sales from transfers that
are secured borrowings.  The Statement also requires measuring  instruments that
have a substantial  prepayment  risk at fair value,  much like debt  instruments
classified as available for sale or trading.  While SFAS No. 125 supersedes SFAS
No. 122, "Accounting for Mortgage Servicing Rights," it only marginally modifies
the  accounting and  disclosure  requirements  of SFAS No. 122. SFAS No. 125, as
amended by SFAS No. 127, is expected to have no material impact on the Company's
consolidated financial condition or results of operations.

   In March 1997, the FASB issued Statement No. 128, "Earnings Per Share," which
is effective for financial statements beginning with year end 1997. SFAS No. 128
simplifies the  calculation of earnings per share by replacing  primary EPS with
basic EPS. It also requires dual  presentation  of basic EPS and diluted EPS for
entities with complex capital structures.  Basic EPS includes no dilution and is
computed  by  dividing   income   available  to  common   shareholders   by  the
weighted-average  common shares outstanding for the period. Diluted EPS reflects
the potential dilution of securities that could share in earnings, such as stock
options,  warrants or other common stock  equivalents.  The Company expects SFAS
No. 128 to have little impact on its earnings per share  calculations  in future
years, other than changing  terminology from primary EPS to basic EPS. All prior
period data will be restated to conform with the new presentation.

                                       14
<PAGE>
Report of Independent Auditors


                                  CROWE CHIZEK



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

   We have audited the  accompanying  consolidated  balance  sheets of Bank West
Financial  Corporation  (the  "Company")  as of June  30,  1997 and 1996 and the
related consolidated  statements of income,  changes in shareholders' equity and
cash flows for each of the three years in the period ended June 30, 1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

   In our  opinion,  the  consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Bank West
Financial  Corporation  as of June 30,  1997 and 1996,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 1997 in conformity with generally accepted accounting principles.

                                                /s/Crowe, Chizek and Company LLP

                                                   Crowe, Chizek and Company LLP

Grand Rapids, Michigan
August 15, 1997


                                       15
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
June 30, 1997 and 1996
                                                                         1997                 1996
<S>                                                                  <C>                 <C>        
ASSETS
  Cash and due from financial institutions                           $ 1,722,734         $ 1,571,662
  Interest-bearing deposits in financial institutions                  1,950,522           5,122,427 
-----------------------------------------------------------------------------------------------------
      Total cash and cash equivalents                                  3,673,256           6,694,089

  Interest-bearing time deposits                                          99,000             298,000
  Trading securities                                                   2,921,251             708,438
  Securities available for sale (Note 3)                              25,550,974          22,779,280
  Securities held to maturity (fair value:
    1997 - $4,001,875; 1996 - $2,006,000) (Note 3)                     4,003,575           2,004,288
  Loans held for sale (Note 4)                                         2,231,151           4,297,092
  Loans, net (Note 5)                                                111,530,092          95,737,191
  Federal Home Loan Bank stock                                         1,550,000           1,475,000
  Premises and equipment - net (Note 6)                                3,128,158           3,106,972
  Accrued interest receivable                                            762,990             632,043
  Mortgage servicing rights (Note 4)                                     148,569             142,697
  Other assets                                                            76,175             107,216
-----------------------------------------------------------------------------------------------------
                                                                    $155,675,191        $137,982,306
=====================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Deposits (Note 7)                                                 $102,862,152        $ 91,028,072
  Federal Home Loan Bank borrowings (Note 8)                          29,000,000          19,000,000
  Accrued interest payable                                               202,217             156,946
  Advanced payments by borrowers for taxes and insurance                 491,710             459,391
  Deferred federal income tax (Note 9)                                   287,635             225,760
  Other liabilities                                                      239,168             301,691
-----------------------------------------------------------------------------------------------------
      Total liabilities                                              133,082,882         111,171,860
<PAGE>
<CAPTION>
Consolidated Balance Sheets
June 30, 1997 and 1996
                                                                         1997                 1996
<S>                                                                  <C>                 <C>        
Commitments and Contingencies (Note 10)

Shareholders' equity (Notes 9, 12 and 13)
  Preferred stock, 5,000,000 shares
  authorized, none issued Common stock,
  $.01 par value; 10,000,000 shares authorized;
    1,753,475 and 2,199,575 issued at June 30, 1997
    and 1996 (Note 2)                                                     17,535              21,996
  Additional paid-in capital                                          11,432,798          16,542,107
  Retained earnings, substantially restricted (Notes 9 and 13)        12,647,112          12,231,242
  Net unrealized gain (loss) on securities available for sale,
    net of tax of ($6,548) in 1997 and $106,834 in 1996                   12,710            (207,387)
  Management Recognition Plan (unearned shares) (Note 12)               (513,398)           (643,464)
  Employee Stock Ownership Plan (unallocated shares)
    (Note 12)                                                         (1,004,448)         (1,134,048)
-----------------------------------------------------------------------------------------------------
                                                                      22,592,309          26,810,446
-----------------------------------------------------------------------------------------------------
                                                                    $155,675,191        $137,982,306
=====================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       16
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
Years ended June 30, 1997, 1996 and 1995

                                                                   1997              1996             1995
<S>                                                            <C>                <C>              <C>       
Interest and dividend income
  Loans                                                        $ 8,206,364        $7,901,948       $6,882,198
  Securities                                                     1,907,129         1,739,792          671,728
  Other interest-earning deposits                                  199,210           325,796          229,097
  Dividends on Federal Home Loan Bank stock                        115,838           120,467           65,156
--------------------------------------------------------------------------------------------------------------
                                                                10,428,541        10,088,003        7,848,179
Interest expense
  Deposits                                                       4,924,144         4,605,347        4,065,586
  FHLB advances                                                  1,224,959         1,324,732          597,578
--------------------------------------------------------------------------------------------------------------

                                                                 6,149,103         5,930,079        4,663,164
--------------------------------------------------------------------------------------------------------------

Net interest income                                              4,279,438         4,157,924        3,185,015

Provision for loan losses (Note 5)                                  60,000            60,000           20,500
--------------------------------------------------------------------------------------------------------------

Net interest income after provision for loan losses              4,219,438         4,097,924        3,164,515

Other income
  Net gain on sales of loans (Note 4)                              498,666           617,286          136,747
  Fees and service charges                                         317,286           200,330          104,580
  Net gain on trading securities                                   731,156           366,465               --
  Net gain (loss) on sales of securities
    available for sale                                                (285)           10,529           18,999
  Other income                                                       7,050             7,402            9,849
--------------------------------------------------------------------------------------------------------------

                                                                 1,553,873         1,202,012          270,175
Other expenses
  Compensation and benefits (Notes 11 and 12)                    2,234,337         1,827,177        1,200,931
  Federal deposit insurance expense                                121,246           196,397          205,209
  FDIC special assessment (Note 7)                                 550,556
  Professional fees                                                188,561           272,163          152,098
  Data processing expense                                          177,878           172,596          113,157
  Occupancy expense                                                266,457           206,058           76,878
  Furniture, fixtures and equipment expense                        137,249           124,366           63,317
  Advertising                                                      119,993            87,770          104,497
  Provision to adjust loans held for sale
    to lower of cost or market                                          --            22,039               --
  Other expense                                                    575,481           560,482          436,113
--------------------------------------------------------------------------------------------------------------

                                                                 4,371,758         3,469,048        2,352,200
--------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Consolidated Statements of Income
Years ended June 30, 1997, 1996 and 1995

                                                                   1997              1996             1995
<S>                                                            <C>                <C>              <C>       
Income before federal income tax expense                         1,401,553         1,830,888        1,082,490

Federal income tax expense (Note 9)                                478,724           622,400          366,478
--------------------------------------------------------------------------------------------------------------


Net income                                                    $    922,829        $1,208,488       $  716,012
==============================================================================================================

Earnings per common and common equivalent
  share subsequent to conversion (Note 1)                          $   .52            $  .57           $  .10
==============================================================================================================

Dividends per common share                                          $  .28               .28              N/A
==============================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       17
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Years ended June 30, 1997, 1996 and 1995
                                                                  Net Unrealized
                                                                    Gain (Loss)
                                        Additional                 on Securities  Unearned   Unallocated      Total
                              Common      Paid-in      Retained    Available for     MRP        ESOP      Shareholders'
                               Stock      Capital      Earnings  Sale (Net of Tax) Shares      Shares        Equity
---------------------------------------------------------------------------------------------------------------------------
<S>                           <C>       <C>          <C>            <C>          <C>        <C>           <C>        
Balance at July 1, 1994                              $10,910,124     $(66,529)                            $10,843,595

Net income for the year
  ended June 30, 1995                                    716,012                                              716,012

Sale of 2,314,375 shares of
  common stock, net of
  conversion costs
  (Note 2, 12 and 14)         $23,144   $17,807,694                                         $(1,296,048)   16,534,790

Shares released under
  Employee Stock
  Ownership Plan (Note 12)                    5,063                                              32,400        37,463

Change in net unrealized
  gain (loss) on securities
  available for sale, net of
  tax of $20,210                                                       39,234                                  39,234
---------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1995       23,144    17,812,757   11,626,136      (27,295)               (1,263,648)   28,171,094

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

Issuance of 92,575 shares of
  common stock for
  Management Recognition
  Plan (MRP) (Note 12)            926       741,658                              $(742,584)

Shares earned under MRP                                                             99,120                     99,120

Cash dividends of
  $.28 per share                                        (603,382)                                            (603,382)

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

Shares committed to be
  released under Employee
  Stock Ownership Plan
  (Note 12)                                  34,679                                             129,600       164,279

Change in net unrealized
  gain (loss) on securities available
  for sale, net of tax of $92,775                                    (180,092)                               (180,092)
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.

                                       18
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity (Continued)
Years ended June 30, 1997, 1996 and 1995

                                                                  Net Unrealized
                                                                    Gain (Loss)
                                        Additional                 on Securities  Unearned   Unallocated      Total
                              Common      Paid-in      Retained    Available for     MRP        ESOP      Shareholders'
                               Stock      Capital      Earnings  Sale (Net of Tax) Shares      Shares        Equity
---------------------------------------------------------------------------------------------------------------------------
<S>                           <C>       <C>          <C>            <C>          <C>        <C>           <C>        
Balance at June 30, 1996      $21,996   $16,542,107  $12,231,242    $(207,387)   $(643,464) $(1,134,048)  $26,810,446

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

Net grant of 1,742 shares
  of common stock for MRP
  (Note 12)                                  19,852                                (19,852)

Shares earned under MRP
149,918                                                                            149,918

Cash dividends of
  $.28 per share                                        (506,959)                                            (506,959)

Repurchase of 446,100 shares
  of stock (Note 14)           (4,461)   (5,189,405)                                                       (5,193,866)

Shares committed to be
  released under Employee
  Stock Ownership Plan
  (Note 12)                                  60,244                                             129,600       189,844

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

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

          See accompanying notes to consolidated financial statements.

                                       19
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Years ended June 30, 1997, 1996 and 1995

                                                                   1997             1996              1995
--------------------------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>              <C>        
Cash flows from operating activities
  Net income                                                   $   922,829       $ 1,208,488      $   716,012
  Adjustments to reconcile net income to
    net cash from operating activities
      Purchase of trading securities                            (5,428,775)       (2,224,537)              --
      Proceeds from sales of trading securities                  3,947,118         1,882,564               --
      Origination and purchase of mortgage
         loans for sale                                        (30,350,557)      (48,488,782)     (16,997,866)
      Proceeds from sales of mortgage loans                     32,915,164        45,798,332       14,382,754
      Net (gain) loss on sales of:
          Loans                                                   (498,666)         (617,286)        (136,747)
          Securities                                              (730,871)         (376,994)         (18,999)
          Real estate owned                                           (210)           (4,806)              --
      Depreciation                                                 192,495           179,742           62,718
      Amortization of premium, net                                  13,848           103,072           17,154
      ESOP expense                                                 189,844           164,279           37,463
      MRP expense                                                  149,918            99,120               --
      Loss on disposal of fixed assets                                  --             2,662               --
      Provision for loan losses                                     60,000            60,000           20,500
      Provision to adjust loans held for sale
        to lower of cost or market                                      --            22,039               --
      Change in:
          Deferred loan fees                                       (77,301)          (47,292)         (64,652)
          Other assets and accrued interest receivable             (85,866)          (15,373)        (532,741)
          Other liabilities and accrued interest payable           (36,442)         (144,282)         563,259
--------------------------------------------------------------------------------------------------------------
              Net cash from operating activities                 1,182,528        (2,399,054)      (1,951,145)

Cash flows from investing activities
  Purchase of FHLB stock                                           (75,000)               --         (635,200)
  Net (increase) decrease in interest-bearing
    time deposits                                                  199,000           989,000       (1,287,000)
  Loan originations, net of repayments                         (13,664,118)        3,696,997         (248,962)
  Loans purchased for portfolio                                 (2,156,750)       (1,921,400)      (3,016,261)
  Purchase of securities available for sale                    (14,725,895)      (21,217,480)      (9,728,635)
  Proceeds from sales of securities
    available for sale                                          10,731,577        14,077,014        1,671,263
  Purchase of securities held to maturity                       (3,002,813)               --      (14,610,995)
  Proceeds from maturities, calls and principal
    payments of securities available for sale                    1,545,498         8,874,974          160,528
  Proceeds from maturities, calls and principal
    payments of securities held to maturity                      1,000,000         2,877,708          277,415
  Property and equipment expenditures                             (213,681)         (202,205)      (2,721,038)
  Proceeds from sale of real estate owned                           25,566            50,181               --
  Proceeds from sale of real estate                                     --                --           84,510
--------------------------------------------------------------------------------------------------------------
              Net cash from investing activities               (20,336,616)        7,224,789      (30,054,375)
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       20
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
Years ended June 30, 1997, 1996 and 1995

                                                                   1997             1996              1995
--------------------------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>              <C>        
Cash flows from financing activities
    Net increase (decrease) in deposits                        $11,834,080       $ 5,847,822      $(4,779,731)
    Repayment of FHLB borrowings                               (11,000,000)      (11,922,256)              --
    Proceeds from FHLB borrowings                               21,000,000         6,000,000       19,922,256
    Repurchase of common stock                                  (5,193,866)       (2,049,061)              --
    Dividends paid on common stock                                (506,959)         (603,382)              --
    Issuance of common stock                                            --                --       16,534,790
--------------------------------------------------------------------------------------------------------------

        Net cash from financing activities                      16,133,255        (2,726,877)      31,677,315
--------------------------------------------------------------------------------------------------------------


Net change in cash and cash equivalents                         (3,020,833)        2,098,858         (328,205)

Cash and cash equivalents at beginning of period                 6,694,089         4,595,231        4,923,436
--------------------------------------------------------------------------------------------------------------


Cash and cash equivalents at end of period                     $ 3,673,256       $ 6,694,089      $ 4,595,231
==============================================================================================================


Supplemental disclosures of cash flow information:
    Cash paid during the period for
        Interest                                                $6,103,832        $5,954,870      $ 4,595,797
        Income taxes                                               456,050           520,000          322,500

Supplemental disclosure of noncash investing activities:
    Transfer of loans from held for sale
      to held to maturity                                               --         1,756,663        1,287,879
    Transfer from loans to real estate owned                        45,268            45,375               --
</TABLE>

   During November of 1995,  securities with a carrying value of $15,008,666 and
a fair value of $14,964,245 were transferred from securities held to maturity to
securities available for sale (Note 3).

          See accompanying notes to consolidated financial statements.

                                       21
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1997, 1996 and 1995

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Nature of Operations:  Bank West Financial  Corporation  (the  "Company") was
organized as a thrift holding  company to be the sole  shareholder of Bank West,
FSB (the "Bank"), a federally chartered savings bank. The consolidated financial
statements  include the  accounts of the Company and the Bank.  All  significant
intercompany  transactions  and balances have been eliminated in  consolidation.
The Bank's primary services include  accepting  deposits and making mortgage and
installment loans in Kent County and Eastern Ottawa County,  Michigan.  The Bank
also engages in mortgage banking activities consisting of selling originated and
purchased  loans into the secondary  market.  The Bank has formed a wholly-owned
service company for the future purpose of involvement with insurance  activities
permitted  by federal  and state  regulations.  At June 30,  1997,  the  service
company was inactive and had no assets or  liabilities.  During fiscal 1996, the
Company began trading equity securities to a limited extent.

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

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

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

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

   Securities:  Securities which the Bank has the positive intent and ability to
hold to maturity  are  classified  as held to maturity  and carried at amortized
cost.  Securities  not  classified as held to maturity or trading,  as discussed
above, are classified as available for sale.  Securities classified as available
for sale are  reported  at their fair value and the related  unrealized  holding
gain or loss is  reported,  net of  related  income tax  effects,  as a separate
component of shareholders' equity, until realized.

   Gains and losses on the sale of securities  available for sale are determined
using the specific identification method.

   Premiums and discounts on securities are recognized in interest  income using
the level yield method over the period to maturity.

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


                                       22
<PAGE>
   Loans: Loans are stated at unpaid principal balances,  less the allowance for
loan losses, net deferred loan fees and costs, and charge-offs.  Interest income
on  loans  is  accrued  over  the term of the  loans  based  upon the  principal
outstanding.  Interest  income is not  reported  when full loan  repayment is in
doubt,  typically when payments are past due 90 days or more.  Payments received
on such loans are reported as principal reductions.

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

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

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

   Mortgage Loan Servicing Rights: The Company purchases and originates mortgage
loans for sale to the  secondary  market,  and sells  the loans  with  servicing
retained and released.  Effective July 1, 1995, the Company adopted Statement of
Financial Accounting Standards No. 122, Accounting for Mortgage Servicing Rights
(SFAS No.  122).  The  Statement  requires  capitalizing  the  rights to service
originated  mortgage  loans.  Prior to SFAS No.  122,  only  purchased  mortgage
servicing  rights were  required to be  capitalized.  The total cost of mortgage
loans purchased or originated  with the intent to sell is allocated  between the
loan  servicing  right and the mortgage loan without  servicing,  based on their
relative fair values. The capitalized cost of loan servicing rights is amortized
in  proportion  to,  and over the  period of,  estimated  net  future  servicing
revenue.

   Mortgage  servicing  rights are  periodically  evaluated  for  impairment  by
stratifying  them based on predominant  risk  characteristics  of the underlying
serviced loans,  such as loan type, term, and note rate.  Impairment  represents
the excess of cost of an individual  mortgage  servicing rights stratum over its
fair value, and is recognized through a valuation allowance.

   Fair  values  for  individual  stratum  are  based on quoted  market  prices.
Estimates  of fair value  include  assumptions  about  prepayment,  default  and
interest rates, and other factors which are subject to change over time. Changes
in these  underlying  assumptions  could cause the fair value of loan  servicing
rights,  and the related  valuation  allowance,  to change  significantly in the
future.

   Premises and  Equipment:  The Company's  premises and equipment are stated at
cost  less  accumulated  depreciation.   Premises  and  related  components  are
depreciated using the straight-line  method with useful lives ranging from 31 to
50 years. Furniture and equipment are depreciated using the straight-line method
with useful


                                       23
<PAGE>
lives  ranging  from five to ten years.  Maintenance  and repairs are charged to
expense  and  improvements  are  capitalized.  These  assets  are  reviewed  for
impairment when events indicate the carrying amount may not be recoverable.

   Real Estate  Owned:  Real estate  owned is carried at the lower of cost (fair
value at date of  foreclosure)  or fair  value  minus  estimated  costs to sell.
Adjustments  to  fair  value  at the  date of  acquisition  are  charged  to the
allowance for loan losses.  Allowances are established for subsequent losses, if
any, with corresponding charges to operations.

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

   Employee Stock  Ownership  Plan: The Company  accounts for its employee stock
ownership plan (ESOP) in accordance  with AICPA  Statement of Position 93-6. The
cost of  shares  issued to the ESOP but not yet  allocated  to  participants  is
presented  as a  reduction  of  shareholders'  equity.  Compensation  expense is
recorded  based on the market  price of the shares as they are  committed  to be
released for allocation to  participant  accounts.  The  difference  between the
market  price and the cost of shares  committed to be released is recorded as an
adjustment to paid in capital.  Dividends on allocated  ESOP shares are recorded
as a reduction of retained  earnings while dividends on unallocated  ESOP shares
are reflected as a reduction of debt and accrued interest.

   Management  Recognition  Plan (MRP):  The MRP is a stock award plan accounted
for under APB Opinion 25 with the measurement of total  compensation  cost based
upon the fair value of the shares on the date of grant.  MRP awards vest in five
equal  annual  installments  from the date of grant,  subject to the  continuous
employment of the recipients as defined under such plans.  Compensation  expense
for the MRPs is  recognized  on a prorata  basis over the vesting  period of the
awards.  The unamortized  unearned  compensation value of the MRPs is shown as a
reduction of shareholders' equity.

   Stock  Option Plan (SOP):  Expense for  employee  compensation  under SOPs is
based on APB Opinion 25, with expense reported only if options are granted below
the market price at the grant date.  As shown in Note 12, pro forma  disclosures
of net income and earnings per share are provided as if the fair value method of
Statement of  Financial  Accounting  Standard No. 123 were used for  stock-based
compensation.

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

   Fair Values of Financial  Instruments:  Fair values of financial  instruments
are estimated using relevant market information and other  assumptions,  as more
fully  disclosed  in Note 16. Fair value  estimates  involve  uncertainties  and
matters  of  significant   judgment  regarding  interest  rates,   credit  risk,
prepayments,  and other factors,  especially in the absence of broad markets for
particular  items.   Changes  in  assumptions  or  in  market  conditions  could
significantly affect the estimates. The fair value estimates of existing on- and
off-balance-sheet   financial   instruments   does  not  include  the  value  of
anticipated  future  business  or the  values  of  assets  and  liabilities  not
considered financial instruments.

                                       24
<PAGE>
   Earnings  Per  Share:  Earnings  per share is based on the  weighted  average
number of outstanding common shares and dilutive common stock equivalents during
the  year.  ESOP  shares  are  considered  outstanding  for  earnings  per share
calculations  as they are committed to be released;  unallocated  shares are not
considered  outstanding.  The weighted average number of shares  outstanding was
1,773,242 and 2,104,921 for the years ended June 30, 1997 and 1996. The weighted
average  number  of  shares  outstanding  for  the  1995  period  subsequent  to
conversion was 2,154,394.

   Issued But Not Yet Adopted Accounting Standards:  In June 1996, the Financial
Accounting  Standards  Board (FASB)  issued  Statement No. 125,  Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments  of Liabilities
(SFAS No. 125). The Standard  provides  that,  following a transfer of financial
assets, an entity is to recognize the financial and servicing assets it controls
and the liabilities it has incurred,  derecognize  financial assets when control
has  been  surrendered,  and  derecognize  liabilities  when  extinguished.  The
Statement  is  effective  for  transactions   occurring  after  June  30,  1997.
Management  does not  expect  the  Statement  to have a  material  impact on the
consolidated financial condition or results of operations of the Company.

   In March  1997,  the FASB  issued  Statement  No.  128,  Earnings  Per Share,
revising the accounting  requirements  for calculating  earnings per share.  The
Statement  will  require the  reporting of basic  earnings per share  calculated
solely on average common shares outstanding. In addition, the Statement requires
the reporting of diluted earnings per share to reflect the potential dilution of
stock  options  and other  potentially  dilutive  shares.  For  reporting  dates
beginning December 31, 1997, all prior calculations will be restated to meet the
new  presentation  requirements.  The  Company's  earnings per common and common
equivalent share amounts,  as reported for 1996 and prior years, are expected to
be comparable in amount to the calculations of basic earnings per share for such
years.  As the Company has not had  significant  dilution  from its common stock
equivalents, basic earnings per share amounts reported will not be significantly
higher than diluted earnings per share amounts for corresponding years.

   Reclassifications:  Certain  prior year  amounts  have been  reclassified  to
conform to the current year presentation.


NOTE 2 - CONVERSION TO STOCK FORM OF OWNERSHIP

   On  October  24,  1994,  the  Board of  Directors  of the  Bank,  subject  to
regulatory approval and approval by the members of the Bank, unanimously adopted
a Plan of Conversion to convert from a federally  chartered  mutual savings bank
to a federally chartered stock savings bank with the concurrent formation of the
Company as the Bank's holding  company.  The conversion was consummated on March
30,  1995 by  amending  the Bank's  federal  charter and the sale of the holding
company's  common  stock in an amount equal to the pro forma market value of the
Bank after  giving  effect to the  conversion.  A  subscription  offering of the
shares  of the  Company's  common  stock was  offered  initially  to the  Bank's
depositors,  to  tax-qualified  employee  plans  and then to other  members  and
directors,  officers and  employees of the Bank.  Proceeds of  $16,533,717  were
received from the sale of 2,314,375 common shares, after deduction of conversion
costs of $694,235  and the  issuance of 162,006  shares for the ESOP in exchange
for a note receivable  from the ESOP.  Upon closing of the stock  offering,  the
Company purchased 100% of the common shares of the Bank. Bank West, FSB is now a
wholly-owned   subsidiary  of  the  Company.  The  conversion  was  an  internal
reorganization with historical balances carried forward without adjustment.

                                       25
<PAGE>
NOTE 3 - SECURITIES

   The amortized cost and estimated  market values of securities at June 30, are
as follows:
<TABLE>
<CAPTION>
                                                                   Gross            Gross
                                               Amortized        Unrealized       Unrealized          Fair
                                                 Cost              Gains           Losses            Value
--------------------------------------------------------------------------------------------------------------
<S>                                           <C>                 <C>            <C>              <C>        
Available for Sale

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

1996
    U.S. agencies                             $ 4,997,678         $ 7,500        $ (60,110)       $ 4,945,068
    Corporate bonds                               496,870              --           (4,271)           492,599
    Mortgage-backed securities                  2,330,061           3,524          (26,089)         2,307,496
    Collateralized mortgage obligations        15,268,892             302         (235,077)        15,034,117
--------------------------------------------------------------------------------------------------------------
                                              $23,093,501         $11,326        $(325,547)       $22,779,280
==============================================================================================================
Held to Maturity

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

1996
    U.S. agencies                             $ 2,004,288           3,998       $   (2,286)       $ 2,006,000
==============================================================================================================
</TABLE>
<PAGE>
   The scheduled maturities of securities available for sale and securities held
to maturity at June 30, 1997 are shown  below.  Expected  maturities  may differ
from  contractual  maturities  because  borrowers  may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                 -- Available for Sale --            -- Held to Maturity --
                                               Amortized          Fair            Amortized          Fair
                                                 Cost             Value             Cost             Value
-------------------------------------------------------------------------------------------------------------------
<S>                                                <C>              <C>               <C>               <C>
    Due within one year                                     --               --       $1,000,762        $1,001,875
    Due after one year through
      five years                                   $ 2,998,182      $ 2,976,638               --                --
    Mortgage-backed securities
      and collateralized mortgage obligations       22,533,534       22,574,336        3,002,813         3,000,000
-------------------------------------------------------------------------------------------------------------------
                                                   $25,531,716      $25,550,974       $4,003,575        $4,001,875
===================================================================================================================
</TABLE>

                                       26
<PAGE>
   Proceeds  from sales of  securities  amounted to  approximately  $14,679,000,
$15,969,000,  and $1,671,000  for the years ended June 30, 1997,  1996 and 1995,
respectively,  including  approximately  $3,947,000 and  $1,883,000  relative to
trading securities in fiscal 1997 and 1996.

   Gains (losses) on  securities,  reflected in the  consolidated  statements of
income, were as follows for the years ended June 30:
<TABLE>
<CAPTION>
                                                  1997               1996             1995
---------------------------------------------------------------------------------------------
<S>                                              <C>               <C>               <C>    
Gross realized gains on sales of:
    Securities available for sale                $ 17,075          $ 27,965          $18,999
    Trading securities                            602,570           372,278               --
---------------------------------------------------------------------------------------------

                                                  619,645           400,243           18,999
Gross realized (losses) on sales of:
    Securities available for sale                 (17,360)          (17,436)              --
    Trading securities                             (1,977)               --               --
---------------------------------------------------------------------------------------------

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

Net realized gains                                600,308           382,807           18,999
Net unrealized gain (loss) on trading securities  130,563            (5,813)              --
---------------------------------------------------------------------------------------------

                                                 $730,871          $376,994          $18,999
=============================================================================================
</TABLE>

   In accordance  with the FASB Special  Report,  A Guide to  Implementation  of
Statement  No. 115 on  Accounting  for  Certain  Investments  in Debt and Equity
Securities,  securities  held to maturity with a carrying value of  $15,008,666,
fair value of  $14,964,245,  unrealized  gain of $8,485 and  unrealized  loss of
$52,906 were  transferred to the available for sale  classification  on November
20, 1995. The transfer decreased  shareholders' equity by $29,318,  which is net
of the related deferred tax asset of $15,103.  The  reclassification was made to
provide greater flexibility in managing liquidity and interest rate risk.
<PAGE>
NOTE 4 - SECONDARY MARKET MORTGAGE ACTIVITIES

   The following  summarizes the Bank's  secondary  market mortgage  activities,
which consist solely of one-to four-family real estate loans:
<TABLE>
<CAPTION>
                                                         1997             1996              1995
----------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>               <C>          
    Loans held for sale - beginning of period        $ 4,297,092     $  2,746,019      $  1,282,039 
    Activity during the periods:                                                                    
        Loans originated and purchased for sale       30,350,557       48,488,782        16,997,866 
        Proceeds from sale of mortgage loans         (32,915,164)     (45,798,332)      (14,382,754)
        Transfer of loans from held for sale to                                                     
          held to maturity                                    --       (1,756,663)       (1,287,879)
        Gain on sale of loans                            498,666          617,286           136,747 
----------------------------------------------------------------------------------------------------
                                                                                                    
    Loans held for sale - end of period              $ 2,231,151     $  4,297,092      $  2,746,019 
====================================================================================================
</TABLE>

                                       27
<PAGE>
   Mortgage  loans  serviced  for others are not  included  in the  accompanying
balance  sheets.  The unpaid  principal  balances  of these loans at June 30 are
summarized as follows:
<TABLE>
<CAPTION>
                                                 1997              1996             1995
---------------------------------------------------------------------------------------------
<S>                                           <C>              <C>               <C>        
    Mortgage loan portfolios serviced for
        FHLMC                                 $26,980,056      $28,590,578       $23,699,436
=============================================================================================

    Loans servicing fee income                 $   70,661        $  66,725         $  47,451
=============================================================================================
</TABLE>

   Custodial  escrow  balances  maintained in connection with the foregoing loan
servicing were $116,813 and $135,011 at June 30, 1997 and 1996, respectively.

   Following is the activity for mortgage  servicing  rights for the years ended
June 30:
<TABLE>
<CAPTION>
                                                  1997              1996
---------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>               <C>     
    Balance at July 1                            $142,697          $ 68,196
        Additions                                  16,372           124,501
        Amortization                              (10,500)          (50,000)
---------------------------------------------------------------------------------------------------------------------------

    Balance at June 30                           $148,569          $142,697
===========================================================================================================================
</TABLE>
<PAGE>
NOTE 5 - LOANS
   Loans are classified as follows at June 30:
<TABLE>
<CAPTION>

                                                                   1997             1996
---------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>         
    Real estate loans:
        One-to four-family residential - fixed rate            $ 18,595,586     $ 20,351,715
        One-to four-family residential - balloon                 12,493,524       12,841,337
        One-to four-family residential - adjustable              49,743,799       47,544,192
        Construction                                             21,500,849       14,073,497
        Commercial mortgages                                      2,764,314        1,193,464
        Home equity lines of credit                               6,370,698        2,214,227
        Second mortgages                                          4,312,760        1,927,282
---------------------------------------------------------------------------------------------

                Total mortgage loans                            115,781,530      100,145,714
    Consumer loans                                                1,081,391          622,353
    Commercial non-mortgage                                       2,032,190        1,010,076
---------------------------------------------------------------------------------------------

                Total                                           118,895,111      101,778,143

    Less:
        Loans in process                                          7,169,073        5,827,705
        Net deferred fees (costs)                                   (29,916)          47,385
        Allowance for loan losses                                   225,862          165,862
---------------------------------------------------------------------------------------------

                                                               $111,530,092     $ 95,737,191
=============================================================================================
</TABLE>

                                       28
<PAGE>
   An analysis of the  allowance  for loan losses for the years ended June 30 is
follows:
<TABLE>
<CAPTION>
                                                   1997             1996             1995
---------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>     
    Beginning balance                            $165,862         $108,000          $ 87,500
        Provision charged to operations            60,000           60,000            20,500
        Charge-offs                                    --           (2,138)               --
---------------------------------------------------------------------------------------------

Ending balance                                   $225,862         $165,862          $108,000
=============================================================================================
</TABLE>

   During the years ended June 30, 1997 and 1996, the Company had no loans which
were impaired as defined under the provisions of SFAS Nos. 114 and 118.

   Certain  directors  and  executive  officers  of the  Company  and  the  Bank
(including family members, affiliates, and companies in which they are principal
owners) had loans  outstanding with the Bank in the ordinary course of business.
A summary of the aggregate  loans  outstanding  which exceeded  $60,000 to these
individuals follows:
<TABLE>
<CAPTION>
                                                                          Year ending
                                                                     1997            1996
---------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>      
    Balance at beginning of year                                  $ 841,851        $ 935,104
    New loans                                                            --           86,537
    Payments                                                       (200,379)        (161,029)
    Officers transferred out                                             --          (18,761)
---------------------------------------------------------------------------------------------

    Balance at end of year                                        $ 641,472        $ 841,851
=============================================================================================
</TABLE>
<PAGE>
NOTE 6 - PREMISES AND EQUIPMENT - NET

   A summary of premises and equipment is as follows at June 30:
<TABLE>
<CAPTION>
                                                                    1997             1996
---------------------------------------------------------------------------------------------
<S>                                                              <C>              <C>       
    Land                                                         $  529,300       $  529,300
    Bank building and improvements                                2,361,987        2,301,045
    Furniture and equipment                                         967,652          814,944
---------------------------------------------------------------------------------------------

                                                                  3,858,939        3,645,289
    Accumulated depreciation                                       (730,781)        (538,317)
---------------------------------------------------------------------------------------------

                                                                 $3,128,158       $3,106,972
=============================================================================================
</TABLE>

                                       29
<PAGE>
NOTE 7 - DEPOSITS

   Deposits at June 30, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
                                                              1997                             1996
--------------------------------------------------------------------------------------------------------------

                                                    Amount              %              Amount           %
--------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>             <C>              <C>  
            Noninterest-bearing                    $3,965,790         3.86%         $ 2,338,248        2.57%
                  Now accounts and MMDAs            3,848,395         3.74            3,703,359        4.07
            Passbook and statement savings         17,387,602        16.90           16,571,616       18.20
            Certificates of deposit                77,660,365        75.50           68,414,849       75.16
--------------------------------------------------------------------------------------------------------------
                                                 $102,862,152       100.00%         $91,028,072      100.00%
==============================================================================================================
</TABLE>

   At June 30, 1997, the scheduled maturities of all certificates of deposit are
as follows by fiscal year-end:

             1998                      $54,997,764
             1999                       16,187,047
             2000                        3,119,261
             2001                        1,525,691
             2002                        1,695,426
             Thereafter                    135,176
                                       -----------
                                       $77,660,365
                                       ===========

   As of June 30, 1997 and 1996, the Bank had deposit  accounts with balances of
$100,000 or more of  $14,120,000  and  $11,914,000.  Related party deposits were
$974,000 and $796,000 at June 30, 1997 and 1996, respectively.

   On September 30, 1996, as part of the omnibus  appropriations  package signed
by  President  Clinton,   the  government   mandated  a  special  assessment  to
recapitalize  the  Savings  Association   Insurance  Fund  ("SAIF"),   which  is
administered  by  the  Federal  Deposit  Insurance  Corporation  ("FDIC").   The
one-time,   special  SAIF  assessment  amounted  to  $.657  for  every  $100  of
SAIF-insured  deposits as of March 31, 1995. The FDIC notified the Bank that the
Bank's special assessment was $551,000,  which after taxes reduced the Company's
net income by $364,000 or $.21 per share for the year ended June 30,  1997.  The
Bank's deposit premiums,  which were $.23 for every $100 of assessable  deposits
in 1996, were reduced to $.064 for every $100 of assessable  deposits  beginning
January 1, 1997.  Based on the Bank's  deposits  at June 30,  1997,  the premium
reduction should result in a pre-tax cost savings of approximately  $171,000 per
year for the Bank, or approximately $.06 per share after taxes.

                                       30
<PAGE>
NOTE 8 - FEDERAL HOME LOAN BANK BORROWINGS

   Advances from the Federal Home Loan Bank of Indianapolis,  collateralized  by
mortgage loans and securities under a blanket collateral  agreement,  consist of
the following at June 30:
<TABLE>
<CAPTION>
                                                           Rate at
              Date Due                                  June 30, 1997            1997                1996
-------------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>                  <C>        
    Single-maturity fixed rate advance
        September 3, 1996                                                             --         $ 1,000,000
        December 16, 1996                                                             --           1,000,000

    Adjustable rate advance
        August 5, 1996 - reprices quarterly                                           --           4,000,000
        August 4, 1997 - reprices quarterly                 5.78%            $ 3,000,000                  --
        September 22, 1997 - reprices quarterly             5.75               1,000,000                  --
        October 27, 1997 - reprices daily                   6.05               1,000,000                  --
        October 30, 1997 - reprices monthly                 5.81               2,000,000           2,000,000
        November 3, 1997 - reprices daily                   6.05               1,000,000                  --
        December 15, 1997 - reprices quarterly              5.78               1,000,000                  --
        December 18, 1997 - reprices quarterly              5.75               1,000,000                  --
        December 22, 1997 - reprices daily                  6.05               3,000,000                  --
        December 24, 1997 - reprices quarterly              5.75               2,000,000                  --
        March 27, 1998 - reprices quarterly                 5.75               2,000,000                  -- 
        April 30, 1998 - reprices quarterly                 5.82               1,000,000                  -- 
        October 30, 1998 - reprices monthly                 5.81               4,000,000           4,000,000 
        October 30, 1999 - reprices monthly                 5.81               5,000,000           5,000,000 
        August 26, 2001 - reprices monthly                  5.88               2,000,000           2,000,000 
-------------------------------------------------------------------------------------------------------------
                                                                             $29,000,000         $19,000,000
=============================================================================================================
</TABLE>

   Maturities of borrowings  outstanding at June 30, 1997 are as follows for the
next 5 years:

                     1998                     $18,000,000
                     1999                       4,000,000
                     2000                       5,000,000
                     2001                               0
                     2002                       2,000,000
                                              -----------
                                              $29,000,000
                                              ===========

   Prepayment of certain remaining advances is permitted only upon the Company's
termination  of its FHLB  membership,  while  others are  subject to  prepayment
penalties under the provisions and conditions of the credit policy of the FHLB.

                                       31
<PAGE>
NOTE 9 - FEDERAL INCOME TAXES

   The  provision  for federal  income  taxes for the years ended June 30, 1997,
1996 and 1995 consists of the following:
<TABLE>
<CAPTION>
                                                  1997               1996            1995
---------------------------------------------------------------------------------------------
<S>                                              <C>               <C>              <C>     
    Current income tax expense                   $530,231          $496,158         $358,085
    Deferred income tax expense (benefit)         (51,507)          126,242            8,393
---------------------------------------------------------------------------------------------

                                                 $478,724          $622,400         $366,478
=============================================================================================
</TABLE>

   Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
                                                                     1997            1996
----------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>     
        Deferred tax assets:
            Loan fees                                             $  20,120         $  7,021
            Unrealized loss on securities available for sale             --          106,834
            Accrued expenses                                         16,116           17,211
            Management Recognition Plan                              34,200           33,701
            Loans marked-to-market                                   27,736               --
            Other                                                     3,067              621
----------------------------------------------------------------------------------------------

                                                                    101,239          165,388
        Deferred tax liabilities
            Bad debt allowance                                      188,779          209,164
            FHLB stock dividend                                      49,116           49,116
            Loans marked-to-market                                       --           12,674
            Fixed assets                                             93,917           71,677
            Mortgage servicing rights                                50,514           48,517
            Unrealized gain on securities available for sale          6,548               --
----------------------------------------------------------------------------------------------

                                                                    388,874          391,148
----------------------------------------------------------------------------------------------

        Net deferred tax liability                                $(287,635)       $(225,760)
==============================================================================================
</TABLE>

   No valuation allowance was provided on deferred tax assets.
<PAGE>
   The  provision  for federal  income taxes  differs from that  computed at the
statutory corporate tax rate as follows:
<TABLE>
<CAPTION>
                                                                 Years ended
                                                  ---------------- June 30, -------------------

                                                  1997               1996            1995
-----------------------------------------------------------------------------------------------
<S>                                              <C>               <C>              <C>     
        Statutory rate                             34%               34%              34%
        Tax expense at statutory rate            $476,528          $622,502         $368,047
        Tax exempt interest                            --              (639)          (2,360)
        Stock compensation plans                    3,150             2,669               --
        Other                                        (954)            (2132)             791
-----------------------------------------------------------------------------------------------

                                                 $478,724          $622,400         $366,478
===============================================================================================

        Effective rate                             34%               34%              33%
</TABLE>

                                       32
<PAGE>
   Differences  in the deduction  for bad debts for tax and financial  statement
purposes after 1988 are included in deferred taxes. For years prior to 1988, the
Bank had determined  taxable income after deducting a provision for bad debts in
excess of such  provisions  recorded in the financial  statements.  Accordingly,
retained earnings at June 30, 1997 and 1996 includes approximately $3,364,000 on
which no  provision  for  federal  income  taxes has been  made.  The  amount of
unrecorded deferred taxes is $1,144,000. If this portion of retained earnings is
used for any  purpose  other than to absorb bad debts,  the amount  used will be
added to future taxable income.

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


NOTE 10 - COMMITMENTS, CONTINGENCIES AND FINANCIAL
   INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
   The Company is a party to financial instruments with  off-balance-sheet  risk
in the normal course of business to meet the financing  needs of its  customers.
These financial  instruments  include commitments to make loans, unused lines of
credit and loans in process.  The Company's exposure to credit loss in the event
of nonperformance by the other party to the financial  instrument is represented
by the  contractual  amount of those  instruments.  The Company follows the same
credit policy to make such  commitments  as is followed for those loans recorded
in the financial statements.

   The contract  amounts of these  financial  instruments are as follows at June
30:
<TABLE>
<CAPTION>
                                                  1997              1996
--------------------------------------------------------------------------------
<S>                                            <C>               <C>       
        Commitments to make loans              $3,201,000        $6,690,000
        Unused lines of credit                  6,207,777         3,987,000
        Loans in process                        7,169,074         5,828,000
</TABLE>

   Approximately  33% and 77% of  commitments to make loans and to fund loans in
process  were made at fixed rates as of June 30, 1997 and 1996.  Rate ranges for
these fixed rate commitments were 7.625% to 12.25% and 7.0% to 10.75% as of June
30, 1997 and 1996. Lines of credit are issued at current market rates.

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

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

   The  Company  has  entered  into  employment  agreements  with  three  of its
officers.  Under  the  terms of those  agreements,  certain  events  leading  to
separation   from  the  Company  could  result  in  cash  payments   aggregating
approximately $686,000.

                                       33
<PAGE>
NOTE 11 - EMPLOYEE BENEFIT PLANS

   The Company  participates in the Financial  Institutions  Retirement  Fund, a
multi-employer  defined  benefit pension plan.  Substantially  all employees are
eligible for  participation  in the Plan. The benefits are based on a percentage
of the participant's career average salary for each year of service. An employee
becomes fully vested upon  completion of five years of qualifying  service.  The
plan is  currently  overfunded  and did not  require  contributions  or  charges
against income for the years ended June 30, 1997,  1996 and 1995.  Specific plan
assets and accumulated benefit information for the Bank's portion of the Fund is
not available.  Under the Employee  Retirement  Income  Security Act (ERISA),  a
contributor  to a  multi-employer  pension  plan may be  liable  in the event of
complete or partial withdrawal for the benefit payments  guaranteed under ERISA.
Since the plan is  overfunded,  no liability  for  contributions  is  necessary.
Effective  December 31, 1997, the Company will withdraw from the defined benefit
pension plan.

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


NOTE 12 - STOCK-BASED COMPENSATION PLANS
   As part of the  conversion  transaction  described  in  Note 2,  the  Company
established  an  employee  stock  ownership  plan  ("ESOP")  for the  benefit of
substantially all employees.  The ESOP borrowed  $1,296,048 from the Company and
used those  funds to acquire  162,006  shares of the  Company's  stock at $8 per
share.

   Shares issued to the ESOP are committed to be released based on the number of
unallocated  shares held  immediately  before  release for the current plan year
multiplied  by a  fraction.  The  numerator  of the  fraction  is the  amount of
quarterly  principal and interest paid.  The  denominator of the fraction is the
sum of the  numerator  plus the principal and interest to be paid for all future
periods. The loan is secured by shares purchased with the loan proceeds and will
be repaid by the ESOP with funds from the  Company's  contributions  to the ESOP
and earnings on ESOP assets.  Principal  and interest  payments are scheduled to
occur in  quarterly  amounts of  $45,326  over a ten-year  period.  An  employee
becomes fully vested upon completion of seven years of qualifying services. Upon
withdrawal from the plan, participants are entitled to a distribution in cash or
Company stock, or both.

                                       34
<PAGE>
   During 1997 and 1996,  16,200  shares of stock with an average  fair value of
$11.72  per share in 1997 and  $10.14  per share in 1996  were  committed  to be
released.  ESOP compensation  expense for the years ended June 30, 1997 and 1996
were $189,844 and  $164,279.  Shares held by the ESOP at June 30 are as follows:
<TABLE>
<CAPTION>
                                                                      1997            1996
---------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>              <C>       
        Allocated to participants                                    36,450           20,250
        Distributions                                                  (863)
        Unallocated                                                 125,556          141,756
---------------------------------------------------------------------------------------------------------------------------

                Total ESOP shares                                   161,143          162,006
===========================================================================================================================

        Fair value of unallocated shares                         $1,695,006       $1,488,438
===========================================================================================================================
</TABLE>

   Employee  and  director  Stock  Option  Plans (SOPs) and officer and director
Management  Recognition  Plans (MRPs) were authorized by the shareholders at the
October 25, 1995 annual meeting.  The MRPs are restricted stock award plans. The
employee SOP and the officers' MRP are  administered by a committee of directors
of the Company, while grants under the directors' SOP and the directors' MRP are
pursuant  to  formulas  set forth in the plans.  MRP  shares are  granted at the
closing  market  price of the  Company's  stock on the date of grant and vest in
five equal annual  installments  from the date of grant. SOP options are granted
at the average of the high and low market prices of the  Company's  stock on the
date of grant and vest in five equal  annual  installments  and expire ten years
from the date of grant.
<PAGE>
<TABLE>
<CAPTION>
                                     Directors' SOP     Employees' SOP     Directors' MRP     Employees' MRP
                                            Weighted           Weighted          Weighted            Weighted
                                             Average            Average           Average             Average
                                            Exercise           Exercise         Grant Date          Grant Date
                                    Options   Price    Options   Price   Shares Fair Value  Shares  Fair Value
--------------------------------------------------------------------------------------------------------------
<S>                                 <C>       <C>     <C>         <C>    <C>       <C>       <C>      <C>  
Total options/shares available      69,431            162,006            27,771              64,804
Activity:
    Grant 10/25/95                  52,073   $10.44                      24,992    $10.00
    Grant 10/26/95                                                                           49,250   $10.00
    Grant 11/1/95                                      24,000   $ 9.94
--------------------------------------------------------------------------------------------------------------
Balance outstanding
  June 30, 1996                     52,073    10.44    24,000     9.94   24,992     10.00    49,250    10.00
    Grant 7/8/96                                       14,300    11.00
    Grant 10/25/96                  17,353    10.88                       2,779     10.88
    Grant 12/20/96                                     58,900    10.75
    Forfeitures                                        (4,100)   10.62                      (1,037)    10.00
--------------------------------------------------------------------------------------------------------------

Balance outstanding
  June 30, 1997                     69,426    10.55    93,100    10.59   27,771     10.09    48,213    10.00
==============================================================================================================
Options/shares exercisable
  (vested)                          10,414              4,800             4,998               9,850
==============================================================================================================
Options/shares available for
  future grant                           5             68,906                 0              16,591
==============================================================================================================
</TABLE>

                                       35
<PAGE>
   During the years  ended June 30,  1997 and 1996,  $149,918  and  $99,120  was
charged to compensation expense for the MRPs.

   SFAS No. 123, which became effective for the fiscal year ended June 30, 1997,
requires pro forma  disclosures  for companies  that do not adopt its fair value
accounting  method  for  stock-based  employee  compensation.  Accordingly,  the
following pro forma  information  presents net income and earnings per share had
the  Standard's  fair value  method been used to measure  compensation  cost for
stock options  granted  during fiscal 1997 and 1996.  No  compensation  cost was
actually recognized for stock options for fiscal 1997 and 1996.
<TABLE>
<CAPTION>
                                                                  -- Years ending June 30, --
                                                                    1997             1996
---------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>       
        Net income as reported                                     $922,829       $1,208,488
        Pro forma net income                                        892,662        1,194,049

        Earnings per share as reported                                  .52              .57
        Pro forma earnings per share                                    .50              .57

        Weighted-average grant-date fair value per option              1.44             1.38
</TABLE>

   In future  years,  the pro forma  effect of not  applying  this  standard  is
expected to increase as additional options are granted.

   The  fair  value  of  options   granted  is  estimated  using  the  following
weighted-average information: risk-free interest rate of 6% in 1997 and 5.75% in
1996, expected life of 5 years,  expected volatility of stock price of 6.3%, and
expected dividends of 3% per year in 1997 and 2.49% per year in 1996.

   At June 30, 1997, options outstanding were as follows:

          Number of options                                162,526
          Range of exercise price                   $9.94 - $11.00
          Weighted-average exercise price                   $10.56
          Weighted-average remaining option life        8.9  years
          For options now exercisable: number               15,214
                   Weighted-average exercise price          $10.28

                                       36
<PAGE>
NOTE 13 - CAPITAL REQUIREMENTS AND RESTRICTIONS
   ON RETAINED EARNINGS

   The Bank is  subject  to  regulatory  capital  requirements  administered  by
federal regulatory  agencies.  Capital adequacy guidelines and prompt corrective
action regulations involve  quantitative  measures of assets,  liabilities,  and
certain   off-balance-sheet   items  calculated   under  regulatory   accounting
practices.  Capital amounts and  classifications are also subject to qualitative
judgments by regulators about  components,  risk weightings,  and other factors,
and the regulators can lower  classifications in certain cases.  Failure to meet
various capital  requirements  can trigger  regulatory  action that could have a
direct material effect on the financial statements.

   The  prompt  corrective  action  regulations  provide  five  classifications,
including   well   capitalized,   adequately   capitalized,    undercapitalized,
significantly undercapitalized, and critically undercapitalized,  although these
terms are not used to  represent  overall  financial  condition.  If  adequately
capitalized,  regulatory  approval is required to accept brokered  deposits.  If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion,   and  plans  for  capital  restoration  are  required.  The  minimum
requirements are:
<TABLE>
<CAPTION>
                                                        Capital to Risk-
                                                         Weighted Assets            Tier 1 Capital
-----------------------------------------------------------------------------------------------------
                                                      Total          Tier 1       to Adjusted Assets
-----------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>               <C>
        Well capitalized                               10%              6%                5%
        Adequately capitalized                          8               4                 4
        Undercapitalized                                6               3                 3
</TABLE>
<PAGE>
   At year end, actual capital levels (dollars in millions) and minimum required
levels were:
<TABLE>
<CAPTION>
                                                                                                  Minimum Required  
                                                                                                     to be Well     
                                                                          Minimum Required        Capitalized Under 
                                                                             for Capital          Prompt Corrective 
                                                       Actual             Adequacy Purposes      Action Regulations 
---------------------------------------------------------------------------------------------------------------------------
                                                  Amount      Ratio       Amount      Ratio       Amount      Ratio 
---------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>         <C>         <C>        <C>           <C>       <C>   
1997                                                                                                                
    Total capital (to risk-                                                                                         
      weighted assets)                             $18.7       23.4%       $6.4       8.0%          $8.0      10.0% 
    Tier 1 (core) capital (to risk-                                                                                 
      weighted assets)                              18.4       23.1         3.2       4.0            4.8       6.0  
    Tier 1 (core) capital (to adjusted                                                                              
      total assets)                                 18.4       12.2         4.5       3.0            7.6       5.0  
    Tangible capital (to adjusted                                                                                   
      total assets)                                 18.4       12.2         2.3       1.5            N/A            
                                                                                                                    
1996                                                                                                                
    Total capital (to risk weighted assets)        $20.3       31.4%       $5.2       8.0%          $6.5      10.0% 
    Tier 1 (core) capital (to risk weighted                                                                         
      total assets)                                 20.2       31.1         2.6       4.0            3.9       6.0  
    Tier 1 (core) capital (to adjusted                                                                              
      total assets)                                 20.2       15.4         3.9       3.0            6.5       5.0  
    Tangible capital (to adjusted                                                                                   
      total assets)                                 20.2       15.4         2.0       1.5            N/A            
</TABLE>

   At June 30, 1997 and 1996, the Bank was categorized as well capitalized.

                                       37
<PAGE>
   The  Qualified  Thrift  Lender  (QTL)  test  requires  65%  of  assets  to be
maintained in housing-related finance and other specified areas. If the QTL test
is not met,  limits are  placed on  growth,  branching,  new  investments,  FHLB
advances,  and dividends,  or the institution  must convert to a commercial bank
charter. Management believes that the QTL test has been met.

   Under  OTS  regulations,  limitations  have  been  imposed  on  all  "capital
distributions" by savings institutions, including cash dividends. The regulation
establishes a three-tiered system of restrictions, with the greatest flexibility
afforded  to  thrifts  which  are  both  well-capitalized  and  given  favorable
qualitative examination ratings by the OTS. For example, a thrift which is given
one of the two highest  examination ratings and has "capital" equal to its fully
phased-in  regulatory capital requirements (a "tier 1 institution") could, after
prior  notice  but  without  the  prior   approval  of  the  OTS,  make  capital
distributions  in any year that would reduce by up to one-half the amount of its
capital which exceeds its most stringent capital requirement as of the beginning
of the  calendar  year plus net income to date for the six months ended June 30,
1997.  Other  thrifts  would  be  subject  to  more  stringent   procedural  and
substantive  requirements,  the most restrictive being prior OTS approval of any
capital distribution. The Bank is a tier one institution.

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

   Under the most  restrictive of the dividend  limitations  described above, at
June  30,  1997,  approximately  $6,611,000  was  available  to the Bank for the
payment of dividends to the holding company.


NOTE 14 - STOCK REPURCHASE PROGRAMS
   During  fiscal 1997,  the Company  repurchased  446,100  shares of its common
stock after receiving  regulatory  approval to repurchase  505,100  shares.  The
shares were  repurchased at an average price of $11.64 and remain  available for
general corporate  purposes,  including  issuance in connection with stock-based
compensation plans.

                                       38
<PAGE>
NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL
   INFORMATION

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

                                                                              1997             1996
-------------------------------------------------------------------------------------------------------
<S>                                                                       <C>               <C>           
   ASSETS

                    Cash and cash equivalents                            $     70,523       $ 2,222,329   
                    Interest-bearing time deposits                             99,000           198,000   
                    Trading securities                                      2,921,251           708,438   
                    Securities available for sale                                   --        2,473,199  
                    Loan receivable from Employee                                                         
                      Stock Ownership Plan                                  1,077,382         1,178,792   
                    Investment in subsidiary bank                          18,451,967        19,978,259   
                    Accrued interest receivable                                 1,122            19,733   
                    Other assets                                                5,540            35,629   
--------------------------------------------------------------------------------------------------------- 
                                                                                                          
                        Total assets                                      $22,626,785       $26,814,379   
========================================================================================================= 
                                                                                                          
   LIABILITIES                                                                                            
                                                                                                          
                    Other liabilities                                        $ 34,476         $   3,933   
                                                                                                          
                                                                                                          
            SHAREHOLDERS' EQUITY                                           22,592,309        26,810,446   
--------------------------------------------------------------------------------------------------------- 
                                                                         
                        Total liabilities and shareholders' equity        $22,626,785       $26,814,379
=========================================================================================================
</TABLE>


                                       39
<PAGE>
<TABLE>
<CAPTION>
                         CONDENSED STATEMENTS OF INCOME,
                                 for the years:
                                                                                            March 30, 1995
                                                          -------- June 30, --------           through
                                                          1997               1996            June 30, 1995
-----------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>                  <C>     
      Interest and dividend income
          Securities                                    $  39,415         $  249,350           $ 97,074
          Loan to Employee Stock Ownership Plan            79,892             86,691             22,681
          Other interest-bearing deposits                  53,732            164,328             42,358
          Dividends from subsidiary bank                2,500,000                 --                 --
          Other dividends                                  16,040              3,772                 --
-----------------------------------------------------------------------------------------------------------
                                                        2,689,079            504,141            162,113

      Interest expense                                     11,794                 --                 --
-----------------------------------------------------------------------------------------------------------

      Net interest income                               2,677,285            504,141            162,113

      Other income
          Net gain on trading securities                  731,156            366,465                 --
          Net gain (loss) on sales of securities
            available for sale                            (14,995)            (7,725)            18,922
-----------------------------------------------------------------------------------------------------------
                                                          716,161            358,740             18,922

      Operating expenses                                   88,468             90,521             10,635
-----------------------------------------------------------------------------------------------------------

      Income before federal income taxes and
        equity in undistributed earnings of
        subsidiary bank                                 3,304,978            772,360            170,400

      Federal income tax expense                          273,700            262,500             57,936
-----------------------------------------------------------------------------------------------------------

      Income before equity in undistributed
        earnings of subsidiary bank                     3,031,278            509,860            112,464

      Equity in undistributed (excess distributed)
        earnings of subsidiary Bank                    (2,108,449)           698,628             96,442
-----------------------------------------------------------------------------------------------------------

      Net income                                       $  922,829         $1,208,488           $208,906
===========================================================================================================
</TABLE>

                                       40
<PAGE>
<TABLE>
<CAPTION>
                       CONDENSED STATEMENTS OF CASH FLOWS,

                                 for the years:
                                                                                              March 30, 1995
                                                      --------    June 30,    --------            through
                                                          1997                  1996           June 30, 1995
-------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                <C>               <C>        
Cash flows from operating activities
    Net income                                           $ 922,829          $ 1,208,488      $    208,906
    Adjustments to reconcile net income to
      cash provided by operations
        Equity in undistributed (excess distributed)
           earnings of subsidiary Bank                   2,108,449             (698,628)          (96,442)
        Purchase of trading securities                  (5,428,775)          (2,224,537)               --
        Proceeds from sale of trading securities         3,947,118            1,882,564                --
        Gain on sales of securities                       (716,161)            (358,740)          (18,922)
        Net accretion of securities                             --               (1,411)             (390)
        Change in
            Interest receivable                             18,611               64,357           (84,090)
            Other assets                                    30,089               21,884           (57,513)
            Other liabilities                               22,495              (55,739)           72,757
-------------------------------------------------------------------------------------------------------------
                 Net cash from operating
                   activities                              904,655             (161,762)           24,306

Cash flows from investing activities
    Purchases of securities available for sale                  --           (2,000,000)       (6,527,180)
    Proceeds from sales of securities available
      for sale                                           2,481,875            1,091,200         1,169,700
    Proceeds from maturities and calls of
      securities available for sale                             --            3,782,408                --
    Principal reduction on ESOP note receivable            101,410               94,611            22,645
    Contribution to subsidiary Bank                        (37,921)             (42,527)               --
    Net (increase) decrease in interest-bearing
      time deposits                                         99,000            1,089,000        (1,287,000)
    Investment in subsidiary Bank                               --                   --        (8,915,419)
-------------------------------------------------------------------------------------------------------------
                 Net cash from investing activities      2,644,364            4,014,692       (15,537,254)

Cash flows from financing activities
    Proceeds from issuance of common stock,
      net of conversion costs                                   --                   --        16,534,790
    Proceeds of loan from subsidiary Bank                1,300,000                   --                --
    Repayment of loan to subsidiary Bank                (1,300,000)                  --                --
    Dividends paid on common stock                        (506,959)            (603,382)               --
    Repurchase of common stock                          (5,193,866)          (2,049,061)               --
-------------------------------------------------------------------------------------------------------------
                 Net cash from financing activities     (5,700,825)          (2,652,443)       16,534,790
-------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents                 (2,151,806)           1,200,487         1,021,842
Cash and cash equivalents at beginning
  of period                                              2,222,329            1,021,842                --
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period               $  70,523          $ 2,222,329       $ 1,021,842
=============================================================================================================
</TABLE>
                                       41
<PAGE>
NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

   The  estimated  fair  values  of  the  Company's  financial  instruments  (in
thousands) are as follows at June 30:
<TABLE>
<CAPTION>
                                                                   1997                               1996
---------------------------------------------------------------------------------------------------------------------------
                                                         Carrying           Fair            Carrying          Fair
                                                           Value            Value             Value           Value
---------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>              <C>              <C>
          Financial assets
                Cash and cash equivalents                   $ 3,673          $ 3,673         $ 6,694          $ 6,694
                Interest-bearing time deposits                   99               99             298              298
                Securities                                   32,476           32,474          25,492           25,494
                Loans, net                                  111,530          113,366          95,737           96,186
                Loans held for sale                           2,231            2,265           4,297            4,346
                Mortgage servicing rights                       149              149             143              143
                Federal Home Loan Bank stock                  1,550            1,550           1,475            1,475
                Accrued interest receivable                     763              763             632              632
                                                                                                                     
          Financial liabilities                                                                                      
                Deposits                                    102,862          102,733          91,028           90,941
                Federal Home Loan Bank borrowings            29,000           29,000          19,000           19,000
                Accrued interest payable                        202              202             157              157
                Advance payments by borrowers                                                                        
                  for taxes and insurance                       492              492             459              459
</TABLE>

                                       42
<PAGE>
Your Partners in Bank West Financial Corporation


DIRECTORS

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

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

Paul W. Sydloski, President, Chief Executive Officer

Jacob Haisma, Owner of Jacob Haisma Builders, Inc.

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

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

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

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


EXECUTIVE OFFICERS

Paul W. Sydloski, President,
  Chief Executive Officer
Kevin A. Twardy, Vice President,
  Chief Financial Officer
James A. Koessel, Vice President,
  Chief Lending Officer
Laurie S.Adams, Vice President,
  Director of RetailBanking
<PAGE>
LEGAL COUNSEL

Elias, Matz, Tiernan and Herrick L.L.P.
Suite 1200
734 15th Street, N.W.
Washington, D.C.  20005


TRANSFER AGENT

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


INDEPENDENT AUDITORS

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

                                       43
<PAGE>
CORPORATE HEADQUARTERS 2185 Three Mile Rd., N.W.
Grand Rapids, Michgian 49544-1451


STOCK INFORMATION

Bank West Financial  Corporation is traded on the NASDAQ  National  Market under
the  symbol  of  "BWFC".  Total  shares  outstanding  as of June 30,  1997  were
1,753,475.  The high and low bid  quotations for the common stock as reported on
the NASDAQ, as well as dividends declared per share, were as follows:

<TABLE>
<CAPTION>
Quarter Ended              High         Low       Dividends
-----------------------------------------------------------
<S>                      <C>          <C>           <C> 
September 30, 1995       $10.250      $ 8.750       $.07
December 31, 1995         11.000        9.625        .07
March 31, 1996            10.500        9.625        .07
June 30, 1996             11.125        8.875        .07
September 30, 1996        12.750       10.500        .07
December 31, 1996         11.500       10.250        .07
March 31, 1997            12.125       10.500        .07
June 30, 1997             14.250       11.125        .07
</TABLE>

The  information  set forth in the table above was  provided by The  NASDAQStock
Market. Such information  reflects  interdealer prices,  without retail mark-up,
mark-down  or  commission  and  may not  represent  actual  transactions.  As of
September 15, 1997, the Company had approximately 660 shareholders of record and
1,753,475 shares of common stock outstanding.


INVESTOR INFORMATION

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