To Our Stockholders:


   This past year we have made great strides in changing the Bank's image from a
113 year old savings and loan  institution  to a community  bank.  It has been a
year of dramatic asset growth,  improved  profitability and improved  efficiency
for your Bank as described in more detail below:

         Asset  Growth - Assets  increased  30% from  $206.7  million  to $268.4
         million,  primarily  as a result of growth both in the  commercial  and
         residential lending areas.

         Improved Profitability - Net income was $1.1 million, or $.46 per share
         for the fiscal year ended June 30, 2000, an increase of 520.5% compared
         to net  income of  $176,000  or $.07 per  share for the same  period of
         1999.

                                            [graphic-photo of Robert J. Stephan]


         Improved  Efficiency - Senior  management has managed to better balance
         operational  overhead  expense in the loan and  deposit  areas  through
         consolidation  and realignment of duties  throughout the  organization,
         thus contributing to the improved earnings for the year. We continue to
         focus on improving  the  efficiency  ratio without  impacting  customer
         service.

   The Y2K event  turned out to be a non-event  at Bank West.  We  expected  and
accomplished a smooth  transition due to the substantial  investment of time and
resources to ensure that no interruption would occur to our system.

   The  strategic  plan we put in place  this past year is  showing  significant
improvement  to the  financial  results.  Next year,  our major focus will be on
deposit  growth and  commercial  lending.  We expect these  efforts will further
improve our interest margin and overall  profitability.  Over the past year, our
dramatic  growth in  assets  has set the  stage  for more  consistent  quarterly
earnings  growth.  We are hopeful that the progress we have shown  quarter after
quarter eventually will be recognized by the marketplace, which should translate
into a higher stock price.


[graphic-photo of Ronald A. Van HOuten]

   The rising overall  interest rate  environment as well as a dramatic shift of
investments  to the  technology  sector  has  resulted  in lack of  interest  by
investors  relating  to bank  stocks.  This has caused a downward  spiral in the
market value of bank stocks throughout the entire financial  services sector. As
you can see from the financial highlights under Selected Consolidated  Financial
Data, the book value of your Bank at June 30, 2000 is $8.81 per share. Bank West
stock is presently  trading at a low percentage of book value and a low multiple
of earnings as compared to historical averages for the banking sector.

   Our goal is to  continue  to serve our  customers  as well as  expanding  our
customer base throughout the Western  Michigan  community by delivering  banking
services that meet or exceed their expectations.  We invite you as a stockholder
to refer  your  friends,  family and  associates  to utilize  the  products  and
services offered at Bank West. Your support definitely makes a difference.

   Your company is blessed with talented and committed team members. During this
past year,  they have worked  through many changes and  challenges  in achieving
current year results.  We thank them for their efforts.

   On November 26, 1999 our friend,  colleague and Chairman of the Board, George
A. Jackoboice,  suddenly passed away while vacationing in Salzburg, Austria. His
years of wisdom and guidance were very much  appreciated.  A copy of the Board's
"In Memoriam" resolution is printed on the following page.

   Our directors,  management and staff want to thank you, our stockholders, for
your  investment  and belief in our  efforts and vision.  We will  continue  our
efforts  to grow  and  diversify  your  company,  with  the  goal  of  enhancing
shareholder  value.  With this in mind,  we look  forward  to our 114th  year of
offering superior banking services throughout the Western Michigan area.

Sincerely,                                Sincerely,


/s/Ronald A. Van Houten                   /s/Robert J. Stephan
-----------------------                   --------------------
Ronald A. Van Houten                      Robert J. Stephan
President and Chief Executive Officer     Chairman of the Board


<PAGE>
                             IN MEMORIAM RESOLUTION

                    [GRAPHIC-photo of George A. Jackoboice]





                              George A. Jackoboice
                              --------------------

   WHEREAS,  George A.  Jackoboice  was first elected as a Director of Bank West
(formerly West Side Federal  Savings and Loan) in 1978, and served  continuously
in that office before being  unanimously  elected Chairman of the Board in 1991;
and

   WHEREAS,  Director and Chairman  Jackoboice served the Board and the Bank and
all of its members and  shareholders  with singular  dedication and distinction,
thereby contributing immeasurably to the growth, stability and reputation of the
Bank; and,

   WHEREAS, his unfortunate and unexpected sudden demise on November 26, 1999 at
the age of 57 years,  leaves an unwanted  void of  leadership on the Board and a
great sense of loss of companionship among his fellow directors and officers;

   NOW THEREFORE, BE IT RESOLVED, that the untimely death of our Chairman George
Alan Jackoboice on November 26, 1999 be and hereby is officially  noted in these
minutes of the Board of Directors  meeting of December  20,  1999,  and that the
Secretary  of the Board  be,  and  hereby  is,  directed  to send a copy of this
resolution to the Jackoboice  family  together with our  condolences.

   The above resolution was unanimously adopted.

<PAGE>
<TABLE>
<CAPTION>
Selected Consolidated Financial Data

                                                                         Year Ended June 30,
                                                   2000          1999           1998          1997         1996
                                                 --------      --------       --------      --------    ----------
<S>                                              <C>           <C>            <C>           <C>         <C>
Summary of Operations

Total interest income                            $ 17,605      $ 13,666       $ 12,549      $ 10,429    $   10,088
Net interest income                                 6,693         5,352          4,937         4,279         4,158
Provision for loan losses                             400           220             81            60            60
Other income                                          428           621          1,012         1,554         1,202
One-time special SAIF assessment                       --            --             --           551            --
Other expenses                                      5,025         5,339          4,585         3,821         3,469
Income taxes                                          604           146            453           478           622
Income before cumulative effect of
  accounting change                                 1,092           268            830           923         1,209
Cumulative effect of change in accounting              --           (92)            --            --            --
Net income                                          1,092           176            830           923         1,209
Balance Sheet Data
Total assets                                    $ 268,370      $206,669       $181,469      $155,675      $137,982
Cash and cash equivalents                           3,734         9,106          4,206         3,673         6,694
Securities                                         20,735        17,733          6,745         3,978         7,422
Mortgage collateralized securities                 21,867        24,539         36,507        25,578        17,341
Loans, net                                        210,717       145,206        118,906       111,530        95,737
Loans held for sale                                   573         2,381          8,157         2,231         4,297
Deposits                                          155,840       132,401        119,979       102,862        91,028
FHLB advances                                      88,803        50,000         37,000        29,000        19,000
Equity                                             22,223        22,552         23,275        22,592        26,810
Per Share Data(1)
Basic earnings per share                        $     .46      $    .07       $    .35      $    .36      $    .39
Diluted earnings per share                            .46           .07            .33           .36           .39
Dividends per share                                   .24           .24            .22           .19           .19
Book value per share                                 8.81          8.68           8.87          8.59          8.13
Ratios
Average yield on interest-earning assets             7.62%         7.23%          7.74%         7.61%         7.52%
Average rate on interest-bearing liabilities         5.02          4.88           5.26          5.15          5.37
Average interest spread                              2.60          2.35           2.48          2.46          2.15
Net interest margin                                  2.90          2.83           3.04          3.12          3.10
Return on average assets                              .45           .09            .49           .64           .87
Return on average equity                             4.97           .76           3.58          3.89          4.38
Efficiency ratio                                    67.21         72.16          76.34         74.89         68.56
Dividend pay-out ratio                              52.17        342.86          64.96         54.94         49.93
Average equity to average assets                     9.15         11.72          13.60         16.42         19.77
Non-performing loans as a % of loans, net             .19           .88            .71           .37           .04

</TABLE>

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


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

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

   This Annual Report includes  statements  that may constitute  forward-looking
statements,  usually  containing  the words  "believe,"  "estimate,"  "project,"
"expect," "intend" or similar expressions. These statements are made pursuant to
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995. Forward-looking statements inherently involve risks and uncertainties that
could cause  actual  results to differ  materially  from those  reflected in the
forward-looking statements. Factors that could cause future results to vary from
current expectations include, but are not limited to, the following:  changes in
economic  conditions  (both  generally and more  specifically  in the markets in
which Bank West  operates);  changes in  interest  rates,  deposit  flows,  loan
demand,  real estate values and competition;  changes in accounting  principles;
government  legislation and  regulation;  and changes in 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, a state
chartered savings bank.  Substantially all of the Company's assets are currently
held in, and its  operations are conducted  through,  its sole  subsidiary  Bank
West. The Company's business consists primarily of attracting  deposits from the
general  public and using such  deposits,  together  with Federal Home Loan Bank
("FHLB")  advances,  to originate  and purchase  residential  real estate loans,
including  residential  construction loans,  commercial loans, home equity loans
and, to a lesser extent, 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  dependent  upon the level of
interest  rates and the extent to which such rates are  changing.  The Company's
profitability  also is  dependent  on the level of its other  income,  including
gains on sales of loans in connection with its mortgage  banking  activities and
fees and service charges.

   The  Company's  net income was  $1,092,000,  $176,000 and $830,000 for fiscal
2000, 1999 and 1998, respectively.  Net income for fiscal 2000,1999 and 1998 was
impacted  by a  number  of  items  which  management  believes  will  no  longer
significantly  impact future  earnings.  See "Results of Operations for the Year
Ended June 30, 2000  Compared to the Year Ended June 30,  1999" and  "Results of
Operations  for the Year Ended June 30, 1999 Compared to the Year Ended June 30,
1998" sections for further clarification of such items.

Changes in Financial Condition

Assets.  Total assets  increased by $61.7 million or 29.9% from June 30, 1999 to
June 30, 2000.  The increase is largely due to an increase in net loans of $65.5
million or 45.1% as greater  emphasis was placed on  originating  and  retaining
commercial   loans  and  balloon   single-family   mortgage   loans  instead  of
concentrating primarily on residential mortgage banking activities. The increase
in net loans was partially  offset by a decrease in cash and cash equivalents by
$5.4  million or 59.3% as excess  cash was  utilized  to fund loan  growth.  The
additional  emphasis on the origination of commercial and balloon  single-family
mortgage  loans during  fiscal 2000 was  designed to  diversify  the Bank's loan
portfolio from its traditional emphasis on adjustable-rate  mortgages ("ARM's"),
which  have  recently  been  out-of-favor  due  to  the  overall  interest  rate
environment that reflects an inverted U.S. Treasury yield curve, and to react to
increased  competitiveness in the residential  mortgage banking business.  Total
commercial  loans increased as a percent of total loans from 12.5% at the end of
fiscal 1999 to 22.2% at the end of fiscal 2000. Management's strategy for fiscal
2001 and beyond is to place greater  emphasis on  commercial  lending and reduce
the emphasis in the  residential  lending area due to the  increasing  disparity
between yields on commercial loans versus  residential loans.  Accordingly,  the
anticipated  growth in  commercial  loans is  expected to  favorably  impact the
Bank's net interest income and net interest margin.


<PAGE>
   The Bank's mortgage  banking  activities  consist of selling newly originated
and purchased loans into the secondary market. Total loans sold amounted to $9.4
million,  $41.6  million  and  $45.0  million  in  fiscal  2000,  1999 and 1998,
respectively.  Loans held for sale  amounted to $573,000,  $2.4 million and $8.2
million at June 30,  2000,  1999 and 1998,  respectively.  The dollar  amount of
loans sold and loans held for sale decreased significantly in fiscal 2000 due to
both the rise in overall market interest rates and management's  strategy during
fiscal 2000 to portfolio  ten-year balloon mortgages versus selling them. Adding
ten-year  balloon  loans to  portfolio  was  designed to offset the  significant
prepayments  of ARM's and  longer-term  fixed-rate  mortgages  during the fiscal
year. In addition,  the portfolio lending strategy has reduced the Bank's excess
capital position and provided significant growth in net interest income.

   Collateralized mortgage obligations ("CMO's") decreased from $21.1 million at
June 30,  1999 to $19.2  million  at June 30,  2000.  The  decrease  in CMO's is
consistent with management's  current strategy to orderly liquidate the majority
of the CMO portfolio to provide liquidity over the next few years to fund higher
yielding  commercial loan growth.  The remaining CMO's have floating rates based
on either the prime or one month LIBOR rates, and are structured with relatively
low  weighted  average  note rates as compared to current  market  rates,  which
reduces prepayment risk.

   Other securities  classified as available for sale primarily  consist of U.S.
agency securities,  corporate bonds, pass-through mortgage-backed securities and
municipal securities.  These types of securities increased from $21.2 million at
June 30, 1999 to $23.4  million at June 30, 2000.  The increase is primarily due
to the purchase of corporate bonds early in the fiscal year. Management plans to
orderly  liquidate  the  securities  portfolio  over the next few  years to fund
higher yielding commercial loan growth.

   At June 30, 2000,  the  unrealized  loss on the Company's  entire  securities
portfolio  was  approximately  $831,000,  net of  taxes,  which  is  shown  as a
component of stockholders'  equity. The increase in the net unrealized loss from
$410,000 at June 30, 1999 is due to the recent rise in overall  market  interest
rates. Management believes that the recent decline in the market values of these
securities is temporary.

   Liabilities.  Deposits increased by $23.4 million or 17.7% from June 30, 1999
to June 30, 2000. The increase in total deposits was primarily  attributable  to
growth in  certificates of deposit of $25.5 million,  or 26.8%.  Certificates of
deposit  accounted for  approximately 77% of total deposits at June 30, 2000 and
approximately  72% of total  deposits at June 30, 1999. At June 30, 2000,  $93.0
million or 77.2% of total  certificates  of deposit  mature in one year or less,
and $51.5 million or 42.7% of the total  certificates of deposit had balances of
$100,000 or more.  The  increase  in deposits  was  achieved  primarily  through
continued  development  of  new  and  existing  commercial  and  retail  account
relationships.  In  addition,  the Bank has  increased  its reliance on brokered
certificates  of deposit to fund part of the loan  growth  during  fiscal  2000.
Brokered  certificates of deposits increased from $19.2 million at June 30, 1999
to $37.6 million at June 30, 2000.  The interest rates offered on these deposits
approximate the interest rates in the local market area.

   The Bank has become more  susceptible to short-term  fluctuations  in deposit
flows,  as customers  have become more  interest  rate  conscious.  Based on its
experience,  management believes that its passbook and statement savings, demand
deposits and NOW accounts are relatively  stable  sources of deposits.  However,
the ability of the Bank to attract and maintain certificates of deposit, and the
rates paid on these  deposits,  have been and will  continue  to be  affected by
market conditions.

   Because the growth in deposits has not matched the growth in assets in recent
years, the Bank has utilized Federal Home Loan Bank ("FHLB") borrowings.  During
fiscal 2000, the Bank increased FHLB  borrowings by $38.8 million.  The proceeds
of these  borrowings,  as well as deposit growth discussed above, were primarily
used to fund loan growth.  Management  expects to continue to utilize additional
FHLB borrowings,  Federal Funds and brokered certificates of deposit in the next
fiscal year to fund additional loan growth.

Shareholders' Equity.  Shareholders' equity amounted to $22.2 million or 8.3% of
total assets at June 30, 2000 compared to $22.6 million or 10.9% of total assets
at June 30, 1999.  The Company had  increased  earnings  over the prior year and
reported  net income of  $1,092,000.  Net income was  impacted by  approximately
$106,000,  net of tax,  during fiscal 2000 due to  professional  fees related to
defending  the Bank in a lawsuit  that was  dismissed  during the  fiscal  year.
Management believes that this expense will no longer significantly impact future
earnings.  For  additional  discussion,  see "Results of Operations for the Year
Ended June 30,  2000  Compared  to the Year Ended June 30,  1999"  section.  The
decrease in total shareholders' equity relates primarily to net income offset by
dividends,  stock repurchases and an increase in unrealized losses on securities
available for sale.


<PAGE>
   The cost of shares  issued to the Company's  Employee  Stock  Ownership  Plan
("ESOP") but not yet  allocated to  participants  totaling  $616,000 at June 30,
2000  is  presented  in  the  consolidated  balance  sheet  as  a  reduction  of
shareholders'   equity.  The  unearned   compensation  value  of  the  Company's
Management  Recognition  Plans ("MRP's") totaled $36,000 at June 30, 2000 and is
also shown as a reduction of shareholders' equity.

   The  Company's  securities  classified  as available  for sale are carried at
market value,  with unrealized gains or losses reported as a separate  component
of shareholders'  equity, net of federal income taxes. At June 30, 2000, the net
unrealized  loss was $831,000,  while at June 30, 1999, the net unrealized  loss
was  $410,000.  The  increase in overall  market  interest  rates had a negative
impact on the market value of the securities portfolio.

Non-performing Assets and the Allowance for Loan Losses


The table below sets forth the amounts and categories of  non-performing  assets
at June 30, 2000 and June 30, 1999:
<TABLE>
<CAPTION>

                                                            June 30,   June 30,
                                                              2000       1999
                                                             ------     ------
                                                           (Dollars in Thousands)
<S>                                                          <C>        <C>
         Non-accrual loans
           One- to four-family                               $   14     $  207
           Construction and land development                    275        930
           Commercial                                            --         --
           Consumer (including second mortgages)                115        142
                                                             ------     ------
                           Total                                404      1,279
         Real estate owned
                           Construction and land development    380        310
                                                             ------     ------
         Total non-performing assets                         $  784     $1,589
                                                             ======     ======
         Total non-performing assets as
           a percentage of total assets                         .29%       .77%
                                                             ======     ======
</TABLE>
   Non-performing  assets  in the  construction  and land  development  category
consist  of  six   single-family   homes.   The  majority  of  these  homes  are
substantially complete. Management believes that these non-performing assets are
adequately collateralized. The two loans on non-accrual did not require specific
reserves against the allowance for loan losses at June 30, 2000. The real estate
owned properties  required a write-down of  approximately  $33,000 during fiscal
2000.  The  allowance  for loan  losses  totaled  $844,000  or  208.9%  of total
non-performing  loans at June 30,  2000.  During the year  ended June 30,  2000,
there were $36,339 in net charge-offs. At June 30, 2000, $139.5 million or 62.9%
of the Bank's total loan portfolio was  collateralized  by first liens on one-to
four-family  residences,  and the net loan portfolio  amounted to 78.5% of total
assets.

Results of Operations for the Year Ended June 30, 2000
Compared to the Year Ended June 30, 1999

   Net  Income.  Net income for fiscal 2000 was  $1,092,000  or $.46 per diluted
share,  compared  to $176,000 or $.07 per  diluted  share for fiscal  1999.  The
increase in the  Company's  net income of $916,000 or 520.5% in fiscal 2000 from
fiscal 1999 was  primarily  due to an increase  in net  interest  income of $1.3
million,  resulting from net loan growth of $65.5 million. In addition,  several
non-recurring items, which management believes are not expected to impact future
earnings,  had a  significant  impact on fiscal 1999 earnings but only a nominal
impact on fiscal 2000 earnings.  These items are described below on an after tax
basis. First, the Company realized a $340,000, net of tax, loss on securities in
fiscal 1999  compared  to a net of tax loss of $19,000 in fiscal 2000  primarily
resulting from the liquidation of the Company's equity  investments and the sale
of certain  CMO's  during  fiscal  1999 in order to  reposition  the  securities
portfolio for future liquidity needs. Second, the Company incurred approximately
$253,000,  net of tax, in legal costs during fiscal 1999 associated with a class
action lawsuit filed on July 17, 1998 by a Bank West  borrower,  compared to net
of tax expense of $106,000 during fiscal


<PAGE>
2000  associated  with the  lawsuit.  Third,  during  fiscal  1999,  the Company
incurred  a  $140,000,  net of tax,  settlement  accrual  related  to the former
President and Chief Executive  Officer.  Fourth, the Company incurred a $55,000,
net of tax, loss on disposal of fixed assets in fiscal 1999 related to Year 2000
compliance.  These  items are  discussed  in  greater  detail  in the  following
sections.

   Net Interest Income.  The Company's net income is largely  dependent upon net
interest income. Net interest income is the difference between the average yield
earned on loans,  securities and other earning assets, and the average rate paid
on deposits and other borrowings.  Net interest income is affected by changes in
volume and the  composition  of  interest-earning  assets  and  interest-bearing
liabilities, market rates of interest, the level of nonperforming assets, demand
for loans and other market forces.

   Net  interest  income  increased  by $1.3 million or 25.1% for the year ended
June 30, 2000 as compared to the year ended June 30,  1999.  The increase in net
interest income was primarily  attributable to a $44.2 million or 32.3% increase
in the average loan  portfolio  (including  loans held for sale).  The Company's
average  interest  spread  increased  from  2.35% to  2.60%,  reflecting  higher
yielding commercial and second mortgage loan growth during fiscal 2000.

   The yield on interest-earning  assets increased from 7.23% for fiscal 1999 to
7.62% for  fiscal  2000.  The yield  increased  primarily  due to the  growth in
commercial loans which typically have a higher yield than  residential  mortgage
loans.  In addition,  during the fiscal year, the Federal Reserve Bank increased
the federal funds rate by 175 basis points and the overall market interest rates
increased significantly from the previous year, resulting in an upward repricing
of floating rate loans and securities.  Management  expects that its strategy to
increase  the  emphasis on  commercial  lending  for fiscal 2001 will  favorably
impact the average yield on interest-earning assets.

   The cost of interest-bearing liabilities increased from 4.88% for fiscal 1999
to 5.02% for fiscal 2000,  primarily due to the increase in the overall interest
rate  environment  and  the  change  in  mix  of  interest-bearing  liabilities.
Certificates  of deposit as a percentage of total deposits  increased from 71.7%
at June 30, 1999 to 77.3% at June 30,  2000.  In  addition,  FHLB  advances as a
percentage of total  interest-bearing  liabilities  increased from 28.7% at June
30, 1999 to 37.4% at June 30, 2000.  Management  expects that the higher overall
interest  rate  environment  will result in an  increase in the average  cost of
interest-bearing liabilities during fiscal 2001.

   Net interest margin  increased from 2.83% for fiscal 1999 to 2.90% for fiscal
2000.  The increase in net interest  margin was primarily due to a change in mix
of  interest-earning  assets resulting from the significant growth in commercial
loans,  which typically have a higher yield than  residential  loans.

   The future trend of the Company's net interest income and net interest margin
may be  impacted  by the  level  of loan  originations,  purchases,  repayments,
refinances,  and sales, and a resulting  change in the Company's  composition of
interest-earning  assets. The recent rapid rise in overall market interest rates
is expected to have a negative  impact on the  Company's  net  interest  income.
However,  the  anticipated  growth in commercial  loans is expected to partially
offset any negative impact. Additional factors that may affect the Company's net
interest  income are the slope of the yield curve,  asset  growth,  maturity and
repricing activity and competition.

<PAGE>
Average  Balances,  Interest Rates and Yields.  The following table presents for
the periods  indicated the total dollar  amount of interest  income from average
interest-earning  assets  and the  resultant  yields,  as  well as the  interest
expense on average interest-bearing  liabilities,  expressed both in dollars and
rates, and the net interest margin.  All average balances are based on month-end
balances.
<TABLE>
<CAPTION>
                                              Year Ended June 30,              Year Ended June 30,          Year Ended June 30,
                                                      2000                            1999                          1998
                                        ------------------------------    -----------------------------  -------------------------
                                                               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)                   $181,035     $14,185     7.84%    $136,874   $10,598    7.74%   $120,844  $ 9,795   8.11%
  Securities                              44,337       3,001     6.77       46,077     2,677    5.81      36,669    2,446   6.67
  Interest-bearing deposits                1,940         109     5.62        3,652       191    5.23       2,738      152   5.55
  FHLB stock                               3,875         310     8.00        2,521       199    7.89       1,958      156   7.97
                                        --------     -------     ----     --------   -------    ----    --------  -------   ----
    Total interest-earning assets        231,187      17,605     7.62      189,124    13,665    7.23     162,209   12,549   7.74
                                                     -------     ----                -------    ----              -------   ----
Noninterest-earning assets                 9,491                             7,547                         8,522
                                        --------                          --------                      --------
    Total assets                        $240,678                          $196,671                      $170,731
                                        ========                          ========                      ========

Interest-bearing liabilities:
  Savings, checking and MMDA's          $ 36,291         968     2.67     $ 31,883       857    2.69    $ 25,821      794   3.08
  Certificates of deposit                102,655       5,557     5.41       91,307     5,044    5.52      83,032    4,808   5.79
  Other borrowings                        78,298       4,387     5.60       47,185     2,412    5.11      35,803    2,010   5.61
                                        --------     -------     ----     --------   -------    ----    --------  -------   ----
    Total interest-bearing liabilities   217,244      10,912     5.02      170,375     8,313    4.88     144,656    7,612   5.26
                                                     -------     ----                -------    ----              -------   ----

Noninterest-bearing liabilities            1,453                             3,247                         2,853
                                        --------                          --------                      --------
     Total liabilities                   218,697                           173,622                       147,509
Stockholders' equity                      21,981                            23,049                        23,222
                                        --------                          --------                      --------
    Total liabilities and
      stockholders' equity              $240,678                          $196,671                      $170,731
                                        ========                          ========                      ========

Net interest income; average
  interest rate spread                  $  6,693        2.60%                        $ 5,352    2.35%             $ 4,937  2.48%
                                        ========        ====                         =======    ====              =======  ====

Net interest margin(3)                                  2.90%                                   2.83%                      3.04%
                   ==                                   ====                                    ====                       ====
Average interest-earning assets to
  Avg. interest-bearing liabilities                     1.06x                                  1.11x                       1.12x
                                                        ====                                   ====                        ====

</TABLE>

(1) At June 30, 2000, the weighted  average yields earned and rates paid were as
follows:  loans receivable 8.41%;  securities 6.99%;  interest-bearing  deposits
6.47%; FHLB stock 8.00%; total interest-earning assets 8.17%; savings,  checking
and MMDA's 2.88%;  certificates  of deposit 5.89%;  FHLB advances  6.65%;  total
interest-bearing liabilities 5.73%; and interest rate spread 2.44%.

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

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


<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, 2000                     June 30, 1999
                                                  vs.                               vs.
                                              Year Ended                        Year Ended
                                             June 30, 1999                     June 30, 1998
                                               Increase                          Increase
                                              (Decrease)                        (Decrease)
                                                Due to                            Due to
                                  --------------------------------     -----------------------------
                                                           Total
                                   Rate                   Increase     Rate                   Total
                                   Effect       Volume   (Decrease)    Effect     Volume    Increase
                                   ------       ------   ----------    ------     ------    --------
                                                              (In Thousands)
<S>                               <C>         <C>         <C>         <C>         <C>        <C>
Interest income:
  Loans receivable                $   138     $ 3,449     $ 3,587     $  (460)    $ 1,263    $   803
  Securities                          428        (104)        324        (342)        573        231
  Interest-bearing deposits            13         (95)        (82)         (9)         48         39
  FHLB stock                            3         108         111          (2)         45         43
                                  -------     -------     -------     -------     -------    -------
      Total interest income           582       3,358       3,940        (813)      1,929      1,116
                                  -------     -------     -------     -------     -------    -------

Interest expense:
  Savings, checking and MMDA's         (6)        117         111        (109)        172         63
  Certificates of deposit            (102)        615         513        (230)        466        236

 Other borrowings                     251       1,724       1,975        (192)        594        402
                                  -------     -------     -------     -------     -------    -------
      Total interest expense          143       2,456       2,599        (531)      1,232        701
                                  -------     -------     -------     -------     -------    -------
Increase (decrease) in
  net interest income             $   439     $   902     $ 1,341     $  (282)    $   697    $   415
                                  =======     =======     =======     =======     =======    =======
</TABLE>

   Provision  for  Loan  Losses.  Provisions  for loan  losses  are  charged  to
operations based on management's evaluation of probable losses in the portfolio.
In addition to providing  loss  allocations on specific loans where a decline in
value has been identified,  general  provisions for losses are established based
upon the  overall  portfolio  composition  and  general  market  conditions.  In
establishing  both  specific and general loss  allocations,  management  reviews
individual  loans,  recent loss  experience,  current economic  conditions,  the
overall balance and composition of the portfolio,  and such other factors which,
in management's  judgment,  deserve  recognition in estimating  probable losses.
Management believes the allowance for loan losses is adequate.  While management
uses available information to recognize losses on loans, future additions to the
allowance may be necessary based on changes in economic  conditions and borrower
circumstances.

   The provision for loan losses  increased by $180,000 or 81.8% when  comparing
fiscal 2000 to fiscal 1999.  During the fiscal year,  management  increased  the
provision for loan losses  primarily as a result of increases,  both on a dollar
basis and as a  percentage  of total  loans,  in  commercial  loans.  Management
believes  commercial  lending  has a higher  degree of credit  risk  compared to
residential mortgage lending and intends to add to the allowance for loan losses
based on the increased credit risk.


<PAGE>
   The Company's ratio of nonperforming  assets,  consisting of loans 90 days or
more delinquent and foreclosed  assets,  to total assets was .29% as of June 30,
2000  compared to .77% as of June 30, 1999.  The  allowance for loan losses as a
percentage  of total loans at June 30, 2000  increased to .38% from .31% at June
30, 1999. The allowance for loan losses equaled 208.9% of nonperforming loans at
June 30, 2000.  The ratio of net  charge-offs to average loans  outstanding  was
 .02% for both fiscal 1999 and 2000.

   Total Other  Income.  Total other  income  decreased  by $192,000 or 31.0% in
fiscal 2000 from fiscal 1999,  primarily due to a $547,000 or 82.3%  decrease in
gain on sales of loans.  The  significantly  lower gain was partially due to the
increase in overall market  interest rates during fiscal 2000 compared to fiscal
1999  resulting in lower loan sales volume.  In addition,  the Bank  portfolioed
ten-year  residential  balloon  mortgages in an effort to deploy excess capital.
The lower gain on sale of loans was partially offset by lower losses on the sale
of  securities  available  for sale by $320,000 or 92.1%.  Fiscal 1999 losses on
securities  available for sale resulted  from the  liquidation  of the Company's
equity  investments  and the sale of certain  CMO's in order to  reposition  the
securities  portfolio  with  shorter  average  life bonds to  anticipate  future
liquidity needs.

   Total Other Expenses.  Total other expenses  decreased by $314,000 or 5.9% in
fiscal 2000 as compared to fiscal 1999.  The decrease was  primarily  due to the
factors discussed below.  Compensation and benefits expense decreased by $79,000
or 2.7%. Fiscal 1999  compensation and benefits  included a $225,000  settlement
accrual related to the former President and Chief Executive Officer.  Absent the
settlement accrual,  compensation and benefits expense was higher in fiscal 2000
by $146,000,  or 5.3%  primarily due to the hiring of  additional  staff for the
newly opened  Jenision  branch as well as regular annual wage  increases.  These
amounts were partially offset by lower ESOP expense of $51,000  resulting from a
decline in the market value of the Company's stock in fiscal 2000 as compared to
1999.  The Bank has completed the majority of personnel  additions  necessary to
support continued growth in its lending areas and existing branches.  Management
expects that  additional  loan and deposit growth given current  staffing levels
should result in an improvement to the Bank's efficiency ratio for fiscal 2001.

   Professional  fees  decreased by  $280,000,  or 42.0%.  The Company  incurred
approximately  $165,000 in legal costs during  fiscal 2000  compared to $384,000
during fiscal 1999 associated with defending a class action lawsuit. See Note 10
to Consolidated Financial Statements for more information. During March of 2000,
the Kent  County  Circuit  Court  entered  judgment in favor of Bank West on all
claims.  While the plaintiffs have a right to appeal,  Bank West won all aspects
of the case and expects to prevail in the appeals that have been filed.

   During fiscal 1999,  the Company  incurred an $83,000 loss on the disposal of
fixed assets  considered  non-compliant  with respect to the Year 2000 event. No
losses on the disposal of fixed assets occurred during fiscal 2000.

   The above decreases in other expenses were partially offset by an increase in
furniture,   fixtures  and  equipment   expense  of  $56,000  or  30.6%  due  to
depreciation  expense  related to the purchase of a new teller service  platform
and new lending software. In addition,  advertising expense increased by $71,000
or 78.9% due to the grand opening of the Jenison branch as well as the increased
emphasis on advertising loan and deposit products.

   Cumulative  Effect of a Change in Accounting  Principle.  During fiscal 1999,
the  Company  changed the  accounting  for certain  securities  by  transferring
certain  held  to  maturity  securities  to  the  trading  portfolio  under  the
provisions of Statement of Financial  Accounting  Standards No. 133,  Accounting
for Derivative Instruments and Hedging Activities.  The transfer resulted in the
recognition of a $92,000, net of tax charge, in fiscal1999. The transfer allowed
the Company to subsequently sell such securities in fiscal 1999.  Federal Income
Tax Expense.

   Federal  income tax  expense  increased  by $458,000 or 313.7% in fiscal 2000
from fiscal 1999, due to an increase in pre-tax income.

Results of Operations for the Year Ended June 30, 1999
Compared to the Year Ended June 30, 1998

   Net  Income.  Net income for fiscal  1999 was  $176,000  or $.07 per  diluted
share,  compared  to $830,000 or $.33 per  diluted  share for fiscal  1998.  The
decrease  in the  Company's  net income of $654,000 or 78.8% in fiscal 1999 from
fiscal  1998 was due to several  events  described  below on an after tax basis.
First,  the  Company  realized  a  $340,000,  net of  tax,  loss  on  investment
securities in 1999 compared

<PAGE>
to a net of tax loss of $1,100 in 1998 primarily  resulting from the liquidation
of the Company's  equity  investments  and the sale of certain CMO's in order to
reposition the securities portfolio.  Second, the Company incurred approximately
$253,000,  net of tax,  in  legal  costs  in  fiscal  1999  associated  with the
previously  mentioned  class  action  lawsuit.  Third,  the  Company  incurred a
$140,000, net of tax, settlement accrual in 1999 related to the former President
and Chief Executive Officer. Fourth, the Company incurred a $55,000, net of tax,
loss on disposal of fixed assets in 1999 related to Year 2000 compliance.  These
items are  discussed  in greater  detail in the  following  sections.  The above
amounts were partially  offset by growth in net interest income of $415,000,  or
8.4% in fiscal 1999.

   Net Interest  Income.  Net interest income increased by $415,000 for the year
ended June 30, 1999 as compared to the year ended June 30, 1998. The increase in
net  interest  income was  primarily  attributable  to a $16.0  million or 13.2%
increase in the average  loan  portfolio  (including  loans held for sale).  The
Company's average interest spread decreased from 2.48% to 2.35%,  reflecting the
relatively flat U.S. Treasury yield curve during fiscal 1999.

   The yield on total  interest-earning  assets  decreased from 7.74% for fiscal
1998 to 7.23% for fiscal 1999. The yield  decreased  primarily due to refinances
of a portion of the Bank's existing loan portfolio to lower rates as well as the
downward  repricing of the Bank's  floating  rate CMO  portfolio.  During fiscal
1999, the Federal Reserve lowered the federal funds rate by 75 basis points, and
overall market interest rates declined substantially from the previous year.

   The cost of interest-bearing liabilities decreased from 5.26% for fiscal 1998
to 4.88% for fiscal 1999,  primarily due to the decline in the overall  interest
rate  environment.  In addition,  the Bank increased its non-CD core deposits to
$37.4  million or 28.3% of total  deposits  at June 30,  1999  compared to $30.7
million or 25.6% of total deposits at June 30, 1998.

   Net interest margin  decreased from 3.04% for fiscal 1998 to 2.83% for fiscal
1999.  The decrease in net interest  margin was primarily due to the  relatively
flat  U.S.  Treasury  yield  curve,  which  negatively  impacted  the  yield  on
interest-earning  assets as loans repriced  downward faster than certificates of
deposit and FHLB advances.

   Provision  for Loan  Losses.  The  provision  for loan  losses  increased  by
$139,000 or 171.6% when  comparing  fiscal 1999 to fiscal  1998.  The  Company's
ratio of  nonperforming  assets,  consisting of loans 90 days or more delinquent
and foreclosed  assets, to total assets was .77% as of June 30, 1999 compared to
 .57% as of June 30, 1998. The allowance for loan losses as a percentage of total
loans at June 30, 1999  increased to .31% compared to .23% at June 30, 1998. The
allowance for loan losses equaled 37.5% of nonperforming loans at June 30, 1999.
The ratio of net  charge-offs to average loans  outstanding  was .02% for fiscal
1999 compared to .01% for fiscal 1998.

   Total Other  Income.  Total other  income  decreased  by $392,000 or 38.7% in
fiscal 1999 from fiscal 1998,  primarily due to a $217,000 decrease in net gains
on trading securities.  In addition,  the loss on sales of securities  available
for sale increased by $157,000. The increase in net loss on securities available
for sale was primarily due to a first quarter charge totaling  $401,000  related
to what management believed to be an other-than-temporary  decline in the market
value of certain equity securities. Management decided to liquidate the majority
of the remaining equity securities during fiscal 1999 in order to reposition the
securities  portfolio  as  previously  mentioned.  The  carrying  value  of  the
remaining  equity  securities  was  approximately  $60,000 at June 30, 1999. The
decrease in net gain on trading  securities was due to the Company's decision to
eliminate its equity trading  account in the prior fiscal year in light of stock
market volatility.

   Total Other Expenses.  Total other expenses increased by $754,000 or 16.4% in
fiscal 1999 as compared to fiscal 1998.  The increase was  primarily  due to the
factors  discussed  below.  Compensation  and  benefits  expense  was  higher by
$149,000 or 5.3%. This expense category included a $225,000  settlement  accrual
related  to the  former  President  and  Chief  Executive  Officer.  Absent  the
settlement  accrual,  compensation and benefits expense was lower in fiscal 1999
by $76,000 or 2.7%  primarily  due to lower ESOP  expense of $112,000  resulting
from a decline  in the market  value of the  Company's  stock in fiscal  1999 as
compared to 1998.

   Professional  fees  increased  by  $404,000,  or 153.2% in fiscal  1999.  The
Company  incurred  approximately  $384,000  in legal  costs  during  fiscal 1999
associated with defending the previously  mentioned  class action  lawsuit.

   The Company  incurred an $83,000 loss in fiscal 1999 on the disposal of fixed
assets considered non-compliant with respect to the Year 2000 event.


<PAGE>
   Data  processing  expense  increased  by $64,000 or 32.2% in fiscal 1999 from
fiscal 1998  primarily due to $25,000 of Year  2000-related  pass-through  costs
from the service bureau the Bank utilizes.  In addition,  maintenance  agreement
costs increased due to utilizing additional software products, and the volume of
transactions processed increased.

   Cumulative  Effect of a Change in Accounting  Principle.  During fiscal 1999,
the  Company  changed the  accounting  for certain  securities  by  transferring
certain  held  to  maturity  securities  to  the  trading  portfolio  under  the
provisions of Statement of Financial  Accounting  Standards No. 133,  Accounting
for Derivative Instruments and Hedging Activities.  The transfer resulted in the
recognition  of a $92,000,  net of tax  charge,  in fiscal  1999.  The  transfer
allowed the Company to subsequently sell such securities in fiscal 1999.

   Federal Income Tax Expense.  Federal income tax expense decreased by $355,000
or 78.4% in fiscal 1999 from fiscal 1998, due to a decrease in pre-tax income.

Market Risk

   Derivative  financial  instruments include futures,  forwards,  interest rate
swaps,   option   contracts  and  other  financial   instruments   with  similar
characteristics.  The Company  currently does not enter into futures,  forwards,
swaps or options.  However, 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
extend  credit  and  standby  letters of credit.  These  instruments  involve to
varying  degrees  elements  of credit  and  interest  rate risk in excess of the
amount  recognized in the  consolidated  balance  sheets.  Commitments to extend
credit are  agreements to lend to a customer as long as there is no violation of
any condition  established  in the contract.  Commitments  generally  have fixed
expiration dates.  Standby letters of credit are conditional  commitments issued
by the Bank to guarantee the  performance of a customer to a third party up to a
stipulated amount and with specified terms and conditions. Commitments to extend
credit and standby  letters of credit are not  recorded as an asset or liability
by the Bank until the instrument is exercised.

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

Asset and Liability Management

   Consistent net interest income is largely dependent upon the achievement of a
positive  interest  rate spread that can be  sustained  during  fluctuations  in
prevailing  interest  rates.  Interest  rate  sensitivity  is a  measure  of the
difference  between  amounts of  interest-earning  assets  and  interest-bearing
liabilities  that 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  (consisting  of  ARM's,
commercial,  home  equity and  builder  spec  loans and  floating  rate  CMO's).
Significant  effort has been made to reduce the duration and average life of the
Bank's interest-earning assets by porfolioing commercial and residential balloon
loans versus longer-term  fixed-rate  mortgages.  During fiscal 2000, the Bank's
ratio of interest-sensitive  assets to interest-sensitive  liabilities decreased
from  1.11 to 1.06 due to the  large  growth  in the loan  portfolio  funded  by
interest-bearing liabilities.

   Another way the Bank has managed interest rate risk is by selling most of the
newly originated or purchased,  fixed-rate mortgages with terms of fifteen years
or greater,  while  originating the previously  mentioned  adjustable-rate  loan
types and balloon  mortgage loans for retention in the loan  portfolio.  At June
30, 2000,  the Bank's  adjustable-rate  and balloon  mortgage  loans amounted to
$96.4 million or 43.4% of total loans.  Management's strategy for fiscal 2001 is
to emphasize  growth in commercial loans and  de-emphasize  residential  balloon
loans due to the present  inverted U.S.  Treasury  yield curve and its effect on
pricing different loan types.

<PAGE>
   With its funding  sources,  management  has attempted to reduce the impact of
interest rate changes by matching FHLB  borrowings  and  certificate  of deposit
terms to the average lives of interest-earning assets.

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

   Net  portfolio  value is equal to the market value of assets minus the market
value of liabilities,  with adjustments made for off-balance  sheet items.  This
analysis assesses the risk of loss in market sensitive  instruments in the event
of sudden and  sustained 1% to 4%  increases  and  decreases in market  interest
rates.  The following table presents the Bank's  projected change in NPV and NII
for the various rate shock levels at June 30, 2000:
<TABLE>
<CAPTION>

                              Net Portfolio Value           Net Interest Income
                           -------------------------     -------------------------
      Change in Interest   $ Amount        % Change      $ Amount         % Change
      Rate (Basis Points)   of NPV           in NPV      of NII             in NII
      -------------------   ------           ------      ------             ------
                                           (Dollars in Thousands)
<S>             <C>         <C>              <C>          <C>              <C>
               +400         $ 9,167          (56.83)%     $ 5,549          (19.49)%
               +300          12,004          (43.47)        5,902          (14.38)
               +200          15,250          (28.18)        6,262           (9.15)
               +100          18,481          (12.97)        6,609           (4.12)
              Static         21,235              --         6,893              --
               (100)         23,030            8.45         7,097            2.97
               (200)         22,871            7.70         7,060            2.43
               (300)         22,546            6.17         6,991            1.43
               (400)         22,348            5.24         6,930             .55
</TABLE>

   As illustrated in the above table,  an increase in interest rates will result
in a decrease in the Bank's NPV as  compared  to a decrease  in  interest  rates
which will  result in an increase  in the Bank's  NPV.  This occurs  principally
because,  when rates increase,  the Bank's shorter-term  certificates of deposit
and adjustable-rate  borrowings reprice upward faster than fixed-rate loans with
longer maturities. An increase in interest rates also will negatively impact the
securities  available for sale,  which is shown as a component of  stockholders'
equity.  A decrease in interest  rates  assumes an  increase in  prepayments  in
loans,  which reduces the extent of a positive  impact as compared to the extent
of a negative impact when rates increase.

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


<PAGE>
Liquidity and Capital Resources

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

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

   The  significant  loan growth during fiscal 2000 reduced the  availability of
additional FHLB advances to  approximately  $9.8 million at June 30, 2000, based
on  collateral.  The Bank also has a $4 million  federal funds facility with its
correspondent  bank.  As a result of the lower  level of  liquidity  than in the
prior year,  the Bank has increased its reliance upon brokered  certificates  of
deposit in addition to retail deposit growth to fund loan growth.  During fiscal
2001, management intends to de-emphasize adding residential balloon loans to the
portfolio  and  focus on  commercial  loan  growth  as a  strategy  to  preserve
liquidity.  In addition,  a portion of the Bank's  available for sale securities
may be liquidated as an additional liquidity source. See Consolidated  Statement
of Cash  Flows for  additional  information  on major cash flow items for fiscal
1998,  1999 and 2000.

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

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

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.


<PAGE>
Report of Independent Auditors

                           [CROWE CHIZEK LETTERHEAD]



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,  2000 and 1999 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, 2000.  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,  2000 and 1999,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 2000 in conformity with generally accepted accounting principles.

   As discussed in Note 1 to the consolidated financial statements,  the Company
changed its method of accounting for certain securities  effective April 1, 1999
to conform with the  provisions of Statement of Financial  Accounting  Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities.

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

Grand Rapids, Michigan
August 9, 2000


<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
June 30, 2000 and 1999
                                                                              2000                       1999
                                                                        -------------              -------------
<S>                                                                     <C>                        <C>
ASSETS

         Cash and due from financial institutions                       $   3,564,615              $   1,527,481
         Interest-bearing deposits in financial institutions                  169,330                  7,578,387
                                                                        -------------              -------------
                  Total cash and cash equivalents                           3,733,945                  9,105,868
         Securities available for sale                                     42,601,603                 42,272,306
         Loans held for sale                                                  572,731                  2,380,576
         Loans, net                                                       210,717,246                145,205,691
         Federal Home Loan Bank (FHLB) stock                                4,500,000                  2,700,000
         Premises and equipment - net                                       3,694,888                  3,000,951
         Accrued interest receivable                                        1,439,246                  1,019,165
         Mortgage servicing rights                                            230,703                    232,561
         Real estate owned                                                    380,332                    309,826
         Other assets                                                         499,404                    442,257
                                                                        -------------              -------------
                                                                        $ 268,370,098              $ 206,669,201
                                                                        =============              =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
         Deposits

                  Noninterest-bearing                                   $   7,099,390              $   8,419,022
                  Interest-bearing                                        148,740,440                123,982,183
                                                                        -------------              -------------
                           Total deposits                                 155,839,830                132,401,205
         FHLB borrowings                                                   88,803,024                 50,000,000
         Accrued interest payable                                             655,568                    292,289
         Advanced payments by borrowers for taxes and insurance               574,319                    509,218
         Other liabilities                                                    274,531                    914,358
                                                                        -------------              -------------
                  Total liabilities                                       246,147,272                184,117,070

Commitments and contingencies

Shareholders' equity
         Preferred stock, 5,000,000 shares authorized, none issued
         Common stock, $.01 par value; 10,000,000 shares authorized;
           2,521,059 and 2,597,729 issued at June 30, 2000 and 1999            25,211                     25,978
         Additional paid-in capital                                        10,645,624                 11,328,830
         Retained earnings, substantially restricted                       13,034,267                 12,517,215
         Accumulated other comprehensive income (loss), net
           of tax of $428,081 in 2000 and $211,018 in 1999                   (830,981)                  (409,623)
         Management Recognition Plan (unearned shares)                        (35,647)                  (165,021)
         Employee Stock Ownership Plan (unallocated shares)                  (615,648)                  (745,248)
                                                                        -------------              -------------
                                                                           22,222,826                 22,552,131
                                                                        -------------              -------------
                                                                         $ 268,370,098              $ 206,669,201
                                                                         =============              =============


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

<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
Years ended June 30, 2000, 1999 and 1998
                                                              2000                      1999             1998
                                                          ------------              ------------     ------------
<S>                                                       <C>                       <C>              <C>
Interest and dividend income
         Loans                                            $ 14,185,674              $ 10,598,406     $  9,795,291
         Securities                                          3,000,715                 2,677,378        2,446,042
         Other interest-earning deposits                       109,538                   190,711          152,152
         Dividends on FHLB stock                               309,554                   199,142          155,825
                                                          ------------              ------------     ------------
                                                            17,605,481                13,665,637       12,549,310
Interest expense

         Deposits                                            6,524,850                 5,900,947        5,601,870
         FHLB borrowings                                     4,333,999                 2,412,433        2,010,465
         Federal funds purchased                                53,616                        --               --
                                                          ------------              ------------     ------------
                                                            10,912,465                 8,313,380        7,612,335
                                                          ------------              ------------     ------------
Net interest income                                          6,693,016                 5,352,257        4,936,975
Provision for loan losses                                      400,000                   220,000           81,000
                                                          ------------              ------------     ------------
Net interest income after provision for loan losses          6,293,016                 5,132,257        4,855,975
Other income

         Net gain on sales of loans                            117,925                   664,568          662,203
         Fees and service charges                              377,578                   333,584          349,637
         Net gain (loss) on trading securities                      --                   (16,498)         200,148
         Net loss on securities available for sale             (28,406)                 (358,784)        (201,890)
         Gain (loss) on real estate owned                      (38,856)                   (2,501)           2,241
                                                          ------------              ------------     ------------
                                                               428,241                   620,369        1,012,339
Other expenses

         Compensation and benefits                           2,880,128                 2,959,351        2,809,557
         Federal deposit insurance                              51,010                    70,427           64,306
         Professional fees                                     386,924                   666,946          263,374
         Data processing                                       260,550                   261,093          197,487
         Occupancy                                             356,014                   336,370          301,185
         Furniture, fixtures and equipment                     238,546                   183,228          153,899
         Advertising                                           160,796                    89,876          111,351
         Loss on disposal of fixed assets                           --                    83,460               --
         Other                                                 691,360                   687,861          683,532
                                                          ------------              ------------     ------------
                                                             5,025,328                 5,338,612        4,584,691
                                                          ------------              ------------     ------------
Income before federal income tax expense and
  cumulative effect of accounting change                     1,695,929                   414,014        1,283,623
Federal income tax expense                                     604,000                   145,600          453,255
                                                          ------------              ------------     ------------
Income before cumulative effect of
  accounting change                                          1,091,929                   268,414          830,368
Cumulative effect of change in accounting for
  certain securities, net of tax benefit of $47,600                 --                   (92,399)              --
Net income                                                $  1,091,929              $    176,015     $    830,368
                                                          ============              ============     ============
Basic earnings per share:
         Income before cumulative effect of
           accounting change                              $       0.46              $       0.11     $       0.35
         Cumulative effect of accounting change                     --                     (0.04)              --
                                                          ------------              ------------     ------------
         Net income                                       $       0.46              $       0.07     $       0.35
                                                          ============              ============     ============
Diluted earnings per share:
         Income before cumulative effect of
           accounting change                              $       0.46              $       0.11     $       0.33
         Cumulative effect of accounting change                     --                     (0.04)              --
                                                          ------------              ------------     ------------
         Net income                                       $       0.46              $       0.07     $       0.33
                                                          ============              ============     ============

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Years ended June 30, 2000, 1999 and 1998


                                                                            Accumulated
                                                  Additional                   Other          Unearned    Unallocated      Total
                                      Common       Paid-in      Retained   Comprehensive         MRP          ESOP     Shareholders'
                                      Stock        Capital      Earnings    Income (Loss)      Shares        Shares       Equity
                                    ---------   ------------  -----------   ----------    -----------  ------------   ------------
<S>                                 <C>         <C>           <C>           <C>           <C>          <C>            <C>
Balance at July 1, 1997             $  17,535   $ 11,432,798  $12,647,112   $   12,710    $  (513,398) $ (1,004,448)  $ 22,592,309

Net income                                 --             --      830,368           --              --            --       830,368
Other comprehensive income
  (loss), net of tax:
  Unrealized gains (losses) arising
    during the year                        --             --           --     (140,825)            --            --       (140,825)
  Less reclassification adjustments
    for net losses included
    in net income                          --             --           --      133,247             --            --        133,247
                                                                           -----------                                ------------
      Other comprehensive loss             --             --           --       (7,578)            --            --         (7,578)
Comprehensive income                       --             --           --           --             --            --        822,790
Shares earned under MRP                    --             --           --           --        152,400            --        152,400
Cash dividends of $.22 per share           --             --     (539,433)          --             --            --       (539,433)
Issuance of 876,654 shares
  of common stock for
  three-for-two stock split,
  net of cash paid on
  fractional shares                     8,767             --       (10,019)         --             --            --         (1,252)
Repurchase of 7,500 shares
  of stock                                (75)      (105,863)          --           --             --            --       (105,938)
Shares committed to be released
  under Employee Stock
  Ownership Plan                           --        216,928           --           --             --       129,600        346,528
Shares issued upon exercise
  of stock options                         10          7,273           --           --             --            --          7,283
                                    ---------   ------------  -----------   ----------    -----------  ------------   ------------
Balance at June 30, 1998               26,237     11,551,136   12,928,028        5,132       (360,998)     (874,848)    23,274,687

Net income                                 --             --      176,015           --             --            --        176,015
Other comprehensive income
  (loss), net of tax:
 Unrealized loss on transfer
  of securities held to maturity
  to available for sale                    --             --           --      (26,469)            --            --        (26,469)
  Unrealized gains (losses)
    arising during the year                --             --           --     (728,371)            --            --       (728,371)
  Less reclassification adjustments
    for net losses included
    in net income                          --             --           --      340,085             --            --        340,085
                                                                           -----------                                ------------
      Other comprehensive loss             --             --           --     (414,755)            --            --       (414,755)

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity (Continued)
Years ended June 30, 2000, 1999 and 1998


                                                                            Accumulated
                                                  Additional                   Other          Unearned    Unallocated      Total
                                      Common       Paid-in      Retained   Comprehensive         MRP          ESOP     Shareholders'
                                      Stock        Capital      Earnings    Income (Loss)      Shares        Shares       Equity
                                    ---------   ------------  -----------   ----------    -----------  ------------   ------------
<S>                                 <C>         <C>           <C>           <C>           <C>          <C>            <C>
Comprehensive loss                  $     --    $         --  $         --  $        --   $       --   $        --    $   (238,740)
Shares earned under MRP                   --              --            --           --      107,800            --         107,800
Shares forfeited under MRP                --         (88,177)           --           --       88,177            --              --
Cash dividends of $.24 per share          --              --      (586,828)          --           --            --        (586,828)
Repurchase of 46,000 shares
  of stock                              (460)       (415,852)           --           --           --            --        (416,312)
Shares committed to be released
  under Employee Stock
  Ownership Plan                          --         105,047            --           --           --       129,600         234,647
Shares issued upon exercise
  of stock options                       201         139,462            --           --           --            --         139,663
Tax benefit relating to employee
  stock compensation plans                --          37,214            --           --           --            --          37,214
                                    --------    ------------  ------------    ---------  -----------   -----------    ------------
Balance at June 30, 1999              25,978      11,328,830    12,517,215     (409,623)    (165,021)     (745,248)     22,552,131

Net income                                --              --     1,091,929           --           --            --       1,091,929
Other comprehensive income
  (loss), net of tax:
  Unrealized gains (losses) arising
    during the year                       --              --            --     (440,106)          --            --        (440,106)
  Less reclassification adjustments
    for net losses included
    in net income                         --              --            --       18,748           --            --          18,748
      Other comprehensive loss            --              --            --     (421,358)          --            --        (421,358)
Comprehensive income                      --              --            --           --           --            --         670,571
Shares earned under MRP                   --              --            --           --      119,000            --         119,000
Shares forfeited under MRP--                                       (10,374)          --           --        10,374              --
Cash dividends of $.24 per share          --              --      (574,877)          --           --            --        (574,877)
Repurchase of 80,000 shares
  of stock                              (800)       (751,137)           --           --           --            --        (751,937)
Shares committed to be released
  under Employee Stock
  Ownership Plan                          --          54,168            --           --           --       129,600         183,768
Shares issued upon exercise
  of stock options                        33          24,137            --           --           --            --          24,170
                                    --------    ------------  ------------    ---------  -----------   -----------    ------------
Balance at June 30, 2000            $ 25,211    $ 10,645,624  $ 13,034,267    $(830,981) $   (35,647)  $  (615,648)   $ 22,222,826
                                    ========    ============  ============    =========  ===========   ===========    ============

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Years ended June 30, 2000, 1999 and 1998


                                                                                   2000             1999             1998
                                                                              ------------     ------------     ------------
<S>                                                                           <C>              <C>              <C>
Cash flows from operating activities
         Net income                                                           $  1,091,929     $    176,015     $    830,368
         Adjustments to reconcile net income to
           net cash from operating activities
                  Purchase of trading securities                                        --               --       (2,530,635)
                  Proceeds from sales of trading securities                             --               --        4,486,385
                  Origination and purchase of mortgage
                    loans for sale                                              (7,441,349)     (35,127,650)     (50,245,577)
                  Proceeds from sales of mortgage loans                          9,367,119       41,568,214       44,982,359
                  Net (gain) loss on sales of:
                           Loans                                                  (117,925)        (664,568)        (662,203)
                           Securities                                               28,406          515,281            1,742
                           Real estate owned                                        38,856            2,501           (2,241)
                  Depreciation                                                     302,509          247,685          213,787
                  Amortization of premium, net                                      34,681          242,923           79,741
                  Loss on disposal of fixed assets                                      --           83,460               --
                  ESOP expense                                                     183,768          234,647          346,528
                  MRP expense                                                      119,000          107,800          152,400
                  Provision for loan losses                                        400,000          220,000           81,000
                  Change in:
                           Deferred loan fees                                     (207,727)        (191,521)        (180,698)
                           Other assets and accrued interest receivable           (289,961)        (218,843)        (541,027)

                           Other liabilities and accrued interest payable         (211,447)         768,899           (2,039)
                                                                              ------------     ------------     ------------
                           Net cash from operating activities                    3,297,859        7,964,843       (2,990,110)

Cash flows from investing activities
         Purchase of FHLB stock                                                 (1,800,000)        (600,000)        (550,000)
         Net decrease in interest-bearing time deposits                                 --               --           99,000
         Loan originations, net of repayments                                  (45,801,372)     (19,099,197)      (4,296,879)
         Loans purchased for portfolio                                         (20,510,756)      (7,539,188)      (3,295,025)
         Securities available for sale:
                  Purchases                                                     (5,164,654)     (36,282,467)     (24,143,884)
                  Proceeds from sales                                            2,446,275       27,518,645       15,634,260
                  Proceeds from maturities, calls and principal
                    repayments                                                   1,687,575       11,450,457        2,786,772
         Securities held to maturity:
                  Purchases                                                             --       (3,093,501)     (11,102,747)
                  Proceeds from maturities, calls and principal
                    repayments                                                          --               --        4,000,625
         Property and equipment expenditures                                      (996,639)        (170,143)        (250,534)
         Proceeds from disposal of fixed assets                                         --            2,952               --
         Proceeds from sale of real estate owned                                   530,784          189,579          162,918
                                                                              ------------     ------------     ------------
                           Net cash from investing activities                  (69,608,787)     (27,622,863)     (20,955,494)

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
Years ended June 30, 2000, 1999 and 1998

                                                                        2000              1999              1998
                                                                   -------------     -------------     -------------
<S>                                                                <C>               <C>               <C>
Cash flows from financing activities
         Net increase in deposits                                  $  23,438,625     $  12,421,826     $  17,117,227
         Repayment of FHLB borrowings                                (79,000,000)      (39,000,000)      (43,000,000)
         Proceeds from FHLB borrowings                               117,803,024        52,000,000        51,000,000
         Repurchase of common stock                                     (751,937)         (416,312)         (105,938)
         Issuance of shares upon exercise of
           stock options                                                  24,170           139,663             7,283
         Dividends paid on common stock                                 (574,877)         (586,828)         (540,685)
                                                                   -------------     -------------     -------------
                  Net cash from financing activities                  60,939,005        24,558,349        24,477,887
                                                                   -------------     -------------     -------------

Net change in cash and cash equivalents                               (5,371,923)        4,900,329           532,283

Cash and cash equivalents at beginning of period                       9,105,868         4,205,539         3,673,256

Cash and cash equivalents at end of period                         $   3,733,945     $   9,105,868     $   4,205,539
                                                                   =============     =============     =============
Supplemental disclosures of cash flow information:
         Cash paid during the period for
                  Interest                                         $  10,549,186     $   8,274,128     $   7,561,515
                  Income taxes                                           717,000           281,000           768,119
Supplemental disclosure of noncash investing activities:
         Transfer of securities from held to maturity
           to available for sale                                              --         6,096,798                --
         Transfer of securities from held to maturity
           to trading                                                         --         8,024,251                --
         Transfer of securities from trading to available
           for sale                                                           --                --         1,165,649
         Transfer from loans to real estate owned                        608,300           309,826           316,083

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>
Notes to Consolidated Financial Statements
June 30, 2000, 1999 and 1998

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Basis of Reporting:  Bank West  Financial  Corporation  (the  "Company")  was
organized  as a thrift  holding  company  for Bank  West (the  "Bank"),  a state
chartered stock savings bank. The consolidated  financial statements include the
accounts  of the  Company,  the Bank and the Bank's  wholly-owned  subsidiaries,
Sunrise Mortgage  Company and BW Investments  LLC. All significant  intercompany
transactions and balances have been eliminated in consolidation.

   Nature of Operations and Line of Business: The Company and the Bank provide a
broad  range  of  banking  and  financial  services  in  the  banking  industry.
Substantially  all revenues  and services are derived from banking  products and
services.  The Bank's primary  services  include  accepting  deposits and making
commercial,  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.

   While the Company's chief decision-makers  monitor the revenue streams of the
various products and services,  operations are managed and financial performance
is evaluated on a Company-wide basis. Accordingly,  all of the Company's banking
operations  are  considered by  management  to be  aggregated in one  reportable
operating segment.

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

   Concentrations  of Credit Risk: The Bank grants loans to and accepts deposits
from customers primarily in Kent County and eastern Ottawa County,  Michigan. No
significant  number of the Bank's  customers  are  employed at any one  specific
entity or in any one specific  industry.  Substantially all loans are secured by
specific items of collateral, primarily residential and commercial real estate.

   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. There were no trading securities at June 30, 2000 and 1999.

   Securities:  Securities which the Company has the positive intent and ability
to hold to maturity are  classified as held to maturity and carried at amortized
cost.  Securities,  other than trading  securities,  that might be sold prior to
maturity are classified as available for sale. Securities available for sale are
carried at fair value,  with  unrealized  holding  gains and losses  reported in
other  comprehensive  income.  Securities  are written down to fair value when a
decline in fair value is not temporary.

   Gains and losses on the sale of securities are based on the amortized cost of
the security  sold.  Premiums and  discounts on  securities  are  recognized  in
interest income using the level yield method over the period to maturity.

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

   Loans:  Loans that  management  has the  intent  and  ability to hold for the
foreseeable  future or until  maturity  or payoff  are  reported  at the  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.


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   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:  The  allowance  for loan  losses is a valuation
allowance for probable credit losses, increased by the provision for loan losses
and decreased by charge-offs  less  recoveries.  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
losses that are currently  anticipated  based on past loss  experience,  general
economic  conditions,  information about specific borrower situations  including
their financial  position and collateral  values and other factors and estimates
which are  subject  to change  over  time.  While  management  may  periodically
allocate  portions of the allowance for specific  problem loan  situations,  the
whole  allowance is available  for any loan  charge-offs  that occur.  A loan is
charged-off  against the  allowance  by  management  when deemed  uncollectible,
although collection efforts continue and future recoveries may occur.

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

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

   Premises  and  Equipment:  Premises  and  equipment  are  stated at cost less
accumulated  depreciation.  Premises and  equipment  are  depreciated  using the
straight-line-method  over the  useful  lives  of the  assets.  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 properties  acquired through,  or in lieu of,
loan  foreclosure  are to be sold and are initially  recorded at fair value less
estimated  costs to sell at the  date of  acquisition,  establishing  a new cost
basis.  Any reduction to fair value from the carrying  value of the related loan
at the time of acquisition  is accounted for as a loan loss and charged  against
the allowance for loan losses. After acquisition, the property is carried at the
lower of cost or fair value, less estimated costs to sell. A valuation allowance
is  recorded  through a charge  to  income  for the  amount  of  selling  costs.
Valuations are periodically performed by management and valuation allowances are
adjusted  through a charge to income  for  changes  in fair  value or  estimated
selling  costs.  Costs  relating to  improvement  of property  are  capitalized,
whereas costs and revenues relating to the holding of property are expensed.

   Income Taxes:  Income tax expense is the total of the current year income tax
due or  refundable  and the  change in  deferred  tax  assets  and  liabilities.
Deferred tax assets and  liabilities are the expected future tax amounts for the
temporary  differences  between  carrying  amounts  and tax bases of assets  and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces  deferred  tax assets to the amount  expected to be  realized.

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

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

   Financial Instruments: Financial instruments include credit instruments, such
as  commitments  to make loans and  standby  letters  of credit,  issued to meet
customer  financing  needs.  The face  amount  for these  items  represents  the
exposure to loss, before  considering  customer  collateral or ability to repay.
Such financial instruments are recorded when they are funded.

   Derivatives  include  interest  rate  swaps,   futures,  and  similar  items.
Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments and Hedging  Activities,  requires all derivatives to be recorded at
fair value.  Unless  designated as hedges,  changes in these fair values will be
recorded  in the income  statement.  Fair value  changes  involving  hedges will
generally be recorded by offsetting gains and losses on the hedge and the hedged
item, even if the fair value of the hedged item is not otherwise recorded. As of
April 1, 1999, the Company  adopted this  statement and, in accordance  with its
provisions,  chose to  reclassify  certain  securities  from held to maturity to
available for sale and trading,  as more fully disclosed in a separate note. The
Company does not have  derivative  instruments  in its  portfolio to account for
under the provisions of this  statement.

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

   Earnings  and  Dividends  Per  Share:  Basic  earnings  per share is based on
weighted  average  common  shares   outstanding.   ESOP  shares  are  considered
outstanding  as they are  committed  to be  released;  unearned  shares  are not
considered  outstanding.  MRP shares are  considered  outstanding  as they vest.
Diluted earnings per share further assumes issuance of dilutive potential common
shares  relating to  outstanding  stock  options and  unvested  MRP shares.  All
earnings and dividends per share amounts have been adjusted for a  three-for-two
stock split paid in December, 1997.

   Comprehensive  Income:  Comprehensive income consists of net income and other
comprehensive  income.  Other comprehensive income includes unrealized gains and
losses on securities  available for sale, net of tax, which are also  recognized
as a separate component of shareholders' equity.

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

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 2 - SECURITIES

   The amortized  cost and fair values of securities  available for sale at June
30, are as follows:
<TABLE>
<CAPTION>

                                                            Gross             Gross
                                        Amortized         Unrealized       Unrealized           Fair
                                           Cost             Gains             Losses            Value
                                       ------------    ------------     ------------     ------------
<S>                                    <C>             <C>              <C>              <C>
2000
  U.S. agencies                        $ 10,919,802    $         --     $   (357,927)    $ 10,561,875
  Mortgage-backed securities              2,885,607              --         (180,195)       2,705,412
  Collateralized mortgage obligations    19,551,885          53,582         (443,363)      19,162,104
  Corporate bond                          5,762,543              --         (149,730)       5,612,813
  Non-taxable municipal bonds               680,950           5,046               --          685,996
  Taxable municipal bonds                 3,559,878              --          (88,975)       3,470,903
  Trust preferred stock                     500,000              --          (97,500)         402,500
                                       ------------    ------------     ------------     ------------
                                       $ 43,860,665    $     58,628     $ (1,317,690)    $ 42,601,603
                                       ============    ============     ============     ============

1999
  U.S. agencies                        $ 10,898,521    $      5,382     $   (130,128)    $ 10,773,775
  Mortgage-backed securities              3,501,610              --          (94,083)       3,407,527
  Collateralized mortgage obligations    21,485,867          40,689         (395,670)      21,130,886
  Corporate bonds 3,285,678                     570          (7,723)       3,278,525
  Taxable municipal bonds                 3,659,131              --          (37,463)       3,621,668
  Equity securities                          62,140              --           (2,215)          59,925
                                       ------------    ------------     ------------     ------------
                                       $ 42,892,947    $     46,641     $   (667,282)    $ 42,272,306
                                       ============    ============     ============     ============

</TABLE>

   The scheduled  maturities  of securities  available for sale at June 30, 2000
are  shown  below.  Securities  not due at a  single  maturity  date  are  shown
separately.  Expected maturities may differ from contractual  maturities because
borrowers may have the right to call or prepay  obligations with or without call
or prepayment penalties.
<TABLE>
<CAPTION>

                                                    Amortized          Fair
                                                      Cost             Value
                                                  -----------        -----------
<S>                                               <C>                <C>
Due after one year through
  five years                                      $17,783,727        $17,256,953
Due after five years through
  ten years                                         3,139,446          3,074,634
Mortgage-backed securities
  and collateralized

  mortgage obligations                             22,437,492         21,867,516
Trust preferred stock                                 500,000            402,500
                                                  -----------        -----------
                                                  $43,860,665        $42,601,603
                                                  ===========        ===========
</TABLE>

   Proceeds  from sales of  securities  amounted  to  approximately  $2,446,000,
$27,519,000 and $20,121,000  for 2000,  1999 and 1998,  including  approximately
$4,486,000 relative to trading securities for the year ended June 30, 1998.


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 2 - SECURITIES(Continued)

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

                                                             2000           1999              1998
                                                           --------      ---------         ---------
<S>                                                        <C>           <C>               <C>
         Gross realized gains on:
             Securities available for sale                 $ 11,492      $ 263,474         $  59,447
             Trading securities                                  --             --           667,238
                                                             11,492        263,474           726,685
           Gross realized losses on:
             Securities available for sale                  (39,898)      (622,258)         (261,337)
             Trading securities                                  --       (156,497)               --
                                                            (39,898       (778,755)         (261,337)
           Net realized gains (losses)                      (28,406)      (515,281)          465,348
           Net unrealized loss on trading securities             --             --          (467,090)
                                                           --------      ---------         ---------
                                                           $(28,406)     $(515,281)        $  (1,742)
                                                           ========      =========         =========
</TABLE>

   During April of 1999,  securities were  transferred from the held to maturity
portfolio  to the  available  for sale  portfolio  and the trading  portfolio in
accordance  with the provisions of Statement of Financial  Accounting  Standards
No. 133, Accounting for Derivative  Instruments and Hedging  Activities.  At the
date of transfer, the securities transferred to the available for sale portfolio
had an  amortized  cost of  $6,096,798  and  increased  the  unrealized  loss on
securities  available for sale by $40,104 and decreased  shareholders' equity by
$26,469  (net of tax of  $13,635).  The  securities  transferred  to the trading
portfolio had an amortized  cost of $8,024,251  and a fair value of  $7,884,252,
resulting  in a loss of $139,999 at the date of  transfer.  This amount has been
shown net of a $47,600  tax  benefit  as a  cumulative  effect of an  accounting
change in the consolidated  statements of income.  These trading securities were
subsequently  sold  during  1999  at a loss  of  $16,498,  resulting  in a gross
realized loss on trading securities of $156,497, as shown in the table above.

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

NOTE 3 - SECONDARY MARKET MORTGAGE ACTIVITIES

   The following summarizes secondary market mortgage activities,  which consist
solely of one-to-four-family real estate loans:
<TABLE>
<CAPTION>

                                                   2000            1999               1998
                                             ------------     ------------     ------------
<S>                                          <C>              <C>              <C>
Loans held for sale - beginning of period    $  2,380,576     $  8,156,572     $  2,231,151
Activity during the periods:
  Loans originated and purchased for sale       7,441,349       35,127,650       50,245,577
  Proceeds from sales of mortgage loans        (9,367,119)     (41,568,214)     (44,982,359)
  Gain on sale of loans                           117,925          664,568          662,203
                                             ------------     ------------     ------------
Loans held for sale - end of period          $    572,731     $  2,380,576     $  8,156,572
                                             ============     ============     ============
</TABLE>


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 3 - SECONDARY MARKET MORTGAGE ACTIVITIES (Continued)

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

                                                       2000              1999              1998
                                                   -----------       -----------      -----------
<S>                                                <C>               <C>              <C>
         Mortgage loan portfolios serviced for
           FHLMC                                   $25,140,223       $27,179,312      $33,201,177
                                                   ===========       ===========      ===========
         Loan servicing fee income                 $    65,601       $    77,241      $    78,433
                                                   ===========       ===========      ===========
</TABLE>

   Custodial  escrow  balances  maintained in connection with the foregoing loan
servicing were $169,897 and $173,793 at June 30, 2000 and 1999.

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

                                                      2000              1999              1998
                                                   ---------         ---------         --------
<S>                                                <C>               <C>              <C>
         Balance at July 1                         $ 232,561         $ 280,869        $148,569
           Additions                                  12,142            65,692         190,800
           Amortization                              (14,000)         (114,000)        (58,500)
                                                   ---------         ---------         --------
         Balance at June 30                        $ 230,703         $ 232,561         $280,869
                                                   =========         =========         ========
</TABLE>

   A  valuation  allowance  for  mortgage  servicing  rights was not  considered
necessary for 2000, 1999 and 1998.

 NOTE 4 - LOANS, NET

   Net loans are classified as follows at June 30:
<TABLE>
<CAPTION>

                                                       2000              1999
                                                 -------------     -------------
<S>                                              <C>               <C>
Real estate loans:
  One-to four-family residential - fixed rate    $  15,425,090     $  14,559,680
  One-to four-family residential - balloon          79,222,832        51,842,742
  One-to four-family residential - adjustable       17,215,143        18,833,825
  Construction                                      27,652,791        25,395,916
  Commercial mortgages                              32,867,625        15,457,293
  Home equity lines of credit                       12,516,347        10,512,823
  Second mortgages                                  16,580,734        10,820,377
  Land development                                   1,803,163         1,189,394
                                                 -------------     -------------
      Total mortgage loans                         203,283,725       148,612,050
Consumer loans                                       2,368,998         1,849,363
Commercial non-mortgage                             16,324,067         3,823,834
                                                 -------------     -------------
      Total                                        221,976,790       154,285,247
Less:
  Loans in process                                  11,025,478         9,001,424
  Net deferred costs                                  (609,862)         (402,135)
  Allowance for loan losses                            843,928           480,267
                                                 -------------     -------------
                                                  $ 210,717,246     $ 145,205,691
                                                  =============     =============
</TABLE>

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998


NOTE 4 - LOANS, NET (Continued)

   Activity in the  allowance  for loan losses for the years ended June 30 is as
follows:
<TABLE>
<CAPTION>

                                                        2000        1999          1998
                                                     --------     --------      --------
<S>                                                   <C>         <C>           <C>
         Beginning balance                           $480,267     $289,696      $225,862
           Provision charged to operations            400,000      220,000        81,000
           Loans charged-off                          (36,339)     (29,429)      (17,166)
           Recoveries                                      --           --            --
                                                     --------     --------      --------
         Ending balance                              $843,928     $480,267      $289,696
                                                     ========     ========      ========
</TABLE>

   During the years ended June 30, 2000, 1999 and 1998, the Company had no loans
which were considered impaired.  Non-performing loans,  consisting of loans past
due over 90 days and still  accruing  and loans on  nonaccrual,  were  $404,000,
$1,279,000 and $841,000 at June 30, 2000, 1999 and 1998.

   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.
Related  party loan  activity  during 2000 and 1999 and  balances as of June 30,
2000 and 1999 did not exceed 5% of shareholders' equity.

NOTE 5 - PREMISES AND EQUIPMENT - NET

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

                                                      2000              1999
                                                   ----------        ----------
<S>                                                <C>               <C>
         Land                                      $  756,100        $  529,300
         Building and improvements                  2,642,537         2,411,654
         Furniture and equipment                    1,593,971         1,051,429
                                                    4,992,608         3,992,383
         Accumulated depreciation                  (1,297,720)         (991,432)
                                                   ----------        ----------
                                                   $3,694,888        $3,000,951
                                                   ==========        ==========
</TABLE>
NOTE 6 - DEPOSITS

   Deposits at June 30 are summarized as follows:
<TABLE>
<CAPTION>

                                                      2000                        1999
                                         ------------------------     ----------------------
                                             Amount           %           Amount         %
                                         ------------      ------     ------------    ------
<S>                                      <C>                 <C>      <C>               <C>
         Noninterest-bearing             $  7,099,390        4.56%    $  8,419,022      6.36%
         Now accounts and MMDAs            11,816,567        7.58        9,731,425      7.35
         Passbook and statement savings    16,409,469       10.53       19,267,901     14.55
         Certificates of deposit          120,514,404       77.33       94,982,857     71.74
                                         ------------      ------     ------------    ------
                                         $155,839,830      100.00%    $132,401,205    100.00%
                                         ============      ======     ============    ======
</TABLE>

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 6 - DEPOSITS (Continued)

   At June 30, 2000, the scheduled  maturities of certificates of deposit are as
follows by fiscal year-end:

                  2001            $92,966,776
                  2002             18,803,559
                  2003              5,671,997
                  2004              1,327,105
                  2005              1,742,911
                  Thereafter            2,056
                                 ------------
                                 $120,514,404
                                 ============

   As of June 30, 2000 and 1999, the Bank had issued through brokers $37,644,000
and  $19,194,000  of time deposits with  maturities  ranging from 3 to 24 months
which are included in the table above.

   As of June 30,  2000 and  1999,  the Bank  had  time  deposit  accounts  with
balances of $100,000  or more of  $51,476,000  and  $20,890,000.  Related  party
deposits were $1,769,000 and $1,296,000 at June 30, 2000 and 1999.

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

   Borrowings from the Federal Home Loan Bank (FHLB) of Indianapolis  consist of
the following at June 30:
<TABLE>
<CAPTION>

                                                          2000           1999
                                                      -----------    -----------
<S>                                                   <C>            <C>
Fixed-rate advance with a maturity of
  November  2001  and a rate of 7.46%                 $ 5,000,000    $        --

Putable  advances with  maturities
  June 2005 through August 2008
  and rates ranging from 5.33% to 6.75% at
  June 30, 2000,  averaging  5.9% at June
  30, 2000 and 5.22% at June 30, 1999                  25,000,000     30,000,000

Adjustable-rate  advances with maturities
  July 2000 through  December 2000 and
  rates ranging from 6.87% to 6.90% at June
  30, 2000,  averaging 6.89% at June 30,
  2000 and 5.01% at June 30, 1999                      58,000,000     20,000,000

$2,000,000 adjustable-rate line of credit
  with a maturity of September 2000 and rate
  of 6.90% at June 30, 2000                               803,024             --
                                                      -----------    -----------
                                                      $88,803,024    $50,000,000
                                                      ===========    ===========
</TABLE>

   For the putable  advances,  the FHLB has the option to convert the advance to
an adjustable  rate  beginning  one, two or five years after the purchase  date,
depending on the advance,  and  quarterly  thereafter.  Maturities of borrowings
outstanding at June 30, 2000 are as follows:

                  2001             $58,803,024
                  2002               5,000,000
                  2003                      --
                  2004                      --
                  2005              10,000,000
                  Thereafter        15,000,000
                                   -----------
                                   $88,803,024
                                   ===========


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS (Continued)

   Prepayment of certain  remaining  advances is permitted  only upon the Bank's
termination  of its FHLB  membership,  while  others are  subject to  prepayment
penalties  under the provisions and conditions of the credit policy of the FHLB.
The Bank did not incur prepayment penalties for 2000, 1999 and 1998.

   In addition to FHLB stock, the advances are  collateralized  by approximately
$142,764,000 and $121,000,000 of first mortgage loans and securities at June 30,
2000 and 1999.

NOTE 8 - FEDERAL INCOME TAXES

   The provision  for federal  income taxes for the years ended June 30 consists
of the following:
<TABLE>
<CAPTION>

                                                                  2000          1999          1998
                                                               ---------     ---------     ---------
<S>                                                            <C>           <C>           <C>
Current income tax expense                                     $ 636,902     $ 199,758     $ 401,804
Deferred income tax expense (benefit)                            (32,902)      (54,158)       51,451
                                                               ---------     ---------     ---------
         Total expense attributable to operations                604,000       145,600       453,255
Tax benefit attributable to cumulative effect
  of accounting change                                                --       (47,600)           --
Deferred expense allocated to other
  comprehensive loss items:
                  Unrealized loss on transfer of securities
                    held to maturity to available for sale            --       (13,635)           --
                  Unrealized losses arising during the year     (226,721)     (375,222)      (72,546)
                  Less reclassification adjustments for net
                    losses included in net income                  9,658       175,195        68,642
                                                               ---------     ---------     ---------
                      Other comprehensive loss                  (217,063)     (213,662)       (3,904)
                                                               ---------     ---------     ---------
                                                               $ 386,937     $(115,662)    $ 449,351
                                                               =========     =========     =========
</TABLE>

   Deferred tax assets and liabilities at June 30 consist of the following:
<TABLE>
<CAPTION>

                                                                         2000        1999
                                                                       --------   ---------
<S>                                                                    <C>         <C>
         Deferred tax assets:
           Accrued expenses                                            $ 20,662    $ 70,963
           Bad debt allowance                                           109,888          --
           Management Recognition Plan                                   22,224      18,744
           Loans marked-to-market                                        10,905          --
           Unrealized loss on securities available for sale             428,081     211,018
           Other                                                         56,899      72,774
                                                                       --------   ---------
                                                                        648,659     373,499
         Deferred tax liabilities
           Loan fees                                                    215,249     139,329
           Bad debt allowance                                                --      58,019
           FHLB stock dividend                                           49,116      49,116
           Fixed assets                                                 123,252     114,389
           Loans marked-to-market                                            --         938
           Mortgage servicing rights                                     78,439      79,070
                                                                       --------   ---------
                                                                        466,056     440,861
                                                                       --------   ---------
         Net  deferred  tax asset  (liability)                         $182,603   $ (67,362)
                                                                       ========   =========

</TABLE>

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 8 - FEDERAL INCOME TAXES (Continued)

   No valuation allowance was provided on deferred tax assets.

   The provision for federal income taxes attributable to continuing  operations
differs from that computed at the statutory corporate tax rate as follows:
<TABLE>
<CAPTION>

                                                       Years ended
                                             -------------June 30,-------------
                                               2000        1999         1998
                                             --------    --------     --------
<S>                                           <C>         <C>          <C>
         Statutory rate                            34%         34%          34%
         Tax expense at statutory rate       $576,616    $140,765     $436,432
         Stock compensation plans              18,420      35,717       16,982
         Other                                  8,964     (30,882)        (159)
                                             --------    --------     --------
                                             $604,000    $145,600     $453,255
                                             ========    ========     ========
         Effective rate                            36%         35%          35%
</TABLE>

   Differences  in the deduction  for bad debts for tax and financial  statement
purposes after 1988 are included in deferred taxes. For years prior to 1988, the
Bank had determined  taxable income after deducting a provision for bad debts in
excess of such  provisions  recorded in the financial  statements.  Accordingly,
retained earnings at June 30, 2000 and 1999 includes approximately $3,364,000 on
which no  provision  for  federal  income  taxes has been  made.  The  amount of
unrecorded deferred taxes is $1,144,000. If this portion of retained earnings is
used for any  purpose  other than to absorb bad debts,  the amount  used will be
added to future taxable income.

   The Company files  consolidated  federal  income tax returns on a fiscal year
basis.  Prior to July 1, 1997,  if certain  conditions  were met in  determining
taxable  income,  the Bank was allowed a special bad debt  deduction  based on a
percentage of taxable income. Tax legislation passed in August 1996 now requires
the Bank to deduct a provision  for bad debts for tax  purposes  based on actual
loss  experience  and recapture the excess bad debt reserve  accumulated  in tax
years after 1987.  The related  amount of tax is  approximately  $177,000 and is
payable over a six-year period beginning with the year ending June 30, 1999.

NOTE 9 - EARNINGS PER SHARE

   A  reconciliation  of the  numerators and  denominators  of basic and diluted
earnings per share for the years ended June 30 are as follows:
<TABLE>
<CAPTION>
                                                                     2000          1999          1998
                                                                   ----------    ----------    ----------
<S>                                                                <C>           <C>           <C>
Basic earnings per share
         Net income available to common shareholders               $1,091,929    $  176,015    $  830,368
                                                                   ----------    ----------    ----------
         Weighted average common shares outstanding                 2,364,352     2,399,997     2,370,243
                                                                   ----------    ----------    ----------
         Basic earnings per share                                  $      .46    $      .07    $      .35
                                                                   ==========    ==========    ==========

Diluted earnings per share
         Net income available to common shareholders               $1,091,929    $  176,015    $  830,368
                                                                   ----------    ----------    ----------
         Weighted average common shares outstanding                 2,364,352     2,399,997     2,370,243
         Add:  dilutive effects of assumed exercise of
           stock options and unvested MRP's
                  Stock options                                        22,060        49,155       107,670
                  MRP shares                                            4,101         5,913        10,413
                                                                   ----------    ----------    ----------
         Weighted average common and dilutive
           potential common shares outstanding                      2,390,513     2,455,065     2,488,326
                                                                   ----------    ----------    ----------
         Diluted earnings per share$                                      .46    $      .07    $      .33
                                                                   ==========    ==========    ==========
</TABLE>

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 9 - EARNINGS PER SHARE (Continued)

   Stock  options  for  46,313  and  67,995  shares  of  common  stock  were not
considered in the computation of diluted  earnings per share for the years ended
June 30,  2000 and 1999 as they  were  antidilutive.  All  share  and per  share
amounts have been retroactively adjusted for stock splits.

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

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

   The contract  amounts of these  financial  instruments are as follows at June
30:

                                                      2000               1999
                                                  -----------       -----------
                  Commitments to make loans       $13,974,000       $ 7,092,000
                  Unused lines of credit           21,412,000        14,392,000
                  Loans in process                 11,025,000         9,001,000
                  Letters of credit                 1,986,000           330,000


   Approximately  47% and 80% of  commitments to make loans and to fund loans in
process  were made at fixed rates as of June 30, 2000 and 1999.  Interest  rates
for these fixed rate commitments were 8.00% to 10.00% and 6.625% to 9.125% as of
June 30, 2000 and 1999. 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  Bank  was  a  defendant  under  two  legal   proceedings   alleging  the
unauthorized  practice of law and various violations of law. During fiscal 2000,
a final judgment in favor of the Bank was made in one case and an order granting
summary  disposition to the Bank was made in the second case. A claim for appeal
has been made in each case.  Management  intends  to  continue  to  contest  the
appeals  vigorously.  Based on a review  of  current  facts  and  circumstances,
management is unable to determine the amount of loss, if any, that is possible.

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

   During  1999,  a settlement  agreement  totaling  $225,000 was reached with a
former  management  executive.  Per the provisions of the  agreement,  the total
settlement is being paid in 52 equal bi-weekly installments,  ending in March of
2001.  Approximately  $84,000 is included in other  liabilities at June 30, 2000
and represents the remaining amount to be paid under the agreement.

   The  Company  has  entered  into  employment  agreements  with six  executive
officers of the Company.  Under the terms of those  agreements,  certain  events
leading to  separation  from the Company could result in a cash payment equal to
two times the  affected  employee's  compensation  payable  in 24 equal  monthly
installments,  and  continued  participation  in medical  and  dental  plans the
employee  was  entitled  to prior to the date of  separation.  There has been no
liability recorded for these contingent payments.

   The Company has also entered into a separate  employment  agreement  with the
President/CEO of the Company. Under the terms of this agreement,  certain events
leading to separation from the Company could result in the immediate  vesting of
the 33,334 stock

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

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

options  granted in April of 1999  under the Stock  Option  Plan,  as more fully
disclosed in Note 12. At the date of separation,  such  immediate  vesting could
result in a cash payment up to an amount equal to the 33,334 options  multiplied
by the difference between the market value of the Company's stock at the date of
separation  and the exercise  price of the options.  There has been no liability
recorded for this contingent expense.

NOTE 11 - EMPLOYEE BENEFIT PLANS

   The Company  participated in the Financial  Institutions  Retirement  Fund, a
multi-employer  defined  benefit pension plan.  Effective  February 1, 2000, the
Company withdrew its participation in the plan. Substantially all employees were
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. At the
date of withdrawal from the plan, no liability for contributions to the plan was
necessary  and no  contributions  were  required  during the year ended June 30,
2000. For the year ended June 30, 1999 and 1998, the plan was overfunded and did
not require  contributions  or charges against income.  Specific plan assets and
accumulated  benefit  information  for the Company's  portion of the fund is not
available.  Under  the  Employee  Retirement  Income  Security  Act  (ERISA),  a
contributor  to a  multi-employer  pension  plan may be  liable  in the event of
complete or partial withdrawal for the benefit payments guaranteed under ERISA.

   The Company  maintains a qualified  401(k) plan  covering  substantially  all
employees.  Employees  who are 18 years and older and who have  completed  1,000
hours of service in a 12  consecutive-month  period are eligible.  Employees may
elect to  contribute  to the  plan  from 1% to 15% of their  salary  subject  to
statutory limitations.  The Company makes matching contributions equal to 25% of
the first 3% of employee contributions.  Although not required, the Company also
has the  option to make an  additional,  nonelective  contribution  to the plan.
Beginning  after 2 years of service,  employees  become  vested in the Company's
contributions  at the rate of 20% per year, with 100% vesting  occurring after 6
years of  service.  The  Company's  contributions  for 2000,  1999 and 1998 were
approximately $11,500, $10,600 and $9,600.

NOTE 12 - STOCK-BASED COMPENSATION PLANS

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

   Shares issued to the ESOP are committed to be released based on the number of
unallocated  shares held  immediately  before  release for the current plan year
multiplied  by a  fraction.  The  numerator  of the  fraction  is the  amount of
quarterly  principal and interest paid.  The  denominator of the fraction is the
sum of the  numerator  plus the principal and interest to be paid for all future
periods. The loan is secured by shares purchased with the loan 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 10-year period.  The balance of the
loan was  $727,296 at June 30,  2000.  An  employee  becomes  fully  vested upon
completion of seven years of qualifying service.  Upon withdrawal from the plan,
participants are entitled to a distribution in cash or Company stock, or both.

   During  fiscal 2000,  1999 and 1998,  24,300  shares of stock with an average
fair  value of $7.56 per share in 2000,  $9.66 per share in 1999 and  $14.26 per
share in 1998 were  committed to be released.  Distributions  of 6,201 and 2,244
shares were made to participants  during the years ended June 30, 2000 and 1999.
ESOP  compensation  expense for the years ended June 30, 2000, 1999 and 1998 was
$183,768,  $234,647  and  $346,528.  Shares  held by the  ESOP at June 30 are as
follows:

                                                2000            1999
                                             --------      ----------
         Allocated to participants            113,033          94,934
         Unallocated                          115,434         139,734
                                             --------      ----------
             Total ESOP shares                228,467         234,668
                                             --------      ----------
         Fair value of unallocated shares    $692,604      $1,406,073
                                             ========      ==========



<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 12 - STOCK-BASED COMPENSATION PLANS (Continued)

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

                                              Directors' SOP         Employees' SOP         Directors' MRP       Employees' MRP
                                                      Weighted                Weighted             Weighted             Weighted
                                                      Average                 Average              Average              Average
                                                      Exercise                Exercise             Grant Date           Grant Date
                                           Options     Price     Options       Price      Shares   Fair Value  Shares   Fair Value
                                           -------     -----     -------       -----      ------   ----------  ------   ----------
<S>                                        <C>          <C>      <C>          <C>         <C>        <C>        <C>         <C>
Total options/shares available             104,146               243,009                  41,657               97,206

Balance outstanding July 1, 1997           104,139      $7.03    139,650      $ 7.06      41,657     $6.73      72,320      $6.67
         Granted September 2, 1997                                69,000       11.38
         Exercised                                                (1,000)       7.28
         Forfeited                                                (3,150)       7.36
                                           -------               -------                 ------                 ------

Balance outstanding June 30, 1998          104,139       7.03    204,500        8.51      41,657      6.73      72,320       6.67
         Granted July 30, 1998                                    37,495       13.25
         Granted April 14, 1999                                   33,334        8.66
         Granted May 6, 1999                                       5,000        9.00
         Exercised                                               (20,100)       6.95
         Forfeited                                               (62,320)      10.02                           (13,221)      6.67
                                           -------               -------                 ------                 ------

Balance outstanding June 30, 1999          104,139       7.03    197,909        9.11     41,657       6.73      59,099       6.67
         Granted October 1, 1999                                   2,000        8.75
         Exercised                                                (3,330)       7.26
         Forfeited                                                (9,145)      10.86                              (778)      6.67
                                           -------               -------                 ------                 ------

Balance outstanding June 30, 2000          104,139      $7.03    187,434      $ 9.05     41,657      $6.73      58,321      $6.67
                                           =======               =======                 ======                 ======

         Options/shares exercisable
           (vested)                         78,106                83,607                 33,800                 50,553
                                            ======                ======                 ======                 ======
         Options/shares available for
           future grant                          7                31,145                     --                 38,885
                                            ======                ======                 ======                 ======

</TABLE>

   Subsequent to June 30, 2000,  employee stock options  totaling  61,550 with a
weighted-average  exercise price of $12.06 were canceled under the provisions of
the SOP.

   During 2000,  1999 and 1998,  $119,000,  $107,800 and $152,400 was charged to
compensation  expense for the MRPs.



<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 12 - STOCK-BASED COMPENSATION PLANS (Continued)

   Had  compensation  cost for stock options been measured  using FASB Statement
No. 123, net income and earnings per share would have been the pro forma amounts
indicated below. The pro forma effect may increase in the future if more options
are granted.
<TABLE>
<CAPTION>
                                                           Years ended
                                                ------------June 30,---------
                                                   2000       1999     1998
                                                ----------  -------- --------
<S>                                              <C>         <C>      <C>
         Net income as reported                  $ 1,091,92  $176,015 $830,368
          Pro forma net income                     1,047,473   113,933  716,649

         Basic earnings per share as reported           .46       .07      .35
         Pro forma basic earnings per share             .44       .05      .30

         Diluted earnings per share as reported         .46       .07      .33
         Pro forma diluted earnings per share           .44       .05      .29

         Weighted-average fair value of options
           granted during the year                     1.32     1.39      2.07
</TABLE>

   The fair value of options  granted  during  2000,  1999 and 1998 is estimated
using the following  weighted-average  information:  risk-free  interest rate of
5.90%, 5.33% and 6.22%, expected life of 5 years, expected monthly volatility of
stock price of 9.1%, 8.7% and 7.1% and expected dividends of 2.7%, 2.7% and 1.9%
per year. At June 30, 2000, options outstanding were as follows:

                  Number of options                                 291,573
                  Range of exercise prices                  $6.63 to $13.25
                  Weighted-average exercise price                     $8.33
                  Weighted-average remaining option life         6.59 Years
                  For options now exercisable:  number              161,713
                  Weighted-average exercise price                     $7.69

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

NOTE 13 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON  RETAINED EARNINGS

   Effective   December  29,  1997,   Bank  West,  the  Company's   wholly-owned
subsidiary,  completed its conversion to a Michigan chartered savings bank. As a
state chartered  savings bank, Bank West's primary  regulatory  agencies are the
Financial  Institutions  Bureau of the State of Michigan and the Federal Deposit
Insurance Corporation.

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

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

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

   The  prompt  corrective  action  regulations  provide  five  classifications,
including   well   capitalized,   adequately   capitalized,    undercapitalized,
significantly undercapitalized, and critically undercapitalized,  although these
terms are not used to  represent  overall  financial  condition.  If  adequately
capitalized,  regulatory  approval is required to accept brokered  deposits.  If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and plans for capital restoration are required.

   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>
2000
  Total capital (to risk weighted assets)            $22.6     12.4%    $14.6      8.0%    $18.3     10.0%
  Tier 1 capital (to risk weighted assets)            21.7     11.9       7.3      4.0      11.0      6.0
  Tier 1 capital (to average total assets)            21.7      8.3      10.5      4.0      13.1      5.0

1999
         Total capital (to risk weighted assets)     $21.1     18.0%    $ 9.4      8.0%    $11.7     10.0%
         Tier 1 capital (to risk weighted assets)     20.6     17.6       4.7      4.0       7.0      6.0
         Tier 1 capital (to average total assets)     20.6     10.4       7.9      4.0       9.9      5.0
</TABLE>

   At June 30, 2000 and 1999, the Bank was categorized as well capitalized.

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

   Federal and state banking laws and regulations place certain  restrictions on
the amount of  dividends a bank can pay to its holding  company.  Under the most
restrictive  of these  dividend  limitations,  at June 30,  2000,  approximately
$7,979,000  was  available  for the payment of dividends to the holding  company
without prior regulatory approval.


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE 14 - STOCK REPURCHASE PROGRAMS

   During 2000 and 1999, the Company repurchased 80,000 and 46,000 shares of its
common stock after receiving  approval from its federal  regulator to repurchase
up to 5%, or 133,500  shares of the  Company's  common  stock.  The shares  were
repurchased  at an  average  price of $9.40 and $9.05  during  2000 and 1999 and
remain  available  for  general  corporate   purposes,   including  issuance  in
connection with stock-based compensation plans.

NOTE  15  -  PARENT  COMPANY  ONLY  CONDENSED  FINANCIAL  INFORMATION

   Condensed  financial  information  of Bank West  Financial  Corporation is as
follows:
<TABLE>
<CAPTION>

                           CONDENSED BALANCE SHEETS
                                    as of:
                                                                -----------June 30,-------
                                                                     2000          1999
                                                                -----------    -----------
<S>                                                             <C>            <C>
ASSETS

  Cash and cash equivalents                                     $    52,697    $ 1,409,630
  Securities available for sale                                     402,500         59,925
  Loan receivable from Employee Stock Ownership Plan                727,296        852,176
  Investment in subsidiary bank                                  20,976,390     20,204,318
  Accrued interest receivable                                            32          4,249
  Other assets                                                       63,942         21,880
                                                                -----------    -----------
      Total assets                                              $22,222,857    $22,552,178
                                                                ===========    ===========

LIABILITIES

  Other liabilities                                             $        31    $        47

SHAREHOLDERS' EQUITY                                             22,222,826     22,552,131
                                                                -----------    -----------
     Total liabilities and shareholders' equity                 $22,222,857    $22,552,178
                                                                ===========    ===========
</TABLE>

<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

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


                                                 -----------------June 30,-----------------
                                                    2000           1999             1998
                                                 ---------      ---------         --------
<S>                                                <C>          <C>               <C>
Interest and dividend income
         Securities                                $ 45,833     $  76,079         $150,447
         Loan to Employee Stock Ownership Plan       56,954        64,794           72,605
         Other interest-bearing deposits             14,514        47,064           18,595
         Dividends from subsidiary bank             300,000            --               --
                                                 ---------      ---------         --------
                                                    417,301       187,937          241,647

Interest expense                                         --         3,719           99,850
                                                 ---------      ---------         --------

Net interest income                                 417,301       184,218          141,797

Other income

         Net gain on trading securities                 --             --          200,148
         Net loss on securities available for sale (22,139)      (332,714)        (259,730)
                                                 ---------      ---------         --------
                                                   (22,139)      (332,714)         (59,582)

Operating expenses                                  98,672         95,806          152,108
                                                 ---------      ---------         --------

Income (loss) before federal income taxes
  and equity in undistributed earnings of
  subsidiary bank                                  296,490       (244,302)         (69,893)

Federal income tax benefit                          (1,200)       (83,000)         (23,745)
                                                 ---------      ---------         --------

Income (loss) before equity in undistributed
  earnings of subsidiary bank                      297,690       (161,302)         (46,148)

Equity in undistributed earnings
  of subsidiary Bank                               794,239        337,317          876,516
                                                 ---------      ---------         --------

Net income                                       1,091,929        176,015          830,368

Other comprehensive loss, net of tax:
  Change in unrealized gain (loss) on
    securities, net of reclassification effects   (421,358)      (414,755)          (7,578)
                                                 ---------      ---------         --------
Comprehensive income (loss)                      $ 670,571      $(238,740)        $822,790
                                                 =========      =========         ========
</TABLE>


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

NOTE  15  -  PARENT  COMPANY  ONLY  CONDENSED  FINANCIAL  INFORMATION
            (Continued)
<TABLE>
<CAPTION>

                                CONDENSED STATEMENTS OF CASH FLOWS,
                                            for the years:

                                                                         ----------------- June 30,-----------------
                                                                             2000            1999           1998
                                                                         -----------     -----------     -----------
<S>                                                                      <C>             <C>             <C>
Cash flows from operating activities
         Net income                                                      $ 1,091,929     $   176,015     $   830,368
         Adjustments to reconcile net income to
           cash provided by operations
                  Equity in undistributed earnings of
                    subsidiary bank                                         (794,239)       (337,317)       (876,516)
                  Trading securities:
                    Purchases                                                     --              --      (2,530,635)
                    Proceeds from sales                                           --              --       4,486,385
                  Net loss on sales of securities                             22,139         332,714          59,582
                  Change in

                    Accrued interest receivable                                4,217          (3,355)            228
                    Other assets                                              (9,664)        140,712        (156,302)
                    Other liabilities                                            (16)             12         (34,441)
                                                                         -----------     -----------     -----------
                           Net cash from operating activities                314,366         308,781       1,778,669

Cash flows from investing activities
         Securities available for sale:

                  Purchases                                                 (500,000)       (350,000)     (1,904,438)
                  Proceeds from sales                                         40,000       2,706,107          59,399
         Principal reduction on ESOP note receivable                         124,880         116,508         108,698
         Contribution to subsidiary Bank                                     (33,535)        (42,374)        (38,426)
         Net decrease in interest-bearing time deposits                           --              --          99,000
                  Net cash from investing activities                        (368,655)      2,430,241      (1,675,767)

Cash flows from financing activities
         Proceeds of loan from subsidiary Bank                                    --              --       2,450,000
         Repayment of loan to subsidiary Bank                                     --        (750,000)     (1,700,000)
         Dividends paid on common stock                                     (574,877)       (586,828)       (540,685)
         Repurchase of common stock                                         (751,937)       (416,312)       (105,938)
         Issuance of shares upon exercise of stock options                    24,170         139,663           7,283
                                                                         -----------     -----------     -----------
                  Net cash from financing activities                      (1,302,644)     (1,613,477)        110,660
                                                                         -----------     -----------     -----------

Net change in cash and cash equivalents                                   (1,356,933)      1,125,545         213,562

Cash and cash equivalents at beginning of period                           1,409,630         284,085          70,523
                                                                         -----------     -----------     -----------
Cash and cash equivalents at end of period                               $    52,697     $ 1,409,630     $   284,085
                                                                         ===========     ===========     ===========

Supplemental disclosure of cash flow information:
</TABLE>

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


<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 2000, 1999 and 1998

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. Fair values
of securities  are based on quoted market prices or, if no quotes are available,
on the rate and term of the security and on  information  about the issuer.  For
fixed-rate  loans or  deposits  and for  variable-rate  loans or  deposits  with
infrequent  repricing  or  repricing  limits,  the fair  value is  estimated  by
discounted  cash flow analysis using current market rates for the estimated life
and credit risk. Fair value of loans held for sale is based on market estimates.
The fair  value of  Federal  Home Loan  Bank  borrowings  is based on  currently
available rates for similar financing. The fair value of off-balance sheet items
is based on the fees or costs that would  currently  be charged to enter into or
terminate such  arrangements.  The fair value of off-balance sheet items was not
material for this presentation.

   The  estimated  fair  values  of  the  Company's  financial  instruments  (in
thousands) are as follows at June 30:
<TABLE>
<CAPTION>

                                                       2000                     1999
                                              -------------------    ---------------------
                                              Carrying     Fair        Carrying      Fair
                                                Value      Value         Value       Value
                                                -----      -----         -----       -----
<S>                                           <C>          <C>       <C>         <C>
Financial assets
         Cash and cash equivalents            $  3,734       3,734   $   9,106   $   9,106
         Securities available for sale          42,602      42,602      42,272      42,272
         Loans, net                            210,717     208,088     145,206     144,517
         Loans held for sale                       573         581       2,381       2,407
         Mortgage servicing rights                 231         231         233         233
         Federal Home Loan Bank stock            4,500       4,500       2,700       2,700
         Accrued interest receivable             1,439       1,439       1,019       1,019

Financial liabilities
         Deposits                              155,840     155,464     132,401     132,496
         Federal Home Loan Bank borrowings      88,803      87,777      50,000      50,019
         Accrued interest payable                  656         656         292         292
         Advance payments by borrowers
           for taxes and insurance                 574         574         509         509

</TABLE>
40