Table of Contents


Section 1

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

Section 2

   Report of Independent Auditors .......................................     17

   Consolidated Financial Statements
   Consolidated Balance Sheets ..........................................     18
   Consolidated Statements of Income ....................................     19
   Consolidated Statements of Changes
       in Shareholders' Equity ..........................................     20
   Consolidated Statements of Cash Flows ................................     22
   Notes to Consolidated Financial Statements ...........................     24


Annual Meeting

   The Annual Meeting of  Shareholders  is scheduled for Wednesday,  October 27,
   1999 at 10:00 a.m.,  at the Grand Rapids Elks Lodge,  located at 2715 Leonard
   Street, N.W., Grand Rapids, Michigan.

Corporate Headquarters
2185 Three Mile Rd., N.W.
Grand Rapids, Michgian 49544-1451

<PAGE>
To Our Stockholders:

   First,  let me say it is a  distinct  privilege  to  join  Bank  West  as its
President and Chief Executive  Officer. I joined the Bank West team on April 13,
1999, with 45 years of banking experience that includes  commercial and mortgage
lending and various other areas of responsibility in the banking sector.

   After  reviewing  the Bank's  strategic  plan, I was pleased to find that the
principles  of the plan of core loan and deposit  growth were  parallel  with my
banking  philosophy.  I recognized,  however,  that we needed to strengthen  our
management  team by adding  experience  in other areas of the Bank if we were to
grow and diversify our balance sheet,  continue to portfolio high quality loans,
and significantly improve profitability.  Our goal is to establish high caliber,
experienced  leadership  in the key areas of the Bank  which  subscribes  to our
vision  of  responsive,  personalized  community  banking.  As  we  work  toward
accomplishing  this goal,  we must  continue  to  differentiate  ourselves  as a
community  bank that values  relationships  and  recognizes  the role we play in
enhancing the prosperity of our customers and the communities we serve.

   We are  excited  about  the  opening  of our  fourth  branch  in  Jenison,  a
southwestern  suburb of Grand Rapids, in November 1999. This branch will play an
important role in our loan and deposit  growth plans.  We also plan on upgrading
our loan origination and processing  software that will enable us to improve our
efficiency in various areas of the Bank.  The investment we have made in people,
systems and  geographical  expansion  will provide the  foundation for continued
growth and profitability.

   The Bank  achieved 22% net loan growth  during  fiscal 1999,  primarily  from
commercial and residential  mortgage loans.  Net income for 1999 was $176,000 as
compared to $830,000  and $923,000  for 1998 and 1997,  respectively.  The items
impacting  1999  net  income  are  described  in  detail  in  the  "Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations"section.  We  recognized  that  such  charges  were  necessary  as we
continue to position our Company for future  earnings based upon our strategy of
core loan and deposit  growth.  Although we are  disappointed  in fiscal  1999's
results, we are optimistic of the Company's success in the years ahead.

   Bank West has  aggressively  addressed  the upcoming  Year 2000 ("Y2K") event
during the fiscal year, working within FDIC guidelines. We renovated or upgraded
all mission critical computer systems to ensure Y2K compliance. Additionally, we
have  evaluated our credit  customers to determine the risk that they might pose
as a result  of Y2K so that we can take  appropriate  steps  to  mitigate  those
risks. Policies,  plans, and procedures have been developed to guide contingency
business resumption efforts in the event of some unforeseen development, such as
power or telecommunications failure. Like all companies, we face the uncertainty
of external  influences on our  operations at the turn of the century.  However,
the  substantial  investment  of time and  resources  we have  made in this area
allows us to look forward to the new millennium with confidence.
<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 113th  year of
offering superior banking services throughout the Western Michigan area.

                                           Sincerely,


                                           /s/Ronald A. Van Houten
                                           -----------------------
                                           Ronald A. Van Houten
                                           President and Chief Executive Officer



                                                                               1
<PAGE>
<TABLE>
<CAPTION>
Selected Consolidated Financial Data

                  (Dollars in thousands except per share data)
                                                                       Year Ended June 30,

                                                      1999       1998        1997         1996       1995
------------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>           <C>         <C>
Summary of Operations

Total interest income                               $ 13,666    $ 12,549    $ 10,429      10,088      7,848
Net interest income                                    5,352       4,937       4,279       4,158      3,185
Provision for loan losses                                220          81          60          60         21
Other income                                             621       1,012       1,554       1,202        270
One-time special SAIF assessment                          --          --         551          --        --
Other expenses                                         5,339       4,585       3,821       3,469      2,352
Income taxes                                             146         453         478         622        366
Income before cumulative effect of
  accounting change                                      268          --          --          --         --
Cumulative effect of change in accounting                (92)         --          --          --         --
Net income                                               176         830         923       1,208        716

Balance Sheet Data

Total assets                                        $206,669    $181,469    $155,675    $137,982   $139,648
Cash and cash equivalents                              9,106       4,206       3,673       6,694      4,595
Securities                                            17,733       6,745       3,978       7,422     11,405
Mortgage collateralized securities                    24,539      36,507      25,578      17,341     18,335
Loans, net                                           145,206     118,906     111,530      95,737     95,836
Loans held for sale                                    2,381       8,157       2,231       4,297      2,746
Deposits                                             132,401     119,979     102,862      91,028     85,180
FHLB advances                                         50,000      37,000      29,000      19,000     24,922
Equity                                                22,552      23,275      22,592      26,810     28,171

Per Share Data(1)

Basic earnings per share(2)                         $    .07    $    .35    $    .36     $   .39    $   .07
Diluted earnings per share(2)                            .07         .33         .36         .39        .07
Dividends per share                                      .24         .22         .19         .19         --
Book value per share                                    8.68        8.87        8.59        8.13       8.11

Ratios

Average yield on interest-earning assets                7.23%       7.74%       7.61%       7.52%      6.97%
Average rate on interest-bearing liabilities            4.88        5.26        5.15        5.37       4.76
Average interest spread                                 2.35        2.48        2.46        2.15       2.21
Net interest margin                                     2.83        3.04        3.12        3.10       2.83
Return on average assets (ROA)                           .09         .49         .64         .87        .62
Return on average equity (ROE)                           .76        3.58        3.89        4.38       4.34
Efficiency ratio                                       72.16       76.34       74.89       68.56      69.56
Dividend pay-out ratio                                342.86       64.96       54.94       49.93         --
Average equity to average assets                       11.72       13.60       16.42       19.77      14.46
Non-performing loans as a % of loans, net                .88         .71         .37         .04        .15
</TABLE>
<PAGE>

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


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

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

   The Company's operations and profitability are subject to changes in interest
rates, applicable regulations and general economic conditions,  as well as other
factors beyond the Company's  control.  The  profitability  of Bank West depends
primarily  on its net  interest  income,  which is  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.
<PAGE>
   During December 1997, the Bank formed Sunrise Mortgage Corporation,  a wholly
owned  subsidiary  engaged to  originate  and purchase  non-conforming  mortgage
loans,  including  sub-prime  mortgage  loans  for  resale.  All  of  the  loans
originated  and purchased were required to have a commitment to sell in place to
an investor on a  servicing  released  basis.  Recently,  management  decided to
discontinue  non-conforming  lending through Sunrise Mortgage Corporation due to
the lower than expected  loan volume  originated  and purchased  during the most
recent fiscal year.

   The Company's net income was $176,000, $830,000 and $923,000 for fiscal 1999,
1998 and 1997, respectively.  Fiscal 1999 net income, and to some degree, fiscal
1998 and 1997 net income were  impacted  by a number of items  which  management
feels will no longer  significantly  impact  future  earnings.  See  "Results of
Operations  for the Year Ended June 30, 1999 Compared to the Year Ended June 30,
1998" and "Results of Operations for the Year EndedJune 30, 1998 Compared to the
Year ended June 30, 1997" sections for further clarification of such items.


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

Changes in Financial Condition

   Assets.  Total assets  increased by $25.2 million or 13.9% from June 30, 1998
to June 30, 1999.  The increase is primarily  due to an increase in net loans of
$26.3 million or 22.1% as greater emphasis was placed on originating  commercial
loans  and  balloon  single-family   mortgage  loans  instead  of  concentrating
primarily on residential mortgage banking activities. The additional emphasis on
the  origination of these loans during fiscal 1999 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  lower
interest  rate  environment,  and to react to increased  competitiveness  in the
residential  mortgage  banking  business.  Total  commercial  and consumer loans
increased  as a percent of total  loans from 18.4% at the end of fiscal  1998 to
23.9% at the end of fiscal  1999.  Management  expects  the next fiscal year and
future  years to  reflect  significant  growth  in  commercial  loans due to the
strategic  realignment  that  occurred  during  March of 1999.  The Bank's newly
appointed  President/Chief  Executive  Officer and Vice  President of Commercial
Lending  both have  extensive  commercial  lending and banking  experience.  The
Bank's  strategic  plan and business  model has changed in focus to  concentrate
greater  efforts on  commercial  lending  activities.  The growth in  commercial
lending is expected to contribute  significantly toward improving the Bank's net
interest income and margins.

   The Bank's mortgage  banking  activities  consist of selling newly originated
and  purchased  loans into the  secondary  market.  Total loans sold amounted to
$41.6  million,  $45.0 million and $32.9 million in fiscal 1999,  1998 and 1997,
respectively.  Loans held for sale  amounted to $2.4  million,  $8.2 million and
$2.2 million at June 30, 1999, 1998 and 1997, respectively. The dollar amount of
loans sold and loans held for sale decreased in fiscal 1999 due to  management's
recent strategy 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 current  strategy will leverage the balance sheet
which is expected to provide  additional net interest income. The Bank continues
to explore  different  options to increase  retail and  wholesale  mortgage loan
volume.

   Collateralized  mortgage obligations ("CMO's) decreased from $35.7 million at
June 30, 1998 to $21.1  million at June 30, 1999.  During the fourth  quarter of
fiscal  1999,  the Bank sold  approximately  $15  million of its CMO's that were
lower  yielding and had longer  average lives than the bonds that replaced them,
taking  advantage  of the recent rise in overall  market  interest  rates.  This
decision  will result in higher net interest  income and also provide  liquidity
over the next few years to fund anticipated  commercial loan growth.  The fourth
quarter sale of CMO's resulted in a $129,000 loss, net of income taxes. However,
it is  anticipated  that the  higher  yielding  bonds that were  purchased  will
recover the loss in the form of higher interest income within twelve months. The
remaining  CMO's,  which have  floating  rates  based on either the prime or one
month LIBOR rates,  are structured  with  relatively  low weighted  average note
rates of approximately  7.1% as compared to current market rates,  which reduces
<PAGE>
prepayment risk. During April of 1999, securities were transferred from the held
to  maturity  portfolio  to the  available  for sale and trading  portfolios  in
accordance  with the provisions of Statement of Financial  Accounting  Standards
No. 133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities" to
provide  the  Company  with  additional  flexibility  in the  management  of its
security portfolio as discussed below. At the date of transfer, these securities
had an amortized cost of $14.1 million.

   Other securities which are classified as available for sale primarily consist
of U.S. agency securities, corporate bonds, pass-thru mortgage-backed securities
and taxable municipal securities.  These types of securities increased from $7.6
million at June 30,  1998 to $21.1  million at June 30,  1999.  The  increase is
primarily  due to the  purchase of U.S.  agency  securities  and  corporate  and
municipal  bonds that are higher  yielding and have much shorter  average  lives
than CMO's.  The Company also  liquidated the majority of its equity  securities
during the fiscal year.

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

Remaining equity  securities have a carrying value of  approximately  $60,000 at
June 30, 1999. The shift in the mix of the security portfolio represents another
step in the Bank's  strategy to focus on its principles of long-term loan growth
through liquidity,  asset/liability  and credit risk management by matching debt
securities with planned loan growth.

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

   Liabilities.  Deposits increased by $12.4 million or 10.4% from June 30, 1998
to June 30, 1999. The increase in total deposits was primarily  attributable  to
growth in certificates of deposit of $5.8 million or 6.5%, and growth in NOW and
money  market  deposits  of $5.3  million  or  119.4%.  Certificates  of deposit
accounted  for  approximately  72% of  total  deposits  at  June  30,  1999  and
approximately  74% of total  deposits at June 30, 1998. At June 30, 1999,  $73.6
million or 77.5% of total  certificates  of deposit  mature in one year or less,
and $20.9 million or 22.0% of the total  certificates of deposit had balances of
$100,000 or more.  The  increase  in deposits  was  achieved  primarily  through
continued  development  of  new  and  existing  commercial  and  retail  account
relationships.  In addition, the Bank has attracted and retained certificates of
deposit including  out-of-state jumbo accounts by offering  competitive interest
rates.  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")  advances.  During
fiscal 1999, the Bank increased FHLB advances by $13.0 million.  The proceeds of
these advances,  as well as deposit growth discussed above,  were primarily used
to fund loan and  securities  growth  as well as  mortgage  banking  activities.
Management  expects to continue to utilize  additional FHLB advances in the next
fiscal year.

   Shareholders' Equity. Shareholders' equity amounted to $22.6 million or 10.9%
of total  assets at June 30, 1999  compared  to $23.3  million or 12.8% of total
assets at June 30,  1998.  The  Company's  trend of  profitability  continued in
fiscal 1999 with the Company earning $176,000.  However, net income was impacted
by a number of items which management feels will no longer  significantly impact
future  earnings as discussed in the "Results of  Operations  for the Year Ended
June 30, 1999 Compared to the Year Ended June 30, 1998" section. The decrease in
total shareholders'  equity relates primarily to net income offset by dividends,
stock  repurchases  and an increase in  unrealized  losses on available for sale
securities.
<PAGE>
   The cost of shares  issued to the Company's  Employee  Stock  Ownership  Plan
("ESOP") but not yet  allocated to  participants  totaling  $745,000 at June 30,
1999  is  presented  in  the  consolidated  balance  sheet  as  a  reduction  of
shareholders'  equity.  The unearned  compensation  value of the Company's  MRPs
totalled  $165,000  at  June  30,  1999  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, 1999, the net
unrealized  loss was $410,000,  while at June 30, 1998, the net unrealized  gain
was $5,000.  The $14.1 million of CMO  securities  transferred  from the held to
maturity  portfolio to the  available  for sale  portfolio  during April of 1999
increased the unrealized loss on securities  available for sale equity component
by $119,000.


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

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, 1999 and June 30, 1998:
<TABLE>
<CAPTION>
                                                         June 30,       June 30,
                                                           1999           1998
--------------------------------------------------------------------------------
                                                          (Dollars in Thousands)
<S>                                                      <C>             <C>
Non-accrual loans
  One- to four-family                                    $  207          $  682
  Construction and land development                         930              --
  Commercial                                                 --              32
  Consumer                                                  142             127
                                                         ------          ------
        Total                                             1,279             841
Foreclosed assets
  Construction and land development                         310             192
                                                         ------          ------
Total non-performing assets                              $1,589          $1,033
                                                         ======          ======
Total non-performing assets
  as a percentage of total assets                           .77%            .57%
                                                         ======          ======

</TABLE>

   Non-performing  assets  in the  construction  and land  development  category
consist of seven  construction  spec loans to five  builders  in the western and
southwestern   Michigan  area.  These  loans,   which  are   collateralized   by
single-family  homes, had a maximum  loan-to-value ratio of 75%. The majority of
these homes are substantially complete. Management believes that these loans are
adequately collateralized.  Such loans did not require specific reserves against
the allowance for loan losses at June 30, 1999.  However,  due to an increase in
delinquencies in these types of loans,  general reserve  allocation  percentages
were increased  resulting in increased general reserves for those types of loans
at June 30, 1999.  The  allowance  for loan losses  totalled  $480,000 or 38% of
total non-  performing  loans at June 30, 1999,  and no portion of the allowance
for loan losses was allocated to specific loans.  During the year ended June 30,
1999,  there were $29,429 in  charge-offs.  At June 30, 1999,  $110.6 million or
71.7% 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 70.2% of
total assets.
<PAGE>

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 that are not  expected to impact  future
earnings  which are described  below on an after tax basis.  First,  the Company
realized a $340,000 net of tax loss on investment securities in 1999 compared 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 as previously mentioned. Second, the Company
incurred  $253,000,  net of tax, in legal costs  associated  with a class action
lawsuit  filed on July 17,  1998 by a Bank West  borrower.  Third,  the  Company
incurred  $140,000  net of tax, in a  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%.


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


   Net Interest Income.  The Company's net income is largely  dependent upon net
interest income. Net interest income is the difference between the average yield
earned on loans,  securities and other earning assets, and the average rate paid
on deposits and FHLB  advances.  Net  interest  income is affected by changes in
volume  and  composition  of   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 $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 the fiscal year.

   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 the fiscal
year, the Federal Reserve lowered the federal funds rate by 75 basis points, and
overall market  interest rates  declined  substantially  from the previous year.
Since June 30, 1999,  single-family  mortgage  interest rates have risen back to
levels  experienced  in the recent  past.  Management  expects that its strategy
shift to place greater emphasis on commercial lending will positively impact the
yield on the loan portfolio.

   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  compared to $30.7 million or 25.6% of
total deposits.

   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 the repricing of
certificates of deposit and FHLB advances.

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


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

   Average Balances, Interest Rates and Yields. The following table presents for
the periods  indicated the total dollar  amount of interest  income from average
interest-earning  assets  and the  resultant  yields,  as  well as the  interest
expense on average interest-bearing  liabilities,  expressed both in dollars and
rates, and the net interest margin.  All average balances are based on month end
balances.
<TABLE>
<CAPTION>
                                           Year Ended June 30,            Year Ended June 30,            Year Ended June 30,
                                                  1999                           1998                           1997
--------------------------------------------------------------------------------------------------------------------------------
                                                           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)                 $136,874   $ 10,598   7.74%    $120,844   $ 9,795  8.11%      $103,324   $ 8,206   7.94%
  Securities                            46,077      2,677   5.81       36,669     2,446  6.67         28,601     1,907   6.67
  Interest-bearing deposits              3,652        191   5.23        2,738       152  5.55          3,633       199   5.48
  FHLB stock                             2,521        199   7.89        1,958       156  7.97          1,483       116   7.81
--------------------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets      189,124     13,665   7.23      162,209    12,549  7.74        137,041    10,428   7.61
--------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets               7,547                          8,522                          7,419
--------------------------------------------------------------------------------------------------------------------------------
    Total assets                      $196,671                       $170,731                       $144,460
================================================================================================================================

Interest-bearing liabilities:
  Savings, checking and MMDA's        $ 31,883        857   2.69     $ 25,821       794  3.08        $23,507       729   3.10
  Certificates of deposit               91,307      5,044   5.52       83,032     4,808  5.79         73,465     4,195   5.71
  FHLB advances                         47,185      2,412   5.11       35,803     2,010  5.61         22,433     1,225   5.46
--------------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing liabilities 170,375      8,313   4.88      144,656     7,612  5.26        119,405     6,149   5.15
--------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities          3,247                          2,853                          1,340
--------------------------------------------------------------------------------------------------------------------------------
    Total liabilities                  173,622                        147,509                        120,745
Stockholders' equity                    23,049                         23,222                         23,715
--------------------------------------------------------------------------------------------------------------------------------
    Total liabilities and
      stockholders' equity            $196,671                       $170,731                       $144,460
================================================================================================================================

Net interest income; average
  interest rate spread                            $ 5,352   2.35%               $ 4,937  2.48%                 $ 4,279   2.46%
================================================================================================================================
Net interest margin(3)
                                                            2.83%                        3.04%                           3.12%
================================================================================================================================
Average interest-earning assets to
  average interest-bearing liabilities                       1.11x                       1.12x                           1.15x
================================================================================================================================
</TABLE>
<PAGE>
(1) At June 30, 1999, the weighted  average yields earned and rates paid were as
follows: loans receivable,  7.73%; securities, 6.11%; interest-bearing deposits,
5.77%;  FHLB  stock,  8.00%;  total  interest-earning  assets,  7.31%;  savings,
checking and MMDA's,  3.11%;  certificates  of deposits,  5.20%;  FHLB advances,
5.22%; total interest-bearing liabilities, 4.86%; and interest spread, 2.45%.

(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.


8
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)


Rate/Volume Analysis.  The following table describes the extent to which changes
in  interest  rates  and  changes  in  volume  of  interest-related  assets  and
liabilities  have affected the Company's  interest income and expense during the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in rate (change in rate  multiplied by prior year volume),  and (ii)
changes in volume (change in volume multiplied by prior year rate). The combined
effect of changes in both rate and volume has been allocated  proportionately to
the change due to rate and the change due to volume.
<TABLE>
<CAPTION>

                                             Year Ended                              Year Ended
                                           June 30, 1999                           June 30, 1998
                                                vs.                                     vs.
                                            Year Ended                              Year Ended
                                           June 30, 1998                           June 30, 1997
---------------------------------------------------------------------------------------------------------------------------
                                              Increase                                Increase
                                             (Decrease)                              (Decrease)
                                               Due to                                  Due to
---------------------------------------------------------------------------------------------------------------------------
                                                             Total                                   Total
                                                            Increase                                Increase
                                     Rate      Volume      (Decrease)          Rate     Volume     (Decrease)
---------------------------------------------------------------------------------------------------------------------------
                                                                  (In Thousands)
<S>                                  <C>        <C>            <C>            <C>       <C>         <C>
Interest income:
  Loans receivable                   $(460)     $1,263         $ 803          $178      $1,411      $1,589
  Securities                          (342)        573           231            15         524         539
  Interest-bearing deposits             (9)         48            39             3         (50)        (47)
  FHLB stock                            (2)         45            43             2          38          40
---------------------------------------------------------------------------------------------------------------------------

      Total interest income           (813)      1,929         1,116           198       1,923       2,121
---------------------------------------------------------------------------------------------------------------------------


Interest expense:
  Savings, checking and MMDA's        (109)        172            63            (5)         70          65
  Certificates of deposit             (230)        466           236            60         553         613
  FHLB advances                       (192)        594           402            35         750         785
---------------------------------------------------------------------------------------------------------------------------

      Total interest expense          (531)      1,232           701            90       1,373       1,463
---------------------------------------------------------------------------------------------------------------------------

Increase (decrease) in
  net interest income                $(282)     $  697         $ 415          $108       $ 550      $  658
===========================================================================================================================
</TABLE>
   Provision  for Loan  Losses.  The  provision  for loan  losses is a result of
management's  periodic analysis of the allowance for loan losses.  The allowance
is maintained by management  at a level  considered  adequate to cover  possible
losses that are currently  anticipated  based on past loss  experience,  general
economic conditions,  information about specific borrower situations,  and other
factors and estimates which are subject to change over time.

   The provision for loan losses  increased by $139,000 or 171.6% when comparing
fiscal 1999 to fiscal 1998.  During the fiscal year,  management  increased  the
provision for loan losses as a result of increases in general reserve percentage
assumptions utilized for construction and land development loans due to a recent
increase in  delinquencies  of builder spec loans. In addition,  the increase in
commercial  loans,  both on a dollar basis and as a  percentage  of total loans,
required additional general reserves.


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


   Management  believes  that the allowance is adequate to provide for potential
losses; however, there can be no assurance the related allowance may not have to
be increased in the future.  Management expects the provision for loan losses to
increase  in the next  fiscal  year to keep  pace  with the  growth  in the loan
portfolio and to reflect the higher risk of loss  associated  with  management's
intention to increase the commercial and consumer loan portfolios.

   The Company's ratio of nonperforming  assets,  consisting of loans 90 days or
more delinquent and foreclosed  assets,  to total assets was .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 .33% compared to .24% at
June 30, 1998.  The allowance for loan losses  equalled  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,  partially due to a $157,000  increase in the loss
on sales of  securities  available  for sale.  In additon,  net gains on trading
securites  decreased  by  $217,000.  The  increase  in net  loss  on  securities
available for sale was primarily due to a first quarter change 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.  The  former
President  and Chief  Executive  Officer  was  replaced by Ronald A. Van Houten.
Absent the settlement  accrual,  compensation  and benefits expense was lower by
$76,000,  or 2.7% primarily due to lower ESOP expense of $112,000 resulting from
a general decline in the market value of the Company's stock in 1999 as compared
to 1998. Except for expected personnel additions in the commercial lending area,
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 the current  staffing level should
result in an improvement to the Bank's efficiency ratio for fiscal 2000.

   Professional  fees  increased by $404,000,  or 153.2%.  The Company  incurred
approximately  $384,000  in legal  costs  during  fiscal  1999  associated  with
defending a class action lawsuit filed on July 17, 1998 by a Bank West borrower.
See  Note  10  to  Consolidated   Financial  Statements  for  more  information.
Management  anticipates  additional legal defense costs in fiscal 2000, however,
management is unable to determine the amount to be incurred.
<PAGE>
   The  Company  incurred  an  $83,000  loss on the  disposal  of  fixed  assets
considered  non-complaint  with  respect to the Year  2000.  See "The Year 2000"
section  for  additional  information  on the  status  of the  Bank's  Year 2000
efforts.

   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 resulting in higher data processing expense.

   Cumulative  Effect of a Change in  Accounting  Principle.  During  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

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


Hedging Activities. The transfer resulted in the recognition of a $92,000 net of
tax charge in 1999. The transfer  allowed the Company to subsequently  sell such
securities in 1999,  consistent  with  management's  strategy to reposition  the
security portfolio as previously mentioned.

   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.

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

   Net Income.  Net income for fiscal 1998 was $830,000 or $.35 per basic share,
compared to $923,000 or $.36 per basic share for fiscal 1997.  The Company's net
income  decreased  by  $93,000 or 10.1% in fiscal  1998 from  fiscal  1997.  The
results of operations for fiscal 1997 include a one-time assessment of $364,000,
net of taxes,  or $.14 per share  relating  to  legislation  signed  into law on
September 30, 1996 to recapitalize  the SAIF. Net income for fiscal 1997 without
the SAIF  assessment  would have been $1.3 million or $.50 per share.  On a SAIF
adjusted basis, net income  decreased  $457,000 or 35.5% for the year ended June
30,  1998  compared  to June 30,  1997.  The  decrease  was  primarily  due to a
reduction  of other  income by  $542,000 as a result of less  successful  equity
securities  trading  activities by $531,000,  a write-down of available for sale
equity securities of $260,000 relating to an other-than-temporary market decline
and an increase in other expenses  (excluding  the one-time SAIF  assessment) of
$764,000,  primarily  due to an increase in  compensation  and  benefits.  These
decreases were partially  offset by growth in net interest income and in gain on
sale of loans of $658,000 and $163,000, respectively.

   Net Interest  Income.  Net interest  income  increased  $658,000 for the year
ended June 30, 1998 as compared to the year ended June 30, 1997. The increase in
net  interest  income was  primarily  attributable  to a $17.5  million or 17.0%
increase in the average  loan  portfolio  (including  loans held for sale) and a
$8.1 million or 28.2% increase in the average  securities  portfolio,  primarily
mortgage  collateralized  securities.  The  Company's  average  interest  spread
improved  slightly  from  2.46% to 2.48%,  with  improvements  in yield on total
interest-earning  assets  substantially  offset  by an  increase  in the cost of
interest-bearing liabilities.

   The yield on total  interest-earning  assets  improved  from 7.61% for fiscal
1997 to 7.74% for fiscal 1998. The yield improved primarily due to the growth in
the commercial and consumer loan portfolios, which in total represented 23.1% of
total loans at the end of fiscal 1998  compared to 14% of total loans at the end
of fiscal 1997.

   The cost of interest-bearing liabilities increased from 5.15% for fiscal 1997
to 5.26% for fiscal 1998.  The higher cost was  primarily  due to an increase in
FHLB  advances  as a percent of total  interest-bearing  liabilities  and,  to a
lesser  extent,  a shift in mix from lower  costing  demand  deposit and savings
accounts to higher costing money market and certificate accounts.
<PAGE>
   Net interest margin  decreased from 3.12% for fiscal 1997 to 3.04% for fiscal
1998.  The reduction in net interest  margin was primarily  attributable  to the
Company  becoming  more  leveraged  through  internal  growth.  This increase in
leverage is reflected in the ratio of average interest-earning assets to average
interest-bearing  liabilities,  which  declined to 1.12x for the year ended June
30,1998 compared to 1.15x for the same period in 1997.

   Provision for Loan Losses. The provision for loan losses increased by $21,000
or  35.0%  when  comparing   fiscal  1998  and  1997.  The  Company's  ratio  of
nonperforming  assets,  consisting  of  loans  90 days or  more  delinquent  and
foreclosed assets, to total assets was .57% as of June 30, 1998 compared to .28%
as of June 30, 1997.  The allowance for loan losses as a percentage of net loans
at June 30,  1998  increased  to .24%  compared  to .20% at June 30,  1997.  The
allowance  for loan losses  equalled  34.5% of  nonperforming  loans at June 30,
1998. Nonperforming loans consisted primarily of one- to four-family properties.
The ratio of net  charge-offs to average loans  outstanding  was .01% for fiscal
1998 compared to none for fiscal 1997.


                                                                              11
<PAGE>
   Total Other  Income.  Total other  income  decreased  by $542,000 or 34.9% in
fiscal 1998 from fiscal 1997,  primarily due to a $531,000 or 72.6%  decrease in
the net gains on trading equity  securities and a $202,000  increase in net loss
on securities available for sale. This amount was partially offset by a $163,000
or 32.7% increase in gain on sale of loans.  The decrease in net gain on trading
equity  securities  was primarily due to the Company's  decision to stop trading
equity  securities in light of increased stock market volatility in fiscal 1998.
The  increase  in net  loss  on  securities  available  for  sale  was due to an
other-than-temporary  decline  in  certain  equity  securities  resulting  in  a
write-down  of  $260,000.  The  increase in gain on sale of loans is a result of
higher  refinancing  volume from lower prevailing market interest rates compared
to the prior fiscal year.

   Total Other Expenses.  Total other expenses  increased by $213,000 or 4.9% in
fiscal  1998  from  fiscal  1997.  The  increase  was  primarily  due to  higher
compensation and benefits expense of $576,000 or 25.8%, and higher  professional
fees of $75,000 or 39.7%. In addition,  fiscal 1997 total other expenses include
a one-time  assessment of $551,000  relating to  legislation  signed into law on
September 30, 1996 to  recapitalize  the SAIF. On a SAIF adjusted  basis,  total
other  expenses  increased  $764,000  or 20.0% for the year ended June 30,  1998
compared to June 30, 1997.

   The increase in compensation and benefits was due in part to a greater number
of full-time equivalent employees to support the growth in the mortgage banking,
consumer  and  commercial  loan  departments,  and a $157,000  increase  in ESOP
expense attributable to the higher market price of the Company's stock in fiscal
1998  compared  to  fiscal  1997.  Professional  fees  increased  due to  higher
consulting fees and out-sourcing the human resources function.

   Federal Income Tax Expense.  Federal income tax expense  decreased by $26,000
or 5.4% in fiscal 1998 from fiscal 1997, due to a decrease in 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 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
<PAGE>
additional information.  Interest rate risk is the potential for economic losses
due to future interest rate changes. These economic losses can be reflected as a
loss of future net interest  income and/or a loss of current fair market values.
Management  realizes that certain risks are inherent and the goal is to identify
and minimize the risks. The Bank has no market risk sensitivity instruments held
for trading purposes.

Asset and Liability Management

   Consistent net interest income is largely dependent upon the achievement of a
positive  interest  rate spread that can be  sustained  during  fluctuations  in
prevailing  interest  rates.  Interest  rate  sensitivity  is a  measure  of the


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

difference  between  amounts of  interest-earning  assets  and  interest-bearing
liabilities  which either  reprice or mature within a given period of time.  The
difference,  or the interest rate repricing "gap," provides an indication of the
extent to which an  institution's  interest  rate  spread  will be  affected  by
changes in interest rates.

   The Bank  attempts to manage its  interest  rate risk by  maintaining  a high
percentage  of its  assets  in  adjustable-rate  assets  (consisting  of  ARM's,
commercial  and home equity 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.  This has been  accomplished by  management's  current
strategy to portfolio balloon mortgages versus longer-term  fixed-rate mortgages
as well as portfolio  commercial and home equity loans.  During fiscal 1999, the
Bank's  ratio of  interest-sensitive  assets to  interest-sensitive  liabilities
remained approximately the same as in the prior year.

   Another way the Bank has managed interest rate risk is by selling most of the
newly originated or purchased,  fixed-rate mortgages with terms of fifteen years
or greater,  while  originating  adjustable-rate  and balloon mortgage loans for
retention in the loan  portfolio.  In addition,  the Bank continues to emphasize
commercial  and home equity  loans  which have  shorter  average  lives than the
mortgage  portfolio.  At June 30, 1999, the Bank's  adjustable-rate  and balloon
mortgage  loans  amounted  to $70.7  million or 48.7% of total  loans.  The Bank
experienced  a high  level  of ARM  prepayments  during  fiscal  1999 due to the
relatively flat yield curve.  Management anticipates that the Bank will retain a
sufficient  amount of newly  originated  balloons and other loan types to offset
loan prepayments in the next fiscal year.

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

   Management  presently  measures  the Bank's  interest  rate risk by computing
estimated  changes in net interest  income  ("NII") and the net portfolio  value
("NPV") of equity in the event of a range of assumed  changes in market interest
rates.  The Bank's  exposure to interest  rates is reviewed  quarterly by senior
management  and the  Board of  Directors.  Exposure  to  interest  rate  risk is
measured  with the use of interest  rate  sensitivity  analysis to determine the
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, 1999:
<PAGE>
<TABLE>
<CAPTION>
                                     Net Portfolio Value                            Net Interest Income
                             ----------------------------------             --------------------------------
Change in Interest           $ Amount                  % Change             $ Amount                % Change
Rate (Basis Points)           of NPV                     in NPV              of NII                  in NII
-------------------           ------                     ------              ------                  ------
                                                  (Dollars in Thousands)
<S>                          <C>                         <C>                <C>                      <C>
      +400                   $ 9,740                     (50.04)%           $5,380                   (11.38)%
      +300                    12,065                     (38.11)             5,603                    (7.70)
      +200                    14,683                     (24.67)             5,830                    (3.95)
      +100                    17,121                     (12.17)             5,960                    (1.82)
      Static                  19,493                         --              6,070                      --
      (100)                   19,946                       2.33              5,917                    (2.53)
      (200)                   19,446                      (0.24)             5,701                    (6.08)
      (300)                   18,517                      (5.00)             5,415                   (10.80)
      (400)                   17,771                      (8.84)             5,166                   (14.90)
</TABLE>


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

   As  illustrated  in the table,  an increase in interest  rates will result in
larger net  decreases  in the Bank's NPV as  compared  to a decrease in interest
rates. This occurs principally because, when rates increase, the Bank's deposits
reprice faster than its ARM's and other  adjustable-rate  loans.  An increase in
interest rates also will  negatively  impact the  securities  available for sale
which is shown as a component of stockholders' equity.

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

Liquidity and Capital Resources

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

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

   The Bank routinely borrows FHLB advances when overnight deposits are drawn to
low  levels.  These  borrowings  are made  pursuant  to the  blanket  collateral
agreement  with the FHLB.  At June 30, 1999,  the Bank has  approximately  $23.6
million of excess borrowing capacity under the blanket collateral agreement with
the FHLB.

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

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



14
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)

The Year 2000

   General.  The Year  2000  issue  confronting  us,  as well as our  suppliers,
customers' suppliers and competitors,  centers on the inability of many computer
systems to recognize the Year 2000. Many existing  computer programs and systems
originally were programmed with six digit dates that provided only two digits to
identify the calendar  year in the date field.  With the  impending  millennium,
these  programs and computers  will  recognize "00" as the year 1900 rather than
the year 2000 unless they are corrected or replaced.

   Like most financial service  providers,  we may be significantly  affected by
the Year 2000 issue due to our dependence on technology and date-sensitive data.
Computer  software,  hardware and other  equipment,  both within and outside the
Bank's  direct  control and third parties with whom the Bank  electronically  or
operationally  interfaces are likely to be affected. If computer systems are not
modified  in  order  to be  able  to  identify  the  Year  2000,  many  computer
applications could fail or create erroneous results. In this event, calculations
which rely on date field information, such as interest, payment or due dates and
other  operating  functions,  could  generate  results  which are  significantly
misstated.

   In accordance with federal  regulatory  pronouncements,  the Bank's Year 2000
plan addressed issues involving awareness, assessment,  renovation,  validation,
implementation and contingency planning. These phases are discussed below.

   Awareness  and  Assessment.  The Bank has a Year 2000 team,  consisting  of a
committee of the Board of Directors which consists of two outside directors, the
Chief  Executive  Officer,  three Vice  Presidents,  and an Information  Systems
Coordinator.  The Year 2000  Committee  meets  monthly  and the  Chairman of the
Committee,  an outside director,  reports to the Board of Directors on a monthly
basis.

   Management   has  conducted  an   assessment   of  all  software,   hardware,
environmental  systems  and  other  computer-controlled  systems.  In  addition,
management  has  identified  and  developed an  inventory  of all  technological
components and vendors. All "mission critical" areas have been identified.

   Renovation  Phase.  The Bank  completed its upgrade of in-house  hardware and
software  considered  mission  critical  prior to June 30, 1999. The Bank's core
data processing software is provided by Fiserv Milwaukee,  Inc.  ("Fiserv"),  an
outside vendor. Fiserv represents that they are fully compliant.

   Validation  or Testing  Phase.  Utilizing  a test lab  environment,  the Bank
during 1998  tested its loan  origination,  loan  servicing,  savings  deposits,
savings   withdrawal,   general  ledger  and  other  activities  for  Year  2000
compliance.  Extensive  testing also took place with applications that interface
with Fiserv. Management explored during 1998 the steps involved in switching its
data  processing  to a  different  service  provider  in the event  its  current
provider was unable to become Year 2000 compliant in a timely  manner.  Based on
their  review,  management  does  not  believe  that a switch  to a new  service
provider will be necessary.

   Implementation Phase.  Additional testing was conducted during the first half
of 1999, and the Bank completed the implementation phase by June 30, 1999.
<PAGE>
   Contingency  Planning.  The Bank has adopted a contingency  plan in the event
that one or more of its internal and external  computer  systems fail to operate
on or after  January 1, 2000. In a worst case  scenario,  the Bank would need to
post accounts and general ledger entries manually. This system is in the process
of being set up. Testing of the Bank's business resumption plan was completed by
June 30, 1999.

   The Bank has in place a $2 million  line of credit from the Federal Home Loan
Bank of Indianapolis that can be used for liquidity purposes if other sources of
funds are not available when needed.  The Bank can also obtain  short-term  FHLB
advances if necessary.


                                                                              15
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)

   Risks. If one or more internal or external  computer  systems fail to operate
properly  on or  after  January  1,  2000,  the Bank may be  unable  to  process
transactions,   prepare   statements  or  engage  in  similar  normal   business
activities.  If all  transactions  were  required to be handled  manually due to
computer or other  failures,  the Bank would need to hire  additional  personnel
which could significantly increase expenses.

   In the  event any of our  local  utility  companies  were  unable to  provide
electricity or other needed  services,  our operations  would be disrupted.  Our
electricity provider has represented that they are Year 2000 compliant; however,
the Bank is unable to provide any  assurances  as to the Year 2000  readiness of
the electricity provider or other utility companies.

   We believe we have taken  appropriate  steps with respect to matters that are
within  our  control  in order to  become  ready  for the Year  2000 in a timely
manner.  Based  on  the  steps  taken  to  date,  including  testing  and  other
documentation,  management  believes  that issues  related to Year 2000 will not
have a material adverse effect on the Company's liquidity,  capital resources or
consolidated  results of  operations.  However,  we are  unable to  provide  any
assurances  that we have  foreseen  all  problems  that may  develop on or after
January  1,  2000 or that we have  taken  all  actions  that  may be  considered
necessary  in  hindsight.  In  addition,  the  readiness  of all third  parties,
including  customers  and  suppliers,  is  inherently  uncertain  and  cannot be
guaranteed by us. While our outside service  providers have shared with us their
testing results, none of the service providers have provided us with enforceable
assurances.

   Costs.  The Bank  currently  estimates  the total cost of becoming  Year 2000
compliant  is  approximately  $150,000.  These  costs cover the  replacement  of
depreciable assets, primarily personal computers and consulting costs. The costs
associated with Year 2000 readiness are based on management's best estimates. In
addition,  the Bank  incurred a loss of $83,460 on  disposal  of  non-Year  2000
compliant hardware and software.

   Status of Borrowers and Other  Customers.  The Bank's  customer base consists
primarily of individuals who use the Bank's services for personal,  household or
consumer  uses.   Management   believes  these   customers  are  not  likely  to
individually pose material Year 2000 risks directly.  It is not possible at this
time to gauge the indirect  risks which could be faced if the employers of these
customers  encounter  unresolved Year 2000 issues.  Most of the Bank's loans are
residential  or consumer in nature.  The Bank had  approximately  130 commercial
borrowers  as of June 30,  1999.  Management  has  performed  a review  of these
commercial  borrowers to determine if there are any Year 2000 issues or concerns
of the borrower  that could affect  repayment  of the Bank's loan.  To-date,  no
issues or concerns  have been  identified.  Accordingly,  no specific  Year 2000
related reserves have been assigned to these loans.

   For new  commercial  loans,  the Bank is requiring  the borrower to represent
that it expects to become  Year 2000  compliant  in a timely  manner and that it
will promptly notify the Bank if the borrower or any of its material  vendors or
suppliers  will not  achieve  compliance  timely,  in each  case  excluding  any
noncompliance  that would not have a material  adverse  effect on the borrower's
financial  condition.  The  Bank  believes  these  representations  will  assist
management in monitoring the status of new commercial borrowers.
<PAGE>
Impact of New Accounting Standards

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


16
<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,  1999 and 1998 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, 1999.  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,  1999 and 1998,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 1999 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 16, 1999

                                                                              17
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
June 30, 1999 and 1998

                                                                        1999                1998
                                                                    ------------        ------------
 <S>                                                                  <C>                 <C>
ASSETS

  Cash and due from financial institutions                           $ 1,527,481         $ 2,408,476
  Interestbearing deposits in financial institutions                   7,578,387           1,797,063
                                                                    ------------        ------------
      Total cash and cash equivalents                                  9,105,868           4,205,539
  Securities available for sale                                       42,272,306          32,167,697
  Securities held to maturity (fair value:
    1998 - $11,079,178)                                                       --          11,084,361
  Loans held for sale                                                  2,380,576           8,156,572
  Loans, net                                                         145,205,691         118,905,611
  Federal Home Loan Bank (FHLB) stock                                  2,700,000           2,100,000
  Premises and equipment net                                           3,000,951           3,164,905
  Accrued interest receivable                                          1,019,165             879,082
  Mortgage servicing rights                                              232,561             280,869
  Real estate owned                                                      309,826             192,080
  Other assets                                                           442,257             332,136
                                                                    ------------        ------------
                                                                    $206,669,201        $181,468,852
                                                                    ============        ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
  Deposits                                                          $132,401,205        $119,979,379
  FHLB borrowings                                                     50,000,000          37,000,000
  Accrued interest payable                                               292,289             253,037
  Advanced payments by borrowers for taxes and insurance                 509,218             512,538
  Deferred federal income tax                                             67,362             335,182
  Other liabilities                                                      846,996             114,029
                                                                    ------------        ------------
      Total liabilities                                              184,117,070         158,194,165
Commitments and contingencies
Shareholders' equity
  Preferred stock,  5,000,000 shares authorized,  none issued
  Common stock, $.01 par value; 10,000,000 shares authorized;
    2,597,729 and 2,623,629 issued at June 30, 1999 and 1998              25,978              26,237
  Additional paid-in capital                                          11,328,830          11,551,136
  Retained earnings, substantially restricted                         12,517,215          12,928,028
  Accumulated other comprehensive income, net of tax
    of $211,018 in 1999 and ($2,644) in 1998                            (409,623)              5,132
  Management Recognition Plan (unearned shares)                         (165,021)           (360,998)
  Employee Stock Ownership Plan (unallocated shares)                    (745,248)           (874,848)
                                                                    ------------        ------------
                                                                      22,552,131          23,274,687
                                                                    ------------        ------------
                                                                    $206,669,201        $181,468,852
                                                                    ============        ============
</TABLE>
          See accompanying notes to consolidated financial statements.

18
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
Years ended June 30, 1999, 1998 and 1997
                                                                   1999              1998             1997
                                                                ----------       -----------     ------------
<S>                                                            <C>               <C>              <C>
Interest and dividend income
  Loans                                                        $10,598,406       $ 9,795,291      $ 8,206,364
  Securities                                                     2,677,378         2,446,042        1,907,129
  Other interest-earning deposits                                  190,711           152,152          199,210
  Dividends on FHLB stock                                          199,142           155,825          115,838
                                                                ----------       -----------     ------------
                                                                13,665,637        12,549,310       10,428,541
Interest expense
  Deposits                                                       5,900,947         5,601,870        4,924,144
  FHLB borrowings                                                2,412,433         2,010,465        1,224,959
                                                                ----------       -----------     ------------
                                                                 8,313,380         7,612,335        6,149,103
                                                                ----------       -----------     ------------
Net interest income                                              5,352,257         4,936,975        4,279,438
Provision for loan losses                                          220,000            81,000           60,000
                                                                ----------       -----------     ------------
Net interest income after provision for loan losses              5,132,257         4,855,975        4,219,438
Other income
  Net gain on sales of loans                                       664,568           662,203          498,666
  Fees and service charges                                         319,884           340,967          317,286
  Net gain (loss) on trading securities                            (16,498)          200,148          731,156
  Net gain (loss) on securities available for sale                (358,784)        (201,890)             (285)
  Other income                                                      11,199            10,911            7,050
                                                                ----------       -----------     ------------
                                                                   620,369         1,012,339        1,553,873
Other expenses
  Compensation and benefits                                      2,959,351         2,809,557        2,234,337
  Federal deposit insurance expense                                 70,427            64,306          121,246
  FDIC special assessment                                               --                --          550,556
  Professional fees                                                666,946           263,374          188,561
  Data processing expense                                          261,093           197,487          177,878
  Occupancy expense                                                336,370           301,185          266,457
  Furniture, fixtures and equipment expense                        183,228           153,899          137,249
  Advertising                                                       89,876           111,351          119,993
  Loss on disposal of fixed assets                                  83,460                --               --
  Other expense                                                    687,861           683,532          575,481
                                                                ----------       -----------     ------------
                                                                 5,338,612         4,584,691        4,371,758
                                                                ----------       -----------     ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                            <C>               <C>              <C>
Income before federal income tax expense and
  cumulative effect of accounting change                           414,014         1,283,623        1,401,553
Federal income tax expense                                         145,600           453,255          478,724
                                                                ----------       -----------     ------------
Income before cumulative effect of accounting change               268,414           830,368          922,829
Cumulative effect of change in accounting for certain
  securities, net of tax benefit of $47,600                        (92,399)               --               --
                                                                ----------       -----------     ------------
Net Income                                                      $  176,015       $   830,368     $    922,829
                                                                ==========       ===========     ============

Basic earnings per share:
  Income before cumulative effect of accounting change            $   0.11       $      0.35        $    0.36

  Cumulative effect of accounting change                             (0.04)               --               --
                                                                ----------       -----------     ------------

  Net Income                                                      $   0.07         $    0.35         $   0.36
                                                                ==========       ===========     ============

Diluted earnings per share:
  Income before cumulative effect of accounting change            $   0.11        $     0.33         $   0.36

  Cumulative effect of accounting change                             (0.04)               --               --
                                                                ----------       -----------     ------------

  Net Income                                                      $   0.07          $   0.33         $   0.36
                                                                ==========       ===========     ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                                                              19
<PAGE>
Consolidated Statements of Changes in Shareholders' Equity
Years Ended June 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                                       Accumulated
                                              Additional                  Other       Unearned     Unallocated          Total
                                   Common      Paid-in     Retained   Comprehensive      MRP           ESOP         Shareholders'
                                    Stock      Capital      Earnings      Income       Shares         Shares           Equity
                                  --------   -----------  -----------    ---------    ---------     -----------      -----------
<S>                                <C>       <C>          <C>            <C>          <C>           <C>              <C>
Balance at July 1, 1996            $21,996   $16,542,107  $12,231,242    $(207,387)   $(643,464)    $(1,134,048)     $26,810,446

Net income for the year
  ended June 30, 1997                                         922,829                                                    922,829
Other comprehensive
  income, net of tax:
  Unrealized gains (losses)
    arising during the year                                                219,909                                       219,909
  Less reclassification
    adjustments for net losses
    included in net income                                                     188                                           188
                                                                         ---------                                    ----------
  Other comprehensive income                                               220,097                                       220,097
                                                                                                                      ----------
Comprehensive income                                                                                                   1,142,926
Net grant of 1,742 shares of
  common stock for MRP                            19,852                                (19,852)
Shares earned under MRP                                                                 149,918                          149,918
Cash dividends of
  $.19 per share                                             (506,959)                                                  (506,959)
Repurchase of 446,100
  shares of stock                   (4,461)   (5,189,405)                                                             (5,193,866)
Shares committed to be
  released under Employee
  Stock Ownership Plan                            60,244                                                129,600          189,844
                                  --------   -----------  -----------    ---------    ---------     -----------      -----------
Balance at June 30, 1997            17,535    11,432,798   12,647,112       12,710     (513,398)     (1,004,448)      22,592,309
Net income for the year
  ended June 30, 1998                                         830,368                                                    830,368
Other comprehensive
  income, net of tax:
Unrealized 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
      income (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)

</TABLE>
          See accompanying notes to consolidated financial statements.
20
<PAGE>
Consolidated Statements of Changes in Shareholders' Equity (Continued)
Years Ended June 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
                                                                         Accumulated
                                             Additional                     Other      Unearned   Unallocated      Total
                                   Common      Paid-in      Retained    Comprehensive     MRP        ESOP      Shareholders'
                                    Stock      Capital      Earnings       Income       Shares      Shares        Equity
                                   -------   -----------  -----------    ---------    ---------    ---------   -----------
<S>                                <C>       <C>          <C>            <C>          <C>          <C>         <C>
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 for the year
  ended June 30, 1999                                         176,015                                              176,015
Other comprehensive
  income, net of tax:
Unrealized loss on transfer
  of securities held to maturity
  to available for sale                                                    (26,469)                                (26,469)
Unrealized 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
      income (loss)                                                       (414,755)                               (414,755)
                                                                                                                ----------
Comprehensive income (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
                                   =======   ===========  ===========    =========    =========    =========   ===========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                                                              21
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Years ended June 30, 1999, 1998 and 1997

                                                                   1999             1998              1997
                                                               -----------       -----------      -----------
<S>                                                            <C>               <C>              <C>
Cash flows from operating activities
  Net income                                                    $  176,015        $  830,368        $ 922,829
  Adjustments to reconcile net income to
    net cash from operating activities
      Purchase of trading securities                                    --        (2,530,635)      (5,428,775)
      Proceeds from sales of trading securities                         --         4,486,385        3,947,118
      Origination and purchase of mortgage
         loans for sale                                        (35,127,650)      (50,245,577)     (30,350,557)
      Proceeds from sales of mortgage loans                     41,568,214        44,982,359       32,915,164
      Net (gain) loss on sales of:
          Loans                                                   (664,568)         (662,203)        (498,666)
          Securities                                               515,281             1,742         (730,871)
          Real estate owned                                          2,501            (2,241)            (210)
      Depreciation                                                 247,685           213,787          192,495
      Amortization of premium, net                                 242,923            79,741           13,848
      Loss on disposal of fixed assets                              83,460                --               --
      ESOP expense                                                 234,647           346,528          189,844
      MRP expense                                                  107,800           152,400          149,918
      Provision for loan losses                                    220,000            81,000           60,000
      Change in:
          Deferred loan fees                                      (191,521)         (180,698)         (77,301)
          Other assets and accrued interest receivable            (218,843)         (541,027)         (85,866)
          Other liabilities and accrued interest payable           768,899            (2,039)         (36,442)
                                                               -----------       -----------      -----------
              Net cash from operating activities                 7,964,843        (2,990,110)       1,182,528

Cash flows from investing activities
  Purchase of FHLB stock                                          (600,000)         (550,000)         (75,000)
  Net decrease in interest-bearing time deposits                        --            99,000          199,000
  Loan originations, net of repayments                         (19,099,197)       (4,296,879)     (13,664,118)
  Loans purchased for portfolio                                 (7,539,188)       (3,295,025)      (2,156,750)
  Securities available for sale:
      Purchases                                                (36,282,467)      (24,143,884)     (14,725,895)
      Proceeds from sales                                       27,518,645        15,634,260       10,731,577
      Proceeds from maturities, calls
        and principal repayments                                11,450,457         2,786,772        1,545,498
  Securities held to maturity:
      Purchases                                                 (3,093,501)      (11,102,747)      (3,002,813)
      Proceeds from maturities, calls
        and principal repayments                                        --         4,000,625        1,000,000
  Property and equipment expenditures                             (170,143)         (250,534)        (213,681)
  Proceeds from disposal of fixed assets                             2,952                --               --
  Proceeds from sale of real estate owned                          189,579           162,918           25,566
                                                               -----------       -----------      -----------
              Net cash from investing activities               (27,622,863)      (20,955,494)     (20,336,616)
</TABLE>

          See accompanying notes to consolidated financial statements.

22
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
Years ended June 30, 1999, 1998 and 1997


                                                                   1999              1998             1997
                                                              ------------      ------------     ------------
<S>                                                           <C>               <C>              <C>
Cash flows from financing activities
  Net increase in deposits                                    $ 12,421,826      $ 17,117,227     $ 11,834,080
  Repayment of FHLB borrowings                                 (39,000,000)      (43,000,000)     (11,000,000)
  Proceeds from FHLB borrowings                                 52,000,000        51,000,000       21,000,000
  Repurchase of common stock                                      (416,312)         (105,938)      (5,193,866)
  Issuance of shares upon exercise of stock options                139,663             7,283               --
  Dividends paid on common stock                                  (586,828)         (540,685)        (506,959)
                                                              ------------      ------------     ------------
        Net cash from financing activities                      24,558,349        24,477,887       16,133,255
                                                              ------------      ------------     ------------

Net change in cash and cash equivalents                          4,900,329           532,283       (3,020,833)

Cash and cash equivalents at beginning of period                 4,205,539         3,673,256        6,694,089
                                                              ------------      ------------     ------------

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

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
     Interest                                                 $  8,274,128      $  7,561,515     $  6,103,832
     Income taxes                                                  281,000           768,119          456,050

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                         309,826           316,083           45,268

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

                                                                              23
<PAGE>
Notes to Consolidated Financial Statements
June 30, 1999, 1998 and 1997


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 and the Bank. 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.

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

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

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

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

   Securities:  Securities which the Company has the positive intent and ability
to hold to maturity are  classified as held to maturity and carried at amortized
cost.  Securities,  other than trading  securities,  that might be sold prior to
maturity are classified as available for sale. Securities 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.
<PAGE>

   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 are stated at unpaid principal balances,  less the allowance for
loan losses, net deferred loan fees and costs, and charge-offs.  Interest income
on  loans  is  accrued  over  the term of the  loans  based  upon the  principal


24
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

outstanding.  Interest  income is not  reported  when full loan  repayment is in
doubt,  typically  when  payments  are past due  ninety  days or more.  Payments
received on such loans are reported as principal reductions.

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

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

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

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

   Premises  and  Equipment:  Premises  and  equipment  are  stated at cost less
accumulated depreciation.  Premises and related components are depreciated using
the  straight-line-method  with useful lives  ranging from  thirty-one  to forty
years.  Furniture and equipment are depreciated  using the  straight-line-method
with useful lives ranging from three to ten years.  Maintenance  and repairs are
charged to expense and improvements  are capitalized.  These assets are reviewed
for impairment when events indicate the carrying amount may not be recoverable.
<PAGE>
   Real Estate Owned:  Real estate properties  acquired through,  or in lieu of,
loan  foreclosure  are to be sold and are initially  recorded at fair value 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

                                                                              25
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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

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

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

   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.

   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.
TheCompany does not have derivative  instruments in its portfolio to account for
under the provisions of this statement.
<PAGE>
   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.



26
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   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 1997
earnings and dividends per share amounts have been retroactively  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.  The accounting  standard that
requires  reporting  comprehensive  income first  applies for fiscal 1999,  with
prior information restated to be comparable.

   New Accounting Pronouncements:  Mortgage loans originated in mortgage banking
are converted into securities on occasion.  A new accounting standard for fiscal
2000 will allow classifying these securities as available for sale,  trading, or
held to  maturity,  instead of the current  requirement  to classify as trading.
This is not  expected  to  have a  material  effect  but the  effect  will  vary
depending on the level and designation of  securitizations  as well as on market
price movements.

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

<PAGE>
NOTE 2 - SECURITIES

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

1998
  U.S. agencies                               $ 3,995,488              --        $  (3,613)       $ 3,991,875
  Mortgage-backed securities                      817,236              --           (9,916)           807,320
  Collateralized mortgage obligations          24,596,237        $230,029         (210,089)        24,616,177
  Equity securities                             2,750,960          61,250          (59,885)         2,752,325
                                              -----------        --------       ----------        -----------
                                              $32,159,921        $291,279       $ (283,503)       $32,167,697
                                              ===========        ========       ==========        ===========

Held to Maturity

1998
Collateralized mortgage obligations           $11,084,361        $ 42,498       $  (47,681)       $11,079,178
                                              ===========        ========       ==========        ===========
</TABLE>

                                                                              27
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

NOTE 2 - SECURITIES (Continued)

   The scheduled  maturities  of securities  available for sale at June 30, 1999
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                                $15,184,791      $15,047,130
  Due after five years through
    ten years                                   2,658,539        2,626,838
  Mortgagebacked securities
    and collateralized
    mortgage obligations                       24,987,477       24,538,413
  Equity securities                                62,140           59,925
                                              -----------      -----------
                                              $42,892,947      $42,272,306
                                              ===========      ===========
</TABLE>

   Proceeds  from sales of  securities  amounted to  approximately  $27,518,000,
$20,121,000  and  $14,679,000  for the years ended June 30, 1999, 1998 and 1997,
respectively,  including  approximately  $4,486,000 and  $3,947,000  relative to
trading securities for the years ended June 30, 1998 and 1997.
<PAGE>
   Gains (losses) on  securities,  reflected in the  consolidated  statements of
income, were as follows for the years ended June 30:
<TABLE>
<CAPTION>

                                                   1999             1998             1997
                                                ---------          --------         --------
<S>                                             <C>                <C>              <C>
  Gross realized gains on:
    Securities available for sale               $ 263,474          $ 59,447         $ 17,075
    Trading securities                                 --           667,238          602,570
                                                ---------          --------         --------

                                                  263,474           726,685          619,645
  Gross realized losses on:
    Securities available for sale                (622,258)         (261,337)         (17,360)
    Trading securities                           (156,497)               --           (1,977)
                                                ---------          --------         --------

                                                 (778,755)         (261,337)         (19,337)
                                                ---------          --------         --------

  Net realized gains (losses)                    (515,281)          465,348          600,308
  Net unrealized gain (loss)
    on trading securities                              --          (467,090)         130,563
                                                ---------          --------         --------

                                                $(515,281)         $ (1,742)        $730,871
                                                =========          ========         ========
</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


28
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

NOTE 2 - SECURITIES (Continued)

value of  $7,884,252,  resulting  in a loss of $139,999 at the date of transfer.
This  amount has been shown net of tax of $47,600 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. There are no trading securities held at June 30, 1999.

   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 the Bank's  secondary  market mortgage  activities,
which consist solely of one- to four-family real estate loans:

<TABLE>
<CAPTION>

                                                 1999               1998             1997
                                             ------------       -----------      -----------
<S>                                          <C>                <C>              <C>
  Loans held for sale - beginning of period  $  8,156,572       $ 2,231,151      $ 4,297,092
  Activity during the periods:
    Loans originated and purchased for sale    35,127,650        50,245,577       30,350,557
    Proceeds from sales of mortgage loans     (41,568,214)      (44,982,359)     (32,915,164)
    Gain on sale of loans                         664,568           662,203          498,666
                                             ------------       -----------      -----------

  Loans held for sale end of period           $ 2,380,576       $ 8,156,572      $ 2,231,151
                                              ===========       ===========      ===========
</TABLE>


   Mortgage  loans  serviced  for others are not  included  in the  accompanying
consolidated  balance sheets.  The unpaid  principal  balances of these loans at
June 30 are summarized as follows:
<TABLE>
<CAPTION>
                                                  1999            1998              1997
                                              -----------      -----------       -----------
<S>                                           <C>              <C>               <C>
  Mortgage loan portfolios serviced for
    FHLMC                                     $27,179,312      $33,201,177       $26,980,056
                                              ===========      ===========       ===========

  Loan servicing fee income                     $  77,241        $  78,433         $  70,661
                                              ===========      ===========       ===========

</TABLE>
<PAGE>
   Custodial  escrow  balances  maintained in connection with the foregoing loan
servicing were $173,793 and $192,262 at June 30, 1999 and 1998.

   Following is the activity for mortgage  servicing  rights for the years ended
June 30:
<TABLE>
<CAPTION>
                                                1999               1998             1997
                                              ---------          --------         --------
<S>                                           <C>                <C>              <C>
  Balance at July 1                           $ 280,869          $148,569         $142,697
    Additions                                    65,692           190,800           16,372
    Amortization                               (114,000)          (58,500)         (10,500)
                                              ---------          --------         --------

  Balance at June 30                          $ 232,561          $280,869         $148,569
                                              =========          ========         ========
</TABLE>


                                                                              29
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

Note 4 - LOANS

   A  valuation  allowance  for  mortgage  servicing  rights was not  considered
necessary for 1999, 1998 and 1997.

   Loans are classified as follows at June 30:
<TABLE>
<CAPTION>
                                                                   1999            1998
                                                               ------------     ------------
<S>                                                            <C>              <C>
   Real estate loans:
     One-to four-family residential - fixed rate               $ 14,559,680     $ 15,383,013
     One-to four-family residential - balloon                    51,842,742       24,413,846
     One-to four-family residential - adjustable                 18,833,825       32,599,924
     Construction                                                25,395,916       24,730,805
     Commercial mortgages                                        15,457,293        6,485,449
     Home equity lines of credit                                 10,512,823        9,877,359
     Second mortgages                                            10,820,377        8,148,412
     Land development                                             1,189,394          675,498
                                                               ------------     ------------

          Total mortgage loans                                  148,612,050      122,314,306
   Consumer loans                                                 1,849,363        1,665,606
   Commercial non-mortgage                                        3,823,834        3,253,091
                                                               ------------     ------------

          Total                                                 154,285,247      127,233,003
   Less:
     Loans in process                                             9,001,424        8,248,310
     Net deferred fees (costs)                                     (402,135)        (210,614)
     Allowance for loan losses                                      480,267          289,696
                                                               ------------     ------------

                                                               $145,205,691     $118,905,611
                                                               ============     ============
</TABLE>
   Activity in the  allowance  for loan losses for the years ended June 30 is as
follows:
<TABLE>
<CAPTION>
                                                   1999             1998             1997
                                                 --------          --------         --------
<S>                                              <C>               <C>              <C>
   Beginning balance                             $289,696          $225,862         $165,862
     Provision charged to operations              220,000            81,000           60,000
     Charge-offs, net of recoveries               (29,429)          (17,166)              --
                                                 --------          --------         --------

   Ending balance                                $480,267          $289,696         $225,862
                                                 ========          ========         ========
</TABLE>
<PAGE>


   During the years ended June 30, 1999, 1998 and 1997, the Company had no loans
which were considered impaired.

   Certain  directors  and  executive  officers  of the  Company  and  the  Bank
(including family members, affiliates, and companies in which they are principal
owners) had loans  outstanding with the Bank in the ordinary course of business.
Related  party loan  activity  during 1999 and 1998 and  balances as of June 30,
1999 and 1998 did not exceed $600,000.


30
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

NOTE 5 - PREMISES AND EQUIPMENT NET

   A summary of premises and equipment is as follows at June 30:
<TABLE>
<CAPTION>
                                                  1999             1998
                                               ----------        ----------
<S>                                            <C>               <C>
   Land                                        $  529,300        $  529,300
   Bank building and improvements               2,411,654         2,399,476
   Furniture and equipment                      1,051,429         1,180,697
                                               ----------        ----------

                                                3,992,383         4,109,473
   Accumulated depreciation                      (991,432)         (944,568)
                                               ----------        ----------

                                               $3,000,951        $3,164,905
                                               ==========        ==========
</TABLE>

NOTE 6 - DEPOSITS

   Deposits at June 30 are summarized as follows:
<TABLE>
<CAPTION>
                                                         1999                          1998
                                            -------------------------   ----------------------------
                                                Amount           %            Amount            %
                                            ------------      ------    ------------         ------
<S>                                          <C>              <C>       <C>                  <C>
   Noninterest-bearing                       $ 8,419,022        6.36%    $ 7,010,473           5.84%
   Now accounts and MMDAs                      9,731,425         7.35      4,434,858            3.70
   Passbook and statement savings             19,267,901        14.55     19,334,577           16.11
   Certificates of deposit                    94,982,857        71.74     89,199,471           74.35
                                            ------------      ------    ------------         ------

                                            $132,401,205      100.00%   $119,979,379         100.00%
                                            ============      ======    ============         ======
</TABLE>

<PAGE>
   At June 30, 1999, the scheduled  maturities of certificates of deposit are as
follows by fiscal year-end:
<TABLE>
<CAPTION>

<S>                               <C>                        <C>
                                  2000                       $73,607,227
                                  2001                        15,046,159
                                  2002                         2,408,500
                                  2003                         2,193,413
                                  2004                         1,689,478
                                  Thereafter                      38,080
                                                             -----------
                                                             $94,982,857
                                                             ===========

</TABLE>
   As of June 30,  1999 and  1998,  the Bank  had  time  deposit  accounts  with
balances of $100,000  or more of  $20,890,000  and  $17,183,000.  Related  party
deposits were $1,704,000 and $2,095,000 at June 30, 1999 and 1998.


                                                                              31
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

NOTE 6 - DEPOSITS (Continued)


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


NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

   Advances  from the Federal Home Loan Bank (FHLB) of  Indianapolis  consist of
the following at June 30:
<TABLE>
<CAPTION>
                                                            1999         1998
                                                        -----------  -----------
<S>                                                     <C>          <C>
Putable  advances  with  maturities  January  2003
through  January  2009,  with rates  ranging  from
4.65% to 5.34% at June 30, 1999,  averaging  5.22%
at June 30, 1999 and 5.23% at June 30, 1998             $30,000,000  $22,000,000

Adjustable-rate  advances with maturities  October
1999 through  December  1999,  with rates  ranging
from  4.90% to 5.38% at June 30,  1999,  averaging
5.01% at June 30, 1999 and 5.78% at June 30, 1998        20,000,000   15,000,000
                                                        -----------  -----------
                                                        $50,000,000  $37,000,000
                                                        ===========  ===========

</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.
<PAGE>

   Maturities of borrowings  outstanding at June 30, 1999 are as follows for the
next 5 years:

                                    2000                     $20,000,000
                                    2001                              --
                                    2002                              --
                                    2003                      10,000,000
                                    2004                              --
                                    Thereafter                20,000,000
                                                             -----------

                                                             $50,000,000
                                                             ===========


   Prepayment of certain  remaining  advances is permitted  only upon the Bank's
termination  of its FHLB  membership,  while  others are  subject to  prepayment
penalties  under the provisions and conditions of the credit policy of the FHLB.
The Bank did not incur  prepayment  penalties  for the years ended June 30, 1999
and 1998.

   In addition to FHLB stock,  the advances are  collateralized  at a minimum of
160% of the advances outstanding by approximately  $121,000,000 and $118,000,000
of first mortgage loans and securities  under a blanket lien arrangement at June
30, 1999 and 1998.


32
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


NOTE 8 - FEDERAL INCOME TAXES

   The provision  for federal  income taxes for the years ended June 30 consists
of the following:
<TABLE>
<CAPTION>
                                                   1999             1998             1997
                                                ---------          --------         --------
<S>                                             <C>                <C>              <C>
   Current income tax expense                   $ 199,758          $401,804         $530,231
   Deferred income tax expense (benefit)          (54,158)           51,451          (51,507)
                                                ---------          --------         --------
      Total expense attributable to operations    145,600           453,255          478,724
   Tax benefit attributable to cumulative
     effect of accounting change                  (47,600)               --               --
   Deferred expense allocated to other
     comprehensive income items:
         Unrealized loss on transfer of
           securities held to maturity
           to available for sale                  (13,635)
         Unrealized gains (losses) arising
           during the year                       (375,222)          (72,546)         113,286
         Less reclassification adjustments
           for net losses included
           in net income                          175,195            68,642               97
                                                ---------          --------         --------
             Other comprehensive income          (213,662)           (3,904)         113,383
                                                ---------          --------         --------

                                                $(115,662)         $449,351         $592,107
                                                =========          ========         ========
</TABLE>
<PAGE>

   Deferred tax assets and liabilities at June 30 consist of the following:
<TABLE>
<CAPTION>
                                                                     1999            1998
                                                                   --------        ---------
<S>                                                                <C>             <C>
   Deferred tax assets:
         Accrued expenses                                          $ 70,963        $  15,300
         Management Recognition Plan                                 18,744           34,054
         Loans marked-to-market                                        (938)          89,422
         Unrealized loss on securities
           available for sale                                       211,018               --
         Other                                                       72,774           31,084
                                                                   --------        ---------

                                                                    372,561          169,860
   Deferred tax liabilities
         Loan fees                                                  139,329           81,172
         Bad debt allowance                                          58,019          162,555
         FHLB stock dividend                                         49,116           49,116
         Fixed assets                                               114,389          114,060
         Mortgage servicing rights                                   79,070           95,495
         Unrealized gain on securities
           available for sale                                            --            2,644
                                                                   --------        ---------

                                                                    439,923          505,042
                                                                   --------        ---------

   Net deferred tax liability                                      $(67,362)       $(335,182)
                                                                   ========        =========
</TABLE>
   No valuation allowance was provided on deferred tax assets.

                                                                              33
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


NOTE 8 - FEDERAL INCOME TAXES (Continued)


   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, ----------------
                                                   1999              1998             1997
                                                 --------          --------         --------
<S>                                              <C>               <C>              <C>
   Statutory rate                                      34%               34%              34%

   Tax expense at statutory rate                 $140,765          $436,432         $476,528
   Stock compensation plans                        35,717            16,982            3,150
   Other                                          (30,882)             (159)            (954)
                                                 --------          --------         --------

                                                 $145,600          $453,255         $478,724
                                                 ========          ========         ========

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

   Differences  in the deduction  for bad debts for tax and financial  statement
purposes after 1988 are included in deferred taxes. For years prior to 1988, the
Bank had determined  taxable income after deducting a provision for bad debts in
excess of such  provisions  recorded in the financial  statements.  Accordingly,
retained earnings at June 30, 1999 and 1998 includes approximately $3,364,000 on
which no  provision  for  federal  income  taxes has been  made.  The  amount of
unrecorded deferred taxes is $1,144,000. If this portion of retained earnings is
used for any  purpose  other than to absorb bad debts,  the amount  used will be
added to future taxable income.

   The Company files  consolidated  federal  income tax returns on a fiscal year
basis.  Prior to July 1, 1997,  if certain  conditions  were met in  determining
taxable  income,  the Bank was allowed a special bad debt  deduction  based on a
percentage of taxable income. Tax legislation passed in August 1996 now requires
the Bank to deduct a provision  for bad debts for tax  purposes  based on actual
loss  experience  and recapture the excess bad debt reserve  accumulated  in tax
years after 1987.  The related  amount of deferred tax  liability  which must be
recaptured  is  approximately  $265,572  and is payable  over a six-year  period
beginning with the year ending June 30, 1999.

34
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


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>
                                                                    1999           1998            1997
                                                                ----------     ----------      ----------
<S>                                                              <C>            <C>             <C>
   Basic earnings per share
         Net income available to common shareholders             $  176,015     $  830,368      $  922,829
                                                                 ----------     ----------      ----------
         Weighted average common shares outstanding               2,399,997      2,370,243       2,572,335
                                                                 ----------     ----------      ----------

         Basic earnings per share                                $      .07     $      .35      $      .36
                                                                 ==========     ==========      ==========
   Diluted earnings per share
         Net income available to common shareholders             $  176,015     $  830,368      $  922,829
                                                                 ----------     ----------      ----------
         Weighted average common shares outstanding               2,399,997      2,370,243       2,572,335
         Add: dilutive effects of assumed exercise of
           stock options and unvested MRP's
             Stock options                                           49,155        107,670          10,827
             MRP shares                                               5,913         10,413              --
                                                                 ----------     ----------      ----------

         Weighted average common and dilutive
           potential common shares outstanding                    2,455,065      2,488,326       2,583,162
                                                                 ----------     ----------      ----------

         Diluted earnings per share                              $      .07     $      .33      $      .36
                                                                 ==========     ==========      ==========

</TABLE>

   Stock  options  for  67,995  and  26,026  shares  of  common  stock  were not
considered in the computation of diluted  earnings per share for the years ended
June 30, 1999 and 1997, respectively,  as they were antidilutive.  All share and
per share amounts have been retroactively adjusted for stock splits.


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

   The Company is a party to financial instruments with  off-balance-sheet  risk
in the normal course of business to meet the financing  needs of its  customers.
These financial  instruments  include commitments to make loans, unused lines of
credit, loans in process and letters of credit. The Company's exposure to credit
loss  in the  event  of  nonperformance  by the  other  party  to the  financial
instrument is represented by the contractual  amount of those  instruments.  The
Company  follows the same credit policy to make such  commitments as is followed
for those loans recorded in the financial statements.
<PAGE>
   The contract  amounts of these  financial  instruments are as follows at June
30:
<TABLE>
<CAPTION>
                                                  1999             1998
                                              -----------       -----------

<S>                                           <C>               <C>
   Commitments to make loans                  $ 7,092,000       $ 7,035,000
   Unused lines of credit                      14,392,000        11,172,000
   Loans in process                             9,001,000         8,248,000
   Letters of credit                              330,000           278,000
</TABLE>


   Approximately  80% and 61% of  commitments to make loans and to fund loans in
process  were made at fixed rates as of June 30, 1999 and 1998.  Rate ranges for
these fixed rate commitments were 6.625% to 9.125% and 7.0% to 9.125% as of June
30, 1999 and 1998. Lines of credit are issued at current market rates.


                                                                              35
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

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


   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 is a defendant under two legal proceedings alleging the unauthorized
practice of law and various violations of law. Management intends to continue to
contest  these  cases  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 or 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 monthly  installments,  ending in March of
2001.  Approximately  $190,000 is included in other liabilities at June 30, 1999
and represents the remaining amount to be paid under the agreement.

   The  Company has  entered  into  employment  agreements  with four  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  emloyee's  compensation  payable  in twenty  four equal
monthly  installments,  and continued  participation in medical and dental plans
the employee was entitled to prior to the date of separation.

   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 options granted inApril of 1999 under the Stock OptionPlan,  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.


NOTE 11 - EMPLOYEE BENEFIT PLANS

   The Company  participates in the Financial  Institutions  Retirement  Fund, a
multi-employer  defined  benefit pension plan.  Substantially  all employees are
eligible for  participation  in the Plan. The benefits are based on a percentage
of the participant's career average salary for each year of service. An employee
becomes fully vested upon  completion of five years of qualifying  service.  The
<PAGE>
plan is  currently  overfunded  and did not  require  contributions  or  charges
against income for the years ended June 30, 1999,  1998 and 1997.  Specific plan
assets and accumulated benefit information for the Company's portion of the Fund
is not available.  Under the Employee  Retirement Income Security Act (ERISA), a
contributor  to a  multi-employer  pension  plan may be  liable  in the event of
complete or partial withdrawal for the benefit payments  guaranteed under ERISA.
Since the plan is overfunded, no liability for contributions is necessary.

   The Company  maintains a qualified  401(k) plan  covering  substantially  all
employees.  Employees  who are 18 years and older and who have  completed  1,000
hours of service in a 12  consecutive-month  period are eligible.


36
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

NOTE 11 - EMPLOYEE BENEFIT PLANS (Continued)

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 fiscal 1999, 1998 and
1997 were approximately $10,600, $9,600 and $5,200, respectively.


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 ten-year period. The balance of the
loan was  $852,176 at June 30,  1999.  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 1999, 1998 and 1997, 24,300 shares of stock with an average fair value
of $9.66 per share in 1999, $14.26 per share in 1998 and $7.81 per share in 1997
were committed to be released. Distributions of 2,244 and 4,802 shares were made
to participants during the years ended June 30, 1999 and 1998. ESOP compensation
expense for the years ended June 30, 1999, 1998 and 1997 was $234,647,  $346,528
and $189,844. Shares held by the ESOP at June 30 are as follows:
<TABLE>
<CAPTION>

                                                  1999             1998
                                               ----------        ----------
<S>                                            <C>               <C>
   Allocated to participants                       94,934            72,878
   Unallocated                                    139,734           164,034
                                               ----------        ----------

      Total ESOP shares                           234,668           236,912
                                               ==========        ==========

   Fair value of unallocated shares            $1,406,073        $2,316,980
                                               ==========        ==========
</TABLE>
   All share and per share  amounts have been  retroactively  adjusted for stock
splits.
<PAGE>

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


                                                                              37
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

NOTE 12 - STOCK-BASED COMPENSATION PLANS (Continued)

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, 1996                       78,113       6.96     36,000        6.63     37,488     6.67        73,875     6.67
    Granted 7/8/96                                         21,450        7.33
    Granted 10/25/96                 26,026       7.25                             4,169     7.25
    Granted 12/20/96                                       88,350        7.17
    Forfeited                                              (6,150)       7.08                            (1,555)    6.67
                                    -------               -------                 ------                -------
Balance outstanding
  June 30, 1997                     104,139       7.03    139,650        7.06     41,657     6.73        72,320     6.67
    Granted 9/2/97                                         69,000       11.38
    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 7/30/98                                        37,495       13.25
    Granted 4/14/99                                        33,334        8.66
    Granted 5/6/99                                          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
                                    =======               =======                 ======                 ======

    Options/shares exercisable
      (vested)                       57,278                49,380                 24,160                 43,164
                                    =======               =======                 ======                 ======
    Options/shares available for
      future grant                        7                24,000                      0                 38,107
                                    =======               =======                 ======                 ======

</TABLE>
<PAGE>
   During the years ended June 30, 1999, 1998 and 1997,  $107,800,  $152,400 and
$149,918 was charged to compensation expense for the MRPs.

   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.


38
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

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

                                                          1999           1998              1997
                                                        --------       --------          --------

<S>                                                     <C>            <C>               <C>
   Net income as reported                               $176,015       $830,368          $922,829
   Pro forma net income                                  113,933        716,649           885,286

   Basic earnings per share as reported                      .07            .35               .36
   Pro forma basic earnings per share                        .05            .30               .33

   Diluted earnings per share as reported                    .07            .33               .36
   Pro forma diluted earnings per share                      .05            .29               .33

   Weighted-average fair value of options granted
     during the year                                        1.39           2.07               .96

</TABLE>

   The fair value of options  granted during the years ended June 30, 1999, 1998
and  1997,  respectively,  is  estimated  using the  following  weighted-average
information: risk-free interest rate of 5.33%, 6.22%, and 6%, expected life of 5
years,  expected  monthly  volatility of stock price of 8.7%,  7.1% and 6.3% and
expected dividends of 2.7%, 1.9% and 3% per year.

   At June 30, 1999, options outstanding were as follows:

       Number of options                                             302,048
       Range of exercise prices                               $6.63 - $13.25
       Weighted-average exercise price                                 $8.39
       Weighted-average remaining option life                     7.59 Years
       For options now exercisable: number                           106,810
         Weighted-average exercise price                               $7.36


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


NOTE 13 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED
EARNINGS

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



                                                                              39
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

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

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

<S>                                                   <C>              <C>               <C>
   Well capitalized                                   10%              6%                5%
   Adequately capitalized                               8               4                 4
   Undercapitalized                                     6               3                 3
</TABLE>

   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>
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

1998
  Total capital (to risk weighted assets)      $20.1       20.9%       $7.7       8.0%          $9.6      10.0%
  Tier 1 capital (to risk weighted assets)      19.8       20.6         3.9       4.0            5.8       6.0
  Tier 1 capital (to average total assets)      19.8       11.3         7.0       4.0            8.8       5.0
</TABLE>

   At June 30, 1999 and 1998, the Bank was categorized as well capitalized.

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

40
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

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

to the current adjusted qualifying  balancesfor 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,  1999,  approximately
$11,300,000  was  available  to the Bank for the  payment  of  dividends  to the
holding company without prior regulatory approval.

NOTE 14 - STOCK REPURCHASE PROGRAMS

   During fiscal 1999 and 1998, the Company  repurchased 46,000 and 7,500 shares
of its common  stock after  receiving  approval  from its federal  regulator  to
repurchase up to 5%, or 133,500 shares of the Company's common stock. The shares
were repurchased at an average price of $9.05 and $14.125 during fiscal 1999 and
1998 and remain available for general corporate purposes,  including issuance in
connection with  stock-based  compensation  plans.  Subsequent to June 30, 1999,
80,000 shares of the Company's common stock were repurchased at an average price
of $9.38.
<PAGE>
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, ----------
                                                                      1999                1998
                                                                  -----------         -----------
<S>                                                               <C>                  <C>
         ASSETS
                 Cash and cash equivalents                        $ 1,409,630          $  284,085
                 Securities available for sale                         59,925           2,752,325
                 Federal income tax receivable                         13,921             149,171
                 Loan receivable from Employee
                    Stock Ownership Plan                              852,176             968,684
                 Investment in subsidiary bank                     20,204,318          19,857,357
                 Accrued interest receivable                            4,249                 894
                 Other assets                                           7,208              12,670
                                                                 -----------         -----------

                         Total assets                             $22,551,427         $24,025,186
                                                                  ===========         ===========
         LIABILITIES
                 Note payable to subsidiary                       $        --         $   750,000
                 Deferred taxes (benefit)                                (751)                464
                 Other liabilities                                         47                  35


         SHAREHOLDERS' EQUITY                                      22,552,131          23,274,687
                                                                 -----------         -----------

                 Total liabilities and shareholders' equity       $22,551,427         $24,025,186
                                                                  ===========         ===========
</TABLE>
                                                                              41
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

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

                              for the years ended:

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

                                                                  1999            1998              1997
                                                                ---------      -----------      -----------
<S>                                                             <C>            <C>              <C>
      Interest and dividend income
          Securities                                            $  76,079      $   150,447      $    55,455
          Loan to Employee Stock Ownership Plan                    64,794           72,605           79,892
          Other interest-bearing deposits                          47,064           18,595           53,732
          Dividends from subsidiary bank                             --               --          2,500,000
                                                                ---------      -----------      -----------
                                                                  187,937          241,647        2,689,079

      Interest expense                                              3,719           99,850           11,794
                                                                ---------      -----------      -----------

      Net interest income                                         184,218          141,797        2,677,285

      Other income
          Net gain on trading securities                             --            200,148          731,156
          Net gain (loss) on securities
            available for sale                                   (332,714)        (259,730)         (14,995)
                                                                ---------      -----------      -----------
                                                                 (332,714)         (59,582)         716,161

      Operating expenses                                           95,806          152,108           88,468
                                                                 ---------      -----------      -----------

      Income before federal income taxes and
        equity in undistributed earnings of
        subsidiary bank                                          (244,302)         (69,893)       3,304,978

      Federal income tax expense (benefit)                        (83,000)         (23,745)         273,700
                                                                ---------      -----------      -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                             <C>            <C>              <C>
      Income (loss) before equity in undistributed
        earnings of subsidiary bank                              (161,302)         (46,148)       3,031,278

      Equity in undistributed (excess distributed)
        earnings of subsidiary Bank                               337,317          876,516       (2,108,449)
                                                                ---------      -----------      -----------

      Net income                                                  176,015          830,368          922,829

      Other comprehensive income, net of tax:
          Change in unrealized gain (loss) on
            securities, net of reclassification effects          (414,755)          (7,578)         220,097
                                                                 ---------      -----------      -----------

      Comprehensive income                                      $(238,740)     $   822,790      $ 1,142,926
                                                                =========      ===========      ===========
</TABLE>
42
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997

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

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

                                                              1999              1998             1997
                                                           -----------      -----------      -----------
<S>                                                        <C>              <C>              <C>
Cash flows from operating activities
    Net income                                             $   176,015      $   830,368      $   922,829
    Adjustments to reconcile net income to
      cash provided by operations
        Equity in undistributed (excess
           distributed) earnings of subsidiary Bank           (337,317)        (876,516)       2,108,449
        Trading securities:
             Purchases                                            --         (2,530,635)      (5,428,775)
             Proceeds from sales                                  --          4,486,385        3,947,118
        (Gain) loss on sales of securities                     332,714           59,582         (716,161)
        Change in
            Accrued interest receivable                         (3,355)             228           18,611
            Other assets                                       140,712         (156,302)          30,089
            Other liabilities                                       12          (34,441)          22,495
                                                           -----------      -----------      -----------
                 Net cash provided by operating
                   activities                                  308,781        1,778,669          904,655

Cash flows from investing activities
    Securities available for sale:
             Purchases                                        (350,000)      (1,904,438)
             Proceeds from sales                             2,706,107           59,399        2,481,875
    Principal reduction on ESOP note receivable                116,508          108,698          101,410
    Contribution to subsidiary Bank                            (42,374)         (38,426)         (37,921)
    Net (increase) decrease in interest-bearing
      time deposits                                               --             99,000           99,000
                                                           -----------      -----------      -----------

                 Net cash used in investing activities       2,430,241       (1,675,767)       2,644,364
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                        <C>              <C>              <C>
Cash flows from financing activities
    Proceeds of loan from subsidiary Bank                         --          2,450,000        1,300,000
    Repayment of loan to subsidiary Bank                      (750,000)      (1,700,000)      (1,300,000)
    Dividends paid on common stock                            (586,828)        (540,685)        (506,959)
    Repurchase of common stock                                (416,312)        (105,938)      (5,193,866)
    Issuance of shares upon exercise of
       stock options                                           139,663            7,283             --
                                                           -----------      -----------      -----------

                 Net cash from financing activities         (1,613,477)         110,660       (5,700,825)
                                                           -----------      -----------      -----------

Net change in cash and cash equivalents                      1,125,545          213,562       (2,151,806)

Cash and cash equivalents at beginning of period               284,085           70,523        2,222,329
                                                           -----------      -----------      -----------

Cash and cash equivalents at end of period                 $ 1,409,630      $   284,085      $    70,523
                                                           ===========      ===========      ===========
</TABLE>

Supplemental disclosure of cash flow information:

   During  May of 1998,  securities  with a  carrying  value  and fair  value of
$1,165,649 were transferred from trading securities to securities  available for
sale.
<PAGE>
Notes to Consolidated Financial Statements (Continued)
June 30, 1999, 1998 and 1997


NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

                                                                    1999                            1998
                                                                    ----                            ----
                                                        Carrying            Fair         Carrying           Fair
                                                          Value             Value          Value            Value
                                                         -------          -------         -------          -------
<S>                                                      <C>              <C>             <C>              <C>
          Financial assets
                Cash and cash equivalents                $ 9,106          $ 9,106         $  4,206         $ 4,206
                Securities                                42,272           42,272           43,252          43,247
                Loans, net                               145,206          144,517          118,906         119,380
                Loans held for sale                        2,381            2,407            8,157           8,298
                Mortgage servicing rights                    233              233              281             281
                Federal Home Loan Bank stock               2,700            2,700            2,100           2,100
                Accrued interest receivable                1,019            1,019              879             879

          Financial liabilities
                Deposits                                 132,401          132,496          119,979         120,229
                Federal Home Loan Bank borrowings         50,000           50,019           37,000          36,802
                Accrued interest payable                     292              292              253             253
                Advance payments by borrowers
                  for taxes and insurance                    509              509               513            513
</TABLE>
44
<PAGE>
Your Partners in Bank West Financial Corporation

DIRECTORS

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

Carl A. Rossi, Treasurer; Contract Manager and
   part-owner of Bay Area Interiors

Jacob Haisma, Owner of Jacob Haisma Builders, Inc.

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

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

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

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

Harry E. Mika, Private Investor, Director for 29 years
   at five different banks in Western Michigan

Wallace D. Riley, President and Senior Partner of
   Riley and Roumell, P.C.

SPECIAL COUNSEL

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

GENERAL COUNSEL

Siebers Mohney Associates, P.L.C.
The Ledyard Building
Suite 340
125 Ottawa Avenue N.W.
Grand Rapids, Michigan 49503

TRANSFER AGENT

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

INDEPENDENT AUDITORS

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

EXECUTIVE OFFICERS

Ronald A. Van Houten, President,
  Chief Executive Officer
James A. Koessel, Senior Vice President
  of Mortgage Lending
Laurie S.Adams, Vice President,
  Director of RetailBanking
Louis D. Knooihuizen, Vice President
  of Commercial Lending
Kevin A. Twardy, Vice President,
  Chief Financial Officer



STOCK INFORMATION

Bank West Financial  Corporation is traded on the Nasdaq  National  Market under
the  symbol  of  "BWFC."  Total  shares  outstanding  as of June 30,  1999  were
2,597,729.  As  of  September  15,  1999,  the  Company  had  approximately  611
shareholders of record.  The high and low bid quotations for the common stock as
reported  on the  Nasdaq,  as well as  dividends  declared  per  share,  were as
follows:


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

September 30, 1997               $12.667      $ 9.000        $.05
December 31, 1997                 17.625       12.583         .05
March 31, 1998                    16.250       12.750         .06
June 30, 1998                     14.750       13.500         .06
September 30, 1998                14.250        9.500         .06
December 31, 1998                 11.250        8.750         .06
March 31, 1999                    10.000        8.250         .06
June 30, 1999                     10.938        8.250         .06

The  information  set forth in the table above was  provided by The Nasdaq Stock
Market. Such information  reflects  interdealer prices,  without retail mark-up,
mark-down or commission and may not represent actual transactions.


INVESTOR INFORMATION

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