AmTrust Capital Corp.

                 SELECTED CONSOLIDATED FINANCIAL INFORMATION(1)

<TABLE>
<CAPTION>
                                                                                                  June 30,
                                                                     ---------------------------------------------------------------
                                                                      1998           1997         1996           1995           1994
                                                                     ---------------------------------------------------------------
                                                                                               (In Thousands)
Selected Consolidated Financial Condition Data:
<S>                                                                  <C>           <C>           <C>           <C>           <C>    
Total assets .................................................       $58,069       $72,245       $71,892       $68,013       $58,644
Loans held for sale ..........................................         1,944         1,082         1,509         1,842         3,240
Loans, net ...................................................        42,574        49,645        49,800        47,790        41,127
Investment securities available for sale .....................         4,350        12,149        11,919         3,635         1,238
Investment securities held to maturity .......................         1,140         2,067         2,613         7,941         9,182
Deposits .....................................................        46,881        53,523        44,562        50,514        48,349
Total borrowings .............................................         3,070        10,902        19,500         9,500         6,250
Stockholders' equity .........................................         7,431         7,464         7,211         7,637         3,591
</TABLE>

<TABLE>
<CAPTION>
                                                                                              Year Ended June 30,
                                                                           ---------------------------------------------------------
                                                                           1998        1997         1996           1995        1994
                                                                           ---------------------------------------------------------
                                                                                                 (In Thousands)
<S>                                                                        <C>         <C>         <C>            <C>         <C>   
Selected Consolidated Operations Data:
Total interest income ...............................................      $4,658      $5,127      $4,957         $4,479      $4,124
Total interest expense ..............................................       2,851       3,170       3,084          2,734       2,166
                                                                           ------      ------      ------         ------      ------
    Net interest income .............................................       1,807       1,957       1,873          1,745       1,958
Provision for loan losses ...........................................          92          33         125             88         161
                                                                           ------      ------      ------         ------      ------
    Net interest income after provision for loan losses .............       1,715       1,924       1,748          1,657       1,797
Gains on sales of loans and investment securities ...................         284         175         216            195         176
Gain on sale of deposits ............................................          --          --         181             --          --
Gain on sale of premises and equipment ..............................          --          --          80             --         113
Other non-interest income ...........................................         430         381         370            199         199
                                                                           ------      ------      ------         ------      ------
    Total non-interest income .......................................         714         556         847            394         488
    Total non-interest expense ......................................       2,172       2,299       2,071          1,745       1,519
                                                                           ------      ------      ------         ------      ------
    Income before income tax and cumulative effect of
        change in accounting method .................................         257         181         524            306         766
Income tax expense ..................................................         119          47         191            112         296
Cumulative effect of change in accounting method ....................          --          --          --             --          30
                                                                           ------      ------      ------         ------      ------
    Net income ......................................................      $  138      $  134      $  333         $  194      $  500
                                                                           ======      ======      ======         ======      ======
    Basic earnings per share ........................................      $  .29      $  .27      $  .63(2)
    Diluted earning per share .......................................      $  .28      $  .27      $  .63(2)
</TABLE>

----------
(1)  AmTrust  Capital Corp.  completed its initial public  offering on March 28,
     1995 and purchased all of the outstanding  stock of  AmericanTrust  Federal
     Savings Bank. As a result,  the information  above represents the Bank only
     prior to March 28, 1995.

(2)  Net income  per share for prior  periods is not  meaningful  since  AmTrust
     Capital Corp. completed its initial offering on March 28, 1995.

                                        2

<PAGE>


<TABLE>
<CAPTION>
                                                                                            Year Ended June 30,
                                                                       -------------------------------------------------------------
                                                                         1998          1997          1996         1995         1994
                                                                         ----          ----          ----         ----         ----
<S>                                                                     <C>           <C>           <C>         <C>         <C>   
Selected Financial Ratios and Other Data:
  Dividends per share ..............................................   $   .20       $   .10            --          --          --
  Dividend pay out ratio ...........................................     68.97%        37.03%           --%         --%         --%

Performance Ratios:
  Return on assets (ratio of net income to average
     total assets) .................................................       .21           .19           .47         .30         .88
  Return on equity capital (ratio of net income to
     average equity) ...............................................      1.94          1.90          4.63        4.06       14.51
  Interest rate spread (average during year) .......................      2.66          2.68          2.48        2.68        3.52
  Net interest margin(1) ...........................................      2.90          2.90          2.80        2.84        3.63
  Ratio of operating expense to average total assets ...............      3.23          3.19          2.95        2.67        2.66
  Ratio of average interest-earning assets to average
     interest-bearing liabilities ..................................    105.19        104.81        107.13      103.46      102.66

Quality Ratios:
 Non-performing assets to total assets, at end of period(2) ........      4.61          3.64          3.38        1.35        2.60
 Non-performing loans to total loans, at end of period(3) ..........      5.34          4.81          4.66        1.85        3.32
 Allowance for losses on loans to non-performing assets,
    at end of period ...............................................     19.35         19.92         20.31       43.67       21.92
 Allowance for losses on loans to total loans, at end of
    period .........................................................      1.15          1.02           .95         .81         .75
 Allowance for losses on loans to non-performing loans,
    at end of period ...............................................     21.54         21.43         20.68       43.67       22.54

Capital Ratios:
 Equity to total assets, at end of period ..........................     12.80         10.33         10.03       11.23        6.12
 Average equity to average assets ..................................     10.63          9.80         10.23        7.31        6.03

Other Data:
 Number of full-service offices ....................................         3             2             2           3           3
</TABLE>

----------
(1)  Net interest income divided by average interest-earning assets.

(2)  Non-performing assets include non-accruing loans, accruing loans 90 days or
     more past due, restructured loans and real estate owned. 

(3)  Non-performing loans include non-accruing loans,  accruing loans 90 days or
     more past due and restructured loans.

                                        3

<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

     When used in this  filing  and in future  filings by the  Company  with the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive  officer,  the words or phrases "would be,"
"will  allow,"  "intends  to," "will likely  result,"  "are  expected to," "will
continue," "is anticipated,"  "estimate,"  "project" or similar  expressions are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
risks and  uncertainties,  including  but not  limited to  changes  in  economic
conditions  in the  Company's  market  area,  changes in policies by  regulatory
agencies,  fluctuations  in interest  rates,  demand for loans in the  Company's
market area and competition,  all or some of which could cause actual results to
differ  materially from historical  earnings and those presently  anticipated or
projected.

     The Company  wishes to caution  readers not to place undue  reliance on any
such  forward-looking  statements,  which  speak only as of the date  made,  and
advises readers that various factors,  including  regional and national economic
conditions,  substantial  changes in levels of market interest rates, credit and
other risks of lending and investment  activities and competitive and regulatory
factors,  could affect the Company's  financial  performance and could cause the
Company's  actual  results for future  periods to differ  materially  from those
anticipated or projected.

     The Company does not undertake,  and specifically disclaims any obligation,
to update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.

Introduction

     AmTrust  Capital Corp.  (the  "Company"),  a Delaware  corporation,  is the
parent company of  AmericanTrust  Federal Savings Bank  ("AmericanTrust"  or the
"Bank").  The  Bank,  through  its  main  office  and  three  branches,   serves
communities located in Howard and Miami counties, Indiana.

     The Company is significantly  affected by prevailing economic conditions as
well as  government  policies and  regulations  concerning,  among other things,
monetary and fiscal affairs,  housing and financial institutions.  Deposit flows
are  influenced  by a  number  of  factors,  including  interest  rates  paid on
competing  investments,  account  maturities  and level of  personal  income and
savings.  Lending  activities  are  influenced  by the  demand for and supply of
housing  lenders,  the  availability  and cost of funds and various other items.
Sources of funds for lending activities include deposits,  payments on loans and
other  investments,  borrowings,  sale of assets and other funds  provided  from
operations.


                                        4

<PAGE>


Financial Condition

     June 30, 1998  Compared to June 30,  1997.  Total  assets  decreased  $14.1
million,  or 19.6%, to $58.1 million at June 30, 1998 from $72.2 million at June
30, 1997 primarily due to decreases in investments and loans.

     Investment  Securities  available  for sale and held to maturity  decreased
$8.7  million to $5.5  million at June 30,  1998 from $14.2  million at June 30,
1997. This decrease was due to principal repayments and maturities.

     Loans and loans held for sale  decreased  approximately  $6.2  million,  or
12.2%,  to $44.5  million at June 30, 1998 compared to $50.7 million at June 30,
1997 as loan  repayments  and sales  exceeded loan  originations.  During fiscal
1998,  the  Company  originated  $18.4  million  of  loans  secured  by  one- to
four-family  real  estate (of which  $12.3  million  were sold in the  secondary
market) and $2.2  million in consumer  loans.  The Bank is no longer  purchasing
indirect consumer loans. All consumer loan originations are obtained directly by
Bank personnel.

     Bank premises and equipment  (net of  accumulated  depreciation)  increased
approximately  $517,000  from $1.2  million at June 30, 1997 to $1.7  million at
June 30, 1998.  This increase is  attributable  to various office  equipment and
computer upgrades and to the opening of a new banking  location,  increasing the
full service locations from two to three.

     Advances  from Federal Home Loan Bank (the "FHLB")  decreased  $7.8 million
from  $10.9  million at June 30,  1997 to $3.1  million  at June 30,  1998.  The
decrease was accomplished through the use of investment principal repayments and
maturities.

     Deposits  decreased  $6.6  million  from $53.5  million at June 30, 1997 to
$46.9  million at June 30, 1998 due  primarily  to  decreases of $2.1 million in
public funds and $4.5 million in core deposits.  As part of its strategic  plan,
the Bank was less  aggressive in retail core deposit  pricing in order to reduce
cost of savings deposit expense.

     Stockholders'  equity  decreased to $7.4 million at June 30, 1998 from $7.5
million at June 30,  1997.  This net  decrease  of  $33,000  was a result of net
income of $138,000,  a decrease of unrealized losses on securities available for
sale of $194,000  and an increase of $169,000  from  employee  benefit and stock
option plans offset by purchases of treasury  stock of $430,000 and dividends of
$104,000.

     June 30, 1997 Compared to June 30, 1996. Total assets  increased  $353,000,
or .5%, to $72.2  million at June 30,  1997 from $71.9  million at June 30, 1996
due to increases in cash and other interest-bearing deposits.

     Investment  Securities  available  for sale and held to maturity  decreased
$316,000 to $14.2  million at June 30, 1997 from $14.5 million at June 30, 1996.
This decrease was due to principal repayments.


                                        5

<PAGE>


     Loans and loans held for sale decreased approximately $583,000, or 1.1%, to
$50.7  million at June 30, 1997  compared  to $51.3  million at June 30, 1996 as
loan  repayments and sales exceeded loan  originations.  During fiscal 1997, the
Company  originated  $8.4 million of loans secured by one- to  four-family  real
estate  (of which  $6.3  million  were sold in the  secondary  market)  and $8.9
million in consumer loans.

     Advances  from Federal Home Loan Bank (the "FHLB")  decreased  $8.6 million
from $19.5  million at June 30,  1996 to $10.9  million  at June 30,  1997.  The
decrease was due to an increase in deposits used to repay advances.

     Deposits  increased  $8.9  million  from $44.6  million at June 30, 1996 to
$53.5  million at June 30, 1997 due  primarily to an increase of $8.6 million in
public funds.

     Stockholders'  equity  increased to $7.5 million at June 30, 1997 from $7.2
million at June 30, 1996.  This increase was primarily a result of net income of
$134,000 and a decrease of unrealized losses on securities available for sale of
$137,000.

Results of Operations

     The  Company's  results of  operations  depend  primarily  on net  interest
income,  which is the difference  between interest income from  interest-earning
assets and  interest  expense on  interest-bearing  liabilities.  The  Company's
operations are also affected by non-interest  income,  such as customer  deposit
service charges, gains on sales of assets and loan fees. The Company's principal
operating expenses consist of salaries and employee benefits,  deposit insurance
assessments,  equipment and  occupancy  costs,  provisions  for losses on loans,
advertising and promotion expenses and other general and administrative expense.

Comparison of Operating Results for Years Ended June 30, 1998 and 1997

     General.  Net  income for the fiscal  year  ended June 30,  1998  increased
$4,000 to $138,000 for fiscal 1998 from $134,000 for fiscal 1997.

     Net Interest  Income.  Net interest income  decreased from $2.0 million for
fiscal 1997 to $1.8 million for fiscal 1998.

     Interest  Income.  Interest income for the fiscal years ended June 30, 1998
and June 30, 1997, was $4.7 million and $5.1 million, respectively. The decrease
in fiscal 1998 from fiscal 1997 was due to a decrease in the average  balance of
interest-earning  assets as well as a  decrease  in yields on such  assets  from
7.61% in fiscal 1997 to 7.48% in fiscal 1998.  Average  interest-earning  assets
were $62.3  million and $67.4  million for the fiscal  years ended June 30, 1998
and June 30, 1997, respectively.

     Interest  Expense.  Interest  expense  for fiscal  1998 and 1997,  was $2.9
million and $3.2  million,  respectively.  The  decrease in interest  expense of
$319,00 in fiscal 1998 from fiscal 1997 was due  primarily  to a decrease in the
average balance of interest-bearing liabilities as well as a decrease in cost of
funds from 4.93% in fiscal 1997 to 4.81% in fiscal 1998. The average  balance of
interest-bearing liabilities was $59.2 million for fiscal 1998 compared to $64.3
million for fiscal

                                        6

<PAGE>


1997. The Company's cost of funds on deposits  decreased to 4.50% in fiscal 1998
from 4.54% in fiscal 1997.  The cost of funds on FHLB  advances  increased  from
6.24%  in  fiscal  1997  to  6.27%  in  fiscal  1998.  The  average  balance  of
interest-bearing  liabilities  decreased  due to the  Company's  payment of FHLB
advances.  Average FHLB advances decreased from $14.6 million during fiscal 1997
to $10.6 million in fiscal 1998.  Interest  bearing deposits also decreased from
$49.7  million in fiscal  1997 to $48.7  million in fiscal 1998 as a result of a
less aggressive pricing structure.

     Other  Income.  Other  income  for fiscal  1998 was  $714,000  compared  to
$556,000 for fiscal 1997,  an increase of $158,000.  The increase is primarily a
result of an increase in gains on the sale of loans of $109,000. Other increases
included an increase  in service  charges on deposit  accounts of $23,000 and an
increase of $17,000 on annuity and other commissions. A restructuring of service
fee charges and price increases accounted for the service fee increase.

     Other  Expenses.  Other expenses  decreased  $126,000 from $2.3 million for
fiscal 1997 to $2.2  million  for fiscal  1998.  A decrease in FDIC  premiums of
$329,000 as a result of the one-time FDIC special assessment to recapitalize the
SAIF in 1997 was  partially  offset by increases to  salaries,  occupancy,  data
processing and advertising  costs  associated with opening a third  full-service
branch.

     Provision for Loan Losses. The Company's  provision for loan losses for the
fiscal years ended June 30, 1998 and 1997 was $92,000 and $33,000, respectively.
At June 30, 1998 and 1997, the Company's  allowance for losses on loans to total
loans was 1.15% and 1.02%,  respectively.  The allowance  represented 21.54% and
21.43%,  of  non-performing  loans at June 30, 1998 and 1997.  The change in the
provision   for  loan  losses  is  based  upon  the  level  and   condition   of
non-performing  loans and  management's  evaluation of the Bank's  existing loan
portfolio  (including  the increase in and change in the mix of such  portfolio)
for losses  inherent in the  portfolio,  reviewing  existing  delinquencies  and
troubled  loans,  evaluating  historical  loan loss trends and  considering  the
interest rate  environment  and its impact on borrowers'  continuing  ability to
repay their  loans.  Consumer  loans may entail  greater  risk than  traditional
residential  mortgage lending,  particularly in the case of consumer loans which
are unsecured or are secured by rapidly  depreciable  assets such as automobiles
or mobile  homes.  At June 30,  1998 and 1997,  non-performing  loans were $2.40
million  and  $2.44  million,  respectively  or 5.3% and 4.8%,  of total  loans,
respectively.  Future  additions  to the  allowance  for  losses  on  loans  are
dependent upon the  performance of the loan portfolio,  the economy,  changes in
real estate values, interest rates and inflation.

     Bennett Funding Group,  Inc. The Company has a business  relationship  with
Bennett  Funding  Group,  Inc.  ("BFGI")  which filed for Chapter 11  bankruptcy
protection  on  March  29,  1996.  From  1992 to  1995,  the  Company  purchased
commercial lease contracts covering business equipment from BFGI, for which BFGI
acts as the servicer.  At June 30, 1998,  the book value of the Company's  lease
contracts totaled $449,000. In addition,  the Company had $674,000 in Short Term
Dealer  Contracts  with  Bennett  Leasing  Corporation  ("BLC")  which was later
included in the bankruptcy  proceedings.  Newspapers reports have indicated that
BFGI may have utilized fictitious leases in some of its business activities. The
Securities  and Exchange  Commission has filed a criminal and civil suit against
an officer of BFGI which alleges various  fraudulent  actions including the sale
of the same leases to two or more buyers. Reserves of $67,000 have been recorded
for probable losses as a result of lease prepayments.  In addition,  reserves of
$149,000  have been  allocated to the leases for other  potential  losses.  BFGI
continues to service the lease contracts and

                                        7
<PAGE>


has initially  remitted $350,000 during June 1998 under the  conservatorship  of
the  court  appointed  trustee.  The  Company  is  continuing  to  evaluate  the
allegations  against BFGI and BLC and the effect that the bankruptcy filing will
have  on its  leases  and  its  security.  Until  the  evaluation  is  complete,
management is unable to predict with any certainty the effects of the bankruptcy
on the Company.

     Income Tax Expense.  Income tax expense for the fiscal years ended June 30,
1998 and  1997 was  $119,000  and  $47,000,  respectively.  Income  tax  expense
increased  $72,000 from fiscal 1997 to fiscal 1998 as a result of an increase in
pretax income.

Comparison of Operating Results for Years Ended June 30, 1997 and 1996

     General.  Net  income for the fiscal  year  ended June 30,  1997  decreased
$199,000 to $134,000 for fiscal 1997 from $333,000 for fiscal 1996. The decrease
was primarily a result of the one-time FDIC special  assessment to  recapitalize
the SAIF of $170,000,  net of tax. Absent the one-time special  assessment,  net
income for the year would have been $304,000.

     Net Interest  Income.  Net interest income  increased from $1.9 million for
fiscal 1996 to $2.0 million for fiscal 1997.

     Interest  Income.  Interest income for the fiscal years ended June 30, 1997
and June 30, 1996, was $5.1 million and $5.0 million, respectively. The increase
in fiscal 1997 over fiscal 1996 was due to an increase in the average balance of
interest-earning  assets as well as an  increase  in yields on such  assets from
7.47% in fiscal 1996 to 7.61% in fiscal 1997.  Average  interest-earning  assets
were $67.4  million and $66.8  million for the fiscal  years ended June 30, 1997
and June 30, 1996, respectively.

     Interest  Expense.  Interest  expense  for fiscal  1997 and 1996,  was $3.2
million and $3.1  million,  respectively.  The  increase in interest  expense of
$86,000 in fiscal 1997 over fiscal 1996 was due  primarily to an increase in the
average balance of interest-bearing  liabilities as cost of funds decreased from
4.94%  in  fiscal  1996  to  4.93%  in  fiscal  1997.  The  average  balance  of
interest-bearing liabilities was $64.3 million for fiscal 1997 compared to $62.3
million for fiscal 1996.  The Company's  cost of funds on deposits  decreased to
4.54% in  fiscal  1997  from  4.66% in  fiscal  1996.  The cost of funds on FHLB
advances also  increased  from 6.03% in fiscal 1996 to 6.24% in fiscal 1997. The
average balance of interest-bearing  liabilities  increased due to the Company's
use of FHLB advances to fund loan demand.  Average FHLB advances  increased from
$12.8 million during fiscal 1996 to $14.6 million in fiscal 1997.

     Other  Income.  Other  income  for fiscal  1997 was  $556,000  compared  to
$847,000 for fiscal  1996,  a decrease of $291,000.  The decrease is primarily a
result of a gain of $261,000 on the sale of the Warsaw,  Indiana branch building
and deposits in fiscal  1996.  Other  decreases  included a decrease in gains on
loans  held for sale of  $25,000,  a  decrease  in  service  charges  on deposit
accounts of $21,000 and a decrease of $14,000 on loan fees.  These  decreases in
other  income  were  partially  offset  by an  increase  in  annuity  and  other
commissions  of  $46,000  as a result  of the  purchase  of a title  company  in
December 1995.


                                        8
<PAGE>


     Other  Expenses.  Other expenses  increased  $228,000 from $2.1 million for
fiscal  1996 to $2.3  million  for fiscal  1997.  An  increase of $45,000 was in
salaries and employee  benefits due to increased  expenses related to additional
employees  at the title  company.  The primary  reason for the increase in other
expenses  related to an increase in FDIC premiums of $243,000 as a result of the
one-time FDIC special  assessment to  recapitalize  the SAIF.  This increase was
partially  offset by savings in net occupancy  expenses and data processing fees
related to the sale of the Warsaw branch facility and deposits.

     Provision for Loan Losses. The Company's  provision for loan losses for the
fiscal   years  ended  June  30,  1997  and  1996  was  $33,000  and   $125,000,
respectively.  At June 30, 1997 and 1996, the Company's  allowance for losses on
loans to total loans was 1.02% and .95%, respectively. The allowance represented
21.43% and 20.68%, of non-performing loans at June 30, 1997 and 1996. The change
in the  provision  for loan  losses is based  upon the level  and  condition  of
non-performing  loans and  management's  evaluation of the Bank's  existing loan
portfolio  (including  the increase in and change in the mix of such  portfolio)
for losses  inherent in the  portfolio,  reviewing  existing  delinquencies  and
troubled  loans,  evaluating  historical  loan loss trends and  considering  the
interest rate  environment  and its impact on borrowers'  continuing  ability to
repay their  loans.  Consumer  loans may entail  greater  risk than  traditional
residential  mortgage lending,  particularly in the case of consumer loans which
are unsecured or are secured by rapidly  depreciable  assets such as automobiles
or mobile  homes.  At June 30,  1997 and 1996,  non-performing  loans were $2.44
million  and  $2.39  million,  respectively  or 4.8% and 4.7%,  of total  loans,
respectively.  Future  additions  to the  allowance  for  losses  on  loans  are
dependent upon the  performance of the loan portfolio,  the economy,  changes in
real estate values, interest rates and inflation.

     Bennett Funding Group,  Inc. The Company has a business  relationship  with
Bennett  Funding  Group,  Inc.  ("BFGI")  which filed for Chapter 11  bankruptcy
protection  on  March  29,  1996.  From  1992 to  1995,  the  Company  purchased
commercial lease contracts covering business equipment from BFGI, for which BFGI
acts as the servicer.  At June 30, 1997,  the book value of the Company's  lease
contracts totaled $817,000. In addition,  the Company had $674,000 in Short Term
Dealer  Contracts  with  Bennett  Leasing  Corporation  ("BLC")  which was later
included in the bankruptcy  proceedings.  Newspapers reports have indicated that
BFGI may have utilized fictitious leases in some of its business activities. The
Securities  and Exchange  Commission has filed a criminal and civil suit against
an officer of BFGI which alleges various  fraudulent  actions including the sale
of the same leases to two or more buyers. Reserves of $67,000 have been recorded
for probable losses as a result of lease prepayments.  In addition,  reserves of
$149,000  have been  allocated  to the leases for other  potential  losses.  The
Company is continuing to evaluate the  allegations  against BFGI and BLC and the
effect  that the  bankruptcy  filing  will have on its leases and its  security.
Until the  evaluation  is  complete,  management  is unable to predict  with any
certainty the effects of the bankruptcy on the Company.

     Income Tax Expense.  Income tax expense for the fiscal years ended June 30,
1997 and  1996 was  $47,000  and  $191,000,  respectively.  Income  tax  expense
decreased  $144,000 from fiscal 1996 to fiscal 1997 as a result of a decrease in
pretax income.


                                        9

<PAGE>


Average Balances, Interest Rates and Yields

     The  following  table  presents for the periods  indicated the total dollar
amount of interest income from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates.  No tax equivalent  adjustments  were made.
All average balances are monthly average balances.  Non-accruing loans have been
included in the table as loans carrying a zero yield.

<TABLE>
<CAPTION>
                                                                     Year Ended June 30,
                                       --------------------------------------------------------------------------------------------
                                                     1998                            1997                          1996
                                       ----------------------------------  ----------------------------  --------------------------
                                         Average    Interest             Average   Interest            Average   Interest
                                       Outstanding   Earned/   Yield/  Outstanding  Earned/  Yield/  Outstanding  Earned/    Yield/
                                         Balance      Paid      Rate     Balance     Paid     Rate      Balance    Paid       Rate
                                       -----------   -------   ------  -----------  -------  ------  -----------  -------    ------
                                                                       (Dollars in Thousands)
<S>                                       <C>          <C>      <C>        <C>        <C>      <C>      <C>         <C>       <C>  
Assets:
 Interest-earning assets
   Interest-bearing deposits with
     other financial institutions ....    $1,083       $61      5.63%      $873       $55      6.30%    $2,520      $132      5.24%
   Loans(1) ..........................    47,727     3,653      7.65     50,896     3,997      7.85     50,323     3,950       7.85
   Investment securities, including
      FHLB stock .....................    13,530       944      6.98     15,618     1,075      6.88     13,988       875       6.26
                                         -------     -----              -------     -----              -------     -----      
    Total interest-earning assets(1) .    62,340     4,658      7.47     67,387     5,127      7.61     66,831     4,957       7.42
                                                     -----                          -----                          -----            
 Non-interest-earning assets .........     4,905                          4,598                          3,370
                                         -------                        -------                        ------- 
    Total assets .....................   $67,245                        $71,985                        $70,201
                                         =======                        =======                        =======
Liabilities and Equity:
 Interest-bearing liabilities
   Savings deposits ..................    10,827       332      3.07    $11,540       400      3.47    $12,878       446       3.46
   NOW deposits ......................     7,602       140      1.84      6,901       166      2.41      7,345       169       2.30
   Certificate accounts ..............    30,251     1,715      5.67     31,235     1,691      5.41     29,391     1,699       5.78
   FHLB advances .....................    10,587       664      6.27     14,618       913      6.24     12,771       770       6.03
                                         -------     -----              -------     -----              -------     -----      
    Total interest-bearing liabilities    59,267     2,851      4.81     64,294     3,170      4.93     62,385     3,084       4.94
                                                     -----                          -----                          -----
   Other liabilities .................       831                            637                            632
                                         -------                        -------                        -------                
     Total liabilities ...............    60,098                         64,931                         63,017
 Equity ..............................     7,147                          7,054                          7,184
                                         -------                        -------                        -------                
     Total liabilities and equity ....   $67,245                        $71,985                        $70,201
                                         =======                        =======                        =======
Net interest income ..................               1,807                         $1,957                         $1,873
                                                     -----                          =====                          ===== 
Net interest rate spread .............                         2.66                            2.68                            2.48
Net interest-earning assets ..........    $3,073                         $3,093                         $4,446
                                         =======                        =======                        =======
Net yield on average interest-
  earning assets .....................                         2.90                            2.90                            2.80
Average interest-earning assets
  to average interest-bearing
  liabilities ........................   105.19%                        104.81%                       107.13%
</TABLE>

----------
(1)  Calculated  net of deferred loan fees,  loan  discounts,  loans in process,
     allowance  for loan  losses.  In  addition,  non-accrual  loans  have  been
     included in the average balances.


                                       10
<PAGE>


Rate/Volume Analysis of Net Interest Income

     The  following  schedule  presents the dollar amount of changes in interest
income and interest expense for major components of interest-earning  assets and
interest-bearing  liabilities.  It distinguishes  between the changes related to
outstanding  balances and those due to the changes in interest  rates.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information is provided on changes  attributable to (i) changes in volume (i.e.,
changes  in  volume  multiplied  by old rate) and (ii)  changes  in rate  (i.e.,
changes in rate multiplied by old volume).  For purposes of this table,  changes
attributable  to both rate and volume,  which  cannot be  segregated,  have been
allocated  proportionately  to the  change  due to volume  and the change due to
rate.

<TABLE>
<CAPTION>
                                                                         Year Ended June 30,
                                              ---------------------------------------------------------------------
                                                              1998 vs. 1997                1997 vs. 1996
                                              ----------------------------------  ---------------------------------
                                              Increase (Decrease)         Total      Increase (Decrease)    Total
                                                    Due to              Increase          Due to           Increase
                                               Volume      Rate        (Decrease)     Volume     Rate     (Decrease)
                                               ------      ----        ----------     ------     ----     ----------
                                                                        (In Thousands)
<S>                                              <C>      <C>            <C>          <C>        <C>          <C>
Interest-earning assets:
  Interest-bearing deposits with other
      financial institutions...............      $  12     $   (6)        $   6       $(100)     $  23        $ (77)
  Loans....................................       (243)      (101)         (344)         45          2           47
  Securities, including FHLB stock.........       (146)        15          (131)        107         93          200
                                                 -----     ------         -----       -----      -----        -----
    Total interest-earning assets..........      $(377)    $ (92)          (469)      $  52      $ 118          170
                                                 =====     ======         -----       =====      =====        -----

Interest-bearing liabilities:
  Savings deposits.........................      $ (22)    $  (46)        $ (68)      $ (46)     $  --        $ (46)
  NOW deposits.............................         13        (39)          (26)        (10)         7           (3)
  Certificate accounts.....................        (56)        80            24         103       (111)          (8)
  FHLB advances............................       (253)         4          (249)        115         28          143
                                                 -----     ------         -----       -----      -----        -----
    Total interest-bearing liabilities.....      $(318)    $   (1)         (319)      $ 162      $ (76)          86
                                                 =====     ======         -----       =====      =====        -----
Net interest income........................                               $(150)                              $  84
                                                                          =====                               =====
</TABLE>


                                       11
<PAGE>


     The following  table presents the weighted  average yields earned on loans,
investments and other  interest-earning  assets,  and the weighted average rates
paid  on  savings  deposits  and  other  interest-bearing  liabilities  and  the
resultant  interest  rate  spreads  at the  dates  indicated.  Weighted  average
balances are based on monthly balances.

<TABLE>
<CAPTION>
                                                                                     Year Ended June 30,
                                                                          ----------------------------------------
                                                                          1998        1997        1996        1995
                                                                          ----        ----        ----        ----
<S>                                                                       <C>         <C>         <C>         <C>  
Weighted average yield on:
  Interest-bearing deposits with other financial institutions....         5.63%       6.30%       5.24%       4.85%
  Loans..........................................................         7.65        7.85        7.85        7.42
  Securities, including FHLB stock...............................         6.98        6.88        6.26        7.18
    Combined weighted average yield on interest-earning
        assets...................................................         7.47        7.61        7.42        7.28

Weighted average rate paid on:
  Savings deposits...............................................         3.07        3.47        3.46        3.68
  NOW deposits...................................................         1.84        2.41        2.30        2.47
  Certificate accounts...........................................         5.67        5.41        5.78        5.14
  FHLB advances..................................................         6.27        6.24        6.03        5.83
    Combined weighted average rate paid on interest-
        bearing liabilities......................................         4.81        4.93        4.94        4.60

Spread...........................................................         2.66        2.68        2.48        2.68
</TABLE>


Asset/Liability Management

     The  Company  is  subject  to  interest  rate risk to the  extent  that its
interest-bearing   liabilities   reprice   on  a   different   basis   than  its
interest-earning  assets. OTS regulations  provide a Net Portfolio Value ("NPV")
approach to the quantification of interest rate risk. In essence,  this approach
calculates the  difference  between the present value of  liabilities,  expected
cash flows from assets and cash flows from off balance  sheet  contracts.  Under
OTS regulations,  an  institution's  "normal" level of interest rate risk in the
event of an immediate and sustained 200 basis point change in interest  rates is
a decrease in the institution's NPV in an amount not exceeding 2% of the present
value of its assets.  Thrift  institutions  with greater than "normal"  interest
rate exposure must take a deduction  from their total capital  available to meet
their risk-based capital  requirement.  The amount of that deduction is one-half
of the difference  between (a) the institution's  actual calculated  exposure to
the 200 basis point interest rate increase or decrease (whichever results in the
greater pro forma  decrease in NPV) and (b) its "normal" level of exposure which
is 2% of the present value of its assets. Regulations do exempt all institutions
under $300 million in assets and risk-based capital exceeding 12% from reporting
information  to calculate  exposure and making any  deductions  from  risk-based
capital.  At June 30,  1998,  the Bank's  total  assets  were $58.4  million and
risk-based  capital  was  19.0%  and  the  Bank  would  have  been  exempt  from
calculating or making any risk-based capital reduction.

     The Bank's management feels  interest-rate  risk is an important factor and
makes all reports  necessary  to the OTS to  calculate  interest-rate  risk on a
voluntary  basis. At June 30, 1998, 2% of the present value of the Bank's assets
was approximately  $1.2 million which was more than the greatest decrease in NPV
resulting from a 200 basis point change in interest rates. As a result, the Bank
would  not  have  been  required  to make a  deduction  from  total  capital  in
calculating its risk-


                                       12
<PAGE>


based capital  requirement had this rule been in effect on such date and had the
Bank not been exempt from reporting on such date.

     It has been and  continues to be a priority of the Board of  Directors  and
management to manage interest rate risk and thereby limit any negative effect of
changes in interest  rates on the NPV.  The Bank's  Interest  Rate Risk  Policy,
established  by the Board of  Directors,  promulgates  acceptable  limits on the
amount of change  in NPV given  certain  changes  in  interest  rates.  Specific
strategies have included the sale of most long-term,  fixed-rate loans to reduce
the average maturity of the Bank's  interest-earning  assets and the use of FHLB
advances to lengthen the effective maturity of its interest-bearing liabilities.

     Presented  below,  as of  June  30,  1998,  is an  analysis  of the  Bank's
estimated interest rate risk as measured by changes in NPV for instantaneous and
sustained parallel shifts in interest rates, up and down 300 basis points in 100
point increments,  compared to the limits set by the Board.  Assumptions used in
calculating the amounts in this table are those assumptions  utilized by the OTS
in  assessing  the  interest  risk  of the  thrifts  it  regulates.  Based  upon
assumptions  at June 30, 1998,  the NPV of the Bank's assets was $58.4  million.
NPV is calculated  by the OTS for the purposes of interest rate risk  assessment
and should not be considered as an indicator of value of the Bank.

<TABLE>
<CAPTION>
    Assumed                      
   Change in                                     At June 30, 1998                         At June 30, 1997
Interest Rates       Board Limit       -----------------------------------     -----------------------------------
(Basis Points)     % Change in NPV     $ Change in NPV     % Change in NPV     $ Change in NPV     % Change in NPV
--------------     ---------------     ---------------     ---------------     ---------------     ---------------
<S>                       <C>              <C>                   <C>               <C>                    <C>
    +300                  -57              -1,639                -22               -3,571                 -82
    +200                  -46                -967                -13               -2,340                 -54
    +100                  -35                -395                 -5               -1,128                 -26
       0                    0                   0                  0                    0                   0
    -100                  -35                 341                  5                  956                  22
    -200                  -46                 673                  9                1,825                  42
    -300                  -57               1,274                 17                2,906                  67
</TABLE>


     In the event of a 300  basis  point  change in  interest  rate  based  upon
estimates as of June 30, 1998,  the Bank would  experience a 17% increase in NPV
in a  declining  rate  environment  and a 22%  decrease  in NPV in a rising rate
environment.  During periods of rising rates,  the value of monetary  assets and
liabilities decline.  Conversely,  during periods of falling rates, the value of
monetary assets and liabilities increase. However, the amount of change in value
of specific  assets and liabilities due to changes in rates is not the same in a
rising rate  environment as in a falling rate  environment  (i.e., the amount of
value  increase  under a specific rate decline may not equal the amount of value
decrease  under  an  identical  upward  rate  movement).   Based  upon  the  NPV
methodology,  the decreased level of interest rate risk  experienced by the Bank
during  fiscal  year 1998 was a result of several  agency  bonds with  long-term
maturity being called and, thus, shortening asset maturities.

     In  evaluating  the  Bank's   exposure  to  interest  rate  risk,   certain
shortcomings,  inherent in the method of  analysis  presented  in the  foregoing
table must be considered.  For example,  although certain assets and liabilities
may have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. Also, 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. Further, in the event of a change in interest


                                       13
<PAGE>


rates,  prepayments and early withdrawal levels could deviate significantly from
those assumed in calculating the table.  Finally,  the ability of many borrowers
to service their debt may decrease in the event of an interest rate increase. As
a result,  the actual  effect of  changing  interest  rates may differ from that
presented in the foregoing table.

Liquidity and Capital Resources

     Liquidity  refers to the  ability of a  financial  institution  to generate
sufficient cash to fund current loan demand,  meet savings  deposit  withdrawals
and pay operating expenses. The Company's primary sources of funds are deposits,
proceeds  from  principal  and interest  payments on loans (both  scheduled  and
prepayments) and investment and mortgage-backed securities. The Company attempts
to price  its  deposits  to meet  asset/liability  objectives  discussed  above,
consistent  with  local  market  conditions.   While  maturities  and  scheduled
amortization of loans and mortgage-backed securities are a predictable source of
funds,  deposit flows and mortgage  prepayments are greatly influenced by market
interest rates,  economic  conditions and competition.  In a period of declining
interest rates, it is anticipated that mortgage prepayments would increase. As a
result,  these  proceeds  from mortgage  prepayments  would be invested in lower
yielding loans or other  investments thus reducing interest income. In contrast,
in  a  period  of  rising  interest  rates,  it  is  anticipated  that  mortgage
prepayments  would decrease  thereby reducing the proceeds from such prepayments
that would be available for  investment in higher  yielding loans or investments
which would have the effect of increasing interest income.

         The  Company's  most liquid asset is cash.  At June 30, 1998,  1997 and
1996,  cash totaled $1.8 million,  $1.5 million and $1.1 million,  respectively.
     The level of cash is dependent on the Company's operating, financing and
investing activities.  These activities are discussed below for the fiscal years
ended June 30, 1998, 1997 and 1996.

     Year Ended June 30, 1998  Compared to Year Ended June 30, 1997.  During the
fiscal year ended June 30, 1998,  cash increased  $262,000 and  interest-earning
deposits  increased $6,000.  In addition,  interest-bearing  deposits  decreased
$11.0 million and FHLB advances  decreased  $7.8 million,  paid from  investment
principal proceeds.  The decrease in interest bearing deposits was the result of
a less aggressive pricing strategy.

     Year Ended June 30, 1997  Compared to Year Ended June 30, 1996.  During the
fiscal year ended June 30, 1997,  cash increased  $386,000 and  interest-earning
deposits increased $415,000.  In addition,  interest-bearing  deposits increased
$9.0 million and FHLB advances decreased $8.6 million.  The increase in deposits
was used to repay advances.

     The  primary  investing  activity  of the  Company  is the  origination  of
mortgage and consumer loans and the purchase of  mortgage-backed  securities and
other  securities.  During the fiscal years ended June 30, 1998,  1997 and 1996,
the Company originated  mortgage loans of $18.4 million,  $8.4 million and $15.3
million,  respectively.  The Company  originated $2.2 million,  $8.9 million and
$7.3 million, respectively, of consumer loans during fiscal 1998, 1997 and 1996.
During its year ended June 30, 1995,  mortgage-backed  securities purchased were
$3.0 million.

     Liquidity management for the Company is both a daily and long-term
function  of  the  Company's  management  strategy.   The  Company  adjusts  its
investments in liquid assets based upon


                                       14
<PAGE>


management's assessment of (i) expected loan demand, (ii) projected purchases of
investment and  mortgage-backed  securities,  (iii) expected deposit flows, (iv)
yields  available  on  interest-bearing  deposits,  and  (v)  liquidity  of  its
asset/liability  management  program.  Excess  funds are  generally  invested in
short-term  investments such as short-term deposits and U.S. Agency obligations.
In the event  that the  Company  should  require  funds  beyond  its  ability to
generate  them  internally,  it has the ability to borrow funds from the FHLB of
Indianapolis.  Such  borrowings,  which must be  collateralized,  are limited by
federal law to 20 times the amount  paid for  capital  stock of the FHLB and are
typically limited by FHLB policy to 50% of the Company's  adjusted assets (total
assets less  borrowings).  At June 30,  1998,  the  Company had $3.1  million in
outstanding  advances  from the FHLB of  Indianapolis  and $1.1  million of FHLB
stock.  The Company has the ability to purchase  additional  stock from the FHLB
which would be necessary for the Company to increase its FHLB borrowings.

     At June 30, 1998,  the Company had  outstanding  loan  commitments  of $1.1
million. The Company anticipates that it will have sufficient funds available to
meet its current loan  commitments.  Certificates of deposit which are scheduled
to  mature  in one  year or less  from  June 30,  1998  totaled  $19.5  million.
Management believes that a significant portion of such deposits will remain with
the Company.

     The Bank is required to maintain minimum levels of liquid assets as defined
by OTS regulations.  This  requirement,  which may be varied at the direction of
the OTS  depending  upon  economic  conditions,  is based upon a  percentage  of
deposits and short-term borrowings.  The required ratio at June 30, 1998 was 5%.
The Bank's liquidity ratios were 8.83% and 11.3%, respectively, at June 30, 1998
and June 30, 1997.


                                       15
<PAGE>


     As a federally  chartered  savings bank, the Bank is required to maintain a
minimum level of regulatory  capital. At June 30, 1998, the Bank exceeded all of
its capital  requirements on a fully phased-in  basis.  The following table sets
forth AmericanTrust's compliance with its capital requirements at June 30, 1998.

                                                             At June 30, 1998
                                                         -----------------------
                                                         Amount(1)       Percent
                                                         ---------       -------
Tangible Capital:
   Capital level ............................            $7,023            12.1%
   Requirement ..............................               870             1.5
                                                         ------            ----
   Excess ...................................            $6,153            10.6%
                                                         ======            ====

Core Capital:
   Capital level ............................            $7,023            12.0%
   Requirement(2) ...........................             1,749             4.0
                                                         ------            ----
   Excess ...................................            $5,274             9.0%
                                                         ======            ====

Risk-Based Capital:
   Capital level ............................            $7,404            19.0%
   Requirement(3) ...........................             3,118             8.0
                                                         ------            ----
   Excess ...................................            $4,286            11.0%
                                                         ======            ====

----------
(1)  Tangible  and core  capital  levels are shown as a  percentage  of adjusted
     total  assets;  risk-based  capital  levels  are shown as a  percentage  of
     risk-weighted assets.

(2)  In April 1991,  the OTS  proposed a core  capital  requirement  for savings
     associations  comparable to the  requirement for national banks that became
     effective  December  31, 1990.  The proposal  calls for an OTS core capital
     requirement  of at least 3% of  total  adjusted  assets  for  thrifts  that
     receive the highest supervisory rating for safety and soundness,  with a 4%
     to 5% core capital requirement for all other thrifts.

(3)  Includes $382,000 of general valuation allowances.

Impact of New Accounting Standards and Changes in Federal Tax Law

     In  February  1997,  the FASB  issued  SFAS No.  128,  Earnings  per Share,
establishing  standards for computing and presenting  earnings per share ("EPS")
and applies to entities  with  publicly  held common stock or  potential  common
stock,  as well as any other entity that chooses to present EPS in its financial
statements.

     This  Statement  simplifies  the current  standards  of APB Opinion No. 15,
Earnings per Share, and makes them comparable to international EPS standards. It
eliminates the  presentation  of primary EPS and requires  presentation of basic
EPS (the  principal  difference  being that  common  stock  equivalents  are not
considered in the computation of basic EPS). It also requires dual  presentation
of basic and diluted EPS on the face of the income  statement  for all  entities
with complex capital  structures and requires a reconciliation  of the numerator
and denominator of the basic EPS computation of the numerator and denominator of
the diluted EPS computation.

     Basic EPS includes no dilution and is computed by dividing income available
to  common  stockholders  by  the  weighted-average   number  of  common  shares
outstanding  for the period.  Diluted EPS reflects the  potential  dilution that
could occur if the  potential  common  shares were  exercised or converted  into
common stock or resulted in the issuance of common stock that then shared in the


                                       16
<PAGE>


earnings of the  entity.  Diluted  EPS is  computed  similarly  to that of fully
diluted EPS pursuant to
Opinion No. 15.

     The Company  adopted the  statement on January 1, 1998,  and as required by
the statement restated all prior period EPS data presented in this Annual Report
to Stockholders.

     In February 1997,  the FASB issued SFAS No. 129,  Disclosure of Information
about Capital Structure, continuing the current requirements to disclose certain
information  about an entity's  capital  structure  found in APB Opinion No. 10,
Omnibus  Opinion  -- 1966,  Opinion  No.  15,  and SFAS No.  47,  Disclosure  of
Long-Term  Obligations.  It consolidates  specific disclosure  requirements from
those standards.  SFAS No. 129 is effective for our financial  statements issued
for periods ending after December 15, 1997, including interim periods.

     In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
establishing standards for reporting and display of comprehensive income and its
components   (revenues,   expenses,   gains  and   losses)  in  a  full  set  of
general-purpose  financial  statements.  It  requires  that all  items  that are
required  to  be  recognized  under   accounting   standards  as  components  of
comprehensive income be reported in a financial statement that is displayed with
the same  prominence as other  financial  statements.  This  Statement  does not
require a specific  format for that  financial  statement  but requires  that an
enterprise  display an amount  representing total  comprehensive  income for the
period in that financial statement.

     SFAS No. 130 will also require the Company to (a)  classify  items of other
comprehensive  income by their nature in a financial  statement  and (b) display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in capital in the equity section of a statement of
financial position.

     The Statement is effective for fiscal years  beginning  after  December 15,
1997.  Reclassification of financial statements for earlier periods provided for
comparative purposes is required.

     In June 1997, the FASB issued SFAS No. 131,  Disclosures  about Segments of
an Enterprise and Related Information, establishing standards for the way public
business  enterprises  report  information  about  operating  segments in annual
financial  statements  and  requires  that  those  enterprises  report  selected
information  about  operating  segments in interim  financial  reports issued to
shareholders.  It also  establishes  standards  for  related  disclosures  about
products and services,  geographic  areas and major  customers.  This  Statement
supersedes  SFAS  No.  14,  Financial  Reporting  for  Segments  of  a  Business
Enterprise,  but  retains  the  requirement  to report  information  about major
customers.   It  amends  SFAS  No.  94,   Consolidation  of  All  Majority-Owned
Subsidiaries,  to remove the  special  disclosure  requirements  for  previously
unconsolidated subsidiaries.

     SFAS No. 131 requires that a public business  enterprise  report  financial
and descriptive  information about its reportable operating segments.  Operating
segments  are  components  of  an  enterprise  about  which  separate  financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.  Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.


                                       17
<PAGE>


     This Statement requires that a public business  enterprise report a measure
of segment  profit or loss,  certain  specific  revenue  and  expense  items and
segment assets. It requires  reconciliations  of total segment  revenues,  total
segment  profit or loss,  total segment  assets and other amounts  disclosed for
segments to corresponding amounts in the enterprise's  general-purpose financial
statements.  This  statement  also  requires that a public  business  enterprise
report  descriptive  information about the way that the operating  segments were
determined,  the  products  and  services  provided by the  operating  segments,
differences  between the measurements used in reporting segment  information and
those used in the enterprise's  general-purpose financial statements and changes
in the measurement of segment amounts from period to period.

     SFAS No. 131 is effective for financial  statements  for periods  beginning
after  December  15,  1997.  In the  initial  year of  application,  comparative
information  for earlier  years is to be restated.  This  Statement  need not be
applied to interim financial  statements in the initial year of its application,
but  comparative  information  for  interim  periods  in  the  initial  year  of
application is to be reported in financial statements for interim periods in the
second year of application.

Impact of Inflation and Changing Prices

     The  Company's  Consolidated  Financial  Statements  and  Notes  have  been
prepared in accordance  with generally  accepted  accounting  principles,  which
require the measurement of financial  position and operating results in terms of
historical dollars without  consideration for changes in the relative purchasing
power of money over time due to inflation.  The impact of inflation can be found
in the  increased  cost of the Company's  operations.  Nearly all the assets and
liabilities of the Company are financial, unlike most industrial companies. As a
result,  the Company's  performance is directly  impacted by changes in interest
rates,  which  are  indirectly  influenced  by  inflationary  expectations.  The
Company's ability to match the financial assets to the financial  liabilities in
its  asset/liability  management  will tend to  minimize  the change of interest
rates  on  the  Company's  performance.  Changes  in  investment  rates  do  not
necessarily  move to the same  extent  as  changes  in the  price  of goods  and
services.

Impact of the Year 2000

     The Company has conducted a comprehensive review of its computer systems to
identify  applications  that could be affected by the "Year 2000" issue, and has
developed  an  implementation  plan to address  the issue.  The  Company's  data
processing  is  performed  primarily  in-house;  however  software  and hardware
utilized is under maintenance agreements with third party vendors,  consequently
the Company is very  dependent  on those  vendors to conduct its  business.  The
Company has already  contacted  each vendor to request time tables for year 2000
compliance  and expected  costs,  if any, to be passed along to the Company.  To
date,  the  Company  has  been  informed  that  its  primary  service  providers
anticipate  that all  reprogramming  efforts  will be  completed by December 31,
1999, allowing the Company adequate time for testing. Certain other vendors have
not yet responded,  however, the Company will pursue other options if it appears
that these  vendors will be unable to comply.  Management  does not expect these
costs to have a  significant  impact on its  financial  position  or  results of
operations  however,  there can be no assurance that the vendors systems will be
2000  compliant,  consequently  the  Company  could incur  incremental  costs to
convert to another  vendor.  The Company has identified  certain of its hardware
and  software  equipment  that will not be Year 2000  compliant  and  intends to
purchase new  equipment  and software  prior to March 31,  1999.  These  capital
expenditures are expected to total approximately $250,000.


                                       18
<PAGE>


                      AMTRUST CAPITAL CORP. AND SUBSIDIARY

                        Consolidated Financial Statements
                          June 30, 1998, 1997 and 1996




                                       19
<PAGE>


                      AMTRUST CAPITAL CORP. AND SUBSIDIARY
                                Table of Contents


                                                                            Page
--------------------------------------------------------------------------------


Financial Statements

   Independent auditor's report                                                1

   Consolidated balance sheet                                                  2

   Consolidated statement of income                                            3

   Consolidated statement of changes in stockholders' equity                   4

   Consolidated statement of cash flows                                        5

   Notes to consolidated financial statements                                  6




                                       20
<PAGE>




[OLIVE LETTERHEAD]

                          Independent Auditor's Report


To the Stockholders and
Board of Directors
AmTrust Capital Corp.
Peru, Indiana


We have audited the  consolidated  balance sheet of AmTrust  Capital  Corp.  and
subsidiary as of June 30, 1998 and 1997, and the related consolidated statements
of income,  changes in stockholders' equity and cash flows for each of the three
years in the period ended June 30, 1998. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  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 described above present
fairly, in all material respects, the consolidated financial position of AmTrust
Capital Corp.  and  subsidiary as of June 30, 1998 and 1997,  and the results of
their  operations and their cash flows for each of the three years in the period
ended  June  30,  1998,  in  conformity  with  generally   accepted   accounting
principles.


Olive LLP
Indianapolis, Indiana
July 23, 1998, except for Note 15
   as to which the date is
   July 24, 1998


                                       21
<PAGE>


                      AMTRUST CAPITAL CORP. AND SUBSIDIARY
                           Consolidated Balance Sheet

<TABLE>
<CAPTION>
June 30                                                                1998           1997
---------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>         
Assets
   Cash and due from banks                                       $  1,776,692    $  1,514,563
   Interest-bearing deposits                                        1,099,107       1,093,288
   Investment securities
     Available for sale                                             4,349,636      12,148,535
     Held to maturity                                               1,139,995       2,067,249
                                                                 ----------------------------
         Total investment securities                                5,489,631      14,215,784
   Mortgage loans held for sale                                     1,944,088       1,081,538
   Loans                                                           43,091,521      50,167,394
   Allowance for loan losses                                         (517,653)       (522,743)
                                                                 ----------------------------
         Net loans                                                 42,573,868      49,644,651
   Premises and equipment                                           1,794,803       1,277,976
   Federal Home Loan Bank of Indianapolis stock                     1,050,000       1,050,000
   Cash surrender value--life insurance policies                    1,296,746       1,135,038
   Interest receivable                                                257,754         376,812
   Deferred income tax benefit                                         66,575         204,193
   Current income tax refundable                                      123,735         196,299
   Other assets                                                       595,610         455,320
                                                                 ----------------------------
         Total assets                                            $ 58,068,609    $ 72,245,462
                                                                 ============================
Liabilities
   Deposits
     Noninterest bearing                                         $    699,043    $    451,252
     Interest bearing                                              46,182,445      53,071,449
                                                                 ----------------------------
         Total deposits                                            46,881,488      53,522,701
   Advances from Federal Home Loan Bank of Indianapolis             3,070,405      10,901,738
   Interest payable                                                   101,259          85,254
   Other liabilities                                                  584,079         272,256
                                                                 ----------------------------
         Total liabilities                                         50,637,231      64,781,949
                                                                 ----------------------------
Commitments and Contingencies

Stockholders' Equity
   Preferred stock, $.01 par value
     Authorized and unissued--350,000 shares
   Common stock, $.01 par value
     Authorized--1,750,000 shares
     Issued--580,064 shares                                             5,801           5,801
   Paid-in capital                                                  4,236,559       4,193,137
   Retained earnings--substantially restricted                      4,284,019       4,249,256
   Unearned employee stock ownership plan ("ESOP")
     shares--27,594 and 34,804 shares                                (220,752)       (278,430)
   Treasury stock at cost--76,610 and 53,585 shares                  (915,583)       (553,086)
   Net unrealized gain (loss) on securities available for sale         41,334        (153,165)
                                                                 ------------    ------------
         Total stockholders' equity                                 7,431,378       7,463,513
                                                                 ------------    ------------

         Total liabilities and stockholders' equity              $ 58,068,609    $ 72,245,462
                                                                 ============    ============
</TABLE>


See notes to consolidated financial statements.

                                       22
<PAGE>


                      AMTRUST CAPITAL CORP. AND SUBSIDIARY
                        Consolidated Statement of Income

<TABLE>
<CAPTION>
Year Ended June 30                                           1998         1997         1996
----------------------------------------------------------------------------------------------
<S>                                                       <C>          <C>          <C>       
Interest Income
   Loans receivable                                       $3,652,724   $3,997,135   $3,949,769
   Investment securities, including dividends                943,926    1,074,817      875,140
   Deposits with financial institutions                       61,708       55,128      131,645
                                                          ------------------------------------
         Total interest income                             4,658,358    5,127,080    4,956,554
                                                          ------------------------------------

Interest Expense
   Deposits                                                2,187,280    2,257,431    2,314,154
   Advances from Federal Home Loan Bank of Indianapolis      663,727      912,693      769,631
                                                          ------------------------------------
         Total interest expense                            2,851,007    3,170,124    3,083,785
                                                          ------------------------------------

Net Interest Income                                        1,807,351    1,956,956    1,872,769
   Provision for loan losses                                  92,284       32,652      124,683
                                                          ------------------------------------

Net Interest Income After Provision for Losses on Loans    1,715,067    1,924,304    1,748,086
                                                          ------------------------------------

Other Income
   Service charges on deposit accounts                        99,981       76,847       98,091
   Gains on sale of
     Investment securities                                                              15,436
     Loans held for sale                                     283,611      174,974      200,274
     Deposits                                                                          180,613
     Bank premises                                                                      80,322
   Loan fees and service charges                              60,784       77,455       91,024
   Annuity and other commissions                             160,992      144,052       98,291
   Other income                                              108,858       82,278       83,181
                                                          -------------------------------------
                                                             714,226      555,606      847,232
                                                          ------------------------------------
Other Expenses
   Salaries and employee benefits                            982,195      915,164      869,743
   Net occupancy expenses                                    149,113      124,753      152,818
   Equipment expenses                                        118,454      107,881       97,914
   Data processing fees                                      118,508      106,589      117,178
   Deposit insurance expense                                  31,295      360,563      117,208
   Legal fees                                                 22,672       53,269       65,395
   Customer deposit account expense                           26,381       53,524       66,599
   Advertising and promotion                                  55,117       41,599       50,123
   Printing and office supplies                               54,886       48,463       59,688
   Bank fees                                                  60,006       49,290       71,875
   Repossession expense                                       66,268       18,200          738
   Other expenses                                            487,555      419,523      402,196
                                                          ------------------------------------
                                                           2,172,450    2,298,818    2,071,475
                                                          ------------------------------------

Income Before Income Tax                                     256,843      181,092      523,843
   Income tax expense                                        118,511       46,798      191,085
                                                          ------------------------------------

Net Income                                                $  138,332   $  134,294   $  332,758
                                                          ====================================

Basic Earnings per share                                        $.29         $.27         $.63
Diluted Earnings per share                                       .28          .27          .63
</TABLE>


See notes to consolidated financial statements.


                                       23
<PAGE>


                      AMTRUST CAPITAL CORP. AND SUBSIDIARY
            Consolidated Statement of Changes in Stockholders' Equity

<TABLE>
<CAPTION>


                                                            Common Stock
                                                       ----------------------          Paid-in          Retained          Unearned
                                                    Shares            Amount           Capital          Earnings         ESOP Shares
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>               <C>               <C>               <C>
Balances, July 1, 1995                              580,064         $    5,801        $4,170,097        $3,835,102        $(352,678)

   Net income for 1996                                                                                     332,758
   Purchase of common stock
   ESOP shares earned                                                                      8,121                             37,124
   Net change in unrealized gain (loss) on
     securities available for sale
                                                -----------------------------------------------------------------------------------

Balances, June 30, 1996                             580,064              5,801         4,178,218         4,167,860         (315,554)

   Net income for 1997                                                                                     134,294
   Dividends ($.10 per share)                                                                              (52,898)
   Purchase of common stock
   ESOP shares earned                                                                     14,919                             37,124
   Recognition and retention plan ("RRP")
     shares earned
   Net change in unrealized gain (loss) on
     securities available for sale
                                                -----------------------------------------------------------------------------------

Balances, June 30, 1997                             580,064              5,801         4,193,137         4,249,256         (278,430)

   Net income for 1998                                                                                     138,332
   Dividends ($.20 per share)                                                                             (103,569)
   Purchase of common stock
   ESOP shares earned                                                                     45,400                             57,678
   RRP shares earned                                                                        (890)
   Options exercised                                                                      (1,088)
   Net change in unrealized gain (loss) on
     securities available for sale
                                                -----------------------------------------------------------------------------------

Balances, June 30, 1997                             580,064              5,801         4,236,559         4,284,019        $(220,752)
                                                ===================================================================================


<CAPTION>
                                                                                     Net Unrealized
                                                                                     Gain (Loss) on
                                                        Treasury Stock                 Securities
                                                    ------------------------           Available
                                                    Shares            Amount            For Sale          Total
                                                    -------------------------------------------------------------- 

<S>                                                 <C>            <C>                 <C>             <C>        
Balances, July 1, 1995                                                                 $ (21,187)      $ 7,637,135


   Net income for 1996                                                                                     332,758
   Purchase of common stock                         (52,205)       $  (535,299)                           (535,299)
   ESOP shares earned                                                                                       45,245
   Net change in unrealized gain (loss) on
     securities available for sale                                                      (268,550)         (268,550)
                                                    -------------------------------------------------------------- 


Balances, June 30, 1996                             (52,205)          (535,299)         (289,737)        7,211,289


   Net income for 1997                                                                                     134,294
   Dividends ($.10 per share)                                                                              (52,898)
   Purchase of common stock                          (5,000)           (56,250)                            (56,250)
   ESOP shares earned                                                                                       52,043
   Recognition and retention plan ("RRP")
     shares earned                                    3,620             38,463                              38,463
   Net change in unrealized gain (loss) on
     securities available for sale                                                       136,572           136,572
                                                    -------------------------------------------------------------- 


Balances, June 30, 1997                             (53,585)          (553,086)         (153,165)        7,463,513


   Net income for 1998                                                                                     138,332
   Dividends ($.20 per share)                                                                             (103,569)
   Purchase of common stock                         (29,220)          (429,523)                           (429,523)
   ESOP shares earned                                                                                      103,078
   RRP shares earned                                  3,295             35,488                              34,598
   Options exercised                                  2,900             31,538                              30,450
   Net change in unrealized gain (loss) on
     securities available for sale                                                       194,499           194,499
                                                    -------------------------------------------------------------- 
Balances, June 30, 1998                             (76,610)       $  (915,583)      $    41,334       $ 7,431,378
                                                    ============================================================== 
</TABLE>


See notes to consolidated financial statements.



                                       24
<PAGE>



                      AMTRUST CAPITAL CORP. AND SUBSIDIARY
                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>

    
Year Ended June 30                                                                        1998              1997             1996
----------------------------------------------------------------------------------------------------------------------------------- 

Operating Activities
<S>                                                                                <C>               <C>               <C>         
   Net income                                                                      $    138,332      $    134,294      $    332,758
   Adjustments to reconcile net income to net cash provided (used) by
     operating activities
     Provision for loan losses                                                           92,284            32,652           124,683
     Premium and discount amortization, net                                                 134              (289)            8,101
     Depreciation and amortization                                                      131,782           107,520            94,183
     Gains on sales of securities                                                                                           (15,436)
     Gain on sale of deposits                                                                                              (180,613)
     Gain on disposal of bank premises                                                                                      (80,322)
     Loss on disposal of equipment                                                        1,644
     Deferred income tax                                                                 14,108            32,881           (51,495)
     Current income tax refundable                                                       72,564          (174,194)
     Loans originated for sale                                                      (13,230,652)       (5,892,481)      (12,488,882)
     Proceeds from sales and paydowns on loans held for sale                         12,555,342         6,494,528        13,022,131
     Gains on sales of loans held for sale                                             (283,611)         (174,974)         (200,274)
     ESOP shares earned                                                                 103,078            52,043            45,245
     RRP compensation expense                                                            34,598            38,463
     Change in
       Interest receivable and other assets                                              75,139          (151,084)         (128,500)
       Cash surrender value of life insurance policies                                  (52,698)          (34,835)          (46,696)
       Interest payable and other liabilities                                           323,980          (261,307)          257,372
                                                                                   ------------------------------------------------
       Net cash provided (used) by operating activities                                 (23,976)          203,217           692,255
                                                                                   ------------------------------------------------

Investing Activities
   Net change in interest-bearing deposits                                               (5,819)         (475,446)        1,479,592
   Purchases of securities available for sale                                           (60,071)          (50,441)      (10,439,338)
   Payments on securities available for sale                                          8,075,682                           1,444,868
   Proceeds from sales of securities available for sale                                                                   3,748,088
   Payments on securities held to maturity                                              926,710           593,149         1,852,206
   Net change in mutual fund                                                            105,555
   Net change in loans                                                                6,978,499           123,042        (2,134,989)
   Proceeds from disposal of bank premises                                                                                  200,000
   Purchase of premises and equipment                                                  (650,253)         (260,977)         (177,056)
   Purchase of FHLB of Indianapolis stock                                                                                  (250,000)
   Purchase of life insurance policies                                                 (109,010)                           (109,010)
                                                                                   ------------------------------------------------
       Net cash provided (used) by investing activities                              15,261,293           (70,673)       (4,385,639)
                                                                                   ------------------------------------------------

Financing Activities
   Net change in deposits                                                            (6,641,213)        8,961,176        (5,772,323)
   Proceeds from FHLB advances                                                       28,200,000        38,716,570        41,300,000
   Repayment of FHLB advances                                                       (36,031,333)      (47,314,868)      (31,299,964)
   Exercise of options                                                                   30,450
   Purchase of common stock                                                            (429,523)          (56,250)         (535,299)
   Dividends paid                                                                      (103,569)          (52,898)
                                                                                   ------------------------------------------------
       Net cash provided (used) by financing activities                             (14,975,188)          253,730         3,692,414
                                                                                   ------------------------------------------------


Net Change in Cash                                                                      262,129           386,274              (970)


Cash and Due From Banks, Beginning of Year                                            1,514,563         1,128,289         1,129,259
                                                                                   ------------------------------------------------


Cash and Due From Banks, End of Year                                               $  1,776,692      $  1,514,563      $  1,128,289
                                                                                   ================================================


Additional Cash Flows and Supplementary Information
   Interest paid                                                                   $  2,835,002      $  3,192,068      $  3,058,401
   Income tax paid                                                                       36,038           283,711           127,350
   Capitalized mortgage servicing rights                                                 96,371
</TABLE>

See notes to consolidated financial statements.


                                       25
<PAGE>


                      AMTRUST CAPITAL CORP. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements
                       (Table Dollar Amounts in Thousands)


Note 1 -- Nature of Operations and Summary of Significant Accounting Policies

The accounting and reporting  policies of AmTrust Capital Corp.  ("Company") and
its wholly owned subsidiary, AmericanTrust Federal Savings Bank ("Bank") and the
Bank's wholly owned subsidiary, Indiana Financial Service Corporation ("IFSCO"),
conform to generally  accepted  accounting  principles  and reporting  practices
followed  by the thrift  industry.  The more  significant  of the  policies  are
described below.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

The  Company  is a  thrift  holding  company  whose  principal  activity  is the
ownership and  management of the Bank.  The Bank operates under a federal thrift
charter and provides  full  banking  services in a single  significant  business
segment. As a  federally-chartered  thrift, the Bank is subject to regulation by
the Office of Thrift  Supervision  ("OTS")  and the  Federal  Deposit  Insurance
Corporation.

The Bank  generates  mortgage and  consumer  loans and  receives  deposits  from
customers located  primarily in Miami and Howard counties.  The Bank's loans are
generally  secured by specific  items of collateral  including real property and
consumer  assets.  Although the loan  portfolio is  diversified,  a  significant
portion of the loan portfolio is comprised of mortgage loans.

IFSCO  provides  annuity  sales,  credit  life  insurance,  and title  insurance
services to customers in the Bank's market areas.

Consolidation--The consolidated financial statements include the accounts of the
Company,  the Bank,  and IFSCO after  elimination  of all material  intercompany
transactions.

Investment  Securities--Debt  securities are classified as held to maturity when
the Bank has the positive intent and ability to hold the securities to maturity.
Securities held to maturity are carried at amortized cost.

Debt  securities  not classified as held to maturity are classified as available
for  sale.  Securities  available  for  sale  are  carried  at fair  value  with
unrealized gains and losses reported  separately through  stockholders'  equity,
net of tax.

Amortization  of premiums  and  accretion of  discounts  are recorded  using the
interest  method as interest income from  securities.  Realized gains and losses
are  recorded  as net  security  gains  (losses).  Gains and  losses on sales of
securities are determined on the specific-identification method.

Mortgage  loans held for sale are  recorded  at the lower of  aggregate  cost or
market value. Net unrealized  losses, if any, are recognized through a valuation
allowance by charges to income based on the difference  between  estimated sales
proceeds and aggregate cost.


                                       26
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Loans are carried at the principal amount outstanding.  A loan is impaired when,
based on current  information  or events,  it is probable  that the Bank will be
unable to collect all amounts due  (principal  and  interest)  according  to the
contractual terms of the loan agreement.  Payments with insignificant delays not
exceeding 90 days outstanding are not considered  impaired.  Certain  nonaccrual
and  substantially  delinquent loans may be considered to be impaired.  The Bank
considers its investment in one-to-four family residential loans, consumer loans
and lease  contracts to be  homogeneous  and  therefore  excluded  from separate
identification  for evaluation of impairment.  Interest income is accrued on the
principal  balances of loans. The accrual of interest on impaired and nonaccrual
loans is discontinued when, in management's  opinion, the borrower may be unable
to meet payments as they become due. When interest accrual is discontinued,  all
unpaid  accrued  interest is reversed when  considered  uncollectible.  Interest
income is subsequently recognized only to the extent cash payments are received.
Certain  loan fees and  direct  costs are being  deferred  and  amortized  as an
adjustment of yield on the loans over the contractual lives of the loans. When a
loan is paid off or sold, any unamortized  loan  origination fee or cost balance
is credited to income.

Allowance  for  loan  losses  is  maintained  to  absorb  loan  losses  based on
management's  continuing  review and  evaluation  of the loan  portfolio and its
judgment  as to  the  impact  of  economic  conditions  on  the  portfolio.  The
evaluation by management includes consideration of past loss experience, changes
in the composition of the portfolio,  the current  condition and amount of loans
outstanding,  and the probability of collecting all amounts due.  Impaired loans
are  measured by the present  value of expected  future cash flows,  or the fair
value of the collateral of the loan, if collateral dependent.

The  determination  of the adequacy of the allowance for loan losses is based on
estimates  that are  particularly  susceptible  to  significant  changes  in the
economic environment and market conditions.  Management believes that as of June
30,  1998,  the  allowance  for loan  losses is  adequate  based on  information
currently  available.  A worsening or  protracted  economic  decline in the area
within which the Company  operates  would  increase the likelihood of additional
losses due to credit and market risks and could  create the need for  additional
loss reserves.

Premises  and  equipment  are carried at cost net of  accumulated  depreciation.
Depreciation is computed using the  straight-line  method based on the estimated
useful  lives of the assets.  Maintenance  and repairs are  expensed as incurred
while major  additions and  improvements  are  capitalized.  Gains and losses on
dispositions are included in current operations.

Federal Home Loan Bank stock is a required  investment for institutions that are
members of the Federal Home Loan Bank ("FHLB") system.  The required  investment
in the common stock is based on a predetermined formula.

Mortgage  servicing rights on originated loans are capitalized by allocating the
total cost of the mortgage loans between the mortgage  servicing  rights and the
loans based on their  relative  fair values.  Capitalized  servicing  rights are
amortized in proportion to and over the period of estimated servicing revenues.

Treasury stock is stated at cost. Cost is determined by the first-in,  first-out
method.

Stock  options  are granted for a fixed  number of shares to  employees  with an
exercise  price equal to the fair value of the shares at the date of grant.  The
Company  accounts for and will  continue to account for stock  option  grants in
accordance  with APB Opinion No. 25,  Accounting  for Stock Issued to Employees,
and,  accordingly,  recognizes  no  compensation  expense  for the stock  option
grants.


                                       27
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Income tax in the consolidated  statement of income includes deferred income tax
provisions or benefits for all significant  temporary differences in recognizing
income and expenses for financial reporting and income tax purposes. The Company
files consolidated income tax returns with its subsidiaries.

Earnings per share have been  computed  based upon the weighted  average  common
shares  outstanding and potential common shares.  Unearned ESOP shares have been
excluded from the  computation  of average  common  shares and potential  common
shares outstanding.


Note 2 -- Investment Securities
<TABLE>
<CAPTION>
                                                                          1998
                                        ------------------------------------------------------------------
                                                                 Gross            Gross
                                             Amortized        Unrealized        Unrealized          Fair
June 30                                        Cost             Gains             Losses            Value
----------------------------------------------------------------------------------------------------------
<S>                                           <C>               <C>               <C>               <C>
Available for sale
   Federal agencies                           $  500                              $    1            $  499
   Mortgage-backed securities                  2,717            $   15                 6             2,726
   Mutual funds                                1,071                55                 1             1,125
                                              ------------------------------------------------------------
         Total available for sale              4,288                70                 8             4,350
                                              ------------------------------------------------------------

Held to maturity
   Mortgage-backed securities                  1,063                 5                15             1,053
   Other asset-backed securities                  77                                  35                42
                                              ------------------------------------------------------------
         Total held to maturity                1,140                 5                50             1,095
                                              ------------------------------------------------------------

         Total investment securities          $5,428            $   75            $   58            $5,445
                                              ============================================================


                                                                          1997
                                        ------------------------------------------------------------------
                                                                 Gross           Gross
                                             Amortized        Unrealized        Unrealized          Fair
June 30                                        Cost             Gains             Losses            Value
----------------------------------------------------------------------------------------------------------
Available for sale
   Federal agencies                           $ 8,500                             $    191         $ 8,309
   Mortgage-backed securities                   2,792                                   68           2,724
   Mutual funds                                 1,117                                    1           1,116
                                              ------------------------------------------------------------
         Total available for sale              12,409                                  260          12,149
                                              ------------------------------------------------------------

Held to maturity
   Federal agencies                               500                                    7             493
   Mortgage-backed securities                   1,384                                   34           1,350
   Other asset-backed securities                  183                                   33             150
                                              ------------------------------------------------------------
         Total held to maturity                 2,067                                   74           1,993
                                              ------------------------------------------------------------

         Total investment securities          $14,476           $     0           $    334         $14,142
                                              ============================================================
</TABLE>


                                       28
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The amortized  cost and fair value of securities  held to maturity and available
for sale at June 30, 1998, by contractual  maturity,  are shown below.  Expected
maturities will differ from contractual  maturities because issuers may have the
right  to  call  or  prepay  obligations  with or  without  call  or  prepayment
penalties.
<TABLE>
<CAPTION>
                                                  Available for Sale               Held to Maturity
                                             ----------------------------------------------------------
                                             Amortized             Fair         Amortized          Fair
                                               Cost                Value          Cost            Value
--------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>               <C>              <C>
Less than one
One to five years
Five to ten years                            $   500           $    499
After ten years
                                             -----------------------------------------------------------
                                                 500                499
Mortgage-backed securities                     2,717              2,726          $1,063           $1,053
Other asset-backed securities                                                        77               42
Mutual funds                                   1,071              1,125
                                             -----------------------------------------------------------

         Totals                               $4,288             $4,350          $1,140           $1,095
                                             ===========================================================
</TABLE>

Securities with a carrying value of $314,314 and $8,146,000 were pledged at June
30, 1998 and 1997 to secure FHLB advances.

There were no sales of  securities  for the years  ended June 30, 1998 and 1997.
Proceeds  from  sales  of  securities   available  for  sale  during  1996  were
$3,748,000.  Gross  gains of  $15,000  for the year  ended  June 30,  1996  were
realized on those sales.


Note 3 -- Loans Allowance
<TABLE>
<CAPTION>
June 30                                                                   1998             1997
-------------------------------------------------------------------------------------------------
<S>                                                                    <C>               <C>    
Loans at June 30
   Real estate mortgage loans--1 to 4 family dwellings                  $22,744           $24,460
   Real estate mortgage loans--other                                      1,956             2,307
   Consumer loans                                                       16,595            20,577
   Construction loans                                                      179               919
   Lease contracts                                                       1,132             1,491
                                                                  --------------------------------
         Total loans                                                    42,606            49,754
                                                                  --------------------------------

   Undisbursed portion of loans                                           (439)             (857)
   Unearned interest                                                       (16)              (25)
   Deferred loan fees and costs, net                                       941             1,295
                                                                  --------------------------------
                                                                           486               413
                                                                  --------------------------------

                                                                       $43,092           $50,167
                                                                  ================================
</TABLE>




                                       29
<PAGE>




AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)

<TABLE>
<CAPTION>
Year Ended June 30                                                                    1998                1997                1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                 <C>                 <C>    
Allowance for loan losses
   Balances, July 1                                                                 $   523             $   494             $   400
   Provision for loan losses                                                             92                  33                 125
   Recoveries on loans                                                                                        5
   Loans charged off                                                                    (97)                 (9)                (31)
                                                                                    -----------------------------------------------

   Balances, June 30                                                                $   518             $   523             $   494
                                                                                    ===============================================

June 30                                                                                1998                1997                1996
-----------------------------------------------------------------------------------------------------------------------------------

Impaired and other nonperforming loans at June 30
    Total impaired (no allowance is required)                                       $   278             $   280
   Nonaccruing                                                                        1,767               1,796             $ 1,580
   Restructured                                                                         359                 363                 809

Other information on impaired loans:

Year Ended June                                                                                            1998                1997
-----------------------------------------------------------------------------------------------------------------------------------

Average balance of impaired loans                                                                       $   279             $   282
Interest income recognized on impaired loans                                                                 27                  14
Cash-basis interest included above                                                                           25                  12
</TABLE>


Additional interest income of approximately  $171,000,  $169,000 and $26,000 for
1998,  1997 and 1996 would have been  recorded  had  income on  nonaccruing  and
restructured loans been considered  collectible and accounted for on the accrual
basis under their original terms.

The Bank has a business  relationship  with Bennett Funding Group, Inc. ("BFGI")
which filed for Chapter 11 bankruptcy protection on March 29, 1996. From 1992 to
1995, the Bank purchased  commercial lease contracts covering business equipment
from BFGI, for which BFGI acts as servicer.  At June 30, 1998 and 1997, the book
value of the Bank's lease contracts totaled $449,000 and $817,000.  In addition,
the Bank had  $674,000 at June 30, 1998 and 1997 in Short Term Dealer  Contracts
with  Bennett  Leasing  Corporation  ("BLC")  which were later  included  in the
bankruptcy  proceedings.  Newspaper  reports have  indicated  that BFGI may have
utilized  fictitious leases in some of its business  activities.  The Securities
and Exchange  Commission  has filed a criminal and civil suit against an officer
of BFGI which alleges various  fraudulent actions including the sale of the same
leases to two or more buyers.  An allowance for loan losses of $216,000 has been
allocated  for  potential  losses  on  leases.   The  leases  are  currently  on
non-accrual  status.  BFGI  continues  to service  the lease  contracts  and has
initially  remitted $350,000 during June 1998 under the  conservatorship  of the
court-appointed  Trustee.  The Bank is  continuing  to pursue  collection of the
remaining  balance of the  contracts.  The Company is continuing to evaluate the
allegations  against BFGI and BLC and the effect that the bankruptcy filing will
have on its  leases  and its  collateral.  Until  the  evaluation  is  complete,
management is unable to predict with any certainty the effects of the bankruptcy
on the Bank.



                                       30
<PAGE>

AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The Bank  has  entered  into  transactions  with  certain  directors,  executive
officers,  significant  stockholders and their affiliates or associates (related
parties).  Such  transactions  were made in the  ordinary  course of business on
substantially  the same  terms  and  conditions,  including  interest  rates and
collateral,  as those  prevailing at the same time for  comparable  transactions
with other  customers,  and did not, in the opinion of management,  involve more
than normal credit risk or present other unfavorable features.

The  aggregate  amount of loans,  as defined,  to such  related  parties were as
follows:

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

Balances, July 1, 1997                                                    $470

New loans, including renewals                                              451
Payments, etc., including renewals                                        (331)
                                                                    ------------

Balances, June 30, 1998                                                   $590
                                                                    ============


Note 4 -- Premises and Equipment

June 30                                                  1998           1997
--------------------------------------------------------------------------------

Land                                                    $   173         $   173
Buildings and land improvements                           1,477           1,060
Furniture and equipment                                   1,000             768
                                                    ----------------------------
       Total cost                                         2,650           2,001
Accumulated depreciation                                   (855)           (723)
                                                    ----------------------------

         Net                                             $1,795          $1,278
                                                    ============================


                                       31
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Note 5 -- Deposits

June 30                                                           1998     1997
--------------------------------------------------------------------------------

Noninterest bearing                                            $   699   $   451
Interest-bearing demand                                          7,034     6,849
Savings deposits                                                10,089    11,592
Certificates and other time deposits of $100,000 or more        10,798    13,287
Other certificates and time deposits                            18,261    21,344
                                                               -----------------

       Total deposits                                          $46,881   $53,523
                                                               =================

Certificates and other time deposits maturing in
years ending June 30


 1999                                                          $19,459
 2000                                                            4,277
 2001                                                            2,172
 2002                                                              849
 2003                                                            1,960
Thereafter                                                         342
                                                               -------
                                                                      
                                                               $29,059
                                                               =======
                                                                        


Note 6 -- Advances From Federal Home Loan Bank of Indianapolis

                            1998                          1997
                    ---------------------        ------------------------ 
                                 Weighted                        Weighted
                                 Average                         Average
June 30               Amount      Rate           Amount           Rate
-----------------------------------------        ------------------------

Maturities in years
 ending June 30

1998                                            $ 6,900           5.97%
1999                 $ 1,390      6.04%           1,630           5.97
2006                   1,680      6.71            2,372           6.71
                       -----                      -----  


                     $ 3,070      6.41          $10,902           6.13
                     =======                    =======           ====
                                  

The terms of a security  agreement  with the FHLB  require the Bank to pledge as
collateral for advances specific qualifying first mortgage loans in an amount of
approximately $4,668,000, securities in an amount of approximately $314,000, and
all stock in the FHLB.  Advances are subject to restrictions or penalties in the
event of prepayment.


                                       32
<PAGE>

AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Note 7 -- Loan Servicing

Mortgage  loans  serviced  for  others  are  not  included  in the  accompanying
consolidated  balance  sheet.  The unpaid  principal  balances of mortgage loans
serviced for others totaled  $31,833,000  at June 30, 1998;  $29,025,000 at June
30, 1997; and $27,887,000 at June 30, 1996.

On July 1, 1996, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 122,  Accounting  for Mortgage  Servicing  Rights.  This  Statement
requires the  capitalization of retained mortgage servicing rights on originated
or purchased  loans by allocating  the total cost of the mortgage  loans between
the mortgage servicing rights and the loans (without the servicing rights) based
on their relative fair values.  SFAS No. 122 was superseded  during 1996 by SFAS
No.  125,  Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishment  of Liabilities.  SFAS No. 125 (as did SFAS No. 122) requires the
assessment of impairment of capitalized  mortgage  servicing rights and requires
that  impairment be recognized  through a valuation  allowance based on the fair
value of  those  rights.  The  aggregate  fair  value  of  capitalized  mortgage
servicing rights at June 30, 1998 approximates carrying value.

Year Ended June 30                                   1998          1997
--------------------------------------------------------------------------------

Mortgage servicing rights               
   Balance, beginning of year                       $  48  
   Servicing rights capitalized                        96          $53
   Amortization of servicing rights                   (29)          (5)
                                              ---------------------------       
   Balances, end of year                             $115          $48
                                              ===========================


                                       33
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Note 8 -- Income Tax

<TABLE>
<CAPTION>
Year Ended June 30                                                        1998           1997          1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>             <C>           <C> 
Income tax expense
   Currently payable
     Federal                                                             $   72          $  9          $182
     State                                                                   33             5            61
   Deferred
     Federal                                                                 14            27           (36)
     State                                                                                  6           (16)
                                                                      -----------------------------------------

         Total income tax expense                                          $119           $47          $191
                                                                      =========================================

Reconciliation of federal statutory to actual tax expense
   Federal statutory income tax at 34%                                    $  87           $62          $178
   Non-taxable income                                                       (25)          (12)          (17)
   Non-deductible expenses                                                   20             9             9
   Effect of state income taxes                                              21             7            30
   Other                                                                     16           (19)           (9)
                                                                      -----------------------------------------

         Actual tax expense                                                $119           $47          $191
                                                                      =========================================

         Effective income tax rate                                         46.1%         25.8%         34.0%
                                                                      =========================================
</TABLE>

The tax expense related to securities gains was $6,174 for 1996.


                                       34
<PAGE>

AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


A cumulative net deferred tax asset is included in other assets.  The components
of the asset are as follows:

June 30                                                     1998          1997
--------------------------------------------------------------------------------
Assets
   Allowance for loan losses                                $171           $172
   Deferred compensation                                      85             59
   Accounting for accrued expenses                            15
   Allowance for accrued interest                             15             12
   Unrealized losses on securities available for sale                       103
   Other                                                       2             10
                                                           ---------------------
         Total assets                                        288            356
                                                           ---------------------

Liabilities
   Depreciation                                               81             72
   State income tax                                            7              9
   Mortgage servicing rights                                  49             21
   Loan fees                                                  41             30
   FHLB stock dividends                                       20             20
   Unrealized gain on securities                              20
   Other                                                       3
                                                           ---------------------
         Total liabilities                                   221            152
                                                           ---------------------

                                                           $  67           $204
                                                           =====================

No valuation allowance was required at June 30, 1998 or June 30, 1997.

Retained earnings include approximately  $1,014,000 for which no deferred income
tax  liability  has been  recognized.  This amount  represents  an allocation of
income to bad debt  deductions  for tax purposes  only.  Reduction of amounts so
allocated for purposes  other than tax bad debt losses  including  redemption of
bank stock or excess dividends, or loss of "bank status" would create income for
tax purposes only, which income would be subject to the  then-current  corporate
income tax rate.  The  unrecorded  deferred  income tax  liability  on the above
amount was approximately $400,000.

                                       35
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Note 9 -- Commitments and Contingent Liabilities

In  the  normal  course  of  business  there  are  outstanding  commitments  and
contingent  liabilities,  such as commitments  to extend  credit,  which are not
included in the accompanying financial statements. The Bank's exposure to credit
loss  in the  event  of  nonperformance  by the  other  party  to the  financial
instruments  for  commitments to extend credit is represented by the contractual
or notional amount of those instruments.  The Bank uses the same credit policies
in making such  commitments as it does for instruments  that are included in the
consolidated balance sheet.

Financial  instruments  whose contract amount  represents credit risk at June 30
were as follows:

                                                         1998      1997
--------------------------------------------------------------------------------

Mortgage loan commitments                                $35       $181
Consumer loan commitments                                726        766
Mandatory commitments to sell loans to investors 
  with interest rates ranging from 7.63% to 12.45%       322        258
Loans sold with recourse                               1,938      2,507

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 or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash  requirements.  The Bank evaluates each customer's  credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's  credit
evaluation.  Collateral held varies,  but may include  residential  real estate,
income-producing commercial properties, or other assets of the borrower.

The  Company  and Bank are also  subject  to claims  and  lawsuits  which  arise
primarily in the ordinary  course of business.  It is the opinion of  management
that the  disposition  or  ultimate  determination  of such  possible  claims or
lawsuits will not have a material adverse effect on the  consolidated  financial
position of the Company or Bank.


                                       36
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Note 10 --Dividends and Capital Restrictions

The  Company is not  subject to any  regulatory  restriction  on the  payment of
dividends to its stockholders.

The OTS  regulations  provide  that a  savings  association  which  meets  fully
phased-in  capital  requirements  (those in effect on December  31, 1994) and is
subject only to "normal supervision" may pay out, as a dividend,  100 percent of
net income to date over the  calendar  year and 50  percent  of surplus  capital
existing at the beginning of the calendar year without supervisory approval, but
with 30  days  prior  notice  to the  OTS.  Any  additional  amount  of  capital
distributions  would require prior regulatory  approval.  A savings  association
failing  to  meet  current  capital   standards  may  only  pay  dividends  with
supervisory approval.

At the time of conversion,  a liquidation  account was  established in an amount
equal to the Bank's net worth as reflected in the latest  statement of condition
used in its final  conversion  offering  circular.  The  liquidation  account is
maintained  for the benefit of eligible  deposit  account  holders who  maintain
their deposit account in the Bank after  conversion.  In the event of a complete
liquidation (and only in such event),  each eligible deposit account holder will
be entitled to receive a liquidation  distribution from the liquidation  account
in the  amount of the then  current  adjusted  subaccount  balance  for  deposit
accounts  then  held,  before  any  liquidation  distribution  may  be  made  to
stockholders.  Except for the repurchase of stock and payment of dividends,  the
existence of the liquidation account will not restrict the use or application of
net worth. The initial balance of the liquidation account was $3,625,000.

At June 30, 1998,  total  stockholder's  equity of the Bank was  $6,877,000,  of
which approximately $2,498,000 was available for the payment of dividends.


Note 11 -- Regulatory Capital

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies and is assigned to a capital category. The assigned
capital  category is largely  determined  by three  ratios  that are  calculated
according to the regulations:  total risk adjusted capital,  Tier 1 capital, and
Tier 1 leverage  ratios.  The ratios are intended to measure capital relative to
assets and  credit  risk  associated  with those  assets and  off-balance  sheet
exposures of the entity.  The capital category assigned to an entity can also be
affected by  qualitative  judgments  made by regulatory  agencies about the risk
inherent in the entity's activities that are not part of the calculated ratios.

There are five capital categories defined in the regulations,  ranging from well
capitalized to critically  undercapitalized.  Classification of a bank in any of
the  undercapitalized  categories can result in actions by regulators that could
have a material  effect on a bank's  operations.  At June 30, 1998 and 1997, the
Bank is categorized as well  capitalized  and met all subject  capital  adequacy
requirements.  There  are no  conditions  or  events  since  June 30,  1998 that
management believes have changed the Bank's classification.


                                       37
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The Bank's actual and required capital amounts and ratios are as follows:
<TABLE>
<CAPTION>
                                                                                    1998
                                                    -----------------------------------------------------------------------
                                                                                Required for            To Be Well
                                                            Actual             Adequate Capital(1)     Capitalized(1)
                                                    -----------------------------------------------------------------------
June 30                                                Amount      Ratio      Amount      Ratio     Amount       Ratio
---------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>        <C>          <C>      <C>         <C>  
Total risk-based capital(1) (to risk-weighted assets)  $7,404      19.0%      $3,118       8.0%     $3,898      10.0%

Core capital(1) (to adjusted tangible assets)           7,023      12.1%       1,740       4.0%      3,480       6.0%

Core capital(1) (to adjusted total assets)              7,023      12.0%       1,749       4.0%      2,914       5.0%

----------
(1) As defined by regulatory agencies


The Bank's tangible capital at June 30, 1998 was $7,023,000, which amount was
12.0% of tangible assets and exceeded the required ratio of 1.5%.

<CAPTION>
                                                                                    1997
                                                    -----------------------------------------------------------------------
                                                                                Required for            To Be Well
                                                            Actual             Adequate Capital(1)     Capitalized(1)
                                                    -----------------------------------------------------------------------
June 30                                                Amount      Ratio      Amount      Ratio     Amount       Ratio
---------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>        <C>          <C>      <C>         <C>  
Total risk-based capital(1) (to risk-weighted assets)  $7,642      16.8%      $3,640       8.0%     $4,550      10.0%

Core capital(1) (to adjusted tangible assets)           7,260      10.1%       2,165       4.0%      4,330       6.0%

Core capital(1) (to adjusted total assets)              7,260      10.1%       2,167       4.0%      3,609       5.0%
</TABLE>
----------
(1) As defined by regulatory agencies


The Bank's tangible capital at June 30, 1997 was $7,260,000, which amount was
10.1% of tangible assets and exceeded the required ratio of 1.5%.


Note 12-Employee Benefit Plans

The Bank participates in a noncontributory  multi-employer pension plan covering
all  qualified  employees.  The  plan is  administered  by the  trustees  of the
Pentegra Group (formerly the Financial  Institutions  Retirement Fund). There is
no separate  valuation of benefits nor  segregation of plan assets  specifically
for the Bank because the plan is a  multi-employer  plan and separate  actuarial
valuations are not made with respect to each  employer,  nor are the plan assets
so segregated.  However, as of June 30, 1997, the total plan assets exceeded the
actuarially  determined  value of total  vested  benefits.  Pension  expense  is
recognized  in the  amount  of  calculated  contributions  (which  have not been
required since July 1987).

The  Bank  has  a  supplemental   retirement  plan  and  deferred   compensation
arrangements for the benefit of certain officers.  These arrangements are funded
by life  insurance  contracts  which have been purchased by the Bank. The Bank's
expense for the plan was $6,500,  $5,800 and $4,800 for the years ended June 30,
1998, 1997 and 1996.

                                       38
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The Bank also has deferred  compensation  arrangements  with  certain  directors
whereby,   in  lieu  of  currently   receiving  fees,  the  directors  or  their
beneficiaries  will be paid  benefits for an  established  period  following the
director's  retirement or death. These arrangements are funded by life insurance
contracts which have been purchased by the Bank. The Bank's expense for the plan
was  $43,000,  $34,100 and $32,500 for the years ended June 30,  1998,  1997 and
1996.

The Company has an ESOP covering  substantially  all employees of the Bank.  The
ESOP  acquired  46,405  shares at $8.00 per share in the  conversion  with funds
provided by a loan from the Company. Accordingly, the $371,240 of stock acquired
by the ESOP was reflected as a reduction to stockholders' equity.  Unearned ESOP
shares  totaled 27,594 and 34,804 at June 30, 1998 and 1997 and had a fair value
of $394,925 at June 30, 1998 and $439,401 at June 30, 1997.  Shares are released
to participants  proportionately  as the loan is repaid.  Dividends on allocated
shares are recorded as dividends and charged to retained earnings.  Dividends on
unallocated  shares,  which will be distributed to participants,  are treated as
compensation expense.  Compensation expense is recorded equal to the fair market
value of the stock when  contributions,  which are  determined  annually  by the
Board of Directors of the Bank, are made to the ESOP. The expense under the ESOP
was  $103,078,  $52,043 and $45,245 for the years ended June 30, 1998,  1997 and
1996. At June 30, 1998 and 1997, the ESOP had 19,259 and 13,498 allocated shares
and 27,146 and 32,439 suspense shares.

The Bank has a Recognition and Retention Plan ("RRP").  Effective on October 23,
1995,  awards of grants  for 23,202  shares  were  issued to various  directors,
officers and  employees of the Bank.  These awards  generally are to vest and be
earned by the recipient at a rate of 20 percent per year, commencing October 23,
1996. The shares, once earned, are issued from Treasury stock. The expense under
the RRP was $34,598 and $61,075 for the years ended June 30, 1998 and 1997.


Note 13 --  Stock Option Plan

Under  the  Bank's  incentive  stock  option  plan,  which is  accounted  for in
accordance with Accounting  Principles Board Opinion ("APB") No. 25,  Accounting
for Stock  Issued to  Employees,  and related  interpretations,  the Bank grants
selected  executives and other key employees stock option awards which vest at a
rate of 20 percent  per year and  become  fully  exercisable  at the end of five
years of  continued  employment.  A total of  58,006  common  shares  have  been
reserved for issuance  under the plan. The exercise price of each option granted
to date,  which has a ten-year  life,  has been equal to the market price of the
Bank's stock on the date of grant;  therefore,  no compensation expense has been
recognized.

Although  the Bank has elected to follow APB No. 25, SFAS No. 123  requires  pro
forma  disclosures  of net  income  and  earnings  per  share as if the Bank had
accounted for its employee stock options under that Statement. The fair value of
each option grant was estimated on the grant date using an option-pricing  model
with the following assumptions:

                                                     1998      1997      1996
                                                --------------------------------
Risk-free interest rates                             5.81%      6%         6%
Dividend yields                                      1.45%      2%         2%
Volatility factors of expected 
 market price of common stock                        15.7%      13%        13%

Weighted-average expected life of the options     8 years    8 years    8 years

                                       39
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Under  SFAS No.  123,  compensation  cost is  recognized  in the  amount  of the
estimated  fair value of the options and  amortized to expense over the options'
vesting  period.  The pro forma  effect on net income and  earnings per share of
this statement are as follows:

                                                  1998       1997        1996
                                                --------------------------------
Net income                     As reported      $138,332   $134,294   $332,758
                                  Pro forma      118,138    112,496    310,960
Basic earnings per share       As reported           .29        .27        .63
                                  Pro forma          .25        .23        .59
Diluted earnings per share     As reported           .28        .27        .63
                                  Pro forma          .24        .23        .59


The  following  is a summary of the status of the Bank's  stock  option plan and
changes in that plan as of and for the years ended June 30, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Year Ended June 30                              1998                          1997                       1996
------------------------------------------------------------------------------------------------------------------------------------
                                                   
                                                    Weighted-                     Weighted-                   Weighted-      
                                                    Average Exercise              Average Exerci              Average Exerci 
Options                                Shares       Price           Shares        Price          Shares       Exercise Price 
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>             <C>          <C>      
Outstanding, beginning of year         43,381       $   10.50       46,629       $   10.50
Granted                                 1,000           16.19                                    47,957       $   10.50
Exercised                              (2,900)          10.50
Forfeited/expired                      (4,350)          10.50       (3,248)          10.50       (1,328)          10.50
                                      ---------                     -------                    ---------
Outstanding, end of year               37,131           10.65       43,381           10.50       46,629           10.50
                                      =========                     =======                    =========
Options exercisable at year end        14,940                        9,326
Weighted-average fair value of
  options granted during the year     $  4.84                                                                 $    2.81
</TABLE>


As of June 30, 1998, 36,131 options outstanding have an exercise price of $10.50
and a remaining contractual life of eight years and 1,000 options outstanding
have an exercise price of $16.19 and a remaining contractual life of 10 years.

                                       40
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Note 14 --  Earnings Per Share

Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>
                                                                                              Year Ended June 30, 1998
                                                                                ----------------------------------------------------
                                                                                            Weighted Average
                                                                                  Income         Shares             Per-Share Amount
------------------------------------------------------------------------------------------------------------------------------------

Basic Earnings Per Share                                                                                     
<S>                                                                                <C>           <C>                      <C> 
   Income available to common stockholders                                         $138          480,208                  $.29
Effect of Dilutive Securities
   Stock options and awards                                                                       11,426
                                                                                ------------------------------
Diluted Earnings Per Share

   Income available to common stockholders and assumed conversions                 $138          491,634                  $.28
                                                                                ===================================================



                                                                                        Year Ended June 30, 1997
                                                                                ----------------------------------------------------
                                                                                            Weighted Average
                                                                                  Income         Shares             Per-Share Amount
------------------------------------------------------------------------------------------------------------------------------------

Basic Earnings Per Share                                                                                     
   Income available to common stockholders                                         $134          491,287                  $.27
Effect of Dilutive Securities
   Stock options and awards                                                                        2,633
                                                                                ------------------------------
Diluted Earnings Per Share

   Income available to common stockholders and assumed conversions                 $134          493,920                  $.27
                                                                                ====================================================



                                                                                              Year Ended June 30, 1996
                                                                                ----------------------------------------------------
                                                                                            Weighted Average
                                                                                  Income         Shares             Per-Share Amount
------------------------------------------------------------------------------------------------------------------------------------

Basic Earnings Per Share                                                                                     
   Income available to common stockholders                                         $333          527,669                  $.63
Effect of Dilutive Securities
   Stock options and awards
                                                                                ------------------------------
Diluted Earnings Per Share

   Income available to common stockholders and assumed conversions                 $333          527,669                  $.63
                                                                                ====================================================
</TABLE>

                                       41
<PAGE>

AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Options  to  purchase  46,629  shares of common  stock at $10.50  per share were
outstanding at June 30, 1996 but were not included in the computation of diluted
EPS because the  options'  exercise  price was greater  than the average  market
price of the common shares.


Note 15-Subsequent Event

On July 24, 1998, the Bank acquired a branch facility.  This  acquisition  added
approximately $11,000,000 of deposits to the Bank's customer base.

Note 16-Fair Values of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instrument:

Cash and Due From Banks--The fair value of cash and due from banks  approximates
carrying value.

Interest-bearing  Deposits--The  fair value of  interest-bearing  time  deposits
approximates carrying value.

Investment Securities--Fair values are based on quoted market prices.

Loans--For both short-term loans and variable-rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying
values. The fair values for certain mortgage loans, including one-to-four family
residential,  are  based on  quoted  market  prices  of  similar  loans  sold in
conjunction with securitization  transactions,  adjusted for differences in loan
characteristics.  The fair value for other loans, are estimated using discounted
cash flow analyses,  using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.

FHLB Stock--Fair value of FHLB stock is based on the price at which it may be
resold to the FHLB.

Interest  Receivable/Payable--The  fair  values of  interest  receivable/payable
approximate carrying values.

Deposits--The fair values of  noninterest-bearing,  interest-bearing  demand and
savings  accounts are equal to the amount payable on demand at the balance sheet
date.  Fair values for fixed-rate  certificates of deposit are estimated using a
discounted  cash flow  calculation  that applies  interest rates currently being
offered on certificates to a schedule of aggregated  expected monthly maturities
on such time deposits.

FHLB  Advances--The  fair  value  of  these  borrowings  are  estimated  using a
discounted cash flow calculation, based on current rates for similar debt.

                                       42
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>

                                                                        1998                                1997
                                             ----------------------------------------------------------------------------------
                                                               Carrying         Fair            Carrying            Fair
                                                                Amount          Value            Amount             Value
-------------------------------------------------------------------------------------------------------------------------------
Assets
<S>                                                           <C>              <C>              <C>              <C>    
   Cash and due from banks                                    $ 1,777          $ 1,777          $ 1,515          $ 1,515
   Interest-bearing deposits                                    1,099            1,099            1,093            1,093
   Investment securities available for sale                     4,350            4,350           12,149           12,149
   Investment securities held to maturity                       1,140            1,095            2,067            1,993
   Loans including loans held for sale, net                    44,518           43,414           50,726           49,540
   Stock in FHLB                                                1,050            1,050            1,050            1,050
   Interest receivable                                            258              258              377              377

Liabilities
   Deposits                                                    46,881           46,993           53,523           53,488
   FHLB advances                                                3,070            3,075           10,902           10,857
   Interest payable                                               101              101               85               85
</TABLE>


Note-17 -- Condensed Financial Information (Parent Company Only)

Presented  below is condensed  financial  information as to financial  position,
results of operations and cash flows of the Company:

                            Condensed Balance Sheet

June 30                                                         1998       1997
--------------------------------------------------------------------------------
Assets
   Cash on deposit                                           $    242    $   233
   Investment in subsidiary                                     7,093      7,182
   Other assets                                                   117         73
                                                         -----------------------
         Total assets                                          $7,452     $7,488
                                                         =======================
Liabilities                                                  $     21   $     24
Stockholders' Equity                                            7,431      7,464
                                                         -----------------------
         Total liabilities and stockholders' equity            $7,452     $7,488
                                                         =======================

                                       43
<PAGE>


AMTRUST CAPITAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


                          Condensed Statement of Income

<TABLE>
<CAPTION>

Year Ended June 30                                                                       1998              1997           1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>              <C> 
Income
   Dividend income from subsidiary                                                        $500             $300
   Interest income                                                                          23               24         $  27
                                                                                      ----------------------------------------------
                                                                                           523              324            27

Other expenses                                                                             122              143            87
                                                                                      ----------------------------------------------
Income (loss) before income tax and equity in undistributed income of subsidiary           401              181           (60)
Income tax benefit                                                                          21               46            21
                                                                                      ----------------------------------------------
Income (loss) before equity in undistributed income of subsidiary                          422              227           (39)
Equity in undistributed income (distribution in excess of income) of subsidiary           (284)             (93)          372
                                                                                      ----------------------------------------------
Net Income                                                                                $138             $134          $333
                                                                                      ==============================================
</TABLE>


                        Condensed Statement of Cash Flows

<TABLE>
<CAPTION>

Year Ended June 30                                                                       1998              1997           1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>             <C>              <C> 
Operating Activities
   Net income                                                                             $138            $134             $333
   Adjustments to reconcile net income to net cash provided
    (used) by operating activities                                                         375             164             (349)
                                                                                   -------------------------------------------------
         Net cash provided (used) by operating activities                                  513             298              (16)
                                                                                   -------------------------------------------------
Financing Activities
   Purchase of common stock                                                               (430)            (56)            (535)
   Exercise of options                                                                      30
   Dividends                                                                              (104)            (53)
                                                                                   -------------------------------------------------
         Net cash used by financing activities                                            (504)           (109)            (535)
                                                                                   -------------------------------------------------
Net Increase (Decrease) in Cash                                                              9             189             (551)
Cash at Beginning of Year                                                                  233              44              595
                                                                                   -------------------------------------------------
Cash at End of Year                                                                       $242            $233             $ 44
                                                                                   =================================================
</TABLE>


                                       44
<PAGE>


                             STOCKHOLDER INFORMATION


Corporate Office

20 West Fifth Street
Peru, Indiana  46970

Annual Meeting

     The Annual Meeting of Stockholders will be held at 9:00 a.m., Peru, Indiana
time on  October  19,  1998 at the  Company's  office  located  at 20 West Fifth
Street, Peru, Indiana.

Annual Report on Form 10-KSB

     A copy of AmTrust  Capital  Corp.'s  Annual  Report on Form 10-KSB as filed
with the Securities and Exchange  Commission may be obtained without charge upon
written request to Deborah M. Huff, AmTrust Capital Corp., 20 West Fifth Street,
Peru, Indiana 46970, or by calling (765) 472-1991.

Registrar/Transfer Agent

     Communications  regarding  change of  address,  transfer  of stock and lost
certificates should be sent to:

                       American Securities Transfer, Inc.
                              1825 Lawrence Street
                           Denver, Colorado 80202-1817

                                      ####


                                   Accountants

                                    Olive LLP
                            201 North Illinois Street
                        Indianapolis, Indiana 46204-1904

                                  Local Counsel

                            James Berkshire, Esquire
                               16 East 5th Street
                               Peru, Indiana 46970

                                 Special Counsel

                         Silver, Freedman & Taff, L.L.P.
                              Suite 700 East Tower
                            1100 New York Avenue, NW
                            Washington, DC 20005-3934



                                       45
<PAGE>


Stock Listing

     AmTrust  Capital  Corp.'s  common stock is on the OTC  Electronic  Bulletin
Board under the symbol "ATSB." At September 14, 1998,  there were 497,454 shares
of AmTrust  Capital  Corp.  common stock issued and  outstanding  and there were
approximately  200 holders of record.  The price  range of the common  stock for
each quarter and dividends per share were as follows:

                                       STOCK PRICE           DIVIDENDS 
       FISCAL 1998                  HIGH          LOW         PER SHARE 
       -----------                  ----          ---         --------- 
First Quarter...........         $13.875        $12.75          $.05
Second Quarter..........          14.25          13.75           .05
Third Quarter...........          15.109         15.109          .05
Fourth Quarter..........          15.75          14.25           .05


                                       STOCK PRICE           DIVIDENDS 
       FISCAL 1998                  HIGH          LOW         PER SHARE 
       -----------                  ----          ---         --------- 
First Quarter..........         $  9.50        $  8.50         $  N/A
Second Quarter.........           10.625          8.75            N/A
Third Quarter..........           12.375         10.00           .05
Fourth Quarter.........           12.75          11.50           .05


Market Makers

Capital Resources, Inc.
Rodman & Renshaw, Inc.
Mayer & Schweitzer, Inc.
McDonald & Company Securities, Inc.
Tucker Anthony, Inc.

Dividends

         The Company  began paying a cash  dividend  during the third quarter of
fiscal 1997 and  continued  each quarter of fiscal 1998.  The Board of Directors
considers the payment of cash dividends,  dependent on the results of operations
and financial condition of the Company, tax considerations,  industry standards,
economic  conditions,  regulatory  restrictions,  general business practices and
other  factors.  The  Company's  ability to pay  dividends  is  dependent on the
dividend  payments it receives  from its  subsidiary,  AmericanTrust,  which are
subject to regulations and the Bank's  continued  compliance with all regulatory
capital  requirements.  See Notes to the Consolidated  Financial  Statements for
information  regarding limitations of the Bank's ability to pay dividends to the
Company.


                                       46
<PAGE>


                              AmTrust Capital Corp.
                                       and
                       AmericanTrust Federal Savings Bank


         Directors

Kenneth L. Hasselkus
Chairman of the Board of the Company and
the Bank, Retired Chief Engineer, Motion
Control, Inc.

Bruce M. Borst
President and Chief Executive Officer of the
Company and the Bank

Dean H. Hartley
Farmer

Thomas A. Kirk
Certified Public Accountant

Roderic E. Daniels
Retired Manager of CR Metals


     Executive Officers

Bruce M. Borst
President and Chief Executive Officer

Deborah M. Huff
Treasurer and Chief Financial Officer




                                       47