UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K 

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 [FEE REQUIRED]

     For the fiscal year ended September 30, 1998

                                       OR

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

     For the transition period from              to

                         Commission file number: 0-22376

                                  HOME BANCORP
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        Indiana                                                35-1906765
--------------------------------------------------------------------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

 132 East Berry Street, P.O. Box 989, Fort Wayne, Indiana      46801-0989
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code:          (219) 422-3502

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

                         Common Stock, without par value
                                (Title of class)

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

         The aggregate  market value of the voting stock held by  non-affiliates
of the  registrant,  computed by reference to the average of the closing bid and
asked  prices of such stock on the Nasdaq  National  Market as of  December  14,
1998, was $62.5 million.  (The exclusion from such amount of the market value of
the  shares  owned  by any  person  shall  not be  deemed  an  admission  by the
registrant that such person is an affiliate of the registrant.)
<PAGE>
         As of December 14, 1998,  there were issued and  outstanding  2,185,045
shares of the Registrant's Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Parts  II and IV of  Form  10-K -  Portions  of the  Annual  Report  to
Stockholders for the fiscal year ended September 30, 1998.

         Part III of Form 10-K - Portions of the Proxy Statement for fiscal 1998
Annual Meeting of Stockholders.
<PAGE>
                                    PART I

Item 1.  Description of Business

General

         Home Bancorp (the  "Company")  was formed as an Indiana  corporation on
December  14,  1993 to act as the  holding  company  for Home Loan Bank fsb (the
"Bank")  upon the  completion  of the Bank's  conversion  from the mutual to the
stock form (the "Conversion").  The Company received approval from the Office of
Thrift Supervision (the "OTS") to acquire all of the common stock of the Bank to
be outstanding  upon completion of the Conversion.  The Conversion was completed
on March 29, 1995. All references to the Company, unless otherwise indicated, at
or before March 29, 1995 refer to the Bank. The Company's Common Stock trades on
The Nasdaq Stock Market under the symbol "HBFW".

         At  September  30, 1998,  the Company had $372.4  million of assets and
stockholders' equity of $41.0 million (or 11.0% of total assets).

         The Bank  was  organized  under  the name  Teutonia  Building  Loan and
Savings Association on March 22, 1893. In November 1993, the Bank converted from
an Indiana building and loan association to an Indiana  chartered mutual savings
bank,  and in December 1994  converted to a federally  chartered  mutual savings
bank. On March 29, 1995, upon  completion of the Conversion,  the Bank converted
from a federally  chartered  mutual savings bank to a federally  chartered stock
savings bank. The Bank's deposit accounts are insured up to applicable limits by
the Savings  Association  Insurance Fund (the "SAIF"),  which is administered by
the Federal Deposit Insurance  Corporation (the "FDIC"). The Bank is a member of
the Federal Home Loan Bank (the "FHLB") System.

         The  Company's  principal  business  historically  has been  attracting
deposits  from the general  public and  originating  long-term,  fixed-rate  and
adjustable-rate  loans  secured  primarily  by first  mortgage  liens on one- to
four-family real estate. The Company offers a variety of deposit accounts having
a wide range of interest rates and terms, does not actively solicit or advertise
for  deposits  outside of  northeastern  Indiana,  particularly  Allen and Adams
Counties, and does not accept brokered deposits.

         The  Company's  principal  source of revenue is  interest  income  from
lending activities, primarily one- to four-family residential mortgage loans.

         The  Company's  executive  office is located at 132 East Berry  Street,
P.O. Box 989, Fort Wayne, Indiana 46801-0989,  and its telephone number is (219)
422-3502.

         The  Company  and the Bank may from time to time make  written  or oral
"forward-looking  statements",  including  statements contained in the Company's
filings  with  the  Securities  and  Exchange  Commission   (including  Exhibits
thereto),  in its reports to  shareholders  and in other  communications  by the
Company,  which are made in good faith by the Company  and the Bank  pursuant to
the "safe harbor" provisions of the Private Securities  Litigation Reform Act of
1995.

         These forward-looking statements include statements with respect to the
Company's  and the  Bank's  beliefs,  plans,  objectives,  goals,  expectations,
anticipations,  estimates and intentions,  that are subject to significant risks
and  uncertainties,  and are subject to change based on various factors (some of
which are beyond the Company's and Bank's  control).  The words "may",  "could",
"should",  "would", "believe",  "anticipate",  "estimate",  "expect",  "intend",
<PAGE>
"plan"  and  similar  expressions  are  intended  to  identify   forward-looking
statements.  The following factors,  among others, could cause the Company's and
the  Bank's  financial   performance  to  differ   materially  from  the  plans,
objectives,   expectations,   estimates   and   intentions   expressed  in  such
forward-looking  statement: the strength of the United States economy in general
and the  strength of the local  economies  in which the Company and Bank conduct
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies  of the  Federal  Reserve  Board;
inflation,   interest  rate,  market  and  monetary  fluctuations;   the  timely
development  of and  acceptance of new products and services of the Bank and the
perceived overall value of thee products and services;  the willingness of users
to  substitute  competitors'  products and services for the Bank's  products and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes;  acquisitions;  changes in consumer spending
and saving habits; and the success of the Company and the Bank at managing risks
involved in the foregoing.

         The foregoing list of important  factors is not exclusive.  The Company
does not undertake to update any forward-looking  statement,  whether written or
oral,  that may be made from time to time by or on behalf of the  Company or the
Bank.

Market Area

         The Company's market area is currently northeastern Indiana,  primarily
Allen and Adams Counties.  The Company serves its market area through eight bank
offices in Allen County and a single bank office in Adams County.

         Fort  Wayne,  the county  seat for Allen  County,  is located 118 miles
northeast of Indianapolis and is situated in the center of an approximately  160
mile radius hub  consisting of Chicago,  Grand Rapids,  Detroit,  Columbus,  and
Cincinnati.  Allen County has a broad mix of large  employers  which  provides a
relatively stable local business climate during recessionary times. Allen County
has 18 employers with 1,000 or more employees,  ranging from  communications  to
education to medical care to  manufacturing.  Allen County's largest employer is
Fort Wayne Community  Schools with 3,298 employees.  The second largest employer
is the  General  Motors  Truck  and  Bus  Group  which  in  1986  established  a
state-of-the-art manufacturing facility in Allen County which produces full-size
C/K pick-up  trucks.  The GM facility  currently  employs 3,194 people.  Lincoln
National  Corporation,  the parent  company of Lincoln  National Life  Insurance
Company,  has approximately  2,978 employees and is headquartered in Fort Wayne.
Lincoln National  Corporation has recently announced plans to move its corporate
center to the Philadelphia,  PA area by mid year 1999. As announced in published
reports,  the move only affects  approximately 60 employees.  The fourth largest
employer is Parkview Hospital with an employment of 2,730.

Lending Activities

         General.   The  Company   historically  has  concentrated  its  lending
activities on the  origination  of loans secured by first mortgage liens for the
purchase,  construction or refinancing of one- to four-family  residential  real
property.  These  loans  continue to be the major  focus of the  Company's  loan
origination activities, representing 96.5% of the Company's total loan portfolio
at September 30, 1998  (including one- to four-family  residential  construction
loans).  The Company also  originates a limited amount of commercial real estate
loans  secured by  owner-occupied  property,  and a limited  number of  consumer
loans,  primarily in the form of home equity loans. These commercial real estate
loans and consumer loans constituted  approximately 0.5% and 3.0%, respectively,
of the Bank's total loan portfolio at September 30, 1998.
<PAGE>
         All loans must be  approved by three  members of the Bank's  six-person
loan committee consisting of the President, the Vice President of Lending, three
other  officers,   and  one  outside  director.   Commercial  loan  applications
aresubmitted  for approval to the same  committee,with  the  consultation  of an
outside and independent appraiser. The loan committee and all loan officers meet
weekly  and  each  loan  officer   presents  his  or  her  loans  for  approval.
Occasionally,  a  unique  or  high  principal  loan  will be  presented,  at the
discretion of management, to the Bank's Board of Directors for review.

         The Bank's regulatory lending limit for  loans-to-one-borrower is equal
to the greater of $500,000 or 15% of unimpaired  capital and surplus (except for
loans fully secured by certain readily marketable collateral, in which case this
limit is increased to 25% of unimpaired  capital and surplus).  At September 30,
1998,  the Bank's  lending limit under this  restriction  was $5.1  million.  On
September 30, 1998 the Bank's largest aggregate lending relationship was through
a local  not-for-profit  community  development  corporation  that  underwrites,
originates and then  guarantees  payment on single family  residential  loans to
very low to moderate  income  individuals  in targeted areas of the city of Fort
Wayne. The Bank generally takes a participation  interest along with other local
lenders on these loans made to individual  borrowers.  The oustanding balance on
the  aggregate  of  these  loans as of  September  30,  1998  was  approximately
$860,000.The  Bank's  largest  single  lending  relationship  was a  first  lien
residential  loan  mortgage  loan of $774,000.  There was only one other lending
relationships  in excess of $500,000 as of September 30, 1998,  which was also a
one- to  four-family  residential  loan.  All of these loans were  performing in
accordance with their repayment terms.
 
         Loan Portfolio  Data. The following table sets forth the composition of
the Company's loan portfolio by loan type as of the dates indicated, including a
reconciliation  of gross loans receivable  after  consideration of the allowance
for loan losses, deferred net loan fees, and loans in process.
<PAGE>
<TABLE>
<CAPTION>
                                                                              At September 30,
                                         -----------------------------------------------------------------------------------------
                                                1998                    1997                   1996                   1995        
                                          ------------------     -------------------     -----------------     ------------------- 
                                          Amount     Percent     Amount      Percent     Amount    Percent     Amount      Percent
                                          ------     -------     ------      -------     ------    -------     ------      -------
                                                                        (Dollars in Thousands)
TYPE OF LOAN
<S>                                      <C>         <C>        <C>          <C>        <C>         <C>        <C>          <C>    
Mortgage loans:
  One- to four-family residential....    $308,627     92.99%    $269,995      92.28%    $238,102     91.83%    $204,886      92.48%
  Commercial real estate.............       1,715       .52        1,856        .64        1,357       .52        1,313        .59 
  One- to four-family residential -                                                                                                
    Construction.....................      11,512      3.47       11,797       4.03       12,407      4.79        8,814       3.98 
                                                                                                                                   
Consumer loans:                                                                                                                    
  Loans secured by deposits..........         873       .26          885        .30          743       .29          880        .40 
  Home equity loans..................       8,012      2.41        7,029       2.40        5,466      2.11        4,401       1.98 
  Home improvement loans.............       1,165       .35        1,024        .35        1,197       .46        1,262        .57 
                                         --------    ------     --------     ------     --------    ------     --------     ------ 
     Total loans receivable(1).......     331,904    100.00%     292,586     100.00%     259,272    100.00%     221,556     100.00%
                                                     ======                  ======                 ======                  ====== 
Less:                                                                                                                              
  Allowance for loan losses..........       1,390                  1,388                   1,385                  1,372            
  Deferred net loan fees.............         393                    338                     393                    454            
  Loans in process...................       5,933                  6,873                   7,188                  5,325            
                                         --------               --------                --------              ---------            
     Net loans receivable............    $324,188               $283,987                $250,306               $214,405            
                                         ========               ========                ========               ========            
<CAPTION>
                                              At September 30,
                                          ------------------------
                                                    1994             
                                          ------------------------                       
                                          Amount           Percent    
                                          ------           -------    
TYPE OF LOAN                          
<S>                                      <C>                <C>                                            
Mortgage loans:                       
  One- to four-family residential....    $192,650           92.82%   
  Commercial real estate.............       1,086             .52    
  One- to four-family residential -                                  
    Construction.....................       8,156            3.93    
                                                                     
Consumer loans:                                                      
  Loans secured by deposits..........         680             .33    
  Home equity loans..................       3,431            1.65    
  Home improvement loans.............       1,544             .75    
                                                                     
     Total loans receivable(1).......     207,547          100.00%   
                                                           ======                                                                  
Less:                                                                
  Allowance for loan losses..........       1,288                    
  Deferred net loan fees.............         533                    
  Loans in process...................       5,048                    
                                        ---------                    
     Net loans receivable............    $200,678                    
                                         ========                    
</TABLE>
<PAGE>
    The following  table sets forth certain  information  at September 30, 1998,
regarding the dollar amount of loans  maturing in the Company's  loan  portfolio
based on the date that final payment is due under the terms of the loan.  Demand
loans  having no stated  schedule  of  repayments  and no  stated  maturity  and
overdrafts  are  reported  as due in one year or less.  This  schedule  does not
reflect  the effects of  possible  prepayments  or  enforcement  of  due-on-sale
clauses.
<TABLE>
<CAPTION>
                                                 Balance                 Due During Fiscal Years Ended September 30,
                                              Outstanding       ----------------------------------------------------------------
                                                    at                                    2002      2004       2009      2014
                                              September 30,                                to         to         to       and
                                                   1998         1999     2000    2001     2003      2008       2013    following
                                              -------------  -------     ----   -----    -----     -----     ------    ---------
                                                                               (In Thousands)
<S>                                              <C>         <C>         <C>    <C>      <C>       <C>       <C>        <C>     
Mortgage loans:
  One- to four-family residential.......         $320,139(1) $   125     $227   $1,301   $4,910    $49,380   $127,147   $137,049
  Commercial real estate................            1,715        177      159      ---      218        106      1,055        ---

Consumer loans:
  Home improvement......................            1,165        401       19       55      375        315        ---        ---
  Home equity...........................            8,012      8,012      ---      ---      ---        ---        ---        ---
  Loans secured by deposits.............              873        873      ---      ---      ---        ---        ---        ---
                                                 --------     ------     ----   ------   ------    -------   --------   --------
                                                  
Total Loans Receivable..................         $331,904     $9,588     $405   $1,356   $5,503    $49,801   $128,202   $137,049
                                                 ========     ======     ====   ======   ======    =======   ========   ========
</TABLE>

(1)  Includes  $11.5  million in one- to  four-family  residential  construction
     loans,  all of which are scheduled to convert into permanent loans maturing
     after the year 2014.


         The following  table sets forth,  as of September 30, 1998,  the dollar
amount  of all loans due after one year  which  have  fixed  interest  rates and
variable interest rates.
<TABLE>
<CAPTION>
                                                             Due After September 30, 1999
                                                   -----------------------------------------------
                                                   Fixed Rates      Variable Rates          Total
                                                   -----------      --------------          -----
                                                                    (In Thousands)
<S>                                                   <C>               <C>               <C>     
Mortgage loans:
  One- to four-family residential...........          $265,657          $ 54,357          $320,014
  Commercial real estate....................                95             1,443             1,538

Consumer loans:
  Home improvement..........................               764               ---               764
  Home equity...............................               ---               ---               ---
  Loans secured by deposits.................               ---               ---               ---
                                                      --------          --------          --------

Total Loans Receivable......................          $266,516          $ 55,800          $322,316
                                                      ========          ========          ========
</TABLE>
<PAGE>
         One-  to  Four-Family   Residential   Mortgage  Loans.   The  Company's
residential   mortgage   loans  consist   primarily  of  one-  to   four-family,
owner-occupied  mortgage loans.  Approximately  $320.1 million, or 96.4%, of the
Company's  loan portfolio at September 30, 1998 consisted of one- to four-family
residential  mortgage  loans.  A  significant  portion,   approximately  80%  at
September 30, 1998, of the Company's  one- to four-family  residential  mortgage
and residential mortgage  construction loans provide for fixed rates of interest
and for  repayment of principal  over a fixed period of 10, 15 or 20 years.  The
Company does not make fixed rate loans exceeding 30 years. The Company's one- to
four-family  residential  mortgage loans have normally remained  outstanding for
shorter periods than provided for by their  contractual  terms. The average life
of such loans  varies  from year to year with  changes in  interest  rates,  but
management believes it is generally significantly less than the full term of the
loans. While the Company's  fixed-rate one- to four-family  residential mortgage
loans are priced at rates close to its competitors'  rates, the Company competes
for loan customers somewhat more on the basis of quality of service and somewhat
less on the basis of pricing.

         The  Company  underwrites  all  its  fixed  rate  one-  to  four-family
residential  mortgage loans to Federal National  Mortgage  Association  ("FNMA")
standards so that they may be sold in the  secondary  market.  The Company holds
for  investment all fixed rate one- to  four-family  residential  mortgage loans
with terms of 20 years or less and,  in 1991,  began  selling all of its 30-year
fixed rate loans in the secondary  market. As of September 30, 1998, the Company
had no fixed-rate loans held for investment with remaining terms in excess of 20
years.   The  Company  retains  the  servicing  on  all  loans  it  sells.   See
"-Originations  and Sale of Loans." Management feels that this strategy improves
liquidity and enables the Company to better  manage its interest rate risk.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  -  Asset/Liability  Management"  contained  in the Annual  Report to
Stockholders attached as Exhibit 13 to this document (the "Annual Report").

         The Company also offers  adjustable  rate loan products that reprice as
frequently  as every  year or can be fixed  for a term of up to seven  years and
adjust  annually  thereafter.  Currently  originated  adjustable  rate  mortgage
("ARM") loans that reprice  annually are indexed to the one-year  U.S.  Treasury
securities  yield with a margin of 2 3/4% above such  index.  In  addition,  the
maximum  rate  adjustment  per  year and over the life of the loan is 2% and 6%,
respectively.  The Company also originates loans which are fixed for three, five
and seven years,  respectively,  which  convert to a one year ARM indexed to the
one-year U.S.  Treasury  thereafter.  These  products have annual caps of 2% and
lifetime  caps of 6%.  ARMs  are  underwritten  for  terms  up to 30  years.  At
September 30, 1998,  the Company's  one- to  four-family  ARM portfolio  totaled
$55.7 million, or 16.8% of the Company's gross loan portfolio.

         Substantially all of the one- to four-family residential mortgage loans
that the  Company  originates  include  "due-on-sale"  clauses,  which  give the
Company  the right to declare a loan  immediately  due and  payable in the event
that, among other things,  the borrower sells or otherwise  disposes of the real
property subject to the mortgage and the loan is not repaid.

         The Company does not currently originate mortgage loans if the ratio of
the loan  amount to the  value of the  property  securing  the loan  (i.e.,  the
"loan-to-value"  ratio)  exceeds 95%. In the event that the amount of a mortgage
loan exceeds 80% of the value of the real estate and  improvements,  the Company
requires that borrowers obtain private mortgage insurance in amounts intended to
reduce the Company's  exposure to 80% or less of the appraised value of the real
estate and improvements or the purchase price of the underlying collateral.  The
Company's mortgage lending is subject to loan origination  procedures prescribed
by its Board of Directors. See "- Origination and Sale of Loans."
<PAGE>
         The Company makes fixed-rate and adjustable-rate  construction loans to
finance the construction of one- to four-family  residences.  Most  construction
lending is of a construction/permanent type where interest only is collected for
a period  of up to one year and then is  converted  to an  amortizing  permanent
loan.  These loans are made to borrowers  working with licensed  contractors  or
builders  with an  established  credit  history  confirmed  through the National
Association of Credit  Management  and/or with membership in local home builders
associations.  The Company also makes builder "spec" loans to the aforementioned
types of  contractors  and builders,  generally  with no one builder having more
than three such loans  outstanding at any one time. The money borrowed under the
mortgage is disbursed  through four draws.  Draws occur after the  foundation is
laid, after roofing and flatwork is completed,  after  dry-walling is completed,
and after full  completion  of the  residence.  An occupancy  permit is required
before the Company releases the final  disbursement.  There are also inspections
before each  disbursement.  In the case of builder "spec" loans, upon completion
of the residence,  the  mortgagor/owner-occupier  assumes a residential mortgage
loan with the Company.  The Company  requires that all builder "spec" loans have
personal guarantees from the principal and his or her spouse.

         Loans to  individuals  for the  construction  of their  residences  are
structured  to be  permanent  loans,  with an initial  construction  phase which
typically  runs up to six  months.  These  loans have rates and terms  which are
consistent with those of other one- to four-family mortgage loans offered by the
Company,  except that during the construction  phase, the borrower pays interest
only. Residential  construction loans are generally underwritten pursuant to the
same guidelines  used for  originating  permanent  residential  loans,  with the
exception that the maximum  loan-to-value  ratio of owner occupied single family
construction loans is 90%.

          At September 30, 1998,  $11.5 million,  or 3.5%, of the Company's loan
portfolio consisted of construction  loans.  Although no construction loans were
classified as  non-performing as of September 30, 1998, these loans do involve a
higher level of risk than conventional one- to four-family  residential mortgage
loans. For example, if a project is not completed and the borrower defaults, the
Company may have to hire another  contractor to complete the project at a higher
cost. Also, a house may be completed but may not be marketable, resulting in the
borrower defaulting and the Company taking title to the house.

         Commercial Real Estate Loans.  At September 30, 1998, $2.0 million,  or
0.6%, of the Company's loan portfolio consisted of commercial real estate loans,
the largest of which was a construction  loan for $480,000 secured by a mortgage
loan on a professional building. All commercial real estate loans are secured by
owner-occupied,  non-residential  real estate, such as small office buildings or
churches.  The Company  underwrites these loans on a case-by-case  basis and, in
addition to its normal mortgage underwriting criteria, the Company will evaluate
the borrower's  ability to service the debt from the net operating income of the
property.  As of  September  30,  1998,  no  commercial  real estate  loans were
included in non-performing assets.

         Consumer Loans. The Company originates  consumer loans secured by liens
on real estate, including home improvement and home equity line of credit loans,
as well as deposit secured loans. At September 30, 1998, $10.0 million, or 3.0%,
of the Company's loan portfolio  consisted of consumer loans.  Substantially all
of the  Company's  consumer  loans were secured by real estate at September  30,
1998.
<PAGE>
         The Company's home equity line of credit loans,  the largest  component
of the Company's  consumer loan  portfolio,  are  transactional  accounts with a
maximum line of credit and with a minimum disbursement  amount.  Equity lines of
credit are not tied to a borrower's regular checking account. They are currently
priced at 1.5% above the prime rate of interest and are adjustable quarterly. In
addition, the equity lines of credit currently have a lifetime cap of 15.9%. The
minimum and  maximum  amounts  that can be borrowed  under a home equity line of
credit  are  $5,000  and   $100,000,   respectively,   provided   that   maximum
loan-to-value ratios relating to debt secured by the residence are not exceeded.
These maximum loan-to-value ratios are 85% if the Company is the first mortgagee
and 80% if another financial institution is the first mortgagee.

         Consumer  loans  generally  involve a higher  level of credit risk than
one- to four-family residential mortgage loans because of the type and nature of
the collateral and, in certain cases, the absence of collateral. These risks are
not as prevalent in the case of the Company's consumer loan portfolio because of
the high  percentage of home  improvement  loans and home equity lines of credit
secured by real estate and  underwritten  in a manner such that they result in a
lending  risk   substantially   similar  to  single-family   residential  loans.
Furthermore,  their  relatively  higher yields and shorter terms to maturity are
believed to be helpful in reducing the interest-rate  risk of the Company's loan
portfolio and in broadening the Company's lending services.  As of September 30,
1998, no consumer loans were included in non-performing assets.

         Origination and Sale of Loans.  Loan originations come from a number of
sources.  One-  to  four-family   residential  mortgage  loan  originations  are
attributable  primarily to existing and walk-in  customers,  print and newspaper
advertisement  and to referrals from real estate brokers.  Loan applications are
taken by loan  officers at all of the  Company's  branches  and its main office.
Consumer  and  commercial  loans  are  also  obtained  from the  above  sources,
especially existing customers and other direct contacts with the Company.

         The  Company's  loan  approval   process  is  intended  to  assess  the
borrower's  ability  to repay the loan.  To do this,  the  Company  studies  the
borrower's  employment,  credit  history and  information  on the historical and
projected income and expenses of its potential mortgagors.

         The Company's loan approval  process also assesses,  in addition to the
prospective  borrower's  ability  to repay,  the  adequacy  of the  property  as
collateral for the loan  requested.  All loans must be approved by three members
of the Bank's  six-person loan committee  consisting of the President,  the Vice
President of Lending,  three other officers,  and one outside director. The loan
committee and all loan  officers meet weekly and each loan officer  presents his
or her loans for approval.  Occasionally, and at the discretion of management, a
unique or high principal loan will be presented to the Bank's Board of Directors
for review.

         Property  appraisals on the real estate and  improvements  securing the
Company's one- to four-family residential mortgage loans are made by independent
appraisers  approved by the Bank's Board of Directors.  The  appraisers  inspect
properties in the process of construction  before  disbursements of construction
loan  proceeds are  authorized.  The Company  obtains  either a title  insurance
policy or an  abstract  of title and  opinion of counsel  on all  mortgage  real
estate  loans,   and  borrowers  also  must  obtain  hazard  insurance  and,  if
applicable,  flood insurance  prior to closing.  The Company  generally  escrows
hazard insurance  premiums,  mortgage  insurance premiums and real estate taxes.
The  borrower is required to make escrow  payments on a monthly  basis with each
payment of principal and interest.
<PAGE>
         The Company originates  substantially all its fixed rate mortgage loans
in  conformity  with the  standard  criteria of the FNMA.  In fiscal  1991,  the
Company began  selling all its fixed rate mortgage  loans with terms of 30 years
in the secondary  market.  It retains  servicing,  however,  on all the loans it
sells.  The Company  does not  securitize  mortgages  or  participations.  As of
September  30, 1998,  the Company had one loan held as available for sale with a
balance of approximately $87,000. The Company was also servicing $2.0 million of
loans sold in the  secondary  market as of September  30,  1998.  The balance of
loans  serviced is relatively  low because the Company has only sold longer term
loans since 1991 and it does not  aggressively  market  30-year  fixed rate loan
products.  Due to the limited  amount of  longer-term  loans  originated  by the
Company, it does not hedge these loans or have a hedging policy in place.

         Although the Company  currently  has  authority to lend anywhere in the
United States,  it has confined its loan origination  activities to northeastern
Indiana,  primarily  Allen  and Adams  Counties.  At  September  30,  1998,  the
Company's entire loan portfolio was secured by property located within the State
of Indiana.

         The following table shows loan origination, sale and repayment activity
for the Company during the periods indicated:
<TABLE>
<CAPTION>
                                                For the Year Ended September 30,
                                                --------------------------------
                                                  1998        1997        1996
                                                --------    --------    --------
                                                        (In Thousands)
<S>                                             <C>         <C>         <C>     
Gross loans receivable
  at beginning of period ...................    $292,586    $259,272    $221,556
                                                --------    --------    --------

Originations:
  Mortgage loans:
    One- to four-family residential ........     104,595      74,304      78,011
    Commercial real estate .................         655         777         200
                                                --------    --------    --------
       Total mortgage loans originated .....     105,250      75,081      78,211

  Consumer loans:
    Home improvement/equity loans ..........       8,320       6,343       5,245
    Loans secured by deposits ..............         601         464         461
                                                --------    --------    --------
       Total consumer loans originated .....       8,921       6,807       5,706
                                                --------    --------    --------
       Total originations ..................     114,171      81,888      83,917
                                                --------    --------    --------

Sales:
  Mortgage loans:
    One- to four-family residential ........        --          --           124
                                                --------    --------    --------
       Total sales .........................        --          --           124
                                                --------    --------    --------
Repayments and other deductions ............      74,853      48,574      46,077
                                                --------    --------    --------
Gross loans receivable at end of period ....    $331,904    $292,586    $259,272
                                                ========    ========    ========
</TABLE>
<PAGE>
Non-Performing and Problem Assets

         Savings banks identify problem assets in several categories,  including
accruing loans delinquent more than 90 days,  non-accruing loans,  troubled debt
restructurings,  and real estate acquired through foreclosure,  also called real
estate owned or "REO." At September  30, 1998,  only  $292,000 of the  Company's
assets were so classified, which represented .08% of the Company's total assets.

         Mortgage  loans are reviewed by the Company on a regular  basis and may
be placed on non-accrual status when they display a higher than acceptable level
of risk. This occurs when a loan is deemed inadequately protected (either by the
underlying  collateral  or by  the  paying  capacity  and/or  net  worth  of the
borrower) to an extent that makes  collectability  of interest  less probable or
the  collection  of  principal  in  full  doubtful.  Mortgage  loans  are put on
non-accrual status when they are 90 days delinquent (60 days for loans less than
one year old),  but only if the loan balance  equals or exceeds the value of the
property. Generally, when a loan is placed on non-accrual status, unpaid accrued
interest  is written off and  further  income  with  respect to the loan is only
recognized to the extent cash is received.  When  principal  repayment is deemed
doubtful, the loan is written off.

         The  following  table  sets forth the  amounts  and  categories  of the
Company's non-performing assets. It is the policy of the Company that earned but
uncollected  interest  on all loans be  reviewed  monthly  to  determine  if any
portion thereof should be classified as  uncollectible  for any loan past due in
excess of 90 days.
<TABLE>
<CAPTION>
                                                                                  At September 30,
                                                              ------------------------------------------------------
                                                              1998         1997        1996         1995        1994
                                                              ----         ----        ----        -----       -----
                                                                                (Dollars in Thousands)

<S>                                                           <C>          <C>         <C>         <C>         <C>  
Accruing loans delinquent more than 90 days...........        $292         $223        $231        $  97       $  90
Non-accruing loans....................................         ---          ---         ---          ---         ---
Troubled debt restructurings..........................         ---          ---         ---          ---         ---
                                                              ----         ----        ----        -----        ----  
    Total non-performing loans........................         292          223         231           97          90
Real estate owned, net................................         ---          ---         ---          ---          34
                                                              ----         ----        ----        -----        ---- 
   Total non-performing assets........................        $292         $223        $231        $  97        $124
                                                              ====         ====        ====        =====        ====

Non-performing loans to total loans, net(1)...........       0.09%        0.08%       0.09%        0.05%       0.04%
Non-performing assets to total assets.................       0.08%        0.06%       0.07%        0.03%       0.05%

</TABLE>

(1) Total loans less deferred net loan fees and loans in process.
<PAGE>
         Delinquent Loans. The following table sets forth certain information at
September 30, 1998 relating to delinquencies in the Company's portfolio.
<TABLE>
<CAPTION>
                                                 Loans Delinquent For:                            
                            ------------------------------------------------------------------        Total Loans Delinquent
                                     60-89 Days                        90 Days and Over                  60 Days and Over
                            -------------------------------      -----------------------------    ----------------------------- 
                                                    Percent                            Percent                          Percent
                                                    of Loan                            of Loan                          of Loan
                            Number     Amount      Category      Number   Amount      Category    Number   Amount      Category
                            ------     ------      --------      ------   ------      --------    ------   ------      --------
                                                                     (Dollars in Thousands)
<S>                           <C>       <C>          <C>          <C>     <C>           <C>         <C>     <C>           <C>   
One- to four-family
  residential mortgage
  loans ..............        17        $670          .21%          6      $292         .09%         23      $962          .30% 
Commercial real estate                                                                                                          
   loans .............         1          20         1.17%         --        --          --           1        20         1.02% 
                                                                                                                                
Consumer loans .......        --          --           --          --        --          --          --        --           --  
                             ---        ----                     ----      ----                    ----      ----     
                                                                                                                                
     Total loans .....        18        $690          .21%          6      $292         .09%         24      $982          .29% 
                             ===        ====                     ====      ====                    ====      ====
</TABLE>
                                                                 

         When a borrower  fails to make a required  payment  after a fifteen-day
grace period,  the Company attempts to cause the borrower to cure the deficiency
by corresponding with the borrower.  A late notice is sent to the borrower and a
phone call to the borrower is also made. Deficiencies are cured promptly in most
cases;  however,  if continued  trouble  exists,  the Company will initiate more
aggressive  collection  actions.  If  it  is  determined  after  this  that  the
deficiency  cannot be  cured,  the  Company  normally  gives  notice of and then
institutes appropriate legal action, such as foreclosure.

         As of September 30, 1998,  included in the 90 or greater  category were
three  residential loans with an outstanding  balance of approximately  $215,000
where  foreclosure  is believed to be imminent.  The  Company's  potential  loss
exposure is considered minimal due to low loan to values and/or private mortgage
insurance.  There were no loans which were not included in the table above where
known  information  about the  possible  credit  problems  of  borrowers  caused
management  to have  serious  doubts as to the ability of the borrower to comply
with present loan  repayment  terms and which may result in  disclosure  of such
loans in the future.

         Classified assets.  Federal  regulations provide for the classification
of loans and other assets, such as debt and equity securities  considered by the
OTS to be of lesser quality, as "substandard," "doubtful" or "loss." An asset is
considered  "substandard"  if it is  inadequately  protected  by the current net
worth and paying capacity of the obligor or of the collateral  pledged,  if any.
"Substandard"  assets include those characterized by the "distinct  possibility"
that the insured  institution  will sustain "some loss" if the  deficiencies are
not  corrected.  Assets  classified  as  "doubtful"  have all of the  weaknesses
<PAGE>
inherent in those classified  "substandard," with the added  characteristic that
the weaknesses present make "collection or liquidation in full," on the basis of
currently  existing facts,  conditions,  and values,  "highly  questionable  and
improbable."  Assets  classified as "loss" are those considered  "uncollectible"
and  of  such  little  value  that  their  continuance  as  assets  without  the
establishment of a specific loss reserve is not warranted.

         An insured  institution is required to establish general allowances for
loan  losses in an amount  deemed  prudent by  management  for loans  classified
substandard or doubtful,  as well as for other problem loans. General allowances
represent loss allowances  which have been established to recognize the inherent
risk associated with lending activities,  but which, unlike specific allowances,
have  not  been  allocated  to  particular  problem  assets.   When  an  insured
institution  classifies  problem  assets as  "loss,"  it is  required  either to
establish  a specific  allowance  for losses  equal to 100% of the amount of the
asset so classified or to charge off such amount. An institution's determination
as to  the  classification  of its  assets  and  the  amount  of  its  valuation
allowances  is  subject  to review by the OTS and the FDIC,  which may order the
establishment of additional general or specific loss allowances.

         In connection  with its  classification  of asset  policy,  the Company
regularly  reviews its loan  portfolio  to determine  whether any loans  require
classification.  At September 30, 1998,  the  aggregate  amount of the Company's
classified  assets,  and of the Company's  general and specific loss allowances,
were as follows:
<TABLE>
<CAPTION>
                                                       At September 30, 1998
                                                       ---------------------
                                                           (In Thousands)

<S>                                                            <C>   
Substandard assets ..................................          $  292
Doubtful assets .....................................            --
Loss assets .........................................            --
                                                               ------
   Total classified assets ..........................          $  292
                                                               ======

General loss allowances .............................          $1,390
Specific loss allowances ............................            --
                                                               ------
   Total allowances .................................          $1,390
                                                               ======
</TABLE>
Allowance for Loan Losses

         The allowance  for loan losses is maintained  through the provision for
loan losses which is charged to earnings.  In establishing its allowancefor loan
losses,  the Company  considers the level of its classified  and  non-performing
assets and their estimated value,  the national  economic outlook which may tend
to inhibit  economic  activity  and depress  real estate and other values in the
Company's  primary market area, the regulators'  view of adequate reserve levels
for the thrift industry,  and the Company's historically low loan losses and the
levels of the allowance for loan losses  established  by the Company's  peers in
assessing the adequacy of the loan loss allowance.  Accordingly, the calculation
of the  adequacy of the  allowance  for loan  losses is not based  solely on the
level of non-performing loans.
<PAGE>
          Real estate  properties  acquired through  foreclosure are recorded at
fair  value.  If the fair  value at the date of  foreclosure  is lower  than the
balance of the related loan, the difference will be charged-off to the allowance
for loan losses at the time of transfer.  Valuations are periodically updated by
management  and if the value less estimated  disposition  costs is less than the
carrying  value a specific  provision for losses on such property is established
by a charge to operations. The Company had no loan losses in fiscal 1998.

         Although   management  believes  that  it  uses  the  best  information
available to determine the allowance,  unforeseen market conditions could result
in adjustments and net earnings could be significantly affected if circumstances
differ   substantially   from  the   assumptions   used  in  making   the  final
determination. Future additions to the Company's allowance will be the result of
periodic loan,  property and collateral  reviews and thus cannot be predicted in
advance. See Notes 1 and 4 of the Notes to Consolidated  Financial Statements in
the Annual Report.  In management's  opinion,  the Company's  allowance for loan
losses is adequate to absorb  probable future losses from loans at September 30,
1998.

         Summary of Loan Loss  Experience.  The following table analyzes changes
in the allowance for loan losses during the past five years ended  September 30,
1998.
<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                 -------------------------------------------------------------
                                                  1998         1997         1996          1995           1994
                                                 ------       ------       ------       -------        -------
                                                                    (Dollars in Thousands)
<S>                                              <C>          <C>          <C>          <C>            <C>    
Balance of allowance at beginning of period      $1,388       $1,385       $1,372       $ 1,288        $ 1,244
Add:
Recoveries of loans previously charged off:
 One- to four-family residential ..........        --           --           --            --             --
                                                 ------       ------       ------       -------        -------
Less charge-offs:
  One- to four-family residential .........        --           --           --              (3)            (1)
                                                 ------       ------       ------       -------        -------
Net charge-offs ...........................        --           --           --              (3)            (1)
Provisions for loan losses ................           2            3           13            87             45
                                                 ------       ------       ------       -------        -------
Balance of allowance at end of period .....      $1,390       $1,388       $1,385       $ 1,372        $ 1,288
                                                 ======       ======       ======       =======        =======

Net charge-offs to total average loans
 outstanding for period(1) ................         ---%         ---%         ---%          ---%           ---%
                                                 ======       ======       ======       =======        =======
Allowance to net loans receivable at end of
 period ...................................         .43%         .49%         .55%          .64%           .64%
                                                 ======       ======       ======       =======        =======
Allowance to total non-performing loans at
 end of period ............................         476%         623%         600%        1,411%         1,431%
                                                 ======       ======       ======       =======        =======
</TABLE>


(1) Total average loans exclude deferred net loan fees and loans in process.
<PAGE>
         Allocation of Allowance for Loan Losses.  The following  table presents
an analysis of the allocation of the Company's  allowance for loan losses at the
dates indicated.
<TABLE>
<CAPTION>
                                                                          At September 30,
                           ---------------------------------------------------------------------------------------------------------
                                    1998                1997                   1996                1995                   1994
                           -------------------   ----------------      ------------------    ------------------  -------------------
                                      Percent             Percent                Percent              Percent               Percent
                                      of Loans            of Loans               of Loans             of Loans              of Loans
                                      in Each             in Each                in Each              in Each               in Each
                                      Category            Category               Category             Category              Category
                                      to Total            to Total               to Total             to Total              to Total
                             Amount     Loans     Amount    Loans       Amount    Loans       Amount    Loans     Amount    Loans
                                                                       (Dollars In Thousands)
<S>                          <C>        <C>       <C>        <C>       <C>         <C>        <C>        <C>      <C>         <C>   
Balance at end of period
 applicable to:
One- to four-family
  residential ..........     $1,085     92.99     $1,078     92.28     $1,058      91.83      $1,050     92.48    $1,005      92.82%
Commercial real estate .         35       .52         35       .64         35        .52          35       .59        33        .52 
Construction loans .....        105      3.47        110      4.03        112       4.79         102      3.98        95       3.93 
Consumer loans .........         45      3.02         45      3.05         40       2.86          40      2.95        33       2.73 
Unallocated ............        120        --        120        --        140         --         145        --       122         -- 
                             ------    ------     ------    ------     ------     ------      ------    ------    ------     ------ 
                                                                                                                                
     Total .............     $1,390    100.00     $1,388    100.00     $1,385     100.00      $1,372    100.00    $1,288     100.00%
                             ======    ======     ======    ======     ======     ======      ======    ======    ======     ====== 
</TABLE>
Investments

         The Bank must maintain  minimum levels of  investments  that qualify as
liquid  assets  under  OTS  regulations.  Liquidity  may  increase  or  decrease
depending upon the  availability of funds and comparative  yields on investments
in relation to the return on loans. Historically, the Bank has maintained liquid
assets at levels above the minimum  requirements  imposed by the OTS regulations
and  above  levels  believed   adequate  to  meet  the  requirements  of  normal
operations,  including  potential  deposit  outflows.  Cash flow projections are
regularly  reviewed and updated to assure that adequate liquidity is maintained.
At September 30, 1998, the Bank's liquidity ratio (liquid assets as a percentage
of net withdrawable savings deposits and current borrowings) was 9.7%.

         Federally  chartered savings  institutions have the authority to invest
in various types of liquid assets, including United States Treasury obligations,
securities  of various  federal  agencies,  certain  certificates  of deposit of
insured banks and savings institutions, certain bankers' acceptances, repurchase
agreements  and  federal  funds.  Subject  to  various  restrictions,  federally
chartered savings  institutions may also invest their assets in investment grade
commercial  paper and corporate  debt  securities  and mutual funds whose assets
conform to the investments  that a federally  chartered  savings  institution is
otherwise authorized to make directly.

         The Company's  investment policy, which was established by the Board of
Directors and is implemented by the President,  is designed primarily to provide
and maintain  liquidity  within  federal  regulatory  guidelines,  to maintain a
balance of high quality  investments to minimize  risk,  and to maximize  return
without sacrificing  liquidity and safety. The Company restricts its investments
<PAGE>
 the following six types of investments:  (I) U.S.  Treasury Bills,  (ii) U.S.
Treasury Notes, (iii) U.S. Treasury and Agency Bonds, (iv) federal funds up to a
maximum  of $2  million  per  commercial  bank,  (v) FHLB of  Indianapolis  time
deposits, and (vi) certificates of deposit of $1 million per commercial bank. At
September 30, 1998, the Company had an  outstanding  balance of $17.2 million in
investment  securities  (excluding FHLB stock) with a weighted  average yield of
6.67%.

         The following table sets forth the carrying book value and market value
of the Company's investment portfolio at the dates indicated.
<TABLE>
<CAPTION>
                                                                        At September 30,
                                         ----------------------------------------------------------------------------
                                                   1998                       1997                       1996
                                         ----------------------     ----------------------     ---------------------- 
                                         Carrying        Market     Carrying        Market     Carrying        Market
                                          Value          Value       Value          Value       Value          Value
                                                                         (In Thousands)
<S>                                       <C>           <C>          <C>           <C>          <C>           <C>    
U.S. Treasury Bonds, held to
    maturity........................      $12,024       $12,195      $26,955       $27,214      $48,819       $49,273
U.S. Treasury Bonds, available
   for sale ........................        5,137         5,137       11,126        11,126        3,969         3,969
FHLB stock..........................        2,783         2,783        2,449         2,449        2,054         2,054
                                         --------      --------     --------      --------     --------      --------
Total investments...................      $19,944       $20,115      $40,530       $40,789      $54,842       $55,296
                                          =======       =======      =======       =======      =======       =======

</TABLE>
         The  following  table sets forth the amount of  investment  securities,
excluding  FHLB stock which mature during each of the periods  indicated and the
weighted average yields for each range of maturities at September 30, 1998.
<TABLE>
<CAPTION>


                                                              September 30, 1998
                           -------------------------------------------------------------------------------------
                                            Over 1         Over 5
                            1 Year         Through        Through           Over
                            or Less        5 Years        10 Years        10 Years   Total Investment Securities
                           ---------       ---------      ----------     ----------  ---------------------------  
                            Carrying       Carrying       Carrying       Carrying        Carrying         Market
                              Value          Value          Value          Value           Value          Value
                                                               (Dollars in Thousands)
<S>                        <C>             <C>            <C>            <C>            <C>             <C>    
U.S. Treasury Bonds ..     $   12,085      $   5,076      $     --       $     --       $   17,161      $17,332
                           ==========      =========      ==========     ==========     ==========      =======

Weighted average yield           6.60%          6.82%            ---%           ---%          6.67%
</TABLE>


 
         At September 30, 1998, the Company's  investment  securities  portfolio
contained  neither  tax-exempt  securities  nor securities of any issuer with an
aggregate  book value in excess of 10% of the  Company's  stockholders'  equity,
excluding those issued by the United States Government or its agencies.
<PAGE>
Sources Of Funds

         General.  Deposits have traditionally been the Company's primary source
of funds for use in lending and investment activities.  In addition to deposits,
the Company derives funds from loan amortization, prepayments, retained earnings
and  income  on  earning  assets.   While  loan   amortization   and  income  on
interest-earning  assets are relatively stable sources of funds, deposit inflows
and outflows can vary widely and are  influenced by prevailing  interest  rates,
market  conditions  and  levels  of  competition.  Borrowings  from  the FHLB of
Indianapolis  may be used in the  short-term  to  compensate  for  reductions in
deposits or deposit  inflows at less than projected  levels and may be used when
advance rates offer lower funding opportunities than traditional  deposits.  The
Company has recently borrowed for terms from 30 days to ten years in response to
favorable funding rates and anticipated liquidity needs.

         Deposits. Deposits are attracted,  principally from within northeastern
Indiana,  particularly Allen and Adams Counties, through the offering of a broad
selection of deposit instruments,  including NOW and other transaction accounts,
fixed-rate certificates of deposit,  individual retirement accounts, and savings
accounts.  The Company  does not  actively  solicit or  advertise  for  deposits
outside of northeastern Indiana,  particularly Allen and Adams Counties,  and it
does not accept brokered deposits. Substantially all of the Company's depositors
are residents of northeastern  Indiana,  particularly  Allen and Adams Counties.
Deposit  account terms vary,  with the principal  differences  being the minimum
balance  required,  the  amount of time the  funds  remain  on  deposit  and the
interest rate.

         The Company has maintained its deposit base,  estimated as of September
30, 1998, at  approximately  7.0% and 8.5% of the market among each of Allen and
Adams Counties' banks and savings associations.

         Interest  rates  paid,  maturity  terms,  service  fees and  withdrawal
penalties are established by the Company on a periodic basis.  Determination  of
rates and terms are predicated on funds, acquisition and liquidity requirements,
rates paid by  competitors,  growth goals and federal  regulations.  The Company
relies,  in part,  on customer  service  and  long-standing  relationships  with
customers to attract and retain its deposits,  but also competitively prices its
deposits  in  relation  to rates  offered by its  competitors.  For  information
relating to the average  balance of and rates paid on the Company's  deposits by
category,  see "Management's  Discussion and Analysis of Financial Condition and
Results of  Operations  - Average  Balances,  Interest  Rates and Yields" in the
Annual Report.
<PAGE>
         An analysis of the  Company's  deposit  accounts by type,  maturity and
rate at September 30, 1998, is as follows:
<TABLE>
<CAPTION>

                                                        Minimum        Balance at                       Weighted
                                                        Opening       September 30,     % of             Average
Type of Account                                         Balance            1998         Deposits           Rate
---------------                                         -------            ----         --------           ----
                                                             (Dollars in Thousands except minimum balance)
<S>                                                     <C>             <C>                 <C>            <C>  
Withdrawable:
  Passbook savings accounts......................       $   200         $ 15,725            4.97%          2.22%
  Money market accounts..........................         2,500           49,540            15.68          4.54
  NOW and other transactions accounts . . . . .             100           16,092             5.09          0.66
                                                                        --------          -------
    Total withdrawable...........................                         81,357            25.74
                                                                        --------           ------

Certificates and IRA's (original terms):(1)
  90 days and less...............................         1,000            3,210             1.02          5.65
  91 days........................................         1,000            2,787              .88          4.95
  182 days.......................................         1,000           38,949            12.32          5.38
  12 months......................................         1,000           72,514            22.95          5.49
  18 months......................................         1,000           22,750             7.20          5.61
  24 months......................................         1,000           10,896             3.45          5.83
  30 months......................................         1,000           17,531             5.55          6.03
  36 months.....................................          1,000            4,324             1.37          5.71
  48 months......................................         1,000              876              .28          5.89
  60 months......................................         1,000           17,043             5.39          6.30
  72 months......................................         1,000              ---             -.--          -.--
  84 months and over.............................         5,000           43,761            13.85          6.98
                                                                         -------           ------
     Total certificates and IRA's................                        234,641            74.26
                                                                        --------           ------
     Total deposits..............................                       $315,998          100.00%
                                                                        ========          ======
</TABLE>

(1)  Total IRA account balances are $25.9 million. The IRA accounts are included
     in the various CD terms with corresponding minimums.


         The following  table  indicates the amount of Company  certificates  of
deposit of $100,000 or more by time remaining until maturity as of September 30,
1998.


         Maturity Period                                          (In Thousands)
         ---------------                                          --------------

Three months or less......................................          $  8,177
Greater than three months through six months..............             8,505
Greater than six months through twelve months.............            12,092
Over twelve months........................................            13,218
                                                                    --------
     Total................................................          $ 41,992
                                                                    ========
<PAGE>
         Borrowings.  The Company  focuses on generating  high quality loans and
then seeks the best source of funding from deposits,  investments or borrowings.
On occasion the Company has obtained  borrowings from the FHLB of  Indianapolis.
There are regulatory  restrictions on advances from the FHLBs. See "Regulation -
Federal Home Loan Bank System." These  limitations  are not expected to have any
impact on the  Company's  ability to borrow  from the FHLB of  Indianapolis.  At
September 30, 1998,  the Company had $9.0 million in advances  outstanding  with
the FHLB. Prior to fiscal 1998 the Bank had not had borrowings outstanding since
1983.  The Company does not  anticipate  any  difficulty  in obtaining  advances
appropriate to meet its requirements in the future.

Regulation

         General.  The Bank is a federally  chartered savings bank, the deposits
of which are  federally  insured  and backed by the full faith and credit of the
United  States  Government.  Accordingly,  the Bank is subject to broad  federal
regulation  and  oversight  extending  to all its  operations.  The Company is a
member of the FHLB of Indianapolis and is subject to certain limited  regulation
by the Board of  Governors  of the  Federal  Reserve  System  ("Federal  Reserve
Board").  As the savings and loan holding  company of the Bank, the Company also
is subject to federal regulation and oversight. The purpose of the regulation of
the  Company  and other  holding  companies  is to  protect  subsidiary  savings
associations.  The Bank is a member of the Savings  Association  Insurance  Fund
("SAIF"),  which  together with the Bank  Insurance Fund (the "BIF") are the two
deposit  insurance funds  administered by the FDIC, and the deposits of the Bank
are  insured  by the FDIC.  As a result,  the FDIC has  certain  regulatory  and
examination  authority over the Bank.  Certain of these regulatory  requirements
and restrictions are discussed below or elsewhere in this document.

         Federal  Regulation  of  Savings  Associations.  The OTS has  extensive
authority  over  the  operations  of  savings  associations.  As  part  of  this
authority,  the Bank is required to file  periodic  reports  with the OTS and is
subject to periodic  examinations  by the OTS and the FDIC. The last regular OTS
examination  of the Bank was as of September 30, 1998.  When these  examinations
are  conducted by the OTS, the  examiners may require the Company to provide for
higher  general or specific loan loss  reserves.  All savings  associations  are
subject to a semi-annual assessment,  based upon the savings association's total
assets,  to fund the  operations of the OTS. The Bank's OTS  assessment  for the
fiscal year ended September 30, 1998, was approximately $86,000.

         The OTS also  has  extensive  enforcement  authority  over all  savings
institutions  and their holding  companies,  including the Bank and the Company.
This enforcement  authority includes,  among other things, the ability to assess
civil  money  penalties,  to issue  cease-and-desist  or  removal  orders and to
initiate  injunctive  actions.  In  general,  these  enforcement  actions may be
initiated  for  violations  of  laws  and  regulations  and  unsafe  or  unsound
practices.  Other  actions or  inactions  may provide the basis for  enforcement
action,  including  misleading or untimely  reports  filed with the OTS.  Except
under certain  circumstances,  public disclosure of final enforcement actions by
the OTS is required.

         In addition,  the  investment,  lending and branching  authority of the
Bank is  prescribed  by federal laws and it is  prohibited  from engaging in any
activities not permitted by such laws. For instance,  no savings institution may
invest in  non-investment  grade  corporate debt  securities.  In addition,  the
permissible  level of  investment  by federal  associations  in loans secured by
non-residential real property may not exceed 400% of total capital,  except with
approval of the OTS. Federal savings  associations are also generally authorized
to establish branch offices nationwide. The Bank is in compliance with the noted
restrictions.
<PAGE>
         The Bank's general permissible lending limit for  loans-to-one-borrower
is equal to the  greater of $500,000  or 15% of  unimpaired  capital and surplus
(except for loans fully secured by certain  readily  marketable  collateral,  in
which case this limit is increased to 25% of unimpaired capital and surplus). At
September 30, 1997, the Company's  lending limit under this restriction was $5.1
million. The Bank is in compliance with the loans-to-one-borrower limitation.

         The OTS, as well as the other  federal  banking  agencies,  has adopted
guidelines  establishing  safety and soundness standards on such matters as loan
underwriting and  documentation,  asset quality,  earnings  standards,  internal
controls and audit  systems,  interest rate risk exposure and  compensation  and
other  employee  benefits.  Any  institution  which  fails to comply  with these
standards must submit a compliance plan. A failure to submit a plan or to comply
with an  approved  plan will  subject  the  institution  to further  enforcement
action.

         Insurance of Accounts and  Regulation by the FDIC. The Bank is a member
of the SAIF,  which is  administered  by the FDIC.  Deposits  are  insured up to
applicable limits by the FDIC and such insurance is backed by the full faith and
credit of the United States  Government.  As insurer,  the FDIC imposes  deposit
insurance  premiums and is authorized to conduct  examinations of and to require
reporting by FDIC-insured  institutions.  It also may prohibit any  FDIC-insured
institution  from engaging in any activity the FDIC  determines by regulation or
order  to pose a  serious  risk to the SAIF or the  BIF.  The FDIC  also has the
authority to initiate  enforcement actions against savings  associations,  after
giving the OTS an opportunity to take such action, and may terminate the deposit
insurance if it determines that the institution has engaged in unsafe or unsound
practices or is in an unsafe or unsound condition.

         The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums  based upon their  level of
capital and supervisory evaluation. The current assessment rates range from .00%
to .27% of deposits.

         The FDIC is authorized to increase  assessment  rates,  on a semiannual
basis,  if it  determines  that the reserve ratio of the SAIF or the BIF, as the
case may be, will be less than the designated  reserve ratio of 1.25% of SAIF or
BIF insured deposits,  respectively. In setting these increased assessments, the
FDIC must seek to restore the reserve ratio to that designated reserve level, or
such higher reserve ratio as established by the FDIC.

         Prior to the enactment of legislation  recapitalizing the SAIF in 1996,
a portion of the SAIF  assessment  imposed on savings  associations  was used to
repay  obligations  issued  by a  federally  chartered  corporation  to  provide
financing for resolving the thrift crisis in the 1980s. Although the legislation
also now requires  assessments  to be made on  BIF-assessable  deposits for this
purpose,  effective  January 1, 1997,  that assessment was limited to 20% of the
rate imposed on SAIF assessable  deposits until the earlier of December 31, 1999
or when no savings  association  continues to exist,  thereby imposing a greater
burden  on SAIF  member  institutions  such as the  Bank.  Thereafter,  however,
assessments  on  BIF-member  institutions  will  be made on the  same  basis  as
SAIF-member  institutions.  The rates  established by the FDIC to implement this
requirement for all FDIC-insured  institutions during calendar year 1998 for the
semiannual  periods were 6.28 and 6.22 basis points assessment on SAIF deposits,
and 1.26 and 1.24 basis  points on BIF deposits  until BIF insured  institutions
participate fully in the assessment.
<PAGE>
         Regulatory    Capital    Requirements.    Federally   insured   savings
associations,  such as the Bank,  are  required to  maintain a minimum  level of
regulatory  capital.  The OTS has  established  capital  standards,  including a
tangible capital requirement, a leverage ratio (or core capital) requirement and
a risk-based capital requirement applicable to such savings associations.  These
capital  requirements  must be generally as stringent as the comparable  capital
requirements  for national  banks.  The OTS is also authorized to impose capital
requirements  in excess  of these  standards  on  individual  associations  on a
case-by-case basis.

         The capital  regulations  require  tangible capital of at least 1.5% of
adjusted total assets (as defined by  regulation).  Tangible  capital  generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible capital for calculating  compliance with
the  requirement.  At September 30, 1998,  the Bank did not have any  intangible
assets.

         The OTS regulations establish special  capitalization  requirements for
savings associations that own subsidiaries.  In determining  compliance with the
capital requirements,  all subsidiaries engaged solely in activities permissible
for national  banks or engaged in certain other  activities  solely as agent for
its customers are  "includable"  subsidiaries  that are consolidated for capital
purposes in proportion to the association's level of ownership. At September 30,
1998, the Bank did not have any subsidiaries.

         At September 30, 1998, the Bank had tangible  capital of $33.8 million,
or 9.23% of adjusted total assets,  which is  approximately  $28.3 million above
the minimum requirement of 1.5% of adjusted total assets in effect on that date.

         The capital standards also require core capital equal to at least 3% of
adjusted total assets.  Core capital generally consists of tangible capital plus
certain intangible  assets,  including a limited amount of purchased credit card
relationships.  As a result of the prompt corrective action provisions discussed
below,  however, a savings  association must maintain a core capital ratio of at
least  4%  to  be  considered  adequately  capitalized  unless  its  supervisory
condition is such to allow it to maintain a 3% ratio. At September 30, 1998, the
Bank had no intangibles which were subject to these tests.

         At  September  30,  1998,  the  Bank had  core  capital  equal to $33.8
million,  or 9.23% of adjusted  total  assets,  which is $22.8 million above the
minimum leverage ratio requirement of 3% as in effect on that date.

          The OTS risk-based  requirement  requires savings associations to have
total capital of at least 8% of risk-weighted  assets. Total capital consists of
core capital, as defined above, and supplementary capital. Supplementary capital
consists of certain  permanent  and  maturing  capital  instruments  that do not
qualify as core capital and general  valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used
to satisfy the risk-based  requirement  only to the extent of core capital.  The
OTS is  also  authorized  to  require  a  savings  association  to  maintain  an
additional  amount of total capital to account for  concentration of credit risk
and the risk of non-traditional  activities. At September 30, 1998, the Bank had
no capital instruments that qualify as supplementary capital and $1.4 million of
general loss reserves, which was less than 1.25% of risk-weighted assets.
<PAGE>
         Certain  exclusions from capital and assets are required to be made for
the purpose of calculating  total  capital.  Such  exclusions  consist of equity
investments  (as  defined  by  regulation)  and that  portion  of land loans and
nonresidential  construction  loans in excess of an 80% loan-to-value  ratio and
reciprocal  holdings of  qualifying  capital  instruments.  The Bank had no such
exclusions from capital and assets at September 30, 1998.

         In  determining  the  amount  of  risk-weighted   assets,  all  assets,
including certain  off-balance sheet items, will be multiplied by a risk weight,
ranging from 0% to 100%,  based on the risk  inherent in the type of asset.  For
example,  the OTS has assigned a risk weight of 50% for  prudently  underwritten
permanent  one- to  four-family  first lien mortgage loans not more than 90 days
delinquent  and having a loan to value ratio of not more than 80% at origination
unless insured to such ratio by an insurer approved by the FNMA or FHLMC.

         OTS regulations  also require that every savings  association with more
than normal  interest rate risk exposure to deduct from its total  capital,  for
purposes of determining compliance with such requirement, an amount equal to 50%
of its  interest-rate  risk  exposure  multiplied  by the  present  value of its
assets. This exposure is a measure of the potential decline in the net portfolio
value of a savings  association,  greater  than 2% of the  present  value of its
assets,  based upon a  hypothetical  200 basis  point  increase  or  decrease in
interest rates (whichever results in a greater decline).  Net portfolio value is
the  present  value  of  expected  cash  flows  from  assets,   liabilities  and
off-balance  sheet  contracts.  The rule will not become effective until the OTS
evaluates the process by which savings  associations may appeal an interest rate
risk deduction determination.  It is uncertain as to when this evaluation may be
completed.  Any savings  association with less than $300 million in assets and a
total capital ratio in excess of 12% is exempt from this requirement  unless the
OTS determines otherwise.

         On September  30,  1998,  the Bank had total  capital of $35.2  million
(including  $33.8  million in core capital) and  risk-weighted  assets of $185.7
million  (with $6.1 million of converted  off-balance  sheet  assets);  or total
capital of 18.97% of risk-weighted  assets.  This amount was $20.4 million above
the 8% requirement in effect on that date.

         The OTS and the FDIC are authorized  and,  under certain  circumstances
required, to take certain actions against savings associations that fail to meet
their  capital  requirements.  The OTS is  generally  required to take action to
restrict the activities of an "undercapitalized  association" (generally defined
to be  one  with  less  than  either  a 4%  core  capital  ratio,  a 4%  Tier  1
risked-based  capital  ratio  or an  8%  risk-based  capital  ratio).  Any  such
association  must  submit a  capital  restoration  plan and  until  such plan is
approved by the OTS may not increase its assets,  acquire  another  institution,
establish a branch or engage in any new  activities,  and generally may not make
capital  distributions.  The OTS is authorized,  and in respect to  institutions
whose capital is further depleted,  required to impose  additional  restrictions
that can affect all aspects of the institution's  operations.  As a condition to
the  approval of the  capital  restoration  plan,  any  company  controlling  an
undercapitalized  association  must  agree  that it will  enter  into a  limited
capital maintenance  guarantee with respect to the institution's  achievement of
its capital requirements.

         The  imposition by the OTS or the FDIC of any of these  measures on the
Company  or the Bank may have a  substantial  adverse  effect  on the  Company's
operations  and  profitability.  Company  shareholders  do not  have  preemptive
rights,  and  therefore,  if the  Company is  directed by the OTS or the FDIC to
issue  additional  shares of  Common  Stock,  such  issuance  may  result in the
dilution in the percentage of ownership of the Company.
<PAGE>
         Limitations   on  Dividends  and  Other  Capital   Distributions.   OTS
regulations impose various  restrictions on savings associations with respect to
their ability to make distributions of capital,  which include dividends,  stock
redemptions or repurchases,  cash-out mergers and other transactions  charged to
the capital account.  OTS regulations  also prohibit a savings  association from
declaring or paying any dividends or from repurchasing any of its stock if, as a
result,  the regulatory  capital of the  association  would be reduced below the
amount  required to be maintained  for the  liquidation  account  established in
connection with its mutual to stock conversion.

         Generally,  savings  associations,  such as the Bank,  that  before and
after the  proposed  distribution  meet  their  capital  requirements,  may make
capital  distributions  during any calendar year equal to the greater of 100% of
net  income for the  year-to-date  plus 50% of the amount by which the lesser of
the  association's  tangible,  core or  risk-based  capital  exceeds its capital
requirement  for such  capital  component,  as measured at the  beginning of the
calendar  year,  or 75% of their net income  for the most  recent  four  quarter
period.  However,  an  association  deemed  to be in need of  more  than  normal
supervision  by the OTS may have its dividend  authority  restricted by the OTS.
The Bank may pay dividends in accordance with this general authority.

         Savings  associations  proposing to make any capital  distribution need
only  submit  written  notice  to the OTS 30 days  prior  to such  distribution.
Savings  associations  that do not,  or would  not meet  their  current  minimum
capital requirements  following a proposed capital  distribution,  however, must
obtain OTS approval prior to making such distribution. The OTS may object to the
distribution  during that 30-day  period  notice  based on safety and  soundness
concerns. See "- Regulatory Capital Requirements."

         Liquidity.  All savings associations,  including the Bank, are required
to  maintain  an  average  daily  balance  of liquid  assets  equal to a certain
percentage of the sum of its average daily balance of net  withdrawable  deposit
accounts and  borrowings  payable in one year or less.  For a discussion of what
the Bank includes in liquid assets, see "Management's Discussion and Analysis of
Financial   Condition   and  Results  of  Operations  -  Liquidity  and  Capital
Resources."  This  liquid  asset  ratio  requirement  may vary from time to time
(between 4% and 10%) depending upon economic conditions and savings flows of all
savings associations.  At September 30, 1998, the minimum liquid asset ratio was
4%.Penalties may be imposed upon associations for violations of the liquid asset
ratio  requirement.  At September 30, 1998, the Bank was in compliance  with the
requirements, with a liquid asset ratio of 9.7%. The Bank's liquidity as of that
same date was 9.02%.

         Accounting.   An  OTS  policy  statement   applicable  to  all  savings
associations  clarifies and  re-emphasizes  that the investment  activities of a
savings   association  must  be  in  compliance  with  approved  and  documented
investment policies and strategies, and must be accounted for in accordance with
GAAP. Under the policy statement,  management must support its classification of
and  accounting  for loans  and  securities  (i.e.,  whether  held to  maturity,
available for sale, or trading) with appropriate  documentation.  The Bank is in
compliance with these amended rules.

         OTS accounting regulations,  which may be made more stringent than GAAP
by the OTS, require that transactions be reported in a manner that best reflects
their underlying economic substance and inherent risk and that financial reports
must  incorporate any other accounting  regulations or orders  prescribed by the
OTS.
<PAGE>
         Qualified Thrift Lender Test. All savings  associations,  including the
Bank,  are  required to meet a qualified  thrift  lender  ("QTL")  test to avoid
certain  restrictions  on  their  operations.   This  test  requires  a  savings
association  to have  at  least  65% of its  portfolio  assets  (as  defined  by
regulation) in qualified thrift investments on a monthly average for nine out of
every 12 months on a rolling basis. As an alternative,  the savings  association
may maintain 60% of its assets in those assets specified in Section  7701(a)(19)
of the Internal Revenue Code.  Under either test, such assets primarily  consist
of residential housing related loans and investments. At September 30, 1998, the
Bank met the test and has always met the test since its effectiveness.

         Any savings association that fails to meet the QTL test must convert to
a national bank charter, unless it requalifies as a QTL and thereafter remains a
QTL. If an  association  does not  requalify  and  converts  to a national  bank
charter,  it must remain  SAIF-insured  until the FDIC permits it to transfer to
the BIF.  If such an  association  has not yet  requalified  or  converted  to a
national  bank,  its  new  investments  and  activities  are  limited  to  those
permissible  for both a  savings  association  and a  national  bank,  and it is
limited to national bank branching  rights in its home state.  In addition,  the
association is immediately  ineligible to receive any new FHLB borrowings and is
subject to national  bank limits for payment of dividends.  If such  association
has not requalified or converted to a national bank within three years after the
failure,  it must  divest  of all  investments  and  cease  all  activities  not
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding FHLB borrowings,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies. See "- Holding Company Regulation."

         Community  Reinvestment  Act.  Under  the  Community  Reinvestment  Act
("CRA"),  every  FDIC  insured  institution  has a  continuing  and  affirmative
obligation  consistent  with safe and sound  banking  practices to help meet the
credit  needs  of its  entire  community,  including  low  and  moderate  income
neighborhoods.  The CRA does not  establish  specific  lending  requirements  or
programs  for  financial   institutions  nor  does  it  limit  an  institution's
discretion  to develop the types of products and  services  that it believes are
best  suited  to its  particular  community,  consistent  with the CRA.  The CRA
requires the OTS, in connection  with the examination of the Bank, to assess the
institution's  record of meeting the credit needs of its  community  and to take
such record into account in its  evaluation of certain  applications,  such as a
merger or the establishment of a branch,  by the Bank. An unsatisfactory  rating
may be used as the basis for the denial of an application by the OTS.

         The federal banking agencies,  including the OTS, have recently revised
the CRA  regulations  and  the  methodology  for  determining  an  institution's
compliance with the CRA. Due to the heightened  attention being given to the CRA
in the past few years,  the Bank may be required to devote  additional funds for
investment  and lending in its local  community.  The Bank was last examined for
CRA compliance as of July 31, 1998 and received a rating of "satisfactory."

         Transactions with Affiliates. Generally, transactions between a savings
association or its  subsidiaries  and its affiliates are required to be on terms
as  favorable  to  the  association  as  transactions  with  non-affiliates.  In
addition,  certain of these  transactions,  such as loans to an  affiliate,  are
restricted to a percentage of the association's capital.  Affiliates of the Bank
<PAGE>
include the Company and any company which is under common control with the Bank.
In addition,  a savings  association  may not lend to any  affiliate  engaged in
activities not  permissible for a bank holding company or acquire the securities
of most affiliates. The Bank's subsidiaries are not deemed affiliates;  however,
the OTS has the  discretion to treat  subsidiaries  of savings  associations  as
affiliates on a case by case basis.

         Certain  transactions with directors,  officers or controlling  persons
are also subject to laws that impose  restrictions  on loans to such persons and
their related  interests.  Among other things,  such loans must be made on terms
substantially the same as for loans to unaffiliated  individuals  except if made
pursuant  to an  employee  benefit  plan.  The Bank is in  compliance  with this
requirement.

         Holding Company  Regulation.  The Company is a unitary savings and loan
holding company subject to regulatory oversight by the OTS. As such, the Company
is  required  to  register  and  file  reports  with the OTS and is  subject  to
regulation  and  examination  by the OTS. In addition,  the OTS has  enforcement
authority over the Company and its non-savings  association  subsidiaries  which
also permits the OTS to restrict or prohibit  activities  that are determined to
be a serious risk to the subsidiary savings association.

         As a unitary savings and loan holding company, the Company generally is
not subject to activity restrictions. If the Company acquires control of another
savings association as a separate subsidiary, it would become a multiple savings
and loan  holding  company,  and the  activities  of the  Company and any of its
subsidiaries (other than the Bank or any other SAIF-insured savings association)
would become subject to such  restrictions  unless such other  associations each
qualify as a QTL and were acquired in a supervisory acquisition.

         If the Bank fails the QTL test, the Company must obtain the approval of
the OTS prior to continuing  after such  failure,  directly or through its other
subsidiaries,  any  business  activity  other than those  approved  for multiple
savings and loan holding companies or their  subsidiaries.  In addition,  within
one year of such failure the Company must register as and will become subject to
the restrictions applicable to bank holding companies. The activities authorized
for a bank holding  company are more limited than are the activities  authorized
for a unitary or multiple  savings and loan  holding  company.  See "- Qualified
Thrift Lender Test."

         The Company must obtain approval from the OTS before acquiring  control
of  any  other  SAIF-insured   association.   Such  acquisitions  are  generally
prohibited  if they  result  in a  multiple  savings  and loan  holding  company
controlling  savings  associations  in  more  than  one  state.   However,  such
interstate  acquisitions are permitted based on specific state  authorization or
in a supervisory acquisition of a failing savings association.

         Federal Securities Law. The stock of the Company is registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").  The Company is subject to the information,  proxy
solicitation,  insider trading  restrictions  and other  requirements of the SEC
under the Exchange Act.

         Company stock held by persons who are affiliates  (generally  officers,
directors and principal  stockholders)  of the Company may not be resold without
registration unless sold in accordance with certain resale restrictions.  If the
Company meets specified current public information requirements,  each affiliate
of the Company is able to sell in the public  market,  without  registration,  a
limited number of shares in any three-month period.
<PAGE>
         Federal  Reserve  System.   The  Federal  Reserve  Board  requires  all
depository  institutions to maintain  noninterest-bearing  reserves at specified
levels against their transaction accounts (primarily checking, NOW and Super NOW
checking accounts). At September 30, 1998, the Bank was in compliance with these
reserve  requirements.  The balances maintained to meet the reserve requirements
imposed  by  the  Federal  Reserve  Board  may  be  used  to  satisfy  liquidity
requirements that may be imposed by the OTS. See "- Liquidity."

         Savings  associations are authorized to borrow from the Federal Reserve
Bank  "discount   window,"  but  Federal  Reserve  Board   regulations   require
associations to exhaust other reasonable alternative sources of funds, including
FHLB borrowings, before borrowing from the Federal Reserve Bank.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Indianapolis,  which is one of 12  regional  FHLBs,  that  administers  the home
financing credit function of savings associations. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB  System.  It makes loans to members  (i.e.,  advances) in  accordance  with
policies and procedures established by the board of directors of the FHLB, which
are subject to the oversight of the Federal Housing Finance Board.  All advances
from the FHLB are  required  to be fully  secured by  sufficient  collateral  as
determined  by the FHLB.  In addition,  all  long-term  advances are required to
provide funds for residential home financing.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of Indianapolis.  At September 30, 1998, the Company had approximately $2.8
million in FHLB stock,  which was in compliance with this  requirement.  In past
years, the Bank has received  substantial  dividends on its FHLB stock. Over the
past five calendar  years such  dividends have averaged 8.75% and were 8.02% for
fiscal 1998.

         Under  federal  law the FHLBs are  required  to  provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low  and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction  in value of the  Bank's  FHLB  stock may  result  in a  corresponding
reduction in the Bank's capital.

         Federal  Taxation.  Savings  associations  such as the Bank  that  meet
certain  definitional  tests  relating  to the  composition  of assets and other
conditions  prescribed  by the Internal  Revenue  Code of 1986,  as amended (the
"Code"),  had been  permitted  to  establish  reserves for bad debts and to make
annual additions thereto which may, within specified formula limits, be taken as
a deduction in computing  taxable  income for federal  income tax purposes.  The
amount of the bad debt reserve deduction for "non-qualifying  loans" is computed
under the experience  method.  The amount of the bad debt reserve  deduction for
"qualifying  real  property  loans"  (generally  loans  secured by improved real
estate) may be computed under either the experience  method or the percentage of
taxable income method (based on an annual election).

         Under the  experience  method,  the bad debt  reserve  deduction  is an
amount  determined  under a formula based  generally upon the bad debts actually
sustained by the savings association over a period of years.
<PAGE>
         The  percentage of specially  computed  taxable income that was used to
compute a savings  association's bad debt reserve deduction under the percentage
of taxable  income  method (the  "percentage  bad debt  deduction")  was 8%. The
percentage bad debt deduction thus computed was reduced by the amount  permitted
as a  deduction  for  non-qualifying  loans  under the  experience  method.  The
availability  of the  percentage of taxable income method  permitted  qualifying
savings  associations to be taxed at a lower  effective  federal income tax rate
than that applicable to corporations generally (approximately 31.3% assuming the
maximum percentage bad debt deduction).

         Under the percentage of taxable income method,  the percentage bad debt
deduction  could not exceed the amount  necessary to increase the balance in the
reserve for  "qualifying  real property  loans" to an amount equal to 6% of such
loans  outstanding  at the end of the  taxable  year or the  greater  of (I) the
amount  deductible  under the  experience  method or (ii) the amount  which when
added to the bad debt deduction for "non-qualifying loans" equaled the amount by
which 12% of the amount comprising savings accounts at year-end exceeded the sum
of surplus, undivided profits and reserves at the beginning of the year.

         In  August   1996,   legislation   was   enacted   that   repeals   the
above-described  reserve  method of  accounting  (including  the  percentage  of
taxable income method) used by many thrift  institutions  to calculate their bad
debt reserve for federal  income tax  purposes.  Thrift  institutions  with $500
million or less in assets may, however,  continue to use the experience  method.
As a result,  the Bank must  recapture  that portion of the reserve that exceeds
the amount that could have been taken under the experience  method for post-1987
tax years. The recapture will occur over a six-year period,  the commencement of
which will be delayed until the first taxable year beginning  after December 31,
1997, provided the institution meets certain  residential lending  requirements.
The legislation  also requires thrift  institutions to account for bad debts for
federal income tax purposes on the same basis as commercial  banks for tax years
beginning after December 31, 1995.

         In addition to the regular income tax, corporations,  including savings
associations  such as the Bank,  generally  are  subject  to a minimum  tax.  An
alternative  minimum tax is imposed at a minimum tax rate of 20% on  alternative
minimum  taxable  income,  which is the sum of a  corporation's  regular taxable
income (with certain  adjustments) and tax preference  items, less any available
exemption.  The alternative  minimum tax is imposed to the extent it exceeds the
corporation's  regular  income tax and net  operating  losses can offset no more
than 90% of alternative  minimum  taxable  income.  For taxable years  beginning
after 1986 and before 1996, corporations, including savings associations such as
the Bank, are also subject to an  environmental  tax equal to .12% of the excess
of alternative  minimum taxable income for the taxable year (determined  without
regard to net operating losses and the deduction for the environmental tax) over
$2 million. The environmental tax expired as of January 1, 1997.

         To the extent earnings appropriated to a savings association's bad debt
reserves for  "qualifying  real property  loans" and deducted for federal income
tax purposes  exceed the allowable  amount of such reserves  computed  under the
experience method and to the extent of the association's  supplemental  reserves
for  losses on loans  ("Excess"),  such  Excess  may not,  without  adverse  tax
consequences,   be  utilized  for  the  payment  of  cash   dividends  or  other
distributions   to  a  shareholder   (including   distributions  on  redemption,
dissolution or  liquidation) or for any other purpose (except to absorb bad debt
losses).  As of September 30, 1998, the Bank's Excess for tax purposes for which
no deferred  tax  liability  has been  established  totaled  approximately  $7.6
million.
<PAGE>
         The Bank files federal  income tax returns on a fiscal year basis using
the  accrual  method of  accounting.  The Company  intends to file  consolidated
federal  income tax returns  with the Bank.  Savings  associations,  such as the
Bank,  that file federal income tax returns as part of a consolidated  group are
required by applicable  Treasury  regulations to reduce their taxable income for
purposes of computing the percentage bad debt deduction for losses  attributable
to activities of the non-savings  association  members of the consolidated group
that are  functionally  related to the  activities  of the  savings  association
member.

         State Taxation.  For its taxable period beginning  January 1, 1990, the
Bank became subject to Indiana's new Financial  Institutions Tax ("FIT"),  which
is imposed at a flat rate of 8.5% on  "adjusted  gross  income."  The Company is
also subject to FIT.  "Adjusted  gross income," for purposes of FIT, begins with
taxable  income as defined by  Section  63 of the Code and,  thus,  incorporates
federal tax law to the extent that it affects the computation of taxable income.
Federal  taxable income is then adjusted by several Indiana  modifications,  the
most notable of which is the required add back of interest  that is tax-free for
federal  income tax purposes.  Other  applicable  state taxes include  generally
applicable sales and use taxes plus real and personal property taxes. The Bank's
state income tax returns have not been audited in recent years.

Competition

         The Company  originates  most of its loans to, and accepts  most of its
deposits from,  residents of  northeastern  Indiana,  primarily  Allen and Adams
Counties.   The  Company  is  subject  to  competition  from  various  financial
institutions,  including  state and national  banks,  state and federal  savings
associations,  credit unions,  certain non-banking  consumer lenders,  and other
companies  or firms,  including  brokerage  houses and  mortgage  brokers,  that
provide similar services in northeastern  Indiana,  particularly Allen and Adams
Counties,  some of which have significantly more resources than the Company.  In
total,  there  are 11  banks  and  thrifts  located  in Allen  County,  Indiana,
including the Bank. These financial  institutions  consist of nine banks and two
savings  associations  (or  thrifts).  The Company must also compete with banks,
thrifts,   and  credit  unions  throughout   northeastern  Indiana  since  media
advertising  from  across  this region  reaches  the Fort Wayne  community.  The
Company also competes with money market funds and with insurance  companies with
respect to its individual retirement accounts and savings investments.

         Competition has increased in recent years due to changes in Indiana law
permitting  (i) state wide  branching  by  national  and state banks and savings
associations  and (ii) nationwide  acquisitions on a reciprocal  basis of and by
Indiana banks and bank holding  companies.  Indiana law permits  acquisitions of
Indiana  banks and bank  holding  companies by certain  non-Indiana  federal and
state FDIC-insured institutions and their holding companies if the laws of their
home state  permit  Indiana bank  holding  companies  to acquire  banks and bank
holding companies of that state.

         The primary factors  influencing  competition for deposits are interest
rates,  service,  and convenience of office locations.  The Company competes for
loan  originations  primarily  through the efficiency and quality of services it
provides  borrowers,  builders and Realtors and through  interest rates and loan
fees it charges.  Competition  is affected by, among other  things,  the general
availability of lendable funds, general and local economic  conditions,  current
interest rate levels,  and other factors that are not readily  predictable.  The
Company  attempts to  differentiate  itself from other  providers  of  financial
<PAGE>
services by emphasizing the local and personalized nature of its service as well
as  its  strong  capital  base.  In  September  1998,  the  Company   originated
approximately  7.5% and  6.0% of the  mortgages  recorded  in  Allen  and  Adams
Counties,  respectively. As of September 30, 1998, the Company had approximately
7.0% and 8.5% of all financial  institution  deposits in each of Allen and Adams
Counties, respectively.

Employees

         As of  September  30,  1998,  the  Company  employed  82  persons  on a
full-time  basis and six persons on a  part-time  basis.  None of the  Company's
employees are represented by a collective bargaining group. Management considers
its employee relations to be good.

Executive Officers of the Company and the Bank Who Are Not Directors

         The following information as to the business experience during the past
five years is supplied with respect to the executive officers of the Company and
the Bank who do not serve on the  Company's  or the Bank's  Board of  Directors.
Information  regarding  executive  officers who are  directors of the Company is
incorporated in Part III of this Form 10-K from the Company's  proxy  statement.
There are no arrangements or  understandings  between such persons named and any
persons pursuant to which such officers were selected.

         John E.  Fitzgerald  (age 49) has served as Vice  President of the Bank
since  1993.  He  also  currently  serves  as  the  Community  Reinvestment  Act
Compliance  Officer  of the  Bank.  Prior  to  that,  he was an  Assistant  Vice
President,  Assistant  Secretary,  Loan Officer and Loan  Representative  of the
Bank. He has worked for the Bank since 1976.

         Gary L. Hemrick (age 53) has served as Vice  President and Secretary of
the Company since its  incorporation,  Vice President of the Bank since 1983 and
has been Vice  President in charge of branch  operations at the Bank since 1987.
Mr. Hemrick has been employed by the Bank since 1976.
<PAGE>
Item 2.  Description of Property

         At September 30, 1998, the Company conducted its business from its main
office at 132 East Berry Street,  Fort Wayne,  Indiana and eight branch offices.
All nine offices are full-service  offices.  Management is continually reviewing
its facilities for adequacy and for business  opportunities  for the Company and
the Bank.

         The following table provides  certain  information  with respect to the
Company's offices as of September 30, 1998:
<TABLE>
<CAPTION>

                                                          Lease                             Net Book Value of
                                  Owned or     Year    Expiration     Total Deposits at    Property, Furniture     Approximate
                                   Leased     Opened      Date        September 30, 1998       and Fixtures       Square Footage
                                   ------     ------      ----        ------------------       ------------       --------------
                                                                      (Dollars in Thousands)

<S>                               <C>          <C>       <C>                 <C>                    <C>                <C>    
Main Office                         Owned      1916        ---               $58,268                $1,185             10,500 
132 E. Berry Street                                                                                                           
Fort Wayne, IN 46802                                                                                                          
                                                                                                                              
Southtown Mall                    Leasehold    1971      4/30/01              46,226                    11              2,278 
1110 E. Tillman Road                                                                                                          
Fort Wayne, IN 46816                                                                                                          
                                                                                                                              
Decatur                            Leased      1973      6/26/00              39,789                   ---              2,000 
101 N. Second Street                                                                                                          
Decatur, IN 46733                                                                                                             
                                                                                                                              
Canterbury                         Leased      1975      10/1/99              36,931                     3              1,800 
5611 St. Joe Road                                                                                                             
Fort Wayne, IN 46835                                                                                                          
                                                                                                                              
Covington/Times Corner              Owned      1977        ---                38,773                   121              2,064 
6128 Covington Road                                                                                                           
Fort Wayne, IN 46804                                                                                                          
                                                                                                                              
West State                          Owned      1987        ---                26,620                   217              2,048 
926 W. State Boulevard                                                                                                        
Fort Wayne, IN 46808                                                                                                          
                                                                                                                              
New Haven                           Owned      1987        ---                17,722                   260              2,221 
1230 Lincoln Highway E.                                                                                                       
New Haven, IN 46774                                                                                                           
                                                                                                                              
Georgetown                          Owned      1992        ---                37,546                   427              2,563 
6411 State Boulevard                                                                                                          
Fort Wayne, IN  46815                                                                                                         
                                                                                                                              
Dupont Crossing                     Owned      1996        ---                14,123                   581              2,800 
720 E. Dupont Road                                                                                                   
Fort Wayne, IN 46825
</TABLE>
--------------------
<PAGE>
         The Company owns computer and data  processing  equipment which is used
for transaction processing and accounting. The net book value of electronic data
processing  equipment  owned  by  the  Company  was  approximately  $400,000  at
September 30, 1998 and is included in the net book value of the Main Office. The
Company also has  contracted for the data  processing and reporting  services of
NCR Corporation.  The cost of these data processing  services was  approximately
$13,000 per month during  fiscal  1998,  and will be  approximately  $17,000 per
month in fiscal 1999 due to communication and software enhancements.

Item 3.  Legal Proceedings

         From time to time the Company is involved as  plaintiff or defendant in
various legal actions arising in the normal course of business.  Presently,  the
Company is not a party to any material pending legal proceeding.

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

         No matter was  submitted  to a vote of  security  holders,  through the
solicitation  of proxies or otherwise,  during the quarter  ended  September 30,
1998.


                                     PART II


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

         Page 41 of the attached  1998 Annual Report to  Stockholders  is herein
incorporated by reference.

Item 6.  Selected Financial Data

         Pages 2 and 3 of the attached  1998 Annual Report to  Stockholders  are
herein incorporated by reference.

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

         Pages 4 through 14 of the attached 1998 Annual  Report to  Stockholders
are herein incorporated by reference.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

         Pages 9 through 11 of the attached 1998 Annual  Report to  Stockholders
are herein incorporated by reference.

Item 8.  Financial Statements and Supplementary Data

         Pages 15 through 40 of the attached 1998 Annual Report to  Stockholders
are herein incorporated by reference.


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

         There has been no  Current  Report  on Form 8-K filed  within 24 months
prior to the date of the most recent financial  statements reporting a change of
accountants and/or reporting disagreements on any matter of accounting principle
or financial statement disclosure.
<PAGE>
                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

         Information  concerning  Directors of the  Registrant  is  incorporated
herein by reference from the  Corporation's  definitive  Proxy Statement for the
Annual Meeting of Shareholders  scheduled to be held on January 26, 1999, except
for information  contained under the heading  "Compensation  Committee Report on
Executive  Compensation" and "Shareholder  Return Performance  Presentation",  a
copy of which  will be filed  not  later  than 120 days  after  the close of the
fiscal year.

         Information concerning the executive officers of the Registrant who are
not directors of the  Corporation is contained in Part I of this form 10-K under
the  caption  "Executive  Officers  of the  Company  and  the  Bank  who are not
Directors" and is incorporated herein by this reference.


Item 11.  Executive Compensation

         Information concerning executive compensation is incorporated herein by
reference  from the  Corporation's  definitive  Proxy  Statement  for the Annual
Meeting of  Shareholders  scheduled to be held on January 26,  1999,  except for
information  contained  under  the  heading  "Compensation  Committee  Report on
Executive  Compensation" and "Shareholder  Return Performance  Presentation",  a
copy of which  will be filed  not  later  than 120 days  after  the close of the
fiscal year.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         Information  concerning security ownership of certain beneficial owners
and  management  is  incorporated  herein by  reference  from the  Corporation's
definitive  Proxy Statement for the Annual Meeting of Shareholders  scheduled to
be held on January 26, 1999, except for information  contained under the heading
"Compensation  Committee  Report on  Executive  Compensation"  and  "Shareholder
Return Performance  Presentation",  a copy of which will be filed not later than
120 days after the close of the fiscal year.


Item 13.  Certain Relationships and Related Transactions

         No  information  was required to be reported by the Company  under Item
404 of Regulation S-K for the fiscal year ended September 30, 1998.
<PAGE>
                                     PART IV


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

         (a) (1)  Financial Statements:

         The following  information  appearing in the Registrant's Annual Report
to  Shareholders  for the year ended  September  30, 1998,  is  incorporated  by
reference in this Form 10-K Annual Report as Exhibit 13.


                                                                    Pages in
                                                                      Annual
               Annual Report Section                                  Report
               ---------------------                                  ------

Report of Independent Auditors...................................       15

Consolidated Balance Sheets at September 30, 1998 and 1997.......       16

Consolidated Statements of Income for the years ended
September 30, 1998, 1997 and 1996................................       17

Consolidated Statement of Changes in Shareholders' Equity 
for the years ended September 30, 1998, 1997 and 1996............       18

Consolidated Statements of Cash Flows for the years ended 
September 30, 1998, 1997 and 1996................................       19

Notes to Consolidated Financial Statements........................    20 - 40


         (a) (2)  Financial Statement Schedules:

         All financial  statement schedules have been omitted as the information
is not required under the related instructions or is inapplicable.
<PAGE>
         (a) (3)  Exhibits:

<TABLE>
<CAPTION>
                                                                             Reference to
Regulation                                                                 Prior Filing or
S-K Exhibit                                                                 Exhibit Number
  Number                          Document                                 Attached Hereto
  ------                          --------                                 ---------------

<S>             <C>                                                          <C>        
2               Plan of acquisition, reorganization, arrangement,                None
                liquidation or succession
3(i)            Certificate of Incorporation                                      *
3(ii)           Bylaws, as amended                                               ***
4               Instruments defining the rights of security holders,              *
                including indentures
9               Voting trust agreement                                           None
10.1            Employment Agreements of W. Paul Wolf,                            *
                Matthew P. Forrester, Gary L. Hemrick, Donald
                E. Thornton and John E. Fitzgerald
10.2            Employee Stock Ownership Plan                                     *
10.3            1995 Stock Option and Incentive Plan                              **
10.4            Recognition and Retention Plan                                    **
11              Statement re: computation of per share earnings              Not required
12              Statement re: computation or ratios                          Not required
13              Annual Report to Security Holders                                 13
16              Letter re: change in certifying accountants                  Not Required
18              Letter re: change in accounting principles                       None
21              Subsidiaries of Registrant                                        21
22              Published report regarding matters submitted to                  None
                 vote of security holders
23              Consent of Experts                                                23
24              Power of Attorney                                            Not required
27              Financial Data Schedule                                           27
99              Additional exhibits                                              None
</TABLE>
-------------------

     *Filed on December  23,  1995,  as exhibits to the  Registrant's  Form SB-2
registration statement  (Registration No. 33-87906),  pursuant to the Securities
Act of 1933.  All of such  previously  filed  documents are hereby  incorporated
herein by reference in accordance with Item 601 of Regulation S-K.

     **Filed as Exhibits  10.3 and 10.4 to the  Company's  Annual Report on Form
10-K  (File No.  0-22376)  for the  fiscal  year ended  September  30,  1995 and
incorporated herein by reference in accordance with Item 601 of regulation S-K.

     ***Filed on October 3, 1997 on Form 8-K (File No. 0-22376) and incorporated
herein by reference in accordance with Item 601 of regulation S-K.

         (b) Reports on Form 8-K:

         The following  reports on Form 8-K were filed by the Company during the
period covered by this report.


         Date of Report     Subject
         --------------     -------

           7-28-98          Press Release relative to 3rd Quarter 1998 Earnings 
                            and Dividend Declaration
           9-18-98          Press Release relative to Declaration of Cash 
                            Dividend
<PAGE>
                                   SIGNATURES


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

                                           HOME BANCORP




Date: December 18, 1998                By: /s/W. Paul Wolf
                                           ---------------
                                           W. Paul Wolf, Chairman of the Board,
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)


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



/s/ W. Paul Wolf                            /s/ Matthew P. Forrester
----------------                            ------------------------
W. Paul Wolf, Chairman of the Board         Matthew P. Forrester, Director, Vice
President and Chief Executive Officer       President and Treasurer (Chief
(Principal Executive Officer)               Accounting Officer and Principal
                                            Financial Officer)

Date: December 18, 1998                     Date: December 18, 1998


/s/ C. Philip Andorfer                      /s/ Walter A. McComb, Jr.
----------------------                      -------------------------
C. Philip Andorfer, Director                Walter A. McComb, Jr., Director

Date: December 18, 1998                     Date: December 18, 1998


/s/ Daniel F. Fulkerson                     /s/ Richard P. Hormann
-----------------------                     ----------------------
Daniel F. Fulkerson, Director               Richard P. Hormann, Director

Date: December 18, 1998                     Date: December 18, 1998


/s/ Rod M. Howard                           /s/ Luben Lazoff
-----------------                           ----------------
Rod M. Howard, Director                     Luben Lazoff, Director

Date: December 18, 1998                     Date: December 18, 1998


/s/ Donald E. Thornton
----------------------
Donald E. Thornton, Director

Date: December 18, 1998
<PAGE>




                                Index to Exhibits


 Exhibit
 Number
 ------



  13              Annual Report to Security Holders

  21              Subsidiaries of the Registrant

  23              Consent of Experts

  27              Financial Data Schedule