<PAGE>   1
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


  For Quarter Ended September 30, 1999          Commission File Number 0-22224
--------------------------------------------------------------------------------


                              LEDGER CAPITAL CORP.
                   (formerly known as Hallmark Capital Corp.)
             (Exact name of registrant as specified in its charter)

           Wisconsin                                   39-1762467
  (State of Incorporation)                (I.R.S. Employer Identification No.)


       5555 N. Port Washington Road
            Glendale, Wisconsin                                        53217
  (Address of principal executive offices)                          (Zip Code)

                  Registrant's telephone number: (414) 290-7900

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 filing
requirements for the past 90 days.

                                    (1)  Yes  [X]         No  [_]

                                    (2)  Yes  [X]         No  [_]

The number of shares outstanding of the issuer's common stock, par value $1.00
per share, was 2,702,941 at November 12, 1999, the latest practicable date.

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

<PAGE>   2



                       LEDGER CAPITAL CORP. AND SUBSIDIARY
                                   FORM 10-Q/A


<TABLE>
<S>     <C>                                                                                                     <C>
Part I.  Financial Information

         Item 1.  Financial Statements (unaudited):


                  Consolidated Statements of Financial Condition
                     as of September 30, 1999 (unaudited) and June 30, 1999...............................       1

                  Consolidated Statements of Income for the Three Months
                     ended September 30, 1999 and 1998 (unaudited)........................................       2

                  Consolidated Statements of Shareholders' Equity for the Three
                     Months ended September 30, 1999 and 1998 (unaudited).................................       3

                  Consolidated Statements of Cash Flows for the Three Months
                     ended September 30, 1999 and 1998 (unaudited)........................................       4

                  Notes to Consolidated Financial Statements (unaudited)..................................       6


         Item 2.  Management's Discussion and Analysis of Financial Condition
                     and Results of Operations............................................................      11


         Item 3.  Quantitative and Qualitative Disclosure About Market Risk...............................      25


Part II. Other Information

         Item 1.  Legal Proceedings.......................................................................      27

         Item 2.  Changes in Securities and Use of Proceeds...............................................      27

         Item 3.  Defaults Upon Senior Securities.........................................................      27

         Item 4.  Submission of Matters to a Vote of Security Holders.....................................      27

         Item 5.  Other Information.......................................................................      27

         Item 6.  Exhibits and Reports on Form 8-K........................................................      28

                  Signature Page..........................................................................      29
</TABLE>


<PAGE>   3

                       LEDGER CAPITAL CORP. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,            JUNE 30,
                                                                                   1999                   1999
                                                                               -------------            --------
                                                                                (Unaudited)
                                                                                (Restated)

<S>                                                                              <C>                   <C>
ASSETS
Cash and non-interest bearing deposits.....................................      $  2,437              $  3,582
Interest-bearing deposits..................................................         3,614                 5,017
                                                                                 --------              --------
Cash and cash equivalents..................................................         6,051                 8,599

Securities available-for-sale (at fair value):
  Investment securities....................................................        55,801                44,902
  Mortgage-backed and related securities...................................        47,040                55,566
Securities held-to-maturity:
  Mortgage-backed and related securities (fair value -
   $53,688 at September 30, 1999; $54,854 at June 30, 1999)................        53,682                54,618
Loans held for sale, at lower of cost or market............................         6,370                 6,437
Loans receivable, net......................................................       332,305               281,120
Investment  in Federal Home Loan Bank stock, at cost.......................         7,037                 6,527
Foreclosed properties, net.................................................         1,893                   621
Office properties and equipment............................................         5,716                 5,771
Prepaid expenses and other assets..........................................         6,747                 5,498
                                                                                 --------              --------
          Total assets.....................................................      $522,642              $469,659
                                                                                 ========              ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Deposits.................................................................      $319,788              $288,714
  Notes payable and other borrowings.......................................       160,378               129,519
  Advance payments by borrowers for taxes and insurance....................         4,768                 3,225
  Accrued interest on deposit accounts and other borrowings................         2,220                 2,006
  Accrued expenses and other liabilities...................................         1,755                11,699
                                                                                 --------              --------
          Total liabilities................................................      $488,909              $435,163

Shareholders' Equity:
  Preferred stock, $1.00 par value; authorized 2,000,000 shares;
    none outstanding.......................................................             -                     -
  Common stock, $1.00 par value; authorized 6,000,000 shares;
    issued 3,162,500 shares; outstanding 2,731,941 shares at
    September 30, 1999 and 2,839,941 shares at June 30, 1999...............         3,162                 3,162
  Additional paid-in capital...............................................        10,005                 9,937
  Unearned ESOP compensation...............................................          (375)                 (405)
  Unearned restricted stock awards.........................................           (76)                  (78)
  Accumulated other comprehensive income/(loss)............................        (1,422)               (1,089)
  Treasury stock, at cost: 430,559 shares at September 30, 1999
    and 322,559 shares at June 30, 1999....................................        (4,134)               (2,796)
  Retained earnings, substantially restricted..............................        26,573                25,765
                                                                                 --------              --------
          Total shareholders' equity.......................................      $ 33,733              $ 34,496
                                                                                 --------              --------
          Total liabilities and shareholders' equity.......................      $522,642              $469,659
                                                                                 ========              ========
</TABLE>

     See accompanying Notes to Consolidated Financial Statements (unaudited)


                                       1
<PAGE>   4


                       LEDGER CAPITAL CORP. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                (Dollars in thousands, except for per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                       September 30,
                                                                             -------------------------------
                                                                               1999                    1998
                                                                             ----------               ------
                                                                             (Restated)

<S>                                                                           <C>                     <C>
INTEREST INCOME:
     Loans receivable..................................................       $6,200                  $5,901
     Mortgage-backed and related securities............................        1,575                   2,067
     Securities and interest-bearing deposits..........................        1,099                     392
                                                                              ------                  ------
               Total interest income...................................        8,874                   8,360

INTEREST EXPENSE:
     Deposits..........................................................        3,634                   3,698
     Advance payments by borrowers for taxes and insurance.............           24                      26
     Notes payable and other borrowings................................        2,104                   1,839
                                                                              ------                  ------
               Total interest expense..................................        5,762                   5,563
                                                                              ------                  ------
     Net interest income...............................................        3,112                   2,797
     Provision for losses on loans.....................................          120                     130
                                                                              ------                  ------
     Net interest income after provision for losses on loans...........        2,992                   2,667

NON-INTEREST INCOME:
     Service charges on loans..........................................           57                      78
     Service charges on deposit accounts...............................          122                     113
     Loan servicing fees, net..........................................           12                      14
     Insurance commissions.............................................           12                      19
     Gain on sale of securities and
         mortgage-backed and related securities, net...................           54                       -
     Gain on sale of loans.............................................           96                     214
     Other income......................................................           54                      42
                                                                              ------                  ------
               Total non-interest income...............................          407                     480

NON-INTEREST EXPENSE:
     Compensation and benefits.........................................        1,370                   1,239
     Marketing.........................................................           53                      66
     Occupancy and equipment...........................................          393                     409
     Deposit insurance premiums........................................           45                      42
     Other non-interest expense........................................          335                     318
                                                                              ------                  ------
               Total non-interest expense..............................        2,196                   2,074
                                                                              ------                  ------
     Income before income taxes........................................        1,203                   1,073
     Income taxes......................................................          395                     355
                                                                              ------                  ------
          Net income...................................................       $  808                  $  718
                                                                              ======                  ======
          Earnings per share - (basic) ................................       $ 0.30                  $ 0.26
                                                                              ======                  ======
          Earnings per share - (diluted) ..............................       $ 0.29                  $ 0.25
                                                                              ======                  ======
</TABLE>


    See accompanying Notes to Consolidated Financial Statements (unaudited)

                                        2
<PAGE>   5


                       LEDGER CAPITAL CORP. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 Additional     Unearned        Unearned
                                                     Common       Paid-In        ESOP         Restricted
                                                      Stock        Capital    Compensation       Stock
                                                     -------      ---------   ------------    -----------
THREE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------
<S>                                                   <C>          <C>           <C>             <C>
Balance at June 30, 1999...........................   $3,162       $9,937        ($405)          ($78)

Net income.........................................        -            -            -              -
Accumulated other comprehensive income:
    Unrealized holding loss arising during period          -            -            -              -
    Re-classification adjustment for gains
    realized in income.............................        -            -            -              -
    Income tax effect.............................         -            -            -              -
Comprehensive income...............................        -            -            -              -
Amortization of unearned ESOP and
  restricted stock award compensation..............        -           68           30              2
Purchase of treasury stock (108,000 shares)........        -            -            -              -
Exercise of stock options .........................        -            -            -              -
                                                      ------      -------        -----          -----

Balance at September 30, 1999......................   $3,162      $10,005        ($375)         ($ 76)
                                                      ======      =======        =====          =====

THREE MONTHS ENDED SEPTEMBER 30, 1998
Balance at June 30, 1998...........................   $3,162       $9,512        ($532)         ($124)
Net income.........................................        -            -            -              -
Accumulated other comprehensive income:
    Unrealized holding gain arising during period          -            -            -              -
    Re-classification adjustment for gains
    realized in income.............................        -            -            -              -
    Income tax effect.............................         -            -            -              -

Comprehensive income...............................        -            -            -              -
Amortization of unearned ESOP and
  restricted stock award compensation..............        -           69           27             21
Exercise of stock options (5,000 shares)...........        -           19            -              -
                                                      ------      -------        -----          -----

Balance at September 30, 1998......................   $3,162       $9,600        ($505)         ($103)
                                                      ======      =======        =====          =====
</TABLE>

<TABLE>
<CAPTION>
                                                                            Accumulated
                                                                              Other          Total
                                                     Retained   Treasury  Comprehensive  Shareholders'
                                                     Earnings     Stock   Income/(loss)     Equity
                                                     ---------- -------   -------------  -------------
                                                     (Restated)                           (Restated)

<S>                                                  <C>         <C>         <C>           <C>
Balance at June 30, 1999...........................  $25,765     ($2,796)    ($1,089)      $34,496

Net income.........................................      808           -           -           808
Accumulated other comprehensive income:
    Unrealized holding loss arising during period          -           -        (492)         (492)
    Re-classification adjustment for gains
    realized in income.............................        -           -         (54)          (54)
    Income tax effect.............................         -           -         213           213
                                                                                           -------
Comprehensive income...............................        -           -           -           475
Amortization of unearned ESOP and
  restricted stock award compensation..............        -           -           -           100
Purchase of treasury stock (108,000 shares)........        -      (1,338)          -        (1,338)
Exercise of stock options .........................        -           -           -             -
                                                     -------     -------      ------       -------

Balance at September 30, 1999......................  $26,573     ($4,134)     ($1,422)     $33,733
                                                     =======     =======      =======      =======

THREE MONTHS ENDED SEPTEMBER 30, 1998
Balance at June 30, 1998...........................  $22,847     ($1,385)       ($27)      $33,453
Net income.........................................      718           -           -           718
Accumulated other comprehensive income:
    Unrealized holding gain arising during period          -           -         109           109
    Re-classification adjustment for gains
    realized in income.............................        -           -           -             -
    Income tax effect.............................         -           -         (43)          (43)
                                                                                            -------
Comprehensive income...............................        -           -           -           784
Amortization of unearned ESOP and
  restricted stock award compensation..............        -           -           -           117
Exercise of stock options (5,000 shares)...........      (11)         31           -            39
                                                     -------     -------      ------       -------

Balance at September 30, 1998......................  $23,554     ($1,354)         $39      $34,393
                                                     =======     =======      =======      =======
</TABLE>


     See accompanying Notes to Consolidated Financial Statements (unaudited)


                                       3


<PAGE>   6


                       LEDGER CAPITAL CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                           SEPTEMBER 30,
                                                                                  -------------------------------
                                                                                     1999                  1998
                                                                                  -----------             -------
                                                                                   (Restated)
                                                                                          (IN THOUSANDS)
<S>                                                                               <C>                     <C>
OPERATING ACTIVITIES
Net Income..................................................................      $   808                 $   718
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
  Provision for losses on loans.............................................          120                     130
  Provision for depreciation and amortization...............................          119                     105
  Net (gain) loss on sales of investments and
    mortgage-backed and related securities..................................          (54)                      -
  Net gain on sale of loans.................................................          (96)                   (214)
  Amortization of unearned ESOP and restricted stock awards.................          100                     136
  Loans originated for sale.................................................       (4,558)                (13,975)
  Sales of loans originated for sale........................................        4,625                  12,668
  Increase in prepaid expenses and other assets.............................       (1,249)                   (809)
  Decrease in payables for investments purchased...........................        (9,909)                 (9,858)
  Increase in accrued expenses and other liabilities........................          (35)                      -
  Other adjustments.........................................................          533                     211
                                                                                  -------                 -------
Net cash used in operating activities.......................................       (9,596)                (10,888)
                                                                                  -------                 -------

INVESTING ACTIVITIES
Proceeds from the sale of securities available-for-sale.....................       11,507                       -
Proceeds from the maturity of securities available-for-sale.................        4,000                       -
Purchases of securities available-for-sale..................................      (29,800)                (21,238)
Purchases of mortgage-backed and related securities.........................       (3,937)                      -
Principal collected on mortgage-backed and related securities...............       16,195                  20,473
Net increase in loans receivable............................................      (52,481)                   (357)
Purchase of Federal Home Loan Bank stock....................................         (510)                   (500)
Purchases of office properties and equipment, net...........................          (64)                   (128)
                                                                                  -------                 -------
Net cash used in investing activities.......................................      (55,090)                 (1,750)
                                                                                  -------                 -------

FINANCING ACTIVITIES
Net increase in deposits....................................................       31,074                  20,503
Proceeds from long-term notes payable to Federal Home Loan Bank.............       20,000                  15,000
Repayment of long-term notes payable to Federal Home Loan Bank..............       (5,000)                 (5,000)
Net increase in short-term notes payable and other borrowings...............       15,859                       -
Exercise of stock options...................................................            -                      39
Purchase of treasury stock..................................................       (1,338)                      -
Net increase in advance payments by borrowers for
  taxes and insurance.......................................................        1,543                   1,480
                                                                                  -------                 -------
Net cash provided by financing activities...................................       62,138                  32,022
                                                                                  -------                 -------
Increase in cash and cash equivalents.......................................       (2,548)                 19,384
Cash and cash equivalents at beginning of period............................        8,599                   8,184
                                                                                  -------                 -------
Cash and cash equivalents at end of period..................................       $6,051                 $27,568
                                                                                   ======                 =======
</TABLE>

     See accompanying Notes to Consolidated Financial Statements (unaudited)


                                       4
<PAGE>   7

                      LEDGER CAPITAL CORP. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                                         THREE MONTHS ENDED
                                                                                           SEPTEMBER 30,
                                                                                     ------------------------
                                                                                        1999            1998
                                                                                     -------           ------
                                                                                            (IN THOUSANDS)

<S>                                                                                  <C>               <C>
Supplemental disclosures of cash flow information:

Interest paid (including amounts credited to deposit accounts) ..............        $5,525            $5,422

Income taxes paid ...........................................................          $493              $335


Non-cash transactions:

Loans transferred to foreclosed properties ..................................        $1,272                 -
</TABLE>




     See accompanying Notes to Consolidated Financial Statements (unaudited)


                                       5
<PAGE>   8



                       LEDGER CAPITAL CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(1) BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America ("GAAP") for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation of the results
for the interim periods have been included.

The results of operations and other data for the three months ended September
30, 1999 are not necessarily indicative of results that may be expected for the
entire fiscal year ending June 30, 2000.

The unaudited consolidated financial statements include the accounts of Ledger
Capital Corp. (formerly known as Hallmark Capital Corp.) (the "Company") and its
wholly-owned subsidiary, West Allis Savings Bank and subsidiaries (the "Bank")
as of and for the three months ended September 30, 1999. All material
intercompany accounts and transactions have been eliminated in consolidation.



(2) STOCK BENEFITS AND INCENTIVE PLANS

At September 30, 1999, the Company has reserved 375,642 shares of common stock
for a non-qualified stock option plan for employees and directors. With respect
to options, which have not been granted, the option exercise price cannot be
less than the fair market value of the underlying common stock as of the date of
option grant, and the maximum term cannot exceed ten years. At September 30,
1999 there were 279,480 shares outstanding. No options were exercised or granted
during the three months ending September 30, 1999.



(3) EARNINGS PER SHARE

Basic earnings per share of common stock for the three months ended September
30, 1999 have been computed by dividing net income for the period by the
weighted average number of shares of common stock reduced by ungranted
restricted stock and uncommitted ESOP shares. Diluted earnings per share is
calculated by dividing net income by the sum of the weighted average shares used
in the basic earnings per share calculation plus the effect of dilutive stock
options. The effect of dilutive stock options is calculated using the treasury
stock method. The computation of earnings per share is as follows:



                                       6
<PAGE>   9




(3) EARNINGS PER SHARE (CONT.)

<TABLE>
<CAPTION>
For the Three Months Ended September 30, 1999                             Basic            Diluted
---------------------------------------------                             -----            -------

<S>                                                                    <C>              <C>
         Weighted average common shares outstanding...........         2,787,071        2,787,071
         Ungranted restricted stock...........................           (18,462)         (18,462)
         Uncommitted ESOP shares..............................          (107,525)        (107,525)
         Common stock equivalents due to
            dilutive effect of stock options..................                 -           82,779
                                                                      ----------       ----------

         Total weighted average common shares
            and equivalents outstanding.......................         2,661,084        2,743,863
                                                                      ==========       ==========
            Net income for period.............................          $808,000         $808,000
            Earnings per share................................             $0.30            $0.29
                                                                      ==========       ==========
</TABLE>

<TABLE>
<CAPTION>
For the Three Months Ended September 30, 1998                              Basic          Diluted
---------------------------------------------                              -----          -------

<S>                                                                    <C>              <C>
         Weighted average common shares outstanding...........         2,935,891        2,935,891
         Ungranted restricted stock...........................           (18,462)         (18,462)
         Uncommitted ESOP shares..............................          (132,825)        (132,825)
         Common stock equivalents due to
            dilutive effect of stock options..................                 -          115,967
                                                                      ----------       ----------

         Total weighted average common shares
            and equivalents outstanding.......................         2,784,604        2,900,571
                                                                      ==========        =========
            Net income for period.............................        $  718,000       $  718,000
            Earnings per share................................             $0.26            $0.25
                                                                      ==========       ==========
</TABLE>


(4) COMMITMENTS AND CONTINGENCIES

Commitments to originate mortgage loans of $4.1 million at September 30, 1999
represent amounts which the Bank expects to fund during the quarter ending
December 31, 1999. There were no commitments to sell fixed-rate mortgage loans
at September 30, 1999. The Bank had unissued credit under existing home equity
line-of-credit loans and credit card lines of $12.2 million and $7.8 million,
respectively, as of September 30, 1999. Also, the Bank had unused credit under
existing commercial line-of-credit loans of $12.7 million at September 30, 1999.
The Bank had no commitments to purchase fixed-rate mortgage related securities
as of September 30, 1999.


(5) REGULATORY CAPITAL ANALYSIS

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possibly additional discretionary - actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt and corrective action, the Bank must meet
specific capital guidelines that involve quantitative measures of the Bank's
assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and classification
also are subject to qualitative judgments by the regulators about components,
risk weightings and other factors.


                                       7
<PAGE>   10

(5) REGULATORY CAPITAL ANALYSIS (CONT.)

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). As of As of September 30, 1999, Management believes that
the Bank meets all capital adequacy requirements to which it is subject.

As of September 30, 1999, the Bank is well capitalized as defined by regulatory
standards. To be categorized as well capitalized, the Bank must maintain minimum
total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in
the table below. There are no conditions or events since that notification that
management believes have changed the Bank's category.

The Bank's actual capital amounts and ratios are presented in the tables below.

<TABLE>
<CAPTION>
                                                                                            TO BE WELL CAPITALIZED
                                                                        FOR CAPITAL         UNDER PROMPT CORRECTIVE
                                                    ACTUAL           ADEQUACY PURPOSES         ACTION PROVISIONS
                                               ----------------      -----------------      -----------------------
                                               AMOUNT     RATIO      AMOUNT      RATIO        AMOUNT        RATIO
                                               ------     -----      ------      -----        ------        -----
                                                                     (DOLLARS IN THOUSANDS)

<S>                                           <C>        <C>        <C>         <C>           <C>          <C>
As of September 30, 1999:
 Tier I Capital Leverage (to Average Assets):
     Consolidated........................     $34,736     7.07%     $14,739      3.00%           N/A         N/A
     West Allis Savings Bank.............      31,369     6.40       14,698      3.00         24,497        5.00
 Tier I Capital (to Risk-Weighted Assets):
     Consolidated........................      34,736    11.14       12,474      4.00            N/A         N/A
     West Allis Savings Bank.............      31,369    10.07       12,461      4.00         18,691        6.00
 Total Capital (to Risk-Weighted Assets):
     Consolidated........................      37,501    12.03       24,948      8.00            N/A         N/A
     West Allis Savings Bank.............      34,134    10.96       24,921      8.00         31,151       10.00
</TABLE>


As a state-chartered savings bank, the Bank also is subject to a minimum
regulatory capital requirement of the State of Wisconsin. At September 30, 1999,
on a fully-phased-in basis of 6.0%, the Bank had actual capital of $34,134,000
with a required amount of $31,474,000, for excess capital of $2,660,000. There
is no requirement to calculate the amount to be well capitalized under prompt
corrective action provisions on a consolidated basis.


                                       8
<PAGE>   11



(6) LOANS RECEIVABLE

Loans receivable are summarized as follows:

<TABLE>
<CAPTION>
                                                           SEPTEMBER 30,              JUNE 30,
                                                               1999                     1999
                                                         ------------------      -------------------
                                                                       (IN THOUSANDS)
                                                                                                          Increase
                                                         Amount     Percent      Amount      Percent     (Decrease)
                                                         ------     -------      ------      -------     ----------
<S>                                                     <C>          <C>         <C>           <C>         <C>
Real estate mortgage loans:
    Residential one-to-four family...................   $174,802      48.9%      $147,960      49.5%       $26,842
    Home equity......................................     20,176       5.7%        20,457       6.8%          (281)
    Residential multi-family.........................     42,634      11.9%        36,320      12.2%         6,314
    Commercial real estate...........................     54,512      15.3%        42,366      14.2%        12,146
    Residential construction.........................     14,367       4.0%        12,673       4.2%         1,694
    Other construction and land......................     24,806       6.9%        17,056       5.7%         7,750
                                                        --------     ------      --------      -----       -------
         Total real estate mortgage loans............    331,297      92.1%       276,832      92.6%        54,465

Consumer-related loans:
    Automobile.......................................        357       0.1%           444       0.2%           (87)
    Credit card......................................      2,311       0.7%         2,372       0.8%           (61)
    Other consumer loans.............................        994       0.3%         1,030       0.3%           (36)
                                                        --------     ------      --------      -----       -------
         Total consumer-related loans................      3,662       1.4%         3,846       1.3%          (184)
                                                        --------     ------      --------      -----       -------

Commercial loans.....................................     22,275       6.2%        18,254       6.1%         4,021
                                                        --------     ------      --------      -----       -------
         Gross loans.................................    357,234     100.0%       298,932     100.0%        58,302

Accrued interest receivable..........................      2,016                    1,664

Less:
    Undisbursed portion of loan proceeds.............    (23,528)                 (16,279)
    Deferred loan fees...............................       (595)                    (490)
    Unearned interest................................        (57)                     (59)
    Allowances for loan losses.......................     (2,765)                  (2,648)
                                                        --------                 --------
                                                        $332,305                 $281,120
                                                        ========                 ========
</TABLE>

Loans serviced for investors totaled $31.5 million and $29.2 million at
September 30, 1999 and June 30, 1999, respectively.



                                       9
<PAGE>   12


(7)  NOTES PAYABLE AND OTHER BORROWINGS

Notes payable and other borrowings are summarized as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                                              SEPTEMBER 30, 1999                    JUNE 30, 1999
                                          -------------------------           -------------------------
                                                         WEIGHTED                             WEIGHTED
                                                          AVERAGE                              AVERAGE
                             MATURITY      AMOUNT          RATE                AMOUNT           RATE
                             --------     --------       ---------            --------         --------
<S>                          <C>          <C>             <C>                 <C>              <C>
Advances from
  Federal Home Loan Bank       1999       $  8,500         6.61%              $  7,000          6.55%
                               2000         27,002         6.02                 27,002          5.98
                               2001          3,000         5.91                  3,000          5.91
                               2002         28,500         5.61                 28,500          5.61
                               2003          3,042         5.60                  8,042          5.13
                               2004         20,000         5.56                  5,000          6.32
                               2005          5,000         5.33                  5,000          5.33
                               2007          6,500         6.52                  6,500          6.52
                               2008         30,000         4.85                 30,000          4.79
                               2009          5,000         5.02                      -             -
                                          --------                            --------
                                          $136,544         5.59%              $120,044          5.59%
                                                           =====                                =====

Securities sold under
  Agreements to repurchase     1999       $ 14,434         5.50%              $  9,475          5.25%
                               2004          9,400         5.44                      -             -
                                          --------                            --------
                                          $ 23,834         5.48%              $  9,475          5.25%
                                          --------         =====              --------          =====

                                          $160,378                            $129,519
                                          ========                            ========
</TABLE>



FHLB advances totaled $136.5 million, or 85.1%, and $120.0 million, or 92.7%, of
total borrowings at September 30, 1999 and June 30, 1999, respectively. The
Company is required to maintain as collateral unencumbered one-to-four family
mortgage loans in its portfolio such that the outstanding balance of FHLB
advances does not exceed 60% of the book value of this collateral. The Company
had delivered mortgage-backed securities with a carrying value of $71.0 million
and $51.9 million at September 30, 1999 and June 30, 1999, respectively. In
addition, all FHLB advances are collateralized by all Federal Home Loan Bank
stock and are subject to prepayment penalties. The Company's unused advance line
with the Federal Home Loan Bank was $10.7 million based upon collateral pledged
at September 30, 1999. FHLB variable rate term borrowings consist of $3.0
million tied to the one-month LIBOR index.

The Company enters into sales of mortgage-backed securities with agreements to
repurchase identical securities (reverse repurchase agreements) and
substantially identical securities (dollar reverse repurchase agreements). These
transactions are treated as financings with the obligations to repurchase
securities reflected as a liability. The dollar amount of securities underlying
the agreements remains in the asset accounts. The securities underlying the
agreements are delivered to the counterparty's account. Securities sold under
agreements to repurchase were $23.8 million and $9.5 million at September 30,
1999 and June 30, 1999, respectively.


(8) RESTATEMENT OF FINANCIAL STATEMENTS


In April, 2001 the Company discovered a mathematical error in the way in which
interest income was being accrued on certain purchased commercial real estate
mortgage and multi-family residential mortgage loans. The error resulted from an
inadvertent erroneous set-up of the loans in the Company's outsourced data
processing system. The error resulted in the under accrual of interest income on
these loans of $122,295 for the three months ended September 30, 1999. Interest
income has been restated to correct that error. As a



                                       10
<PAGE>   13


(8) RESTATEMENT OF FINANCIAL STATEMENTS (CONT.)


result of increased earnings in 2000 from the correction of this error,
additional compensation of $36,500 is required to be accrued under the Company's
Annual Incentive Plan. The Company's 2000 consolidated financial statements
have, therefore, been restated to accrue the additional interest income and the
additional compensation expense as well as income tax expense of $33,717 related
to the $85,795 net effect of the corrections on income before taxes. The effect
of the restatement increased net income by $52,078 and basic and diluted
earnings per share by $.02 and $.01, respectively.

                                       11
<PAGE>   14


                       LEDGER CAPITAL CORP. AND SUBSIDIARY

      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS

When used in this Quarterly Report on Form 10-Q/A or future filings with the
Securities and Exchange Commission, in annual reports or press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, various words or phrases are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements include words and phrases such as: "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," "intends
to" or similar expressions and various other statements indicated herein with an
asterisk after such statements. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made, and to advise readers that various factors could affect the
Company's financial performance and could cause actual results for future
periods to differ materially from those anticipated or projected. Such factors
include, but are not limited to: (i) general market rates, (ii) general economic
conditions, (iii) legislative/regulatory changes, (iv) monetary and fiscal
policies of the U.S. Treasury and Federal Reserve, (v) changes in the quality or
composition of the Company's loan and investment portfolios, (vi) demand for
loan products, (vii) deposit flows, (viii) competition, (ix) demand for
financial services in the Company's markets, and (x) changes in accounting
principles, policies or guidelines.

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

In April, 2001 the Company discovered a mathematical error in the way in which
interest income was being accrued on certain purchased commercial real estate
mortgage and multi-family residential mortgage loans. The error resulted from an
inadvertent erroneous set-up of the loans in the Company's outsourced data
processing system. The error resulted in the under accrual of interest income on
these loans of $122,295 for the three months ended September 30, 1999. Interest
income has been restated to correct that error. As a result of increased
earnings in 2000 from the correction of this error, additional compensation of
$36,500 is required to be accrued under the Company's Annual Incentive Plan. The
Company's 2000 consolidated financial statements have, therefore, been restated
to accrue the additional interest income and the additional compensation expense
as well as income tax expense of $33,717 related to the $85,795 net effect of
the corrections on income before taxes. The effect of the restatement increased
net income by $52,078 and basic and diluted earnings per share by $.02 and $.01,
respectively.

GENERAL

The Company's primary strategy since the Conversion has been to focus on
effectively utilizing the capital acquired in the Conversion through asset
growth and asset portfolio diversification into higher-yielding assets. This
strategy resulted in an increase in the Company's asset size from $179.6 million
at June 30, 1994 to $522.6 million at September 30, 1999. The Company's asset
growth has come primarily through (i) the origination and purchase of mortgage
loans (principally loans secured by one-to-four family owner-occupied homes)
within and outside of the Company's primary lending area, (ii) the purchase of
mortgage-backed and related securities, and (iii) the origination and purchase
of commercial real-estate and business loans within and outside of the Company's
primary lending area. This asset growth was funded through significant increases
in Federal Home Loan Bank ("FHLB") advances and other borrowings, and increases
in deposits consisting primarily of brokered and non-brokered wholesale
deposits. The Company's asset portfolio diversification has been, and continues
to be, achieved by altering the composition of loans and securities originated,
purchased, sold and held in the total asset portfolio. In particular, the
Company has focused on originating and purchasing higher-yielding multi-family,


                                       12
<PAGE>   15



commercial real estate and commercial business loans secured by properties or
assets located within the Company's primary lending area (as defined herein), to
either replace or supplement lower-yielding one-to-four family mortgage loans
and principal run-off from the mortgage securities portfolio.* As part of its
asset portfolio diversification strategy, the Company established a new
commercial lending division in fiscal 1997 to originate commercial/industrial
real estate term loans, construction loans, equipment leasing, inventory/
equipment/receivables financing, lines of credit, letters of credit and
government loan programs both within and outside of the Company's primary
lending area. In fiscal 2000, the Company intends to continue its asset
portfolio diversification strategy while maintaining a steady rate of growth of
its asset base.*

Approximately 88% of the asset growth during the three months ended September
30, 1999 was attributable to the purchase of $46.5 million in higher yielding,
non-conforming one-to-four family, multi-family, commercial real estate and
commercial loans. The loans are secured by properties located outside of the
Company's primary lending area.

In fiscal 2000, the Company's business strategy is to continue its focus on
increasing net interest income and generating additional non-interest income
from existing and new revenue sources.* In order to increase net interest
income, the Company intends to continue to utilize its asset portfolio
diversification strategy of selling lower-yielding assets such as securities and
one-to-four family mortgage loans that conform to Federal Home Loan Mortgage
Corporation ("FHLMC") and Federal National Mortgage Association ("Fannie Mae")
guidelines in the secondary market to provide liquidity to fund higher-yielding
one-to-four family non-conforming mortgage, multi-family, commercial real estate
and commercial business loan originations and purchases, increase non-interest
income and maintain adequate levels of capital.* The Company anticipates that
increased sales of one-to-four family conforming mortgage loans will decrease
the proportion of the gross loan portfolio represented by such loans and will
increase non-interest income as a result of increased gains on the sales of such
loans.*

Portfolio diversification in fiscal 2000 also will include an increased level of
purchases of loans or participation interests in loans originated by other
lenders both within and outside the Company's primary lending area.* The Company
anticipates that slightly over half of the asset growth in fiscal 2000 will come
from residential and commercial loan and participation interest purchases
outside of its primary lending area.* Loans purchased, or participation
interests purchased, which relate to properties or business assets located
outside of the Company's primary lending area will primarily consist of
higher-yielding non-conforming one-to-four family, multi-family, commercial real
estate, multi-family construction, commercial real estate construction and
commercial business loans.* Of the $46.5 million in higher yielding loans
purchased for the Company's portfolio during the quarter, $26.4 million were
one-to-four family loans, none of which conformed to FHMLC and Fannie Mae
secondary market guidelines. Such loans are secured by properties located
primarily in the midwest region of the country outside of the Company's primary
lending area.

In fiscal 2000, the Company projects total loan and participation interest
purchases which relate to residential and commercial properties or business
assets to be approximately $90 million compared to $56.9 million in fiscal
1999.* The Company anticipates that approximately $50 million of such amount
will relate to one-to-four family non-conforming mortgage loans secured by
properties located outside of the Company's primary lending area and the balance
(approximately $40 million) will relate to the purchase of multi-family,
multi-family construction, commercial real estate, commercial construction and
commercial business loans secured by properties and assets located both inside
and outside its primary lending area.* In deciding whether or not to purchase a
loan or participation interest in a loan secured by properties or business
assets located outside of the Company's primary lending area, management of the
Company has applied, and will continue to apply, underwriting guidelines at
least as strict as those applicable to the origination of similar loans within
its primary lending area.*

In fiscal 2000, the Company will evaluate opportunities to purchase one-to-four
family mortgage loans which conform to FHMLC and Fannie Mae underwriting
guidelines and non-conforming portfolio loans


                                       13
<PAGE>   16


which are not sold in the secondary agency market due to underwriting
characteristics that do not conform to the secondary agency market.* Purchases
of conforming and non-conforming one-to-four family mortgage loans will include
lending opportunities on a national basis. One-to-four family non-conforming
loans also will be originated by the Company within its primary lending area.
For the quarter ended September 30, 1999, the Company purchased $26.4 million of
non-conforming one-to-four family mortgage loans.

In fiscal 2000, the Company also intends to continue increasing the activities
of its commercial lending division as another element of its overall portfolio
diversification strategy.* The focus of the Company's commercial lending
operation will be the origination and purchase of small business loans and
leases.* During fiscal 1999, the Company originated and purchased $137.7 million
of multi-family, commercial real estate, multi-family construction, commercial
construction and commercial business loans, lines of credit and leases. For the
quarter ended September 30, 1999 the Company originated and purchased $29.3
million of multi-family, commercial real estate, multi-family construction,
commercial construction and commercial business loans, lines of credit and
leases. Management currently projects that the commercial lending division will
increase its level of originations and purchases to approximately $150 million
in new commercial loans, lines of credit and leases during fiscal 2000.*
Management believes the commercial lending component of its operations will
benefit the Company longer term and contribute to a long-term increase in net
income and return on equity.* The commercial lending division also has enhanced
the Company's core deposit base, through the establishment of new deposit
relationships with the commercial lending division's customers.

The Company also intends to enhance earnings in fiscal 2000 through non-interest
fee income generated from the Company's new mortgage banking subsidiary, Ledger
Financial, Inc. (d/b/a Major Finance).* Major Finance was established at the end
of fiscal 1999 to provide lending activities involving higher credit risk
financial services (also known as subprime lending). Major Finance currently
acts as a broker of non-conforming subprime residential and commercial mortgage
loans. The Company anticipates that the majority of Major Finance's subprime
lending activity will relate to residential mortgage loans as opposed to
commercial real estate loans in fiscal 2000.* As a broker, Major Finance
interviews prospective borrowers, completes a loan application, collects and
verifies financial data on the borrower and submits the loan file to a potential
lender or investor. The lender or investor makes the final underwriting decision
and closes the loan in their own name. Major Finance receives a fee directly
from the lender or investor for its brokering services but Major Finance does
not fund or retain the loan in its portfolio. For the three months ended
September 30, 1999, Major Finance brokered approximately $899,000 in subprime
loans, generating $24,100 in fee income on such subprime loans. The Company
intends to evaluate opportunities to broker subprime loans both within and
outside of its primary market area. Management estimates that Major Finance will
broker approximately $7.5 million in subprime loans, generating approximately
$175,000 in fee income on such subprime loans in fiscal 2000.* The borrowers on
such loans typically have credit deficiencies on their credit history, such as
late mortgage loan payments, low credit scores, foreclosures or bankruptcies.
Other non-conforming factors which may result in a loan being classified as
subprime include higher debt-to-income ratios, no down payment, limited
documentation, high cash-out refinances or no verification of the borrower's
income or assets. A secondary market of private investors and mortgage bankers
provides a mechanism for the underwriting, funding, sale and servicing of
subprime loans. Due to the higher degree of credit risk inherent in this type of
lending, subprime residential mortgage loan rates generally are higher yielding
compared to conventional one-to-four family mortgage rates, and if sold in the
secondary market, a higher origination fee and yield spread premium are
generally paid in connection with such loans.

The Company currently intends to broker all subprime loans originated by Major
Finance on a service released basis in fiscal 2000.* However, in the event
management decides to originate, service and retain any subprime loans in its
portfolio in fiscal 2000, instead of solely brokering such loans, a risk
assessment and risk management policy would be established in advance and
approved by the Company's Board of Directors.


                                       14
<PAGE>   17



During fiscal 2000, the Company also intends to increase its non-interest income
by expanding the residential lending and commercial banking fee income producing
divisions.* The Company expects one-to-four family mortgage loan originations to
remain strong despite the generally higher level of market interest rates.* It
is currently anticipated that substantially all of the 30-year fixed rate
conforming one-to-four family mortgage loans originated in fiscal 2000 will be
sold in the secondary market resulting in income from gains on loans sold.* The
Company also expects increased fee income from the commercial banking division
resulting from a growth in business deposit relationships and loan
originations.* The Company expects its insurance subsidiary, Ledger Planning
Services, Inc., to continue to generate fee income from investment product and
annuity sales.* The Company also has recently implemented a program for mortgage
contract cash processing within the commercial lending division, a service
intended to generate fee income.* The Bank acts as a partial sub-servicer,
providing a cash/processing function for nationally-originated commercial real
estate loans.

The Company also intends to expand its community "relationship banking" focus by
targeting cross sales opportunities to individuals and businesses through
customer segmentation and database marketing, planning the opening of a new
retail location at the Company's headquarters in Glendale, Wisconsin, and
expanding the delivery of products and services through the Internet.*

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of funds are retail and wholesale brokered
deposits, proceeds from principal and interest payments on loans, principal and
interest payments on mortgage-backed and related securities, FHLB-Chicago
advances and reverse repurchase agreements. Alternative funding sources are
evaluated and utilized based upon factors such as interest rates, availability,
maturity, administrative costs and retention capability. Although maturity and
scheduled amortization of loans are predicable sources of funds, deposit flows,
mortgage prepayments and prepayments on mortgage-backed and related securities
are influenced significantly by general interest rates, economic conditions and
competition. Mortgage loans and mortgage securities prepayments increased in
fiscal 1999 overall as interest rates declined significantly during the first
half of the fiscal year before increasing in the last half of the fiscal year.
During fiscal years 1997 and 1998, prepayments increased as interest rates
decreased in the second half of both fiscal years. The upward trend in interest
rates extended through the first fiscal quarter ending September 30, 1999
keeping the mortgage loan and mortgage securities prepayments and gain on sales
of loans low.

The primary investing activity of the Company is the origination and purchase of
loans and the purchase of mortgage-backed and related securities. For the three
months ended September 30, 1999, the Company originated and purchased loans
totaling $32.0 million and $46.5 million, respectively, as compared to the three
months ended September 30, 1998 when originated and purchased loans totaled
$54.0 million and $4.0 million, respectively. Purchases of mortgage-backed and
related securities held-to-maturity for the three months ended September 30,
1999 and 1998 totaled $3.9 million and $3.8 million, respectively. There were no
purchases of investment securities held-to-maturity for the three months ended
September 30, 1999 and 1998. For the three months ended September 30, 1999 and
1998, these activities were funded primarily by principal repayments on loans of
$31.0 million and $41.6 million, respectively; principal repayments on
mortgage-backed and related securities of $16.2 million and $20.5 million,
respectively; proceeds from the sale of mortgage loans of $4.6 million and $12.7
million, respectively; net proceeds from notes payable to the FHLB-Chicago of
$21.5 million and $15.0 million, respectively; and a net increase in deposits of
$31.1 million during the 1999 period. Purchases of securities available-for-sale
totaled $29.8 million and sales were $11.5 for the three months ended September
30, 1999, compared to purchases of $21.2 million and sales of $0 for the three
months ended September 30, 1998.

The Company is required to maintain minimum levels of liquid assets under the
regulations of the Wisconsin Department of Financial Institutions, Division of
Savings and Loan for state-chartered stock savings banks. Savings banks are
required to maintain an average daily balance of liquid assets (including cash,
certain time deposits, certain bankers acceptances, certain corporate debt
securities, securities of certain mutual funds



                                       15
<PAGE>   18


and specified United States government, state or federal agency obligations) of
not less than 8.0%. The Company's liquidity ratio was 20.0% at September 30,
1999. The Company adjusts its liquidity levels to meet various funding needs and
to meet its asset and liability management objectives.

The Company's most liquid assets are cash and cash equivalents, which include
investments in highly-liquid, short-term investments. The levels of these assets
are dependent on the Company's operating, financing, lending and investing
activities during any given period. At September 30, 1999 and June 30, 1999,
cash and cash equivalents were $6.1 million and $8.6 million, respectively. The
decrease in cash and cash equivalents was due to an increase in the loan and
securities portfolios.

Management believes that the strategy of leveraging the capital acquired in the
Conversion to achieve the targeted asset size established by the Board of
Directors within a three-to-five year period following the Conversion, could not
have been achieved solely through the use of retail deposits from the local
market. Management also believes that the costs, overhead and interest expense
of achieving comparable retail deposit growth would have exceeded the costs
related to the use of FHLB-Chicago advances and wholesale brokered deposits as a
funding source. However, management recognizes that the likelihood for retention
of brokered certificates of deposit is more a function of the rate paid on such
accounts as compared to retail deposits which may be established due to Bank
location or other intangible reasons. The Company maintains a $10.0 million
backup credit facility for contingency purposes to replace funds from wholesale
brokered deposits should retention of those deposits diminish due to
extraordinary events in the financial markets. The Company's overall cost of
funds has increased in recent years due primarily to a much greater percentage
of the deposits being in certificates, both wholesale brokered and retail, as
opposed to passbooks, money market accounts and checking accounts. Management
believes that a significant portion of its retail deposits will remain with the
Company and, in the case of wholesale brokered deposits, may be replaced with
similar type accounts should the level of interest rates change.* However, in
the event of a significant increase in market interest rates, the cost of
obtaining replacement brokered deposits would increase as well.

At September 30, 1999, retail and wholesale certificates of deposit totaled
$60.6 million and $192.9 million, respectively. Management believes that a
significant portion of its retail deposits will remain with the Company and, in
the case of wholesale brokered deposits, may be replaced with similar type
accounts should the level of interest rates change.* However, in the event of a
significant increase in market interest rates, the cost of obtaining replacement
wholesale deposits and FHLB advances would increase as well.

The Bank's Board of Directors has set a maximum limitation of total borrowings
equal to 32% of total assets. This internal limit is 3% below the allowable
borrowing limit (for all borrowings including FHLB advances and reverse
repurchase agreements) of 35% of total assets established by the FHLB-Chicago.
At September 30, 1999, FHLB advances totaled $136.5 million or 26.1% of the
Bank's total assets. At September 30, 1999, securities sold under agreements to
repurchase were $23.8 million or 4.6% of the Bank's total assets. At September
30, 1999, the Bank had unused borrowing authority under the borrowing
limitations established by the Board of Directors of $6.6 million and $22.2
million under the FHLB total asset limitation. The Bank has and intends to
continue to fund asset portfolio diversification in fiscal 2000 through modest
increases in FHLB advances due the increased use of FHLB advances and reverse
repurchase agreements during the three months ended September 30, 1999.
Management and the Bank's Board of Directors are currently evaluating the
internal 3% excess borrowing capacity limitation. A decrease in this limitation
would provide the Bank greater borrowing authority to fund future loan growth.

Liquidity management for the Company is both an ongoing and long-term function
of the Company's asset/liability management strategy. Excess funds generally are
invested in short-term investments such as federal funds or overnight deposits
at the FHLB-Chicago. Whenever the Company requires funds beyond its ability to
generate them internally, additional sources of funds usually are available and
obtainable from the wholesale brokered and non-brokered market as well as the
unused credit line from the FHLB-Chicago, and funds also may be available
through reverse repurchase agreements wherein the Company pledges investment,
mortgage-backed or related securities. The Company maintains a $10.0 million
contingent backup credit facility with a major correspondent bank to replace a
portion of its interest rate sensitive



                                       16
<PAGE>   19


liabilities, such as borrowings and wholesale brokered and non-brokered deposits
should such funding sources become difficult or impracticable to obtain or
retain due to a changing interest rate environment. The Company also has a
federal funds open line of credit in the amount of $10.0 million with a
correspondent bank which does not require the direct pledging of any assets. In
addition, the Company maintains a relatively high level of liquid assets such as
investment securities and mortgage-backed and related securities
available-for-sale in order to ensure sufficient sources of funds are available
to meet the Company's liquidity needs.

The Company has various unfunded commitments at September 30, 1999 which
represent amounts the Company expects to fund during the quarter ended December
31, 1999. For a summary of such commitment see discussion under footnote (4)
"Commitments and Contingencies" contained in the section entitled, "Notes to
Consolidated Financial Statements." The Company anticipates it will have
sufficient funds available to meet its current loan commitments, including loan
applications received and in process to the issuance of firm commitments.

CHANGE IN FINANCIAL CONDITION

Total assets increased $52.9 million, or 11.3%, from $469.7 million at June 30,
1999 to $522.6 million at September 30, 1999. This increase is primarily
reflected in an increase in loans receivable and securities available-for-sale,
funded primarily by an increase in deposits, FHLB-Chicago advances and decreases
in mortgage-backed and related securities held-to-maturity. Cash and cash
equivalents were $6.1 million and $8.6 million at September 30, 1999 and June
30, 1999, respectively. The decrease in cash and cash equivalents was due to an
increase in the use of the funds to help fund the increase in the loan and
securities portfolios.

Loans receivable increased to $332.3 million at September 30, 1999 compared to
$281.1 million at June 30, 1999. The increase at September 30, 1999 compared to
June 30, 1999 is primarily the result of the purchase of non-conforming
one-to-four family, multi-family and commercial real estate loans secured by
properties located out of the Company's primary lending area, as such loans
carried higher yields than comparable mortgage-backed and related securities
during the three months ended September 30, 1999. Total mortgage loans
originated and purchased amounted to $72.7 million ($45.0 million of which were
purchased mortgage loans) and $44.3 million ($4.0 million of which were
purchased mortgage loans) for the three months ended September 30, 1999 and
1998, respectively. The Company originated $14.6 million of conforming
one-to-four family mortgage and construction loans within the primary lending
area and purchased $26.4 million of non-conforming one-to-four family mortgage
loans outside of the primary lending area. Sales of fixed-rate mortgage loans
totaled $4.2 million and $13.0 million for the three months ended September 30,
1999 and 1998, respectively. The Company originated $6.7 million of
non-conforming multi-family loans within the primary lending area and purchased
$4.9 million of non-conforming multi-family loans outside of the primary lending
area for the period ending September 30, 1999. Total commercial real estate
mortgage loans originated and purchased totaled $19.4 million and $8.5 million
for the three months ended September 30, 1999 and 1998, respectively. Of the
$19.4 million commercial real estate mortgage loans originated and purchased,
$6.2 million were originations of non-conforming commercial real estate loans
within the Company's primary lending area, while $11.7 million were purchases of
non-conforming commercial real estate loans outside the Company's primary
lending area and $1.5 million were purchased non-conforming commercial real
estate loans within the Company's primary lending area. The Company originated
$2.9 million of non-conforming commercial loans within the primary lending area
and purchased $1.5 million of non-conforming commercial loans outside of the
primary lending area.

Securities available-for-sale increased to $102.8 million at September 30, 1999
compared to $100.5 million at June 30, 1999. Mortgage-backed and related
securities available-for-sale decreased to $47.0 million at September 30, 1999
compared to $55.6 million at June 30, 1999. Investment securities
available-for-sale increased to $55.8 million at September 30, 1999 compared to
$44.9 million at June 30, 1999. The increase in the securities
available-for-sale was the result of management's decision to increase such
assets to increase the leverage of the bank and increase net interest income.
Management also decreased the



                                       17
<PAGE>   20


mortgage-backed and related securities available-for-sale and increased the
investment securities available-for-sale based on the higher yield obtainable by
investing in investment securities.

Deposits increased $31.1 million to $319.8 million at September 30, 1999 from
$288.7 million at June 30, 1999. The increase in deposits was primarily due to
the Company's increase in wholesale brokered deposits. Brokered certificates of
deposit totaled $162.7 million at September 30, 1999, representing 50.9% of
total deposits as compared to $101.2 million, or 35.0% of total deposits, at
June 30, 1999. Non-brokered wholesale deposits totaled $29.8 million at
September 30, 1999, representing 9.3% of total deposits as compared to $55.2
million, or 19.1% of total deposits at June 30, 1999. Deposits are the Company's
primary source of externally generated funds. The level of deposits is heavily
influenced by such factors as the general level of short- and long-term interest
rates as well as alternative yields that investors may obtain on competing
investment securities such as money market mutual funds.

FHLB-Chicago advances increased to $136.5 million at September 30, 1999 compared
to $120.0 million at June 30, 1999. At September 30, 1999, securities sold under
agreements to repurchase were $23.8 million compared to $9.5 million at June 30,
1999. The Company has increased its use of FHLB-Chicago advances and securities
sold under agreements to repurchase as a funding source due to attractive rates
offered in relation to deposit funds obtainable in the Company's local market.

ASSET/LIABILITY MANAGEMENT

The Company closely monitors interest rate risk in an attempt to manage the
extent to which net interest income is significantly affected by changes in
market interest rates. In managing the Company's interest rate risk during the
three months ended September 30, 1999, the Company utilized wholesale brokered
and non-brokered deposits and FHLB-advances to fund increases in the Company's
interest-bearing assets due primarily to the attractive rates offered on
wholesale deposits and FHLB advances. At September 30, 1999, the Company's
estimated cumulative one-year gap between assets and liabilities was a negative
34.9% of total assets as compared to a negative 25.6% at June 30, 1999. The
increase in the Company's negative one-year gap reflects the increased use of
shorter-term maturity deposits and FHLB advances to fund a larger portfolio of
fixed-rate mortgage, mortgage related securities and investment securities. In
conjunction with the increased negative gap position of the Company, management
and the Board of Directors are reviewing the use of derivative securities(i.e.
swaps, caps, collars, etc.) to manage the Company's future interest rate risk
exposures. During periods of rising interest rates, a positive interest rate
sensitivity gap would tend to positively affect net interest income, while a
negative interest rate sensitivity gap would adversely affect net income.
Although the opposite effect on net income would occur in periods of falling
interest rates, the Company could experience substantial prepayments of its
fixed rate mortgage loans and mortgage-backed and related securities, which
would result in the reinvestment of such proceeds at market rates which are
lower than current rates.*


                                       18
<PAGE>   21


ASSET/LIABILITY MANAGEMENT SCHEDULE

The following table sets forth at September 30, 1999 the amounts of
interest-earning assets and interest-bearing liabilities maturing or repricing
within the time periods indicated, based on the information and assumptions set
forth in the notes thereto.

<TABLE>
<CAPTION>
                                                                           AMOUNT MATURING OR REPRICING
                                                         ------------------------------------------------------------------
                                                                                 MORE THAN   MORE THAN
                                                         WITHIN      FOUR TO     ONE YEAR   THREE YEARS
                                                          THREE      TWELVE      TO THREE     TO FIVE   OVER FIVE
                                                         MONTHS      MONTHS        YEARS       YEARS      YEARS      TOTAL
                                                         ------      ------     ---------   ----------- ---------    -----
                                                                         (DOLLARS IN THOUSANDS)
<S>                                                   <C>         <C>          <C>        <C>         <C>        <C>
INTEREST-EARNING ASSETS(1):
Mortgage loans(2):
   Fixed rate....................................     $ 12,127    $ 34,718     $ 61,650    $ 56,105   $ 47,023    $211,623
   Adjustable rate...............................       23,063      43,468       24,637       6,409      2,066      99,643
Consumer loans(2)................................          273       2,749          480           -          -       3,502
Commercial loans(2)..............................        4,901       6,595       10,168           -          -      21,664
Mortgage-backed and related securities:
   Fixed rate and securities available-for-sale..        2,001       5,318       10,296       6,563      8,267      32,445
   Adjustable rate...............................       45,391      22,882            -           -          -      68,273
Investment securities and
  securities available-for-sale .................       10,884         887                    9,762    44,920       66,453
                                                      --------    --------     --------    --------   -------     --------
   Total interest-earning assets.................     $ 98,640    $116,617     $107,231    $ 78,839   $102,276    $503,603
                                                      ========    ========     ========    ========   ========    ========

INTEREST-BEARING LIABILITIES:
Deposits(3):
   NOW accounts..................................     $    218    $    654     $  1,037    $    508   $    488    $  2,905
   Money market deposit accounts.................        5,277      15,831       11,821       1,891        360      35,180
   Passbook savings accounts.....................        1,541       4,622        7,333       3,593      3,452      20,541
   Certificates of deposit.......................      135,159     101,751       13,695       2,827          -     253,432
   Escrow deposits...............................        4,768           -            -           -          -       4,768
Borrowings(4)
   FHLB advances and other borrowings............       84,834      43,002       13,042       3,000     16,500     160,378
                                                      --------    --------     --------    --------   -------     --------
   Total interest-bearing liabilities............     $231,797    $165,860     $ 46,928    $ 11,819   $ 20,800    $477,204
                                                      ========    ========     ========    ========   ========    ========
Excess (deficiency) of interest-earning assets over
  interest-bearing liabilities...................    ($133,157)  ($ 49,243)    $ 60,303    $ 67,020   $ 81,476    $ 26,399
                                                      ========    ========     ========    ========   ========    ========
Cumulative excess (deficiency) of interest-earning
  assets over interest-bearing liabilities.......    ($133,157)  ($182,400)   ($122,097)  ($ 55,077)  $ 26,399    $ 26,399
                                                      ========    ========     ========    ========   ========    ========
Cumulative excess (deficiency) of interest-earning
  assets over interest-bearing liabilities
  as a percent of total assets...................        (25.5)%     (34.9)%      (23.4)%     (10.6)%      5.1%       5.1%
                                                          ====        ====         ====        ====        ====       ====
</TABLE>

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

(1)  Adjustable- and floating-rate assets are included in the period in which
     interest rates are next scheduled to adjust rather than in the period in
     which they are due, and fixed-rate assets are included in the periods in
     which they are scheduled to be repaid based on scheduled amortization, in
     each case adjusted to take into account estimated prepayments utilizing the
     Company's historical prepayment statistics modified for forecasted
     statistics using annual prepayment rates ranging from 5% to 20%, based on
     the loan type.

(2)  Balances have been reduced for undisbursed loan proceeds, unearned credit
     insurance premiums, deferred loan fees, purchased loan discounts and the
     allowance for loan losses, which aggregated $24.1 million at September 30,
     1999.

(3)  Although the Company's negotiable order of withdrawal ("NOW") accounts,
     passbook savings accounts and money market deposit accounts generally are
     subject to immediate withdrawal, management considers a certain historical
     amount of such accounts to be core deposits having significantly longer
     effective maturities and times to repricing based on the Company's
     historical retention of such deposits in changing interest rate
     environments. NOW accounts, passbook savings accounts and money market
     deposit accounts are assumed to be withdrawn at annual rates of 30%, 30%
     and 60%, respectively, of the declining balance of such accounts during the
     period shown. The withdrawal rates used are higher than the Company's
     historical rates but are considered by management to be more indicative of
     expected withdrawal rates currently. If all of the Company's NOW accounts,
     passbook savings accounts and money market deposit accounts had been
     assumed to be subject to repricing within one year, the one-year cumulative
     deficiency of interest-earning assets over interest-bearing liabilities
     would have been $212.9 million or 40.8% of total assets.

(4)  Adjustable- and floating-rate borrowings are included in the period in
     which their interest rates are next scheduled to adjust rather than in the
     period in which they are due.


                                       19
<PAGE>   22


ASSET QUALITY

The Company and the Bank regularly review assets to determine proper valuation.
The review consists of an update of the historical loss experience, valuation of
the underlying collateral and the outlook for the economy in general as well as
the regulatory environment.

The following table sets forth information regarding the Bank's non-accrual
loans and foreclosed properties at the dates indicated:


<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                              -----------------------------------------------------

                                                              SEP 30      JUN 30     MAR 31      DEC 31      SEP 30
                                                               1999        1999       1999        1998        1998
                                                              ------      ------     ------      ------      ------

<S>                                                           <C>         <C>        <C>         <C>         <C>
Non-accrual mortgage loans............................        $1,100      $2,118     $2,266      $3,238      $1,674
Non-accrual consumer loans............................            49          88        129         136          45
                                                              ------      ------     ------      ------      ------
Total non-accrual loans...............................        $1,149      $2,206     $2,395      $3,374      $1,719
                                                              ======      ======     ======      ======      ======

Loans 90 days or more
  delinquent and still accruing.......................            82         219         54          52          32
                                                              ------      ------     ------      ------      ------
Total non-performing loans............................        $1,231      $2,425     $2,449      $3,426      $1,751
                                                              ======      ======     ======      ======      ======

Non-accrual investment securities.....................           235         235        233         233           -

Total foreclosed real estate net of
  related allowance for losses .......................         1,893         621        512         11          11
                                                              ------      ------     ------      ------      ------
Total non-performing assets...........................        $3,359      $3,281     $3,194      $3,670      $1,762
                                                              ======      ======     ======      ======      ======


Non-performing loans to
  gross loans receivable..............................          0.34%       0.81%      0.83%       1.14%       0.60%
                                                              ======      ======     ======      ======      ======

Non-performing assets to total assets ................          0.64%       0.70%      0.67%       0.76%       0.38%
                                                              ======      ======     ======      ======      ======
</TABLE>

At September 30, 1999, non-performing loans decreased to $1.2 million from $2.4
million at June 30, 1999. The decrease primarily relates to the transfer of a
multi-family real estate loan located in the Bank's primary market from
non-performing loans to foreclosed real estate. The balance of the loan was $1.1
million. Impaired loans decreased to $0 at September 30, 1999 from $1.1 million
at June 30, 1999. Impaired loans consist primarily of commercial and commercial
real estate loans which, based on current information and events, it is probable
that the Bank will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Management believes that these loans
are adequately collateralized and/or have specific loan loss reserves
established which are adequate to absorb probable losses related to resolution.

Potential problem loans are loans where known information about possible credit
problems of borrowers causes management to have doubts as to the ability of such
borrowers to comply with the present loan repayment terms. The decision by
management to categorize a loan as a potential problem loan does not necessarily
indicate that the Company expects losses to occur, but that management
recognizes there is a higher degree of risk associated with these performing
loans. At September 30, 1999, the bank had a potential problem loan with a
balance of $3.3 million secured by 22 first lien one-to-four family mortgages
held in trust for the benefit of the Bank and a secondary payee under the loan
obligation. The original balance of the loan was $4.1 million. At September 30,
1999, the loan was current as to payment of principal and interest. Proceeds
from payments made to the trustee from potential homeowners (occupying the
properties under 2-year leases with an option to purchase at an agreed upon
price upon expiration of the lease-term), or from any other eventual sale of the
one-to-four family residences securing the obligation, are to be applied by the
trustee first to the repayment of the total of all principal and interest due
the Bank, with any excess over such amounts becoming due to the secondary payee.
The Bank

                                       20
<PAGE>   23


assumed responsibility for receipt and servicing of payments from the potential
homeowners upon the secondary payee's filing of bankruptcy in June 1999, and the
Bank currently is working directly with the trustee. The secondary payee's
bankruptcy may complicate servicing and collection and could delay the Bank's
ability to act promptly to realize upon its security in the event of default.
The one-to-four family properties securing the obligation are located in the
Bank's primary lending area and management believes the underlying value of the
properties and the Bank's first lien status are sufficient to prevent any
significant loss from this credit.

ALLOWANCE FOR LOAN LOSSES

The following table sets forth an analysis of the Bank's allowance for loan
losses:

<TABLE>
<CAPTION>
                                                           THREE MONTHS           YEAR            THREE MONTHS
                                                               ENDED              ENDED               ENDED
                                                           SEP. 30, 1999      JUNE 30, 1999       SEP. 30, 1998
                                                           -------------      -------------       -------------
                                                                             (DOLLARS IN THOUSANDS)

<S>                                                           <C>              <C>                 <C>
     Balance at beginning of period.....................      $ 2,648          $ 2,329             $ 2,329
     Additions charged to operations:
       Multi-family and commercial real estate..........          120              310                  90
       Consumer.........................................            -              120                  10
       Commercial.......................................            -               50                  30
                                                              -------          -------             -------
                                                                  120              480                 130

     Recoveries:
       Consumer.........................................            6               15                   6

     Charge-offs:
       One- to four-family..............................            -              (11)                (11)
       Multi-family & commercial real estate............            -              (34)                  -
       Consumer.........................................           (9)            (131)                 (6)
                                                              -------          -------             -------
                                                                   (9)            (176)                (17)
                                                              -------          -------             -------

     Net charge-offs....................................           (3)            (161)                (11)
                                                              -------          -------             -------

     Balance at end of period...........................      $ 2,765          $ 2,648             $ 2,448
                                                              =======          =======             =======

    Allowance for loan losses to
       non-performing loans at end
       of the period....................................       224.55%          109.19%             139.82%
                                                              =======          =======             =======

    Allowance for loan losses to
       total loans at end of the period.................         0.77%            0.89%               0.84%
                                                              =======          =======             =======
</TABLE>


The level of allowance for loan losses at September 30, 1999, reflects the
continued low level of charged off loans. Management believes that the allowance
for loan losses is adequate as of September 30, 1999.

                                       21
<PAGE>   24




RESULTS OF OPERATIONS - COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1999
AND 1998

GENERAL

Net income for the three months ended September 30, 1999 increased to $808,000
from $718,000 for the comparable 1998 period. The increase in net income was
primarily due to an increase in net interest income. Return on average equity
increased to 9.47% for the three months ended September 30, 1999 from 8.49% for
the comparable 1998 period. Return on average assets increased to 0.66% for the
three months ended September 30, 1999 from 0.65% for the comparable 1998 period.

NET INTEREST INCOME

The following table presents certain information related to average
interest-earning assets and liabilities, net interest rate spread and net
interest margin:

<TABLE>
<CAPTION>
                                                               FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                           -------------------------------------------------------------------------
                                                         1 9 9 9                                1 9 9 8
                                           ---------------------------------      ----------------------------------
                                                        INTEREST    AVERAGE                    INTEREST      AVERAGE
                                            AVERAGE      EARNED/    YIELD/         AVERAGE      EARNED/      YIELD/
                                            BALANCE       PAID       RATE          BALANCE       PAID         RATE
                                           ---------    --------   --------        -------     --------     --------
                                                                  (DOLLARS IN THOUSANDS)

<S>                                        <C>           <C>         <C>          <C>           <C>           <C>
ASSETS:
Interest-earning assets:
  Mortgage loans.......................... $277,129      $5,604      8.09%        $262,567      $5,463        8.32%
  Consumer loans..........................    3,616         126     13.94            4,601         155       13.48
  Commercial loans........................   18,617         470     10.10           12,825         283        8.83
                                           --------      ------                   --------      ------
     Total loans..........................  299,362       6,200      8.28          279,993       5,901        8.43
  Securities held-to-maturity:
    Mortgage-backed securities............   10,183         161      6.32           20,971         374        7.13
    Mortgage related securities...........   43,858         702      6.40           42,786         758        7.09
                                           --------      ------                   --------      ------
      Total mortgage-backed
       and related securities.............   54,041         863      6.39           63,757       1,132        7.10
  Investment and other securities.........    8,322         112      5.38            8,221         128        6.23
  Securities available-for-sale...........  101,583       1,586      6.25           64,262       1,094        6.81
  Federal Home Loan Bank stock............    6,702         113      6.74            6,213         105        6.76
                                           --------      ------                   --------      ------
    Total interest-earning assets.........  470,010       8,874      7.55          422,446       8,360        7.92
Non-interest earning assets...............   21,966                                 18,318
                                           --------                               --------
    Total assets.......................... $491,976                               $440,764
                                           ========                               ========

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
  NOW accounts............................ $  2,816          12      1.70%        $  2,658          12        1.81%
  Money market deposit accounts...........   35,860         400      4.46           28,986         369        5.09
  Passbook accounts.......................   20,697         151      2.92           21,324         155        2.91
  Certificates of deposit.................  231,101       3,071      5.32          215,924       3,162        5.86
                                           --------      ------                   --------      ------
    Total deposits........................  290,474       3,634      5.00          268,892       3,698        5.50
Advance payments by borrowers
  for taxes and insurance................     4,028          24      2.38            3,925          26        2.65
Borrowings................................  148,350       2,104      5.67          122,559       1,839        6.00
                                           --------      ------                   --------      ------
    Total interest-bearing liabilities....  442,852       5,762      5.20          395,376       5,563        5.63
Non-interest bearing deposits
  and liabilities.........................   14,981                                 11,555
Shareholders' equity......................   34,143                                 33,833
                                           --------                               --------
    Total liabilities and
      shareholders' equity................ $491,976                               $440,764
                                           ========                               ========
Net interest income/interest rate spread..               $3,112      2.35%                      $2,797        2.29%
                                                         ======      ====                       ======        ====
Net earning assets/net interest margin.... $ 27,158                  2.65%         $27,070                    2.65%
                                          =========                  ====         ========                    ====
</TABLE>

                                       22


<PAGE>   25


Net interest income before provision for losses on loans increased $315,000, or
11.3%, to $3.1 million for the three months ended September 30, 1999 from $2.8
million for the comparable 1998 period. Interest income increased $514,000 for
the three months ended September 30, 1999, partially offset by an increase in
interest expense of $199,000. The level of net interest income primarily
reflects a 11.3% increase in average interest-earning assets to $470.0 million
for the three months ended September 30, 1999 from $440.8 million for the
comparable 1998 period, a .30% increase in the excess of the Company's average
interest-earning assets over average interest-bearing liabilities to $27.2
million for the three months ended September 30, 1999 from $27.1 million for the
comparable 1998 period, combined with an increase in interest rate spread to
2.35% for the three months ended September 30, 1999 from 2.29% for the
comparable 1998 period. The increase in interest rate spread was primarily due
to higher yielding loans and offsetting lower yielding investments added to the
portfolio since the period ending September 30, 1998 than those added prior to
September 30, 1998. Even though incremental yields on assets added in the period
ending September 30, 1999 are higher than that of the comparable 1998 period,
the effect of the increasing yields has not fully impacted the overall yields
for the current period when compared to the prior period.

INTEREST INCOME

Interest income increased 6.1% to $8.9 million for the three months ended
September 30, 1999 from $8.4 million for the comparable 1998 period. The
increase in interest income was the result of an increase in average
interest-earning assets of 11.3% to $470.0 million for the three months ended
September 30, 1999 from $440.8 million for the comparable 1998 period, offset by
a decrease of 37 basis points in the yield on interest-earning assets to 7.55%
for the three months ended September 30, 1999 from 7.92% for the comparable 1998
period. Interest income on loans increased 5.1% to $6.2 million for the three
months ended September 30, 1999, from $5.9 million for the comparable 1998
period. The increase was the result of an increase in the Company's average
gross loans of 6.9% to $299.4 million for the three months ended September 30,
1999 from $280.0 million for the comparable 1998 period. The increase was
partially offset by a decrease in average yield to 8.28% for the three months
ended September 30, 1999 from 8.43% for the comparable 1998 period. Gross loans
increased primarily as a result of the Company purchasing more loans in the
secondary market and increases in multi-family and commercial components of the
portfolio and retaining substantially all of its adjustable and short-term fixed
rate loan originations. See "Change in Financial Condition" for a discussion of
the increase in gross loans. The decrease in yield is attributable to the
increase in loans originated and purchased at lower interest rates since the
period ending September 30, 1998. The interest rates on loans originated and
purchased in the quarter ending September 30, 1999 are increasing but the effect
of the increasing rate environment is not yet reflected in the yield. At
September 30, 1999, the multifamily and commercial components of the Company's
loan portfolio totaled $144.2 million, or 40.4% of the total loan portfolio,
compared to $101.8 million, or 35.0% of the total loan portfolio at September
30, 1998.

Interest income on mortgage-backed securities decreased 57.0% to $161,000 for
the three months ended September 30, 1999 from $374,000 for the comparable 1999
period. The decrease was primarily due to a decrease in average balances to
$10.2 million for the three months ended September 30, 1999 from $21.0 million
for the comparable 1998 period and a decrease in average yield to 6.32% for the
1999 period from 7.13% for the 1998 period. The decrease in average yield on
mortgage-backed securities was primarily due to the downward rate adjustment in
the adjustable rate securities portion of this portfolio which decreased due to
the lower interest rate environment since the period ending September 30, 1998
and the accelerated amortization of purchase premiums on mortgage-backed
securities due to faster that projected principal repayments in the 1999 period.
The interest rates on mortgage-backed securities purchased in the quarter ending
September 30, 1999 are increasing, but the effect of the increasing rate
environment is not yet reflected in the yield. Interest income on
mortgage-related securities decreased 7.4% to $702,000 for the three months
ended September 30, 1999 from $758,000 for the comparable 1998 period. The
decrease was primarily due to a decrease in average yield to 6.40% for the three
months ended September 30, 1999 from 7.09% for the comparable 1998 period. The
decrease was partially offset by an increase in average balances to $43.9
million for the three months ended September 30, 1999 from $42.8 million for the
comparable 1998 period. The decrease in average yield on mortgage-related
securities was primarily due to

                                       23
<PAGE>   26


accelerated amortization of purchase premiums on mortgage related securities due
to faster than projected principal repayments during the 1999 period. The
decline in average balances of mortgage-backed and related securities is due to
management's decision to increase the securities available-for-sale portfolio.
Interest income on investment securities and securities available-for-sale and
investment and other securities increased 40.0% to $1.7 million for the three
months ended September 30, 1999 from $1.2 million for the comparable 1998
period. The increase was primarily due to an increase in average balance to
$109.9 million for the three months ended September 30, 1999 from $72.5 million
for the 1998 period, partially offset by a decrease in average yield to 6.12%
for the three months ended September 30, 1999 from 6.74% for the comparable 1998
period. The increase in securities available-for-sale was due to management's
decision to have the ability to sell securities to meet future loan demand. The
lower average yield was primarily attributable to the lower interest rate
environment since the period ending September 30, 1998. The interest rates on
securities available-for-sale purchased in the quarter ending September 30, 1999
are increasing, but the effect of the increasing rate environment is not yet
reflected in the yield.

INTEREST EXPENSE

Interest expense increased 3.6% to $5.8 million for the three months ended
September 30, 1999 from $5.6 million for the comparable 1998 period. The
increase was the result of an 12.0% increase in the average amount of
interest-bearing liabilities to $442.9 million for the three months ended
September 30, 1999 compared to $395.4 million for the comparable 1998 period,
partially offset by a decrease in the average rate paid on interest-bearing
liabilities to 5.20% for the 1999 period from 5.63% for the 1998 period. The
increased balances of wholesale deposits, money market deposit accounts, NOW
accounts and borrowings at lower average interest rates was the primary reason
for the decrease in the average rate paid on the interest-bearing liabilities
for the three months ended September 30, 1999 as compared to the comparable 1998
period. Interest expense on deposits decreased 1.7% to $3.6 million for the
three months ended September 30, 1999 from $3.7 million for the comparable 1998
period. The decrease was the result of a decrease in the average rate paid to
5.00% for the 1999 period from 5.50% for the 1998 period. The decrease was
partially offset by an increase in average balances of 8.0% to $290.5 million
for the three months ended September 30, 1999 from $268.9 million for the
comparable 1998 period. The increase in deposits was primarily due to an
increase of 23.7% in money market deposit accounts to $35.9 million for the
three months ended September 30, 1999 from $29.0 million for the comparable 1998
period, with a decrease in the average rate paid on such accounts to 4.46% for
the 1999 period from 5.09% for the 1998 period. Money market deposit accounts
increased primarily due to aggressive marketing and a competitive rate offered
during the three months ended September 30, 1999. Certificate of deposit
accounts (including brokered deposits) increased 7.0% to $231.1 million for the
three months ended September 30, 1999 from $215.9 million for the 1998 period,
with a decrease in the average rate to 5.32% for the 1999 period from 5.86% for
the 1998 period. NOW accounts increased 5.9% to $2.8 million for the three
months ended September 30, 1999 from $2.7 million for the comparable 1998
period, with a decrease in average rate paid to 1.70% for the 1999 period from
1.81% for the 1998 period. The Company's increase in certificates of deposit was
the result of aggressive marketing and pricing and the use of brokered
certificates of deposit. Of the $231.1 million in the average balance of
certificates of deposit for the three months ended September 30, 1999, $111.5
million, or 48.3%, represented brokered certificates of deposit compared to
$85.8 million, or 39.7%, for the 1998 period. The average rate paid on brokered
certificates of deposit decreased to 5.38% for the three months ended September
30, 1999 from 5.97% for the comparable 1998 period. The decrease was primarily
due to the longer average maturity of the brokered deposits in the 1998 period.
Interest on borrowings (FHLB advances and reverse repurchase agreements)
increased 14.4% to $2.1 million for the three months ended September 30, 1999
from $1.8 million for the comparable 1998 period. The increase was primarily due
to the increase in average balances of FHLB advances and reverse repurchase
agreements of 21.0% to $148.4 million for the three months ended September 30,
1999 from $122.6 million for the comparable 1998 period, with a decrease in the
average rate paid to 5.67% for the 1999 period from 6.00% for the 1998 period.


                                       24
<PAGE>   27



PROVISION FOR LOSSES ON LOANS

The provision for losses on loans decreased 7.7% to $120,000 for the three
months ended September 30, 1999 from $130,000 for the comparable 1998 period.
The level of allowance for losses on loans generally is determined by the Bank's
historical loan loss experience, the condition and composition of the Bank's
loan portfolio, and existing general economic conditions. Management anticipates
that as the Company's volume of multi-family and commercial/non-residential real
estate lending activity continues to increase, the Company will need to build a
higher level of allowance for loan losses established through a provision for
loan losses.* Based on management's evaluation of the loan portfolio and the
increase in gross loans during the three months ended September 30, 1999, the
allowance for losses on loans increased 4.4% to $2.8 million at September 30,
1999 compared to $2.6 million at June 30, 1999. While the allowance for losses
on loans increased, the allowance for loan losses as a percentage of gross loans
decreased to 0.77% at September 30, 1999 from 0.89% at June 30, 1999 reflecting
the continued low level of loans charged off. This increase in the allowance was
primarily the result of the increase in the gross loan portfolio. The amount of
non-performing loans at September 30, 1999 was $1.2 million, or 0.34% of gross
loans, compared to $2.4 million, or 0.81% of gross loans, at June 30, 1999 and
$1.8 million or 0.60% of gross loans at September 30, 1998. Management believes
that these loans are adequately collateralized and/or have specific loan loss
reserves established which are adequate to absorb probable losses related to
resolution.

NON-INTEREST INCOME

Non-interest income decreased 15.2% to $407,000 for the three months ended
September 30, 1999 from $480,000 for the comparable 1998 period. The largest
components of the decrease were a decrease in gains on the sale of loans to
$96,000 for the three months ended September 30, 1999 compared to $214,000 for
the comparable 1998 period, a decrease in service charges on loans to $57,000
for the three months ended September 30, 1999 from $78,000 for the comparable
1998 period, a decrease in insurance commissions to $12,000 for the three months
ended September 30, 1999 from $19,000 for the comparable 1998 period and a
decrease in loan servicing fees to $12,000 for the three months ended September
30, 1999 from $14,000 for the comparable 1998 period. The decrease in gains on
the sale of loans reflects the decrease in long-term fixed rate loans sold into
the secondary market during the 1999 period as compared to the 1998 period due
to the higher level of interest rates that led to a lower level of mortgage
loans refinanced in the 1999 period as compared to the 1998 period. Partially,
offsetting the decreases in non-interest income was an increase in gains on the
sale of securities and mortgage-backed and related securities of $54,000 from $0
for the comparable 1998 period, an increase in service charges on deposit
accounts to $122,000 for the three months ended September 30, 1999 from $113,000
for the comparable 1998 period, and an increase in other income to $54,000 for
the three months ended September 30, 1999 from $42,000 for the comparable 1998
period.

NON-INTEREST EXPENSE

Non-interest expense increased 5.9% to $2.2 million for the three months ended
September 30, 1999 from $2.1 million for the comparable 1998 period. The
increase was primarily due to an increase in compensation and benefits expense
of $131,000 to $1.4 million for the three months ended September 30,1999 from
$1.2 million for the comparable 1998 period and an increase in other
non-interest expense of $17,000 to $335,000 for the three months ended September
30, 1999 from $318,000 for the comparable 1998 period. Partially, offsetting the
increases in non-interest expense was a decrease in occupancy and equipment
expense of $16,000 to $393,000 for the three months ended September 30, 1999
from $409,000 for the comparable 1998 period and a decrease in marketing expense
of $13,000 to $53,000 for the three months ended September 30, 1999 from $66,000
for the comparable 1998 period. The increase in compensation and benefits
expense primarily relates to higher salary levels and an increase in the number
of full time equivalent employees. The increase in other non-interest expense is
primarily due to increases in printing, office supplies, organization dues,
legal and other miscellaneous expenses.



                                       25
<PAGE>   28


IMPACT OF YEAR 2000

The Company is currently in the process of addressing a potential problem that
faces all users of automated systems including information systems. Many
computer systems process transactions based on two digits representing the year
of transaction, rather than four digits. These computer systems may not operate
properly when the last two digits become "00", as will occur on January 1, 2000.
The problem could affect a wide variety of automated information systems, such
as mainframe applications, personal computers, communication systems,
environmental systems and other information systems.

The Company has identified areas of operations critical for the delivery of its
loan and deposit products. The majority of the Company's applications used in
operations are purchased from outside vendors. The vendors providing the
software are responsible for maintenance of the systems and modifications to
enable uninterrupted usage after December 31, 1999. The Company's plan includes
obtaining certification of compliance from third parties and testing all of the
impacted applications (both internally developed and third party provided).
Testing of the system and conversion activities were completed as of June 30,
1999. There are no mission critical systems which are non-compliant. The Company
has developed and finalized contingency plans for any adverse situations that
may arise related to Year 2000. The Company's plan also includes reviewing any
potential risks associated with loan and deposit data base information due to
the Year 2000 issue. Potential risks could include, but are not limited to,
system failure or miscalculations causing disruptions of operations which may
include the temporary inability to process transactions, and to provide accurate
customer loan payment or deposit receipt information.

Based on currently available information, management does not anticipate that
the cost to address the Year 2000 issues will have a material adverse impact on
the Company's financial position.* Direct expenditures in fiscal year 1999, and
for the three months ended September 30, 1999 for the Year 2000 project totaled
$37,800 and $9,900, respectively. It is estimated that completion of the project
will result in additional expenditures of approximately $20,000.* Direct
expenditures include capital expenditures for compliant equipment and software,
write-offs of non-compliant equipment and software upgrades. The expenditures
will be funded by increases in the Company's non-interest expense budget. The
Company has utilized and will continue to utilize internal staff to coordinate
the Year 2000 project which may delay new product implementation through fiscal
2000. No scheduled projects have been delayed. The Company does not plan to
engage consultants to complete the Year 2000 project. There can be no guarantee
that the systems of other parties on which the Company's systems rely will be
timely converted and not have an adverse impact on the Company's systems.

The Company also made inquiries and reviewed plans of certain third parties,
such as commercial loan customers, where Year 2000 failures could result in
significant adverse impact on the Company. The Company has completed the inquiry
and review process and is satisfied the Bank will not be subject to significant
adverse impact.* The Board of Directors of the Company receives written status
reports on the Year 2000 project and meets with project leaders quarterly.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A derivative financial instrument includes futures, forwards, interest rate
swaps, option contracts, and other financial instruments with similar
characteristics. The Company currently does not enter into futures, forwards,
swaps or options. However, the Company is party to financial instruments with
off-balance sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments consist primarily of
commitments to extend credit. These instruments involve to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the consolidated balance sheets. Commitments to extend credit are agreements to
lend to a customer as long as there is no violation of any condition established
in the contract. Commitments generally have fixed expiration dates and may
require collateral from the borrower if deemed necessary by the Company.



                                       26
<PAGE>   29



The information required herein pursuant to Item 305 of Regulation S-K is
incorporated by reference in sections entitled "Liquidity and Capital Resources"
from pages 14 to 16 and "Asset/Liability Management" from pages 17 to 18 hereof.


                                       27
<PAGE>   30



                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          From time to time the Company and the Bank are parties to legal
          proceedings arising out of its lending activities and other
          operations. However, there are no pending legal proceedings of which
          the Company or the Bank is a party which, if determined adversely to
          the Company or the Bank, would have a material adverse effect on the
          consolidated financial position of the Company.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

          Not applicable.

ITEM 3.   DEFAULT UPON SENIOR SECURITIES

          Not applicable.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          The Annual Meeting of Shareholders of the Company was held on October
          27, 1999. There were 2,731,941 shares of Common Stock of the Company
          entitled to vote at the Annual Meeting, and 2,507,619 shares present
          at the meeting by holders thereof in person or by proxy, which
          constituted a quorum. The following is a summary of the results of the
          votes:
<TABLE>
<CAPTION>
                                                                                 NUMBER OF VOTES
                                                                            Against or                    Broker
                                                                For          Withheld      Abstain       Non-Votes
                                                              ---------     ----------     -------       ---------
         <S>                                                  <C>            <C>           <C>            <C>
          Nominees for Director for
            Three-Year Term Expiring in 2002
                  Martin Hedrich, Jr........................  2,398,055      109,564            -            -
                  Donald A. Zellmer.........................  2,409,102       98,517            -            -

            Ratification of KPMG LLP
            as independent auditors for
            fiscal year ending June 30, 2000................  2,463,262       38,221        6,136            -
</TABLE>


          The continuing directors of the Company include: James D. Smessaert,
          Peter A. Gilbert, Reginald M. Hislop, III and Charles E. Rickheim.

ITEM 5.   OTHER INFORMATION

          On August 11, 1999, the Company announced it had adopted a share
          repurchase program for its common stock to purchase up to 5%, or
          approximately 142,000 shares. The repurchased shares will become
          treasury shares and will be used for general corporate purposes. As of
          November 12, 1999, the Company had purchased 137,000 shares of common
          stock pursuant to the repurchase program and has the ability to
          repurchase approximately 5,000 additional shares.

          On October 27, 1999, the Company announced it had declared a dividend
          of $0.05 per share on the common stock of the Company. The dividend
          will be payable on November 24, 1999 to shareholders of record as of
          November 10, 1999.

                                       28
<PAGE>   31






ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          Exhibits:
             11     Computation of Earnings per Share - See Note 2 to the
                    unaudited Consolidated Financial Statements


          No reports on Form 8-K were filed during the quarter for which this
          report was filed.

            * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

                                       29
<PAGE>   32


                                   SIGNATURES


Pursuant to the requirement 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.



                                            Ledger Capital Corp.
                                            --------------------
                                            (Registrant)



Date:  April 27, 2001                       /s/    James D. Smessaert
                                            ------------------------------------
                                            James D. Smessaert
                                            Chairman of the Board
                                            Chief Executive Officer



Date:  April 27, 2001                       /s/    Arthur E. Thompson
                                            ------------------------------------
                                            Arthur E. Thompson
                                            Chief Financial Officer


                                       30
<PAGE>   33



                                   SIGNATURES


Pursuant to the requirement 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.



                                            Ledger Capital Corp.
                                            --------------------
                                            (Registrant)



Date:  April 27, 2001
                                            ------------------------------------
                                            James D. Smessaert
                                            Chairman of the Board
                                            Chief Executive Officer



Date:  April 27, 2001
                                            ------------------------------------
                                            Arthur E. Thompson
                                            Chief Financial Officer



                                       31