<PAGE>

                                                                      EXHIBIT 13

               [LOGO OF HIGH COUNTRY BANCORP, INC. APPEARS HERE]


                               ANNUAL REPORT FOR

                                THE YEAR ENDED

                                 JUNE 30, 1999
<PAGE>

[LETTERHEAD OF HIGH COUNTRY BANCORP, INC. APPEARS HERE]

TO OUR STOCKHOLDERS:

     The Board of Directors and Management of High Country Bancorp, Inc. would
like to thank you for your support during the past year. With the successful
completion of another year, we are pleased to present this annual report to the
Stockholders.

     During Fiscal 1999, assets increased $13.4 million to $114 million.  This
growth was primarily the result of continued strong loan demand and lending
diversification in the local economy.  As a result of the 28.64% increase in net
income, Stockholder's equity is $18 million. Asset quality remains good, with
continued application of good underwriting standards.

     Several major events in 1999 included the announcement of a stock
repurchase program. Believing that our stock is undervalued, we have repurchased
37,781 shares to date.  We also began operating a secondary mortgage department
in order for us to offer a very competitive mortgage loan product and improve
fee income and interest rate risk.  Our new building project was started and
should be completed by early spring, 2000.  This building is being built with
the future in mind, on our West Highway 50 location in Salida.  We plan on
continuing our downtown Salida location as a branch office.

     After serving the local area for 113 years, we are confident of the
Company's sound financial condition and look forward to supporting the future
growth within our communities. The Company is positioned to take advantage of
competitive opportunities. We are committed to serving our local customers and
meeting the challenges of the financial services industry.

     We invite you to review this Annual Report for the past year.  We
appreciate your support, as well as look forward to the future with great
confidence and enthusiasm.

Sincerely,


/s/ Larry D. Smith
---------------------------
Larry D. Smith, President
and Chief Executive Officer
<PAGE>

                             FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                             At June 30,                            Change
                                                  ------------------------------          ----------------------------
                                                     1999                1998              Amount             Percent
                                                  -----------         ----------          ---------           --------
                                                                         (Dollars in thousands)
<S>                                               <C>                 <C>                 <C>                 <C>
Financial Position:
 Total assets............................          $  114,014         $  100,589          $ 13,425              13.35%
 Loans receivable, net...................              98,433             81,359            17,074              20.99
 Mortgage-backed and related securities..               3,639              4,637              (998)             21.52
 Investment securities...................               1,201              1,066               135              12.66
 Deposits................................              72,604             63,425             9,179              14.47
 Stockholders' equity....................              18,028             18,279              (251)              1.37

 Number of common shares outstanding.....           1,298,719          1,322,500           (23,781)              1.80


                                                          For the Year Ended
                                                              June 30,                              Change
                                                  ------------------------------          ---------------------------
                                                     1999                1998              Amount             Percent
                                                  ----------          ----------          --------            -------
                                                                          (Dollars in thousands)
<S>                                               <C>                 <C>                 <C>                 <C>
Results of Operations:
 Interest income.........................         $    8,536          $    7,033          $  1,503              21.37%
 Interest expense........................              3,920               3,266               654              20.02
 Net interest income.....................              4,616               3,767               849              22.53
 Provision for loan losses...............                230                 219                11               5.02
 Net interest income after provision
  for loan losses........................              4,386               3,548               838              23.62
 Non-interest income.....................                189                 158                31              19.62
 Non-interest expense....................              3,228               2,625               603              22.97
 Net earnings............................                840                 653               187              28.64
</TABLE>

                                       1
<PAGE>

                SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA



Selected Financial Condition Data:

<TABLE>
<CAPTION>

                                                                                 At June 30,
                                                  -----------------------------------------------------------------------
                                                    1999           1998          1997           1996             1995
                                                  --------       --------       -------        -------        -----------
                                                                         (Dollars in thousands)
<S>                                               <C>            <C>            <C>            <C>            <C>
Total assets...........................           $114,014       $100,589       $76,324        $63,185            $54,813
Cash...................................              2,249          2,999           895            511              1,355
Interest-earning deposits..............              4,410          6,963         2,381          1,577                513
Securities available for sale..........                 --             --            --            989              1,385
Securities  held to maturity...........              3,639          4,637         5,340          6,843              8,368
Loans receivable, net..................             98,433         81,359        63,127         50,076             41,537
Savings deposits.......................             72,604         63,425        56,152         49,537             45,914
Stockholders' equity...................             18,028         18,279         5,958          5,907              5,379
----------------------------------------------
Number of:
  Real estate loans outstanding........              1,231          1,185         1,137          1,054                965
  Savings accounts.....................             11,064         10,199         9,126          7,828              7,324
  Full-service offices.................                  3              3             3              2                  2
</TABLE>

<TABLE>
<CAPTION>

Selected Operations Data:

                                                                           Year Ended June 30,
                                                  -------------------------------------------------------------------
                                                    1999           1998           1997          1996            1995
                                                  --------       --------       -------        -------        -------
                                                                            (In thousands)
<S>                                               <C>            <C>            <C>            <C>            <C>
Interest income........................           $  8,536       $  7,033       $ 5,764        $ 4,948        $ 3,911
Interest expense.......................              3,920          3,266         2,813          2,293          1,603
                                                  --------       --------       -------        -------        -------
  Net interest income..................              4,616          3,767         2,951          2,655          2,308
Provision for loan losses..............                230            219           282             59             59
                                                  --------       --------       -------        -------        -------
  Net interest income after provision
   for loan losses.....................              4,386          3,548         2,669          2,596          2,249
                                                  --------       --------       -------        -------        -------
Noninterest income.....................                189            158           141            146            146
                                                  --------       --------       -------        -------        -------
  Subtotal.............................              4,575          3,706         2,810          2,742          2,395
                                                  --------       --------       -------        -------        -------

Noninterest expense:
 Compensation and benefits.............              1,866          1,506         1,345            868            730
 Other.................................              1,362          1,119         1,410            948            771
                                                  --------       --------       -------        -------        -------
 Total noninterest expense.............              3,228          2,625         2,755          1,816          1,501
                                                  --------       --------       -------        -------        -------
  Income before taxes..................              1,347          1,081            55            926            894
Income tax expense.....................                507            428            11            407            327
                                                  --------       --------       -------        -------        -------
  Net income...........................           $    840       $    653       $    44        $   519        $   567
                                                  ========       ========       =======        =======        =======
</TABLE>

                                       2
<PAGE>

Operating Ratios
----------------

<TABLE>
<CAPTION>
                                                              At or for the Year
                                                                Ended June 30,
                                                           ------------------------
                                                             1999            1998
                                                           -------          -------
<S>                                                        <C>              <C>
Performance Ratios:

Return on assets (ratio of net earnings
  to average total assets)...............................    0.77%            0.74%

Return on equity (ratio of net earnings
  to average equity).....................................    4.61%            5.22%

Ratio of average interest-earning assets to
  average interest-bearing liabilities...................  115.52%          110.76%

Ratio of net interest income, after provision
  for loan losses, to noninterest expense................  135.87%          135.16%

Net interest rate spread (difference between weighted
  average yield on interest-earning assets and weighted
  average cost of interest-bearing liabilities)..........    3.88%            4.10%

Net yield on average interest-earning assets.............    4.47%            4.53%

Quality Ratios:

Non-performing loans to total loans
  at end of period.......................................    0.28%            0.46%

Non-performing loans to total assets.....................    0.24%            0.39%

Non-performing assets to total assets
  at end of period.......................................    0.26%            0.41%

Allowance for loan losses to non-performing
  loans at end of period.................................     331%             192%

Allowance for loan losses to total loans.................    0.89%            0.89%

Capital Ratios:

Equity to total assets at end of period..................   15.81%           18.17%

Average equity to average assets.........................   16.86%           14.14%
</TABLE>

                                       3
<PAGE>

                  BUSINESS OF THE COMPANY AND THE ASSOCIATION

High Country Bancorp, Inc.

     High Country Bancorp, Inc. (the "Company") was incorporated under the laws
of the State of Colorado in August 1997 for the purpose of becoming a savings
and loan holding company for Salida Building and Loan Association ("Salida" or
the "Association"). On December 9, 1997, the Association consummated its
conversion from mutual to stock form (the "Conversion") and the Company
completed its offering of Common Stock through the sale and issuance of
1,322,500 shares of Common Stock at a price of $10.00 per share, realizing gross
proceeds of $13.21 million and net proceeds of $12.7 million. The Company
purchased all of the capital stock of the Association with $5.8 million of the
offering proceeds.

     Prior to the acquisition of all of the outstanding stock of the
Association, the Company had no assets or liabilities and engaged in no business
activities. Since its acquisition of the Association, the Company has engaged in
no significant activity other than holding the stock of the Association,
investing the net proceeds of the offering and operating the business of a
savings and loan association through the Association. Accordingly, the
information set forth in this report, including financial statements and related
data, relates primarily to the Association.

     The Company's executive offices are located at 130 West 2nd Street, Salida,
Colorado. Its telephone number is (719) 539-2516.

Salida Building and Loan Association

     The Association is a federal savings and loan association operating through
offices located in Salida, Colorado, Buena Vista, Colorado and Leadville,
Colorado and serving Chaffee, Lake, Western Fremont and Saguache Counties in
Colorado. The Association was chartered in 1886 as the first state-chartered
building and loan association in Colorado. The Association received federal
insurance of its deposit accounts and became a member of the FHLB in 1937. The
Association became a federally-chartered association on August 16, 1993 under
its current name of Salida Building and Loan Association. At June 30, 1999, the
Association had total assets of $111.2 million, loans receivable (net) of $98.4
million, total deposits of $72.6 million and stockholders' equity of $12.6
million.

     Historically, the Association has operated as a traditional savings
institution by emphasizing the origination of loans secured by one- to four-
family residences. Since fiscal 1996, the Association has significantly
increased its origination of consumer (primarily automobile), commercial
business and commercial real estate loans, including loans for the purchase and
development of raw land, all of which loans have been originated in its market
area.

     The Association is subject to examination and comprehensive regulation by
the Office of Thrift Supervision ("OTS"), and the Association's savings deposits
are insured up to applicable limits by the Savings Association Insurance Fund
("SAIF"), which is administered by the Federal Deposit Insurance Corporation
("FDIC"). The Association is a member of and owns capital stock in the Federal
Home Loan Bank ("FHLB") of Topeka, which is one of 12 regional banks in the FHLB
System. The Association is further subject to regulations of the Federal Reserve
Board governing reserves to be maintained and certain other matters. Regulations
significantly affect the operations of the Association.

     The Association's executive offices are located at 130 W. 2nd Street,
Salida, Colorado 81201-0309, and its main telephone number is (719) 539-2516.

                                       4
<PAGE>

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

General

     Prior to the acquisition of all of the outstanding stock of the
Association, the Company had no assets or liabilities and engaged in no business
activities. Since its acquisition of the Association, the Company has engaged in
no significant activity other than holding the stock of the Association,
investing the net proceeds of the offering and operating the business of a
savings and loan association through the Association. Accordingly, the
information set forth in this report, including financial statements and related
data, relates primarily to the Association.

     The principal business of the Association consists of accepting deposits
from the general public and investing these funds primarily in loans and in
investment securities and mortgage-backed securities. The Association's loan
portfolio consists primarily of loans secured by residential real estate located
in its market area, with terms of 15 to 30 years, as well as commercial real
estate, commercial business, land development and consumer loans.

     The Association's net income is dependent primarily on its net interest
income, which is the difference between interest income earned on its loan,
investment securities and mortgage-backed securities portfolio and interest paid
on interest-bearing liabilities. Net interest income is determined by (i) the
difference between yields earned on interest-earning assets and rates paid on
interest-bearing liabilities ("interest rate spread") and (ii) the relative
amounts of interest-earning assets and interest-bearing liabilities. The
Association's interest rate spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows. To a lesser extent, the Association's net income also is affected by the
level of noninterest expenses such as compensation and employee benefits and
FDIC insurance premiums.

     The operations of the Association are significantly affected by prevailing
economic conditions, competition and the monetary, fiscal and regulatory
policies of governmental agencies. Lending activities are influenced by the
demand for and supply of housing, competition among lenders, the level of
interest rates and the availability of funds. Deposit flows and costs of funds
are influenced by prevailing market rates of interest, primarily on competing
investments, account maturities and the levels of personal income and savings in
the Association's market area.

Asset/Liability Management

     The Association's asset/liability management strategy has been to emphasize
shorter term loans and develop a deposit portfolio of transaction accounts.
Beginning in late fiscal 1999 the Association began selling long-term fixed rate
loans in the secondary market. The Association's business plan calls for
continued emphasis on shorter term, adjustable rate loans and sales of long-term
fixed rate loans.

     As noted above, the Association is seeking to reduce its exposure to
changes in interest rates by originating shorter term consumer and commercial
business loans with maturities of no more than 10 years and by selling long-term
fixed rate loans. The matching of the Association's assets and liabilities may
be analyzed by examining the extent to which its assets and liabilities are
interest rate sensitive and by monitoring the expected effects of interest rate
changes on the Association's net interest income.

     An asset or liability is interest rate sensitive within a specific time
period if it will mature or reprice within that time period. If the
Association's assets mature or reprice more quickly or to a greater extent than
its liabilities, the Association's net portfolio value and net interest income
would tend to increase during periods of rising interest rates but decrease
during periods of falling interest rates. If the Association's assets mature or
reprice more slowly or to a lesser extent than its liabilities, the
Association's net portfolio value and net interest income would tend to decrease
during periods of rising interest rates but increase during periods of falling
interest rates. As a result of the interest rate risk inherent in the historical
savings institution business of originating long-term loans funded by short-term
deposits, the Association has pursued certain strategies designed to decrease
the vulnerability of its earnings to material and prolonged changes in interest
rates.

                                       5
<PAGE>

Interest Rate Sensitivity Analysis

     The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific period if it
will mature or reprice within that period. The interest rate sensitivity gap is
defined as the difference between the amount of interest-earning assets maturing
or repricing within a specific time period and the amount of interest-bearing
liabilities maturing or repricing within that time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of
interest rate sensitive liabilities, and is considered negative when the amount
of interest rate sensitive liabilities exceeds the amount of interest rate
sensitive assets.

     Generally, during a period of rising interest rates, a negative gap would
be expected to adversely affect net interest income while a positive gap would
be expected to result in an increase in net interest income, while conversely
during a period of declining interest rates, a negative gap would be expected to
result in an increase in net interest income and a positive gap would be
expected to adversely affect net interest income. As noted above, the
Association is attempting to improve its significant negative gap by emphasizing
the origination of shorter-term consumer and commercial business loans, and by
investing a portion of the net proceeds of the Conversion in adjustable-rate
mortgage-backed securities.

     Net Portfolio Value. In recent years, the Association has measured its
interest rate sensitivity by computing the "gap" between the assets and
liabilities which were expected to mature or reprice within certain periods,
based on assumptions regarding loan prepayment and deposit decay rates formerly
provided by the OTS. However, the OTS now requires the computation of amounts by
which the net present value of an institution's cash flows from assets,
liabilities and off balance sheet items (the institution's net portfolio value,
or "NPV") would change in the event of a range of assumed changes in market
interest rates. These computations estimate the effect on an institution's NPV
from instantaneous and permanent 1% to 3% increases and decreases in market
interest rates. In the Association's interest rate sensitive policy, the Board
of Directors has established a maximum decrease in net interest income and
maximum decreases in NPV given these instantaneous changes in interest rates.

     The following table sets forth the interest rate sensitivity of the
Association's net portfolio value as of June 30, 1999 in the event of 1%, 2% and
3% instantaneous and permanent increases and decreases in market interest rates,
respectively. These changes are set forth below as basis points, where 100 basis
points equals one percentage point.

<TABLE>
<CAPTION>
                         Net Portfolio Value                NPV as % of Portfolio Value of Assets
      Change        ------------------------------          -------------------------------------
     in Rates       $ Amount  $ Change   % Change           NPV Ratio          Basis Point Change
     --------       --------  ---------  ---------          ----------         ------------------
                       (Dollars in thousands)
     <S>            <C>       <C>        <C>                <C>                <C>
     + 300 bp       $ 12,940     (3,558)       (22)%             11.92%              (246)  bp
     + 200 bp         14,314     (2,184)       (13)              12.93               (146)  bp
     + 100 bp         15,572       (926)        (6)              13.80                (59)  bp
         0 bp         16,498                                     14.38
     - 100 bp         16,882        384          2               14.55                 16   bp
     - 200 bp         17,017        518          3               14.52                 13   bp
     - 300 bp         17,163        665          4               14.49                 10   bp
</TABLE>

                                       6
<PAGE>

     The following table sets forth the interest rate risk capital component for
the Association at June 30, 1999 given a hypothetical 200 basis point rate
change in market interest rates.

                                                                  June 30, 1999
                                                                  -------------

Pre-shock NPV Ratio: NPV as % of Portfolio Value of Assets........     14.38%
Exposure Measure: Post-Shock NPV Ratio............................     12.93%
Sensitivity Measure: Change in NPV Ratio..........................       146 bp

     Computations of prospective effects of hypothetical interest rate changes
are based on numerous assumptions, including relative levels of market interest
rates and loan prepayments, and should not be relied upon as indicative of
actual results. Further, the computations do not contemplate any actions the
Association may undertake in response to changes in interest rates.

     Certain shortcomings are inherent in the method of analysis presented in
both the computation of NPV and in the analysis presented in prior tables
setting forth the maturing and repricing of interest-earning assets and
interest-bearing liabilities. For example, although certain assets and
liabilities may have similar maturities or periods to repricing, they may react
in differing degrees to changes in market interest rates. The interest rates on
certain of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other assets and liabilities may lag
behind changes in market rates. Based on the above, net interest income should
decline with instantaneous increases in interest rates while net interest income
should increase with instantaneous declines in interest rates. Further, in the
event of a change in interest rates, prepayment and early withdrawal levels
would likely deviate significantly from those assumed in the tables.

     The Association originates fixed-rate and variable-rate real estate loans
and has historically held most loans in portfolio until maturity. Because the
Association's interest-bearing liabilities which mature or reprice within short
periods substantially exceed its earning assets with similar characteristics,
material and prolonged increases in interest rates generally would adversely
affect net interest income, while material and prolonged decreases in interest
rates generally, but to a lesser extent because of their historically low
levels, would have the opposite effect.

Average Balance, Interest and Average Yields and Rates

     The following table sets forth certain information relating to the
Association's average interest-earning assets and interest-bearing liabilities
and reflects the average yield on assets and average cost of liabilities for the
periods and at the date indicated. Such yields and costs are derived by dividing
income or expense by the average monthly balance of assets or liabilities,
respectively, for the periods presented. Management does not believe that the
use of month-end balances instead of daily balances has caused any material
difference in the information presented.

     The table also presents information for the periods and at the date
indicated with respect to the difference between the average yield earned on
interest-earning assets and average rate paid on interest-bearing liabilities,
or "interest rate spread," which savings institutions have traditionally used as
an indicator of profitability. Another indicator of an institution's net
interest income is its "net yield on interest-earning assets," which is its net
interest income divided by the average balance of interest-earning assets. Net
interest income is affected by the interest rate spread and by the relative
amounts of interest-earning assets and interest-bearing liabilities. When
interest-earning assets approximate or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income.

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                   Year Ended June 30,
                                                               ----------------------------------------------------------
                                                                            1999                          1998
                                                 At June 30,   ----------------------------  ----------------------------
                                                   1999
                                             -----------------                       Average                      Average
                                                       Yield/   Average              Yield/  Average              Yield/
                                             Balance   Cost     Balance  Interest     Cost   Balance  Interest     Cost
                                             -------  -------  --------  ---------  -------  -------  ---------  --------
                                                                       (Dollars in thousands)
<S>                                          <C>      <C>      <C>       <C>        <C>      <C>      <C>        <C>
Interest-earning assets:
 Interest-bearing deposits.................  $  4,410    4.55%  $  6,596   $   305     4.62%  $ 6,502   $   275      4.23%
 Investments...............................     4,840    6.30      5,386       336     6.24     6,030       410      6.80
 Loans.....................................    98,433    8.55     91,363     7,895     8.64    70,706     6,348      8.98
                                             --------           --------   -------            -------   -------
Total interest-earning assets..............   107,683    8.28    103,345     8,536     8.26    83,238     7,033      8.45
                                                                           -------                      -------
Non-interest-earning assets................     6,331              4,702                        5,293
                                             --------           --------                      -------
Total assets...............................  $114,014           $108,047                      $88,531
                                             ========           ========                      =======

Interest-bearing liabilities:
 Savings deposits..........................  $ 72,604    3.82   $ 68,888   $ 2,686     3.90   $61,096   $ 2,394      3.92
 FHLB advances.............................    22,685    5.97     20,573     1,234     6.00    14,055       872      6.20
                                             --------           --------   -------            -------   -------
Total interest-bearing liabilities.........    95,289    4.33     89,461     3,920     4.38    75,151     3,266      4.35
                                                                           -------                      -------
Non-interest bearing liabilities...........       697                364                          863
                                             --------           --------                      -------
Total liabilities..........................    95,986             89,825                       76,014
Equity.....................................    18,028             18,222                       12,517
                                             --------           --------                      -------
Total liabilities and equity...............  $114,614           $108,047                      $88,531
                                             ========           ========                      =======

Net interest income........................                                $ 4,616                      $ 3,767
                                                                           =======                      =======
Net interest rate spread (1)...............              4.47%                         3.88%                         4.10%
                                                         ====                          =====                         =====
Net interest\dividend earning assets.......                     $ 13,884                      $ 8,087
                                                                ========                      =======
Net interest margin (2)....................                                            4.47%                         4.53%
                                                                                       =====                         =====
Average interest-earning assets to
 average interest-bearing liabilities (3)..                                 115.52%                      110.76%
                                                                           =======                      =======
</TABLE>

__________________
(1)  Net interest rate spread represents the difference between the average
     yield on interest-earning assets and the average rate on interest-bearing
     liabilities.
(2)  Net interest margin represents net interest income divided by average
     interest-earning assets.
(3)  Due to the immaterial amount of non-accruing loans, the balances of such
     loans have been included as interest-earning assets.

                                       8
<PAGE>

Rate/Volume Analysis

     The following table sets forth certain information regarding changes in
interest income and interest expense of the Association for the periods
indicated. For each category of interest-earning asset and interest-bearing
liability, information is provided on changes attributable to: (i) changes in
volume (changes in volume multiplied by old rate); (ii) changes in rate (changes
in rate multiplied by old volume); and (iii) changes in rate/volume (changes in
rate multiplied by changes in volume).

<TABLE>
<CAPTION>
                                                                 Year Ended June 30,
                                                       -----------------------------------------
                                                            1999         vs.         1998
                                                       -----------------------------------------
                                                              Increase (Decrease) Due to
                                                       -----------------------------------------
                                                                                Rate/
                                                       Volume    Rate           Volume    Total
                                                       ------    -----          ------    ------
                                                                    (In thousands)
<S>                                                    <C>       <C>            <C>       <C>
Interest-earning assets:
 Interest-bearing deposits.............                $    4    $  25            $  1    $   30
 Investments...........................                   (44)     (34)              4       (74)
 Loans.................................                 1,855     (240)            (68)    1,547
                                                       ------    -----            ----    ------
  Total interest-earning assets........                 1,815     (249)            (63)    1,503
                                                       ------    -----            ----    ------

Interest-bearing liabilities:
 Deposits..............................                   305      (12)             (1)      292
 FHLB advances.........................                   404      (28)            (14)      362
                                                       ------    -----            ----    ------
   Total interest-bearing liabilities..                   709      (40)            (15)      654
                                                       ------    -----            ----    ------

 Increase (decrease) in net interest
  income...............................                $1,106    $(209)           $(48)   $  849
                                                       ======    =====            ====    ======
</TABLE>

Comparison of Financial Condition at June 30, 1999 and June 30, 1998

     The Company's total assets increased by $13.4 million or 13.32% from $100.6
million at June 30, 1998 to $114.0 million at June 30, 1999. The increase in
assets was due to loan growth of $17.1 million. The loan growth was partially
offset by decreases in cash and amounts due from banks, interest-bearing
deposits and mortgage-backed securities.

     Net loans totaled $98.4 million at June 30, 1999 and $81.4 million at June
30, 1998. The majority of the increase occurred in residential mortgage loans,
which increased $8.6 million. In addition to the growth in residential loans,
auto loans increased $3.6 million, commercial loans increased $2.5 million, and
commercial real estate loans increased $3.6 million. The growth in loans is due
to significant refinancing of residential mortgage loans due to low mortgage
interest rates, seasonal commercial borrowing, and a strong local economy. The
increase would have been greater without residential loan sales of $5.7 million.
The loan sales occurred during the last quarter of the year. The Association
began a new program of ongoing sales of new fixed rate residential loans to the
Federal Home Loan Mortgage Corporation ("FHLMC"). The sales began in order to
manage interest rate risk, compete with mortgage companies and increase fee
income.

     The allowance for loan losses totaled $909,000 at June 30, 1999 and
$751,000 at June 30, 1998. As of those dates the non-performing loans in the
Association's portfolio were $275,000 and $392,000, respectively. The total non-

                                       9
<PAGE>

performing loans at June 30, 1999 included 20 loans secured by single family
residences, business equipment and autos. The largest non-performing loan
balance was $74,000. There were $86,000 of loans charged off and $14,000 of
recoveries of previous loan losses during the year ended June 30, 1999. The
determination of the allowance for loan losses is based on management's
analysis, performed on a quarterly basis, of various factors, including the
market value of the underlying collateral, growth and composition of the loan
portfolio, the relationship of the allowance for loan losses to outstanding
loans, historical loss experience, delinquency trends and prevailing economic
conditions. Although management believes its allowance for loan losses is
adequate, there can be no assurance that additional alllowances will not be
required or that losses on loans will not be incurred. The Company has had
minimal losses on loans in prior years. At June 30, 1998 and 1999, the ratio of
the allowance for loan losses to net loans was .92%.

     At June 30, 1999, the Company's investment portfolio included mortgage-
backed securities and local municipal bonds classified as "held to maturity"
carried an amortized cost of $3.6 million and an estimated fair value of $3.7
million. The balance of the Company's investment portfolio at June 30, 1999
consists of interest bearing deposits with various financial institutions
totaling $4.4 million, a decrease of $2.6 million since June 30, 1998. The
decrease was used to fund loan growth.

     During the year ended June 30, 1999 deposits increased by 14.47% to $72.6
million at June 30, 1999 from $63.4 million at June 30, 1998. The increase was
used to fund loan growth. Management is continually evaluating the investment
alternatives available to the Company's customers, and adjusts the pricing on
its savings products to maintain its existing deposits.

     Advances from the Federal Home Loan Bank increased to $22.7 million at June
30, 1999, from $17.9 million at June 30, 1998. The increase was used to fund
loan growth.

     The Company announced the commencement of a stock repurchase program on May
24, 1999. The program will acquire up to 10% of the Company's outstanding common
stock. At June 30, 1999 the Company had repurchased 23,781 shares at a total
cost of $285,000. The Company repurchased an additional 14,000 shares in July
1999 at a cost of $172,000.

Comparison of Operating Results for the Year Ended June 30, 1999 and 1998

     Net Income. The Company's net income for the year ended June 30, 1999 was
$840,000 compared to $653,000 for the year ended June 30, 1998. The increase in
net income resulted primarily from increased interest income. The increase in
interest income offset increases in compensation and benefit expenses, Company
legal and accounting expenses, and other expenses due to growth.

     Net Interest Income. Net interest income for the year ended June 30, 1999
was $4.6 million compared to $3.8 million for the year ended June 30, 1998. The
increase is attributed to increased interest earned on interest earning assets
due to loan growth, less the increase in interest expense due to the increase in
interest bearing liabilities. The increase in interest earning assets offset a
decrease in the interest rate spread from 4.10% for the year ended June 30, 1998
to 3.88% for the year ended June 30, 1999. The decrease in the interest rate
spread was caused by a decrease in the average yield on interest earning assets
from 8.45% for the year ended June 30, 1998 to 8.26% for the year ended June 30,
1999. The decrease in yields reflects the significant refinancing activity of
residential mortgage loans to lower rates. The interest rate spread was also
affected by a slight increase in the average cost of interest bearing
liabilities from 4.35% for the year ended June 30, 1998 to 4.38% for the year
ended June 30, 1999. This increase reflects an increased reliance on FHLB
advances which have higher rates than deposits.

     Allowance for Loan Losses. The provision for loan losses for the year ended
June 30, 1999 was $230,000 as compared to $219,000 for the year ended June 30,
1998. The provision during the years ended June 30, 1998 and 1999 reflect the
mix of loans being made and the need to maintain an adequate balance in the
allowance for loan losses.

                                      10
<PAGE>

     Non-Interest Expenses. The non-interest expenses for the year ended June
30, 1999 were $3.2 million compared to $2.6 million for the year ended June 30,
1998. The increase was due to higher compensation and benefit expenses
associated with the adoption of a Management Recognition Plan, additional
employees, Company legal and accounting expenses, higher data processing, and
other expenses associated with growth and with becoming a publicly-owned
company.

     Dividends Paid. The Company paid a $0.40 per share dividend during the year
ended June 30, 1999 compared to $0.075 per share during the year ended June 30,
1998.

Liquidity and Capital Resources

     The Company's primary sources of funds consists of deposits, repayment of
loans and mortgage-backed securities, maturities of investments and interest-
bearing deposits, and funds provided form operations. While scheduled repayments
of loans and mortgage-backed securities and maturities of investment securities
are predicable sources of funds, deposit flows and loan prepayments are greatly
influenced by the general level of interest rates, economic conditions and
competition. The Company uses its liquidity resources principally to fund
existing and future loan commitments, to fund maturing certificates of deposit
and demand deposit withdrawals, to invest in other interest-earning assets, to
maintain liquidity, and to meet operating expenses. Management believes that
proceeds from loan repayments and other sources of funds will be adequate to
meet the Company's liquidity needs for the immediate future.

     The Association is required to maintain minimum levels of liquid assets as
defined by OTS regulations. This requirement, which may be varied at the
direction of the OTS depending upon economic conditions and deposit flows, is
based upon a percentage of deposits and short-term borrowings. The required
minimum ratio was 5% until November 24, 1997 when the requirement was lowered to
4%. The Association has historically maintained a level of liquid assets in
excess of regulatory requirements. The Association's liquidity ratios at June
30, 1999 and 1998 were 4.93% and 5.92%, respectively.

Year 2000 Readiness Disclosure

     The Company is continually evaluating the potential effect of the year 2000
on its information processing systems. Because critical computer systems and
software are vendor maintained, the Company is not directly involved with
programming changes or application upgrades. The Company expects the providers
to be compliant on a timely basis and is testing the compliance efforts. The
Association's primary data processor has indicated that renovations to their
system for year 2000 compliance are complete. The Association tested the system
in September 1998 in a year 2000 environment and did not encounter any problems.
The Association will continue to test this system as well as other critical
systems during 1999. The primary data processor has substantially completed
testing the interfaces they have with other systems for year 2000 compliance.
The data processor has not encountered Year 2000 problems with these tests. It
is management's opinion that the modifications will not have a material effect
on the Company's financial position. All costs associated with modifications
will be expensed as incurred.

     The Association has developed a contingency and business resumption plan in
case critical systems are not year 2000 ready or fail in the year 2000. The plan
has identified alternative means of operations in case a system is not expected
to be year 2000 ready by a certain date or malfunctions in the year 2000. The
disaster plan for the majority of the systems includes pre-year 2000 procedures
as well as post-year 2000 procedures. The pre-year 2000 procedures include
having customer information, forms and software available for critical systems.
The post-year 2000 procedures have been developed to identify alternatives if
critical systems fail in the year 2000. Depending on the problems encountered in
the post-year 2000 environment, the contingency and business resumption plan
includes working from a manual basis to a fully functioning basis. The plan is
reviewed on an ongoing basis.

                                      11
<PAGE>

Impact of Inflation and Changing Prices

     The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and results of operations in terms
of historical dollars without considering changes in the relative purchasing
power of money over time because of inflation. Unlike most industrial companies,
virtually all of the asset and liabilities of the Company are monetary in
nature. As a result, interest rates have a more significant impact on the
Company's performance than the effects of general levels of inflation. Interest
rates do not necessarily move in the same direction or in the same magnitude as
the prices of goods and services.

Impact of New Accounting Standards

     Accounting For Derivatives and Similar Financial Instruments and For
Hedging Activities. In June 1998, the Financial Accounting Standards Board
issued Statement No. 133, which was subsequently amended by Statement No. 137
regarding the effective date. The Statement requires all derivatives to be
measured at fair value and to be recognized as either assets or liabilities in
the statement of financial condition, and is effective for fiscal years
beginning after June 15, 2000. Management, at this time, has not determined the
impact of adopting this statement on July 1, 2000.

     Accounting for Mortgage-Backed Securities Retained after the Securitization
of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise. In October
1998, the Financial Accounting Standards Board issued Statement No. 134. The
Statement amends Financial Accounting Standards No. 65. Requiring the
classification of any retained mortgage-backed securities as trading securities
if the entity commits to sell the securities before or during the securitization
process. The Company adopted this pronouncement effective January 1, 1999, and
it did not have an effect on the Company.

                                      12
<PAGE>

                       CONSOLIDATED FINANCIAL STATEMENTS
                  HIGH COUNTRY BANCORP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>

                                                                                    Page
<S>                                                                                 <C>
Independent Auditors' Report                                                        14

Consolidated Statements of Financial Condition as of June 30, 1999 and 1998         15

Consolidated Statements of Income for the Years Ended June 30, 1999 and 1998        16

Consolidated Statements of Equity for the Years Ended June 30, 1999 and 1998        17

Consolidated Statements of Cash Flows for the Years Ended June 30, 1999 and 1998    18

Notes to Consolidated Financial Statements                                          19
</TABLE>

                                      13
<PAGE>

            [LETTERHEAD OF GRIMSLEY, WHITE & COMPANY APPEARS HERE]






                         INDEPENDENT AUDITORS' REPORT


Board of Directors
High Country Bancorp, Inc.
Salida, Colorado

We have audited the accompanying consolidated statements of financial condition
of High Country Bancorp, Inc. as of June 30, 1999 and 1998, and the related
consolidated statements of income, equity, and cash flows for the years then
ended.  These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of High Country
Bancorp, Inc. as of June 30, 1999 and 1998 and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.


                                        /s/ GRIMSLEY, WHITE & COMPANY
                                        GRIMSLEY, WHITE & COMPANY



La Junta, Colorado
August 12, 1999

                                      14

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                            JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                            ASSETS                                                       1999              1998
                                                                                    --------------    --------------
<S>                                                                                 <C>               <C>
Cash and amounts due from banks                                                     $    2,248,971    $    2,999,284
Interest- bearing deposits at other institutions                                         4,409,949         6,963,130
Mortgage-backed securities, held to maturity                                             3,328,789         4,326,603
Securities held to maturity                                                                310,000           310,000
Loans receivable - net                                                                  98,433,182        81,359,296
Federal Home Loan Bank stock, at cost                                                    1,201,300         1,065,500
Accrued interest receivable                                                                801,223           699,982
Property and equipment, net                                                              2,863,725         2,475,773
Mortgage servicing rights                                                                   22,496            29,856
Prepaid expenses and other assets                                                          386,664           359,231
Deferred income taxes                                                                        7,400                 -
                                                                                    --------------    --------------

            TOTAL ASSETS                                                            $  114,013,699    $  100,588,655
                                                                                    ==============    ==============

                    LIABILITIES AND EQUITY
LIABILITIES
Deposits                                                                            $   72,604,408    $   63,424,713
Advances by borrowers for taxes and insurance                                               18,015            92,954
Accounts payable and other liabilities                                                     656,030           566,641
Advances from Federal Home Loan Bank                                                    22,685,000        17,890,000
Accrued income taxes payable                                                                22,014           288,140
Deferred income taxes                                                                            -            47,300
                                                                                    --------------    --------------

            TOTAL LIABILITIES                                                           95,985,467        82,309,748
                                                                                    --------------    --------------

Commitments and contingencies

EQUITY
Preferred stock- $.01 par value; authorized 1,000,000
   shares; no shares issued or outstanding                                                       -                 -
Common stock-$.01 par value; authorized 3,000,000 shares;
   issued and outstanding 1,298,719 (1999)and 1,322,500 shares (1998)                       12,987            13,225
Paid-in capital                                                                         12,426,953        12,690,438
Retained earnings - substantially restricted                                             6,868,120         6,519,509
Note receivable from ESOP Trust                                                           (838,465)         (944,265)
Deferred MRP stock awards                                                                 (441,363)                -
                                                                                    --------------    --------------

            TOTAL EQUITY                                                                18,028,232        18,278,907
                                                                                    --------------    --------------

            TOTAL LIABILITIES AND EQUITY                                            $  114,013,699    $  100,588,655
                                                                                    ==============    ==============
</TABLE>

                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      15

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                       CONSOLIDATED STATEMENTS OF INCOME

                      YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                            1999            1998
                                                                                        ------------    ------------
<S>                                                                                     <C>             <C>
Interest Income
      Interest on loans                                                                 $  7,895,000    $  6,348,304
      Interest on securities held-to-maturity                                                254,651         332,951
      Interest on other interest- bearing assets                                             385,997         351,549
                                                                                        ------------    ------------

                  Total interest income                                                    8,535,648       7,032,804
                                                                                        ------------    ------------
Interest Expense
      Deposits                                                                             2,686,082       2,393,811
      Federal Home Loan Bank advances                                                      1,234,111         872,049
                                                                                        ------------    ------------

                  Total interest expense                                                   3,920,193       3,265,860
                                                                                        ------------    ------------

                  Net interest income                                                      4,615,455       3,766,944
Provision for losses on loans                                                                229,781         219,360
                                                                                        ------------    ------------
                  Net income after provision
                        for loan losses                                                    4,385,674       3,547,584
                                                                                        ------------    ------------

Noninterest Income
      Service charges on deposits                                                            142,878         139,215
      Other                                                                                   46,504          18,561
                                                                                        ------------    ------------

                  Total noninterest income                                                   189,382         157,776
                                                                                        ------------    ------------

Noninterest Expense
     Compensation and benefits                                                             1,865,538       1,505,658
     Occupancy and equipment                                                                 643,524         562,198
     Insurance and professional fees                                                         237,383         131,732
     Other                                                                                   481,784         425,021
                                                                                        ------------    ------------

                  Total noninterest expense                                                3,228,229       2,624,609
                                                                                        ------------    ------------

                  Income before income taxes                                               1,346,827       1,080,751

                  Income tax expense                                                         507,304         428,208
                                                                                        ------------    ------------

                  Net income                                                            $    839,523    $    652,543
                                                                                        ============    ============

Basic Earnings Per Common Share (1998 earnings
  based on income allocated from December 9, 1997)                                      $       0.69    $       0.32
                                                                                        ============    ============
Diluted Earning Per Common Share                                                        $       0.69    $       0.32
                                                                                        ============    ============
Weighted Average Common Shares Outstanding
      Basic                                                                                1,220,410       1,272,280
      Diluted                                                                              1,220,410       1,272,280
Dividends Paid Per Share                                                                $      0.400    $      0.075
</TABLE>
                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      16

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                       CONSOLIDATED STATEMENTS OF EQUITY

                      YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                         NOTE           DEFERRED
                                       COMMON         PAID-IN          RETAINED       RECEIVABLE          STOCK
                                       STOCK          CAPITAL          EARNINGS          ESOP            AWARDS
                                    -----------     -----------      -----------     -----------     -----------
<S>                                 <C>             <C>              <C>             <C>             <C>
BALANCES JUNE 30, 1997              $         -     $         -      $ 5,958,220     $         -     $         -

     Net income                                                          652,543

     Proceeds from issuance of
     stock net of conversion
     costs of $570,716                   13,225      11,583,059

     Purchase of common stock
     by ESOP                                          1,058,000                        1,058,000

     ESOP contribution                                   49,379

     ESOP note payment                                                                  (105,800)

     Dividends paid                                                      (91,254)         (7,935)

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

BALANCES JUNE 30, 1998                   13,225      12,690,438        6,519,509         944,265               -

     Net income                                                          839,523

     Management recognition
     plan stock purchase                                                                                 551,721

     MRP stock awards                                                                                   (110,358)

     ESOP contribution                                   21,596

     ESOP note payment                                                                  (105,800)

     Stock purchased and
     retired                               (238)       (285,081)

     Dividends paid                                                     (490,912)

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

BALANCES JUNE 30, 1999              $    12,987     $12,426,953      $ 6,868,120     $   838,465     $   441,363
                                    ===========     ===========      ===========     ===========     ===========
</TABLE>

                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      17

<PAGE>

                           HIGH COUNTRY BANCORP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                       YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                     1999            1998
                                                                                --------------   -------------
<S>                                                                             <C>              <C>
Operating Activities
      Net income                                                                $      839,523   $     652,543
      Adjustments to reconcile net income to net cash provided
            by operating activities:
      Amortization of:
            Deferred loan origination fees                                            (102,655)       (131,269)
            Premiums on investments                                                     13,955          18,814
      Compensation expense on ESOP share                                               105,800               -
      Compensation expense on Management Recognition Plan                              110,358               -
      Stock dividend received from FHLB                                                (80,100)        (77,000)
      ESOP market value expense                                                         21,596         163,114
      Provision for losses on loans                                                    230,000         219,900
      Deferred income taxes                                                            (54,700)        (27,300)
      Depreciation                                                                     189,212         182,594
      Income taxes                                                                    (266,126)        288,140
      Net change in miscellaneous assets                                              (121,314)         (3,801)
      Net change in miscellaneous liabilities                                           89,389          74,712
                                                                                --------------   -------------

            Net cash provided by operating activities                                  974,938       1,360,447
                                                                                --------------   -------------

Investing Activities
      Net change in loans receivable                                               (17,201,231)    (18,321,063)
      Purchase of securities-held-to-maturity                                                -        (310,000)
      Principal repayments of mortgage-backed securities-held-to-maturity              983,859         994,345
      Purchase of Federal Home Loan Bank stock                                         (55,700)              -
      Purchases of property and equipment                                             (577,164)       (150,969)
      Purchase of Management Recognition Plan Stock                                   (551,721)              -
                                                                                --------------   -------------

            Net cash used by investing activities                                  (17,401,957)    (17,787,687)
                                                                                --------------   -------------

Financing Activities
      Issuance of common stock                                                               -      11,596,284
      Net change in deposits                                                         9,179,695       7,272,535
      Net change in mortgage escrow funds                                              (74,939)        (34,221)
      Purchase of common stock                                                        (285,319)              -
      Cash dividends paid                                                             (490,912)        (91,254)
      Proceeds (payment) on FHLB advances                                            4,795,000       4,370,000
                                                                                --------------   -------------

              Net cash provided by financing activities                             13,123,525      23,113,344
                                                                                --------------   -------------

              Net increase (decrease) in cash and cash equivalents                  (3,303,494)      6,686,104

Cash and cash equivalents, beginning                                                 9,962,414       3,276,310
                                                                                --------------   -------------

Cash and cash equivalents, ending                                               $    6,658,920   $   9,962,414
                                                                                ==============   =============

Supplemental disclosure of cash flow information

Cash paid for:
     Taxes                                                                      $      828,130   $     167,368
     Interest                                                                        3,909,387       3,261,885
</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       18



<PAGE>


                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -1   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          The following is a description of the more significant accounting
          policies which High Country Bancorp, Inc. ( the Company and its wholly
          owned subsidiary Salida Building and Loan Association (the
          Association) follow in preparing and presenting the consolidated
          financial statements.

          Basis of Presentation

          The consolidated financial statements include the accounts of the
          Company and its wholly owned subsidiary Salida Building and Loan
          Association. All significant intercompany accounts and transactions
          have been eliminated.

          Organization

          Salida Building and Loan Association (the Association) is a federally
          chartered association with its main office in Salida, Colorado and
          branch offices in Leadville and Buena Vista, Colorado. The Association
          provides a variety of financial services to the area it serves. Its
          primary deposit products are interest-bearing checking accounts and
          certificates of deposit, and its primary lending products are real
          estate mortgages, consumer and commercial loans.

          The Company's purpose is to act as a holding company with the
          Association as its sole subsidiary. The Company's principal business
          is the business of the Association and holding investments.

          Savings deposits of the Association are insured by the Federal Deposit
          Insurance Corporation ("FDIC") up to certain limitations. The
          Association pays a premium to FDIC for the insurance of such savings.

          Use of Estimates

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

          Investment Securities and Mortgage-Backed Securities

          Securities Held to Maturity. Bonds and notes for which the Company has
          the positive intent and ability to hold to maturity are reported at
          cost, adjusted for premiums and discounts that are recognized in
          interest income using the interest method over the period to maturity.

          Securities Available for Sale. Available-for-sale securities consist
          of bonds and notes not classified as trading securities nor as
          held-to-maturity securities.

          Unrealized holding gains and losses, net of tax, on available-for-sale
          securities are reported as a net amount in a separate component of
          shareholders' equity until realized.

          Gains and losses on the sale of available-for-sale securities are
          determined using the specific-identification method.

          Declines in the fair value of individual held-to-maturity and
          available-for-sale securities below their cost that are other than
          temporary would result in write-downs of the individual securities to
          their fair value. Should the Company incur write-downs they will be
          included in earnings as realized losses.

          Premiums and discounts are recognized in interest income using the
          interest method over the period to maturity.


                                      19
<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -1   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Federal Home Loan Bank Stock

          The stock is an equity interest in the Federal Home Loan Bank of
          Topeka. The Association, as a member of the FHLB, is required to
          maintain an investment in capital stock of the FHLB. The stock is
          carried at cost, as its cost is assumed to equal its market value.
          FHLB stock can only be sold at par value to the FHLB or to another
          member institution. The FHLB declares cash and stock dividends. The
          stock dividends are recognized as income due to the fact they are
          redeemable at par value ($100 per share) from the FHLBs or another
          member institution.

          Loans

          Loans are stated at unpaid principal balances, less the allowance for
          loan losses, net of deferred loan fees and loans in process.

          Loan origination and commitment fees, as well as certain direct
          origination costs, are deferred and amortized as a yield adjustment
          over the lives of the related loans using the interest method.
          Amortization of deferred loan fees is discontinued when a loan is
          placed on nonaccrual status.

          Loans are placed on nonaccrual status when principal and interest is
          delinquent for 90 days or more. Uncollectible interest on these loans
          is charged off, or an allowance is established, based on management's
          periodic evaluation, by a charge to interest income equal to all
          interest previously accrued. Income is subsequently recognized only to
          the extent that cash payments are received.

          Management has determined that first mortgage loans on one-to-four
          family properties, home equity, second mortgage loans, and all
          consumer loans are large groups of smaller-balance homogenous loans
          that are collectively evaluated. Accordingly, such loans are outside
          the scope of Statement Nos. 114 and 118.

          Management considers an insignificant delay, which is determined as 90
          days by the Association, will not cause a loan to be classified as
          impaired. A loan is not impaired during a period of delay in payment
          if the Association expects to collect all amounts due including
          interest accrued at the contractual interest rate for the period of
          delay. All loans identified as impaired are evaluated independently by
          management.

          Allowance for Loan Losses

          The allowance for loan losses is maintained at a level which, in
          management's judgment, is adequate to absorb losses inherent in the
          loan portfolio. The amount of the allowance is based on management's
          evaluation of the collectibility of the loan portfolio, including the
          nature of the portfolio, credit concentrations, specific impaired
          loans, and economic conditions. The allowance is increased by a
          provision for loan losses, which is charged to expense, and reduced by
          charge-offs, net of recoveries. Such provisions are based on
          management's estimate of net realizable value or fair value of the
          collateral, as applicable. These estimates are susceptible to economic
          changes that could result in a material adjustment to results of
          operations in the near term. Recovery of the carrying value of such
          loans is dependent to a great extent on economic, operational, and
          other conditions that may be beyond the Association's control.

          Loan Servicing

          The cost of mortgage servicing rights is amortized in proportion to,
          and over the period of, estimated net servicing revenues. Impairment
          of mortgage servicing rights is assessed based on the fair value of
          those rights. Fair values are estimated using discounted cash flows
          based on a current market interest rate.

                                      20

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -1   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Property and Equipment

          Property and equipment are stated at cost less accumulated
          depreciation. Depreciation is calculated using primarily the straight-
          line method over the estimated useful lives of the related assets.
          Estimated useful lives of furniture, fixtures, and equipment range
          from two to ten years; buildings and improvements range from five to
          forty years.

          Income Taxes

          Income taxes are provided in accordance with SFAS No. 109, Accounting
          for Income Taxes. Under the provisions of SFAS No. 109, deferred tax
          assets and liabilities are recorded based on the differences between
          the financial statement and tax bases of assets and liabilities and
          the tax rates which will be in effect when these differences are
          expected to reverse. If appropriate, deferred tax assets are reduced
          by a valuation allowance which reflects expectations of the extent to
          which such assets will be realized. The Company and its subsidiary
          file individual income tax returns.

          Financial Instruments

          Off-balance sheet instruments. In the ordinary course of business the
          Association has entered into off-balance sheet financial instruments
          consisting of commitments to extend credit, and standby letters of
          credit. Such financial instruments are recorded in the financial
          statements when they are funded.

          Fair Values of Financial Instruments

          The following methods and assumptions were used by the Company in
          estimating fair values of financial instruments as disclosed herein:

          Cash and short-term instruments. The carrying amounts of cash and
          short-term instruments approximate fair values.

          Available-for-sale and held-to-maturity securities. Fair values for
          securities, excluding restricted equity securities, are based on
          quoted market prices. The carrying values of restricted equity
          securities approximate fair values.

          Loans receivable. For variable-rate loans that reprice frequently and
          have no significant change in credit risk, fair values are based on
          carrying-values. Fair values for mortgage loans, consumer loans,
          commercial real estate and commercial loans are estimated using
          discounted cash flow analysis, using interest rates currently being
          offered for loans with similar terms to borrowers of similar credit
          quality. Fair values for impaired loans are estimated using discounted
          cash flow analysis or underlying collateral values, where

          Deposit Liabilities. The fair values disclosed for demand deposits
          are, by definition, equal to the amount payable on demand at the
          reporting date. The carrying amounts of variable-rate, fixed-term
          money-market accounts and certificates of deposit (CDs) approximate
          their fair values at the reporting date. Fair values for fixed-rate
          CDs are estimated using a discounted cash flow calculation that
          applies interest rates currently being offered on certificates to a
          schedule of aggregated expected monthly maturities on time deposits.

          Advances from Federal Home Loan Bank. The fair values are based on the
          borrowing rates and remaining maturities.

          Cash Equivalents

          For the purpose of reporting cash flows, cash and cash equivalents
          include cash on hand, amounts due from banks, and interest-bearing
          deposits at other institutions. The Company considers all highly
          liquid debt instruments with original maturities of three months or
          less to be cash equivalents.

                                      21

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -1   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Earnings Per Share

          The Company adopted Financial Accounting Standards Board Statement No.
          128 relating to earnings per share, effective for the quarter ended
          December 31, 1997. The statement requires dual presentations of basic
          and diluted earnings per share on the face of the income statement.
          Basic EPS excludes dilution and is computed by dividing income
          available to common stockholders by the weighted-average number of
          common shares outstanding for the period. Diluted EPS reflects the
          potential dilution that could occur if securities or other contracts
          to issue common stock were exercised or converted into common stock or
          resulted in the issuance of common stock that then shares in the
          earnings of the entity.

          Advertising Costs

          Advertising costs are charged to expense as incurred.

NOTE -2   SECURITIES

          Securities are classified in categories and accounted for as follows:

          Mortgage-Backed Securities Held-to-Maturity

          The amortized cost and estimated fair value of mortgage-backed
          held-to-maturity securities at June 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                              Gross          Gross
                                              Amortized     Unrealized     Unrealized        Fair
               1999                             Cost          Gains          Losses          Value
          ---------------                    ----------     ----------     ---------      ----------
          <S>                                <C>            <C>            <C>            <C>
          Mortgage-backed securities
           GNMA certificates                 $  981,640     $    9,970     $       0      $  991,610
           FHLMC certificates                   772,886         15,151        (7,703)        780,334
           FNMA certificates                  1,574,263         16,282        (6,890)      1,583,655
                                             ----------     ----------     ---------      ----------
                                             $3,328,789     $   41,403     $ (14,593)     $3,355,599
                                             ==========     ==========     =========      ==========


                                                              Gross          Gross
                                              Amortized     Unrealized     Unrealized        Fair
               1998                             Cost          Gains          Losses          Value
          ---------------                    ----------     ----------     ---------      ----------
          <S>                                <C>            <C>            <C>            <C>
          Mortgage-backed securities
           GNMA certificates                 $1,325,924     $   21,024     $       0      $1,346,947
           FHLMC certificates                 1,046,346         23,616        (5,053)      1,064,910
           FNMA certificates                  1,954,333         31,532          (619)      1,985,246
                                             ----------     ----------     ---------      ----------
                                             $4,326,603     $   76,172     $  (5,672)     $4,397,103
                                             ==========     ==========     =========      ==========
</TABLE>

          Expected maturities will differ from contractual maturities because
          borrowers may have the right to call or prepay obligations with or
          without call or prepayment penalties.

          Securities Held-to-Maturity

          The amortized cost and estimated fair value of held-to-maturity
          securities are as follows:

<TABLE>
<CAPTION>
                                                              Gross          Gross
                                              Amortized     Unrealized     Unrealized        Fair
               1999                             Cost          Gains          Losses          Value
          ---------------                    ----------     ----------     ---------      ----------
          <S>                                <C>            <C>            <C>            <C>
          Chaffee County School
           District Bonds                    $  310,000     $      308     $       0      $  310,308
                                             ==========     ==========     =========      ==========


                                                              Gross          Gross
                                              Amortized     Unrealized     Unrealized        Fair
               1998                             Cost          Gains          Losses          Value
          ---------------                    ----------     ----------     ---------      ----------
          <S>                                <C>            <C>            <C>            <C>
          Chaffee County School
           District Bonds                    $  310,000     $        0     $  (1,747)     $  308,253
                                             ==========     ==========     =========      ==========
</TABLE>

                                      22

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -2   SECURITIES (Continued)

          The amortized cost and fair value of debt securities held-to-maturity
          as of June 30, 1999, by contractual maturity, is as follows:


                                                      Amortized      Fair
          Held-to-Maturity Debt Securities              Cost         Value
          --------------------------------            ---------    ---------
          Due after one year through five years       $ 310,000    $ 310,308
                                                      =========    =========

          At June 30, investments with a carrying value of $2,662,732 (1999) and
          $2,604,157 (1998) were pledged as collateral for deposits of public
          funds.

NOTE -3   LOANS RECEIVABLE

          Loans receivable at June 30, are summarized as follows

<TABLE>
<CAPTION>
                                                                   1999           1998
                                                               ------------   ------------
          <S>                                                  <C>            <C>
          Loans secured by real estate:
           One-to-four family residences                       $ 63,964,498   $ 55,330,494
           Commercial real estate                                 8,504,406      4,913,427
           Construction                                           4,468,486      5,228,459
           Land                                                   3,208,715      2,794,717
                                                               ------------   ------------
           Total Loans Secured by Real Estate                    80,146,105     68,267,097

          Consumer loans, net of discounts                       11,920,807      8,359,810
          Loans collateralized by savings accounts                  691,448      1,213,290
          Commercial loans                                        9,057,554      6,580,299
          Other loans                                                14,763        100,951
                                                               ------------   ------------
           Total Loans                                          101,830,677     84,521,447

          Less:
           Undisbursed portion of loans in process                1,953,837      1,937,636
           Deferred loan origination fees                           534,187        473,392
           Allowance for loan losses                                909,471        751,123
                                                               ------------   ------------
           Loans Receivable, Net                               $ 98,433,182   $ 81,359,296
                                                               ============   ============
</TABLE>

          The changes in the allowance for loan losses were as follows:

<TABLE>
<CAPTION>
                                                                   1999           1998
                                                               ------------   ------------
          <S>                                                  <C>            <C>
          Balance, beginning of year                           $    751,123   $    604,405
          Provision for losses                                      230,000        219,900
          Recoveries                                                 14,176         18,529
          Losses incurred                                           (85,828)       (91,711)
                                                               ------------   ------------
          Balance, end of year                                 $    909,471   $    751,123
                                                               ============   ============
</TABLE>

          At June 30, the Association had adjustable interest rate loans of
          approximately $4,713,000 (1999) and $5,380,000 (1998). The adjustable
          rate loans have interest rate adjustment limitations and are generally
          indexed to the 1-year U.S. Treasury Note rate or prime rate. Future
          market factors may affect the correlation of the interest rate
          adjustment with the rates the Association pays on the short-term
          deposits that have been primarily utilized to fund these loans.

          Loans for which interest accruals had been discontinued at June 30
          were approximately $275,000 (1999) and $392,000 (1998). If interest on
          these loans had been accrued, such interest would have increased
          income by immaterial amounts.

          As of June 30, 1999, $1,349,368 of loans had been pledged as
          collateral for deposits of public funds.

          Loans receivable at June 30 include loans to officers and directors of
          approximately $1,575,000 (1999) and $1,034,000 (1998). For the year
          ended June 30, 1999, $685,000 of new loans were made and payments of
          $194,000 were received.

                                      23


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -4   LOAN SERVICING

          Mortgage loans serviced for others are not included in the
          accompanying statements of financial condition. The unpaid principal
          balances of these loans at June 30 are summarized as follows:
<TABLE>
<CAPTION>
                                                              1999        1998
                                                          -----------  -----------
          <S>                                             <C>          <C>
          Mortgage loan portfolios serviced for:
            FHLMC                                         $ 5,184,915  $ 7,158,554
            Other investors                                         0       11,984
                                                          -----------  -----------
                                                          $ 5,184,915  $ 7,170,538
                                                          ===========  ===========
</TABLE>

          In connection with these loans serviced for others at June 30, the
          Association held borrowers' escrow balances of $1,709 (1999) and
          $14,747 (1998).

NOTE -5   ACCRUED INTEREST RECEIVABLE

          Interest receivable at June 30, relates to the following:
<TABLE>
<CAPTION>
                                                              1999        1998
                                                          -----------  -----------
          <S>                                             <C>          <C>
          Loans                                           $   778,010  $   667,985
          Mortgage-backed securities                           22,163       30,947
          Other investments                                     1,050        1,050
                                                          -----------  -----------

                                                          $   801,223  $   699,982
                                                          ===========  ===========
</TABLE>

NOTE - 6  PROPERTY AND EQUIPMENT

          Property and equipment and the related accumulated depreciation at
          June 30, are summarized as follows:
<TABLE>
<CAPTION>
                                                              1999        1998
                                                          -----------  -----------
          <S>                                             <C>          <C>
          Land and improvements                           $   526,942  $   325,235
          Buildings and improvements                        2,111,487    2,099,544
          Furniture, fixtures and equipment                   990,247      869,184
          Construction in progress                            231,863            0
                                                          -----------  -----------
                                                            3,860,539    3,293,963
          Less accumulated depreciation                      (996,814)    (818,190)
                                                          -----------  -----------

                                                          $ 2,863,725  $ 2,475,773
                                                          ===========  ===========
</TABLE>

          Depreciation expense for the years ended June 30, totaled $189,212
          (1999) and $182,594 (1998).

NOTE -7   DEPOSIT ACCOUNTS

          Deposit accounts at June 30 are summarized as follows:
<TABLE>
<CAPTION>
                                                                    1999                          1998
                                                          ------------------------     ------------------------
                                                                   Weighted                     Weighted
                                                                   Average                      Average
                                                             Amount        Rate           Amount       Rate
                                                          -----------  -----------     -----------  -----------
          <S>                                             <C>          <C>             <C>          <C>
          NOW accounts, including
            non-interest bearing
            deposits of $4,206,450 (1999)
            and $3,973,002 (1999)                         $18,197,360      1.35%       $14,773,320     1.19%
          Money market and
            savings accounts                               16,941,441      3.03%        15,158,899     3.00%
          Certificate accounts                             37,465,607      5.38%        33,492,494     5.65%
                                                          -----------                  -----------

                                                          $72,604,408                  $63,424,713
                                                          ===========                  ===========
</TABLE>
                                      24


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE -7   DEPOSIT ACCOUNTS (Continued)

          At June 30, 1999, scheduled maturities of the above certificate
          accounts are summarized as follows:

<TABLE>
<CAPTION>
                                                Year ending June 30,
                           -----------------------------------------------------------------
                                                                                   2004 and
                               2000        2001         2002         2003         thereafter
                           -----------  -----------  -----------   -----------   -----------
          <S>              <C>          <C>          <C>           <C>           <C>
          3.01-4.00        $   423,080
          4.01-5.00          7,345,368  $   628,884
          5.01-6.00         20,844,838    4,040,589  $   857,637   $   990,033
          6.01-7.00          1,240,614      255,600      100,000                 $   190,000
          7.01-8.00            225,197                   196,000        98,052        29,715
                           -----------  -----------  -----------   -----------   -----------

                           $30,079,097  $ 4,925,073  $ 1,153,637   $ 1,088,085   $   219,715
                           ===========  ===========  ===========   ===========   ===========
</TABLE>

          The aggregate amount of certificates of deposits with a minimum
          denomination of $100,000 at June 30, was $10,102,283 (1999) and
          $9,323,122 (1998).

          Deposits in excess of $100,000 are not insured by the Savings
          Association Insurance Fund (SAIF).

          Interest expense on deposits for the years ended June 30 is summarized
          as follows:

<TABLE>
<CAPTION>
                                                     1999         1998
                                                  -----------  -----------
          <S>                                     <C>          <C>
          NOW accounts                            $   182,585  $   126,212
          Money market and savings accounts           480,998      448,634
          Certificate accounts                      2,022,499    1,818,965
                                                  -----------  -----------

                                                  $ 2,686,082  $ 2,393,811
                                                  ===========  ===========
</TABLE>

NOTE -8   ADVANCES FROM FEDERAL HOME LOAN BANK

          Advances from the Federal Home Loan Bank (FHLB) at June 30 are
          summarized as follows:

<TABLE>
<CAPTION>
                                         Interest
                                           Rate        1999         1998
                                        ----------  -----------  -----------
          <S>                           <C>         <C>          <C>
          Maturing within one year      5.14-6.79%  $ 6,000,000  $ 4,500,000
          Maturing in 2001                5.46-6.%    3,760,000    3,000,000
          Maturing in 2002              5.74-6.80%            0    3,390,000
          Maturing in 2003              5.81-6.56%    5,000,000    5,000,000
          Maturing in 2004                   6.18%            0    1,000,000
          Maturing after 2004           5.42-6.18%    7,925,000    1,000,000
                                                    -----------  -----------

                                                    $22,685,000  $17,890,000
                                                    ===========  ===========
</TABLE>

          Pursuant to collateral agreements with the FHLB, advances are secured
          by a blanket pledge agreement with the FHLB which includes real estate
          loans and other non-pledged securities.


          At June 30, 1998, the Association had an approved line of credit of
          $10,000,000 with the FHLB which expired May 1, 1999. At June 30, 1999,
          the Association has an approved line of credit for $10,000,000 with
          the FHLB with an expiration date of April 28, 2000. No amount was
          drawn on the line of credit at June 30, 1999.

                                      25


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE -9   INCOME TAXES

          The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                1999        1998
                                                            -----------  -----------
          <S>                                               <C>          <C>
          Current                                           $   562,004  $   455,508
          Deferred                                              (54,700)     (27,300)
                                                            -----------  -----------

                                                            $   507,304  $   428,208
                                                            ===========  ===========
</TABLE>

          The effective tax rate on income before the provisions for income
          taxes differs from the federal statutory income tax rate of 34% for
          the following reasons:

<TABLE>
<CAPTION>
                                                                1999        1998
                                                            -----------  -----------
          <S>                                               <C>          <C>
          Provision for income taxes at statutory rate      $   457,900  $   367,500
          Nondeductible expenses for tax purposes                23,300       19,900
          State income taxes, net of federal income
            tax benefit                                          34,500       27,600
          Other, net                                             (8,396)      13,208
                                                            -----------  -----------

                                                            $   507,304  $   428,208
                                                            ===========  ===========

          Effective tax rates                                    38%          40%
</TABLE>

          Deferred income taxes reflect the net tax effects of temporary
          differences between the carrying amounts of assets and liabilities for
          financial reporting purposes and the amounts used for income tax
          purposes. The net deferred tax assets (liabilities) as of June 30, are
          as follows:

<TABLE>
<CAPTION>
                                                                1999        1998
                                                            -----------  -----------
          <S>                                               <C>          <C>
          Difference between tax basis and
          carrying basis of FHLB stock                      $  (185,300) $  (155,600)
          Tax depreciation in excess of
          financial statement amounts                           (83,900)     (83,700)
          Difference between tax basis and carrying
          basis of long term incentive plan                     117,500       99,900
          Loan loss allowance                                   159,100       92,100
                                                            -----------  -----------

                                                            $     7,400  $   (47,300)
                                                            ===========  ===========
</TABLE>

          The deferred tax expense (benefit) results from timing differences in
          the recognition of income and expense for tax and financial purposes.
          The sources and tax effects of these temporary timing differences are
          as follows:

<TABLE>
<CAPTION>
                                                                1999        1998
                                                            -----------  -----------
          <S>                                               <C>          <C>
          FHLB stock dividends                              $    29,700  $    28,500
          Accumulated depreciation                                  200        7,000
          Allowance for loan losses - net                       (67,000)     (50,600)
          Long-term incentive plan                              (17,500)     (12,200)
                                                            -----------  -----------

                                                            $   (54,700) $   (27,300)
                                                            ===========  ===========
</TABLE>

                                      26

<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE - 9  INCOME TAXES (Continued)

          The Association was in prior years permitted under the Internal
          Revenue Code to deduct an annual addition to reserve for bad debts in
          determining taxable income, subject to certain limitations. This
          deduction differed from the bad debt provision used for financial
          accounting purposes. Bad debt deductions for income tax purposes are
          included in taxable income of later years only if the bad debt reserve
          is used subsequently for purposes other than to absorb bad debt
          losses. Because the Association does not intend to use the reserve for
          purposes other than to absorb losses, no deferred income taxes have
          been provided. Retained earnings at June 30, 1999, includes
          approximately $1,169,000, representing such bad debt deductions for
          which no income taxes have been provided.

NOTE - 10 REGULATORY CAPITAL REQUIREMENTS

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

          Quantitative measures established by regulation to ensure capital
          adequacy require the Association to maintain minimum amounts and
          ratios as outlined below. Management believes, as of June 30, 1999.
          The Association meet all capital adequacy requirements to which it is
          subject.

          As of October 8, 1997, the most recent notification from Office of
          Thrift Supervision categorized the Association as well capitalized
          under the regulatory framework for prompt corrective action. To be
          well capitalized the Association must maintain minimum total risk-
          based, Tier I risk-based, and Tier I leverage ratios. There are no
          conditions or events since that notification that management believes
          have changed the institution's category.

          The following is a reconciliation of capital computed under generally
          accepted accounting principles (GAAP) to regulatory capital. OTS
          regulations specify minimum capital requirements for the Association.
          The following reconciliation also compares the capital requirements as
          computed to the minimum capital requirements for the Association, as
          of June 30.
<TABLE>
<CAPTION>
                                                       1999          1998
                                                   -----------   -----------
          <S>                                      <C>           <C>
          Equity Per GAAP                          $12,588,013   $12,291,128
          Less Servicing Rights Plus Valuations         (2,250)       (2,986)
                                                   -----------   -----------

          Equity Per GAAP- Tier I Capital           12,585,763    12,288,142
          Valuation Allowance                          909,471       748,000
                                                   -----------   -----------

          Regulatory Capital                       $13,495,234   $13,036,142
                                                   ===========   ===========
</TABLE>
                                      27
<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE - 10 REGULATORY CAPITAL REQUIREMENTS (Continued)

<TABLE>
<CAPTION>
                                                         Minimum Required      To Be Well Capitalized
                                                           For Capital        Under Prompt Corrective
                                        Actual          Adequacy Purposes        Action Regulations
                                  Amount      Ratio     Amount      Ratio         Amount       Ratio
                               ------------  -------  ----------  ----------  --------------  --------
           <S>                 <C>           <C>      <C>         <C>         <C>             <C>
           1999
           ----
           Total Capital
             (to Risk
             Weighted
             Assets)            $13,495,234   18.03%  $5,988,960       8.00%      $7,486,200    10.00%

           Tier I Capital
             (to Risk
             Weighted
             Assets)             12,585,763   16.81    2,245,860       3.00        4,491,720     6.00

           Tier I Capital
             (to Average
             Assets)             12,585,763   12.18    1,550,532       1.50        5,168,440     5.00

           Tangible Capital
             (to Tangible
             Assets)             12,585,763   11.31    1,668,638       1.50           N/A

           1998
           ----
           Total Capital
             (to Risk
             Weighted
             Assets)            $13,036,142   21.73%  $4,799,760       8.00%      $5,999,700    10.00%

           Tier I Capital
             (to Risk
             Weighted
             Assets)             12,288,142   20.48    1,799,910       3.00        3,599,820     6.00

           Tier I Capital
             (to Average
             Assets)             12,288,142   13.89    1,326,698       1.50        4,422,328     5.00

           Tangible Capital
             (to Tangible
             Assets)             12,288,142   13.00    1,082,820       1.50           N/A
</TABLE>

          The Association's management believes that, under the current
          regulations, the Association will continue to meet its minimum capital
          requirements in the coming year. However, events beyond the control of
          the Association, such as increased interest rates or a downturn in the
          economy in the Association's operating area, could adversely affect
          future earnings and, consequently, the ability of the Association to
          meet its future minimum capital requirements.

                                      28


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE - 11 BENEFIT PLANS

          The Association had a defined contribution plan (the Plan) for
          employees who have completed one year of service. The Association
          terminated the plan in December, 1997. Contributions to the Plan were
          $19,241 in 1998.

          The Association adopted a Long-Term Incentive Plan in June, 1997
          covering the directors and key employees of the Association. On June
          30 of each year following 1997 the participants will have a
          contribution made to their account providing the participant continues
          to be an employee or director of the Association. Prior to
          distribution under the terms of the Plan, each participant's account
          shall be credited with a rate of return, on any amounts previously
          credited, equal to the highest rate of interest paid by the
          Association on one-year certificates of deposit, or after conversion
          the rate of return will equal the dividend-adjusted rate of return on
          the common stock.

          Amounts credited to Participant's Accounts on the effective date and
          thereafter shall be fully vested. Account balances shall be paid, in
          cash, in ten equal annual installments beginning during the first
          quarter of the calendar year which next follows the calendar year in
          which the participant ceases to be a director or employee for any
          reason, with subsequent payments being made by the last day of the
          first quarter of each subsequent calendar year until the participant
          has received the entire amount of his account. Notwithstanding the
          foregoing a participant may elect to have his account paid in lump sum
          distribution or in annual payments over a period less than ten years.
          Any benefits accrued under the plan will be paid from the
          Association's general assets. The Association has established a trust
          in order to hold assets with which to pay benefits. Trust assets,
          which are included in the consolidated statement of financial
          condition will be subject to the claims of the Association's general
          creditors. The Association recognized an expense of $237,031 in the
          year ended June 30, 1997, which represented the funding of the plan
          for past services. The expense for the plan recognized for the years
          ended June 30, 1999 and 1998 was $31,727 and $33,053.

          As part of the conversion to stock, the Association established an
          ESOP to benefit substantially all employees. The ESOP purchased
          105,800 shares of common stock in the conversion with proceeds
          received from a loan from the Company. The note is to be repaid in ten
          annual principal installments of $105,800, starting June 30, 1998.
          Interest is based on the Wall Street Journal Prime plus one percent,
          and is adjusted annually on July 1. The unallocated shares of stock
          held by the ESOP are pledged as collateral on the debt. The ESOP is
          funded by contributions made by the Association in amounts sufficient
          to retire the debt. At June 30, 1999 and June 30, 1998, the
          outstanding balance of the note receivable was $838,465 and $944,265
          and is presented as a reduction of stockholders' equity. ESOP
          compensation expense for the years ended June 30, 1999 and 1998 was
          $158,663 and $163,114.

          In November 1993, the AICPA issued Statement of Position 93-6
          "Employers' Accounting for Employee Stock Ownership Plans." The
          statement was adopted December 9, 1997, the effective date of the
          Association's conversion to a stock company. The Statement requires,
          among other things, that: (1) for ESOP shares committed to be released
          in a period to compensate employees directly, employers should
          recognize compensation cost equal to the average fair value ( as
          determined on a monthly basis) of the shares committed to be released,
          (2) dividends on unallocated shares used to repay ESOP loans are not
          considered dividends for financial reporting purposes, dividends on
          allocated or committed shares are credited to the accounts of the
          participants and reported as dividends in the financial statements,
          (3) for an internally leveraged ESOP, the Company's loan receivable
          and the ESOP note payable as well as the interest income/expense is
          not reflected in the consolidated financial statements and (4) for
          earnings per share computations, ESOP shares that have been committed
          to be released should be considered outstanding. ESOP shares that have
          not been committed to be released should not be considered
          outstanding.

                                      29


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE - 11 BENEFIT PLANS (Continued

          The ESOP shares as of June 30, 1999 are as follows:

<TABLE>
<CAPTION>

              <S>                                            <C>
              Shares released                                    10,580
              Shares committed to be released for allocation     10,580
              Unreleased shares                                  84,640
                                                             ----------

              Total ESOP shares                                 105,800
                                                             ==========
              Fair value of unreleased shares                $1,015,680
                                                             ==========
</TABLE>

          The board of directors of the Company approved a Management
          Recognition Plan ("MRP") for directors and employees. The MRP was
          approved by the stockholders at the annual meeting in December, 1998.
          The Company purchased in the open market 39,675 shares of it's common
          stock, at a cost of $551,721, to fund the MRP. Under the terms of the
          plan 31,736 shares of common stock were awarded to directors and
          employees on December 15, 1998. The shares awarded pursuant to the MRP
          have a vesting schedule which provides that 25% of the shares awarded
          will automatically vest on the effective date of the award and 25%
          will vest on each subsequent anniversary date. Compensation expense
          related to the MRP was $165,537 for the year ended June 30, 1999.


NOTE - 12 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS
          OF CREDIT RISK

          The Association is a party to financial instruments with off-balance
          sheet risk in the normal course of business to meet the financing
          needs of its customers. At June 30, 1999, the Association has
          commitments to fund fixed rate mortgage loans of $1,047,000, with
          interest rates from 6.75% to 10.00%, unfunded lines of credit of
          $2,462,000, and letters of credit of $156,000. The Association makes
          contractual commitments to extend credit, which are legally binding
          agreements to lend money to customers at prevailing interest rates for
          specified periods of time. The credit risk involved in issuing these
          commitments is essentially the same as that involved in extending loan
          facilities to customers.

          As such, the Association's exposure to credit loss, in the event of
          non-performance by the counterparty to the financial instrument, is
          represented by the contractual amount of those instruments. However,
          the Association applies the same credit standards used in the lending
          process when extending these commitments, and periodically reassesses
          the customers' credit worthiness. Additional risks associated with
          these commitments arise when they are drawn upon, such as the demands
          on liquidity that the Association could experience if a significant
          portion were drawn down at once. This is considered unlikely, however,
          as commitments may expire without having been drawn upon.

          The Association originates loans primarily in Chaffee and Lake
          Counties, Colorado. Although the Association has a diversified loan
          portfolio, a substantial portion of its borrower's ability to repay
          their loans is dependent upon economic conditions in the Association's
          market area.

                                      30


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE - 13 FAIR VALUES OF FINANCIAL INSTRUMENTS

          The estimated fair values of the Association's financial instruments
          are as follows:

<TABLE>
<CAPTION>
                                                         Carrying         Fair       Carrying       Fair
                                                          Amount         Value        Amount        Value
                                                       ------------  ------------  ------------  ------------
          <S>                                          <C>           <C>           <C>           <C>
          Financial Assets:
          Cash                                         $  2,248,971  $  2,248,971  $  2,999,284  $  2,999,284
          Interest-bearing deposits                       4,409,949     4,409,949     6,963,130     6,963,130
          Mortgage backed securities                      3,328,789     3,356,000     4,326,603     4,397,103
          Securities held to maturity                       310,000       310,308       310,000       308,253
          FHLB stock                                      1,201,300     1,201,300     1,065,500     1,065,500
          Loans receivable - net                         98,433,182   100,396,000    81,359,296    83,496,000

          Financial liabilities
          Deposits                                       72,604,408    72,851,000   63,424,713   63,613,000
          Advances from FHLB                             22,685,000    22,214,000   17,890,000   17,920,000
</TABLE>

NOTE - 14 OTHER NON-INTEREST EXPENSE

<TABLE>
<CAPTION>
                                                           1999          1998
                                                       ------------  ------------
          <S>                                          <C>           <C>
          Advertising                                  $     65,210  $     67,918
          Stationery Supplies                                97,047        72,926
          Postage                                            74,431        70,745
          Telephone                                          25,203        22,659
          Dues and Subscriptions                             31,103        26,063
          Community Support                                  29,171        23,963
          Bank Charges                                       33,222        35,272
          Other                                             126,397       105,475
                                                       ------------  ------------
                                                       $    481,784  $    425,021
                                                       ============  ============
</TABLE>

NOTE - 15 PLAN OF CONVERSION

          On May 15, 1997, the Board of Directors of Salida Building and Loan
          Association adopted a Plan of Conversion (the Plan) under which the
          Association would convert from a mutual savings institution to a stock
          savings and loan and become a wholly-owned subsidiary of the Company
          formed in connection with the conversion. The Plan was approved by the
          Office of Thrift Supervision (OTS) and included the filing of a
          registration statement with the Securities and Exchange Commission.
          The Plan was approved by the members of the Association. In accordance
          with the Plan, the Company issued common stock which was sold in the
          Conversion. The closing of the offering occurred on December 9, 1997
          and resulted in a stock subscription of $13,225,000 (including
          $1,058,000 in shares subscribed by the ESOP). The Company transferred
          fifty percent of the net proceeds for the purchase of all of the
          capital stock of the Association.

          The cost of issuing the common stock were deducted from the proceeds
          of the stock sale, and amounted to $570,716.

          For the purpose of granting eligible members of the Association a
          priority in the event of future liquidation, the Association, at the
          time of conversion, established a liquidation account equal to its
          regulatory capital as of the date of the latest balance sheet used in
          the final conversion offering circular. In the event (and only in such
          event) of future liquidation of the converted Association, an eligible
          savings account holder who continues to maintain a savings account
          shall be entitled to receive a distribution from the liquidation
          account, in the proportionate amount of the then current adjusted
          balance of the savings deposits then held, before any distributions
          may be made with respect to capital stock. The Association may not
          declare or pay a cash dividend on its common stock if its net worth
          would thereby be reduced below either the aggregate amount then
          required for the liquidation account or the minimum regulatory capita
          requirements imposed by federal regulations.

                                      31


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE - 16 STOCKHOLDERS' EQUITY

          In the year ended June 30, 1999, the Company purchased 23,781 shares
          of its common stock, at a cost of $285,319, and retired the stock in
          accordance with Colorado Revised Statutes

          For the years ended June 30, 1999 and 1998, the Company paid a cash
          dividend of $.60 and $.075 per share respectively.


NOTE - 17 IMPACT OF NEW ACCOUNTING STANDARDS

          Accounting For Derivatives and Similar Financial Instruments and For
          Hedging Activities. In June 1998, the Financial Accounting Standards
          Board issued Statement No. 133, which was subsequently amended by
          Statement No. 137 regarding the effective date. The Statement requires
          all derivatives to be measured at fair value and to be recognized as
          either assets or liabilities in the statement of financial condition,
          and is effective for fiscal years beginning after June 15, 2000.
          Management, at this time, has not determined the impact of adopting
          this statement on July 1, 2000.

          Accounting for Mortgage-Backed Securities Retained after the
          Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
          Enterprise. In October 1998, the Financial Accounting Standards Board
          issue Statement No. 134. The Statement amends Financial Accounting
          Standards No. 65. Requiring the classification of any retained
          mortgage-backed securities as trading securities if the entity commits
          to sell the securities before or during the securitization process.
          The Company adopted this pronouncement effective January 1, 1999, and
          it did not have an effect on the Company.


NOTE - 18 EARNINGS PER SHARE

          The conversion from a mutual savings association to a stock
          institution and the formation of the holding company was completed on
          December 9, 1997. The computation of earnings per share is based on
          the net income earned from the date of the conversion to the end of
          the fiscal year divided by the weighted-average number of shares
          issued from the date of conversion until the end of the fiscal year.

NOTE - 19 YEAR 2000 ISSUE

          The Company has an ongoing program of evaluating the effect of the
          year 2000 on its information processing systems. The Company's core
          data processing is performed by an outside vendor, as such the Company
          is not directly involved with programming changes or application
          upgrades. The processor has indicated that renovations to their system
          for year 2000 are complete. The Company will continue to test this
          system as well as other systems for year 2000 compliance. It is
          management's position that the cost of modifications will not have a
          material effect on the Company's operations. Depending upon the nature
          of the expenditure, the Company will follow its accounting practices
          for capitalization. It is not possible to be certain that all aspects
          of the year 2000 issue affecting the Company, including those related
          to the efforts of customers, other financial institutions, suppliers,
          or other third parties, will be fully resolved.


NOTE - 20 CONTINGENCIES AND COMMITMENTS

          In the normal course of business, the Association is involved in
          various legal actions arising in the ordinary course of business. In
          the opinion of management, after consultation with legal counsel, the
          ultimate disposition of these matters is not expected to have a
          material adverse effect on the financial position of the Association.

          The Association is building a new main office in Salida, Colorado. The
          building has an estimated total cost of $2.5 million and is expected
          to be completed in 2000. As of June 30, 1999, construction costs
          totaled $231,863

                                      32


<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE - 21 CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

          The following condensed statements summarize the financial position,
          operating results and cash flows of High Country Bancorp, Inc.,

<TABLE>
<CAPTION>
                                                                1999          1998
                                                            ------------  ------------
          <S>                                               <C>           <C>
              ASSETS
              Cash and equivalents                          $ 3,391,725   $ 6,045,845
              Investment in subsidiary                        6,629,793     6,332,908
              Note due from subsidiary                        2,500,000             0
              ESOP note receivable                              838,465       944,265
              Other                                               7,579         7,935
                                                            -----------   -----------
                                                            $13,367,562   $13,330,953
                                                            ===========   ===========
              LIABILITIES AND STOCKHOLDERS' EQUITY
              Accruals                                      $    17,722   $    66,000
              Stockholders' equity                           13,349,840    13,264,953
                                                            -----------   -----------
                                                            $13,367,562   $13,330,953
                                                            ===========   ===========

          CONDENSED STATEMENT OF INCOME
          For the year ended June 30, 1999 and
          For the period December 9, 1997 to June 30, 1998
          Equity in undistributed net income of subsidiary  $   746,886   $   584,766
          Other net                                              92,637        67,777
                                                            -----------   -----------

                                                            $   839,523   $   652,543
                                                            ===========   ===========

          CONDENSED STATEMENT OF CASH FLOWS
          For the year ended June 30, 1999 and
          For the period December 9, 1997 to June 30, 1998
          Operating Activities:
          Net income                                        $   839,523   $   652,543
          Adjustments to reconcile net income to cash
          provided by operating activities:
          Equity in undistributed net income of
          subsidiary                                           (746,886)     (584,766)
          Other                                                 (26,326)      115,378
                                                            -----------   -----------

          Net cash provided by operations                        66,311       183,155
                                                            -----------   -----------

          Investing Activities:
          Investment in subsidiary                                    0    (5,798,142)
          ESOP note payment                                     105,800       105,800
          Loan to subsidiary                                 (2,500,000)            0
          Dividends received                                    450,000        50,000
                                                            -----------   -----------
          Net cash used in investing activities              (1,944,200)   (5,642,342)
                                                            -----------   -----------
          Financing Activities:
          Proceeds from stock sale net of expenses                    0    11,596,284
          Purchase of common stock                             (285,319)            0
          Dividends paid                                       (490,912)      (91,252)
                                                            -----------   -----------
          Net cash provided (used)by financing activities      (776,231)   11,505,032
                                                            -----------   -----------
          Net increase (decrease) in cash                    (2,654,120)    6,045,845
          Cash beginning                                      6,045,845             0
                                                            -----------   -----------
          Cash ending                                       $ 3,391,725   $ 6,045,845
                                                            ===========   ===========
</TABLE>

                                      33


<PAGE>

                        MARKET AND DIVIDEND INFORMATION

Trading in the Common Stock and Dividends Paid

     The Company's Common Stock is traded on the Nasdaq SmallCap Market under
the symbol "HCBC."  As of September 15, 1999, there were1,284,719 shares of the
Common Stock issued and outstanding and approximately 357 holders of record of
the Common Stock (not including shares held in "street name").

     The following table sets forth certain information as to the range of the
high and low bid prices for the Company's common stock for the calendar quarters
since the Common Stock's issuance on December 11, 1997.

                         High Bid (1)  Low Bid (1)  Dividends Paid
                         ------------  -----------  --------------
Fiscal 1998:
 Second Quarter (from
   December 11, 1997)        15.50        14.75          $  --
 Third Quarter               15.50        14.44             --
 Fourth Quarter              15.25        14.25           .075

Fiscal 1999:
 First Quarter               14.88        11.88             --
 Second Quarter              14.13        10.25           0.20
 Third Quarter               13.50        11.25             --
 Fourth Quarter              12.06        10.00           0.20

-------------------------
(1)  Quotations reflect inter-dealer price, without retail mark-up, mark-down or
     commissions, and may not represent actual transactions.


Dividend Restrictions

     For a period of one year following the completion of the Conversion, the
Company may not pay any special dividends or dividends that would be construed
as a return of capital nor take any actions to pursue or propose such dividends.
The payment of dividends, will be subject to the requirements of applicable law
and the determination by the Board of Directors of the Company that the net
income, capital and financial condition of the Company and the Association,
thrift industry trends and general economic conditions justify the payment of
dividends, and there can be no assurance that dividends will be paid or, if
paid, will continue to be paid in the future.

     Since the Company initially has no significant source of income other than
dividends from the Association, principal and interest payments on the note
payable from the ESOP and earnings from investment of the cash proceeds of the
Conversion retained by the Company, the payment of dividends by the Company will
depend in large part upon the proceeds from the Conversion retained by the
Company and the Company's earnings thereon and the receipt of dividends from the
Association, which is subject to various tax and regulatory restrictions on the
payment of dividends.  Unlike the Converted Association, the Company is not
subject to regulatory restrictions on the payment of dividends to stockholders.
Under the Colorado General Corporation Law, dividends may be paid either out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or the preceding fiscal year.

                                      34
<PAGE>

                          HIGH COUNTRY BANCORP, INC.

                              BOARD OF DIRECTORS

<TABLE>
<S>                                      <C>                                      <C>
Larry D. Smith                           Philip W. Harsh                          Timothy R. Glenn
President and Chief Executive            Owner and Agent of Fredrickson           Owner and Funeral Director of
Officer of the Company and               Brown Insurance Agency                   Lewis & Glenn Funeral Home
the Association


Scott G. Erchul                          Robert B. Mitchell                       Richard A. Young
Vice President of the Company            Retired                                  Partner of Swartz & Young, P.C.
and the Association


                                         EXECUTIVE OFFICERS

Larry D. Smith                           Scott G. Erchul                          Frank L. DeLay
President and Chief Executive Officer    Vice President of the Company and        Chief Financial Officer of the
 of the Company and the Association      the Association                          Company and the Association


                                         OFFICE LOCATIONS

Main Office:                             Branch Office:                           Branch Office:
130 West 2nd                             600 Harrison                             713 East Main
Salida, Colorado                         Leadville, Colorado                      Buena Vista, Colorado


                                        GENERAL INFORMATION

Independent Public Accountants           Annual Meeting                           Annual Report on Form 10-KSB
Grimsley, White & Company,               The 1999 Annual Meeting of               A copy of the Company's Annual
Certified Public Accountants             Stockholders will be held on October     Report on Form 10-KSB for the
La Junta, Colorado                       21, 1999 at 5:00 p.m. at  The Senior     fiscal year ended June 30, 1999 as
                                         Citizens Center, 305 F Street, Salida,   filed with the Securities and
General Counsel                          Colorado  81210                          Exchange Commission will be
Rush and Rush, P.C.                                                               furnished without charge to
Salida, Colorado                         Transfer Agent and Registrar             stockholders as of the record date for
                                         Illinois Stock Transfer                  the 1999 Annual Meeting upon
Special Counsel                          233 West Jackson Boulevard               written request to Richard A. Young,
Housley Kantarian & Bronstein, P.C.      Suite 1210                               Secretary, High Country Bancorp,
1220 19th Street, N.W., Suite 700        Chicago, Illinois  60606                 Inc., 130 West 2nd Street, Salida,
Washington, D.C.  20036                                                           Colorado  81201.
</TABLE>