<PAGE>


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

                             FORM 10-QSB
(MARK ONE)
/X/           QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

        FOR THE QUARTERLY PERIOD ENDED     SEPTEMBER 30, 1996      
                                       ----------------------------
                                                    OR

/ /           TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

              FOR THE TRANSITION PERIOD FROM      TO     
                                             ----    ----

              COMMISSION FILE NUMBER       0-25204
                                     --------------------


                            GATEWAY BANCORP, INC.
---------------------------------------------------------------------------
    (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


            KENTUCKY                               61-1269067
      -------------------                     --------------------
 (STATE OR OTHER JURISDICTION OF        (IRS EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

                2717 LOUISA STREET, CATLETTSBURG, KENTUCKY  41129
---------------------------------------------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (606) 739-4126
               -------------------------------------------------
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

     CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY 
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE 
PAST 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED 
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS 
FOR THE PAST 90 DAYS.

YES  X  NO
   ----    ----

    STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE:

    AS OF NOVEMBER 1, 1996, THERE WERE ISSUED AND OUTSTANDING 1,113,872
    SHARES OF THE REGISTRANT'S COMMON STOCK.  AS OF DECEMBER 31, 1994,
    CATLETTSBURG FEDERAL SAVINGS AND LOAN ASSOCIATION, THE REGISTRANT'S
    WHOLLY-OWNED SUBSIDIARY, HAD NOT YET COMPLETED ITS MUTUAL-TO-STOCK
    CONVERSION AND REORGANIZATION INTO A HOLDING COMPANY FORMAT.  THE
    FINANCIAL INFORMATION PRESENTED HEREIN FOR DECEMBER 31, 1994 IS FOR
    CATLETTSBURG FEDERAL SAVINGS AND LOAN ASSOCIATION ONLY.


    TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):


YES     NO  X
   ----    ----


<PAGE>



                         GATEWAY BANCORP, INC. AND SUBSIDIARY

                                  TABLE OF CONTENTS



PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets (as of September 30,
         1996 (unaudited) and December 31, 1995)                         3

         Consolidated Statements of Income (for the three
         months ended September 30, 1996 and 1995 (unaudited))           4

         Consolidated Statements of Income (for the
         nine months ended September 30, 1996 and 1995
         (unaudited))                                                    5

         Consolidated Statements of Changes in
         Stockholders' Equity (for the nine months 
         ended September 30, 1996 (unaudited) and the year 
         ended December 31, 1995)                                        6

         Consolidated Statements of Cash Flows (for the nine
         months ended September 30, 1996 and 1995 (unaudited))           7

         Notes to Consolidated Financial Statements                   8-10

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                         11-14


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                              15

Item 2.  Changes in Securities                                          15

Item 3.  Defaults Upon Senior Securities                                15

Item 4.  Submission of Matters to a Vote of Security Holders            15

Item 5.  Other Information                                              15

Item 6.  Exhibits and Reports on Form 8-K                               15

Signatures                                                              16


<PAGE>



                         GATEWAY BANCORP, INC. AND SUBSIDIARY

                             CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                 SEPTEMBER 30,            DECEMBER 31,
              ASSETS                                 1996                     1995
                                                 ------------             ------------
                                                 (UNAUDITED)

<S>                                              <C>                       <C>
CASH AND CASH EQUIVALENTS                        $ 2,887,510               $ 6,542,257

INVESTMENT SECURITIES HELD TO MATURITY            18,511,339                21,443,489

LOANS RECEIVABLE, net                             18,141,443                16,920,304

MORTGAGE-BACKED SECURITIES
 HELD TO MATURITY                                 29,065,308                27,618,404

ACCRUED INTEREST RECEIVABLE                          340,585                   493,502

OFFICE PROPERTIES AND EQUIPMENT                      363,036                   366,995

INCOME TAXES REFUNDABLE                              117,812                     --

OTHER ASSETS                                          69,135                    23,725
                                                 -----------               -----------
                                                 $69,496,168               $73,408,676
                                                 -----------               -----------
                                                 -----------               -----------

               LIABILITIES AND STOCKHOLDERS' EQUITY

DEPOSITS                                         $51,490,403               $53,287,904

INCOME TAXES PAYABLE:
  Current                                            --                         66,730
  Deferred                                            93,385                    96,872

DIVIDENDS PAYABLE                                    --                      1,366,717

ACCRUED INTEREST PAYABLE                              49,288                    35,155

ACCRUED SAIF SPECIAL ASSESSMENT                      338,631                    --

OTHER LIABILITIES                                     99,785                    77,035
                                                 -----------               -----------

          Total liabilities                       52,071,492                54,930,413
                                                 -----------               -----------

STOCKHOLDERS' EQUITY:
  Common stock                                        11,139                   11,970
  Employee benefit plans                            (981,923)               (1,098,907)
  Additional paid-in capital                      10,088,573                10,849,388
  Retained earnings-
  substantially restricted                         8,306,887                 8,715,812
                                                 -----------               -----------
          Total stockholders' equity              17,424,676                18,478,263
                                                 -----------               -----------

                                                 $69,496,168               $73,408,676
                                                 -----------               -----------
                                                 -----------               -----------
</TABLE>
                                         -3-

<PAGE>


                         GATEWAY BANCORP, INC. AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
                                                     FOR THE THREE MONTHS ENDED
                                                     --------------------------
                                                SEPTEMBER 30,             SEPTEMBER 30,
                                                    1996                      1995
                                                ------------              -------------
                                                 (UNAUDITED)               (UNAUDITED)
<S>                                              <C>                       <C>
INTEREST INCOME:
  Loans receivable-
   Mortgage loans                                 $  333,774                $  292,381
   Other loans                                        10,203                    12,408
  Investment securities                              344,506                   309,917
  Mortgage-backed and related securities             494,780                   505,912
  Other interest-earning assets                       13,259                    60,302
                                                 -----------               -----------
          Total interest income                    1,196,522                 1,180,920
                                                 -----------               -----------

INTEREST EXPENSE:
  Passbook savings                                    38,506                    36,120
  Certificates of deposit                            610,590                   657,892
                                                 -----------               -----------
          Total interest expense                     649,096                   694,012
                                                 -----------               -----------
          Net interest income                        547,426                   486,908
PROVISION FOR LOAN LOSSES                              --                        5,000
                                                 -----------               -----------
          Net interest income after provision
           for loan losses                           547,426                   481,908
                                                 -----------               -----------
NON-INTEREST INCOME:
  Gain on foreclosed real estate                        --                       --   
  Gain on investments                                   --                       --   
  Loan fees                                             --                          50
  Other                                                3,036                     1,222
                                                 -----------               -----------
          Total non-interest income                    3,036                     1,272
                                                 -----------               -----------

NON-INTEREST EXPENSE:
  Compensation and benefits                           90,821                   111,479
  Occupancy and equipment                              9,110                     8,236
  SAIF deposit insurance premium                     369,655                    15,272
  Professional services                               15,851                    32,114
  Other taxes                                         13,620                    11,700
  Other                                               49,951                    50,469
                                                 -----------               -----------
          Total non-interest expense                 549,008                   229,270
                                                 -----------               -----------
INCOME BEFORE PROVISION FOR INCOME TAXES               1,454                   253,910

PROVISION FOR INCOME TAXES                            (2,033)                   82,546
                                                 -----------               -----------
NET INCOME                                       $     3,487               $   171,364
                                                 -----------               -----------
                                                 -----------               -----------
NET INCOME PER SHARE                                    $.00                     $.14
                                                 -----------               -----------
                                                 -----------               -----------

</TABLE>

                                         -4-

<PAGE>

                         GATEWAY BANCORP, INC. AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
                                                       FOR THE NINE MONTHS ENDED
                                                       -------------------------
                                                 SEPTEMBER 30,            SEPTEMBER 30,
                                                    1996                       1995
                                                ------------              -------------
                                                 (UNAUDITED)                (UNAUDITED)

<S>                                              <C>                       <C>

INTEREST INCOME:
  Loans receivable-
   Mortgage loans                                $   972,795               $   783,286
   Other loans                                        33,367                    35,800
  Investment securities                              992,480                 1,008,782
  Mortgage-backed and related securities           1,450,110                 1,531,559
  Other interest-earning assets                      113,001                   181,611
                                                 -----------               -----------
          Total interest income                    3,561,753                 3,541,038
                                                 -----------               -----------
INTEREST EXPENSE:
  Passbook savings                                   137,989                   129,644
  Certificates of deposit                          1,893,396                 1,838,120
                                                 -----------               -----------
          Total interest expense                   2,031,385                 1,967,764
                                                 -----------               -----------
          Net interest income                      1,530,368                 1,573,274
PROVISION FOR LOAN LOSSES                             --                        15,000
                                                 -----------               -----------
          Net interest income after provision
           for loan losses                         1,530,368                 1,558,274
                                                 -----------               -----------
NON-INTEREST INCOME:
  Gain on foreclosed real estate                      14,181                    --
  Gain on investments                                  2,000                    --
  Loan fees                                           --                           975
  Other                                                7,580                     4,781
                                                 -----------               -----------
          Total non-interest income                   23,761                     5,756
                                                 -----------               -----------
NON-INTEREST EXPENSE:
  Compensation and benefits                          281,537                   306,597
  Occupancy and equipment                             28,042                    27,927
  SAIF deposit insurance premium                     430,467                   107,923
  Professional services                              108,956                   104,979
  Other taxes                                         45,327                    35,100
  Other                                              167,169                   146,703
                                                 -----------               -----------
          Total non-interest expense               1,061,498                   729,229
                                                 -----------               -----------
INCOME BEFORE PROVISION FOR INCOME TAXES             492,631                   834,801

PROVISION FOR INCOME TAXES                           150,285                   278,292
                                                 -----------               -----------
NET INCOME                                       $   342,346               $   556,509
                                                 -----------               -----------
                                                 -----------               -----------
NET INCOME PER SHARE                                    $.30                      $.46
                                                 -----------               -----------
                                                 -----------               -----------
</TABLE>
                                         -5-

<PAGE>


 
                         GATEWAY BANCORP, INC. AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
                                                                                           RETAINED
                                                              EMPLOYEE      ADDITIONAL     EARNINGS-         TOTAL
                                                 COMMON        BENEFIT       PAID-IN     SUBSTANTIALLY   STOCKHOLDERS'
                                                 STOCK          PLANS        CAPITAL      RESTRICTED         EQUITY
                                                -------       ---------      -------     -------------   -------------
<S>                                             <C>          <C>             <C>          <C>
BALANCES, December 31, 1994                     $  --        $    --         $     --     $ 9,593,390     $ 9,593,390

NET INCOME, year ended December 31, 1995           --             --               --         820,661         820,661

COMMON STOCK ISSUED,  $.01 par value             12,446          (500,000)    11,698,818       --          11,211,264

DIVIDENDS DECLARED,  $1.50 per share               --              --           (387,445)  (1,456,890)     (1,844,335)

ESOP SHARES RELEASED,  7,746 shares                --              77,460        (14,545)      --              62,915

RRP STOCK PURCHASED,  49,782 shares                --            (721,839)        --           --            (721,839)

RRP STOCK AMORTIZED,  3,136 shares                 --              45,472         --           --              45,472

PURCHASE OF 47,600 TREASURY SHARES                 (476)           --           (447,440)    (241,349)       (689,265)
                                                -------       -----------    -----------  -----------     -----------
BALANCES, December 31, 1995                      11,970        (1,098,907)    10,849,388    8,715,812      18,478,263

NET INCOME, nine months ended 
  September 30, 1996 (unaudited)                   --              --             --          342,346         342,346

DIVIDENDS DECLARED, $.30 per share 
  (unaudited)                                      --              --             --         (332,051)       (332,051)

ESOP SHARES RELEASED, 4,882 shares 
  (unaudited)                                      --              48,820        20,306       (14,126)         55,000

RRP STOCK AMORTIZED, 4,701 shares 
  (unaudited)                                      --              68,164         --            --             68,164
                                                -------       -----------    -----------  -----------     -----------

PURCHASE OF 83,098 TREASURY SHARES 
  (unaudited)                                      (831)           --           (781,121)    (405,094)     (1,187,046)

BALANCES, September 30, 1996 
  (unaudited)                                   $11,139       $  (981,923)   $10,088,573  $ 8,306,887     $17,424,676
                                                -------       -----------    -----------  -----------     -----------
                                                -------       -----------    -----------  -----------     -----------

</TABLE>
                                         -6-
<PAGE>
                         GATEWAY BANCORP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                       FOR THE NINE MONTHS ENDED
                                                      ---------------------------
                                                SEPTEMBER 30,             SEPTEMBER 30,
                                                   1996                        1995
                                                ------------              -------------
<S>                                              <C>                       <C>
OPERATING ACTIVITIES:                            (Unaudited)                (Unaudited)
  Net income                                     $   342,346               $   556,509
  Adjustments to reconcile net income to net
   cash provided by operating activities--
    Gain on sale of investments                        2,000                    --
    Provision for depreciation                        15,428                    14,361
    Amortization and accretion                       (55,167)                  (58,449)
    Provision for deferred income taxes               (3,487)                    9,430
    Provision for loan losses                         --                        15,000
    ESOP compensation                                  9,000                    53,650
    RRP compensation                                  68,164                    22,736
    FHLB stock dividends                             (39,400)                  (35,500)
    Net change in --
       Accrued interest receivable                   152,917                   133,171    
       Other assets                                  (41,415)                  (44,800)
       Income taxes refundable                      (184,542)                   (3,573)
       Accrued interest payable                       14,133                    21,095
       Other liabilities                              13,750                   (88,839)
       Accrued SAIF special assessment               338,631                     --
                                                ------------              -------------
          Net cash provided by 
          operating activities                       632,358                    594,791
                                                ------------              -------------

INVESTING ACTIVITIES:
  Net increase in loans                           (1,221,139)                (4,953,732)
  Purchases of investment securities             (13,280,499)                (8,573,117)
  Maturities of investment securities             15,920,030                  7,956,442
  Sales and calls of investment securities           350,000                     --
  Purchases of mortgage-backed securities         (5,837,034)                (1,895,510)
  Principal collected on mortgage-backed 
   securities                                      4,425,316                  2,774,565
  Purchases of office properties and
      equipment                                      (11,469)                   (20,860)
                                                ------------              -------------
          Net cash provided by (used for) 
          investing activities                       345,205                 (4,712,212)
                                                ------------              -------------
FINANCING ACTIVITIES:
  Net decrease in savings accounts                  (389,142)                (4,225,036)
  Net decrease in certificates of deposit         (1,408,359)                (2,815,520)
  Decrease in prepaid stock conversion costs          --                        278,054
  Net proceeds from sale of stock                     --                     11,217,907
  Purchase of RRP stock                               --                       (721,839)
  Dividends paid                                  (1,647,763)                  (358,371)
  Purchase of common stock                        (1,187,046)                    --    
                                                ------------              -------------
          Net cash provided by (used for) 
           financing activities                   (4,632,310)                 3,375,195
                                                ------------              -------------
DECREASE IN CASH AND CASH EQUIVALENTS             (3,654,747)                  (742,226)

CASH AND CASH EQUIVALENTS, beginning of period     6,542,257                  7,394,270
                                                ------------              -------------
CASH AND CASH EQUIVALENTS, end of period          $2,887,510              $   6,652,044
                                                ------------              -------------
                                                ------------              -------------
SUPPLEMENTAL DISCLOSURES OF
 CASH FLOW INFORMATION:
   Income taxes paid                                $309,000              $     292,000
                                                ------------              -------------
                                                ------------              -------------
   Interest paid                                  $2,017,252              $   1,946,669
                                                ------------              -------------
                                                ------------              -------------
</TABLE>
                                         -7-

<PAGE>



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

         FINANCIAL CONDITION

         ASSETS.  Total assets decreased by $3.9 million, or 5.3%, from $73.4 
million at December 31, 1995 to $69.5 million at September 30, 1996.  The 
decrease consisted primarily of decreases in cash and cash equivalents and 
investment securities of $3.7 million and $2.9 million, respectively, offset 
by increases in loans receivable, net, and mortgage-backed securities held to 
maturity of $1.2 million and $1.5 million, respectively.

         CASH AND CASH EQUIVALENTS.  The $3.7 million decrease in cash and 
cash equivalents, or 56.9%, is primarily attributable to cash utilized during 
the period of approximately $1.6 million to pay dividends, and $1.2 million 
to purchase treasury stock.  The remaining decrease in cash resulted from 
purchases of mortgage-backed securities.  The $1.6 million decrease in cash 
resulting from the payment of dividends included $1.4 million in dividends 
declared in 1995, but not paid until 1996.

         INVESTMENT SECURITIES.  The Company's investment portfolio declined 
$2.9 million, or 13.5%, from $21.4 million at December 31, 1995, to $18.5 
million at September 30, 1996.  The decline was attributable to lower levels 
of purchases during the period in order to use cash generated from scheduled 
maturities for other financing activities.

         LOANS RECEIVABLE.  Loans receivable increased $1.2 million, or 7.1%, 
from $16.9 million at December 31, 1995, to $18.1 million at September 30, 
1996. Mortgage loan demand increased during the third quarter of 1996, 
primarily in single family dwelling loans made at variable interest rates. 

         MORTGAGE-BACKED SECURITIES.  The Company continues to invest heavily 
in mortgage-backed securities.  The portfolio increased $1.5 million, or 
5.4%, from $27.6 million at December 31, 1995, to $29.1 million at September 
30, 1996. The increase reflects a normal replenishment of the portfolio 
during the period.

         DEPOSITS.  Deposits decreased by $1.8 million, or 3.3%, from $53.3 
million at December 31, 1995, to $51.5 million at September 30, 1996.  The 
Company continues to offer competitive interest rates on deposits, but due to 
adequate liquidity levels, has found it unnecessary at this time to actively 
solicit new deposit accounts.

         STOCKHOLDERS' EQUITY.  Stockholders' equity decreased $1.1 million, 
or 5.9%, from $18.5 million at December 31, 1995, to $17.4 million at 
September 30, 1996.  The decrease was largely due to the purchase of treasury 
stock during the period for $1.2 million.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO 
THREE MONTHS ENDED SEPTEMBER 30, 1995

         NET INCOME.  Net income decreased $167,877, or 98.0%, from $171,364 
for the 1995 quarter to $3,487 for the 1996 quarter.  The primary reason for 
the decline was a $338,631 pretax charge in the third quarter of 1996, 
reflecting the consequences of the one-time assessment by the FDIC to restore 
the SAIF insurance fund to the statutorily prescribed level of 1.25% of 
insured deposits. If not for this one-time assessment, net income for the 
1996 quarter would have been $226,983, or a 32.5% increase, over the 1995 
quarter.  See note (10) to the consolidated financial statements.

                                         -11-

<PAGE>

         NET INTEREST INCOME.  For the 1996 three month period, net interest 
income increased $60,518, or 12.4%, from $486,908 for the 1995 period to 
$547,426 for 1996.  The increase resulted from an increase in interest income 
of $15,602 and a decrease in interest expense of $44,916.

         INTEREST INCOME.  The $15,602, or 1.3%, increase in interest income 
for the third quarter resulted from increases in interest income on mortgage 
loans and investment securities of $41,393 and $34,589, which was partially 
offset by decreases in interest income on mortgage-backed and related 
securities and other interest-earning assets of $11,132 and $47,043, 
respectively.  The increase in mortgage loan interest is largely due to 
upward rate adjustments on the Bank's variable rate portfolio during 1996, 
and to a lesser extent, from increased volume.  The increase in interest on 
investment securities is due to a higher yielding portfolio in 1996 as 
compared to 1995, offset by a modest decline in volume.  Mortgage-backed and 
related securities interest declined due to a temporary 1996 third quarter 
decrease in the average volume of the portfolio as compared to the 1995 
comparable quarter.  Interest from other-interest earning assets declined due 
to the significant decline during the 1996 quarter in the average balances of 
other interest-earning assets.

         INTEREST EXPENSES.  The $44,916, or 6.5%, decrease in interest 
expense for the three months ended September 30, 1996 as compared to 1995, is 
reflective of the decline during 1996 in the average balances of 
interest-bearing liabilities as compared to the 1995 quarter.  Due to ample 
levels of liquidity, management has found it unnecessary in 1996 to solicit 
new funding sources in the form of deposits.

         NON-INTEREST INCOME.  For the three months ended September 30, 1996, 
as compared to 1995, non-interest income increased $1,764, to $3,036.  The 
Bank does not generate significant levels of non-interest income.

         NON-INTEREST EXPENSE.  For the first three months of 1996, 
non-interest expense increased $319,738, or 139.5%.  Without the $338,631 
charge for the special one-time SAIF assessment as described above, 
non-interest expense would have decreased by $18,893, or 8.2%.  Of the 
$319,738 total increase, $354,383 was due to increases in the SAIF deposit 
insurance premiums, which was partially offset by reductions in compensation 
and benefits expense of $20,658, or 18.5%, and professional services of 
$16,263, or 50.6%.

         The decrease in compensation and benefits included a reduction in 
ESOP compensation expense of $19,919 due to the Company electing to utilize 
dividends on unallocated ESOP shares to pay the quarterly debt service 
requirements during the period.  Professional services declined due to the 
timing of expenditures associated with the Company operating as a public 
company.

         PROVISION FOR INCOME TAXES.  The provision for income taxes declined 
for the three months ending September 30, 1996 as compared to 1995 due to 
lower pretax income.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO 
NINE MONTHS ENDED SEPTEMBER 30, 1995

         NET INCOME.  Net income decreased $214,163, or 38.5%, from $556,509 
for the 1995 nine month period to $342,346 for the first three quarters of 
1996. If not for the consequences of the one-time SAIF special assessment as 
described above, the 1996 nine month period net income would have been 
$565,842, or a 1.7% increase, over 1995.


                                         -12-

<PAGE>


         NET INTEREST INCOME.  For the 1996 nine month period, net interest 
income decreased $42,906, or 2.7%, to $1,530,368 for the 1996 period from 
$1,573,274 for 1995.  The decrease resulted from an increase in interest 
income of $20,715, which was more than offset by the $63,621 increase in 
interest expense.

         INTEREST INCOME.  The $20,715, or 0.6%, increase in interest income 
for the nine months ended September 30, 1996 as compared to 1995, resulted 
primarily from increases in interest income on mortgage loans of $189,509, 
offset by decreases in interest income on investment securities, 
mortgage-backed and related securities and other interest-earning assets of 
$16,302, $81,449 and $68,610, respectively.  The increase in mortgage loan 
interest reflects the upward rate adjustments on the Bank's variable rate 
loan portfolio during 1996, most of these loans being originated during 1995. 
 The decrease in interest on investment securities is due to lower volumes 
during 1996 as compared to 1995, offset by a modest increase in yields.  
Mortgage-backed and related securities interest declined due to lower 1996 
average volumes of the portfolio as compared to the 1995.  Interest from 
other-interest earning assets declined due to the significant decline during 
the nine months ended September 30, 1996 in the average balances of other 
interest-earning assets as compared to the 1995 comparable period.

         INTEREST EXPENSE.  The $63,621, or 3.2%, increase in interest 
expense for the nine months ended September 30, 1996 as compared to 1995, 
reflects the increase in market rates of interest in 1996 as compared to 
1995, offset in 1996 by a decline in the average balances of interest-bearing 
liabilities.

         NON-INTEREST INCOME.  For the nine months ended September 30, 1996 
as compared to 1995, non-interest income increased $18,005, from $5,756 to 
$23,761. The largest factor contributing to the increase was the $14,181 in 
gains  on foreclosed real estate during 1996, such gains representing 
recoveries of losses on sales of foreclosed real estate in prior years.

         NON-INTEREST EXPENSE.  For the nine months ended September 30, 1996, 
non-interest expense increased $332,269, or 45.6%.  Without the $338,631 
charge for the one-time SAIF special assessment as described above, 
non-interest expense would have decreased by $6,362, or 0.87%.  Of the 
$332,269 total increase, $322,544 was due to increases in the SAIF deposit 
insurance premiums, while taxes other than income taxes and other 
non-interest expenses increased by $10,277 and $20,466, respectively.  
Compensation and benefits expense declined by $25,060 for the nine months 
ended September 30, 1996 as compared to 1995.

         The decrease in compensation and benefits included a reduction in 
ESOP compensation expense of $51,292 due to the Company electing to utilize 
dividends on unallocated ESOP shares to pay the first three quarterly debt 
service payments during the period, which was partially offset by an increase 
in RRP compensation expense of $45,428.  The remaining portion of the 
decrease resulted from the Company capitalizing more salaries and wages 
during 1996 as compared to 1995, as loan origination costs.  Taxes other than 
income taxes increased due to a higher taxable base for purposes of 
calculating the Kentucky building and loan tax.

         PROVISION FOR INCOME TAXES.  The provision for income taxes declined 
for the nine months ended September 30, 1996 as compared to 1995 due to lower 
pretax income.

                                         -13-

<PAGE>

         LIQUIDITY AND CAPITAL RESOURCES

         The Company's liquidity, represented by cash and cash equivalents, 
is a product of its operating, investing and financing activities.  The 
Company's primary sources of funds are deposits, amortization, prepayments 
and maturities of outstanding loans and mortgage-backed securities, 
maturities of investment securities and other short-term investments and 
funds provided from operations. While scheduled payments from the 
amortization of loans and mortgage-backed securities and maturing investment 
securities and short-term investments are relatively predictable sources of 
funds, deposit flows and loan prepayments are greatly influenced by general 
interest rates, economic conditions and competition.  In addition, the Bank 
invests excess funds in overnight deposits and other short-term 
interest-earning assets which provide liquidity to meet lending requirements. 
 The Bank has been able to generate sufficient cash through its deposits.  At 
September 30, 1996, the Bank had no outstanding advances from the Federal 
Home Loan Bank of Cincinnati or other borrowings.

         Liquidity management is both a daily and long-term function of 
business management.  Excess liquidity is generally invested in short-term 
investments such as overnight deposits.  On a longer-term basis, the Bank 
maintains a strategy of investing in various investment and mortgage-backed 
securities and residential mortgage loans.  The Bank uses its sources of 
funds primarily to meet its ongoing commitments, to pay maturing savings 
certificates and savings withdrawals, to fund loan commitments and to 
maintain a portfolio of mortgage-backed and investment securities.  At 
September 30, 1996, the total approved loan commitments outstanding amounted 
to $602,640.  At the same date, there were no commitments under unused lines 
of credit.  Certificates of deposit scheduled to mature in one year or less 
at September 30, 1996, totaled $34.4 million.  Management believes that a 
significant portion of maturing deposits will remain with the Bank.  The Bank 
anticipates that with interest rates at higher levels than have been 
experienced in recent months, it will continue to have sufficient funds to 
meet its current commitments.  At September 30, 1996, the Bank had a 
liquidity ratio of 9.51%, which exceeded the required minimum liquid asset 
ratio of 5.0%.

         At September 30, 1996, the Bank had regulatory capital which was 
well in excess of applicable limits.  At September 30, 1996, the Bank was 
required to maintain tangible capital of 1.5% of adjusted total assets, core 
capital of 3.0% of adjusted total assets and risk-based capital of 8.0% of 
adjusted risk-weighted assets.  At September 30, 1996, the Bank's tangible 
capital was $16.6 million or 24.2% of adjusted total assets, core capital was 
$16.6 million or 24.2% of adjusted total assets and risk-based capital was 
$16.7 million or 83.3% of adjusted risk-weighted assets, exceeding the 
requirements by $15.6 million, $14.5 million and $15.1 million, respectively.


                                         -14-
<PAGE>


                         GATEWAY BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF FINANCIAL STATEMENT PRESENTATION

         Gateway Bancorp, Inc. (the "Company") was incorporated under 
Kentucky law in October 1994 by Catlettsburg Federal Savings and Loan 
Association in connection with its conversion (the "Conversion") to a 
federally-chartered stock savings bank known as "Catlettsburg Federal Savings 
Bank" (the "Bank").  The Conversion was completed on January 18, 1995.  See 
Note 2 herein.

         The accompanying consolidated financial statements were prepared in 
accordance with instructions to Form 10-QSB, and therefore, do not include 
information or footnotes necessary for a complete presentation of financial 
position, results of operations and cash flows in conformity with generally 
accepted accounting principles.  However, all normal, recurring adjustments 
which, in the opinion of management, are necessary for a fair presentation of 
the financial statements, have been included.  These financial statements 
should be read in conjunction with the audited financial statements and the 
notes thereto for the year ended December 31, 1995.  The results for the nine 
months ended September 30, 1996 are not necessarily indicative of the results 
that may be expected for the year ended December 31, 1996.

     BUSINESS

         The Company's principal business is conducted through the Bank which 
conducts business from its main office located in Catlettsburg, Kentucky, and 
one full-service branch located in Grayson, Kentucky.  The Bank's deposits 
are insured by the Savings Association Insurance Fund ("SAIF") to the maximum 
extent permitted by law.  The Bank is subject to examination and 
comprehensive regulation by the Office of Thrift Supervision ("OTS"), which 
is the Bank's chartering authority and primary regulator.  The Bank is also 
subject to regulation by the Federal Deposit Insurance Corporation ("FDIC"), 
as the administrator of the SAIF, and to certain reserve requirements 
established by the Federal Reserve Board ("FRB").  The Bank is a member of 
the Federal Home Loan Bank of Cincinnati ("FHLB").

     PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of the 
Company, the Bank, and the Bank's one wholly-owned subsidiary.   All 
significant intercompany transactions have been eliminated in consolidation.  
Additionally, certain reclassifications may have been made in order to 
conform with the current period's presentation.  The accompanying 
consolidated financial statements have been prepared on the accrual basis.


                                         -8-

<PAGE>

 (2) CONVERSION TRANSACTION

         On January 18, 1995, (i) the Bank converted from a 
federally-chartered mutual savings and loan association to a 
federally-chartered stock savings bank and (ii) the Company acquired all of 
the common stock of the Bank in the Conversion.  As part of the Conversion, 
the Company issued 1,244,570 shares of its Common Stock.  Total proceeds of 
$12,445,700 were reduced by $500,000 for shares to be purchased by the 
Employee Stock Ownership Plan ("ESOP") and by approximately $737,200 for 
conversion expenses.  As a result of the Conversion, the Company contributed 
approximately $5,900,000 of additional capital to the Bank and retained the 
balance of the proceeds.

 (3) NET INCOME PER SHARE

         Net income per share for the three months and nine months ended 
September 30, 1996 and 1995 was computed using the weighted average 
(1,124,875 and 1,196,423, respectively) number of shares outstanding.  Shares 
which have not been committed to be released to the ESOP are not considered 
to be outstanding for purposes of calculating net income per share.

 (4) DIVIDENDS PER SHARE

         For purposes of recording dividends, dividends paid on unallocated 
ESOP shares are not considered dividends for financial reporting purposes. 
There were 12,628 and 7,746 shares released to the ESOP at September 30, 1996 
and December 31, 1995, respectively.

 (5) CHANGE IN FISCAL YEAR

         On March 29, 1995, the Company established December 31 as its fiscal 
year end, effective as of December 31, 1994.  The Company took this action in 
order to report its results as a public company in a manner which is 
consistent with the way the Bank has traditionally conducted its business. 

 (6) PURCHASE OF COMMON STOCK

         During the nine months ended September 30, 1996 and the year ended 
December 31, 1995, respectively, the Company purchased 83,098 and 47,600 
shares of its outstanding common stock on the open market.  In accordance 
with the 1988 amendment to the Kentucky Business Corporation Act, the 
purchase of these shares has been recorded as a purchase of common stock 
shares, which are authorized but unissued.  The shares are available for 
reissuance.

 (7) EMPLOYEE STOCK OWNERSHIP PLAN

         The Company has established the ESOP for employees of the Company 
and the Bank effective upon the Conversion.  Full-time employees of the 
Company and the Bank who have been credited with at least 1,000 hours of 
service during a twelve month period and who have attained age 21 are 
eligible to participate in the ESOP.  The Company loaned the ESOP $500,000 
for the initial purchase of the ESOP shares.  The loan is due and payable in 
forty (40) equal quarterly installments of $12,500 beginning March 31, 1995, 
plus interest at the rate of 8.75% per annum.  The Company will make 
scheduled discretionary cash contributions to the ESOP sufficient to amortize 
the principal and interest on the loan.  The Company accounts for its ESOP in 
accordance with Statement of Position 93-6, "Employer's Accounting For 
Employee Stock Ownership Plans."  As shares are committed to be released to 
participants, the Company reports compensation expense


                                         -9-

<PAGE>

equal to the average market price of the shares during the period.  ESOP 
compensation expense recorded during the three months and nine months ended 
September 30, 1996 and 1995 was $3,000 and $22,920, and $9,000 and $60,293, 
respectively.  The Company used $66,234 in dividends on unallocated ESOP 
shares to pay the quarterly debt service through September 30, 1996.

 (8) RECOGNITION AND RETENTION PLAN AND TRUST

         At the Company's 1995 Annual Meeting of Stockholders, the 
Recognition and Retention Plan and Trust (the "RRP") was approved by the 
Company's stockholders.  The Office of Thrift Supervision indicated its 
non-objection to the RRP plan provisions on September 7, 1995.  As of 
December 31, 1995, the Company had purchased 49,782 shares in the open market 
to fund the RRP at an aggregate cost of $721,839.  As of September 30, 1996, 
41,938 of the shares available under the RRP have been awarded to the 
Company's Board of Directors and the Bank's executive officers and other key 
employees, subject to vesting and other provisions of the RRP.

         At September 30, 1996, the deferred cost of unearned RRP shares 
totaled $608,203 and is recorded as a charge against stockholders' equity. 
Compensation expense will be recognized ratably over the five year vesting 
period only for those shares awarded.  The Company recorded compensation 
expense related to the RRP of $22,721 and $68,164 for the three months and 
nine months ended September 30, 1996, respectively, and $22,736 during the 
three months ended September 30, 1995.

 (9) STOCK OPTION PLAN

         At the Company's 1995 Annual Meeting of Stockholders, the Stock 
Option Plan (the "Plan") was approved by the Company's stockholders.  A total 
of 124,457 shares may be issued pursuant to the Plan.  Through September 30, 
1996 an aggregate of 73,423 stock options have been granted to the Company's 
Board of Directors, and the Bank's executive officers and other key 
employees.  These options are subject to vesting provisions as well as other 
provisions of the Plan.  Such options were not dilutive during the three and 
nine months ended September 30, 1996.  No options have been exercised as of 
September 30, 1996.

(10) SAIF SPECIAL ASSESSMENT

         On September 30, 1996, Bank Insurance Fund ("BIF")-SAIF reform was 
enacted as part of the 1997 omnibus appropriations bill.  As part of this 
legislation, thrifts, including the Bank, will pay a special one-time 
assessment to restore the SAIF insurance fund to the statutorily prescribed 
level of 1.25% of insured deposits.  The assessment rate will be 65.7 basis 
points on SAIF-insured deposits as of March 31, 1995.  Payments for the 
one-time charge are due November 27, 1996.  In accordance with generally 
accepted accounting principles, the Bank has accrued $338,631 at September 
30, 1996, to record this assessment.

         Future quarterly SAIF assessments will be reduced beginning January 
1, 1997, to $.064 for every $100 of insured deposits, from the present level 
of $.23 per $100 of insured deposits.  Based upon the $51.5 million of 
assessable deposits at September 30, 1996, the Bank would expect to pay 
$21,372 less in insurance premiums per quarter during 1997.

                                         -10-

<PAGE>


PART II - OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

          There are no material legal proceedings to which the Registrant or 
          any of its subsidiaries is a part, or to which any of their 
          property is subject.

Item 2.   CHANGES IN SECURITIES

          Not applicable.

Item 3.   DEFAULTS UPON SENIOR SECURITIES

          Not applicable.

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

          Not applicable.

Item 5.   OTHER INFORMATION

          Not applicable.

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

          a)   Exhibits:

          NO.  DESCRIPTION                                            PAGE

          27   Financial Data Schedule                                 E-1

          b)   No Form 8-K reports were filed during the quarter.

                                         -15-

<PAGE>

 


SIGNATURES

         In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                             GATEWAY BANCORP, INC.



Date: NOVEMBER 7, 1996       By:  /S/ REBECCA R. JACKSON
----------------------       ----------------------------------
                             Rebecca R. Jackson, President and
                             Chief Executive Officer


Date: NOVEMBER 7, 1996       By:  /S/ PAMELA HOWARD
----------------------       -----------------------------------
                             Pamela Howard, Assistant Secretary/
                             Treasurer (chief accounting officer)


                                         -16-