SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------
                                    FORM 10-K

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

For the fiscal year ended      September 30, 1997
                          -------------------------------

                                     - OR -

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

For the transition period from                     to  
                               -------------------    --------------------
SEC  File Number:  0-23620

                         MID CONTINENT BANCSHARES, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

            Kansas                                             48-1146797
----------------------------------                          --------------------
(State or other jurisdiction of                              (I.R.S. Employer
of incorporation or organization)                           Identification No.)

124 W. Central,   El Dorado, Kansas                                67042
---------------------------------------                          ----------
(Address of principal executive offices)                         (Zip Code)

Registrants telephone number, including area code:              (316) 321-2700
                                                                --------------
Securities registered pursuant to Section 12(b) of the Act:          None
                                                                --------------
Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X     No 
                                             -----     ------

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

         The aggregate  market value of the voting stock held by  non-affiliates
of  the   Registrant,   based  upon  the  last  sale  price  of  such  stock  on
December 17, 1997 was $73.5 million. 

         As of December 17, 1997, the Registrant had 1,997,332  shares of Common
Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

1.  Part II -- Portions of the Registrant's 1997 Annual Report to Stockholders.

2.  Part III -- Portions of the Registrant's  Proxy Statement for Annual Meeting
    of Stockholders to be held in February - March 1998.


<PAGE>


PART I

Item 1.  Business
(Dollars in Thousands)

General

         Mid Continent Bancshares, Inc. ("Registrant" or "Company") is a unitary
savings and loan holding company that was incorporated in January 1994 under the
laws of the State of Kansas for the purpose of  acquiring  all of the issued and
outstanding common stock of Mid-Continent  Federal Savings Bank  ("Mid-Continent
Federal" or "Savings Bank"). This acquisition  occurred in June 1994 at the time
Mid-Continent  Federal changed its name from  Mid-Continent  Federal Savings and
Loan Association of El Dorado,  simultaneously  converted from a mutual to stock
institution,  and sold all of its  outstanding  capital stock to the Company and
the Company made its initial  public  offering of common stock.  As of September
30, 1997,  the Company had total assets of $405,262,  total deposits of $236,333
and  stockholders'  equity of $39,982 or 9.87% of total assets  under  generally
accepted accounting  principles ("GAAP").  The only subsidiary of the Company is
the Savings Bank. The Savings Bank has one subsidiary, Laredo Investment, Inc.

         Mid-Continent  Federal is a federally  chartered  capital stock savings
bank  located in El Dorado,  Kansas.  The Savings  Bank was founded in 1925 as a
Kansas  chartered  savings  and loan  association  under the name  Mid-Continent
Savings  and Loan  Association.  In 1935,  the  Savings  Bank  adopted a federal
charter  and  changed  its  name  to  Mid-Continent  Federal  Savings  and  Loan
Association  of El Dorado (the  "Association").  In June 1994,  the  Association
converted from a federally  chartered mutual savings and loan association to its
current form, a federally  chartered  capital stock savings bank subsidiary of a
savings and loan holding  company.  The Savings  Bank's  deposits are  federally
insured by the Federal Deposit Insurance Corporation ("FDIC").

         The Company  directs and plans the  activities of the Savings Bank, the
Company's  primary asset.  The Company's  business  activities to date have been
limited to its  investment in the Savings  Bank,  loans made to the Savings Bank
for  use  in the  normal  course  of  the  Savings  Bank's  business  and to the
Mid-Continent Federal Savings Bank Employee Stock Ownership Plan (the "ESOP") to
enable the ESOP to purchase shares of the Company's  common stock in the initial
public  offering and the  repurchase  of a portion of the  Company's  stock,  as
permitted by the Office of Thrift Supervision. References to the Company include
the Savings Bank, unless the context otherwise indicates.

         The  Company is  primarily  engaged  in  attracting  deposits  from the
general  public and using those funds to originate and sell real estate loans on
one-to-four family residences and, to a lesser extent, to originate consumer and
construction  loans for its portfolio.  The Company also  purchases  one-to-four
family  residential  loans.  The  Company  has  offices  in El  Dorado,  Newton,
Winfield,  Augusta, Derby and Wichita,  Kansas, which are located in its primary
market  area of Butler,  Cowley,  Sedgwick  and Harvey  Counties in the State of
Kansas.  The Company opened two full service branches in 1997. In addition,  the
Company invests in mortgage-related  

                                       2

<PAGE>

securities  and  investment   securities.   The  Company  offers  its  customers
fixed-rate,  and adjustable-rate mortgage loans ("ARM"), as well as FHA/VA loans
and  consumer   loans,   including  home  equity  and  savings   account  loans.
Adjustable-rate   mortgage  loans  and  short-term   fixed-rate  mortgage  loans
generally  are  originated  for  retention  in  the  Company's  portfolio  while
long-term  fixed-rate  mortgage  loans are  generally  sold  into the  secondary
market. All consumer loans are retained in the Company's portfolio.

         The principal sources of funds for the Company's lending activities are
deposits and the amortization, repayment and maturity of loans, mortgage-related
securities,  and investment securities and borrowings from the Federal Home Loan
Bank.   Principal   sources   of  income  are   interest   and  fees  on  loans,
mortgage-related  securities,  investment securities, and deposits held in other
financial  institutions.  The  Company's  principal  expense is interest paid on
deposits.

         The Company is actively  engaged in the  purchase  and sale of mortgage
loans  through  a  correspondent   network.  These  purchased  loans  and  loans
originated by the Company are then sold,  generally without  recourse,  into the
secondary market with the Company generally  retaining the servicing rights. The
Company  is  contingently  liable  on  certain  loans  sold with  recourse.  The
principal  balance of loans sold with  recourse  totaled  approximately  $207 at
September 30, 1997.

         The Company has striven to increase its other income by increasing  its
portfolio  of loans  serviced  for others.  The  Company  expects to continue to
increase the size of its portfolio of loans serviced for others.  This portfolio
totaled  approximately  $1,291,331  as of September  30, 1997.  Income from loan
servicing fees, net of amortization and before operating expenses,  has provided
a substantial  portion of net income in recent years and totaled $3,099,  before
income tax, for the fiscal year ended September 30, 1997.

         The counties of Butler,  Cowley,  Sedgwick  and Harvey,  Kansas are the
Company's  primary  market area for  deposits  and are located in south  central
Kansas. This area was founded on agriculture and the oil and gas industry, which
continue  to play a major role in the  economy.  This area has also  attracted a
variety of industries  including  aircraft,  recreational and camping equipment,
balloon plant,  meat  processing,  refineries,  state and private  universities,
junior  colleges,  electronics  manufacturing,  and heating and air conditioning
equipment  manufacturing.  This area also  includes the health  care,  financial
service,  and other service related industries,  including the  wholesale/retail
trade industries.  Also, within Butler County are located two state prisons. The
largest employment sectors in the Company's market area are aircraft, industrial
manufacturing, and retail.

Lending Activities

         General.  The Company's loan portfolio consists of fixed-rate  mortgage
loans and adjustable-rate  mortgage loans ("ARMs") secured by one-to-four family
residences  and, to a much lesser extent,  commercial  real estate,  mobile home
loans,  and real estate  construction  loans.  As of  September  30,  1997,  the
Company's total  portfolio of loans (the "loan  portfolio") was $233,311 (net of
loans in process,  deferred fees and costs and  allowance  for loan losses),  of


                                       3

<PAGE>

which $237,197 or 101.67%,  was secured by one-to-four  family  residential real
estate,  $607,  or 0.26%,  was secured by commercial  real estate,  and $128, or
0.05%, was secured by mobile homes.  The following table sets forth  information
about the company's loan portfolio at September 30, of each year presented.

<TABLE>
<CAPTION>
                                                                    (Dollars in Thousands)

                                    1993                1994                1995              1996                1997
                                    ----                ----                ----              ----                ----
                                 $        %        $          %         $        %         $         %         $        %
                                 -        -        -          -         -        -         -         -         -        -
<S>                           <C>      <C>      <C>        <C>      <C>       <C>      <C>        <C>      <C>       <C>    
TYPE OF LOANS:
Real Estate Loans
   Residential                $53,727   94.89%  $ 96,631    94.52%  $117,216   93.93%  $159,672    93.29%   219,819   94.22% 
   Construction                   569    1.00%     6,976     6.82%    10,351    8.29%    17,367    10.15%    17,534    7.52%
   Commercial                   1,809    3.19%     1,210     1.18%     1,212    0.97%       964     0.56%       813    0.35%
   Land                            67    0.12%        73     0.07%       599    0.48%        49     0.03%        44    0.02%
Consumer Loans
   Mobile home loans              931    1.60%       716     0.70%       499    0.40%       305     0.18%       128    0.05%
   Savings account loans          479    0.85%       699     0.68%       688    0.55%       769     0.45%       795    0.34%
   Home improvement loans       1,031    1.82%       873     0.85%       414    0.33%     1,012     0.59%       962    0.41%
   Automobile loans                31    0.05%       682     0.67%     1,050    0.84%     1,115     0.65%     1,292    0.55%
   Other                          182    0.32%       225     0.22%       507    0.41%       890     0.52%     1,454    0.62%
                              -------  ------   --------   ------    -------   ------   --------   ------   --------  ------ 
      Total                    58,826  103.89%   108,085   105.71%   132,536  106.20%   182,143   106.42%   242,841  104.08%

Less:
   Loans in process            (1,036)  (1.83%)   (4,581)   (4.49%)   (6,624)  (5.30%)  (10,407)   (6.08%)   (9,547)  (4.09%)
   Deferred loan fees
    and costs                    (821)  (1.53%)     (987)   (0.97%)     (693)  (0.56%)     (157)   (0.09%)      482    0.21%
   Allowance for loan
    losses                       (346)  (0.61%)     (274)    0.27%      (423)  (0.34%)     (421)   (0.25%)     (465)  (0.20%) 
                              -------  ------   --------  -------   --------  ------   --------   ------   --------  ------ 
Total loans, net              $56,623  100.00%  $102,243   100.00%  $124,796  100.00%  $171,158   100.00%   233,311  100.00%
                              =======  ======   ========  =======   ========  ======   ========   ======   ========  ====== 

Total mortgage-related 
  securities, net             $42,856  100.00%  $ 45,030   100.00%  $ 40,004  100.00%  $ 34,383   100.00%  $ 28,124  100.00%
                              =======  ======   ========   ======   ========  ======   ========   ======   ========  ====== 


TYPE OF SECURITY:
Residential real estate
   1 to 4 family               53,900   95.19%   103,607  101.34%    127,567  102.22%   176,843   103.33%   237,197  101.67%
   Other dwelling units           396    0.70%       275    0.27%        254    0.20%       231     0.13%       362    0.16%
Commercial real estate          1,809    3.19%       935    0.91%        958    0.77%       929     0.54%       607    0.26%
Land                               67    0.12%        73    0.07%        599    0.48%        49     0.03%        44    0.02%
Consumer loans
   Mobile homes                   931    1.64%       716    0.70%        499    0.40%       305     0.18%       128    0.05%
   Savings accounts               479    0.85%       699    0.68%        688    0.55%       769     0.45%       795    0.34%
   Home improvement             1,031    1.82%       873    0.85%        414    0.33%     1,012     0.59%       962    0.41%
   Automobiles                     31    0.05%       682    0.67%      1,050    0.84%     1,115     0.65%     1,292    0.55%
   Other                          182    0.32%       225    0.22%        507    0.41%       890     0.52%     1,454    0.62%
                              -------  ------  ---------  ------    -------   ------   --------   ------   --------  ------ 
      Total                    58,826  103.89%   108,085  105.71%    132,536  106.20%   182,143   106.42%   242,841  104.08%

Less:
Loans in process               (1,036)  (1.83%)   (4,581)  (4.49%)    (6,624)  (5.30%)  (10,407)   (6.08%)   (9,547)  (4.09%)
Deferred loan fees
  and costs                      (821)  (1.53%)     (987)  (0.97%)      (693)  (0.56%)     (157)   (0.09%)      482    0.21%
Allowance for loan losses        (346)  (0.61%)     (274)  (0.27%)      (423)  (0.34%)     (421)   (0.25%)     (465)  (0.20%)
                              -------  ------  ---------  ------    --------   ------   --------   ------   --------  ------ 
Total loans, net              $56,623  100.00% $ 102,243  100.00%   $124,796  100.00%  $171,158   100.00%  $233,311  100.00%
                              =======  ======  =========  ======    ========  ======   ========   ======   ========  ====== 
Total mortgage-related
  securities, net             $42,856  100.00% $  45,030  100.00%   $ 40,004  100.00%  $ 34,383   100.00%  $ 28,124  100.00%
                              =======  ======  =========  ======    ========  ======   ========   ======   ========  ====== 
</TABLE>

                                       4

<PAGE>



Loan Maturity. The following table sets forth the maturity of the Company's loan
portfolio  at  September  30, 1997.  The table does not include  prepayments  or
scheduled principal  repayments.  Prepayments and scheduled principal repayments
on loans  totaled  $30,688,  $44,858,  and  $58,362,  for the three  years ended
September 30, 1995, 1996 and 1997, respectively.  Adjustable-rate mortgage loans
are shown as maturing based on contractual maturities.

<TABLE>
<CAPTION>


                                             Multi-
                             1-4 Family    Family and
                             Real Estate   Commercial
                              Mortgage     Real Estate   Construction      Consumer      Total
                              --------     -----------   ------------      --------      -----
                                                        (In Thousands)
<S>                           <C>          <C>             <C>             <C>         <C>      
Amounts Due:
Within 1 year                 $      25    $      38       $  17,534       $     759   $  18,356
                              ---------    ---------       ---------       ---------   ---------
                                                                          
After 1 year                                                              
   1 to 5 years                   2,801          169                           2,339       5,309
   Over 5 years                 216,993          650                           1,533     219,176
                              ---------    ---------       ---------       ---------   ---------
                                                                          
Total due after one year        219,794          819                           3,872     224,485
                              ---------    ---------       ---------       ---------   ---------
                                                                          
                      Total   $ 219,819    $     857       $  17,534           4,631     242,841
                              =========    =========       =========       =========   
                                                                           
Less:                                                                     
Allowance for loan loss                                                                     (465)
Loans in process                                                                          (9,547)
Deferred  loan  origination                                               
fees and cost                                                                                482
                                                                                       ---------
                                                                          
      Loans receivable, net                                                            $ 233,311
                                                                                       =========
</TABLE>

                                                                       

         The following table sets forth the dollar amount of all loans due after
September  30,  1998,  which have  predetermined  interest  rates and which have
floating or adjustable interest rates.

                                                    Floating or
                                            Fixed   Adjustable
                                            Rate      Rates      Total
                                            ----      -----      -----
                                                 (In Thousands)
One-to-four family                        $ 75,499   $144,295   $219,794
Multi-family and Commercial real estate        512        307        819
Construction                                     0          0          0
Consumer                                     3,592        280      3,872
                                          --------   --------   --------
      Total                               $ 79,603   $144,882   $224,485
                                          ========   ========   ========



                                        5

<PAGE>

         The  following  table  sets  forth the  contractual  maturities  of the
Company's mortgage-backed securities portfolio as of September 30, 1997.

<TABLE>
<CAPTION>
                                                       2001 to          2003 to         2008 and
      1998             1999             2000            2002             2007          Thereafter         Total
      ----             ----             ----            ----             ----          ----------         -----
                                                 (Dollars in Thousands)
<S>                   <C>              <C>             <C>              <C>             <C>              <C>    
       $12            $1,197           $ - 0 -         $3,931           $ - 0 -         $22,984          $28,124
</TABLE>


         Residential  Loans. The Company's  primary lending activity consists of
the  origination of one-to-four  family,  owner-occupied,  residential  mortgage
loans secured by property  located in the Company's  primary  market area of the
state of Kansas. At September 30, 1997, the Company had $237,353, or 101.74%, of
its net loan portfolio  invested in these loans.  Management  believes that this
policy  of  focusing  on  one-to-four  family  lending  has  been  effective  in
contributing  to net interest  income while reducing credit risk by keeping loan
delinquencies and losses to a minimum.

         The Company  offers ARMs that adjust  every one to three years and have
terms from 10 to 30 years, as well as ARMs that adjust annually,  but only after
the third year. One year ARMs have  adjustments  that are limited to 2% per year
and 6% over the life of the loan,  and ARMs  that are fixed for the first  three
years and adjust annually thereafter have adjustments that are limited to 2% per
year and 5% over the life of the loan.  The  Company  also  offers  conventional
fixed-rate  mortgage  loans  with  terms  from 10 to 30  years.  Generally,  the
interest rates on ARMs are based on treasury bill indices. The Company considers
the market  factors  and  competitive  rates on loans as well as its own cost of
funds when  determining the rates on the loans that it offers.  The Company also
has a network of  correspondents  from whom the  Company  may be  referred  both
fixed- and  adjustable-rate  real estate mortgage loans.  The Company expects to
expand its purchases and sales of mortgage loans,  subject to market conditions.
Since  1989,  the Company has sold most of its  originated  fixed-rate  mortgage
loans into the secondary market. The Company does, however,  service most of the
loans sold since 1991.

         Generally, during periods of rising interest rates, the risk of default
on an ARM is  considered  to be greater than the risk of default on a fixed-rate
loan due to the upward  adjustment of interest  costs to the  borrower.  To help
reduce such risk, the Company  qualifies the loan at the fully indexed  interest
rate, as opposed to the original  interest  rate. ARM loans may be made at up to
95% loan to value  ratio.  The Company  does not  originate  ARMs with  negative
amortization.

         Regulations  limit the amount which a savings  association  may lend in
relationship  to the  appraised  value of the real estate  securing the loan, as
determined  by an appraisal at the time of loan  origination.  Such  regulations
permit a maximum  loan-to-value  ratio of 100% for residential  property and 90%
for all other real  estate  loans.  The  Company's  lending  policies,  however,
generally limit the maximum loan-to-value ratio to 80% of the appraised value of
the property, based on an independent or staff appraisal. When the Company makes
a loan in  excess  of 80% of the  appraised  value or  purchase  price,  private
mortgage  insurance is required for at least the 


                                        6

<PAGE>

amount  of the  loan  in  excess  of 80% of the  appraised  value.  The  Company
generally  does not make  conventional  mortgage  loans in  excess of 95% of the
appraised value.

         The  loan-to-value  ratio,   maturity,  and  other  provisions  of  the
residential  real estate loans made by the Company  reflect the policy of making
loans generally below the maximum limits permitted under applicable regulations.
The Company requires an independent  appraisal,  title  insurance,  flood hazard
insurance (if  applicable),  and fire and casualty  insurance on all  properties
securing real estate loans made by the Company.  The Company  reserves the right
to approve  the  selection  of which title  insurance  companies'  policies  are
acceptable to insure the real estate in the loan transactions.

         While  one-to-four  family  residential  real estate loans are normally
originated with 10-30 year terms,  such loans typically  remain  outstanding for
substantially  shorter  periods.  This is because  borrowers  often prepay their
loans in full upon sale of the property  pledged as security or upon refinancing
the original loan. In addition,  substantially  all of the  fixed-interest  rate
loans in the Company's loan portfolio contain due-on-sale clauses providing that
the Company may declare the unpaid  amount due and payable  upon the sale of the
property  securing the loan. The Company enforces these  due-on-sale  clauses to
the extent permitted by law. Thus, average loan maturity is a function of, among
other  factors,  the level of  purchase  and sale  activity  in the real  estate
market,  the  prevailing  interest  rates,  and the  interest  rates  payable on
outstanding loan.

         Multi-Family   Loans.   The  Company  does  not   presently   originate
multi-family  loans.  The  existing  portfolio,  $362  at  September  30,  1997,
consisted of  permanent  loans  secured by  apartments.  Multi-family  loans are
generally  considered  to have more credit risk than  traditional  single family
mortgage loans.

         Construction  Loans.  As of September 30, 1997, the Company had $17,534
of  construction  loans or 7.52% of the  Company's  total  loan  portfolio.  The
Company  originates  construction  loans within its market area for custom homes
built for specific borrowers. The Company also originates construction loans for
homes being built by  professional  builders for which a final retail  purchaser
has not yet been identified.  Construction  financing is generally considered to
involve a higher  degree of risk of loss than  long-term  financing on improved,
occupied real estate.  Risk of loss on a construction  loan is dependent largely
upon the accuracy of the initial  estimate of the property's value at completion
of construction  or development  and the estimated cost (including  interest) of
construction. During the construction phase, a number of factors could result in
delays and cost  overruns.  If the estimate of  construction  costs proves to be
inaccurate,  the  Company may be  required  to advance  funds  beyond the amount
originally committed to permit completion of the development. If the estimate of
value proves to be inaccurate, the Company may be confronted, at or prior to the
maturity of the loan,  with a project having a sales value which is insufficient
to assure  full  repayment.  Construction  loans  originated  for homes built by
professional  builders for which the ultimate  purchaser has not been identified
have the increased risk that the builder may be unable to locate a purchaser and
may be unable to continue funding the monthly interest and principal expense.


                                       7

<PAGE>

         Consumer Loans.  Mid-Continent  views consumer  lending as an important
component of its business  operations  because  consumer  loans  generally  have
shorter terms and higher yields,  thus reducing  exposure to changes in interest
rates. In addition,  the Company believes that offering  consumer loans helps to
expand and create stronger ties to its customer base. Consequently,  the Company
intends to increase its consumer lending by marketing consumer loans to existing
and potential customers.  All branches are now able to originate consumer loans.
Regulations permit federally chartered savings  associations to make secured and
unsecured  consumer loans up to 35% of the Company's  assets.  In addition,  the
Company has lending  authority  above the 35% limit for certain  consumer loans,
such as home improvement loans and loans secured by savings accounts.

         Consumer loans consist of personal,  unsecured loans,  home improvement
loans,  automobile loans, mobile home loans, and savings account loans, at fixed
rates. Of these consumer loans, as of September 30, 1997, approximately $128, or
0.05% of the  Company's  total loan  portfolio  consisted  of mobile home loans.
These mobile home loans were  obtained in 1986.  The Company does not  originate
mobile  home loans and expects  that the size of the mobile home loan  portfolio
will continue to decline as  outstanding  loans are repaid.  As of September 30,
1997,  total consumer loans aggregated  $4,631,  or 1.97% of the Company's total
loan portfolio.

         The underwriting  standards  employed by the Company for consumer loans
include a determination of the applicant's payment history on other debts and an
assessment of liability to meet existing obligation and payments on the proposed
loan. In addition,  the stability of the applicant's monthly income from primary
employment is considered during the underwriting  process.  Creditworthiness  of
the applicant is of primary  consideration;  however,  the underwriting  process
also  includes a  comparison  of the value of the  security  in  relation to the
proposed loan amount.

         Consumer loans entail greater credit risk than do residential  mortgage
loans, particularly in the case of consumer loans which are unsecured or secured
by assets that depreciate rapidly, such as automobiles, mobile homes, boats, and
recreational  vehicles.  In such cases,  repossessed  collateral for a defaulted
consumer  loan  may  not  provide  an  adequate  source  of  repayment  for  the
outstanding  loan and the remaining  deficiency  often does not warrant  further
substantial  collection  efforts  against the borrower.  In particular,  amounts
realizable on the sale of repossessed  automobiles may be significantly  reduced
based  upon the  condition  of the  automobiles  and the lack of demand for used
automobiles.  The Company adds a general  provision  to its  consumer  loan loss
allowance,  based on general  economic  conditions,  prior loss  experience  and
management's periodic evaluation.

         Commercial Real Estate Loans. The Company does not presently  originate
commercial real estate loans. The existing portfolio, $607, or 0.26% of the loan
portfolio as of  September  30, 1997,  consisted of permanent  loans  secured by
small office buildings, churches and other non-residential buildings. Commercial
real estate secured loans were, in the past,  originated in amounts up to 80% of
the appraised  value of the property.  Such appraised value was determined by an
independent appraiser previously approved by the Company.

                                       8

<PAGE>

         Loans secured by  commercial  real estate  generally  involve a greater
degree of risk than  residential  mortgage loans and carry larger loan balances.
This  increased  credit  risk is a result  of  several  factors,  including  the
concentration  of  principal  in a limited  number of loans and  borrowers,  the
effects of general economic  conditions on income  producing  properties and the
increased  difficulty  of  evaluating  and  monitoring  these  types  of  loans.
Furthermore,  the  repayment  of loans  secured  by  commercial  real  estate is
typically  dependent  upon the  successful  operation of the related real estate
project. If the cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired. As of September 30, 1997, the largest commercial
real estate loan had a balance of $162 and was performing in accordance with its
terms.

         Loan  Solicitation  and Processing for Portfolio  Loans.  The Company's
source  of  mortgage  loan  applications  is  referrals  from  existing  or past
customers,  real estate brokers,  call-in and walk-in customers, and also as the
result of advertising. The Company has, in the past, added to its portfolio some
of the adjustable-rate  loans and shorter term fixed-rate loans and, to a lesser
extent,  some of the short term balloon loans  obtained  from the  correspondent
network that the Company uses for its mortgage banking operations.

         All  loans  are  underwritten  and  approved,  or  denied,  by the loan
committee,  including  loans obtained  through the  correspondent  network.  All
single-family  loans approved by the loan committee are ratified by the Board of
Directors.

         The Company uses  independent fee appraisers on all real estate related
transactions  that are  originated  in the  branches of the Company and for each
purchased  loan.  Each fee  appraiser  used must be  licensed  and  approved  by
Mid-Continent's  Board  of  Directors.  Each  purchased  loan  is  reviewed  and
underwritten as if Mid-Continent  were originating the loan. It is the Company's
policy to obtain title and fire and casualty insurance for all mortgage loans.
If appropriate, flood insurance is also required.

         Loan Solicitation and Processing for Mortgage Banking  Operations.  The
Company solicits fixed- and adjustable-rate  mortgage loans through a network of
approximately  125  correspondents  located primarily in Kansas and Oklahoma for
sale in the secondary mortgage market.

         The Company regularly  advises its  correspondents of the rates it will
pay to purchase  mortgage loans.  All loans are  underwritten  and approved,  or
denied, by the loan committee. All single family loans are reviewed and approved
by both the loan  committee  and the Board of  Directors.  The Company  issues a
commitment  letter by which the Company  will  extend the offer of a  particular
rate and  terms  for a period of up to 60 days.  The  Company's  correspondents,
typically  other  financial  institutions,  close  the  loan in the  name of the
correspondent  and sell the loan to the  Company  based on the terms  previously
established for the loan.

         The  Company  generally  retains the  servicing  rights to the loans it
sells. The Company also sells mortgage loans originated  through  referrals from
existing or past customers,  real estate brokers, call-in and walk-in customers,
and also as the result of advertising. 

                                        9

<PAGE>

Origination, Purchase and Sale of Loans

         During the  fiscal  year  ended  September  30,  1997,  the  Registrant
originated  $115,236  in loans,  purchased  $219,374  in loans  (all  secured by
one-to-four family residences), and sold $215,076 in loans (including $85,067 of
loans securitized primarily through GNMA).

         Loan Sales. The Company currently sells most of its fixed-rate mortgage
loan originations to FNMA, GNMA, FHLMC and private secondary market  purchasers.
The Company does not have  separate  underwriting  policies for loans to be sold
and loans to be retained.  Loans originated for sale are  underwritten  with the
same  standards  used to originate  loans to be retained in the  Company's  loan
portfolio.  The Company pools its FHA and VA loans into GNMA pools that are then
sold.  Mortgage loans are typically  sold with retention of servicing  rights by
the Company but generally without recourse.

         Loan  Commitments.  The Company issues written,  formal  commitments to
prospective borrowers on all real estate approved loans. The commitment requires
acceptance within 60 days of the date of issuance. As of September 30, 1997, the
Company had $87,584 of commitments to originate  mortgage loans. The Company has
commitments to sell, with servicing rights retained,  $34,191 of these loans and
the intent to add $17,486 of loans to its  investment in loans  receivable to be
held to maturity.

         Loan  Processing and Servicing  Fees. In addition to interest earned on
loans, the Company  recognized fees and service charges which consist  primarily
of fees on loans serviced for others.  The Company recognized net loan servicing
fees of $3,102,  $3,128 and $3,099,  before  operating  expenses,  for the years
ended  September 30, 1995,  1996,  and 1997,  respectively.  As of September 30,
1997, loans serviced for others totaled  approximately  $1,291,331.  The Company
has a strategy in place to expand the amount of loans serviced for others.  This
strategy  requires the increase in both loans originated by the Company and sold
into the  secondary  market with  servicing  retained as well as the purchase of
loans  originated  out of Kansas for the purpose of resale with retention of the
servicing rights.

         Loans to One  Borrower.  Regulations  limit loans to one borrower in an
amount  equal to (i) 15% of  unimpaired  capital  and  retained  earnings  on an
unsecured basis and an additional amount equal to 10% of unimpaired  capital and
retained  earnings  if the loan is  secured  by  readily  marketable  collateral
(generally,  financial instruments,  not real estate) or (ii) $500, whichever is
higher.  The Company's  maximum  loan-to-one  borrower  limit was  approximately
$5,427 as of September 30, 1997.

         As of September 30, 1997, the Company's largest aggregation of loans to
one  borrower  was  two  loans  secured  by  62  one-to-four  family  residence,
originated  prior to August  1989 in the  amount of $3,039  having a balance  of
$3,710 as of September 30, 1997.  These loans are secured by non-owner  occupied
one-to-four  family  units  located in Wichita,  Kansas and were  performing  in
accordance  with their terms as of September  30, 1997.  They were  restructured
during  October 1994. No provision for loss was considered  necessary,  based on
the  restructured  terms and the cash  flows  expected  to be  generated  by the
underlying collateral.

                                       10

<PAGE>


         Loan Delinquencies.  The Company's  collection  procedures provide that
when a mortgage loan is 16 days past due, a computer printed  delinquency notice
is sent and borrowers are contacted by telephone to discuss the delinquency.  If
the loan  continues  in a  delinquent  status for 90 days or more,  the Board of
Directors  of the Company  generally  approves  the  initiation  of  foreclosure
proceedings unless other repayment  arrangements are made. Collection procedures
for non-mortgage loans generally begin after is loan is ten days delinquent.

         Loans are  reviewed on a regular  basis and are  generally  placed on a
non-accrual status when the loan becomes more than 90 days delinquent or, in the
opinion of  management,  the  collection  of  additional  interest is  doubtful.
Interest  accrued and unpaid at the time a loan is placed on non-accrual  status
is charged against interest income. Subsequent payments, if any, are recorded as
interest income.

         Real estate  acquired by the Company as a result of foreclosure or by a
deed in lieu of foreclosure  is classified as foreclosed  real estate until such
time as it is sold. When foreclosure real estate is acquired,  it is recorded at
fair value as of the date of  foreclosure  or transfer less  estimated  disposal
costs. It is  subsequently  carried at the lower of the new basis (fair value at
foreclosure  or transfer) or fair value.  As of September 30, 1997,  the Company
had no loans  that were  considered  troubled  debt  restructurings  within  the
meaning of SFAS No. 15.

Non-Performing Assets

<TABLE>
<CAPTION>
                                                     At September 30,
                                              1993    1994   1995     1996   1997
                                              ----    ----   ----     ----   ----
                                                      (Dollars in Thousands)
<S>                                           <C>     <C>     <C>     <C>     <C> 
Loans accounted for on a non-accrual basis:
Mortgage loans:
   Permanent loans secured by one-to-four
     family dwelling units                    $ 45    $125    $368    $445    $898
   All other mortgage loans                      0       0       0       0       0
Non-mortgage loans:
   Consumer                                      0      22      24      39      34
                                              ----    ----    ----    ----    ----

Total                                         $ 45    $147    $392    $484    $932
                                              ====    ====    ====    ====    ====

Accruing loans which are contractually past
  due 90 days or more                         $  0    $  0    $  0    $  0    $  0
Total non-accrual and accrual loans             45     147     392     484     932
REO                                            837      46     187      28      41
                                              ----    ----    ----    ----    ----

Total non-performing assets                   $882    $193    $579    $512    $973
                                              ====    ====    ====    ====    ====

Total non-accrual loans to net loans          0.08%   0.12%   0.31%   0.28%   0.39%
Total non-accrual loans to total assets       0.03%   0.06%   0.14%   0.14%   0.23%
Total non-performing assets to total assets   0.52%   0.08%   0.21%   0.15%   0.24%
</TABLE>


         Accrued interest on non-performing  loans for the years ended September
30, 1996 and 1997 totaled approximately $45 and $79.

                                       11

<PAGE>

         During 1995, the Savings Bank restructured  loans with a carrying value
of approximately $3,039. No provision for loss was considered necessary based on
the  restructured  terms and the cash  flows  expected  to be  generated  by the
underlying  collateral.  The Savings  Bank did not engage in any  troubled  debt
restructurings  during the years ended  September  30, 1995,  1996 and 1997.  No
loans were  considered  impaired  under  SFAS No.  114  during  the years  ended
September 30, 1995, 1996 and 1997.

         Classified Assets. OTS regulations provide for a classification  system
for problem assets of insured institutions that covers all problem assets. Under
this  classification   system,   problem  assets  of  insured  institutions  are
classified  as  "substandard",  "doubtful",  or "loss".  An asset is  considered
"substandard"  if it is  inadequately  protected  by the  current  net worth and
paying  capacity  of  the  obligor  or  of  the  collateral   pledged,  if  any.
"Substandard"  assets include those characterized by the "distinct  possibility"
that the insured  institution  will sustain "some loss" if the  deficiencies are
not  corrected.  Assets  classified  as  "doubtful"  have all of the  weaknesses
inherent in those classified  "substandard",  with the added characteristic that
the weaknesses present make "collection or liquidation in full", on the basis of
currently  existing  facts,  conditions  and values,  "highly  questionable  and
improbable".  Assets  classified as "loss" are those considered  "uncollectible"
and  of  such  little  value  that  their  continuance  as  assets  without  the
establishment  of a specific loss reserve is not  warranted.  Assets  designated
"special  mention" by management are assets  included on the Company's  internal
watchlist  because of  potential  weakness  but which do not  currently  warrant
classification in one of the aforementioned categories.

         When  an  insured  institution  classified  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowance which have been  established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem  assets as  "loss",  it is  required  either  to  establish  a  specific
allowance for losses equal to 100% of that portion of the asset so classified or
to  charge  off  such  amount.   An   institution's   determination  as  to  the
classification  of its  assets  and the amount of its  valuation  allowances  is
subject to review by the OTS,  which may order the  establishment  of additional
general or  specific  loss  allowances.  A portion of  general  loss  allowances
established to cover possible losses related to assets classified as substandard
or doubtful may be included in determining an institution's  regulatory capital,
while specific valuation  allowances for loan losses generally do not qualify as
regulatory  capital.  At  September  30,  1997 the  Company  had a general  loss
allowance for loans and REO of $484.

                                       12

<PAGE>
                                                   At September 30,
                                                         1997
                                                 ---------------------
                                                    (In Thousands)
Special Mention                                                $4,559
Substandard                                                       116
Doubtful assets                                                     0
Loss assets                                                         1
General loss allowance                                            484
Specific loss allowance                                             0
Charge-offs, net                                                  124



         REO.  Real  estate  owned or  acquired  by the  Company  as a result of
foreclosure,  judgment or by a deed in lieu of foreclosure is classified as real
estate owed until it is sold.  When  property is acquired it is recorded at fair
value as of the date of foreclosure or transfer less estimated  disposal  costs.
It is  subsequently  carried  at the  lower  of the new  basis  (fair  value  at
foreclosure or transfer) or fair value.

         The Company held REO with a net balance of $41 as of September 30, 1997
consisting of two  one-to-four  family  dwellings with a carrying value totaling
$34. An allowance for loss of $19 is carried on real estate  owned.  See Note 10
to the Notes to Consolidated Financial Statements.

         Allowance for Loan and Real Estate Losses. It is management's policy to
provide for losses on  unidentified  loans in its loan  portfolio and foreclosed
real  estate.  A  provision  for loan losses is charged to  operations  based on
management's  evaluation  of the  potential  losses  that may be incurred in the
Company's loan portfolio. Such evaluation,  which includes a review of all loans
of which full  collectibility  of interest and  principal  may not be reasonably
assured,  considers,  among other matters, the estimated net realizable value of
the underlying collateral.  During the years ended September 30, 1995, 1996, and
1997, the Company  charged $224, $75, and $143,  respectively,  to the provision
for loan losses and $81, $18, and $10, respectively, to the provision for losses
on REO or in judgment and other repossessed assets.

         Management  will  continue  to review  the  entire  loan  portfolio  to
determine the extent, if any, to which further additional loss provisions may be
deemed  necessary.  There can be no assurance that the allowance for losses will
be adequate to cover losses which may in fact be realized in the future and that
additional provisions for losses will not be required.

         The  distribution  of the  Company's  allowance  for losses on loans is
shown below at the dates indicated:

                                       13

<PAGE>
<TABLE>
<CAPTION>
                                                                   (Dollars in Thousands)
                                                                       At September 30,
                          1993                  1994               1995                1996                 1997
                          ----                  ----               ----                ----                 ----
                               Percent               Percent           Percent             Percent              Percent
                               of Loans              of Loans          of Loans            of Loans             of Loans
                               in Each               in Each           in Each             in Each              in Each
                               Category              Category          Category            Category             Category
                               to Total              to Total          to Total            to Total             to Total
                       Amount   Loans      Amount     Loans    Amount   Loans      Amount   Loans     Amount     Loans
                       ------  --------    ------    --------  ------  --------    ------  --------   ------    -------- 
<S>                     <C>    <C>          <C>     <C>         <C>    <C>          <C>    <C>         <C>      <C>   
Residential real        $307    92.13%      $224     95.98%     $365    96.49%      $351    97.06%     $381      97.75%
estate
Commercial real           18     3.19%        10      0.90%       10     0.98%        10     0.55%        7       0.28%
estate
Consumer                  21     4.68%        41      3.12%       48     2.53%        60     2.39%       77       1.97%
                        ----   ------       ----    ------      ----   ------       ----   ------      ----     ------ 

Total                   $346   100.00%      $275    100.00%     $423   100.00%      $421   100.00%     $465     100.00%
                        ====   ======       ====    ======      ====   ======       ====   ======      ====     ====== 
</TABLE>
Analysis of the Allowance for Loan Losses.

         The  following  table  sets  forth  information  with  respect  to  the
Company's allowance for loan losses at the dates indicated:

<TABLE>
<CAPTION>
                                                                    At September 30,
                                             1993           1994          1995          1996          1997
                                             ----           ----          ----          ----          ----
                                                                 (Dollars in Thousands)
<S>                                        <C>           <C>           <C>           <C>           <C>      
Total loans outstanding, net               $  56,623     $ 102,243     $ 124,796     $ 171,158     $ 233,311
                                           =========     =========     =========     =========     =========
Average loans outstanding                     65,959        63,751       119,247       134,013       193,512
                                           =========     =========     =========     =========     =========
Allowance balances (at beginning 
  of period)                                     283           346           275           423           421
Provision for loan losses                        154             6           224            75           143
Charge-offs:
     Residential                                 (65)          (67)          (60)          (64)          (88)
     Consumer                                    (30)          (13)          (21)          (26)          (28)
Recoveries
     Residential                                   3             2             4             6            11
     Consumer                                      1             1             1             7             6
                                           ---------     ---------     ---------     ---------     ---------
Allowance balance (at end of period)       $     346     $     275     $     423     $     421           465
                                           =========     =========     =========     =========     =========
Allowance  for loan  losses as a percent
of total loans outstanding                      0.61%         0.27%         0.34%         0.25%         0.20%
Net loans  charged  off as a percent  of
average loans outstanding                       0.14%         0.12%         0.06%         0.06%         0.05%
</TABLE>

Analysis of the Allowance for REO

<TABLE>
<CAPTION>
                                                      At September 30,
                                        1993      1994      1995      1996      1997
                                        ----      ----      ----      ----      ----
                                                    (Dollars in Thousands)
<S>                                    <C>       <C>       <C>       <C>       <C>  
Total REO, net                         $ 837     $  46     $ 187     $  28     $  41
                                       =====     =====     =====     =====     =====
Allowance balance (at beginning
  of period)                              36        25        16        51        34
Provision for loss                        29        59        81        18        10
Charge-offs                              (40)      (76)      (47)      (35)      (25)
Recoveries                                --         8         1        --        --
                                       -----     -----     -----     -----     -----
Allowance balance (at end of period)      25        16        51        34        19
                                       =====     =====     =====     =====     =====

Allowance for loss on REO to net REO    2.99%    34.78%    27.27%   121.43%    46.34%
                                       =====     =====     =====     =====     =====
</TABLE>

                                       14
<PAGE>

Loan Servicing

         General.   The  Company's   loan  servicing   portfolio   represents  a
substantial asset  which, in the opinion of management,  is expected to generate
a significant  source of fee income.  As of September 30, 1997,  the Company was
servicing  approximately  $1,291,331  of loans  for  others.  The  portfolio  of
mortgage   loans  serviced  for  others  at  September  30,  1997  consisted  of
approximately  22,750 loans with an average balance of  approximately  $57 and a
weighted average service fee of approximately  0.42% per annum.  Since 1988, the
loan servicing  portfolio has been  increasing  and the Company  expects that it
will continue to increase.  In management's  view, the loan servicing  portfolio
also  acts to some  degree  as a hedge  for the  lending  and  mortgage  banking
components of the Company's business.

         The  Company  receives  fees from a variety of  institutional  mortgage
owners  in  return  for  performing  the  traditional   services  of  collecting
individual  payments and managing the loan  portfolio.  Loan servicing  includes
processing  payments,  accounting  for loan funds and collecting and paying real
estate  taxes,  hazard  insurance and other  loan-related  items such as private
mortgage  insurance.  When the Company  receives the gross mortgage payment from
individual borrowers,  it remits to the investor in the mortgage a predetermined
net amount  based on the yield on that  mortgage.  The  difference  between  the
coupon on the underlying  mortgage and the  predetermined net amount paid to the
investor is the gross loan  servicing  fee.  In  addition,  the Company  retains
certain  amounts in escrow for the  benefit of the lender for which the  Company
incurs no interest  expense but is able to lend. As of September  30, 1997,  the
Company  held $19,870 in borrower  escrow and  principal  and interest  payments
related to loans serviced for others.  These amounts are categorized as deposits
for financial reporting purposes.

         Loan Servicing Portfolio.  The loan servicing portfolio as of September
30, 1997 was composed  primarily of GNMA mortgage loan  (66.17%),  FNMA mortgage
loans  (7.80%),  and FHLMC  mortgage  loans  (25.57%).  The  balance of the loan
servicing  portfolio as of September 30, 1997  consisted of loans serviced for a
variety of private  investors.  The loans serviced for others are  predominantly
secured by property  located in Kansas.  As of September 30, 1997, the portfolio
also included loans secured by property located  primarily in Kansas,  Oklahoma,
Louisiana, Michigan and Illinois.

         As a  result  of the  increase  in the size of the  portfolio  of loans
serviced for others,  gross loan  servicing  fees have increased from $1,261 for
the year ended  September  30, 1991 to $4,841 for the year ended  September  30,
1997.

         As part of its  responsibilities for various investors in VA-guaranteed
or FHA-insured  mortgage loans,  the Company is required to advance interest and
certain  other  costs on those  loans when the  mortgagor  is  delinquent.  This
requirement  continues until the Company pays the remaining  principal amount of
the loan to the investor and forecloses upon the loan. The Company  subsequently
files  with  either  the VA or FHA a claim  for the  amount  of loan  principal,
advanced interest and other costs incurred.

                                       15

<PAGE>

         When a claim is filed  with the VA, the VA either (i) pays the claim in
full and takes title to the foreclosed  property (in which case the Company does
not suffer a loss) or (ii)  exercises  its option to pay to the company only the
mortgage  guarantee  amount up to a maximum of 50% of the loan  amount (in which
case the Company must rely upon the sale of the  foreclosed  property to recover
the balance of its claim).  The VA typically  exercises  this latter option when
the value of the property plus the guarantee is less than the carrying amount of
the loan. To the extent that the guarantee, insurance, and the amounts generated
from foreclosure proceedings are insufficient to retire the indebtedness on such
loans, a loss will be incurred.

         When a claim is filed with the FHA, the Company is  reimbursed  for its
advances of interest on the loan at the debenture interest rate in effect on the
date that the loan was originated; in addition, the interest starts to accrue on
the  61st  day  after  the  date of  default  at the  debenture  interest  rate.
Furthermore,  if an  originated  loan does not conform to the loan  underwriting
standards  of the  acquiror,  the acquiror has a right to require the Company to
repurchase such loans.

         Included  in other  assets as of  September  30,  1997,  were $1,741 in
claims  receivable from the FHA or VA for insured or guaranteed  mortgage loans.
These receivables are carried at the lower of cost or net realizable value.

         Mortgage Servicing Rights ("MSRs").  The Savings Bank adopted Statement
of Financial Accounting Standards ("SFAS") No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities,  effective for
the year ended  September  30, 1997.  For each  servicing  contract in existence
before January 1, 1997, previously recognized originated and purchased servicing
rights and "excess  servicing"  receivables are combined,  net of any previously
recognized  servicing  obligations under that contract,  as a servicing asset or
liability.  The Statement  provides  that  servicing  assets and other  retained
interests in transferred  assets be measured by allocating the previous carrying
amount between the assets sold, if any, and retained interest,  if any, based on
their relative fair values at the date of the transfer, and servicing assets and
liabilities be  subsequently  measured by (1)  amortization in proportion to and
over the period of estimated net servicing  income or loss,  and (2)  assessment
for asset  impairment or increased  obligation  based on their fair values.  The
implementation  of  this  Statement  did  not  have  a  material  impact  on the
consolidated financial statements.

         Originated  mortgage  servicing  rights are recorded at cost based upon
the  relative  fair  values  of the loans and the  servicing  rights.  Servicing
release  fees paid on  comparable  loans and  discounted  cash flows are used to
determine  estimates of fair values.  Purchased  mortgage  servicing  rights are
acquired from independent  third-party originators and are recorded at the lower
of cost or fair value.  These rights are amortized in proportion to and over the
period of expected net servicing income.

         Impairment Evaluation. The Savings Bank evaluates the carrying value of
capitalized  mortgage  servicing  rights  on a  periodic  basis  based  on their
estimated  fair value.  For purposes of evaluating  and measuring  impairment of
capitalized  servicing rights, in accordance with SFAS No. 125, the Savings Bank
stratifies  the rights  based on their  predominant  risk  characteristics.  

                                       16

<PAGE>

         The significant risk characteristics considered by the Savings Bank are
loan type,  period of  origination  and stated  interest rate. If the fair value
estimated,  using a discounted cash flow methodology,  is less than the carrying
amount of the  portfolio,  the  portfolio  is written  down to the amount of the
discounted expected cash flows utilizing a valuation allowance. The Savings Bank
utilizes consensus market prepayment  assumptions and discount rates to evaluate
its capitalized servicing rights which considers the risk characteristics of the
underlying  servicing  rights.  For the years ended 1995 and 1996, there were no
write downs or valuation  allowances  established for capitalized  servicing.  A
write down and valuation allowance of $10 was established at September 30, 1997.

         Sale of Mortgage Servicing Rights. The Savings Bank recognizes gains on
sales of mortgage  servicing rights when a legal closing of the sale occurs with
title passing to the buyer, all significant  risks and rewards of ownership have
transferred  to  the  buyer,  including  risks  related  to  default  prepayment
(including no uncapped risks related to defaults or  prepayments)  and there are
no  significant  unresolved  contingencies.  The Savings Bank defers the gain on
sale of servicing until these conditions are met.

         The following  table sets forth the loan  servicing fees of the Company
as well as such fees as a  percentage  of net  interest  income  of the  Company
during the periods indicated.

<TABLE>
<CAPTION>
                                                                     Year Ended September 30,
                                                           1993      1994     1995       1996      1997
                                                           ----      ----     ----       ----      ----
                                                                       (Dollars in Thousands)

<S>                                                       <C>       <C>       <C>       <C>       <C>   
Loan servicing fees, net of MSR  amortization             $1,125    $1,789    $3,102    $3,128    $3,099
Net interest income                                       $5,509    $5,605    $7,221    $7,905    $9,213
Loan  servicing  fees as a  percentage  of net interest
income                                                      20.4%     31.9%     43.0%     39.6%     33.6%

</TABLE>

         The  following  tables sets forth the  composition  of the portfolio of
loans serviced for others as of September 30, 1997.

                                            Unpaid principal balance
                                            ------------------------
                                                 (In Thousands)
                  GNMA                            $  854,467
                  FNMA                               100,778
                  FHLMC                              330,225
                  Other (1)                            5,861
                                                  ----------
                                                  $1,291,331
                                                  ==========

---------------------------
(1)      Includes   private   investors,   other  financial   institutions   and
         municipalities.


                                       17
<PAGE>

Interest Bearing Accounts Held at Other Financial Institutions

As of September 30, 1997, the Company held $15,940 in interest-bearing  deposits
in other  financial  institutions,  principally  with the  FHLB of  Topeka.  The
Company maintains these accounts in order to maintain  liquidity and improve the
interest-rate sensitivity of its assets.

Investment Activities

         Mid-Continent  is  required  under  federal  regulations  to maintain a
minimum  amount of liquid  assets which may be invested in specified  short-term
securities and certain other investments. The Company has generally maintained a
liquidity portfolio well in excess of regulatory requirements.  Liquidity levels
may  be  increased  or  decreased   depending  upon  the  yields  on  investment
alternatives  and upon  management's  judgment as to the  attractiveness  of the
yields then available in relation to other  opportunities and its expectation of
future yield levels,  as well as  management's  projections as to the short-term
demand  for  funds  to be used  in the  Company's  loan  origination  and  other
activities. As of September 30, 1997, the Company had an investment portfolio of
approximately   $86,065,   consisting   primarily  of  U.S.   Government  agency
obligations,  U.S. Treasury  securities,  and FHLB stock as permitted by the OTS
regulations.  The  Company  has  found its level of  investment  securities  has
increased in recent years as a result of increased interest rates. Mid-Continent
has  invested in  mortgage-related  securities  to offset any excess  liquidity;
principally  in FNMA ARMs and FHLMC  ARMs.  The Company  anticipates  having the
ability to fund all of its  investing  activities  from funds held on deposit at
FHLB of Topeka.  Mid-Continent  will  continue to seek high quality  investments
with short to intermediate maturities and duration from one to five years.

Investment Portfolio

         The  following  table sets forth the  carrying  value of the  Company's
investment  securities  portfolio,  short-term  investments,  FHLB stock, at the
dates  indicated.  As of September  30, 1997,  the market value of the Company's
total investment securities portfolio was $85,895.

<TABLE>
<CAPTION>

                                                    At September 30,
                                      1993     1994       1995      1996     1997
                                      ----     ----       ----      ----      ----
                                                     (In Thousands)
<S>                                 <C>       <C>       <C>       <C>       <C>    
Investment Securities
   U.S. Government Securities       $ 1,126   $ 1,222   $ 1,326   $ 1,438   $ 1,560
   U.S. Agency Securities            11,812    20,946    52,917    84,797    77,830
   FHLB Stock                         2,206     2,206     2,206     4,327     6,675
                                    -------   -------   -------   -------   -------
      Total Investment Securities   $15,144   $24,374   $56,449   $90,562   $86,065
                                    =======   =======   =======   =======   =======
</TABLE>

         On June 1, 1989,  the OTS issued a rule to clarify the  application  of
GAAP to securities held for  investment,  sale and/or trading by insured savings
associations.  The rule  requires  an  insured  savings  association's  board of
directors  to  document  and  monitor  its  investment  policy  and  strategies,
discusses the appropriate  documentation of investment  decisions of the insured
savings  association's  board  of  directors,   summarizes  GAAP  applicable  to
securities held for investment,  sale and/or trading, and offers guidance on the
application of GAAP by insured 

                                       18

<PAGE>


savings  associations in determining  whether a security should be accounted for
as a  security  held as an  investment,  as a  security  held  for  sale or as a
security held for trading.

                                       19

<PAGE>


Investment Portfolio Maturities

The  following  table sets forth  certain  information  regarding  the  carrying
values,  weighted  average  yields and  maturities of the  Company's  investment
securities portfolio as of September 30, 1997.

<TABLE>
<CAPTION>
                                                    As of September 30, 1997
                   One Year or Less One to Five Years Five to Ten Years More than Ten Years Total Investment Securities
                   Carrying Average Carrying  Average Carrying Average   Carrying  Average  Carrying   Average   Market
                     Value   Yield   Value    Yield    Value    Yield     Value    Yield     Value     Yield     Value
                     -----   -----   -----    -----    -----    -----    -----      -----    -----     -----     -----
                                                      (Dollars in Thousands)
<S>                 <C>     <C>     <C>        <C>    <C>        <C>     <C>       <C>     <C>       <C>      <C>   
Investment
 Securities:
  U.S. Government
   Obligations      $1,455  14.00%                    $   105    8.02%                     $ 1,560    13.60%   $ 1,579
  U.S. Agency
   Obligations       7,000   4.88%   $4,996    5.04%  $27,500    7.22%   $38,334    7.35%   77,830     6.93%    77,641
  FHLB Stock                                                               6,675    7.25%    6,675     7.25%     6,675
                    ------   ----    ------    ----   -------    ----     ------    ----   -------     ----    -------
             
   Total            $8,455   6.45%   $4,996    5.04%  $27,605    7.23%   $45,009    7.33%  $86,065     7.08%   $85,895
                    ======   ====    ======    ====   =======    ====     ======    ====   =======     ====    =======
</TABLE>

                                       20

<PAGE>

Mortgage-Related Securities

         The   Company   has   a   substantial    investment   in    residential
mortgage-related  securities.  Although such securities are held for investment,
they can serve as collateral for borrowings and, through repayments, as a source
of liquidity.  As of September 30, 1997, the carrying value of  mortgage-related
securities  totaled $28,124,  or 6.94% of total assets. The market value of such
securities  totaled  approximately  $28,556  as of  September  30,  1997.  As of
September  30,  1997,  $12,873 in  mortgage-related  securities  were pledged as
collateral for public funds.

         The  mortgage-related  securities  portfolio as of  September  30, 1997
consisted of fixed and adjustable rate pass through  certificates issued by GNMA
($9,871).  Fixed  and  adjustable  pass  through  certificates  issued  by FHLMC
($13,607),  and fixed and adjustable  pass through  certificates  issued by FNMA
($2,697).  To a less extent,  the  mortgage-related  securities  portfolio  also
contains pass through  certificates  issued by the Mortgage Guarantee  Insurance
Corporation ("MGIC").

         Mortgage-related  securities  represent a  participation  interest in a
pool of  single-family  or  multi-family  mortgages,  the principal and interest
payments  on  which  are  passed   from  the   mortgage   originators,   through
intermediaries (generally  quasi-governmental  agencies) that pool and repackage
the participation interests in the form of securities,  to investors such as the
Company.  Such  quasi-governmental  agencies,  which  guarantee  the  payment of
principal and interest to investors, primarily include FHLMC, FNMA and GNMA.

         FHLMC is a corporation  chartered by the United States  Government that
issues  participation  certificates backed principally by conventional  mortgage
loans.  FHLMC  guarantees the timely payment of interest and the ultimate return
or principal.  FHLMC  securities  are indirect  obligations of the United States
Government.  FNMA is a private corporation  chartered by Congress with a mandate
to establish a secondary market for conventional mortgage loans. FNMA guarantees
the timely payment of principal and interest,  and FNMA  securities are indirect
obligations of the United States  Government.  GNMA is a government  agency with
HUD which is intended to help finance government assisted housing programs. GNMA
guarantees the timely payment of principal and interest, and GNMA securities are
backed by the full  faith and  credit of the  United  States  Government.  Since
FHLMC,  FNMA  and  GNMA  were  established  to  provide  support  for  low-  and
middle-income  housing,  there are  limits  to the  maximum  size of loans  that
qualify for these programs.  To accommodate  larger-sized loans, and loans that,
for other reasons,  do not conform to the agency  programs,  a number of private
institutions have established their own home-loan origination and securitization
programs.

         Mortgage-related  securities typically are issued with stated principal
amounts,  and the  securities  are backed by pools of mortgages  that have loans
with  interest  rates that are within a range and have varying  maturities.  The
underlying pool of mortgages can be composed of either  fixed-rate  mortgages or
ARMs.   Mortgage-related  securities  are  generally  referred  to  as  mortgage
participation  certificates  or  pass-through  certificates.  As a  result,  the
interest rate risk  characteristics  of the underlying pool of mortgages,  i.e.,
fixed-rate or adjustable-rate,  as well as prepayment risk, are passed on to the
certificate  holder.  The life of a  mortgage-related  pass-

                                       21

<PAGE>

through   security   is  equal  to  the  life  of  the   underlying   mortgages.
Mortgage-related securities issued by FHLMC, FNMA, and GNMA make up the majority
of the pass-through market.

         In a declining  interest rate  environment,  the Company may experience
significant  prepayments  on both  fixed- and  adjustable-rate  mortgage-related
securities. In such an environment or in an environment where interest rates are
perceived  to be low, the Company may not be able to reinvest the cash flow from
these securities into comparable yielding investments.

         The  following  table sets forth the  carrying  value of the  Company's
mortgage-related securities portfolio at the dates indicated.

<TABLE>
<CAPTION>

                                                       At September 30,
                                             1994       1995      1996      1997
                                             ----       ----      ----      ----
                                                         (In Thousands)
<S>                                         <C>       <C>       <C>       <C>    
Held for Investment:
   FNMA-ARMs                                $ 3,391   $ 2,990   $ 2,616   $ 2,352
   FHLMC-ARMs                                 8,293     6,786     6,219     5,865
   GNMA-ARMs                                  6,020     5,729     5,043     4,302
   FHLMC-fixed rate                          15,256    13,835    11,853     7,742
   FNMA-fixed rate                              585       459       365       345
   GNMA-fixed rate                            8,086     7,293     6,151     5,569
   MGIC                                       3,399     2,912     2,136     1,949
                                            -------   -------   -------   -------
Total mortgage-related securities           $45,030   $40,004   $34,383   $28,124
                                            =======   =======   =======   =======
</TABLE>

         To supplement  lending  activities  in period of deposit  growth and/or
declining  loan  demand,   Mid-Continent   has  increased  its   investments  in
residential  mortgage-related  securities  during  recent  years.  Although such
securities are held for investment,  they can serve as collateral for borrowings
and through  repayments,  as a source of  liquidity.  As of September  30, 1997,
$50,849 in investment and mortgage-related securities were pledged as collateral
for public funds.

Subsidiary Activities

         Mid-Continent  is  permitted  to invest  up to 2% of its  assets in the
capital  stock of, or secured or unsecured  loans to,  subsidiary  corporations,
with an additional investment of 1% of assets when such additional investment is
utilized primarily for community development purposes. As of September 30, 1997,
the net book value of the Company's total investment in its service  corporation
was $131.

         The  Bank  has  one  subsidiary,  Laredo  Investment,  Inc.  which  was
incorporated  in the State of Kansas and is engaged in the sale of tax  deferred
annuities through Mid-Continent's branch offices. Insurance commissions from the
sale of tax deferred annuities amount to $3 and $2 for the years ended September
30, 1996 and 1997, respectively.

Source of Funds

         General.  Deposits  are the  major  source of the  Company's  funds for
lending  and  other  investment  purposes.   Mid-Continent  derives  funds  from
amortization and prepayment of loans and mortgage-related securities, maturities
of investment securities and operations. Scheduled loan principal repayments are
a relatively stable source of funds, while deposit inflows and outflows and loan
prepayments are  significantly  influenced by general  interest rates and market
conditions.  Mid-Continent  utilizes  FHLB  advances.  The Company  does not use
brokered deposits.

                                       22

<PAGE>

         Deposits.  Consumer deposits are attracted  principally from within the
Company's  primary  market area  through the  offering of a broad  selection  of
deposit instruments including checking,  statement savings, money market deposit
and term  certificate  accounts  (including  negotiated  jumbo  certificates  in
denominations of $100,000 or more) and retirement account funds. Deposit account
terms vary according to the minimum balance required,  the time period the funds
must remain on deposit, and the interest rate, among other factors.

         The  Company  intends to  continue to  aggressively  seek new  checking
accounts and other related  products and services by utilizing  automated teller
machines,  direct mail, gifts, and in-branch promotions in an effort to increase
fee  income.  In April 1993,  the Company  introduced  a  totally-free  checking
account program which has been successful in attracting new checking accounts.

         NOW  account,  money  market  accounts,  regular  savings  accounts and
custodial  accounts  constituted  $67,301,  or 28.48% of the  Company's  deposit
portfolio  as  of  September  30,  1997.  Certificates  of  deposit  constituted
$116,585,  or 49.33% of the deposit  portfolio,  excluding Jumbo accounts,  with
principal amounts of $100 or more, which constituted  $52,447,  or 22.19% of the
deposit portfolio, as of September 30, 1997.

Deposit Accounts of $100 or More

         The following table  indicates the amount of the Company's  deposits of
$100 or more by time remaining until maturity as of September 30, 1997.

Maturity Period
---------------
                                                 (Dollars in Thousands)
Within three months                                  $27,793
Over three through six months                          2,848
Over six through twelve months                         9,813
Over twelve months                                    11,993
                                                     -------
         Total                                       $52,447
                                                     =======

Borrowings

         Deposits are the primary  source of funds of the Company's  lending and
investment  activities and for its general  business  purposes.  The Company has
obtained  advances from the FHLB of Topeka to supplement  its supply of lendable
funds.  Advances from the FHLB of Topeka have typically been secured by a pledge
of the  Company's  stock in the FHLB of Topeka  

                                       23

<PAGE>

and a portion of the Company's  first  mortgage  loans and certain other assets.
The  Company,  if the need  arises,  may also  access the Federal  Reserve  Bank
discount  window to supplement  its supply of lendable funds and to meet deposit
withdrawal requirements. As of September 30, 1997, Mid-Continent had $121,800 in
advances  outstanding from the FHLB of Topeka. The Savings Bank has entered into
a line-of-credit  agreement with the FHLB of Topeka wherein the Savings Bank can
borrow up to $68,292 subject to certain  limitations.  As of September 30, 1997,
there was $7,300 outstanding  relative to this agreement.  The agreement expires
December 26, 1997.

Personnel

         As of  September  30,  1997,  the  Company  had  155  full-time  and 29
part-time  employees.  None of the  Company's  employees  are  represented  by a
collective bargaining group.

Competition

         The Company  encounters  strong  competition  both in the attraction of
deposits and  origination  of loans.  Competition  comes  primarily from savings
institutions,  commercial banks and credit unions that operate in counties where
Mid-Continent's  offices are located.  The Company competes for savings accounts
by offering depositors  competitive  interest rates and a high level of personal
service. The Company competes for loans primarily through the interest rates and
loan fees it charges  and the  efficiency  and  quality of  services it provides
borrowers, real estate brokers, and contractors.

Regulation

         Set forth below is a brief  description of certain laws which relate to
the regulation of the Company.  The description  does not purport to be complete
and  is  qualified  in  its  entirety  by  reference  to  applicable   laws  and
regulations. Unless otherwise indicated, this section discusses regulations that
apply to the Company  indirectly through their direct application to the Savings
Bank.

         General. As a federally  chartered,  FDIC-insured  savings association,
the Savings  Bank is subject to  extensive  regulation  by the OTS and the FDIC.
Lending  activities  and other  investments  must  comply with  various  federal
statutory  and  regulatory  requirements.  The Savings  Bank is also  subject to
certain  reserve  requirements  promulgated  by the  Board of  Governors  of the
Federal Reserve System (the "Federal Reserve Board").

         The OTS, in conjunction with the FDIC,  regularly  examines the Savings
Bank and prepares  reports for the  consideration of the Savings Bank's Board of
Directors on any deficiencies  that they find in the Savings Bank's  operations.
The Savings  Bank's  relationship  with its  depositors  and  borrowers  is also
regulated to a great extent by federal  law,  especially  in such matters as the
ownership  of savings  accounts  and the form and content of the Savings  Bank's
mortgage documents.

                                       24

<PAGE>

         The Savings Bank must file reports with the OTS and the FDIC concerning
its  activities  and financial  condition,  in addition to obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the FDIC and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.  Any change in such  regulations,  whether by the OTS, the FDIC or the
Congress could have a material adverse impact on the Company and its operations.
The Company is also required to file certain reports with, and otherwise  comply
with the  rules  and  regulations  of the OTS and the  Securities  and  Exchange
Commission ("SEC").

Regulatory Capital Requirements

         OTS capital  regulations  require  savings  institutions  to meet three
capital standards:  (1) tangible capital equal to 1.5% of total adjusted assets,
(2) a leverage ratio (core capital) equal to 3% of total adjusted assets and (3)
risk-based capital equal to 8.0% of total risk-weighted assets.

         The following  table sets forth the Savings Bank's capital  position at
September 30, 1997, as compared to the minimum regulatory  capital  requirements
imposed by the OTS at that date.

                                                              Percent
                                                            of Adjusted
                                          Amount               Assets
                                          ------               ------
                                             (Dollars in Thousands)
Tangible Capital:
Regulatory capital                        $36,179               8.9%
Regulatory requirement                      6,079               1.5%
                                          -------               ----
      Excess                              $30,100               7.4%
                                          =======               ====

Core Capital:
Regulatory capital                        $36,179               8.9%
Regulatory requirement                     12,158               3.0%
                                          -------               ----
      Excess                              $24,021               5.9%
                                          =======               ====

Risk-Based Capital:
Regulatory capital                        $36,633              22.6%
Regulatory requirement                     12,954               8.0%
                                          -------               ----
      Excess                              $23,679              14.6%
                                          =======              =====


Prompt Corrective Action

         Banking  regulators  are required to take certain  supervisory  actions
against  undercapitalized  institutions,  the severity of which depends upon the
institution's  degree of  capitalization.  Under the OTS rules,  an  institution
shall be deemed to (i) "well  capitalized" if it has total risk-based capital of
10.0% or more, has a Tier I risk-based  capital ratio (core or 


                                       25
<PAGE>

leverage  capital  to  risk-weighted  assets)  of 6.0% or more,  has a  leverage
capital  ratio of 5.0% or more and is not subject to any order or final  capital
directive to meet and maintain a specific capital level for any capital measure,
(ii) "adequately capitalized" if it has a total risk-based capital ratio of 8.0%
or more,  a Tier I  risked-based  ratio of 4.0% or more and a  leverage  capital
ratio of 4.0% or more (3.0% under certain  circumstances)  and does not meet the
definition of "well  capitalized",  (iii)  "undercapitalized"  if it has a total
risk-based  capital  ratio that is less than 6.0%, a Tier I  risk-based  capital
ratio that is less than 4.0% or a leverage  capital ratio that is less than 4.0%
(3.0% in certain circumstances), (iv) "significantly undercapitalized" if it has
a total  risk-based  capital  ratio that is less than 6.0%,  a Tier I risk-based
capital  ratio that is less than 3.0% or a leverage  capital  ratio that is less
than 3.0% and (v)  "critically  undercapitalized"  if it has a ratio of tangible
equity to total assets that is equal to or less than 2.0%.  In  addition,  under
certain   circumstances,   a  federal  banking  agency  may  reclassify  a  well
capitalized  institution as adequately capitalized and may require an adequately
capitalized  institution  or an  undercapitalized  institution  to  comply  with
supervisory  actions as if it were in the next lower  category  (except that the
FDIC  may  not  reclassify  a  significantly   undercapitalized  institution  as
critically undercapitalized).

         Immediately  upon becoming  undercapitalized,  an  institution  becomes
subject to restrictive provisions. The appropriate federal banking agency for an
undercapitalized   institution   also  may  take  any  number  of  discretionary
supervisory  actions  if the  agency  determines  that any of these  actions  is
necessary to resolve the problems of the  institution at the least possible long
term cost to the deposit  insurance fund,  subject in certain cases to specified
procedures.

         The Company is currently a well capitalized institution.

Dividend and Other Capital Distribution Limitations

         OTS  regulations  require  the  Savings  Bank to  give  the OTS 30 days
advance  notice of any proposed  declaration  of  dividends  and the OTS has the
authority under its supervisory powers to prohibit the payment of dividends.  In
addition, the Savings Bank may not declare or pay a cash dividend on its capital
stock if the effect  thereof  would be to reduce the  regulatory  capital of the
Savings Bank below the amount required for the liquidation  account  established
pursuant to the Savings Bank's Plan of Conversion.

         OTS regulations  impose  limitations upon all capital  distributions by
savings  institutions,  such  as  cash  dividends,  payments  to  repurchase  or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out  merger and other  distributions  charged against  capital.  The rule
establishes  three tiers of  institutions,  based primarily on an  institution's
capital  level.  An  institution  that  exceeds  all  fully  phased-in   capital
requirements  before  and  after  a  proposed  capital   distribution  ("Tier  1
institution")  and has not  been  advised  by the OTS that it is in need of more
than the normal  supervision can, after prior notice but without the approval of
the OTS, make capital  distributions during a calendar year equal to the greater
of (i) 100% of its net income to date during the  calendar  year plus the amount
that would reduce by one-half its "surplus  capital  ratio" (the excess  capital
over its fully phased-in capital  requirements) at the beginning of the calendar
year,  or (ii) 75% of its net income over the most recent four  quarter  

                                       26

<PAGE>

period. Any additional capital  distributions require prior regulatory approval.
As of September  30, 1997,  the Savings  Bank was a Tier 1  institution.  In the
event the Company's  capital fell below its fully  phased-in  requirement or the
OTS notified it that it was in need of more than normal supervision, the Savings
Bank's ability to make capital  distributions could be restricted.  In addition,
the OTS could prohibit a proposed capital distribution by any institution, which
would otherwise be permitted by the regulation,  if the OTS determines that such
distribution would constitute an unsafe or unsound practice.

         Finally,  a savings  association  is  prohibited  from making a capital
distribution if, after making the distribution, the savings association would be
"undercapitalized"   (not  meet  any  one  of  its  minimum  regulatory  capital
requirement).

Qualified Thrift Lender Test

         The Home  Owners  Loan  Act  ("HOLA"),  as  amended,  requires  savings
institutions to meet a qualified thrift lender ("QTL") test. If the Savings Bank
maintains  at least 65% of its  portfolio  assets  (defined as all assets  minus
intangible  assets,  property used by the institution in conducting its business
and liquid assets equal to 20% of total assets) in Qualified Thrift  Investments
(primarily  residential  mortgages and related  investments,  including  certain
mortgage-backed  securities  ("QTIs") and otherwise  qualifies as a QTL, it will
continue to enjoy full  borrowing  privileges  from the FHLB of Topeka.  Certain
assets are subject to a percentage  limitation  of 20% of portfolio  assets.  In
addition,  savings  associations may include shares of stock of the Federal Home
Loan Banks,  FNMA and FHLMC as qualifying QTIs.  Compliance with the QTL test is
measured on a monthly basis in nine out of every 12 months.  As of September 30,
1997, the Savings Bank was in compliance with its QTL requirement  with 88.5% of
its total assets invested in Qualified Thrift Investments.

Federal Home Loan Bank System

         The Savings Bank is a member of the FHLB of Topeka,  which is one of 12
regional FHLBs that  administers  the home financing  credit function of savings
associations.  Each FHLB  serves as a reserve  or central  bank for its  members
within its assigned  region.  It is funded  primarily from proceeds derived from
the sale of  consolidated  obligations  of the FHLB  System.  It makes  loans to
members (i.e.,  advances) in accordance with policies and procedures established
by the Board of Directors of the FHLB.

         As a member,  the Savings  Bank is required  to purchase  and  maintain
stock in the FHLB of Topeka in an amount  equal to at least 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations at the beginning of each year. As of September 30, 1997, the Savings
Bank had $6,675 in FHLB stock, which was in compliance with this requirement.

                                       27

<PAGE>

Federal Reserve System

         The Federal  Reserve  Board  requires all  depository  institutions  to
maintain  non-interest  bearing  reserves  at  specified  levels  against  their
transaction accounts (primarily  checking,  NOW and Super NOW checking accounts)
and  non-personal  time  deposits.  The balances  maintained to meet the reserve
requirements  imposed by the  Federal  Reserve  Board may be used to satisfy the
liquidity requirements that are imposed by the OTS.

         Savings  association  have authority to borrow from the Federal Reserve
Bank "discount  window",  but Federal Reserve policy generally  requires savings
association to exhaust all OTS sources before borrowing from the Federal Reserve
System.  The Savings Bank had no discount window  borrowings as of September 30,
1997.

Holding Company Regulation

         The Company is a unitary  savings and loan holding  company  subject to
regulatory  oversight  by the OTS.  As such,  the  Company is  required  to file
reports with the OTS and is subject to regulation and examination by the OTS. In
addition, the OTS has enforcement authority over the Company and its non-savings
association  subsidiaries  which also  permits  the OTS to  restrict or prohibit
activities  that are determined to be a serious risk to the  subsidiary  savings
association.  This  regulation  and  oversight  is  intended  primarily  for the
protection  of the  depositors  of the Company and not for  stockholders  of the
Company.

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

Executive Officers of the Registrant

         The following  individuals were executive officers of the Registrant as
of September 30, 1997:

Name                    Age (1)        Positions Held With the Registrant
----                    -------        ----------------------------------

Richard T. Pottorff     63             Chairman, President, and Chief
                                       Executive Officer

Larry R. Goddard        51             Executive Vice President, Chief Operating
                                       Officer, and Chief Financial Officer

Harold G. Siemens       48             Senior Vice President - Lending

                                       28

<PAGE>


David L. Walter         49             Vice President

----------------------------------
 (1)      At September 30, 1997

         The  following  is  a  description  of  the  principal  employment  and
occupation during at least the past five years of the executive  officers of the
Registrant as of September 30, 1997.

         Richard T. Pottorff has served as a Director and Officer of the Savings
Bank since 1978 and of the Company since its  incorporation in January 1994. Mr.
Pottorff  has  served as a  Director  of the FHLB of Topeka  and has served as a
member of the El Dorado  Chamber of Commerce,  the Wichita  Association  of Real
Estate  Brokers and the  Wichita  Homebuilders  Association.  In  addition,  Mr.
Pottorff is the Chairman of the Federal and State  Legislative  Committee of the
Heartland  Community  Bankers.  Mr.  Pottorff  is  also a past  Chairman  of the
Heartland Community Bankers.

         Larry R.  Goddard  has been with the  Savings  Bank  since 1978 and has
served as a Director of the Savings Bank and the Company since 1994. Mr. Goddard
is a past  President  of the  Mid-West  Savings  Conference  and has  served  as
Chairman  of the Real  Estate  Mortgage  Committee  of the  Heartland  Community
Bankers.  He is also a member of the Lions  Club,  a member of the  Partners  in
Education,  a director of El Dorado,  Inc., and a member of the Community Action
for Retail & Revitalization Board.

         Harold  G.  Siemens  has been  with the  Company  since  1983.  He is a
founding Director and past President of the Kansas Mortgage Banking  Association
and a Director of the Mid-West Savings Conference.  Mr. Siemens is also a member
of the Real Estate Mortgage Committee of the Heartland  Community  Bankers,  the
Wichita Area Association of Realtors and the Wichita Area Builders Association.

         David L.  Walter  has been with the  Savings  Bank  since  1988 and has
served as a Vice  President of the Company since  January 1995.  With respect to
the Savings Bank, Mr. Walter became the Treasurer and the Controller in 1988 and
a Vice  President  in 1989.  Mr.  Walter is a member of the  Financial  Managers
Society and the Treasurer of the El Dorado Kiwanis Club.

Item 2.  Properties

         The  Company  operates  from its  corporate  office  located  at 124 W.
Central,  El Dorado,  Kansas.  The Company owns this office  facility  which was
opened in 1965.

         Full  service  offices  owned and leased by the  Company  are set forth
below.

                                       29

<PAGE>





Location

100 W. Twelfth            405 N. Main                   2123 N. Maize Road
Newton, Kansas  67114     El Dorado, Kansas  67042      Wichita, Kansas  67212

1113 S. Main              255 N. Main                   3055 N. Rock Road
Winfield, Kansas  67156   Wichita, Kansas  67201        Wichita, Kansas  67226

2310 S. Main              1420 N. Ohio                  762 N. West Street
Winfield, Kansas  67156   Augusta, Kansas  67010        Wichita, Kansas  67203

                          300 N. Rock Road
                          Derby, Kansas  67037


         The Company owns all of its facilities except 405 N. Main in El Dorado,
which is leased. This lease expires June 30, 1998.

         The  Company  also  owns  certain  other  properties  that it leases to
others. The location of these properties is set forth below.

409 N. Main                  100 W. Twelfth             402 N. Rose Hill Road
El Dorado, Kansas  67042     Newton, Kansas  67114      Rose Hill, Kansas  67213


Item 3.  Legal Proceedings

         There  are  various  claims  and  lawsuits  in  which  the  Company  is
periodically involved, such as claims to enforce liens, condemnation proceedings
on properties in which the Company holds security  interests,  claims  involving
the making and servicing of real property loans and other issues incident to the
Company's business.  In the opinion of management,  no material loss is expected
from any of such pending claims or lawsuits.

         Supreme  Court  Ruling  on  Breach of  Contract  Regarding  Supervisory
Goodwill: Mid-Continent Federal Savings Bank, the wholly-owned subsidiary of Mid
Continent Bancshares, Inc., is pursuing its claim against the federal government
to recover funds lost as a result of the enactment of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 ("FIRREA").  In 1986, the Bank was
encouraged by the federal  government to acquire an insolvent thrift institution
("Reserve Savings and Loan  Association").  The federal  government  allowed the
Bank to  count  the  insolvent  thrift's  losses  as  "goodwill"  assets  and to
double-count as "capital  credit" federal  government funds provided to help the
Bank take over the failing thrift. The Bank contends (among other things) in its
lawsuit that the federal  government  breached  its contract  with the Bank when
FIRREA was enacted  because FIRREA  prevented the Bank from counting such assets
toward minimum capital requirements.  As a result of FIRREA,

                                       30

<PAGE>

the Bank was  forced  to  write  off  approximately  $7,500,000  in  supervisory
goodwill. This write off reduced the Bank's regulatory capital.

         On July 1, 1996, the United States Supreme Court affirmed  decisions by
a federal  appellate  court that the government had breached  express  contracts
with three  thrifts  (U.S. v. Winstar Corp. et al.) and therefore was liable for
damages.  Those lawsuits stemmed from circumstances that are similar to those of
the Bank; in order to persuade those thrifts to acquire certain insolvent thrift
institutions,  the federal government promised  accounting  treatment similar to
that promised to the Bank.

         While the Supreme  Court's  ruling in U.S.  v.  Winstar  Corp.  et al.,
serves to support the Bank's  legal  claims in its pending  lawsuit  against the
federal  government,  it is not possible at this time to predict what effect the
Supreme  Court's  ruling,  and  subsequent  rulings of a lower court  concerning
damages,  will have on the outcome of the Bank's  lawsuit.  Notwithstanding  the
Supreme Court's ruling,  there can be no assurance that the Bank will be able to
recover any funds  arising out of its claim and,  if any  recovery is made,  the
amount of such recovery.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.

                                       31
<PAGE>


                                     PART II

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

         The  information  contained  under the  section  captioned  "Market and
Dividend  Information" in the Company's  Annual Report to  Stockholders  for the
fiscal year ended  September  30, 1997 (the "Annual  Report"),  is  incorporated
herein by reference.

Item 6.  Selected Financial Data

         The information contained in the table captioned "Selected Consolidated
Financial Highlights" in the Annual Report is incorporated herein by reference.

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

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

Item 7A.  Quantitiative and Qualitative Disclosures about Market Risks

         The  information  contained  in  the  section  captioned  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Market Risk" in the Annual Report is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

         The  Registrant's   financial  statements  listed  under  Item  14  are
incorporated herein by reference.

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

         There has been no change of independent auditor for the Company, or its
subsidiaries, during the two year period ended September 30, 1997.


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

         The  information  contained  under the  section  captioned  "Proposal 4
Election  of  Directors"  and  "Section  16(a)  Beneficial  Ownership  Reporting
Compliance of Mid Continent" in the Registrant's  definitive proxy statement for
the Registrant's 1997 Annual Meeting of Stockholders (the "Proxy  Statement") is
incorporated herein by reference. The Proxy Statement is included in Part I of a
Registration  Statement on Form S-4 of Commercial  Federal  Corporation  ("CFC")
filed with the SEC on or about  December 19, 1997.  This Form S-4 relates to the
merger of the Company with CFC. 

         Additional  information concerning executive officers is included under
"Part I - Executive Officers of the Registrant".

                                       32

<PAGE>

Item 11. Executive Compensation

         The  information  contained  under the sections  captioned  "Proposal 4
Election of Directors - Executive  Compensation",  and  "Compensation  Committee
Interlocks and Insider  Participation"  in the Proxy Statement are  incorporated
herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

         (a)      Security Ownership of Certain Beneficial Owners

                  Information  required by this item is  incorporated  herein by
reference to the section  captioned  "Voting  Securities  and Principal  Holders
Thereof" in the Proxy Statement.

         (b)      Security Ownership of Management

                  Information  required by this item is  incorporated  herein by
reference to the first chart in the section captioned  "Proposal I - Election of
Directors" in the Proxy Statement.

         (c) Management of the Registrant  knows of no  arrangements,  including
any pledge by any person of securities of the Registrant, the operation of which
may at a subsequent date result in a change in control of the Registrant.


Item 13. Certain Relationships and Related Transactions

         The  information  required  by this  item  is  incorporated  herein  by
reference to the section captioned "Proposal I - Election of Directors - Certain
Relationships and Related Transactions" in the Proxy Statement.


                                       33
<PAGE>


                                     PART IV

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

         (a)      The following documents are filed as a part of this report:

                  1.  The  following  financial  statements  and the  report  of
independent  accountants of the  Registrant  included in the  Registrant's  1997
Annual Report to Stockholders are  incorporated  herein by reference and also in
Item 8 hereof.

         Consolidated Balance Sheets as of September 30, 1996 and 1997.

         Consolidated  Statements  of Income for the Years Ended  September  30,
1995, 1996 and 1997.

         Consolidated  Statements  of  Stockholders'  Equity for the Years Ended
September 30, 1995, 1996 and 1997.

         Consolidated Statements of Cash Flows for the Years Ended September 30,
1995, 1996 and 1997.

         Notes to Consolidated Financial Statements.

                  2. Financial Statement  Schedules,  except for Exhibit 11, for
which provision is made in the applicable accounting  regulations of the SEC are
not required under the related  instructions or are  inapplicable  and therefore
have been omitted.

                  3. The  following  exhibits  are  included  in this  Report or
incorporated herein by reference:

                   (a)      List of Exhibits:

                    2       Merger Agreement with CFC*

                   3(i)     Certificate  of   Incorporation   of  Mid  Continent
                            Bancshares, Inc. **

                   3(ii)    Bylaws of Mid Continent Bancshares, Inc. ***

                   10.1     Outside Director Consultation and Retirement Plan **

                   10.2     Employment Agreement with Richard T. Pottorff  

                   10.3     Employment Agreement with Larry R. Goddard  

                   10.4     1994 Stock Option Plan  ***

                   10.5     Management Stock Bonus Plan and Trust Agreement  ***

                                       34

<PAGE>

                   10.6     Severance Agreement with Harold Siemens

                   11       Statement  Regarding  Computation  of  Earnings  Per
                            Share

                   13       Annual  Report to  Stockholders  for the fiscal year
                            ended September 30, 1997

                   21       Subsidiaries of the Registrant ***

                   23       Consent from Deloitte & Touche, LLP


-------------------------
*    Incorporated  by  reference  to  Exhibit  99.2 of the  Form 8-K  (File  No.
     0-23620) dated September 2, 1997.

**   Incorporated by reference to the  registration  statement on Form S-1 (File
     No. 33-76010) declared effective by the SEC on May 3, 1994.

***  Incorporated  by  reference  to the Form 10-K  (File No.  0-23620)  for the
     fiscal year ended September 30, 1996.



         (b)      Reports on Form 8-K:

                  A Form 8-K, dated September 2, 1997 (Items 5 and 7), was filed
                  during the quarter.




Copies of above exhibits not contained  herein are available,  at a fee of $0.15
per page,  to any security  holder upon written  request to the  Secretary,  Mid
Continent Bancshares, Inc., 124 West Central, El Dorado, Kansas 67042.




                                       35

<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf, on December 23, 1997, by the undersigned, thereunto duly authorized.

                                    Mid Continent Bancshares, Inc.


                                    By: /s/ Richard T. Pottorff
                                        ------------------------------------
                                        Richard T. Pottorff
                                        President, Chairman and Chief
                                         Executive Officer
                                        (Duly Authorized Representative)

         Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated as of December 23, 1997.


/s/ Larry R. Goddard                     /s/ Richard T. Pottorff
-------------------------------------    ------------------------------------
Larry R. Goddard                         Richard T. Pottorff
Executive Vice President, Chief          President, Chairman, Chief Executive
Operating Officer, Chief Financial        Officer, and Director
Officer and Director                     (Principal Executive Officer)
(Principal Financial and Accounting 
  Officer)

/s/ Donald Adlesperger                   /s/ Thomas C. Hand
-------------------------------------    ------------------------------------
Donald Adlesperger                       Thomas C. Hand
Director                                 Director

/s/ Kenneth B. Dellett                   /s/ Ron J. McGraw
-------------------------------------    ------------------------------------
Kenneth B. Dellett                       Ron J. McGraw
Director                                 Director