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

                                    FORM 10-K

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

     For the fiscal year ended December 31, 1998

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from                     to
                                   ---------------------  ----------------------
                         Commission file number 0-24118

                          OTTAWA FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              DELAWARE                                       38-3172166
---------------------------------------------           -------------------
(State or other jurisdiction of incorporation            (I.R.S. Employer
               or organization)                         Identification No.)

 245 Central Avenue, Holland, Michigan                              49423
--------------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code:        (616) 393-7000
                                                    ----------------------------

           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 $.01 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 reports) and (2) has been subject to such requirements for
the past 90 days. YES X . NO ___.

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  computed by  reference  to the average of the closing bid and asked
price of such  stock on the Nasdaq  National  Market as of March 25,  1999,  was
$111.8  million.  (The  exclusion  from such  amount of the market  value of the
shares owned by any person  shall not be deemed an  admission by the  registrant
that such person is an affiliate of the registrant.)

As of March 25, 1999, there were issued and outstanding  5,699,041 shares of the
Registrant's common stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

Parts II and IV of Form 10-K - Portions of the Annual Report to Stockholders for
the year ended December 31, 1998.  Part III of Form 10-K - Portions of the proxy
statement for the Annual Meeting of Stockholders for the year ended December 31,
1998.
<PAGE>



                           FORWARD-LOOKING STATEMENTS

         Ottawa  Financial   Corporation,   and  its  wholly-owned   subsidiary,
AmeriBank,  may  from  time  to  time  make  written  or  oral  "forward-looking
statements", including statements contained in their filings with the Securities
and  Exchange  Commission  ("SEC").  These  forward-looking  statements  may  be
included in this Annual Report on Form 10-K and the exhibits  attached to it, in
Ottawa  Financial's  reports to stockholders and in other  communications by the
company,  which  are made in good  faith by us  pursuant  to the  "safe  harbor"
provisions of the Private Securities Litigation Reform Act of 1995.

         These forward-looking  statements include statements about our beliefs,
plans, objectives, goals, expectations, anticipations, estimates and intentions,
that are  subject to  significant  risks and  uncertainties,  and are subject to
change based on various factors, some of which are beyond our control. The words
"may",  "could",  "should",   "would",  "believe",   "anticipate",   "estimate",
"expect",  "intend",  "plan" and similar  expressions  are  intended to identify
forward-looking statements. The following factors, among others, could cause our
financial   performance  to  differ  materially  from  the  plans,   objectives,
expectations,   estimates  and  intentions   expressed  in  the  forward-looking
statements:

    o  the strength of the U.S. economy in general and the strength of the local
       economies in which we conduct operations;
    o  the effects of, and changes in, trade,  monetary and fiscal  policies and
       laws, including interest rate policies of the Federal Reserve Board;
    o  inflation, interest rate, market and monetary fluctuations;
    o  the timely development of and acceptance of our new products and services
       and the perceived  overall value of these products and services by users,
       including  the  features,  pricing and quality  compared to  competitors'
       products and services;
    o  the willingness of users to substitute competitors' products and services
       for our products and services;
    o  our success in gaining regulatory  approval of our products and services,
       when required;
    o  the  impact of  changes  in  financial  services'  laws and  regulations,
       including laws concerning taxes, banking, securities and insurance;
    o  technological changes;
    o  acquisitions;
    o  changes in consumer spending and saving habits; and
    o  our success at managing the risks involved in our business.

         This list of important factors is not exclusive. We do not undertake to
update any forward-looking statement,  whether written or oral, that may be made
from time to time by or on behalf of Ottawa Financial or AmeriBank.




                                        2

<PAGE>



                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

         Ottawa  Financial  Corporation  is  a  holding  company  and  the  sole
shareholder of AmeriBank.  In March 1994, AmeriBank converted from a mutual form
to a stock form of ownership.  Ottawa  Financial's common stock is traded on the
Nasdaq-Amex National Market under the symbol "OFCP."

         On February 13,  1996,  Ottawa  Financial  acquired  AmeriBank  Federal
Savings  Bank, a federally  chartered  savings bank  headquartered  in Muskegon,
Michigan,  pursuant to which Ottawa  Financial  acquired all of the  outstanding
shares of common stock of AmeriBank Federal Savings Bank for approximately $32.7
million in cash, converted options and warrants.  AmeriBank Federal Savings Bank
was then merged into AmeriBank.

         AmeriBank  is  the  only  operating  subsidiary  of  Ottawa  Financial.
AmeriBank  is a  Michigan-  chartered  savings  bank  headquartered  in Holland,
Michigan.  Originally  organized in 1888,  as Ottawa  Savings Bank,  FSB,  which
converted to a federal  savings  bank in 1988,  we changed our name in 1996 from
Ottawa  Savings  Bank,  FSB to  AmeriBank,  and  converted to a  state-chartered
savings bank in July 1997. Our deposits are insured up to the applicable  limits
by the Federal  Deposit  Insurance  Corporation  ("FDIC").  We  currently  serve
Allegan, Kent, Muskegon, Newaygo, Oceana and Ottawa Counties in Western Michigan
through our 26 retail banking offices. At December 31, 1998, we had total assets
of $938.0 million,  deposits of $693.6 million and shareholders' equity of $73.4
million.

         We have  been,  and  intend  to  continue  to be, a  community-oriented
financial institution offering a variety of financial services to meet the needs
of the  communities we serve. We attract retail deposits from the general public
and invests those funds primarily in first mortgages on owner-occupied,  one- to
four-family residences. We also originate  nonowner-occupied one- to four-family
residences, construction, commercial and multi-family real estate.

         Our  revenues  are  derived  principally  from  interest  on loans  and
investment securities.

         We offer a variety of individual and commercial deposit accounts having
a wide range of interest rates and terms.  Our deposits  consist of passbook and
statement savings accounts, interest and non-interest-bearing checking accounts,
and money market and certificate  accounts. We also offer debit and credit cards
as well as ATM services. We solicit deposits from our market area only, and have
never used brokers to obtain deposits.

         Our  executive  offices  are located at 245  Central  Avenue,  Holland,
Michigan 49423 and our telephone number at that address is (616) 393-7000.


                                        3

<PAGE>


MARKET AREA

         Our market area of Allegan, Kent, Muskegon,  Newaygo, Oceana and Ottawa
Counties  located in western  Michigan is diverse.  This area  consists of three
mid-sized  cities,  Grand  Rapids,  Muskegon  and Holland and rural  areas.  Our
headquarters  are  located  in  Holland,  Michigan.  Grand  Rapids is the second
largest city in Michigan and has a solid and diverse economic base. Holland, the
largest city in Ottawa County also has a solid and diverse  economic base, which
includes  tourism,  office  furniture,  automotive  components  and  assemblies,
pharmaceutical,   transportation,   equipment,   candy,  food  and  construction
supplies.  Companies  operating  in the market area  include  Steelcase,  Herman
Miller, Amway, Haworth, Johnson Controls, General Motors, Gerber, SPX, Donnelly,
Foremost Insurance and Meijers, Inc. Holland, situated on Lake Macatawa and Lake
Michigan and Muskegon, situated on Muskegon Lake and Lake Michigan, benefit from
tourism and recreational activities, which peak in the summer months.

         Much of our success as a mortgage  and small  business  lender has been
due to our market area's favorable population,  housing and income demographics.
While population growth has generally been static in Michigan since 1980, as its
manufacturing  base has declined,  demographic trends in our market area reflect
above-average  population growth, including population growth in our market area
of 9.4% since 1990.  Income levels in the market area tend to approximate  state
and  national  averages.  Unemployment  in the  area at  December  31,  1998 was
approximately 2.4% versus 3.4% for the State of Michigan as a whole.

LENDING ACTIVITIES

         GENERAL. We have historically  originated 30 year,  fixed-rate mortgage
loans secured by one- to four-family  residences.  Since 1978,  however, we have
emphasized the origination of adjustable-rate  residential  mortgage loans, call
option and balloon payment loans,  which has dramatically  reduced our portfolio
of long term fixed rate loans.  Today,  we continue to sell fixed rate  mortgage
loans with terms of 15 years or longer.  These sales  activities  have generated
income from the sale of mortgages  in the  secondary  market and have  increased
income  from loan  servicing  operations.  Since the  acquisition  of  AmeriBank
Federal Savings Bank in February 1996, we have generated a larger  percentage of
commercial  business loans,  commercial real estate loans and consumer loans. We
continue to emphasize  commercial and multi-family  real estate,  and commercial
business  loans  as well  as  consumer  loans  which  have  higher  yields  than
traditional  one- to four-family  loans.  Most of the current growth in our loan
portfolio for 1997 and 1998 was in commercial real estate,  commercial  business
and consumer loans. Management's strategy has been to increase the percentage of
assets in our portfolio  with shorter  maturities or terms to repricing,  and in
some cases  higher  yields,  than  traditional  30 year  fixed rate  residential
mortgage loans.


                                        4

<PAGE>



         Our  loan  officers  and  certain  executive   officers  have  approval
authority on loans depending on type and amount. Loans greater than $500,000 but
less than $1.5 million  require the approval of our Loan Committee  comprised of
certain loan  officers and executive  officers.  Loans greater than $1.5 million
must be approved by the Board of Directors.

         At December 31, 1998, the maximum amount that could have been loaned to
any one borrower and the borrower's  related  entities was  approximately  $15.5
million.  At such date, we had no loans or groups of loans to related  borrowers
with outstanding balances in excess of this amount.

         Our largest lending relationship to a single borrower or a single group
of related  borrowers  was a $14.0  million  line of credit with an  outstanding
balance as of December 31, 1998 of $6.2  million.  The line of credit is secured
by publicly  traded  marketable  securities.  At December 31, 1998,  the line of
credit was performing in accordance with its repayment terms.

         The next largest relationship to a single borrower or a single group of
related  borrowers  totaled $12.5 million  consisting of a number of loans,  the
largest  of which is a $8.1  million  loan  secured  by a  multi-family  housing
development.  At December 31, 1998,  the loans were  current and  performing  in
accordance with their terms.

         At December 31, 1998, we had 28 other loans or lending relationships to
a single borrower or group of related borrowers with a balance in excess of $2.5
million,  all of which were  performing in accordance with their repayment terms
at such date.


                                        5

<PAGE>



         LOAN PORTFOLIO COMPOSITION.  The following table sets forth information
concerning  the  composition  of our loan  portfolio  in dollar  amounts  and in
percentages as of the dates  indicated.  The dollar amounts and percentages were
calculated before  deductions for loans in process,  deferred fees and discounts
and allowance for losses.

<TABLE>
<CAPTION>

                                                                            December 31,
                                  --------------------------------------------------------------------------------------------------
                                        1998                1997               1996                 1995                 1994
                                  ----------------    ----------------   -----------------    -----------------    -----------------
                                  Amount   Percent    Amount   Percent   Amount    Percent    Amount    Percent    Amount    Percent
                                  ------   -------    ------   -------   ------    -------    ------    -------    ------    -------
                                                                        (Dollars in Thousands)
<S>                             <C>         <C>     <C>         <C>     <C>         <C>      <C>         <C>      <C>         <C>
REAL ESTATE LOANS:
 One- to four-family ........   $425,974    51.97%  $483,502    62.20%  $516,935    69.59%   $209,159    71.24%   $184,237    76.10%
 Multi-family ...............     49,402     6.03     38,663     4.97     34,262     4.61      13,221     4.50       9,200     3.80
 Commercial .................     51,637     6.30     35,147     4.52     42,745     5.75       4,106     1.40       4,903     2.02
 Construction or development     117,792    14.37     71,145     9.15     33,823     4.55      42,659    14.53      20,420     8.44
                                --------   ------   --------   ------   --------   ------    --------   ------    --------   ------
    Total real estate loans .    644,805    78.67    628,457    80.84    627,765    84.50     269,145    91.67     218,760    90.36
                                --------   ------   --------   ------   --------   ------    --------   ------    --------   ------
OTHER LOANS:
 Consumer Loans:
  Automobile ................     62,778     7.66     49,264     6.34     46,247     6.23       9,530     3.25       4,515     1.86
  Home equity lines of credit     30,178     3.68     32,379     4.17     29,170     3.93      12,039     4.10      10,060     4.16
  Home equity installment ...     19,115     2.33     22,905     2.95     19,247     2.59          --       --          --       --
  Student ...................         --       --         21       --        103      .01          85      .03       7,067     2.92
  Other .....................      8,851     1.08      7,009      .90      5,345      .72       2,804      .95       1,687      .70
                                --------   ------   --------   ------   --------   ------    --------   ------    --------   ------
    Total consumer loans ....    120,922    14.75    111,578    14.36    100,112    13.48      24,458     8.33      23,329     9.64
  Commercial business loans .     53,935     6.58     37,322     4.80     14,996     2.02          --       --          --       --
                                --------   ------   --------   ------   --------   ------    --------   ------    --------   ------
    Total other loans .......    174,857    21.33    148,900    19.16    115,108    15.50      24,458     8.33      23,329     9.64
                                --------   ------   --------   ------   --------   ------    --------   ------    --------   ------
       Total loans ..........    819,622   100.00%   777,357   100.00%   742,873   100.00%    293,603   100.00%    242,089   100.00%
                                           ======              ======              ======               ======               ======
LESS:
 Loans in process ...........     44,797              25,787              22,956               14,861                9,110
 Deferred fees and discounts       1,272                 854               1,237                1,034                1,043
 Allowance for losses .......      3,823               3,293               3,129                1,251                1,118
                                --------            --------            --------             --------             --------
  Total loans receivable, net   $769,770            $747,423            $715,551             $276,457             $230,818
                                ========            ========            ========             ========             ========
</TABLE>



                                        6

<PAGE>



         The  following  table shows the  composition  of our loan  portfolio by
fixed  and  adjustable  rates at the  dates  indicated.  Call  option  loans are
presented as fixed rate loans.

<TABLE>
<CAPTION>

                                                                                December 31,
                                      ----------------------------------------------------------------------------------------------
                                            1998                1997               1996               1995                1994
                                      -----------------   ----------------   ----------------   ----------------    ----------------
                                      Amount    Percent   Amount   Percent   Amount   Percent   Amount   Percent    Amount   Percent
                                      ------    -------   ------   -------   ------   -------   ------   -------    ------   -------
                                                                          (Dollars in Thousands)
<S>                                  <C>         <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>
FIXED-RATE LOANS:
 Real estate:
  One- to four-family .............  $156,383    19.08%  $113,954   14.66%  $108,747   14.64%  $ 95,141   32.40%  $ 96,381   39.82%
  Multi-family ....................    40,003     4.88     27,187    3.50     15,937    2.14      3,163    1.08      3,080    1.27
  Commercial ......................    47,792     5.83     25,558    3.29     27,108    3.65      1,347     .46      2,692    1.11
  Construction or development .....    92,188    11.25     59,300    7.62     12,552    1.69      9,442    3.21      5,841    2.41
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
     Total fixed-rate real
       estate loans ...............   336,366    41.04    225,999   29.07    164,344   22.12    109,093   37.15    107,994   44.61
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
 Commercial .......................    38,097     4.65     14,004    1.80      6,007     .81         --      --         --      --
 Consumer .........................    90,744    11.07     79,199   10.19     65,241    8.78     12,294    4.19      8,028    3.32
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
     Total fixed-rate loans .......   465,207    56.76    319,202   41.06    235,592   31.71    121,387   41.34    116,022   47.93

ADJUSTABLE-RATE LOANS
 Real estate:
  One- to four-family .............   269,591    32.89    369,548   47.54    408,188   54.95    114,018   38.84     87,856   36.29
  Multi-family ....................     9,399     1.15     11,476    1.48     18,325    2.47     10,058    3.43      6,120    2.53
  Commercial ......................     3,845     0.47      9,589    1.23     15,637    2.10      2,759     .94      2,211     .91
  Construction or development .....    25,604     3.12     11,845    1.52     21,271    2.86     33,217   11.31     14,579    6.02
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
     Total adjustable-rate real
       estate loans................   308,439    37.63    402,458   51.77    463,421   62.38    160,052   54.52    110,766   45.75
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
 Commercial .......................    15,838     1.93     23,318    3.00      8,989    1.21         --      --         --      --
 Consumer .........................    30,178     3.68     32,379    4.17     34,871    4.70     12,164    4.14     15,301    6.32
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
     Total adjustable rate loans ..   354,455    43.24    458,155   58.94    507,281   68.29    172,216   58.66    126,067   52.07
                                     --------   ------   --------  ------   --------  ------   --------  ------   --------  ------
         Total loans ..............   819,662   100.00%   777,357  100.00%   742,873  100.00%   293,603  100.00%   242,089  100.00%
                                                ======             ======             ======             ======             ======

LESS:
 Loans in process .................    44,797              25,787             22,956             14,861              9,110
 Deferred fees and discounts ......     1,272                 854              1,237              1,034              1,043
 Allowance for loan losses ........     3,823               3,293              3,129              1,251              1,118
                                     --------            --------           --------           --------           --------
    Total loans receivable, net....  $769,770            $747,423           $715,551           $276,457           $230,818
                                     ========            ========           ========           ========           ========
</TABLE>



                                        7

<PAGE>



         The following table  illustrates  the interest rate  sensitivity of our
loan portfolio at December 31, 1998.  Loans that have adjustable or renegotiable
interest  rates and call option loans are shown as maturing in the period during
which the contract is due. The schedule does not reflect the effects of possible
prepayments,  enforcement of  due-on-sale,  call option clauses or the effect of
the amortization of deferred loan fees.

<TABLE>
<CAPTION>
                                             Real Estate
                              ----------------------------------------
                                                       Construction
                                    Mortgage (1)      or Development         Commercial           Consumer             Total
                              --------------------  ------------------   ------------------   ------------------   -----------------
                                         Weighted             Weighted             Weighted             Weighted            Weighted
                                         Average              Average              Average              Average             Average
                               Amount     Rate      Amount     Rate      Amount     Rate      Amount     Rate      Amount    Rate
                               ------     ----      ------     ----      ------     ----      ------     ----      ------    ----

                                                                          (Dollars in Thousands)
<S>                           <C>         <C>      <C>         <C>      <C>         <C>      <C>         <C>      <C>        <C>
Due During
Periods Ending December 31,

1999(2) ..........            $ 41,233    7.99%    $ 71,854    7.74%    $ 25,022    7.74%    $ 33,138    9.56%    $171,247   7.77%
2000 - 2003 ......             127,155    7.80       26,730    7.38       24,326    8.24       75,544    9.26      253,755   8.63
2004 and following             358,625    7.51       19,208    7.36        4,587    7.84       12,240    8.95      394,660   7.85
                                                                                             --------             --------       
     Totals ......            $527,013    7.62     $117,792    7.60     $ 53,935    7.97     $120,922    9.31     $819,662   8.07
                              ========             ========             ========             ========             ========
</TABLE>



(1) Includes one- to four-family, multi-family and commercial real estate loans.
(2) Includes demand loans, loans having no stated maturity and overdraft loans.



                                        8

<PAGE>



         The total amount of loans due after  December 31, 1999 which have fixed
or  predetermined  interest  rates is $236.9  million  while the total amount of
loans due after such date which have  floating or adjustable  interest  rates is
$411.5 million.

ONE- TO FOUR-FAMILY RESIDENTIAL REAL ESTATE LENDING

         During  1998,  we  focused  our  residential  lending  program  on  the
origination of loans secured by mortgages on owner-occupied, one- to four-family
residences.  We also  originated  loans  secured by  nonowner-occupied,  one- to
four-family  residences.  Residential  mortgage loan originations  derive from a
number of  sources,  including  advertising,  direct  solicitation,  real estate
broker  referrals,  existing  borrowers  and  depositors,  builders  and walk-in
customers. Loan applications are accepted at most of AmeriBank's offices.

         We  emphasize  the  origination  of a  variety  of  residential  loans,
including  conventional  15 and 30 year  fixed-rate  loans  and  adjustable-rate
mortgage  loans.  The  substantial  majority  of these  loans  were  secured  by
properties  in our market  area.  In the past,  we  purchased  loans  secured by
residential  properties in southwest and southeast  Michigan and central  Texas.
Most of these  loans  were  purchased  from a  mortgage  banking  firm which has
established  a long  term  relationship  with us.  The  historical  loan  losses
incurred  from  these  purchased  loans  have been  negligible.  During  1998 we
purchased only $112,000 in loans due to the high volume of loan  originations we
produced internally.

         Our one- to four-family residential  adjustable-rate mortgage loans are
fully  amortizing  loans  with  contractual  maturities  of up to 30 years.  Our
adjustable-rate mortgage loans generally carry interest rates which are reset to
a stated  margin  over an  independent  index,  generally  the  one-,  three- or
five-year  constant  maturity  treasury  index.  Increases  or  decreases in the
interest rate of our adjustable-rate  mortgage loans are generally limited to 2%
annually with lifetime  interest rate caps of 6% over the initial interest rate.
Our adjustable-rate mortgage loans may be convertible into fixed-rate loans upon
payment  of a fee,  do  not  contain  prepayment  penalties  and do not  produce
negative  amortization.  Initial  interest rates offered on our  adjustable-rate
mortgage  loans may be below the fully  indexed  rate,  although  borrowers  are
generally qualified at the fully indexed rate.

         We also  offer  fixed-rate  mortgage  loans  to  owner  occupants  with
maturities up to 30 years, which conform to secondary market standards. Interest
rates charged on these fixed-rate loans are priced on a daily basis according to
market conditions. These loans generally do not include prepayment penalties. We
currently sell in the secondary market,  long-term,  conforming fixed-rate loans
with  terms of 15 years  or  greater  which  we  originated.  See  "Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  --
Asset/Liability  Management"  in the Annual Report to  Stockholders  attached as
Exhibit 13 to this Annual Report on Form 10-K.

         We  offer   one-  to   four-family   residential   mortgage   loans  to
nonowner-occupants. These loans are underwritten considering cash flows from the
subject property in addition to using the same criteria as owner-occupied,  one-
to four-family  residential loans, but are generally priced at higher rates than
owner-occupied loans.  Adjustable rates are offered on nonowner-occupied  one-to
four-family residential loans, with terms of up to 30 years.


                                        9

<PAGE>



         We originate residential mortgage loans with loan-to-value ratios of up
to 97% for owner-occupied  residential loans and up to 80% for nonowner-occupied
residential  loans.  For loans with  loan-to-value  ratios in excess of 80%,  we
require  private  mortgage  insurance  in an amount  sufficient  to  reduce  our
exposure to 80% or less of the lower of the appraised value or purchase price of
the underlying collateral.

         In underwriting  one- to four-family  residential real estate loans, we
evaluate both the borrower's  ability to make monthly  payments and the value of
the  property  securing  the  loan.  Properties  securing  one-  to  four-family
residential  real estate  loans that we made are  appraised by  independent  fee
appraisers.  We require  borrowers to obtain title insurance and fire,  property
and, if necessary,  flood insurance. We originate real estate loans that contain
a "due on sale" clause which allows us to declare the unpaid  principal  balance
due and payable upon the sale of the security property. We generally enforce our
"due on sale" power to allow for faster  repricing and to reduce the duration of
our loan portfolio.

MULTI-FAMILY AND COMMERCIAL REAL ESTATE LENDING

         In order to enhance the yield on our  assets,  we  originate  permanent
loans  secured  by  multi-family  and  commercial  real  estate.  Our  permanent
multi-family and commercial real estate loan portfolio includes loans secured by
apartment  buildings,  condominiums,  small  office  buildings,  small  business
facilities,  medical facilities and other  non-residential  building properties,
substantially all of which are located within our primary market area.

         Permanent  multi-family and commercial real estate loans have a maximum
term  of  25  years,  and  typically  have  terms  of  20  years  or  less,  for
adjustable-rate  mortgage and call option loans,  with  fixed-rate  loans having
terms of 10 years or less.  Multi-family  loans and commercial real estate loans
are written in amounts of up to 80% of the lesser of the appraised  value of the
property or the purchase price,  and borrowers are generally  personally  liable
for all or part of the indebtedness.

          Appraisals on properties  securing  multi-family  and commercial  real
estate loans that we originate are primarily performed by independent appraisers
who we designate at the time the loan is made. Management reviews all appraisals
on multi-family and commercial real estate loans. In addition,  our underwriting
procedures  generally  require  verification  of the borrower's  credit history,
income  and  financial  statements,   banking  relationships,   references,  and
historical and projected cash flows for the property that indicate  minimum debt
service coverage ratios of 1.15% or more.

         Multi-family  and  commercial  real estate  loans  generally  present a
higher level of risk than loans secured by one- to four-family residences.  This
greater risk is due to 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 multi-family and commercial real estate is typically  dependent
upon the successful  operation of the related real estate project.  If cash flow
from the project is  reduced,  the  borrower's  ability to repay the loan may be
impaired.  For example,  if leases are not obtained or renewed,  or a bankruptcy
court  modifies a lease term,  or a major  tenant is unable to fulfill its lease
obligations, cash flow from the project will be

                                       10

<PAGE>



reduced.  At  December  31,  1998,  $879,000  or 0.87% of the  multi-family  and
commercial  real  estate  loan  portfolio  was  non-performing.  See  "--  Asset
Quality." There can be no assurance that  delinquencies will not increase in the
future.

CONSTRUCTION AND DEVELOPMENT LENDING

         We make construction loans to individuals for the construction of their
residences.  Construction loans are also made to builders and developers for the
construction  of one- to four-family  residences and the  development of one- to
four-family lots, residential  subdivisions,  condominium developments and other
commercial developments.

         Construction  loans to individuals for their  residences are structured
to be converted to permanent loans at the end of the construction  phase,  which
typically runs six months.  These  construction loans have rates and terms which
match any one- to  four-family  loans then offered by us, except that during the
construction  phase, the borrower pays interest only.  Residential  construction
loans  are  generally  underwritten  pursuant  to the same  guidelines  used for
originating permanent residential loans.

         Construction  loans  to  builders  of  one- to  four-family  residences
generally  require the  payment of  interest  only for up to one year and either
have terms of up to 30 years with adjustable  rates or with call options.  These
loans are  structured to be assumed by qualified  borrowers as permanent  loans.
These loans may also provide for the payment of loan fees from loan proceeds.

         We also make loans to builders  for the purpose of  developing  one- to
four-family  lots and residential  condominium  projects.  These loans typically
have terms of 36 months or less with maximum loan to value ratios of 80%.  These
loans  may  provide  for the  payment  of loan fees  from  loan  proceeds.  Loan
principal is typically paid down as lots or units are sold.

         Construction  and development  loans are obtained  principally  through
continued  business from  developers and builders who have  previously  borrowed
from us, as well as referrals from existing customers and walk-in customers.  As
part of the  application  process,  the applicant  must submit  accurate  plans,
specifications  and costs of the project to be  constructed  or developed to us.
These items are used as a basis to determine the appraised  value of the subject
property.  Loans are based on the lesser of current  appraised  value and/or the
cost of  construction  (land plus  building).  At December 31,  1998,  we had 25
construction  and  development  loans in excess of $500,000,  all but one of the
loans were current at such date. Our largest  construction  and development loan
at December 31, 1998, was a $8.1 million line of credit for the  construction of
a multi-family housing development, of which $1.79 million was outstanding.

         Because of the  uncertainties  inherent in estimating  development  and
construction  costs  and the  market  for the  project  upon  completion,  it is
relatively  difficult to evaluate  accurately  the total loan funds  required to
complete a project,  the  related  loan-to-value  ratios and the  likelihood  of
ultimate success of the project. Construction and development loans to borrowers
other than  owner-occupants  also involve many of the same risks discussed above
regarding multi-family and

                                       11

<PAGE>



commercial  real estate loans and tend to be more sensitive to general  economic
conditions than many other types of loans.

COMMERCIAL BUSINESS LENDING

         Our commercial business lending portfolio contains loans with a variety
of purposes and security,  including loans to finance  operations and equipment.
Generally,  our  commercial  business  lending  has been  limited  to  borrowers
headquartered,  or doing  business,  in our primary  market area.  Over the last
several years,  management has focused on increasing our portfolio of commercial
business  loans.  These loans typically carry higher yields and shorter terms to
maturity than  mortgage  loans.  Management  intends to continue to increase the
size of our commercial business portfolio during 1999. At December 31, 1998, the
average  outstanding loan balance in our commercial  business loan portfolio was
$106,000,  with the largest commercial  business loan being a $14.0 million line
of credit with an outstanding balance at December 31, 1998 of $6.2 million.

         Unlike  residential  mortgage  loans,  which  generally are made on the
basis of the borrower's ability to make repayment from his or her employment and
other  income,  and which are secured by real  property  whose value tends to be
more  easily  ascertainable,  commercial  business  loans are of higher risk and
typically are made on the basis of the borrower's ability to make repayment from
the cash flow of the borrower's business. As a result, the availability of funds
for the repayment of commercial business loans may be substantially dependent on
the success of the business itself.  Further,  the collateral securing the loans
may  depreciate  over time,  may be difficult  to appraise and may  fluctuate in
value based on the success of the business.

CONSUMER LENDING

         We originate a variety of different types of consumer loans,  including
automobile  loans,  home  equity  lines of credit and  installment  loans,  home
improvement  loans,  deposit  account  loans and other loans for  household  and
personal purposes.  Recently, we have placed greater emphasis on consumer loans,
because of their attractive yields and shorter terms to maturity.

         We originate  automobile  loans, our largest segment of consumer loans,
on both a direct and an  indirect  basis.  Direct  loans are made when we extend
credit  directly to the borrower.  Indirect  loans are obtained when we purchase
loan contracts from retailers of goods or services which have extended credit to
their customers.

         We began our indirect lending program in 1995 with selected  automobile
dealers  located in our lending  area.  Moreover,  we  acquired a $25.0  million
portfolio of mature, indirect automobile loans upon our acquisition of AmeriBank
Federal  Savings  Bank.  At December 31, 1998,  our  automobile  loan  portfolio
totaled $62.8  million,  of which $51.2  million were  originated on an indirect
basis.

         Our home  equity  installment  loans  are  written  so that  the  total
commitment  amount,  when combined with the balance of the first  mortgage lien,
generally  will not exceed  the  greater  of 90% of the  appraised  value of the
property or 90% of two times the Michigan real estate assessment

                                       12

<PAGE>



value.  These loans are written with fixed terms of up to 15 years, or up to ten
years with a call option after five years, and carry fixed rates of interest. We
also  originate  home equity  lines of credit  utilizing  the same  underwriting
standards as for home equity  installment loans. Home equity lines of credit are
revolving line of credit loans. The majority of our existing home equity line of
credit portfolio has an original 10 year term; however, we currently offer these
loans with adjustable rates, interest only payments and a term of five years. At
December 31, 1998,  we had $19.1  million of home equity  installment  loans and
$30.2 million of home equity lines of credit outstanding,  representing 2.3% and
3.7%,  respectively,  of our gross loan  portfolio.  At that date,  we had $34.9
million of unused credit available under our home equity line of credit program.

         The underwriting  standards that we employ for consumer loans include a
determination  of the applicant's  payment history on other debts and ability to
meet  existing   obligations  and  payments  on  the  proposed  loan.   Although
creditworthiness of the applicant is of primary consideration,  the underwriting
process also  includes a  comparison  of the value of the  security,  if any, in
relation to the proposed loan amount.  Consumer  loans may entail greater credit
risk than do residential  mortgage  loans,  particularly in the case of consumer
loans which are unsecured or are secured by rapidly  depreciable assets, such as
automobiles.  In such cases, any repossessed collateral for a defaulted consumer
loan may not provide an adequate  source of  repayment of the  outstanding  loan
balance as a result of the greater  likelihood of damage,  loss or depreciation.
In  addition,   consumer  loan  collections  are  dependent  on  the  borrower's
continuing  financial  stability,  and thus are more  likely to be  affected  by
adverse personal circumstances.  Furthermore, the application of various federal
and state laws,  including  bankruptcy and insolvency laws, may limit the amount
which can be recovered on such loans. At December 31, 1998,  $457,000 or 0.4% of
our consumer loan portfolio was  non-performing.  There can be no assurance that
delinquencies will not increase in the future.

LOAN ORIGINATIONS, PURCHASES AND SALES

         Real estate loans are  originated by our staff of loan  officers.  Loan
applications  are  taken  in most  branch  offices  and  then  submitted  to our
designated loan underwriters for approval.

         We originate both  adjustable-rate and fixed-rate loans;  however,  our
ability to originate  loans is dependent upon the relative  customer  demand for
loans in our  market.  Demand is  affected  by the  interest  rate  environment.
Currently,  almost all fixed-rate  residential mortgage loans with maturities of
15 years or greater are originated for sale to Freddie Mac with servicing rights
retained.  These  loans are  originated  to satisfy  customer  demand,  generate
servicing  fee income and are sold to achieve  the goals of our  asset/liability
management  program.  Borrowers  are allowed to lock in an interest  rate at the
date of application  without a fee. We manage the volume of loans originated but
not closed by offsetting these loan  commitments  with forward  commitments from
Freddie Mac when the volume of applications exceeds $6.0 million.

         When  loans  are sold,  we  typically  retain  the  responsibility  for
collecting  and remitting  loan  payments,  making  certain that real estate tax
payments are made on behalf of borrowers,  and otherwise servicing the loans. We
receive a servicing fee for performing these functions. The

                                       13

<PAGE>



servicing fee is recognized as income over the life of the loan. We serviced for
others mortgage loans that we originated and sold amounting to $227.9 million at
December 31, 1998.

         We purchase real estate loans from  selected  sellers from time to time
to supplement our  origination  volume.  We carefully  review and underwrite all
loans to be purchased to insure that they meet our  underwriting  standards.  We
did not purchase a significant amount of real estate loans during 1998.

         In periods of  economic  uncertainty,  our ability to  originate  large
dollar volumes of real estate loans may be substantially  reduced or restricted,
with a  resultant  decrease  in related fee income and  operating  earnings.  In
addition,  our ability to sell loans may  substantially  decrease  as  potential
buyers, principally government agencies, reduce their purchasing activities.

         The  following  table shows our loan  origination,  purchase,  sale and
repayment activities for the periods indicated. Fixed-rate and call option loans
that we modify are not  reflected as new loan  originations.  See  "Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  --
Results of Operations" in the Annual Report to Stockholders  attached as Exhibit
13 to this Annual Report on Form 10-K.


                                       14

<PAGE>



<TABLE>
<CAPTION>

                                                               Year Ended December 31,
                                                     -----------------------------------------

                                                          1998         1997           1996
                                                     -----------------------------------------
                                                                   (In Thousands)
<S>                                                   <C>            <C>            <C>
ORIGINATIONS BY TYPE:
 ADJUSTABLE RATE:
  Real estate:
     one- to four-family .......................      $  36,790      $  57,043      $ 111,313
     multi-family ..............................            685          1,710         37,261
     commercial ................................            371             --          6,202
     construction or development ...............         31,416          4,507         37,137
  Commercial business ..........................         31,172         19,422             --
  Consumer .....................................         27,944         12,000         37,580
                                                      ---------      ---------      ---------
         Total adjustable-rate .................        128,378         94,682        229,493
                                                      ---------      ---------      ---------

 FIXED-RATE:
  Real estate:
     one- to four-family .......................        172,737         58,086         19,644
     multi-family ..............................         15,386          7,251          6,575
     commercial ................................         19,396          5,836          1,094
     construction or development ...............         76,892         31,877          6,554
  Commercial business ..........................         21,168          8,798             --
  Consumer .....................................         61,126         38,775         35,320
                                                      ---------      ---------      ---------
         Total fixed-rate ......................        366,705        150,623         69,187
                                                      ---------      ---------      ---------
         Total loans originated ................        495,083        245,305        298,680
                                                      ---------      ---------      ---------

PURCHASES:
  Real estate: one- to four-family .............            112          6,039         27,027
  Loans acquired in the acquisition of AmeriBank
  Federal Savings Bank .........................             --             --        294,700
                                                                     ---------      ---------
         Total purchases .......................            112          6,039        321,727
                                                      ---------      ---------      ---------

SALES:
  Real estate: one- to four-family .............        148,280         43,161          9,833
  Consumer loans ...............................             --             --             --
                                                                     ---------      ---------
         Total loan sales ......................        148,280         43,161          9,833
                                                      ---------      ---------      ---------

REPAYMENTS:
  Principal repayments .........................        344,526        179,735        161,303
                                                      ---------      ---------      ---------
         Total reductions ......................        492,806        222,896        171,136
                                                      ---------      ---------      ---------
  Increase (decrease) in other items, net ......         19,958          5,379        (10,176)
                                                      ---------      ---------      ---------
         Net increase ..........................      $  22,347      $  33,827      $ 439,095
                                                      =========      =========      =========
</TABLE>


         Due to the historically  low interest rate environment  during 1998, we
experienced  a shift in  customer  demand  from  adjustable  rate to fixed  rate
products.  Consistent  with our  asset/liability  management  policy,  we sold a
substantial  portion of our fixed rate  products  in the  secondary  market.  In
addition,  consistent  with our strategic plan of achieving a more balanced loan
portfolio between residential mortgage,  and consumer and commercial lending, we
focused our loan origination efforts towards originating consumer and commercial
loans.


                                       15

<PAGE>



ASSET QUALITY

         When a borrower fails to make a required  payment on a loan, we attempt
to cause the delinquency to be cured by contacting the borrower.  In the case of
residential  loans,  a  late  notice  is  sent  for  accounts  30 or  more  days
delinquent.  If the  delinquency is not cured by the 60th day,  contact with the
borrower  may be made by phone and by a second  letter.  Additional  written and
oral contacts may be made with the borrower between 30 and 60 days after the due
date.  If the  delinquency  continues for a period of 60 days, we usually send a
default  letter  to the  borrower  and  after  90  days,  if the  loan is  still
delinquent,  we institute  appropriate  action to foreclose on the property.  If
foreclosed,  the property is sold at public  auction and may be purchased by us.
Delinquent consumer loans are handled in a generally similar manner, except that
initial  contacts are made when the payment is 14 days past due and  appropriate
action may be taken to collect any loan payment that is delinquent for more than
30 days.  Our procedures for  repossession  and sale of consumer  collateral are
subject to various requirements under Michigan consumer protection laws.

         DELINQUENT LOANS. The following table sets forth information concerning
delinquent  loans at December 31, 1998, in dollar amounts and as a percentage of
each category of our loan portfolio.  The amounts presented  represent the total
remaining  principal  balances  of the  related  loans,  rather  than the actual
payment amounts which are overdue.

<TABLE>
<CAPTION>

                                                             Loans Delinquent For:
                                        -------------------------------------------------------------        Total Delinquent
                                                  30-89 Days                    90 Days and Over                  Loans
                                        -------------------------------   ---------------------------  ----------------------------
                                                               Percent                       Percent                       Percent
                                                               of Loan                       of Loan                       of Loan
                                        Number     Amount      Category   Number    Amount   Category  Number   Amount     Category
                                        ------     ------      --------   ------    ------   --------  ------   ------     --------
                                                                     (Dollars in Thousands)

<S>                                        <C>     <C>           <C>        <C>     <C>        <C>       <C>    <C>          <C>
One- to four-family residential .          87      $3,749        0.88%      17      $  728     0.17%     104    $4,477       1.05%
Multi-family and commercial
  real estate ...................          --          --          --        1         879     0.87        1       879       0.87
Construction or development .....           2         262        0.22        3         630     0.53        5       892       0.75
Commercial business .............           1          40        0.07        3         504     0.93        4       544       1.00
Consumer ........................          62         620        0.51       46         457     0.38      108     1,077       0.89
                                         ----      ------                 ----      ------             -----    ------
    Total .......................         152      $4,671                   70      $3,198               222    $7,869
                                         ====      ======                 ====      ======             =====    ======
</TABLE>


         NON-PERFORMING  ASSETS.  The table  below  sets forth the  amounts  and
categories of  non-performing  assets in our loan portfolio.  Interest income on
loans  accrues over the term of the loan based upon the  principal  outstanding,
except where serious doubt exists as to the  collectibility  of a loan, in which
case the accrual of interest is discontinued.  For all years presented,  we have
had no  troubled  debt  restructurings  which  involve  forgiving  a portion  of
interest or  principal on any loans or making loans at a rate or with a maturity
less than  that  customary  in our  market.  Foreclosed  assets  include  assets
acquired in settlement of loans.  The loan amounts shown do not reflect reserves
set up against such assets. See "-- Allowance for Loan Losses."



                                       16

<PAGE>



<TABLE>
<CAPTION>

                                                                             December 31,
                                                  -----------------------------------------------------------
                                                    1998         1997         1996         1995         1994
                                                  -------      -------      -------      -------      -------
                                                                      (Dollars in Thousands)
<S>                                               <C>          <C>          <C>          <C>          <C>
Non-accruing loans:
  One- to four-family ......................      $  696       $  917       $1,792       $   --       $   --
  Multi-family and commercial real estate ..         879           --           --           --           --
  Construction or development ..............         609          611           --           --           --
  Commercial business ......................         504          118           --           --           --
  Consumer .................................         446          434          331           --           --
                                                  ------       ------       ------       ------       ------
     Total .................................       3,134        2,080        2,123           --           --
                                                  ------       ------       ------       ------       ------

Accruing loans delinquent more than 90 days:
  One- to four-family ......................          32           98          132        1,317          922
  Multi-family and commercial real estate ..          --          546          426        1,110           96
   Construction or development .............          21           --           --           --           --
  Consumer .................................          11            2           55            7            1
                                                  ------       ------       ------       ------       ------
     Total .................................          64          646          613        2,434        1,019
                                                  ------       ------       ------       ------       ------

Foreclosed assets:
  One- to four-family ......................         656          276           39          296          164
  Consumer loans ...........................         174          181          150           --           --
                                                  ------       ------       ------       ------       ------
     Total .................................         830          457          189          296          164
                                                  ------       ------       ------       ------       ------

Total non-performing assets ................      $4,028       $3,183       $2,925       $2,730       $1,183
                                                  ======       ======       ======       ======       ======
Total non-performing assets as a percentage
of total assets ............................        0.43%        0.36%        0.34%        0.74%        0.36%
                                                  ======       ======       ======       ======       ======
</TABLE>

         For the year ended December 31, 1998, gross interest income which would
have been recorded had the  non-accruing  loans been current in accordance  with
their  original  terms  amounted  to  $209,000,  none of which was  included  in
interest income.

         NON-PERFORMING  LOANS.  At December  31,  1998,  we had $3.2 million in
non-performing  loans,  which  constituted  0.39% of our gross  loan  portfolio.
Except as  discussed  immediately  below,  there were no  non-accruing  loans or
aggregate non-accruing loans-to-one-borrower in excess of $500,000.

         The largest  non-performing  loan at December 31, 1998 totaled $879,000
and was  secured  by a  multi-family  real  estate  development.  Based upon the
collateral  value  of  property  securing  the  loan  and  the  strength  of the
guarantor, loss of principal is not anticipated.

         OTHER  LOANS OF  CONCERN.  As of  December  31,  1998,  there were $3.3
million of other loans not included in the table or discussed  above where known
information about the possible credit problems of borrowers caused management to
have  doubts as to the  ability of the  borrower  to comply  with  present  loan
repayment terms. These loans consist of eight commercial and multi-family loans,
the largest of which was a $2.0 million loan secured by a  manufacturing  plant.
We are  monitoring  this  loan as a  result  of a tenant  vacancy.  The loan was
current on payments as of December 31, 1998. These loans have been considered by
management in conjunction with the analysis of the adequacy of the allowance for
loan losses.


                                       17

<PAGE>



         As of December 31, 1998,  there were no other loans not included in the
table above or discussed under "Other Loans of Concern" where known  information
about the possible credit problems of borrowers caused management to have doubts
as to the ability of the borrower to comply with present  loan  repayment  terms
and which may result in disclosure of such loans in the future.

         ALLOWANCE FOR LOAN LOSSES.  We established an allowance for loan losses
based on a  systematic  analysis  of risk  factors in the loan  portfolio.  This
analysis includes  evaluation of concentrations of credit, past loss experience,
current  economic  conditions,  amount and  composition  of the loan  portfolio,
estimated fair value of the underlying collateral, loan commitments outstanding,
delinquencies, and other factors. Because we have had limited loan losses during
our history, management also considers the loss experience of similar portfolios
in comparable lending markets. Management's analysis results in establishment of
allowance amounts by loan type, based on allocations by quality  classification.
A  portion  of the  allowance  also  consists  of an  unallocated  amount  which
increased  substantially  in 1996 due to the  combination  of AmeriBank  Federal
Savings Bank's unallocated portion of the allowance with our allowance. In 1997,
the  unallocated  portion of the  allowance  decreased as  management  allocated
larger portions of the allowance to the higher risk consumer,  construction  and
other non-residential lending portfolios due to the increased emphasis on growth
in these portfolios.  Due to our continued emphasis in these lending portfolios,
the allowance  allocations  grew during 1998.  The total  allowance  balance was
increased throughout 1998 in response to continued growth in our loan portfolio,
management's  assessment of the risks inherent in the portfolio and  charge-offs
credited  against the allowance  account  during the year.  Although  management
believes it uses the best  information  available  to make such  determinations,
future  adjustments  to  reserves  may be  necessary  and net  income  could  be
significantly   affected  if  circumstances   differ   substantially   from  the
assumptions  used  in  making  the  initial  determinations.  See  "Management's
Discussion and Analysis of Financial Condition and Results of Operations Results
of Operations - Provision for Loan Losses," in the Annual Report to Stockholders
attached as Exhibit 13 to this Annual Report on Form 10-K.



                                       18

<PAGE>



         The  following  table sets forth an analysis of our  allowance for loan
losses.

<TABLE>
<CAPTION>

                                                                       Year Ended December 31,
                                                     ---------------------------------------------------
                                                       1998           1997           1996          1995          1994
                                                     -------        -------        -------       -------       -------
                                                                      (Dollars in Thousands)

<S>                                                  <C>            <C>            <C>           <C>           <C>
Balance at beginning of period ................      $ 3,293        $ 3,129        $ 1,251       $ 1,118       $   950
Acquired from AmeriBank Federal Savings
Bank ..........................................           --             --          1,358            --            --

Charge-offs:
  Consumer ....................................          576            615            134            28             2
Recoveries ....................................          176            119             90             1            --
                                                     -------        -------        -------       -------       -------
Net charge-offs ...............................         (400)          (496)           (44)          (27)           (2)
Additions charged to operations ...............          930            660            564           160           170
                                                     -------        -------        -------       -------       -------
Balance at end of period ......................      $ 3,823        $ 3,293        $ 3,129       $ 1,251       $ 1,118
                                                     =======        =======        =======       =======       =======

Percentage of net charge-offs during the period
to average loans outstanding during the period           ---%(1)        ---%(1)        ---%(1)       ---%(1)       ---%(1)
                                                     =======        =======        =======       =======       =======

Percentage of net charge-offs during the period
to  average non-performing assets .............        11.09%         16.25%           ---%(1)       ---%(1)       ---%(1)
                                                       =====          =====        =======       =======       =======
</TABLE>

--------------
(1)  Less than 1.00%.





                                       19

<PAGE>



         The  distribution  of our  allowance  for  losses on loans at the dates
indicated is summarized as follows:


<TABLE>
<CAPTION>

                                                                           December 31,
                               -----------------------------------------------------------------------------------------------------
                                       1998                1997                1996                1995                 1994
                               -----------------   ------------------   -------------------  -------------------  ------------------
                                        Percent              Percent              Percent              Percent              Percent
                                        of Loans             of Loans             of Loans             of Loans             of Loans
                                        in Each              in Each              in Each              in Each              in Each
                                        Category             Category             Category             Category             Category
                                        to Total             to Total             to Total             to Total             to Total
                               Amount    Loans     Amount     Loans     Amount     Loans     Amount     Loans      Amount    Loans
                               ------   --------   ------    --------   ------    --------   ------    --------   -------  ---------
                                                                          (Dollars in Thousands)

<S>                           <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>       <C>
One- to four-family .......   $  263     51.97%    $  289     62.20%    $  331     69.59%    $  166     71.24%    $  148    76.10%
Multi-family ..............       72      6.03         14      4.97         18      4.61        413      4.50        287     3.80
Commercial real estate ....      670      6.30        593      4.52        606      5.75         21      1.40         25     2.02
Construction or development      548     14.37        461      9.15         54      4.55         53     14.53         28     8.44
Commercial business .......      568      6.58        289      4.80        150      2.02         --        --         --       --
Consumer ..................    1,193     14.75      1,024     14.36        777     13.48        143      8.33         62     9.64
Unallocated ...............      509        --        623        --      1,193        --        455        --        568       --
                              ------    ------     ------    ------     ------    ------     ------    ------     ------   ------
     Total ................   $3,823    100.00%    $3,293    100.00%    $3,129    100.00%    $1,251    100.00%    $1,118   100.00%
                              ======    ======     ======    ======     ======    ======     ======    ======     ======   ======
</TABLE>




                                       20

<PAGE>



INVESTMENT ACTIVITIES

         Generally,  our  investment  policy is to invest  funds  among  various
categories  of  investments  and  maturities  based  upon  our   asset/liability
management policies, concern for the highest investment quality, liquidity needs
and  performance   objectives.   As  market  conditions   change,  we  regularly
re-evaluate the marketable securities in our portfolio.  The investment security
portfolio  currently is composed of federal  agency  securities,  collateralized
mortgage obligations,  mortgage-backed  securities,  municipal bonds,  corporate
debt securities and Federal Home Loan Bank stock.

         At  December  31,  1998,  our  entire  investment  and  mortgage-backed
securities portfolios were classified as available for sale. The amortized cost,
fair value and weighted  average  yield of  securities  at December 31, 1998, by
contractual  maturity,  are shown  below.  Expected  maturities  may differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without call or prepayment  penalties.  Yields on tax exempt
obligations have been computed on a tax equivalent basis.


                                                 Securities
                                           ---------------------
                                           Amortized                Weighted
                                              Cost    Fair Value  Average Yield
                                           ---------  ----------  -------------
                                                    (Dollars in Thousands)

Due in one year or less .............       $ 5,542     $ 5,543       5.25%
Due after one year through five years        28,605      28,722       5.82
Due after five through 10 years .....           107         106       7.33
                                            -------     -------       ----
                                             34,254      34,371       5.72

Asset-backed debt securities(1) .....        37,358      37,275       6.57
                                            -------     -------       ----
                                            $71,612     $71,646       6.16
                                            =======     =======
--------------------
           (1) Consists of asset-backed Small Business  Administration loans and
mortgage-backed securities.


         Due  to  their  variable  payments,  asset-backed  securities  are  not
reported by a specific maturity grouping.

                                       21

<PAGE>



         The  following  table  sets  forth the  composition  of our  securities
portfolio at the dates indicated.  For additional  information on our investment
and  mortgage-backed  securities,  see  Note  3 of  the  Notes  to  Consolidated
Financial Statements in the Annual Report to Stockholders attached as Exhibit 13
to this Annual Report on Form 10-K.


                                                        December 31,
                                       -----------------------------------------
                                         1998             1997            1996
                                       --------         --------       ---------
                                       Carrying         Carrying       Carrying
                                         Value            Value          Value
                                       --------        ---------       ---------
                                                  (Dollars in Thousands)

Equity Securities ............         $    --         $    --         $   296
                                       -------         -------         -------

Debt Securities:
  Corporate ..................           8,176           2,010          11,353
  Asset-backed Small Business
Administration loans .........          10,731          15,232          12,816
  Mortgage-backed ............          26,544          13,203          17,773
  Government and agency ......          25,542          25,007          15,960
  Municipal obligations ......             653           1,856           4,708
                                       -------         -------         -------
      Total debt securities ..          71,646          57,308          62,610
  Federal Home Loan Bank Stock          11,782           7,308           6,958
                                       -------         -------         -------

     Total securities ........         $83,428         $64,616         $69,864
                                       =======         =======         =======

SOURCES OF FUNDS

         GENERAL.  Our  primary  sources of funds are  deposits,  principal  and
interest payments on loans, sales of loans, maturities of securities, securities
available for sale and borrowings, principally Federal Home Loan Bank advances.

         DEPOSITS. We offer a variety of deposit accounts having a wide range of
interest rates and terms. Our deposits consist of passbook and statement savings
accounts,  interest and  non-interest-bearing  checking  accounts,  money market
checking and savings accounts, and certificates of deposit. Our High Performance
Checking  Account  Program  offers a variety of checking  accounts to customers.
These checking accounts  increase our core deposits,  provide the opportunity to
cross sell our other products and generate additional fee income;  however,  the
cost of servicing these accounts has increased our non-interest expense. We rely
primarily on advertising,  competitive  pricing policies and customer service to
attract and retain  these  deposits.  We solicit  deposits  from our market area
only, and have never used brokers to obtain deposits.

         The flow of deposits is influenced  significantly  by general  economic
conditions,   changes  in  money  market  and  prevailing   interest  rates  and
competition.  We offer a variety of deposit  accounts which has allowed us to be
competitive  in obtaining  funds and to respond with  flexibility  to changes in
consumer demand.  We have become more susceptible to short-term  fluctuations in
deposit flows, as customers have become more interest rate conscious.  We manage
the pricing of our  deposits  in keeping  with our  asset/liability  management,
profitability and growth objectives.  See "Management's  Discussion and Analysis
of Financial  Condition and Results of Operations - Asset/Liability  Management"
in the Annual  Report to  Stockholders  attached  as  Exhibit 13 to this  Annual
Report

                                       22

<PAGE>



on Form 10-K. Based on our experience, we believe that our savings, interest and
non-interest-bearing   checking   accounts  are  relatively  stable  sources  of
deposits.  However, our ability to attract and maintain certificates of deposit,
and the  rates  paid on  these  deposits,  has  been  and  will  continue  to be
significantly affected by market conditions.

         The  following  table sets forth our savings  flows  during the periods
indicated.

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                         ---------------------------------------------
                                                           1998              1997              1996
                                                         --------          ---------         ---------
                                                                  (Dollars in Thousands)

<S>                                                      <C>               <C>               <C>
Opening balance ................................         $654,560          $622,492          $243,220
Deposits acquired from AmeriBank Federal Savings
Bank ...........................................               --                --           333,000
Net Deposits (Withdrawals) .....................           14,081             6,373            23,462
Interest credited ..............................           24,991            25,695            22,810
                                                         --------          --------          --------
Ending balance .................................         $693,632          $654,560          $622,492
                                                         ========          ========          ========

Net increase ...................................         $ 39,072          $ 32,068          $379,272
                                                         ========          ========          ========

Percent increase ...............................             5.97%             5.15%           155.94%
                                                         ========          ========          ========
</TABLE>


         The following table sets forth the dollar amount of savings deposits in
the various types of deposit programs that we offered at the dates indicated.

<TABLE>
<CAPTION>

                                                                              December 31,
                                             --------------------------------------------------------------------------

                                                    1998                       1997                       1996
                                             --------------------       --------------------       --------------------
                                                         Percent                    Percent                    Percent
                                             Amount      of Total       Amount      of Total       Amount      of Total
                                             ------      --------       ------      --------       ------      --------
                                                                                (Dollars in Thousands)
Transaction and Savings Deposits:
---------------------------------
<S>                                        <C>             <C>        <C>             <C>        <C>             <C>
Noninterest-bearing .................      $ 40,813        5.88%      $ 28,431        4.34%      $ 25,487        4.09%
Savings accounts (1.74%(1)) .........        54,475        7.85         60,143        9.19         64,987       10.44
NOW accounts and money market deposit
 accounts (3.49%(1)) ................       200,132       28.86        160,296       24.49        154,711       24.85
                                           --------      ------       --------      ------       --------      ------
Total Non-certificates ..............       295,420       42.59        248,870       38.02        245,185       39.38
                                           --------      ------       --------      ------       --------      ------
Certificates:
   3.00-4.99% .......................        26,539        3.83          9,612        1.47         25,807        4.15
   5.00-6.99% .......................       360,045       51.91        359,494       54.92        301,184       48.38
   7.00-8.99% .......................        11,241        1.62         36,109        5.52         49,651        7.98
   9.00-10.99% ......................           387        0.05            475         .07            665         .11
                                           --------      ------       --------      ------       --------      ------
Total Certificates ..................       398,212       57.41        405,690       61.98        377,307       60.62
                                           --------      ------       --------      ------       --------      ------
Total Deposits ......................      $693,632      100.00%      $654,560      100.00%      $622,492      100.00%
                                           ========      ======       ========      ======       ========      ======
</TABLE>

------------------
(1)  At December 31, 1998.



                                       23

<PAGE>



         The  following  table  shows  rate  and  maturity  information  on  our
certificates of deposit as of December 31, 1998.

<TABLE>
<CAPTION>
                                           3.00-        5.00-         7.00-          9.00-                    Percent
                                           4.99%        6.99%         8.99%          10.99%     Total         of Total
                                         --------      --------      -------         ------    --------       --------
                                                                 (Dollars in Thousands)
Certificate accounts maturing
in quarter ending:
-----------------------------
<S>                                      <C>           <C>           <C>              <C>      <C>             <C>
March 31, 1999......................     $  3,775      $113,615      $   315          $ 89     $117,794        29.58%
June 30, 1999.......................        7,606       102,519          356           298      110,779        27.82
September 30, 1999..................        5,503        63,197          100           ---       68,800        17.28
December 31, 1999...................        3,301        19,106          411           ---       22,818         5.73
March 31, 2000......................           37        12,124        7,598           ---       19,759         4.96
June 30, 2000.......................           40        13,045        1,618           ---       14,703         3.69
September 30, 2000..................           11        10,975           26           ---       11,012         2.77
December 31, 2000...................        3,332         4,419          191           ---        7,942         1.99
March 31, 2001......................          ---         4,163          222           ---        4,385         1.10
June 30, 2001.......................        1,198         2,377           85           ---        3,660         0.92
September 30, 2001..................            1         1,590            2           ---        1,593         0.40
December 31, 2001...................          876           563           16           ---        1,455         0.36
Thereafter..........................          859        12,352          301           ---       13,512         3.40
                                         --------      --------      -------          ----     --------       ------
   Total............................     $ 26,539      $360,045      $11,241          $387     $398,212       100.00%
                                         ========      ========      =======          ====     ========       ======

   Percent of total.................         6.67%        90.42%        2.82%         0.09%      100.00%
                                             ====         =====         ====          ====       ======
</TABLE>


         The following table indicates the amount of our certificates of deposit
and other deposits by time remaining until maturity as of December 31, 1998.

<TABLE>
<CAPTION>
                                                                        Maturity
                                                   -----------------------------------------------
                                                                  Over         Over
                                                   3 Months      3 to 6      6 to 12       Over
                                                   or Less       Months       Months     12 months     Total
                                                   --------    --------      -------     ---------   ---------
                                                                         (In Thousands)
<S>                                                <C>         <C>           <C>          <C>         <C>
Certificates of deposit less
 than $100,000..............................       $105,014    $ 96,105      $79,902      $72,445     $353,466

Certificates of deposit of
 $100,000 or more...........................         12,780      14,674       11,716        5,576       44,746
                                                   --------    --------      -------      -------     --------

Total certificates of deposit...............       $117,794    $110,779      $91,618      $78,021     $398,212
                                                   ========    ========      =======      =======     ========
</TABLE>


         BORROWINGS.  Our other available sources of funds include advances from
the Federal Home Loan Bank of Indianapolis and other borrowings.  As a member of
the Federal Home Loan Bank of Indianapolis, we are required to own capital stock
in the Federal Home Loan Bank and are  authorized to apply for advances from the
Federal Home Loan Bank.  Each Federal Home Loan Bank credit  program has its own
interest  rate,  which may be fixed or variable,  and range of  maturities.  The
Federal Home Loan Bank of  Indianapolis  may prescribe the  acceptable  uses for
these advances, as well as limitations on the size of the advances and repayment
provisions.

                                       24

<PAGE>



         We have borrowed funds from the Federal Home Loan Bank of  Indianapolis
primarily under its fixed-rate  lending  programs,  with terms requiring monthly
interest payments and principal payments due upon maturity.  To a lesser extent,
we have used putable advances to reduce our cost of borrowing. A putable advance
provides us with a low fixed interest rate in exchange for the Federal Home Loan
Bank to have the option to convert  the  advance  before  maturity  on any given
conversion  date to an adjustable  rate advance of  predetermined  index for the
remaining  term to maturity.  Of the $160.0  million of advances  outstanding at
December 31,  1998,  $106.0  million were fixed term and rate and $54.0  million
were putable advances. We utilize Federal Home Loan Bank advances as part of our
asset/liability  management  strategy  in order to cost  effectively  extend the
maturity of our liabilities. We are subject to a fee if we prepay the advance.

         At  December  31,  1998,  we had $160.0  million of  advances  from the
Federal Home Loan Bank of  Indianapolis  and the capacity to borrow up to $314.0
million;  however,  the current Board policy  limits our  borrowing  capacity to
$235.0 million. For additional information on our borrowings and maturities, see
Note 9 of the Notes to Consolidated Financial Statements contained in the Annual
Report to  Stockholders  attached  as Exhibit 13 to this  Annual  Report on Form
10-K.

         The  following  table  sets forth the  maximum  month-end  balance  and
average  balance of Federal Home Loan Bank  advances for the periods  indicated.


                                                  Year Ended December 31,
                                           ----------------------------------
                                            1998          1997         1996
                                           -------      --------     --------
                                                     (In Thousands)
DURING THE PERIODS:

Maximum Balance:
----------------
  Federal Home Loan Bank advances........ $169,768      $145,458     $139,170

Average Balance:
----------------
  Federal Home Loan Bank advances........ $160,533      $140,746     $ 94,269


         The  following  table sets forth the end of period  interest  rates and
balances at the dates indicated:


                                                     December 31,
                                       --------------------------------------
                                         1998           1997           1996
                                       --------       --------       --------
                                                (Dollars in Thousands)

Federal Home Loan Bank advances....... $160,268       $145,458       $139,170

Weighted average interest rate of
Federal Home Loan Bank advances.......     5.91%          5.98%          5.87%


                                       25

<PAGE>



SUBSIDIARY AND OTHER ACTIVITIES

         AmeriBank has two wholly-owned  service  corporation  subsidiaries:  OS
Services,  Inc. and  AmeriPlan  Financial  Services,  Inc. At December 31, 1998,
AmeriBank's investment in its service corporations totaled $1.4 million.

         OS Services, Inc. invests in the stock of MMLIC Life Insurance Company,
a  subsidiary  of  the  Minnesota  Mutual  Life  Insurance  Company,  St.  Paul,
Minnesota.  In addition,  OS Services invests in limited  partnerships  that are
involved in developing and providing  affordable housing.  The partnerships also
provide investors with low income housing tax credits available under Section 42
of the Internal Revenue Code of 1986, as amended. AmeriBank, through OS Services
has an equity  investment in the partnerships  totaling  $858,000.  In addition,
Ottawa  Financial  received  $327,000 in tax credits  during 1998 as a result of
these  activities.   AmeriPlan's   operations  consist  of  offering  investment
products,  including mutual funds and annuities,  as well as discount  brokerage
services.  AmeriPlan's  gross revenues from sales of these products and services
amounted to $597,000.  The  subsidiaries  of AmeriBank  generated  net income of
$368,000 during 1998.

REGULATION

         GENERAL.  AmeriBank is a state chartered  savings bank, the deposits of
which are federally  insured and backed by the full faith and credit of the U.S.
Government.  Accordingly, AmeriBank is subject to broad regulation and oversight
by the Michigan  Financial  Institution Bureau and the FDIC extending to all its
operations.  AmeriBank is a member of the Federal Home Loan Bank of Indianapolis
and is subject to certain  limited  regulation  by the Board of Governors of the
Federal  Reserve  System.  As the savings and loan holding company of AmeriBank,
Ottawa  Financial  also is subject to federal  regulation  and  oversight by the
Office of Thrift Supervision.

         INSURANCE OF ACCOUNTS AND REGULATION BY THE FDIC. AmeriBank is a member
of the Savings  Association  Insurance Fund,  which is administered by the FDIC.
Deposits are insured up to applicable  limits by the FDIC. As insurer,  the FDIC
imposes deposit insurance premiums and is authorized to conduct  examinations of
and to require reporting by FDIC insured institutions.  It also may prohibit any
FDIC insured  institution  from engaging in any activity the FDIC  determines by
regulation or order to pose a serious risk to the Savings Association  Insurance
Fund or the Bank  Insurance  Fund.  The FDIC also has the  authority to initiate
enforcement  actions  against savings  associations,  after giving the Office of
Thrift  Supervision  an opportunity  to take action,  and may terminate  deposit
insurance if it determines  that an institution has engaged in unsafe or unsound
practices or is in an unsafe or unsound condition.

         The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums  based upon their  level of
capital and supervisory evaluation. Under the system, institutions classified as
well  capitalized  (i.e., a core capital ratio of at least 5%, a ratio of Tier 1
or core capital to  risk-weighted  assets  ("Tier 1  risk-based  capital") of at
least 6% and a risk-based  capital ratio of at least 10%) and considered healthy
pay the  lowest  premium  while  institutions  that  are  less  than  adequately
capitalized (i.e., core or Tier 1 risk-based capital ratios of less than 4% or

                                       26

<PAGE>



a  risk-based  capital  ratio of less  than 8%) and  considered  of  substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions  is made by the FDIC  semi-annually.  At December 31, 1998, we were
classified  as a  well-capitalized  institution  and  was  not  subject  to  any
assessment.  See Note 12 of Notes to  Consolidated  Financial  Statements in the
Annual  Report to  Stockholders  attached as Exhibit 13 to this Annual Report on
Form 10-K.

         Effective January 1, 1997, the premium schedule for Bank Insurance Fund
and Savings Association  Insurance Fund insured institutions ranged from 0 to 27
basis points. However,  Savings Association Insurance Fund-insured  institutions
and Bank  Insurance  Fund-insured  institutions  are required to pay a Financing
Corporation assessment, in order to fund the interest on bonds issued to resolve
thrift  failures in the 1980s. In 1998, this amount was equal to about six basis
points for each $100 in domestic deposits for Savings Association Insurance Fund
members while Bank Insurance Fund-insured  institutions paid an assessment equal
to about  1.50 basis  points for each $100 in  domestic  deposits.  The  savings
institutions  assessment  is expected to be reduced to about two basis points no
later than January 1, 2000, when Bank Insurance Fund- insured institutions fully
participate in the  assessment.  These  assessments,  which may be revised based
upon the level of Bank  Insurance  Fund and Savings  Association  Insurance Fund
deposits, will continue until the bonds mature in the year 2017.

         CAPITAL REQUIREMENTS. Under FDIC regulations,  state-charted banks that
are not members of the Federal  Reserve  System  ("State  nonmember  banks") are
required to maintain a minimum  leverage  capital  requirement  consisting  of a
ratio of Tier 1 capital to total assets of 3%, if the FDIC  determines  that the
institution is not anticipating or experiencing significant growth and has well-
diversified  risk,  including not undue interest rate risk  exposure,  excellent
asset  quality,  high  liquidity,  good  earnings and in general is considered a
strong  banking  organization,  rated  composite 1 under the  Uniform  Financial
Institutions  Rating System (the CAMEL rating system) established by the Federal
Financial  Institutions  Examination  Council. For all but the most highly rated
institutions  meeting the  conditions  set forth  above,  the  minimum  leverage
capital  ratio is 3% plus an  additional  cushion  amount of at least 100 to 200
basis  points,  consisting  of a ratio of Tier 1 capital to total  assets of not
less  than  4%.  Tier 1  capital  is the  sum of  common  stockholders'  equity,
noncumulative  perpetual  preferred  stock,  including  any related  surplus and
minority  interests in consolidated  subsidiaries,  minus all intangible assets,
other than certain purchased mortgage servicing rights and purchased credit card
relationships,  minus  identified  losses and minus  investments  in  securities
subsidiaries.

         In addition to the leverage ratios, State nonmember banks must maintain
a minimum ratio of qualifying total capital to risk-weighted  assets of at least
8.0%,  of which at least 4%  points  must be Tier 1  capital.  Qualifying  total
capital consists of Tier 1 capital plus Tier 2 or  supplementary  capital items,
which  include  allowances  for  loan  losses  in an  amount  of up to  1.25% of
risk-weighted assets,  perpetual preferred stock that does not qualify as Tier 1
capital and long-term  preferred stock with an original  maturity of at least 20
years and certain other capital  instruments.  The  includable  amount of Tier 2
capital  cannot  exceed a bank's  Tier 1 capital.  Qualifying  total  capital is
further  reduced by the amount of the bank's  investments in banking and finance
subsidiaries  that  are  not  consolidated  for  regulatory   capital  purposes,
reciprocal   cross-holdings  of  capital   securities  issued  by  other  banks,
investments in securities  subsidiaries and certain other deductions.  Under the
FDIC

                                       27

<PAGE>



risk-weighting  systems,  all of the bank's  balance sheet assets and the credit
equivalent  amounts of certain  off-balance  sheet items are  assigned to one of
four broad risk weight categories.  The aggregate dollar amount of each category
is multiplied  by the risk weight  assigned to that  category.  The sum of these
weighted values equals the bank's risk-weighted assets.

         At  December  31,  1998,  AmeriBank's  ratio of Tier 1 capital of total
assets was 6.3%,  its ratio of Tier 1 capital to  risk-weighted  assets was 9.6%
and its ratio of total capital to  risk-weighted  assets was 10.3%.  At December
31, 1998, AmeriBank was classified as "well capitalized" under FDIC regulations.

         DIVIDEND  LIMITATIONS.  AmeriBank  may not pay dividends on its capital
stock if its  regulatory  capital would thereby be reduced below the amount then
required  for the  liquidation  account  established  for the benefit of certain
depositors of AmeriBank at the time of its conversion to stock form. AmeriBank's
earnings  appropriated  to bad debt reserves and deducted for federal income tax
purposes are not available for payment of cash dividends or other  distributions
to  stockholders  without  payment  of  taxes at the  then  current  tax rate by
AmeriBank  on the  amount  of  earnings  removed  from  the  reserves  for  such
distributions.

         Under FDIC regulation,  AmeriBank is prohibited from making any capital
distributions  if after making the  distribution,  AmeriBank  would have:  (i) a
total  risk-based  capital  ratio of less than  8.0%;  (ii) a Tier 1  risk-based
capital ratio of less than 4.0%; or (iii) a leverage ratio of less than 4.0%.

         COMMUNITY REINVESTMENT ACT. Under the Community Reinvestment Act, every
FDIC insured institution has a continuing and affirmative  obligation consistent
with safe and sound  banking  practices  to help  meet the  credit  needs of its
entire community, including low and moderate income neighborhoods. The Community
Reinvestment  Act requires  the FDIC,  in  connection  with the  examination  of
AmeriBank, to assess the institution's record of meeting the credit needs of its
community  and to take this record  into  account in its  evaluation  of certain
applications,  such as a merger or the  establishment of a branch, by AmeriBank.
An  unsatisfactory  rating  may be  used  as the  basis  for  the  denial  of an
application  by the Office of Thrift  Supervision.  AmeriBank  was  examined for
Community  Reinvestment Act compliance in November 1996 and received a rating of
"satisfactory."

         HOLDING COMPANY  REGULATION.  Ottawa Financial is a unitary savings and
loan holding  company  subject to  regulatory  oversight by the Office of Thrift
Supervision.  Ottawa Financial is required to register and file reports with and
is subject to regulation and examination by the Office of Thrift Supervision. In
addition, the Office of Thrift Supervision has enforcement authority over Ottawa
Financial and its non-savings  association  subsidiaries  which also permits the
Office of  Thrift  Supervision  to  restrict  or  prohibit  activities  that are
determined to be a serious risk to the subsidiary savings association.

         As a  unitary  savings  and  loan  holding  company,  Ottawa  Financial
generally is not subject to activity restrictions.  If Ottawa Financial acquires
control of another savings association as a separate subsidiary, it would become
a multiple savings and loan holding company, and the activities


                                       28
<PAGE>



of Ottawa  Financial  and any of its  subsidiaries  other than  AmeriBank or any
other Savings  Association  Insurance Fund insured  savings  institution,  would
generally become subject to additional restrictions.

         FEDERAL  SECURITIES  LAW. The stock of Ottawa  Financial is  registered
with the SEC under the  Securities  Exchange  Act of 1934,  as  amended.  Ottawa
Financial is subject to the  information,  proxy  solicitation,  insider trading
restrictions and other requirements of the SEC under the Securities Exchange Act
of 1934, as amended.

         Ottawa  Financial stock held by persons who are  affiliates,  generally
including executive officers, directors and 10% stockholders of Ottawa Financial
may not be resold without registration or unless sold in accordance with certain
resale  restrictions.   If  Ottawa  Financial  meets  specified  current  public
information requirements,  each affiliate of Ottawa Financial is able to sell in
the  public  market,  without  registration,  a limited  number of shares in any
three-month period.

         FEDERAL HOME LOAN BANK SYSTEM. We are a member of the Federal Home Loan
Bank of  Indianapolis,  which is one of 12 regional Federal Home Loan Banks that
administers  the home financing  credit function of savings  institutions.  Each
Federal  Home Loan Bank  serves as a reserve  or  central  bank for its  members
within  its  assigned  region.  It makes  loans to members  in  accordance  with
policies and  procedures,  established  by the board of directors of the Federal
Home Loan  Bank,  which are  subject to the  oversight  of the  Federal  Housing
Finance  Board.  All advances from the Federal Home Loan Bank are required to be
fully  secured by  sufficient  collateral as determined by the Federal Home Loan
Bank. In addition,  all long-term  advances  must be used for  residential  home
financing.

         As a member,  we are  required to purchase  and  maintain  stock in the
Federal  Home Loan Bank of  Indianapolis.  At December  31,  1998,  we had $11.8
million in  Federal  Home Loan Bank  stock,  which was in  compliance  with this
requirement.  We receive dividends on our Federal Home Loan Bank stock. Over the
past five calendar  years,  these dividends have averaged 8.5% and were 8.0% for
the calendar year 1998.  For the year ended  December 31, 1998, the Federal Home
Loan Bank of Indianapolis paid us dividends totaling $777,000.

         MICHIGAN BANKING LAW. Effective July 1, 1996, the Michigan  Legislature
enacted the Michigan Savings Bank Act. In several respects, the Michigan Savings
Bank Act  contains  provisions  similar to the  Michigan  Banking  Code of 1969.
Pursuant to the Michigan  Savings Bank Act,  AmeriBank has converted its charter
from that of a federal savings bank to that of a Michigan savings bank.

         As a state-chartered savings bank, AmeriBank is subject to the Michigan
Savings  Bank Act and the  regulations  of the Michigan  Financial  Institutions
Bureau adopted  thereunder,  as well as other applicable  provisions of Michigan
law.  AmeriBank  derives  its lending and  investment  powers 


                                       29

<PAGE>



from the Michigan  Savings Bank Act, and is subject to periodic  examination and
reporting  requirements  by the  Financial  Institutions  Bureau.  The  Michigan
Savings Bank Act further  regulates  many of the internal  operating  affairs of
AmeriBank,  including the  activities of the board of directors and the noticing
and conduct of the annual shareholder meetings.

         In order to  maintain  its  qualification  as a savings  bank under the
Michigan  Savings Bank Act,  AmeriBank  must  maintain at least 50% of its total
assets, as measured by monthly averages calculated at the close of each calendar
month, in at least 9 months of the immediately  preceding 12 months,  in certain
consumer related assets,  including  residential single and multi-family  loans,
home equity  loans,  stock  issued by a federal  home loan bank,  loans to small
businesses and loans for personal, family, household or education purposes.

         FEDERAL TAXATION.  Savings  institutions that meet certain definitional
tests relating to the composition of assets and other  conditions  prescribed by
the Internal  Revenue  Code,  had been  permitted to establish  reserves for bad
debts and to make annual additions which may, within  specified  formula limits,
be taken as a deduction  in  computing  taxable  income for  federal  income tax
purposes.  The  amount of the bad debt  reserve  deduction  for  "non-qualifying
loans" was  computed  under the  experience  method.  The amount of the bad debt
reserve  deduction for  "qualifying  real  property  loans," which are generally
loans secured by improved real estate,  was computed under either the experience
method or the percentage of taxable income method.

         The  percentage of specially  computed  taxable income that was used to
compute a savings  institution's bad debt reserve deduction under the percentage
of taxable  income  method was 8%.  This  percentage  was  reduced by the amount
permitted as a deduction for  non-qualifying  loans under the experience method.
The availability of the percentage of taxable income method permitted qualifying
savings  institutions to be taxed at a lower  effective  federal income tax rate
than that applicable to corporations  generally,  which is  approximately  31.3%
assuming the maximum percentage bad debt deduction.

         In addition to the regular income tax, corporations,  including savings
institutions, generally are subject to a minimum tax. An alternative minimum tax
is imposed at a minimum tax rate of 20% on alternative  minimum  taxable income,
which  is the  sum of a  corporation's  regular  taxable  income,  with  certain
adjustments,  and tax  preference  items,  less  any  available  exemption.  The
alternative  minimum tax is imposed to the extent it exceeds  the  corporation's
regular  income  tax and net  operating  losses  can  offset no more than 90% of
alternative  minimum taxable income.  For taxable years beginning after 1986 and
before 1996, corporations,  including savings institutions, were also subject to
an environmental tax equal to .12% of the excess of alternative  minimum taxable
income for the taxable year, which is determined without regard to net operating
losses and the deduction for the environmental tax, over $2.0 million.

         To the extent earnings appropriated to a savings institution's bad debt
reserves for  "qualifying  real property  loans" and deducted for federal income
tax purposes  exceed the allowable  amount of such reserves  computed  under the
experience method and to the extent of the institution's  supplemental  reserves
for losses on loans , such reserves for losses on loans may not, without adverse
tax  consequences,  be  utilized  for the  payment  of cash  dividends  or other
distributions to a

                                       30

<PAGE>



shareholder,  including distributions on redemption, dissolution or liquidation,
or for any other  purpose  except to absorb bad debt losses.  As of December 31,
1998,  our  supplemental  reserves for losses on loans for tax purposes  totaled
approximately $12.3 million.

         Ottawa Financial and its subsidiaries file consolidated  federal income
tax returns on a calendar  year basis using the  accrual  method of  accounting.
Savings institutions, such as AmeriBank, that file federal income tax returns as
part of a consolidated group are required by applicable Treasury  regulations to
reduce their taxable  income for purposes of computing the  percentage  bad debt
deduction for losses  attributable to activities of the non-savings  institution
members  of  the  consolidated  group  that  are  functionally  related  to  the
activities of the savings institution member.

         We have been  audited by the  Internal  Revenue  Service  ("IRS")  with
respect to consolidated federal income tax returns for 1990 through 1993. We are
currently  undergoing  an  audit  by the IRS with  respect  to the  consolidated
federal  income tax return for 1995.  With respect to years examined by the IRS,
either all  deficiencies  have been  satisfied or sufficient  reserves have been
established to satisfy asserted deficiencies.  In the opinion of management, any
examination  of still  open  returns,  including  returns  of  subsidiaries  and
predecessors  of, or entities  that we have merged  with,  would not result in a
deficiency  which  could  have  a  material  adverse  effect  on  our  financial
condition.

         MICHIGAN  TAXATION.  The State of Michigan  imposes a tax on intangible
personal property in the amount of $.20 per $1,000 of deposits of a savings bank
or a savings and loan  institution less deposits owed to the federal or Michigan
state governments, their agencies or certain other financial institutions.  This
tax has been  repealed  effective  January 1, 1998.  The State of Michigan  also
imposes a "Single  Business Tax," which is a value-added  type of tax and is for
the privilege of doing business in the State of Michigan.  The major  components
of the Single  Business  Tax base are  compensation,  depreciation  and  federal
taxable  income,  as increased by net  operating  loss carry  forwards,  if any,
utilized in arriving at federal  taxable  income,  and  decreased by the cost of
acquisition  of tangible  assets  during the year.  The tax rate is 2.30% of the
Michigan adjusted tax base.

         DELAWARE TAXATION.  As a Delaware holding company,  Ottawa Financial is
exempted  from Delaware  corporate  income tax but is required to file an annual
report with and pay an annual fee to the State of Delaware.  Ottawa Financial is
also subject to an annual franchise tax imposed by the State of Delaware.

COMPETITION

         We  face  strong   competition  in  originating  loans  and  attracting
deposits.   Competition  comes  from  other  commercial  banks,   other  savings
institutions,  credit  unions,  mortgage  banking  companies and other  non-bank
financial services companies including insurance companies and investment firms.
Finance companies compete with us for consumer loan business.

         We attract all of our  deposits  through  AmeriBank's  branch  offices,
primarily  from the  communities  in which those  branch  offices  are  located;
therefore,  competition  for those  deposits is  

                                       31

<PAGE>



principally from other savings  institutions,  commercial banks,  credit unions,
mutual funds and insurance companies.  We compete for these deposits by offering
a variety of deposit accounts at competitive rates,  convenient  business hours,
and  convenient  branch  locations  with  interbranch   deposit  and  withdrawal
privileges.  Automated  teller machine  facilities are also available at most of
AmeriBank's 26 locations.

         Our six county market area has a strong base of financial  institutions
and several of those  competitors  are much larger than we are in terms of total
deposits and number of branches.  The largest  commercial banks operating in the
market area are National City, Old Kent,  Huntington Bank, NBD Bank and Michigan
National  Bank.  Despite  the  presence  of  significant  competition,  we  have
demonstrated  the ability to sustain  positive  deposit  growth rates during the
past year.  Growth of deposits  can be  attributed  to a strong  local  economy,
customer loyalty and our local orientation.

EMPLOYEES

         At December 31,  1998,  we had a total of 310  employees,  including 91
part-time  employees.  Our  employees  are  not  represented  by any  collective
bargaining group. Management considers our employee relations to be good.

EXECUTIVE OFFICERS OF OTTAWA FINANCIAL

         DOUGLAS J.  IVERSON.  Mr.  Iverson,  age 49, was  appointed,  effective
January 1, 1999,  Chief  Executive  Officer  and Vice  Chairman of the Boards of
Ottawa  Financial  and  AmeriBank.  Previously,  he  served  as  Executive  Vice
President,  Secretary  and  Chief  Operating  Officer  of Ottawa  Financial  and
President and Secretary of AmeriBank.  Mr. Iverson joined AmeriBank in 1972, and
has served in numerous capacities during such tenure.

         RONALD L. HAAN. Mr. Haan, age 45, was appointed,  effective  January 1,
1999,  President and Chief Operating  Officer of Ottawa Financial and AmeriBank.
Previously, he served as Senior Vice President and Assistant Secretary of Ottawa
Financial and Executive Vice President and Assistant Secretary of AmeriBank. Mr.
Haan also serves as a director of Ottawa Financial and AmeriBank. Before joining
Ottawa  Financial in February  1996,  he was employed in 1989 as Executive  Vice
President of AmeriBank  Federal  Savings Bank and in February 1990 was appointed
Chief Financial Officer. In December 1990, Mr. Haan was elected President, Chief
Administrative  Officer and a director of AmeriBank  Federal Savings Bank. Prior
to his  employment at AmeriBank  Federal  Savings Bank, Mr. Haan was employed by
MetroBanc Federal Savings Bank of Grand Rapids,  Michigan,  from 1978 to 1987 as
Vice President,  and from 1987 to 1989 at Comerica Bank, Grand Rapids, Michigan,
as Vice President and Regional Manager.

         JON W. SWETS.  Mr. Swets, age 33, is Vice President and Chief Financial
Officer of Ottawa Financial and Senior Vice President-Chief Financial Officer of
AmeriBank.  He joined  Ottawa  Financial  and  AmeriBank in these  capacities in
November 1996. Prior to joining Ottawa Financial and AmeriBank,  Mr. Swets was a
Senior Manager with Crowe, Chizek and Company LLP, a large 

                                       32

<PAGE>



public  accounting  firm.  Mr. Swets joined  Crowe,  Chizek and Company LLP as a
staff accountant in June 1987.

ITEM 2.  PROPERTIES

         Our operations  are conducted  through  AmeriBank's  main office and 25
branches,  including a  "drive-up"  facility.  At December  31,  1998,  we owned
AmeriBank's  main office and 23 of its branch offices;  the remaining two branch
offices and the land on which they are situated were leased.  As of December 31,
1998,  the  net  book  value  of  our  investment  in  premises,  equipment  and
leaseholds, excluding computer equipment, was approximately $13.6 million.

         We maintain an on-line  data base of depositor  and  borrower  customer
information.  The net book value of the data  processing and computer  equipment
and software utilized by Ottawa Financial at December 31, 1998 was $1.6 million.



                                       33

<PAGE>



ITEM 3.  LEGAL PROCEEDINGS

         Ottawa Financial is involved as plaintiff or defendant in various legal
actions arising in the normal course of business.  While the ultimate outcome of
these  proceedings  cannot be  predicted  with  certainty,  it is the opinion of
management,   after  consultation  with  our  counsel  representing  us  in  the
proceedings, that the resolution of these proceedings should not have a material
effect on our results of  operations.  See Note 11 of the Notes to  Consolidated
Financial Statements in the Annual Report to Stockholders attached as Exhibit 13
to this Annual Report on Form 10-K.

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

         No matter was  submitted  to a vote of  security  holders,  through the
solicitation  of proxies or  otherwise,  during the quarter  ended  December 31,
1998.

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
         HOLDER MATTERS

         The section entitled "Shareholder Information - Market" of the attached
Annual Report to  Stockholders  for year ended December 31, 1998 is incorporated
herein by reference.

ITEM 6.  SELECTED FINANCIAL DATA

         The section entitled "Selected  Consolidated  Financial Information" of
the attached Annual Report to  Stockholders  for year ended December 31, 1998 is
incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The section entitled "Management's Discussion and Analysis of Financial
Condition  and  Results  of  Operations"  of  the  attached   Annual  Report  to
Stockholders  for  year  ended  December  31,  1998 is  incorporated  herein  by
reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The section entitled "Management  Discussion of Financial Condition and
Results of  Operations -  Asset/Liability  Management"  of the  attached  Annual
Report to Stockholders  for year ended December 31, 1998 is incorporated  herein
by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  section  entitled  "Consolidated   Financial  Statements"  of  the
attached  Annual  Report to  Stockholders  for year ended  December  31, 1998 is
incorporated herein by reference.


                                       34

<PAGE>



ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

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

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

         Information  concerning  directors of Ottawa  Financial is incorporated
herein by reference from the definitive  proxy  statement for the Annual Meeting
of Shareholders to be held in April 1999, except for information contained under
the  heading  "Compensation  Committee  Report on  Executive  Compensation"  and
"Shareholder Return Performance Presentation", a copy of which will be filed not
later than 120 days after the close of the fiscal year.

EXECUTIVE OFFICERS

         Information  concerning  executive  officers of Ottawa Financial is set
forth under the caption  "Executive  Officers of Ottawa Financial"  contained in
Part I of this Form 10-K.

COMPLIANCE WITH SECTION 16(A)

         Section 16(a) of the Exchange Act requires Ottawa Financial's directors
and executive officers,  and persons who own more than 10% of a registered class
of  Ottawa  Financial's  equity  securities,  to file  with the SEC  reports  of
ownership  and reports of changes in  ownership of common stock and other equity
securities  of  Ottawa  Financial.  Officers,  directors  and  greater  than 10%
stockholders  are required by SEC  regulation to furnish  Ottawa  Financial with
copies of all Section 16(a) forms they file.

         To Ottawa Financial's knowledge, based solely on a review of the copies
of such reports furnished to Ottawa Financial and written  representations  that
no other reports were required  during the fiscal year ended  December 31, 1998,
all Section 16(a) filing requirements applicable to its officers,  directors and
greater than 10 percent beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION

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

                                       35

<PAGE>





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information  concerning certain  relationships and related transactions
is incorporated  herein by reference from the definitive proxy statement for the
Annual Meeting of Shareholders to be held in April 1999,  except for information
contained  under  the  heading  "Compensation   Committee  Report  on  Executive
Compensation" and "Shareholder Return Performance Presentation", a copy of which
will be filed not later than 120 days after the close of the fiscal year.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

         (1)  FINANCIAL STATEMENTS:

         The following  financial  statements are included under Part II, Item 8
of this Form 10-K:


         1. Report of Independent Auditors.
         2. Consolidated  Statements  of Balance  Sheet at December 31, 1998 and
            1997.
         3. Consolidated  Statements of Income for the Years ended  December 31,
            1998, 1997 and 1996.
         4. Consolidated  Statements of Changes in Shareholders'  Equity for the
            Years ended December 31, 1998, 1997 and 1996.
         5. Consolidated  Statements of Cash Flows for the Years ended  December
            31, 1998, 1997 and 1996.
         6. Consolidated  Statements of Comprehensive Income for the Years ended
            December 31, 1998, 1997 and 1996.
         7. Notes to Consolidated Financial Statements.
         8. Ottawa Financial Corporation Quarterly Financial Data.



                                       36

<PAGE>



         (2)  FINANCIAL STATEMENT SCHEDULES:

         All financial  statement schedules have been omitted as the information
is not required under the related instructions or is inapplicable.

         (3) EXHIBITS:

         See Index to Exhibits.

(b) REPORTS ON FORM 8-K:

         1.       Ottawa  Financial  filed a  Current  Report  on Form 8-K dated
                  November 13, 1998,  containing a press release  announcing the
                  retirement  of Gordon L.  Grevengoed  as Vice  Chairman of the
                  Board and President  and Chief  Executive  Officer  ("CEO") of
                  Ottawa  Financial  and  AmeriBank.   The  press  release  also
                  announced  the  appointment  of Douglas J.  Iverson as CEO and
                  Vice Chairman of the Boards of Ottawa  Financial and AmeriBank
                  and Ronald L. Haan as President and Chief Operating Officer of
                  Ottawa Financial and AmeriBank.

                                       37

<PAGE>



                                   SIGNATURES


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

                                 OTTAWA FINANCIAL CORPORATION



Date:  March 30, 1999                           By: /s/ Douglas J. Iverson
       ----------------------                       ----------------------------
                                                    Douglas J. Iverson
                                                    Vice Chairman of the Board 
                                                     and Chief Executive Officer
                                                         (DULY AUTHORIZED 
                                                          REPRESENTATIVE)


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



By: /s/ Douglas J. Iverson                      By: /s/ Gordon H. Cunningham
    --------------------------------------          ----------------------------
    Douglas J. Iverson, Vice Chairman of            Gordon H. Cunningham,
     the Board and Chief Executive Officer            Chairman of the Board
     (PRINCIPAL EXECUTIVE OFFICER)

Date:  March 30, 1999                           Date:  March 30, 1999 
       ---------------------                           -------------------------



By: /s/ Ronald L. Haan                          By: /s/ Gordon L. Grevengoed
    --------------------------------------          ----------------------------
    Ronald L. Haan, President and Director          Gordon L. Grevengoed,
                                                       Director

Date:  March 30, 1999                           Date:  March 30, 1999 
       -----------------------------------             -------------------------


By: /s/ Leon E. Koops                           By: /s/ Brian W. Koop
    --------------------------------------          ----------------------------
    Leon E. Koops, Director                         Brian W. Koop, Director

Date:  March 30, 1999                           Date:  March 30, 1999 
       -----------------------------------             -------------------------



<PAGE>







By: /s/ Ronald J. Bieke                         By: /s/ B. Patrick Donnelly, III
    --------------------------------------          ----------------------------
    Ronald J. Bieke, Director                       B. Patrick Donnelly, III,
                                                       Director

Date:  March 30, 1999                           Date:  March 30, 1999 
       -----------------------------------             -------------------------



By: /s/ Robert D. Kolk                          By: /s/ G. W. Haworth
    --------------------------------------          ----------------------------
    Robert D. Kolk, Director                        G. W. Haworth, Director

Date:  March 30, 1999                           Date:  March 30, 1999 
       -----------------------------------             -------------------------



By: /s/ Jon W. Swets
    --------------------------------------
      Jon W. Swets, Vice President and
      Chief Financial Officer (PRINCIPAL
      FINANCIAL AND ACCOUNTING OFFICER)

Date:  March 30, 1999 
       -----------------------------------



<PAGE>



                                INDEX TO EXHIBITS


 Exhibit
 Number                                     Document
 ------           --------------------------------------------------------------

   3(i)           Registrant's  Certificate  of  Incorporation  as  currently in
                  effect,  filed on March 18, 1994 as an exhibit to Registrant's
                  Registration  Statement  on Form S-1 (File No. 33- 76600),  is
                  incorporated herein by reference.

   3(ii)          Registrant's  Amended and Restated  Bylaws,  as amended and as
                  currently in effect.

   4              Registrant's  Specimen Stock  Certificate,  filed on March 18,
                  1994 as an exhibit to Registrant's  Registration  Statement on
                  Form S-1  (File  No.  33-76600),  is  incorporated  herein  by
                  reference.

  10.1            Employment   Agreement  between  the  Registrant's   operating
                  subsidiary and Douglas J. Iverson,  filed on March 18, 1994 as
                  an exhibit to Registrant's  Registration Statement on Form S-1
                  (File No. 33-76600), is incorporated herein by reference.

  10.2            Employment   Agreement  between  the  Registrant's   operating
                  subsidiary  and  Ronald L.  Haan,  filed as an  exhibit to the
                  Registrant's  Report on Form 10-K for the year ended  December
                  31,  1995  (File  No.  0-24118),  is  incorporated  herein  by
                  reference.

  10.3            Registrant's Employee Stock Ownership Plan, filed on March 18,
                  1994 as an exhibit to Registrant's  Registration  Statement on
                  Form S-1  (File  No.  33-76600),  is  incorporated  herein  by
                  reference.

  10.4            Registrant's 1995 Stock Option and Incentive Plan, filed as an
                  exhibit to the  Registrant's  Report on Form 10-K for the year
                  ended December 31, 1994 (File No.  0-24118),  is  incorporated
                  herein by reference.

  10.5            Registrant's  Recognition  and  Retention  Plan,  filed  as an
                  exhibit to the  Registrant's  Report on Form 10-K for the year
                  ended December 31, 1994 (File No.  0-24118),  is  incorporated
                  herein by reference.

  11              Statement re: computation of per share earnings

  13              Annual Report to Stockholders

  21              Subsidiaries of the Registrant

  23              Consent of Accountants

  27              Financial  Data  Schedule   (electronic  filing  only)