<PAGE>

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

                                   FORM 10-KSB

|X|     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

| |     TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1945 FOR THE TRANSITION PERIOD FROM __________ TO __________

                         COMMISSION FILE NUMBER 0-28894

                          ACCESS ANYTIME BANCORP, INC.
                 (Name of small business issuer in its charter)

              DELAWARE                                  85-0444597
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
   incorporation or organization)

                    801 PILE STREET, CLOVIS, NEW MEXICO      88101
                (Address of principal executive offices)   (Zip Code)


         Issuer's telephone number, including area code: (505) 762-4417

       SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: NONE

         SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:

                           COMMON STOCK $.01 PAR VALUE
                           ---------------------------
                                (Title of class)

       Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

                                 Yes |X| No | |

       Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. |X|

       The issuer's revenues for the year ended December 31, 1999, were
$10,688,367.

       The aggregate market value of the voting stock held by non-affiliates
of the issuer, computed by reference to the average of the closing bid and
asked prices of such stock on the Nasdaq Small-Cap Market as of February 25,
2000 was approximately $8,049,431. (The exclusion from such amount of the
market value of the shares owned by any person shall not be deemed an
admission by the issuer that such person is an affiliate of the issuer.)

       As of February 25, 2000, the issuer had outstanding 1,238,374 shares
of Common Stock, par value $0.01 per share, its only class of Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

       The following document is incorporated by reference into Part III of
this Annual Report on Form 10-KSB: Definitive Proxy Statement for the issuer's
2000 Annual Meeting of Stockholders.

       Transitional Small Business Disclosure Format (check one): Yes | | No |X|

===============================================================================

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
                                               PART I
<S>        <C>                                                                                                 <C>
Item 1.    Description of Business.................................................................             4
           Overview................................................................................             4
           Lending Activities......................................................................             4
               General.............................................................................             4
               Loan Portfolio Composition..........................................................             6
               One-to-Four Family Residential Mortgage Lending.....................................             8
               Multi-Family and Commercial Real Estate Lending.....................................             9
               Commercial Business Lending.........................................................            10
               Construction Lending................................................................            10
               Consumer Lending....................................................................            10
               Loan Servicing......................................................................            11
           Originations, Purchases and Sales of Loans..............................................            11
           Asset Quality...........................................................................            12
               Delinquent Loans....................................................................            12
               Non-Performing Assets...............................................................            13
               Criticized Assets...................................................................            14
               Allowance for Loan Losses...........................................................            14
           Investment Activities...................................................................            16
               General.............................................................................            16
               Other Investments...................................................................            18
           Sources of Funds........................................................................            18
               The Company.........................................................................            18
               The Bank............................................................................            18
               Borrowings..........................................................................            22
           Subsidiary of the Bank..................................................................            22
           Regulation..............................................................................            22
               General.............................................................................            22
               Regulation of the Company...........................................................            23
               Federal Securities Law..............................................................            23
               Insurance of Accounts and Regulations by the FDIC...................................            24
               Regulatory Capital Requirements.....................................................            24
               Limitations on Dividends and Other Capital Distributions............................            26
               Liquidity...........................................................................            26
               Accounting..........................................................................            26
               Qualified Thrift Lender Test........................................................            27
               Community Reinvestment Act..........................................................            27
               Transactions with Affiliates........................................................            27
               Federal Home Loan Bank System.......................................................            28
               Regulatory Environment for 2000.....................................................            28
           Federal and State Taxation..............................................................            31
               Federal Taxation....................................................................            31
               State Taxation......................................................................            32
           New Accounting Standards................................................................            33
           Competition.............................................................................            33
           Employees...............................................................................            33

                                   (Continued)

                                       2
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>        <C>                                                                                               <C>
Item 2.    Description of Property.................................................................            34

Item 3.    Legal Proceedings.......................................................................            34

Item 4.    Submission of Matters to a Vote of Security Holders.....................................            34

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters...................            35

Item 6.    Management's Discussion and Analysis or Plan of Operation...............................            36
               Selected Consolidated Financial Highlights..........................................            36
               General.............................................................................            38
               Regulatory Matters..................................................................            39
               Results of Operations...............................................................            40
                    Comparison of Years Ended December 31, 1999 and 1998...........................            42
                    Comparison of Years Ended December 31, 1998 and 1997...........................            42
               Asset/Liability Management and Interest Rate Sensitivity............................            43
               Liquidity and Capital Resources.....................................................            46
               Asset Quality.......................................................................            47
                    Allowance for Loan Losses......................................................            47
                    Non-Performing Assets..........................................................            49
                    Investment Securities..........................................................            49
               Off-Balance Sheet Financial Instruments.............................................            49
               Income Taxes........................................................................            50
               Impact of Inflation and Changing Prices.............................................            50
               Impact of New Accounting Standards..................................................            50
               Impact of Year 2000.................................................................            52
               Forward-Looking Information.........................................................            52

Item 7.    Financial Statements....................................................................            52

Item 8.    Changes In and Disagreements with Accountants on Accounting
           and Financial Disclosures...............................................................            52

                                              PART III

Item 9.    Directors, Executive Officers, Promoters and Control
           Persons; Compliance with Section 16(a) of the Exchange Act..............................            53

Item 10.   Executive Compensation..................................................................            53

Item 11.   Security Ownership of Certain Beneficial Owners and Management..........................            53

Item 12.   Certain Relationships and Related Transactions..........................................            53

Item 13.   Exhibits and Reports on Form 8-K........................................................            54

Signatures ........................................................................................            56

Index to Consolidated Financial Statements.........................................................           F-1

Glossary of Certain Terms..........................................................................           G-1
</TABLE>
                                       3
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

PLEASE REFER TO THE GLOSSARY OF CERTAIN TERMS (PAGE G-1) FOR DEFINITIONS OF
VARIOUS TERMS.

OVERVIEW

         Access Anytime Bancorp, Inc. (the "Company") is a Delaware
corporation which was organized in 1996 for the purpose of becoming the thrift
holding company of First Savings Bank, F.S.B. renamed FirstBank (the "Bank").
The Company owns all of the outstanding stock of the Bank, which is the
Company's principal asset. The Bank was originally chartered by the FHLBB in
1934. Currently, deposits with the Bank are insured to the maximum extent
permitted by the SAIF, which is under the supervision of the FDIC. The Bank is
a member of the FHLB system and the Company and the Bank are subject to
comprehensive regulation, examination, and supervision of the OTS and the FDIC.

         The Bank is the second largest financial institution headquartered in
Clovis, New Mexico, with approximately $142 million in assets. The Bank
conducts full service banking operations through four offices located in
Clovis, Portales, and Gallup, New Mexico and through a loan production office
in Rio Rancho, New Mexico, near Albuquerque. The Company's executive offices
are located at 801 Pile Street, Clovis, New Mexico. The telephone number at
that address is (505) 762-4417. In general, the Bank has a normal lending
territory, as defined by federal regulations, that includes all areas within
the State of New Mexico, Arizona, and a 100 mile radius from the Company's
main office in Clovis, New Mexico, which extends into the State of Texas. The
primary service area's economic base is derived from Cannon Air Force Base, a
regional switching headquarters for the Burlington Northern Santa Fe Railroad,
Eastern New Mexico University, and farming and ranching.

         On November 5, 1999, the Bank purchased certain assets and assumed
all of the liabilities of the Bank of Albuquerque's branch facilities located
in Clovis and Gallup, New Mexico. The Bank assumed approximately $23.9 million
in deposits and $2.3 million in net loans.

         The Company's and the Bank's revenues are derived principally from
interest on loans and securities, servicing fee income, income from deposit
account service charges and gains on the sale of loans. The results of
operations of the Company and the Bank, in general, are significantly
influenced by general economic conditions, the monetary and fiscal policies of
the federal government, competition in the Company's and the Bank's market
area, and the policies of financial institution regulatory authorities.

         The Bank, since 1991, has engaged in the business of attracting
deposits from the general public, making loans secured by first liens on
single-family homes (primarily for sale into the secondary market), consumer
and commercial loans, and investing in mortgage related securities. The
principal sources of funds for the Bank's lending and investing activities
include the sale of loans, principal payments and prepayments on loans and
mortgage related securities, and deposits. The Bank's primary sources of
income are income on loans and securities, loan servicing fees, income from
deposit account service charges, and gains on the sale of loans and loan
servicing. Its principal expenses are interest paid on deposits and borrowings
and general operating expenses. The earnings of the Bank depend primarily on
the differences between its income from lending and investment activities and
the interest cost of its deposits and borrowings.

LENDING ACTIVITIES

         GENERAL. The Bank has historically originated fixed-rate and
adjustable-rate mortgage loans. In order to reduce its exposure to changes in
interest rates, it has also, since the early 1980's, emphasized the
origination and retention of ARM loans. Management's strategy has been to
increase assets in its portfolio which more frequently reprice or which have
shorter maturities. In response to customer demand, however, the Bank
continues to originate conventional fixed-rate mortgages.

         The Bank's balanced focus in lending activities is on the origination
of loans secured by first mortgages on owner-occupied, one-to-four family
residences, and consumer and commercial loans. The Bank also

                                       4
<PAGE>

originates residential construction, commercial real estate and consumer loans
in its market area. Most residential mortgage loans originated by the Bank are
in conformity with FHLMC, FNMA and GNMA loan underwriting standards so that
they may be sold in the secondary market. Mortgage loans made by the Bank are
generally long-term loans, amortized on a monthly basis, with principal and
interest due each month. The initial contractual loan payment period for
residential loans typically ranges from 15 to 30 years. The Bank's experience
indicates, however, that real estate loans remain outstanding for
significantly shorter periods than their contractual terms. Borrowers may
refinance or prepay loans at their option, subject to any prepayment penalty
provisions, if included in the note.

         All of the Bank's lending is subject to written underwriting
standards and to loan origination procedures. Decisions on loan applications
are made on the basis of detailed applications and property valuations
(consistent with the Bank's written appraisal policy) by independent
appraisers. The loan applications are designed primarily to determine the
borrower's ability to repay and the more significant items on the application
are verified through use of credit reports, financial statements, tax returns
and/or confirmations.

         In connection with the loan approval process, the Bank's loan
personnel analyze the loan application and the property involved. Consumer
loans are approved by loan committee and/or individual loan officers, in
accordance with policies established by the Bank's Board of Directors.

         Loan applicants are notified of the Bank's decision setting forth the
terms and conditions of the decision. If approved, these terms and conditions
include the amount of the loan, interest rate, amortization term, a brief
description of the real estate to be mortgaged to the Bank, and the
requirement of fire and casualty insurance coverage to be maintained to
protect the Bank's interest.

         It is the policy of the Bank to obtain a title insurance policy
insuring that it has a valid lien on all property securing real estate loans.
Hazard insurance or homeowner's policies must be obtained by the borrower
prior to closing. If required by federal rules and regulations, flood
insurance policies are obtained. Upon closing, most borrowers are required to
advance funds for the establishment of a mortgage escrow account. Thereafter,
the borrower makes contributions to this account along with monthly principal
and interest payments. Disbursements are made from this account for items such
as real estate taxes, hazard insurance premiums, and private mortgage
insurance premiums.

         The Bank receives loan origination fees for originating loans and
also receives commitment fees for making commitments to originate
construction, residential, commercial, and multi-family residential loans, as
well as various fees and charges related to existing loans, which include late
charges and assumption fees.

         As part of the loan application, the borrower pays the Bank for its
out-of-pocket costs in reviewing the application, such as the appraisal fee,
whether or not the borrower closes the loan. The interest rate charged is
normally the prevailing rate at the time the loan application is approved. In
the case of larger construction loans, the Bank normally charges a 1%
commitment fee, which may be included in the loan origination charge when the
loan is made. Commitment fees and other terms of commercial and multi-family
residential loans are individually negotiated.

         In order to monitor the adequacy of cash flows on income-producing
properties, the borrower or lead lender is notified periodically and asked to
provide financial information including rental rates and income, maintenance
costs and an update of real estate property tax payments.

         The aggregate amount of loans that the Bank is permitted to make
under applicable federal regulations to any one borrower, including related
entities, is limited generally to the greater of 15% of unimpaired capital and
surplus or $500,000. At December 31, 1999, the maximum amount which the Bank
could have lent to any one borrower and the borrower's related entities was
approximately $1,393,000. The Bank had no loans in excess of the legal lending
limit at December 31, 1999.

                                       5
<PAGE>

         LOAN PORTFOLIO COMPOSITION. The following table shows the composition
of the Bank's loan portfolio in dollar amounts and in percentages as of dates
indicated.
<TABLE>
<CAPTION>
                                                                             December 31
                                         -------------------------------------------------------------------------------------
                                                    1999                         1998                         1997
                                         ---------------------------  ---------------------------  ---------------------------
                                            Amount        Percent        Amount        Percent        Amount        Percent
                                         -------------  ------------  -------------  ------------  -------------  ------------
                                                                            (In Thousands)
<S>                                      <C>            <C>           <C>            <C>           <C>            <C>
Real estate loans (a):
   Residential mortgage loans:
     One-to-four family.............     $    66,791       62.88%     $    63,491       69.72%     $    37,875       63.45%
     Multi-family...................             902        0.85              918        1.01              942        1.58
     Other dwelling units...........             502        0.47              539        0.59              762        1.28
   Commercial.......................          20,553       19.35           12,555       13.79            8,741       14.64
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total real estate loans......          88,748       83.55           77,503       85.11           48,320       80.95
                                         -------------  ------------  -------------  ------------  -------------  ------------
Other loans:
   Savings accounts.................             694        0.65              596        0.65              627        1.05
   Other consumer items (b).........          16,778       15.80           12,964       14.24           10,750       18.00
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total other loans............          17,472       16.45           13,560       14.89           11,377       19.05
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total loans..................         106,220      100.00%          91,063      100.00%          59,697      100.00%
                                                        ============                 ============                 ============
Less:
   Loans in process.................             414                          947                          535
   Discounts, deferred loan fees
      and other.....................             765                          706                          463
   Allowance for loan losses........             864                          601                          527
                                         -------------                -------------                -------------

       Total loans receivable, net..     $   104,177                  $    88,809                  $    58,172
                                         =============                =============                =============
</TABLE>
(a) Includes construction loans to be converted to permanent loans and
    refinanced loans.
(b) Includes, among other things, commercial, automobile, credit card and home
    improvement loans.

                                       6
<PAGE>

         The following table shows the composition of the Bank's loan portfolio
by fixed- and adjustable-rate categories at the dates indicated.
<TABLE>
<CAPTION>
                                                                             December 31
                                         -------------------------------------------------------------------------------------
                                                    1999                         1998                         1997
                                         ---------------------------  ---------------------------  ---------------------------
                                            Amount        Percent        Amount        Percent        Amount        Percent
                                         -------------  ------------  -------------  ------------  -------------  ------------
                                                                            (In Thousands)
<S>                                      <C>            <C>           <C>            <C>           <C>            <C>
Fixed-rate loans:
Real estate (a):
   Residential mortgage loans:
     One-to-four family.............     $    54,802       51.59%     $    53,549       58.81%     $    27,835       46.63%
     Multi-family...................             623        0.59              632        0.69              626        1.05
     Other dwelling units...........              99        0.09              125        0.14              317        0.53
   Commercial.......................          13,416       12.63           10,941       12.01            5,669        9.50
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total real estate loans......          68,940       64.90           65,247       71.65           34,447       57.71
                                         -------------  ------------  -------------  ------------  -------------  ------------

Other:
   Savings accounts.................             694        0.66              596        0.65              627        1.05
   Consumer (b).....................          13,747       12.94           12,371       13.59           10,681       17.89
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total other loans............          14,441       13.60           12,967       14.24           11,308       18.94
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total fixed-rate loans.......          83,381       78.50           78,214       85.89           45,755       76.65
                                         -------------  ------------  -------------  ------------  -------------  ------------

Adjustable-rate loans:
Real estate (a):
   Residential mortgage loans:
     One-to-four family.............          11,989       11.29            9,942       10.93           10,040       16.82
     Multi-family...................             279        0.26              286        0.31              316        0.53
     Other dwelling units...........             403        0.38              414        0.45              445        0.75
   Commercial.......................           7,137        6.72            1,614        1.77            3,072        5.14
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total real estate loans......          19,808       18.65           12,256       13.46           13,873       23.24

Consumer (b)........................           3,031        2.85              593        0.65               69        0.11
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total adjustable-rate loans..          22,839       21.50           12,849       14.11           13,942       23.35
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total loans receivable.......         106,220      100.00%          91,063      100.00%          59,697      100.00%
                                                        ============                 ============                 ============
Less:
   Loans in process.................             414                          947                          535
   Discounts, deferred loan fees
      and other.....................             765                          706                          463
   Allowance for loan losses........             864                          601                          527
                                         -------------                -------------                -------------

       Total loans receivable, net..     $   104,177                  $    88,809                  $    58,172
                                         =============                =============                =============
</TABLE>
(a) Includes construction loans to be converted to permanent loans and
    refinanced loans.
(b) Includes, among other things, commercial, automobile, credit card and home
    improvement loans.

                                       7
<PAGE>

         The following table outlines the specific loan types with contractual
maturity dates as of December 31, 1999. Loans which have adjustable or
renegotiable rates are shown as maturing during the period when the contract is
due. This schedule does not reflect the effects of possible principal
prepayments by the borrower.
<TABLE>
<CAPTION>
                                  Real Estate                                 Non-Real Estate
                  --------------------------------------------  --------------------------------------------
                       Mortgages             Construction             Consumer         Commercial Business           Total
                  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------
                              Weighted               Weighted               Weighted               Weighted               Weighted
                              average                average                average                average                average
                   Amount       rate      Amount      rate       Amount       rate      Amount       rate      Amount       rate
                  ----------  ---------  ---------- ----------  ----------  ---------  ----------  ---------  ----------  ---------
                                                                   (In Thousands)
<S>               <C>         <C>        <C>        <C>         <C>           <C>      <C>         <C>        <C>         <C>
Within one
   year           $   4,818      8.85%   $     569     9.91%    $   1,683      8.54%   $   1,671      9.43%   $   8,741      8.97%
More than one
   year through
   two  years           616      8.67           --      --          1,282      9.99          336      9.36        2,234      9.53
More than two
   years
   through three
   years                946      9.05           --      --          3,506     12.07          164     10.10        4,616     11.38
More than
   three years
   through
   five years         5,311      8.72           --      --          5,244      9.42        1,691      9.47       12,246      9.12
More than five
   years
   through ten
   years             13,854      7.63           --      --            973      9.61          761      9.46       15,588      7.84
More than ten
   years
   through
   fifteen years     44,259      7.13           --      --             --       --            43     10.00       44,302      7.13
More than
   fifteen years     18,375      7.53           --      --             --       --           118      9.06       18,493      7.54
                  ----------  ---------  ---------- ----------  ----------  ---------  ----------  ---------  ----------  ---------
Total loans
   receivable     $  88,179      7.52%   $     569     9.91%    $  12,688     10.11%   $   4,784      9.46%   $ 106,220      7.93%
                  ==========  =========  ========== ==========  ==========  =========  ==========  =========  ==========  =========
</TABLE>
         As of December 31, 1999, the total amount of loans with maturities
longer than one year which had fixed interest rates was approximately $76
million and with floating or adjustable interest rates was approximately $21
million.

         ONE-TO-FOUR FAMILY RESIDENTIAL MORTGAGE LENDING. The primary lending
activity of the Bank has been the granting of conventional loans to enable
borrowers to purchase new or existing homes or refinance their current home.
The Bank also originates VA-guaranteed and FHA-insured loans. Residential loan
originations are generated by the Bank's marketing efforts, its present
customers, walk-in customers and referrals from realtors and builders. The
Bank has focused its lending efforts primarily on the origination of loans
secured by first mortgages on owner-occupied, single-family residences in its
market area.

         During 1998, the Bank increased its loans receivable because of the
increased volume in 15 year mortgage loan originations. Late in the last
quarter of 1998, the Bank changed its strategy and began to sell all mortgage
loan originations and servicing rights for 15 and 30 year originations. Loan
originations slowed in the last half of 1999, which slowed down both
originations and sales of loans receivable.

         The Bank's fixed-rate loans generally conform to secondary market
standards (I.E., FHLMC, FNMA and GNMA standards) and, since 1991, have been
primarily originated for sale in the secondary market. A portion of these
loans has been originated pursuant to forward sales commitments. Most of the
Bank's fixed-rate residential loans have contractual terms to maturity of 30
years. As a part of its asset/liability management strategy and in response to
an increase in refinancing activity, the Bank also originates 15 year
fixed-rate, fully amortizing loans.

         The Bank has offered ARM loans at rates, terms and fees determined in
accordance with market and competitive factors. The programs currently offered
primarily meet the standards and requirements of the

                                       8
<PAGE>

secondary market for residential loans. The Bank's current one-to-four family
residential ARM loans are fully amortizing loans with contractual maturities
of up to 30 years. The interest rates on the ARM loans originated by the Bank
are subject to adjustment at stated intervals and are subject to annual and
lifetime adjustment limits below and above the initial rate. Most of the
Bank's ARM loans have interest rates which adjust annually based on a margin
over one of several indices. These loans' annual and lifetime caps on interest
rate increases may reduce the extent to which they can help protect the Bank
against interest rate risk. The Bank has from time to time offered ARM loans
at below the fully-indexed rate; however, borrowers of ARM loans are qualified
at the fully-indexed rates.

         The Bank retains ARM loans in its portfolio consistent with its
ongoing asset/liability objectives. ARM loans decrease the risks associated
with changes in interest rates but involve other risks, primarily because as
interest rates rise, the payment by the borrower rises to the extent permitted
by the terms of the loan, thereby increasing the potential for default. At the
same time, the marketability of the underlying property may be adversely
affected by higher interest rates. The Bank believes that these risks, which
have not had a material adverse effect on the Bank to date, generally are less
than the risks associated with holding fixed-rate loans in a rising interest
rate environment. In this regard, the Bank's delinquency experience on its ARM
loans has generally been similar to its experience on fixed-rate residential
loans.

         The Bank evaluates both the borrower's ability to make principal,
interest and escrow payments and the value of the property that will secure
the loan. The Bank originates residential mortgage loans with loan-to-value
ratios up to 95%. On any mortgage loan exceeding an 80% loan-to-value ratio at
the time of origination, the Bank will generally require private mortgage
insurance in an amount intended to reduce the Bank's exposure to 80% or less
of the appraised value of the underlying property, unless otherwise approved
by the Bank's Board of Directors.

         The Bank's residential mortgage loans customarily include a
due-on-sale clause giving the Bank the right to declare the loan immediately
due and payable in the event that, among other things, the borrower sells or
otherwise disposes of the property subject to the mortgage and the loan is not
repaid. The Bank has generally enforced due-on-sale clauses in its mortgage
loan contracts. Yield increases may be obtained through the authorization of
assumptions of existing loans at higher rates of interest, assuming the
current rates are higher than the existing note rate, and the imposition of
assumption fees. ARM loans may be assumed provided home buyers meet the Bank's
underwriting standards and the applicable fees are paid.

         MULTI-FAMILY AND COMMERCIAL REAL ESTATE LENDING. The Bank's
multi-family and commercial real estate loan portfolio includes loans secured
by apartment buildings, office buildings, retail stores and other properties,
most of which are located in the Bank's normal lending territory. The Bank
intends to originate multi-family and commercial real estate loans in the
future, subject to regulatory restrictions. Multi-family and commercial real
estate loans generally are originated in amounts up to 75% of the appraised
value of the property securing the loan. Commercial and multi-family loans are
made at both fixed and adjustable interest rates for terms of up to 25 years.
The terms and conditions of multi-family and commercial real estate loans are
negotiated on a case-by-case basis.

         Appraisals on properties securing multi-family and commercial real
estate loans originated by the Bank are performed by an independent appraiser
subject to regulatory guidelines at the time the loan is made. All appraisals
on multi-family and commercial real estate loans are reviewed by the Bank's
management. In addition, the current underwriting procedures require
verification of the borrower's credit history, income and financial
statements, banking relationships, references and income projections for the
property. Personal guarantees are generally obtained for the Bank's
multi-family and commercial real estate loans.

         Multi-family and commercial real estate lending affords the Bank an
opportunity to receive interest at rates higher than those generally available
from one-to-four family residential lending. Nevertheless, loans secured by
such properties are generally larger and involve a greater degree of risk than
one-to-four family residential mortgage loans. Because payments on loans
secured by multi-family and commercial real estate properties are often
dependent on the successful operation or management of the properties,
repayment of such loans may be subject to adverse conditions in the real
estate market or the economy. If the cash flow from the project is reduced
(for example, if leases are not obtained or renewed), the borrower's ability
to repay the loan

                                       9
<PAGE>

may be impaired. In addition, adjustable-rate multi-family and commercial real
estate loans are subject to increased risk of delinquency or default as
interest rates increase. The Bank has attempted to minimize these risks
through its underwriting standards and by lending primarily on existing
income-producing properties.

         COMMERCIAL BUSINESS LENDING. The Bank began offering commercial
business loans guaranteed by the SBA in 1991. The SBA program provides lenders
with the ability to offer flexible terms and longer maturities on loans to
small businesses and professionals. The program provides the lender a
guaranteed portion (generally 75%-80%) of principal and interest. Since these
loans are guaranteed, they generally offer minimal risk to the Bank. These
loans are made with adjustable and fixed interest rates with maturities of up
to 25 years, depending on the underlying collateral. The loans are approved by
the SBA. The Bank intends to expand its commercial lending by utilizing the
SBA program.

         The Bank intends to provide short and medium term credit to
businesses in the Bank's primary lending territory. Commercial loans include
revolving credit lines and term loans, or a combination thereof, and are
generally secured by equipment, accounts receivable, inventories, real estate
or other business assets or a combination thereof. Commercial business loans
are made pursuant to specified loan approval limits set by the Bank's Board of
Directors. The Bank usually requires that business borrowers maintain their
operating accounts with the Bank in the form of demand deposits. Loans made to
corporations are generally personally guaranteed by the principals of the
corporation.

         CONSTRUCTION LENDING. The Bank originates loans to finance the
construction of single-family residences and commercial businesses. Many of
these loans are made to individuals who will ultimately be the owner-occupants
of the residence. Such loans are generally made, although not required, with
permanent financing on the constructed property to be provided by the Bank.
Construction loans are generally made with a six month term on a fixed-rate,
interest-only basis. Residential construction loans to owner-occupants are
generally underwritten using the same criteria as for one-to-four family
residential loans. Commercial construction loans are generally made with 12 to
24 month maturities. Loan proceeds are disbursed in increments as construction
progresses and inspections warrant.

         Construction loans afford the Bank the opportunity to charge loan
origination fees, to increase the frequency of repricing of its loan portfolio
and to earn yields higher than those obtainable on loans secured by existing
one-to-four family residential properties. The higher yields reflect the
higher risks associated with construction lending, which include principally
the difficulty in evaluating accurately the total funds required to complete a
project and the post-completion value of the project. As a result, the Bank
places a strong emphasis upon the borrower's ability to repay and the
experience and expertise of the builder who has contracted to construct the
property.

         CONSUMER LENDING. Management considers consumer lending to be an
important component of its strategic plan. Specifically, consumer loans
generally have shorter terms to maturity (thus reducing the Bank's exposure to
changes in interest rates) and carry higher rates of interest than do
one-to-four family residential mortgage loans. In addition, management
believes that the offering of consumer loan products helps to expand and
create stronger ties to its existing customer base by increasing the number of
customer relationships and providing cross-marketing opportunities. Under
applicable federal laws, the Bank is authorized to invest up to 35% of its
assets in consumer loans excluding credit card and education loans.

         The Bank offers a variety of secured consumer loans, including home
improvement loans, auto loans, personal lines of credit, equity lines of
credit and loans secured by savings deposits. The Bank also offers a limited
amount of unsecured and credit card loans. The Bank currently originates all
of its consumer loans in its market area. Consumer loan terms vary according
to the type of collateral, length of contract and creditworthiness of the
borrower. The Bank's consumer loans generally have fixed rates of interest.

         The Bank currently has several arrangements to originate consumer
automobile loans on an indirect basis (I.E., where loan contracts are
purchased from automobile retailers which have extended credit to their
customers). The Bank applies the underwriting standards mentioned below in the
approval process of purchasing these contracts. These loans have a fixed
interest rate and maturities of 6 years or less. As of December 31, 1999, the
Bank had $4,828,927 in indirect automobile contracts or 4.5% of its loan
portfolio before net items.

                                       10
<PAGE>

         The underwriting standards employed by the Bank for consumer loans
include a determination of the applicant's payment history on other debts and
an assessment of the ability to meet existing obligations and payments on the
proposed loan. Although creditworthiness of the applicant is a 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 risk than do residential mortgage
loans, particularly in the case of consumer loans which are unsecured, or
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, may limit the amount which can be recovered on such
loans. Although the level of delinquencies in the Bank's consumer loan
portfolio has generally been low (at December 31, 1999, approximately $30,000,
or 0.24% of the net consumer loan portfolio, was 60 days or more delinquent),
there can be no assurance that delinquencies will not increase in the future.

         LOAN SERVICING. In December 1998, the Bank sold its loan servicing
portfolio of approximately $100 million to a New Mexico loan servicer. The fee
for selling loans with servicing released is generally 1/4% to 1 3/4%. During
1999, the Bank retained loan servicing on certain of the one-to-four family
mortgages sold.

ORIGINATIONS, PURCHASES AND SALES OF LOANS

         As described previously, the Bank originates loans through its
marketing efforts, its existing customer base, walk-in customers, and real
estate brokers and builders. Commercial real estate loan originations are
obtained by direct solicitation. The Bank originates both adjustable-rate and
fixed-rate loans. Its ability to originate loans is dependent upon the
relative customer demand in the origination market which is affected by market
conditions such as short-term and long-term interest rates as well as the
expected future level of interest rates.

         On November 5, 1999, the Bank purchased approximately $2.3 million of
whole loans in connection with the acquisition of two branches in New Mexico.
The Bank had no outstanding commitments to purchase any loans or
mortgage-backed securities at December 31, 1999. At the same date, the Bank
had loan origination commitments of $1,960,217 and commitments to sell
residential loans of $394,067. The Bank expects to continue to sell most of
its residential mortgage loans in order to enhance liquidity and to maintain
its risk-based capital position. This has generally been the procedure since
1991.

                                       11
<PAGE>

         The following table sets forth the principal amount of the Bank's loan
origination, purchase and sales activity for the periods indicated.

<TABLE>
<CAPTION>
                                                                                             Year Ended December 31
                                                                                    ------------------------------------------
                                                                                        1999          1998           1997
                                                                                    -------------  ------------  -------------
                                                                                                 (In Thousands)
<S>                                                                                 <C>            <C>           <C>
Originations by loan type
Fixed-rate:
    Construction loans.................................................             $    3,644     $    1,888    $    1,214
    Mortgage loans.....................................................                 31,967         41,518        16,446
    Consumer loans (2).................................................                  6,337          9,671         7,680
    Loans refinanced...................................................                  5,512         11,214        10,624
Adjustable-rate:
    Mortgage loans.....................................................                  2,270          1,507           616
    Consumer loans (2).................................................                  5,858          1,084             1
    Loans refinanced...................................................                     45            765            46
                                                                                    -------------  ------------  -------------

          Total loans originated.......................................                 55,633         67,647        36,627
                                                                                    -------------  ------------  -------------

Purchases:
    Loans purchased....................................................                  2,267             --            --
                                                                                    -------------  ------------  -------------

Sales and repayments:
    Sales (1)..........................................................                 19,375         13,128         8,770
    Principal repayments...............................................                 24,500         22,595        15,239
                                                                                    -------------  ------------  -------------

          Total reductions.............................................                 43,875         35,723        24,009
                                                                                    -------------  ------------  -------------

Increase (decrease) in other items, net................................                    671           (730)         (308)
                                                                                    -------------  ------------  -------------

          Net increase ................................................             $   14,696     $   31,194    $   12,310
                                                                                    =============  ============  =============
</TABLE>

(1) Consists entirely of one-to-four family fixed-rate loans
(2) Includes non-mortgage commercial loans

ASSET QUALITY

         DELINQUENT LOANS. When a borrower fails to make a required payment
on a loan, the Bank attempts to cause the delinquency to be cured by
contacting the borrower. In the case of residential loans, a late notice is
sent 16 days after the due date. If the delinquency is not cured by the
thirtieth day, contact with the borrower is made by telephone or a letter is
sent. Additional written and verbal contacts are made with the borrower
between 35 and 70 days after the due date.

         In the event a real estate loan payment is past due for 45 days or
more, the Bank performs an in-depth review of the loan status, the condition
of the property and circumstances of the borrower. Based upon the results of
its review, the Bank may negotiate and accept a repayment program with the
borrower, accept a voluntary deed in lieu of foreclosure or when deemed
necessary, initiate foreclosure proceedings. If foreclosed on, real property
is sold at a public sale and the Bank may bid on the property to protect its
interest. A decision as to whether and when to initiate foreclosure
proceedings is based on such factors as the amount of the outstanding loan in
relation to the original indebtedness, the extent of delinquency and the
borrower's ability and willingness to cooperate in curing delinquencies.

         Delinquent consumer loans are handled in a generally similar manner,
except that contacts are made beginning when the payment is 10 days past due.
If these efforts fail to bring the loan current, appropriate action may be
taken to collect any loan payment that remains delinquent. The Bank's
procedures for repossession and

                                       12
<PAGE>

sale of consumer collateral are subject to various requirements under New
Mexico consumer protection laws. Loans are generally placed on non-accrual
status after 90 days delinquency or notice of bankruptcy.

         The following table sets forth the Bank's loan delinquencies by
type, amount, and percentage of type at December 31, 1999.

<TABLE>
<CAPTION>
                                                    Loans Delinquent For
                               --------------------------------------------------------------
                                                                                                  Total Loans Delinquent
                                         60-89 Days                   90 Days And Over                60 Days or More
                               ------------------------------  ------------------------------  -----------------------------
                                                    Percent                         Percent                         Percent
                                                    of loan                         of loan                         of loan
                                Number     Amount   category    Number    Amount    category    Number    Amount    category
                               ---------  --------- ---------  --------- ---------  ---------  --------  ---------  --------
                                                                      (In Thousands)
<S>                            <C>        <C>       <C>        <C>       <C>        <C>        <C>       <C>        <C>

Mortgage loans:
    One-to-four family...             3   $    47     0.07%           4  $   119       0.18%          7  $   166      0.25%
    Other dwelling units.            --        --        --          --       --         --          --       --        --
    Commercial real estate           --        --        --          --       --         --          --       --        --
Consumer loans...........             4        24     0.19            2        6       0.05           6       30      0.24
                               ---------  ---------            --------- ---------             --------  ---------

Total loans..............             7   $    71     0.07%           6  $   125       0.12%         13  $   196      0.18%
                               =========  =========            ========= =========             ========  =========
</TABLE>

         NON-PERFORMING ASSETS. Non-performing assets consist of loans on
which interest is no longer being accrued, troubled debt restructurings, real
estate acquired by foreclosure or deed-in-lieu of foreclosure and repossessed
assets.

         The following table sets forth the amounts and categories of
non-performing assets in the Bank's portfolio. Loans are generally placed on
non-accrual status after 90 days delinquency.

<TABLE>
<CAPTION>
                                                                                                   December 31
                                                                                    ------------------------------------------
                                                                                        1999          1998           1997
                                                                                    -------------  ------------  -------------
                                                                                                 (In Thousands)
<S>                                                                                 <C>            <C>           <C>

Non-accrual loans (1)..................................................             $      125     $      349    $        7
Past due 90 days or more and still accruing............................                     --             --            --
Real estate owned (2)..................................................                    188            166            76
                                                                                    -------------  ------------  -------------

Total non-performing assets............................................             $      313     $      515    $       83
                                                                                    =============  ============  =============

Ratio of non-performing assets to total assets.........................                  0.22%          0.42%         0.08%
                                                                                    =============  ============  =============
</TABLE>

(1)    Generally refers to loans that are contractually delinquent (i.e.,
       payments were due and unpaid for more than 90 days).

(2)    Refers to real estate acquired by the Bank through foreclosure or
       voluntary deed in lieu of loan foreclosure.




                                       13
<PAGE>

         For the year ended December 31, 1999, gross interest income which
would have been recorded had the non-accruing loans and renegotiated loans
been current in accordance with their original terms amounted to $7,841. The
amount that was included in interest income on such loans was $0 for the year
ended December 31, 1999.

         CRITICIZED ASSETS. Federal regulations provide for the
classification of loans and other assets, such as debt and equity securities
considered by the OTS to be of lesser quality, as "substandard," "doubtful"
or "loss." An asset is considered "substandard" if it is inadequately
protected by the current net worth and paying capacity of the obligor or of
the collateral pledged, if any. "Substandard" assets include those
characterized by the "distinct possibility" that the insured institution will
sustain "some loss" if the deficiencies are not corrected. Assets classified
as "doubtful" have all of the weaknesses inherent in those classified
"substandard," with the added characteristic that the weaknesses present make
"collection or liquidation in full," on the basis of currently existing
facts, conditions, and values, "highly questionable and improbable." Assets
classified as "loss" are those considered "uncollectible" and of such little
value that their continuance as assets without the establishment of a
specific loss reserve is not warranted. Assets which do not currently expose
the insured institution to sufficient risk to warrant classification in one
of the aforementioned categories, but possess weaknesses, are required to be
designated "special mention" by management.

         When an insured institution classifies problem assets as either
substandard or doubtful, it may establish general allowances for loan losses
in an amount deemed prudent by management. General allowances represent loss
allowances which have been established to recognize the inherent risk
associated with lending activities, but which, unlike specific allowances,
have not been allocated to particular problem assets. When an insured
institution classifies problem assets as loss, it is required either to
establish a specific allowance for losses equal to 100% of that portion of
the asset so classified or to charge-off such amount. An institution's
determination as to the classification of its assets and the amount of its
valuation allowances is subject to review by the regulatory authorities, who
may order the establishment of additional general or specific loss allowances.

         In connection with the filing of its periodic reports with the OTS
and in accordance with its classification of assets policy, the Bank
regularly reviews the problem loans in its portfolio to determine whether any
loans require classification in accordance with applicable regulations.
Criticized assets of the Bank at December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                                                                                          December 31, 1999
                                                                                                         --------------------
<S>                                                                                                      <C>

Substandard............................................................                                  $         314,050
Doubtful...............................................................                                                 --
Loss...................................................................                                                 --
                                                                                                         --------------------

Total classified assets................................................                                            314,050
Special mention assets.................................................                                          1,001,257
                                                                                                         --------------------

Total criticized assets................................................                                  $       1,315,307
                                                                                                         ====================
</TABLE>

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is
established through a provision for loan losses based on management's
quarterly asset classification review and evaluation of the risk inherent in
its loan portfolio and changes in the nature and volume of its loan activity.
Such evaluation, which includes a review of all loans of which full
collectibility may not be reasonably assured, considers among other matters,
the estimated value of the underlying collateral, economic conditions, cash
flow analyses, historical loan loss experience, discussions held with
delinquent borrowers and other factors that warrant recognition in providing
for an adequate loan allowance. 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,

                                       14
<PAGE>

if circumstances differ substantially from the assumptions used in making the
initial determinations. The Bank's quarterly asset classification review
determines which loans to charge-off.

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

<TABLE>
<CAPTION>
                                                                                Year ended December 31
                                                       -----------------------------------------------------------------------
                                                           1999          1998            1997          1996           1995
                                                       -------------  ------------  -------------  ------------  -------------
                                                                                    (In Thousands)
<S>                                                    <C>            <C>           <C>            <C>           <C>

Balance at beginning of year..............             $      601     $      527    $      429     $      428    $      461

Provision charged (credited)..............                    324            238           118             14           (15)
Acquired general valuation allowance......                    250             --            --             --            --

Charge-offs:
Mortgage loans:
    Single family.........................                     --             --            (2)            --            --
    Commercial real estate................                     --             --            --             --            --
Consumer loans and other..................                   (342)          (190)          (60)           (18)          (21)

Recoveries:
Mortgage loans:
    Single family.........................                     --             --            21              2            --
    Commercial real estate................                     --             --            --             --            --
Consumer loans and other..................                     31             26            21              3             3
                                                       -------------  ------------  -------------  ------------  -------------

Balances at end of year...................             $      864     $      601    $      527     $      429    $      428
                                                       =============  ============  =============  ============  =============

Ratio of net charge-offs during the period
    to average loans outstanding during
    the period............................                  0.32%          0.22%         0.04%          0.03%         0.05%
                                                       =============  ============  =============  ============  =============

Allowance for loan losses to
    non-performing loans, at the end of
    the period............................                276.84%        116.62%       634.94%         25.06%        25.37%
                                                       =============  ============  =============  ============  =============

Allowance for loan losses to total loans,
    at end of period......................                  0.83%          0.68%         0.91%          0.94%         1.25%
                                                       =============  ============  =============  ============  =============
</TABLE>









                                       15
<PAGE>

INVESTMENT ACTIVITIES

         GENERAL. The Bank has maintained levels of investments that qualify
as liquid assets under OTS regulations. Liquidity may increase or decrease
depending upon the availability of funds and comparative yields on
investments in relation to the return on loans. Historically, the Bank has
maintained liquid assets at levels above the minimum requirements imposed by
the OTS regulations and at levels believed adequate to meet the requirements
of normal operations, including repayments of maturing debt and potential
deposit outflows. Cash flow projections are regularly reviewed and updated to
assure that adequate liquidity is maintained. For the month of December 1999,
the Bank's liquidity ratio (liquid assets as a percentage of net withdrawable
savings deposits and current borrowings) was 13.21%.

         Federally chartered thrift institutions have the authority to invest
in various types of liquid assets, including United States Treasury
obligations, securities of various federal agencies, certain certificates of
deposit of insured banks and savings institutions, certain bankers'
acceptances, repurchase agreements and federal funds. Subject to various
restrictions, federally chartered thrift institutions may also invest their
assets in commercial paper, investment grade corporate debt securities and
mutual funds whose assets conform to the investments that a federally
chartered thrift institution is otherwise authorized to make directly.

         Generally, the investment policy of the Bank is to invest funds
among various categories of investments and maturities based upon the Bank's
asset/liability management policies, investment quality and marketability,
liquidity needs and performance objectives.

         The Bank has a substantial portfolio of mortgage-backed securities.
Historically, most of the Bank's mortgage-backed securities were long-term,
fixed-rate federal agency securities. In recent years, the Bank purchased
other types of mortgage-backed securities consistent with its asset/liability
management and balance sheet objectives. At December 31, 1999, approximately
$10 million or 73% of the Bank's mortgage-backed securities carried
adjustable rates of interest. The Bank's recent policy is to reduce
mortgage-backed securities balances and increase loans for yield enhancement.
The Bank also has pooled fixed-rate loans in its existing loan portfolio to
create mortgage-backed securities.

         Under the OTS' risk-based capital requirements, GNMA mortgage-backed
securities have a zero percent risk-weighting and FNMA, FHLMC and AA- or
higher rated mortgage-backed securities have a 20% risk-weighting. None of
the mortgage-backed securities held by the Bank had a risk-weight for
regulatory capital purposes above 20%.

         All of the Bank's mortgage-backed securities are backed by FHLMC,
GNMA or FNMA, or rated AA or higher. Accordingly, management believes that
the Bank's mortgage-backed securities generally are resistant to credit
problems.

         The Bank's holdings of mortgage-backed securities have decreased in
recent years primarily as a result of increase in the Bank's loan portfolio.
FHLMC, GNMA and FNMA mortgage-backed securities generally carry a yield
approximately 50 to 100 basis points below that of the corresponding type of
residential loan (due to the insurance or guarantee feature of such
securities and the retention of a servicing spread by the loan servicer), and
the Bank's other mortgage-backed securities also carry lower yields (because
such securities tend to have shorter actual durations than 30-year loans).
The Bank will continue to evaluate mortgage-backed securities purchases and
loan securitizations of its existing loans in the future based on its
strategic and asset/liability objectives, market conditions and alternative
investment opportunities.










                                       16
<PAGE>

         The following table sets forth the composition of the Bank's
investment portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                             December 31
                                         -------------------------------------------------------------------------------------
                                                    1999                         1998                         1997
                                         ---------------------------  ---------------------------  ---------------------------
                                           Carrying        % of         Carrying        % of         Carrying        % of
                                            value          total         value          total         value          total
                                         -------------  ------------  -------------  ------------  -------------  ------------
                                                                            (In Thousands)
<S>                                      <C>            <C>           <C>            <C>           <C>            <C>

Available-for-sale:
Mortgage-backed securities:
   GNMA adjustable rate.............     $     9,120      100.0%      $    11,426      100.0%      $    15,032      100.0%
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total available-for-sale.....     $     9,120      100.0%      $    11,426      100.0%      $    15,032      100.0%
                                         =============  ============  =============  ============  =============  ============

Held-to-maturity:
Mortgage-backed securities:
   FNMA participation certificates..     $     1,515       22.1%      $     2,861       38.0%      $     4,362       23.0%
   FHLMC participation certificates.           2,176       31.7             3,356       44.6            12,942       68.3
   FHLMC adjustable rate............             970       14.1             1,311       17.4             1,643        8.7
US Agency bonds                                1,000       14.6                --        --                 --         --
Corporate bonds                                  896       13.1                --        --                 --         --
Trust preferred securities                       300        4.4                --        --                 --         --
                                         -------------  ------------  -------------  ------------  -------------  ------------

       Total held-to-maturity.......           6,857      100.0%            7,528      100.0%           18,947      100.0%
                                         -------------  ============  -------------  ============  -------------  ============

FHLB stock..........................             880                          790                        1,667
                                         -------------                -------------                -------------

Other interest-earning assets:
   Interest-bearing deposits with banks        5,092                        2,590                        1,530
                                         -------------                -------------                -------------

       Total........................     $    21,949                  $    22,334                  $    37,176
                                         =============                =============                =============

Average remaining life excluding
   other-interest-earning assets and
   FHLB stock (does not include
   prepayment assumptions)                  11 years                     14 years                     12 years

</TABLE>

         The following table sets forth the composition and contractual
maturities of the Bank's investment securities.

<TABLE>
<CAPTION>
                                                                     December 31, 1999
                              -------------------------------------------------------------------------------------------------
                                                                                                         Total investment
                                                                                                            securities
                                                                                                     --------------------------
                                Within        1 to 5        5 to 10       10 to 20       Over 20      Amortized      Market
                               one year        years         years         years          years         cost          value
                              ------------  ------------  ------------  -------------  ------------  ------------  ------------
                                                                       (In Thousands)
<S>                           <C>           <C>           <C>           <C>            <C>           <C>           <C>

Available-for-sale:
Mortgage-backed securities:
  GNMA adjustable rate....    $        --   $        --   $        --   $     2,374    $     6,746   $     9,231   $     9,120
                              ------------  ------------  ------------  -------------  ------------  ------------  ------------

    Total securities
      available-for-sale..    $        --   $        --   $        --   $     2,374    $     6,746   $     9,231   $     9,120
                              ============  ============  ============  =============  ============  ============  ============

Weighted average yield....             --%           --%           --%        5.81%          6.07%         6.01%
                              ============  ============  ============  =============  ============  ============
</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                     December 31, 1999
                              -------------------------------------------------------------------------------------------------
                                                                                                         Total investment
                                                                                                            securities
                                                                                                     --------------------------
                                Within        1 to 5        5 to 10       10 to 20       Over 20      Amortized      Market
                               one year        years         years         years          years         cost          value
                              ------------  ------------  ------------  -------------  ------------  ------------  ------------
                                                                       (In Thousands)
<S>                           <C>           <C>           <C>           <C>            <C>           <C>           <C>

Held-to-maturity:
Mortgage-backed securities:
  FNMA participation
   certificates...........    $     1,219   $       296   $        --   $        --    $        --   $     1,515   $     1,499
  FHLMC participation
   certificates...........            665         1,511            --            --             --         2,176         2,154
  FHLMC adjustable-rate
   certificates...........             --            --            --           442            528           970           932
US Agency bonds...........             --         1,000            --            --             --         1,000           996
Corporate bonds...........             --           896            --            --             --           896           888
Trust preferred securities             --            --            --           200            100           300           310
                              ------------  ------------  ------------  -------------  ------------  ------------  ------------

    Total securities
      held-to-maturity....    $     1,884   $     3,703   $        --   $       642    $       628   $     6,857   $     6,779
                              ============  ============  ============  =============  ============  ============  ============

Weighted average yield....          5.18%         6.12%          --  %       6.99%           6.10%         5.94%
                              ============  ============  ============  =============  ============  ============
</TABLE>

         OTHER INVESTMENTS. At December 31, 1999, the Bank's interest bearing
deposits with banks were $5,092,000 or 3.59% of total assets. As of such
date, the Bank also had a $879,758 investment in FHLB stock. At December 31,
1999, the Bank's investment in stock of the FHLB was adequate. It is the
Bank's general policy to purchase investment securities, which are U.S.
Government securities and federal agency obligations, and other issues that
are rated investment grade or have credit enhancements.

SOURCES OF FUNDS

         THE COMPANY. The Company's primary source of funds are dividends
from the Bank, borrowings from the Bank in the form of advances and outside
borrowings. The Bank paid dividends to the Company of $0 and $98,956 in the
years ended December 31, 1999 and 1998, respectively. The Bank had no
advances to the Company at December 31, 1999 or 1998.

         At December 31, 1999 and 1998, the Company had lines of credit
totaling $260,000 and $200,000 respectively, from other banks. The lines of
credit bear market rates of interest and borrowings, thereunder, if any, are
to be used for general Company purposes. These borrowings mature between
August 11, 2000 and June 5, 2001.

         THE BANK. The Bank's primary sources of funds are deposits,
amortization and prepayment of loan principal, sales or maturities of loans,
investment securities, mortgage-backed securities and short-term investments,
borrowings and funds provided from operations.

         Borrowings, predominantly from the FHLB of Dallas, may be used on a
short-term basis to compensate for seasonal reductions in deposits or deposit
inflows at less than projected levels, and may be used in the future on a
longer-term basis to support lending and investing activities.

         The Bank offers a variety of deposit accounts having a wide range of
interest rates and terms. The Bank's deposits consist of statement savings,
NOW accounts and money market accounts and CDs. The Bank relies primarily on
advertising, competitive pricing policies and customer service to attract and
retain these deposits. The Bank solicits deposits from its primary market
area only and does not use brokers to obtain deposits.

         The flow of deposits is influenced significantly by general economic
conditions, changes in money markets and prevailing interest rates and
competition. To maintain proper capital ratios and improve its net

                                       18
<PAGE>

interest margin, management decided in 1995 to be less aggressive in bidding
for public fund deposits and the decline in deposits is partially attributed
to that strategic plan as well as management's overall strategy to change the
product mix offered to its customers. The policy was discontinued during 1997
as the capital ratios of the Bank improved. During 1998, the Bank increased
its deposits in order to increase loans receivable. During the first ten
months of 1999, the Bank borrowed short-term from FHLB advances to increase
its loans receivable. On November 5, 1999, the Bank acquired two branches in
Gallup and Clovis, New Mexico. The purchase of approximately $23.9 million of
deposits allowed the Bank to pay off the short-term FHLB advances.

         Management believes that customers continue to place a value on
federal insurance on deposit accounts and that, to the extent the Bank
maintains competitive rates, it will be able to maintain its deposit and
liquidity levels. The Bank manages the pricing of its deposits in keeping
with its asset/liability management and profitability objectives.

         Based on its experience, the Bank believes that its savings
accounts, interest-bearing and non-interest-bearing checking accounts are
relatively stable sources of deposits. However, the ability of the Bank to
attract and maintain CDs, and the rates paid on these deposits, has been and
will continue to be significantly affected by market conditions.

         The following tables set forth the deposits in the various programs
offered by the Bank at the dates indicated:

<TABLE>
<CAPTION>
                 Balance at                       Balance at                       Balance at                       Balance at
                 December      % of     Increase   December     % of     Increase   December      % of     Increase  December
                 31, 1999    deposits  (decrease)  31, 1998    deposits (decrease)  31, 1997    deposits  (decrease)  31, 1996
                 ----------  --------  ---------- ----------- --------- ----------- ----------  --------  ---------- -----------
                                                                  (In Thousands)
<S>              <C>         <C>       <C>        <C>         <C>       <C>         <C>         <C>       <C>        <C>

Transactional
  accounts       $  17,233     14.07%  $   5,328  $  11,905     11.34%  $   1,920   $   9,985     10.25%  $   1,569  $   8,416
Jumbo CDs            9,834      8.03         513      9,321      8.87       1,025       8,296      8.52         574      7,722
Savings
  accounts           7,003      5.72         665      6,338      6.03        (589)      6,927      7.11      (1,394)     8,321
Money market
  deposit
  accounts          24,089     19.67       5,335     18,754     17.85       3,043      15,711     16.13       5,200     10,511
IRA accounts        11,874      9.69       2,333      9,541      9.08          90       9,451      9.70        (360)     9,811
Other CDs           52,447     42.82       3,261     49,186     46.83       2,144      47,042     48.29      (6,341)    53,383
                 ----------  --------  ---------- ----------- --------- ----------- ----------  --------  ---------- -----------

                 $ 122,480    100.00%  $  17,435  $ 105,045    100.00%  $   7,633   $  97,412    100.00%  $    (752) $  98,164
                 ==========  ========  ========== =========== ========= =========== ==========  ========  ========== ===========
</TABLE>













                                       19


<PAGE>

<TABLE>
<CAPTION>

                                      December 31, 1999               December 31, 1998                December 31, 1997
                               -------------------------------- ------------------------------- --------------------------------
                               Weighted                         Weighted                        Weighted
                               average               Percentage average              Percentage  average              Percentage
  Minimum                      interest              of total   interest              of total   interest              of total
  amount         Category        rate      Balance   deposits     rate     Balance    deposits     rate      Balance   deposits
------------ ----------------- ---------- ---------- ---------- --------- ----------- --------- ---------- ---------- ----------
                                                                        (In Thousands)
<S>          <C>               <C>        <C>        <C>        <C>       <C>         <C>       <C>        <C>        <C>

$    100     Transactional
              accounts              0.00% $   8,033      6.56%     0.00% $  4,474       4.26%      0.00% $   3,226      3.32%
              zero-rate
     100     Transactional
              accounts              1.02      9,200      7.51      1.11     7,431       7.08       1.12      6,759      6.94
   1,000     Money market           2.56      9,201      7.51      2.81     5,837       5.55       3.05      6,030      6.19
     100     Savings accounts       2.00      7,003      5.72      2.25     6,338       6.03       2.50      6,927      7.11
   2,500     Access money
              market                3.82     14,888     12.16      4.26    12,917      12.30       4.50      9,681      9.94

             Certificates of
              Deposit
   1,000     30-60 day CDs          2.91        211      0.17      4.80     2,576       2.45       3.04         63      0.06
   1,000     91 day CDs             4.01      2,300      1.88      3.94       828       0.79       3.65        599      0.61
   1,000     6 month CDs            4.33     12,699     10.37      4.83    12,591      11.99       4.66     13,864     14.23
   1,000     1 year CDs             4.51     20,113     16.41      5.01    17,667      16.82       4.88     17,127     17.59
   1,000     18 month CDs           4.74      3,317      2.71      5.19     2,322       2.21       4.95      1,607      1.65
   1,000     2 year CDs             4.89      3,992      3.26      5.09     4,255       4.05       4.96      3,656      3.75
   1,000     30 month CDs           5.01      2,688      2.19      5.08     2,799       2.66       5.19      3,068      3.15
   1,000     3 year CDs             5.50      1,745      1.42       --         --        --         --          --       --
   1,000     4 year CDs             5.07      1,550      1.27      5.74     2,104       2.00       5.69      2,371      2.43
   1,000     5 year CDs             5.74      3,832      3.13      5.81     4,044       3.86       5.70      4,687      4.81
  90,000     Jumbo CDs              4.91      9,834      8.03      5.29     9,321       8.87       5.27      8,296      8.52
     100     IRA floating rate      4.87      4,501      3.67      4.81     4,024       3.82       5.05      4,217      4.33
     100     1 year IRA             4.41      2,410      1.97      5.09     2,041       1.94       5.04      2,024      2.08
     100     2 year IRA             4.80        231      0.19      5.45        81       0.08       5.57         94      0.10
     100     3 year IRA             5.19      2,003      1.64      5.30       921       0.88       5.72      1,154      1.18
     100     5 year IRA             5.81      2,729      2.23      5.91     2,474       2.36       5.87      1,962      2.01
                               ---------- ---------- --------- --------- ---------- --------- ---------- ---------- ---------

                                    3.72% $ 122,480    100.00%     4.21% $ 105,045    100.00%      4.24% $  97,412    100.00%
                               ========== ========== ========= ========= ========== ========= ========== ========== =========

</TABLE>

         The following table sets forth the savings flows of the Bank during the
periods indicated. Net deposits (withdrawals) refer to the amount of deposits
during a period less the amount of withdrawals during the same period. Deposit
flows at savings institutions may also be influenced by external factors such as
governmental credit policies and, particularly in recent periods, depositors'
perceptions of the adequacy of federal insurance of accounts.

<TABLE>
<CAPTION>

                                                                                             Year Ended December 31
                                                                                    ------------------------------------------
                                                                                        1999          1998           1997
                                                                                    -------------  ------------  -------------
                                                                                                 (In Thousands)
<S>                                                                                 <C>            <C>           <C>

Deposits acquired                                                                   $   23,892     $       --    $       --
Net deposits (withdrawals) before interest credited....................                (10,798)         3,358        (3,783)
Interest credited......................................................                  4,341          4,275         3,031
                                                                                    -------------  ------------  -------------

          Net increase (decrease) in savings deposits..................             $   17,435     $    7,633    $     (752)
                                                                                    =============  ============  =============

Percent increase (decrease)............................................                16.60%          7.84%        (0.77)%

</TABLE>




                                       20

<PAGE>

         The following table shows interest rate and maturity information for
the Bank's CDs as of December 31, 1999.

<TABLE>
<CAPTION>

                                  0.00-           3.00-           5.00-            7.00-                          Percent
                                  2.99%           4.99%           6.99%            8.99%           Total         of total
                              --------------  --------------  --------------   --------------  --------------  --------------
                                                                      (In Thousands)
<S>                           <C>             <C>             <C>              <C>             <C>             <C>

Certificate accounts
maturing in quarter
ending:
-------------------------

March 31, 2000...........     $         389   $      19,347   $       4,066    $         190   $      23,992        32.35%
June 30, 2000............               106          15,374           2,959               52          18,491        24.94
September 30, 2000.......                --           7,759           1,682               --           9,441        12.73
December 31, 2000........                --           6,355           1,631               --           7,986        10.77
March 31, 2001...........                 -           1,037           1,185               --           2,222         3.00
June 30, 2001............                --           1,077           1,596               --           2,673         3.60
September 30, 2001.......                --             298             504               --             802         1.08
December 31, 2001........                --             380           1,064               --           1,444         1.95
March 31, 2002...........                --             188             347               --             535         0.72
June 30, 2002............                --             128             918               --           1,046         1.41
September 30, 2002                       --              34           1,543               --           1,577         2.13
December 31, 2002........                --              35           1,451               --           1,486         2.00
Thereafter...............                --             805           1,655               --           2,460         3.32
                              --------------  --------------  --------------   --------------  --------------  --------------

     Total                    $         495   $      52,817   $      20,601    $         242   $      74,155       100.00%
                              ==============  ==============  ==============   ==============  ==============  ==============

     Percent of total                 0.67%          71.22%          27.78%            0.33%         100.00%
                              ==============  ==============  ==============   ==============  ==============

</TABLE>


         The following table indicates the amount of the Bank's CDs by size or
from public entities, by time remaining until maturity as of December 31, 1999.

<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>

CDs of $100,000 or less...............        $      21,203   $      17,354    $      16,420   $      13,372   $      68,349

CDs over $100,000.....................                1,790             989            1,007             872           4,658

Public funds(1).......................                1,000             148               --              --           1,148
                                              --------------  --------------   --------------  --------------  --------------

Total CDs and public funds............        $      23,993   $      18,491    $      17,427   $      14,244   $      74,155
                                              ==============  ==============   ==============  ==============  ==============

</TABLE>


----------------
(1)   Certificates of deposit from government and other public entities.

         From time to time, the Bank has had greater amounts of public funds.
The amount of public funds held by the Bank at December 31, 1999 and 1998 was
$2,545,168 and $3,294,961, respectively. The Bank is required to pledge
collateral against such funds equal to 100% of such funds.

                                       21

<PAGE>

         BORROWINGS. Although deposits are the Bank's primary source of
funds, the Bank's policy has been to utilize borrowings when there is a net
outflow of deposits, when advances are a less costly source of funds or when
funds from advances can be invested at a positive spread. In addition, the
Bank has relied upon selected borrowings for short-term liquidity needs.

         The Bank may obtain advances from the FHLB of Dallas upon the
security of its capital stock of the FHLB of Dallas and certain of its
mortgage loans, investment securities and mortgage-backed securities. Such
advances may be made pursuant to several different credit programs, each of
which has its own interest rate and range of maturities. At December 31,
1999, the Bank had $7,250,000 in FHLB borrowings outstanding, which allowed
the Bank to increase the amount of its loans receivable.

         During fiscal 1999, the Bank utilized advances from FHLB of Dallas
to cover funding of loans.

         The following table sets forth maximum balance, average balance, and
average rate paid on FHLB advances for the period indicated.

<TABLE>
<CAPTION>

                                                                                             Year ended December 31
                                                                                    ------------------------------------------
                                                                                        1999          1998           1997
                                                                                    -------------  ------------  -------------
                                                                                                 (In Thousands)
<S>                                                                                 <C>            <C>           <C>

Maximum amount of borrowings outstanding...............................             $   16,450     $    5,750    $    4,100

Approximate average borrowings outstanding.............................             $    8,661     $    4,786    $      231

Approximate weighted average interest rate paid........................                  5.38%          5.49%         5.64%

</TABLE>


SUBSIDIARY OF THE BANK

         In 1974, the Bank incorporated First Equity Development Corporation
("FEDCO"), a New Mexico corporation, as a wholly-owned subsidiary of the
Bank. The directors and officers of FEDCO also serve as officers of the Bank.
Prior to 1991, FEDCO's primary business was real estate acquisition,
development and construction, and investment in the Bank's former data
processing service bureau. FEDCO had $842 and $967 in cash at December 31,
1999 and 1998, respectively, and no other assets or liabilities and is
currently an inactive corporation. Thrift institutions are permitted to
invest an amount equal to 2% of their assets, through a subsidiary, with an
additional investment of 1% of assets where such investment serves primarily
community, inner-city and community development purposes.

REGULATION

         GENERAL. The Bank is subject to extensive regulation, examination
and supervision by the OTS, as its chartering agency, and the FDIC, as its
deposit insurer. The Bank's deposit accounts are insured up to applicable
limits by the SAIF administered by the FDIC, and it is a member of the FHLB
of Dallas. The Bank must file reports with the OTS and the FDIC concerning
its activities and financial condition, and it must obtain regulatory
approvals prior to entering into certain transactions, such as mergers with,
or acquisitions of, other depository institutions. The OTS and the FDIC
conduct periodic examinations to assess the Bank's compliance with various
regulatory requirements. Such regulation and supervision establish a
comprehensive framework of activities in which an institution may engage and
are intended primarily for the protection of the insurance fund and
depositors. The Company, as a unitary thrift holding company, is required to
file certain reports with, and otherwise comply with, the rules and
regulations of the OTS and of the Securities and Exchange Commission
("Commission") under the federal securities laws.

         The OTS and the FDIC have significant discretion in connection with
their supervisory and enforcement activities and examination policies,
including policies with respect to the classification of assets and the
establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulation and policies, whether by the OTS, the FDIC or
action of the United States Congress, could have a material adverse impact on
the Company, the Bank and the operations of both.

                                       22

<PAGE>

         The Bank was subject to an Amended Prompt Corrective Action
Directive dated August 1994 and a Supervisory Agreement dated June 1996
mainly directed to the improvement of capital ratios, plan and
asset/liability management issues. These agreements were terminated by the
OTS in November 1997.

         REGULATION OF THE COMPANY. The Company, as a unitary thrift holding
company, is a savings and loan holding company within the meaning of HOLA. As
such, the Company is required to register with the OTS and is subject to OTS
regulations, examinations, supervision and reporting requirements. In
addition, the OTS has enforcement authority over the Company and its
non-thrift subsidiaries, if any. Among other things, this authority permits
the OTS to restrict or prohibit activities that are determined to be a
serious risk to the financial safety, soundness or stability of a subsidiary
savings association.

         Except under limited circumstances, thrift holding companies are
prohibited from acquiring, without prior approval of the OTS, control of any
other savings institutions or thrift holding company or substantially all the
assets thereof or more than five percent of the voting shares of a thrift
institution or holding company thereof which is not a subsidiary. In
evaluating an application by a holding company to acquire a thrift
association, the OTS must consider the financial and managerial resources and
future prospects of the company and thrift association involved, the effect
of the acquisition on the risk to the insurance funds, the convenience and
needs of the community and competitive factors. Acquisitions which result in
a thrift holding company controlling thrift associations in more than one
state are generally prohibited except in supervisory transactions involving
failing savings associations or based on specific state authorization to
permit such acquisitions.

         Federal law also requires OTS approval prior to any change of
control of the Company or the Bank. Under OTS regulations, "control" is
presumed to exist if an individual or company acquires more than twenty-five
percent of any class of voting stock of a thrift association or holding
company. Control is also presumed to exist, subject to being rebutted, if a
person acquires more than ten percent of any class of voting stock (or more
than twenty-five percent of any class of non-voting stock) and is subject to
any of several control factors, including, among other matters, the relative
ownership position of a person, the existence of control agreements and other
factors.

         As a unitary thrift holding company, the Company generally will not
be restricted under existing laws to the types of business activities in
which it may engage, provided that the Bank continues to satisfy the QTL
test. Upon any non-supervisory acquisition by the Company of another thrift
or savings bank that meets the QTL test and is deemed to be a savings
association by the OTS and that will be held as a separate subsidiary, the
Company would become a multiple thrift holding company and would be subject
to limitations on the types of business activities in which it could engage.
HOLA generally limits the activities of a multiple thrift holding company and
its non-insured association subsidiaries primarily to activities permissible
for bank holding companies under the Bank Holding Company Act, subject to the
prior approval of the OTS, and to other activities authorized by OTS
regulation.

         A thrift association or a thrift holding company is required to give
30 days prior written notice to the OTS of any proposed appointment of a
director or senior executive officer if the institution has been chartered
less than two years, has undergone a change in control within the preceding
two years, or is not in compliance with the minimum capital requirements or
otherwise is in a troubled condition. The OTS then has the opportunity to
disapprove any such appointment.

         Transactions between the Bank and the Company and its other
subsidiaries are subject to various conditions and limitations. Well run,
healthy thrift institutions that satisfy certain criteria would be permitted
to file with the OTS schedules of proposed capital distributions over a
specified period not to exceed 12 months. The Bank being a wholly owned
subsidiary of a thrift holding company must file a notice with the OTS of
anticipated distributions of capital.

         FEDERAL SECURITIES LAW. The stock of the Company is registered with
the Commission under the Exchange Act ("Exchange Act"). The Company is
subject to the information, proxy solicitation, insider trading restrictions
and other requirements of the Commission under the Exchange Act.

         Company stock held by persons who are affiliates (generally
officers, directors and principal stockholders) of the Bank may not be resold
without registration or unless sold in accordance with certain resale

                                       23

<PAGE>

restrictions. If the Company meets specified current public information
requirements, each affiliate of the Company is able to sell in the public
market, without registration, a limited number of shares in any three-month
period.

         INSURANCE OF ACCOUNTS AND REGULATIONS BY THE FDIC. The Bank is a
member of the SAIF, which is administered by the FDIC. Deposits are insured
up to applicable limits by the FDIC and such insurance is backed by the full
faith and credit of the United States Government. 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 FDIC. The
FDIC also has the authority to initiate enforcement actions against thrift
associations, after giving the OTS an opportunity to take such action, and
may terminate the deposit insurance if it determines that the institution has
engaged or is engaging 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 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 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 will be made by the FDIC for each semi-annual assessment
period.

         REGULATORY CAPITAL REQUIREMENTS. Federally insured thrift
associations, such as the Bank, are required to maintain a minimum level of
regulatory capital. The OTS has established capital standards, including a
tangible capital requirement, a leverage ratio (or core capital) requirement
and a risk-based capital requirement applicable to such thrift associations.
These capital requirements must be generally as stringent as the comparable
capital requirements for national banks. The OTS is also authorized to impose
capital requirements in excess of these standards on individual associations
on a case-by-case basis.

         The capital regulations require tangible capital of at least 1.5% of
adjusted total assets (as defined by regulation). Tangible capital generally
includes common stockholders' equity and retained income, and certain
noncumulative perpetual preferred stock and related income. Intangible assets
including disallowed servicing assets and disallowed deferred tax assets are
deducted from capital to calculate adjusted tangible capital.

         The OTS regulations establish special capitalization requirements
for thrift associations that own subsidiaries. Under these regulations
certain subsidiaries are consolidated for capital purposes and others are
excluded from assets and capital. In determining compliance with the capital
requirements, all subsidiaries engaged solely in activities permissible for
national banks or engaged in certain other activities solely as agent for its
customers are "includable" subsidiaries that are consolidated for capital
purposes in proportion to the association's level of ownership, including the
assets of includable subsidiaries in which the association has a minority
interest that is not consolidated for generally accepted accounting
principles ("GAAP") purposes. For excludable subsidiaries, the debt and
equity investments in such subsidiaries are deducted from assets and capital,
with a five-year transition period beginning on July 1, 1990, for investments
made before April 12, 1989. At December 31, 1999, the Bank had tangible
capital of $8,424,140 or 6.06% of adjusted total assets, which was $6,340,415
above the minimum requirement of 1.5% of adjusted total assets in effect on
that date.

         The capital standards also require core capital equal to at least 3%
of adjusted total assets (as defined by regulation). Core capital generally
consists of tangible capital plus certain intangible assets, including a
limited amount of purchased credit card relationships. A thrift association
must maintain a core capital ratio of at least 4% to be considered adequately
capitalized unless its supervisory condition is such to allow it to maintain
a 3% ratio. At December 31, 1999, the Bank had core capital equal to
$8,424,140 or 6.06% of adjusted total assets, which was $2,867,540 above the
minimum leverage ratio requirement of 4% as in effect on that date.

                                       24

<PAGE>

         The OTS risk-based requirement requires thrift associations to have
total capital of at least 8% of risk-weighted assets. Total capital consists
of core capital, as defined above, and supplementary capital. Supplementary
capital consists of certain permanent and maturing capital instruments that
do not qualify as core capital and general valuation loan and lease loss
allowances up to a maximum of 1.25% of risk-weighted assets. Supplementary
capital may be used to satisfy the risk-based requirement only to the extent
of core capital. The OTS is also authorized to require a thrift association
to maintain an additional amount of total capital to account for
concentration of credit risk and the risk of non-traditional activities. At
December 31, 1999, the Bank had no capital instruments that qualify as
supplementary capital. In addition, general loss reserves at that date were
less than 1.25% of risk-weighted assets.

         Certain exclusions from capital and assets are required to be made
for the purpose of calculating total capital. Such exclusions consist of
equity investment (as defined by regulation) and that portion of land loans
and nonresidential construction loans in excess of an 80% loan-to-value ratio
and reciprocal holdings of qualifying capital instruments. The Bank had no
such exclusions from capital and assets at December 31, 1999.

         In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet items, will be multiplied by a risk
weight, ranging from 0% to 100%, based on the risk inherent in the type of
asset. For example, the OTS has assigned a risk weight of 50% for prudently
underwritten permanent one-to-four family first lien mortgage loans not more
than 90 days delinquent and having a loan to value ratio of not more than 80%
at origination unless insured to such ratio by an insurer approved by the
FNMA or FHLMC.

         At December 31, 1999, the Bank had risk-based capital of $9,288,457
or 10.44% of risk-weighted assets. This amount was $2,169,097 above the 8%
requirement in effect on that date.

         The OTS has adopted a rule that requires every thrift association
with more than normal interest rate risk to deduct from its total capital,
for purposes of determining compliance with such requirement, an amount equal
to 50% of its interest rate risk exposure multiplied by the present value of
its assets. This exposure is a measure of the potential decline in the net
portfolio value of a thrift association, greater than 2% of the present value
of its assets, based upon a hypothetical 200 basis point increase or decrease
in interest rates (whichever results in a greater decline). Net portfolio
value is the present value of expected cash flows from assets, liabilities
and off-balance sheet contracts. The rule provides for a two quarter lag
between calculating interest rate risk and recognizing any deduction from
capital. Any thrift association with less than $300 million in assets and a
total capital ratio in excess of 12% is exempt from this requirement unless
the OTS determines otherwise. Currently, the Bank is exempt from this rule.

         The OTS and the FDIC are authorized and, under certain circumstances
required, to take certain actions against thrift associations that fail to
meet their capital requirements. The OTS is generally required to take action
to restrict the activities of an "undercapitalized association" (generally
defined to be one with less than either a 4% core capital ratio, a 4% Tier 1
risked-based capital ratio or an 8% risk-based capital ratio). Any such
association must submit a capital restoration plan and until such plan is
approved by the OTS may not increase its assets, acquire another institution,
establish a branch or engage in any new activities, and generally may not
make capital distributions. The OTS is authorized to impose the additional
restrictions, discussed below, that are applicable to significantly
undercapitalized associations.

         As a condition to the approval of the capital restoration plan, any
company controlling an undercapitalized association must agree that is will
enter into a limited capital maintenance guarantee with respect to the
institution's achievement of its capital requirements.

         Any thrift association that fails to comply with its capital plan or
is "significantly undercapitalized" (i.e., Tier 1 risk-based or core capital
ratios of less than 3% or a risk-based capital ratio of less than 6%) must be
made subject to one or more of additional specified actions and operating
restrictions. These actions and restrictions include requiring the issuance
of additional voting securities; limitations on asset growth; mandated asset
reduction; changes in senior management; divestiture, merger or acquisition
of the association; restrictions on executive compensation; and any other
action the OTS deems appropriate. An association that becomes "critically
undercapitalized" (i.e., a tangible capital ratio of 2% or less) is subject
to further mandatory restrictions on its activities in addition to those
applicable to significantly undercapitalized associations. In

                                       25

<PAGE>

addition, the OTS must appoint a receiver (or conservator with the
concurrence of the FDIC) for a thrift association, with certain limited
exceptions, within 90 days after it becomes critically undercapitalized.

         Any undercapitalized association is also subject to other possible
enforcement actions by the OTS or the FDIC. Such actions could include a
capital directive, a cease-and-desist order, civil money penalties, the
establishment of restrictions on all aspects of the Bank's operations or the
appointment of a receiver or conservator or a forced merger into another
institution.

         If the OTS determines that an association is in an unsafe or unsound
condition or is engaged in an unsafe or unsound practice, it is authorized to
reclassify a well-capitalized association as an adequately capitalized
association and if the association is adequately capitalized, to impose the
restrictions applicable to an undercapitalized association. If the
association is undercapitalized, the OTS is authorized to impose the
restrictions applicable to a significantly undercapitalized association.

         The imposition by the OTS or the FDIC of any of these measures on
the Bank may have a substantial adverse effect on the Company's operations
and profitability. The Company's shareholders do not have preemptive rights,
and therefore, if the Bank is directed by the OTS or the FDIC to issue
additional shares of Common Stock, such issuance may result in the dilution
in the percentage of ownership of the Company.

         LIMITATIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS. OTS
regulations impose various restrictions on thrift associations with respect
to their ability to make distributions of capital, which include dividends,
stock redemptions or repurchases, cash-out mergers and other transactions
charged to the capital account. OTS regulations also prohibit a thrift
association from declaring or paying any dividends or from repurchasing any
of its stock if, as a result, the regulatory capital of the association would
be reduced below the amount required to be maintained for the liquidation
account established in connection with its mutual to stock conversion.

         Generally, thrift associations, such as the Bank, that before and
after the proposed distribution meet their capital requirements, may make
capital distributions during any calendar year equal to the greater of 100%
of net income for the year-to-date plus 50% of the amount by which the lesser
of the association's tangible, core or risk-based capital exceeds its capital
requirement for such capital component, as measured at the beginning of the
calendar year, or requirement for such capital component, as measured at the
beginning of the calendar year, or 75% of its net income for the most recent
four quarter period. However, an association deemed to be in need of more
than normal supervision by the OTS may have its dividend authority restricted
by the OTS. The Bank may pay dividends in accordance with this general
authority.

         Thrift associations proposing to make any capital distributions need
only submit written notice to the OTS 30 days prior to such distribution.
Thrift associations that do not, or would not meet their current minimum
capital requirements following a proposed capital distribution, however, must
obtain OTS approval prior to making such distribution. The OTS may object to
the distribution during that 30-day period notice based on safety and
soundness concerns.

         LIQUIDITY. All thrift associations, including the Bank, are required
to maintain an average daily balance of liquid assets equal to a certain
percentage of the sum of its average daily balance of net withdrawable
deposit accounts and borrowings payable in one year or less. This liquid
asset ratio requirement may vary from time to time (between 4% and 10%)
depending upon economic conditions and savings flows of all thrift
associations. At the present time, the minimum liquid asset ratio is 4%.

         In addition, short-term liquid assets (i.e., cash, certain time
deposits, etc.) currently must constitute 1% of the Bank's average daily
balance of net withdrawable deposit accounts and current borrowings.
Penalties may be imposed upon associations for violations of either liquid
asset ratio requirement. At December 31, 1999, the Bank was in compliance
with both requirements, with an overall liquid asset ratio of 13.21%.

         ACCOUNTING. An OTS policy statement applicable to all savings
associations clarifies and re-emphasizes that the investment activities of a
thrift association must be in compliance with approved and documented
investment policies and strategies, and must be accounted for in accordance
with GAAP. Under the policy statement, management must support its
classification of and accounting for loans and securities (i.e., whether

                                       26

<PAGE>

held for investment, sale or trading) with appropriate documentation. The
Bank is in compliance with this policy statement.

         The OTS had adopted an amendment to its accounting regulations to
require that transactions be reported in a manner that best reflects their
underlying economic substance and inherent risk and that financial reports
must incorporate any other accounting regulations or orders prescribed by the
OTS. Such regulations may result in reporting transactions in a manner that
is more stringent than may be required by GAAP.

         QUALIFIED THRIFT LENDER TEST. All thrift associations, including the
Bank, are required to meet a QTL test to avoid certain restrictions on their
operations. This test requires a savings association to have at least 65% of
its portfolio assets (as defined by regulation) in qualified thrift
investments on a monthly average for nine out of every 12 months on a rolling
basis. As an alternative, the thrift association may maintain 60% of its
assets in those assets specified in Section 7701(a)(19) of the Internal
Revenue Code. Under either test, such assets primarily consist of residential
housing related loans and investments. At December 31, 1999, the Bank met the
QTL test and has always met the test since its inception.

         Any thrift association that fails to meet the QTL test must convert
to a national bank charter, unless it requalifies as a QTL and thereafter
remains a QTL. Requalification as a QTL is restricted to one time only. If an
association does not requalify and converts to a national bank charter, it
must remain SAIF-insured until the FDIC permits it to transfer to the BIF. If
an association that fails the test has not yet requalified and has not
converted to a national bank, its new investments and activities are limited
to those permissible for both a thrift association and a national bank, and
it is limited to national bank branching rights in its home state. In
addition, the association is immediately ineligible to receive any new FHLB
borrowings and is subject to national bank limits for payment of dividends.
If such association has not requalified or converted to a national bank
within three years after the failure, it must divest of all investments and
cease all activities not permissible for a national bank. In addition, it
must repay promptly any outstanding FHLB borrowings, which may result in
prepayment penalties. If any association that fails the QTL test is
controlled by a holding company, then within one year after the failure, the
holding company must register as a bank holding company and become subject to
all restrictions on bank holding companies.

         COMMUNITY REINVESTMENT ACT. Under the CRA, 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 CRA does not
establish specific lending requirements or programs for financial
institutions nor does it limit an institution's discretion to develop the
types of products and services that it believes are best suited to its
particular community, consistent with the CRA. The CRA requires the OTS, in
connection with the examination of the Bank, to assess the institution's
record of meeting the credit needs of its community and to take such record
into account in its evaluation of certain applications, such as a merger or
the establishment of a branch, by the Bank. An unsatisfactory rating may be
used as the basis for the denial of an application by the OTS. The most
recent CRA examination as of June 28, 1999 classified the Bank as
satisfactory.

         The federal banking agencies, including the OTS, revised the CRA
regulations and the methodology for determining an institution's compliance
with the CRA. Due to the heightened attention being given to the CRA in the
past few years, the Bank may be required to devote additional funds for
investment and lending in its local community.

         TRANSACTIONS WITH AFFILIATES. Generally, transactions between a
thrift association or its subsidiaries and its affiliates are required to be
on terms as favorable to the association as transactions with non-affiliates.
In addition, certain of these transactions, such as loans to an affiliate,
are restricted to a percentage of the association's capital. Affiliates of
the Bank include the Company and any company which is under common control
with the Bank. In addition, a thrift association may not lend to any
affiliate engaged in activities not permissible for a bank holding company or
acquire the securities of most affiliates. The OTS has the discretion to
treat subsidiaries of thrift associations as affiliates on a case-by-case
basis.

         Certain transactions with directors, officers of controlling persons
are also subject to conflict of interest regulations enforced by the OTS.
These conflict of interest regulations and other statutes also impose
restrictions

                                       27

<PAGE>

on loans to such persons and their related interests. Among other things,
such loans must be made on terms substantially the same as for loans to
unaffiliated individuals. At December 31, 1999, loans to directors, executive
officers, and major stockholders were $1,300,285.

         FEDERAL HOME LOAN BANK SYSTEM. The Bank is a member of the FHLB of
Dallas, which is one of 12 regional FHLBs that administer the home financing
credit function of thrift associations. Each FHLB serves as a reserve or
central bank for its members within its assigned region. It is funded
primarily from proceeds derived from the sale of consolidated obligations of
the FHLB System. It makes loans to members (i.e., advances) in accordance
with policies and procedures established by the board of directors of the
FHLB. These policies and procedures are subject to the regulation and
oversight of the Federal Housing Finance Board. All advances from the FHLB
are required to be fully secured by sufficient collateral as determined by
the FHLB. In addition, all long-term advances are required to provide funds
for residential home financing.

         Under federal law, the FHLBs are required to provide funds for the
resolution of troubled thrift associations and to contribute to low- and
moderately priced housing programs through direct loans or interest subsidies
on advances targeted for community investment and low- and moderate-income
housing projects. These contributions have affected adversely the level of
FHLB dividends paid and could continue to do so in the future. These
contributions could also have an adverse effect on the value of FHLB stock in
the future. A reduction in value of the Bank's FHLB stock may result in a
corresponding reduction in the Bank's capital.

         As a member, the Bank is required to purchase and maintain stock in
the FHLB of Dallas. At December 31, 1999, the Bank had $879,758 in FHLB
stock, which was adequate. The Bank has received dividends on its FHLB stock,
which have averaged 6.00% over the past five calendar years and were 5.50%
for calendar year 1999.

         For the year ended December 31, 1999, stock and cash dividends paid
by the FHLB of Dallas to the Bank totaled $45,862 which constitutes a $12,915
decrease from the amount of dividends received in fiscal year 1998. The
$12,471 dividend received for the quarter ended December 1999 reflects an
annualized rate of 5.75%.

         REGULATORY ENVIRONMENT FOR 2000. The Gramm-Leach-Bliley Act (the
"Act") was signed by the President and enacted into law on November 12, 1999.
The Act does three fundamental things:

o        IT REPEALS KEY PROVISIONS OF THE 66-YEAR OLD GLASS-STEAGALL ACT TO
         PERMIT COMMERCIAL BANKS To AFFILIATE WITH INVESTMENT BANKS.

o        IT SUBSTANTIALLY MODIFIES THE 43-YEAR OLD BANK HOLDING COMPANY ACT OF
         1956 TO PERMIT COMPANIES THAT OWn COMMERCIAL BANKS TO ENGAGE IN ANY
         TYPE OF FINANCIAL ACTIVITY.

o        IT ALLOWS SUBSIDIARIES OF BANKS TO ENGAGE IN A BROAD RANGE OF FINANCIAL
         ACTIVITIES THAT ARE NOt PERMITTED FOR BANKS THEMSELVES.

         The result is that banks of all sizes will be able to offer their
customers a wide range of financial products and services without the costly
restraints of outdated laws (e.g., the "town of 5000" provision). In
addition, banking companies and other types of financial companies--securities,
insurance, and financial technology companies, for example--will be able to
combine much more readily.

         Although the provisions authorizing the combination of banking and
financial activities are the core of the new law, the Act includes many other
important provisions. For example, the Act eliminates the authority of
commercial companies to acquire thrift institutions through the unitary
thrift holding vehicle. The Act also includes important new provisions
regarding the privacy of customer information; increased access by community
banks to the Federal Home Loan Bank System; and significant changes to the
requirements imposed by the Community Reinvestment Act.

         This summary of the Act is divided into the following eight sections:

I.       "FINANCIAL HOLDING COMPANIES" AND "FINANCIAL SUBSIDIARIES." This
         section describes the new types of regulated entities that are
         authorized to engage in the broad new range of financial activities. A
         "financial holding company," which can engage in ALL of the Act's
         newly-authorized activities, is simply

                                       28

<PAGE>

         a bank holding company whose depository institutions are
         well-capitalized, well-managed, and CRA-rated "satisfactory" or
         better. A "financial subsidiary," which can engage in MOST of the
         newly-authorized activities, is a direct subsidiary of a bank that
         satisfies the same conditions as the FHC--plus several others.

II.      NEWLY-AUTHORIZED ACTIVITIES. This section describes the most important
         of the newly-permissible financial activities for financial holding
         companies, i.e., SECURITIES, INSURANCE, MERCHANT BANKING/EQUITY
         INVESTMENT, "FINANCIAL IN NATURE," AND "COMPLEMENTARY" ACTIVITIES. The
         "merchant banking" provisions are especially significant because they
         will allow a financial holding company to make a controlling
         investment in ANY kind of company, financial or commercial. As a
         group, these new powers allow a banking organization to engage in
         virtually every type of activity currently recognized as financial,
         and provide substantial discretion to the Federal Reserve and Treasury
         Department to authorize new activities as "financial," or as
         "incidental" or "complementary" to a financial activity.

III.     UNITARY THRIFT HOLDING COMPANY RESTRICTIONS. This section describes the
         Act's termination of the ability of commercial companies to acquire
         thrifts through unitary thrift holding companies. Existing commercial
         unitary thrift holding companies are grandfathered (as of May 4, 1999),
         but such companies may not sell their thrifts to any other COMMERCIAL
         company.

IV.      FEDERAL HOME LOAN BANK SYSTEM REFORMS. This section summarizes the
         Act's significant changes to laws governing the Federal Home Loan Bank
         System. It focuses on those provisions that dramatically increase the
         access of community banks and thrifts to the System, which will create
         a whole new source of low-cost liquidity for these institutions.

V.       PRIVACY. This section summarizes the Act's four new requirements, which
         apply equally to ALL financial institutions, regarding the sharing of
         customer information with others. Each financial institution must: (1)
         establish and annually disclose a PRIVACY POLICY; (2) provide customers
         THE RIGHT TO OPT-OUT of having their information shared with
         NONAFFILIATED THIRD PARTIES (subject to many significant exceptions);
         (3) NOT share customer account numbers with nonaffiliated third
         parties; and (4) abide by regulatory standards to protect the security
         and integrity of customer information.

VI.      COMMUNITY REINVESTMENT ACT PROVISIONS. This section explains the three
         controversial CRA provisions that nearly prevented the legislation from
         passing: (1) the provision establishing "satisfactory" CRA ratings as a
         condition for engaging in the Act's new activities; (2) the "sunshine"
         provision requiring disclosure of CRA agreements between financial
         institutions and third parties; and (3) the provision establishing a
         lengthened CRA exam cycle for community banks and thrifts.

VII.     OTHER REGULATORY PROVISIONS. This section summarizes other key
         regulatory provisions in the Act affecting banks and financial
         institutions, including the Federal Reserve's "umbrella" supervisory
         authority over financial holding companies; provisions affecting
         foreign banks; limitations on the states' ability to establish
         regulations that discriminate against banking organization; revisions
         to federal antitrust authority affecting financial holding companies;
         ATM disclosure provisions; and elimination of the "Special Reserve" of
         the Savings Association Insurance Fund.

VIII.    EFFECTIVE DATES. The last section sets forth the effective dates for
         key provisions of the Act. This includes the 120-day delayed effective
         date for the financial holding company and financial subsidiary
         sections of the Act.





                                       29

<PAGE>

         KEY EFFECTIVE DATES

TITLE I - AFFILIATIONS

-    ESTABLISHMENT OF "FINANCIAL HOLDING COMPANIES." - 120 days after date of
     enactment (March 11, 2000). The Federal Reserve will issue regulations in
     the interim that will interpret key provisions of the Act as they relate to
     financial holding companies.

-    ESTABLISHMENT OF "FINANCIAL SUBSIDIARIES." - No sooner than 120 days after
     date of enactment (March 11, 2000). OCC "implementing" regulations must be
     in place 270 days after enactment (August 8, 2000), but will likely be
     issued within the 120-day period.

-    CERTAIN REGULATION OF INSURANCE ACTIVITIES (104) - Date of enactment
     (November 12, 1999).


TITLE II - SECURITIES

-    SEC REGULATION OF BANK SECURITIES ACTIVITIES ("PUSH-OUTS") AND BANK
     INVESTMENT COMPANY ACTIVITIES - 18 months after date of enactment (May 12,
     2001).

-    OTHER SECURITIES PROVISIONS - Date of enactment (November 12, 1999).

TITLE III - INSURANCE REGULATION

-    REGULATION OF INSURANCE ACTIVITIES OF BANKING ORGANIZATIONS - Date of
     enactment (November 12, 1999).

TITLE IV - UNITARY THRIFT HOLDING COMPANIES

-    ELIMINATION OF COMMERCIAL COMPANY AFFILIATIONS - Retroactive to May 4,
     1999.

TITLE V - PRIVACY

-    GENERAL REQUIREMENTS FOR DISCLOSURE OF NONPUBLIC PERSONAL INFORMATION -
     Generally, six months after regulations are issued, and regulations must be
     issued six months after date of enactment (May 12, 2000) but regulators may
     prescribe a later effective date.

-    FRAUDULENT ACCESS TO FINANCIAL INFORMATION - Date of enactment
     (November 12, 1999).

-    AMENDMENTS TO FAIR CREDIT REPORTING ACT - Date of enactment
     (November 12, 1999).

TITLE VI - FEDERAL HOME LOAN BANK SYSTEM REFORMS

-    RELAXED REQUIREMENTS FOR MEMBERSHIP AND INCREASED ACCESS TO ADVANCES - Date
     of enactment (November 12, 1999).

-    VOLUNTARY MEMBERSHIP FOR FEDERAL THRIFTS. - Six months after date of
     enactment (May 12, 2000).

TITLE VII - MISCELLANEOUS REGULATORY PROVISIONS

-    CRA DISCLOSURE PROVISIONS - Applies to all CRA agreements entered into 6
     months after date of enactment (May 12, 2000).

-    CRA SMALL BANK REGULATORY RELIEf - Date of enactment (November 12, 1999).


                                      30
<PAGE>

-    ATM FEE DISCLOSURE REQUIREMENTS - Date of enactment, but operators have
     until December 31, 2004 to adopt technology for "right-to-cancel" option.

What does this new law mean for our company?

              IMPLICATIONS OF THE ACT ON THE COMPANY AND FIRSTBANK

-    For several years many of America's largest corporations have applied to
     OTS to obtain a federal thrift charter to qualify they must be financial
     service companies

-    The Company has the authority to engage in broader activities than those
     authorized under the Act provided the following conditions are met:

     -         FirstBank (the "Bank") remains a qualified thrift lender; and

     -         The Company does not acquire a second bank or thrift subsidiary

-    The Company and the Bank have still have only one regulator - the OTS

-    HOLA provides broad preemption authority that the OTS is typically not
     afraid to use

-    Interstate branching authority are advantages for unitary thrift companies

-    Most favored lender doctrine still remains for mortgage lenders

FEDERAL AND STATE TAXATION

         FEDERAL TAXATION. Prior to the enactment of recent legislation
(discussed below), thrift associations such as the Bank that met certain
definitional tests relating to the composition of assets and other conditions
prescribed by the Internal Revenue Code of 1986, as amended (the "Code"), had
been permitted to establish reserves for bad debts and to made annual additions
thereto which could, 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" (generally loans secured by improved real estate) is
computed under the experience method.

         In August 1996, legislation was enacted that repeals the percentage of
taxable income method of accounting used by many thrifts to calculate their bad
debt reserve for federal income tax purposes. As a result, small thrifts must
recapture that portion of the reserve that exceeds the amount that could have
been taken under the experience method for post-1987 tax years. The legislation
also requires thrifts to account for bad debts for federal income tax purposes
on the same basis as commercial banks for tax years beginning after December 31,
1995. The recapture will occur over a six-year period, the commencement of which
will be delayed until the first taxable year beginning after December 31, 1998,
provided the institution meets certain residential lending requirements. The
legislation did not have a material impact on the Bank.

         In addition to regular income tax, corporations, including thrift
institutions such as the Bank, 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 thrift associations such as
the Bank, are also subject to an environmental tax equal to 0.12% of the


                                      31
<PAGE>

excess of alternative minimum taxable income for the taxable year (determined
without regard to net operating losses and the deduction for the
environmental tax) over $2 million.

         To the extent earnings appropriated to a thrift 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 thrift's supplemental reserves for
losses on loans ("Excess"), such Excess may not, without adverse tax
consequences, be utilized for the payment of cash dividends or other
distributions to a stockholder (including distributions on redemption,
dissolution or liquidation) or for any other purpose (except to absorb bad debt
losses). As of December 31, 1997, the Bank had no Excess. Under present law
should the Bank cease to be a thrift institution, the Company would be required
to recapture the Bank's bad debt reserves in its Excess.

         At December 31, 1999, the Company had remaining net operating loss
("NOL") carryforwards of approximately $4,500,000 for federal income tax
purposes which expire in varying amounts through 2011. In addition, the
alternative minimum tax ("AMT") NOL carryforward and AMT credit carryforward
were approximately $5,465,000 and $115,000, respectively, which expire in
varying amounts through 2011. Investment tax credit carryforwards of
approximately $38,000 expire in varying amounts through 2005.

         Section 382 of the Internal Revenue Code ("Code") provides that the
aforementioned tax NOL carryforwards would be subjected to an annual limitation
should there be a change of over 50% in the stock ownership of the Company
during any three year testing period. Due to the fact that the Company has a tax
NOL carryforward, it is required to report changes in ownership of 5% or greater
of stockholders annually to the Internal Revenue Service. The statute and
applicable Treasury regulations are extremely complex. The Company believes that
no change of ownership as defined in applicable Section 382 regulations occurred
through the three-year testing period ended December 31, 1999. However, if such
a change in ownership occurs, the annual use of the tax NOL carryforwards would
be subject to an annual limitation.

         The Company files consolidated federal income tax returns with the Bank
and its subsidiary on a fiscal year basis using the accrual method of
accounting. The Bank's federal income tax returns have not been examined by the
Internal Revenue Service since 1990. 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 merged into, the Bank) would not result in a
deficiency which could have a material adverse effect on the financial condition
or results of operations of the Company and its consolidated subsidiary.

         STATE TAXATION. As a Delaware holding company, the Company 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. The Bank is also subject to an
annual franchise tax imposed by the State of Delaware.

         The State of New Mexico has a corporate tax which subjects the Bank's
New Mexico taxable income to tax rates ranging from 4.8% to 7.65%. New Mexico
taxable income is computed by applying certain modifications to federal taxable
income. The principal difference between state and federal taxable income is
that interest earned on U.S. government obligations is not taxable for state
purposes.

         The Bank's income tax returns have not been audited by state
authorities during the past five years.


                                      32
<PAGE>

NEW ACCOUNTING STANDARDS

         The Financial Accounting Standards Board has issued SFAS No. 130,
REPORTING COMPREHENSIVE INCOME, which is effective for the fiscal years
beginning after December 15, 1997. This statement establishes standards for
reporting and display of comprehensive income and its components, revenue,
expenses, gains and losses, in a full set of general purpose financial
statements. This statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The adoption of this statement during 1998 did not
have a significant impact on the Company's financial statements during that year
or in years prior to 1998.

         The Financial Accounting Standards Board recently adopted Statement No.
131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION.
Statement No. 131, which became effective for periods beginning after December
15, 1997, requires that business enterprises report information about operating
segments in annual financial statements. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The adoption of the statement in management's opinion did not result
in any significant disclosures in addition to those already contained in the
Company's financial statements.

         Effective January 1, 1999, the Company adopted the provisions of
Statement of Position ("SOP") No. 98-5, REPORTING ON THE COSTS OF START-UP
ACTIVITIES issued by the American Institute of Certified Public Accountants
("AICPA"). This statement requires costs of start-up activities and
organizational costs to be expensed as incurred and its provisions are
retroactive upon adoption of the SOP. All remaining unamortized organization
costs were charged to expense in the first quarter of 1999.

         In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INVESTMENTS AND HEDGING Activities, which addresses the accounting for
derivative instruments and hedging activities. Subsequently, the FASB issued
SFAS No. 137 which delayed the effective date of SFAS No. 133 by one year. The
Company will now be required to adopt the new standard beginning with its 2001
fiscal year. Management is currently evaluating the reporting requirements under
this new standard, and its impact on the financial results of the Company upon
adoption is not expected to be material.

COMPETITION

         The Bank's primary service area, which presently represents the
principal operating activities of the Company, includes the New Mexico counties
of Bernalillo, Cibola, Curry, De Baca, Los Alamos, McKinley, Roosevelt,
Sandoval, Santa Fe, Torrance, Valencia, and the Texas counties of Parmer and
Bailey. The Bank attracts all of its deposits and loans through its branch
offices and loan production office, primarily from the communities in which
those branch offices are located; therefore, competition for those deposits is
principally from other thrift institutions and commercial banks located in the
same communities as well as brokerage firms and insurance companies.

EMPLOYEES

         As of December 31, 1999, the Bank had 49 full-time and 11 peak-time
employees. The Bank's employees are not represented by any collective bargaining
group. Management considers its employee relations to be good.


                                      33
<PAGE>

ITEM 2.      DESCRIPTION OF PROPERTY

         The Company's principal asset is the common stock of the Bank.

         The following table sets forth information relating to each of the
Bank's current offices. Net book value and total investment figures are for
land, building, furniture and fixtures.

<TABLE>
<CAPTION>
                                                           Net book value at       Branch deposits at
          Location                     Date acquired     December 31, 1999 (1)     December 31, 1999
--------------------------------       -------------     ---------------------     ------------------
<S>                                    <C>               <C>                       <C>
MAIN OFFICE:
801 Pile Street                             1966              $  1,314,659           $  66,547,905
Clovis, New Mexico

BRANCH OFFICES:
Prince and Parkland Streets                 1978                   383,845              15,107,630
Clovis, New Mexico

400 West First Street                       1982                   628,027              29,494,886
Portales, New Mexico

101 West Hill Street                        1999                   109,884 (2)          11,329,317
Gallup, New Mexico

LOAN PRODUCTION OFFICE:
4061 Ridgerock Road, Suite C                1996                    36,288 (2)       Not applicable
Rio Rancho, New Mexico
</TABLE>

(1) The book value of the Bank's investment in land, premises and equipment,
    less accumulated depreciation, totaled $2,472,703 at December 31, 1999.

(2) The book value of the Bank's investment is for equipment and furniture. The
    office building is under an operating lease.

ITEM 3.      LEGAL PROCEEDINGS

         The Company and its subsidiary are from time to time parties to various
legal actions arising in the normal course of business. Management believes that
there is no proceeding threatened or pending against the Company or its
subsidiary which, if determined adversely, would have a material adverse effect
on the financial condition or results of operations of the Company.

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

         Not applicable


                                      34
<PAGE>

                                     PART II

ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
             MATTERS

         The Common Stock of the Bank was traded in the over-the-counter market
on the NASDAQ Small Cap Market under the symbol "FSBC" prior to October 21,
1996, and the Common Stock of the Company has been traded in the
over-the-counter market on the NASDAQ Small Cap Market under the symbol "AABC"
since October 21, 1996. As of February 25, 2000, the Company had 1,238,374
shares of common stock outstanding and 416 holders of record.

         The following table sets forth the high and low sales prices of the
Common Stock of the Company as quoted on the NASDAQ Small Cap Market.

<TABLE>
<CAPTION>
                                                       Price range
                                       ------------------------------------------
                                                                         Cash
                                                                    Dividends per
                                           High           Low          share
                                       -----------    -----------  ---------------
<S>                                    <C>            <C>          <C>
1998
    First Quarter                       $   12.50      $   10.00           --
    Second Quarter                      $   13.00      $   11.00           --
    Third Quarter                       $   12.00      $    7.00           --
    Fourth Quarter                      $    8.63      $    6.38     $    .05

1999
    First Quarter                       $    7.50      $    6.44           --
    Second Quarter                      $   12.00      $    6.63           --
    Third Quarter                       $    8.75      $    7.56           --
    Fourth Quarter                      $    8.75      $    7.31           --
</TABLE>

         For a foreseeable period of time, the principal source of cash revenues
to the Company will be dividends paid by the Bank with respect to the Bank's
common stock. There are certain statutory and regulatory limitations on the
payment of such dividends (and other capital distributions) including OTS
regulatory capital requirements. In some cases, the OTS may prohibit a dividend
payment that meets these requirements on the basis that such a distribution
would be an unsafe or unsound practice. Furthermore, the Bank may not pay a
dividend if it will cause the institution to become "undercapitalized."

         The Bank is required to give the OTS thirty days prior notice of the
proposed declaration by its directors of any dividend. Any such dividend
declared within the thirty-day period or without giving such notice shall be
invalid and shall confer no rights or benefits on the Company as the sole
stockholder of the Bank.

         Under the Federal Deposit Insurance Act, an insured bank is prohibited
from paying dividends on its capital stock while in default in the payment of
any assessment due to the FDIC except in those cases where the amount of the
assessment is in dispute and the insured bank has deposited satisfactory
security. The Bank is not in default in the payment of any such assessment.

         The Company paid a 2% stock dividend on December 1, 1997 and a cash
dividend of $.05 per share to shareholders of record as of December 31, 1998.
Payment was made to shareholders on January 15, 1999. No dividends were declared
in the year ended December 31, 1999.


                                      35
<PAGE>

ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS

         The Company became the unitary thrift holding company for the Bank as a
result of the consummation of an Agreement and Plan of Reorganization and
related Plan of Merger on October 21, 1996 (the "Merger"). The Company did not
have any material assets prior to the Merger. Following the Merger, the
Company's consolidated statement of financial condition and statement of
operations are not materially different from the Bank's statement of financial
condition and statement of operations. The Company is the successor registrant
to the Bank under the Securities Act of 1933 and the Securities and Exchange Act
of 1934. The following table sets forth selected consolidated historical
financial and operating data for the Company as of and for each of the five
fiscal years ended December 31, 1999 and has been derived from and should be
read in conjunction with the audited consolidated financial statements of the
Company. The following summary financial information is qualified in its
entirety by and should be read in conjunction with the detailed information and
financial statements of the Company, including the notes thereto, which
information as of December 31, 1999 and 1998 and for each of the three years in
the period ended December 31, 1999, are included in this Form 10-KSB.

<TABLE>
<CAPTION>

                                                                     For the years ended December 31
                                              -------------------------------------------------------------------------------
SELECTED CONSOLIDATED OPERATING DATA:             1999            1998            1997             1996            1995
                                              --------------  --------------  --------------   --------------  --------------
                                                                   (In Thousands Except Per Share Data)
<S>                                           <C>             <C>             <C>              <C>             <C>
Income statement data:
    Interest income                           $      8,888    $      8,010    $      7,250     $      7,473    $      8,417
    Interest expense                                 4,794           4,523           4,149            4,717           5,423
                                              -------------   -------------   -------------    --------------  -------------
    Net interest income before provision
      for loan losses                                4,094           3,487           3,101            2,756           2,994
    Provision for loan losses charged
      (credited)                                       324             238             118               14             (15)
                                              -------------   -------------   -------------    --------------  -------------
Net interest income after provision for
  loan losses                                        3,770           3,249           2,983            2,742           3,009
    Net gain on mortgage loans
      held-for-sale                                    297             223             149              141             118
    Net gain on sale of securities                     739              --              21               --              --
    Real estate operations, net                        (35)             10              (3)             (43)            (58)
    Other income, net                                  765           1,545             697              664             716
    Other expenses                                  (4,380)         (3,921)         (3,463)          (4,238)         (3,371)
                                              -------------   -------------   -------------    --------------  -------------
Income (loss) before income taxes                    1,156           1,106             384             (734)            414
    Income tax expense (benefit)                      (242)            346          (1,212)              --              --
                                              -------------   -------------   -------------    --------------  -------------

Net income (loss)                             $      1,398    $        760    $      1,596     $       (734)   $        414
                                              =============   =============   =============    ==============  =============

Per share data:
    Earnings  (loss) per common share         $       1.13    $       0.62    $       1.40     $      (1.01)   $       0.58
                                              =============   =============   =============    ==============  =============
    Earnings (loss) per common
      share-assuming  dilution                $       1.10    $       0.59    $       1.37     $      (1.01)   $       0.58
                                              =============   =============   =============    ==============  =============
</TABLE>

                                      36
<PAGE>

<TABLE>
<CAPTION>
                                                                               December 31
                                              -------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL
 CONDITION DATA:                                  1999            1998            1997             1996            1995
                                              --------------  --------------  --------------   --------------  --------------
                                                                              (In Thousands)
<S>                                           <C>             <C>             <C>              <C>             <C>
Loans receivable, net                         $    104,177    $     88,809    $     58,172     $     45,596    $     34,332
Loans held-for-sale                                    184             855             298              564             862
Securities held-to-maturity                          6,857           7,528          18,947           29,113          36,404
Securities available-for-sale                        9,120          11,426          15,032           23,640          33,090
Real estate owned, net                                 188             166              76               86             114
Total assets                                       141,808         121,768         107,213          106,853         116,966
Deposits                                           122,480         105,045          97,412           98,164         110,633
Borrowings                                           7,250           5,750              --            3,000              --
Net unrealized depreciation on
   available-for-sale securities, net                  (73)            (41)             (3)            (199)           (204)
Stockholders' equity                                11,313           9,925           9,145            5,086           5,620


SELECTED FINANCIAL RATIOS AND OTHER DATA:

                                                  1999            1998            1997             1996            1995
                                              --------------  --------------  --------------   --------------  --------------

PERFORMANCE RATIOS:
    Return on assets (ratio of net
      income/(loss)to average total
      assets)                                      1.06%           0.66%           1.49%           (0.66)%          0.34%
    Interest rate spread information:
      Average during period                        3.17            3.02            2.91             2.43            2.45
      End of period                                3.55            3.04            3.01             2.68            2.13
    Net interest margin (1)                        3.33            3.20            3.08             2.54            2.54
    Ratio of operating expense to average
      total assets                                 3.35            3.42            3.24             3.83            2.83
    Return on equity (ratio of net
      income/(loss) to average equity)            13.17            7.97           22.43           (13.70)           7.75

QUALITY RATIOS:
    Non-performing assets to total assets
      at end of year                               0.22%           0.42%           0.08%            1.60%           1.44%
    Allowance for loan losses to
      non-performing loans                       276.84          116.62          634.94            25.06           25.37
    Allowance for loan losses to total
      loans                                        0.83            0.68            0.91             0.94            1.25

CAPITAL RATIOS:
    Equity to total assets at the end of
      year                                         7.98%           8.15%           8.53%            4.76%           4.81%
    Average equity to average assets               8.06            8.33            6.65             4.78            4.40
    Ratio of average interest-earning
      assets to average interest-bearing
      liabilities                                104.25          112.47          103.86           102.55          101.99
</TABLE>

(1)   Net interest income divided by average interest earning assets


                                      37
<PAGE>

GENERAL

         The Company is a Delaware corporation which was organized in 1996 for
the purpose of becoming the thrift holding company of the Bank. The Bank is a
federally chartered stock savings bank conducting business from four banking
locations in Clovis, Portales, and Gallup, New Mexico and a loan production
office in Rio Rancho, New Mexico. The Bank has a wholly-owned subsidiary, FEDCO,
which is currently inactive.

         The Bank is principally engaged in the business of attracting retail
deposits from the general public and investing those funds in first mortgage
loans in owner occupied, single-family residential loans and mortgage-backed
securities. To a lesser extent, the Bank originates residential construction
loans and commercial real estate loans. The Bank also originates consumer loans,
including loans for the purchase of automobiles and home improvement loans, and
commercial loans including SBA loans.

         The most significant outside factors influencing the operations of the
Bank and other financial institutions include general economic conditions,
competition in the local market place and the related monetary and fiscal
policies of agencies that regulate financial institutions. More specifically,
the cost of funds, primarily consisting of deposits, is influenced by interest
rates on competing investments and general market rates of interest. Lending
activities are influenced by the demand for real estate financing and other
types of loans, which in turn is affected by the interest rates at which such
loans may be offered and other factors affecting loan demand and funds
availability.

         In order to continue to meet the financial services needs of the
communities it serves, the Bank intends to continue to grow in a reasonable,
prudent manner which may include expansion of the existing branch network. As a
part of this intended growth, the Bank has increased the portfolio allocation of
single-family lending, consumer lending and commercial lending. Certain
improvements have been completed and should assist in the expansion of the
Bank's core deposit base.

         Growth of the Bank may be financed by either increasing the deposit
portfolio or from borrowed funds. The use of borrowed funds to purchase short
duration, mortgage-backed securities or single family mortgage loans may be
considered to add to the Bank's portfolio.

         The Company's strategic plan will continue to be reviewed quarterly for
progress by the Board of Directors. The Board will modify the plan as deemed
appropriate to reflect the operational environment of the Bank.

         Interest rates at the beginning of 1999 were low, but increased during
the year. The Bank's high volume of permanent single family lending activity
during 1998 continued for the first three quarters of 1999. However, by October
1999, the high volume of lending activity, especially in the area of
refinancing, decreased to more normal levels.

         Prepayment tendencies on loans and mortgage-backed securities may vary
from historical experience and depositors' preference for various deposit
products and maturities may also vary. The Bank's favorable liquidity position
of 13.21% allows some flexibility in adjusting to cash flow requirements brought
on by interest rate changes. The Bank's one-year interest-rate sensitivity gap
was a negative 9.29% of total assets as December 31, 1999. A negative gap
indicates there are more interest-bearing liabilities repricing during a stated
period than interest-earnings assets.

         At December 31, 1999, the Bank had unrealized losses in its
mortgage-backed securities portfolio which are being held to maturity. The Bank
has both the intent and ability to hold these securities until maturity. In
addition, management believes the Bank will be able to collect all amounts due
according to the contractual terms of the debt securities and is not aware of
any information that would indicate the inability of any issuer of such
securities to make contractual payments in a timely manner. As such the Bank
believes that these unrealized losses will not ultimately be realized.

         All of the Bank's mortgage-backed securities are agency securities and
are either guaranteed by the full faith and credit of the United States
Government (GNMA) or are insured by a Government Sponsored Enterprise (FNMA &
FHLMC). None of these securities are considered "high risk" as defined by the
OTS and none have


                                      38
<PAGE>

failed to pass the Federal Financial Institution Examination Council (FFIEC)
mandatory test for "high risk" securities. The Bank does not invest in such
"high risk" securities.

         Management of the investment portfolio is not designed to be the
primary source of funds for the Bank's operations. Rather, it is viewed as a use
of funds generated by the Bank to be invested in interest-earning assets to be
held-to-maturity or available-for-sale. Cash flow mismatches between sources and
uses of funds should not require any of the securities to be liquidated. While
cash flows from the securities vary depending on the prepayment speeds
associated with each particular security, the variance in the prepayment speeds
does not impact the over-all cash flow needs of the Bank since the Bank has the
ability to borrow funds from the FHLB of Dallas. See LIQUIDITY AND CAPITAL
RESOURCES in this Form 10K-SB.

REGULATORY MATTERS

         The Bank was subject to an Amended Prompt Corrective Action Directive
dated August 1994 and a Supervisory Agreement dated June 1996 mainly directed to
the improvement of capital ratios, plan and asset/liability management issues.
These agreements were terminated by the OTS in November 1997.


                                      39
<PAGE>

RESULTS OF OPERATIONS

         Operating results are impacted by many factors, the most important
factor being the interest spread between the yield on loans and investments
and the cost of funds. The following table presents for the periods indicated
the total dollar amount of interest income from average interest-earning
assets and the resultant yields, as well as the interest expense on average
interest-bearing liabilities, expressed both in dollars and rates. No tax
equivalent adjustments were made and all average balances are monthly average
balances. Non-accruing loans have been included in the table as loans
carrying a zero yield.

<TABLE>
<CAPTION>

                                                                  Year ended December 31,
                                                                      (In Thousands)
                               ----------------------------------------------------------------------------------------------------
                                           1999                            1998                            1997
                               ------------------------------  -----------------------------------  -------------------------------
                                 Average    Interest              Average    Interest                Average   Interest
                               outstanding   earned/   Yield/   outstanding   earned/    Yield/    outstanding  earned/    Yield/
                                 balance      paid      rate      balance      paid       rate       balance     paid       rate
                               -----------  --------  --------  -----------  ---------  ---------  ----------- --------- ---------
<S>                            <C>          <C>       <C>       <C>          <C>       <C>         <C>         <C>       <C>
Interest-earning assets:
  Loans receivable (1)         $    99,178  $  7,593      7.66% $    76,674  $   6,144       8.01% $    52,909 $   4,490      8.49%
  Mortgage-backed securities        16,309       900      5.52       26,029      1,452       5.58       42,019     2,379      5.66
Investment securities                1,234        74      5.98        1,006         70       6.98        1,607       104      6.46
Other interest-earning assets        6,241       320      5.13        5,417        344       6.36        4,238       277      6.54
                               -----------  --------  --------  -----------  ---------  ---------  ----------- --------- ---------

    Total interest-earning
      assets (1)               $   122,962  $  8,887      7.23% $   109,126  $   8,010       7.34% $   100,773 $   7,250      7.19%
                               ===========  ========  ========  ===========  =========  =========  =========== ========= =========

Interest-bearing liabilities:
  Savings deposits             $   109,286  $  4,328      3.96% $    99,823  $   4,260       4.27% $    96,798 $   4,136      4.27%
  Federal Home Loan Bank
    advances                         8,661       466      5.38        4,786        263       5.49          231        13      5.64
                               -----------  --------  --------  -----------  ---------  ---------  ----------- --------- ---------

    Total interest-bearing
      liabilities              $   117,947  $  4,794      4.06% $   104,609  $   4,523       4.32% $    97,029 $   4,149      4.28%
                               ===========  ========  ========  ===========  =========  =========  =========== ========= =========

Net interest income                         $  4,093                         $   3,487                         $   3,101
                                            ========                         =========                         =========
Net interest rate spread                                  3.17%                              3.02%                            2.91%
                                                      ========                          =========                        =========

Net interest-earning assets    $     5,015                      $     4,517                        $     3,744
                               ===========                      ===========                        ===========
Net yield
   on average
   interest-earning assets                                3.33%                              3.20%                            3.08%
                                                      ========                          =========                        =========

Average interest-earning
   assets to average
   interest-bearing
   liabilities                                104.25%                           104.32%                           103.86%
                                            ========                         =========                         =========
</TABLE>

(1)  Calculated net of loans in process

                                       40

<PAGE>

         The following table presents the weighted average yields earned on
loans, investments, and other interest-earning assets, and the weighted
average rates paid on deposits and borrowings and the resultant interest rate
spreads at the dates indicated. Weighted average rates are based on the
balances at the end of the period.

<TABLE>
<CAPTION>

                                                                                                At December 31,
                                                                                    -----------------------------------------
                                                                                        1999          1998          1997
                                                                                    -------------  ------------  ------------
<S>                                                                                 <C>            <C>           <C>
WEIGHTED AVERAGE YIELD ON:
  Loans receivable                                                                       7.70%          7.81%         8.31%
  Mortgage-backed securities                                                             5.72           5.44          5.56
  Investment securities and other interest-earning assets                                6.16           6.34          6.94
                                                                                    -------------  ------------  ------------
COMBINED WEIGHTED AVERAGE YIELD ON INTEREST-EARNING ASSETS                               7.34%          7.31%         7.26%
                                                                                    -------------  ------------  ------------
WEIGHTED AVERAGE RATE PAID ON:
  Savings deposits                                                                       1.97%          2.25%         2.50%
  Transaction accounts                                                                   2.12           2.60          2.64
  CDs                                                                                    4.72           5.11          5.04
  Borrowings                                                                             5.40           5.44           --
                                                                                    -------------  ------------  ------------
COMBINED WEIGHTED AVERAGE RATE PAID ON INTEREST-BEARING LIABILITIES                      3.79%          4.27%         4.25%
                                                                                    -------------  ------------  ------------

SPREAD                                                                                   3.55%          3.04%         3.01%
                                                                                    =============  ============  ============
</TABLE>

         The following table presents the dollar amount of changes in
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities and distinguishes between the
increase related to higher or lower outstanding balances and the volatility
of interest rates. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to (i) changes in volume (i.e., changes in volume multiplied by old rate) and
(ii) changes in rate (i.e., changes in rate multiplied by old volume). For
purposes of this table, changes attributable to both rate and volume, which
cannot be segregated, have been presented separately.

<TABLE>
<CAPTION>

                                                                  Year ended December 31
                              ------------------------------------------------------------------------------------------------
                                               1999 vs 1998                                     1998 vs 1997
                              -----------------------------------------------  -----------------------------------------------
                                        Increase (decrease) due to                       Increase (decrease) due to
                              -----------------------------------------------  -----------------------------------------------
                                                         Rate/                                            Rate/
                                Volume       Rate       volume        Total       Volume       Rate        volume      Total
                              ----------  ----------  -----------  -----------  ----------  ----------  -----------  ---------
<S>                           <C>         <C>         <C>          <C>          <C>         <C>         <C>          <C>
                                                                      (In Thousands)

Interest-earning assets:
  Loan portfolio              $    1,803  $     (268) $       (86) $     1,449  $    2,018  $     (254) $      (110) $   1,654
  Investments                         16         (10)          (2)           4         (39)          8           (3)       (34)
  Mortgage-backed
    securities                      (542)        (16)           6         (552)       (905)        (34)          12       (927)
  Other interest earning
    assets                            52         (67)          (9)         (24)         77          (8)          (2)        67
                              ----------  ----------  -----------  -----------  ----------  ----------  -----------  ---------

Total interest-earning
  assets                      $    1,329  $     (361) $       (91) $       877  $    1,151  $     (288) $      (103) $     760
                              ==========  ==========  ===========  ===========  ==========  ==========  ===========  =========

Interest-bearing
  liabilities:
  Savings deposits            $      404  $     (309) $       (27)  $       68  $      129  $       --  $        (5) $     124
  Federal Home Loan Bank
   advances                          213          (5)          (5)         203         257          --           (7)       250
                              ----------  ----------  -----------  -----------  ----------  ----------  -----------  ---------

Total interest-bearing
  liabilities                 $      617  $     (314) $       (32) $       271  $      386  $       --  $       (12) $     374
                              ==========  ==========  ===========  ===========  ==========  ==========  ===========  =========

Change in net interest
  income                      $      712  $      (47) $       (59) $       606  $      765  $     (288) $       (91) $     386
                              ==========  ==========  ===========  ===========  ==========  ==========  ===========  =========
</TABLE>

                                       41

<PAGE>

COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998

         Net income for the year ended was $1,398,000 or $1.13 per share
compared to net income of $760,000 or $.62 per share for 1998. The $638,000
or 83.95% increase in earnings was primarily due to an increase of $606,000
in net interest income.

         NET INTEREST INCOME. Net interest income before provision for loan
losses increased by 17.39% to $4,093,000 in 1999, compared to $3,487,000 in
1998. The increase in 1999 was due to an increase in loan volume while
decreasing the rate paid on interest bearing deposits to enhance net interest
income.

         PROVISION FOR LOAN LOSSES. The level of the allowance for loan
losses is based on such factors as the amount of non-performing assets,
historical loss experience, regulatory policies, general economic conditions,
the estimated fair value of the underlying collateral and other factors which
may affect the collectibility of the loans. During 1999, the provision for
loan losses increased to $324,000 from $238,000 in 1998 due to the increased
size of the loan portfolio.

         NONINTEREST INCOME. Noninterest income was $1,801,000 in 1999
compared to $1,778,000 in 1998. During 1999, a long-term capital gain on the
sale of securities of $739,000 increased noninterest income. During 1998, a
net gain of $838,000 on the sale of approximately $100,000,000 of mortgage
servicing rights increased other noninterest income.

         NONINTEREST EXPENSE. Noninterest expense increased by $493,000 or
12.57% to $4,414,000 compared to $3,921,000 in 1998. Other expenses increased
$243,000 in 1999, which was partially due to the $115,000 amortization of
organization costs of the Holding Company due to the adoption of a new
accounting standard in the first quarter. Other expense also includes an
increase of $127,000 due to loan servicing fee expense in 1999, as a result
of the sale of loan servicing in December 1998.

         PROVISION FOR INCOME TAXES. The net income tax benefit of $242,000
in 1999 as compared to an expense of $346,000 in 1998, was primarily due to a
reduction in 1999 of the deferred tax asset valuation allowance of
approximately $635,000. To the extent the valuation allowance was reduced,
the related tax benefit was credited to income.


COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997.

         Net income for the year ended December 31, 1998 was $760,000 or $.62
per share compared to net income of $1,596,000 or $1.40 per share for 1997.
The 1998 $836,000 decrease in income compared to 1997 resulted from a
reduction in the valuation allowance of the deferred tax asset of the Company
of $1,373,000 in September 1997 reduced by a net gain of $838,000 on the sale
of mortgage loan servicing rights in 1998.

         NET INTEREST INCOME. Net interest income before provision for loan
losses is the difference between interest earned on interest-earning assets
and interest paid on interest-bearing liabilities. Net interest income before
provision for loan losses increased $386,000 to $3,487,000 for 1998 compared
to $3,101,000 in 1997. The increase in 1998 was due to an effort by
management of the Bank to reduce the level of mortgage-backed securities and
increase loans in order to enhance interest income.

         PROVISION FOR LOAN LOSSES. Management determines the amount of the
allowance for loan loss which covers specific loans as well as estimated
losses inherent in the loan portfolio. The level of the allowance is based on
such factors as the amount of non-performing assets, historical loss
experience, regulatory policies, general economic conditions, the estimated
fair value of the underlying collateral and other factors which may affect
the collectibility of the loans. During 1998, the provision for loan losses
increased to $238,000 from $118,000 for 1997. The increase in provision was
reflective of the increase in loans in 1998.

                                       42

<PAGE>

         NONINTEREST INCOME. Noninterest income was $1,778,000 in 1998
compared to $866,000 in 1997. The increase of $912,000 or 105% was primarily
due to a net gain of $838,000 on the sale of approximately $100,000,000 of
mortgage loan servicing rights in the last quarter of 1998 and, to a lesser
extent, the increase was partially due to a $74,000 increase in the net
realized gains on sales of loans.

         NONINTEREST EXPENSE. Noninterest expense increased by $455,000 or
13.13% to $3,921,000 compared to $3,466,000 in 1997. Salaries and employee
benefits increased by $284,000 in 1998. Deposit insurance premiums declined
by $135,000 in 1998 due to a reduction in the rate paid for SAIF insurance
premiums for the Bank. Professional fees increased $155,000, due to a
recovery in 1997 exceeding $100,000, which reduced expenses for that year.

         PROVISION FOR INCOME TAXES. The net income tax benefit of $1,212,000
in 1997 as compared to an expense of $346,000 in 1998 results primarily from
the 1997 deferred tax asset valuation adjustment of $1,373,000. Prior to
1997, the deferred tax asset valuation allowance was due primarily to NOL
carryforwards which were not expected to be utilized before their respective
expiration dates which, prior to 1997, the Company was unable to predict
whether they would more likely than not be realized. During 1997, the Company
changed its estimate with respect to the future benefits of the NOL
carryforwards and, accordingly, reduced the related valuation allowance. To
the extent the valuation allowance was reduced, the related tax benefit was
credited to income.

ASSET/LIABILITY MANAGEMENT AND INTEREST RATE SENSITIVITY

         The Bank attempts to maximize net interest income by achieving a
positive interest rate spread that can be sustained during fluctuations in
prevailing interest rates. Management monitors the mix of earning assets on a
continuous basis in order to react to fluctuating interest rate environments.

         Risk-based capital guidelines and the corresponding asset risk
weighting have resulted in an incentive to invest in mortgage-backed and U.S.
Agency Securities, particularly those issued by government sponsored entities
such as FNMA, GNMA, and FHLMC. In addition, the favorable risk weighting
assigned to residential loans provided the incentive to invest in these
assets. This asset mix has always been the basis on which the Bank has
focused.

         The Bank assumes a high level of interest rate risk as a result of
its policy to originate fixed-rate single family home loans. These risks are
minimized by selling mostly thirty-year mortgage loans into the secondary
market. These loans generally have longer terms than the short term
characteristics and liabilities of customer accounts and borrowed money.
Rates decreased in 1998, but increased in 1999. As the prepayment on loans
and mortgage-backed securities have occurred, the proceeds have been
channeled to new loans with a resulting increase in interest income.

         Interest rate sensitivity is the rate at which the Bank's assets and
liabilities are subject to repricing at future time periods. Management seeks
to effectively manage interest rate sensitivity to insure that net interest
income is maximized while the impact of change on market interest rates is
minimized. It is the objective of the Bank to reduce the sensitivity of its
earnings to fluctuating interest rates by diversifying the sources of funds,
improving its interest rate spread, and improving the ratio of earning assets
to interest bearing liabilities. Also, the Bank needs to maintain a match of
maturities and interest rate sensitivity of its assets and liabilities.

         The differences between the volume of assets and liabilities in the
Bank's current portfolio, which are subject to repricing in future time
periods, are known as interest rate sensitivity gaps. Certain estimates and
assumptions are included in the data in the table below which sets forth the
interest rate sensitivity analysis at December 31, 1999.

         The following table sets forth the assumed repricing and maturity
periods of the Bank's interest-earning assets and interest-bearing
liabilities at December 31, 1999 and the interest rate sensitivity gap
percentages at the

                                       43

<PAGE>

dates indicated. The interest rate sensitivity gap is defined as the amount
by which assets repricing within the respective periods exceed liabilities
repricing within such periods. The effect of these assumptions is to quantify
the dollar amount of items that are interest-rate sensitive and can be
repriced within each of the periods specified. Such repricing can occur in
one of three ways: (1) the rate of interest to be paid on an asset or
liability may adjust periodically on the basis of an index; (2) an asset or
liability such as a mortgage loan may amortize, permitting reinvestment of
cash flows at the then-prevailing interest rates; or (3) an asset or
liability may mature, at which time the proceeds can be reinvested at current
market rates.

<TABLE>
<CAPTION>

                                                                      Maturing or Repricing Amount
                                        -----------------------------------------------------------------------------------------
                                        Within one    Over 1 to 3  Over 3 to 5  Over 5 to 10  Over 10 to   Over 20
                                           year          years        years         years      20 years     years        Total
                                        -----------   -----------  -----------  ------------ -----------  ----------  -----------
<S>                                     <C>           <C>          <C>          <C>          <C>          <C>         <C>
                                                                            (In Thousands)

Total Rate Sensitive Assets:
  Mortgages:
   Adjustable-rate (1)                  $     9,960   $     1,462  $        --   $        -- $        --  $       --  $    11,422
   Fixed-rate (2)                             6,577        11,833        9,722        17,417       9,099       1,164       55,812
   Construction(6)                              156            --           --            --          --          --          156
   Non-residential adjustable (2)             5,961         1,562          918            --          --          --        8,441
   Non-residential fixed                      7,842         1,894          951           881         992          54       12,614
  Non-Mortgages:
   Consumer and Commercial adjustable         2,831            --          145            --          --          --        2,976
   Consumer and Commercial fixed  (2)(6)      7,145         5,896        1,295           109          --          --       14,445

  Investments:
   Investment securities (3)                  7,396         2,196           --            --          --         307        9,899
   Mortgage-backed (1)(2)                    12,673         1,219           --            --          --          --       13,892
   Funds sold (3)                               562            --           --            --          --          --          562
                                        -----------   -----------  -----------  ------------ -----------  ----------  -----------

TOTAL                                   $    61,103   $    26,062  $    13,031  $     18,407 $    10,091  $    1,525  $   130,219
                                        ===========   ===========  ===========  ============ ===========  ==========  ===========

Total Rate Sensitive Liabilities:
  Deposits:
   Certificates of deposit (3)          $    51,569   $     9,245  $     1,467   $        -- $        --  $       --  $    62,281
   IRAs                                       8,341         2,530        1,003            --          --          --       11,874
   Money market (4)                           4,817         5,380        3,052        10,840          --          --       24,089
   NOW accounts (4)                           1,656         1,717        1,043         4,784          --          --        9,200
   Savings accounts (4)                       1,401         1,984        1,447         2,171          --          --        7,003
 Advances                                     6,500            --          750            --          --          --        7,250
                                        -----------   -----------  -----------  ------------ -----------  ----------  -----------

TOTAL                                   $    74,284   $    20,856  $     8,762  $     17,795 $        --  $       --  $   121,697
                                        ===========   ===========  ===========  ============ ===========  ==========  ===========

December 31, 1999
Cumulative interest rate sensitivity
  gap (5)                               $   (13,181)  $    (7,975) $    (3,706) $     (3,094)  $   6,997  $    8,522
Cumulative interest rate sensitivity
  gap (5) as a percent of total  assets       (9.29)%       (5.62)%      (2.61)%       (2.18)%      4.93%       6.01%
 December 31, 1998
Cumulative interest rate sensitivity
  gap (5) as a percent of  total assets       (6.13)%       (0.16)%       3.78%         5.39%       7.70%       7.80%
December 31, 1997
Cumulative interest rate sensitivity
  gap (5) as a percent of total assets        (4.03)%       (5.75)%      (2.35)%        2.70%       6.46%       6.52%
</TABLE>

(1) MOST ADJUSTABLE RATE ASSETS ARE INCLUDED IN THE "UNDER 1 YEAR" CATEGORY,
    AS THEY ARE SUBJECT TO AN INTEREST RATE ADJUSTMENT EVERY SIX OR TWELVE
    MONTHS, DEPENDING UPON LOAN PLAN.
(2) MATURITY/RATE SENSITIVITY IS BASED UPON CONTRACTUAL MATURITY WITH PROJECTED
    REPAYMENT OF PRINCIPAL.
(3) BASED ON CONTRACTUAL MATURITY OF THE INVESTMENTS.
(4) SAVINGS ACCOUNT DECAY RATES USED ASSUME THAT THE ACCOUNTS HAVE A MARKET
    VALUE SENSITIVITY APPROXIMATING THAT OF A 2 1/2 YEAR TREASURY BONd.
(5) THE DIFFERENCE BETWEEN RATE SENSITIVE ASSETS AND RATE SENSITIVE LIABILITIES.
(6) GENERALLY FIXED RATE.

                                       44

<PAGE>

         As prepayment activity changes however, the resulting gap is
expected to be affected. An increase in prepayment speeds would be expected
to move the gap towards a matched or positive position. The opposite would be
expected to occur if prepayment speeds decrease. Prepayment speeds are
influenced by fluctuation in interest rates and may not produce the same
results as reflected in the previous table. Also, certain assets and
liabilities may have similar maturities or repricing periods but could react
differently to changes in interest rates. Assets which have adjustable-rate
features may have a limitation on the periodic interest rate adjustments and
could result in a rate that is still below existing market rates. This same
feature may also limit the downward adjustment in a declining rate
environment.

         Beginning in the third quarter of 1997, FHLB advances were used to
supplement cash flow from operations as the Bank's lending activities began
to increase. The Bank purchased approximately $23.9 million in liabilities on
November 5, 1999, which it used to pay off its short-term FHLB advances. The
Bank increased deposits and used FHLB advances to fund the increased loan
origination volume in 1998 and 1999.

         Presented below, as of December 31, 1999, is an analysis of the
Bank's interest rate risk as measured by changes in net present value for
instantaneous and sustained parallel shifts in the yield curve, in 50 or 100
basis point increments, up and down 300 basis points. As illustrated in the
table, the Bank's NPV is more sensitive to rising rates than declining rates.
This occurs principally because, as rates rise, the market value of
fixed-rate loans declines due to both the rate increase and slowing
prepayments (and the NPV focuses on the Bank's entire portfolio, not just
assets that are subject to adjustment or maturity within one year). When
rates decline, the Bank does not experience a significant rise in market
value for these loans because borrowers repay at relatively high rates.

<TABLE>
<CAPTION>

                                                                   Net Present Value
                                         Change in                At December 31, 1999
                                       interest rate     --------------------------------------
                                      (basis points)         $ Change            % Change
                                     ------------------  ------------------  ------------------
                                                               (000's)
                                     <S>                 <C>                 <C>
                                           +300          $           (5,061)         (27)%
                                           +200                      (3,498)         (19)
                                           +100                      (1,792)         (10)
                                            +50                        (942)          (5)
                                              0                          --           --
                                            -50                       1,604            5
                                           -100                       2,103           11
                                           -200                       3,422           18
                                           -300                       1,604            9
</TABLE>

                                       45

<PAGE>

         Management reviews these measurements periodically. In addition to
monitoring selected measures on NPV, management also monitors effects on net
interest income resulting from increases or decreases in rates. This measure
is used in conjunction with NPV measures to identify excessive interest rate
risk.

         Certain shortcomings are inherent in the method of analysis
presented in the foregoing table. For example, although certain assets and
liabilities may have similar maturities or periods to repricing, they may
react in different degrees to changes in market interest rates. Also, the
interest rates on certain types of assets and liabilities may fluctuate in
advance of changes in market rates. Additionally, certain assets, such as
adjustable rate mortgage loans, have features which restrict changes in
interest rates on a short-term basis and over the life of the asset. Further,
in the event of a change in interest rates, prepayment and early withdrawal
levels would likely deviate significantly from those assumed in calculating
the table. Finally, the ability of many borrowers to service their debt may
decrease in the event of an interest rate increase.

         In addition, the previous table does not necessarily indicate the
impact of general interest rate movements on the Bank's net interest income
because the repricing of certain categories of assets and liabilities is
subject to competitive and other pressures beyond the Bank's control. As a
result, certain assets and liabilities indicated as maturing or otherwise
repricing within a stated period may in fact mature or reprice at different
times and at different volumes.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's current liquidity and capital resources are dependent
on its ability to borrow funds from the Bank and other sources as well as
receive dividends from the Bank. The Bank's primary sources of funds are
deposits, sales of mortgage loans, principal and interest payments on loans
and mortgage-backed securities, borrowings, and funds provided by operations.
While scheduled loan and mortgage-backed securities principal repayments are
a relatively predictable source of funds, deposits flows, prepayments of
principal on loans and mortgage-backed securities, and sales of mortgage
loans are greatly influenced by general interest rates, economic conditions,
and competition. Current OTS regulations require the Bank to maintain cash
and eligible investments in an amount equal to at least 4% of customer
accounts and short-term borrowings to assure its ability to meet demands for
withdrawals and repayment of short-term borrowings. As of December 31, 1999,
the Bank's liquidity ratio was 13.21% which was in excess of the minimum
regulatory requirements.

         During the year ended December 31, 1999, total deposits increased
approximately $17.4 million or 16.60%, and FHLB advances increased by $1.5
million. Stock options were exercised in 1999 with proceeds to the Company of
$37,124. Securities available-for-sale decreased by $2.3 million and
securities held-to-maturity decreased by $0.7 million in 1999. The increase
in deposits and decrease in securities was used to fund loans which increased
by $15.4 million in 1999.

         The Bank's capital for regulatory purposes at December 31, 1999 was
$6,945,750 or 6.06% of total regulatory assets. Regulations require savings
institutions to have a minimum regulatory tangible capital ratio equal to
1.5% of adjustable tangible assets, a minimum 3% core capital ratio, and a
minimum 8% risk-based capital ratio. At December 31, 1999 and 1998, the Bank
was in compliance with all applicable capital standards.

         Beginning in December 1996, the Company offered to the then existing
stockholders of the Company subscription rights for the issuance of 732,198
shares of the Company's common stock. The subscription price was $5.25 per
share. Holders of the subscription rights were able to exercise their
subscription rights until the expiration date on February 14, 1997. An
aggregate of 286,054 shares of the 732,198 shares of common stock were
subscribed which amounted to $1,501,783. In addition, the Company issued
174,824 additional shares of stock to other investors at the same
subscription price of $5.25 per share. When the supplemental offering expired
April 8, 1997, the Company received $917,826 for 174,824 shares. The 271,320
remaining shares were withdrawn from registration in December 1997.

         The OTS has adopted a rule that requires every thrift association
with more than normal interest rate risk to deduct from its total capital,
for purposes of determining compliance with such requirement, an amount equal
to 50% of its interest rate risk exposure multiplied by the present value of
its assets. This exposure is a measure

                                       46

<PAGE>

of the potential decline in the net portfolio value of a thrift association,
greater than 2% of the present value of its assets, based upon a hypothetical
200 basis point increase or decrease in interest rates (whichever results in
a greater decline). Net portfolio value is the present value of expected cash
flows from assets, liabilities and off-balance sheet contracts. The rule
provides for a two quarter lag between calculating interest rate risk and
recognizing any deduction from capital. Any thrift association with less than
$300 million in assets and a total capital ratio in excess of 12% is exempt
from this requirement unless the OTS determines otherwise. Currently, the
Bank is exempt from this rule.

         The table below presents the Bank's capital position at December 31,
1999 relative to the existing regulatory requirements:

<TABLE>
<CAPTION>

                                                                                                                Percent of
                                                                                               Amount           assets (1)
                                                                                          ------------------  ---------------
                                                                                            (In Thousands)
<S>                                                                                       <C>                 <C>
Tangible capital                                                                          $        8,424             6.06%
Tangible capital requirement                                                                       2,084             1.50
                                                                                          ------------------  ---------------

       Excess tangible capital                                                            $        6,340             4.56%
                                                                                          ==================  ===============

Core capital                                                                              $        8,424             6.06%
Core capital requirement                                                                           5,557             4.00
                                                                                          ------------------  ---------------

       Excess core capital                                                                $        2,867             2.06%
                                                                                          ==================  ===============

Total capital (i.e., core and supplemental capital)                                       $        9,288            10.44%
Risk-based capital requirement                                                                     7,119             8.00
                                                                                          ------------------  ---------------

       Excess total capital                                                               $        2,169             2.44%
                                                                                          ==================  ===============
</TABLE>

(1)  Based upon adjusted assets for purposes of the tangible capital and core
     capital requirements, and risk-weighted assets for purposes of the
     risk-based capital requirement.

         The OTS Capital Distribution Regulation differentiates thrift
institutions primarily by their capital levels and prescribes the amount of
capital distributions that can be made without prior OTS approval.

         The Bank has met its liquidity requirements with funds generated
from operations, proceeds from repayment or sale of loans and investment
securities, short-term borrowings, and the purchase of deposits during 1999.
If alternative funding is needed, the Bank can generate additional funds from
several other sources.

Currently, the FHLB system functions as a source of credit for the Bank.

ASSET QUALITY

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is
established through a provision for loan losses based on management's
quarterly asset classification review and evaluation of the risk inherent in
its loan portfolio and changes in the nature and volume of its loan activity.
Such evaluation, which includes a review of all loans of which full
collectibility may not be reasonably assured, considers among other matters,
the estimated fair value of the underlying collateral, economic conditions,
cash flow analysis, historical loan loss experience, discussions held with
delinquent borrowers and other factors that warrant recognition in providing
for allowance for loan losses.

         During 1999, net loans increased approximately $15,368,000 or 17.30%
from December 31, 1998 and the allowance for loan losses increased $263,000.
Management feels that the December 31, 1999 allowances are adequate for
future needs.

                                       47

<PAGE>

         The following presents an analysis of the allowance for loan losses for
years ended December 31, 1999, 1998, and 1997.

<TABLE>
<CAPTION>

                                                                                             Year ended December 31
                                                                                    -----------------------------------------
                                                                                        1999          1998          1997
                                                                                    -------------  ------------  ------------
<S>                                                                                 <C>            <C>           <C>

MORTGAGE LOANS AND CONTRACTS:
Balance at beginning of year                                                        $   361,772    $   300,638   $   232,665

Loans charged-off                                                                            --             --        (1,862)
Recoveries                                                                                   68             --        20,710
                                                                                    -------------  ------------  ------------

       Net loans recovered                                                                   68             --        18,848
Provision for loan losses charged to operations                                          60,000         61,134        49,125
                                                                                    -------------  ------------  ------------

BALANCE AT END OF YEAR                                                              $   421,840    $   361,772   $   300,638
                                                                                    =============  ============  ============

CONSUMER AND OTHER:
Balance at beginning of year                                                        $   239,212    $   226,709   $   196,576

Loans charged-off                                                                      (341,775)      (190,056)      (59,735)
Recoveries                                                                               31,220         25,413        21,076
                                                                                    -------------  ------------  ------------

       Net loans charged-off                                                           (310,555)      (164,643)      (38,659)
Provision for loan losses charged to operations                                         263,820        177,146        68,792
Acquired general valuation allowance                                                    250,000             --             -
                                                                                    -------------  ------------  ------------

BALANCE AT END OF YEAR                                                              $   442,477    $   239,212   $   226,709
                                                                                    =============  ============  ============

TOTAL ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of year                                                        $   600,984    $   527,347   $   429,241

Loans charged-off                                                                      (341,775)      (190,056)      (61,597)
Recoveries                                                                               31,288         25,413        41,786
                                                                                    -------------  ------------  ------------

       Net loans charged-off                                                           (310,487)      (164,643)      (19,811)
Provision for loan losses charged to operations                                         323,820        238,280       117,917
Acquired general valuation allowance                                                    250,000             --            --
                                                                                    -------------  ------------  ------------

BALANCE AT END OF YEAR                                                              $   864,317    $   600,984   $   527,347
                                                                                    =============  ============  ============

Allowance for loan losses as a percentage of total loans outstanding                     0.81%          0.66%         0.90%
                                                                                    =============  ============  ============

</TABLE>







                                       48

<PAGE>

         NON-PERFORMING ASSETS. Total non-performing assets decreased by
approximately $202,000 during 1999. The non-performing assets to total assets
ratio is one indicator of the exposure to credit risk. Non-performing assets of
the Bank consist of non-accruing loans, troubled debt restructurings, and real
estate which was acquired as a result of foreclosure. The composition of the
Bank's portfolio of non-performing assets is shown in the following table:

<TABLE>
<CAPTION>

                                                                                        1999          1998          1997
                                                                                    -------------  ------------  ------------
                                                                                                  (In Thousands)
<S>                                                                                 <C>            <C>           <C>

Non-accruing loans*                                                                 $      125     $      349    $        7
Past due 90 days or more and still accruing                                                 --             --            --
Other real estate                                                                          188            166            76
                                                                                    -------------  ------------  ------------

Total non-performing assets                                                         $      313     $      515    $       83
                                                                                    =============  ============  ============

Ratio of non-performing assets to total assets                                          0.22%          0.42%         0.08%
                                                                                    =============  ============  ============

</TABLE>

*  Primarily loans which are past due for 90 days or more

         Interest lost on non-performing assets amounted to $7,841 in 1999
compared to $28,589 in 1998.

         INVESTMENT SECURITIES - The Bank's available-for-sale securities
portfolio has a $111,163 unrealized loss, which is recorded net of tax at
December 31, 1999, while an unrealized loss of $62,102 was recorded at December
31, 1998. The Bank's held-to-maturity securities portfolio has an unrealized
loss of $77,397 and $20,396 at December 31, 1999 and 1998, respectively. The
Bank's available-for-sale and held-to-maturity portfolios did not experience
significant fair market value fluctuations during the year ended December 31,
1999.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

         The Bank may be a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuation in interest rates. These
financial instruments include commitments to extend credit (including credit
cards), standby letters of credit, and financial guarantees. These instruments
involve, to varying degrees, elements of credit and interest rate risk in excess
of the amount recognized in the consolidated statements of financial position.
The contract or notional amounts of these instruments reflect the extent of
involvement the Bank has in particular classes of financial instruments. The
Bank uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments.

         At December 31, 1999, unfunded credit commitments are as follows:

<TABLE>

        <S>                                                   <C>
        Commitments to extend residential loans               $       1,960,217
        Lines of credit                                       $       7,728,702
        Credit cards                                          $       1,298,704

</TABLE>


         Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Some of the commitments are expected to expire
without being drawn upon. The total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the customers.

                                       49

<PAGE>

         Standby letters of credit and financial guarantees written are
conditional commitments issued by the Bank to guarantee the performance of a
customer to a third party. Currently, letters of credit are not extended beyond
one year. The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loan facilities to customers. The Bank
holds collateral and personal guarantees as deemed necessary. At December 31,
1999, the Bank had $49,500 in standby letters of credit outstanding.

         At December 31, 1999, the Bank had no open interest rate swaps,
futures, options, or forward contracts.

         At December 31, 1999 and 1998, the Bank had $394,067 and $2,057,237,
respectively, of commitments to sell newly-originated single family residential
loans.

INCOME TAXES

         At December 31, 1999, the Company had remaining net operating loss
("NOL") carryforwards of approximately $4,500,000 for federal income tax
purposes which expire in varying amounts through 2011. In addition, the
alternative minimum tax ("AMT") NOL carryforward and AMT credit carryforward
were approximately $5,465,000 and $115,000, respectively, which expire in
varying amounts through 2011. Investment tax credit carryforwards of
approximately $38,000 expire in varying amounts through 2005.

         Section 382 of the Internal Revenue Code ("Code") provides that the
aforementioned tax NOL carryforwards would be subjected to an annual limitation
should there be a change of over 50% in the stock ownership of the Company
during any three year testing period. Due to the fact that the Company has a tax
NOL carryforward, it is required to report changes in ownership of 5% or greater
of stockholders annually to the Internal Revenue Service. The statute and
applicable Treasury regulations are extremely complex. The Company believes that
no change of ownership as defined in applicable Section 382 regulations occurred
through the three-year testing period ended December 31, 1999. However, if such
a change in ownership occurs, the annual use of the tax NOL carryforwards would
be subject to an annual limitation.

IMPACT OF INFLATION AND CHANGING PRICES

         The consolidated financial statements and related data have been
prepared in accordance with generally accepted accounting principles which
require measurement of financial position and operating results in terms of
historical dollars, without considering changes in relative purchasing power
over time due to inflation.

         Virtually all of the assets and liabilities of a financial institution
are monetary in nature. As a result, interest rates generally have a more
significant impact on the Company's and the Bank's performance than does the
effect of inflation.

IMPACT OF NEW ACCOUNTING STANDARDS

         In June 1996, the FASB issued SFAS No. 125, ACCOUNTING FOR TRANSFERS
AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES, which was
amended in December 1996. The Statement provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishment of
liabilities. The Company was required to adopt certain provisions of SFAS No.
125 for the year beginning January 1, 1997 and certain other provisions of the
Statement for the year beginning January 1, 1998. The adoption of the applicable
provision in 1997 did not have a material impact on the Company's financial
position or results of operations. The adoption of the applicable provisions of
this new standard, as amended, in 1998, also did not have a material impact on
the Company's and the Bank's financial position or results of operations.

         In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE
INCOME. This Statement establishes standards for reporting and display of
comprehensive income and its components in a full set of financial statements.
Comprehensive income is the total of reported net income and all other revenues,
expenses, gains and losses that under generally accepted accounting principles
bypass reported net income. SFAS No. 130 requires that comprehensive income be
reported in a financial statement that is displayed with the same

                                       50

<PAGE>

prominence as other financial statements with the aggregate amount of
comprehensive income reported in that same financial statement. SFAS No. 130
permits the statement of changes in stockholders' equity to be used to meet
this requirement. Companies are encouraged, but not required, to display the
components of other comprehensive income below the total for net income in
the statement of operations or in a separate statement of comprehensive
income. Companies are also required to display the cumulative total of other
comprehensive income for the period as a separate component of equity in the
statement of financial position. This Statement is effective for fiscal years
beginning after December 15, 1997. The Company adopted the provisions of this
statement effective January 1, 1998.

         In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. This Statement supersedes
SFAS No. 14, FINANCIAL REPORTING SEGMENTS OF A BUSINESS ENTERPRISE, and
utilizes the "management approach" for segment reporting. The management
approach is based on the way that the chief operating decision maker
organizes segments within a company for making operating decisions and
assessing performance. Reportable segments are based on any manner in which
management disaggregates its company such as by products and services,
geography, legal structure and management structure. SFAS No. 131 requires
disclosures for each segment that are similar to those required under current
standards with the addition of quarterly disclosure requirements and more
specific and detailed geographic disclosures especially by countries as
opposed to broad geographic regions. This Statement also requires descriptive
information about the way the operating segments were determined, the
products/services provided by the operating segments, the differences between
the measurements used in reporting segment information and those used in
general purpose financial statements, and the changes in the measurement of
segment amounts from period to period. The provisions of SFAS No. 131 are
effective for fiscal years beginning after December 15, 1997. The adoption of
this statement did not have a material impact on the Company.

         In February 1998, the FASB released SFAS 132, EMPLOYERS' DISCLOSURES
ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS, AN AMENDMENT OF FASB
STATEMENTS NO. 87, 88, AND 106 ("SFAS 132"). SFAS 132 standardizes disclosure
requirements for pensions and postretirement benefits where applicable and
suggests a combined format for presentation purposes, requires additional
information on changes in the benefit obligations and fair values of plan
assets, and eliminates certain disclosures that are no longer useful. This
statement, however, does not change the measurement or recognition
requirements of pension or postretirement benefit plans. SFAS 132 is
effective for fiscal years beginning after December 15, 1997 and requires
restatement of earlier periods if the information is readily available. The
impact of this statement did not have a material effect on the Company's
financial statements.

         In June 1998, the FASB released SFAS 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. The accounting for changes in the fair value
of a derivative (that is, gains and losses) depends on the intended use of
the derivative and the resulting designation. This statement was originally
effective for all fiscal quarters of fiscal years beginning after June 15,
1999. Subsequently the FASB issued SFAS No. 137 which delayed the effective
date of SFAS 133 by one year. As such, the statement will be adopted by the
Company beginning with its 2001 fiscal year. The Company does not expect this
statement to have a material effect on the financial statements.

         In October 1998, the FASB released SFAS 134, ACCOUNTING FOR
MORTGAGE-BACKED SECURITIES RETAINED AFTER THE SECURITIZATION OF MORTGAGE
LOANS HELD-FOR-SALE BY A MORTGAGE BANKING ENTERPRISE ("SFAS 134"). SFAS 134
requires that after the securitization of a mortgage loan held-for-sale, an
entity engaged in mortgage banking activities classify the resulting
mortgage-backed securities or other retained interests based on its ability
and intent to sell or hold those investments. This Statement conforms the
subsequent accounting for securities retained after the securitization of
mortgage loans by a mortgage banking enterprise with the subsequent
accounting for securities retained after the securitization of other types of
assets by a nonmortgage banking enterprise. SFAS 134 was effective for the
first fiscal quarter beginning after December 15, 1998 and did not have a
material effect on the Company's financial statements.

                                       51

<PAGE>

         In April 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accounts issued Statement of Position
("SOP") No. 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES. This SOP
provides guidance on the financial reporting of start-up activities and
organization costs to be expensed as incurred. This SOP is effective for
financial statements for fiscal years beginning December 15, 1998 and at the
time of adoption, any such costs that have previously been capitalized should
be expensed and reported as a cumulative effect of change in accounting
principle. The adoption of this SOP resulted in the Company charging
approximately $115,000 in unamortized organizational costs to expense on
January 1, 1999.

IMPACT OF YEAR 2000

         The Company is not aware of any significant problems that have
arisen as a result of the change in century on January 1, 2000. The Company
may still be exposed to risks associated with Year 2000 dating problems. This
problem can affect computer software and hardware; transactions with
customers, vendors and other entities; and equipment dependent on microchips.
The Company recognizes that Year 2000 dating problems pose a risk beyond
January 1, 2000, as errors may not become evident until after that date. The
Company has performed the remediation steps it believes necessary to address
Year 2000 dating problems at a total cost of less than $50,000 as of December
31, 1999. It is not possible for any entity to guarantee the results of its
own remediation efforts or to accurately predict the impact of Year 2000
dating problems on third parties with which the Company does business. If
remediation efforts of the Company or third parties with which it does
business are not successful, it is possible the Year 2000 dating problem
could negatively impact the Company's financial condition and results of
operations.

         The Year 2000 statements in the "Impact of Year 2000" section of this
Form 10-KSB are Year 2000 Readiness Disclosures pursuant to the Year 2000
Information and Readiness Disclosure Act, Pub. L. No. 105-271, 112 Stat. 2386
(1998).







FORWARD-LOOKING INFORMATION

         When used in this report, the words "believes," "anticipates," "expect"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could cause
actual results to differ materially, including, but not limited to, those set
forth in "Management's Discussion and Analysis or Plan of Operation." READERS
ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS,
WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO
PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING
STATEMENTS WHICH MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE
HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.


ITEM 7.  FINANCIAL STATEMENTS

         Financial statements are filed as a part of this report at the end
of Part III hereof beginning at page F-1, Index to Consolidated Financial
Statements, and are incorporated herein by reference.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES

         None

                                       52

<PAGE>

                                    PART III

         The information required by Part III is omitted from this report
because the Company will file a definitive Proxy Statement for the Company's
2000 Annual Meeting of Stockholders (the "Proxy Statement") pursuant to
Regulation 14A of the Securities Exchange Act of 1934 not later than 120 days
after the end of the fiscal year covered by this Form 10-KSB and certain
information included therein is incorporated herein by reference.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The information required by this Item is incorporated by reference to
the Proxy Statement.

ITEM 10. EXECUTIVE COMPENSATION

         The information required by this Item is incorporated by reference to
the Proxy Statement.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item is incorporated by reference to
the Proxy Statement.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is incorporated by reference to
the Proxy Statement.
















                                       53

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

(A) EXHIBITS
     EXHIBIT NO.                                                    DESCRIPTION
----------------------  -----------------------------------------------------------------------------------------------------
<S>                     <C>

      **2.0             Branch Purchase and Deposit Assumption Agreement dated
                        June 18, 1999 between Bank of Albuquerque, National
                        Association, and FirstBank, a federal savings bank
                        (incorporated by reference from the Company's Form 8-K
                        filed November 19, 1999)

      **2.1             Letter amendment, dated September 30, 1999, to Branch
                        Purchase and Deposit Assumption Agreement dated June 18,
                        1999 between Bank of Albuquerque, National Association,
                        and FirstBank, a federal savings bank (incorporated by
                        reference from the Company's Form 8-K filed November 19,
                        1999)

      **3.1             Certificate of Amendment of Certificate of Incorporation
                        and Certificate of Incorporation of the Company
                        (incorporated by reference from the Company's Quarterly
                        Report on Form 10-QSB for the quarter ended June 30, 1997,
                        SEC File No. 0-28894)

      **3.2             Amended Bylaws of the Company (incorporated by reference
                        from the Company's Registration Statement on Form S-8, filed
                        June 2,1997, SEC File No. 333-28215)

     **10.1             Agreement and Plan of Reorganization and Plan of Merger
                        (incorporated by reference from the Company's Registration
                        Statement on Form 8-A, filed October 11, 1996, SEC File No.
                        001-12309)

     **10.3             Profit Sharing and Employee Stock Ownership Plan of First
                        Savings Bank, F.S.B. (incorporated by reference from the
                        Company's Registration Statement on Form 8-A, filed October
                        11, 1996, SEC File No. 001-12309)

     **10.3.1           Amendment Number One to Profit Sharing and Employee Stock
                        Ownership Plan of First Savings Bank, F.S.B. (refiled)
                        (incorporated by reference from the Company's Registration
                        Statement on Form 8-A, filed October 11, 1996, SEC File No.
                        001-12309)

     **10.3.2           Amendment Number Two to Profit Sharing and Employee Stock
                        Ownership Plan of First Savings Bank, F.S.B. (incorporated
                        by reference from the Company's September 30, 1999 10-QSB)

     **10.3.3           Amendment Number Three to Profit Sharing and Employee Stock
                        Ownership Plan of FirstBank (Formerly First Savings Bank,
                        F.S.B.) (incorporated by reference from the Company's
                        September 30, 1999 10-QSB)

     **10.3.4           Amendment Number Four to Profit Sharing and Employee Stock
                        Ownership Plan of FirstBank (Formerly First Savings Bank,
                        F.S.B.) (incorporated by reference from the Company's
                        September 30, 1999 10-QSB)

     **10.4             Agreement for Standby Letter of Credit
                        Advances/Confirmation, Collateral Pledge and Security
                        Agreement with FHLB of Dallas (incorporated by reference
                        from the Company's Registration Statement on Form 8-A,
                        filed October 11, 1996, SEC File No. 001-12309)

 **/***10.6             Employment Agreement with Kenneth J. Huey, Jr. (incorporated
                        by reference from the Company's Registration Statement on
                        Form 8-A, filed October 11, 1996, SEC File No. 001-12309)

 **/***10.6.1           Extension of Employment Agreement with Kenneth J. Huey, Jr.
                        dated November 20, 1997 (incorporated by reference from the
                        Company's September 30, 1999 10-QSB)

 **/***10.6.2           Extension of Employment Agreement with Kenneth J. Huey, Jr.
                        dated July 29, 1999 (incorporated by reference from the
                        Company's September 30, 1999 10-QSB)

 **/***10.7             Employment Agreement with Norman R. Corzine (incorporated by
                        reference from the Company's 1996 10-KSB)

 **/***10.7.1           Extension of Employment Agreement with Norman R. Corzine dated
                        November 20, 1997 (incorporated by reference from the
                        Company's September 30, 1999 10-QSB)

 **/***10.7.2           Extension of Employment Agreement with Norman R. Corzine dated
                        July 29, 1999 (incorporated by reference from the Company's
                        September 30, 1999 10-QSB)

 **/***10.10            Non-Employee Director Retainer Plan (incorporated by reference
                        from the Company's Registration Statement on Form S-8, filed
                        June 2, 1997, SEC File No. 333-28217)

 **/***10.11            1997 Stock Option and Incentive Plan (incorporated by reference
                        from the Company's Registration Statement on Form S-8, filed
                        June 2, 1997, SEC File No. 333-28215)

                                   (Continued)

                                       54

<PAGE>
     EXHIBIT NO.                                                    DESCRIPTION
----------------------  -----------------------------------------------------------------------------------------------------
                                                                    (Continued)

 **/***10.12            Nonqualified 401(K) Rabbi Trust for an Executive Savings Plan
                        dated June 1, 1998 (incorporated by reference from the
                        Company's September 30, 1999 10-QSB)

 **/***10.12.1          Amendment Number One to Nonqualified 401(K) Rabbi Trust
                        for an Executive Savings Plan dated June 1, 1998
                        (incorporated by reference from the Company's September
                        30, 1999 10-QSB)

      *21               Subsidiaries of the Small Business Issuer

      *23               Consent of Independent Accountants

      *27               Financial Data Schedule

</TABLE>

      * Filed herewith
     ** Previously filed
    ***  Designates each management contract or compensatory plan or arrangement
         required to be identified pursuant to Item 13(a) of Form 10-KSB.




(b)  REPORTS ON FORM 8-K

         The following subparagraph sets forth information concerning one Form
8-K filed during the fourth quarter ended December 31, 1999:

         1.    On November 19, 1999 filed a Form 8-K reporting that the Bank
               purchased certain assets and deposit liabilities of the Bank of
               Albuquerque's branch facilities located in Clovis and Gallup, New
               Mexico.














                                       55

<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.

                                  ACCESS ANYTIME BANCORP, INC.


         Date:  March 2, 2000     /s/ Norman R. Corzine
                                  ---------------------------------------------
                                  Norman R. Corzine, Chairman of the Board,
                                  Chief Executive Officer
                                  (DULY AUTHORIZED REPRESENTATIVE)





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

<TABLE>

<S>  <C>                                       <C>  <C>
By:  /s/ Norman R. Corzine                     By:  /s/ R. Chad Lydick
     --------------------------------------         ---------------------------------------------------
     Norman R. Corzine                              R. Chad Lydick
     Chairman of the Board                          Director
     Chief Executive Officer
     Director

     Date:  March 2, 2000                           Date:  March 2, 2000

By:  /s/ Ken Huey, Jr.                         By:  /s/ Charles Guthals
     --------------------------------------         ---------------------------------------------------
     Ken Huey, Jr.                                  Charles Guthals
     President, Chief Financial Officer             Director
     Director

     Date:  March 2, 2000                           Date:  March 2, 2000

By:  /s/ Carl Deaton                           By:  /s/ Allan M. Moorhead
     --------------------------------------         ---------------------------------------------------
     Carl Deaton                                    Allan M. Moorhead
     Director                                       Director

     Date:  March 2, 2000                           Date:  March 2, 2000

By:  /s/ Thomas W. Martin, III                 By:  /s/ Cornelius Higgins, Ph.D.
     --------------------------------------         ---------------------------------------------------
     Thomas W. Martin, III                          Cornelius Higgins
     Director                                       Director

     Date:  March 2, 2000                           Date:  March 2, 2000


                                   (Continued)

                                       56

<PAGE>

                                   SIGNATURES

                                   (CONTINUED)

By:  /s/ David Ottensmeyer, M.D.               By:   /s/ Richard H. Harding
     ---------------------------------------         ---------------------------------------------------
     David Ottensmeyer                                   Richard H. Harding
     Director                                            Director

     Date:  March 2, 2000                                Date:  March 2, 2000


</TABLE>




















                                       57

<PAGE>

<TABLE>
<CAPTION>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                                                         Page
                                                                                                         ----
<S>                                                                                                      <C>

Report of Independent Accountants............................................................             F-2

Financial Statements:
         Consolidated Statements of Financial Condition......................................             F-3
         Consolidated Statements of Operations...............................................             F-4
         Consolidated Statements of Stockholders' Equity.....................................             F-5
         Consolidated Statements of Cash Flows...............................................             F-6
         Notes to Consolidated Financial Statements..........................................             F-8

</TABLE>













                                      F-1

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS





Members of the Audit Committee
Board of Directors and Stockholders
Access Anytime Bancorp, Inc.
Clovis, New Mexico


We have audited the accompanying consolidated statements of financial
condition of Access Anytime Bancorp, Inc. and subsidiary as of December 31,
1999 and 1998, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Access
Anytime Bancorp, Inc. and subsidiary as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for earnings per share in 1997.




Robinson Burdette Martin & Cowan, L.L.P.

Lubbock, Texas
March 2, 2000, except as
to Note 19 for which the
date is March 6, 2000.







                                      F-2

<PAGE>

<TABLE>
<CAPTION>
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                                                                  December 31
                                                                                    -----------------------------------------
ASSETS                                                                                     1999                  1998
------                                                                              --------------------  -------------------
<S>                                                                                 <C>                   <C>

Cash and cash equivalents                                                           $         7,874,748   $         5,232,708
Certificates of deposit                                                                       5,092,000             2,590,000
Securities available-for-sale (amortized cost of $9,231,129 and $11,487,694)                  9,119,966            11,425,592
Securities held-to-maturity (aggregate fair value of $6,779,494
   and  $7,507,941)                                                                           6,856,891             7,528,337
Loans held-for-sale (aggregate fair value of $187,175 and $869,777)                             183,850               855,258
Loans receivable, net                                                                       104,176,810            88,809,104
Interest receivable                                                                             869,234               634,546
Real estate owned                                                                               187,778               166,195
Federal Home Loan Bank stock                                                                    879,758               790,233
Premises and equipment, net                                                                   2,472,703             2,375,205
Servicing rights                                                                                 83,737                    --
Organizational cost, net                                                                             --               115,162
Goodwill, net                                                                                 2,134,860                    --
Deferred tax asset                                                                            1,334,100             1,075,586
Other assets                                                                                    541,282               170,441
                                                                                    --------------------  -------------------

       Total assets                                                                 $       141,807,717   $       121,768,367
                                                                                    ====================  ===================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Liabilities:
   Deposits                                                                         $       122,479,738   $       105,045,150
   Federal Home Loan Bank advances                                                            7,250,000             5,750,000
   Accrued interest and other liabilities                                                       664,686               686,447
   Advanced payments by borrowers for taxes and insurance                                        99,861               362,009
                                                                                    --------------------  -------------------

       Total liabilities                                                                    130,494,285           111,843,606
                                                                                    --------------------  -------------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.01 par value; 4,000,000 shares authorized; none
     issued                                                                                          --                    --
   Common stock, $.01 par value; 6,000,000 shares authorized;
     1,244,016 and 1,236,955 shares issued; 1,238,374 and 1,235,579                             12,440                12,370
     outstanding in 1999 and 1998, respectively
   Capital in excess of par value                                                             9,659,555             9,604,001
   Retained earnings                                                                          1,754,815               356,601
   Accumulated other comprehensive loss, net of tax of $37,795 and
     $21,115                                                                                    (73,368)              (40,987)
                                                                                    --------------------  -------------------
                                                                                             11,353,442             9,931,985
   Treasury stock, at cost                                                                      (40,010)               (7,224)
                                                                                    --------------------  -------------------
       Total stockholders' equity                                                            11,313,432             9,924,761
                                                                                    --------------------  -------------------

       Total liabilities and stockholders' equity                                   $       141,807,717   $       121,768,367
                                                                                    ====================  ===================
</TABLE>

          The accompanying notes are an integral part of these consolidated
          financial statements.

                                      F-3

<PAGE>

<TABLE>
<CAPTION>
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                    Years ended December 31
                                                                   ---------------------------------------------------------
                                                                         1999               1998                 1997
                                                                   -----------------  ------------------  ------------------
<S>                                                                <C>                <C>                 <C>

Interest income:
   Loans receivable                                                $       7,593,497  $       6,143,506   $       4,490,079
   U.S. government agency securities                                          73,777             70,241             103,888
   Mortgage-backed securities                                                900,027          1,452,059           2,379,293
   Other interest income                                                     320,229            344,241             277,041
                                                                   -----------------  ------------------  ------------------

       Total interest income                                               8,887,530          8,010,047           7,250,301
                                                                   -----------------  ------------------  ------------------

Interest expense:
   Deposits                                                                4,328,019          4,260,384           4,136,200
   Federal Home Loan Bank advances                                           466,128            262,640              13,007
                                                                   -----------------  ------------------  ------------------

       Total interest expense                                              4,794,147          4,523,024           4,149,207
                                                                   -----------------  ------------------  ------------------

Net interest income before provision for loan losses                       4,093,383          3,487,023           3,101,094
Provision for loan losses                                                    323,820            238,280             117,917
                                                                   -----------------  ------------------  ------------------

       Net interest income after provision for loan
         losses                                                            3,769,563          3,248,743           2,983,177
                                                                   -----------------  ------------------  ------------------

Noninterest income:
   Loan servicing and other fees                                             251,845            314,316             329,420
   Net realized gains on sales of available-for-sale
     securities                                                              739,475                 --              20,637
   Net realized gains on sales of loans                                      296,853            222,830             148,915
   Real estate operations, net                                                    --             10,466                  --
   Other income                                                              512,664          1,230,666             367,338
                                                                   -----------------  ------------------  ------------------

       Total other income                                                  1,800,837          1,778,278             866,310
                                                                   -----------------  ------------------  ------------------

Noninterest expenses:
   Salaries and employee benefits                                          2,081,742          2,061,294           1,777,190
   Occupancy expense                                                         616,981            522,832             401,755
   Deposit insurance premium                                                 148,742            122,928             258,375
   Advertising                                                                42,738             54,058              53,465
   Real estate operations, net                                                35,435                 --               3,013
   Professional fees                                                         233,236            171,377              16,611
   Amortization of goodwill                                                   24,056                 --                  --
   Other expense                                                           1,231,090            988,235             955,369
                                                                   -----------------  ------------------  ------------------

       Total other expenses                                                4,414,020          3,920,724           3,465,778
                                                                   -----------------  ------------------  ------------------

Income before income taxes                                                 1,156,380          1,106,297             383,709

Income tax expense (benefit)                                                (241,834)           346,179          (1,212,000)
                                                                   -----------------  ------------------  ------------------

Net income                                                         $       1,398,214  $         760,118   $       1,595,709
                                                                   =================  ==================  ==================

Earnings per common share                                          $           1.13   $            .62    $           1.40
                                                                   =================  ==================  ==================

Earnings per common share-assuming dilution                        $           1.10   $            .59    $           1.37
                                                                   =================  ==================  ==================
</TABLE>


          The accompanying notes are an integral part of these consolidated
          financial statements.

                                      F-4

<PAGE>

<TABLE>
<CAPTION>
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                             Common Stock       Treasury Stock                            Accumulated
                                          ------------------- --------------------                          Other
                                                                                  Capital     Retained   Comprehensive
                                                                                 in Excess    Earnings/     Income
                            Comprehensive   Number             Number              Of Par   (Accumulated    (Loss),
                               Income     of shares  Amount  of Shares  Amount     Value      Deficit)        Net         Total
                            ------------- --------- -------- --------- -------- ----------- ------------  -----------  -----------
<S>                         <C>           <C>       <C>      <C>       <C>      <C>         <C>           <C>          <C>

Balance at December 31, 1996                732,198 $  7,322        -- $     -- $ 7,019,577 $ (1,742,182) $  (198,595) $ 5,086,122

Net income                  $   1,595,709        --       --        --       --          --    1,595,709           --    1,595,709

Net changes in  unrealized
   depreciation on
   available-for-sale
   securities, net                195,912        --       --        --       --          --           --      195,912      195,912
                            -------------

Total comprehensive income  $   1,791,621
                            =============

Common stock issued                         461,422    4,614        --       --   2,253,569           --           --    2,258,183

Common stock rights
   awarded in lieu of
   directors cash
   compensation                                  --       --        --       --      10,500           --           --       10,500


2% common  stock  dividend
   issued on  December 1,
   1997                                      23,716      237        --       --     193,759     (193,996)          --           --

Cash dividends-fractional
  shares in cash                                 --       --        --       --          --       (1,204)          --       (1,204)
                                          --------- -------- --------- -------- ----------- ------------  -----------  -----------

Balance at December 31,
   1997                                   1,217,336   12,173        --       --   9,477,405     (341,673)      (2,683)   9,145,222

Net income                  $     760,118        --       --        --       --          --      760,118           --      760,118

Net changes in  unrealized
   depreciation on
   available-for-sale
   securities, net                (38,304)       --       --        --       --          --           --      (38,304)     (38,304)
                            -------------

Total comprehensive income  $     721,814

                            =============

Common stock issued                          19,619      197        --       --     108,596           --           --      108,793

Common stock rights
   awarded in lieu  of
   directors cash
   compensation                                  --       --        --       --      18,000           --           --       18,000

Purchase treasury stock                          --       --     1,376   (7,224)         --           --           --       (7,224)

Cash dividends                                   --       --        --       --          --      (61,844)          --      (61,844)
                                          --------- -------- --------- -------- ----------- ------------  ----------- -----------

Balance  at  December  31,                1,236,955   12,370     1,376   (7,224)  9,604,001      356,601      (40,987)   9,924,761
   1998

Net income                  $   1,398,214        --       --        --       --          --    1,398,214           --    1,398,214

Net changes in unrealized
   depreciation on
   available-for-sale
   securities, net                (32,381)       --       --        --       --          --           --      (32,381)     (32,381)
                            -------------

Total comprehensive income  $   1,365,833
                            =============

Common stock issued                           7,061       70        --       --      37,054           --           --       37,124

Common stock rights
   awarded in lieu of
   directors cash
   compensation                                  --       --        --       --      18,500           --           --       18,500

Purchase treasury stock                          --       --     4,266  (32,786)         --           --           --      (32,786)
                                          --------- -------- --------- -------- ----------- ------------  -----------  -----------

Balance  at  December  31,                1,244,016 $ 12,440     5,642 $(40,010)$ 9,659,555 $  1,754,815  $   (73,368) $11,313,432
   1999                                   ========= ======== ========= ======== =========== ============  ===========  ===========
</TABLE>

          The accompanying notes are an integral part of these consolidated
          financial statements.

                                      F-5

<PAGE>

<TABLE>
<CAPTION>
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                    Years ended December 31
                                                                   ---------------------------------------------------------
                                                                         1999               1998                 1997
                                                                   -----------------  ------------------  ------------------
<S>                                                                <C>                <C>                 <C>

Cash flows from operating activities:
   Net income                                                      $      1,398,214   $        760,118    $      1,595,709
   Adjustments to reconcile net income to cash
    provided by operating activities:
     Depreciation                                                           338,118            269,072             144,419
     Deferred income taxes                                                 (241,834)           346,179          (1,212,000)
     Provision for loan losses charged                                      323,820            238,280             117,917
     Amortization of premiums on investment securities                      110,814            178,164             308,294
     Amortization of loan premiums, discounts and
       deferred fees, net                                                    59,500            244,007             134,689
     Amortization of organizational costs                                   115,162             41,877              38,241
     Amortization of goodwill                                                24,056                 --                  --
     Gain on sale of mortgage servicing rights                                   --           (838,143)                 --
     Gain on sale of available-for-sale securities                         (739,476)                --             (20,637)
     Gain on sale of loans held-for-sale                                   (296,853)          (222,830)           (148,915)
     Proceeds from sales of loans held-for-sale                          19,375,329         13,210,392           8,769,996
     Originations of loans held-for-sale                                (18,508,724)       (13,674,579)         (8,347,287)
     Common stock rights awarded in lieu of directors
       compensation                                                          18,500             18,000              10,500
     (Gain) loss on foreclosed real estate                                   15,242            (14,575)               (813)
     (Gain) loss on disposition of assets                                    (5,944)           (14,418)                727
     Net (increase) decrease in accrued interest
       receivable and other assets                                         (674,810)           (74,079)            162,186
     Increase in accrued expense and other liabilities                       40,083            266,449               7,019
                                                                   -----------------  ------------------  ------------------

       Net cash provided by operating activities                          1,351,197            733,914           1,560,045
                                                                   -----------------  ------------------  ------------------

Cash flows from investing activities:
   Proceeds from maturities and principal repayments
     of available-for-sale securities                                     2,186,035          3,438,728           3,250,346
   Purchases of held-to-maturity securities                              (2,200,000)                --                  --
   Proceeds from maturities and principal repayments
     of held-to-maturity securities                                       2,831,162         11,350,626          10,055,258
   Proceeds from sales of available-for-sale-securities                     746,409                 --           5,376,284
   Proceeds from the redemption of FHLB stock                                    --            877,201                  --
   Proceeds from sale of mortgage servicing rights                               --          1,203,905                  --
   Net increase in certificates of deposit                               (2,502,000)        (1,060,000)         (1,149,430)
   Net increase in loans                                                (13,793,812)       (31,165,066)        (12,836,195)
   Proceeds from sales of foreclosed real estate                            263,436             66,000              19,600
   Proceeds from sales of equipment                                           8,000                 --                  --
   Purchases of premises and equipment                                     (326,622)          (575,612)           (274,988)
   Net cash received in branch acquisition                               19,355,057                 --                  --
                                                                   -----------------  ------------------  ------------------

       Net cash provided (used) by investing activities                   6,567,665        (15,864,218)          4,440,875
                                                                   -----------------  ------------------  ------------------

Cash flows from financing activities:
   Net increase (decrease) in deposits                                   (6,457,168)         7,633,145            (751,996)
   Net increase (decrease) in other borrowed funds                        1,500,000          5,750,000          (3,000,000)
   Net increase (decrease) in advance payments by
     borrowers for taxes and insurance                                     (262,148)            64,172              45,738
   Organizational costs incurred                                                 --                 --             (31,907)
   Rights offering costs incurred                                                --                 --             (69,253)
   Purchase of treasury stock                                               (32,786)            (7,224)                 --
   Proceeds from issuance of common stock                                    37,124            108,793           2,422,601
   Cash dividend                                                            (61,844)                --              (1,204)
                                                                   ---------------------------------------------------------

       Net cash provided (used) in financing activities                  (5,276,822)        13,548,886          (1,386,021)
                                                                   -----------------  ------------------  ------------------

Increase (decrease) in cash and cash equivalents                          2,642,040         (1,581,418)          4,614,899
Cash and cash equivalents at January 1                                    5,232,708          6,814,126           2,199,227
                                                                   -----------------  ------------------  ------------------

Cash and cash equivalents at December 31                           $      7,874,748   $      5,232,708    $      6,814,126
                                                                   =================  ==================  ==================
                                   (Continued)
</TABLE>

                                      F-6

<PAGE>

<TABLE>
<CAPTION>
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                                                                                    Years ended December 31
                                                                   ---------------------------------------------------------
                                                                         1999               1998                 1997
                                                                   -----------------  ------------------  ------------------
<S>                                                                <C>                <C>                 <C>

Supplemental disclosures of cash flow information:
Cash paid during the year for:
     Interest                                                      $      4,809,055   $      4,437,249    $      4,147,090
     Income taxes                                                            25,000                 --                  --
   Supplemental disclosure of non-cash investing and
    financing activities
     Real estate acquired in settlement of loans                            589,519             46,169              20,862
     Common stock dividend                                                       --                 --             193,996
     Loans to facilitate the sale of real estate owned                      279,800                 --                  --

</TABLE>











          The accompanying notes are an integral part of these consolidated
          financial statements.


                                      F-7
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION AND USE OF ESTIMATES -
Access Anytime Bancorp, Inc. (the "Company") is a thrift holding company for
its wholly-owned subsidiary FirstBank (the "Bank") and the Bank's wholly-owned
subsidiary, First Equity Development Corporation ("FEDCO"). The consolidated
financial statements include the accounts and transactions of the Company, the
Bank and FEDCO. All significant intercompany accounts and transactions have
been eliminated in consolidation.

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

CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash, due from
banks and all certificates of deposit with original maturities of three months
or less. There are no amounts subject to withdrawal or usage restrictions.

SECURITIES AVAILABLE-FOR-SALE - Securities to be held for indefinite periods
of time and not intended to be held-to-maturity are classified as
available-for-sale. Assets included in this category are those assets that
management intends to use as part of its asset/liability management strategy
and that may be sold in response to changes in liquidity needs, interest
rates, resultant prepayment risk, and other factors related to interest rate
and resultant prepayment risk changes. Securities available-for-sale are
recorded at fair value. Both unrealized gains and losses on securities
available-for-sale, net of taxes, are included as a separate component of
accumulated other comprehensive income (loss) in the consolidated statements
of financial condition until these gains or losses are realized. Gains and
losses are determined using the specific-identification method. If a security
has a decline in fair value that is other than temporary, the security is
written down to its fair value by recording a loss in the consolidated
statements of operations.










                                  (Continued)

                                      F-8
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

SECURITIES HELD-TO-MATURITY - Securities for which the Bank has the positive
intent and ability to hold to maturity are reported at cost, adjusted for
premiums and discounts that are recognized in interest income using the
interest method over the period to maturity. If a security has a decline in
fair value below its amortized cost that is other than temporary, the security
is written down to its new cost basis by recording a loss in the consolidated
statements of operations. The Bank has not experienced a permanent decline on
securities that would result in a charge to operations.

LOANS HELD-FOR-SALE - Loans to be held for indefinite periods of time and not
intended to be held-to-maturity are classified as held-for-sale. Loans
held-for-sale are recorded at the lower of amortized cost or fair value with
only net unrealized losses included in the consolidated statements of
operations.

FEDERAL HOME LOAN BANK (FHLB) STOCK - This asset is owned due to regulatory
requirements and is carried at cost. This stock is pledged as collateral to
secure FHLB advances.

LOANS RECEIVABLE - Loans receivable that management has the intent and ability
to hold for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal adjusted for any unearned discount, the
allowance for loan losses and any deferred fees or costs on originated loans.

Unearned discount on installment loans is recognized as income over terms
which approximate the interest method. Interest on other loans is recognized
using the simple-interest method on the daily balances of the principal
amounts outstanding.

The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued interest
is reversed. If the ultimate collectibility of principal, wholly or partially,
is in doubt, any payment received on a loan on which the accrual of interest
has been suspended is applied to reduce principal to the extent necessary to
eliminate such doubt. Otherwise, interest income is recognized for such
payments.

Loan origination fees and direct origination costs are deferred and recognized
as an adjustment of the yield of the related loan.

The Bank defines a loan as impaired when, based on current information and
events, it is probable that the Bank will be unable to collect all amounts due
according to the contractual terms of the loan agreement. The Bank uses the
same criteria in placing a loan on nonaccrual status, exclusive of residential
mortgage loans and consumer loans which are placed on nonaccrual status when
they become 90 days past due. When interest accrual is discontinued, all
unpaid accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.










                                  (Continued)

                                      F-9
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

The allowance for loan losses is increased by charges to income and decreased
by revisions in the estimate of the necessary allowance and by charge-offs
(net of recoveries). Management's periodic evaluation of the adequacy of the
allowance is based on the Bank's past loan loss experience, known and inherent
risks in the portfolio, adverse situations that may affect the borrower's
ability to repay, the estimated value of any underlying collateral, and
current economic conditions.

LOAN SERVICING - The cost of mortgage servicing rights is amortized in
proportion to, and over the period of, estimated net servicing revenues.
Impairment of mortgage servicing rights is assessed based on the fair value of
those rights. Fair values are estimated using discounted cash flows based on a
current market interest rate. For purposes of measuring impairment, the rights
are stratified based on the predominant risk characteristics of the underlying
loans. The amount of impairment recognized is the amount by which the
capitalized mortgage servicing rights for a stratum exceed their fair value.

When participating interests in loans sold have an average contractual
interest rate, adjusted for normal servicing fees, that differs from the
agreed yield to the purchaser, gains or losses are recognized equal to the
present value of such differential over the estimated remaining life of such
loans. The resulting "excess servicing receivable" or "deferred servicing
revenue" is amortized over the estimated life using a method approximating the
interest method.

Quoted market prices are not available for the excess servicing receivables.
Thus, the excess servicing receivables and the amortization thereon are
periodically evaluated in relation to estimated future servicing revenues,
taking into consideration changes in interest rates, current prepayment rates,
and expected future cash flows. The Bank evaluates the carrying value of the
excess servicing receivables by estimating the future servicing income of the
excess servicing receivables based on management's best estimate of remaining
loan lives and discounted at the original discount rate.

For originated mortgage servicing rights, the Bank allocates the total cost of
the mortgage loans to the mortgage servicing rights and the loans (without the
mortgage servicing rights) based on their relative fair values. Fair values
are based on quoted market prices in active markets for loans and loan
servicing rights. For purchased mortgage servicing rights, the cost of
acquiring loan servicing contracts is capitalized to the extent such costs do
not exceed the amount by which the present value of estimated future servicing
revenue exceeds the present value of expected future servicing costs.










                                  (Continued)

                                     F-10


<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PREMISES AND EQUIPMENT - Land is carried at cost. Premises and equipment are
carried at cost, less accumulated depreciation computed by the straight-line
method over the estimated useful life of the assets. Maintenance and repairs
are charged to expense as incurred and improvements are capitalized.

FORECLOSED REAL ESTATE - Real estate properties acquired through foreclosure,
or in lieu of foreclosure are to be sold and are initially recorded at fair
value at the date of foreclosure establishing a new cost basis. Any excess of
the loan balance and foreclosure costs over the fair value at the date of
foreclosure is charged to the allowance for loan losses. After foreclosure,
valuations are periodically performed by management and the real estate is
carried at the lower of carrying amount or fair value less cost to sell.
Revenue and expenses from operations and changes in the valuation allowance
are included in real estate operations, net.

ORGANIZATIONAL COSTS - Organizational costs were being amortized using the
straight-line method over five years. Effective January 1, 1999, the Company
adopted the provisions of Statement of Position ("SOP") No. 98-5, REPORTING
ON THE COSTS OF START-UP ACTIVITIES issued by the American Institute of
Certified Public Accountants ("AICPA"). This statement requires costs of
start-up activities and organizational costs to be expensed as incurred and
its provisions are retroactive upon adoption of the SOP. All remaining
unamortized organizational costs were charged to expense in the first quarter
of 1999.

GOODWILL - The excess of the net liabilities assumed in connection with the
acquisition of certain branches during 1999 and direct acquisition costs over
the net cash acquired in the assumption of the branches' deposits has been
included in the consolidated financial statements as goodwill and is being
amortized on a straight-line basis over the estimated life of the core
deposits acquired.

STOCK-BASED COMPENSATION - The Company applies Accounting Principles Board
Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" ("APB 25") and
related interpretations in accounting for its stock-based compensation plans.

In 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards (SFAS) No. 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION" which was effective for fiscal years beginning after December
15, 1995. Under SFAS No. 123, the Company may elect to recognize stock-based
compensation expense based on the fair value of the awards or continue to
account for stock-based compensation under APB 25. The Company has elected to
continue to apply the measurement provisions of APB 25.

INCOME TAXES - The Company utilizes the liability method of accounting for
income taxes, whereby deferred income taxes are recognized for the tax
consequences in future years of differences in the tax bases of assets and
liabilities and their financial reporting amounts based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are established,
if necessary, to reduce deferred tax assets to the amount expected to be
realized.

NET INCOME PER SHARE - Basic earnings per share has been computed on the
basis of the weighted-average number of shares of common stock outstanding
during the period. Diluted earnings per share reflects the potential dilution
that would have occurred if stock options and other contingently issuable
shares of common stock had been issued during the period.


                                    (Continued)

                                       F-11

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PRESENTATION - Effective January 1, 1998, the Company adopted SFAS No. 130,
REPORTING COMPREHENSIVE INCOME. SFAS No. 130 establishes new rules for the
reporting and display of comprehensive income and its components, but has no
effect on the Company's net income or total stockholders' equity. SFAS No.
130 requires unrealized gains and losses on the Company's available-for-sale
securities, which prior to adoption were reported separately in stockholders'
equity, to be included in comprehensive income. The 1997 financial statements
have been reclassified to conform to the requirements of SFAS No. 130.

IMPACT OF NEW ACCOUNTING STANDARDS - In June 1998, the FASB issued SFAS No.
133, ACCOUNTING FOR DERIVATIVE INVESTMENTS AND HEDGING ACTIVITIES, which
addresses the accounting for derivative instruments and hedging activities.
Subsequently, the FASB issued SFAS No. 137 which delayed the effective date
of SFAS No. 133 by one year. The Company will now be required to adopt the
new standard beginning with its 2001 fiscal year. Management is currently
evaluating the reporting requirements under this new standard. The impact on
the financial results of the Company upon adoption is not expected to be
material.

RECLASSIFICATIONS - Certain amounts for prior years have been reclassified to
conform with the current year presentation. These reclassifications had no
effect on net income or stockholders' equity.


NOTE 2   ACQUISTION OF BRANCHES

On November 5, 1999, the Bank acquired certain assets of two branches of Bank
of Albuquerque, N.A. ("BOA"), a wholly-owned subsidiary of BOK Financial
Corporation, for the assumption of deposits and related liabilities of the
branches. The acquisition was accounted for as a purchase and the results of
operations of the branches are included in the consolidated statements of
operations from the date of acquisition.

The fair values of assets acquired, liabilities assumed and cash paid less
cash acquired were as follows:

<TABLE>

<S>                                                                <C>

Deposits and liabilities assumed                                   $      23,891,756
Less assets acquired:
   Loans receivable, net                                                   2,266,733
   Premises and equipment                                                    111,050
                                                                   -------------------
     Net liabilities assumed                                       $      21,513,973
                                                                   ===================

Net liabilities assumed                                            $      21,513,973
Less cash paid for deposits and other direct acquisition costs             2,158,916
                                                                   -------------------
     Net cash acquired in assumption of branch deposits            $      19,355,057
                                                                   ===================

</TABLE>

The deposit premium and direct acquisition costs are being amortized using
the straight-line method over the estimated remaining life of the core
deposits acquired.

                                    (Continued)

                                       F-12

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 3   SECURITIES

Securities have been classified in the consolidated statements of financial
condition according to management's intent. The carrying amounts of securities
and their approximate fair values at December 31 follow:

<TABLE>
<CAPTION>

                                                    Amortized                 Gross unrealized                   Fair
                                                       Cost               Gains              Losses             Value
                                                 -----------------  ------------------  -----------------  -----------------
<S>                                              <C>                <C>                 <C>                <C>

AVAILABLE-FOR-SALE SECURITIES:

   December 31, 1999:
     Mortgage-backed securities:
       GNMA adjustable rate                      $       9,231,129  $          4,565    $         115,728  $      9,119,966
                                                 =================  ==================  =================  =================

   December 31, 1998:
     Mortgage-backed securities:
       GNMA adjustable rate                      $      11,487,694  $         17,726    $          79,828  $     11,425,592
                                                 =================  ==================  =================  =================

<CAPTION>
                                                    Amortized                 Gross unrealized                   Fair
                                                       Cost               Gains              Losses             Value
                                                 -----------------  ------------------  -----------------  -----------------

HELD-TO-MATURITY SECURITIES:

   December 31, 1999:
     Mortgage-backed securities:
       FNMA participation certificates           $       1,515,252  $              --   $          15,801  $       1,499,451
       FHLMC participation certificates                  2,175,614                 --              21,716          2,153,898
       FHLMC adjustable rate                               969,828                 --              37,607            932,221
     US government agency bonds                          1,000,000                 --               4,146            995,854
     Corporate bonds                                       896,197                 --               7,877            888,320
     Trust preferred securities                            300,000             13,500               3,750            309,750
                                                 -----------------  ------------------  -----------------  -----------------

                                                 $       6,856,891  $          13,500   $          90,897  $       6,779,494
                                                 =================  ==================  =================  =================

   December 31, 1998:
     Mortgage-backed securities:
       FNMA participation certificates           $       2,860,553  $           1,020   $          10,234  $       2,851,339
       FHLMC participation certificates                  3,356,571              4,019               1,207          3,359,383
       FHLMC adjustable rate                             1,311,213                 --              13,994          1,297,219
                                                 -----------------  ------------------  -----------------  -----------------

                                                 $       7,528,337  $           5,039   $          25,435  $       7,507,941
                                                 =================  ==================  =================  =================

</TABLE>

                                    (Continued)

                                       F-13

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 3   SECURITIES  (CONTINUED)

The scheduled maturities of securities available-for-sale and held-to-maturity
at December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                                    Available-for-sale securities:         Held-to-maturity securities:
                                                 -------------------------------------  ------------------------------------
                                                    Amortized             Fair             Amortized             Fair
                                                       Cost               Value               Cost              Value
                                                 -----------------  ------------------  -----------------  -----------------
<S>                                              <C>                <C>                 <C>                <C>

Due in one year or less                          $              --  $              --   $       1,883,855  $       1,866,538
Due from one to five years                                      --                 --           3,703,208          3,670,985
Due from five to ten years                                      --                 --                  --                 --
Due after ten years                                      9,231,129          9,119,966           1,269,828          1,241,971
                                                 -----------------  ------------------  -----------------  -----------------

                                                 $       9,231,129  $       9,119,966   $       6,856,891  $       6,779,494
                                                 =================  ==================  =================  =================

</TABLE>

For purposes of the maturity table, mortgage-backed securities, which are not
due at a single maturity date, have been allocated over maturity groupings based
on the weighted-average contractual maturities of underlying collateral. The
underlying principal on mortgage-backed securities may be recovered earlier than
their scheduled contractual maturities because of principal prepayments.

Securities of $4,821,470 and $4,445,695 were pledged to secure public deposits
and for other purposes required or permitted by law at December 31, 1999 and
1998, respectively.

NOTE 4   LOANS HELD-FOR-SALE

The carrying amount of loans held-for-sale and their estimated fair value, as
determined on an aggregate basis, at December 31, follows:

<TABLE>
<CAPTION>

                                                                     Gross unrealized
                                                        --------------------------------------------
      December 31               Amortized cost                Gains                    Losses                 Fair value
------------------------      -------------------       -------------------      -------------------      -------------------
<S>                           <C>                       <C>                      <C>                      <C>

         1999                 $         183,850         $           3,325        $              --        $         187,175
         1998                           855,258                    14,519                       --                  869,777

</TABLE>

Proceeds from sale of loans held-for-sale were $19,375,329, $13,127,660 and
$8,769,996 for the years ended December 31, 1999, 1998 and 1997, respectively.
Gains of $302,701 and losses of $5,848 were recognized in 1999, while gains of
$223,083 and losses of $253 were recognized in 1998, and gains of $149,742 and
losses of $827 were recognized in 1997.




                                    (Continued)

                                       F-14

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 5   LOANS RECEIVABLE

The components of loans in the consolidated statements of financial condition
were as follows:

<TABLE>
<CAPTION>

                                                                                                   December 31
                                                                                      --------------------------------------
                                                                                            1999                1998
                                                                                      -----------------  -------------------
<S>                                                                                   <C>                <C>

First mortgage loans:
   Conventional                                                                       $      78,163,131  $      67,703,131
   FHA insured and VA guaranteed                                                              6,350,481          6,520,261
Consumer and installment loans                                                               17,472,395         13,560,182
Construction loans                                                                              569,176          1,329,806
Other                                                                                         3,664,735          1,949,673
                                                                                      -----------------  -------------------

                                                                                            106,219,918         91,063,053

Less:
   Loans in process                                                                             413,520            947,193
   Unearned discounts, deferred loan fees, and other                                            765,271            705,772
   Allowance for loan losses                                                                    864,317            600,984
                                                                                      -----------------  -------------------

                                                                                      $     104,176,810  $      88,809,104
                                                                                      =================  ===================

</TABLE>

An analysis of the changes in allowance for loan losses follows:

<TABLE>
<CAPTION>
                                                                                    Years ended December 31
                                                                    --------------------------------------------------------
                                                                          1999                1998               1997
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>

Balance at beginning of year                                        $        600,984    $        527,347   $        429,241

Loans charged-off                                                           (341,775)           (190,056)           (61,597)
Recoveries                                                                    31,288              25,413             41,786
                                                                    ------------------  -----------------  -----------------

       Net loans charged-off                                                (310,487)           (164,643)           (19,811)
Provision for loan losses charged to operations                              323,820             238,280            117,917
Acquired general valuation allowance                                         250,000                  --                 --
                                                                    ------------------  -----------------  -----------------

Balance at end of year                                              $        864,317    $        600,984   $        527,347
                                                                    ==================  =================  =================

</TABLE>

An analysis of the changes of loans to directors, executive officers, and major
stockholders follows:

<TABLE>
<CAPTION>

                                                                                    Years ended December 31
                                                                    --------------------------------------------------------
                                                                          1999                1998               1997
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>

Balance at beginning of year                                        $      2,272,616    $        984,434   $        315,605
Loans originated                                                             217,074           1,743,100            904,375
Loan principal payments and other reductions                              (1,189,405)           (454,918)          (235,546)
                                                                    ------------------  -----------------  -----------------

Balance at end of year                                              $      1,300,285    $      2,272,616   $        984,434
                                                                    ==================  =================  =================

</TABLE>


                                    (Continued)

                                       F-15

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 5   LOANS RECEIVABLE (CONTINUED)

The Bank had outstanding commitments to originate real estate loans at December
31, 1999 and 1998 of approximately $1,960,217 and $2,057,000, respectively.

The following table summarizes impaired loan information:

<TABLE>
<CAPTION>

                                                                                                  December 31,
                                                                                            1999                1998
                                                                                      -----------------  -------------------
<S>                                                                                   <C>                <C>

Recorded investment in impaired loans                                                 $         314,050  $         882,213
Average recorded investment in impaired loans                                                   598,132            121,143
Interest income on impaired loans                                                                    --                 --

</TABLE>


The Bank is not committed to lend additional funds to borrowers with
non-performing or renegotiated loans.



NOTE 6   PREMISES AND EQUIPMENT

Components of premises and equipment included in the consolidated statements of
financial condition at December 31, 1999 and 1998 were as follows:

<TABLE>
<CAPTION>

                                                                                            1999                1998
                                                                                      -----------------  -------------------
<S>                                                                                   <C>                <C>

Cost:
   Land                                                                               $         407,593  $         407,593
   Bank premises                                                                              2,178,932          2,176,599
   Furniture and equipment                                                                    1,707,290          1,441,315
   Automobiles                                                                                  101,076             95,385
                                                                                      -----------------  -------------------

       Total cost                                                                             4,394,891          4,120,892
Less accumulated depreciation                                                                 1,922,188          1,745,687
                                                                                      -----------------  -------------------

       Net book value                                                                 $       2,472,703  $       2,375,205
                                                                                      =================  ===================

</TABLE>

Certain Bank facilities and equipment are leased under various operating leases.
Rental expense was $27,893 in 1999, $18,942 in 1998 and $17,818 in 1997.

Future minimum rental commitments under noncancelable leases are:

<TABLE>

                  <S>                                                                 <C>
                  2000                                                                $          80,397
                  2001                                                                            9,832
                                                                                      -----------------

                                                                                      $          90,229
                                                                                      =================

</TABLE>



                                    (Continued)

                                       F-16

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 7   LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. All existing mortgage servicing
rights were sold in the last quarter of 1998 at which time the Bank realized a
gain of $838,143. During 1999, the Bank sold loans totaling approximately
$7,646,000 and retained the servicing on such loans. The unpaid balances of
loans serviced for others at December 31 are summarized as follows:

<TABLE>
<CAPTION>

                                                                          1999                1998               1997
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>

Mortgage loans underlying pass through certificates:

  GNMA                                                              $              --   $              --  $       2,630,780
  FHLMC                                                                            --                  --          5,115,155
Mortgage loan portfolios serviced for:

  FNMA                                                                      7,313,948                  --         33,371,117
  Other investors                                                                  --                  --          1,252,871
                                                                    ------------------  -----------------  -----------------

                                                                    $       7,313,948   $              --  $      42,369,923
                                                                    ==================  =================  =================

</TABLE>

Custodial escrow balances maintained in connection with loan servicing were
$54,100 and $0 at December 31, 1999 and 1998, respectively.

Mortgage servicing rights retained on loans sold of $101,656 and $129,632 were
capitalized in 1999 and 1998, respectively.

Following is an analysis of the aggregate changes in servicing rights asset
balances for the years 1999, 1998 and 1997.

<TABLE>

<S>                                                                                                        <C>

Balance, January 1, 1997                                                                                   $        345,554
Originated mortgage servicing rights                                                                                 55,122
Amortization*                                                                                                       (69,380)
                                                                                                           -----------------

Balance, January 1, 1998                                                                                            331,296
Originated mortgage servicing rights                                                                                129,632
Amortization*                                                                                                       (95,166)
Originated mortgage servicing rights sold                                                                          (365,762)
                                                                                                           -----------------

Balance, January 1, 1999                                                                                                  0
Originated mortgage servicing rights                                                                                101,656
Amortization*                                                                                                       (17,919)
                                                                                                           -----------------

Balance, December 31, 1999                                                                                 $         83,737
                                                                                                           =================

</TABLE>

*Includes valuation adjustments, if any, due to changes in prepayment
 assumptions

NOTE 8   CONCENTRATION OF CREDIT RISK

The Bank invests available funds in mortgage-backed securities and
interest-bearing deposits and maintains funds in other depository institutions,
including the FHLB of Dallas. Generally, the Bank's investments in U.S.
Government securities and mortgage-backed securities are recorded in book entry
form only, and the Bank does


                                    (Continued)

                                       F-17

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 8   CONCENTRATION OF CREDIT RISK (CONTINUED)

not take possession of the actual investment certificates. The Bank's investment
in interest-bearing deposits, excluding those with the FHLB of Dallas, is
normally limited to amounts covered by applicable Federal Deposit Insurance
Corporation (FDIC) limits. As of December 31, 1999, the Bank has investments in
interest-bearing deposits in excess of FDIC limits totaling $500,000.

The Bank has two full service bank locations in Clovis, New Mexico, one in
Portales, New Mexico and another in Gallup, New Mexico. The Bank also has a loan
production office in Rio Rancho, New Mexico, near Albuquerque. The Bank's
primary service area includes the New Mexico counties of Bernalillo, Cibola,
Curry, De Baca, Los Alamos, McKinley, Roosevelt, Sandoval, Santa Fe, Torrance,
Valencia, and the Texas counties of Parmer and Bailey.

The Bank has historically been a major lender of mortgage loans in the Eastern
New Mexico area and is dedicated to the promotion of thrift through the
solicitation of savings accounts. The Bank's five offices primarily service the
Curry, McKinley, and Roosevelt counties of New Mexico and the adjoining West
Texas counties. The Bank offers a comprehensive range of credit and depository
services, while conducting business in a manner based on financial stability,
service, and community involvement.

The Bank grants consumer, commercial business, commercial real estate, and
residential loans to customers in its trade area. Generally, the loans are
secured by real estate; however, the Bank does make consumer loans and
commercial loans. The loans are expected to be repaid from the cash flow of the
borrowers. Although the Bank has a diversified loan portfolio, a substantial
portion of its debtors' ability to honor their contracts is dependent upon the
general economic conditions of the region.

The Bank's collateral policy is to secure all real estate loans by mortgages,
place first liens on available assets underlying commercial loans, and perfect
purchase money liens on consumer loan products. The Bank grants unsecured loans
to its customers.

NOTE 9   DEPOSITS

The composition of deposits and the effective rates of interest at December 31
were as follows:

<TABLE>
<CAPTION>

                                                                                              1999               1998
                                                                                        -----------------  -----------------
<S>                                                                                     <C>                <C>

Checking accounts - noninterest bearing                                                 $       8,032,571  $       4,474,107
Savings accounts (1999 - 2.00%; 1998 - 2.25%)                                                   7,003,357          6,338,225
Insured Money Market accounts (1999 - 2.30%-5.00%; 1998 - 2.55%-4.75%)                         24,089,495         18,754,049
Transaction accounts (1999 - .01%-2.30%; 1998 -.50%-2.70%)                                      9,199,888          7,430,775
Certificates of deposit:
   2.01% - 3.00%                                                                                  494,700             67,132
   3.01% - 4:00%                                                                                  820,533            779,096
   4.01% - 5.00%                                                                               56,017,550         39,958,157
   5.01% - 6.00%                                                                               13,362,006         23,463,691
   6.01% - 7.00%                                                                                3,328,592          3,332,233
   7.01% - 8.00%                                                                                  131,046            447,685
                                                                                        -----------------  -----------------

                                                                                        $     122,479,738  $     105,045,150
                                                                                        =================  =================

</TABLE>


                                    (Continued)

                                       F-18

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 9   DEPOSITS (CONTINUED)

At December 31, 1999, the scheduled maturities of certificates of deposits were
as follows:

<TABLE>
<CAPTION>

                                                                                             Amount        Percent of total
                                                                                        -----------------  -----------------
<S>                                                                                     <C>                <C>

2000                                                                                    $      59,910,250            80.8%
2001                                                                                            7,141,355             9.6
2002                                                                                            4,642,998             6.3
2003                                                                                            1,653,656             2.2
2004                                                                                              806,168             1.1
                                                                                        -----------------  -----------------

                                                                                        $      74,154,427           100.0%
                                                                                        =================  =================

</TABLE>

At December 31, 1999 and 1998, individual certificates of deposit in excess of
$100,000 amounted to $5,657,798 and $6,034,088, respectively.

Interest expense on deposits for the years ended December 31 was as follows:

<TABLE>
<CAPTION>

                                                                          1999                1998               1997
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>

Savings accounts                                                    $        134,674    $        160,639   $        188,337
Money Market accounts                                                        732,901             499,684            487,209
Transaction accounts                                                          62,440             234,631             88,385
Certificates of Deposit                                                    3,398,004           3,365,430          3,372,269
                                                                    ------------------  -----------------  -----------------

                                                                    $      4,328,019    $      4,260,384   $      4,136,200
                                                                    ==================  =================  =================

</TABLE>

At December 31, 1999 and 1998, the Bank had accrued interest payable on
certificates of deposit totaling $128,265 and $155,094, respectively. The
weighted average interest rate on deposits was 3.96%, 4.27%, and 4.27% for the
years ended December 31, 1999, 1998 and 1997, respectively.

NOTE 10  OTHER BORROWED FUNDS

Each FHLB is authorized to make advances to its members, subject to such
regulations and limitations as the FHLB may prescribe. At December 31, 1999,
advances from FHLB of $7,250,000 were collateralized by mortgage loans held by
the Bank. Interest on these advances accrues at rates ranging between 5.33% and
5.77% and the advances mature in 2000 and 2003. The Bank is also required to
maintain stock ownership in the FHLB of at least a minimum percentage of its
loans. At December 31, 1999, the Bank's investment in stock of the FHLB was
adequate. At December 31, 1998, advances from the FHLB of $5,750,000 were
collateralized by investment securities totaling $7,137,000.

At December 31, 1999 and 1998, the Company had lines of credit totaling $260,000
and $200,000 respectively, from other banks. The lines of credit bear market
rates of interest and borrowings thereunder, if any, are to be used for general
Company purposes. These borrowings mature between August 11, 2000 and June 5,
2001. There were no amounts outstanding under these arrangements at December 31,
1999 and 1998.


                                    (Continued)

                                       F-19

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 11  INCOME TAXES

At December 31, 1999, the Company had remaining net operating loss ("NOL")
carryforwards of approximately $4,500,000 for federal income tax purposes which
expire in varying amounts through 2011. In addition, the alternative minimum tax
("AMT") NOL carryforward and AMT credit carryforward were approximately
$5,465,000 and $115,000, respectively, which expire in varying amounts through
2011. Investment tax credit carryforwards of approximately $38,000 expire in
varying amounts through 2005.

Section 382 of the Internal Revenue Code ("Code") provides that the
aforementioned tax NOL carryforwards would be subjected to an annual limitation
should there be a change of over 50% in the stock ownership of the Company
during any three year testing period. Due to the fact that the Company has a tax
NOL carryforward, it is required to report changes in ownership of 5% or greater
of stockholders annually to the Internal Revenue Service. The statute and
applicable Treasury regulations are extremely complex. The Company believes that
no change of ownership as defined in applicable Section 382 regulations occurred
through the three-year testing period ended December 31, 1999. However, if such
a change in ownership occurs, the annual use of the tax NOL carryforwards would
be subject to an annual limitation.

Stockholders' equity at December 31, 1999 includes approximately $2,100,000 for
which no provision for Federal income tax has been accrued. These amounts
represent allocation of income to bad debt reserves for tax purposes only.
Reduction of amounts so allocated for purposes other than losses on loans will
create income for tax purposes only, which will be subject to the then current
corporate tax rate.

The Company, the Bank and FEDCO are parties to a tax sharing agreement. The
general provisions of the agreement require the Bank and FEDCO to pay the
Company on the tax due date the taxes due calculated for each entity. The
Company in turn calculates the taxes due on a consolidated basis and forwards
the required payments to the taxing authorities.

The reasons for the differences between the statutory federal income tax rates
and the effective tax rates for the years ended December 31 are summarized as
follows:

<TABLE>
<CAPTION>

                                                                          1999                1998               1997
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>

Statutory rates                                                            34.00 %             34.00 %            34.00 %
Effect of net operating loss                                              (34.00)                --              (34.00)
Deferred tax asset valuation allowance adjustment                         (20.91)                --             (315.86)
Other                                                                       --                 (2.71)               --
                                                                    ------------------  -----------------  -----------------

                                                                          (20.91)%             31.29%           (315.86)%
                                                                    ==================  =================  =================

</TABLE>






                                    (Continued)

                                       F-20

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 11  INCOME TAXES (CONTINUED)

The tax effect of significant temporary differences representing deferred tax
assets and liabilities and changes thereon were as follows:
<TABLE>
<CAPTION>
                                December 31,           Net            December 31,            Net            December 31,
                                    1997              change              1998               change              1999
                              -----------------  -----------------  -----------------   -----------------  -----------------
<S>                           <C>                <C>                <C>                 <C>                <C>
OPERATIONAL ITEMS:
  Deferred taxes assets:
   Net operating loss
    carryforward              $       2,091,000  $        (381,000) $       1,710,000   $        (180,000) $       1,530,000
   Capital loss
    carryforward                        319,000           (150,000)           169,000            (169,000)                --
   Bad debt deduction and
    deferred loan fees                  165,000             13,000            178,000               6,000            184,000
   Other                                  9,000             (9,000)                --               4,000              4,000
                              -----------------                     ------------------                     -----------------

                                      2,584,000                             2,057,000                              1,718,000
   Valuation allowance                 (635,000)                --           (635,000)            635,000                 --
                              -----------------  -----------------  ------------------  -----------------  -----------------

    Deferred tax assets               1,949,000           (527,000)         1,422,000             296,000          1,718,000
                              -----------------  -----------------  ------------------  -----------------  -----------------
  Deferred tax liabilities:
   Depreciation                        (229,000)            (8,000)          (237,000)            (12,000)          (249,000)
   FHLB stock                          (253,000)           126,000           (127,000)            (18,000)          (145,000)
   Originated mortgage
    servicing rights                    (66,000)            66,000                 --             (28,000)           (28,000)
   Other                                     --             (4,000)            (4,000)              4,000                 --
                              -----------------  -----------------  ------------------  -----------------  -----------------
    Deferred tax
     liabilities                       (548,000)           180,000           (368,000)            (54,000)          (422,000)
                              -----------------  -----------------  ------------------  -----------------  -----------------

    Net deferred tax asset    $       1,401,000  $        (347,000) $       1,054,000   $         242,000  $       1,296,000
                              =================  =================  ==================  =================  =================
EQUITY ITEMS:
  Deferred tax assets:
   Investments                $           1,000  $          20,000  $          21,000   $          17,000  $          38,000
                              -----------------                     ------------------                     -----------------

                                          1,000                                21,000                                 38,000
   Valuation allowance                       --                 --                 --                  --                 --
                              -----------------  -----------------  ------------------  -----------------  -----------------

    Deferred tax assets                   1,000             20,000             21,000              17,000             38,000

  Deferred tax liabilities                   --                 --                 --                  --                 --
                              -----------------  -----------------  ------------------  -----------------  -----------------

    Net deferred tax asset    $           1,000  $          20,000  $          21,000   $          17,000  $          38,000
                              =================  =================  ==================  =================  =================
</TABLE>

During 1999 and 1997, the Company changed its estimate with respect to the
future benefits of their NOL carryforwards and, accordingly, reduced the
related valuation allowance. To the extent the valuation allowance was
reduced, the related tax benefit was credited to income.

                                  (Continued)

                                      F-21
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 12  REGULATORY MATTERS

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

In accordance with Office of Thrift Supervision ("OTS") regulations, the Bank
must have: (1) core capital equal to 4% of adjusted total assets; (2)
tangible capital equal to 1.5% of adjusted total assets; and (3) total
capital equal to 8.0% of risk-weighted assets, which includes off-balance
sheet items.

The following table is a reconciliation of the Bank's capital for regulatory
purposes at December 31, 1999 as reported to the OTS.
<TABLE>
<CAPTION>
                                                                         Tier 1-            Tier 1-             Total
                                                                          Core             Risk-based         Risk-based
                                                                         Capital            Capital            Capital
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>
Total regulatory assets                                             $    141,792,542
Net unrealized depreciation on
   available-for-sale securities, net                                         73,368
Less intangible assets disallowed for
   regulatory purposes                                                    (2,950,918)
                                                                    ------------------

Adjusted regulatory total assets                                    $    138,914,992
                                                                    ==================
Risk-based assets                                                                       $    88,992,000    $    88,992,000
                                                                                        =================  =================

Stockholders' equity                                                $     11,301,690    $    11,301,690    $    11,301,690
Net unrealized depreciation on
   available-for-sale securities, net                                         73,368             73,368             73,368
General valuation allowance                                                       --                 --            864,317
Less intangible assets disallowed for
   regulatory purposes                                                    (2,950,918)        (2,950,918)        (2,950,918)
                                                                    ------------------  -----------------  -----------------

Regulatory capital                                                         8,424,140          8,424,140          9,288,457
Regulatory capital required to be "well capitalized"                       6,945,750          5,339,520          8,899,200
                                                                    ------------------  -----------------  -----------------

Excess regulatory capital                                           $      1,478,390    $     3,084,620    $       389,257
                                                                    ==================  =================  =================

Bank's capital to adjusted regulatory assets                                   6.06%
                                                                    ==================

Bank's capital to risk-based assets                                                                9.47%             10.44%
                                                                                        =================  =================
</TABLE>

                                  (Continued)

                                      F-22
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 12  REGULATORY MATTERS (CONTINUED)

The Bank was subject to an Amended Prompt Corrective Action Directive dated
August 1994 and a Supervisory Agreement dated June 1996 mainly directed to
the improvement of capital ratios, plan and asset/liability management
issues. These agreements were terminated by the OTS in November 1997. The
most recent notification from the OTS categorized the Bank as "well
capitalized" under the regulatory framework for prompt corrective action. To
remain categorized as "well capitalized", the Bank would have to maintain
minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as
disclosed in the table below. There are no conditions or events since the
most recent notification that management believes have changed the Bank's
prompt corrective action category.
<TABLE>
<CAPTION>
                                                                                                   To Be Well Capitalized
                                                                        For Capital                Under Prompt Corrective
                                          Actual                     Adequacy Purposes                Action Provisions
                               ------------------------------  -------------------------------  ------------------------------
At December 31, 1999:             Amount           Ratio          Amount            Ratio          Amount           Ratio
-----------------------------  --------------  --------------  --------------   --------------  --------------  --------------
<S>                            <C>             <C>             <C>              <C>             <C>             <C>
Total Capital
  (to risk weighted assets)    $   9,288,457       10.44%      $   7,119,360         8.00%      $   8,899,200      10.00%
Tier 1 Capital
  (to risk weighted assets)        8,424,140        9.47%          3,559,680         4.00%          5,339,520       6.00%
Tier 1 Capital
  (to regulatory assets)           8,424,140        6.06%          5,556,600         4.00%          6,945,750       5.00%

At December 31, 1998:
-----------------------------

Total Capital
  (to risk weighted assets)    $   9,978,824       14.70%      $   5,430,640         8.00%      $   6,788,300      10.00%
Tier 1 Capital
  (to risk weighted assets)        8,377,840       13.81%          2,715,320         4.00%          4,072,980       6.00%
Tier 1 Capital
  (to regulatory assets)           9,377,840        7.73%          4,850,885         4.00%          6,063,607       5.00%
</TABLE>


OTS regulations impose various restrictions on the Bank with respect to its
ability to pay dividends to the Company.

                                  (Continued)

                                      F-23
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 13  COMMON STOCK, STOCK OPTION PLANS AND DIRECTOR RETAINER PLAN

On October 30, 1997, the Company declared a 2% stock dividend on the
Company's common stock for stockholders of record on October 31, 1997. The
dividend was paid in December 1997. The dividend was charged to accumulated
deficit in the amount of $195,201, including a $1,204 cash payment for
dividends on fractional shares. Average shares outstanding and all per share
amounts included in the consolidated financial statements and notes are based
on the increased number of shares giving effect to the stock dividend. A cash
dividend of $.05 per share was paid on January 5, 1999 to shareholders of
record as of December 31, 1998.

Under the 1986 Stock Option and Incentive Plan ("1986 Plan"), as amended, the
Bank could grant Incentive and Non-Incentive Stock Options, as well as Stock
Appreciation Rights ("SARs") to officers, directors, key employees and other
persons up to a maximum of 68,250 shares of the Bank's common stock. The 1986
Plan was administered by a committee of the Board of Directors and was
terminated in August 1996. Under the provisions of the 1986 Plan, stock
options had terms that were determined by the committee, but not to exceed
ten years from the date of grant. However, in the case of optionees who owned
in excess of 10% of the outstanding common stock of the Bank, the term of the
stock option could not exceed five years. The aggregate fair market value of
the options for which any persons could be granted in any calendar year could
not exceed $100,000. During 1997, 544 shares of common stock were issued in
connection with exercises of stock options awarded under this plan, with
proceeds to the Company of $2,992. During 1998, 12,519 shares of common stock
were issued in connection with exercise of options awarded under this plan
with proceeds to the Company of $68,855. After the 1998 exercises, there were
no remaining options outstanding under the 1986 Plan.

In 1997, the stockholders approved the 1997 Stock Option and Incentive Plan
("1997 Plan") to provide a means for the Company to attract and retain
officers, directors and employees. Under the terms of the 1997 Plan, the
aggregate number of shares of stock to be issued pursuant to the exercise of
all options granted under the 1997 Plan may not exceed 183,600. No options
may be granted under the 1997 Plan after ten years from the date of the
adoption of the 1997 Plan. In addition, the 1997 Plan also provides for the
granting of Stock Appreciation Rights ("SARs"). During 1997, options to
purchase 165,240 shares were granted all of which were immediately
exercisable. No options were awarded under the 1997 Plan during 1998. During
1999, options to purchase 12,240 shares were granted all of which were
immediately exercisable. No SARs have been awarded as of December 31, 1999.
During 1998, 7,100 shares of common stock were issued in connection with
exercise of options under the 1997 Plan with proceeds to the Company of
$39,938. During 1999, 6,600 shares of common stock were issued in connection
with exercise of options under the 1997 Plan with proceeds to the Company of
$37,125. Previously awarded stock options under the 1997 Plan to purchase
4,080 shares were forfeited during 1999, leaving these shares available for
reissuance. At December 31, 1999, options to purchase 10,200 shares of the
Company's common stock were available for issuance under the 1997 Plan.

                                  (Continued)

                                      F-24
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 13  COMMON STOCK, STOCK OPTION PLANS AND DIRECTOR RETAINER PLAN (CONTINUED)

A summary of the status of the Company's stock options as of December 31,
1999, 1998 and 1997, and the changes for the years then ended is presented
below:
<TABLE>
<CAPTION>
                                                                    For the year ended December
                                  -----------------------------------------------------------------------------------------------
                                                1999                            1998                            1997
                                  -------------------------------  ------------------------------  ------------------------------
                                                     Weighted                         Weighted                        Weighted
                                                     Average                          Average                         Average
                                                     Exercise                         Exercise                        Exercise
                                      Shares          Price            Shares          Price           Shares          Price
<S>                                <C>            <C>              <C>             <C>             <C>             <C>
Options outstanding,
  beginning of year                    158,140    $       6.902         177,759    $       6.752        13,063     $     5.500
Granted                                 12,240            7.750              --             --         165,240           6.847
Exercised                               (6,600)           5.625         (19,619)           5.545          (544)          5.500
Expired                                 (4,080)           8.375              --             --              --              --
                                  --------------                   --------------                  --------------
Options outstanding, end
  of year                              159,700    $       6.982         158,140    $       6.902       177,759     $     6.752
                                  ==============  ===============  ==============  ==============  ==============  ==============
Weighted average fair
  market value of options
  granted during the year                         $       4.480                    $      N/A                      $     2.540
                                                =================                  ==============                  ==============
</TABLE>

The following table summarizes information about options outstanding as of
December 31, 1999:
<TABLE>
<CAPTION>
                                                             Options Outstanding and Exercisable
                                  ------------------------------------------------------------------------------------------
                                           Number                   Weighted Average                   Weighted
                                       Outstanding and            Remaining Contractual            Average Exercise
   Range of Exercise Price               Exercisable                 Life (In Years)                     Price
-------------------------------   -------------------------   ------------------------------   -----------------------------
<S>                               <C>                         <C>                              <C>
$5.625 to $8.375                                159,700                      7.76                         $   6.982
</TABLE>

The Company accounts for compensation costs incurred in connection with the
granting of stock options using the intrinsic value method prescribed in APB
Opinion No. 25. As such, no compensation expense was recorded in connection
with the awarding of stock options during 1999 or 1997 as the exercise price
was not below the market price of the Company's common stock at the
respective dates of grant. No options were awarded during 1998. In 1995, the
FASB issued SFAS No. 123, ACCOUNTING FOR STOCK BASED COMPENSATION, which, if
fully adopted by the Company, would have changed the method the Company
applies in recognizing costs associated with the granting of stock options.
Adoption of the cost recognition provisions of SFAS No. 123 was optional and
the Company determined not to elect these provisions. However, pro-forma
disclosure of net income and earnings per share as if the Company adopted the
cost recognition provisions of SFAS No. 123 are required and are presented
below.

                                  (Continued)

                                      F-25
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 13  COMMON STOCK, STOCK OPTION PLANS AND DIRECTOR RETAINER PLAN (CONTINUED)

The fair value of each option granted during 1999 and 1997 was estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
                                                                                              1999               1997
                                                                                        -----------------  -----------------
<S>                                                                                     <C>                <C>
Dividend yield                                                                                   -- %               -- %
Expected volatility                                                                            61.35%             30.73%
Risk-fee interest rate                                                                          5.89%              6.16%
Expected lives (in years)                                                                       5                  5
</TABLE>

Had compensation cost for all grants of stock options during 1999 and 1997 been
determined based on the fair value at the date of grant, reported net income and
earnings per share would have been adjusted to the pro-forma amounts shown
below:
<TABLE>
<CAPTION>
                                                                                              1999               1997
                                                                                        -----------------  -----------------
<S>                                                                                     <C>                <C>
Net income
  As reported                                                                           $       1,398,214  $       1,595,709
  Pro-forma                                                                                     1,362,050          1,319,376

Earnings per share
  As reported                                                                           $            1.13  $            1.40
  Pro-forma                                                                                          1.10               1.16

Earnings per share-assuming dilution
  As reported                                                                           $            1.10  $            1.37
  Pro-forma                                                                                          1.08               1.13
</TABLE>

During 1997, the Company adopted the Non-Employee Director Retainer Plan
("Retainer Plan") which provides for the payment of all or a portion of the
directors fees in shares of common stock of the Company. The number of shares is
determined based on the fair market value of the Bank's stock during the month
the fee is payable.

The Retainer Plan defers the recognition of compensation by the directors by
deferring the issuance of common stock to the director until the director leaves
the board. A total of 50,000 shares of common stock have been reserved for
issuance under the Retainer Plan. During 1997, $10,500 of directors fees,
representing 1,579 shares of common stock to be issued, were reserved under the
terms of the Retainer Plan. During 1998, $18,000 of directors fees, representing
1,736 shares of common stock to be issued, were reserved under the terms of the
Retainer Plan. During 1999, $18,500 of director fees, representing 2,436 shares
of common stock to be issued, were reserved under the terms of the Retainer
Plan. As of December 31, 1999, 461 of these shares have been issued.

                                  (Continued)

                                      F-26
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 14  EMPLOYEE BENEFIT PLANS

The Company and the Bank have a profit sharing/employee stock ownership plan
for which substantially all employees are eligible. Contributions, when made,
may be made in the form of cash or in common stock of the Company.
Contribution amounts are based upon employee's compensation, but may not
exceed maximum deductible limits for federal income tax purposes. Employer
contributions to the employee stock ownership plan of $21,004, $15,754, and
$11,637, were made in 1999, 1998 and 1997, respectively.

Effective January 1, 1989, this plan was amended to include a 401(k)
before-tax salary deferral feature. Employees may elect to contribute to the
plan and such contributions may be matched by the Bank as a percentage of
each employee's contribution. Employer contributions made to the 401(k) plan
for the years ended December 31, 1999, 1998 and 1997 totaled $17,089,
$20,161, and $15,849, respectively.

In June 1998, the Bank established an executive savings plan to provide
additional benefits for select highly compensated management employees of the
Bank as a means for participants to defer a portion of their compensation for
the future. Participants may contribute to the plan a percentage of their
basic compensation varying from 1% to 12%. The Bank may make discretionary
matching contributions to the plan. Salary deferrals and matching
contributions, if any, are funded into a Rabbi Trust which are available to
the general creditors of the Bank and, as a result, are recorded on the books
and records of the Company. Employer contributions made to the executive
savings plan for the years ended December 31, 1999 and 1998, totaled $30,921
and $7,563, respectively. All salary deferral contributions are invested in
the Company's common stock.

NOTE 15  NET INCOME PER SHARE

Basic net income per share has been computed by dividing net income available
to common stockholders for the period by the weighted average number of
common shares outstanding during the period. Diluted net income per share has
been computed by dividing net income available to common stockholders for the
period by the weighted average number of common shares outstanding during the
period adjusted for the assumed exercise of outstanding stock options and
other contingently issuable shares of common stock. Net income for basic and
diluted earnings per share are the same, as there are no contingently
issuable shares of stock whose issuance would have impacted net income.

A reconciliation between basic and diluted weighted average common shares
outstanding follows:
<TABLE>
<CAPTION>
                                                                          1999                1998               1997
                                                                    ------------------  -----------------  -----------------
<S>                                                                 <C>                 <C>                <C>
Weighted average common
     shares - Basic*                                                      1,240,328           1,224,005           1,141,962

Plus effect of dilutive securities:
  Stock Options                                                              22,763              63,418              24,066
  Shares held by Rabbi Trust                                                  3,404                 366                 --
                                                                    ------------------  -----------------  -----------------
Weighted average common
     shares - Assuming Dilution                                           1,266,495           1,287,789           1,166,028
                                                                    ==================  =================  =================
</TABLE>

*Includes shares awarded to directors under the Non-Employee Director
Retainer Plan

                                  (Continued)

                                      F-27
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 16  FINANCIAL INSTRUMENTS

The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers
and to reduce its own exposure to fluctuation in interest rates. These
financial instruments include commitments to extend credit, standby letters
of credit, and financial guarantees. These instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated statements of financial position. The contract
or notional amounts of these instruments reflect the extent of involvement
the Bank has in particular classes of financial instruments. The Bank uses
the same credit policies in making commitments and conditional obligations as
it does for on-balance sheet instruments.

At December 31, 1999, unfunded credit commitments are as follows:
<TABLE>
        <S>                                               <C>
        Commitments to extend residential loans           $   1,960,217
        Lines of credit                                   $   7,728,702
        Credit cards                                      $   1,298,704
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Some of the commitments are
expected to expire without being drawn upon. The total commitment amounts do
not necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Bank upon extension of credit, is based
on management's credit evaluation of the customers.

Standby letters of credit and financial guarantees written are conditional
commitments issued by the Bank to guarantee the performance of a customer to
a third party. Currently, letters of credit are not extended beyond one year.
The credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loan facilities to customers. The Bank holds
collateral and personal guarantees as deemed necessary. At December 31, 1999,
the Bank had $49,500 in standby letters of credit outstanding.

At December 31, 1999, the Bank had no open interest rate swaps, futures,
options, or forward contracts.

At December 31, 1999 and 1998, the Bank had $394,067 and $2,912,495,
respectively, of commitments to sell newly-originated single family
residential loans.

                                  (Continued)

                                      F-28
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 16  FINANCIAL INSTRUMENTS (CONTINUED)

SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires
disclosure of fair value information about financial instruments, whether or
not recognized on the balance sheet, for which it is practicable to estimate
that value. Quoted market prices, if available, are utilized as an estimate
of the fair value of financial instruments. Because no quoted market prices
exist for a part of the Bank's financial instruments, the fair value of such
instruments has been derived based on management's assumptions with respect
to future economic conditions, the amount and timing of future cash flows and
estimated discount rates. Different assumptions could significantly affect
these estimates. Accordingly, the estimates provided herein do not
necessarily indicate amounts which could be realized in a current exchange.
Further, as it is management's intent to hold a portion of its financial
instruments to maturity, it is not probable that the fair values shown below
will be realized in a current transaction. In addition, fair value estimates
are based solely on existing on-and off balance sheet financial instruments
without attempting to estimate the value of anticipated future business and
the value of assets and liabilities that are not considered financial
instruments. Examples would include portfolios of loans serviced for others,
investments in real estate, premises and equipment, and deferred tax assets.

Because of the wide range of permissible valuation techniques and the
numerous estimates which must be made, it may be difficult to make reasonable
comparisons of the fair value information to that of other financial
institutions. The aggregate fair value amount should in no way be construed
as representative of the underlying value of the Company and/or the Bank.

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practical to estimate
that value:

CASH AND CASH EQUIVALENTS - The carrying amount for cash and cash equivalents
approximates the assets' fair value because of the short maturity of those
instruments.

SECURITIES - The fair value of long-term investments such as U.S. Government
and agency obligations and mortgage-backed securities is estimated based on
bid quotations received from securities dealers and the FHLB.

LOANS RECEIVABLE - Fair values are estimated for portfolios of loans with
similar financial characteristics. Mortgage loans are segregated by type,
including but not limited to residential, commercial and construction.
Consumer loans are segregated by type, including but not limited to home
improvement loans, automobile loans, loans secured by deposits and secured
and unsecured personal loans. Each loan category may be segmented, as
appropriate, into fixed and adjustable interest rate terms, ranges of
interest rates, performing and non-performing, and repricing frequency.

For certain homogeneous categories of loans, such as some residential
mortgages, fair value is estimated using the quoted market prices for
securities backed by similar loans, adjusted for differences in loan
characteristics. The fair values of other types of loans are estimated by
discounting the future scheduled and unscheduled cash flows using the current
rates at which similar loans would be made to borrowers with similar credit
ratings and for the same remaining maturities. Unscheduled cash flows take
the form of estimated prepayments and may be based upon historical experience
as well as anticipated experience derived from current and prospective
economic and interest rate environments. For certain types of loans,
anticipated prepayment experience exists in published tables from securities
dealers.

                                  (Continued)

                                      F-29
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 16  FINANCIAL INSTRUMENTS (CONTINUED)

The fair value of significant non-performing mortgage loans is based on
estimated value of the collateral. Where appraisals are not available,
estimated cash flows are discounted using a rate commensurate with the credit
risk associated with those cash flows. Assumptions regarding credit risk,
cash flows and discount rates are judgementally determined using available
market information and specific borrower information. The fair value of
non-performing consumer loans is based on historical experience with such
loans.

The fair value of loans held-for-sale is estimated based on outstanding
commitments from investors or current market prices for similar loans.

FEDERAL HOME LOAN BANK STOCK - The fair value of stock in the FHLB is
estimated to be equal to its carrying amount given it is not a publicly
traded equity security, it has an adjustable dividend rate, and all
transactions in the stock are executed at the stated par value.

DEPOSITS AND ADVANCES FROM BORROWERS FOR TAXES AND INSURANCE - The fair value
of deposits with no stated maturity, such as interest-bearing or
non-interest-bearing checking accounts, savings accounts, money market
accounts and advances from borrowers for taxes and insurance is equal to the
amount payable upon demand. The fair value of certificates of deposit is
based on the lower of redemption or discounted value of contractual cash
flows. Discount rates for certificates of deposit are estimated using current
market rates.

FEDERAL HOME LOAN BANK ADVANCES - The estimated fair value of the FHLB
advances is normally based upon the discounted value of the differences
between contractual interest rates and current market rates for similar
agreements. However, the estimated fair value is the same as the carrying
value due to the short-term nature of the advances.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - The fair value of commitments to
extend credit is estimated using the fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreements
and the present creditworthiness of the counterparties. For fixed-rate loan
commitments, fair value also considers the difference between current levels
of interest rates and the committed rates. The fair value of guarantees and
letters of credit is based on fees currently charged for similar agreements
or on the estimated cost to terminate them or otherwise settle the
obligations with the counterparties at the reporting date.

The fair value of off-balance sheet financial instruments is estimated to
equal the carrying amount at December 31, 1999 and 1998.

NON-FINANCIAL INSTRUMENTS - SFAS No. 107 does not permit financial
institutions to take into account the value of long-term relationships with
depositors, commonly known as core deposit intangibles, when estimating the
fair value of deposit liabilities. These intangibles are considered to be
separate intangible assets that are not financial instruments. Nonetheless,
financial institutions' core deposits have typically traded at premiums to
their book values under both historical and current market conditions.

Likewise, SFAS No. 107 does not permit financial institutions to take into
account the value of the cash flows and income stream derived from its
portfolio of loans serviced for others.

                                  (Continued)

                                      F-30
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 16  FINANCIAL INSTRUMENTS (CONTINUED)

The estimated fair values of the Bank's financial instruments are shown below:

<TABLE>
<CAPTION>

                                                               December 31, 1999                  December 31, 1998
                                                        ---------------------------------  ---------------------------------
                                                            Carrying      Estimated fair      Carrying        Estimated fair
                                                             amount           value            amount             value
                                                        ---------------- ----------------  ----------------  ---------------
                                                                                   (In Thousands)
<S>                                                     <C>              <C>               <C>               <C>

Financial assets:
   Cash and cash equivalents                            $         7,875  $         7,875   $         5,233   $         5,233
   Certificates of deposit                                        5,092            5,137             2,590             2,602
   Securities available-for-sale                                  9,120            9,120            11,426            11,426
   Securities held-to-maturity                                    6,857            6,779             7,528             7,508
   Loans held-for-sale                                              184              187               855               870

   Loans receivable                                             104,177          103,353            88,809            91,045
   Accrued interest receivable                                      869              869               635               635
   FHLB stock                                                       880              880               790               790

Financial liabilities:
   Deposits                                                     122,480          114,105           105,045           101,535
   Accrued interest payable                                         665              665               686               686
   Advance payments by borrowers for taxes and
     insurance                                                      100              100               362               362
   FHLB advances                                                  7,250            7,209             5,750             5,778

</TABLE>

The deferred income amounts arising from unrecognized financial instruments are
not significant. Also, these financial instruments have contractual interest
rates at or above current market rates. Therefore, no market value disclosure is
provided for these items.



NOTE 17  COMMITMENTS AND CONTINGENCIES

The Company and its subsidiary are from time to time parties to various legal
actions arising in the normal course of business. Management believes that there
is no proceeding threatened or pending against the Company or its subsidiary
which, if determined adversely, would have a material adverse effect on the
financial condition or results of operations of the Company.






                                    (Continued)

                                       F-31

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 17  COMMITMENTS AND CONTINGENCIES (CONTINUED)

The Company is not aware of any significant problems that have arisen as a
result of the change in century on January 1, 2000. The Company may still be
exposed to risks associated with Year 2000 dating problems. This problem can
affect computer software and hardware; transactions with customers, vendors and
other entities; and equipment dependent on microchips. The Company recognizes
that Year 2000 dating problems pose a risk beyond January 1, 2000, as errors may
not become evident until after that date. The Company has performed the
remediation steps it believes necessary to address Year 2000 dating problems at
a total cost of less than $50,000 as of December 31, 1999. It is not possible
for any entity to guarantee the results of its own remediation efforts or to
accurately predict the impact of Year 2000 dating problems on third parties with
which the Company does business. If remediation efforts of the Company or third
parties with which it does business are not successful, it is possible the Year
2000 dating problem could negatively impact the Company's financial condition
and results of operations.

NOTE 18  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

The following condensed statements of financial condition as of December 31,
1999 and 1998, and the related statements of operations and cash flows for the
years then ended for the Company should be read in conjunction with the
consolidated financial statements and notes thereto.

                        STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                                   December 31
                                                                                    -----------------------------------------
                                                                                            1999                 1998
                                                                                    --------------------  -------------------
<S>                                                                                 <C>                   <C>
Assets:
   Cash and cash equivalents                                                        $            73,967   $           128,243
   Investment in the Bank                                                                    11,301,691             9,642,085
   Organizational cost, net                                                                          --               115,162
   Other assets                                                                                   2,472               126,609
                                                                                    --------------------  -------------------

       Total assets                                                                 $        11,378,130   $        10,012,099
                                                                                    ====================  ===================

Liabilities:
   Accounts payable and accrued expenses                                            $            64,698   $            25,494
   Accrued dividends payable                                                                         --                61,844
                                                                                    --------------------  --------------------

       Total liabilities                                                                         64,698                87,338
                                                                                    --------------------  -------------------

Stockholders' equity:
   Common stock                                                                                  12,440                12,370
   Capital in excess of par value                                                             9,659,555             9,604,001
   Retained earnings                                                                          1,754,815               356,601
   Accumulated other comprehensive loss, net                                                    (73,368)              (40,987)
                                                                                    --------------------  -------------------
                                                                                             11,353,442             9,931,985
   Treasury stock, at cost                                                                      (40,010)               (7,224)
                                                                                    --------------------  -------------------
       Total stockholders' equity                                                            11,313,432             9,924,761
                                                                                    --------------------  -------------------

Total liabilities and stockholders' equity                                          $        11,378,130   $        10,012,099
                                                                                    ====================  ===================
</TABLE>

                                    (Continued)

                                       F-32
<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 18  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS  (CONTINUED)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                   ---------------------------------------------------------
                                                                                    Years ended December 31
                                                                   ---------------------------------------------------------
                                                                         1999               1998                 1997
                                                                   -----------------  ------------------  ------------------
<S>                                                                <C>                <C>                 <C>

Equity in income of the Bank                                       $     1,691,987    $       891,317     $     1,711,649
Salaries and employee benefits                                            (112,767)           (98,842)            (27,483)
Other expense                                                             (181,006)          (145,341)           (101,827)
Income tax benefit                                                              --            112,984              13,370
                                                                   -----------------  ------------------  ------------------

       Net income                                                  $     1,398,214    $       760,118     $     1,595,709
                                                                   =================  ==================  ==================


                            STATEMENTS OF CASH FLOWS

Cash flows from operating activities:
   Net income                                                      $     1,398,214    $       760,118     $     1,595,709
   Adjustments to reconcile net income to cash
     used by operating activities:
       Equity in income of the Bank                                     (1,691,987)          (891,317)         (1,711,649)
       Deferred income taxes                                               126,354           (112,984)            (13,370)
       Amortization of organizational costs                                115,162             41,877              38,241
       Common stock rights issued in lieu of
         directors compensation                                             18,500             18,000              10,500
       Increase in other assets                                             (2,217)               (85)               (169)
       Increase in accounts payable and
         accrued expenses                                                   39,204              6,709              18,785
                                                                   -----------------  ------------------  ------------------

       Net cash provided by (used in) operating activities                   3,230           (177,682)            (61,953)
                                                                   -----------------  ------------------  ------------------

Cash flows from investing activities:
   Capital contribution to the Bank                                             --                 --          (1,883,531)
   Dividend from the Bank                                                       --             98,956                  --
                                                                   -----------------  ------------------  ------------------

       Net cash provided by (used in) investing activities                      --             98,956          (1,883,531)
                                                                   -----------------  ------------------  ------------------

Cash flows from financing activities:
   Organizational costs incurred                                                --                 --             (31,907)
   Rights offering costs incurred                                               --                 --             (69,254)
   Increase in payable to Bank                                                  --                 --            (269,357)
   Purchase of treasury stock                                              (32,786)            (7,224)                 --
   Proceeds from issuance of common stock                                   37,124            108,793           2,422,601
   Cash dividend                                                           (61,844)                --              (1,204)
                                                                   -----------------  ------------------  ------------------

       Net cash provided by (used in) financing activities                 (57,506)           101,569           2,050,879
                                                                   -----------------  ------------------  ------------------

Increase (decrease) in cash and cash equivalents                           (54,276)            22,843             105,395
Cash and cash equivalents at beginning of period                           128,243            105,400                   5
                                                                   -----------------  ------------------  ------------------

Cash and cash equivalents at end of period                         $        73,967    $       128,243     $       105,400
                                                                   =================  ==================  ==================

</TABLE>

                                    (Continued)

                                       F-33

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 19  SUBSEQUENT EVENT

In the first quarter of 2000, the Bank received approval from the OTS to
establish a branch in Albuquerque, New Mexico. This will be the Bank's first
full-service branch in Albuquerque and is expected to open in the second
quarter.





















                                       F-34

<PAGE>

                            GLOSSARY OF CERTAIN TERMS

The following are definitions of certain terms used in this report on Form
10-KSB.

<TABLE>

<S>                                                                        <C>

ARM.............................................................           Adjustable Rate Mortgage
BIF.............................................................           Bank Insurance Fund
CAMELS..........................................................           Capital Adequacy, Asset Quality,
                                                                           Management/Administration, Earnings,
                                                                           Liquidity-Asset/Liability Management, Sensitivity
CD..............................................................           Certificate of Deposit
CRA.............................................................           Community Reinvestment Act
DOT.............................................................           Department of Treasury
FDIC............................................................           Federal Deposit Insurance Corporation
FFIEC...........................................................           Federal Financial Institution Examination
                                                                             Council
FHA.............................................................           Federal Housing Administration
FHLB............................................................           Federal Home Loan Bank
FHLBB...........................................................           Federal Home Loan Bank Board
FHLMC...........................................................           Federal Home Loan Mortgage Corporation
FICO............................................................           Financing Corporation Funding
FNMA............................................................           Federal National Mortgage Association
FRB.............................................................           Federal Reserve Bank
GNMA............................................................           Government National Mortgage Association
HOLA............................................................           Home Owners' Loan Act
IRR.............................................................           Interest Rate Risk
NOW.............................................................           Negotiable Order of Withdrawal
NPV.............................................................           Net Present Value
OTS.............................................................           Office of Thrift Supervision
QTL.............................................................           Qualified Thrift Lender
SAIF............................................................           Savings Association Insurance Fund
SBA.............................................................           Small Business Administration
VA..............................................................           Veterans Administration

</TABLE>










                                       G-1

<PAGE>

                                INDEX OF EXHIBITS

<TABLE>
<CAPTION>

     EXHIBIT NO.                                                    DESCRIPTION
----------------------  -----------------------------------------------------------------------------------------------------
<S>                     <C>

      **2.0             Branch Purchase and Deposit Assumption Agreement dated June 18, 1999 between Bank of Albuquerque,
                        National Association, and FirstBank, a federal savings bank (incorporated by reference from the
                        Company's Form 8-K filed November 19, 1999)

      **2.1             Letter amendment, dated September 30, 1999, to Branch Purchase and Deposit Assumption Agreement
                        dated June 18, 1999 between Bank of Albuquerque, National Association, and FirstBank, a federal
                        savings bank (incorporated by reference from the Company's Form 8-K filed November 19, 1999)

      **3.1             Certificate of Amendment of Certificate of Incorporation and Certificate of Incorporation of the
                        Company (incorporated by reference from the Company's Quarterly Report on Form 10-QSB for the
                        quarter ended June 30, 1997, SEC File No. 0-28894)

      **3.2             Amended Bylaws of the Company (incorporated by reference from the Company's Registration Statement
                        on Form S-8, filed June 2,1997, SEC File No. 333-28215)

     **10.1             Agreement and Plan of Reorganization and Plan of Merger (incorporated by reference from the
                        Company's Registration Statement on Form 8-A, filed October 11, 1996, SEC File No. 001-12309)

     **10.3             Profit Sharing and Employee Stock Ownership Plan of First Savings Bank, F.S.B. (incorporated by
                        reference from the Company's Registration Statement on Form 8-A, filed October 11, 1996, SEC File
                        No. 001-12309)

     **10.3.1           Amendment Number One to Profit Sharing and Employee Stock Ownership Plan of First Savings Bank,
                        F.S.B. (refiled) (incorporated by reference from the Company's Registration Statement on Form 8-A,
                        filed October 11, 1996, SEC File No. 001-12309)

     **10.3.2           Amendment Number Two to Profit Sharing and Employee Stock Ownership Plan of First Savings Bank,
                        F.S.B. (incorporated by reference from the Company's September 30, 1999 10-QSB)

     **10.3.3           Amendment Number Three to Profit Sharing and Employee Stock Ownership Plan of FirstBank (Formerly
                        First Savings Bank, F.S.B.) (incorporated by reference from the Company's September 30, 1999 10-QSB)

     **10.3.4           Amendment Number Four to Profit Sharing and Employee Stock Ownership Plan of FirstBank (Formerly
                        First Savings Bank, F.S.B.) (incorporated by reference from the Company's September 30, 1999 10-QSB)

     **10.4             Agreement for Standby Letter of Credit Advances/Confirmation, Collateral Pledge and Security Agreement
                        with FHLB of Dallas (incorporated by reference from the Company's Registration Statement on Form 8-A,
                        filed October 11, 1996, SEC File No. 001-12309)

 **/***10.6             Employment Agreement with Kenneth J. Huey, Jr. (incorporated by reference from the Company's
                        Registration Statement on Form 8-A, filed October 11, 1996, SEC File No. 001-12309)

 **/***10.6.1           Extension of Employment Agreement with Kenneth J. Huey, Jr. dated November 20, 1997 (incorporated
                        by reference from the Company's September 30, 1999 10-QSB)

 **/***10.6.2           Extension of Employment Agreement with Kenneth J. Huey, Jr. dated July 29, 1999 (incorporated by
                        reference from the Company's September 30, 1999 10-QSB)

 **/***10.7             Employment Agreement with Norman R. Corzine (incorporated by reference from the Company's 1996
                        10-KSB)

 **/***10.7.1           Extension of Employment Agreement with Norman R. Corzine dated November 20, 1997 (incorporated by
                        reference from the Company's September 30, 1999 10-QSB)

 **/***10.7.2           Extension of Employment Agreement with Norman R. Corzine dated July 29, 1999 (incorporated by
                        reference from the Company's September 30, 1999 10-QSB)

 **/***10.10            Non-Employee Director Retainer Plan (incorporated by reference from the Company's Registration
                        Statement on Form S-8, filed June 2, 1997, SEC File No. 333-28217)

 **/***10.11            1997 Stock Option and Incentive Plan (incorporated by reference from the Company's Registration
                        Statement on Form S-8, filed June 2, 1997, SEC File No. 333-28215)

                                   (Continued)

<PAGE>

     EXHIBIT NO.                                                    DESCRIPTION
----------------------  -----------------------------------------------------------------------------------------------------
                                                                    (Continued)

 **/***10.12            Nonqualified 401(K) Rabbi Trust for an Executive Savings Plan dated June 1, 1998 (incorporated by
                        reference from the Company's September 30, 1999 10-QSB)

 **/***10.12.1          Amendment Number One to Nonqualified 401(K) Rabbi Trust for an Executive Savings Plan dated
                        June 1, 1998 (incorporated by reference from the Company's September 30, 1999 10-QSB)

      *21               Subsidiaries of the Small Business Issuer

      *23               Consent of Independent Accountants

      *27               Financial Data Schedule

</TABLE>

      * Filed herewith
     ** Previously filed
    ***  Designates each management contract or compensatory plan or arrangement
         required to be identified pursuant to Item 13(a) of Form 10-KSB.