<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

  X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----                                                                     
       EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 1997

                                       OR

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

For the transition period from _____________ to _______________

Commission file number 1-6868


                              SIENA HOLDINGS, INC.
                     --------------------------------------
                     (FORMERLY LOMAS FINANCIAL CORPORATION)
             (Exact name of registrant as specified in its charter)


           Delaware                                75-1043392     
-------------------------------               --------------------
(State or other jurisdiction of               (I.R.S. employer    
incorporation or organization)                identification no.) 

 717 North Harwood,   Dallas, Texas                    75201    
------------------------------------                ----------- 
(Address of principal executive offices)            (Zip code)  


                                  (214) 665-6301                       
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                            YES   X        NO 
                                -----         -----

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                        DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                            YES   X        NO       
                                -----         ------

On October 10, 1995, the Registrant and certain of its subsidiaries filed
bankruptcy proceedings under Chapter 11 of the Federal Bankruptcy Code in the
District of Delaware.

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of each of the issuer's classes of common
stock as of January 31, 1998:  Common Stock, $.10 par value -- 4,000,000
shares.
<PAGE>   2
                     SIENA HOLDINGS, INC. AND SUBSIDIARIES
            (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES)

               FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1997

                                     INDEX

<TABLE>
<CAPTION>
                                                                              PAGE
                                                                              ----
<S>                                                                           <C>
                         PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

        Consolidated Balance Sheets - December 31, 1997 and June 30, 1997   . . 2
        Statement of Consolidated Operations-Quarters and Six Months Ended
        December 31, 1997 and 1996   . . . . . . . . . . . . . . . . . . . . .  3
        Statement of Consolidated Cash Flows - Six Months Ended
        December 31, 1997 and 1996   . . . . . . . . . . . . . . . . . . . . .  4
        Notes to Consolidated Financial Statements   . . . . . . . . . . . . .  5

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

        Results of Operations  . . . . . . . . . . . . . . . . . . . . . . . .  9
        Liquidity and Capital Resources  . . . . . . . . . . . . . . . . . . . 10

                          PART II -- OTHER INFORMATION

Item 1. Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 12
</TABLE>





                                       1
<PAGE>   3
                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                          CONSOLIDATED BALANCE SHEETS

                     SIENA HOLDINGS, INC. AND SUBSIDIARIES
            (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   Reorganized Company
                                                                           ----------------------------------
                                                                           December 31, 1997    June 30, 1997
                                                                           -----------------   --------------
                                                                              (Unaudited)          (Note)
<S>                                                                         <C>                <C>
                                                    ASSETS
Cash and cash equivalents ...............................................   $          1,903   $        1,941
Investment in real estate . .............................................              4,800            4,800
Receivables . ...........................................................                327              242
Prepaid expenses and other assets .......................................                116               68
                                                                            ----------------   --------------
                                                                            $          7,146   $        7,051
                                                                            ================   ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Accounts payable and accrued expenses ...................................   $            999   $          990

Stockholders' equity:
Preferred stock -- ($1 par value, 1,000 shares authorized, 0 shares issued
  and outstanding and 1,000 shares authorized, 0 shares issued and
  outstanding, respectively).............................................                 --               --
Common stock -- ($.10 par value, 15,000 shares authorized, 4,000 shares
  issued and outstanding respectively).... ..............................                400              400
Other paid-in capital ...................................................              5,777            5,747
Accumulated deficit .....................................................                (30)             (86)
                                                                            ----------------   --------------
                                                                                       6,147            6,061
                                                                            ----------------   --------------
                                                                            $          7,146   $        7,051
                                                                            ================   ==============
</TABLE>


Note: The balance sheet at June 30, 1997, as presented is derived from the
audited financial statements at that date.

See notes to consolidated financial statements.





                                       2
<PAGE>   4
                STATEMENT OF CONSOLIDATED OPERATIONS (UNAUDITED)

                     SIENA HOLDINGS, INC. AND SUBSIDIARIES
            (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES)
               (IN THOUSANDS, EXCEPT NET LOSS PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                            Reorganized      Predecessor        Reorganized        Predecessor
                                              Company          Company            Company            Company
                                         ---------------   --------------    ----------------   ----------------
                                           Quarter Ended    Quarter Ended     Six Months Ended  Six Months Ended
                                           December 31,      December 31,       December 31,       December 31,
                                               1997              1996               1997               1996
                                         ---------------   --------------    ----------------   ----------------
<S>                                      <C>               <C>               <C>                <C>             
Revenues:

   Commissions and fees  . . . . . . . . $            61   $          185    $            212   $          1,408
   Interest  . . . . . . . . . . . . . .              24               57                  47                883
   Investment  . . . . . . . . . . . . .              --               --                  --                 16
   Gain on sales . . . . . . . . . . . .              --               18                  --                188
   Other   . . . . . . . . . . . . . .  .            115               78                 162                381
                                         ---------------   --------------    ----------------   ----------------
                                                     200              338                 421              2,876
                                         ---------------   --------------    ----------------   ----------------
Expenses:
   Personnel . . . . . . . . . . . . . .              25              160                  45              1,471
   Depreciation and amortization . . . .              --               --                  --                106         
   Other operating . . . . . . . . . . .             158              267                 290              2,714
   Loss on sale or disposal of assets. .              --               --                  --              3,718
                                         ---------------   --------------    ----------------   ----------------
                                                     183              427                 335              8,009
                                         ---------------   --------------    ----------------   ----------------

Income (loss) from continuing operations                                                   
     before reorganization items . . . .              17              (89)                 86             (5,133)
                                         ---------------   --------------    ----------------   ----------------
Reorganization items:
   Interest earned on cash accumulated .              --              151                  --              2,905
   Professional fees . . . . . . . . . .              --           (1,045)                 --             (5,686)
   Other bankruptcy expenses . . . . . .              --              (35)                 --                (88)
                                         ---------------   --------------    ----------------   ----------------
                                                      --             (929)                 --             (2,869)
                                         ---------------   --------------    ----------------   ----------------
Income (loss) before federal income
  tax . . . . . . . . . . . . . . . . . .             17           (1,018)                 86             (8,002)
Federal income tax expense  . . . . . . .             (6)              --                 (30)                --
                                         ---------------   --------------    ----------------   ----------------
        Net income (loss)  . . . . . . . $            11   $       (1,018)   $             56  $          (8,002)
                                         ===============   ==============    ================  ================= 
                                                                                                                 


Earnings per common share:
   Net income  . . . . . . . . . . . . . $          0.00   $            *    $           0.01  $               *
                                                                                                               

Earnings per common share - assuming
dilution:
   Net income  . . . . . . . . . . . . . $          0.00   $            *    $           0.01  $               *
                                                                                                               
</TABLE>

See notes to consolidated financial statements.

*  Per share amount is not meaningful due to reorganization.




                                       3
<PAGE>   5
                STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)

                     SIENA HOLDINGS, INC. AND SUBSIDIARIES
            (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               Reorganized        Predecessor
                                                                                 Company            Company
                                                                            ----------------   ---------------- 
                                                                             Six Months Ended  Six Months Ended
                                                                              December 31,       December 31,
                                                                                   1997              1996
                                                                            ----------------   ---------------- 
<S>                                                                         <C>                <C>              
Operating activities:

    Net income (loss)   . . . . . . . . . . . . . . . . . . . . . . . . . . $             56   $         (8,002)
                                                                                                                
    Adjustments to reconcile net income (loss) to net cash (used) 
       provided by operating activities before working capital changes:
         Loss on sale or disposal of assets . . . . . . . . . . . . . . . .               --              3,718
         Depreciation and amortization  . . . . . . . . . . . . . . . . . .               --                106
         Federal income tax expense   . . . . . . . . . . . . . . . . . . .               30                 --
                                                                            ----------------   ---------------- 
    Cash (used) provided by operations before working capital changes   . .               86             (4,178)
    Net change in sundry receivables, payables, and other assets                        (124)            (2,742)
                                                                            ----------------   ---------------- 
                Net cash (used) provided by operating activities    . . . .              (38)            (6,920)
                                                                            ----------------   ---------------- 

Investing activities:
    Purchases of investments  . . . . . . . . . . . . . . . . . . . . . . .               --            (12,383)
    Net sales of foreclosed real estate   . . . . . . . . . . . . . . . . .               --                276
    Net sales of fixed assets   . . . . . . . . . . . . . . . . . . . . . .               --             25,374
    Proceeds from assets sold to First Nationwide Mortgage Corp   . . . . .               --              6,160
    Distribution of LMUSA pursuant to reorganization plan . . . . . . . . .               --           (191,557)
                                                                            ----------------   ---------------- 
                Net cash (used) provided by investing activities    . . . .               --           (172,130)
                                                                            ----------------   ---------------- 
Financing activities:
    Term debt repayments  . . . . . . . . . . . . . . . . . . . . . . . . .               --            (11,632)
                                                                            ----------------   ---------------- 
                Net cash used by financing activities   . . . . . . . . . .               --            (11,632)
                                                                            ----------------   ---------------- 
Net (decrease) increase in cash and cash equivalents  . . . . . . . . . . .              (38)          (190,682)
Cash and cash equivalents at beginning of period  . . . . . . . . . . . . .            1,941            197,800
                                                                            ----------------   ---------------- 
Cash and cash equivalents at end of period  . . . . . . . . . . . . . . . . $          1,903   $          7,118
                                                                            ================   ================
                                                                                                               

Cash payments for:
    Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $             --   $             --
                                                                                                               
    Federal income tax  . . . . . . . . . . . . . . . . . . . . . . . . . . $             --   $             --
                                                                                                               
</TABLE>


See notes to consolidated financial statements.





                                       4
<PAGE>   6
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                     SIENA HOLDINGS, INC. AND SUBSIDIARIES
            (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES)

                               DECEMBER 31, 1997


NOTE A -- BASIS OF FINANCIAL STATEMENT PRESENTATION

     The accompanying unaudited consolidated financial statements include the
accounts of Siena Holdings, Inc. ("SHI"), formerly Lomas Financial Corporation
("LFC"), and its subsidiaries (collectively, the "Company"). SHI's wholly-owned,
principal subsidiaries are Siena Housing Management Corp. and LLG Lands, Inc.
Prior to October 1, 1996, SHI's wholly-owned principal subsidiary was Lomas
Mortgage USA, Inc. ("LMUSA"), now known as Nomas Corp. As a result of the
Chapter 11 proceedings discussed in "Note B - Reorganization", the Company's
interest in LMUSA was extinguished effective October 1, 1996. LFC's plan of
reorganization was confirmed on October 4, 1996, but not effective until March
1997.

       In accordance with the American Institute of Certified Public
Accountants' Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, the Company adopted fresh-start
accounting as of March 31, 1997, after all material conditions required by the
Plan were satisfied. The delay in the adoption of fresh-start accounting was
due to uncertainties surrounding the resolution of claims and intercompany
disputes between the LMUSA Creditors' Committee and the LFC Creditors'
Committee. In accordance with fresh-start accounting, the gain on discharge of
debt resulting from the bankruptcy proceedings was reflected on the predecessor
Company's financial statements for the period ended March 31, 1997. In
addition, the accumulated deficit of the predecessor Company at March 31, 1997
was eliminated, and, at April 1, 1997, the reorganized Company's financial
statements reflected no beginning retained earnings or deficit. See "Item 8.
Financial Statements and Supplementary Data" in the Company's annual Form 10-K
for the year ended June 30, 1997 for more details on fresh-start reporting.

       Since April 1, 1997, the Company's financial statements have been
prepared as if it is a new reporting entity and a vertical black line has been
placed to separate post-reorganization operating results (the "Reorganized
Company") from pre-reorganization operating results (the "Predecessor Company")
since they are not prepared on a comparable basis. Under fresh-start
accounting, all assets and liabilities were restated to reflect their
reorganization value, which approximated fair value at the date of
reorganization. 

       The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation at December 31, 1997 have been
included. Operating results for the quarter and six months ended December 31,
1997 are not necessarily indicative of the results that may be expected for the
fiscal year ending June 30, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual Form 10-K for the year ended June 30, 1997.

NOTE B -- REORGANIZATION

       On October 10, 1995, LFC, two subsidiaries of LFC and LMUSA
(collectively the "Debtor Corporations") filed separate voluntary petitions for
reorganization under Chapter 11 of the Federal Bankruptcy Code in the District
of Delaware. The petitioning subsidiaries were Lomas Information Systems, Inc.
("LIS") and Lomas Administrative Services, Inc. ("LAS"). The Chapter 11 cases
were jointly administered until October 1, 1996. The Debtor Corporations
managed their businesses in the ordinary course as debtors-in-possession
subject to the control and





                                       5

<PAGE>   7
supervision of the Federal Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") from October 10, 1995 through October 4, 1996.

       On October 23, 1995, a single creditors' committee (the "Joint
Creditors' Committee") was appointed by the U.S. Trustee for the District of
Delaware (the "U.S. Trustee") to represent creditors of all the Debtor
Corporations. On March 15, 1996, the U.S. Trustee revoked the appointment of
the Joint Creditors' Committee and appointed statutory committees of unsecured
creditors of LFC (the "LFC  Creditors' Committee") and of LMUSA (the "LMUSA
Creditors' Committee").

       The Debtor Corporations filed two separate proposed plans of
reorganization with the Bankruptcy Court. LFC, LIS and LAS (the "Joint
Debtors") filed their proposed joint plan of reorganization on April 8, 1996
and subsequently filed their first amended joint plan of reorganization on May
13, 1996 and their second amended joint plan of reorganization on July 3, 1996.
An order confirming the second amended joint plan of reorganization filed on
October 4, 1996 and a stipulation and order among the Joint Debtors and the LFC
Creditors' Committee regarding technical modifications to the plan of
reorganization and confirmation order filed on January 27, 1997 together with
the second amended joint plan of reorganization filed on July 3, 1996 are
collectively referred to herein as the "Joint Plan". LMUSA filed its own
proposed plan of reorganization on April 8, 1996 and subsequently filed its own
proposed first amended plan of reorganization on May 13, 1996 and its second
amended joint plan of reorganization on July 3, 1996 (the "LMUSA Plan" and
together with the Joint Plan, the "Plans"). In addition, on July 3, 1996, the
Joint Debtors filed with the Bankruptcy Court a proposed form of disclosure
statement relating to the Joint Plan (the "Joint Disclosure Statement"), and
LMUSA filed with the Bankruptcy Court a substantially similar proposed form of
disclosure statement (with the same Exhibits as the Joint Disclosure Statement)
relating to the LMUSA Plan (the "LMUSA Disclosure Statement" and together with
the Joint Disclosure Statement, the "Disclosure Statements").

       The LMUSA Plan was confirmed by the Bankruptcy Court on October 1, 1996,
was discharged from the bankruptcy case, and changed its name to Nomas Corp.
As a result of LMUSA's reorganization plan, LFC distributed its interest in
LMUSA to LMUSA's creditors as of October 1, 1996. This distribution decreased
the Company's assets and liabilities by $293.3 million and $419.4 million,
respectively, and stockholders' deficit was increased by $126.1 million. The
operations of LMUSA are included in the Statement of Consolidated Operations
and the Statement of Consolidated Cash Flows through the date of distribution
of LMUSA.

       The Joint Plan was confirmed on October 4, 1996, by the Bankruptcy
Court. The Joint Plan's effectiveness was conditioned on the satisfaction, or
waiver by the LFC Creditors' Committee, of certain conditions. On January 23,
1997, the LFC Creditors' Committee and the LMUSA Creditors' Committee signed an
agreement in respect of intercompany claims (the "Intercompany Agreement").
The Intercompany Agreement was approved by the Bankruptcy Court on February 21,
1997. As a result of the settlement, certain assets were transferred to the
Company on the effective date of March 7, 1997. The LFC Creditors' Committee
waived all other conditions and the Joint Plan became effective March 7, 1997
and the Company emerged with a new name, Siena Holdings, Inc. See Exhibit
10.1, Exhibit 10.2 and Exhibit 10.3 which are filed as exhibits to the
Company's annual Form 10-K for the year ended June 30, 1997.


                                       6

<PAGE>   8
       The following is a summary of the claims, excluding administrative, as
of the initial distribution date (as defined herein), (in thousands):

<TABLE>
   <S>                                                       <C>        <C>
   Priority  LIS claims - allowed  . . . . . . . . . . . . . $              234
   Convenience claims - allowed  . . . . . . . . . . . . . .                  1
   Unsecured Class 3 claims -
        Bondholders - allowed  . . . . . . . . . . . . . . .            145,433
        Other claims - allowed . . . . . . . . . . . . . . .              1,366
   MSP claims - disputed . . . . . . . . . . . . . . . . . .              8,803
                                                             ------------------
                                                             $          155,837
                                                             ==================
</TABLE>

       Pursuant to the Joint Plan, the Class 3 unsecured creditors will receive
a combination of cash and new common stock as settlement of their allowed
claim.  On November 12, 1997, the initial distribution date (the "Initial
Distribution Date"),  $12.5 million was disbursed to the distribution agent for
distribution to the Class 3 unsecured creditors.  In addition, as assets in the
Creditors' Trust (see "Note D - Creditors' Trust") are liquidated, additional
distributions will be made to the Class 3 unsecured creditors.  Also, on the
Initial Distribution Date pursuant to the Joint Plan and a decision by the LFC
Creditors' Committee, 4,000,000 shares of the new common stock were issued by
the stock transfer agent.  For balance sheet presentation and earnings (loss)
per share, the 4,000,000 shares were considered issued as of April 1, 1997.

       The estimated distribution is calculated based on fair values applied to
the assets upon adoption of fresh-start reporting  and known liabilities.  The
amounts ultimately  distributed to the creditors are solely dependent on the
success of the Company and the amounts realized from the collection of assets 
and the settlement of liabilities for both the Creditors' Trust and the 
Litigation Trust.  See "Note D - Creditors' Trust".

NOTE C -- ASSETS DISPOSED OF AND LIABILITIES ASSUMED

       On October 2, 1995, LMUSA closed the sale to First Nationwide Mortgage
Corporation ("First Nationwide") of its GNMA servicing portfolio (approximately
$7.9 billion in unpaid principal balance of mortgage loans), its investment in
LMUSA Partnership and its loan production business including its mortgage loans
held for sale and the payment of the related warehouse lines of credit (the
"GNMA Sale").  On January 31, 1996, LMUSA closed the sale to First Nationwide
of its remaining mortgage servicing portfolio (approximately $12 billion in
unpaid principal balance of mortgage loans) and certain other assets pursuant
to Section 363 of the Bankruptcy Code (the "Section 363 Sale").

       The above transactions resulted in a loss on sale or disposal of assets
in the Company's Statement of Consolidated Operations of $0 and $0 for the
quarters ended December 31, 1997 and 1996, respectively and $0 and $3.7 million
for the six months ended December 31, 1997 and 1996, respectively.  These
transactions were subject to additional adjustments which are solely the
responsibility of Nomas Corp. as a result of the distribution of LMUSA by the
Company.

       On July 16, 1996, the former Lomas headquarters and all other campus
buildings were sold through the Bankruptcy Court process for $23.5 million.
Pursuant to a stipulation and order among Travelers Insurance Company
("Travelers"), the Debtors', and the LMUSA Creditors' Committee, Travelers
received approximately $11.43 million of the proceeds.  The net cash received
was deposited into a joint account for the Company  and LMUSA.  In conjunction
with the intercompany claims settlement process in March, 1997, the Company
received $1.3 million and LMUSA was granted the remainder plus accrued interest
from the joint account.  Additionally, substantially all of the remaining
furniture, fixtures and equipment of the Company and LMUSA were sold by a
liquidator during July and August 1996.





                                       7
<PAGE>   9
NOTE D -- CREDITORS' TRUST

       The Joint Plan established a creditors' trust (the "Creditors' Trust")
which the Company serves as trustee.  The Creditors' Trust holds the
nonreorganized assets of the Company in trust pending their disposition and/or
distribution to creditors in accordance with the terms of the Joint Plan.  The
Creditors' Trust is organized for the sole purpose of liquidating the non-
reorganized assets and will terminate on October 4, 2001 unless an extension is
approved by the Bankruptcy Court.  The assets and liabilities of the Creditors'
Trust are not reflected in the accompanying Consolidated Balance Sheet as the
Company is not the beneficiary of the Trust.  Accordingly, revenues and
expenses related to the Creditors' Trust assets and liabilities since April 1,
1997, are not reflected in the accompanying Statement of Consolidated
Operations.  The allocation of costs between the Creditors' Trust and the
Company is based on management's estimate of each entity's proportional share
of costs.  Gains and losses from the Creditors' Trust are solely for the
creditors' benefit and the Company has no risk of loss on the assets or
liabilities.  The amounts ultimately distributed to the creditors are solely
dependent on the amounts realized from the collection of the trust assets and
settlement of trust liabilities.

       The following is a summary of the nonreorganized assets and liabilities
held in the Creditors' Trust as of December 31, 1997 (in thousands)
(unaudited):

<TABLE>
<S>                                                                                    <C>
Cash held in reserve for payment of administrative expenses and other trust                          
    liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $        1,860
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . .          (1,517)
                                                                                       --------------
       Cash available for future trust expenses . . . . . . . . . . . . . . . . . . .  $          343
                                                                                       ==============


Cash held in reserve for payment of certain claims  . . . . . . . . . . . . . . . . .  $           54
                                                                                       ==============
MSP Trust cash held in reserve pending settlement of MSP claims and expenses  . . . .  $        6,708
                                                                                       ==============


Net assets available for future distribution to Class 3 creditors:
      Cash  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $        2,048
      Subordinated promissory note receivable pursuant to bankruptcy court                           
          settlement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8,100
      Investments:
           Two limited partnerships which fund institutional mortgage loans . . . . .           1,060

           Residual cash in the MSP Trust pending settlement of MSP claims and                  
               expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,503
           Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              21
                                                                                       --------------   
                 Total investments  . . . . . . . . . . . . . . . . . . . . . . . . .           2,584
                                                                                       --------------   
                  Net assets available for future distribution to Class 3 creditors .  $       12,732  *
                                                                                       ==============
</TABLE>


       *  Pursuant to the Joint Plan, an additional $300,000 of cash can be
          set aside for payment of additional trust expenses, if needed.

       On January 14, 1998, the Creditors' Trust received $8.1 million pursuant
to the final settlement of a subordinated promissory note.  The settlement was
approved by the Bankruptcy Court on December 29, 1997.

       Also on December 29, 1997, the Bankruptcy Court approved the procedures
to be used in settlement of the MSP litigation (see "Part II Other Information,
Item 1. Legal Proceedings").  Under the approved procedures the Creditors'
Trust and the beneficiaries of the MSP will share the assets remaining in the
trust equally after payment of certain legal expenses and MSP trust fees.  The
procedures include application to federal district court for approval of a
class action and settlement.  If the settlement is approved, the reserve for
MSP claimants would be $3.9 million as of December 31, 1997, thus increasing
the funds available for distribution to Class 3 unsecured creditors by $2.4
million.  The ultimate amount to be distributed to MSP claimants may differ
from the above, pending the outcome of all bankruptcy and legal proceedings.

NOTE E -- EARNINGS (LOSS) PER SHARE

       During the second quarter of 1998 the Company adopted SFAS 128 "Earnings
Per Share" ("FAS 128") which replaces the presentation of primary earnings per
share ("EPS") with a presentation of basic EPS and requires dual presentation
of basic and diluted EPS.  The Company retroactively applied FAS 128 to the
quarter ended September 30, 1997.  Adoption of FAS 128 did not have a material
impact on the earnings per share.

       Earnings per common share for the quarter and six months ended December
31, 1997 was computed using the 4,000,000 shares reserved for issuance and
ultimately issued on November 12, 1997.  The effects of outstanding options are
included in the calculation of earnings per common share - assuming dilution to
the extent that they are dilutive to earnings.  Effective December 1, 1997 the
Company granted options under the Siena Holdings, Inc. Nonqualified Stock
Option Agreements (the "Nonqualified Stock Option Agreements"), included as
Exhibits 10.3 and 10.4 to this quarterly report Form 10-Q as of December 31,
1997, which are considered in the calculation of earnings per common share -
assuming dilution.  Earnings (loss) per share information for the predecessor
is not presented because of the revision of the Company's capital structure
pursuant to the Plan of Reorganization makes such information not meaningful.


                                       8
<PAGE>   10

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

RESULTS OF OPERATIONS

       In accordance with the American Institute of Certified Public
Accountants' Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, the Company  adopted fresh-start
accounting as of March 31, 1997.   See "Note A - Basis of Financial Statement
Presentation".  The accumulated deficit of the predecessor Company at March 31,
1997 was eliminated, and, at April 1, 1997, the reorganized Company's financial
statements reflected no beginning retained earnings or deficit.  Since April 1,
1997, the  Company's financial statements have been prepared as if it is a new
reporting entity and a vertical black line has been placed to separate the
operating results of the Predecessor Company from those of the Reorganized
Company since they are not prepared on a comparable basis.

       On October 1, 1996, the Company distributed its interest in LMUSA to
LMUSA's creditors pursuant to LMUSA's reorganization plan.  Effective March 7,
1997, the Company settled its intercompany disputes with LMUSA resulting in the
transfer of assets and writeoff of receivables and payables with a net increase
in retained earnings of $16.8 million.  See "Note B - Reorganization".

          The operating results of the Company during the quarters and six
months ended December 31, 1997 and 1996 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                            Reorganized         Predecessor         Reorganized         Predecessor
                                                              Company             Company             Company             Company
                                                            ------------        ------------        ------------       ------------
                                                              Quarter             Quarter           Six Months          Six Months
                                                               Ended               Ended               Ended               Ended
                                                            December 31,        December 31,        December 31,        December 31,
                                                               1997                1996                1997                1996
                                                            ------------        ------------        ------------       ------------
<S>                                                         <C>                 <C>                 <C>                <C>          
Operating income (loss):

       Mortgage banking .............................       $         --        $         --        $         --       $     (1,340)
   Assisted care management .........................                 39                 138                 160                265
       Other ........................................                123                 127                 176                384
                                                            ------------        ------------        ------------       ------------
                                                                     162                 265                 336               (691)
Expenses:
       General and administrative ...................               (145)               (354)               (250)              (724)

       Loss on sale or disposal of assets ...........                 --                  --                  --             (3,718)
                                                            ------------        ------------        ------------       ------------
                                                                    (145)               (354)               (250)            (4,442)
                                                            ------------        ------------        ------------       ------------
Income (loss) from operations before reorganization
   items ............................................                 17                 (89)                 86             (5,133)
Reorganization items---net ..........................                 --                (929)                 --             (2,869)
                                                            ------------        ------------        ------------       ------------
Income (loss) before federal income tax expense .....                 17              (1,018)                 86             (8,002)

Federal income tax expense ..........................                 (6)                 --                 (30)                --
                                                            ------------        ------------        ------------       ------------
               Net income (loss) ....................       $         11        $     (1,018)       $         56       $     (8,002)
                                                            ============        ============        ============       ============
</TABLE>

       The operating results presented above for the quarter and six months
ended December 31, 1997 are not comparable to those for the same periods in
fiscal year 1997. The first quarter of fiscal 1997 included the operations of
LMUSA prior to the distribution of LMUSA from the Company on October 1, 1996.
During that period, LMUSA recorded an additional loss on the sale of assets of
$3.7 million as a result of an adjustment to the calculation of interest on the
receivables from First Nationwide and an agreed upon settlement of the final
purchase price on the GNMA sale. Additionally, during the quarter and six months
ended December 31, 1996, the Company recorded net reorganization





                                       9
<PAGE>   11
items of $0.9 million and $2.9 million, respectively.  At fresh start on April
1, 1997, certain assets were transferred to the Creditors' Trust.  See "Note D
- Creditors' Trust".  This resulted in lower income for the quarter and six
months ended December 31, 1997 than for the same periods in the prior fiscal
year as it relates to those assets that were transferred to the Creditors'
Trust.

       The decreased profitability of the assisted care management operations
from $39,000 and $160,000 for the quarter and six months ended December 31,
1997, respectively, as compared to $138,000 and $265,000 for the quarter and six
months ended December 31, 1996, respectively, is primarily attributable to the
decreased management fee received by Siena Housing Management, Inc. ("SHM"), a
wholly-owned subsidiary of the Company. SHM manages and maintains an assisted
care facility in Houston, Texas under a management agreement into which it
entered on June 27, 1977 with Treemont, Inc. ("Treemont"). Treemont elected to
begin significant capital improvements for fire protection that are to be funded
by operations. These expenditures decreased the second quarter management fee
received by SHM and will continue to result in lower management fees until the
completion of the project which is expected to be finished by the end of fiscal
year 1998. After December 31, 1997, Treemont will no longer pay the Company for
pension benefits paid to the employees of SHM. The reduction in Treemont expense
will reduce the effect of the capital expenditures on SHM revenue during fiscal
year 1998 and increase profitability thereafter. Refer to the Company's annual
report on Form 10-K for the fiscal year ended June 30, 1997 for more information
on the Company's assisted care business and management contract.

       The Company reported other operating income of $123,000 and $176,000 for
the quarter and six months ended December 31, 1997, respectively, including an
overhead allocation for certain expenses charged to the Creditors' Trust of
$114,000. The remaining income consisted of investment and dividend income.
Other operating income for the quarter and six months ended December 31, 1996
included investment and dividend income related to assets that were transferred
to the Creditors' Trust as of April 1, 1997, and thus not comparable to the
quarter and six months ended December 31, 1997.

       The Company has reviewed the real estate interests held in its subsidiary
LLG Lands, Inc. and has begun to market the property zoned for multi-family use.
The Company holds approximately 150 net acres of undeveloped land in Allen,
Texas. Of this total, approximately 37 net acres are zoned for multi-family use,
the remaining net acreage is zoned for single family use and commercial use. The
Company will attempt to increase the values of the property through the
re-zoning and relocation of zoning in certain tracts. Refer to the Company's
annual report on Form 10-K for the fiscal year ended June 30, 1997 for more
information on the Company's real estate investment.

       General and administrative expenses decreased from the same period in
fiscal year 1997 as a result of the significant decrease in the number of
employees or consultants and related occupancy and other office expenses.

       Effective December 1, 1997, the Board of Directors of the Company
approved the separate retention for its two officers, John P. Kneafsey - Chief
Executive Officer and W. Joseph Dryer - President, (the "Retention Agreements")
included as Exhibits 10.1 and 10.2, respectively, to this Form 10-Q for the
quarter ended December 31, 1997. The Retention Agreements, with a five year
term, provide for the payment of: (1) a monthly retainer, (2) severance upon
early termination of the contract by the Company, and (3) a success bonus based
upon certain performance criteria. The Retention Agreements also awarded stock
options to Mr. Kneafsey and Mr. Dryer pursuant to the SHI Nonqualified Stock
Option Agreements included as Exhibits 10.3 and 10.4, respectively, to this Form
10-Q for the quarter ended December 31, 1997. The stock options resulted in
related expense of $1,000 for the quarter ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

       As of December 31, 1997, the only liabilities of the Company were
accounts payable and accrued expenses which will be paid from current operating
cash available as of December 31, 1997.





                                       10
<PAGE>   12

PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

       The Company had a Management Security Plan ("MSP") for certain of its
employees. According to the MSP, key employees of the Company who participated
in the MSP are to be paid, in the event of retirement or death, a portion of the
employee's salary which such employee chose as the basis for computation of
retirement or death benefits. The Company ceased new enrollments in 1985. The
LFC Creditors' Committee has argued that the funds contributed to the MSP are
held in a trust (the "MSP Trust") subject to the claims of creditors in the
event of insolvency.

       Because of the bankruptcy filings by the Company and LMUSA, no
contributions, payments or actuarial evaluation have been made to the MSP since
the petition date. On June 11, 1996, the Bankruptcy Court authorized the LFC
Creditors' Committee to commence and prosecute an action against the trustee
seeking the return of funds held in such MSP Trust. The LFC Creditors' Committee
contends that the funds in the trust constitute property of the Company's
estate. However, the trustee, Bankers Trust, has asserted that the trustee is
obligated to hold the assets for the sole benefit of the MSP participants. In
addition, during the course of litigation, the Unofficial Committee of MSP
Beneficiaries filed a motion to intervene in the adversary proceeding which the
Bankruptcy Court granted, and filed an action against Bankers Trust to turn over
to the MSP beneficiaries the assets held in the MSP Trust.

       On April 29, 1997, pursuant to a Stipulation and Order Regarding Reserve
for MSP Claimants, the Bankruptcy Court authorized the Company to maintain a
single distribution reserve in the amount of $6.3 million in order to satisfy
any obligations to the MSP Claimants under the Joint Plan. On December 31, 1997,
the balance of the MSP Trust was $8.2 million. Pursuant to the above
stipulation, the Creditors' Trust assumed $6.3 million of the MSP Trust balance
to be held in reserve for MSP claimants. The remainder of the MSP Trust, $1.9
million, net of a reserve of $0.4 million for MSP related legal fees and
expenses, is included as an asset in the Creditors' Trust available for
distribution to the Class 3 unsecured creditors. The preliminary MSP disputed
claims total $8.8 million. On December 29, 1997, the Bankruptcy Court approved
procedures for a settlement whereby the MSP claimants would receive fifty
percent of the MSP Trust balance after deducting certain legal fees and MSP
trust expenses. If this settlement is approved by a federal district court, the
reserve for MSP claimants would be $3.9 million, thus increasing the funds
available for distribution to the Class 3 unsecured creditors by $2.4 million.
The ultimate amount to be distributed to the MSP claimants may differ from the
above, pending the outcome of all bankruptcy and legal proceedings.

       The LFC Committee also commenced an adversary proceeding to recover the
funds in the rabbi trust for the Company's Excess Benefit Plan (the "EBP Trust")
on September 20, 1996, having obtained the Bankruptcy Court's approval for such
action on September 9, 1996. Bankers Trust, the trustee of the EBP Trust, agreed
that the Company is entitled to the funds held in the EBP Trust, and
accordingly, funds totaling $0.6 million were received by the Company in June,
1997 and subsequently transferred to the Creditors' Trust. The remaining funds
were received in July 1997.

       On August 28, 1996 the Bankruptcy Court authorized the LFC Committee to
commence an action against Residential Information Services Limited Partnership
("RIS") and certain of its affiliates and related companies. In a complaint
dated September 30, 1996, the LFC Committee commenced such an action. On January
10, 1997, the LFC Committee filed an amended complaint. The amended complaint
contains, inter alia, claims for breach of contract, fraud, tortious
interference with contract, turnover and quantum meruit against RIS and the
other defendants in connection with RIS' acquisition of substantially all of the
assets of Lomas Information Systems, Inc. in December 1994. The amended
complaint seeks substantial damages from the defendants together with interest,
costs and attorneys' fees and punitive damages. This case was settled and
proceeds of $5.4 million were received in June 1997 by the Company and
subsequently transferred, net of $234,000 for certain administrative claims, to
the Creditors' Trust.





                                       11
<PAGE>   13

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:


       Exhibit
       Number
       ------

       (10.1) Retention Agreement effective December 1, 1997 by and between SHC
              and John P. Kneafsey

       (10.2) Retention Agreement effective December 1, 1997 by and between SHC
              and W. Joseph Dryer

       (10.3) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated
              December 1, 1997 by and between SHC and John P. Kneafsey

       (10.4) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated
              December 1, 1997 by and between SHC and W. Joseph Dryer

       (11)   Computation of Earnings (Loss) Per Share

       (27)   Financial Data Schedule (submitted to the Securities and Exchange
              Commission for its information).

(b) Reports on Form 8-K: None.





                                       12
<PAGE>   14
                                   SIGNATURES

       Pursuant to the requirements 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.

                                                                              
                                                                              
                                                      SIENA HOLDINGS, INC. 
                                                   ----------------------------
                                                         (Registrant)




Date: February 11, 1998                       By:     /S/ W. JOSEPH DRYER      
                                                   -----------------------------
                                                            President




Date: February 11, 1998                       By:     /S/ W. JOSEPH DRYER      
                                                  -----------------------------
                                                   Principal Accounting Officer





                                       13
<PAGE>   15

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       Exhibit
       Number       Description
       ------       -----------
       <S>    <C>
       (10.1) Retention Agreement effective December 1, 1997 by and between SHC
              and John P. Kneafsey

       (10.2) Retention Agreement effective December 1, 1997 by and between SHC
              and W. Joseph Dryer

       (10.3) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated
              December 1, 1997 by and between SHC and John P. Kneafsey

       (10.4) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated
              December 1, 1997 by and between SHC and W. Joseph Dryer

       (11)   Computation of Earnings (Loss) Per Share

       (27)   Financial Data Schedule (submitted to the Securities and Exchange
              Commission for its information).
</TABLE>