x Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934



Commission File Number: 0-22269







|Louisiana                         | 72-1341014              
|--------------------------------- | ------------------------
|(State or Other Jurisdiction      | (IRS Employer ID Number)
|of Incorporation or Organization) |                         









Registrant's Telephone Number: (504) 457-6220







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.



|x Yes | No
|----- | --

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



As of March 18, 2002, there were 1,650,462 shares of the Registrants
common stock, par value $.01 per share, issued and outstanding.
The aggregate market value of such stock, excluding the shares
held by all directors, officers and affiliates of the Registrant,
was $17.0 million at March 18, 2002 based on the per common share
price at closing of $15.00 on that date. The information presented
in this Form 10-K at December 31, 2001 and 2000, and for the twelve
months ended December 31, 2001, 2000, and 1999 represent the financial
condition and results of operations of GS Financial Corp. and
its wholly-owned subsidiary, Guaranty Savings & Homestead
Association.

DOCUMENTS INCORPORATED BY REFERENCE

Listed hereunder are the following documents which have been
incorporated by reference and the Part of the Form 10-K into which
the document is incorporated.



|(1) | Portions of the Annual Report to Shareholders for the fiscal
    year ended December 31, 2001 are incorporated into Part II, Items
    5 through 8, and Part IV, Item 14.                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Portions of the definitive proxy statement for the 2002 Annual
    Meeting of Shareholders to be filed within 120 days of the Registrants
    fiscal year end are incorporated into Part III, Items 10 through
    13.



Item 1. BUSINESS

In addition to historical information, this Annual Report on
Form 10-K includes certain "forward-looking statements,"
as defined in the Securities Act of 1933 and the Securities Exchange
Act of 1934, based on current management expectations. The Companys
actual results could differ materially from those management expectations.
Such forward-looking statements include statements regarding the
Companys intentions, beliefs or current expectations as
well as the assumptions on which such statements are based. Stockholders
and potential stockholders are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements. Factors
that could cause future results to vary from current management
expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal
policies of the federal government, changes in tax policies, rates
and regulations of federal, state and local tax authorities, changes
in interest rates, deposit flows, the cost of funds, demand for
loan products, demand for financial services, competition, changes
in the quality or composition of the Companys loan and investment
portfolios, changes in accounting principles, policies or guidelines,
and other economic, competitive, governmental and technological
factors affecting the Companys operations, markets, products,
services and fees. The Company undertakes no obligation to update
or revise any forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating
results over time.



General

GS Financial Corp. (the "Company") was incorporated
under Louisiana law on December 24, 1996 as a thrift holding company.
The Company commenced operations on April 1, 1997 upon the completion
of its initial public offering of common stock, which trades on
the Nasdaq National Market. On that date the Companys wholly
owned subsidiary, Guaranty Savings and Homestead Association (the
"Association"), was converted from a Louisiana chartered
mutual savings and loan association to a Louisiana chartered stock
savings and loan association. This was accomplished through the
offer and sale of common stock by the Company to certain depositors,
employees, officers and directors of the Association as well as
the GS Financial Employee Stock Ownership Plan (the "ESOP").
The Company simultaneously used a portion of the proceeds of its
sale of common stock to acquire 100% of the stock of the Association.

The Company's principal business is conducted through the Association.
Guaranty Savings and Homestead Association was founded in New
Orleans, Louisiana in 1937 as a mutual savings and loan association.
The Associations unconsolidated assets at December 31, 2001
totaled $186.0 million and comprise 98.7% of the total consolidated
assets of the Company. The Association provides financial services
primarily to individuals, mainly through the origination of mortgage
loans on 1-4 family residences. The Association accepts deposits
in the form of passbook savings, certificates of deposit, demand
deposit accounts and individual retirement accounts. The Association
also invests in short and long term liquid investments such as
US Treasury and Agency securities, mortgage backed securities,
overnight Federal Funds, money market investments and qualified
thrift grade mutual funds. The balance of the consolidated assets
includes $1.7 million in similar short and long term liquid investments,
and $.8 million in fixed assets held exclusively at the Company
level.

Regulation

The Companys primary regulator is the Office of Thrift
Supervision ("OTS"). The OTS regulates all thrifts and
thrift holding companies whose deposits are insured by the Savings
Association Insurance Fund ("SAIF") which is administered
by the Federal Deposit Insurance Corporation ("FDIC").
The Company, by virtue of its state charter is also subject to
the rules and regulations of the Louisiana Office of Financial
Institutions ("OFI"). These two agencies currently examine
the Company approximately every 18 months on an individual basis,
relying on the examination report of the other agency on cycles,
alternating when it is not their year to examine the Association.
The nature of such examinations includes safety and soundness
issues or compliance with applicable laws and regulations. The
Association was last examined by the OFI as of September 30, 2000
and the Company was last examined by the OTS as of December 31,
2000.

As a public registrant the Company is subject to the rules
and regulations of the Securities and Exchange Commission ("SEC").
The Company also is subject to the rules of the NASDAQ Stock Market.

The Association has been a member of the Federal Home Loan
Bank of Dallas ("FHLB") since 1937. The Federal Home
Loan Bank System is comprised of 12 regional banks which serve
thrifts and banks by offering investment opportunities and sources
of funds.

Lending Activities

Loan Portfolio Composition. The following table sets
forth the composition of the Companys loan portfolio by
type of loan at the dates indicated (in thousands):





|                   |                        |                         |        | December 31,
|------------------ | ---------------------- | ----------------------- | ------ | ------------
|                   |                        |                         |        | 2001        
|Real Estate Loans: |                        |                         |        |             
|                   | 1-4 Family Residential | $                       | 69,843 | $           
|                   | FHA and VA             |                         | 9      |             
|                   | Construction           |                         | 1,056  |             
|                   | Commercial Real Estate |                         | 3,431  |             
|                   | Other                  |                         | 6,750  |             
|                   |                        |                         |        | ---------   
|                   |                        | Total Real Estate Loans |        | 81,089      
|                   |                        |                         |        |             
|Consumer Loans:    |                        |                         |        |             
|                   | Second Mortgage        |                         | 11     |             
|                   | Loans on Deposits      |                         | 254    |             
|                   |                        |                         |        | ---------   
|                   |                        | Total Consumer Loans    |        | 265         
|                   |                        |                         |        |             
|Commercial Loans   |                        | 683                     |        | 381         
|                   |                        |                         |        | ---------   
|                   |                        | Total Loans             |        | 82,037      
|                   |                        |                         |        |             
|Allowance for      |                        |                         |        |             
|                   | Loan Losses            |                         | (435)  |             
|                   |                        |                         |        |             
|Net Deferred Loan  |                        |                         |        |             
|                   | Origination Costs      |                         | 9      |             
|                   |                        |                         |        | ---------   
|Net Loans          | $                      | 81,611                  | $      | 74,480      
|                   |                        |                         |        | =====       

Contractual Term to Final Maturities.The following
table sets forth certain information as of December 31, 2001 regarding
the dollar amount of loans maturing in the Companys portfolio,
based on the contractual date of the loans final maturity,
before giving effect to net items. Demand loans and loans having
no stated maturity are reported as due in one year or less. The
amounts shown below do not reflect normal principal amortization;
rather, the balance of each loan outstanding at December 31, 2001
is shown in the appropriate year of the loans final maturity.
The actual maturity of loans varies primarily on prepayments which
to a large extent depend on market interest rates. In general
if prevailing market rates fall below those of the portfolio,
prepayments accelerate. Conversely if market interest rates increase
above portfolio rates early pay-offs tend to decrease.



Fixed rate loans receivable as of December 31, 2001 are scheduled
to mature and adjustable rate loans are scheduled to re-price
as follows (in thousands):



|                            |              |     | Under 
    One 
    Year | One to 
    Five 
    Years | Over Five to Ten Years | Over 
    10 
    Years | Total 
|--------------------------- | ------------ | --- | ------------------------ | --------------------------- | ---------------------- | ----------------------- | ------
|                            |              |     | ------                   |                             | ------                 |                         | ------
|Loans Secured by 1-4 Family |              |     |                          |                             |                        |                         |       
|                            | Residential: |     |                          |                             |                        |                         |       
|                            | Fixed Rate   | $   | 54                       | $                           | 2,879                  | $                       | 7,610 
|Other Loans Secured by      |              |     |                          |                             |                        |                         |       
|                            | Real Estate: |     |                          |                             |                        |                         |       
|                            | Fixed Rate   |     | 58                       |                             | 2,127                  |                         | 3,546 
|Commercial Fixed Rate       |              | 286 |                          | -                           |                        | 124                     |       
|All Other Loans             |              | 254 |                          | -                           |                        | -                       |       
|                            |              |     | ------                   |                             | ------                 |                         | ------
|                            |              | $   | 652                      | $                           | 5,006                  | $                       | 11,280
|                            |              |     | =====                    |                             | =====                  |                         | ===== 

Loan Origination Activity. The table below sets forth
the Companys total loan origination and reduction experience
during the periods indicated. Historically, the Company has not
purchased or sold any loans.



|                                  |                        |        | December 31,
|--------------------------------- | ---------------------- | ------ | ------------
|                                  |                        |        | 2001        
|                                  |                        |        | -------     
|Loan Originations (in thousands): |                        |        |             
|                                  | 1-4 Family Residential | $      | 12,062      
|                                  | Construction           |        | 1,670       
|                                  | Commercial real estate |        | 1,430       
|                                  | Consumer               |        | 252         
|                                  | Commercial             |        | 610         
|                                  | Other Real Estate      |        | 6,030       
|                                  |                        |        | -------     
|Total Loan Originations           |                        | 22,054 |             
|Loan principal                    |                        |        |             
|                                  | Repayments             |        | (14,521)    
|Increase (decrease)               |                        |        |             
|                                  | due to other items     |        | (14)        
|                                  |                        |        | -------     
|Net increase (decrease) in        |                        |        |             
|                                  | Loan portfolio         | $      | 7,519       
|                                  |                        |        | ======      

Real Estate Lending Standards and Underwriting Policies.

The lending activities of the Company are subject to written
underwriting standards and loan origination procedures established
by the Company's Board of Directors and Management which are consistent
with safe and sound banking requirements. These standards and
procedures are incorporated into the Company's Underwriting Standards
and Lending Policy which are reviewed annually by the Board of
Directors (the "Board"). The underwriting standards
dictate the manner in which loan applications are accepted and
processed. Such standards are written to comply with all applicable
laws and regulations including but not limited to Truth-In-Lending
(Regulation Z) and the Real Estate Settlement and Procedures Act
("RESPA"). These standards pertain to such issues as
appraisal guidelines, disclosure requirements, credit criteria,
complete applications, and title requirements. The Company requires
appraisals from Board-approved state licensed and certified appraisers.
The lending policy establishes the overall direction of the Company's
lending activities within the community and forms the basis for
setting underwriting standards which are intended to limit the
Company's exposure to credit risk. Such factors include loan amount,
debt to income ratios, collateral, and acceptable rates and terms.

Briefly stated, the loan process consists of applicants meeting
with loan personnel and providing pertinent documentation, including
but not limited to, requested loan amount, property description,
security offered as collateral, intended down payments and an
acceptable rate and term consistent with the Company's then current
lending policy. Upon receipt of a favorable credit report, an
appraisal is obtained with requisite documentation to support
the property's stated market value. Upon completion the loan package
is presented to the Loan Committee for consideration. All applicants
receive written notification of the Committees decision
to approve or deny the request. Approved loans are assigned to
one of the Company's approved attorneys for closing. Actions of
the Loan Committee are submitted to the Board of Directors for
consideration and ratification on a monthly basis.

Loan applications are accepted at all three of the Companys
full service branches and the two loan production offices in Ponchatoula
and Metairie and forwarded to the Loan Committee which meets weekly.
The Company requires a title insurance policy on all loans secured
by real estate prior to closing.

The Companys conventional fixed rate mortgage loans on
1-4 family residential dwellings are offered with terms up to
30 years. Currently, the minimum cash down payment is 20% of the
lesser of purchase price or appraised value. The Company originates
and funds construction loans which subsequently convert to permanent,
fixed rate mortgage loans. During the construction period, the
Company requires payment of interest only on the amount of principal
drawn.

In 2000, the Company began shifting some of its lending activity
towards the commercial market to diversify and enhance the products
and services offered to its customers and add loans to the overall
portfolio with yields higher than current market rates on residential
mortgage loans. Commercial loans typically carry higher yields
and associated risk than loans on 1-4 family dwellings. The Company
offers mortgage loans on residential investment property, commercial
real estate, condominiums and vacant ground. The Company also
offers commercial asset based loans secured by non-real estate
collateral such as inventory and accounts receivable.

During 2001, the Company was able to originate approximately
$8 million of non-residential loans. Of this amount approximately
$6 million was secured by multi-family dwellings. The Company
applies similar underwriting standards to its commercial loans
with particular attention paid to debt coverage ratios. Commercial
loan documentation procedures differ from residential lending
requirements on a case-by-case basis.

Loans are available to depositors of the Company secured by
passbook savings or certificates of deposit at a rate 2 percentage
points above the savings rate up to 90% of the face amount of
a certificate of deposit or 90% of the current available balance
of a passbook. The minimum amount on such loans is $1,000 and
these loans are payable on demand subject to 30 days notice.

Asset Quality

General. The Company has adopted an asset classification
policy which is designed to draw attention to assets before collection
becomes a problem, thus maintaining the quality of the Companys
investment as an interest earning asset. The policy also insures
the accurate reporting of the Companys assets from a valuation
standpoint.

All of the Companys assets are reviewed on a quarterly
basis. Payment histories as well as the value of the underlying
collateral are reviewed and assessed in light of several risk
factors. The most significant risk factor is the state of the
local economy. A healthy economy is characterized by low unemployment
which usually leads to strong real estate markets and the maintenance
if not appreciation of underlying collateral values. Current interest
rates and expectations of the movement thereof is also a significant
risk factor. Low or falling interest rates can act to stimulate
local real estate markets while also increasing prepayment speeds
on existing assets. Rising or high interest rates usually slows
down payments. The level of credit concentration the customer
has with the Company is also a risk factor. Other risk factors
include environmental factors which could impair the value of
the underlying collateral of an asset or changes in federal and
state regulations which might reduce the ability of the Company
to collect all of the principal and interest owed to the Company.

The Companys Watch List, comprising substandard and special
mention assets is presented to the Board quarterly. Assets displaying
tendencies which might hinder full collection of principal are
classified as substandard. Such tendencies include but are not
limited to late payments on loans or deterioration of the underlying
collateral. Those loans classified substandard, for which a specific
potential for loss has been identified, are considered "special
assets." Assets classified as special mention are those not
yet serious enough to merit the substandard classification but
do require additional attention from management.

Loan collection efforts in the form of past due notices commence
when loan payments are more than 15 days past due. Once a loan
reaches 30 days past due status, the Companys collection
manager initiates personal contact with the borrower. When a loan
becomes 90 days past due, the Company initiates foreclosure proceedings.
At this point, loans are placed on non-accrual status. All interest
and late charges due on such loans are reversed in the form of
reserves for uncollectible interest and late charges.

Real estate acquired by the Company through foreclosure is
classified as foreclosed real estate until such time as the property
is sold. All such assets are booked at the lower of appraised
value or cost which includes all principal, escrow overdrafts
and attorney fees. All Foreclosed Real Estate is considered substandard.

Delinquent Loans and Non-Performing Assets. The following
tables set forth the Companys delinquent loans and non-performing
assets as of the dates indicated. Balances are indicative of the
total principal balances of such loans rather than the actual
principal past due based on the number of payments past due. At
December 31 of the five years presented, predominantly all of
the Associations delinquent loans and non performing assets
were either 1-4 family residential dwellings or loans secured
by 1-4 family residential loans.











|                       |   | 2001  |   | 2000  |   | 1999  |   | 1998  |   | 1997 
|---------------------- | - | ----- | - | ----- | - | ----- | - | ----- | - | -----
|                       |   | ----- |   | ----- |   | ----- |   | ----- |   | -----
|30-89 Days             | $ | 3,542 | $ | 2,231 | $ | 2,673 | $ | 2,171 | $ | 271  
|90+ Days               |   | 249   |   | 434   |   | 100   |   | 266   |   | 166  
|                       |   | ----- |   | ----- |   | ----- |   | ----- |   | -----
|Total Delinquent Loans | $ | 3,791 | $ | 2,665 | $ | 2,773 | $ | 2,437 | $ | 437  
|                       |   | ====  |   | ====  |   | ====  |   | ====  |   | ==== 

During 1998, the Company changed its data processing parameters
to include accounts exactly 30 days past due in the delinquent
30-89 day category. This accounts for the material increase in
the amount of loans delinquent 30-89 days in 1998 through 2001
compared to 1997.







|                            |                     |     | 2001  |     | 2000  |     | 1999  |     | 1998  |     | 1997 
|--------------------------- | ------------------- | --- | ----- | --- | ----- | --- | ----- | --- | ----- | --- | -----
|                            |                     |     | ----- |     | ----- |     | ----- |     | ----- |     | -----
|90+ Day Delinquent Loans    | $                   | 249 | $     | 434 | $     | 100 | $     | 266 | $     | 166
|Foreclosed Real Estate      |                     | -   |       | 117 |       | 14  |       | -   |       | -  
|                            |                     |     | ----- |     | ----- |     | ----- |     | ----- |     | -----
|Total Non Performing Assets | $                   | 249 | $     | 551 | $     | 114 | $     | 266 | $     | 166
|                            |                     |     | ===   |     | ===   |     | ===   |     | ===   |     | ===  
|Non Performing Loans as     |                     |     |       |     |       |     |       |     |       |    
|                            | a % of Total Loans  |     | .30%  |     | .58%  |     | .14%  |     | .42%  |     | .31% 
|Non Performing Assets as    |                     |     |       |     |       |     |       |     |       |    
|                            | a % of Total Assets |     | .13%  |     | .28%  |     | .06%  |     | .17%  |     | .13% 



Classified Assets.The following table presents information
pertaining to the Companys Watch list of classified assets
and associated specific valuation allowances as of the dates indicated.
All substandard and special mention loans receivable and related
specific valuation allowances were on 1-4 family residential mortgage
loans.











|                   |             |       | At December 31,
|------------------ | ----------- | ----- | ---------------
|                   |             |       | 2001           
|                   |             |       | ------         
|Substandard        | $           | 1,771 | $              
|Special Mention    |             | 66    |                
|                   |             |       | ------         
|Gross              |             | 1,837 |                
|                   |             |       |                
|Less Allowance for |             |       |                
|                   | Loan Loss * |       | -              
|                   |             |       | ------         
|Net                | $           | 1,837 | $              
|                   |             |       | =====          

* Up until the safety and soundness examination completed by
the OTS in November, 1999, the Company maintained a specific and
general valuation allowance for loan loss. At the suggestion of
OTS regulators, the Company adopted a methodology of one single
allowance for loan loss, eliminating the prior separate accounting
of the specific and general valuation allowances for loan loss.

Allowance for Loan Loss. The allowance for loan loss
("ALL") is calculated by assessing the need for specific
reserves on identified problem credits (see special assets in
the previous paragraph) in addition to using historical and economic
based percentages on certain classifications of homogeneous loans
to arrive at an overall ALL. Several of these categories are based
on the particular loan being included on the Companys Watch
List. Other categories are based on the type of underlying collateral
such as commercial or residential real estate while still other
categories are based on the nature of the loan such as construction
versus permanent financing. At December 31, the ALL was allocated
as follows for the five years presented:



Allocation of the Allowance for Loan Losses

(Dollars in Thousands)



|Balance at
    End of PeriodApplicable to: | 2001                      | 2000   | 1999                      | 1998   | 1997                     
|------------------------------------------ | ------------------------- | ------ | ------------------------- | ------ | -------------------------
|Amount                                     | Percent
    of TotalLoans | Amount | Percent
    of TotalLoans | Amount | Percent
    of TotalLoans
|1-4 Family Residential                     | $ 337                     | 85.1%  | $ 390                     | 94.9%  | $ 340                    
|FHA and VA                                 | -                         | 0.0%   | -                         | .1%    | -                        
|Construction                               | 5                         | 1.4%   | -                         | .8%    | -                        
|Commercial Real Estate                     | 57                        | 4.2%   | 24                        | 1.3%   | 39                       
|Other Real Estate                          | 33                        | 8.2%   | -                         | 1.9%   | 45                       
|Second Mortgage                            | -                         | 0.0%   | -                         | .1%    | -                        
|Loans on Deposits                          | -                         | .3%    | -                         | .3%    | -                        
|Commercial Loans                           | 3                         | .8%    | 6                         | .5%    | -                        
|                                           |                           |        |                           |        |                          
|TOTAL                                      | $ 435                     | 100.0% | $ 420                     | 100.0% | $ 424                    



LOAN LOSS EXPERIENCE

Provisions for loan losses are charged to earnings to bring
the total ALL to a level considered appropriate by management.
Losses are incurred via foreclosure, deterioration of the underlying
collateral, inability of the customer to repay the loan or other
means. These losses are charged against the ALL. The ALL is evaluated
on a quarterly basis and provisions to increase or adjustments
to reduce the allowance to the appropriate level deemed by management
are recorded when necessary. Charge-offs reduce the allowance
while recoveries increase the allowance during the quarter. Management
assesses the ALL accordingly and establishes additional provisions
to bring the ALL to an appropriate level. The appropriate level
of the ALL is determined by managements estimation of the
amount of loss associated with loans considered to be impaired
in accordance with SFAS 114, "Accounting by Creditors for
Impairment of a Loan," as well as managements estimate
of loss associated with the remaining portfolio. Historical analysis
of factors such as number of foreclosures, level of delinquencies
and amount of charge-offs as well as other factors such as local
and national economic conditions help management set both the
formula used to calculate the ALL for the remaining loan portfolio
as well as an appropriate level for the ALL overall.

The following table sets forth the Companys loan loss
experience for the years presented. All of the charge-offs and
provisions in the following table were on first mortgages of one-to-four
family dwellings.



An analysis of the allowance for loan losses is as follow (dollars
in thousands):



|                          |                        |         | Years Ended December 31,
|------------------------- | ---------------------- | ------- | ------------------------
|                          |                        |         | 2001                    
|Balance, Beginning        |                        | -----   |                         
|                          | of Year                | $       | 420                     
|Provision for Losses      |                        | 25      |                         
|Loans Charged Off         |                        | (10)    |                         
|Recoveries                |                        | -       |                         
|                          |                        |         | -----                   
|Balance, End of Year      | $                      | 435     | $                       
|                          |                        |         | ====                    
|Allowance for Loan        |                        |         |                         
|                          | Losses as a % of       |         |                         
|                          | Total Loans Receivable | .53%    | .56%                    
|                          |                        |         |                         
|Allowance for Loan        |                        |         |                         
|                          | Losses as a % of       |         |                         
|                          | Non Performing Loans   | 174.80% | 96.69%                  
|                          |                        |         |                         
|Net Charge-Offs as a % of |                        |         |                         
|                          | Average Loans          | 0.01%   | 0.02%                   

Mortgage-Backed Securities

The Company has invested in a portfolio of fixed-rate, mortgage-backed
securities that are issued or guaranteed by the Government National
Mortgage Association (GNMA). GNMA securities represent direct
obligations of the Federal government. Because of this, these
securities are considered high quality investments with minimal
credit risks. The guaranteed aspect of these investments results
in yields slightly less than the actual yields on the underlying
mortgage loans.

Mortgage-backed securities represent participating interests
in pools of first mortgage loans originated and serviced by their
prospective issuers. Principal and interest payments of the underlying
mortgage loans are passed through intermediaries, including but
not limited to the issuing agencies, on to investors such as GS
Financial Corp. These securities in general offer slightly higher
yields than United States Treasury obligations.

The Company invests in mortgage-backed securities with terms
varying from 5 to 30 years. These securities are subject to variations
in cash flow and yield due to the prepayment rates of the underlying
mortgage loans. All such mortgage-backed securities meet the requirements
of qualified thrifts investments as later defined.

On September 30, 1997 the Company reclassified all of its mortgage-backed
securities as available-for-sale pursuant to SFAS 115. Management
felt that this classification was more appropriate considering
the magnitude of the Companys investment in these instruments
and the liquidity available should other investment opportunities
arrive.

The following table sets forth the composition of the Companys
mortgage-backed securities portfolio at each of the dates indicated
(dollars in thousands):

MORTGAGE-BACKED SECURITIES



|December 31, 2001   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|------------------- | - | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                    |   | ----------         |                                | ----------                      |                
|Available for Sale: |   |                    |                                |                                 |                
|GNMA                | $ | 857                | $                              | 28                              | $              
|                    |   | -------            |                                | -------                         |                
|                    | $ | 857                | $                              | 28                              | $              
|                    |   | =====              |                                | =====                           |                
|                    |   |                    |                                |                                 |                
|December 31, 2000   |   | Amortized Cost     | Gross Unrealized Gains         | Gross Unrealized Losses         | Fair 
    Value
|                    |   | ----------         |                                | ----------                      |                
|Available for Sale: |   |                    |                                |                                 |                
|FNMA                | $ | 1,481              | $                              | -                               | $              
|FHLMC               |   | 1,096              |                                | -                               |                
|GNMA                |   | 1,541              |                                | 4                               |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 4,118              | $                              | 4                               | $              
|                    |   | ====               |                                | ==                              |                

The following table sets forth the maturities of the mortgage-backed
security portfolio as of December 31, 2001 (dollars in thousands):

MORTGAGE-BACKED SECURITIES



|                                     | December 31, 2001                  |   | Amortized
    Cost | Fair
    Value | Weighted
    Average
    Rate
|------------------------------------ | ---------------------------------- | - | ------------------ | -------------- | -----------------------------
|                                     |                                    |   | ---------          |                | ---------                    
|Mortgage-Backed Securities Maturing: |                                    |   |                    |                |                              
|                                     | In One Year or Less                | $ | -                  | $              | -                            
|                                     | After One Year Through Five Years  |   | -                  |                | -                            
|                                     | After Five Years Through Ten Years |   | -                  |                | -                            
|                                     | After Ten Years                    |   | 857                |                | 885                          
|                                     |                                    |   | ------             |                | ------                       
|                                     |                                    | $ | 857                | $              | 885                          
|                                     |                                    |   | ====               |                | ====                         

The following table sets forth the purchases, sales and principal
repayments of the Companys mortgage-backed securities during
the periods indicated (dollars in thousands):

MORTGAGE-BACKED SECURITIES



|                           |                           |                  |         | 2001    |          | 2000    |         | 1999   
|-------------------------- | ------------------------- | ---------------- | ------- | ------- | -------- | ------- | ------- | -------
|                           |                           |                  |         | ------- |          | ------- |         | -------
|Mortgage Backed Securities |                           |                  |         |         |          |        
|                           | Balance at January 1,     | $                | 4,118   | $       | 16,743   | $       | 23,058 
|                           | Purchases                 |                  | -       |         | -        |         | -      
|                           | Repayments                |                  | (925)   |         | (1,956)  |         | (6,227)
|                           | Sales (Net of Gains)      |                  | (2,321) |         | (10,650) |         | -      
|                           | Amortizations of Premiums |                  |         |         |          |         |        
|                           |                           | /Discounts (Net) |         | (15)    |          | (19)    |         | (88)   
|                           |                           |                  |         | ------- |          | ------- |         | -------
|                           | Balance at December 31,   | $                | 857     | $       | 4,118    | $       | 16,743 
|                           |                           |                  |         | ====    |          | ======  |         | ====== 
|                           | Weighted Average Yield    |                  | 6.54%   |         | 6.68%    |         | 6.53%  

Investment Securities

The Company invests in United States Treasury and Agency issued
obligations ranging in term from 3 months to 10 years. The investment
policy of the Company is reviewed periodically by Management and
ratified annually by the Board of Directors. At present the investment
policy of the Company strives to maintain a liquid, conservative
portfolio of investments keeping in mind the cash flow and investment
needs of the Company.

The Company also invests its excess cash in three institutional
funds whose principal underlying holdings are qualified thrift
investments. These three funds provide a supplement to the Companys
other short-term money market investments and Federal Funds Sold,
typically yielding a higher rate of return while still providing
excellent liquidity.

Interest rates dictate many of the investment decisions and
policies of the Company. It is the policy of the Company not to
engage in speculative purchasing, selling or trading of investments;
however, certain profits may be taken from time to time on the
sale of investments. When interest rate spreads reach acceptable
levels the Company may utilize leveraged purchasing of investment
securities. Also, when anticipated earnings permit, certain portfolio
adjustments may be made to enhance the overall portfolio yield
even though losses may be recognized in doing so.





INVESTMENT SECURITIES

Securities available-for-sale consist of the following (in
thousands):



|                           | December 31, 2001    |        | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|-------------------------- | -------------------- | ------ | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                           |                      |        | ----------         |                                | ----------                      |                
|U. S. Government           |                      |        |                    |                                |                                 |                
|                           | and Federal Agencies | $      | 801                | $                              | 85                              | $              
|Adjustable Rate            |                      |        |                    |                                |                                 |                
|                           | Mortgage Mutual Fund |        | 12,481             |                                | 32                              |                
|Ultra Short Term           |                      |        |                    |                                |                                 |                
|                           | Mutual Fund          |        | 4,255              |                                | -                               |                
|Intermediate               |                      |        |                    |                                |                                 |                
|                           | Mortgage Mutual Fund |        | 394                |                                | 3                               |                
|FHLMC Common Stock         |                      | 16     |                    | 1,031                          |                                 | -              
|FHLMC Preferred Stock      |                      | 16,224 |                    | 326                            |                                 | -              
|Equity Investments - Other |                      | 173    |                    | 3                              |                                 | -              
|                           |                      |        | -------            |                                | -------                         |                
|                           |                      | $      | 34,344             | $                              | 1,480                           | $              
|                           |                      |        | ======             |                                | =====                           |                
|                           |                      |        |                    |                                |                                 |                
|                           | December 31, 2000    |        | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|                           |                      |        | ----------         |                                | ----------                      |                
|U. S. Government           |                      |        |                    |                                |                                 |                
|                           | and Federal Agencies | $      | 2,389              | $                              | 72                              | $              
|Adjustable Rate            |                      |        |                    |                                |                                 |                
|                           | Mortgage Mutual Fund |        | 2,831              |                                | -                               |                
|Intermediate               |                      |        |                    |                                |                                 |                
|                           | Mortgage Mutual Fund |        | 400                |                                | -                               |                
|FHLMC Common Stock         |                      | 25     |                    | 1,767                          |                                 | -              
|FHLMC Preferred Stock      |                      | 3,506  |                    | -                              |                                 | 2              
|Equity Investments - Other |                      | 50     |                    | -                              |                                 | -              
|                           |                      |        | -------            |                                | -------                         |                
|                           |                      | $      | 9,201              | $                              | 1,839                           | $              
|                           |                      |        | =====              |                                | =====                           |                



The following table sets forth the amount of investment securities
which mature during each of the periods indicated at December
31, 2001 (dollars in thousands):

INVESTMENT SECURITIES



|                     |                                    | Securities        
|-------------------- | ---------------------------------- | ------------------
|                     |                                    | Available-for-Sale
|                     | December 31, 2001                  |                   
|                     |                                    |                   
|Amounts Maturing in: |                                    |                   
|                     | In One Year or Less                | $                 
|                     | After One Year Through Five Years  |                   
|                     | After Five Years Through Ten Years |                   
|                     |                                    |                   
|                     |                                    | $                 
|                     |                                    |                   

COLLATERALIZED MORTGAGE OBLIGATIONS

Currently, the Companys investment in Collateralized
Mortgage Obligations (CMOs) is limited to first-tranche Real Estate
Mortgage Investment Conduits (REMICs). A REMIC is a pass through
investment created under the Tax Reform Act of 1986 to issue multiple
class mortgage-backed securities. The mulitiple classes within
a REMIC are known as "tranches." The tranches are paid
principal and/or interest based on the payment schedule outlined
in the prospectus.

The Companys investment in REMICs is limited to those
issued by FNMA, FHLMC and "AAA" rated non-governmental
issuers. These are defined to be within the 20% risk-weighted
category for thrift institutions. The contractual maturity of
a REMIC is defined by the latest maturity date of the underlying
group of mortgage loans. In terms of actual cash flow, the term
or duration of the REMICs purchased by the Company varies
from 2 to 4 years. The cash flow of these investments facilitates
the operating needs of the Company.



The following table sets forth the composition of the Companys
portfolio of Collateralized Mortgage Obligations indicated (in
thousands):

COLLATERALIZED MORTGAGE OBLIGATIONS



|December 31, 2001   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|------------------- | - | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                    |   | ----------         |                                | ----------                      |                
|Available-for-Sale: |   |                    |                                |                                 |                
|FNMA                | $ | 1,283              | $                              | -                               | $              
|FHLMC               |   | 13,702             |                                | 153                             |                
|Other               |   | 35,810             |                                | 1,213                           |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 50,795             | $                              | 1,366                           | $              
|                    |   | =====              |                                | =====                           |                

|December 31, 2000   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|------------------- | - | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                    |   | ----------         |                                | ----------                      |                
|Available-for-Sale: |   |                    |                                |                                 |                
|FNMA                | $ | 5,766              | $                              | -                               | $              
|FHLMC               |   | 14,254             |                                | 196                             |                
|Other               |   | 33,562             |                                | 583                             |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 53,582             | $                              | 779                             | $              
|                    |   | =====              |                                | =====                           |                

Sources of Funds

General. Deposits have always been the primary source
of the Companys funds for lending and other investment purposes.
The supply of retail deposits has decreased due to more investors
putting their money in the markets. As a result, the Company has
turned towards wholesale sources such as the FHLB which allows
member institutions such as the Company to borrow money at discounted
costs.

Deposits. The Companys deposits are attracted
principally from within its market area. Many depositors are also
mortgage loan customers. The Company offers passbook savings,
demand deposit accounts, now accounts and certificates of deposit.
Terms for certificates of deposit vary from 6 months to 5 years
while rates tend to increase with term.



The following table shows the distribution of, and certain
other information relating to the Companys deposits. Deposit
account balances at December 31, 2001, 2000, and 1999 are summarized
as follows (in thousands):



|                |          | Years Ending December 31,
|--------------- | -------- | -------------------------
|                |          |                          
|                |          |                          
|                |          |                          
|                |          |                          
|                |          |                          
|Demand Deposit  |          |                          
|                | Accounts | $                        
|Regular Savings |          |                          
|                | Accounts |                          
|Certificates of |          |                          
|                | Deposit  |                          
|                |          |                          
|                |          | $                        
|                |          |                          

The following table sets forth the deposit cash flow of the
Company during the periods indicated (in thousands):



|                                    |                   | Year Ended December 31,
|----------------------------------- | ----------------- | -----------------------
|                                    |                   |                        
|                                    |                   |                        
|Increase (decrease) before          |                   |                        
|                                    | Interest Credited | $                      
|Interest Credited                   |                   | 2,271                  
|                                    |                   |                        
|Net increase (decrease) in deposits | $                 | 12,290                 

The Company attempts to price its deposit accounts to remain
generally competitive with other financial institutions in its
market area, while maintaining its traditional margins. Traditionally
the Company has relied on its passbook savings accounts as a core
deposit base. During 2001, the Company was able to establish a
portfolio of demand deposit accounts of approximately $8 million.
This was in line with the Company's goals in diversify and expanding
the products and services offered to its customers. The Company
does not pay "jumbo" rates for deposits $100,000 and
over.

The principal methods used by the Company to attract deposits
include its emphasis on personal service, competitive interest
rates and convenient office locations. The Company does not advertise
for deposits outside of its primary market area. At December 31,
2001, the Company had no deposits that were obtained through deposit
brokers.

The following table presents the amount of certificates of
deposit at December 31, 2001 which mature during the periods indicated
(dollars in thousands).



|                               |                        |        | Amount  | Percent
|------------------------------ | ---------------------- | ------ | ------- | -------
|                               |                        |        | ------- | -------
|Certificate Accounts Maturing: |                        |        |        
|                               | Under 12 months        | $      | 32,485  | 75.17% 
|                               | 12 months to 24 months |        | 8,049   | 18.62% 
|                               | 24 months to 36 months |        | 2,180   | 5.04%  
|                               | 36 months to 48 months |        | 496     | 1.15%  
|                               | 48 months to 60 months |        | 7       | .02%   
|                               |                        |        | ------  | -----  
|Total Certificates             | $                      | 43,217 | 100.00%
|                               |                        |        | =====   | ====== 

The following table sets forth the maturities of the Companys
deposits of $100,000 or more at December 31, 2001 by time remaining
to maturity (in thousands).





|Maturing in 3 months or less     | $ | 4,315 
|-------------------------------- | - | ------
|Maturing in 3 to 6 months        |   | 1,257 
|Maturing in 6 months to 1 year   |   | 1,238 
|Maturing in 1 to 2 years         |   | 1,114 
|Maturing in more than 2 years    |   | 209   
|                                 |   | ------
|Total Deposits $100,000 and over | $ | 8,133 
|                                 |   | ===== 



Borrowings. During 2001 the Company obtained advances
from the FHLB, as part of a leveraged investment program. The
Company borrows the funds which are subsequently reinvested in
mortgage-backed securities, collateralized mortgage obligations
and other investments which earn interest at a rate greater than
the rate charged on the advances. The advances consist of fully
amortizing and balloon advances which mature between January,
2001 and June, 2008. A summary of the advances by maturity and
interest rate are detailed as follows (in thousands):



|                     |   |            | Weighted  
|-------------------- | - | ---------- | ----------
|Maturing in the Year |   |            | Average   
|Ending December 31,  |   | Amount     | Rate      
|-------------------  |   | ---------- | ----------
|2002                 | $ | 17,241     | 5.67%     
|2003                 |   | 23,098     | 5.51%     
|2004                 |   | 6,225      | 5.57%     
|2005                 |   | 10,205     | 5.97%     
|2006                 |   | 5,462      | 5.55%     
|Thereafter           |   | 17,034     | 5.63%     
|                     |   | ---------  |           
|                     | $ | 79,265     |           

The maximum amount of advances outstanding at any month-end
during 2001 was $102.1 million. The average balance outstanding
during 2001 was $86.8 million.

Treasury Stock

Since 1998, the Company has been repurchasing shares of its
common stock. The Company became eligible one year from the date
of its initial public offering to begin repurchasing stock. For
the first two years of the buyback program, the Company was limited
to 10% per year per OTS regulations. On April 1, 2000, the three
year anniversary of the Companys IPO, the 10% per year limitation
on buybacks was lifted. The following table summarizes the repurchase
of shares of its common stock by year:

GS Financial Corp.

Common Stock Repurchases



|      | Shares       | Average 
|----- | ------------ | --------
|Year  | Repurchased  | Price   
|1998  | 491,054      | $ 16.95 
|1999  | 299,000      | $ 12.22 
|2000  | 679,600      | $ 12.64 
|2001  | 305,684      | $ 15.09 
|      | ------------ | --------
|Total | 1,775,338    | $ 14.18 

All purchases were open market transactions. Due to the highly
capitalized condition of the Company, management felt that these
purchases, most of which were at a discount to book value, were
an effective way to reduce capital while still enhancing shareholder
value. The alternative to reducing capital would have been rapid
growth probably through some type of acquisition. Given the premium
nature of current financial institution buyouts, the alternative
approach to reducing capital through buybacks seemed a more conservative
approach. These shares have not been retired and could potentially
serve as a source of funding should the need arise in the future.

Subsidiaries

Guaranty Savings & Homestead Association is a wholly-owned
subsidiary of the Company. The Company has no other subsidiaries.

Competition

Guaranty Savings & Homestead Association faces significant
competition both in attracting deposits and in originating loans.
Its most direct competition for deposits has come from commercial
banks, credit unions, other savings and loans and mortgage brokers
located in the metropolitan New Orleans market. The Association
also competes for investors funds with short-term money
market mutual funds and issuers of corporate and government securities.
Guaranty Savings & Homestead Association does not rely on
any individual group or entity for a material portion of its deposits
or mortgage loan portfolio. The Associations primary factors
in competing in the home mortgage loan market are its efficient
personal service and attractive interest rates and terms.

Employees

The Association had 36 full-time employees at December 31,
2001. None of these employees are represented by a collective
bargaining agreement. Guaranty Savings & Homestead Association
believes that it enjoys excellent relations with its personnel.

Regulation

Set forth below is a brief description of certain laws and
regulations which are applicable to the Company and Guaranty Savings
& Homestead Association. The description of these laws and
regulations, as well as descriptions of laws and regulations contained
elsewhere herein, does not purport to be complete and is qualified
in its entirety by reference to applicable laws and regulations.

The Company

General. The Company, as a savings and loan holding
company within the meaning of the Home Owners Loan Act,
as amended ("HOLA"), is registered with and subject
to OTS regulations, examinations, supervision and reporting. As
a subsidiary of a savings and loan holding company, Guaranty Savings
& Homestead Association is subject to certain restrictions
in its dealings with the Company and any affiliates thereof.



Activities Restrictions. There are generally no restrictions
on the activities of a savings and loan holding company which
holds only one subsidiary savings institution. However, if the
Director of the OTS determines that there is reasonable cause
to believe that the continuation by a savings and loan holding
company of an activity constitutes a serious risk to the financial
safety, soundness or stability of its subsidiary savings institution,
the Director may impose such restrictions as deemed necessary
to address such risk, including limiting (i) payment of dividends
by the savings institution; (ii) transactions between the savings
institution and its affiliates; and (iii) any activities of the
savings institution that might create a serious risk that the
liabilities of the holding company and its affiliates may be imposed
on the savings institution. Notwithstanding the above rules as
to permissible business activities of unitary savings and loan
holding companies, if the savings institution subsidiary of such
a holding company fails to meet the qualified thrift lender ("QTL")
test, as discussed under "- The Association  Qualified
Thrift Lender Test," then such unitary holding company also
shall become subject to the activities restrictions applicable
to multiple savings and loan holding companies and, unless the
savings institution re-qualifies as a QTL within one year thereafter,
shall register as, and become subject to the restrictions applicable
to, a bank holding company. See "- The Association 
Qualified Thrift Lender Test."

If the Company were to acquire control of another savings institution,
other than through merger or other business combination with Guaranty
Savings, the Company would thereupon become a multiple savings
and loan holding company. Except where such acquisition is pursuant
to the authority to approve emergency thrift acquisitions and
where each subsidiary savings institution meets the QTL test,
as set forth below, the activities of the Company and any of its
subsidiaries (other than Guaranty Savings or other subsidiary
savings institutions) would thereafter be subject to further restrictions.
Among other things, no multiple savings and loan holding company
or subsidiary thereof which is not a savings institution shall
commence or continue for a limited period of time after becoming
a multiple savings and loan holding company or subsidiary thereof
any business activity, other than: (i) furnishing or performing
management services for a subsidiary savings institution; (ii)
conducting an insurance agency or escrow business; (iii) holding,
managing, or liquidating assets owned by or acquired from a subsidiary
savings institution; (iv) holding or managing properties used
or occupied by a subsidiary savings institution; (v) acting as
trustee under deeds of trust; (vi) those activities authorized
by regulation as of March 5, 1987 to be engaged in by multiple
savings and loan holding companies; or (vii) unless the Director
of the OTS by regulation prohibits or limits such activities for
savings and loan holding companies. Those activities described
in clause (vii) above also must be approved by the Director of
the OTS prior to being engaged in by a multiple savings and loan
holding company.

Limitations on Transactions with Affiliates. Transactions
between savings institutions and any affiliate are governed by
Sections 23A and 23B of the Federal Reserve Act. An affiliate
of a savings institution is any company or entity which controls,
is controlled by or is under common control with the savings institution.
In a holding company context, the parent holding company of a
savings institution (such as the Company) and any companies which
are controlled by such parent holding company are affiliates of
the savings institution. Generally, Sections 23A and 23B (i) limit
the extent to which the savings institution or its subsidiaries
may engage in "covered transactions" with any one affiliate
to an amount equal to 10% of such institutions capital stock
and surplus, and contain an aggregate limit on all such transactions
with all affiliates to an amount equal to 20% of such capital
stock and surplus and (ii) require that all such transactions
be on terms substantially the same, or at least as favorable,
to the institution or subsidiary as those provided to a non-affiliate.
The term "covered transaction" includes the making of
loans, purchase of assets, issuance of guarantee and other similar
transactions. In addition to the restrictions imposed by Sections
23A and 23B, no savings institution may (i) loan or otherwise
extend credit to an affiliate, except for any affiliate which
engages only in activities which are permissible for bank holding
companies, or (ii) purchase or invest in any stocks, bonds, debentures,
notes or similar obligations of any affiliate, except for affiliates
which are subsidiaries of the savings institution.

In addition, Sections 22(h) and (g) of the Federal Reserve
Act place restrictions on loans to executive officers, directors
and principal stockholders. Under Section 22(h), secured loans
to a director, an executive officer and to a greater than 10%
stockholder of a savings institution, and certain affiliated interest
of either, may not exceed, together with all other outstanding
loans to such person and affiliated interests, the savings institutions
loans to one borrower limit (generally equal to 25% of the institutions
unimpaired capital and surplus). Section 22(h) also requires that
loans to directors, executive officers and principal stockholders
be made on terms substantially the same as offered in comparable
transactions to other persons unless the loans are made pursuant
to a benefit or compensation program that (i) is widely available
to employees of the institution and (ii) does not give preference
to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of
the savings institution. Section 22(h) also requires prior Board
approval for certain loans. In addition, the aggregate amount
of extensions of credit by a savings institution to all insiders
cannot exceed the institutions unimpaired capital and surplus.
Furthermore, Section 22(g) places additional restrictions on loans
to executive officers. At December 31, 2001 Guaranty Savings was
in compliance with the above restrictions.

Restrictions on Acquisitions. Except under limited circumstances,
savings and loan holding companies are prohibited from acquiring,
without prior approval of the Director of the OTS, (i) control
of any other savings institution or savings and loan holding company
or substantially all the assets thereof or (ii) more than 5% of
the voting shares of a savings institution or holding company
thereof which is not a subsidiary. Except with the prior approval
of the Director of the OTS, no director or officer of a savings
and loan holding company or person owning or controlling by proxy
or otherwise more than 25% of such companys stock, may acquire
control of any savings institution, other than a subsidiary savings
institution, or of any other savings and loan holding company.

The Director of the OTS may only approve acquisitions resulting
in the formation of a multiple savings and loan holding company
which controls savings institutions in more than one state if
(i) the multiple savings and loan holding company involved controls
a savings institution which operated a home or branch office located
in the state of the institution to be acquired as of March 5,
1987; (ii) the acquirer is authorized to acquire control of the
savings institution pursuant to the emergency acquisition provisions
of the Federal Deposit Insurance Act ("FDIA"); or (iii)
the statutes of the state in which the institution to be acquired
is located specifically permit institutions to be acquired by
the state-chartered institutions or savings and loan holding companies
located in the state where the acquiring entity is located (or
by a holding company that controls such state-chartered savings
institutions).

Under the Bank Holding Company Act of 1956, the Federal Reserve
Bank ("FRB") is authorized to approve an application
by a bank holding company to acquire control of a savings institution.
In addition, a bank holding company that controls a savings institution
may merge or consolidate the assets and liabilities of the savings
institution with, or transfer assets and liabilities to, any subsidiary
bank which is a member of the Bank Insurance fund with the approval
of the appropriate federal banking agency and the FRB. As a result
of these provisions, there have been a number of acquisitions
of savings institutions by bank holding companies in recent years.

Federal Securities Laws. The Companys common stock
is registered with the SEC under the Securities and Exchange Act
of 1934 ("Exchange Act"). The Company is subject to
the information, proxy solicitation, insider trading restrictions
and other requirements under the Exchange Act.

Financial Modernization. Under the Gramm-Leach-Bliley
Act enacted into law on November 12, 1999, no company may acquire
control of a savings and loan holding company after May 4, 1999,
unless the company is engaged only in activities traditionally
permitted to a multiple savings and loan holding company or newly
permitted to a financial holding company under Section 4 (k) of
the Bank Holding Company Act. Existing savings and loan holding
companies and those formed pursuant to an application filed with
the OTS before May 4, 1999, may engage in any activity including
non-financial or commercial activities provided such companies
control only one savings and loan association that meets the Qualified
Thrift Lender test. Corporate reorganizations are permitted, but
the transfer of grand-fathered unitary thrift holding company
status through acquisition is not permitted.

The Association

General. As a Louisiana chartered stock savings and
loan association, the OFI is the Associations chartering
authority, and the OTS serves as the Associations primary
regulator. As such, the OFI and the OTS have extensive authority
over the operations of Louisiana-chartered savings institutions.
The Association is subject to periodic examinations and is required
to file monthly, quarterly and annual reports with either or both
parties. The investment and lending authority of savings institutions
are prohibited from engaging in any activities not permitted by
such laws and regulations. Such regulation and supervision is
primarily intended for the protection of depositors.

Insurance of Accounts. The deposits of Guaranty Savings
and Homestead Association are insured to the maximum permitted
by the SAIF, which is administered by the FDIC, and are backed
by the full faith and credit of the U.S. Government. As insurer,
the FDIC 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 threat
to the FDIC. The FDIC also has the authority to initiate enforcement
actions against savings institutions, after giving the OTS an
opportunity to take such action.

The FDIC may terminate the deposit insurance of any insured
depository institution, including Guaranty Savings and Homestead
Association, if it determines after a hearing that the institution
has engaged or is engaging in unsafe or unsound practices, is
in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, order or any condition
imposed by an agreement with the FDIC. It also may suspend deposit
insurance temporarily during the hearing process for the permanent
termination of insurance, if the institution has no tangible capital.
If insurance of accounts is terminated, the accounts at the institution
at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years,
as determined by the FDIC. Management is aware of no existing
circumstances which would result in termination of the Associations
deposit insurance.



Regulatory Capital Requirements. Federally insured savings
institutions are required to maintain minimum levels of regulatory
capital. The OTS has established capital standards applicable
to all savings institutions. These standards generally must be
as stringent as the comparable capital requirements imposed on
national banks. The OTS also is authorized to impose capital requirements
in excess of these standards on individual institutions on a case-by-case
basis.

Current OTS capital standards require savings institutions
to satisfy three different capital requirements. Under these standards,
savings institutions must maintain tangible capital (1.5%), core
capital (3.0%), and risk based capital (8.0%). Core capital includes
generally recognized capital such as common stockholders
equity and retained earnings plus other items such as qualifying
goodwill. Tangible capital is essentially the same but does not
include qualifying supervisory goodwill. At December 31, 2001
the Association had no goodwill or other intangible assets which
are deducted in computing its tangible capital.

In determining risk-based capital, a savings institution is
allowed to include both core capital and supplementary capital.
Assets are assigned to particular risk-weighted categories and
subsequently multiplied by that particular percentage (cash and
US Treasury and Agency securities equal 0%, 20% for high quality
mortgage-backed securities including those issued by US Government
Agencies and "AAA" rated private companies, state and
local obligations, claims on FHLBs and claims on domestic
depository institutions, 50% for single family mortgage loans
and 100% for all other loans and investments). The sum of these
calculations becomes the total of risk-weighted assets which are
then used to calculate the Associations risk-based capital
ratio.

At December 31, 2001, Guaranty Savings exceeded all of its
regulatory capital requirements, with tangible, core and risk-
based capital ratios of 14.40%, 14.40% and 28.71% respectively.

Liquidity Requirements. During 2001, the OTS adopted
a final rule removing formal regulation requiring savings institutions
to maintain an average daily balance of liquid assets equal to
four percent of its average daily balance of net withdrawable
deposit accounts and borrowings payable in one year or less commonly
referred to as its liquidity base. The Association does maintain
sufficient liquidity to ensure its safe and sound operation. This
includes being able to meet its daily financial obligations including
but not limited to loan disbursements, savings withdrawals, payment
of cash dividends and operating expenses of the Association. The
cash position of the Association is managed through monitoring
and maintaining certain levels of cash on hand, overnight Federal
Funds Sold and other short-term liquid assets.

Capital Distributions. Under OTS regulations, savings
associations that would be well capitalized following a capital
distribution are not subject to any requirement for notice or
application unless the total amount of all capital distributions,
including any proposed capital distribution, for the applicable
calendar year would exceed an amount equal to the savings association's
net income for that year to date plus the savings association's
retained net income for the preceeding two years. However, because
the Association is a subsidiary of a savings and loan holding
company, the Association is required to give the OTS at least
30 days notice prior to any capital distribution to the Company.





Community Reinvestment. Under the Community Reinvestment
Act of 1977, as amended ("CRA"), as implemented by OTS
regulations, a savings institution has a continuing and affirmative
obligation consistent with its safe and sound operation 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 its examination of a savings
institution, 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 by such institution.
The CRA requires public disclosure of an institutions CRA
rating and requires the OTS to provide a written evaluation of
an institutions CRA performance utilizing a rating system
which identifies four levels of performance that may describe
an institutions record of meeting community needs: outstanding,
satisfactory, needs to improve and substantial noncompliance.
The CRA also requires all institutions to make public disclosure
of their CRA ratings. The Associations current CRA rating
is satisfactory.

Qualified Thrift Lender Test. The Qualified Thrift Lender
(QTL) Test measures the Associations level of qualified
thrift investments compared to its total portfolio assets (total
assets less intangibles, property used by a savings association
in its business and liquidity investments in an amount not to
exceed 20% of assets). Generally, qualified thrift investments
("QTIs")are residential housing related assets.
The Internal Revenue Service (IRS) requires a savings institution
to have at least 65% of its assets in "QTIs" to
qualify for tax treatment as a building and loan association.
At December 31, 2001, 99.99% of the Associations assets
were invested in QTIs which was in excess of the percentage
required to qualify the Association under the QTL test.

Federal Home Loan Bank System. Guaranty Savings and
Homestead Association is a member of the FHLB of Dallas. 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 FHLB agency issued obligations. As a member,
the Association is required to maintain stock in the FHLB of Dallas
in an amount equal to at least 1% of its aggregate unpaid residential
mortgage loans, home purchase contracts or similar obligations
at the beginning of each year or 5% of its advances from the FHLB
of Dallas, whichever is greater. At December 31, 2001, Guaranty
Savings and Homestead Association had $5.3 million in FHLB stock,
which was in compliance with this requirement.

Federal Taxation

General. The Company and the Association are subject
to the generally applicable corporate tax provisions of the Internal
Revenue Code (the "Code"), and the Association is subject
to certain additional provisions of the Code which apply to thrifts
and other types of financial institutions. The following discussion
of federal taxation is intended only to summarize certain pertinent
federal income tax matters relevant to the taxation of the Company
and the Association and is not a comprehensive discussion of the
tax rules applicable to the Company and the Association.

Year. The Company files a consolidated federal tax return
on the basis of a calendar year ending on December 31.

Bad Debt Reserves. A small financial institution (one
with an adjusted basis of assets of less than $500 million), such
as the Association, is required to determine additions to its
bad debt reserves under the experience method. Under the experience
method, the deductible annual addition to the institutions
bad debt reserves is the amount necessary to increase the balance
of the reserve at the close of the taxable year to the greater
of (a) the amount which bears the same ratio to loans outstanding
at the close of the taxable year as the total net bad debts sustained
during the current and five preceding taxable years bear to the
sum of loans outstanding at the close of the same six years, or
(b) the lower of (i) the balance of the reserve account at the
close of the Associations "base year," which was
its tax year ended December 31, 1987, or (ii) if the amount of
loans outstanding at close of the taxable year is less than the
amount of loans outstanding at the close of the base year, the
amount which bears the same ratio to loans outstanding at the
close of the taxable year as the balance of the reserve at the
close of the base year bears to the amount of loans outstanding
at the close of the base year.

In 1996, the Association was required to change its method
of computing its bad debt deduction from other methods previously
allowable to the experience method. As a result of the change
in law, the Association is required to include an amount into
taxable income over a six-year period beginning in 1998. The amount
required to be included in taxable income is the difference between
its bad debt reserves at December 31, 1995, as determined under
previously allowable bad debt methods, and the reserve allowable
under the experience method at December 31, 1995. The amount to
be included in the Associations taxable income over the
six-year period beginning with 1998 is $145,346, or $24,224 per
year.

At December 31, 2001, the federal income tax reserves of the
Association included $3.8 million for which no federal income
tax has been provided. Because of these federal income tax reserves
and the liquidation account to be established for the benefit
of certain depositors of the Association in connection with the
conversion of the Association to stock form, the retained earnings
of the Association are substantially restricted.

Distributions. If the Association were to distribute
cash or property to its sole stockholder, and the distribution
was treated as being from its accumulated bad debt reserves, the
distribution would cause the Association to have additional taxable
income. A distribution is deemed to have been made from accumulated
bad debt reserves to the extent that (a) the reserves exceed the
amount that would have been accumulated on the basis of actual
loss experience, and (b) the distribution is a "non-qualified
distribution." A distribution with respect to stock is a
non- qualified distribution to the extent that, for federal income
tax purposes, (i) it is in redemption of shares, (ii) it is pursuant
to a liquidation of the institution, or (iii) in the case of a
current distribution, together will all other such distributions
during the taxable year, it exceeds the institutions current and
post-1951 accumulated earnings and profits. The amount of additional
taxable income created by a non-qualified distribution is an amount
that when reduced by the tax attributable to it is equal to the
amount of the distribution.

Minimum Tax. The Internal Revenue Code imposes an alternative
minimum tax at a rate of 20% on corporations with average annual
gross receipts in excess of $7.5 million for the prior three tax
years. Average annual gross receipts of the Company is in excess
of $7.5 million and as a result, the Company is subject to the
provisions of the alternative minimum tax provisions of the Code.
The alternative minimum tax generally applies to a base of regular
taxable income plus certain tax preferences ("alternative
minimum taxable income" or "AMTI") and is payable
to the extent such AMTI is in excess of an exemption amount. The
Code provides items of tax preference including (a) tax exempt
interest on newly issued (generally, issued after August 8, 1986)
private activity bonds other than certain qualified bonds, (b)
certain accelerated depreciation amounts and (c) 75% of the excess
if any of (i) adjusted current earnings as defined in the Code,
over (ii) AMTI (defined without regard to this preference and
prior to reduction by net operating losses).

Net Operating Loss Carryovers. A financial institution
may carry back net operating losses ("NOLs") to the
preceding two taxable years and forward to the succeeding 20 taxable
years. This provision applies to losses incurred in taxable years
beginning after 1986. NOLs arising in tax years ending in 2001
and 2002 may be carried back five years. At December 31, 2001,
the Association had no NOL carry-forwards for federal income tax
purposes.

Capital Gains and Corporate Dividends-Received Deduction.
Corporate net capital gains are taxed at a maximum rate of 35%.
The corporate dividends-received deduction is 80% in the case
of dividends received from 20% or more owned corporations with
which a corporate recipient does not file a consolidated tax return.
Corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received
or accrued on their behalf. However, a corporation may deduct
100% of dividends from a member of the same affiliated group of
corporations.

Other Matters. Federal legislation is introduced from
time to time that would limit the ability of individuals to deduct
interest paid on mortgage loans. Individuals are currently not
permitted to deduct interest on consumer loans. Significant increases
in tax rates or further restrictions on the deductibility of mortgage
interest could adversely affect the Association. The Companys
federal income tax returns for the tax years ended December 31,
1998 forward are open under the statute of limitations and are
subject to review by the IRS.

State Taxation

Any non-banking subsidiaries of the Association ( as well as
the Company) are subject to the Louisiana Corporation Income Tax
based on their Louisiana taxable income, as well as franchise
taxes. The Corporation Income Tax applies at graduated rates from
4% upon the first $25,000 of Louisiana taxable income to 8% on
all Louisiana taxable income in excess of $200,000. For these
purposes, "Louisiana taxable income" means net income
which is earned within or derived from sources within the State
of Louisiana, after adjustments permitted under Louisiana law
including a federal income tax deduction and an allowance for
net operating losses, if any. As a stock thrift, the Association
is subject to the Louisiana Shares Tax. The formula for deriving
the assessed value is to; (a) calculate 15% of the sum of 20%
of the companys capitalized earnings, plus (b) 80% of the
companys taxable stockholders equity, and to subtract
from that figure 50% of the companys real and personal property
assessment. Various items may also be subtracted in calculating
a companys capitalized earnings.

Franchise Tax

The Company is also subject to the Louisiana franchise tax,
which is imposed upon equity and certain borrowings (the franchise
base) at a rate of $3 for every $1,000 of franchise base. Financial
institution holding companies are allowed to reduce the franchise
base to the extent of investments in and advances to subsidiary
financial institutions.



Item 2. PROPERTIES

The following table sets forth certain information relating
to the Companys offices at December 31, 2001. All properties
are owned by the Company except for the Ponchatoula loan production
office. All amounts are in thousands.



|                                     |   | Net    |   |         
|------------------------------------ | - | ------ | - | --------
|                                     |   | Book   |   | Total   
|Location                             |   | Value  |   | Deposits
|----------                           |   | ------ |   | ------- 
|3798 Veterans Blvd., Metairie        | $ | 1,771  | $ | 59,062  
|1700 Veterans Blvd., Metairie *      |   | 532    |   | -       
|2111 N. Causeway Blvd., Mandeville   |   | 307    |   | 3,211   
|3915 Canal St., New Orleans          |   | 238    |   | 8,896   
|1515 Hwy. 51 N., Ponchatoula, LA. ** |   | -      |   | -       
|                                     |   | -----  |   | ------  
|                                     | $ | 2,848  | $ | 71,169  
|                                     |   | =====  |   | =====   

* This location currently offers loan production only. Full
service branch operations will begin some time in 2002.

** Loan production office only. Leased premises.

Item 3. LEGAL PROCEEDINGS

The Company and the Association are not involved in any pending
legal proceedings other than nonmaterial legal proceedings occurring
in the ordinary course of business.

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

There were no matters submitted to security holders during
the quarter ending December 31, 2001.





Item 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The information required herein, to the extent applicable,
is incorporated by reference from page 1 of the Registrants
2001 Annual Report to Stockholders ("Annual Report").

Item 6. SELECTED FINANCIAL DATA

The information required herein is incorporated by reference
from pages 2 to 3 of the Registrants Annual Report.

Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The information required herein is incorporated by reference
from pages 3 to 12 of the Registrants Annual Report.

Item 7a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

The information required herein is incorporated by reference
from pages 13 to 17 of the Registrants Annual Report.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required herein is incorporated by reference
from pages 18 to 53 of the Registrants Annual Report.

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

Not applicable



Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required herein is incorporated by reference
from pages 2-5 of the Registrants definitive proxy statement
for the 2002 Annual Meeting of Stockholders ("Proxy Statement").

Item 11. EXECUTIVE COMPENSATION

The information required herein is incorporated by reference
from pages 8-12 of the Registrants Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.

The information required herein is incorporated by reference
from pages 6-7 of the Registrants Proxy Statement.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required herein is incorporated by reference
from page 2 and page 10 of the Registrants Proxy Statement.





Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON





|(a) | Documents filed as part of this Report.
|--- | ---------------------------------------

|(1) | The following financial statements are incorporated by            
|--- | ------------------------------------------------------------------
|    | Reference from Item 8 hereof (see Exhibit 13):                    
|    | Report of Independent Auditors                                    
|    | Consolidated Balance Sheets as of December 31, 2001 and 2000      
|    | Consolidated Statements of Income for the Fiscal Periods          
|    | Ended December 31, 2001, 2000 and 1999                            
|    | Consolidated Statements of Changes in Shareholders Equity
    for
|    | the Fiscal Periods Ended December 31, 2001, 2000 and 1999         
|    | Consolidated Statements of Cash Flows for the Fiscal Periods      
|    | Ended December 31, 2001, 2000 and 1999                            
|    | Notes to Consolidated Financial Statements                        

|(2) | All schedules for which provision is made in the applicable                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Accounting regulation of the SEC are omitted because of the absence
    of conditions under which they are required or because the required
    information is included in the consolidated financial statements
    and related notes thereto.

|(3) | The following exhibits are filed as part of this form 10-K, and
    this
|--- | ------------------------------------------------------------------------
|    | List includes the Exhibit Index.                                        







|3.1*   | Articles of Incorporation of GS Financial Corp.                       
|------ | ----------------------------------------------------------------------
|3.2*   | Bylaws of GS Financial Corp.                                          
|4.1*   | Stock Certificate of GS Financial Corp.                               
|10.1** | GS Financial Corp. Stock Option Plan                                  
|10.2** | GS Financial Corp. Recognition and Retention Plan and Trust           
|.      | Agreement for Employees and Non-Employee Directors                    
|10.3*  | Employment Agreement among GS Financial Corp. Guaranty Savings
    and
|       | Homestead Association and Donald C. Scott Dated February 13,
    1997 
|10.4*  | Employment Agreement among GS Financial Corp. Guaranty Savings
    and
|       | Homestead Association and Bruce A. Scott Dated February 13, 1997      
|13.0   | 2001 Annual Report to Stockholders                                    
|21.0   | Subsidiaries of the Registrant - Reference is made to                 
|       | "Item 1" Business for the required information                        

* Incorporated herein by reference from the Registration Statement
on Form SB-2 (Registration number 333-18841) filed by the Registrant
with the SEC on December 26, 1996, as subsequently amended.

** Incorporated herein by reference from the definitive proxy
statement, dated September 16, 1997, filed by the Registrant with
the SEC (Commission File No. 000-22269)





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







|March 28, 2002 | By: | /s/ Donald C. Scott
    -------------------
    Donald C. Scott
    Chairman of the Board, President
    And Chief Executive Officer
|-------------- | --- | ------------------------------------------------------------------------------------------------------------------------------------



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



|Name and Signature                                                          | Title                                                                                          | Date Signed   
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | --------------
|/s/ Donald C. Scott
    -------------------
    Donald C. Scott             | Chairman of the Board, President and Chief Executive Officer
    (principal executive officer) | March 28, 2002
|/s/ Bruce A. Scott
    -------------------
    Bruce A. Scott               | Executive Vice President and Director                                                          | March 28, 2002
|/s/ Glenn R. Bartels
    -------------------
    Glenn R. Bartels           | Controller (principal financial and accounting officer)                                        | March 28, 2002
|/s/ J. Scott Key 
    -------------------
    J. Scott Key                  | Director                                                                                       | March 28, 2002
|/s/ M.D. Paine, Jr.
    -------------------
    M.D. Paine, Jr.             | Director                                                                                       | March 28, 2002
|/s/ Bradford A. Glazer
    -------------------
    Bradford A. Glazer       | Director                                                                                       | March 28, 2002
|/s/ Stephen L. Cory
    -------------------
    Stephen L. Cory             | Director                                                                                       | March 28, 2002
|/s/ Albert J. Zahn, Jr.
    -------------------
    Albert J. Zahn, Jr.     | Director                                                                                       | March 28, 2002
|/s/ Kenneth B. Caldcleugh
    -------------------
    Kenneth B. Caldcleugh | Director                                                                                       | March 28, 2002

Exhibit 13



February 1, 2002

TO OUR STOCKHOLDERS

It was a year to remember! The tragedy of September 11 riveted
the world with devastating scenes witnessed on television. The
repercussions exacerbated the already slowing economy. The shocking
disbelief and incomprehension that we could be violated by such
a savage act of terrorism was numbing as the video and commentary
flowed from the New York area. Other events were as surprising:
interest rates at levels not seen since the early 1960's; a tax
cut; a budget surplus that may return to a deficit. We saw the
coming together of our nation in an unprecedented exhibition of
patriotism and charity.

We have all reexamined our priorities of faith, family and
friends. What the long term consequences will be legislatively
and commercially will be an evolving tapestry woven by a new awareness.

Your company, established with the stock offering in 1997,
is still evolving with continued awareness, in our quest for a
more efficient and profitable savings and loan. Our basics have
not changed from our founding over 60 years ago; our vision of
increasing opportunities and our attainment of ever higher goals
for success remain a focus of our future.

With the decision to become a stock owned company in 1997,
I expressed to family, friends and investors that five years would
be required to transform an 84 million dollar mutual savings and
loan into an entity that deserved investor confidence. We have
attained a level of earnings based on solid assets, and an offering
of consumer products that illustrates we are a viable competitor
for our community's needs. We have nurtured an atmosphere of congenial
customer service that is a breath of fresh air in a time when
customer service is being sacrificed, and have done so profitably.

We pledge to you, our shareholders, that the successes experienced
over the last five years will not be squandered. We will continue
to strive for the vision instilled in us by our predecessors and
founders. We will lead by example, and succeed in our endeavors
to build a bettor mortgage, a better deposit account, and a better
future for your company.

Sincerely,



/s/ Donald C. Scott
-------------------
Donald C. Scott
President and Chairman of the Board



The Company

GS Financial Corp. (the "Company") is a thrift holding
company which was organized and incorporated under the laws of
the State of Louisiana on December 24, 1996. The Companys
primary business is conducted through its wholly owned subsidiary,
Guaranty Savings & Homestead Association, at its five locations
in the metropolitan New Orleans area.

Market Information

GS Financial Corp.s common stock trades on The NASDAQ
Stock Market under the symbol GSLA. The Companys stock traded
in the range shown below. At December 31, 2001, the closing price
was $14.94 per share and there were approximately 800 shareholders
of record.



2001



|QUARTER ENDING     | HIGH   | LOW    | Cash Dividend
|------------------ | ------ | ------ | -------------
|------------------ | ------ | ------ | -------      
|March 31, 2001     | 15.000 | 14.563 | $.09         
|June 30, 2001      | 15.500 | 14.600 | $.09         
|September 30, 2001 | 15.500 | 15.000 | $.09         
|December 31, 2001  | 15.500 | 14.190 | $.09         



2000



|QUARTER ENDING     | HIGH   | LOW    | Cash Dividend
|------------------ | ------ | ------ | -------------
|------------------ | ------ | ------ | -------      
|March 31, 2000     | 12.250 | 10.063 | $.09         
|June 30, 2000      | 12.875 | 11.000 | $.09         
|September 30, 2000 | 13.250 | 12.125 | $.09         
|December 31, 2000  | 14.938 | 12.875 | $.09         

Notice of Annual Meeting

The Annual Meeting of Shareholders of GS Financial Corp. will
be held at the offices of Guaranty Savings & Homestead Association,
3798 Veterans Blvd., Metairie, Louisiana on Tuesday, April 23,
2002 at 10:00 a.m. CST.

Shareholder Services

Shareholders desiring to change the name, address or ownership
of stock, to report lost certificates, or to consolidate accounts
should contact our transfer agent:

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

1-800-368-5948

Investor Relations

Shareholders and others seeking financial information or copies
of the Companys publicly available financial information
should contact:

Amy Mashburn, Compliance Officer or, Glenn R. Bartels, Controller

GS Financial Corp.

3798 Veterans Blvd.

Metairie, LA 70002

(504) 457-6220





The following selected consolidated financial and other data
of the Company does not purport to be complete and should be read
in conjunction with, and is qualified in its entirety by, the
more detailed financial information, including the Consolidated
Financial Statements of the Company and Notes thereto, contained
elsewhere herein.



|(Dollars in Thousands)        | At December 31,                    
|----------------------------- | -----------------------------------
|                              |                                    
|Selected Financial Condition: |                                    
|                              | Total Assets                       
|                              | Cash and Cash Equivalents          
|                              | Loans Receivable, Net              
|                              | Investment Securities              
|                              | Mortgage-Backed Securities         
|                              | Collateralized Mortgage Obligations
|                              | Deposit Accounts                   
|                              | Borrowings                         
|                              | Equity                             
|                              |                                    
|Selected Operating Data:      |                                    
|                              | Interest Income                    
|                              | Interest Expense                   
|                              | Net Interest Income                
|                              | Provision for Loan Losses          
|                              | Net Interest Income After Provision
|                              |                                    
|                              | for Loan Losses                    
|                              | Non-Interest Income                
|                              | Non-Interest Expense               
|                              | Net Income Before Taxes            
|                              |                                    
|                              | Income Tax Expense                 
|                              | Extraordinary Item                 
|                              | Net Income                         
|                              | Net Income per share - Basic       
|                              | Net Income per share - Diluted     
|                              | Dividends declared per share       







|(Dollars in Thousands) | At December 31,                             
|---------------------- | --------------------------------------------
|                       |                                             
|Other Data:            |                                             
|Profitability          |                                             
|                       | Average Yield Interest-Earning Assets       
|                       | Average Rate on Interest-Bearing Liabilities
|                       | Average Interest Rate Spread                
|                       | Net Interest Margin                         
|                       | Interest-Earning Assets as a % of Interest- 
|                       | Bearing Liabilities                         
|                       | Net Interest Income After Provision for Loan
|                       | Loss as a % of Non-Interest Expense         
|                       | Non-Interest Expense as a % of              
|                       | Average Assets                              
|                       | Return on Average Assets                    
|                       | Return on Average Equity                    
|                       |                                             
|Capital Ratio's:       |                                             
|                       | Average Equity as a % of Total Assets       
|                       | Tangible Capital Ratio (Association alone)  
|                       | Core Capital Ratio (Association alone)      
|                       | Risk-Based Capital Ratio (Association alone)
|                       |                                             
|Asset Quality Ratios:  |                                             
|                       | Non Performing Loans as a % of Total Loans  
|                       | Non Performing Assets as a % of Total Assets
|                       | Allowance for Loan Losses as a % of Total   
|                       | Loans Receivable                            
|                       | Allowance for Loan Losses as a % of Non     
|                       | Performing Loans                            



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition
and results of operations of GS Financial Corp. (the Company)
and its subsidiary, Guaranty Savings and Homestead Association,
for the years ended December 31, 1997 through 2001 is designed
to assist readers in their understanding of the Company. This
review should be read in conjunction with the audited consolidated
financial statements, accompanying footnotes and supplemental
financial data included herein.

FORWARD-LOOKING STATEMENTS

In addition to the historical information, this Annual Report
includes certain "forward-looking statements" based
on current management expectations. The Companys actual
results could differ materially, as defined in the Securities
Act of 1933 and the Securities Exchange Act of 1934, from those
management expectations. Such forward-looking statements include
statements regarding our intentions, beliefs or current expectations
as well as the assumptions on which such statements are based.
Stockholders and potential stockholders are cautioned that any
such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements. Factors that could cause future results to vary from
current management expectations include, but are not limited to,
general economic conditions, legislative and regulatory changes,
monetary and fiscal policies of the federal government, changes
in tax policies, rates and regulations of federal, state and local
tax authorities, changes in interest rates, deposit flows, the
cost of funds, demand for loan products, demand for financial
services, competition, changes in the quality or composition of
the Companys loan and investment portfolios, changes in
accounting principles, policies or guidelines, and other economic,
competitive governmental and technological factors affecting the
Companys operations, markets, products, services and fees.

The Company undertakes no obligation to update or revise any
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results over time.



ASSETS

General The Company's balance sheet affected
by the eleven rate cuts enacted by the Federal Reserve. Early
in 2001, the Company grew its total assets through both retail
and wholesale funding. Investments were made in both Federal Home
Loan Mortgage Corporation (FHLMC) preferred stock and collateralized
mortgage obligations. Shortly thereafter, rapidly falling interest
rates greatly accelerated prepayment speeds of many of the Company's
loans and collateralzied mortgage obligations. This caused an
influx of cash, which was mainly invested in short-term mutual
funds. The falling interest rates helped the Company attract many
new demand deposit accounts, which was one of the goals of 2001.
The Company's other retail deposits, passbook savings and certificates
of deposits, also grew in 2001. Total assets of the company increased
$35 million or 23%, to $188.5 million at December 31, 2001, compared
to $153.5 million at December 31, 2000. While prepayments of loans
were high in 2001, the Company's investment in loans grew, largely
in the area of non-residential mortgage loans. This was commensurate
with the launching of the Company's commercial lending program,
which originated approximately $7 million in commercial loans
and mortgages during 2001.

Cash and Cash Equivalents  Cash and cash equivalents,
consisting of interest and non-interest bearing deposits and Federal
Funds Sold, increased $5.2 million, or 153%, from $3.4 million
at December 31, 2000, to $8.6 million at December 31, 2001. Cash
and cash equivalents are utilized in the daily operations of the
Company. The Company maintains cash and cash equivalents sufficient
to meet the daily operational needs of the Association including,
but not limited to, operating expenses, loan funding, deposit
withdrawals and investment purchases. The Company also maintains
sufficient balances at the Federal Home Loan Bank (FHLB) Dallas
to service its monthly obligations to that institution. Yields
at the FLHB Dallas are comparable to the overnight rate of Federal
Funds sold.

Loans Receivable, Net  Loans receivable, net,
increased by $7.1 million, or 10%, from $74.5 million at December
31, 2000, to $81.6 million at December 31, 2001. The largest changes
in the loan portfolio came in three areas. Mortgage loans on one-to-four
single family dwellings decreased $1.3 million from $71.1 million
at December 31, 2000, to $69.8 million at December 31, 2001. Mortgages
on commercial real estate increased $2.4 million to $3.4 million
at December 31, 2001. Other mortgage loans, made up primarily
of loans on multi-family dwellings, increased $5.2 million to
$6.7 million at December 31, 2001, compared to $1.5 million at
December 31, 2000. During 2001, the Company originated 180 loans
totaling $21.5 million. This represented the Company's highest
annual loan origination volume ever. The new loan volume was offset
by principal reductions, primarily payoff's rather than regular
monthly payments, of $14.4 million.

Investment Securities  Investment securities consist
of U.S. Treasury and Agency issued notes, three short-term mutual
funds, FHLMC common and preferred stock and other equity investments.
Investment securities increased $24.8 million, from $11.0 million
at December 31, 2000, to $35.8 million at December 31, 2001. Early
in 2001, the Company purchased $12.7 million of FHLMC preferred
stock funded by advances from the FHLB Dallas. The FHLMC preferred
stock purchased contains call options varying from three to seven
years and coupons varying from 5% to 6%. Seventy percent of the
dividends for the FHLMC preferred stock are tax free, boosting
the effective yield of this investment. During 2001, because of
its low dividend yield, the Company sold 10,000 shares of its
FHLMC common stock at gain of $.6 million. The Company's short-term
mutual funds are invested mostly in mortgage-based securities
and money market type investments. These funds carry one-day availability
and carry higher yields than overnight Federal Funds Sold or interest-bearing
deposits in other financial institutions such as the Federal Home
Loan Bank. Due to significant prepayments of the Company's portfolio
of collateralized mortgage obligations, the investment in these
mutual funds increased $13.9 million in 2001.

Mortgage-Backed Securities  Mortgage-backed securities
decreased $3.2 million, or 78%, from $4.1 million at December
31, 2000, to $.9 million at December 31, 2001. In 2001 the Company
sold $2.3 million in mortgage-backed securities to provide funds
for other investments. At December 31, 2001 and 2000, all of the
Companys mortgage-backed securities were FHLMC, FNMA, or
GNMA issued instruments. FHLMC and FNMA are enterprises sponsored
by the Federal government while GNMA securities represent direct
obligations of the Federal Government.

Collateralized Mortgage Obligations  The Company
investment in Collateralized Mortgage Obligations (CMOs) is limited
to first-tranche Real Estate Mortgage Investment Conduits (REMICs)
which pay monthly. REMICs are multiple class mortgage-backed securities
whereby an underlying pool of mortgages held by the issuer serves
as collateral for the debt. The Company has REMICs issued by FNMA,
FHLMC and "AAA" rated non-governmental agencies. The
Company has found these instruments to be ideal for its wholesale
growth strategy due to their regular repayment schedules and attractive
yields. The expected life of these REMICs varies from two to fifteen
years. Advances from the Federal Home Loan Bank funded most of
the investment in CMOs. During 2001, the Companys investment
in CMOs decreased $1.6 million, or 3%, from $53.7 million at December
31, 2000, to $52.1 million at December 31, 2001. Purchases of
CMOs during 2001 of $36.9 million were offset by payments of $37.6
million. Also in 2001, the Company sold $2.7 million of CMOs and
realized a gain of $16,000.

LIABILITIES AND STOCKHOLDERS EQUITY

General  The Companys deposits, borrowings
and equity represent sources of funds for its various investments
and operating needs.

Deposits  The Companys deposits increased
$12.3 million, or 21%, from $58.9 million at December 31, 2000,
to $71.2 million at December 31, 2001. The increases came in demand
deposits, passbook savings and certificates of deposit.

Passbook Savings - During 2001, passbook savings accounts
increased $2.6 million from $17.4 million at December 31, 2000,
to $20.0 million at December 31, 2001. This represents an increase
of 12%. Most of the increase came late in the year, particularly
after September 11, 2001. Falling rates for NOW accounts have
also contributed to the increase in passbook savings.

NOW Accounts - NOW accounts increased from $3.2 million
at December 31, 2000, to $7.9 million at December 31, 2001. This
increase was part of a coordinated effort on the part of the company
to establish a core base of demand deposit accounts. The Company
started offering demand deposit accounts in 2000. Early in 2001,
the Company was able to attract many new accounts by offering
very favorable rates compared to other financial institutions
in the local market.

Certificates of Deposit - Certificates of deposit increased
from $38.3 million at December 31, 2000, to $43.2 million at December
31, 2001. This $4.9 million change represented a 13 % increase.
Most of the growth in certificates of deposit came late in the
year, with most growth coming in certificates with terms of one
year or less.



Borrowings  The Companys borrowings increased
$25.1 million, from $54.2 million at December 31, 2000, to $79.3
million at December 31, 2001. The Companys borrowings consist
of fully amortizing, balloon and "bullet" (interest
only until maturity) advances from the Federal Home Loan Bank
of Dallas which mature between 2002 and 2008. These borrowings
represent the continuation of the Companys wholesale growth
strategy of leveraged investing with most of the funds going to
purchase CMOs or FHLMC preferred stock.

Stockholders Equity  Stockholders
equity decreased $2.4 million, or 6%, from $37.8 million at December
31, 2000, to $35.4 million at December 31, 2001. The decrease
was due to the net effects of the following events:



|Purchase of Treasury Stock             | $ (4.6 million)
|-------------------------------------- | ---------------
|2001 Net Income                        | 1.6 million    
|Cash Dividends Paid                    | (.6 million)   
|Distribution of RRP Stock              | .2 million     
|Distribution of ESOP Stock             | .4 million     
|Increase in Other Comprehensive Income | .6 million     
|                                       | -------------- 
|NET CHANGE                             | $ (2.4 million)
|                                       | =========      

Treasury Stock  During 2001, the Company repurchased
305,684 shares of its common stock for $4.6 million, or an average
price of $15.09 per common share. Since the inception of its stock
buyback program in 1998, the Company has repurchased 1,775,338
shares of its common stock at an average price of $14.18 per common
share, or a total of $25.2 million, contributing to the enhancement
of shareholder value. At December 31, 2001, the book value was
$21.29 per common share. This compares to a book value of $19.20
per common share at December 31, 2000.

COMPARISON OF RESULTS OF OPERATIONS

General  The Company reported net income of $1.6
million, $1.2 million and $1.4 million for the years ended December
31, 2001, 2000, and 1999. The results for 2001 reflected increases
in interest income and gains on sales of investment securities
offset by increases in interest and overhead expenses. Falling
interest rates during 2001 contributed to the decrease in net
interest margin and net interest income. The results for 2000
reflected a net loss on the sale of securities. The earnings of
the Company increased to $1.04 per common share in 2001 compared
to $.60 per common share in 2000. The increase in earnings per
share from 2000 to 2001 was due to reduced shares outstanding
from 2000 to 2001, and by the gains realized on the sale of securities
in 2001 compared to a loss on the sale of securities in 2000.

Interest Income  Interest income increased $1.8
million, or 16%, from $11.3 million in 2000 to $13.1 million in
2001. Overall results for 2001 reflected a yield of 7.12% on average
earning assets of $184.0 million compared to average earning assets
of $151.7 million in 2000 yielding 7.42%. Changes in interest
income were made up of increases in interest income from loans,
investment securities, CMOs and other interest-earning assets,
offset by a decrease in interest income from mortgage-backed securities.

The yield on loans receivable decreased from 7.96% in 2000
to 7.85% in 2001. The decrease in yield was offset by an increase
in the average balance of net loans receivable of $3.6 million
from 2000 to 2001. With mortgage rates hitting their lowest points
in over 20 years, the focus of the Company's efforts was the origination
of approximately $7 million in commercial loans and mortgages,
particularly in the last quarter of 2001. In general, commercial
loans and mortgages carry higher rates than loans on single one
to four family dwellings. A full year's impact of the commercial
loans on the overall portfolio will help increase yields in 2002.
During 2001, many of the Company's loans on single one to four
family dwellings received temporary rate reductions rather than
have the loans refinance elsewhere and payoff. The reversal of
these reductions can only be determined by market interest rates.

Interest income on investment securities increased $1.0 million
from $.4 million in 2000 to $1.4 million in 2001. The yield on
investment securities went down from 5.71% in 2000 to 5.40% in
2001. The reduction was due to the falling yields of the Companys
investment in mortgage-based mutual funds, which carried significantly
higher balances in 2001 due to the reinvestment of cash flows
from rapidly repaying CMOs. The average balance of the funds was
$7.8 million in 2001, compared to $1.6 million in 2000. These
funds are predominantly secured by adjustable-rate, mortgage based
assets. Currently, the Companys mortgage-based mutual funds
typically yield between 3.0% and 4.0% and act as a short-term
investment. The average balance of investments increased $17.6
million, from 2000 to 2001. The increase in balance was due to
the expansion of the Company's leveraged investing program and
related purchase of FHLMC preferred stock, and to the re-investment
of cash from CMO repayments in the Company's short-term mutual
funds.







|                             |                                    | For the Years Ended December 31,
|---------------------------- | ---------------------------------- | --------------------------------
|                             |                                    | 2001                            
|                             |                                    | Average                         
|                             |                                    | Balance                         
|Interest Earning Assets      |                                    |                                 
|                             | Loans Receivable                   | 76,300                          
|                             | Mortgage Backed Securities         | 1,376                           
|                             | Investment Securities              | 24,988                          
|                             | Collateralized Mortgage            | 68,903                          
|                             |                                    | Obligations                     
|                             | Other Interest Earning Assets      | 12,411                          
|                             | Total Interest Earning Assets      | 183,978                         
|                             | Non Interest Earning Assets        | 3,225                           
|                             | TOTAL ASSETS                       | 187,203                         
|                             |                                    |                                 
|Interest Bearing Liabilities |                                    |                                 
|                             | Passbooks Deposits                 | 17,247                          
|                             | Interest Bearing Checking          | 5,797                           
|                             | Certificates of Deposits           | 39,930                          
|                             | Borrowings                         | 86,840                          
|                             | Total Interest Bearing Liabilities | 149,814                         
|                             | Non Interest Bearing Liabilities   | 906                             
|                             | TOTAL LIABILITIES                  | 150,720                         
|                             | Retained Earnings                  | 36,483                          
|                             | TOTAL LIABILITIES AND              |                                 
|                             |                                    | RETAINED EARNINGS               
|                             |                                    |                                 
|Net Interest Earning Assets  | 34,164                             |                                 
|Net Interest Income          |                                    | 5,275                           
|Net Interest Spread          |                                    |                                 
|Net Interest Margin          |                                    |                                 

Interest on mortgage-backed securities decreased $.7 million
from $.8 million in

2000 to $.1 million in 2001. The yield of the Company's mortgage-backed
securities decreased in 2001 to 6.54%, compared to 6.68% in 2000.
The average balance decreased from $12.0 million in 2000 to $1.4
million in 2001. The Company sold $2.3 million in mortgage-backed
securities during 2001.



Interest income from CMOs increased $1.3 million from $3.8
million in 2000 to $5.1 million in 2001, representing an increase
of 34%. During 2001 the average balance of CMOs was $68.9 million
which yielded 7.46%. In 2000, CMOs carried an average balance
of $53.1 million, which yielded 7.15%. The increased yield of
2001 versus 2000 was the result of rapid repayments of the underlying
principal causing discounts to be earned much sooner than expected
in larger lump sums. Discount accretion increases coupon yields,
and currently, the majority of the CMO portfolio is made up of
bonds purchased at discount.

Interest income from other interest earning assets increased
from $.45 million in 2000 to $.53 million in 2001. This increase
was the result of the Company maintaining higher average balances
in Federal Funds Sold and other interest bearing deposits in other
financial institutions. The yield on other interest earning assets
was 4.26% on an average balance of $12.4 million in 2001, compared
to 7.02% on an average balance of $6.4 million in 2000. The yield
in 2000 included a special one-time dividend paid on the Federal
Home Loan Bank stock. The Company currently has $5.3 million in
Federal Home Loan Bank stock.



RATE/VOLUME ANALYSIS

The following table shows the extent to which changes in interest
rates and changes in volume of interest-related assets and liabilities
affected interest income and expense during the periods indicated.
For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume multiplied by prior year
rate) and (ii) changes in rate (change in rate multiplied by prior
year volume). The combined effect of changes in both rate and
volume has been allocated proportionately to the change due to
rate and the change due to volume.









|                 | 12/31/00 to 12/31/01 | 12/31/99 to 12/31/00
|---------------- | -------------------- | --------------------
|                 | Rate                 | Volume              
|Interest Income  |                      |                     
|                 | Loans                | (80)                
|                 | MBS                  | (17)                
|                 | Invest               | (23)                
|                 | CMO's                | 165                 
|                 | Other                | (192)               
|                 |                      |                     
|Total            | (147)                | 1,985               
|                 |                      |                     
|Interest Expense |                      |                     
|                 | Savings/NOW's        | 13                  
|                 | Int Bearing Checking | (14)                
|                 | Certificates         | (16)                
|                 | Borrowings           | (112)               
|                 |                      |                     
|Total            | (129)                | 2,079               
|                 |                      |                     
|Decrease in      |                      |                     
|                 | Net Interest Income  | (18)                

Interest Expense  Interest expense increased $1.9
million, or 32%, from $5.9 million in 2000, to $7.8 million in
2001. Although the Company's overall cost of funds decreased from
2000 to 2001, the increase in interest expense was a result of
a significant increase in interest-bearing deposits and FHLB advances.
Total average interest-bearing liabilities in 2001 were $149.8
million compared to $112.1 in 2000. The Company's overall cost
of funds was 5.22% in 2001 compared to 5.24% in 2000.

Interest Expense on Deposits - Expense on interest-bearing
deposits increased $.1 million in 2001 to $2.8 million, compared
to $2.7 million in 2000. The average cost of interest-bearing
deposits in 2001 was 4.51% on an average balance of $63.0 million,
compared to 2000 where an average balance of interest-bearing
deposits of $58.1 million cost the Company 4.59.

Interest Expense on NOW Accounts - Expense on NOW accounts
increased $.15 million in 2001 to $.2 million, compared to $.05
million in 2000. The average cost of NOW accounts was 3.57% on
an average balance of $5.8 million in 2001. During 2000, NOW accounts
averaged $1.0 million and cost 4.93%.

Interest Expense on Certificates of Deposit - Expense
on certificates of deposit was relatively unchanged from 2000
to 2001. The cost in 2000 of 5.35% decreased slightly to 5.31%
in 2001. The average balance of certificates of deposit increased
slightly to $39.9 million in 2001 compared to $39.2 million in
2000. Most of the Companys increase in certificates of deposit
came late in 2001.

Interest Expense on Passbook Savings  The cost
and average balance of passbook savings accounts was approximately
the same in 2001 and 2000. The approximate cost for both years
was 2.95% while the average balance for both years was $17.5 million.
It should be noted that late in 2001 and early into 2002, the
balance of the Company passbook savings accounts has increased
approximately 20%.

Interest Expense on FHLB Advances  During 2001,
interest expense on advances from the FHLB increased to $5.0 million
compared to $3.2 million in 2000. The increase in cost was due
to the increase in the average balance of FHLB advances from $53.9
million in 2000, to $86.8 million in 2001. This was due to the
Companys expansion of its leveraged investing program. The
cost of FHLB advances in 2001 was 5.74%, compared to 5.95% in
2000.

Provision for Loan Losses -The Allowance for Loan Loss
(ALL) is evaluated on a quarterly basis and provisions to increase
or reductions to the ALL to a level deemed appropriate by management
are made accordingly. Additional provisions are necessary when
either growth of the entire loan portfolio, changes in the loan
mix, or charge-offs drop the ALL below that level deemed appropriate
by management. Reductions occur due to a decline in the size of
the loan portfolio or when previously reserved-for loans are paid
down or collected in full.

The Company had provision for loan losses of $25,000 in 2001
compared to $7,000 in 2000. These limited provisions to the ALL
have been due to the low level of delinquent and substandard loans
and the infrequent number of foreclosures over the past ten years.
Charge-offs were also low with $10,000 charged off in 2001 compared
to $11,000 in 2000. The provision for loan losses reflects managements
evaluation of the underlying credit risk of the Companys
loan portfolio to adequately provide for probable loan losses
inherent in the loan portfolio as of the balance sheet date. As
of December 31, 2001, the ALL as a percent of the entire loan
portfolio was .53 % while the same number in 2000 was .56.%. The
ALL as a percentage of non-performing loans was 175% at December
31, 2001, compared to 97% at December 31, 2000. Future additions
to the ALL will be dependent on a number of factors including
the performance of the Companys loan portfolio, specifically
in terms of delinquencies, foreclosures and charge-offs. Other
factors include the local economy, inflation, and changes in interest
rates and the effect of such changes on real estate values. Management
believes that the ALL is adequate at December 31, 2001.



Non-Interest Income  Non-interest income increased
$.7 million in 2001 to $.6 million for the current year compared
to ($.1 million) for the twelve months ended December 31, 2000.
During 2001, the Company had net gains on the sale of investments
of $.6 million, compared to net losses during 2000 of ($.1 million).
Also during 2001, other fee income increased to $27,000, compared
to $11,000 during 2000.

Other Expenses - Other expenses increased $.3 million
from $3.4 million for the twelve months ended December 31, 2000,
compared to $3.7 million for the twelve months ended December
31, 2001. The increase was attributable in part to an increase
in compensation expense of $.3 million. The expense associated
with the ESOP increased due to an increase in the average price
of the Companys stock during 2001 compared to 2000. There
were also additional employee salaries associated with five new
employees hired during 2001. The new staff was hired in conjunction
with the May, 2001 opening of the Company's loan production office
in Ponchatoula, Louisiana, and with the opening of a second location
in Metairie, Louisiana, which opened in February, 2002. There
were minor increases or decreases in all other expenses.

Income Tax Expense  Income tax expense decreased
from $.7 million in 2000, to $.6 million in 2001. The decrease
was primarily due to the effects of the 70% dividend exclusion
on dividends received from the Companys investment in FHLMC
common and preferred stock.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity measures the Companys ability to meet its financial
commitments and obligations on a timely basis. These commitments
and obligations include loan disbursements, savings withdrawals
by customers, the payment of dividends, cash letters and the daily
operating expenses of the Company. Liquidity management involves
the daily monitoring of cash on hand, non-interest bearing operating
accounts, overnight Federal Funds Sold, short-term investments
and the Companys ability to convert these assets into cash
without incurring a loss. Monthly paydowns on mortgage loans,
mortgage-backed securities and collateralized mortgage obligations
are anticipated and channeled to either cash on hand, overnight
Federal Funds Sold or short-term investments in order to meet
the Companys demands and maximize interest earned on these
funds.

The Companys primary sources of funds are interest and
non-interest bearing customer deposits, advances from the Federal
Home Loan Bank and maturities of its existing investments including
mortgage loans, mortgage-backed securities, investment securities
and collateralized mortgage obligations. The Company offers competitive
interest rates to maintain its core deposit base consisting of
passbook savings, checking accounts and certificates of deposit.
The Company does not utilize brokered deposits nor does it offer
special rates for "jumbo" deposits of $100,000 or more.
The actions of the Federal Reserve and subsequent fall of interest
rates during 2001, greatly accelerated prepayments of the Companys
assets, specifically its loans and CMOs.

Guaranty Savings & Homestead Association, the Companys
wholly-owned subsidiary, is required to maintain regulatory capital
sufficient to meet all three of the regulatory capital requirements,
those being tangible capital (1.5%), core capital (3.0%), and
risk-based capital (8.0%). As of December 31, 2001, the Associations
tangible and core capital amounted to $26.4 million, or 14.4%
of adjusted total assets, while the Associations risk-based
capital was $26.8 million, or 28.7% of total adjusted risk-weighted
assets. The Company remains "well capitalized" under
OTS standards. Since the initial public offering in 1997, the
Company has endeavored to reduce its capital level through stock
buybacks, retail or wholesale asset growth and other means.

MARKET RISK ANALYSIS  ASSET LIABILITY MANAGEMENT

Qualitative Risk Analysis. The ability to maximize net
interest income is largely dependent upon the achievement of a
positive interest rate spread that could be sustained during fluctuations
in prevailing interest rates. Interest rate sensitivity is a measure
of the difference between amounts of interest-earning assets and
interest-bearing liabilities which either re-price or mature within
a given period of time. The difference or the interest rate re-pricing
"gap" provides an indication of the extent to which
an institutions interest rate spread will be affected by
changes in interest rates. A gap is considered positive when the
amount of interest-rate sensitive assets exceeds the amount of
interest-rate sensitive liabilities, and is considered negative
when the amount of interest-rate sensitive liabilities exceeds
the amount of interest-rate sensitive assets. Generally, during
a period of rising interest rates, a negative gap within shorter
maturities would adversely affect net interest income, while a
positive gap within shorter maturities would result in an increase
in net interest income. During a period of falling interest rates,
a negative gap within shorter maturities would result in an increase
in net interest income while a positive gap within shorter maturities
would have the opposite effect. As of December 31, 2001, the ratio
of the Associations cumulative one-year gap to total assets
was 27.8% and its ratio of interest-earning assets to interest-bearing
liabilities maturing or re-pricing within one year was 154.4%.

In order to minimize the potential for adverse effects of material
and prolonged increases in interest rates on the Associations
results of operations, the Association has adopted asset and liability
management policies including an interest rate risk policy to
better enable management to match the re-pricing and maturities
of its interest-earning assets and interest-bearing liabilities.
President Scott and Controller Bartels review monthly the re-pricing
gap on an internal model specifically designed for the assets
and liabilities currently being held by the Association. An interest
rate risk report which analyzes changes to the net portfolio value
(NPV) and net interest income is presented to the Board of Directors
on a quarterly basis. The NPV is the difference between the market
value of the Associations assets and the market value of
the Associations liabilities and off balance sheet commitments.
The Board reviews the internal model and a standard thrift industry
model prepared by the OTS from the Associations quarterly
Consolidated Maturity and Rate Report.

The nature of thrifts such as Guaranty Savings & Homestead
Association lends itself to the creation of negative gaps over
the short term since the Association is invested primarily in
home mortgage loans varying in length usually from 15 to 25 years
while its longest term interest-bearing liabilities are five-year
certificates of deposit and two seven year balloon FHLB advances.
Therefore it is vital that the Association utilize its other investments
to offset in the short-term (12-month) horizon the substantial
negative re-pricing gap which arises from one to five years while
at the same time maximizing net interest income. This is why the
Association places much of its ready cash in short-term investments
such as mortgage-based mutual funds through its primary broker,
Shay Financial. These types of investments provide the benefit
of overnight availability while producing yields approximately
150 basis points higher than overnight Federal Funds sold. The
Association also places a high emphasis on cash flows in its portfolio
of CMO REMICs. The duration of the Associations CMO
REMICs varies from two to fifteen years. At present, due
to the large influx of cash and subsequent reinvestment in short-term
mutual funds during 2001, the Association finds itself in a very
positively gapped position over the twelve-month horizon.

Quantitative Risk Analysis Presented below, as of December
31, 2001 is an analysis of Guaranty Savings & Homestead Associations
interest rate risk as measured by changes in NPV for instantaneous
and sustained parallel shifts in the yield curve, in 100 basis
point increments, up and down 300 basis points in accordance with
OTS regulations. As illustrated in the table, NPV is more sensitive
to and may be more negatively impacted by 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. When rates decline, the Association does
not experience a significant rise in market value for these loans
because borrowers prepay at relatively high rates. The value of
the Associations deposits and borrowings change in approximately
the same proportion in rising or falling rate scenarios.



|Change (in Basis Points) | Net Portfolio Value
    ------------------------
|------------------------ | ------------------------------------------------
|in Interest Rates        | $ Amount                                        
|                         | (Dollars in Thousands)                          
|+300                     | 19,589                                          
|+200                     | 23,459                                          
|+100                     | 27,032                                          
|0                        | 30,478                                          
|-100                     | 34,175                                          
|-200                     | 37,682                                          
|-300                     | 41,090                                          

The assumptions used by management to evaluate the vulnerability
of the Associations operations to changes in interest rates
in the table above are based on assumptions utilized in the gap
table below. Although management finds these assumptions reasonable,
the interest rate sensitivity of the Associations assets
and liabilities and the estimated effects of changes in interest
rates on the Associations net interest income and NPV indicated
in the above table could vary substantially if different assumptions
were used or actual experience differs from such assumptions.



SENSITIVITY ANALYSIS

The following table summarizes the anticipated maturities or
re-pricing of the Associations interest-earning assets and
interest-bearing liabilities as of December 31, 2001, based on
the information and assumptions set forth in the notes below.



|(Dollars in Thousands)                           | Within Three Months                       | Three to Twelve Months | More Than One Year 
    to Three Years | More 
    Than Three Years to Five Years | Over 
    Five 
    Years | Total  
|------------------------------------------------ | ----------------------------------------- | ---------------------- | -------------------------------------- | ---------------------------------------- | ------------------------- | -------
|Interest-Earning assets:                         |                                           |                        |                                        |                                          |                           |        
|                                                 | Cash and interest-earning deposits        | $                      | 8,141                                  | $                                        | -                         | $      
|                                                 | U.S. Government and Agency Securities (1) |                        | -                                      |                                          | -                         |        
|                                                 | FHLMC & FHLB Stock                        |                        | 22,901                                 |                                          | -                         |        
|                                                 | Mortgage-based Mutual Funds               |                        | 16,466                                 |                                          | -                         |        
|                                                 | Mortgage Loans (1)                        |                        | 4,844                                  |                                          | 14,532                    |        
|                                                 | Commercial Loans (2)                      |                        | 55                                     |                                          | 231                       |        
|                                                 | Collateralized Mortgage Obligations (1)   |                        | 17,788                                 |                                          | 34,318                    |        
|                                                 | Consumer Loans                            |                        | 254                                    |                                          | -                         |        
|TOTAL INTEREST-EARNING ASSETS                    |                                           | 70,449                 |                                        | 49,081                                   |                           | 38,754 
|                                                 |                                           | =====                  |                                        | =====                                    |                           | =====  
|                                                 |                                           |                        |                                        |                                          |                           |        
|Interest Bearing Liabilities                     |                                           |                        |                                        |                                          |                           |        
|                                                 | NOW Accounts                              |                        | 7,666                                  |                                          | -                         |        
|                                                 | Passbook Savings                          |                        | 20,042                                 |                                          | -                         |        
|                                                 | Certificates of Deposits (2)              |                        | 8,621                                  |                                          | 23,864                    |        
|                                                 | FHLB Advances (2)                         |                        | 3,405                                  |                                          | 13,836                    |        
|TOTAL INTEREST-EARNING LIABILITIES               |                                           | 39,734                 |                                        | 37,700                                   |                           | 39,552 
|                                                 |                                           | =====                  |                                        | =====                                    |                           | =====  
|                                                 |                                           |                        |                                        |                                          |                           |        
|Excess/(deficiency) of interest-earning          |                                           |                        |                                        |                                          |                           |        
|assets over interest-bearing liabilities         |                                           | $30,715                |                                        | $11,381                                  |                           | ($798) 
|                                                 |                                           |                        |                                        |                                          |                           |        
|Cumulative excess/(deficiency) of interest-      |                                           |                        |                                        |                                          |                           |        
|earning assets over interest bearing liabilities |                                           | $30,715                |                                        | $42,097                                  |                           | $41,298
|                                                 |                                           |                        |                                        |                                          |                           |        
|Cumulative excess/(deficiency) of interest-      |                                           |                        |                                        |                                          |                           |        
|earning assets over interest bearing liabilities |                                           |                        |                                        |                                          |                           |        
|as a percent of total assets                     |                                           | 20.32%                 |                                        | 27.85%                                   |                           | 27.32% 
|                                                 |                                           |                        |                                        |                                          |                           |        
|Ratio of interest-earning assets to interest-    |                                           |                        |                                        |                                          |                           |        
|bearing liabilities                              |                                           | 177.30%                |                                        | 130.19%                                  |                           | 97.98% 
|                                                 |                                           |                        |                                        |                                          |                           |        
|Ratio of cumulative interest-earning assets      |                                           |                        |                                        |                                          |                           |        
|to interest-bearing liabilities                  |                                           | 177.30%                |                                        | 154.36%                                  |                           | 135.30%
|                                                 |                                           |                        |                                        |                                          |                           |        
|(1) Based on average monthly payments for the    |                                           |                        |                                        |                                          |                           |        
|three months ended December 31, 2001             |                                           |                        |                                        |                                          |                           |        
|(2) Based on contractual maturities              |                                           |                        |                                        |                                          |                           |        



IMPACT OF INFLATION

The consolidated financial statements of the Company and notes
thereto, presented elsewhere herein, have been prepared in accordance
with GAAP, which require the measurement of financial position
and operating results in terms of historical dollars without considering
the change in the relative purchasing power of money over time
due to inflation. The impact of inflation is reflected in the
increased cost of the Companys operations. Unlike most industrial
companies, nearly all the assets and liabilities of the Company
are financial. As a result, interest rates have a greater impact
on the Companys performance than do the effects of general
levels of inflation. Interest rates do not necessarily move in
the same direction or to the same extent as the prices of goods
and services.

To The Board of Directors

GS Financial Corp. and Subsidiaries







We have audited the accompanying consolidated balance sheets
of GS FINANCIAL CORP.and its wholly-owned subsidiary,GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION as of December
31, 2001 and 2000, and the related consolidated statements of
income, comprehensive income (loss), changes in stockholders
equity, and cash flows for each of the three years in the period
ended December 31, 2001. 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 auditing standards
generally accepted in the United States of America. 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 financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of GS FINANCIAL CORP.and its wholly-owned subsidiary,GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION as of December
31, 2001 and 2000, and the consolidated results of their operations
and their cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.









A Professional Accounting Corporation





January 14, 2002

Metairie, Louisiana







|GS FINANCIAL CORP.                                     
|-------------------------------------------------------
|CONSOLIDATED BALANCE SHEETS                            
|(Dollars in Thousands)                                 
|                                                       
|ASSETS                                                 
|                                                       
|                                                       
|                                                       
|                                                       
|CASH AND CASH EQUIVALENTS                              
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|Securities Available-for-Sale, at Fair Value           
|Mortgage-Backed Securities Available-for-Sale,         
|                                                       
|Collateralized Mortgage Obligations Available-for-Sale,
|                                                       
|Loans, Net                                             
|Accrued Interest Receivable                            
|Premises and Equipment, Net                            
|Real Estate Held-for-Investment                        
|Stock in Federal Home Loan Bank, at Cost               
|Foreclosed Real Estate                                 
|Deferred Charges                                       
|Other Assets                                           
|                                                       
|                                                       







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





|GS FINANCIAL CORP.               
|---------------------------------
|CONSOLIDATED STATEMENTS OF INCOME
|(Dollars in Thousands)           
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|INTEREST INCOME                  
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|INTEREST EXPENSE                 
|                                 
|                                 
|                                 
|                                 
|                                 
|NET INTEREST INCOME BEFORE       
|                                 
|                                 
|PROVISION FOR LOAN LOSSES        
|                                 
|NET INTEREST INCOME AFTER        
|                                 
|                                 
|NON-INTEREST INCOME              
|                                 
|                                 
|                                 
|                                 







|GS FINANCIAL CORP.                           
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF INCOME (Continued)
|(Dollars in Thousands)                       
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|NON-INTEREST EXPENSES                        
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|INCOME BEFORE INCOME TAX                     
|                                             
|                                             
|INCOME TAX EXPENSE                           
|                                             
|NET INCOME                                   
|                                             
|EARNINGS PER SHARE - BASIC                   
|                                             
|EARNINGS PER SHARE - DILUTED                 





|GS FINANCIAL CORP.                                        
|----------------------------------------------------------
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (LOSS)
|(Dollars in Thousands)                                    
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|NET INCOME                                                
|                                                          
|OTHER COMPREHENSIVE INCOME,                               
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|COMPREHENSIVE INCOME (LOSS)                               
|                                                          





|GS FINANCIAL CORP.                                            
|--------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CHANGES
    IN STOCKHOLDERS' EQUITY
|For The Years Ended December 31,
    2001, 2000 and 1999      
|(Dollars in Thousands)                                        
|                                                              
|                                                              
|                                                              
|                                                              
|BALANCES AT DECEMBER 31, 1998                                 
|                                                              
|Distribution of                                               
|                                                              
|                                                              
|Common Stock Released                                         
|                                                              
|                                                              
|Purchase of Treasury Stock                                    
|                                                              
|Dividends Declared                                            
|                                                              
|Net Income - Year Ended                                       
|                                                              
|                                                              
|Other Comprehensive (Loss), Net of Applicable                 
|                                                              
|BALANCES AT DECEMBER 31, 1999                                 
|                                                              
|Distribution of                                               
|                                                              
|                                                              
|Common Stock Released                                         
|                                                              
|                                                              
|Purchase of Treasury Stock                                    
|                                                              
|Dividends Declared                                            
|                                                              
|Net Income - Year Ended                                       
|                                                              
|                                                              
|Other Comprehensive Income, Net of Applicable                 
|                                                              
|BALANCES AT DECEMBER 31, 2000                                 
|Distribution of                                               
|                                                              
|                                                              
|Common Stock Released                                         
|                                                              
|                                                              
|Purchase of Treasury Stock                                    
|                                                              
|Dividends Declared                                            
|                                                              
|Net Income - Year Ended                                       
|                                                              
|                                                              
|Other Comprehensive Income, Net of Applicable                 
|                                                              
|BALANCES AT DECEMBER 31, 2001                                 







|GS FINANCIAL CORP.                       
|-----------------------------------------
|CONSOLIDATED STATEMENTS OF CASH
    FLOWS
|(Dollars in Thousands)                   
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         







|GS FINANCIAL CORP.                                   
|-----------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH
    FLOWS (continued)
|(Dollars in Thousands)                               
|                                                     
|                                                     
|                                                     
|2001                                                 
|CASH FLOWS FROM INVESTING ACTIVITIES                 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     









|GS FINANCIAL CORP.                                   
|-----------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH
    FLOWS (Continued)
|(Dollars in Thousands)                               
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|CASH FLOWS FROM FINANCING ACTIVITIES                 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|NET INCREASE IN CASH AND                             
|                                                     
|                                                     
|CASH AND CASH EQUIVALENTS - Beginning of Year        
|                                                     
|CASH AND CASH EQUIVALENTS - End of Year              
|                                                     
|                                                     
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                     





NOTE A

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

GS Financial Corp. (the Company) was organized as a Louisiana
corporation on December 24, 1996 for the purpose of becoming the
holding company of Guaranty Savings and Homestead Association
(the Association) in anticipation of converting the Association
from a Louisiana chartered mutual savings and loan association
to a Louisiana chartered stock savings and loan association. The
Association operates in the savings and loan industry and as such
provides financial services to individuals, corporate entities
and other organizations through the origination of loans and the
acceptance of deposits in the form of passbook savings, certificates
of deposit, and demand deposit accounts.



The Association is subject to competition from other financial
institutions, and is also subject to the regulations of certain
Federal and State agencies and undergoes periodic examinations
by those regulatory authorities.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, Guaranty
Savings and Homestead Association. In consolidation, significant
inter-company accounts, transactions, and profits have been eliminated.

BASIS OF FINANCIAL STATEMENT PRESENTATION

The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as
of the date of the statement of financial condition and revenues
and expenses for the year. Actual results could differ significantly
from those estimates.

Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for losses
on loans and valuation of real estate acquired in connection with
foreclosures or in satisfaction of loans. Management independently
determines the allowance for losses on loans based on an evaluation
of the loan history and the condition of the underlying collateral.
In connection with the determination of the allowances for losses
on foreclosed real estate, management assesses the fair market
value or obtains independent appraisals for all properties.



While management uses available information to recognize losses
on loans and foreclosed real estate, future additions to the allowances
may be necessary based on changes in local economic conditions.
In addition, regulatory agencies, as an integral part of their
examination process, periodically review the Associations
allowances for losses on loans and foreclosed real estate. Such
agencies may require the Association to recognize additions to
the allowances based on their judgments about information available
to them at the time of their examination.

CASH AND CASH EQUIVALENTS

For the purposes of presentation in the consolidated statements
of cash flows, cash and cash equivalents include all cash and
amounts due from depository institutions, interest-bearing deposits
in other banks, and Federal Funds Sold.

INVESTMENT SECURITIES

Marketable securities are classified as available-for-sale
and are carried at fair value. Unrealized gains and losses on
securities available-for-sale are recognized as direct increases
or decreases in comprehensive income. The cost of securities sold
is recognized using the specific identification method. Premiums
and discounts are being amortized over the life of the securities
as a yield adjustment.

MORTGAGE-BACKED SECURITIES

Mortgage-backed securities represent participating interests
in pools of first mortgage loans originated and serviced by issuers
of the securities. Unrealized gains and losses on mortgage-backed
securities are recognized as direct increases or decreases in
comprehensive income. The cost of securities sold is recognized
using the specific identification method. Premiums and discounts
are being amortized over the life of the securities as a yield
adjustment.

COLLATERALIZED MORTGAGE OBLIGATIONS

Collateralized Mortgage Obligations (CMOs) are multiple
class mortgage-backed securities. An underlying pool of mortgages
held by the issuer serves as collateral for the debt obligations,
and principal and interest payments from the pool of mortgages
are used to retire the CMOs.

Currently, the Companys investment in CMOs is limited
to first-tranche Real Estate Mortgage Investment Conduits (REMICs).
A REMIC is a pass-through investment vehicle created under the
Tax Reform Act of 1986 to issue multiple class mortgage-backed
securities. The multiple classes in a REMIC are known as "tranches".

Currently, the Companys investment in REMICs is
limited to those issued by FNMA, FHLMC and "AAA" rated
non-governmental agencies. These are defined to be within the
20% risk-weighted category for thrift institutions. Prior to investing,
the Company receives a prospectus that includes the various cash
flow and interest rate risk scenarios possible for each bond.

Unrealized gains and losses on CMOs are recognized as
direct increases or decreases in comprehensive income. The cost
of securities sold is recognized using the specific identification
method. Premiums and discounts are being amortized over the life
of the securities as a yield adjustment.



LOANS

Loans are stated at unpaid principal balances, less the allowance
for loan losses and net deferred loan fees. Loan origination and
commitment fees, as well as certain direct origination costs,
are deferred and amortized as a yield adjustment over the contractual
lives of the related loans using the interest method.

Loans are placed on non-accrual when principal or interest
is delinquent for 90 days or more. Any unpaid interest previously
accrued on those loans is reversed from income, and thereafter
interest is recognized only to the extent of payments received.

A loan is considered impaired when, based on current information
and events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan
agreement. Interest payments on impaired loans are typically applied
to principal unless collectibility of the principal amount is
fully assured, in which case interest is recognized on the cash
basis. Residential mortgage loans and consumer installment loans
are considered to be groups of smaller balance homogeneous loans
and are collectively evaluated for impairment and are not subject
to SFAS 114 measurement criteria.

The allowance for loan losses is maintained at a level that,
in managements judgment, is adequate to absorb probable
losses inherent in the loan portfolio. The amount of the allowance
is based on managements evaluation of the collectibility
of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specific
impaired loans, and economic conditions. The allowance is increased
by a provision for loan losses, which is charged to expense, and
reduced by charge-offs, net of recoveries. Changes in the allowance
relating to impaired loans are charged or credited to the provision
for loan losses.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated
depreciation computed principally on the straight-line and modified
accelerated cost recovery methods over the estimated useful lives
of the assets which range from 5 to 10 years for furniture and
equipment, and 31 to 39 years for buildings. Maintenance and repairs
are expensed as incurred, while major additions and improvements
are capitalized.

When these assets are retired or otherwise disposed of, the
cost and related accumulated depreciation or amortization are
removed from the accounts, and any resulting gain or loss is reflected
in income for the period.



FORECLOSED REAL ESTATE

Foreclosed real estate includes real estate acquired in settlement
of loans. At the time of foreclosure, foreclosed real estate is
recorded at the lower of the Associations cost or the assets
fair value, less estimated selling costs, which becomes the propertys
new basis. After foreclosure, valuations are periodically performed
by management and the real estate is carried at the lower of cost
or fair value less estimated selling costs. Costs incurred in
maintaining foreclosed real estate are included in income (loss)
on foreclosed real estate.

REAL ESTATE HELD-FOR-INVESTMENT

Real estate held-for-investment consists of a newly constructed
multi-suite office building at a former branch location of the
Association. The Company leased two of the four suites beginning
in November, 2001. The Company is retaining two suites to lease
to the Association which has applied for and received approval
to open a branch office sometime in the future.

INCOME TAXES

The Company and its wholly-owned subsidiary file a consolidated
Federal income tax return on a calendar year basis. Each entity
pays its pro rata shares of income taxes in accordance with a
written tax-sharing agreement.

Income taxes are provided for the tax effects of the transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes related to differences between the basis
of assets and liabilities for financial and income tax reporting.
The deferred tax assets and liabilities represent the future tax
return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered
or settled. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not
that some portion of the deferred tax asset will not be realized.
Deferred tax assets and liabilities are adjusted for the effect
of changes in tax laws and rates on the date of enactment.

While the Association is exempt from Louisiana income tax,
it is subject to the Louisiana Ad Valorem tax that is based on
stockholders equity and net income.

NON-DIRECT RESPONSE ADVERTISING COSTS

The Company expenses advertising costs as incurred. Advertising
cost were $95,000, $95,000 and $69,000 for the years ended December
31, 2001, 2000 and 1999, respectively.

NEW ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 140 (SFAS 140),
Accounting for Transfers and servicing of Financial Assets
and Extinguishments of Liabilities, is a replacement of SFAS
125. This statement provides accounting and reporting standards
for transfers and servicing of financial assets and extinguishments
of liabilities. Those standards are based on consistent application
of a financial-components approach that focuses on control. Under
this approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and
the liabilities it has incurred, derecognizes financial assets
when control has been surrendered, and derecognizes liabilities
when extinguished. This statement provides consistent standards
for distinguishing transfers of financial assets that are sales
from transfers that are secured borrowings. This statement is
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001
and for recognition and reclassification of collateral and for
disclosures relating to securitization transactions and collateral
for years ending after December 15, 2000. The adoption of
this pronouncement had no effect on the financial position and
results of operations of the Company.



Statement of Financial Accounting Standards No. 144 (SFAS 144),
Accounting for the Impairment and Disposal of Long-Lived Assets,
is a replacement of SFAS 121. This statement provides accounting
and reporting standards for the recognition and measurement of
the impairment of long-lived assets to be held and used and the
measurement of long-lived assets to be disposed of by abandonment
or sale. This statement requires that long-lived assets (excluding
goodwill) to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable and requires
a probability-weighted cash flow estimation approach, and introduces
a "primary-asset" approach to determine the cash flow
estimation period. In addition, this statement requires that long-lived
assets to be disposed of be reported at the lower of carrying
amount or fair value less cost to sell, and includes accounting
guidance for disposal of a segment of a business that is considered
a discontinued operation. This statement is effective for financial
statements issued for fiscal years beginning after December 15,
2001. This statement will become effective to the Company starting
in 2002.



NOTE B

INVESTMENT SECURITIES

Securities available-for-sale consist of the following (in
thousands):



|                           | December 31, 2001    |        | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair 
    Value
|-------------------------- | -------------------- | ------ | -------------- | ---------------------- | ----------------------- | ---------------
|                           |                      |        | ----------     |                        | ----------              |                
|U. S. Government           |                      |        |                |                        |                         |                
|                           | and Federal Agencies | $      | 801            | $                      | 85                      | $              
|Adjustable Rate            |                      |        |                |                        |                         |                
|                           | Mortgage Mutual Fund |        | 12,481         |                        | 32                      |                
|Ultra Short Term           |                      |        |                |                        |                         |                
|Mutual Fund                |                      | 4,255  |                | -                      |                         | 4              
|Intermediate               |                      |        |                |                        |                         |                
|                           | Mortgage Mutual Fund |        | 394            |                        | 3                       |                
|FHLMC Common Stock         |                      | 16     |                | 1,031                  |                         | -              
|FHLMC Preferred Stock      |                      | 16,224 |                | 326                    |                         | -              
|Equity Investments - Other |                      | 173    |                | 3                      |                         | -              
|                           |                      |        | -------        |                        | -------                 |                
|                           |                      | $      | 34,344         | $                      | 1,480                   | $              
|                           |                      |        | =====          |                        | =====                   |                
|                           |                      |        |                |                        |                         |                
|                           | December 31, 2000    |        | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair 
    Value
|                           |                      |        | ----------     |                        | ----------              |                
|U. S. Government           |                      |        |                |                        |                         |                
|                           | and Federal Agencies | $      | 2,389          | $                      | 72                      | $              
|Adjustable Rate            |                      |        |                |                        |                         |                
|                           | Mortgage Mutual Fund |        | 2,831          |                        | -                       |                
|Intermediate               |                      |        |                |                        |                         |                
|                           | Mortgage Mutual Fund |        | 400            |                        | -                       |                
|FHLMC Common Stock         |                      | 25     |                | 1,767                  |                         | -              
|FHLMC Preferred Stock      |                      | 3,506  |                | -                      |                         | 2              
|Equity Investments-Other   |                      | 50     |                | -                      |                         | -              
|                           |                      |        | -------        |                        | -------                 |                
|                           |                      | $      | 9,201          | $                      | 1,839                   | $              
|                           |                      |        | =====          |                        | =====                   |                



The following is a summary of maturities of securities available-for-sale
(in thousands):



|                     |                                    | December 31,                         
|-------------------- | ---------------------------------- | -------------------------------------
|                     |                                    | 2001
    SecuritiesAvailable-for-Sale
|                     |                                    |                                      
|                     |                                    |                                      
|Amounts Maturing in: |                                    |                                      
|                     | In One Year or Less                |                                      
|                     | After One Year Through Five Years  |                                      
|                     | After Five Years Through Ten Years |                                      
|                     |                                    |                                      
|                     |                                    |                                      
|                     |                                    |                                      

The Company's investment in FHLMC preferred stock represents
an investment in securities which pay a stated rate of interest
quarterly of which 70% is exempt from Federal income tax. This
FHLMC preferred stock contains call options from 2004 to 2009.



In 2001, the company sold 10,000 shares of FHLMC common stock
at a gain of $623,000. The Company also wrote down its investment
in the Intermediate Mortgage Mutual Fund $27,000 in 2001. During
2000, the Company realized losses of $210,000 through the redemption
of $2.6 million of its Intermediate Mortgage Mutual Fund. The
Company also sold 10,000 shares of FHLMC common stock for $413,000,
realizing a gain of $403,000. During 1999, the Company realized
losses of $13,387 through the redemption of $3.1 million of its
Adjustable Rate Mortgage Fund.



At December 31, 2001, three equity securities being carried
at a cost of $77,000 are included in Other Assets. At December
31, 2000, two equity securities being carried at a cost of $27,000
are included in Other Assets. The fair value for these securities
approximates cost.



NOTE C

MORTGAGE-BACKED SECURITIES

Mortgage-backed securities consist of the following (in thousands):



|December 31, 2001   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|------------------- | - | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                    |   | ----------         |                                | ----------                      |                
|Available for Sale: |   |                    |                                |                                 |                
|GNMA                |   | 857                |                                | 28                              |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 857                | $                              | 28                              | $              
|                    |   | =====              |                                | =====                           |                
|                    |   |                    |                                |                                 |                
|December 31, 2000   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|                    |   | ----------         |                                | ----------                      |                
|Available for Sale: |   |                    |                                |                                 |                
|FNMA                | $ | 1,481              | $                              | -                               | $              
|FHLMC               |   | 1,096              |                                | -                               |                
|GNMA                |   | 1,541              |                                | 4                               |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 4,118              | $                              | 4                               | $              
|                    |   | =====              |                                | =====                           |                

The amortized cost and fair value of mortgage-backed securities
at December 31, 2001 and 2000, by contractual maturity, are shown
below (in thousands). Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations without call or prepayment penalties.



|                                     | December 31, 2001                  |   | Amortized
    Cost | Fair
    Value
|------------------------------------ | ---------------------------------- | - | ------------------ | --------------
|                                     |                                    |   | ---------          |               
|Mortgage-Backed Securities Maturing: |                                    |   |                    |               
|                                     | In One Year or Less                | $ | -                  | $             
|                                     | After One Year Through Five Years  |   | -                  |               
|                                     | After Five Years Through Ten Years |   | -                  |               
|                                     | After Ten Years                    |   | 857                |               
|                                     |                                    |   | ------             |               
|                                     |                                    | $ | 857                | $             
|                                     |                                    |   | =====              |               

|                                     | December 31, 2000                  |   | Amortized
    Cost | Fair
    Value
|------------------------------------ | ---------------------------------- | - | ------------------ | --------------
|                                     |                                    |   | ---------          |               
|Mortgage-Backed Securities Maturing: |                                    |   |                    |               
|                                     | In One Year or Less                | $ | 230                | $             
|                                     | After One Year Through Five Years  |   | 814                |               
|                                     | After Five Years Through Ten Years |   | 1,187              |               
|                                     | After Ten Years                    |   | 1,887              |               
|                                     |                                    |   | --------           |               
|                                     |                                    | $ | 4,118              | $             
|                                     |                                    |   | =====              |               

In 2001, the Company sold $2.3 million of mortgage-backed securities
at a net loss of $5,000. In 2000, the Company sold GNMA and FNMA
mortgage-backed securities with a book value of $10.6 million,
resulting in a loss of $337,000. There were no sales of mortgage-backed
securities in 1999.



NOTE D

COLLATERALIZED MORTGAGE OBLIGATIONS

Collateralized Mortgage Obligations (CMOs) consist of
the following (in thousands):



|December 31, 2001   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|------------------- | - | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                    |   | ----------         |                                | ----------                      |                
|Available-for-Sale: |   |                    |                                |                                 |                
|FNMA                | $ | 1,283              | $                              | -                               | $              
|FHLMC               |   | 13,702             |                                | 153                             |                
|GNMA                |   | 35,810             |                                | 1,213                           |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 50,795             | $                              | 1,366                           | $              
|                    |   | =====              |                                | =====                           |                

|December 31, 2000   |   | Amortized
    Cost | Gross
    Unrealized
    Gains | Gross
    Unrealized
    Losses | Fair 
    Value
|------------------- | - | ------------------ | ------------------------------ | ------------------------------- | ---------------
|                    |   | ----------         |                                | ----------                      |                
|Available-for-Sale: |   |                    |                                |                                 |                
|FNMA                | $ | 5,766              | $                              | -                               | $              
|FHLMC               |   | 14,254             |                                | 196                             |                
|GNMA                |   | 33,562             |                                | 583                             |                
|                    |   | -------            |                                | -------                         |                
|                    | $ | 53,582             | $                              | 779                             | $              
|                    |   | =====              |                                | =====                           |                

In 2001, the Company sold $2.7 million of collateralized mortgage
obligations at a gain of $16,000. At December 31, 2001 and 2000,
CMOs are classified as available-for-sale, and are reported
on the financial statements at their fair value. Also, all of
the CMOs held as of December 31, 2001 and 2000 have contractual
maturities of greater than ten years. There were no sales of CMOs
during 2000 and 1999.

CMOs with market values of $28,540,794 and $8,204,550
have been pledged as collateral towards the outstanding balance
of Advances from the Federal Home Loan Bank at December 31, 2001
and 2000, respectively.



NOTE E

LOANS

Loans at December 31, 2001 and 2000 are summarized as follows
(in thousands):



|                      |                        |                         |       | December 31,
|--------------------- | ---------------------- | ----------------------- | ----- | ------------
|                      |                        |                         |       | 2001        
|First Mortgage Loans: |                        |                         |       |             
|                      | One to Four            |                         |       |             
|                      |                        | Family Residential      | $     | 69,843      
|                      | FHA and VA             |                         | 9     |             
|                      | Construction           |                         | 1,056 |             
|                      | Commercial Real Estate |                         | 3,431 |             
|                      | Other                  |                         | 6,750 |             
|                      |                        |                         |       | ---------   
|                      |                        | Total Real Estate Loans |       | 81,089      
|                      |                        |                         |       |             
|Consumer Loans:       |                        |                         |       |             
|                      | Second Mortgage        |                         | 11    |             
|                      | Loans on Deposits      |                         | 254   |             
|                      |                        |                         |       | ---------   
|                      |                        | Total Consumer Loans    |       | 265         
|                      |                        |                         |       |             
|Commercial Loans      |                        | 683                     |       | 381         
|                      |                        |                         |       | ---------   
|                      |                        |                         |       | 82,037      
|                      |                        |                         |       |             
|Allowance for         |                        |                         |       |             
|                      | Loan Losses            |                         | (435) |             
|                      |                        |                         |       |             
|Net Deferred Loan     |                        |                         |       |             
|                      | Origination Costs      |                         | 9     |             
|                      |                        |                         |       | ---------   
|Net Loans             | $                      | 81,611                  | $     | 70,480      
|                      |                        |                         |       | =====       



An analysis of the allowance for loan losses as follows (in
thousands):



|                     |         |      | Years Ended December 31,
|-------------------- | ------- | ---- | ------------------------
|                     |         |      | 2001                    
|                     |         |      | -----                   
|Balance, Beginning   |         |      |                         
|                     | of Year | $    | 420                     
|Provision for Losses |         | 25   |                         
|Loans Charged Off    |         | (10) |                         
|                     |         |      | -----                   
|Balance, End of Year | $       | 435  | $                       
|                     |         |      | ====                    

Loans receivable as of December 31, 2001 are scheduled to mature
and adjustable rate loans are scheduled to reprice as follows
(in thousands):



|                            |              |     | Under 
    One 
    Year | One to 
    Five 
    Years | Six 
    to Ten Years | Over 
    10 
    Years | Total 
|--------------------------- | ------------ | --- | ------------------------ | --------------------------- | --------------------- | ----------------------- | ------
|                            |              |     | ------                   |                             | ------                |                         | ------
|Loans Secured by 1-4 Family |              |     |                          |                             |                       |                         |       
|                            | Residential: |     |                          |                             |                       |                         |       
|Fixed Rate                  | $            | 54  | $                        | 2,879                       | $                     | 7,610                   | $     
|Other Loans Secured by      |              |     |                          |                             |                       |                         |       
|                            | Real Estate: |     |                          |                             |                       |                         |       
|Fixed Rate                  |              | 58  |                          | 2,127                       |                       | 3,546                   |       
|Commercial Fixed Rate       |              | 286 |                          | -                           |                       | 124                     |       
|All Other Loans             |              | 254 |                          | -                           |                       | -                       |       
|                            |              |     | ------                   |                             | ------                |                         | ------
|                            |              | $   | 652                      | $                           | 5,006                 | $                       | 11,280
|                            |              |     | =====                    |                             | =====                 |                         | ===== 

At December 31, 2001 and 2000, the Association had loans totaling
approximately $179,000 and $320,000, respectively, for which impairment
had been recognized. The allowance for loan losses related to
these loans totaled $56,000 and $68,000 at December 31, 2001 and
2000, respectively. The amount of interest income that would have
been recorded on loans in non-accrual status at December 31, 2001,
had such loans performed in accordance with their terms, was approximately
$8,000. Such interest foregone for the year ended December 31,
2000 was approximately $20,000.

In the ordinary course of business, the Association has and
expects to continue to have transactions, including borrowings,
with its officers and directors. In the opinion of management,
such transactions were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
of comparable transactions with other persons and did not involve
more than a normal risk of collectibility or present any other
unfavorable features to the Association.

Loans to such borrowers are summarized as follows (in thousands):



|                     |         |       | December 31,
|-------------------- | ------- | ----- | ------------
|                     |         |       | 2001        
|Balance, Beginning   |         |       |             
|                     | of Year | $     | 1,454       
|Additions            |         | 228   |             
|Payments and Renewal |         | (226) |             
|                     |         |       | ---------   
|Balance, End of Year |         | 1,456 |             

The Associations lending activity is concentrated within
the metropolitan New Orleans area and surrounding parishes, with
its major emphasis in the origination of permanent single-family
dwelling loans. Such loans comprise the majority of the Associations
loan portfolio.

NOTE F

ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at December 31, 2001 and 2000 consists
of the following (in thousands):



|                                    |   |     | December 31,
|----------------------------------- | - | --- | ------------
|                                    |   |     | 2001        
|Loans                               | $ | 348 | $           
|Mortgage-Backed Securities          |   | 6   |             
|Collateralized Mortgage Obligations |   | 277 |             
|Investments and Other               |   | 252 |             
|                                    |   |     | ------      
|Totals                              | $ | 883 | $           
|                                    |   |     | ====        



NOTE G

PREMISES AND EQUIPMENT

A summary of premises and equipment follows (in thousands):



|                                          |   | December 31,
|----------------------------------------- | - | ------------
|                                          |   | 2001        
|Land                                      | $ | 781         
|Buildings and Improvements                |   | 2,071       
|Furniture, Fixture and Equipment          |   | 637         
|                                          |   | ------      
|                                          |   | 3,489       
|Accumulated Depreciation and Amortization |   | (943)       
|                                          |   | ------      
|                                          | $ | 2,546       
|                                          |   | ====        

Depreciation expense for the years ended December 31, 2001,
2000 and 1999 was approximately $139,000, $137,000 and $112,000,
respectively.



NOTE H

FORECLOSED REAL ESTATE

A summary of the activity of the Foreclosed Real Estate account
follows:



|                                |   | December 31,
|------------------------------- | - | ------------
|                                |   | 2001        
|Balance - Beginning of the Year | $ | 117         
|Acquired in Settlement of Loans |   | 363         
|Costs Capitalized               |   | 15          
|Sales of Foreclosed Real Estate |   | (495)       
|                                |   | ------      
|                                | $ | -           
|                                |   | ===         

Expenses applicable to foreclosed real estate consists of operating
expenses, net of rental income. The Company incurred net expenses
associated with foreclosed real estate of approximately $3,000
for the year ended December 31, 2001. For the years ended December
31, 2000 and 1999, the Company recognized net income associated
with foreclosed real estate of approximately $2,000 and $24,000,
respectively.



NOTE I

REAL ESTATE HELD-FOR-INVESTMENT

Real estate held-for-investment, which consists of a multi-suite
office building located on the property of a former branch location
of the Association, is summarized below (in thousands):



|                           |   | December 31,
|-------------------------- | - | ------------
|                           |   | 2001        
|Land                       | $ | 226         
|Buildings and Improvements |   | 307         
|                           |   | ------      
|                           |   | 533         
|Accumulated Depreciation   |   | (1)         
|                           |   | ------      
|                           | $ | 532         
|                           |   | ===         

Depreciation expense for each of the years ended December 31,
2001, 2000 and 1999 was $1,000, $2,000 and $3,000, respectively.
Depreciation expense during 2001 was for the newly constructed
multi-suite office building that was placed into service in November,
2001. Depreciation expense for the years 2000 and 1999 was for
the former structure located on the property. During 2000, the
Company transferred the remaining book value of the structure
from Building and Improvements to Land.

The Company leased this property on a month-to-month basis
for $1,600 per month. The lease was terminated in March, 1999.
Total rental income recognized was approximately $1,700 for the
year ended December 31, 1999.



On February 20, 1998, in response to regulatory considerations,
the Company purchased from the Association the former branch location
and adjoining property for $453,000. The purchase price was based
on the appraised value of the property at the time of the transaction.
This inter-company transaction resulted in a gain to the Association
of approximately $178,000, which is eliminated for the purposes
of these consolidated financial statements.



NOTE J

DEPOSITS

Deposit account balances at December 31, 2001 and 2000 are
summarized as follows:



|                              | Weighted
    Average Rate at |      |      | Year Ended
    December 31, |  
|----------------------------- | ---------------------------- | ---- | ---- | --------------------------- | -
|                              | December 31,                 |      |      | 2001                        |  
|                              | 2001                         |      | 2000 |                             |  
|Balance by Interest Rate:     |                              |      |      |                             |  
|Demand Deposit                |                              |      |      |                             |  
|                              | Accounts                     | 1.94 | %    | 4.64                        | %
|Regular Savings               |                              |      |      |                             |  
|                              | Accounts                     | 2.75 | %    | 3.00                        | %
|Certificates of               |                              |      |      |                             |  
|                              | Deposit                      | 4.34 | %    | 5.85                        | %
|                              |                              |      |      |                             |  
|                              |                              |      |      |                             |  
|                              |                              |      |      |                             |  
|Certificate Accounts Maturing |                              |      |      |                             |  
|                              | Under 12 months              |      |      |                             | $
|                              | 12 months to 24 months       |      |      |                             |  
|                              | 24 months to 36 months       |      |      |                             |  
|                              | 36 months to 48 months       |      |      |                             |  
|                              | 48 months to 60 months       |      |      |                             |  
|                              |                              |      |      |                             |  
|                              |                              |      |      |                             |  
|                              |                              |      |      |                             |  

The aggregate amount of deposits with a minimum balance of
$100,000 was approximately $8,133,000 and $3,928,000 at December
31, 2001 and 2000, respectively.

Interest expense for each of the following periods is as follows
(in thousands):





|                 |   | Years EndedDecember 31,
|---------------- | - | -----------------------
|                 |   | 2001                   
|Certificates     | $ | 2,122                  
|NOW Accounts     |   | 207                    
|Passbook Savings | $ | 514                    
|                 |   |                        
|                 | $ | 2,843                  

The Association held deposits of approximately $779,000 and
$653,000 for officers and directors at December 31, 2001 and 2000,
respectively.



NOTE K

ADVANCES FROM FEDERAL HOME LOAN BANK

Pursuant to collateral agreements with the Federal Home Loan
Bank (FHLB), advances are secured by a blanket floating lien on
first mortgage loans and certain pledged CMOs. Total interest
expense recognized in 2001, 2000 and 1999, respectively, was $4,982,000,
$3,209,000 and $2,674,000.





|Contract Rate  | Advance Total
|-------------- | -------------
|               |              
|4.00% to 4.99% | $            
|5.00% to 5.99% |              
|6.00% to 6.99% |              
|7.00% to 7.99% |              
|               | $            
|               |              

Maturities of Advances at December 31, 2001 for each of the
next five years are as follows (in thousands):



|Year Ending  |   |       
|------------ | - | ------
|December 31, |   | Amount
|2002         | $ | 17,241
|2003         |   | 23,098
|2004         |   | 6,225 
|2005         |   | 10,205
|2006         |   | 5,462 
|Thereafter   |   | 17,034
|             | $ | 79,265

NOTE L

INCOME TAX EXPENSE

The provision for income taxes for 2001, 2000 and 1999 consists
of the following (in thousands):



|                     |   | Years EndedDecember 31,
|-------------------- | - | -----------------------
|                     |   | 2001                   
|Current Tax Expense  | $ | 528                    
|Deferred Tax Expense | $ | 61                     
|                     |   |                        
|                     | $ | 589                    



The provision for Federal income taxes differs from that computed
by applying Federal statutory rates to income (loss) before Federal
income tax expense, as indicated in the following analysis (in
thousands):



|                                     |   | Years EndedDecember 31,
|------------------------------------ | - | -----------------------
|                                     |   | 2001                   
|Expected Tax Provision at a 34% Rate | $ | 750                    
|Expected State Corporate Tax         |   | (2)                    
|Effect of Tax Exempt Income          |   | (207)                  
|Employee Stock Ownership Plan        |   | 53                     
|Other                                |   | (5)                    
|                                     | $ | 589                    

Deferred tax liabilities have been provided for the temporary
differences related to unrealized gains on available-for-sale
securities, deferred loan costs, depreciation, the allowance for
loan losses, and non-cash Federal Home Loan Bank dividends. Deferred
tax assets have been provided for the temporary differences related
to the Companys Recognition and Retention Plan and Employee
Stock Ownership Plan, reserves for uncollected interest and late
charges, deferred loan fees, and the allowance for losses on foreclosed
real estate. The net deferred tax assets or liabilities in the
accompanying consolidated balance sheets include the following
components (in thousands):





|                    |                                |   | 2001 |   | 2000
|------------------- | ------------------------------ | - | ---- | - | ----
|Deferred Tax Assets |                                |   |      |  
|                    | Recognition and Retention Plan | $ | 13   | $ | 13  
|                    | Employee Stock Ownership Plan  |   | 87   |   | 80  
|                    | Other                          |   | 4    |   | 9   
|                    | Total Deferred Tax Assets      |   | 104  |   | 102 

|Deferred Tax Liabilities                              |                                |                               |       |      
|----------------------------------------------------- | ------------------------------ | ----------------------------- | ----- | -----
|                                                      | FHLB Stock Dividends           | $                             | 302   | $    
|                                                      | Market Value Adjustment to     |                               |       |      
|                                                      |                                | Available-for-Sale Securities |       | 950  
|                                                      | Allowance for Loan Losses      |                               | 183   |      
|                                                      | Other                          |                               | 59    |      
|                                                      | Total Deferred Tax Liabilities |                               | 1,494 |      
|                                                      |                                |                               |       |      
|Deferred Tax Liabilities - Net of Deferred Tax Assets | $                              | 1,390                         | $     | 1,044
|                                                      |                                | ====                          |       | ==== 



Included in retained earnings at December 31, 2001 and 2000
is approximately $3,800,000 in bad debt reserves for which no
deferred Federal income tax liability has been recorded. These
amounts represent allocations of income to bad debt deductions
for tax purposes only. Reduction of these reserves for purposes
other than tax bad-debt losses or adjustments arising from carryback
of net operating losses would create income for tax purposes,
which would be subject to the then-current corporate income tax
rate. The unrecorded deferred liability on these amounts was approximately
$1,292,000 for December 31, 2001 and 2000, respectively.



NOTE M

EMPLOYEE STOCK OWNERSHIP PLAN

During 1997, GS Financial Corp. instituted an employee stock
ownership plan (the "ESOP") that covers all employees
of Guaranty Savings and Homestead Association who have completed
one year of service and have attained the age of 21. The ESOP
purchased the statutory limit of eight percent of the shares offered
in the initial public offering of the Company (275,080 shares).
This purchase was facilitated by a loan from the Company to the
ESOP in the amount of $2,750,800. The loan is secured by a pledge
of the ESOP shares. The shares pledged as collateral are reported
as unearned ESOP shares in the balance sheets. The corresponding
note is to be paid back in 40 equal quarterly payments of $103,000
on the last business day of each quarter, beginning June 30, 1997
at the rate of 8.5%. The note payable and the corresponding note
receivable have been eliminated for consolidation purposes.

The Association may contribute to the plan, in the form of
debt service, at the discretion of its board of directors. Dividends
received on ESOP shares are either utilized to service the debt
or credited to participant accounts at the discretion of the trustees
of the Plan. Shares are released for allocation to plan participants
based on principal and interest payments of the note. Compensation
expense is recognized based on the number of shares allocated
to plan participants and the average market price of the stock
for the current year. Released ESOP shares become outstanding
for earnings per share computations.

As compensation expense is incurred, the Unearned ESOP Shares
account is reduced based on the original cost of the stock. The
difference between the cost and average market price of shares
released for allocation is applied to Additional Paid-in Capital.
ESOP compensation expense was approximately $415,000, $377,000
and $355,000 for the years ended December 31, 2001, 2000 and 1999,
respectively.



The ESOP shares as of December 31, 2001 and 2000 were
as follows:



|                                               |   | 2001    |   | 2000   
|---------------------------------------------- | - | ------- | - | -------
|Allocated Shares                               |   | 103,658 |   | 78,215 
|Shares Released for Allocation                 |   | 28,132  |   | 28,132 
|Unreleased Shares                              |   | 136,451 |   | 164,583
|                                               |   |         |   |        
|Total ESOP Shares                              |   | 268,241 |   | 270,930
|                                               |   | ======  |   | ====== 
|Fair Value of Unreleased Shares (in thousands) | $ | 2,039   | $ | 2,397  
|                                               |   | ====    |   | ====   

Total ESOP shares decreased in 2001 and 2000 due to the liquidation
of shares for employees who terminated their employment in 2001
and 2000.

NOTE N

RECOGNITION AND RETENTION PLAN

On October 15, 1997, the Company established a Recognition
and Retention Plan (the "Plan") as an incentive to retain
personnel of experience and ability in key positions. The Company
approved a total of 137,540 shares of stock to be acquired for
the Plan, of which 125,028 shares have been allocated for distribution
to key employees and directors. As shares are acquired for the
Plan, the purchase price of these shares is recorded as unearned
compensation, a contra equity account. As the shares are distributed,
the contra equity account is reduced.

During 1998, by unanimous approval of the Plan participants,
the Plan was amended as a direct effort to reduce the Companys
expenses resulting from the Plan. Prior to the amendment to the
Plan, Plan share awards were earned by recipients at a rate of
20% of the aggregate number of shares covered by the Plan over
five years. The amended Plan stipulates that Plan share awards
are earned by recipients at a rate of 10% of the aggregate number
of shares covered by the plan over ten years. If the employment
of an employee or service as a non-employee director is terminated
prior to the tenth anniversary of the date of grant of Plan share
award for any reason (except for death, disability or retirement),
the recipient shall forfeit the right to any shares subject to
the award which have not been earned.

The total cost associated with the Plan is based on a per share
value of $12.50, the market price of the Companys stock
as of the date on which the Plan was amended. This cost is being
amortized over ten years. Compensation expense pertaining to the
Recognition and Retention plan was $199,000, $156,000 and $156,000
for the years ended December 31, 2001, 2000 and 1999, respectively.
The increased expense in 2001 was attributable to a lump sum distribution
of the remaining awarded shares under the terms of the plan to
a member of the Board of Directors who retired for health reasons.



A summary of the changes in restricted stock follows:



|                             | UnawardedShares | AwardedShares
|---------------------------- | --------------- | -------------
|Balance at January 1, 2000   | 12,472          | 100,028      
|Purchased by Plan            | -               | -            
|Granted                      | -               | -            
|Forfeited                    | -               | -            
|Earned and Issued            | -               | (12,506)     
|                             |                 |              
|Balance at December 31, 2000 | 12,472          | 87,522       
|Purchased by Plan            | -               | -            
|Granted                      | -               | -            
|Forfeited                    | -               | -            
|Earned and Issued            | -               | (16,038)     
|                             |                 |              
|Balance at December 31, 2001 | 12,472          | 71,484       
|                             | =====           | =====        

NOTE O

STOCK OPTION PLAN

In 1997, the Company adopted a stock option plan for the benefit
of directors, officers, and other key employees. The number of
shares of common stock reserved for issuance under the stock option
plan was 343,850 shares, or ten percent of the total number of
shares of common stock sold in the Companys initial public
offering of its common stock.



The plan also permits the granting of Stock Appreciation Rights
(SARs). SARs entitle the holder to receive, in the
form of cash or stock, the increase in the fair value of the Company
stock from the date of grant to the date of exercise. No SARs
have been issued under the plan.



On October 15, 1997, the Company granted a total of 275,076
options to directors, officers, and other key employees. Under
the plan, the exercise price of each option cannot be less than
the fair value of the underlying common stock as of the date of
the option grant, and the maximum term is 10 years. Options vest
over five years.



The Company accounts for the plan under the guidance of Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees. No compensation costs has been recognized
in the financial statements of the Company since the exercise
option price cannot be less than market price of the stock at
the date of the grant. However, SFAS No. 123, Accounting for
Stock-Based Compensation, requires the disclosure of the compensation
costs for stock-based incentives granted after January 31, 1995
based on the fair value at the grant date for awards. Applying
SFAS No. 123 would result in pro forma net income and earnings
per share amounts as follows:





|                          | 2001         | 2000   | 1999  
|------------------------- | ------------ | ------ | ------
|Net Income (In thousands) |              |        |       
|                          | As Reported  | $1,617 | $1,195
|                          | Pro Forma    | 1,407  | 985   
|                          |              |        |       
|Earnings per Share        |              |        |       
|                          | As Reported: |        |       
|                          | Basic        | $1.04  | $.60  
|                          | Diluted      | 1.04   | .60   
|                          | Pro Forma:   |        |       
|                          | Basic        | .90    | .50   
|                          | Diluted      | .90    | .50   



The fair value of options granted on October 15, 1997 was estimated
as of the date of the grant using the Black-Scholes option-pricing
model with the following assumptions: dividend yield of 1.59%;
expected volatility of 16.2%; risk-free interest rate of 6.14%;
and life of 9.88 years.



A summary of the status of the Companys stock option
plan as of December 31, 2001, 2000, and 1999, and changes during
the years ending on those dates is presented below:





|                                 |           |          |      |          |          |  |           |         
|-------------------------------- | --------- | -------- | ---- | -------- | -------- |  | --------- | --------
|                                 | 2001      |          | 2000 |          | 1999    
|                                 |           | Exercise |      |          | Exercise |  |           | Exercise
|Fixed Options                    | Shares    | Price    |      | Shares   | Price    |  | Shares    | Price   
|                                 |           |          |      |          |          |  |           |         
|Outstanding at Beginning of Year | 275,076   | $ 17.18  |      | 275,076  | $ 17.18  |  | 275,076   | $ 17.18 
|Granted                          | -         |          |      | -        |          |  | -         |         
|Exercised                        | -         |          |      | -        |          |  | -         |         
|Forfeited                        | -         |          |      | -        |          |  | -         |         
|                                 | --------- |          |      | -------- |          |  | --------- |         
|Outstanding at End of Year       | 275,076   | $ 17.18  |      | 275,076  | $ 17.18  |  | 275,076   | $ 17.18 
|                                 | ======    |          |      | =====    |          |  | ======    |         
|Options Exercisable at Year-end  | 220,061   | $ 17.18  |      | 176,507  | $ 17.18  |  | 121,492   | $ 17.18 
|                                 | ======    |          |      | =====    |          |  | ======    |         
|                                 |           |          |      |          |          |  |           |         





The following table summarizes information about fixed stock
options outstanding at December 31, 2001:



|         |  | Options Outstanding |  | Options Exercisable
|-------- |  | ------------------- |  | -------------------
|         |  |                     |  |                    
|         |  | Number              |  | Remaining          
|Exercise |  | Outstanding         |  | Contractual        
|Price    |  | at 12/31/01         |  | Life               
|         |  |                     |  |                    
|$ 17.18  |  | 220,061             |  | 5.8 years          

NOTE P

COMPREHENSIVE INCOME

Comprehensive income was comprised of changes in the Companys
unrealized holding gains or losses on securities available-for-sale
during 2001, 2000 and 1999. The following represents the tax effects
associated with the components of comprehensive income.



|                                        |                               | Years Ended December 31,
|--------------------------------------- | ----------------------------- | ------------------------
|                                        |                               |                         
|Gross Unrealized Holding Gains (Losses) |                               |                         
|                                        | Arising During the Period     | $                       
|Tax (Expense) Benefit                   |                               | (413)                   
|                                        |                               |                         
|                                        |                               |                         
|                                        |                               |                         
|Reclassification Adjustment for (Gains) |                               |                         
|                                        | Losses Included in Net Income |                         
|Tax Expense (Benefit)                   |                               | 128                     
|                                        |                               |                         
|                                        |                               |                         
|                                        |                               |                         
|Net Unrealized Holding Gains (Losses)   |                               |                         
|                                        | Arising During the Period     | $                       



NOTE Q

FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF
1991 (FDICIA) AND FINANCIAL INSTITUTIONS REFORM, RECOVERY AND
ENFORCEMENT ACT OF 1989 (FIRREA)

FDICIA was signed into law on December 19, 1991. Regulations
implementing the prompt corrective action provisions of FDICIA
became effective on December 19, 1992. In addition to the prompt
corrective action requirements, FDICIA includes significant changes
to the legal and regulatory environment for insured depository
institutions, including reductions in insurance coverage for certain
kinds of deposits, increased supervision by the Federal regulatory
agencies, increased reporting requirements for insured institutions,
and new regulations concerning internal controls, accounting and
operations.

FIRREA was signed into law on August 9, 1989. Regulations for
savings institutions minimum capital requirements went into
effect on December 7, 1989. In addition to its capital requirements,
FIRREA includes provisions for changes in the Federal regulatory
structure for institutions, including a new deposit insurance
system and restricted investment activities with respect to noninvestment
grade corporate debt and certain other investments. FIRREA also
increases the required ratio of housing-related assets in order
to qualify as a savings institution.

The regulations require institutions to have a minimum regulatory
tangible capital equal to 1.5% of adjusted total assets, a minimum
3% core/leverage capital ratio, a minimum 4% tier 1 risk-based
ratio, and a minimum 8% total risk-based capital ratio to be considered
"adequately capitalized." An institution is deemed to
be "critically undercapitalized" if it has a tangible
equity ratio of 2% or less. The ability to include qualifying
supervisory goodwill for purposes of the core/leverage capital
and tangible capital was phased out by July 1, 1995.

The following table sets out the Associations various
regulatory capital categories at December 31, 2001 and 2000.



|                          | 2001        | 2000      
|------------------------- | ----------- | ----------
|                          | Dollars     | Percentage
|                          | (Thousands) |           
|                          |             |           
|Tangible Capital          | $26,393     | 14.40%    
|Tangible Equity           | $26,393     | 14.40%    
|Core/Leverage Capital     | $26,393     | 14.40%    
|Tier 1 Risk-Based Capital | $26,393     | 28.24%    
|Total Risk-Based Capital  | $26,828     | 28.71%    



As of December 31, 2001, the most recent notification from
the FDIC categorized the Association as "well capitalized"
under the regulatory framework for prompt corrective action. To
be "well capitalized", the Association must maintain
minimum leverage capital ratios and minimum amounts of capital
to "risk-weighted" assets, as defined by banking regulators.



NOTE R

REGULATORY CAPITAL

The following is a reconciliation of generally accepted accounting
principles (GAAP) net income and capital to regulatory capital
for the Association. The following reconciliation also compares
the capital requirements as computed to the minimum capital requirements
for the Association.



|              | Net Income for the 
    Year EndedDecember 31, 2001 | Capital as ofDecember 31, 2001
|------------- | --------------------------------------------------- | ------------------------------
|              |                                                     |                               
|Per GAAP      | $1,578                                              |                               
|              | ====                                                |                               
|Total Assets  |                                                     |                               
|              |                                                     |                               
|Capital Ratio |                                                     |                               

|         |                       |                    | TangibleCapital | TangibleEquity | Core/
    LeverageEquity | Tier 1 
    Risk-BasedCapital | Total Risk-
    BasedCapital
|-------- | --------------------- | ------------------ | --------------- | -------------- | ------------------------ | ----------------------------- | ----------------------------
|Per GAAP | $                     | 28,218             | $               | 28,218         | $                        | 28,218                        | $                           
|         | Assets Required       |                    |                 |                |                          |                               |                             
|         |                       | to be Deducted:    |                 |                |                          |                               |                             
|         |                       | Unrealized Gain    |                 |                |                          |                               |                             
|         |                       | on Securities      |                 |                |                          |                               |                             
|         |                       | Available-for-Sale |                 | (1,825)        |                          | (1,825)                       |                             
|         |                       |                    |                 |                |                          |                               |                             
|         | Allowance for Loan    |                    |                 |                |                          |                               |                             
|         |                       | Losses             |                 | -              |                          | -                             |                             
|         |                       |                    |                 |                |                          |                               |                             
|         | Regulatory Capital    |                    |                 |                |                          |                               |                             
|         |                       | Measure            | $               | 26,393         | $                        | 26,393                        | $                           
|         |                       |                    |                 | =====          |                          | =====                         |                             
|         |                       |                    |                 |                |                          |                               |                             
|         | Adjusted Total Assets | $                  | 183,238         | $              | 183,238                  | $                             | 183,238                     
|         |                       |                    |                 | =====          |                          | =====                         |                             
|         |                       |                    |                 |                |                          |                               |                             
|         | Risk-Weighted Assets  |                    |                 |                |                          |                               |                             
|         |                       |                    |                 |                |                          |                               |                             
|         |                       |                    |                 |                |                          |                               |                             
|         | Capital Ratio         |                    | 14.40%          |                | 14.40%                   |                               | 14.40%                      
|         |                       |                    |                 |                |                          |                               |                             
|         | Required Ratio        |                    | 1.50%           |                | 2.00%                    |                               | 3.00%                       
|         |                       |                    |                 |                |                          |                               |                             
|         | Required Capital      | $                  | 2,749           |                |                          | $                             | 5,497                       
|         |                       |                    |                 | =====          |                          |                               |                             
|         | Excess Capital        | $                  | 23,644          |                |                          | $                             | 20,896                      
|         |                       |                    |                 | =====          |                          |                               |                             







|              | Net Income for the 
    Year EndedDecember 31, 2000 | Capital as ofDecember 31, 2000
|------------- | --------------------------------------------------- | ------------------------------
|              |                                                     |                               
|Per GAAP      | $1,096                                              |                               
|              | ====                                                |                               
|Total Assets  |                                                     |                               
|              |                                                     |                               
|Capital Ratio |                                                     |                               

|         |                       |                    | TangibleCapital | TangibleEquity | Core/ LeverageEquity | Tier 1 Risk-Based

    Capital | Total Risk-BasedCapital
|-------- | --------------------- | ------------------ | --------------- | -------------- | -------------------- | ------------------------------ | -----------------------
|Per GAAP | $                     | 25,492             | $               | 25,492         | $                    | 25,492                         | $                      
|         | Assets Required       |                    |                 |                |                      |                                |                        
|         |                       | to be Deducted:    |                 |                |                      |                                |                        
|         |                       | Unrealized Gain    |                 |                |                      |                                |                        
|         |                       | on Securities      |                 |                |                      |                                |                        
|         |                       | Available-for-Sale |                 | (1,293)        |                      | (1,293)                        |                        
|         |                       |                    |                 |                |                      |                                |                        
|         | Allowance for Loan    |                    |                 |                |                      |                                |                        
|         |                       | Losses             |                 | -              |                      | -                              |                        
|         |                       |                    |                 |                |                      |                                |                        
|         | Regulatory Capital    |                    |                 |                |                      |                                |                        
|         |                       | Measure            | $               | 24,199         | $                    | 24,199                         | $                      
|         |                       |                    |                 | =====          |                      | =====                          |                        
|         |                       |                    |                 |                |                      |                                |                        
|         | Adjusted Total Assets | $                  | 149,217         | $              | 149,217              | $                              | 149,217                
|         |                       |                    |                 | =====          |                      | =====                          |                        
|         |                       |                    |                 |                |                      |                                |                        
|         | Risk-Weighted Assets  |                    |                 |                |                      |                                |                        
|         |                       |                    |                 |                |                      |                                |                        
|         |                       |                    |                 |                |                      |                                |                        
|         | Capital Ratio         |                    | 16.22%          |                | 16.22%               |                                | 16.22%                 
|         |                       |                    |                 |                |                      |                                |                        
|         | Required Ratio        |                    | 1.50%           |                | 2.00%                |                                | 3.00%                  
|         |                       |                    |                 |                |                      |                                |                        
|         | Required Capital      | $                  | 2,238           |                |                      | $                              | 4,476                  
|         |                       |                    |                 | =====          |                      |                                |                        
|         |                       |                    |                 |                |                      |                                |                        
|         | Excess Capital        | $                  | 21,961          |                |                      | $                              | 19,723                 
|         |                       |                    |                 | =====          |                      |                                |                        



NOTE S

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Association has various
outstanding commitments and contingent liabilities that are not
reflected in the accompanying financial statements.

COMMITMENTS TO EXTEND CREDIT

The Association is a party to credit related commitments with
off-balance sheet risk in the normal course of business to meet
the financing needs of its customers. These consist of outstanding
mortgage and construction loan commitments and commercial lines
of credit. As of December 31, 2001 and 2000, outstanding mortgage,
construction and commercial lines of credit commitments were approximately
$2,340,000 and $955,000, respectively.

EMPLOYMENT CONTRACTS

The chief executive officer and the executive vice-president
of the Association serve under employment contracts that were
approved by the Board of Directors on February 13, 1997. The contracts
were amended on February 8, 2001, to increase the base salaries
and extend the term thereof to February 13, 2004.

OPERATING LEASE

During 2001, the Association entered into a lease for a Loan
Production Office. The lease has an initial term of 24 months
with a rental rate of $1,000 per month. In addition, the Association
leases an automobile under an operating lease that expires in
July 2003. Total rent expense incurred under these leases amounted
to $16,076, $4,713 and $-0- for the years ended December 31, 2001,
2000, and 1999, respectively.





|Year EndingDecember 31, |   | Amount
|----------------------- | - | ------
|2002                    | $ | 20,076
|2003                    |   | 8,038 
|                        |   |       
|Total                   | $ | 28,114
|                        |   |       

NOTE T

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Association 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. These financial instruments consist of
commitments to extend credit. These instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of
the amounts recognized in the balance sheets.

The Associations exposure to credit loss in the event
of nonperformance by the other party to these financial instruments
for commitments to extend credit is represented by the contractual
notional amount of those instruments (see Note S). The Association
uses the same credit policies making commitments as it does for
on-balance sheet instruments.



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. The total commitment amount does not necessarily
represent future cash requirements. The Association evaluates
each customers creditworthiness on a case-by-case basis.
The amount and type of collateral obtained varies and is based
on managements credit evaluation of the counterparty.

NOTE U

CONCENTRATION OF CREDIT RISK

The Associations lending activity is concentrated within
the southeastern part of Louisiana. In accordance with industry
practices, the Association has deposits in other financial institutions
for more than the insured limit. These deposits in other institutions
do not represent more than the normal industry credit risk.

NOTE V

DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

The carrying amount of cash and short-term investments approximate
the fair value.

For investment securities, mortgage-backed securities, and
collateralized mortgage obligations, fair value is based on quoted
market prices.

For mortgage loan receivables the fair values are based on
discounted cash flows using current rates at which similar loans
with similar maturities would be made to borrowers with similar
credit risk.

The fair value of savings deposits is calculated using average
rates in the market place at the date of the financial statements.

For certificates of deposit, fair value is estimated based
on current rates for deposits of similar remaining maturities.

Advances from the Federal Home Loan Bank are valued utilizing
the cash flows set forth in the existing amortization schedules
and current rates on similar advances.

The fair value of loan commitments is estimated using rates
and fees that would be charged to enter similar agreements, taking
into account (1) the remaining terms of the agreement, (2) the
creditworthiness of the borrowers, and (3) for fixed rate commitments,
the difference between current interest rates and committed rates.







|                                   |                                        | December 31, 2001 | December 31, 2000
|---------------------------------- | -------------------------------------- | ----------------- | -----------------
|                                   |                                        | CarryingAmount    | FairValue        
|Financial Assets                   |                                        |                   |                  
|                                   | Cash and Short-Term Investments        | $                 | 8,638            
|                                   | Investment Securities                  |                   | 35,820           
|                                   | Mortgage-Backed Securities             |                   | 885              
|                                   | Collateral Mortgage Obligations        |                   | 52,087           
|                                   | Loans (Net of Loan Allowance)          |                   | 81,611           
|                                   |                                        |                   |                  
|Financial Liabilities              |                                        |                   |                  
|                                   | Deposits                               | $                 | 71,169           
|                                   | Advances from Federal Home Loan Bank   |                   | 79,265           
|                                   |                                        |                   |                  
|Unrecognized Financial Instruments |                                        |                   |                  
|                                   | Commitments to Extend Credit           | $                 | 575              
|                                   | Unfunded Construction Loan Commitments |                   | 1,690            
|                                   | Unfunded Commercial Lines of Credit    |                   | 74               



NOTE W

SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

The following sets forth condensed results of operations for
2001 and 2000 (dollar amounts in thousands, except per share data):





|                                                                                            |                     |         | First |         | Second |         | Third |         | Fourth
|------------------------------------------------------------------------------------------- | ------------------- | ------- | ----- | ------- | ------ | ------- | ----- | ------- | ------
|2001                                                                                        |                     | Quarter |       | Quarter |        | Quarter |       | Quarter
|                                                                                            |                     |         |       |         |        |         |       |         |       
|Interest Income                                                                             | $                   | 3,089   | $     | 3,445   | $      | 3,376   | $     | 3,190  
|Interest Expense                                                                            |                     | 1,848   |       | 2,123   |        | 2,008   |       | 1,847  
|                                                                                            | Net Interest Income |         | 1,241 |         | 1,322  |         | 1,368 |         | 1,343 
|Provision for Loan Losses                                                                   |                     | 13      |       | -       |        | 2       |       | 9      
|Other Income                                                                                |                     | 598     |       | 7       |        | 31      |       | 10     
|Other Expense                                                                               |                     | 883     |       | 923     |        | 940     |       | 945    
|Income Tax Expense                                                                          |                     | 335     |       | 124     |        | 131     |       | (1)    
|                                                                                            |                     |         |       |         |        |         |       |         |       
|                                                                                            | Net Income          | $       | 608   | $       | 282    | $       | 326   | $       | 400   
|                                                                                            |                     |         |       |         |        |         |       |         |       
|Net Income per Common Share (1)                                                             |                     |         |       |         |        |         |       |        
|                                                                                            | Basic               | $       | 0.36  | $       | 0.17   | $       | 0.22  | $       | 0.28  
|                                                                                            | Diluted             | $       | 0.36  | $       | 0.17   | $       | 0.22  | $       | 0.28  
|Dividends Per Share                                                                         | $                   | 0.09    | $     | 0.09    | $      | 0.09    | $     | 0.09   
|                                                                                            |                     |         |       |         |        |         |       |         |       
|(1) Quarterly per share amounts do not add to total for the year
    ended due to rounding.
|                                                                                            |                     |         |       |         |        |         |       |         |       
|                                                                                            |                     |         |       |         |        |         |       |         |       
|                                                                                            |                     |         | First |         | Second |         | Third |         | Fourth
|2000                                                                                        |                     | Quarter |       | Quarter |        | Quarter |       | Quarter
|                                                                                            |                     |         |       |         |        |         |       |         |       
|Interest Income                                                                             | $                   | 2,798   | $     | 2,822   | $      | 2,848   | $     | 2,794  
|Interest Expense                                                                            |                     | 1,367   |       | 1,402   |        | 1,537   |       | 1,570  
|                                                                                            | Net Interest Income |         | 1,431 |         | 1,420  |         | 1,311 |         | 1,224 
|Provision for Loan Losses                                                                   |                     | -       |       | -       |        | 7       |       | -      
|Other Income                                                                                |                     | (58)    |       | (196)   |        | 292     |       | (167)  
|Other Expense                                                                               |                     | 835     |       | 868     |        | 864     |       | 823    
|Income Tax Expense                                                                          |                     | 206     |       | 133     |        | 272     |       | 55     
|                                                                                            |                     |         |       |         |        |         |       |         |       
|                                                                                            | Net Income          | $       | 332   | $       | 223    | $       | 460   | $       | 179   
|                                                                                            |                     |         |       |         |        |         |       |         |       
|Net Income per Common Share (1)                                                             |                     |         |       |         |        |         |       |        
|                                                                                            | Basic               | $       | 0.14  | $       | 0.11   | $       | 0.26  | $       | 0.11  
|                                                                                            | Diluted             | $       | 0.14  | $       | 0.11   | $       | 0.26  | $       | 0.11  
|Dividends Per Share                                                                         | $                   | 0.09    | $     | 0.09    | $      | 0.09    | $     | 0.09   
|                                                                                            |                     |         |       |         |        |         |       |         |       
|(1) Quarterly per share amounts do not add to total for the year
    ended due to rounding.





NOTE X

EARNINGS PER COMMON SHARE

Earnings per share are computed using the weighted average
number of shares outstanding. Options to purchase 275,076 shares
at $17.18 per share were outstanding during 2001, 2000, and 1999
but were not included in the computation of diluted earnings per
share because the options exercise price was greater than
the average market value price of the common shares. The options
were still outstanding at December 31, 2001. The Company had no
other securities outstanding during the years ended December 31,
2001, 2000, or 1999 that would have a dilutive effect on earnings
per share.



Average shares outstanding at December 31, 2001, 2000 and 1999
amounted to 1,555,260, 1,976,605, and 2,383,168 respectively.

NOTE Y

CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY



|GS FINANCIAL CORP.                                             |    
|-------------------------------------------------------------- | ---
|CONDENSED FINANCIAL CONDITION                                  |    
|(Dollars in Thousands)                                         |    
|                                                               |    
|ASSETS                                                         |    
|                                                               |    
|                                                               |    
|Cash and Cash Equivalents                                      | $  
|Investments - Available-for-Sale, at Fair Value                |    
|Mortgage-Backed Securities - Available-for-Sale, at Fair Value | 891
|Investment in Subsidiary                                       |    
|Loan Receivable                                                |    
|Dividend Receivable from Subsidiary                            |    
|Other Assets                                                   |    
|                                                               |    
|                                                               |    
|                                                               |    
|                                                               |    
|LIABILITIES AND STOCKHOLDERS' EQUITY                           |    
|                                                               |    
|Deferred Tax Liability                                         | $  
|Other Liabilities                                              |    
|Stockholders' Equity                                           |    
|                                                               |    
|                                                               |    
|                                                               |    





|GS FINANCIAL CORP.       |                                             |                             |       |                    
|------------------------ | ------------------------------------------- | --------------------------- | ----- | -------------------
|STATEMENT OF OPERATIONS  |                                             |                             |       |                    
|(Dollars in Thousands)   |                                             |                             |       |                    
|                         |                                             |                             |       | For the Years Ended
|                         |                                             |                             |       | December 31,       
|                         |                                             |                             |       | 2001               
|INTEREST INCOME          |                                             |                             |       |                    
|                         | Mortgage-Backed Securities                  | $                           | 76    | $                  
|                         | Dividend from Subsidiary                    |                             | -     |                    
|                         | Loans                                       |                             | 152   |                    
|                         | Investment Securities                       |                             | 26    |                    
|                         | Other Interest Income                       |                             | 6     |                    
|                         |                                             |                             |       |                    
|                         |                                             | Total Interest Income       |       | 260                
|                         |                                             |                             |       |                    
|NON-INTEREST INCOME      |                                             |                             |       |                    
|                         | Undistributed Earnings of Subsidiary        |                             | 1,579 |                    
|                         | Income from Real Estate Held-for-Investment |                             | 5     |                    
|                         |                                             |                             |       |                    
|                         |                                             | Total Non-Interest Income   |       | 1,584              
|                         |                                             |                             |       |                    
|NON-INTEREST EXPENSES    |                                             |                             |       |                    
|                         | General and Administrative                  |                             | 70    |                    
|                         | Intercompany Personnel Expense              |                             | 122   |                    
|                         | Taxes                                       |                             | 16    |                    
|                         | Loss on Sale of Investments                 |                             | -     |                    
|                         |                                             |                             |       |                    
|                         |                                             | Total Non-Interest Expenses |       | 208                
|                         |                                             |                             |       |                    
|INCOME BEFORE INCOME TAX |                                             | 1,636                       |       | 1,250              
|                         |                                             |                             |       |                    
|PROVISION FOR INCOME TAX |                                             | 19                          |       | 55                 
|                         |                                             |                             |       |                    
|NET INCOME               | $                                           | 1,617                       | $     | 1,195              









|GS FINANCIAL CORP.                                 |                                                                                      |                      |                                                 |                                                     |        
|-------------------------------------------------- | ------------------------------------------------------------------------------------ | -------------------- | ----------------------------------------------- | --------------------------------------------------- | -------
|STATEMENT OF CASH FLOWS                            |                                                                                      |                      |                                                 |                                                     |        
|(Dollars in Thousands)                             |                                                                                      |                      |                                                 |                                                     |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|OPERATING ACTIVITIES                               |                                                                                      |                      |                                                 |                                                     |        
|                                                   | Net Income                                                                           | $                    | 1,617                                           | $                                                   | 1,195  
|                                                   | Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities |                      |                                                 |                                                     |        
|                                                   |                                                                                      | Depreciation Expense |                                                 | 2                                                   |        
|                                                   |                                                                                      |                      | Loss on Sale of Investments                     |                                                     | -      
|                                                   |                                                                                      |                      | Equity in Undistributed Earnings of Subsidiary  |                                                     | (1,579)
|                                                   |                                                                                      |                      | Amortization of Investment Premium              |                                                     | 15     
|                                                   |                                                                                      |                      | Dividend on ARM Fund                            |                                                     | (21)   
|                                                   |                                                                                      |                      | Dividend on IMF Fund                            |                                                     | (1)    
|                                                   |                                                                                      |                      | Decrease in Accrued Interest Receivable         |                                                     | 5      
|                                                   |                                                                                      |                      | Decrease in Dividend Receivable from Subsidiary |                                                     | 5,035  
|                                                   |                                                                                      |                      | Decrease in Tax Receivable                      |                                                     | -      
|                                                   |                                                                                      |                      | (Decrease) Increase in Deferred Income Tax      |                                                     | (2)    
|                                                   |                                                                                      |                      | (Increase) Decrease in Other Assets             |                                                     | (4)    
|                                                   |                                                                                      |                      | Increase (Decrease) in Accrued Income Tax       |                                                     | 5      
|                                                   |                                                                                      |                      |                                                 | Net Cash Provided by Operating Activities           |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|INVESTING ACTIVITIES                               |                                                                                      |                      |                                                 |                                                     |        
|                                                   | Redemption of IMF Mutual Fund                                                        |                      | -                                               |                                                     | 200    
|                                                   | (Investment) Redemption in ARM Mutual Fund                                           |                      | (481)                                           |                                                     | (60)   
|                                                   | Investment in Other Equity Securities                                                |                      | (123)                                           |                                                     | (50)   
|                                                   | Principal Paydowns Note Receivable GS Financial
    ESOP                             |                      | 229                                             |                                                     | 238    
|                                                   | Principal Paydowns on Mortgage-Backed Securities
    -                               |                      |                                                 |                                                     |        
|                                                   |                                                                                      | Available-for-Sale   |                                                 | 668                                                 |        
|                                                   | Investment in Real Estate                                                            |                      | (316)                                           |                                                     | -      
|                                                   |                                                                                      |                      |                                                 | Net Cash (Used In) Provided by Investing Activities |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|FINANCING ACTIVITIES                               |                                                                                      |                      |                                                 |                                                     |        
|                                                   | Purchase of Treasury Stock                                                           |                      | (4,611)                                         |                                                     | (8,590)
|                                                   | Payment of Dividends                                                                 |                      | (561)                                           |                                                     | (763)  
|                                                   |                                                                                      |                      |                                                 | Net Cash (Used in) Financing Activities             |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|NET (DECREASE) IN CASH
    AND CASH EQUIVALENTS    |                                                                                      | (123)                |                                                 | (316)                                               |        
|                                                   |                                                                                      |                      |                                                 |                                                     |        
|CASH AND CASH EQUIVALENTS - BEGINNING 
    OF YEAR |                                                                                      | 254                  |                                                 | 570                                                 |        
|CASH AND CASH EQUIVALENTS - END 
    OF YEAR       | $                                                                                    | 131                  | $                                               | 254                                                 | $      



Donald C. Scott

Mr. Scott (Age 50) has served as President and Chief Executive
Officer of the Company since February 1997 and President of the
Association since March 1985; prior thereto, he served in various
management and other positions at the Association. He has been
a director since 1982.

Kenneth B. Caldcleugh

Mr. Caldcleugh (Age 52) is the President and Owner of The Cellars
of River Ridge, a fine wine and spirit retail outlet in Louisiana.
Prior thereto, Mr. Caldcleugh was the Vice President and Regional
Manager of Glazer Companies of Louisiana (formerly Glazer Wholesale
Spirit & Wine Distributors), from 1973 to 1996. He has been
a director since 1996.

Stephen L. Cory

Mr. Cory (Age 52) is an insurance agent and President of the
Cory, Tucker & Larrowe Agency in Metairie, Louisiana. He has
been a director since 1995.

Bradford A. Glazer

Mr. Glazer (Age 46) is President of Glazer Enterprises, Inc.,
Cincinnati, Ohio, an independent freight agency for Landstar Ligon.
Formerly, Mr. Glazer was Senior Vice President of Espy & Straus,
Inc., Cincinnati, Ohio. Prior thereto, Mr. Glazer was the Chairman
of Glazer Steel Corporation, in New Orleans, Louisiana (and Knoxville,
Tennessee). He has been a director since 1991.

J. Scott Key

Mr. Key (Age 49) is the President and Chief Operating Officer
of Kencoil, Inc. (previously D & S Industries), an electric
motor coil manufacturer and its subsidiary Scott Armature, a provider
of sales and services of electrical apparatus, in Belle Chasse,
Louisiana. He has been a director since 1991.

Mannie D. Paine, Jr.

Dr. Paine (Age 85) is a retired physician. Dr. Paine has provided
consulting services for various companies. He is a former Medical
Director for Blue Cross of Louisiana, Medicaid and Pan American
Insurance Company. He has been a director since 1976.

Bruce A. Scott

Mr. Scott (Age 49) is an attorney and has served as Executive
Vice President of the Company since February 1997 and Executive
Vice President of the Association since 1985. Mr. Scott also serves
as legal counsel and Personnel Manager of the Association, and
performs certain legal services for the Association and its borrowers
in connection with real estate loan closings and receives fees
from the borrowers in connection therewith. He has been a director
since 1982.

Albert J. Zahn, Jr.

Mr. Zahn (Age 50) is a certified public accountant and president
of the firm Al Zahn, CPA, A Professional Accounting Corporation.
He has been a director since 1992.









Lettie R. Moll

Mrs. Moll has served as Vice President and Secretary of the
Company since 1997 and Vice President and Secretary of the Association
since March 1987 and March 1982, respectively.

Ralph E. Weber

Mr. Weber has primary responsibility for the Associations
data processing requirements and has served as Vice President
of the Company and the Association since February 1997 and March
1987, respectively.