SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                   FORM 10-KSB

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

       For the Fiscal Year Ended December 31, 1996

                                    OR

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

                   Commission File Number: 0-26556

                           CNS BANCORP, INC.
------------------------------------------------------------------------------
     (Exact name of small business issuer as specified in its charter)

                 Delaware                                     43-1738315
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(State or other jurisdiction of incorporation            (I.R.S. Employer
or organization)                                         I.D. Number)

427 Monroe Street, Jefferson City, Missouri                      65101
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 (Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:        (573) 634-3336
                                                         ---------------------

Securities registered pursuant to Section 12(b) of the Act:      None
                                                         ---------------------
Securities registered pursuant to Section 12(g) of the Act:
                                        Common Stock, par value $.01 per share
                                        --------------------------------------
                                                   (Title of Class)

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

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendments to this Form 10-K.
                                            ------
     The Registrant's revenues for the fiscal year under report were
$6,939,778.

     As of March 3, 1997, there were issued and outstanding 1,653,125 shares
of the Registrant's Common Stock.  The Common Stock is listed for trading on
the Nasdaq SmallCap Market under the symbol "CNSB."  Based on the average of
the bid and ask prices, the aggregate value of the Common Stock outstanding
held by the nonaffiliates of the Registrant on March 3, 1997 was $23,873,000
(1,394,025 shares at $17.125 per share).

                   DOCUMENTS INCORPORATED BY REFERENCE

     1.  Portions of Annual Report to Stockholders for the Fiscal Year Ended
December 31, 1996 ("Annual Report") (Parts I and II).

     2.  Portions of Definitive Proxy Statement for the 1997 Annual Meeting of
Stockholders (Part III).

<PAGE>

<PAGE>
                            PART I
Item 1.  Business
-----------------

General

     CNS Bancorp, Inc. ("Company"), a Delaware corporation, was organized in
January 1996 for the purpose of becoming the holding company for City National
Savings Bank, FSB ("Savings Bank") upon its conversion from a federal mutual
savings bank to a federal stock savings bank ("Conversion").  The Conversion
was completed on June 11, 1996 through the issuance of 1,653,125 shares of
common stock by the Company at a price of $10.00 per share.

     The Savings Bank, founded in 1921, is a federally chartered savings bank
located in Jefferson City, Missouri.  The Savings Bank is regulated by the
Office of Thrift Supervision ("OTS"), its primary federal regulator, and the
Federal Deposit Insurance Corporation ("FDIC"), the insurer of its deposits.
The Savings Bank's deposits are federally insured by the FDIC under the
Savings Association Insurance Fund ("SAIF").  The Savings Bank is a member of
the Federal Home Loan Bank ("FHLB") System.  The Savings Bank is a community
oriented financial institution that engages primarily in the business of
attracting deposits from the general public and using these funds to originate
one- to four-family residential mortgage loans within the Savings Company's
market area.  To a lesser extent, the Savings Bank's lending activities
include the origination and purchase of multi-family, commercial real estate,
construction, land, commercial and consumer and other loans.

Market Area

     The Company conducts operations in central Missouri through its main
office in Jefferson City, Missouri (Cole County) and branch offices located in
the cities of Jefferson City (Cole County), California (Moniteau County),
Tipton (Moniteau County) and St. Robert (Pulaski County).  Jefferson City is
the state capital of Missouri, resulting in a significant concentration of
government employment and an historically stable economy for the region.
Moniteau County is a more rural county with a much lower population base and
overall smaller economy.  The Company's St. Robert branch is strategically
located near Fort Leonard Wood, a major military installation in south-
central Missouri.  The counties of Cole, Moniteau and Pulaski represent the
Company's market area for deposit generation and lending activity as most of
its depositors live in these areas and the majority of the Company's loans are
secured by property in these counties.  Approximately two-thirds of the
Company's deposits are located in Jefferson City.

     In general, the Company serves a limited growth market area with a
relatively small population base.  The Cole County economy is based primarily
on the presence of the state capital and government, which has resulted in a
high level of state government employees.  Manufacturing and services also
constitute a significant portion of the Cole County economy, with
wholesale/retail trade, finance, insurance, real estate and agriculture also
contributing.  Conversely, Moniteau County is a much more rural county
containing a number of small towns with a historical agriculture base,
although a large percentage of residents also commute into Jefferson City or
nearby Columbia or Sedalia for employment.  Pulaski County's economy is
dominated by the operations of Fort Leonard Wood, a major military
installation and training center for all branches of the military.  In
general, the economy of the Company's market area has been relatively stable
over the past decade.

Lending Activities

     General.  The principal lending activity of the Company is the
origination and purchase of conventional mortgage loans for the purpose of
purchasing, constructing or refinancing owner-occupied, one- to four-family
residential property.  To a lesser extent, the Company also originates and
purchases multi-family, commercial real estate, construction, land, commercial
and consumer and other loans.  The Company's net loans receivable totalled
$61.0 million at December 31, 1996, representing 62.6% of consolidated total
assets.

                                     -1-
<PAGE>

     Loan Portfolio Analysis.  The following table sets forth the composition
of the Company's loan portfolio by type of loan at the dates indicated. The
Company had no concentration of loans exceeding 10% of total loans other than
as disclosed below.

                                            At December 31,
                           --------------------------------------------------
                                1996             1995            1994
                           ---------------   ---------------  ---------------
                           Amount  Percent   Amount  Percent  Amount  Percent
                           ------  -------   ------  -------  ------  -------
                                        (Dollars in Thousands)
Mortgage loans:
 One- to four-family . .  $48,318   76.57%  $43,609   80.79%  $40,016  86.45%
 Multi-family. . . . . .    3,617    3.73     3,584    6.64     2,162   4.67
 Commercial. . . . . . .    5,642    8.94     3,781    7.00     2,498   5.40
 Construction. . . . . .    2,685    4.26     1,720    3.19       650   1.40
 Land. . . . . . . . . .      135    0.21       159    0.29        31   0.07
                           ------  ------    ------  ------    ------ ------
   Total mortgage loans.   60,397   95.71    52,853   97.91    45,357  97.99
                           ------  ------    ------  ------    ------ ------
Commercial loans . . . .    1,206    1.91        --      --        --     --
Consumer and other
 loans . . . . . . . . .    1,498    2.38     1,128    2.09       931   2.01
                           ------  ------    ------  ------    ------ ------
   Total loans . . . . .   63,101  100.00%   53,981  100.00%   46,288 100.00%
                           ======  ======    ======  ======    ====== ======
Less:
 Loans in process. . . .    1,728             1,049             1,235
 Deferred loan fees
  and discounts. . . . .       10                 1                 5
 Allowance for loan
  losses . . . . . . . .      382               319               195
   Total loans            -------           -------           -------
    receivable, net. . .  $60,981           $52,612           $44,853
                          =======           =======           =======

     Residential Real Estate Lending.  The primary lending activity of the
Company is the origination of mortgage loans to enable borrowers to purchase
existing one- to four-family homes.  The Company also originates home equity
loans and second mortgages secured by one- to four-family homes.  At December
31, 1996, $48.3 million, or 76.6% of the Company's total loan portfolio,
consisted of loans secured by one- to four-family residences.  Of this amount,
$3.8 million were home equity or second mortgage loans.  The Company presently
originates both adjustable rate mortgage ("ARM") loans and fixed-rate mortgage
loans.  The Company's loans are generally underwritten and documented in
accordance with the guidelines established by the Federal Home Loan Mortgage
Corporation ("FHLMC").  The Company generally retains in its portfolio all of
the ARM loans that it originates and may sell to FHLMC the fixed-rate mortgage
loans that it originates.  Generally, the Company sells whole loans on a
servicing-retained basis.  All loans are sold without recourse.  The Company's
decision to hold or sell loans is based on its asset/liability management
policies and goals and the market conditions for mortgages.  Currently, fixed-
rate residential loans with yields greater than 7.5% and terms of 30 years or
less are retained in the Company's loan portfolio to meet the Company's
asset/liability management objectives.  See "-- Lending Activities -- Loan
Originations, Sales and Purchases."  At December 31, 1996, $47.0 million, or
74.5%, of the Company's total loans were subject to periodic interest rate
adjustments.

     The Company offers ARM loans at rates and terms competitive with market
conditions.  Substantially all of the ARM loans originated by the Company meet
the underwriting standards of FHLMC even though the Company originates ARM
loans primarily for its own portfolio.  The Company offers several ARM
products that adjust annually after an initial period ranging from one to five
years.  Certain ARM loans are originated with an option to convert the loan to
a 30-year fixed-rate loan at the then prevailing market interest rate.  These
ARM products utilize the weekly average yield on one-year or three-year U.S.
Treasury securities adjusted to a constant maturity ("CMT") of one or three
years plus a margin of 2.75% to 3.0%.  ARM loans held in the Company's
portfolio do not permit negative amortization of principal and carry no
prepayment restrictions.  Prior to March 1, 1995, when the Savings Bank
switched from a state mutual charter to a federal mutual charter, the Savings
Bank offered ARM loans that were based on the Savings Bank's cost of funds.
The Company currently offers ARM loans with initial rates below

                                     -2-
<PAGE>
those which would prevail under the foregoing computations, determined by the
Company based on market factors and competitive rates for loans having similar
features offered by other lenders for such initial periods.  At December 31,
1996, the initial interest rate on ARM loans offered by the Company ranged
from 1.0% to 1.625% below the fully indexed rate for such loans.  The periodic
interest rate cap (the maximum amount by which the interest rate may be
increased or decreased in a given period) on the Company's ARM loans is
generally 1.0% to 2.0% per adjustment period and the lifetime interest rate
cap is generally 5.0% to 6.0% over the initial interest rate of the loan.
Borrower demand for ARM loans versus fixed-rate mortgage loans is a function
of the level of interest rates, the expectations of changes in the level of
interest rates and the difference between the initial interest rates and fees
charged for each type of loan.  The relative amount of fixed-rate mortgage
loans and ARM loans that can be originated at any time is largely determined
by the demand for each in a competitive environment.

     The Company also offers ARM loans for non-owner-occupied one- to
four-family homes.  The rates on such loans are generally 25 to 125 basis
points higher than for a comparable loan for an owner-occupied residence and
adjust to a rate equal to 2.875% to 3.125% above the one-year or three-year
CMT index.  Loans secured by non-owner-occupied residences generally involve
greater risks than loans secured by owner-occupied residences.  Payments on
loans secured by such properties are often dependent on successful operation
or management of the properties.  In addition, repayment of such loans may be
subject to a greater extent to adverse conditions in the real estate market or
the economy.  The Company requires that borrowers with loans secured by
non-owner-occupied homes submit annual financial statements.

     The terms and conditions of the ARM loans offered by the Company,
including the index for interest rates, may vary from time to time.  The
Company believes that the adjustment features of its ARM loans provide
flexibility to meet competitive conditions as to initial rate concessions
while preserving the Company's objectives by limiting the duration of the
initial rate concession.

     The retention of ARM loans in the Company's loan portfolio helps reduce
the Company's exposure to changes in interest rates.  There are, however,
unquantifiable credit risks resulting from the potential of increased costs
due to changed rates to be paid by the customer.  It is possible that during
periods of rising interest rates the risk of default on ARM loans may increase
as a result of repricing and the increased payments required by the borrower.
Furthermore, because the ARM loans originated by the Company currently
provide, as a marketing incentive, for initial rates of interest below the
rates which would apply were the adjustment index used for pricing initially
(discounting), these loans are subject to increased risks of default or
delinquency.  To lessen this risk, borrowers are approved based on the lower
of the fully indexed rate or 2.0% above the initial rate.  Another
consideration is that although ARM loans allow the Company to increase the
sensitivity of its asset base to changes in the interest rates, the extent of
this interest sensitivity is limited by the periodic and lifetime interest
rate adjustment limits.  Because of these considerations, the Company has no
assurance that yields on ARM loans will be sufficient to offset increases in
the Company's cost of funds.

     While single-family residential real estate loans are normally originated
with 15 to 30 year terms, such loans typically remain outstanding for
substantially shorter periods.  This is because borrowers often prepay their
loans in full upon sale of the property pledged as security or upon
refinancing the original loan.  In addition, substantially all mortgage loans
in the Company's loan portfolio contain due-on-sale clauses providing that the
Company may declare the unpaid amount due and payable upon the sale of the
property securing the loan.  Typically, the Company enforces these due-on-sale
clauses to the extent permitted by law and as business judgment dictates.
Thus, average loan maturity is a function of, among other factors, the level
of purchase and sale activity in the real estate market, prevailing interest
rates and the interest rates payable on outstanding loans.

     The Company generally requires title insurance insuring the status of its
lien or a title abstract and acceptable attorney's opinion on all loans where
real estate is the primary source of security.  The Company also requires that
fire and casualty insurance (and, if appropriate, flood insurance) be
maintained in an amount at least equal to the outstanding loan balance.

                                     -3-
<PAGE>

     The Company's lending policies generally limit the maximum loan-to-value
ratio on mortgage loans secured by owner-occupied properties to 95% of the
lesser of the appraised value or the purchase price, with the condition that
private mortgage insurance is generally required on loans with loan-to-value
ratios greater than 80%.  The maximum loan-to-value ratio on mortgage loans
secured by non-owner-occupied properties is generally 80%.

     Multi-Family Residential and Commercial Real Estate Lending.  The Company
has historically engaged in a moderate amount of multi-family residential and
commercial real estate lending.  The Company has recently increased its
activity in this lending area, primarily in the local Jefferson City market
area.  The Company has focused on extending loans to borrowers who have
secured leases with the state government, which the Company believes reduces
the risk inherent in these types of loans.  As market conditions permit, the
Company intends to sell participation interests in the larger multi-family and
commercial real estate loans that it originates.  The Company also
participates in multi-family and commercial real estate loans with other
Missouri financial institutions on in-state properties.  At December 31, 1996,
the Company's loan portfolio included $3.6 million in multi-family real estate
loans and $5.6 million in commercial real estate loans.

     Multi-family and commercial real estate loans originated by the Company
are predominately adjustable rate loans and are generally for terms of 15
years.  The maximum loan-to-value ratio for multi-family and commercial real
estate loans is generally 75%.  Multi-family loans generally are secured by
small to medium sized projects.  The Company's commercial real estate loan
portfolio generally consists of loans secured by small office buildings and
small businesses, most of which are located in central Missouri.  Appraisals
on properties which secure multi-family and commercial real estate loans are
performed by an independent appraiser engaged by the Company before the loan
is made.  Underwriting of multi-family and commercial real estate loans
includes a thorough analysis of the cash flows generated by the real estate to
support the debt service and the financial resources, experience, and income
level of the borrowers.  Annual operating statements on each multi-family and
commercial real estate loan are required and reviewed by management.
Multi-family and commercial real estate loans and loan participations that are
purchased by the Company are underwritten to the Company's standards.

     Multi-family and commercial real estate lending affords the Company an
opportunity to receive interest at rates higher than those generally available
from one- to four-family residential lending.  However, loans secured by such
properties usually are greater in amount, more difficult to evaluate and
monitor and, therefore, involve a greater degree of risk than one- to
four-family residential mortgage loans.  Because payments on loans secured by
multi-family and commercial properties are often dependent on the successful
operation and management of the properties, repayment of such loans may be
affected by adverse conditions in the real estate market or the economy.  The
Company seeks to minimize these risks by limiting the maximum loan-to-value
ratio to 75% and strictly scrutinizing the financial condition of the
borrower, the quality of the collateral and the management of the property
securing the loan.  The Company also obtains loan guarantees from financially
capable parties based on a review of personal financial statements.

     Construction Lending.  The Company originates residential construction
loans to individuals and, occasionally, to builders, to construct one- to
four-family homes.  In addition, from time to time the Company originates or
participates in construction loans for multi-family or commercial properties.
At December 31, 1996, the Company's construction loan portfolio totalled $2.7
million, or 4.3% of total loans.  At such date, the Company's construction
loan portfolio consisted of six residential construction loans totalling
$800,000 and two multi-family construction loans totalling $1.9 million.

     Construction loans are generally made in connection with permanent
financing.  Construction loans that are not made in connection with the
granting of permanent financing on the property are for terms of six to 12
months.

     Construction lending is considered to involve a higher level of risk as
compared to one- to four-family residential lending because of the inherent
difficulty in estimating both a property's value at completion of the project
and the estimated cost of the project.  The nature of these loans is such that
they are more difficult to evaluate and monitor.  If the estimate of value
proves to be inaccurate, the Company may be confronted at, or prior to, the
maturity of the loan, with a project the value of which is insufficient to
assure full repayment.  The Company

                                     -4-
<PAGE>

attempts to minimize these risks by limiting the maximum loan-to-value ratio
on construction loans to 85% for residential construction loans and 80% for
non-residential construction loans and by conditioning disbursements on the
presentation of itemized bills and an inspection of the construction site.
For non-residential construction loans, the Company generally obtains personal
guarantees and requires borrowers to submit annual financial statements.

     Land Lending.  The Company occasionally originates loans for the
acquisition of land upon which the purchaser can then build or upon which the
purchaser makes improvements necessary to build upon or to sell as improved
lots.  At December 31, 1996, the Company's land loan portfolio totalled
$135,000 and consisted of three loans.  Land loans originated by the Company
have a term to maturity of up to three years and are based on a ten-year
amortization schedule.

     Loans secured by undeveloped land or improved lots involve greater risks
than one- to four-family residential mortgage loans because such loans are
more difficult to evaluate.  If the estimate of value proves to be inaccurate,
in the event of default and foreclosure the Company may be confronted with a
property the value of which is insufficient to assure full repayment.  The
Company attempts to minimize this risk by limiting the maximum loan-to-value
ratio on land loans to 65%.

     Commercial Lending.   The Company has recently expanded its lending
activities to include commercial business lending.  At December 31, 1996, the
Company's loan portfolio included $1.2 million in commercial loans.

     Commercial loans originated by the Company have both fixed and adjustable
rates and are generally for terms of five to 10 years.  These loans are
typically secured by equipment, inventory or other available assets.
Commercial loans generally have shorter terms and higher interest rates than
mortgage loans.  The security on these loans is usually more difficult to
evaluate and monitor and often depreciates rapidly.  Because the repayment on
these loans is often dependent on successful operation and management of a
business, repayment may be adversely affected by changes in the economy or the
specific industry of the business.  The Company attempts to minimize risks by
scrutinizing the financial condition and credit worthiness of the borrower and
the quality of the collateral.  The Company also obtains personal guarantees
on commercial loans from financially capable parties based on a review of
personal financial statements.

     Consumer and Other Lending.  Consumer lending traditionally has been a
small part of the Company's business.  Consumer loans generally have shorter
terms to maturity and higher interest rates than mortgage loans.  The
Company's consumer and other loans consist primarily of deposit account loans,
unsecured loans and automobile loans.  The Company has in the past originated
student loans, though it ceased offering such loans in 1993.  At December 31,
1996, the Company's consumer and other loans totalled approximately $1.5
million, or 2.4%, of the Company's total gross loans.  The Company makes
deposit account loans with the account pledged as collateral to secure the
loan.  Loans may be made up to 90% of the account balance.  Deposit account
loans are payable in monthly payments of principal and interest or in a single
payment.  At December 31, 1996, total loans on deposit accounts amounted to
$485,000.  The Company makes unsecured loans to individuals for personal,
family or household purposes up to a maximum of $5,000.  Generally, unsecured
loans are made to current customers with an established relationship with the
Company.  Such loans may be for a term of up to 24 months.  At December 31,
1996, unsecured loans totalled $687,000.

     Consumer loans entail greater risk than do residential mortgage loans,
particularly in the case of consumer loans that are unsecured or secured by
rapidly depreciating assets such as automobiles.  In such cases, any
repossessed collateral for a defaulted consumer loan may not provide an
adequate source of repayment of the outstanding loan balance as a result of
the greater likelihood of damage, loss or depreciation.  The remaining
deficiency often does not warrant further substantial collection efforts
against the borrower beyond obtaining a deficiency judgment.  In addition,
consumer loan collections are dependent on the borrower's continuing financial
stability, and thus are more likely to be adversely affected by job loss,
divorce, illness or personal bankruptcy.  Furthermore, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount that can be recovered on such loans.  At
December 31, 1996, the Company had no material delinquencies in its consumer
loan portfolio.

                                     -5-
<PAGE>

     Maturity of Loan Portfolio.  The following table sets forth certain
information at December 31, 1996 regarding the dollar amount of principal
repayments becoming due during the periods indicated for loans.  Demand loans,
loans having no stated schedule of repayments and no stated maturity, and
overdrafts are reported as becoming due within one year.  The table does not
include any estimate of prepayments which significantly shorten the average
life of all loans and may cause the Company's actual repayment experience to
differ from that shown below.

                              After     After     After
                              1 Year    3 Years   5 Years
                     Within   Through   Through   Through    Beyond
                    One Year  3 Years   5 Years   10 Years   10 Years   Total
                    --------  -------   -------   --------   --------   -----
                                         (In Thousands)
Mortgage loans:
  One- to four-
   family. . .       $  362   $  732    $1,091    $ 6,822    $39,311   $48,318
  Multi-family           --    1,908        --      1,709         --     3,617
  Commercial .           79      114       435      2,523      2,491     5,642
  Construction          549       --        --         --      2,136     2,685
  Land . . . .           11       --        76         --         48       135
Commercial loans         12       --       687        239        268     1,206
Consumer and
 other loans .          815      230       323        111         19     1,498
    Total gross      ------  -------    ------    -------    -------   -------
     loans . .       $1,828   $2,984    $2,612    $11,404    $44,273   $63,101
                     ======   ======    ======    =======    =======   =======

     The following table sets forth the dollar amount of all loans due after
December 31, 1997, which have fixed interest rates and have floating or
adjustable interest rates.

                                     Fixed-     Floating- or
                                     Rates      Adjustable-Rates     Total
                                     -----      ----------------     -----
                                                 (In Thousands)
Mortgage loans:
  One- to four-family. . . . .     $ 8,979          $38,977        $47,956
  Multi-family . . . . . . . .         297            3,320          3,617
  Commercial . . . . . . . . .       2,967            2,596          5,563
  Construction . . . . . . . .       2,136               --          2,136
  Land . . . . . . . . . . . .          --              124            124
Commercial loans . . . . . . .         400              794          1,194
Consumer and other loans . . .         353              330            683
                                   -------          -------        -------
    Total gross loans. . . . .     $15,132          $46,141        $61,273
                                   =======          =======        =======

                                     -6-
<PAGE>

     Scheduled contractual principal repayments of loans do not reflect the
actual life of such assets.  The average life of a loan is substantially less
than its contractual terms because of prepayments.  In addition, due-on-sale
clauses on loans generally give the Company the right to declare loans
immediately due and payable in the event, among other things, that the
borrower sells the real property subject to the mortgage and the loan is not
repaid.  The average life of mortgage loans tends to increase, however, when
current mortgage loan market rates are substantially higher than rates on
existing mortgage loans and, conversely, decrease when rates on existing
mortgage loans are substantially higher than current mortgage loan market
rates.

     Loan Solicitation and Processing.  Loan applicants come primarily through
existing customers, referrals by realtors, previous and present customers of
the Company and business acquaintances, and walk-ins.  The Company also uses
radio and newspaper advertising to create awareness of its loan products.
Upon receipt of a loan application from a prospective borrower, a credit
report and other data are obtained to verify specific information relating to
the loan applicant's employment, income and credit standing.  An appraisal of
the real estate offered as collateral generally is undertaken by an
independent fee appraiser certified by the State of Missouri.

     Mortgage loans up to $100,000 for owner-occupied residential properties
must be approved by the Savings Bank's Loan Committee, which consists of the
Chief Executive Officer and two officers, or by the Board of Directors' Loan
Committee, which consists of the Chief Executive Officer and three directors.
Loans of $100,000 to $250,000 must be approved by the Board of Director's Loan
Committee, and loans exceeding $250,000 must be approved by the Board of
Directors.  Interest rates are subject to change if the approved loan is not
closed within the time of the commitment.  The Company's loan approval process
allows mortgage loans to be approved in approximately 21 days and closed in 30
days.

     Loan Originations, Sales and Purchases.  While the Company originates
both adjustable-rate and fixed-rate loans, its ability to generate each type
of loan is dependent upon relative customer demand for loans in its market.
Of the $26.0 million of loans originated and purchased during 1996, 53.5% were
adjustable loans and 46.5% were fixed-rate loans.

     In recent periods, the Company has sold its 30-year and 20-year and a
portion of its 15-year fixed-rate single-family residential mortgage loans to
the FHLMC.  Currently, the Company is retaining most of its fixed-rate
mortgage loans for its portfolio.  Sales are made on a non-recourse basis.
Sales of loans for the years ended December 31, 1996, 1995, and 1994 totalled
$4.0 million, $1.7 million and $3.2 million, respectively.  The Company
generally sells loans on a servicing-retained basis.  See "-- Lending
Activities -- Loan Servicing."  At December 31, 1996, the Company had $571,000
in net loans held for sale.

     The Company also purchases whole loans and loan participation interests,
primarily during periods of reduced loan demand in its market area.  It has
been the practice of the Company in recent years only to purchase loans
secured by real estate located in Missouri.  All purchases are made in
conformance with the Company's underwriting standards.

                                     -7-
<PAGE>

     The following table shows total loans originated, purchased, sold and
repaid during the periods indicated.

                                            Year Ended December 31,
                                            -----------------------
                                            1996      1995     1994
                                            ----      ----     ----
                                                (In Thousands)
Loans originated:
Mortgage loans:
  One- to four-family. . . . . . . . . .  $11,900   $ 8,319   $ 8,643
  Multi-family . . . . . . . . . . . . .       --       168       650
  Commercial . . . . . . . . . . . . . .    2,622     1,850        --
  Construction . . . . . . . . . . . . .    2,861     1,721     4,197
  Land . . . . . . . . . . . . . . . . .       30       180        23
Commercial loans . . . . . . . . . . . .    1,237        --        --
Consumer and other loans . . . . . . . .    1,734     1,176       744
                                          -------   -------   -------
    Total loans originated . . . . . . .   20,384    13,414    14,257
                                          -------   -------   -------
Loans purchased:
Mortgage loans:
  One- to four-family. . . . . . . . . .    1,547     1,918     1,143
  Multi-family . . . . . . . . . . . . .    2,604     1,272     1,747
  Commercial . . . . . . . . . . . . . .    1,439     1,010       392
                                          -------   -------   -------
    Total loans purchased. . . . . . . .    5,590     4,200     3,282
                                          -------   -------   -------
Loans sold:
  Total loans sold . . . . . . . . . . .    4,039     1,669     3,186
                                          -------   -------   -------
Mortgage loan principal
 repayments. . . . . . . . . . . . . . .   13,566     8,186    10,175
                                          -------   -------   -------
Net increase (decrease)
 in loans receivable, net. . . . . . . .  $ 8,369   $ 7,759   $ 4,178
                                          =======   =======   =======

     Loan Commitments.  The Company issues commitments to originate loans
conditioned upon the occurrence of certain events.  Such commitments are made
in writing on specified terms and conditions and are honored for up to 45 days
from the date of loan approval.  The Company had outstanding net loan
commitments of approximately $2.5 million at December 31, 1996.

     Loan Origination and Other Fees.  The Company, in some instances,
receives loan origination fees.  Loan fees are a fixed dollar amount or a
percentage of the principal amount of the mortgage loan which is charged to
the borrower for funding the loan.  The amount of fees charged by the Company
is currently $300 for loans secured by single-family homes and up to $500 for
larger loans.  Current accounting standards require fees received (net of
certain loan origination costs) for originating loans to be deferred and
amortized into interest income over the contractual life of the loan.  Net
deferred fees or costs associated with loans that are prepaid are recognized
as income at the time of prepayment.  The Company had $10,000 of net deferred
mortgage loan fees at December 31, 1996.

     Loan Servicing.  The Company sells loans to FHLMC and private investors
on a servicing retained basis and receives fees in return for performing the
traditional services of collecting individual payments and managing the loans.
At December 31, 1996, the Company was servicing $20.0 million of loans for
FHLMC and $1.9 million of loans for private investors.  Loan servicing
includes processing payments, accounting for loan funds and collecting and
paying real estate taxes, hazard insurance and other loan-related items such
as private mortgage insurance.  When the Company receives the gross mortgage
payment from individual borrowers, it remits to the investor in the

                                     -8-
<PAGE>

mortgage a predetermined net amount based on the yield on that mortgage.  The
difference between the coupon on the underlying mortgage and the predetermined
net amount paid to the investor is the gross loan servicing fee.  For the year
ended December 31, 1996, loan servicing fees totalled $52,000.  In addition,
the Company retains certain amounts in escrow for the benefit of FHLMC for
which the Company incurs no interest expense but is able to invest.  At
December 31, 1996, the Savings Bank held $24,000 in escrow for its portfolio
of loans serviced for others.

     Nonperforming Assets and Delinquencies.  When a mortgage loan borrower
fails to make a required payment when due, the Company institutes collection
procedures.  The first notice is mailed to the borrower approximately ten days
after the payment is due in order to permit the borrower to make the payment
before the imposition of a late fee.  A second notice is generated when a
payment becomes 30 days past due.  Attempts to contact the borrower by
telephone or letter generally begin soon after the first notice is mailed to
the borrower.  If a satisfactory response is not obtained, continuous
follow-up contacts are attempted until the loan has been brought current.
Before the 90th day of delinquency, attempts to interview the borrower,
preferably in person, are made to establish (i) the cause of the delinquency,
(ii) whether the cause is temporary, (iii) the attitude of the borrower toward
the debt, and (iv) a mutually satisfactory arrangement for curing the default.

     In most cases, delinquencies are cured promptly; however, if by the 91st
day of delinquency, or sooner if the borrower is chronically delinquent and
all reasonable means of obtaining payment on time have been exhausted,
foreclosure, according to the terms of the security instrument and applicable
law, is initiated.  Interest income on loans is reduced by the full amount of
accrued and uncollected interest.

     The  Board of Directors is informed on a monthly basis as to the status
of all loans that are delinquent more than 30 days, the status on all loans
currently in foreclosure, and the status of all foreclosed and repossessed
property owned by the Company.

                                     -9-
<PAGE>

     The following table sets forth information with respect to the Company's
nonperforming assets and restructured loans within the meaning of Statement of
Financial Accounting Standards ("SFAS") No. 15 at the dates indicated.  It is
the policy of the Company to cease accruing interest on loans 90 days or more
past due.

                                                    At December 31,
                                               ----------------------
                                               1996     1995     1994
                                               ----     ----     ----
                                               (Dollars in Thousands)
Loans accounted for on
  a nonaccrual basis:
   Mortgage loans:
    One- to four-family. . . . . . . . .       $145     $ 88     $ --
    Commercial . . . . . . . . . . . . .        165       --       --
                                               ----     ----     ----
      Total. . . . . . . . . . . . . . .        310       88       --
                                               ----     ----     ----
Accruing loans which are
 contractually past due
 90 days or more . . . . . . . . . . . .         --       --       --

Total nonaccrual and
 90 days past due loans. . . . . . . . .         --       88       --

Real estate owned, net . . . . . . . . .         --      162      422
                                               ----     ----     ----

   Total nonperforming assets. . . . . .       $310     $250     $422
                                               ====     ====     ====

Restructured loans . . . . . . . . . . .       $228     $344     $337

Nonaccrual and 90 days or more
 past due loans as a percentage
 of loans receivable, net. . . . . . . .       0.51%    0.17%      --%

Nonaccrual and 90 days or more
 past due loans as a percentage
 of total assets . . . . . . . . . . . .       0.32     0.10       --

Nonperforming assets as a
 percentage of total assets. . . . . . .       0.32     0.29     0.48

     Interest income that would have been recorded for the year ended December
31, 1996 had nonaccruing loans been current in accordance with their original
terms amounted to approximately $10,000.  The amount of interest included in
interest income on such loans for the year ended December 31, 1996 amounted to
approximately $17,000.

     Real Estate Owned and Held for Investment.  Real estate acquired by the
Company as a result of foreclosure or by deed-in-lieu of foreclosure is
classified as real estate owned ("REO") until it is sold.  When property is
acquired it is recorded at the lower of its cost, which is the unpaid
principal balance of the related loan plus foreclosure costs, or fair market
value.  Subsequent to foreclosure, REO held for sale is carried at the lower
of the foreclosed amount or fair value, less estimated selling costs.  At
December 31, 1996, the Company had no REO.

     Real estate held for investment ("REI") is carried at the lower of cost
or net realizable value.  All costs of anticipated disposition are considered
in the determination of net realizable value.  At December 31, 1996, the
Company's REI consisted of the former Governor Hotel in Jefferson City.  The
Savings Bank acquired the Governor Hotel in 1989 for use as the Savings Bank's
main office and for development.  Due to objections raised by the OTS,

                                     -10-
<PAGE>

the Savings Bank abandoned its plans for the Governor Hotel and has since
offered it for sale.  The Company has periodically engaged in discussions with
interested purchasers, but has been unable to find a buyer.  Because of
limited third party interest in the property, the presence of asbestos and a
regulatory prohibition on financing the sale, the $1.25 million book value has
been fully reserved and, therefore, is carried at a book value of $0.  The
Company believes that it is currently under no obligation to abate the
asbestos in the building.  In the remote possibility that the Company is
required to remove the asbestos, the Company would incur expenses estimated to
equal or exceed $300,000.  Furthermore, in the remote possibility that the
Company is required to demolish the building, the Company estimates that
expenses associated with the demolition and asbestos removal could total $1
million.  The annual cost of holding the property, net of income from the
lease of the hotel's parking lot, is approximately $14,500.

     Asset Classification.  The OTS has adopted various regulations regarding
problem assets of savings institutions.  The regulations require that each
insured institution review and classify its assets on a regular basis.  In
addition, in connection with examinations of insured institutions, OTS
examiners have authority to identify problem assets and, if appropriate,
require them to be classified.  There are three classifications for problem
assets:  substandard, doubtful and loss.  Substandard assets have one or more
defined weaknesses and are characterized by the distinct possibility that the
insured institution will sustain some loss if the deficiencies are not
corrected.  Doubtful assets have the weaknesses of substandard assets with the
additional characteristic that the weaknesses make collection or liquidation
in full on the basis of currently existing facts, conditions and values
questionable, and there is a high possibility of loss.  An asset classified as
loss is considered uncollectible and of such little value that continuance as
an asset of the institution is not warranted.  If an asset or portion thereof
is classified as loss, the insured institution establishes specific allowances
for loan losses for the full amount of the portion of the asset classified as
loss.  All or a portion of general loan loss allowances established to cover
possible losses related to assets classified substandard or doubtful may be
included in determining an institution's regulatory capital, while specific
valuation allowances for loan losses generally do not qualify as regulatory
capital.  Assets that do not currently expose the insured institution to
sufficient risk to warrant classification in one of the aforementioned
categories but possess weaknesses are placed on a "watch list" and monitored
by the Company.

     At December 31, 1996, the Company had $1.3 million of assets classified
as loss, which included two consumer loans totalling $5,000 and the Governor
Hotel.  Assets classified as doubtful or substandard totalled $538,000 and
included one doubtful loan secured by a commercial property, 11 substandard
mortgage loans secured by single family homes and one substandard loan secured
by commercial real estate in the amount of $165,000.  The aggregate amounts of
the Company's classified assets, and of the Company's general and specific
loss allowances at the dates indicated, were as follows:

                                                      At December 31,
                                                    --------------------
                                                    1996            1995
                                                    ----            ----
                                                        (In Thousands)

Loss . . . . . . . . . . . . . . . . . . . .        $1,255           $1,256
Doubtful . . . . . . . . . . . . . . . . . .            73               79
Substandard assets . . . . . . . . . . . . .           465              533
                                                    ------           ------
  Total classified assets. . . . . . . . . .        $1,793           $1,868
                                                    ======           ======
General loss allowances. . . . . . . . . . .        $  367           $  337
Specific loss allowances . . . . . . . . . .         1,265            1,250
                                                    ------           ------
  Total allowances . . . . . . . . . . . . .        $1,632           $1,587
                                                    ======           ======

     Allowance for Loan Losses.  The Company has established a systematic
methodology for the determination of provisions for loan losses.  The
methodology is set forth in a formal policy and takes into consideration the
need for an overall general valuation allowance as well as specific allowances
that are tied to individual loans.

                                     -11-
<PAGE>

     In originating loans, the Company recognizes that losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the creditworthiness of the borrower over the term of
the loan, general economic conditions and, in the case of a secured loan, the
quality of the security for the loan.  The Company increases its allowance for
loan losses by charging provisions for loan losses against the Company's
income.

     The general valuation allowance is maintained to cover losses inherent in
the portfolio of performing loans.  Management's periodic evaluation of the
adequacy of the allowance is based on the Company's past loan loss experience,
known and inherent risks in the portfolio, adverse situations that may affect
the borrower's ability to repay, the estimated value of any underlying
collateral, and current economic conditions.  Specific valuation allowances
are established to absorb losses on loans for which full collectibility may
not be reasonably assured.  The amount of the allowance is based on the
estimated value of the collateral securing the loan and other analyses
pertinent to each situation.  Generally, a provision for losses is charged
against income on a quarterly basis to maintain the allowances.

     At December 31, 1996, the Company had an allowance for loan losses of
$383,000.  Management believes that the amount maintained in the allowances
will be adequate to absorb losses inherent in the portfolio.  Although
management believes that it uses the best information available to make such
determinations, future adjustments to the allowance for loan losses may be
necessary and results of operations could be significantly and adversely
affected if circumstances differ substantially from the assumptions used in
making the determinations.

     While the Company believes it has established its existing allowance for
loan losses in accordance with generally accepted accounting principles, there
can be no assurance that regulators, in reviewing the Company's loan
portfolio, will not request the Company to increase significantly its
allowance for loan losses.  In addition, because future events affecting
borrowers and collateral cannot be predicted with certainty, there can be no
assurance that the existing allowance for loan losses is adequate or that
substantial increases will not be necessary should the quality of any loans
deteriorate as a result of the factors discussed above.  Any material increase
in the allowance for loan losses may adversely affect the Company's financial
condition and results of operations.

                                     -12-
<PAGE>

     The following table sets forth an analysis of the Company's allowance for
loan losses for the periods indicated.  Where specific loan loss reserves have
been established, any differences between the loss allowances and the amount
of loss realized has been charged or credited to current income.

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

Allowance at beginning of
 period. . . . . . . . . . . . . . . . .        $319       $195      $208
                                                ----       ----      ----
Provision for loan losses. . . . . . . .          64        124         6
                                                ----       ----      ----
Total recoveries . . . . . . . . . . . .          --         --        --
                                                ----       ----      ----
Charge-offs:
Mortgage loans:
  One- to four-family. . . . . . . . . .          --         --        19
                                                ----       ----      ----
    Total charge-offs. . . . . . . . . .          --         --        19
                                                ----       ----      ----
Net charge-offs. . . . . . . . . . . . .          --         --        19
                                                ----       ----      ----
 Balance at end of
  period . . . . . . . . . . . . . . . .        $383       $319      $195
                                                ====       ====      ====

Allowance for loan losses as a
 percentage of total loans outstanding
 at the end of the period. . . . . . . .        0.62%      0.60%     0.43%

Net charge-offs as a
 percentage of average loans
 outstanding during the period . . . . .          --         --      0.05

Allowance for loan losses as a
 percentage of nonperforming
 loans at end of period. . . . . . . . .      123.50     362.50        --

                                     -13-
<PAGE>

     The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated.  Management believes that
the allowance can be allocated by category only on an approximate basis.  The
allocation of the allowance to each category is not necessarily indicative of
future losses and does not restrict the use of the allowance to absorb losses
in any other category.

                                        At December 31,
                     --------------------------------------------------------
                            1996               1995              1994
                     ------------------ ------------------  -----------------
                              % of               % of               % of
                              Loans              Loans              Loans
                              in Each            in Each            in Each
                              Category           Category           Category
                              to Total           to Total           to Total
                     Amount   Loans      Amount  Loans      Amount  Loans
                     ------   ---------  ------  ---------  ------  ---------
                                     (Dollars in Thousands)

Mortgage loans:
  One- to four-
   family. . . . .   $180      76.57%     $185     80.79%    $140     86.45%
  Multi-family . .     48       5.73        36      6.64       16      4.67
  Commercial . . .    109       8.94        77      7.00       34      5.40
  Construction . .     18       4.26         7      3.19       --      1.40
  Land . . . . . .      1       0.21         2      0.29       --       .07
Commercial loans .     12       1.91        --        --       --        --
Consumer and
 other loans . . .     15       2.38        12      2.09        5      2.01
Unallocated. . . .     --        N/A        --       N/A       --       N/A
                     ----     ------      ----    ------     ----    ------
 Total allowance for
  loan losses. . .   $383     100.00%     $319    100.00%    $195    100.00%
                     ====     ======      ====    ======     ====    ======

Investment Activities

     The Company is permitted under federal and state law to invest in various
types of liquid assets, including U.S. Treasury obligations, securities of
various federal agencies and of state and municipal governments, deposits at
the FHLB-Des Moines, certificates of deposit of federally insured
institutions, certain bankers' acceptances and federal funds.  Subject to
various restrictions, the Company may also invest a portion of its assets in
commercial paper and corporate debt securities.  The Company is also required
to maintain an investment in FHLB stock.  The Company is required under
federal regulations to maintain a minimum amount of liquid assets.  See
"REGULATION."

     It is the intention of management to classify all securities in the
Company's investment portfolio as available for sale.  SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," requires
the investments be categorized as "held to maturity," "trading securities" or
"available for sale," based on management's intent as to the ultimate
disposition of each security.  SFAS No. 115 allows debt securities to be
classified as "held to maturity" and reported in financial statements at
amortized cost only if the reporting entity has the positive intent and
ability to hold those securities to maturity.  Securities that might be sold
in response to changes in market interest rates, changes in the security's
prepayment risk, increases in loan demand, or other similar factors cannot be
classified as "held to maturity."  Debt and equity securities held for current
resale are classified as "trading securities."  Such securities are reported
at fair value, and unrealized gains and losses on such securities would be
included in earnings.  Debt and equity securities not classified as either
"held to maturity" or "trading securities" are classified as "available for
sale."  Such securities are reported at fair value, and unrealized gains and
losses on such securities are excluded from earnings and reported as a net
amount in a separate component of equity.  During 1995, pursuant to a transfer
grace period allowed by the Financial Accounting Standards Board, the Savings
Bank reclassified securities held to maturity with a book value of $4.0
million as securities available for sale.

                                     -14-
<PAGE>

     A committee consisting of the Chief Executive Officer, the Chief
Financial Officer and three outside Directors determines appropriate
investments in accordance with the Board of Directors' approved investment
policies and procedures.  The Company's investment policies generally limit
investments to U.S. Government and agency securities, municipal bonds,
certificates of deposits, marketable corporate debt obligations,
mortgage-backed securities and certain types of mutual funds.  The Company's
investment policy does not permit engaging directly in hedging activities or
purchasing high risk mortgage derivative products or corporate bonds rated
less than BBB.  Mutual funds held by the Company may from time to time engage
in hedging activities and invest in derivative securities.  Investments are
made based on certain considerations, which include the interest rate, yield,
settlement date and maturity of the investment, the Company's liquidity
position, and anticipated cash needs and sources (which in turn include
outstanding commitments, upcoming maturities, estimated deposits and
anticipated loan amortization and repayments).   The effect that the proposed
investment would have on the Company's credit and interest rate risk, and
risk-based capital is also given consideration during the evaluation.

     The following table sets forth the composition of the Company's
investment and mortgage-backed securities portfolios at the dates indicated.
<TABLE>
                                             At December 31,
              ---------------------------------------------------------------------------
                       1996                      1995                     1994
              ------------------------  -----------------------  ------------------------
                              Percent                 Percent                  Percent
              Carrying Fair     of     Carrying Fair    of      Carrying Fair    of
              Value    Value Portfolio Value   Value Portfolio  Value    Value Portfolio
              -------- ----- --------- -------- ----- --------- -------- ----- ---------
Available                                (Dollars in Thousands)
 for sale:
Investment
 securities:
  U.S.
  Government
  and federal
  agency
<S>           <C>     <C>     <C>     <C>     <C>     <C>     <C>      <C>     <C>
  obligations $10,112 $10,112  36.67% $ 3,986 $ 3,986  15.65% $    -- $    --     --%
  Mutual
   funds . .    5,452   5,452  19.77    7,558   7,558  29.67    7,458   7,458  20.55
    Total     ------- ------- ------  ------- ------- ------  ------- ------- ------
    invest-
    ment
    securi-
    ties . .   15,564  15,564  56.44   11,544  11,544  45.32    7,458   7,458  20.55
Mortgage-
 backed
 securities .  12,010  12,010  43.56   13,926  13,926  54.68   18,966  18,966  52.25
  Total       ------- ------- ------  ------- ------- ------  ------- ------- ------
  available
  for sale. .  27,574  27,574 100.00   25,470  25,470 100.00   26,424  26,424  72.80
Held to       ------- ------- ------  ------- ------- ------  ------- ------- ------
 maturity:
Investment
 securities:
  U.S.
  Government
  and federal
  agency
  obligations      --      --     --       --      --     --   10,156   9,872  27.20
Mortgage-
 backed
 securities .      --      --     --       --      --     --       --      --     --
  Total       ------- ------- ------  ------- ------- ------  ------- ------- ------
  held to
  maturity. .      --      --     --       --      --     --   10,156   9,872  27.20
              ------- ------- ------  ------- ------- ------  ------- ------- ------
  Total . . . $27,574 $27,574 100.00% $25,470 $25,470 100.00% $36,580 $36,296 100.00%
              ======= ======= ======  ======= ======= ======  ======= ======= ======

                                            -15-
</TABLE>
<PAGE>

<PAGE>
<TABLE>

     The table below sets forth certain information regarding the carrying value, weighted average yields
and maturities or periods to repricing of the Company's investment and mortgage-backed securities at
December 31, 1996.

                                              At December 31, 1996
               ------------------------------------------------------------------------------------------
                                             Amount Due or Repricing within:
                                    Over One to       Over Five to
                One Year or Less     Five Years         Ten Years      Over Ten Years       Totals
               ----------------- ----------------  ------------------ ----------------- -----------------
                        Weighted          Weighted           Weighted          Weighted          Weighted
               Carrying Average  Carrying Average  Carrying  Average  Carrying Average  Carrying Average
               Value    Yield    Value    Yield    Value     Yield    Value    Yield     Value   Yield
               -------- -------- -------- -------  --------- -------- -------- -------- -------- --------
                                                     (Dollars in Thousands)

U.S.
 Government
 and federal
 agency
<S>            <C>       <C>     <C>       <C>      <C>        <C>    <C>      <C>     <C>        <C>
 obligations.  $ 6,722   5.80%   $3,390    5.99%    $--        --%    $ --       --%   $10,112    5.89%
Mutual funds.    5,452   5.86        --       --     --        --       --       --      5,452    5.86
Mortgage-
 backed
 securities .   11,296   6.06       215     7.44     --        --      500     7.73     12,011    6.16
               -------           ------                               ----              -------
 Total. . . .  $23,470   5.94    $3,605     6.07     --        --     $500     7.73     $27,575   6.00
               =======           ======                               ====              =======

</TABLE>
     Mutual Funds.  The Company's portfolio of mutual funds consists of two
funds, an adjustable-rate mortgage-backed securities fund, which had a fair
value of $973,000 ($990,000 at amortized cost) and yielded 5.62% at December
31, 1996, and a government securities fund, which had a fair value of $4.5
million ($5.0 million at amortized cost) and yielded 6.15% at December 31,
1996.  During the year ended December 31, 1996, the Company sold $2.0 million
of mutual funds in order to reinvest the proceeds in higher yielding loans.

     U.S. Government and Federal Agency Obligations.  The Company's portfolio
of U.S. Government and federal agency obligations had a fair value of $10.1
million ($10.1 million at amortized cost) at December 31, 1996.  The portfolio
consisted of short-term securities due within two years of December 31, 1996,
all of which are held in the Company's available for sale portfolio.

     Mortgage-Backed Securities.  At December 31, 1996, the Company's net
mortgage-backed securities totaled $12.0 million at fair value ($12.3 million
at amortized cost) and had a weighted average yield of 6.16%.  At December 31,
1996, 95.9% of the mortgage-backed securities were adjustable-rate and 4.1%
were fixed-rate.  The Company purchased most of its mortgage-backed securities
in 1991 through 1993 and has not purchased any mortgage-backed securities
since that time.  The Company currently intends to use available funds to
invest in higher yielding loans and does not intend to increase its
mortgage-backed securities portfolio.

     Mortgage-backed securities (which also are known as mortgage
participation certificates or pass-through certificates) typically represent a
participation interest in a pool of single-family or multi-family mortgages.
The principal and interest payments on these mortgages are passed from the
mortgage originators, through intermediaries (generally U.S. Government
agencies and government sponsored enterprises) that pool and resell the
participation interests in the form of securities, to investors such as the
Company.  Such U.S. Government agencies and government sponsored enterprises,
which guarantee the payment of principal and interest to investors, primarily
include the FHLMC, Fannie Mae (formerly the Federal National Mortgage
Association) and the Government National Mortgage Association.
Mortgage-backed securities typically are issued with stated principal amounts,
and the securities are backed by pools of mortgages that have loans with
interest rates that fall within a specific range and have varying maturities.
Mortgage-backed securities generally yield less than the loans that underlie
such securities because of the cost of payment guarantees and credit
enhancements.  In addition, mortgage-backed securities are usually more liquid
than individual mortgage loans and may be used to collateralize certain
liabilities and obligations of the Company.  These types of securities also
permit the Company to optimize its regulatory capital because they have low
risk weighting.

                                     -16-
<PAGE>

     At December 31, 1996, all of the Company's mortgage-backed securities had
contractual maturities over ten years.  However, the actual maturity of a
mortgage-backed security may be less than its stated maturity due to
prepayments of the underlying mortgages.  Prepayments that are faster than
anticipated may shorten the life of the security and may result in a loss of
any premiums paid and thereby reduce the net yield on such securities.
Although prepayments of underlying mortgages depend on many factors, including
the type of mortgages, the coupon rate, the age of mortgages, the geographical
location of the underlying real estate collateralizing the mortgages and
general levels of market interest rates, the difference between the interest
rates on the underlying mortgages and the prevailing mortgage interest rates
generally is the most significant determinant of the rate of prepayments.
During periods of declining mortgage interest rates, if the coupon rate of the
underlying mortgages exceeds the prevailing market interest rates offered for
mortgage loans, refinancing generally increases and accelerates the prepayment
of the underlying mortgages and the related security.  Under such
circumstances, the Company may be subject to reinvestment risk because, to the
extent that the Company's mortgage-backed securities amortize or prepay faster
than anticipated, the Company may not be able to reinvest the proceeds of such
repayments and prepayments at a comparable rate.

Deposit Activities and Other Sources of Funds

     General.  Deposits and loan repayments are the major sources of the
Company's funds for lending and other investment purposes.  Scheduled loan
repayments are a relatively stable source of funds, while deposit inflows and
outflows and loan prepayments are influenced significantly by general interest
rates and money market conditions.  Borrowings through the FHLB-Des Moines may
be used on a short-term basis to compensate for reductions in the availability
of funds from other sources.  Presently, the Company has no other borrowing
arrangements.

     Deposit Accounts.  Substantially all of the Company's depositors are
residents of the State of Missouri.  Deposits are attracted from within the
Company's market area through the offering of a broad selection of deposit
instruments, including negotiable order of withdrawal ("NOW") accounts, money
market deposit accounts, regular savings accounts, certificates of deposit and
retirement savings plans.  Deposit account terms vary, according to the
minimum balance required, the time periods the funds must remain on deposit
and the interest rate, among other factors.  In determining the terms of its
deposit accounts, the Company considers current market interest rates,
profitability to the Company, matching deposit and loan products and its
customer preferences and concerns.  The Company reviews its deposit mix and
pricing weekly.  The Company does not accept brokered deposits, nor has it
aggressively sought jumbo certificates of deposit.

     The Company currently offers certificates of deposit for terms not
exceeding 48 months.  As a result, the Company believes that it is better able
to match the repricing of its liabilities to the repricing of its loan
portfolio.

                                     -17-
<PAGE>

     The following table sets forth information concerning the Company's time
deposits and other interest-bearing deposits at December 31, 1996.

Weighted
Average                                                           Percentage
Interest                 Checking and         Minimum             of Total
Rate       Term       Savings Deposits        Amount     Balance  Deposits
--------   ----       ----------------        --------   -------  ----------
                                                       (In Thousands)
--%      None        Non-interest-bearing     $  100     $   648     0.09%
2.75     None        NOW                         100       3,455     4.74
3.82     None        Money Market Deposit      1,000       4,906     6.73
2.81     None        Regular savings              10       6,713     9.21

                      Certificates of Deposit
                      -----------------------

2.75     7-31 Day    Fixed term, fixed rate    2,500          10     0.01
4.99     32-181 Day  Fixed term, fixed rate    1,000       1,053     1.45
5.31     182 Day     Fixed term, fixed rate    1,000       9,231    12.67
5.81     9 Mo.       Fixed term, fixed rate    1,000         286     0.39
5.40     12 Mo.      Fixed term, fixed rate      500      15,832    21.72
5.60     15 Mo.      Fixed term, fixed rate      500       3,196     4.39
5.59     18 Mo.      Fixed term, fixed rate      500       3,116     4.28
5.71     24 Mo.      Fixed term, fixed rate      500       6,678     9.16
6.16     30 Mo.      Fixed term, fixed rate      500       5,985     8.21
5.33     36 Mo.      Fixed term, fixed rate      500       3,449     4.73
5.55     48 Mo.      Fixed term, fixed rate      500       8,322    11.42
                                                         -------   ------
                     Total                               $72,880   100.00%
                                                         =======   ======

     The following table indicates the amount of the Company's jumbo
certificates of deposit by time remaining until maturity as of December 31,
1996.  Jumbo certificates of deposit are certificates in amounts of $100,000
or more.


           Maturity Period                              Amount
           ---------------                              ------
                                                     (In Thousands)

Three months or less . . . . . . . . . .                $  301
Over three through six months. . . . . .                 1,146
Over six through 12 months . . . . . . .                   500
Over 12 months . . . . . . . . . . . . .                   650
     Total jumbo certificates                           ------
      of deposit . . . . . . . . . . . .                $2,597
                                                        ======
                                     -18-
<PAGE>

<PAGE>
<TABLE>

     Deposit Flow.  The following table sets forth the balances (inclusive of interest credited) and changes
in dollar amounts of deposits in the various types of accounts offered by the Company between the dates
indicated.

                                                           At December 31,
                            --------------------------------------------------------------------------
                                      1996                        1995                      1994
                            --------------------------   --------------------------   ----------------
                                    Percent                      Percent                       Percent
                                      of     Increase              of     Increase                of
                            Amount  Total   (Decrease)   Amount   Total  (Decrease)    Amount   Total
                            ------  ------- ----------   ------  ------- ----------    ------  --------
                                                            (Dollars in Thousands)
<S>                        <C>      <C>       <C>       <C>        <C>    <C>        <C>       <C>
Noninterest-bearing . . .  $   648    0.89%   $   146   $   502    0.66%  $   (21)   $   523     0.66%
NOW checking. . . . . . .    3,455    4.74       (329)    3,784    4.98       346      3,438     4.33
Regular savings accounts.    6,713    9.21       (840)    7,553    9.95      (604)     8,157    10.26
Money market deposit
 accounts ("MMDAs") . . .    4,906    6.73        313     4,593    6.05    (1,689)     6,282     7.90
Fixed-rate certificates
 which mature:
  Within 1 year . . . . .   41,457   56.88      3,122    38,335   50.49    (6,164)    44,499    55.98
  After 1 year, but
   within 2 years . . . .   10,454   14.35     (3,819)   14,273   18.80     5,742      8,531    10.73
  After 2 years, but
   within 5 years . . . .    5,247    7.20     (1,644)    6,891    9.07    (1,172)     8,063    10.14
                           -------  ------    -------   -------  ------   -------    -------   ------
  Total deposits. . . . .  $72,880  100.00%   $(3,051)  $75,931  100.00%  $(3,562)   $79,493   100.00%
                           =======  ======    =======   =======  ======   =======    =======   ======

                                                               -19-
</TABLE>
<PAGE>

     Time Deposits by Rates.  The following table sets forth the Company's
time deposits  categorized by rates at the dates indicated.

                                                    At December 31,
                                               -------------------------
                                               1996      1995      1994
                                               ----      ----      ----
                                                    (In Thousands)

      0.00 - 3.99% . . . . . . . . . . . .    $    13   $   521   $14,969
      4.00 - 4.99% . . . . . . . . . . . .      4,103     8,166    29,362
      5.00 - 5.99% . . . . . . . . . . . .     42,919    36,314    15,120
      6.00 - 6.99% . . . . . . . . . . . .     10,050    14,415       552
      7.00 - 7.99% . . . . . . . . . . . .         73        83     1,059
      8.00% and over . . . . . . . . . . .         --        --        31
                                              -------   -------   -------
         Total . . . . . . . . . . . . . .    $57,158   $59,499   $61,093
                                              =======   =======   =======

     The following table sets forth the amount and maturities of time deposits
at December 31, 1996.

                                          Amount Due
                     -------------------------------------------------------
                     Less Than      1-2        2-3       3 Years
                     One Year       Years     Years      and After     Total
                     ---------      -----     -----      ---------     -----
                                      (In Thousands)

0.00 - 3.99% . . .   $    13     $    --     $   --       $   --     $    13
4.00 - 4.99% . . .     3,603         500         --           --       4,103
5.00 - 5.99% . . .    32,972       7,684        978        1,285      42,919
6.00 - 6.99% . . .     4,869       2,270      2,901           10      10,050
7.00 - 7.99% . . .        --          --         73           --          73
8.00% and over . .        --          --         --           --          --
                     -------     -------     ------       ------     -------
  Total . . . . .    $41,457     $10,454     $3,952       $1,295     $57,158
                     =======     =======     ======       ======     =======

     Deposit Activity.  The following table sets forth the deposit activities
of the Company for the periods indicated.

                                                 Year Ended December 31,
                                                 -----------------------
                                                 1996     1995      1994
                                                 ----     ----      ----
                                                      (In Thousands)

Beginning balance. . . . . . . . . . . . . .   $75,931   $79,493  $81,035
Net deposits (withdrawals)                     -------   -------  -------
 before interest credited. . . . . . . . . .    (6,058)   (6,470)  (3,614)
Interest credited. . . . . . . . . . . . . .     3,007     2,908    2,072
                                               -------   -------  -------
Net increase (decrease) in
 deposits. . . . . . . . . . . . . . . . . .    (3,051)   (3,562)  (1,542)
                                               -------   -------  -------
Ending balance . . . . . . . . . . . . . . .   $72,880   $75,931  $79,493
                                               =======   =======  =======

                                     -20-
<PAGE>

     Borrowings.  Savings deposits are the primary source of funds for the
Company's lending and investment activities and for its general business
purposes.  The Company has the ability to use advances from the FHLB-Des
Moines to supplement its supply of lendable funds and to meet deposit
withdrawal requirements.  The FHLB-Des Moines functions as a central reserve
bank providing credit for savings associations and certain other member
financial institutions.  As a member of the FHLB-Des Moines, the Company is
required to own capital stock in the FHLB-Des Moines and is authorized to
apply for advances on the security of such stock and certain of its mortgage
loans and other assets (principally securities that are obligations of, or
guaranteed by, the U.S. Government) provided certain creditworthiness
standards have been met.  Advances are made pursuant to several different
credit programs.  Each credit program has its own interest rate and range of
maturities.  Depending on the program, limitations on the amount of advances
are based on the financial condition of the member institution and the
adequacy of collateral pledged to secure the credit.  At December 31, 1996,
1995 and 1994, the Company had no borrowings from the FHLB-Des Moines
outstanding.

     The following table sets forth certain information regarding short-term
borrowings by the Company at the dates and for the periods indicated:

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

Amount of FHLB advances outstanding at
 end of period . . . . . . . . . . . . . . .    $  --    $  --     $ --
Maximum amount of FHLB advances outstanding
  at any month end . . . . . . . . . . . . .       --       --      750
Approximate average FHLB advances
  outstanding during the period. . . . . . .        4        1      188
Approximate weighted average rate paid on
  FHLB advances during the period. . . . . .     5.40%    6.72%    4.79%
Weighted average rate paid on FHLB
 advances at end of period . . . . . . . . .       --       --       --

Competition

     The Company operates in a competitive market for the attraction of
savings deposits (its primary source of lendable funds) and in the origination
of loans.  Its most direct competition for savings deposits has historically
come from local commercial banks, credit unions and other thrifts operating in
its market area.  As of December 31, 1996, there were nine commercial banks
and four other thrifts operating in Cole County, Missouri.  Most of these
financial institutions are locally-owned community oriented banks and thrifts,
however, there are two subsidiaries of larger regional holding companies.  As
a result of this competition, the Company has suffered deposit declines and
loss of market share.  The Company's branches in California, Tipton and St.
Robert, Missouri also face competition from other financial institutions.
Particularly in times of high interest rates, the Company has faced additional
significant competition for investors' funds from short-term money market
securities and other corporate and government securities.  The Company's
competition for loans also comes from mortgage bankers.  Such competition for
deposits and the origination of loans may limit the Company's growth in the
future.

Personnel

     As of December 31, 1996, the Company had 26 full-time and one part-time
employee.  The employees are not represented by a collective bargaining unit.
The Company believes its relationship with its employees is good.

                                     -21-
<PAGE>

Subsidiary Activities

     Federal savings associations generally may invest up to 3% of their
assets in service corporations, provided that at least one-half of any amount
in excess of 2% is used primarily for community, inner-city and community
development projects.  The Savings Bank's investment in its service
corporation, Parity Insurance Agency, Inc. ("Parity"), did not exceed these
limits  at December 31, 1996.

     Parity is a wholly owned subsidiary of the Savings Bank.  Parity
previously sold mortgage life and disability insurance to the Savings Bank's
borrowers and continues to collect commissions.  Parity also owns City
National Real Estate, Inc., which holds the Governor Hotel but otherwise is
inactive.  At December 31, 1996, the Savings Bank's investment in its
subsidiaries was $407,000.

                           REGULATION
General

     The Savings Bank is subject to extensive regulation, examination and
supervision by the OTS as its chartering agency, and the FDIC, as the insurer
of its deposits.  The activities of federal savings institutions are governed
by the Home Owners' Loan Act, as amended (the "HOLA") and, in certain
respects, the Federal Deposit Insurance Act ("FDIA") and the regulations
issued by the OTS and the FDIC to implement these statutes.  These laws and
regulations delineate the nature and extent of the activities in which federal
savings associations may engage.  Lending activities and other investments
must comply with various statutory and regulatory capital requirements.  In
addition, the Savings Bank's relationship with its depositors and borrowers is
also regulated to a great extent, especially in such matters as the ownership
of deposit accounts and the form and content of the Savings Bank's mortgage
documents.  The Savings Bank must file reports with the OTS and the FDIC
concerning its activities and financial condition in addition to obtaining
regulatory approvals prior to entering into certain transactions such as
mergers with, or acquisitions of, other financial institutions.  There are
periodic examinations by the OTS and the FDIC to review the Savings Bank's
compliance with various regulatory requirements.  The regulatory structure
also gives the regulatory authorities extensive discretion in connection with
their supervisory and enforcement activities and examination policies,
including policies with respect to the classification of assets and the
establishment of adequate loan loss reserves for regulatory purposes.  Any
change in such policies, whether by the OTS, the FDIC or Congress, could have
a material adverse impact on the Savings Bank and its operations.

Federal Regulation of Savings Associations

     Office of Thrift Supervision.  The OTS is an office in the Department of
the Treasury subject to the general oversight of the Secretary of the
Treasury.  The OTS generally possesses the supervisory and regulatory duties
and responsibilities formerly vested in the Federal Home Loan Bank Board.
Among other functions, the OTS issues and enforces regulations affecting
federally insured savings associations and regularly examines these
institutions.

     Federal Home Loan Bank System.  The FHLB System, consisting of 12 FHLBs,
is under the jurisdiction of the Federal Housing Finance Board ("FHFB").  The
designated duties of the FHFB are to supervise the FHLBs, to ensure that the
FHLBs carry out their housing finance mission, to ensure that the FHLBs remain
adequately capitalized and able to raise funds in the capital markets, and to
ensure that the FHLBs operate in a safe and sound manner.  The Savings Bank,
as a member of the FHLB-Des Moines, is required to acquire and hold shares of
capital stock in the FHLB-Des Moines in an amount equal to the greater of (i)
1.0% of the aggregate outstanding principal amount of residential mortgage
loans, home purchase contracts and similar obligations at the beginning of
each year, or (ii) 1/20 of its advances (borrowings) from the FHLB-Des Moines.
The Savings Bank is in compliance with this requirement with an investment in
FHLB-Des Moines stock of $939,000 at December 31, 1996.  Among other benefits,
the FHLB provides a central credit facility primarily for member institutions.
It is funded primarily from proceeds derived from the sale of consolidated
obligations of the FHLB System.  It makes advances to members in

                                     -22-
<PAGE>

accordance with policies and procedures established by the FHFB and the Board
of Directors of the FHLB-Des Moines.

     Federal Deposit Insurance Corporation.  The FDIC is an independent
federal agency that insures the deposits, up to prescribed statutory limits,
of depository institutions.  The FDIC currently maintains two separate
insurance funds: the BIF and the SAIF.  As insurer of the Savings Bank's
deposits, the FDIC has examination, supervisory and enforcement authority over
the Savings Bank.

     The Savings Bank's accounts are insured by the SAIF to the maximum extent
permitted by law.  The Savings Bank pays deposit insurance premiums based on a
risk-based assessment system established by the FDIC.  Under applicable
regulations, institutions are assigned to one of three capital groups that are
based solely on the level of an institution's capital -- "well capitalized,"
"adequately capitalized," and "undercapitalized" -- which are defined in the
same manner as the regulations establishing the prompt corrective action
system, as discussed below.  These three groups are then divided into three
subgroups which reflect varying levels of supervisory concern, from those
which are considered to be healthy to those which are considered to be of
substantial supervisory concern.  The matrix so created results in nine
assessment risk classifications, with rates that until September 30, 1996
ranged from 0.23% for well capitalized, financially sound institutions with
only a few minor weaknesses to 0.31% for undercapitalized institutions that
pose a substantial risk of loss to the SAIF unless effective corrective action
is taken.

     Pursuant to the Deposit Insurance Funds Act of 1996 ("DIF Act"), which
was enacted on September 30, 1996, the FDIC imposed a special assessment on
each depository institution with SAIF-assessable deposits which resulted in
the SAIF achieving its designated reserve ratio.  In connection therewith, the
FDIC reduced the assessment schedule for SAIF members, effective January 1,
1997, to a range of 0% to 0.27%, with most institutions, including the Savings
Bank, paying 0%.  This assessment schedule is the same as that for the BIF,
which reached its designated reserve ratio in 1995.  In addition, since
January 1, 1997, SAIF members are charged an assessment of .064% of
SAIF-assessable deposits for the purpose of paying interest on the obligations
issued by the Financing Corporation ("FICO") in the 1980s to help fund the
thrift industry cleanup.  BIF-assessable deposits will be charged an
assessment to help pay interest on the FICO bonds at a rate of approximately
 .013% until the earlier of December 31, 1999 or the date upon which the last
savings association ceases to exist, after which time the assessment will be
the same for all insured deposits.

     The DIF Act provides for the merger of the BIF and the SAIF into the
Deposit Insurance Fund on January 1, 1999, but only if no insured depository
institution is a savings association on that date.  The DIF contemplates the
development of a common charter for all federally chartered depository
institutions and the abolition of separate charters for national banks and
federal savings associations.  It is not known what form the common charter
may take and what effect, if any, the adoption of a new charter would have on
the operation of the Savings Bank.

     The FDIC may terminate the deposit insurance of any insured depository
institution 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 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 that could
result in termination of the deposit insurance of the Savings Bank.

     Liquidity Requirements.  Under OTS regulations, each savings institution
is required to maintain an average daily balance of liquid assets (cash,
certain time deposits and savings accounts, bankers' acceptances, and
specified U.S. Government, state or federal agency obligations and certain
other investments) equal to a monthly average of not less than a specified
percentage (currently 5.0%) of its net withdrawable accounts plus short-term
borrowings.  OTS regulations also require each savings institution to maintain
an average daily balance of short-term

                                     -23-
<PAGE>

liquid assets at a specified percentage (currently 1.0%) of the total of its
net withdrawable accounts plus short-term borrowings.  Monetary penalties may
be imposed for failure to meet liquidity requirements.

     Prompt Corrective Action.  Under the FDIA, each federal banking agency is
required to implement a system of prompt corrective action for institutions
that it regulates.  The federal banking agencies have promulgated
substantially similar regulations to implement this system of prompt
corrective action.  Under the regulations, an institution shall be deemed to
be (i) "well capitalized" if it has a total risk-based capital ratio of 10.0%
or more, has a Tier I risk-based capital ratio of 6.0% or more, has a leverage
ratio of 5.0% or more and is not subject to specified requirements to meet and
maintain a specific capital level for any capital measure; (ii) "adequately
capitalized" if it has a total risk-based capital ratio of 8.0% or more, has a
Tier I risk-based capital ratio of 4.0% or more, has a leverage ratio of 4.0%
or more (3.0% under certain circumstances) and does not meet the definition of
"well capitalized;" (iii) "undercapitalized" if it has a total risk-based
capital ratio that is less than 8.0%, has a Tier I risk-based capital ratio
that is less than 4.0% or has a leverage ratio that is less than 4.0% (3.0%
under certain circumstances); (iv) "significantly undercapitalized" if it has
a total risk-based capital ratio that is less than 6.0%, has a Tier I
risk-based capital ratio that is less than 3.0% or has a leverage ratio that
is less than 3.0%; and (v) "critically undercapitalized" if it has a ratio of
tangible equity to total assets that is equal to or less than 2.0%.

     A federal banking agency may, after notice and an opportunity for a
hearing, reclassify a well capitalized institution as adequately capitalized
and may require an adequately capitalized institution or an undercapitalized
institution to comply with supervisory actions as if it were in the next lower
category if the institution is in an unsafe or unsound condition or has
received in its most recent examination, and has not corrected, a less than
satisfactory rating for asset quality, management, earnings or liquidity.
(The OTS may not, however, reclassify a significantly undercapitalized
institution as critically undercapitalized.)

     An institution generally must file a written capital restoration plan
that meets specified requirements, as well as a performance guaranty by each
company that controls the institution, with the appropriate federal banking
agency within 45 days of the date that the institution receives notice or is
deemed to have notice that it is undercapitalized, significantly
undercapitalized or critically undercapitalized.  Immediately upon becoming
undercapitalized, an institution shall become subject to various mandatory and
discretionary restrictions on its operations.

     Standards for Safety and Soundness.  The federal banking regulatory
agencies have prescribed, by regulation, standards for all insured depository
institutions relating to: (i) internal controls, information systems and
internal audit systems; (ii) loan documentation; (iii) credit underwriting;
(iv) interest rate risk exposure; (v) asset growth; (vi) asset quality; (vii)
earnings and (viii) compensation, fees and benefits ("Guidelines").  The
Guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired.  If the OTS determines that the
Savings Bank fails to meet any standard prescribed by the Guidelines, the
agency may require the Savings Bank to submit to the agency an acceptable plan
to achieve compliance with the standard.  OTS regulations establish deadlines
for the submission and review of such safety and soundness compliance plans.

     Qualified Thrift Lender Test.  All savings associations are required to
meet a qualified thrift lender ("QTL") test to avoid certain restrictions on
their operations.  A savings institution that fails to become or remain a QTL
shall either convert to a national bank charter or be subject to the following
restrictions on its operations:  (i) the association may not make any new
investment or engage in activities that would not be permissible for national
banks; (ii) the association may not establish any new branch office where a
national bank located in the savings institution's home state would not be
able to establish a branch office; (iii) the association shall be ineligible
to obtain new advances from any FHLB; and (iv) the payment of dividends by the
association shall be subject to the rules regarding the statutory and
regulatory dividend restrictions applicable to national banks.  Also,
beginning three years after the date on which the savings institution ceases
to be a QTL, the savings institution would be prohibited from retaining any
investment or engaging in any activity not permissible for a national bank and
would be required to repay any outstanding advances to any FHLB.  In addition,
within one year of the date on which a savings association controlled by a
company ceases to be a QTL, the company must register as a bank holding

                                     -24-
<PAGE>

company and become subject to the rules applicable to such companies.  A
savings institution may requalify as a QTL if it thereafter complies with the
QTL test.

     Currently, the QTL test requires that either an institution quality as a
domestic building and loan association under the Internal Revenue Code or that
65% of an institution's "portfolio assets" (as defined) consist of certain
housing and consumer-related assets on a monthly average basis in nine out of
every 12 months.  Assets that qualify without limit for inclusion as part of
the 65% requirement are loans made to purchase, refinance, construct, improve
or repair domestic residential housing and manufactured housing; home equity
loans; mortgage-backed securities (where the mortgages are secured by domestic
residential housing or manufactured housing); FHLB stock; direct or indirect
obligations of the FDIC; and loans for educational purposes, loans to small
businesses and loans made through credit cards.  In addition, the following
assets, among others, may be included in meeting the test subject to an
overall limit of 20% of the savings institution's portfolio assets:  50% of
residential mortgage loans originated and sold within 90 days of origination;
100% of consumer loans; and stock issued by the FHLMC or the FNMA.  Portfolio
assets consist of total assets minus the sum of (i) goodwill and other
intangible assets, (ii) property used by the savings institution to conduct
its business, and (iii) liquid assets up to 20% of the institution's total
assets.  At December 31, 1996, the qualified thrift investments of the Savings
Bank were approximately 98.2% of its portfolio assets.

     Capital Requirements.  Under OTS regulations a savings association must
satisfy three minimum capital requirements: core capital, tangible capital and
risk-based capital.  Savings associations must meet all of the standards in
order to comply with the capital requirements.

     OTS capital regulations establish a 3% core capital or leverage ratio
(defined as the ratio of core capital to adjusted total assets).  Core capital
is defined to include common stockholders' equity, noncumulative perpetual
preferred stock and any related surplus, and minority interests in equity
accounts of consolidated subsidiaries, less (i) any intangible assets, except
for certain qualifying intangible assets; (ii) certain mortgage servicing
rights; and (iii) equity and debt investments in subsidiaries that are not
"includable subsidiaries," which is defined as subsidiaries engaged solely in
activities not impermissible for a national bank, engaged in activities
impermissible for a national bank but only as an agent for its customers, or
engaged solely in mortgage-banking activities.  In calculating adjusted total
assets, adjustments are made to total assets to give effect to the exclusion
of certain assets from capital and to account appropriately for the
investments in and assets of both includable and nonincludable subsidiaries.
Institutions that fail to meet the core capital requirement would be required
to file with the OTS a capital plan that details the steps they will take to
reach compliance.  In addition, the OTS's prompt corrective action regulation
provides that a savings institution that has a leverage ratio of less than 4%
(3% for institutions receiving the highest CAMEL examination rating) will be
deemed to be "undercapitalized" and may be subject to certain restrictions.
See "-- Federal Regulation of Savings Associations -- Prompt Corrective
Action."

     Savings associations also must maintain "tangible capital" not less than
1.5% of the Savings Bank's adjusted total assets. "Tangible capital" is
defined, generally, as core capital minus any "intangible assets" other than
purchased mortgage servicing rights.

     Each savings institution must maintain total risk-based capital equal to
at least 8% of risk-weighted assets.  Total risk-based capital consists of the
sum of core and supplementary capital, provided that supplementary capital
cannot exceed core capital, as previously defined.  Supplementary capital
includes (i) permanent capital instruments such as cumulative perpetual
preferred stock, perpetual subordinated debt and mandatory convertible
subordinated debt, (ii) maturing capital instruments such as subordinated
debt, intermediate-term preferred stock and mandatory convertible subordinated
debt, subject to an amortization schedule, and (iii) general valuation loan
and lease loss allowances up to 1.25% of risk-weighted assets.

     The risk-based capital regulation assigns each balance sheet asset held
by a savings institution to one of four risk categories based on the amount of
credit risk associated with that particular class of assets.  Assets not
included for purposes of calculating capital are not included in calculating
risk-weighted assets.  The categories range from

                                     -25-
<PAGE>

0% for cash and securities that are backed by the full faith and credit of the
U.S. Government to 100% for repossessed assets or assets more than 90 days
past due.  Qualifying residential mortgage loans (including multi-family
mortgage loans) are assigned a 50% risk weight.  Consumer, commercial, home
equity and residential construction loans are assigned a 100% risk weight, as
are nonqualifying residential mortgage loans and that portion of land loans
and nonresidential construction loans that do not exceed an 80% loan-to-value
ratio.  The book value of assets in each category is multiplied by the
weighing factor (from 0% to 100%) assigned to that category.  These products
are then totalled to arrive at total risk-weighted assets.  Off-balance sheet
items are included in risk- weighted assets by converting them to an
approximate balance sheet "credit equivalent amount" based on a conversion
schedule.  These credit equivalent amounts are then assigned to risk
categories in the same manner as balance sheet assets and included
risk-weighted assets.

     The OTS has incorporated an interest rate risk component into its
regulatory capital rule.  Under the rule, savings associations with "above
normal" interest rate risk exposure would be subject to a deduction from total
capital for purposes of calculating their risk-based capital requirements.  A
savings association's interest rate risk is measured by the decline in the net
portfolio value of its assets (i.e., the difference between incoming and
outgoing discounted cash flows from assets, liabilities and off-balance sheet
contracts) that would result from a hypothetical 200 basis point increase or
decrease in market interest rates divided by the estimated economic value of
the association's assets, as calculated in accordance with guidelines set
forth by the OTS.  A savings association whose measured interest rate risk
exposure exceeds 2% must deduct an interest rate risk component in calculating
its total capital under the risk-based capital rule.  The interest rate risk
component is an amount equal to one-half of the difference between the
institution's measured interest rate risk and 2%, multiplied by the estimated
economic value of the association's assets.  That dollar amount is deducted
from an association's total capital in calculating compliance with its
risk-based capital requirement.  Under the rule, there is a two quarter lag
between the reporting date of an institution's financial data and the
effective date for the new capital requirement based on that data.  A savings
association with assets of less than $300 million and risk-based capital
ratios in excess of 12% is not subject to the interest rate risk component,
unless the OTS determines otherwise.  The rule also provides that the Director
of the OTS may waive or defer an association's interest rate risk component on
a case-by-case basis.  Under certain circumstances, a savings association may
request an adjustment to its interest rate risk component if it believes that
the OTS-calculated interest rate risk component overstates its interest rate
risk exposure.  In addition, certain "well-capitalized" institutions may
obtain authorization to use their own interest rate risk model to calculate
their interest rate risk component in lieu of the OTS-calculated amount.  The
OTS has postponed the date that the component will first be deducted from an
institution's total capital.

     Limitations on Capital Distributions.  OTS regulations impose uniform
limitations on the ability of all savings associations to engage in various
distributions of capital such as dividends, stock repurchases and cash-out
mergers.  In addition, OTS regulations require the Savings Bank to give the
OTS 30 days' advance notice of any proposed declaration of dividends, and the
OTS has the authority under its supervisory powers to prohibit the payment of
dividends.  The regulation utilizes a three-tiered approach which permits
various levels of distributions based primarily upon a savings association's
capital level.

     A Tier 1 savings association has capital in excess of its fully phased-in
capital requirement (both before and after the proposed capital distribution).
Tier 1 savings association may make (without application but upon prior notice
to, and no objection made by, the OTS) capital distributions during a calendar
year up to 100% of its net income to date during the calendar year plus
one-half its surplus capital ratio (i.e., the amount of capital in excess of
its fully phased-in requirement) at the beginning of the calendar year or the
amount authorized for a Tier 2 association.  Capital distributions in excess
of such amount require advance notice to the OTS.  A Tier 2 savings
association has capital equal to or in excess of its minimum capital
requirement but below its fully phased-in capital requirement (both before and
after the proposed capital distribution).  Such an association may make
(without application) capital distributions up to an amount equal to 75% of
its net income during the previous four quarters depending on how close the
association is to meeting its fully phased-in capital requirement.  Capital
distributions exceeding this amount require prior OTS approval.  Tier 3
associations are savings associations with capital below

                                     -26-
<PAGE>

the minimum capital requirement (either before or after the proposed capital
distribution).  Tier 3 associations may not make any capital distributions
without prior approval from the OTS.

     The Savings Bank currently meets the criteria to be designated a Tier 1
association and, consequently, could at its option (after prior notice to, and
no objection made by, the OTS) distribute up to 100% of its net income during
the calendar year plus 50% of its surplus capital ratio at the beginning of
the calendar year less any distributions previously paid during the year.

     Loans to One Borrower.  Under the HOLA, savings institutions are
generally subject to the national bank limit on loans to one borrower.
Generally, this limit is 15% of the Savings Bank's unimpaired capital and
surplus, plus an additional 10% of unimpaired capital and surplus, if such
loan is secured by readily-marketable collateral, which is defined to include
certain financial instruments and bullion.  The OTS by regulation has amended
the loans to one borrower rule to permit savings associations meeting certain
requirements, including capital requirements, to extend loans to one borrower
in additional amounts under circumstances limited essentially to loans to
develop or complete residential housing units.  At December 31, 1996, the
Savings Bank's limit on loans to one borrower was $3.6 million.  At December
31, 1996, the Savings Bank's largest aggregate amount of loans to one borrower
was $1.2 million.

     Activities of Associations and Their Subsidiaries.  A savings association
may establish operating subsidiaries to engage in any activity that the
savings association may conduct directly and service corporation subsidiaries
to engage in certain preapproved activities or, with approval of the OTS,
other activities reasonably related to the activities of financial
institutions.  When a savings association establishes or acquires a subsidiary
or elects to conduct any new activity through a subsidiary that the
association controls, the savings association must notify the FDIC and the OTS
30 days in advance and provide the information each agency may, by regulation,
require.  Savings associations also must conduct the activities of
subsidiaries in accordance with existing regulations and orders.

     The OTS may determine that the continuation by a savings association of
its ownership control of, or its relationship to, the subsidiary constitutes a
serious risk to the safety, soundness or stability of the association or is
inconsistent with sound banking practices or with the purposes of the FDIA.
Based upon that determination, the FDIC or the OTS has the authority to order
the savings association to divest itself of control of the subsidiary.  The
FDIC also may determine by regulation or order that any specific activity
poses a serious threat to the SAIF.  If so, it may require that no SAIF member
engage in that activity directly.

     Transactions with Affiliates.  Savings associations must comply with
Sections 23A and 23B of the Federal Reserve Act ("Sections 23A and 23B")
relative to transactions with affiliates in the same manner and to the same
extent as if the savings association were a Federal Reserve member bank.   A
savings and loan holding company, its subsidiaries and any other company under
common control are considered affiliates of the subsidiary savings association
under the HOLA.  Generally, Sections 23A and 23B:  (i) limit the extent to
which the insured association or its subsidiaries may engage in certain
covered transactions with an affiliate to an amount equal to 10% of such
institution's capital and surplus and place an aggregate limit on all such
transactions with affiliates to an amount equal to 20% of such capital 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, the purchase of assets, the issuance of a guarantee and
similar types of transactions.  Any loan or extension of credit by the Savings
Bank to an affiliate must be secured by collateral in accordance with Section
23A.

     Three additional rules apply to savings associations:  (i) a savings
association may not make any loan or other extension of credit to an affiliate
unless that affiliate is engaged only in activities permissible for bank
holding companies;  (ii) a savings association may not purchase or invest in
securities issued by an affiliate (other than securities of a subsidiary); and
(iii) the OTS may, for reasons of safety and soundness, impose more stringent
restrictions on savings associations but may not exempt transactions from or
otherwise abridge Section 23A or 23B.


                                     -27-
<PAGE>

Exemptions from Section 23A or 23B may be granted only by the Federal Reserve,
as is currently the case with respect to all FDIC-insured banks.

     The Savings Bank's authority to extend credit to executive officers,
directors and 10% shareholders, as well as entities controlled by such
persons, is currently governed by Sections 22(g) and 22(h) of the Federal
Reserve Act, and Regulation O thereunder.  Among other things, these
regulations require that such loans be made on terms and conditions
substantially the same as those offered to unaffiliated individuals and not
involve more than the normal risk of repayment.  Regulation O also places
individual and aggregate limits on the amount of loans the Savings Bank may
make to such persons based, in part, on the Savings Bank's capital position,
and requires certain board approval procedures to be followed.  The OTS
regulations, with certain minor variances, apply Regulation O to savings
institutions.

     Community Reinvestment Act.  Banks are also subject to the provisions of
the Community Reinvestment Act of 1977, which requires the appropriate federal
bank regulatory agency, in connection with its regular examination of a bank,
to assess the bank's record in meeting the credit needs of the community
serviced by the bank, including low and moderate income neighborhoods.  The
regulatory agency's assessment of the bank's record is made available to the
public.  Further, such assessment is required of any bank which has applied,
among other things, to establish a new branch office that will accept
deposits, relocate an existing office or merge or consolidate with, or acquire
the assets or assume the liabilities of, a federally regulated financial
institution.

Savings and Loan Holding Company Regulations

     Holding Company Acquisitions.  The HOLA and OTS regulations issued
thereunder generally prohibit a savings and loan holding company, without
prior OTS approval, from acquiring more than 5% of the voting stock of any
other savings association or savings and loan holding company or controlling
the assets thereof.  They also prohibit, among other things, any director or
officer of a savings and loan holding company, or any individual who owns or
controls more than 25% of the voting shares of such holding company, from
acquiring control of any savings association not a subsidiary of such savings
and loan holding company, unless the acquisition is approved by the OTS.

     Holding Company Activities.  As a unitary savings and loan holding
company, the Company generally is not subject to activity restrictions under
the HOLA.  If the Company acquires control of another savings association as a
separate subsidiary other than in a supervisory acquisition, it would become a
multiple savings and loan holding company.  The HOLA provides that, among
other things, no multiple savings and loan holding company or subsidiary
thereof which is not an insured association shall commence or continue for
more than two years after becoming a multiple savings and loan association
holding company or subsidiary thereof, any business activity other than:  (i)
furnishing or performing management services for a subsidiary insured
institution, (ii) conducting an insurance agency or escrow business, (iii)
holding, managing, or liquidating assets owned by  or acquired from a
subsidiary insured institution, (iv) holding or managing properties used or
occupied by a subsidiary insured institution, (v) acting as trustee under
deeds of trust, (vi) those activities previously directly authorized by
regulation as of March 5, 1987 to be engaged in by multiple holding companies
or (vii) those activities authorized by the Federal Reserve Board as
permissible for bank holding companies, unless the OTS by regulation,
prohibits or limits such activities for savings and loan holding companies.
Those activities described in (vii) above also must be approved by the OTS
prior to being engaged in by a multiple holding company.

     Qualified Thrift Lender Test.  The HOLA requires any savings and loan
holding company that controls a savings  association that fails the QTL test,
as explained under "-- Federal Regulation of Savings Associations -- Qualified
Thrift Lender Test," must, within one year after the date on which the
association ceases to be a QTL, register as and be deemed a bank holding
company subject to all applicable laws and regulations.

                                     -28-
<PAGE>

                                TAXATION

Federal Taxation

     General.  The Company and the Savings Bank report their income on a
fiscal year basis using the accrual method of accounting and are subject to
federal income taxation in the same manner as other corporations with some
exceptions.  The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax
rules applicable to the Savings Bank or the Company.

     Bad Debt Reserve.  Historically, savings institutions such as the Savings
Bank which met certain definitional tests primarily related to their assets
and the nature of their business ("qualifying thrift") were permitted to
establish a reserve for bad debts and to make annual additions thereto, which
may have been deducted in arriving at their taxable income.  The Savings
Bank's deductions with respect to "qualifying real property loans," which are
generally loans secured by certain interest in real property, were computed
using an amount based on the Savings Bank's actual loss experience, or a
percentage equal to 8% of the Savings Bank's taxable income, computed with
certain modifications and reduced by the amount of any permitted additions to
the non-qualifying reserve.  Due to the Savings Bank's loss experience, the
Savings Bank generally recognized a bad debt deduction equal to 8% of taxable
income.

     In August 1996, provisions repealing the current thrift bad debt rules
were enacted by Congress as part of "The Small Business Job Protection Act of
1996."  The new rules eliminate the 8% of taxable income method for deducting
additions to the tax bad debt reserves for all thrifts for tax years beginning
after December 31, 1995.  These rules also require that all institutions
recapture all or a portion of their bad debt reserves added since the base
year (last taxable year beginning before December 31, 1987).  The Savings Bank
has previously recorded a deferred tax liability equal to the bad debt
recapture and as such, the new rules will have no effect on the net income or
federal income tax expense.  For taxable years beginning after December 31,
1995, the Savings Bank's bad debt deduction will be determined under the
experience method using a formula based on actual bad debt experience over a
period of years or, if the Savings Bank is a "large" bank (i.e., assets in
excess of $500 million) on the basis of net charge-offs during the taxable
year.  The new rules allow an institution to suspend bad debt reserve
recapture for the 1996 and 1997 tax years if the institution's lending
activity for those years is equal to or greater than the institutions average
mortgage lending activity for the six taxable years preceding 1996 adjusted
for inflation.  For this purpose, only home purchase or home improvement loans
are included and the institution can elect to have the tax years with the
highest and lowest lending activity removed from the average calculation.  If
an institution is permitted to postpone the reserve recapture, it must begin
its six year recapture no later than the 1998 tax year.  The unrecaptured base
year reserves will not be subject to recapture as long as the institution
continues to carry on the business of banking.  In addition, the balance of
the pre-1988 bad debt reserves continue to be subject to provision of present
law referred to below that require recapture in the case of certain excess
distributions to shareholders.

     Distributions.  To the extent that the Savings Bank makes "nondividend
distributions" to shareholders, such distributions will be considered to
result in distributions from the balance of its bad debt reserve as of
December 31, 1987 (or a lesser amount if the Savings Bank's loan portfolio
decreased since December 31, 1987) and then from the supplemental reserve for
losses on loans ("Excess Distributions"), and an amount based on the Excess
Distributions will be included in the Savings Bank's taxable income.
Nondividend distributions include distributions in excess of the Savings
Bank's current and accumulated earnings and profits, distributions in
redemption of stock and distributions in partial or complete liquidation.
However, dividends paid out of the Savings Bank's current or accumulated
earnings and profits, as calculated for federal income tax purposes, will not
be considered to result in a distribution from the Savings Bank's bad debt
reserves.

     The amount of additional taxable income created from and Excess
Distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution.  Thus, approximately one
and one-half times the Excess Distribution would be includable in gross income
for federal income tax purposes,

                                     -29-
<PAGE>

assuming a 34% federal corporate income tax rate.  The Savings Bank does not
intend to pay dividends that would result in a recapture of any portion of its
tax bad debt reserve.

     Corporate Alternative Minimum Tax.  The Code imposes a tax on alternative
minimum taxable income ("AMTI") at a rate of 20%.  The excess of the tax bad
debt reserve deduction using the percentage of taxable income method over the
deduction that would have been allowable under the experience method is
treated as a preference item for purposes of computing the AMTI.  In addition,
only 90% of AMTI can be offset by net operating loss carryovers.  AMTI is
increased by an amount equal to 75% of the amount by which the Savings Bank's
adjusted current earnings exceeds its AMTI (determined without regard to this
preference and prior to reduction for net operating losses).  For taxable
years beginning after December 31, 1986, and before January 1, 1996, an
environmental tax of .12% of the excess of AMTI (with certain modification)
over $2.0 million is imposed on corporations, including the Savings Bank,
whether or not an Alternative Minimum Tax ("AMT") is paid.

     Dividends-Received Deduction and Other Matters.  The Company may exclude
from its income 100% of dividends received from the Savings Bank as a member
of the same affiliated group of corporations.  The corporate
dividends-received deduction is generally 70% in the case of dividends
received from unaffiliated corporations with which the Company and the Savings
Bank will not file a consolidated tax return, except that if the Company or
the Savings Bank owns more than 20% of the stock of a corporation distributing
a dividend, then 80% of any dividends received may be deducted.

     Other Matters.  There have not been any Internal Revenue Service audits
of the Savings Bank's federal income tax returns during the past five years.

State Taxation

     Missouri.  Missouri-based thrift institutions, such as the Savings Bank,
are subject to a special financial institutions tax, based on net income
without regard to net operating loss carryforwards, at the rate of 7% of net
income.  This tax is in lieu of certain other state taxes on thrift
institutions, on their property, capital or income, except taxes on tangible
personal property owned by the Savings Bank and held for lease or rental to
others and on real estate, contributions paid pursuant to the Unemployment
Compensation Law of Missouri, social security taxes, sales taxes and use
taxes.  In addition, the Savings Bank is entitled to credit against this tax
all taxes paid to the State of Missouri or any political subdivision, except
taxes on tangible personal property owned by the Savings Bank and held for
lease or rental to others and on real estate, contributions paid pursuant to
the Unemployment Compensation Law of Missouri, social security taxes, sales
and use taxes, and taxes imposed by the Missouri Financial Institutions Tax
Law.  Missouri thrift institutions are not subject to the regular corporate
income tax.

     Delaware.  As a Delaware holding company not earning income in Delaware,
the Company is exempted from Delaware corporate income tax, but is required to
file an annual report with and pay an annual franchise tax to the State of
Delaware.

Item 2.  Description of Property
--------------------------------

     The Company operates five full service facilities, all of which it owns.
At December 31, 1996, the net book value of the property (including land and
building) and the Company's fixtures, furniture and equipment was $1.7
million.

                                     -30-
<PAGE>

     The following table sets forth certain information with respect to the
offices of the Company at December 31, 1996.

                                                        Approximate
Location                         Year Opened           Square Footage
--------                         -----------           --------------

Main Office:

427 Monroe St.                      1992                    9,000
Jefferson City, MO

Branch Offices:

201 E. Main                         1980                    2,475
California, MO

3732 W. Truman Blvd.                1979                    1,666
Jefferson City, MO

445 S. Moreau                       1979                    1,950
Tipton, MO

59 S. Missouri Ave.                 1981                    2,160
St. Robert, MO

Item 3.  Legal Proceedings
--------------------------

     Periodically, there have been various claims and lawsuits involving the
Savings Bank, such as claims to enforce liens, condemnation proceedings on
properties on which the Savings Bank holds security interests, claims
involving the making and servicing of real property loans and other issues
incident to the Savings Bank's business.  Neither the Company nor the Savings
Bank is a party to any pending legal proceedings that it believes would have a
material adverse effect on the financial condition or operations of the
Company.

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

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1996.

                                        PART II

Item 5.   Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------

     The information contained under the section captioned "Price Range of
Common Stock" on page 40 of the 1996 Annual Report to Stockholders ("Annual
Report") is incorporated herein by reference.

Item 6.   Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------
Results of Operations or Plan of Operations
-------------------------------------------

     The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
beginning on page 5 of the Annual Report is incorporated herein by reference.

                                     -31-
<PAGE>

Item 7.   Financial Statements
------------------------------

          (a)    Financial Statements
                 Independent Auditor's Report*
                 Consolidated Statements of Financial Condition as of
                  December 31, 1995 and 1996*
                 Consolidated Statements of Income for the Years Ended
                  December 31, 1994, 1995 and 1996*
                 Consolidated Statements of Stockholders' Equity for the Years
                  Ended December 31, 1994, 1995 and 1996*
                 Consolidated Statements of Cash Flows for the Years Ended
                  December 31, 1994, 1995 and 1996*
                 Notes to the Consolidated Financial Statements*

          *  Included in the Annual Report attached as Exhibit 13 hereto and
          incorporated herein by reference.  All schedules have been
          omitted as the required information is either inapplicable or
          included in the Consolidated Financial Statements or related
          Notes contained in the Annual Report.

Item 8.   Changes in and Disagreements with Accountants on Accounting and
-------------------------------------------------------------------------
Financial Disclosure
--------------------

          Not applicable.

                               PART III

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

Executive Officers

     The following table sets forth certain information regarding the
executive officers of the Company.

Name                           Age(1)               Position
----                           ---                  --------

Richard E. Caplinger           63                   Chairman of the Board

Robert E. Chiles               61                   President and Chief
Executive Officer

David L. Jobe                  48                   Treasurer and Secretary

     The following table sets forth certain information regarding the
executive officers of the Bank.

Name                           Age(1)               Position
----                           ---                  --------

Richard E. Caplinger           63                   Chairman of the Board

Robert E. Chiles               61                   President and Chief
                                                    Executive Officer

David L. Jobe                  48                   Secretary and Treasurer

Delphine E. Prenger            59                   Vice President

                                     -32-
<PAGE>

--------------
(1)  As of December 31, 1996.

     Robert E. Chiles serves as President, Chief Executive Officer and
Director of the Savings Bank, positions he has held since 1974.  Mr. Chiles
has also served as President, Chief Executive Officer and Director of the
Company since its formation in 1996.  Mr. Chiles is currently a member of the
Loan Review Committee, the Planning Committee, the Investment Committee and
the In-House Loan Committee.  Mr. Chiles served as a member of the FHLB-Des
Moines Board from 1989 to 1994 and as Vice Chairman in 1994.

     David L. Jobe currently serves as the Treasurer and Secretary of the
Savings Bank, positions which he has held since 1984.  Mr. Jobe also served as
the Treasurer of the Jefferson City Chamber of Commerce in 1996.

     Delphine E. Prenger has been associated with the Savings Bank since 1968
and has served as Vice-President since 1983.  Ms. Prenger is also a member of
the Jefferson City Chamber of Commerce.

     Richard E. Caplinger is co-owner of Caplinger's Inc., a mens' specialty
retailer, with which he has been associated since 1952.  Mr. Caplinger has
served as a Director since 1975 and as Chairman of the Board of Directors of
the Savings Bank since 1993.  He currently serves on the Planning Committee,
the Budget and Salary Committee and the Compliance Committee.  Mr. Caplinger
is also chairman of the Jefferson City Community Betterment Association and a
member of the small business task force of the Jefferson City Chamber of
Commerce.

     The information contained under the section captioned "Proposal I -
Election of Directors" contained in the Company's Proxy Statement is
incorporated herein by reference.  Reference is made to the cover page of this
report for information regarding compliance with Section 16(a) of the Exchange
Act.

Item 10.  Executive Compensation
--------------------------------

     The information contained under the sections captioned "Executive
Compensation," "Directors' Compensation" and "Benefits" under "Proposal I -
Election of Directors" in the Proxy Statement is incorporated herein by
reference.

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

          (a)   Security Ownership of Certain Beneficial Owners

                Information required by this item is incorporated herein by
                reference to the section captioned "Security Ownership of
                Certain Beneficial Owners and Management" of the Proxy
                Statement.

          (b)   Security Ownership of Management

                The information required by this item is incorporated herein
                by reference to the sections captioned "Security Ownership of
                Certain Beneficial Owners and Management" of the Proxy
                Statement.

          (c)   Changes in Control

                The Company is not aware of any arrangements, including any
                pledge by any person of securities of the Company, the
                operation of which may at a subsequent date result in a change
                in control of the Company.

                                     -33-
<PAGE>

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

     The information set forth under the section captioned "Proposal I -
Election of Directors - Transactions with Management" in the Proxy Statement
is incorporated herein by reference.

                                    PART IV

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

          (a)   Exhibits

          3.1   Certificate of Incorporation of CNS Bancorp, Inc.
                (incorporated by reference to Exhibit 3.1 to the Company's
                Registration Statement on Form S-1 (File No. 333-1880))
          3.2   Bylaws of CNS Bancorp, Inc. (incorporated by reference to
                Exhibit 3.2 to the Company's Registration Statement on Form
                S-1 (File No. 333-1880))
          10.1  Employment Agreement with Robert E. Chiles
          13    Annual Report to Stockholders
          21    Subsidiaries of the Registrant
          27    Financial Data Schedule

          (b)   Reports on Form 8-K

                No Reports on Form 8-K were filed during the quarter ended
                December 31, 1996.

                                     -34-
<PAGE>

                                      SIGNATURES

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

                                           CNS BANCORP, INC.


Date:  March 25, 1997                      By: /s/ Robert E. Chiles
                                               ----------------------------
                                               Robert E. Chiles
                                               President and Chief Executive
                                               Officer

     Pursuant to 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.

SIGNATURES                   TITLE                         DATE
----------                   -----                         ----

/s/ Robert E. Chiles
------------------------    President, Chief               March 25, 1997
Robert E. Chiles            Executive Officer and
                            Director (Principal
                            Executive Officer)

/s/ David L. Jobe
------------------------    Treasurer and Secretary        March 25, 1997
David L. Jobe               (Principal Financial
                            and Accounting Officer)
/s/ James F. McHenry
------------------------    Director                       March 25, 1997
James F. McHenry

/s/ James E. Whaley
------------------------    Director                       March 25, 1997
James E. Whaley

/s/ Ronald D. Roberson
------------------------    Director                       March 25, 1997
Ronald D. Roberson

/s/ Richard E. Caplinger
------------------------    Chairman of the Board          March 25, 1997
Richard E. Caplinger

/s/ Michael A. Dallmeyer
------------------------    Director                       March 25, 1997
Michael A. Dallmeyer

/s/ John C. Kolb
------------------------    Director                       March 25, 1997
John C. Kolb

<PAGE>

                                 EXHIBIT 10.1

                  Employment Agreement with Robert E. Chiles
<PAGE>

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT is made effective as of June 11, 1996, by and between
CITY NATIONAL SAVINGS BANK, FSB (the "Bank"), Jefferson City, Missouri; CNS
BANCORP, INC. (the "Company"), a Delaware corporation; and ROBERT E. CHILES
(the "Executive").

      WHEREAS, the Bank wishes to assure itself of the services of Executive
for the period provided in this Agreement; and

      WHEREAS, the Executive is willing to serve in the employ of the Bank on
a full-time basis for said period.

      NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:

1.    POSITION AND RESPONSIBILITIES.

      During the period of his employment hereunder, Executive agrees to serve
as President and Chief Executive Officer of the Bank.  During said period,
Executive also agrees to serve, if elected, as an officer and director of the
Company or any subsidiary or affiliate of the Company or the Bank.

2.    TERMS AND DUTIES.

      (a)  The term of this Agreement shall be deemed to have commenced as of
the date first above written and shall continue for a period of thirty-six
(36) full calendar months thereafter.  Commencing on the first anniversary
date, and continuing at each anniversary date thereafter, the Board of
Directors of the Bank (the "Board") may extend the Agreement for an additional
year.  Prior to the extension of the Agreement as provided herein, the Board
of Directors of the Bank will conduct a formal performance evaluation of the
Executive for purposes of determining whether to extend the Agreement, and the
results thereof shall be included in the minutes of the Board's meeting.

      (b)  During the period of his employment hereunder, except for periods
of absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Bank; provided, however, that, with the
approval of the Board, as evidenced by a resolution of such Board, from time
to time, Executive may serve, or continue to serve, on the boards of directors
of, and hold any other offices or positions in, companies or organizations,
which, in such Board's judgment, will not present any conflict of interest
with the Bank, or materially affect the performance of Executive's duties
pursuant to this Agreement.

3.    COMPENSATION AND REIMBURSEMENT.

      (a)  The compensation specified under this Agreement shall constitute
the salary and benefits paid for the duties described in Sections 1 and 2.
The Bank shall pay Executive as compensation a salary of $93,600 per year
("Base Salary").  Such Base Salary shall be payable in accordance with the
customary payroll practices of the Bank.  During the period of this Agreement,
Executive's Base Salary shall be reviewed at least annually; the first such
review will be made no later than one year from the date of this Agreement.
Such review shall be conducted by a Committee designated by the Board, and the
Board may increase Executive's Base Salary.  In addition to the Base Salary
provided in this Section 3(a), the Bank shall provide Executive

<PAGE>

at no cost to Executive with all such other benefits as are provided uniformly
to permanent full-time employees of the Bank.

      (b)  The Bank will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder.  Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive will be entitled to participate
in or receive benefits under any employee benefit plans including, but not
limited to, retirement plans, supplemental retirement plans, pension plans,
profit-sharing plans, health-and-accident plan, medical coverage or any other
employee benefit plan or arrangement made available by the Bank in the future
to its senior executives and key management employees, subject to, and on a
basis consistent with, the terms, conditions and overall administration of
such plans and arrangements.  Executive will be entitled to incentive
compensation and bonuses as provided in any plan, or pursuant to any
arrangement of the Bank, in which Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be
deemed to be in lieu of other compensation to which the Executive is entitled
under this Agreement, except as provided under Section 5(e).

      (c)  In addition to the Base Salary provided for by paragraph (a) of
this Section 3, the Bank shall pay or reimburse Executive for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from
time to time determine.

4.    PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

      (a)  Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply.  As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following:  (i) the
termination by the Bank of Executive's full-time employment hereunder for any
reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; retirement, as defined
in Section 7 hereof; or Termination for Cause, as defined in Section 8 hereof;
(ii) Executive's resignation from the Bank's employ, upon (A) unless consented
to by the Executive, a material change in Executive's function, duties, or
responsibilities, which change would cause Executive's position to become one
of lesser responsibility, importance, or scope from the position and
attributes thereof described in Sections 1 and 2, above, (any such material
change shall be deemed a continuing breach of this Agreement), (B) a
relocation of Executive's principal place of employment by more than 35 miles
from its location at the effective date of this Agreement, or a material
reduction in the benefits and perquisites to Executive from those being
provided as of the effective date of this Agreement, (C) the liquidation or
dissolution of the Bank, or (D) any breach of this Agreement by the Bank.
Upon the occurrence of any event described in clauses (A), (B), (C) or (D),
above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation upon not less than sixty (60) days prior
written notice given within a reasonable period of time not to exceed, except
in case of a continuing breach, four (4) calendar months after the event
giving rise to said right to elect.

      (b)  Upon the occurrence of an Event of Termination, the Bank shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to the payments due to the Executive
for the remaining term of the Agreement, including Base Salary, bonuses, and
any other cash or deferred compensation paid or to be paid (including the
value of employer contributions that would have been made on the Executive's
behalf over the remaining term of the agreement to any tax-qualified
retirement plan sponsored by the Bank as of the Date of Termination), to the
Executive for the term of the Agreement provided, however, that if the Bank is
not in compliance with its minimum capital requirements or if such payments
would cause the Bank's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the
                                     -2-
<PAGE>

Bank is in capital compliance.  All payments made pursuant to this Section
4(b) shall be paid in substantially equal monthly installments over the
remaining term of this Agreement following the Executive's termination;
provided, however, that if the remaining term of the Agreement is less than
one (1) year (determined as of the Executive's Date of Termination), such
payments and benefits shall be paid to the Executive in a lump sum within
thirty (30) days of the Date of Termination.

      (c)  Upon the occurrence of an Event of Termination, the Bank will cause
to be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained by the Bank for Executive prior to his
termination.  Such coverage shall cease upon the expiration of the remaining
term of this Agreement.

5.    CHANGE IN CONTROL.

      (a)  No benefit shall be paid under this Section 5 unless there shall
have occurred a Change in Control of the Company or the Bank.  For purposes of
this Agreement, a "Change in Control" of the Company or the Bank shall be
deemed to occur if and when (a) an offeror other than the Company purchases
shares of the common stock of the Company or the Bank pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Bank representing 25% or more of the combined voting power of
the Company's then outstanding securities, (c) the membership of the board of
directors of the Company or the Bank changes as the result of a contested
election, such that individuals who were directors at the beginning of any
twenty-four (24) month period (whether commencing before or after the date of
adoption of this Plan) do not constitute a majority of the Board at the end of
such period, or (d) shareholders of the Company or the Bank approve a merger,
consolidation, sale or disposition of all or substantially all of the
Company's or the Bank's assets, or a plan of partial or complete liquidation.

      (b)  If any of the events described in Section 5(a) hereof constituting
a Change in Control have occurred or the Board of the Bank or the Company has
reasonably determined that a Change in Control has occurred, Executive shall
be entitled to the benefits provided in paragraphs (c), (d) and (e) of this
Section 5 upon his subsequent involuntary termination following the effective
date of a Change in Control (or voluntary termination following the effective
date of a Change in Control following any demotion, loss of title, office or
significant authority, reduction in his annual compensation or benefits (other
than a reduction affecting the Bank's personnel generally), or relocation of
his principal place of employment by more than thirty-five (35) miles from its
location immediately prior to the Change in Control), unless such termination
is because of his death, retirement as provided in Section 7, termination for
Cause, or termination for Disability.

      (c)  Upon the occurrence of a Change in Control followed by the
Executive's termination of employment, the Bank shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, as severance pay or liquidated damages, or both, a
sum equal to 2.99 times the Executive's "base amount,"  within the meaning of
Section 280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended.
Such payment shall be made in a lump sum paid within ten (10) days of the
Executive's Date of Termination.

      (d) Upon the occurrence of a Change in Control followed by the
Executive's termination of employment, the Bank will cause to be continued
life, medical, dental and disability coverage substantially identical to the
coverage maintained by the Bank for Executive prior to his severance.  In
addition, Executive shall be entitled to receive the value of employer
contributions that would have been made on the Executive's behalf over the
remaining term of the agreement to any tax-qualified retirement plan sponsored
by the Bank as of the Date of Termination.  Such coverage and payments shall
cease upon the expiration of thirty-six (36) months.

                                     -3-
<PAGE>
      (e)  Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or
the Bank on his behalf, pursuant to any retirement, incentive, profit sharing,
bonus, performance, disability or other employee benefit plan maintained by
the Bank or the Company on the Executive's behalf to the extent that such
benefits are not otherwise paid to the Executive upon a Change in Control.

      (f)   Notwithstanding the preceding paragraphs of this Section 5, in the
event that the aggregate payments or benefits to be made or afforded to the
Executive under this Section would be deemed to include an "excess parachute
payment" under Section 280G of the Code, such payments or benefits shall be
payable or provided to Executive over the minimum period necessary to reduce
the present value of such payments or benefits to an amount which is one
dollar ($1.00) less than three (3) times the Executive's "base amount" under
Section 280G(b)(3) of the Code.

6.    TERMINATION FOR DISABILITY.

      (a)  If the Executive shall become disabled as defined in the Bank's
then current disability plan (or, if no such plan is then in effect, if the
Executive is permanently and totally disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician designated by the Board),
the Bank may terminate Executive's employment for "Disability."

      (b)  Upon the Executive's termination of employment for Disability, the
Bank will pay Executive, as disability pay, a bi-weekly payment equal to
three-quarters (3/4) of Executive's bi-weekly rate of Base Salary on the
effective date of such termination.  These disability payments shall commence
on the effective date of Executive's termination and will end on the earlier
of (i) the date Executive returns to the full-time employment of the Bank in
the same capacity as he was employed prior to his termination for Disability
and pursuant to an employment agreement between Executive and the Bank; (ii)
Executive's full-time employment by another employer; (iii) Executive
attaining the age of sixty-five (65); or (iv) Executive's death; or (v) the
expiration of the term of this Agreement.  The disability pay shall be reduced
by the amount, if any, paid to the Executive under any plan of the Bank
providing disability benefits to the Executive.

      (c)  The Bank will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Bank for Executive prior to his termination for Disability.  This coverage and
payments shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Bank, in the same capacity as he was employed
prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Bank; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of
sixty-five (65); (iv) the Executive's death; or (v) the expiration of the term
of this Agreement.

      (d)  Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of
temporary disability.

7.    TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.

      Termination by the Bank of Executive based on "Retirement" shall mean
retirement at age sixty-five (65) or in accordance with any retirement
arrangement established with Executive's consent with respect to him.  Upon
termination of Executive upon Retirement, Executive shall be entitled to all
benefits under any retirement plan of the Bank or the Company and other plans
to which Executive is a party.  Upon the death of the Executive during the
term of this Agreement,  the Bank shall pay to Executive's estate the
compensation due to the Executive through the last day of the calendar month
in which his death occurred.

                                     -4-
<PAGE>

8.    TERMINATION FOR CAUSE.

        For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement.  For purposes of this Section, no act, or the failure to act, on
Executive's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in
the best interest of the Bank or its affiliates.  Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-fourths (3/4) of
the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof.  The Executive shall
not have the right to receive compensation or other benefits for any  period
after termination for Cause.  Any stock options granted to Executive under any
stock option plan or any unvested awards granted under any other stock benefit
plan of the Bank, the Company, or any subsidiary or affiliate thereof, shall
become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 9 hereof, and shall not be
exercisable by Executive at any time subsequent to such Termination for Cause.

9.    REQUIRED PROVISIONS.

      (a)   The Bank may terminate Executive's employment at any time, but any
termination by the Bank, other than Termination for Cause, shall not prejudice
Executive's right to compensation or other benefits under this Agreement.
Executive shall not have the right to receive compensation or other benefits
for any period after Termination for Cause as defined in Section 8 herein.

      (b)  If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(3) and (g)(1)), the Bank's obligations under the Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings.  If the charges in the notice are dismissed, the Bank may, in its
discretion, (i) pay Executive all or part of the compensation withheld while
its contract obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations that were suspended.

        (c)  If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all
obligations of the Bank under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall not be affected.

        (d)  If the Bank is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.

        (e)  All obligations under this Agreement shall be terminated (except
to the extent determined that continuation of the Agreement is necessary for
the continued operation of the Bank):  (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) of the FDIA or (ii) by the
Director, or his or her designee at the time the Director or such designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe

                                     -5-
<PAGE>

or unsound condition.  Any rights of the parties that have already vested,
however, shall not be affected by such action.

      (f)  Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.

10.   NOTICE.

      (a)  Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto.  For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.

      (b)  "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his
duties on a full-time basis during such thirty (30) day period), and (B) if
his employment is terminated for any other reason,  the date specified in the
Notice of Termination (which, in the case of a Termination for Cause, shall
not be less than thirty (30) days from the date such Notice of Termination is
given).

      (c)  If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, except upon the occurrence
of a Change in Control and voluntary termination by the Executive in which
case the Date of Termination shall be the date specified in the Notice, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal there from having expired and no
appeal having been perfected) and provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.  Notwithstanding the pendency of any
such dispute, the Bank will continue to pay Executive his full compensation in
effect when the notice giving rise to the dispute was given (including, but
not limited to, Base Salary) and continue him as a participant in all
compensation, benefit and insurance plans in which he was participating when
the notice of dispute was given, until the dispute is finally resolved in
accordance with this Agreement.  Amounts paid under this Section are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.

11.   NON-COMPETITION.

      (a)  Upon any termination of Executive's employment hereunder pursuant
to an Event of Termination as provided in Section 4 hereof, Executive agrees
not to compete with the Bank and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Bank
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination.  Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities
of the Bank and/or the Company.  The parties hereto, recognizing that
irreparable injury will result to the Bank and/or the Company, its business
and property in the event of Executive's breach of this Subsection 11(a) agree
that in the event of any such breach by Executive, the Bank and/or the Company
will be entitled, in addition to any other remedies and damages available, to
an injunction to restrain the violation hereof by Executive, Executive's
partners, agents, servants, employers, employees and all persons acting for or
with Executive.  Executive represents and admits that in the event of the
termination of his employment

                                     -6-
<PAGE>

pursuant to Section 8 hereof, Executive's experience and capabilities are such
that Executive can obtain employment in a business engaged in other lines
and/or of a different nature than the Bank and/or the Company, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood.  Nothing herein will be construed as prohibiting the
Bank and/or the Company from pursuing any other remedies available to the Bank
and/or the Company for such breach or threatened breach, including the
recovery of damages from Executive.

      (b)  Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Bank.  Executive will not, during or
after the term of his employment, disclose any knowledge of the past, present,
planned or considered business activities of the Bank or affiliates thereof to
any person, firm, corporation, or other entity for any reason or purpose
whatsoever.  Notwithstanding the foregoing, Executive may disclose any
knowledge of banking, financial and/or economic principles, concepts or ideas
which are not solely and exclusively derived from the business plans and
activities of the Bank.  In the event of a breach or threatened breach by the
Executive of the provisions of this Section, the Bank will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of
the Bank or affiliates thereof, or from rendering any services to any person,
firm, corporation, other entity to whom such knowledge, in whole or in part,
has been disclosed or is threatened to be disclosed.  Nothing herein will be
construed as prohibiting the Bank from pursuing any other remedies available
to the Bank for such breach or threatened breach, including the recovery of
damages from Executive.

12.   SOURCE OF PAYMENTS.

      All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank.  The Company, however, guarantees
all payments and the provision of all amounts and benefits due hereunder to
Executive and, if such payments are not timely paid or provided by the Bank,
such amounts and benefits shall be paid or provided by the Company.

13.   EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

      This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided.  No provision of this Agreement shall
be interpreted to mean that Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.

14.   NO ATTACHMENT.

      (a)  Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and
any attempt, voluntary or involuntary, to affect any such action shall be
null, void, and of no effect.

      (b)  This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank, the Company and their respective successors and assigns.

15.   MODIFICATION AND WAIVER.

      (a)  This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

                                     -7-
<PAGE>

      (b)  No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel.  No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act
other than that specifically waived.

16.   SEVERABILITY.

      If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.

17.   HEADINGS FOR REFERENCE ONLY.

      The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.

18.   GOVERNING LAW.

      This Agreement shall be governed by the laws of the State of Missouri,
unless otherwise specified herein; provided, however, that in the event of a
conflict between the terms of this Agreement and any applicable federal or
state law or regulation, the provisions of such law or regulation shall
prevail.

19.   ARBITRATION.

      Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the employee
within one hundred (100) miles from the location of the Bank, in accordance
with the rules of the American Arbitration Bank then in effect.  Judgment may
be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that Executive shall be entitled to seek specific
performance of his right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with
this Agreement.

20.   PAYMENT OF LEGAL FEES.

      All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, if Executive is successful pursuant to a legal
judgment, arbitration or settlement.

21.   INDEMNIFICATION.

      The Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his having been a director or officer of
the Bank (whether or not he continues to be a directors or officer at the time
of incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgment, court costs and attorneys' fees and
the cost of reasonable settlements.

                                     -8-
<PAGE>
22.   SUCCESSOR TO THE BANK OR THE COMPANY.

      The Bank and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise,
to all or substantially all the business or assets of the Bank or the Company,
expressly and unconditionally to assume and agree to perform the Bank's or the
Company's obligations under this Agreement, in the same manner and to the same
extent that the Bank or the Company would be required to perform if no such
succession or assignment had taken place.

      IN WITNESS WHEREOF, the Bank and the Company hereto have caused this
Agreement to be executed and their seal to be affixed hereunto by a duly
authorized officer or director, and Executive has signed this Agreement, all
on the 11th day of June, 1996.

ATTEST:                          CITY NATIONAL SAVINGS BANK, FSB

/s/ David L. Jobe                   /s/ Richard E. Caplinger
___________________________      BY:______________________________________
                     [SEAL]

ATTEST:                          CNS BANCORP, INC.

/s/ David L. Jobe                   /s/ Richard E. Caplinger
___________________________      BY:______________________________________
                     [SEAL]

WITNESS:

/s/ David L. Jobe                 /s/ Robert E. Chiles
___________________________      _________________________________________
                                 Robert E. Chiles

                                     -9-
<PAGE>

                                 EXHIBIT 13

                      1996 Annual Report to Stockholders
<PAGE>

<PAGE>
==============================================================================

                                      CNS
                                  BANCORP, INC.

                                  A Pillar of
                                   Strength
                                   for the
                                  Community

                              ANNUAL REPORT 1996
==============================================================================

<PAGE>

<PAGE>
------------------------------------------------------------------------------
TABLE OF CONTENTS
------------------------------------------------------------------------------

Letter to Stockholders                                                 1
Business of the Corporation                                            2
Selected Consolidated Financial Information                            3
Management's Discussion and Analysis of Financial
 Condition and Results of Operations                                   5
Independent Auditor's Report                                           14
Consolidated Financial Statements                                      15
Notes to Consolidated Financial Statements                             20
Stockholder Information                                                40
Corporate Information                                                  41

<PAGE>

CNS BANCORP, INC.
------------------------

President's Message
To Our Stockholders:

     On behalf of the Board of Directors and the employees, I am pleased to
share with you the results of CNS Bancorp, Inc.'s fiscal year ended December
31, 1996, and our first annual report.

     A look at 1996 shows a year of tremendous growth and a successful
conversion from a mutual company to a stock company.  This new momentum, built
on CNS Bancorp, Inc.'s growing strengths, indeed reflects a solid performance
in this first annual report.

     CNS Bancorp, Inc. increased total assets by $12.1 million, with loans
receivable increasing by $8.9 million.

     This growth is also emphasized by our net income which doubled in 1996
from $190,297 to $422,786, despite a payment of more than half a million
dollars to the Federal Deposit Insurance Corporation (FDIC), which was a one
time industry wide special assessment to recapitalize the Savings Association
Insurance Fund (SAIF).

     We are pleased City National Savings Bank customers showed such
confidence in our conversion to a stock company.  This was shown by the
substantial reinvestment of deposit accounts into stock purchases, which
resulted in a $3 million decrease in deposits.

     The Company has seen shareholders benefit by an increase in stock value
with shares trading as high as $17.75 per share or 120% of the book value.
Earnings per share of $.28 would have increased to $.48 without the special
SAIF assessment. On March 21, 1997 the second dividend will be paid at $.05
per share.

     CNS Bancorp, Inc. will remain firm in our pledge to be a community
oriented financial institution providing the best and most affordable services
and products to the residents of Jefferson City and our branch communities.

     We appreciate your continued support and taking stock in your future.  We
look forward to a long and profitable relationship.

     THANK YOU for investing in CNS Bancorp, Inc.

Sincerely,

/s/ Robert E. Chiles

Robert E. Chiles
President
                                     1
<PAGE>

     CNS Bancorp, Inc. (the "Company") is a Delaware corporation organized in
January 1996 for the purpose of becoming the holding company for City National
Savings Bank, FSB (the "Bank").  CNS Bancorp Inc. and the Bank are
collectively referred to as "the Company" in this annual report.  The
principal business of the Company consists primarily of attracting deposits
from the general public and using such deposits to originate mortgage loans
secured primarily by one-to four-family residences and to a lesser extent,
one-to four-family residential construction, multi-family and commercial real
estate loans, consumer loans and commercial loans.  These funds have also been
used to purchase loans secured by one-to four-family residences and, to a
lesser extent, multifamily and nonresidential properties.  The Company also
purchases mortgage-backed securities, U.S. government and federal agency
obligations and other permissible securities.

     The Company is not engaged in any significant business activity other
than holding the stock of City National Savings Bank, FSB.  Accordingly, the
information set forth in the report, including financial statements and
related data, applies primarily to the Bank.

     City National Savings Bank, FSB is a federally-chartered,
federally-insured financial institution organized in 1921.  The Bank is
regulated by the Office of Thrift Supervision ("OTS").  Its deposits are
insured up to applicable limits by the Savings Association Insurance Fund
("SAIF) of the Federal Deposit Insurance Corporation ("FDIC").  The Bank is
also a member of the Federal Home Loan Bank ("FHLB") System.

                                     2
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

                                                  At December 31,
                                   -------------------------------------------
                                   1992     1993      1994      1995      1996
                                                  (IN THOUSANDS)

Selected Financial Condition Data:

Total assets                     $94,300  $90,335   $87,966   $85,390  $97,481
Loans receivable, net (1)        $47,979  $40,674   $44,853   $52,611  $60,981
Mortgage-backed securities       $22,172  $24,173   $18,966   $13,926  $12,010
Cash, interest-bearing deposits
 and investments securities      $17,230  $19,922   $18,911   $14,400  $20,136
Deposits                         $85,712  $81,035   $79,493   $75,931  $72,880
Stockholders' equity              $8,329   $9,079    $8,234    $9,180  $24,199

                                             Year Ended December 31,
                                   -------------------------------------------
                                   1992     1993      1994      1995      1996
                                                   (IN THOUSANDS)

Selected Operations Data:

Interest income                   $7,008   $5,787    $5,224    $5,638   $6,551
Interest expense                  $4,570   $3,411    $3,032    $3,617   $3,753
                                  ------   ------    ------    ------   ------
Net interest income               $2,438   $2,376    $2,192    $2,021   $2,798
Provision for loan losses            $26      $24        $7      $124      $64
                                  ------   ------    ------    ------   ------
Net interest income after
 provision for loan losses        $2,412   $2,352    $2,185    $1,897   $2,734
Non-interest income                 $616     $421      $274      $162     $389
Non-interest expense              $1,750   $1,751    $1,818    $1,776   $2,494
Income before income tax          ------   ------    ------    ------   ------
 provision and extraordinary
 item                             $1,278   $1,022      $641      $283     $689
Provision for income taxes          $373     $335      $213       $93     $206
                                  ------   ------    ------    ------   ------
Income before cumulative effect
   of accounting change             $905     $687      $428      $190     $423
Cumulative effect of accounting
 change                              --       $63(2)    --        --       --
                                  ------   ------    ------    ------   ------
Net income                          $905     $750      $428      $190     $423
                                  ======   ======    ======    ======   ======
Dividends per share                 n/a      n/a       n/a       n/a     $0.05

---------------------
(1) Does not include loans held for sale.
(2) Reflects adoption of SFAS No. 109, January 1, 1993.

                                     3
<PAGE>

<PAGE>
                                             Year Ended December 31,
                                   -------------------------------------------
                                   1992     1993      1994      1995      1996


Selected Financial Ratios
-------------------------
 and Other Data:
 --------------

Performance Ratios:
   Return on assets(1)            0.95%     0.81%      0.48%    0.22%    0.44%
   Return on stockholders'
    equity(2)                    11.45%     8.61%      4.99%    2.14%    2.43%
   Stockholders' equity-
    to-assets ratio(3)            8.32%     9.38%      9.63%   10.23%   18.28%
   Interest rate spread(4)        2.54%     2.48%      2.29%    2.02%    2.19%
   Net interest margin(5)         2.73%     2.69%      2.54%    2.40%    3.02%
   Average interest-bearing
    liabilities                 103.64%   105.53%    107.23%  108.73%  120.30%
   Noninterest expense as a
    percent of average total
    assets                        1.84%     1.89%      2.04%    2.05%    2.62%

Asset Quality Ratios:
   Nonaccrual and 90 days or
    more past due loans as a
    percent of total loans,
    net                           0.53%     0.40%      ---      0.17%    0.51%
   Nonperforming assets as a
    percent of total assets       1.48%     0.98%      0.48%    0.29%    0.32%
   Allowance for loan losses
    as a percent of total
    assets                        0.20%     0.23%      0.22%    0.37%    0.39%
   Allowance for loan losses
    as a percent of
    nonperforming loans          72.73%   127.61%      N/A    362.50%  123.23%
   Net charge-offs to average
    outstanding loans             0.00%     0.00%      0.05%    0.00%    0.00%

Number of full service offices      5         5          5        5        5

----------------------
(1) Net income divided by average total assets.
(2) Net income divided by average stockholders' equity.
(3) Average stockholders' equity divided by average total assets.
(4) Difference between weighted average yield on interest-earning assets and
    weighted average rate on interest-bearing liabilities.
(5) Net interest income as a percentage of average interest-earning assets.

                                     4
<PAGE>

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

     The Company's results of operations are primarily dependent upon the
difference (or "spread") between the average yield earned on loans,
mortgage-backed securities and investments and the average rate paid on
deposits and borrowings, as well as the relative amounts of such assets and
liabilities.  The interest rate spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows.  The Company, like other thrift institutions, is subject to
interest-rate risk to the degree that its interest-earning assets mature or
reprice at different times, or on a different basis, than its interest-bearing
liabilities.

     The Company's results of operations are also affected by, among other
things, provision for loan losses, loan servicing income, fee income, income
from real estate owned, gain on sale of assets, other expenses and income
taxes.  Other expenses include compensation and benefits, occupancy and
equipment, federal deposit insurance premiums and other general expenses.

     The Company is significantly affected by prevailing economic conditions
including federal monetary and fiscal policies as well as by federal
regulation of financial institutions.  Deposit balances are influenced by a
number of factors including interest rates paid on competing personal
investments and the level of personal income and savings within the Company's
market area.  Lending activities are influenced by consumer demand as well as
competition from other lending institutions.  The primary sources of funds for
the Company's lending activities include deposits, loan payments, borrowings
and funds provided by operations.

Financial Condition

     December 31, 1995 compared to December 31, 1996.  The Company's total
assets increased $12.1 million, or 14.16%, to $97.5 million at December 31,
1996 from $85.4 million at December 31, 1995.  The increase was primarily
attributable to a $8.4 million increase in loans receivable, a $3.5 million
increase in investment securities and interest earning deposits.  The asset
growth was funded by the Company's initial public offering in connection with
the Bank's mutual to stock conversion in June of 1996 from which the Company
received $14.7 million in cash.

     Net loans receivable increased $8.4 million, or 15.9%, to $61.0 million
at December 31, 1996 from $52.6 million at December 31, 1995.  Loan growth was
primarily the result of increased originations, which were due to an increase
in demand in the Company's primary lending market.  In addition, the Company
increased the purchase of loans secured by properties located in the Company's
primary lending market.  Purchased loans receivable increased $2.5 million, or
22.5%, to $13.4 million at December 31, 1996 from $10.9 million at December
31, 1995.  During 1996, the Company originated and purchased $15.7 million of
one-to four-family residential mortgage loans, $7.2 million of other
residential and nonresidential loans and $1.2 million of commercial loans.

     Investment securities, cash and interest earning deposits increased $3.8
million, or 13.5%, to $32.1 million at December 31, 1996 from $28.3 million at
December 31, 1995.  The increase in investment securities and interest earning
deposits was primarily the result of the investment of the excess liquidity
produced from the sale of stock.

     Deposits decreased $3.0 million, or 4.02%, to $72.9 million at December
31, 1996 from $75.9 million at December 31, 1995.  The decrease is primarily
due to the stock conversion when $2.9 million of deposits were used to buy
stock.

Comparison of Operating Results for the Years Ended December 31, 1995 and 1996

Net Income.  The Company's net income increased $233,000, or 122.2%, to
$423,000 for the year ended December 31, 1996 from $190,000 for the year ended
December 31, 1995.  The increase was due to increases in net interest income
and non-interest income, partially offset by increases in non-interest expense
and the provision for income taxes.  The interest rate spread increased to
2.19% for the year ended December 31, 1996 from 2.02% for the year ended
December 31, 1995.  In 1996, the Company paid $513,000 as part of an
industry-wide special assessment to recapitalize the SAIF.  Without the
special assessment, the Company would have had net income of $768,000.
                                     5
<PAGE>
     Net Interest Income.  Net interest income increased $778,000, or 38.5%,
to $2.8 million for the year ended December 31, 1996 from $2.0 million for the
year ended December 31, 1995.  Total interest income increased $914,000, or
16.2%, to $6.5 million from $5.6 million for the year ended December 31, 1995.
The increase in total interest income was primarily due to an increase in
interest on loans and investment securities which was partially offset by a
decrease in interest on mortgage-backed securities.  Interest income on loans
increased by $853,000, or 23.8%, to $4.4 million for the year ended December
31, 1996 from $3.6 million for the year ended December 31, 1995.  Interest
income on loans increased as a result of a higher average balance on loans,
which increased to $55.7 million in 1996 from $49.1 million in 1995 and an
increase in the average yield on loans to 7.96% in 1996 from 7.30% in 1995.
The increase in yield on loans is due to increased production in every type of
loan at a significantly higher rate of interest than those loans that paid off
during the year.  Interest income from investment securities increased
$195,000, or 43.43%, to $645,000 for the year ended December 31, 1996 from
$450,000 for the year ended December 31, 1995.  Interest income on investment
securities increased due to a higher average balance on investment securities,
which increased to $9.8 million in 1996 from $7.7 million in 1995 and a higher
average yield on investment securities, which increased to 5.94% in  1996 from
4.98% in 1995.  Interest income on mortgage-backed securities decreased
$160,000, or 16.62%, to $804,000 for the year ended December 31, 1996 from
$964,000 for the year ended December 31, 1995.  Interest income on
mortgage-backed securities decreased due to a lower average balance on
mortgage-backed securities which decreased to $13.2 million in 1996 from $16.5
million in 1995.  During 1996, the Company continued to allow  mortgage-backed
securities to be reduced by principal repayment without reinvesting in
mortgage-backed securities.  Total interest expense increased $136,000, or
3.77%, to $3.8 million for the year ended December 31, 1996 from $$3.6 million
for the year ended December 31, 1995.  Interest expense increased due to a
higher average cost on deposits which increased to 4.87% for 1996 from 4.67%
for 1995 which was partially offset by a decrease in the average deposit
balance which decreased to $77.1 million for 1996 from $77.5 million for 1995.

     Provision for Loan Losses.  The provision for loan losses was $64,000 for
the year ended December 31, 1996 as compared to $124,000 in 1995.  The
provision for loan losses was significantly larger in 1995 as management's
methodology for the determination of provisions for loan losses produced an
increase in the allowance for loan losses as a result of the growth of the
loan portfolio and the recording of a specific loss reserve of $39,000 for a
commercial real estate loan in that year.  The allowance for loan losses
increased to $382,000, or .62% of total loans at December 31, 1996 compared to
$319,000, or .60% of total loans at December 31, 1995.

     Provisions for loan losses are charged to earnings to bring the total
allowance for loan losses to a level considered by management to be adequate
to provide for estimated losses based on management's assessment of current
economic conditions, past loss and collection experience, and risk
characteristics of the loan portfolio.  Management also reviews individual
loans for which full collectibility may not be reasonably assured and
considers, among other factors, the estimated fair value of the underlying
collateral.

     Noninterest Income.  Noninterest income increased $225,000, or 138.0%, to
$388,000 for the year ended December 31, 1996 from $163,000 for the year ended
December 31, 1995.  Noninterest income increased primarily due to the increase
in income from real estate owned, the gain on sale of assets and other income,
which was partially offset by a decrease in loan servicing fees.  Income from
real estate owned increased $118,000 as a  result of the sale of all remaining
income producing real estate owned during 1996.  The Company continues to hold
a hotel property that it acquired in 1989 as real estate held for investment.
The annual cost of holding the hotel, which is carried at a book value of
zero, is approximately $12,500.  The hotel is offered for sale and there are
currently negotiations underway to dispose of the property, although there can
be no assurances that an agreement will be reached.  The Company had a $34,000
net gain on sale of assets in 1996 compared to a $54,000 net loss on sale of
assets in 1995.  The net gain in 1996 is primarily the result of the
acquisition by a third party of the Company's data processor, in which the
Company held a cooperative interest.

     Noninterest Expense.  Noninterest expense increased $719,000, or 40.46%,
to $2.5 million in the year ended December 31, 1996 from $1.8 million for the
year ended December 31, 1995.  The increase in noninterest expense in 1996 is
primarily due to increases in compensation and benefits, deposit insurance
premiums and other noninterest expenses.  Compensation and benefits increased
$167,000, or 18.65%, to $1.1 million for the year ended December 31, 1996 from
$898,000 for the year ended December 31, 1995.  The increase in compensation
and benefits is primarily due to a $38,000 increase in directors fees, a
$93,000 increase in ESOP compensation expense and a

                                     6
<PAGE>

$22,000 increase in retirement expense in 1996.  Deposit insurance increased
$497,000, or 276.1%, to $677,000 in 1996 from $180,000 in 1995.  The increase
in deposit insurance was due to a $513,000 special assessment to recapitalize
the SAIF in the third quarter of 1996.  Other noninterest expenses increased
$49,000, or 10.6%, to $510,000 in 1996 from $462,000 in 1995.  The increase in
other noninterest expense was due primarily to a $13,000 increase in data
processing costs, a $8,000 increase in OTS assessments and a $24,000 increase
in legal fees, accounting fees and other expenses related to the operation as
a public company.

     Provision for Income Taxes.   The provision for income taxes increased
$113,000 in 1996 to $206,000 for the year ended December 31, 1996 from $93,000
for the year ended December 31, 1995 as a result of higher taxable income
which increased $344,000, or 121.6%, to $628,000 in 1996 from $284,000 in
1995.

Comparison of Operating Results for the Years Ended December 31, 1994 and 1995

     Net Income.  Net income decreased $238,000, or 55.6%, to $190,000 for the
year ended December 31, 1995 from $428,000 for the year ended December 31,
1994.  Operating results were primarily influenced by the decline in long-term
interest rates, which resulted in a decrease in the Company's interest rate
spread to 2.02% for the year ended December 31, 1995 from 2.29% for the year
ended December 31, 1994.  An increase in the provision for loan losses of
$117,000 and an increase in the net loss on sale of securities of $97,000 also
contributed to the decrease in net income.

     Net Interest Income.  Net interest income decreased $172,000, or 7.8%, to
$2.0 million for the year ended December 31, 1995 from $2.2 million for the
year ended December 31, 1994 as the increase in total interest expense
exceeded the increase in total interest income.  Total interest income
increased $413,000 to $5.6 million for 1995 from $5.2 million for 1994.  The
increase in total interest income was primarily due to an increase in interest
on loans and mutual funds, which was partially offset by a decrease in
interest on mortgage-backed and investment securities.  Interest income on
loans increased $546,000 to $3.6 million in 1995 from $3.0 million in 1994 as
a result of a higher average balance of loans, which increased to $49.1
million in 1995 from $41.9 million in 1994.  The average balance of loans
increased in 1995 due to loan purchases of $4.2 million during the year and
because a large portion of loan originations in 1995 were ARM loans that were
retained in the Savings Bank's loan portfolio.  Interest income on mutual
funds increased $109,000 between the periods as a result of an increase in the
average yield and because the mutual funds, which were purchased in 1994, were
held for the full year in 1995.  Interest income on mortgage-backed securities
decreased $134,000 to $964,000 in 1995 from $1.1 million in 1994.  Though the
average yield on mortgage-backed securities increased to 5.84% from 4.89% as a
result of variable-rate securities paying higher rates as interest rates for
these products increased, this was offset by a decline in the average balance
of mortgage-backed securities to $16.5 million from $22.4 million as
mortgage-backed securities were repaid and sold and the proceeds were invested
in higher yielding loans.  During 1995, the Company implemented a strategy to
improve its interest rate spread and increase net interest income by investing
the proceeds from the sale and maturity of mortgage-backed and investment
securities in higher yielding mortgage loans.  Interest income on investment
securities decreased $126,000 between the periods as a result of the decline
in the average balance to $7.7 million in 1995 from $11.2 million in 1994,
which was partially offset by an increase in the average yield to 4.98 % in
1995 from 4.53% in 1994. Prior to 1995, the Company had maintained a laddered
portfolio of investment securities with maturities extending to three years.
As securities matured in 1995, the Company reinvested the proceeds in higher
yielding loans.  As a result of shortening the maturity ladder to two years,
the average yield declined.  Total interest expense increased $585,000, or
19.5%, to $3.6 million for the year ended December 31, 1995 from $3.0 million
for the year ended December 31, 1994.  The increase in interest expense was
the result of an increase in interest paid on deposits.  Interest paid on
certificates of deposit increased $655,000 between the periods as average cost
increased to 5.14% from 4.11% due to an increase in market rates of interest
and to a slight lengthening of maturities.  The increase in interest paid on
certificates was partially offset by the decrease in interest paid on passbook
and money market deposit accounts ("MMDAs").  Interest paid on passbook and
MMDAs decreased by $66,000 between the periods due to a decrease in the
average balances of such accounts, which was partially offset by a increase in
rates paid on MMDAs.

       Provision for Loan Losses.  The provision for loan losses increased to
$124,000 for the year ended December 31, 1995 from $7,000 for the year ended
December 31, 1994.  The provision for loan losses was significantly larger for
1995 as management's methodology for the determination of provisions for loan
losses produced an increase in

                                     7
<PAGE>

<PAGE>
the allowance for loan losses as a result of the growth of the loan portfolio,
which increased to $52.6 million at December 31, 1995 from $44.9 million at
December 31, 1994, and the increase in the amount of multi-family and
commercial real estate loans in the portfolio, which are generally considered
to involve more risk than one- to four-family mortgage loans.  Multi-family
and commercial real estate loans are generally viewed as exposing the lender
to greater credit risk than one-to four-family residential loans because
repayment of multi-family and commercial real estate loans is dependent, in
large part, on sufficient income from the property to cover operating expense
and debt service.  The amount of multi-family and commercial loans increased
as the Company increased its emphasis on this type of lending in order to
improve its interest-rate spread through the higher yields received on such
loans.  In addition, the Company recorded a specific reserve of $39,000 for a
commercial real estate loan that was classified as "doubtful."

     Noninterest Income.  Noninterest income decreased $111,000, or 40.5%, to
$163,000 for the year ended December 31, 1995 from $274,000 for the year ended
December 31, 1994.  Noninterest income decreased primarily due to the decrease
in income from real estate owned held for sale and a loss on the sale of
securities, which was partially offset by a gain on the sale of other assets.
Income from real estate owned held for sale deceased $46,000 between the
periods as a result of the sale of income producing properties in 1994 and
1995 and because of smaller gains on the sale of real estate owned in 1995.
The Company incurred a net loss of $114,000 on the sale of securities in 1995
as it sold mortgage-backed securities to fund higher paying loans.  Net loss
on the sale of securities in 1994 was $17,000.  In 1995, the Company
recognized a gain of $49,000 in connection with the acquisition by a third
party of a data processor in which the Company held a cooperative interest.

     Noninterest Expense.  Noninterest expense decreased $43,000, or 2.4%,
between the year ended December 31, 1994 and the year ended December 31, 1995.
Expenses for the insurance and surety bond premiums decreased $20,000 and
expenses for supervisory examinations deceased $15,000 between the periods as
a result of the change from a state to a federal mutual charter.  All other
categories of expenses were comparable between 1994 and 1995.

      Provision for Income Taxes.   The provision for income taxes decreased
to $93,000 for the year ended December 31, 1995 from $213,000 for the year
ended December 31, 1994 as a result of lower taxable income.

Average Balances, Interest and Average Yields/Cost
      The following table sets forth certain information for the periods
indicated regarding average balances of assets and liabilities as well as the
total dollar amounts of interest income from average interest-earning assets
and interest expense on average interest-bearing liabilities and average
yields and costs.  Such yields and costs for the periods indicated are derived
by dividing income or expense by the average monthly balance of assets or
liabilities, respectively, for the periods presented.  Average balances are
derived from month-end balances.  Management does not believe that the use of
month-end balances instead of daily balances has caused any material
difference in the information presented.

                                     8
<PAGE>

<PAGE>
<TABLE>
                                                         Year Ended December 31,
                         ----------------------------------------------------------------------------------
                                    1994                       1995                        1996
                         --------------------------  --------------------------  --------------------------
                                            Average                     Average                     Average
                         Average            Yield/   Average            Yield/   Average            Yield/
                         Balance  Interest  Cost     Balance  Interest  Cost     Balance  Interest  Cost
                         -------  --------  -------  -------  --------  -------  -------  --------  -------
                                                                 (Dollars in Thousands)
Interest-earning assets:
 Loans receivable,
<S>                      <C>      <C>        <C>     <C>      <C>       <C>      <C>      <C>       <C>
  net (1). . . . . . .   $41,877  $3,037     7.25%   $49,054  $3,583    7.30%    $55,728  $4,436    7.96%
 Mortgage-backed
  securities
  available
  for sale(2). .          22,444   1,098     4.89     16,515     964    5.84      13,235     804    6.07
 Investment securities
  held to maturity . .    11,239     509     4.53         --      --      --          --      --      --
 Investment securities
  available for sale(2)       --      --       --      7,685     383    4.98       9,746     579    5.94
 Mutual funds . . . . .    7,000     418     5.97      8,000     527    6.59       7,831     466    5.95
 FHLB stock . . . . . .      921      77     8.36        922      67    7.24         939      66    7.03
 Interest-bearing
  deposits. . . . . . .    2,701      85     3.15      2,069     113    5.46       5,306     200    3.77
                         -------  ------             -------  ------             -------  ------
  Total interest-earning
   assets . . . . . . .   86,182   5,224     6.06     84,245   5,637    6.69      92,785   6,551    7.06
                         -------  ------             -------  ------             -------  ------
Noninterest-earning
 assets . . . . . . . .    2,916                       2,443                       2,461
                         -------                     -------                     -------
  Total average assets.  $89,098                     $86,688                     $95,246
                         =======                     =======                     =======
Interest-bearing
 liabilities:
 Regular savings
  accounts. . . . . . .  $ 8,934     245     2.74    $ 7,626     211    2.77     $ 9,659     242    2.51
 MMDAs. . . . . . . . .    7,275     225     3.10      5,034     193    3.83       4,749     181    3.81
 Demand and NOW
  accounts. . . . . . .    3,911      87     2.22      4,047      92    2.27       4,235      93    2.20
 Certificates of
  deposit . . . . . . .   60,062   2,466     4.11     60,776   3,121    5.14      58,483   3,237    5.54
                         -------  ------             -------  ------             -------  ------
  Total average
   deposits . . . . . .   80,182   3,023     3.77     77,483   3,617    4.67      77,126   3,753    4.87
                         -------  ------             -------  ------             -------  ------
 FHLB advances. . . . .      188       9     4.79          1      --    6.72           4      --    5.40
                         -------  ------             -------  ------             -------  ------
  Total interest-bearing
   liabilities. . . . .   80,370   3,032     3.77     77,484   3,617    4.67      77,130   3,753    4.87
                                  ------                      ------                      ------
Noninterest-bearing
 liabilities. . . . . .      146                         339                         709
                         -------                     -------                     -------



  Total average
   liabilities. . . . .   80,516                      77,823                      77,839
                         -------                     -------                     -------
Average stockholders'
 equity . . . . . . . .    8,582                       8,865                      17,407
                         -------                     -------                     -------
  Total liabilities and
   stockholders' equity  $89,098                     $86,688                     $95,246
                         =======                     =======                     =======
Net interest income . .           $2,192                      $2,020                      $2,798
                                  ======                      ======                      ======
Interest rate spread. .                      2.29%                      2.02%                       2.19%
Net interest margin . .             2.54%                       2.40%                       3.02%
Ratio of average
 interest-earning
 assets to average
 interest-bearing
 liabilities. . . . . .   107.23%                     108.72%                     120.30%
-----------------------
(1)    Average loans receivable includes nonperforming loans.  Interest income does not include interest on
       loans 90 days or more past due.
(2)    In December 1995, all investment securities were reclassified as available for sale pursuant to a
       transfer grace period allowed by the Financial Accounting Standards Board.  Yields on average
       mortgage-backed and investment securities available for sale have been calculated based  upon the
       historical cost bases of the underlying securities.

                                                     9
</TABLE>
<PAGE>

<PAGE>
Yields Earned and Rates Paid

     The Company's results of operations are determined primarily by net
interest income and, to a lesser extent, fee income, other operating income
and operating expenses.  Net interest income is determined by the interest
rate spread between the yields earned on its interest-earning assets and the
rate paid on interest-bearing liabilities and by the relative amounts of
interest earning assets and interest-bearing liabilities.

     The following table sets forth the weighted average effective interest
rate earned by the Company on its loan and investment portfolios, the weighted
average effective cost of the Company's deposits and borrowings, the interest
rate spread of the Company, and the net yield on weighted average
interest-earning assets for the periods and at the dates indicated.


                                    Year Ended December 31,     At December 31
                                   --------------------------
                                   1994      1995        1996        1996
                                   ----      ----        ----        ----

Weighted average yield on:
 Loans receivable. . . . . .       7.25%     7.30%       7.96%       8.03%
 Mortgage-backed securities
  available for sale . . . .       4.89      5.84        6.07        6.16
 Investment securities held
  to maturity. . . . . . . .       4.53       --           --          --
 Investment securities
  available for sale . . . .         --      4.98        5.94        5.89
 Mutual funds. . . . . . . .       5.97      6.59        5.95        5.86
 FHLB stock. . . . . . . . .       8.36      7.27        7.03        7.00
 Interest-bearing deposits .       3.15      5.46        3.77        5.35

 All interest-earning assets       6.06      6.69        7.06        7.29

Weighted average rate paid on:
 Regular savings accounts. .       2.74      2.77        2.51        2.75
 Money market deposit accounts     3.10      3.83        3.81        3.82
 Demand and NOW accounts . .       2.22      2.27        2.20        2.34
 Certificate accounts. . . .       4.11      5.14        5.54        5.54
 FHLB advances . . . . . . .       4.79      6.72        5.40          --

 All interest-bearing
  liabilities. . . . . . . .       3.77      4.67        4.87        4.98

Interest rate spread (spread
 between weighted average rate
 on all interest-earning assets
 and all interest-bearing
 liabilities). . . . . . . .       2.29      2.02        2.19        2.31

Net interest margin (net interest
 income as a percentage of average
 interest-earning assets). .       2.54      2.40        3.02        2.94

                                     10
<PAGE>

Rate/Volume Analysis

         The following table sets forth the effects of changing rates and
volumes on the interest income and interest expense.  Information is provided
with respect: (i) to effects attributable to changes in volume (changes in
volume multiplied by prior rate); (ii) to effects attributable to changes in
rate (changes in rate multiplied by prior volume); and (iii) to changes in
rate/volume (change in rate multiplied by change in volume).

                      Year Ended December 31,       Year Ended December 31,
                      1994 Compared to Year         1995 Compared to Year
                      Ended December 31, 1995       Ended December 31, 1996
                      Increase (Decrease) Due to    Increase (Decrease) Due to
                      --------------------------    --------------------------
                                    Rate/                         Rate/
                      Rate  Volume  Volume  Total   Rate  Volume  Volume Total
                      ----  ------  ------  -----   ----  ------  ------ -----
                                             (In Thousands)
Interest income:
 Loans receivable,
  net . . . . . . .   $21    $520     $4     $545   $322   $487    $44   $853
 Mortgage-backed
  securities
  available for
  sale. . . . . . .   213    (290)   (56)    (133)    39   (191)    (8) (160)
 Investment securities
  available for sale   51    (161)   (16)    (126)    74    102     20   196
 Mutual funds . . .    43      60      6      109    (51)   (11)     1   (61)
 FHLB stock . . . .   (10)     --     --      (10)    (2)     1     --    (1)
 Interest-bearing
  deposits. . . . .    63     (20)   (15)      28    (35)   177    (55)   87
                      ----   ----   ----     ----   ----   ----   ----  ----
Total net change in
 income on interest-
 earning assets . .   381     109    (77)     413    347    565      2   914
                     ----    ----   ----     ----   ----   ----   ----  ----
Interest-bearing
  liabilities:
 Regular savings. .     2     (36)    --      (34)   (20)    56     (5)   31
 MMDAs. . . . . . .    53     (69)   (16)     (32)    (1)   (11)    --   (12)
 Demand and NOW
  accounts. . . . .     2       3     --        5     (3)     4     --     1
 Certificates of
  deposit . . . . .   619      29      7      655    243   (118)    (9)  116
 FHLB advances. . .     4      (9)    (4)      (9)    --     --     --    --
                     ----    ----   ----     ----   ----   ----   ----  ----
Total net change in
 expense on interest-
 bearing liabilities  680     (82)   (13)     585    219    (69)   (14)  136
                     ----    ----   ----     ----   ----   ----   ----  ----
Net change in net
 interest income. . $(299)   $191   $(64)   $(172)  $128   $634    $16  $778
                    =====    ====   ====    =====   ====   ====    ===  ====

Asset and Liability Management

     The Company's principal financial objective is to achieve long-term
profitability while reducing its exposure to fluctuating interest rates.  The
Company has sought to reduce exposure of its earnings to changes in market
interest rates by attempting to manage the mismatch between asset and
liability maturities and interest rates.  The principal element in achieving
this objective is to increase the interest-rate sensitivity of the Company's
interest-earning assets by retaining for its portfolio loans with interest
rates subject to periodic adjustment to market conditions and selling
substantially all of its fixed-rate one- to four-family mortgage loans.  In
addition, the Company maintains an investment portfolio with adjustable-rate
mortgage-backed securities and laddered maturities in shorter-term debt
securities.  The Company relies on retail deposits as its primary source of
funds.  Management believes retail deposits, compared to brokered deposits,
reduce the effects of interest rate fluctuations because they generally
represent a more stable source of funds. As part of its interest rate risk
management strategy, the Company promotes transaction accounts and
certificates of deposit with terms up to four years.

     In order to encourage institutions to reduce their interest rate risk,
the OTS adopted a rule incorporating an interest rate risk ("IRR") component
into the risk-based capital rules.  Using data from the Company's quarterly

                                     11
<PAGE>

reports to the OTS, the Company receives a report which measures interest rate
risk by modeling the change in Net Portfolio Value ("NPV") over a variety of
interest rate scenarios.  This procedure for measuring interest rate risk was
developed by the OTS to replace the "gap" analysis (the difference between
interest-earning assets and interest-bearing liabilities that mature or
reprice within a specific time period).  NPV is the present value of expected
cash flows from assets, liabilities and off-balance sheet contracts.  The
calculation is intended to illustrate the change in NPV that will occur in the
event of an immediate change in interest rates of at least 200 basis points
with no effect given to any steps that management might take to counter the
effect of that interest rate movement.  Under proposed OTS regulations, an
institution with a greater than "normal" level of interest rate risk will be
subject to a deduction from total capital for purposes of calculating its
risk-based capital.  An institution with a "normal" level of interest rate
risk is defined as one whose "measured interest rate risk" is less than 2.0%.
Institutions with assets of less than $300 million and a risk-based capital
ratio of more than 12.0% are exempt.  The Company meets these qualifications
and therefore is exempt.  Assuming this proposed rule was in effect at
December 31, 1996 and the Company was not exempt from the rule, the Company's
level of interest rate risk would not have caused it to be treated as an
institution with greater than "normal" interest rate risk.

     The following table is provided by the OTS and illustrates the change in
NPV at December 31, 1996, based on OTS assumptions, that would occur in the
event of an immediate change in interest rate, with no effect given to any
steps that management might take to counter the effect of that interest rate
movement.

                                                       Net Portfolio as % of
                       Net Portfolio Value          Portfolio Value of Assets
                   -------------------------------  -------------------------
Basis Point ("bp")
Change in Rates    $ Amount  $ Change(1)  % Change   NPV Ratio(2)   Change(3)
------------------ --------  -----------  --------   ------------   ---------
                             (Dollars in Thousands)

    +400            $12,858   $(4,487)      (26)%       15.02%      (383) bp
    +300             14,259    (3,086)      (18)        16.30       (254) bp
    +200             15,533    (1,812)      (10)        17.41       (144) bp
    +100             16,581      (765)       (4)        18.27        (58) bp
       0             17,345        --        --         18.85         --
    (100)            17,848       503         3         19.18         33 bp
    (200)            18,212       867         5         19.37         52 bp
    (300)            18,695     1,349         8         19.66         81 bp
    (400)            19,414     2,069        12         20.13        128 bp

------------------
(1)  Represents the increase (decrease) of the estimated NPV at the indicated
     change in interest rates compared to the NPV assuming no change in
     interest rates.
(2)  Calculated as the estimated NPV divided by the portfolio value of total
     assets ("PV").
(3)  Calculated as the increase (decrease) of the NPV ratio assuming the
     indicated change in interest rates over the estimated NPV ratio assuming
     no change in interest rates.

Liquidity and Capital Resources

     The Company's primary sources of funds are customer deposits, proceeds
from principal and interest payments on and the sale of loans, maturing
securities and FHLB advances.  While maturities and scheduled amortization of
loans are a predictable source of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions and competition.

     The Company must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit
withdrawals, to satisfy financial commitments and to take advantage of
investment

                                     12
<PAGE>

opportunities.  The Company generally maintains sufficient cash and short-term
investments to meet short-term liquidity needs.  At December 31, 1996, cash
and due from depository institutions totalled $4.6 million, or 4.7% of total
assets, and mutual funds and investment securities classified as available for
sale that matured in one year or less totalled $12.2 million, or 12.5% of
total assets.  In addition, the Company maintains a credit facility with the
FHLB which provides for immediately available advances.

     Federal regulations require a savings institution to maintain an average
daily balance of liquid assets (cash and eligible investments) equal to at
least 5.0% of the average daily balance of its net withdrawable deposits and
short-term borrowings.  The Company consistently maintains liquidity levels in
excess of regulatory requirements, and believes this is an appropriate
strategy for proper asset and liability management.  At December 31, 1996 the
liquidity ratio was 17.1%.

     The Company uses its liquid resources principally to meet on-going
commitments, to fund maturing certificates of deposits and deposit
withdrawals, to invest, to fund existing and future loan commitments, to
maintain liquidity and to meet operating expenses.  The Company anticipates
that it will have sufficient funds available to meet current loan commitments.
At December 31, 1996 the Company had outstanding commitments to extend credit
which totaled $2.5 million.  Management anticipates that it will have
sufficient funds available to meet its current loan origination commitments.

    The primary investing activity of the Company is the origination and
purchase of mortgage loans.  During years ended December 31, 1994, 1995 and
1996, the Company originated loans in the amounts of $14.3 million, $13.4
million, and $18.7 million, and purchased loans in the amounts of $3.3
million, $4.2 million and $5.6 million, respectively.

     At December 31, 1996 the Company had stockholders' equity of $24.2
million, or 24.8% of total assets which was sufficient to meet all regulatory
capital requirements.

Effect of Inflation and Changing Prices

     The consolidated financial statements and related financial data
presented herein have been prepared in accordance with generally accepted
accounting principles ("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 primary impact of inflation is reflected in the increased
cost of the Company's operations.  Unlike most industrial companies, virtually
all the assets and liabilities of a financial institution are monetary in
nature.  As a result, interest rates generally have a more significant impact
on a financial institution's performance than do 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.

Impact of New Accounting Pronouncements and Regulatory Policies

     SFAS No. 125, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities.  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
that 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 amends SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities, to
clarify that a debt security may not be classified as held-to-maturity if it
can be prepaid or otherwise settled in such a way that the holder of the
security would not recover substantially all of its recorded investment.  The
Company does not anticipate that implementation of SFAS No. 125 will have a
material impact on its financial condition or results of operations.

                                     13
<PAGE>

WILLIAMS                                 107 Adams - Jefferson City, MO  65101
KEEPERS LLP                              - 573/635-6196- 573/635-8394 fax
------------------------------------------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
JEFFERSON CITY
COLUMBIA
MEXICO

                    INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
CNS Bancorp, Inc.
and Subsidiaries

We have audited the accompanying consolidated statements of financial
condition of CNS Bancorp, Inc. and subsidiaries (Company) as of December 31,
1995 and 1996, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to in the first
paragraph present fairly, in all material respects, the consolidated financial
position of CNS Bancorp, Inc. and subsidiaries as of December 31, 1995 and
1996, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.

As described in Note 1, the Company changed its method of accounting for
investments and mortgage-backed securities in 1994, for impaired loans in
1995, and for mortgage servicing rights in 1996.

Williams Keepers LLP

February 7, 1997

                                     14
<PAGE>

                     CNS BANCORP, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       December 31, 1995 and 1996

                   ASSETS                         1995          1996
                                                  ----          ----
Cash and due from depository institutions
 (including interest-bearing accounts
 totaling $2,796,790 in 1995 and $4,204,131
 in 1996)                                    $ 2,855,944    $ 4,572,026
Securities available-for-sale (Note 2)        25,470,739     27,574,516
Stock in Federal Home Loan Bank (Note 2)         939,300        939,300
Loans held-for-sale, net (Note 3)                466,131        570,986
Loans receivable, net (Note 3)                52,611,378     60,980,826
Accrued interest receivable (Note 4)             486,060        619,454
Real estate owned, net (Note 5)                  161,987              -
Premises and equipment, net (Note 6)           1,759,437      1,657,421
Income taxes receivable (Note 7)                 486,472        486,321
Other assets                                     152,989         80,341
                                             -----------    -----------
           Total assets                      $85,390,437    $97,481,191
                                             ===========    ===========

  LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits (Note 9)                            $75,930,917    $72,880,431
Advances from borrowers for taxes
 and insurance                                    63,041         57,299
Accrued expenses and other liabilities           216,608        344,183
                                             -----------    -----------
               Total liabilities              76,210,566     73,281,913
                                             -----------    -----------
Stockholders' equity
Common stock, $.01 par value:
 Authorized, 6,000,000 shares;
 1,653,125 shares issued                               -         16,531
Additional paid-in capital                             -     16,003,502
Retained earnings, substantially
 restricted (Notes 11, 12)                     9,697,118     10,044,280
Deferred compensation - Employee Stock
 Ownership Plan (ESOP) (Note 13)                       -     (1,249,411)
Stock held in trust for Executive Deferred
 Compensation Plan (Note 14)                           -       (127,428)
Unrealized loss on securities available-
 for-sale, net of deferred taxes (Note 2)       (517,247)      (488,196)
                                             -----------    -----------
               Total equity                    9,179,871     24,199,278
                                             -----------    -----------

                Total liabilities and
                 stockholders' equity        $85,390,437    $97,481,191
                                             ===========    ===========

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

                                     15
<PAGE>

                      CNS BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
               Years Ended December 31,  1994, 1995 and 1996

INTEREST INCOME                               1994         1995         1996
                                              ----         ----         ----
 Mortgage loans                            $2,971,807   $3,495,637  $4,316,254
 Consumer and other loans                      64,901       88,003     120,164
 Investment securities                        586,434      449,461     644,656
 Mortgage-backed securities                 1,098,196      964,295     804,073
 Other interest-earning assets                502,483      640,105     666,226
                                           ----------   ----------  ----------
           Total interest income            5,223,821    5,637,501   6,551,373

INTEREST EXPENSE
 Deposits                                   3,023,153    3,616,877   3,752,985
 Borrowed funds (Note 10)                       8,460           92         222
                                           ----------   ----------  ----------
            Total interest expense          3,031,613    3,616,969   3,753,207
                                           ----------   ----------  ----------
            Net interest income             2,192,208    2,020,532   2,798,166
                                           ----------   ----------  ----------
PROVISION FOR LOAN LOSSES (Note 3)              6,746      123,719      63,668
                                           ----------   ----------  ----------
            Net interest income after
             provision for loan losses      2,185,462    1,896,813   2,734,498
                                           ----------   ----------  ----------
NON-INTEREST INCOME
 Loan servicing fees                           60,620       56,257      51,980
 Income from real estate owned (Note 5)       117,549       71,807     189,960
 Net gain (loss) on sale of assets (Note 15)    2,242      (53,632)     34,451
 Other (Note 16)                               93,403       88,270     112,014
                                           ----------   ----------  ----------
            Total non-interest income         273,814      162,702     388,405
                                           ----------   ----------  ----------
NON-INTEREST EXPENSE
 Compensation and benefits                    915,461      897,840   1,065,289
 Occupancy and equipment                      231,696      236,525     241,374
 Deposit insurance premiums (Note 17)         185,717      179,920     677,395
Other (Note 16)                               485,690      461,633     510,416
                                           ----------   ----------  ----------
            Total non-interest expense      1,818,564    1,775,918   2,494,474
                                           ----------   ----------  ----------
            Income before income taxes        640,712      283,597     628,429

PROVISION FOR INCOME TAXES (Note 7)           212,717       93,300     205,643
                                           ----------   ----------  ----------
            Net income                     $  427,995   $  190,297  $  422,786
                                           ==========   ==========  ==========

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

                                     16
<PAGE>

<PAGE>
<TABLE>
                                    CNS BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                Years Ended December 31, 1994, 1995, and 1996

                                                                  Stock Held In
                                                                    Trust For     Unrealized
                                                                    Executive     Loss on
           Common Stock     Additional                Deferred      Deferred      Securities
                             Paid-in     Retained   Compensation  Compensation    Available-for-
           Shares   Amount   Capital     Earnings      ESOP           Plan        Sale, Net       Total
           -----   ------   ----------   --------   ------------  -------------   -------------   -----

Balance,
 December
<S>        <C>    <C>      <C>          <C>          <C>          <C>             <C>          <C>
 31, 1993     -   $    -   $        -   $ 9,078,826  $        -   $         -     $         -  $9,078,826
Net income    -        -            -       427,995           -             -               -     427,995
Net change in
 unrealized
 loss on
 securities
 available-
 for-sale,
 net of
 deferred
 taxes        -        -            -             -             -             -    (1,273,248) (1,273,248)
     ----------   ------   ----------   -----------   -----------   -----------  ------------  ----------

Balance,
 December
 31, 1994     -        -            -     9,506,821             -             -    (1,273,248)  8,233,573
Net income    -        -            -       190,297             -             -            -      190,297
Net change
 in
 unrealized
 loss on
 securities
 available-
 for-sale,
 net of
 deferred
 taxes        -        -            -             -             -             -      756,001      756,001
     ----------   ------   ----------   -----------   -----------   ----------- ------------  -----------
Balance,
 December
 31, 1995     -        -       16,531     9,697,118             -             -     (517,247)   9,196,402
Net
 proceeds
 from
 common
 stock
 issued in
 stock
 conversion
      1,653,125   16,531   15,983,295             -    (1,322,500)            -            -   14,677,326

Compensation
 expense
 recognized
 for ESOP     -        -       20,207             -        73,089             -            -       93,296
Value of
 Company
 stock
 acquired
 for
 executive
 deferred
 compensation
 plan         -        -            -             -             -      (127,428)           -     (127,428)
Dividends     -        -            -       (75,624)            -             -            -      (75,624)
Net income    -        -            -       422,786             -             -            -      422,786
Net change
 in
 unrealized
 loss on
 securities
 available-
 for-sale,
 net of
 deferred
 taxes        -        -            -             -             -             -        29,051      29,051
     ----------  -------   ----------   -----------   -----------   -----------  ------------ -----------
Balance,
 December
 31, 1996
      1,653,125  $16,531  $16,020,033  $10,044,280   $(1,249,411)  $  (127,428) $   (488,196) $24,215,809
      =========  =======  ===========  ===========   ===========   ===========  ============  ===========

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

                                                       17
</TABLE>
<PAGE>

                        CNS BANCORP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Years Ended December 31, 1994, 1995, and 1996

CASH FLOWS FROM OPERATING ACTIVITIES           1994         1995       1996
                                               ----         ----       ----
 Net income                               $  427,995   $  190,297  $  422,786
 Adjustments to reconcile net income to
  net cash flows provided by operating
  activities:
   Federal Home Loan Bank stock dividends          -      (18,500)          -
   Compensation expense - ESOP                     -            -      93,296
   Amortization of premiums on
    securities available-for-sale             93,796       47,488      15,060
   Proceeds from the sale of loans
    held-for-sale                          3,185,571    1,679,504   4,081,012
   Origination of loans held-for-sale     (2,553,982)  (1,541,642) (5,295,676)
   Depreciation                              154,028      147,541     133,872
   Provision for losses on loans and
    real estate owned                         11,026      123,719      63,668
   Loss on sale of securities available-
    for-sale                                  16,708      113,845      45,617
   Gain on sale of real estate owned         (97,763)     (83,560)   (200,716)
   Gain on sales of loans held-for-sale      (18,950)     (10,983)    (41,752)
   Adjustments for (increases) decreases
    in operating assets and increases
    (decreases) in operating liabilities:
      Other assets                           (30,577)     (40,581)    (60,746)
      Accrued expenses and other
       liabilities                            13,947       35,837      84,397
      Income taxes receivable                (17,139)      (5,987)     70,847
                                          ----------   ----------   ---------
         Net cash provided (used) by
          operating activities             1,184,660      636,978    (588,335)
                                          ----------   ----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES
 Loan (origination) and principal
  payments on loans receivable, net         (785,045)  (3,682,555) (1,690,300)
 Purchases of:
   Loans receivable                       (3,400,000)  (4,200,000) (5,591,255)
   Securities available-for-sale          (8,000,000)           - (14,889,757)
   Securities held-to-maturity            (2,747,984)  (1,225,000)          -
 Proceeds from maturity of:
   Securities available-for-sale           3,783,007    1,664,513   9,027,877
   Securities held-to-maturity             3,800,000    7,375,000           -
   Proceeds from sales of securities
    available-for-sale                             -    4,262,354   3,655,781
   Proceeds from sales of real estate
    owned                                    359,731      318,121     358,421
   Cash outflows for premises and
    equipment                                (44,761)     (32,622)    (27,574)
                                          ----------   ----------   ---------
         Net cash provided (used) by
          investing activities            (7,035,052)   4,479,811  (9,156,807)
                                          ----------   ----------   ---------


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

                                     18
<PAGE>

                         CNS BANCORP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Years Ended December 31, 1994, 1995, and 1996

CASH FLOWS FROM FINANCING ACTIVITIES           1994       1995       1996
                                               ----       ----       ----
Net (decrease) in deposits                (1,541,967)  (3,561,888) (3,050,486)
Net increase (decrease) in advance
 payments by borrowers                         4,379        4,447      (5,742)
Net proceeds from stock issuance                   -            -  14,677,326
Acquisition of Company stock held in
 trust for executive deferred
 compensation plan                                 -            -     (84,250)
Dividends                                          -            -     (75,624)
                                         -----------   ----------  ----------
         Net cash provided (used) by
          financing activities            (1,537,588)  (3,557,441) 11,461,224
                                         -----------   ----------  ----------
         Increase (decrease) in cash
          and cash equivalents            (7,387,980)   1,559,348   1,716,082
Cash and cash equivalents at beginning
 of year                                   8,684,576    1,296,596   2,855,944
                                         -----------   ----------  ----------
Cash and cash equivalents at end of year $ 1,296,596   $2,855,944 $ 4,572,026
                                         ===========   ========== ===========
Cash paid for:
  Interest                               $ 3,006,766   $3,595,388 $ 3,784,173
  Income taxes                           $   229,856   $   99,335 $   131,988
Non-cash transactions:
  Transfers from loans receivable to
   real estate owned held-for-sale       $   116,566   $        - $         -
  Transfer from investment securities
   held-to-maturity to investment
   securities available-for-sale         $         -   $4,002,833 $         -
  Exchange of common stock for loan
   receivable from ESOP                  $         -   $        - $ 1,322,500


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

                                     19
<PAGE>

                         CNS BANCORP, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations: CNS Bancorp, Inc. (Company) is a Delaware corporation
incorporated on January 16, 1996, for the purpose of becoming the holding
company of City National Savings Bank, FSB (Bank).The Bank was formerly known
as City National Savings and Loan Association prior to its March 1, 1995
conversion from a state to a federal charter.  On June 16, 1996 the Bank
converted from a mutual to a stock form of ownership and the Company completed
its initial public offering with one-half of the net proceeds used to acquire
all of the issued and outstanding capital stock of the Bank.

The Bank provides a variety of financial services to individuals and corporate
customers through its headquarters office in Jefferson City, Missouri, and its
four branches in Jefferson City, California, Tipton and Waynesville,
Missouri.  The Bank's primary deposit products are interest-bearing checking
and savings accounts and certificates of deposit.  Its primary lending
products are one-to four-family residential loans.

Principles of Consolidation:  The accompanying consolidated financial
statements include the accounts of  the Company and its wholly owned
subsidiary, the Bank. The Bank's wholly-owned subsidiary is Parity Insurance
Agency, Inc. and its wholly-owned subsidiary, City National Real Estate, Inc.
The Bank's subsidiaries have been relatively inactive in recent years, but are
authorized to sell insurance products as well as develop and sell real estate.

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

Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans and the
valuation of real estate owned held-for-sale.  In connection with the
determination of the allowances for losses on loans and real estate owned
held-for-sale, management obtains independent appraisals for significant
properties.

A majority of the Bank's loan portfolio consists of one-to four-family
residential loans in the Central Missouri area.  The Central Missouri economy
is primarily dependent upon state government and, to a lesser extent, upon
light manufacturing and agriculture.  Accordingly, the ultimate collectibility
of a substantial portion of the Bank's portfolio is susceptible to changes in
local market conditions.

While management uses available information to recognize losses on loans and
foreclosed real estate, future changes 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 Bank's allowances for losses on loans and foreclosed real estate.
Such agencies may require the Bank to make changes to the allowances based on
their judgments about information available to them at the time of their
examination.  Because of these factors, the likelihood of a material change in
the allowances for losses on loans and real estate owned held-for-sale is more
than remote.

Regulation:  The Bank is subject to examination and regulation by the Office
of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation
(FDIC).

Cash and Cash Equivalents:  Cash and cash equivalents are composed of cash,
Federal Home Loan Bank (FHLB)

                                     20
<PAGE>

daily time deposits, certificates of deposit and due from depository
institutions.  The Bank considers all highly liquid debt instruments with
original maturities when purchased of three months or less to be cash
equivalents.

Investment Securities:  On January 1, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and classified all mortgage-backed
securities as securities available-for-sale.  Such adoption resulted in a net
decrease to equity as of January 1, 1994 of approximately $58,000. Investments
in debt and equity securities are classified as follows:

-    Trading Securities.  Government bonds held principally for resale in the
     near term and mortgage-backed securities held-for-sale in the near term
     in conjunction with the Company's mortgage banking activities are
     classified as trading securities and recorded at their fair values.
     Unrealized gains and losses on trading securities are included in other
     income.  There were no trading securities held at December 31, 1995 or
     1996.

-    Securities held-to-maturity.  Bonds, notes and debentures for which the
     Company has the positive intent and ability to hold to maturity are
     reported at cost, adjusted for amortization of premiums and accretion of
     discounts which are recognized in interest income using the interest
     method over the period to maturity.  There were no held-to-maturity
     securities at December 31, 1995 or 1996.

-    Securities available-for-sale.  Securities available-for-sale consist of
     mutual funds, bonds, notes, debentures, and mortgage-backed securities
     not classified as trading securities or as securities to be
     held-to-maturity.  Unrealized gains and losses, net of tax, on securities
     available-for-sale are reported as a net amount in a separate component
     of equity until realized.

Any declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than temporary
result in write-downs of the individual securities to their fair value.  The
related write-downs are included in earnings as realized losses.  Gains and
losses on the sale of securities available-for-sale are determined using the
specific-identification method.

Loans Held-for-Sale:  Mortgage loans originated and intended for sale in the
secondary market are carried at the lower of cost or estimated market value in
the aggregate. Gains and losses on the sales of these loans are included as
non-interest income.

Loans Receivable:  Loans receivable that management has the intent and ability
to hold until maturity or pay-off are reported at their outstanding principal
balances adjusted for any charge-offs, the allowance for loan losses, any
deferred fees or costs on originated loans and unamortized premiums or
discounts on purchased loans.

Loan origination fees and certain direct origination costs are capitalized and
recognized as an adjustment of the yield of the related loan.  Discounts and
premiums on purchased loans are amortized to income using the interest method
over the remaining period to contractual maturity, adjusted for anticipated
prepayments.  Commitment fees and costs relating to commitments, the
likelihood of exercise of which is remote,  are recognized over the commitment
period on a straight-line basis.  If the commitment is subsequently exercised
during the commitment period, the remaining unamortized commitment fee at the
time of exercise is recognized over the life of the loan as an adjustment of
yield.

Uncollectible interest on loans that are contractually past due is charged
off, or an allowance is established based on management's periodic evaluation.
The allowance is established by a charge to interest income equal to all
interest previously accrued and outstanding.  Income is subsequently
recognized only to the extent that cash payments are received until, in
management's judgment, the borrower's ability to make periodic interest and
principal payments is back to normal, in which case the loan is returned to
accrual status.

The allowance for loan losses is increased by charges to income and decreased
by charge-offs (net of recoveries).  Management utilizes a systematic,
documented approach in determining the appropriate level of the allowance for
loan losses.  Management's approach, which provides for general and specific
allowances,

                                     21
<PAGE>

is based, among other factors, on the Bank's past loan loss and collection
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions.

On January 1, 1995 the Bank adopted SFAS No. 114,  Accounting by Creditors for
Impairment of a Loan, and SFAS No. 118, Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures (an amendment of SFAS No. 114).
The adoption of these statements did not have a material effect on the Bank's
financial condition or operating results for 1995.  These pronouncements
consider a loan to be impaired when it is probable a creditor will be unable
to collect all amounts due-both principal and interest-according to the
contractual terms of the loan agreement.  Such pronouncements also require
that impaired loans be measured based on the present value of expected future
cash flows or at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent.  If the value computed is less
than the recorded value of the loan, a valuation allowance is recorded for the
difference.  The entire change in valuation allowance is reported as a
component of the provision for loan losses expense.

Management applies its normal loan review procedures in determining when a
loan is impaired.  Management considers impaired loans to be all loans
classified as substandard, doubtful, or loss except for smaller balance
homogeneous loans (primarily consumer installment loans) which are
collectively evaluated for impairment.  Impaired loans are charged off when
deemed to be uncollectible by management.

Management has elected to continue to use its existing nonaccrual methods for
recognizing interest income on impaired loans.

Real Estate Owned:  Real estate properties acquired through, or in lieu of,
loan foreclosure and held-for-sale are initially recorded at fair value at the
date of foreclosure establishing a new cost basis. After foreclosure,
valuations are periodically performed by management and the real estate is
carried at the lower of carrying amount or fair value less cost to sell.
Increases or decreases in the valuation allowance are charged or credited to
income from real estate owned.

Foreclosed assets held for the production of income are carried at cost, less
accumulated depreciation, computed principally by the straight-line method
over the estimated useful lives of the depreciable assets.

Real estate properties acquired for investment are carried at the lower of
cost, including cost of improvements and amenities incurred subsequent to
acquisition, or net realizable value.  Costs relating to development and
improvement of property are capitalized, whereas costs relating to the holding
of property are expensed.  The portion of interest costs relating to the
development of real estate is capitalized.

Valuations are periodically performed by management, and an allowance for
losses is established by a charge to operations if the carrying value of a
property exceeds its estimated net realizable value.

Premises and Equipment:  Land is carried at cost.  Buildings and furniture,
fixtures, and equipment are carried at cost, less accumulated depreciation and
amortization computed principally by the straight-line method over the
estimated useful lives of the assets.

Loan Servicing: Effective January 1, 1996 the Company adopted SFAS No. 122,
Accounting for Mortgage Servicing Rights (an amendment of SFAS No. 65). The
adoption of this statement did not have a material effect on the Company's
financial condition or operating results for 1996. This pronouncement requires
that rights to service mortgage loans for others be recognized as separate
assets, with such rights evaluated for impairment based on the fair value of
such rights.

The cost of mortgage servicing rights is amortized in proportion to, and over
the period of, estimated net servicing revenues. Impairment of mortgage
servicing rights is assessed based on the fair value of those rights. Fair
values are estimated using discounted cash flows based on a current market
interest rate. For purposes of measuring impairment, the rights are stratified
based on the following predominant risk characteristics of the underlying
loans: loan type, interest rate, and term.  The amount of impairment


                                     22
<PAGE>

recognized is the amount by which the capitalized mortgage servicing rights
for a stratum exceed their fair value.

Income Taxes:  Deferred tax assets and liabilities are reflected at currently
enacted income tax rates applicable to the period in which the deferred tax
assets or liabilities are expected to be realized and settled.  As changes in
tax law or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.

Employee Stock Ownership Plan: In conjunction with the Bank's conversion, the
Company formed an ESOP for the benefit of eligible employees. Common stock of
the Company acquired for the ESOP is recorded as deferred compensation, which
is a reduction to stockholders' equity.  ESOP shares are considered
uncommitted until such time the shares are released (committed) to the ESOP
trustee for distribution to the plans' participants.  As the committed shares
are released, compensation expense is recognized for the then fair value of
the stock and deferred compensation for the committed shares is reduced by the
amount of the shares' acquisition cost.  Any difference between the
acquisition cost and the then fair value is credited or charged to additional
paid-in capital.  Dividends paid on uncommitted ESOP shares are recognized as
compensation expense and dividends paid on allocated shares are recognized as
a reduction of retained earnings.

Earnings per share:  Because the Company's common stock was only outstanding
approximately seven months during the year ended December 31, 1996, management
believes that presentation of earnings per share information for 1996 would
not be meaningful.

Advertising:  The Company expenses the production costs of advertising as
incurred.

2.   INVESTMENT SECURITIES

The amortized cost and fair values of investment securities at December 31 are
as follows:

       1995                            Gross         Gross
                        Amortized    Unrealized    Unrealized      Fair
                          Cost         Gains         Losses        Value
                        ---------    ----------    ----------      -----
Available-for-Sale
Mutual funds, which
 invest in adjustable
 rate mortgage-backed
 securities of U.S.
 government agencies
 and short-term
 government debt
 securities           $ 8,000,000    $     -      $441,573    $ 7,558,427

U.S. government and
 federal agency         4,002,833     11,020        27,741      3,986,112

Mortgage-backed
 securities of U.S.
 government agencies   14,239,921     18,105       331,826     13,926,200
                      -----------    -------      --------    -----------
                      $26,242,754    $29,125      $801,140    $25,470,739
                      ===========    =======      ========    ===========

                                     23
<PAGE>

       1996                            Gross         Gross
                        Amortized    Unrealized    Unrealized      Fair
                          Cost         Gains         Losses        Value
                        ---------    ----------    ----------      -----
Available-for-Sale
Mutual funds, which
 invest in adjustable
 rate mortgage-backed
 securities of U.S.
 government agencies
 and short-term
 government debt
 securities           $ 5,990,000    $     -      $537,940    $ 5,452,060

U.S. government and
 federal agency        10,086,647     33,389         7,944     10,112,092

Mortgage-backed
 securities of
 U.S. government
 agencies              12,311,529     15,389       316,554     12,010,364
                      -----------    -------      --------    -----------
                      $28,388,176    $48,778      $862,438    $27,574,516
                      ===========    =======      ========    ===========

On December 31, 1995, pursuant to a transfer grace period allowed by the
Financial Accounting Standards Board, the Bank transferred securities
held-to-maturity with a book value of $4,002,833 to the securities
available-for-sale classification.  Such transfer resulted in an increase of
$16,721 in the unrealized loss on securities available-for-sale reported as a
separate component of equity.

Gross realized and unrealized gains and losses on sales of securities
available-for-sale for the year ended and as of December 31 were as follows:


                                 1994            1995         1996
                                 ----            ----         ----
Gross realized gains         $         -      $  14,950     $     303
Gross realized losses            (16,708)      (128,795)      (45,920)
                             -----------      ---------     ---------
    Net loss on sale of
     securities (Note 15)    $   (16,708)     $(113,845)    $ (45,617)
                             ===========      =========     =========

Gross unrealized gains       $     1,381      $  29,125     $  48,778
Gross unrealized losses       (1,901,751)      (801,140)     (862,438)
                             -----------      ---------     ---------
    Net unrealized losses     (1,900,370)      (772,015)     (813,660)
Deferred tax asset (Note 7)      627,122        254,768       325,464
                             -----------      ---------     ---------
    Unrealized loss on
     securities available-
     for-sale, net of
     deferred taxes          $(1,273,248)     $(517,247)    $(488,196)
                             ===========      =========     =========

The amortized cost and fair value of securities available-for-sale at December
31, 1996, by contractual maturity are shown below.  Expected maturities will
differ from contractual maturities as securities may have the right to call or
prepay with or without call or prepayment penalties.

Amounts maturing in:                   Amortized Cost      Fair Value
                                       --------------      ----------
One year or less                       $ 6,707,090        $ 6,722,379
After one through five years             3,379,557          3,389,713
                                       -----------        -----------
                                        10,086,647         10,112,092
Mortgage-backed securities              12,311,529         12,010,364
Mutual funds                             5,990,000          5,452,060
                                       -----------        -----------
                                       $28,388,176        $27,574,516
                                       ===========        ===========

                                     24

<PAGE>

The investment in FHLB stock of $939,300 at December 31, 1995 and 1996 is
recorded at cost and is considered a restricted asset.

The Bank has pledged certain mortgage-backed securities to secure advances
from the FHLB.  The Bank had no advances outstanding from the FHLB at both
December 31, 1995 and 1996.  At December 31, 1995 and 1996, these pledged
assets had a carrying value of $2,255,188 and $2,039,311, respectively.

3.  LOANS RECEIVABLE

Loans receivable at December 31 are
 summarized as follows:

                                            1995              1996
                                            ----              ----

Mortgage loans (principally
 conventional):
  One-to four-family residences         $43,609,052       $48,318,129
  Other properties                        7,365,320         9,259,133
  Construction loans                      1,719,336         2,685,238
  Land                                      159,000           134,343
                                        -----------       -----------
                                         52,852,708        60,396,843
Less:
  Undisbursed portion of mortgage
   loans                                  1,048,696         1,727,679
  Net deferred loan-origination fees          1,356             9,831
                                        -----------       -----------
Net mortgage loans                       51,802,656        58,659,333
                                        -----------       -----------
Commercial loans                                  -         1,205,687
                                        -----------       -----------
Consumer and other loans:
  Automobile                                 59,863           325,540
  Manufactured home                          16,420                 -
  Share loans                               570,760           485,522
  Other                                     480,460           687,193
                                        -----------       -----------
                                          1,127,503         1,498,255
                                        -----------       -----------
Net loans before allowance for
 loan losses                             52,930,159        61,363,275
Less allowance for loan losses              318,781           382,449
                                        -----------       -----------
Loans receivable, net                   $52,611,378       $60,980,826
                                        ===========       ===========

Loans held-for-sale of $466,131 and $570,986 at December 31, 1995 and 1996,
respectively, were net of a valuation allowance of $-0- for both years.

Activity in the allowance for loan losses is summarized as follows for the
years ended December 31:

                                1994          1995           1996
                                ----          ----           ----

Beginning balance            $207,629       $195,062       $318,781
Provision charged to income     6,746        123,719         63,668
Charge-offs                   (19,313)             -              -
                             --------       --------       --------
Ending balance               $195,062       $318,781       $382,449
                             ========       ========       ========

Loans to directors and executive officers approximated $551,000 and $462,000
as of December 31, 1995 and 1996, respectively.

                                     25
<PAGE>

The following information relates to impaired loans as of and for the years
ended December 31, 1995 and 1996:

                                                        1995     1996
                                                        ----     ----
Recorded investment in impaired loans for which
 a valuation allowance of $10,000 is provided
 for both 1995 and 1996, based upon the measure
 of the loan's fair value of underlying
 collateral                                          $ 20,489   $ 19,766

Recorded investment in impaired loans for which
 there is no need for a valuation allowance,
 based upon the measure of the loan's fair value
 of underlying collateral                             201,169    142,120
                                                     --------   --------
         Total recorded investment in
          impaired loans                             $221,658   $161,886
                                                     ========   ========
Average recorded investment in impaired loans        $226,691   $303,469
                                                     ========   ========

Interest income recognized for cash payments received on impaired loans during
1995 and 1996 totaled $20,324 and $14,879, respectively.

4.  ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at December 31 is summarized as follows:

                                                        1995     1996
                                                        ----     ----
Investment securities                                $ 97,480   $190,041
Mortgage-backed securities                            102,318     89,798
Loans receivable and loans held-for-sale              286,262    339,615
                                                     --------   --------
                                                     $486,060   $619,454
                                                     ========   ========

5.  REAL ESTATE OWNED

Real estate owned consisted of the following at December 31:

                                                        1995     1996
                                                        ----     ----
Foreclosed real estate, including both held-for-
 sale and held for the production of income        $  379,101  $        -
Allowance for losses                                  (18,015)          -
Accumulated depreciation                             (199,099)          -
                                                   ----------  ----------
Foreclosed real estate, net                        $  161,987  $        -
                                                   ==========  ==========
Real estate acquired for investment                $1,250,000  $1,250,000
Allowance for losses                               (1,250,000) (1,250,000)
                                                   ----------  ----------
Real estate acquired for investment, net           $        -  $        -
                                                   ==========  ==========

                                     26
<PAGE>

Income (loss) from real estate owned for the years ended December 31 is as
follows:

                                               1994       1995        1996
                                               ----       ----        ----
Income (loss) from real estate owned, net    $ 24,066   $(11,753)  $(10,756)
(Provision) for losses                         (4,280)         -          -
Net gain on sale of real estate owned          97,763     83,560    200,716
                                             --------   --------   --------
                                             $117,549   $ 71,807   $189,960
                                             ========   ========   ========

Depreciation expense on foreclosed real estate held for the production of
income for the years ended December 31, 1994, 1995, and 1996 totaled $31,139,
$25,607, and $4,282, respectively.

Activity in the allowance for losses for real estate owned for the years ended
December 31 is as follows:
                                               Real Estate
                                Foreclosed     Acquired for
                                Real Estate    Investment      Total
                                -----------    ------------    -----
Balance at December 31, 1993    $ 78,127       $1,250,000    $1,328,127
Provision charged to expense       4,280                -         4,280
Elimination of allowance due
 to sale of real estate owned    (29,085)               -       (29,085)
                                --------       ----------    ----------
Balance at December 31, 1994      53,322        1,250,000     1,303,322
Elimination of allowance due
 to sale of real estate owned    (35,307)               -       (35,307)
                                --------       ----------    ----------
Balance at December 31, 1995      18,015        1,250,000     1,268,015

Elimination of allowance due
 to sale of real estate owned    (18,015)               -       (18,015)
                                --------       ----------    ----------
Balance at December 31, 1996    $      -       $1,250,000    $1,250,000
                                ========       ==========    ==========

6.  PREMISES AND EQUIPMENT

Premises and equipment at December 31 are summarized as follows:

                                                1995          1996
                                                ----          ----
Land                                         $  237,356   $  237,356
Buildings                                     2,115,372    2,115,372
Furniture, fixtures and equipment               388,641      414,718
                                             ----------   ----------
                                              2,741,369    2,767,446
Accumulated depreciation                       (981,932)  (1,110,025)
                                             ----------   ----------
                                             $1,759,437   $1,657,421
                                             ==========   ==========

Depreciation expense for the years ended December 31, 1994, 1995, and 1996
totaled $122,889, $121,934, and $129,590, respectively.

                                     27
<PAGE>

7.  INCOME TAXES

The Company and its subsidiaries anticipate filing separate federal income tax
and individual state tax returns on a calendar year basis for 1996.
Historically, the Bank was allowed a special bad-debt deduction based on a
percentage of taxable income (8 percent for 1994 and 1995) or on specified
experience formulas.  The Bank used the percentage method in 1994 and 1995.
The Small Business Job Protection Act of 1996 repealed the percentage of
taxable income method of computing bad debt deductions for tax years beginning
after December 31, 1995.  Effective for 1996, the Bank is required to compute
its bad debt deduction based on specified experience formulas.

The Small Business Job Protection Act of 1996 also requires the Bank to bring
into taxable income post-1987 tax bad debt reserves. Tax on this income will
be payable over a six to seven year period beginning in 1997 and is included
in deferred tax liabilities in the accompanying consolidated statements of
financial condition.

Generally accepted accounting principles allow an exception to providing a
deferred tax liability on bad debt reserves for tax purposes of qualified
thrift lenders such as the Bank that arose in fiscal years beginning before
December 31, 1987.  Such bad debt reserve for the Bank amounted to
approximately $2,932,000 with an income tax effect of approximately $997,000
at December 31, 1996.  This bad debt reserve would become taxable if the Bank
does not maintain certain qualifying assets as defined, if the reserve is
charged for other than bad debt losses, or if the Bank does not maintain its
thrift charter.

Income taxes receivable (payable) at December 31 are summarized as follows:

                                                1995        1996
                                                ----        ----
Current                                       $ 27,416    $(82,998)
Deferred                                       459,056     569,319
                                              --------    --------
        Income taxes receivable               $486,472    $486,321
                                              ========    ========

The consolidated provision (benefit) for income taxes consisted of the
following for the years ended December 31:

                                          1994       1995        1996
                                          ----       ----        ----
Federal:
 Current                                $180,717   $107,300    $218,678
 Deferred                                 11,000    (26,000)    (39,564)
                                        --------   --------    --------
                                         191,717     81,300     179,114
State:
 Current                                  21,000     12,000      26,529
                                        --------   --------    --------
        Provision for income taxes      $212,717   $ 93,300    $205,643
                                        ========   ========    ========

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

                                          1994       1995      1996
                                          ----       ----      ----
Statutory federal income tax rates        34.0%      34.0%     34.0%
Increase (decrease) resulting from:
  State income taxes                       2.2%       2.8%      4.5%
  Tax-exempt interest                     (1.2)%     (2.6)%    (3.6)%
  Other                                   (1.8)%     (1.3)%    (2.2)%
                                          -----      -----     -----
                                          33.2%      32.9%     32.7%
                                          ====       ====      ====

                                     28
<PAGE>

The tax effects of temporary differences between the financial reporting basis
and income tax basis of assets and liabilities that are included in the net
deferred tax asset at December 31 relate to the following:

                                                 1995           1996
                                                 ----           ----
Deferred tax assets:
 Allowances for losses on loans               $ 52,992       $ 74,644
 Real estate investment                        425,000        425,000
 Deferred compensation                          21,881         27,493
 Unrealized loss on securities
  available-for-sale (Note 2)                  254,768        325,464
 Other                                               -          7,308
                                              --------       --------
         Total deferred tax assets             754,641        859,909
                                              --------       --------
Deferred tax liabilities:
 FHLB stock dividends                          111,671        111,671
 Cash/accrual differences                       16,070         13,194
 Involuntary conversion                        162,538        157,097
 Mortgage servicing rights                           -          8,628
 Other                                           5,306              -
                                              --------       --------
         Total deferred tax liabilities        295,585        290,590
                                              --------       --------
         Net deferred tax asset               $459,056       $569,319
                                              ========       ========
8.  LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition.  The unpaid principal balance
of mortgage loans serviced for others was $21,710,286 and $21,852,453 at
December 31, 1995 and 1996, respectively.

Custodial escrow balances maintained in connection with the foregoing loan
servicing were $26,065 and $24,079 at December 31, 1995 and 1996,
respectively.

Mortgage servicing rights of $28,421 were capitalized in 1996. Amortization of
mortgage servicing rights totaled $3,045 in 1996.  The unamortized balance of
$25,376 approximated the fair value of such rights at December 31, 1996 and is
included in other assets in the accompanying consolidated statement of
financial condition.

9.  DEPOSITS

Deposits at December 31 are summarized as follows:

                                                 1995           1996
                                                 ----           ----
Demand deposits                              $   502,276     $   649,140
Savings deposits                              15,929,867      15,073,728
Time deposits                                 59,498,774      57,157,563
                                             -----------     -----------
                                             $75,930,917     $72,880,431
                                             ===========     ===========

The aggregate amount of short-term certificates of deposit with a minimum
denomination of $100,000 was approximately $2,468,000 and $2,597,000 at
December 31, 1995 and 1996, respectively.  The portions of deposits which
exceed $100,000 are not federally insured.

                                     29
<PAGE>

At December 31, 1996, scheduled maturities of certificates of deposit are as
follows:

                           Year Ending December 31,

Interest Rates:      1997        1998       1999          2000        Total
                     ----        ----       ----          ----        -----
0.0 to 3.99%    $    12,927  $         -  $        -  $        -  $    12,927
4.0 to 4.99%      3,602,559      499,665           -           -    4,102,224
5.0 to 5.99%     32,972,429    7,684,011     978,421   1,284,620   42,919,481
6.0 to 6.99%      4,869,154    2,270,092   2,901,219      10,000   10,050,465
7.0 to 7.99%              -            -      72,466           -       72,466
                -----------  -----------  ----------  ----------  -----------
                $41,457,069  $10,453,768  $3,952,106  $1,294,620  $57,157,563
                ===========  ===========  ==========  ==========  ===========

10.  BORROWED FUNDS

Borrowed funds at December 31 are summarized as follows:

                                                 1995           1996
                                                 ----           ----
Advances from FHLB                             $   -          $   -
                                               =======        =======

Information concerning advances from the FHLB is summarized as follows:

                                                 1995           1996
                                                 ----           ----

Average balance during the year                $1,369         $4,110
Maximum month end balance during the year      $    -         $    -

Interest expense on borrowed funds for the years ended December 31 is
summarized as follows:

                                          1994        1995       1996
                                          ----        ----       ----
Advances from the FHLB                   $8,460       $92        $222
                                         ======       ===        ====

The Bank has signed a blanket pledge agreement with the FHLB under which it
can draw advances of unspecified amounts from the FHLB.  The Bank must hold an
unencumbered portfolio of eligible one-to-four family residential mortgages
with a book value of not less than 150% of the indebtedness.

11.  REGULATORY CAPITAL

At December 31, 1996 the Bank's total equity amounted to $17,619,476 or 19% of
total assets.

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

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain

                                     30
<PAGE>

minimum amounts and ratios (set forth in the table below) of Tangible, Core,
and Risk-based capital (as defined in the regulations) to total average assets
(as defined).  To be considered adequately capitalized (as defined) under the
regulatory framework, the Bank must maintain minimum Tangible, Core, and
Risk-based capital as set forth in the table.  The Bank's actual capital
amounts and ratios are also presented in the table.

                                            Regulatory Capital
                                          (dollars in thousands)
                                   Tangible         Core         Risk-based
                                   --------         ----         ----------
Total equity                       $17,619        $17,619          $17,619
Unrealized loss on securities
 available-for-sale eligible
 for capital inclusion                 498            498              498
Excess mortgage servicing rights        (3)            (3)              (3)
Allowance for loan losses, as
 defined                                 -              -              367
                                   -------        -------          -------
Regulatory capital                  18,114         18,114           18,481
Less:  Regulatory capital
 requirement                         1,390          2,779            3,570
                                   -------        -------          -------
       Regulatory capital-excess   $16,724        $15,335          $14,911
                                   =======        =======          =======
Regulatory capital ratio             19.55%         19.55%           41.41%
Less:  Regulatory capital
 requirement                          1.50%          3.00%            8.00%
                                   -------        -------          -------
       Regulatory capital
        ratio-excess                 18.05%         16.55%           33.41%
                                   =======        =======          =======

Management believes, as of December 31, 1996, the Bank meets all capital
requirements to which it is subject.

As of December 31, 1996, the most recent notification from the OTS categorized
the Bank as well-capitalized under the regulatory framework for prompt
corrective action.  A well-capitalized institution significantly exceeds the
required minimum level for each relevant capital measure.  There are no
conditions or events since that notification that management believes have
changed the institution's category.

12.  CONVERSION TO STOCK OWNERSHIP

On December 19, 1995, the Board of Directors of the Bank adopted a plan of
conversion pursuant to which the Bank converted from a federally-chartered
mutual savings bank to a federally-chartered stock savings bank with the
concurrent formation of the holding company which acquired all of the common
stock of the Bank.  On June 10, 1996, the Company sold 1,653,125 shares of
common stock at $10 per share to eligible purchasers, including depositors of
the Bank.  Total proceeds from the conversion, after deducting conversion
expenses of $531,424, were $15,999,826 and are reflected as common stock and
additional paid-in capital in the accompanying consolidated statements of
financial condition.  The Company utilized $7,999,913 of the net proceeds to
acquire all of the common stock of the Bank.  The Company was also authorized
to issue 1,000,000 shares of $.01 par value  preferred stock.  At December 31,
1996, no shares of preferred stock had been issued.

As part of the conversion, the Bank established a liquidation account for the
benefit of eligible depositors who continue to maintain their deposit accounts
in the Bank after conversion.  In the unlikely event of a complete liquidation
of the Bank, and only in such event, each eligible depositor will be entitled
to receive a liquidation distribution from the liquidation account in the
proportionate amount of the then-current adjusted balance for deposit accounts
held, before distribution may be made with respect to the Bank's capital
stock.  The Bank may not declare or pay a cash dividend to the Company on, or
repurchase any of, its capital stock if the effect thereof would cause the
retained earnings of the Bank to be reduced below the amount required for the
liquidation account.  Except for such restrictions, the existence of the
liquidation account does not restrict the use or application of retained
earnings.

                                     31
<PAGE>

The Bank's capital exceeds all of the fully phased-in capital requirements
imposed by OTS.  OTS regulations provide that an institution that exceeds all
fully phased-in capital requirements before and after a proposed capital
distribution and, like the Bank, has not been notified of a need for more than
normal supervision could, after prior notice but without approval by the OTS,
make capital distributions during the calendar year of up to 100% of its net
income to date during the calendar year plus the amount that would reduce by
one-half its "surplus capital ratio" (the excess capital over its fully
phased-in capital requirements) at the beginning of the calendar year.  Any
additional capital distributions would require prior regulatory approval.

Unlike the Bank, the Company is not subject to these regulatory restrictions
on the payment of dividends to its stockholders.  However, the source of
future dividends may depend upon dividends from the Bank.

On January 24, 1997, the Company received OTS approval to repurchase up to
82,656 shares of its common stock.

13.  BENEFIT PLANS

Pension Plan:  The Bank maintains a non-contributory defined benefit pension
plan for the benefit of eligible employees.  This plan covers all employees
who have completed one year of service and have attained the age of 21 years
and provides for monthly retirement benefits determined on the basis of the
employee's base salary and years of service.  The normal retirement age is 65
and the early retirement age is before age 65, but generally after age 55.
Benefits under the plan are not subject to offset for social security
benefits.  Under the plan, benefits vest at the rate of 20% per year beginning
with a participant's third year of service.  The Bank's funding policy is to
make, as a minimum contribution, the equivalent of the minimum required by the
Employee Retirement Income Security Act of 1974.

The following table sets forth the plan's funded status at the plan's year end
of December 31. Amounts for 1995 have been restated as a result of the
discovery of errors in the calculation of projected benefits and asset values.
Such errors did not materially affect the Company's consolidated financial
condition or operating results for 1994 and 1995 and, accordingly, no
adjustments were made to the Company's consolidated financial statements for
those years.
                                          (Dollars in thousands)
                                            1995          1996
                                            ----          ----
Actuarial present value of benefit
 obligations:
  Accumulated benefit obligation,
   including vested benefits of $416
   and $447                               $(422)         $(454)
                                          =====          =====
  Projected benefit obligation for
   services rendered to date              $(503)         $(539)
  Plan assets at fair value, primarily
   insurance contracts                      479            489
                                          -----          -----
  Projected benefit obligation in
   excess of plan assets                    (24)           (50)
  Unrecognized net (gain) from past
   experience different from that
   assumed                                 (118)           (99)
  Unrecognized net obligation being
   recognized over 15 years                 129            118
                                          -----          -----
  Accrued pension cost                    $ (13)         $ (31)
                                          =====          =====

Net pension cost included the following components for the years ended
December 31 (in thousands):

                                              1994    1995    1996
                                              ----    ----    ----

Service cost - benefits earned
 during the period                            $37     $40     $54
Interest cost on projected benefit
 obligation                                    42      46      35
Actual return on plan assets                  (33)    (34)    (29)

Net amortization and deferral                  11      11       3
                                              ---     ---     ---
Net periodic cost                             $57     $63     $63
                                              ===     ===     ===

                                     32
<PAGE>

The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected
benefit obligations were 7% and 3.5%, respectively.  The expected long-term
rate of return on assets was 7%.

Executive Deferred Compensation Plan:  The Bank maintains a non-qualified
deferred compensation plan for a select group of management employees.  Under
the plan, eligible employees may elect to defer up to 30% of annual
compensation.  The Bank credits employee deferrals with interest based on the
Bank's rate for a certificate of deposit with a term of one year, as well as
changes in values of assets set aside in a revocable trust established in
1996.  Upon termination of employment, the balance of the employee's deferred
compensation account is distributable in a lump sum or in installments over a
number of years specified by the employee.  At December 31, 1995 and 1996, the
Bank had an accrued liability with respect to the plan of  $75,856 and
$149,485 respectively.

Employee Stock Ownership Plan:  In conjunction with the Bank's conversion, the
Company formed an ESOP which covers substantially all employees with more than
one year of employment, who have completed 1,000 hours of service, and who
have attained the age of 21.  The ESOP borrowed $1,322,500 from the Company
and purchased 132,250 common shares, equal to 8% of the total number of shares
issued in the conversion.  The ESOP debt is secured by shares of the Company.
The Bank will make scheduled discretionary contributions to the ESOP
sufficient to service the debt.  At December 31, 1996, the balance outstanding
on this debt was $1,249,411.  As the debt is paid down, the number of shares
to be released from serving as collateral is computed as the ratio of the
current principal to the total original principal to be paid.  Deferred
compensation relating to the ESOP was $1,249,411 at December 31, 1996, and is
reported as a reduction of stockholders' equity.  Compensation expense totaled
$93,296 for 1996.

The following is a summary of ESOP shares at December 31, 1996:

Allocated shares                                7,309
Uncommitted shares                            124,941
                                           ----------
        Total ESOP shares                     132,250
                                           ==========
        Fair value of uncommitted shares   $1,889,733

ESOP participants entitled to a distribution have the right to demand such
distribution in the form of the Company's common stock.  In the event that the
Company's common stock is not readily tradeable on an established market,
participants are entitled to require that the Company repurchase the common
stock under a fair valuation formula, as provided by governmental regulations.

Executive Employment Agreement:  Under an employment agreement with the
President and Chief Executive Officer, the Company and the Bank will provide
severance payments in the event of an involuntary termination of employment in
connection with a change in control of the Company, as defined in the
contract.  If the employment of the President and Chief Executive Officer were
to be terminated as of December 31, 1996 pursuant to a change in control, he
would be entitled to receive a severance payment amounting to approximately
$280,000.

14.  STOCK HELD IN TRUST FOR EXECUTIVE DEFERRED COMPENSATION PLAN

In 1996, the Bank acquired 8,425 shares of the Company's common stock which is
held in a revocable trust as assets set aside for the Bank's executive
deferred compensation plan.  Such stock is recorded at its fair value of
$127,428 as of December 31, 1996 and reported as a reduction of stockholders'
equity in the accompanying consolidated statement of financial condition.

                                     33
<PAGE>

15.  NET GAIN (LOSS) ON SALE OF ASSETS

Net gain (loss) on sale of assets for each of the years ended December 31 is
summarized as follows:

                                         1994        1995          1996
                                         ----        ----          ----
Net (loss) on sale of securities
 (Note 2)                            $(16,708)    $(113,845)    $(45,617)
Net gain on sale of loans held-
 for-sale                              18,950        10,983        41,752
Net gain on sale of other assets            -        49,230        38,316
                                     --------     ---------     ---------
                                     $  2,242     $ (53,632)    $  34,451
                                     ========     =========     =========

16.  OTHER NON-INTEREST INCOME AND EXPENSES

Other non-interest income and expense amounts are summarized as follows for
the years ended December 31:
                                         1994        1995          1996
                                         ----        ----          ----
Other non-interest income:
 Banking service charges and other
  fees                               $ 61,036     $ 57,900      $ 69,874
 Loan late charges                     16,039       14,482        17,113
 Commission income                     13,538       11,984         5,681
 Other miscellaneous                    2,790        3,904        19,346
                                     --------     ---------     ---------
                                     $ 93,403     $ 88,270      $112,014
                                     ========     =========     =========

                                         1994        1995          1996
                                         ----        ----          ----
Other non-interest expense:
 Stationery, printing and other
  supplies                           $ 25,921     $ 27,440      $ 35,000
 Telephone and postage                 32,269       36,037        38,490
 Insurance and surety bond
  premiums                             66,273       46,573        44,940
 Professional fees                     25,234       25,906        33,790
 Supervisory examinations              37,972       23,868        31,901
 Other operating expenses              58,024       64,562        76,243
 Data processing                      123,930      125,965       138,748
 Advertising and promotions           116,067      111,282       111,304
                                     --------     ---------     ---------
                                     $485,690     $461,633      $510,416
                                     ========     =========     =========

17.  RECAPITALIZATION OF THE SAVINGS ASSOCIATION INSURANCE FUND (SAIF)

On September 30, 1996, legislation was enacted to recapitalize the SAIF which
required savings institutions with SAIF insured deposits to pay a one time
special assessment of 65.7 cents per $100 of deposits at March 31, 1995. The
Bank's special assessment amounted to $512,867 and is included in non-interest
expense in the  consolidated statement of income for the year ended December
31, 1996. Subsequent to the special assessment, the Bank's deposit premium
rate decreased from 23 cents to 6.48 cents per $100 of deposits.

                                     34
<PAGE>

18.  FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce its own exposure to fluctuations in interest rates.  These financial
instruments include commitments to extend credit.  Those instruments involve,
to varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the Consolidated Statements of Financial Condition.  The
contractual amounts of those instruments reflect the extent of involvement the
Company has in particular classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments.  The Company uses
the same credit policies in making commitments as it does for on-balance-sheet
instruments.

Commitments to extend credit are agreements to lend funds to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates.  The Company evaluates each
customer's creditworthiness and related collateral on a case-by-case basis.

The Company's exposure to market loss in the event of future changes in market
prices rendering these financial instruments less valuable is represented by
the contractual amount of the instruments.

The Company's exposure to accounting loss on these financial instruments is a
combination of the credit and market risk described above.

The Company does not require collateral or other security to support financial
instruments with credit risk.

The Company is not committed to lend additional funds to debtors whose loans
have been modified.

At December 31, 1996, the Company had approximate outstanding commitments to
originate loans of $2,465,000.  Fixed rate loan commitments were $1,249,000 in
first mortgage loans and $894,000 in commercial loans committed at interest
rates ranging from 7.00% to 9.25%.  Variable-rate loan commitments were
$322,000 in first mortgage loans with interest rates ranging from 7.625% to
8.75%.

The Company also offers home equity lines of credit for its customers.  At
December 31, 1996, the outstanding lines of credit available totaled
approximately $42,000.

Fair value estimates, methods and assumptions for the Company's financial
instruments are set forth below, as of December 31:

                                       (Dollars in thousands)
                                    1995                    1996
                             ------------------     -------------------
FINANCIAL ASSETS             Carrying    Fair       Carrying      Fair
                             Amount      Value      Amount        Value
                             --------    -----      --------      -----
Cash and due from
 depository
 institutions                $ 2,856   $ 2,856      $ 4,572     $ 4,572
Mutual funds                   7,558     7,558        5,452       5,452
Investment securities          3,986     3,986       10,112      10,112
Mortgage-backed securities    13,926    13,926       12,010      12,010
Stock in FHLB                    939       939          939         939
Loans held-for-sale, net         466       466          571         571
Loans receivable, net         52,611    53,175       60,980      61,445
Accrued interest receivable      486       486          619         619

                                     35
<PAGE>

                                       (Dollars in thousands)
                                    1995                    1996
                             ------------------     -------------------
FINANCIAL LIABILITIES        Carrying    Fair       Carrying      Fair
                             Amount      Value      Amount        Value
                             --------    -----      --------      -----

Transaction accounts          16,432    16,432       15,723      15,723
Certificates of deposit       59,499    59,758       57,157      57,361
Advances from borrowers
 for taxes and insurance          63        63           57          57
All other liabilities            280       280          344         344

Cash and due from depository institutions:  The carrying amounts of cash and
due from depository institutions approximate their fair value.

Mutual funds, investment securities, and mortgage-backed securities:  Fair
value is determined by reference to quoted market prices.  See footnote 2 for
accounting for these available-for-sale-securities.

Stock in FHLB:  As discussed in footnote 2, this stock is a restricted asset
and its carrying value is a reasonable estimate of fair value.

Loans held-for-sale:  The carrying value is a reasonable estimate of fair
value.

Loans receivable:  The fair value of first mortgage loans is estimated by
using discounted cash flow analyses, using interest rates currently offered
for loans with similar terms to borrowers of similar credit quality.  The
majority of real estate loans are residential.  First mortgage loans are
segregated by fixed and adjustable interest terms.  The fair value of
commercial and consumer loans is calculated by using the discounted cash flow
based upon the current market for like instruments.  Fair values for impaired
loans are estimated using discounted cash flow analyses.

Accrued interest receivable:  The carrying value approximates fair value.

Transaction deposits:  Transaction deposits, payable on demand or with
maturities of 90 days or less, have a fair value equal to book value.

Certificates of Deposit:  The fair value of fixed maturity certificates of
deposit is estimated by discounting the future cash flows using the rates
currently offered for deposits of similar maturities.

Advances from borrowers for taxes and insurance:  The book value approximates
fair value.

All other liabilities:  The book value approximates fair value.

Off-Balance Sheet Instruments:  The fair value of a loan commitment and a
letter of credit is determined based on the fees currently charged to enter
into similar agreements, taking into account the remaining terms of the
agreement and the present creditworthiness of the counterparties.  Neither the
fees earned during the year on these instruments nor their value at year-end
are significant to the Company's consolidated financial position.

Limitations:  Fair value estimates are made at a specific point in time, based
on relevant market information and information about the financial instrument.
The valuation techniques employed above involve uncertainties and are affected
by assumptions used and judgements regarding prepayments, credit risk,
discount rates, cash flows and other factors.  Changes in assumptions could
significantly affect the reported fair value.

                                     36
<PAGE>

In addition, the fair value estimates are based on existing on and off-balance
sheet financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that are
not considered financial instruments.  For example, the Company has a mortgage
servicing portfolio that contributes net fee income annually.  The mortgage
servicing portfolio is not considered a financial instrument and its value has
not been incorporated into the fair value estimates.  Also, the fair value
estimates do not include the benefit that results from the low-cost funding
provided by the deposit liabilities compared to the cost of borrowing funds in
the market.

19.  PARENT COMPANY FINANCIAL INFORMATION

The following tables present condensed financial information of the parent
company, CNS Bancorp, Inc.

Condensed Statement of Financial Condition
December 31, 1996
                                               (Dollars in Thousands)
                 ASSETS
Cash and due from depository institutions             $ 2,749
Securities available-for-sale                           4,107
Investment in subsidiary                               17,492
Other assets                                            1,321
                                                      -------
       Total assets                                   $25,669
                                                      =======
   LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued liabilities                                   $   102
Due to subsidiary                                       1,368
Stockholders' equity                                   24,199
                                                      -------
       Total liabilities and stockholders' equity     $25,669
                                                      =======

Condensed Statement of Income
From Inception (January 9, 1996) through
 December 31, 1996

Income
 Interest from securities available-for-sale          $   156
 Other interest                                            58
                                                      -------
                                                          214
Expenses                                                   15
                                                      -------
Income before income taxes and equity in
 undistributed earnings of subsidiary                     199
Provision for income taxes                                (96)
Equity in undistributed earnings of subsidiary            320
                                                      -------
Net income                                            $   423
                                                      =======

                                     37
<PAGE>

Condensed Statement of Cash Flows
From Inception (January 9, 1996) through
 December 31, 1996

                                               (Dollars in Thousands)

Cash Flows From Operating Activities
 Net income                                           $   423
 Adjustments to reconcile net income to
  net cash provided by operating
  activities:
   Equity in undistributed earnings of
    subsidiary                                           (320)
   Change in other assets                                 (72)
   Change in accrued liabilities                          135
                                                      -------
       Net cash provided by operating activities          166

Cash Flows From Investing Activities
 Investment in City National Savings Bank, FSB         (8,000)
 Purchases of securities available-for-sale            (7,741)
 Maturities of securities available-for-sale            3,650
                                                      -------
 Net cash (used) by investing activities              (12,091)
                                                      -------
Cash Flows From Financing Activities
 Net proceeds from stock issuance                      14,677
 Payment received on loan to ESOP (other asset)            73
 Dividends paid                                           (76)
                                                      -------
 Net cash provided by financing activities             14,674
                                                      -------
 Net increase in cash and cash equivalents              2,749
 Cash and cash equivalents, beginning of period             -
                                                      -------
 Cash and cash equivalents, end of period             $ 2,749
                                                      =======
Supplemental Disclosure of Non-Cash Transactions:
 Exchange of common stock for loan receivable from
  ESOP (other asset)                                  $ 1,322

                                     38
<PAGE>

20.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly data for each quarter after the conversion are presented
below. Earnings per share for the quarter ended June 30, 1996, is not
presented, as the common stock was outstanding for only twenty one days during
the quarter.

                                           (Dollars in thousands)

                                     June 30,     September      December
                                      1996        30, 1996       31, 1996
                                     --------     ---------      --------
Total interest income                $1,623        $1,737         $1,730
Total interest expense                  983           925            907
                                     ------        ------         ------
Net interest income                     640           812            823
Provision for loan losses                 7            40             21
                                     ------        ------         ------
Net interest income after provision
 for loan losses                        633           772            802
Total non-interest income               263            37             24
Total non-interest expense              494         1,045            551
                                     ------        ------         ------
Income (loss) before income taxes       402          (236)           275
Provision (benefit) for income
 taxes                                   79           (64)           137
                                     ------        ------         ------
Net income (loss)                    $  323        $ (172)        $  138
                                     ======        ======         ======
Income (loss) per share                            $(0.11)        $ 0.09
                                                   ======         ======

                                     39
<PAGE>

                          CNS BANCORP, INC.
                       STOCKHOLDER INFORMATION
ANNUAL MEETING

The annual meeting of stockholders will be held at 10:00 a.m., Tuesday, April
22, 1997, at City National Savings Bank located at 427 Monroe Street,
Jefferson City, Missouri.

STOCK LISTING

The Company's stock is traded on the Nasdaq Small Cap National Market under
the symbol "CNSB".

PRICE RANGE OF COMMON STOCK

The table below shows the price range of common stock for the calendar year of
1996, during which the common stock was outstanding.  This information was
provided by the Nasdaq Stock Market.  These prices represent high and low bids
without retail mark-ups, mark-down or commissions and may not represent actual
transactions.

FISCAL 1996       High     Low    Dividends

First Quarter    N/A       N/A      N/A
Second Quarter   $12.00    $10.50   $.00
Third Quarter    $13.125   $11.00   $.00
Fourth Quarter   $15.50    $12.75   $.05

Dividend payment decisions are made based on a variety of factors including
earnings, financial condition, market considerations and regulatory
restrictions.  Restrictions on dividend payments are described in Note 12 of
the Notes to Consolidated Financial Statements included in this report.

As of February 24, 1997, the Company had approximately 482 stockholders of
record and 1,653,125 outstanding shares of common stock.

SHAREHOLDER AND GENERAL INQUIRIES       TRANSFER AGENT


     Robert E. Chiles                    1st Bankers Trust Company
     City National Savings Bank          Broadway at 12th Street
     427 Monroe Street                   P.O. Box 3566
     Jefferson City,  Mo. 65101          Quincy, Il.  62305-3566
     (573) 634-3336                      (217) 228-8000

ANNUAL AND OTHER REPORTS

The Company is required to file an annual report on Form 10-KSB for its year
ended December 31, 1996 with the Securities and Exchange Commission.  Copies
of the Company's annual and quarterly reports may be obtained without charge
by contacting:

     David L. Jobe
     City National Savings Bank
     427 Monroe Street
     Jefferson City,  Mo. 65101
     (573) 634-3336

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                          CNS BANCORP, INC.
                        CORPORATE INFORMATION

COMPANY AND BANK ADDRESS
  427 Monroe Street                     Telephone:   (573) 634-3336
  Jefferson City, Mo. 65101             Fax:         (573) 636-3191

DIRECTORS OF CNS BANCORP, INC. AND CITY NATIONAL SAVINGS BANK, FSB.
Richard E. Caplinger
     Chairman of the Board CNS Bancorp, Inc. and City National Savings Bank,
     Jefferson City,  Missouri. Retired Co-owner of Caplinger mens clothing
     store.

Robert E. Chiles
     President, Chief Executive Officer and Director of the Savings Bank since
     1974.

James E. Whaley
     Director since 1975.  Majority owner of Whaley's East End Drug and
     Whaley's Medical Center Pharmacy in Jefferson City.

Ronald Roberson
     Director since 1983.  Sole owner of R.D. Roberson & Associates, a
     financial management consulting firm.

John C. Kolb
     Director since 1989.  President and part-owner of Jefferson City Oil Co.,
     Inc. in Jefferson City.

Michael A. Dallmeyer
     Director since 1977.  Partner in the law firm of Hendren and Andrae,
     Jefferson City,  Missouri.

James F. McHenry
     Director since 1964.  Retired Circuit Court Judge for Cole County.

OFFICERS OF CNS BANCORP, INC.

Robert E. Chiles                           David L. Jobe
     Chairman of the Board, President           Secretary/Treasurer
     Chief Executive Officer                    Chief Financial Officer

Delphine Prenger
     Vice President

OFFICERS OF CITY NATIONAL SAVINGS BANK, FSB

Robert E. Chiles                           David L. Jobe
     Chairman of the Board, President           Secretary/Treasurer
     Chief Executive Officer                    Chief Financial Officer

Delphine Prenger
     Vice President

INDEPENDENT AUDITORS                SPECIAL COUNSEL
Williams-Keepers LLP                Breyer & Aguggia
107 Adams Street                    1300 I Street, N.W.
Jefferson City, Missouri 65101      Suite 470 East
                                    Washington, DC 20005

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                                 EXHIBIT 21

                        Subsidiaries of the Registrant
<PAGE>

                                  Exhibit 21

                         Subsidiaries of Registrant

                                   Percentage              Jurisdiction or
Subsidiaries (a)                   of Ownership         State of Incorporation
----------------                   ------------         ----------------------

City National Savings Bank, FSB       100%                  United States

Parity Insurance Agency, Inc.(b)      100%                  Missouri

City National Real Estate, Inc.(c)    100%                  Missouri

-------------------
(a)  The operations of the Company's subsidiaries are included in the
     Company's consolidated financial statements.
(b)  Owned directly by City National Savings Bank, FSB.
(c)  Owned directly by Parity Insurance Agency, Inc.

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