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, 1997

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

427 Monroe Street, Jefferson City, Missouri                   65101
---------------------------------------------      ---------------------------
(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
$7,258,125.

     As of March 2, 1998, there were issued and outstanding 1,644,598 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 2, 1998 was $25,550,556
(1,370,738 shares at $18.64 per share).

               DOCUMENTS INCORPORATED BY REFERENCE

     1.  Portions of Annual Report to Stockholders for the Fiscal Year Ended
         December 31, 1997 ("Annual Report") (Parts I and II).

     2.  Portions of Definitive Proxy Statement for the 1998 Annual Meeting of
         Stockholders (Part III).

<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 Bank'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 an 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 totaled
$66.5 million at December 31, 1997, representing 67.9% 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,
                         ----------------------------------------------------
                               1997              1996             1995
                         ----------------  ----------------  ----------------
                         Amount   Percent  Amount   Percent  Amount   Percent
                         ------   -------  ------   -------  ------   -------
                                      (Dollars in Thousands)
Mortgage loans:
 One- to four-family .  $52,262   76.63%  $48,318   76.57%  $43,609   80.79%
 Multi-family. . . . .    5,234    7.68     3,617    3.73     3,584    6.64
 Commercial. . . . . .    7,034   10.31     5,642    8.94     3,781    7.00
 Construction. . . . .    1,620    2.38     2,685    4.26     1,720    3.19
 Land. . . . . . . . .      109    0.16       135    0.21       159    0.29
   Total mortgage       -------  ------   -------  ------   -------  ------
    loans. . . . . . .   66,263   97.16    60,397   95.71    52,853   97.91
                        -------  ------   -------  ------   -------  ------
Commercial loans . . .      425    0.62     1,206    1.91        --      --
Consumer and other
 loans . . . . . . . .    1,513    2.21     1,498    2.38     1,128    2.09
                        -------  ------   -------  ------   -------  ------
   Total loans . . . .   68,201  100.00%   63,101  100.00%   53,981  100.00%
                        -------  ======   -------  ======   -------  ======
Less:
 Loans in process. . .    1,287             1,728             1,049
 Deferred loan fees and
  discounts. . . . . .       14                10                 1
 Allowance for loan
  losses . . . . . . .      388               382               319
   Total loans          -------           -------           -------
    receivable, net. .  $66,512           $60,981           $52,612
                        =======           =======           =======

     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, 1997, $52.3 million, or 76.6% of the Company's total loan portfolio,
consisted of loans secured by one- to four-family residences.  Of this amount,
$4.9 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, 1997, $46.3 million, or
67.9%, 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

                                        -2-
<PAGE>

cost of funds.  The Company currently offers ARM loans with initial rates
below 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, 1997, 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
engages in a moderate amount of multi-family residential and commercial real
estate lending, primarily in the local Jefferson City market area. As market
conditions permit, the Company intends to sell participation interests in the
larger multi-family 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, 1997, the Company's loan
portfolio included $5.2 million in multi-family real estate loans and $7.0
million in commercial real estate loans.

     Multi-family and commercial real estate loans originated by the Company
have either fixed or adjustable interest rates 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 commercial properties, 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, 1997, the Company's construction loan portfolio totaled $1.6
million, or 2.4% of total loans.  At such date, the Company's construction
loan portfolio consisted of nine residential construction loans totaling $1.0
million and one commercial construction loan totaling $598,000.

     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 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

                                        -4-
<PAGE>

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, 1997, the Company's land loan portfolio totaled
$109,000 and consisted of 2 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 loans secured by undeveloped land to 65% and by improved lots to 85%.

     Commercial Lending.   The Company has recently expanded its lending
activities to include commercial business lending.  At December 31, 1997, the
Company's loan portfolio included $425,000 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 creditworthiness 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.  At December 31, 1997, the Company's
consumer and other loans totaled approximately $1.5 million, or 2.2%, 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, 1997, total
loans on deposit accounts amounted to $651,000.  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, 1997, unsecured loans totaled
$408,000.

     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, 1997, 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, 1997 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. . $  844   $  467   $2,114   $6,495  $42,346   $52,266
  Multi-family . . . . .  1,059      715       --       --    3,460     5,234
  Commercial . . . . . .    657      398       23    2,451    3,505     7,034
  Construction . . . . .  1,366       --       --       --      254     1,620
  Land . . . . . . . . .     --       52       57       --       --       109
Commercial loans . . . .     --       --       58      119      248       425
Consumer and other loans    849      313      245       99        7     1,513
                         ------   ------   ------   ------  -------   -------
    Total gross loans. . $4,775   $1,945   $2,497   $9,164  $49,820   $68,201
                         ======   ======   ======   ======  =======   =======

     The following table sets forth the dollar amount of all loans due after
December 31, 1998, 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. . . . .   $14,366         $37,056         $51,422
  Multi-family . . . . . . . .       219           3,956           4,175
  Commercial . . . . . . . . .     4,732           1,645           6,377
  Construction . . . . . . . .       254              --             254
  Land . . . . . . . . . . . .        28              81             109
Commercial loans . . . . . . .        60             365             425
Consumer and other loans . . .       594              70             664
                                 -------         -------         -------
    Total gross loans. . . . .   $20,253         $43,173         $63,426
                                 =======         =======         =======


                                        -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 $23.7 million of loans originated and purchased during 1997, 42.4% were
adjustable loans and 57.6% 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 selling most of its fixed-rate mortgage
loans.  Sales are made on a non-recourse basis. Sales of loans for the years
ended December 31, 1997, 1996, and 1995 totaled $1.5 million, $4.1 million and
$1.7 million, respectively. The Company generally sells loans on a servicing-
retained basis.  See "-- Lending Activities -- Loan Servicing."  At December
31, 1997, the Company had $447,000 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,
                                       -------------------------
                                       1997       1996      1995
                                       ----       ----      ----
                                            (In Thousands)
Loans originated:
Mortgage loans:
  One- to four-family. . . . .      $14,555    $11,900   $ 8,319
  Multi-family . . . . . . . .           --         --       168
  Commercial . . . . . . . . .        1,315      2,622     1,850
  Construction . . . . . . . .        1,148      2,861     1,721
  Land . . . . . . . . . . . .           49         30       180
Commercial loans . . . . . . .          415      1,237        --
Consumer and other loans . . .        1,894      1,734     1,176
                                    -------    -------   -------
    Total loans originated . .       19,376     20,384    13,414
                                    -------    -------   -------
Loans purchased:
Mortgage loans:
  One- to four-family. . . . .        3,140      1,547     1,918
  Multi-family . . . . . . . .          551      2,604     1,272
  Commercial . . . . . . . . .          625      1,439     1,010
                                    -------    -------   -------
    Total loans purchased. . .        4,316      5,590     4,200
                                    -------    -------   -------
Loans sold:
 Total loans sold . . . . . .         1,524      4,081     1,679
                                    -------    -------   -------
Mortgage loan principal
 repayments. . . . . . . . . .       16,636     13,524     8,176
                                    -------    -------   -------
Net increase in loans
 receivable, net . . . . . . .      $ 5,532    $ 8,369   $ 7,759
                                    =======    =======   =======

     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 $433,000 and lines of credit of $453,000 at
December 31, 1997.

     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 $14,000 of net deferred
mortgage loan fees at December 31, 1997.

     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, 1997, the Company was servicing $18.4 million of loans for
FHLMC and $2.4 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 mortgage a

                                        -8-
<PAGE>

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, 1997, loan servicing fees totaled $64,000.  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,
1997, the Savings Bank held $11,000 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,
                                           ---------------------------
                                           1997        1996       1995
                                           ----        ----       ----
                                             (Dollars in Thousands)
Loans accounted for on
  a nonaccrual basis:
   Mortgage loans:
    One- to four-family. . . . . . . .     $132        $145       $ 88
    Commercial . . . . . . . . . . . .       --         165         --
                                           ----        ----       ----
      Total. . . . . . . . . . . . . .      132         310         88
                                           ----        ----       ----
Accruing loans which are
 contractually past due
 90 days or more . . . . . . . . . . .       --          --         --
                                           ----        ----       ----
Total nonaccrual and
 90 days past due loans. . . . . . . .      132         310         88
                                           ----        ----       ----
Real estate owned, net . . . . . . . .       --          --        162
                                           ----        ----       ----
   Total nonperforming assets. . . . .     $132        $310       $250
                                           ====        ====       ====
Restructured loans . . . . . . . . . .     $ 85        $228       $344

Nonaccrual and 90 days or more
 past due loans as a percentage
 of loans receivable, net. . . . . . .     0.19%       0.51%      0.17%

Nonaccrual and 90 days or more
 past due loans as a percentage
 of total assets . . . . . . . . . . .     0.13        0.32       0.10

Nonperforming assets as a
 percentage of total assets. . . . . .     0.13        0.32       0.29

     Interest income that would have been recorded for the year ended December
31, 1997 had nonaccruing loans been current in accordance with their original
terms amounted to approximately $6,000.  The amount of interest included in
interest income on such loans for the year ended December 31, 1997 amounted to
approximately $6,000.

     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, 1997, the Company had no REO.

     In June 1997, the Company invested in a real estate joint venture in
Waynesville, Missouri, known as Briar Pointe Development Co., LLC.  At
December 31, 1997, the Company's investment was $653,000.   Briar Pointe, LLC
will develop and sell 125 building lots for single family homes in a new
subdivision known as Briar Pointe located in

                                        -10-
<PAGE>

the city of Waynesville, Missouri.  The project is expected to be completed
within the next three years.  The Company will provide the financing and the
other joint venture party will provide the management for the project. When
all lots have been sold any net profit will be shared with the Company to
receive 55% and other joint venture party to receive 45%.  Through December
31, 1997, 13 lots have been sold at an average price of $18,800.

     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, 1997, the Company had $4,000 of assets classified as
loss, which consisted of two consumer loans.  Assets classified as doubtful or
substandard totaled approximately $224,000 and consisted of  five substandard
mortgage loans secured by single family homes and one doubtful loan secured by
a commercial property.  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,
                                         ---------------
                                         1997       1996
                                         ----       ----
                                         (In Thousands)

Loss . . . . . . . . . . . . .           $  4      $1,255
Doubtful . . . . . . . . . . .             66          73
Substandard assets . . . . . .            157         465
                                         ----      ------
  Total classified assets. . .           $227      $1,793
                                         ====      ======

General loss allowances. . . .           $374      $  367
Specific loss allowances . . .             14       1,265
                                         ----      ------
  Total allowances . . . . . .           $388      $1,632
                                         ====      ======

     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.

     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.

                                        -11-
<PAGE>

     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, 1997, the Company had an allowance for loan losses of
$388,000.  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.

     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,
                                          -----------------------
                                          1997      1996    1995
                                          ----      ----    ----
                                          (Dollars in Thousands)

Allowance at beginning of
 period. . . . . . . . . . . . . . .      $383      $319     $195
                                          ----      ----     ----
Provision for loan losses. . . . . .         5        64      124
                                          ----      ----     ----
Total recoveries . . . . . . . . . .        --        --       --
                                          ----      ----     ----
Total charge-offs. . . . . . . . . .        --        --       --
                                          ----      ----     ----
Net charge-offs. . . . . . . . . . .        --        --       --
                                          ----      ----     ----
 Balance at end of
  period . . . . . . . . . . . . . .      $388      $383     $319
                                          ====      ====     ====
Allowance for loan losses as a
 percentage of total loans outstanding
 at the end of the period. . . . . .      0.58%     0.62%    0.60%

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

Allowance for loan losses as a
 percentage of nonperforming
 loans at end of period. . . . . . .    293.94    123.50   362.50

                                        -12-
<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,
                           -------------------------------------------------
                                1997            1996            1995
                           --------------- --------------- -----------------
                                   % 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. . .  $204   76.63%   $180   76.57%   $185   80.79%
  Multi-family . . . . . .    52    7.68      48    5.73      36    6.64
  Commercial . . . . . . .   103   10.31     109    8.94      77    7.00
  Construction . . . . . .     3    2.38      18    4.26       7    3.19
  Land . . . . . . . . . .     1    0.16       1    0.21       2    0.29
Commercial loans . . . . .     4    0.62      12    1.91      --      --
Consumer and other loans .    13    2.21      15    2.38      12    2.09
Unallocated. . . . . . . .     8     N/A      --     N/A      --     N/A
                            ----  ------    ----  ------    ----  ------
    Total allowance for
     loan losses . . . . .  $388  100.00%   $383  100.00%   $319  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.

                                        -13-
<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,
all of which were classified as available for sale.


                                          At December 31,
                      ------------------------------------------------------
                             1997               1996            1995
                      ----------------  -----------------  -----------------
                      Carry- Percent    Carry-  Percent    Carry-  Percent
                      ing       of      ing        of      ing       of
                      Value  Portfolio  Value   Portfolio  Value   Portfolio
                      -----  ---------  -----   ---------  -----   ---------
                                    (Dollars in Thousands)

Investment securities:
  U.S. Government and
   federal agency
   obligations . .    $ 5,806   26.79%  $10,112   36.67%  $ 3,986   15.65%
  Mutual funds . .      5,376   24.81     5,452   19.77     7,558   29.67
                      -------  ------   -------  ------   -------  ------
   Total investment
    securities . .     11,182   51.60    15,564   56.44    11,544   45.32
Mortgage-backed
 securities. . . .     10,489   48.40    12,010   43.56    13,926   54.68
                      -------  ------   -------  ------   -------  ------
   Total available
    for sale . . .    $21,671  100.00%  $27,574  100.00%  $25,470  100.00%
                      =======  ======   =======  ======   =======  ======

                                        -14-
<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, 1997.

                                            At December 31, 1997
                   --------------------------------------------------------------
                                      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
                   Carry-    Aver-    Carry-  Aver-  Carry- Aver-  Carry- Aver-   Carry-   Aver-
                   ing       age      ing     age    ing    age    ing    age     ing      age
                   Value     Yield    Value   Yield  Value  Yield  Value  Yield   Value    Yield
                   -----     -----   -----    -----  -----  -----  -----  -----   -----    -----
                                                (Dollars in Thousands)
<S>                <C>        <C>    <C>      <C>    <C>    <C>    <C>   <C>     <C>       <C>
U.S. Government and
  federal agency
  obligations. .   $ 4,000    5.98%  $1,806   5.87%  $ --     --%  $ --     --%  $ 5,806   5.94%
Mutual funds . .     5,376    6.04       --     --     --     --     --     --     5,376   6.04
Mortgage-backed
 securities  . .     9,924    5.93      179   7.84    261   7.31    130   9.00    10,489   6.03
                   -------           ------          ----          ----          -------
 Total . . . . .   $19,300    5.96   $1,980   6.06   $261   7.31   $130   9.00   $21,671   6.01
                   =======           ======          ====          ====          =======
</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 $974,000 ($990,000 at amortized cost) and yielded 5.41% at December
31, 1997, and a government securities fund, which had a fair value of $4.4
million ($5.0 million at amortized cost) and yielded 5.80% at December 31,
1997.

     U.S. Government and Federal Agency Obligations.  The Company's portfolio
of U.S. Government and federal agency obligations had a fair value of $5.8
million ($5.8 million at amortized cost) at December 31, 1997.  The portfolio
consisted of short-term securities due within two years of December 31, 1997,
all of which are held in the Company's available for sale portfolio.

     Mortgage-Backed Securities.  At December 31, 1997, the Company's net
mortgage-backed securities totaled $10.5 million at fair value ($10.7 million
at amortized cost) and had a weighted average yield of 6.03%.  At December 31,
1997, 96.3% of the mortgage-backed securities were adjustable-rate and 3.7%
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 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.

     At December 31, 1997, $261,000 of the Company's mortgage-backed
securities had contractual maturities under 10 years and the remainder 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

                                        -15-
<PAGE>

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.

                                        -16-
<PAGE>

     The following table sets forth information concerning the Company's time
deposits and other interest-bearing deposits at December 31, 1997.

Weighted                                                             Percent-
Average                                                              age
Interest            Checking and               Minimum               of Total
Rate    Term        Savings Deposits           Amount      Balance   Deposits
----    ----        ----------------           ------      -------   --------
                                                        (In Thousands)

  --%   None        Non-interest-bearing       $  100      $   480     0.66%
2.75    None        NOW                           100        4,015     5.51
3.83    None        Money Market Deposit        1,000        5,340     7.33
2.84    None        Regular savings                10        6,738     9.25

                    Certificates of Deposit
                    -----------------------
4.80    7-31 Day    Fixed term, fixed rate      2,500          110     0.15
5.10    32-181 Day  Fixed term, fixed rate      1,000        1,159     1.59
5.26    182 Day     Fixed term, fixed rate      1,000        8,346    11.45
5.63    9 Mo.       Fixed term, fixed rate      1,000          715     0.98
5.50    12 Mo.      Fixed term, fixed rate        500       16,242    22.29
5.49    15 Mo.      Fixed term, fixed rate        500        3,049     4.18
5.61    18 Mo.      Fixed term, fixed rate        500        3,538     4.85
5.61    24 Mo.      Fixed term, fixed rate        500        7,492    10.28
5.78    30 Mo.      Fixed term, fixed rate        500        5,204     7.14
5.84    36 Mo.      Fixed term, fixed rate        500        3,020     4.14
5.90    48 Mo.      Fixed term, fixed rate        500        7,435    10.20
                                                           -------   ------
                    Total                                  $72,883   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,
1997.  Jumbo certificates of deposit are certificates in amounts of $100,000
or more.

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

Three months or less . . . . .       $  523
Over three through six months.        1,279
Over six through 12 months . .          441
Over 12 months . . . . . . . .          724
     Total jumbo certificates        ------
      of deposit . . . . . . .       $2,967
                                     ======

                                         -17-
<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,
                                -------------------------------------------------------------------------
---
                                          1997                          1996                     1995
                                ----------------------------  ---------------------------  --------------
---
                                         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. . . . .    $   480    0.66%   $  (168)  $   648    0.89%   $   146   $   502
0.66%
NOW checking . . . . . . . .      4,015    5.51        560     3,455    4.74       (329)    3,784
4.98
Regular savings accounts . .      6,738    9.25         25     6,713    9.21       (840)    7,553
9.95
Money market deposit accounts
 ("MMDAs") . . . . . . . . .      5,340    7.33        434     4,906    6.73        313     4,593
6.05
Fixed-rate certificates which
 mature:
  Within 1 year. . . . . . .     40,389   55.41     (1,068)   41,457   56.88      3,122    38,335
50.49
  After 1 year, but within
   2 years . . . . . . . . .      8,729   11.97     (1,725)   10,454   14.35     (3,819)   14,273
18.80
  After 2 years, but within
   5 years . . . . . . . . .      7,192    9.87      1,945     5,247    7.20     (1,644)    6,891
9.07
                                -------- ------    -------   -------  ------    -------   -------   -----
-
  Total deposits . . . . . .    $72,883  100.00%   $     3   $72,880  100.00%   $(3,051)  $75,931
100.00%
                                =======  ======    =======   =======  ======    =======   =======
======

                                                               -18-
</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,
                                ------------------------
                                1997      1996      1995
                                ----      ----      ----
                                     (In Thousands)

0.00 - 3.99% . . . . . .      $    13   $     13    $   521
4.00 - 4.99% . . . . . .          471      4,103      8,166
5.00 - 5.99% . . . . . .       49,273     42,919     36,314
6.00 - 6.99% . . . . . .        6,474     10,050     14,415
7.00 - 7.99% . . . . . .           78         73         83
                              -------    -------    -------
  Total . . . . . . . .       $56,309    $57,158    $59,499
                              =======    =======    =======

     The following table sets forth the amount and maturities of time deposits
at December 31, 1997.

                                         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% . . . . . .      471        --         --         --        471
5.00 - 5.99% . . . . . .   37,323     5,234      4,709      2,007     49,273
6.00 - 6.99% . . . . . .    2,582     3,417        307        168      6,474
7.00 - 7.99% . . . . . .       --        78         --         --         78
                          -------    ------     ------     ------    -------
  Total. . . . . . . . .  $40,389    $8,729     $5,016     $2,175    $56,309
                          =======    ======     ======     ======    =======

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


                                         Year Ended December 31,
                                  -------------------------------------
                                    1997         1996           1995
                                    ----         ----           ----
                                            (In Thousands)

Beginning balance. . . . . . .    $72,880       $75,931       $79,493
Net deposits (withdrawals)
 before interest credited. . .     (2,905)       (6,058)       (6,470)
Interest credited. . . . . . .      2,908         3,007         2,908

Net increase (decrease) in
 deposits. . . . . . . . . . .          3        (3,051)       (3,562)
                                  -------       -------       -------
Ending balance . . . . . . . .    $72,883       $72,880       $75,931
                                  =======       =======       =======

     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

                                        -19-
<PAGE>

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, 1997, the Company had $596,000 borrowed from the
FHLB-Des Moines.  The Company borrowed $600,000 on a mortgage match advance in
October 1997 to fund a loan on commercial property with a yield to the Company
of 8.50%.  At December 31, 1996 and 1995, 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,
                                               -----------------------
                                               1997     1996      1995
                                               ----     ----      ----
                                                (Dollars in Thousands)
Amount of FHLB advances outstanding at
 end of period . . . . . . . . . . . . . . .   $596     $  --     $  --
Maximum amount of FHLB advances outstanding
  at any month end . . . . . . . . . . . . .    600        --        --
Approximate average FHLB advances
  outstanding during the period. . . . . . .    164         4         1
Approximate weighted average rate paid on
  FHLB advances during the period. . . . . .   6.10%     5.40%     6.72%
Weighted average rate paid on FHLB
  advances at end of period. . . . . . . . .   6.35        --        --

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, 1997, there were ten commercial banks and
two 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 at times 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, 1997, the Company had 27 full-time and 2 part-time
employees.  The employees are not represented by a collective bargaining unit.
The Company believes its relationship with its employees is good.

                                        -20-
<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, 1997.

     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 is inactive.  At December 31, 1997, the
Savings Bank's investment in its subsidiaries was $487,000.

Joint Venture

     In 1997, the Company invested in Bales Brothers, Inc.  J. V., a joint
venture which will be building single family homes for sale in the Briar
Pointe subdivision in Waynesville, Missouri.  Under the terms of the joint
venture, the Company provides the funds and Bales Brothers, Inc.  provides the
labor and management for the construction projects. When a house is sold, any
net profit will be shared with the Company to receive 50% and Bales Brothers,
Inc.  to receive 50%.  At December 31, 1997 Bales Brothers, Inc., J.V. had
four houses under construction in the Briar Pointe subdivision.  The Company's
interest in the joint venture at December 31, 1997 was $382,000.  See Note 8
of the Notes to Consolidated Financial Statements.

                            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 ("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 Company, the Savings Bank and their
operations.  The Company, as a savings and loan holding company, is also
required to file certain reports with, and otherwise comply with the rules and
regulations of, the OTS and the Securities and Exchange Commission ("SEC").

     Legislation has been introduced into Congress that would consolidate the
OTS with the Office of the Comptroller of the Currency, which regulates
national banks.  If this or similar legislation is enacted into law, the
Savings Bank could be forced to become a state or national bank and become
subject to regulation by a different government agency.  If the Savings Bank
is required to change charters, its activities and investment authority and
the ability of the Company to engage in diversified activities may be altered
or limited.  It is impossible at this time to predict whether such legislation
will be passed or the impact of any such legislation on the operations of the
Savings Bank and the Company.

                                        -21-
<PAGE>

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; ensure that the
FHLBs carry out their housing finance mission; ensure that the FHLBs remain
adequately capitalized and able to raise funds in the capital markets; and
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, 1997.  Among other benefits,
the FHLB-Des Moines 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
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 maintains two separate insurance funds:
the Bank Insurance Fund ("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 deposit accounts are insured by the FDIC under the
SAIF to the maximum extent permitted by law.  The Savings Bank pays deposit
insurance premiums to the FDIC based on a risk-based assessment system
established by the FDIC for all SAIF-member institutions.  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" or "undercapitalized"), which are defined in the same
manner as the regulations establishing the prompt corrective action system
under the FDIA as discussed below. 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 Fund Act ("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 0.065% of
SAIF-assessable deposits for the purpose of paying interest on the obligations
issued by the Financing Corporation ("FICO") in the 1980's 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 Act contemplates
the development of a common charter for all federally chartered depository
institutions and the abolition of separate charters

                                        -22-
<PAGE>

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 4.0%) 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 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 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.

     At December 31, 1997, the Savings Bank was categorized as "well
capitalized" under the prompt corrective action regulations of the OTS.

     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

                                        -23-
<PAGE>

quality; (vii) earnings, and (viii) compensation, fees and benefits.  The
regulations 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 regulations, 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 become a national bank 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 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 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 qualify as a
domestic building and loan association under the Internal Revenue Code of
1986, as amended ("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 Federal Home Loan Mortgage Corporation or 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, 1997, the Savings Bank was in compliance with the QTL test.

     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.  The Company is not subject to
any minimum 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.
An institution that fails 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

                                        -24-
<PAGE>

rating) will be deemed to be "undercapitalized" and may be subject to certain
restrictions.  See "-- 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 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 totaled 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

                                        -25-
<PAGE>

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).
A 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.  A Tier 3
savings association has capital below the minimum capital requirement (either
before or after the proposed capital distribution).  A Tier 3 savings
association 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, 1997, the
Savings Bank's limit on loans to one borrower was $3.6 million.  At December
31, 1997, the Savings Bank's largest aggregate amount of loans to one borrower
was $1.4 million.

     Activities of Associations and their Subsidiaries.  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 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

                                        -26-
<PAGE>

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.  Exemptions from Section 23A or 23B may
be granted only by the Federal Reserve Board, as is currently the case with
respect to all FDIC-insured banks.  The Savings Bank has not been
significantly affected by the rules regarding transactions with affiliates.

     The Savings Bank's authority to extend credit to executive officers,
directors and 10% shareholders, as well as entities controlled by such
persons, is governed by Sections 22(g) and 22(h) of the Federal Reserve Act,
and Regulation O thereunder.  Among other things, these regulations generally
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.  Generally, 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.  Under the federal CRA, all federally-insured
financial institutions have a continuing and affirmative obligation consistent
with safe and sound operations to help meet all the credit needs of its
delineated community.  The CRA does not establish specific lending
requirements or programs nor does it limit an institution's discretion to
develop the types of products and services that it believes are best suited to
meet all the credit needs of its delineated community.  The CRA requires the
federal banking agencies, in connection with regulatory examinations, to
assess an institution's record of meeting the credit needs of its delineated
community and to take such record into account in evaluating regulatory
applications 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, among others.  The CRA requires public disclosure of an
institution's CRA rating.  The Savings Bank received a "satisfactory" rating
as a result of its latest evaluation.

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.  There generally are more
restrictions on the activities of a multiple savings and loan holding company
than on those of a unitary 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,

                                        -27-
<PAGE>

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 savings and loan holding
company.

     Qualified Thrift Lender Test.  The HOLA provides that any savings and
loan holding company that controls a savings association that fails the QTL
test, as explained under "-- Federal Regulation of Savings Banks -- 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.

                             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, including particularly the Savings Bank's reserve for bad debts
discussed below.  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, the provisions repealing the current thrift bad debt
rules were passed 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 January 1, 1988).  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" association (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-

                                        -28-
<PAGE>

1988 bad debt reserves continue to be subject to provisions 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 the Company, 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 reserve.  The amount of
additional taxable income created from an Excess Distribution is an amount
that, when reduced by the tax attributable to the income, is equal to the
amount of the distribution.  Thus, if the Savings Bank makes a "nondividend
distribution," then approximately one and one-half times the Excess
Distribution would be includable in gross income for federal income tax
purposes, assuming a 34% corporate income tax rate (exclusive of state and
local taxes).  See "REGULATION" for limits on the payment of dividends by the
Savings Bank. 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 0.12% 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 is paid.

     Dividends-Received Deduction.  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.

     Audits.  There have not been any IRS audits of the Savings Bank's Federal
income tax returns or audits of the Savings Bank's state 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.

                                        -29-
<PAGE>

     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, 1997, the net book value of the property (including land and
building) and the Company's fixtures, furniture and equipment was $1.6
million.

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, 1997.

                                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 46 of the 1997 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.

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

    (a)  Financial Statements
         Independent Auditor's Report*
         Consolidated Statements of Financial Condition as of December 31,
          1996 and 1997*
         Consolidated Statements of Income for the Years Ended
          December 31, 1995, 1996 and 1997
         Consolidated Statements of Changes in Stockholders' Equity for the
          Years Ended December 31, 1995, 1996 and 1997
         Consolidated Statements of Cash Flows for the Years Ended
          December 31, 1995, 1996 and 1997
         Notes to the Consolidated Financial Statements*

                                        -30-
<PAGE>

        *  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      64          Chairman of the Board

Robert E. Chiles          62          President and Chief Executive Officer

David L. Jobe             49          Treasurer and Secretary

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

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

Richard E. Caplinger      64           Chairman of the Board

Robert E. Chiles          62           President and Chief Executive Officer

David L. Jobe             49           Secretary and Treasurer

Delphine E. Prenger       60           Vice President

--------------
(1)  As of December 31, 1997.

     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.

                                        -31-
<PAGE>

      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 Company since 1996 and 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.

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))

                                        -32-
<PAGE>

    10.1  Employment Agreement with Robert E. Chiles (incorporated by
          reference to Exhibit 10.1 to the Company's Annual Report on Form
          10-KSB for the year ended December 31, 1996)
    10.2  CNS Bancorp, Inc. 1997 Stock Option Plan (incorporated by reference
          to Exhibit A to the Company's Proxy Statement dated March 19, 1997)
    10.3  CNS Bancorp, Inc. 1997 Management Recognition and Development Plan
          (incorporated by reference as Exhibit B to the Company's Proxy
          Statement dated March 19, 1997)
    13    Annual Report to Stockholders
    21    Subsidiaries of the Registrant
    23    Consent of Independent Auditors
    27    Financial Data Schedule

    (b)   Reports on Form 8-K

          No Reports on Form 8-K were filed during the quarter ended December
31, 1997.

                                        -33-
<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 27, 1998           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 27, 1998
--------------------------
Robert E. Chiles             Executive Officer and
                             Director (Principal
                             Executive Officer)

/s/ David L. Jobe            Treasurer and Secretary      March 27, 1998
--------------------------
David L. Jobe                (Principal Financial
                             and Accounting Officer)

/s/ James F. McHenry         Director                     March 27, 1998
--------------------------
James F. McHenry

/s/ James E. Whaley          Director                     March 27, 1998
--------------------------
James E. Whaley

/s/ Ronald D. Roberson       Director                     March 27, 1998
--------------------------
Ronald D. Roberson

/s/ Richard E. Caplinger     Chairman of the Board        March 26, 1998
--------------------------
Richard E. Caplinger

/s/ Michael A. Dallmeyer     Director                     March 27, 1998
--------------------------
Michael A. Dallmeyer

/s/ John C. Kolb             Director                     March 27, 1998
--------------------------
John C. Kolb

<PAGE>

                            EXHIBIT 13

                1997 Annual Report to Stockholders

<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                                    46
   Corporate Information                                      47


<PAGE>

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

March 18, 1998

Dear Fellow Shareholders:

     On behalf of the Board of Directors and the employees, it is a pleasure
to share with you the results for CNS Bancorp, Inc.'s fiscal year ended
December 31, 1997, and submit to you our second Annual Report as a public
stock company.

     During the fiscal year ended December 31, 1997, CNS Bancorp, Inc.
increased total assets to $98 million, with loans receivable increasing $5.5
million in 1997 to $66.5 million.

     An increase in net income for the fiscal year 1997 resulted primarily
from a $612,000 increase in net interest income, a $59,000 decrease in
provision for loan losses and a $198,000 decrease in noninterest expense which
was partially offset by a $188,000 decrease in non-interest income. The
Company's stock traded in a range from $15.00 per share to $21.625 per share
in 1997. Earnings per share for 1997 were $.56.

     CNS Bancorp, Inc. became a public company in June of 1996 and began
paying regular quarterly dividends in the fourth quarter of 1996. The
cumulative dividends for the fiscal year ended December 31, 1997 were $.22 per
share. As planned, during the course of the fiscal year, the Company announced
the intent to repurchase 66,125 shares of its common stock to fund the
Company's 1997 Management Recognition and Development Plan (MRDP). As of March
2, 1998 the Company has completed the purchase of all of the MRDP shares and
purchased 8,527 shares of Company stock as treasury stock.

     In August 1997, City National Savings Bank, FSB, added more banking
convenience for customers by installing two new 24-hour drive-up automated
teller machines, located at the second Jefferson City branch and at the St.
Robert branch.

     The Board of Directors and Management continues to set goals and develop
long-term strategies to ultimately increase profitability with minimal risk
and to enhance shareholder value. We also remain committed to being a local,
hometown bank, delivering the kind of personal customer service you have come
to know and expect through the years.

     Thank you for your continued support and investment 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, multi-family and non-residential properties. The Company also invests
in 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,
                             -------------------------------------------------
                             1993       1994       1995       1996       1997
                                            (IN THOUSANDS)
Selected Financial
 Condition Data:
 ---------------

Total assets                $90,335    $87,966   $85,390   $97,481    $97,891
Loans receivable, net (1)   $40,674    $44,853   $52,611   $60,981    $66,512
Mortgage-backed securities  $24,173    $18,966   $13,926   $12,010    $10,489
Cash, interest-bearing
 deposits and investments
 securities                 $19,922    $18,911   $14,400   $20,137    $15,673
Deposits                    $81,035    $79,493   $75,931   $72,880    $72,883
Borrowed funds                  ---        ---       ---       ---       $596
Stockholders' equity         $9,079     $8,234    $9,180   $24,199    $23,924

                                          At December 31,
                             -------------------------------------------------
                             1993       1994       1995       1996       1997
                                            (IN THOUSANDS)
Selected Operations Data:
-------------------------

Interest income              $5,787     $5,224    $5,638    $6,551    $7,057
Interest expense             $3,411     $3,032    $3,617    $3,753    $3,647
                             ------     ------    ------    ------    ------
Net interest income          $2,376     $2,192    $2,021    $2,798    $3,410
Provision for loan losses       $24         $7      $124       $64        $5
                                ---         --      ----       ---        --
Net interest income after
 provision for loan losses   $2,352     $2,185    $1,897    $2,734    $3,405
Non-interest income            $421       $274      $162      $389      $201

Non-interest expense         $1,751     $1,818    $1,776    $2,494    $2,297
                             ------     ------    ------    ------    ------
Income before federal
 income tax provision,
 and extraordinary item      $1,022       $641      $283      $629    $1,309

Provision for income taxes
(benefit)                      $335       $213       $93      $206      $445
                               ----       ----       ---      ----      ----
Income before cumulative
 effect of accounting
 change                        $687       $428      $190      $423      $864
Cumulative effect of
 accounting change(2)           $63         --        --        --        --
                                ---       ----       ---      ----      ----
Net income                     $750       $428      $190      $423      $864
                               ====       ====      ====      ====      ====
Earnings per share              n/a        n/a       n/a       n/a      $.56
Dividends per share             n/a        n/a       n/a      $.05      $.22

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

                                        3
<PAGE>

                                        Year Ended December 31,
                             -------------------------------------------------
                             1993       1994       1995       1996       1997
                                            (In Thousands)

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

Performance Ratios:
 Return on assets(1)         0.81%      0.48%     0.22%     0.46%      0.88%
 Return on stockholders'
  equity(2)                  8.61%      4.94%     2.18%     2.53%      3.59%
 Stockholders' equity-
  to-assets ratio(3)         9.38%      9.71%    10.05%    18.25%     24.63%
 Interest rate spread(4)     2.48%      2.29%     2.02%     2.19%      2.43%
 Net interest margin(5)      2.69%      2.54%     2.40%     3.02%      3.58%
 Average interest-earning
  assets to average
  interest-bearing
  liabilities              105.53%    107.23%   108.73%   120.30%    130.15%
 Non-interest expense as
  a percent of average
  total assets               2.04%      2.04%     2.05%     2.73%      2.35%

Asset Quality Ratios:
 Nonaccrual and 90 days or
 more past due loans as a
 percent of total loans,
 net                         0.40%         --     0.17%     0.51%      0.20%
Nonperforming assets as a
 percent of total assets     0.98%      0.48%     0.29%     0.32%      0.15%
Allowance for losses as a
 percent of total assets     0.23%      0.22%     0.37%     0.39%      0.40%
Allowance for losses as a
 percent of nonperforming
 loans                     127.61%       n/a    362.50%   123.23%    272.54%
Net charge-offs to average
 outstanding loans           0.00%      0.05%     0.00%     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 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, borrowing, and
funds provided by operations.

FINANCIAL CONDITION

     DECEMBER 31, 1996 COMPARED TO DECEMBER 31, 1997. The Company's total
assets increased $410,000, or .42%, to $97.9 million at December 31, 1997 from
$97.5 million at December 31, 1996. The increase was primarily attributable to
a $5.5 million increase in loans receivable, an increase of $653,000 in Real
Estate Owned and an increase of $557,000 in other assets, offset by a $5.9
million decrease in investment securities and a $187,000 decrease in income
taxes receivable. The asset growth was funded by the Company's operations.

     Net loans receivable increased $5.5 million, or 9.07%, to $66.5 million
at December 31, 1997 from $61.0 million at December 31, 1996. 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 its loan purchases of loans secured by properties located in the
Company's primary lending market. Purchased loans receivable increased $1.9
million, or 14.18%, to $15.3 million at December 31, 1997 from $13.4 million
at December 31, 1996. During 1997, the Company originated and purchased $18.9
million of one-to four-family residential mortgage loans, $2.5 million of
other residential and nonresidential loans and $2.3 million of nonmortgage
loans.

     Investment securities, mortgage-backed securities, cash and interest
earning deposits decreased $6.0 million, or 23.19%, to $26.2 million at
December 31, 1997 from $32.1 million at December 31, 1996. The decrease in
investment securities, cash and interest earning deposits was primarily the
result of allowing the investment securities and other deposits to mature and
using those funds to fund loan originations and purchases.

     Deposits were virtually unchanged remaining at $72.9 million at December
31, 1997.

                                        5
<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

     NET INCOME. The Company's net income increased $441,000, or 104.4%, to
$864,000 for the year ended December 31, 1997 from $423,000 for the year ended
December 31, 1996. The increase was due to an increase in net interest income,
a decrease in provision for loan losses and a decrease in non-interest expense
offset by a decrease in non-interest income. The interest rate spread
increased to 2.43% for the year ended December 31, 1997 from 2.19% for the
year ended December 31, 1996. 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.

     NET INTEREST INCOME. Net interest income increased $612,000, or 21.87%,
to $3.4 million for the year ended December 31, 1997 from $2.8 million for the
year ended December 31, 1996. Total interest income increased $506,000, or
7.72%, to $7.1 million from $6.6 million for the year ended December 31, 1996.
The increase in total interest income was primarily due to an increase in
interest on loans which was partially offset by a decrease in interest on
investment securities, mortgage-backed securities, and other interest-earning
assets. Interest income on loans increased by $837,000, or 18.87%, to $5.3
million for the year ended December 31, 1997 from $4.4 million for the year
ended December 31, 1996. Interest income on loans increased as a result of a
higher average balance of loans, which increased to $65.2 million in 1997 from
$55.7 million in 1996, and an increase in the average yield on loans to 8.09%
in 1997 from 7.96% in 1996. The increase in yield on loans is due to the
production or purchase of loans at a higher rate of interest than those loans
that paid off during the year. Interest income from investment securities
decreased $108,000, or 16.68% to $537,000 for the year ended December 31, 1997
from $645,000 for the year ended December 31, 1996. Interest income on
investment securities decreased due to a lower average balance of investment
securities, which decreased to $7.9 million in 1997 from $9.7 million in 1996.
The average yield on investment securities remained at 5.94% in 1997 the same
as it was in 1996. Interest income on mortgage-backed securities decreased
$111,000, or 13.85%, to $693,000 for the year ended December 31, 1997 from
$804,000 for the year ended December 31, 1996. Interest income on mortgage
backed securities decreased due to a lower average balance on mortgage-backed
securities which decreased to $11.5 million in 1997 from $13.2 million 1996.
During 1997, the Company continued to allow mortgage-backed securities to be
reduced by principal repayments without reinvesting in mortgage-backed
securities. Interest income from other interest-earning assets decreased
$112,000, or 16.90% to $554,000 for the year ended December 31, 1997 from
$666,000 for the year ended December 31, 1996. Interest income from other
interest-earning assets decreased due to a lower average balance on other
interest-earning assets. Total interest expense decreased $106,000, or 2.83%,
to $3.7 million for the year ended December 31, 1997 from $3.8 million for the
year ended December 31, 1996. Interest expense decreased due to a lower
average deposit balance which decreased $4.2 million, or 5.26% to $72.9
million at the December 31, 1997 from $77.1 million at December 31, 1996 which
was partially offset by an increase in average cost of deposits, which
increased to 4.99% for 1997 from 4.87% for 1996.

     PROVISION FOR LOAN LOSSES. The provision for loan losses was $5,000 for
the year ended December 31, 1997 as compared to $64,000 in 1996. The provision
for loan losses decreased significantly in 1997 due to a reduction in
classified assets when a large commercial real estate loan which was
delinquent at the end of 1996 was paid current. The allowance for loan losses
increased to $387,000, or .58% of total loans at December 31, 1997 compared to
$382,000, or .62% of total loans at December 31, 1996.

     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.

                                        6
<PAGE>

     NON-INTEREST INCOME. Non-interest income decreased $187,000, or 48.26%,
to $201,000 for the year ended December 31, 1997 from $388,000 for the year
ended December 31, 1996. Non-interest income decreased primarily due to the
decrease in income from real estate owned, the gain on sale of assets and
other income and other non-interest income which was partially offset by an
increase in loan servicing fees. Income from real estate owned decreased
$178,000 to $12,000 for the year ended December 31, 1997 from $190,000 for the
year ended December 31, 1996. The decrease in income from real estate owned is
due to the sale of all of the income producing real estate in 1996 except a
hotel building which the Company has owned since 1989. The hotel building was
disposed of in December of 1997 and resulted in an $854,000 contribution carry
forward tax deduction to be utilized over the next five years. The Company had
an $18,000 net gain on sale of assets in 1997 compared to a $34,000 net gain
on sale of assets in 1996.

     NON-INTEREST EXPENSE. Non-interest expense decreased $198,000, or 7.93%,
to $2.3 million in the year ended December 31, 1997 from $2.5 million for the
year ended December 31, 1996. The decrease in non-interest expense in 1997 is
primarily due to a decrease in deposit insurance premiums, which is partially
offset by increases in compensation and benefits, occupancy and equipment and
other non-interest expenses. Compensation and benefits increased $279,000, or
26.16%, to $1.3 million for the year ended December 31, 1997 from $1.1 million
for the year ended December 31, 1996. The increase in compensation and
benefits is primarily due to a $191,000 increase in ESOP compensation expense
and a $103,000 increase in MRDP compensation expense, partially offset by a
$15,000 decrease in retirement and other benefits. Deposit insurance decreased
$631,000, or 93.08%, to $47,000 in 1997 from $677,000 in 1996. The decrease in
deposit insurance was primarily due to a $513,000 special assessment to
recapitalize the SAIF paid in the third quarter of 1996. Other non-interest
expenses increased $149,000, or 29.20%, to $659,000 in 1997 from $510,000 in
1996. The increase in other non-interest expense was due primarily to a
$75,000 increase in franchise taxes and a $50,000 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
$240,000 in 1997 to $445,000 for the year ended December 31, 1997 from
$206,000 for the year ended December 31, 1996 as a result of higher taxable
income which increased $681,000, or 108.39%, to $1.3 million in 1997 from
$628,000 in 1996.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDING 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.

     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 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

                                        7
<PAGE>

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 due to a large
increase in 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.

      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 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 the ESOP compensation expense and a $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 $48,000, or 10.4%, 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.

                                        8
<PAGE>

<TABLE>
                                                     Year Ended December 31,
                              -------------------------------------------------------------------------
                                        1995                     1996                   1997
                              ----------------------- ----------------------- -------------------------
                                               Average                Average                  Average
                              Average          Yield/ Average          Yield/ Average          Yield/
                              Balance Interest Cost   Balance Interest Cost   Balance Interest Cost
                              ------- -------- ----   ------- -------- ----   ------- -------- ----
                                                      (Dollars in Thousands)
<S>                           <C>      <C>    <C>     <C>     <C>     <C>    <C>      <C>     <C>
INTEREST-EARNING ASSETS:
Loans receivable, net
 (1)........................  $49,054  $3,583  7.30%  $55,728  $4,436  7.96%  $65,160  $5,274  8.09%
 Mortgage-backed securities
  - AFS(2)..................  $16,515    $964  5.84%  $13,235    $804  6.07%  $11,491    $693  6.03%
 Investment securities- AFS
  (2)......................    $7,685    $383  4.98%   $9,746    $579  5.94%   $7,929    $471  5.94%
 Mutual funds..............    $8,000    $527  6.59%   $7,831    $466  5.95%   $5,990    $362  6.04%
 FHLB stock................      $922     $67  7.24%     $939     $66  7.03%     $939     $66  7.03%
 Interest-bearing deposits.    $2,069    $113  5.46%   $5,306    $200  3.77%   $3,608    $191  5.29%
                               ------  ------         -------  ------         -------  ------
    TOTAL INTEREST-EARNING
     ASSETS................   $84,245  $5,637  6.69%  $92,785  $6,551  7.06%  $95,117  $7,057  7.42%
                              -------  ------         -------  ------         -------  ------
Non-interest-earning assets    $2,443                  $2,461                  $2,875
                               ------                  ------                  ------
    TOTAL AVERAGE ASSETS...   $86,688                 $95,246                 $97,992
                              =======                 =======                 =======
INTEREST BEARING LIABILITIES:
Regular savings accounts...    $7,626    $211  2.77%   $9,659    $242  2.51%   $6,802    $207  3.04%
MMDAs......................    $5,034    $193  3.83%   $4,749    $181  3.81%   $5,050    $193  3.82%
Demand and NOW accounts....    $4,407     $92  2.27%   $4,235     $93  2.20%   $4,093     $91  2.22%
Certificates of deposit....   $60,776  $3,121  5.14%  $58,483  $3,237  5.54%  $56,973  $3,146  5.52%
                              -------  ------         -------  ------         -------  ------
TOTAL AVERAGE DEPOSITS.....   $77,483  $3,617  4.67%  $77,126  $3,753  4.87%  $72,918  $3,637  4.99%
                              -------  ------         -------  ------         -------  ------
FHLB advances..............        $1      --  6.72%       $4      --  5.40%     $164     $10  6.10%
                              -------  ------         -------  ------         -------  ------
     TOTAL INTEREST-BEARING
      LIABILITIES..........   $77,484  $3,617  4.67%  $77,130  $3,753  4.87%  $73,082  $3,647  4.99%
                                       ------                  ------                  ------
Non-interest-bearing
 liabilities...............      $339                    $709                    $805
                              -------                 -------                 -------
      TOTAL AVERAGE
       LIABILITIES.........   $77,839                 $77,823                 $73,887
                              -------                 -------                 -------
Average Retained Earnings..    $8,865                 $17,407                 $24,105
                              -------                 -------                 -------
Total Liabilities and Retained
 Earnings..................   $86,688                 $95,245                 $97,992
                              =======                 =======                 =======
Net interest income........            $2,020                  $2,798                  $3,410
                                       ======                  ======                  ======
Interest rate spread.......                    2.02%                   2.19%                   2.43%
Net interest margin........              2.40%                   3.02%                   3.58%
Ratio of average interest-
 earning assets to average
 interest-bearing liabilities  108.73%                 120.30%                 130.15%

-----------------------
(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>

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 borrowing, 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.

                                                                       At
                                       Year Ended December 31,       December
                                     ---------------------------       31,
                                     1995        1996       1997      1997
                                     ----        ----       ----      ----

Weighted average yield on:
 Loans receivable, net               7.30%       7.96%      8.09%    8.06%
 Mortgage-backed securities -
  AFS                                5.84%       6.07%      6.03%    6.03%
 Investment Securities - AFS         4.98%       5.94%      5.94%    5.94%
 Mutual funds - AFS                  6.59%       5.95%      6.04%    5.73%
 FHLB Stock                          7.24%       7.03%      7.03%    7.00%
 Interest - bearing Deposits         5.46%       3.77%      5.29%    5.53%

All interest - earning assets        6.69%       7.06%      7.42%    7.45%

Weighted average rate paid on:
 Regular Savings Accounts            2.77%       2.51%      3.04%    2.84%
 MMDA's                              3.83%       3.81%      3.82%    3.83%
 Demand & NOW Accounts               2.27%       2.20%      2.22%    2.26%
 Certificates of Deposit             5.14%       5.54%      5.52%    5.58%
 FHLB Advances                       6.72%       5.40%      6.10%    6.35%

All interest-bearing liabilities     4.67%       4.87%      4.99%    4.99%

Interest rate spread (spread
 between weighted average rate
 on all interest-earning assets
 and all interest-bearing
 liabilities)                        2.02%       2.19%      2.43%    2.46%

Net interest margin (net interest
income as a percentage of average
interest-earnings assets)            2.40%       3.02%      3.58%    3.66%

                                        10
<PAGE>

<TABLE>

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).

                         12 Months Ended Dec.31, 1995         12 Months Ended Dec. 31, 1996
                         Compared to Dec. 31, 1996            Compared to Dec. 31, 1997
                         Increase (Decrease) Due to           Increase (Decrease) Due to
                         -----------------------------        -----------------------------
                                         Rate/                              Rate/
                         Rate   Volume   Volume  Total        Rate  Volume  Volume Total
                         ----   ------   ------  -----        ----  ------  ------ -----
                                                        In
Interest-Earning Assets:                             Thousands
                                                     ---------
<S>                      <C>    <C>      <C>    <C>          <C>   <C>      <C>    <C>
Loans Receivable,
 Net                     $322    $487     $44    $853         $75   $751     $12    $838
Mortgage-backed
 securities-AFS           $39   ($191)    ($8)  ($160)        ($6) ($106)     $1   ($111)
Investment Securi-
 ties - AFS               $74    $102     $20    $196          $0  ($108)     $0   ($108)
Mutual Funds - AFS       ($51)   ($11)     $1    ($61)         $7  ($109)    ($2)  ($104)
FHLB Stock                ($2)     $1      --     ($1)         $0     $0      $0      $0
Interest-bearing
 Deposits                ($35)   $177    ($55)    $87         $81   ($64)   ($26)   ($ 9)
                         -----   ----   -----   -----         ---  -----    -----  -----
Total net change in
 income on interest-
 earning assets          $347    $565      $2    $914        $157   $364    ($15)   $506
                         ----    ----   -----   -----        ----   ----    -----  -----
Interest-Bearing Liabilities:
Regular Savings
 Accounts                ($20)    $56     ($5)    $31         $52   ($72)   ($15)   ($35)
MMDA's                    ($1)   ($11)     --    ($12)         $1    $11      $0     $12
Demand & NOW Accounts     ($3)     $4      $0      $1          $1    ($3)    ($0)    ($2)
Certificates of Deposit  $243   ($118)    ($9)   $116        ($12)  ($79)     $0    ($91)
FHLB Advances              --      --      --      --          $0     $9      $1     $10
                         ----    ----   -----   -----        ----   ----    -----  -----
Total net change in
 expense on interest-
 bearing liabilities     $219    ($69)   ($14)   $136         $42  ($134)   ($14)  ($106)
                         ----    ----   -----   -----        ----   ----    -----  -----
Net change in net
 interest income         $128    $634     $16    $778        $115   $498      ($1)  $612
                         ====    ====     ===    ====        ====   ====      ===   ====
</TABLE>

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.

                                        11
<PAGE>

     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
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%.
Institutions with assets of less than $300 million and a risk-based capital
ratio of more than 12% are exempt. The Company meets these qualifications and
therefore is exempt. Assuming this proposed rule was in effect at December 31,
1997 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.

                                                      Net Portfolio as % of
                               Net Portfolio Value   Portfolio Value of Assets
                               -------------------   -------------------------
Change in Rates   $ Amount     $ Change   % Change     NPV Ratio    Change
---------------   --------     --------   --------     ---------    ------

    +400 bp        15,792       -3,856      -20 %        17.74%     -289 bp
    +300 bp        17,068       -2,580      -13 %        18.79%     -184 bp
    +200 bp        18,183       -1,465       -7 %        19.65%      -98 bp
    +100 bp        19,047         -600       -7 %        20.26%      -37
        0 bp       19,648                                20.63%
    -100 bp        20,033          386       +2 %        20.81%      +18 bp
    -200 bp        20,355          708       +4 %        20.93%      +30 bp
    -300 bp        20,860        1,212       +6 %        21.18%      +55 bp
    -400 bp        21,546        1,898      +10 %        21.57%      +94 bp

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

LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary sources of funds are customer deposits, proceeds
from principal and interest payments on 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 opportunities. The Company generally maintains sufficient cash and
short-term investments to meet short-term liquidity needs. At December 31,
1997, cash and due from depository institutions totaled $4.5 million, or 4.59%
of total assets, and mutual funds and investment securities classified as
available for sale that matured in one year or less totaled $11.2 million, or
11.42% of total assets. In addition, the Company maintains a credit facility
with the FHLB which provides for immediately available advances. The Company
had FHLB advances outstanding of $596,000 at December 31, 1997.

                                        12
<PAGE>

     Federal regulations require a savings institution to maintain an average
daily balance of liquid assets (cash and eligible investments) equal to at
least 4% of the average daily balance of its net withdrawable deposits and
short-term borrowing. 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, 1997 the
liquidity ratio was 17.57%.

     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, 1997 the Company had outstanding commitments to extend credit
which totaled $433,000 and lines of credit which totaled $453,000. 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, 1995, 1996, and
1997, the Company originated loans in the amounts of $13.4 million, $18.7
million, and $19.4 million, and purchased loans in the amounts of $4.2
million, $5.6 million, and $4.3 million, respectively.

     At December 31, 1997 the Company had stockholders' equity of $23.9
million, or 24.44% 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 operation. Unlike most industrial companies, virtually
all the assets and liabilities of a financial institution's 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.

YEAR 2000 ISSUES

     Fiserv, the primary data processor for the Company, is planning to
complete the conversion of the system used by the Bank to a Year 2000
compliant system by the third quarter of this year. Fiserv further plans to
make that system available for testing by the Bank and its other users in the
third quarter of this year. The Bank plans to make changes in its local
hardware and software necessary to meet Year 2000 requirements by the end of
June, 1998 and take advantage of the testing capabilities which will be
offered by Fiserv in the third quarter. Certain hardware has been identified
to be replaced with Year 2000 compliant equipment, however, that equipment
would have been replaced in the general upgrading program of the Bank. The
cost of upgrading is not expected to be material.

                                        13
<PAGE>

WILLIAMS               107 Adams * Jefferson City, MO 651201 * 573/635/6196 *
KEEPERS LLP                                                  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,
1996 and 1997, 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, 1997. 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, 1996 and
1997, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.

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

/s/ Williams-Keepers LLP

February 13, 1998

                                        14
<PAGE>

                        CNS BANCORP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 1996 AND 1997


                         ASSETS                           1996        1997
                                                     -----------  -----------
Cash and due from depository institutions (including
interest-bearing accounts totaling $4,204,131 in
 1996 and $3,112,633 in 1997)                        $ 4,572,026  $ 4,490,638
Securities available-for-sale (Note 2)                27,574,516   21,670,913
Stock in Federal Home Loan Bank (Note 2)                 939,300      939,300
Loans held-for-sale, net (Note 3)                        570,986      446,748
Loans receivable, net (Note 3)                        60,980,826   66,512,442
Accrued interest receivable (Note 4)                     619,454      616,075
Real estate owned, net (Note 5)                                -      652,795
Premises and equipment, net (Note 6)                   1,657,421    1,625,137
Income taxes receivable (Note 7)                         486,321      299,784
Other assets (Note 8)                                     80,341      636,963
                                                     -----------  -----------
     Total assets                                    $97,481,191  $97,890,795
                                                     ===========  ===========
     LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits (Note 10)                                   $72,880,431  $72,882,810
Borrowed funds (Note 11)                                       -      595,985
Advances from borrowers for taxes and insurance           57,299       28,829
Accrued expenses and other liabilities                   344,183      459,045
                                                     -----------  -----------
     Total liabilities                                73,281,913   73,966,669
                                                     -----------  -----------
Stockholders' equity
Common stock, $.01 par value:
  Authorized, 6,000,000 shares; 1,653,125 shares
   issued                                                 16,531       16,531
Additional paid-in capital                            16,003,502   16,023,150
Retained earnings, substantially restricted
 (Notes 12, 13)                                       10,044,280   10,544,892
Deferred compensation - Employee Stock Ownership
 Plan (ESOP) (Note 14)                                (1,249,411)  (1,082,640)
Deferred compensation - Management Recognition and
 Development Plan (MRDP) (Note 14)                             -     (929,883)
Stock held in trust for Executive Deferred
 Compensation Plan (Note 15)                            (127,428)    (162,396)
Unrealized loss on securities available-for-sale,
 net of deferred taxes (Note 2)                         (488,196)    (485,528)
                                                     -----------  -----------
     Total stockholders' equity                       24,199,278   23,924,126
                                                     -----------  -----------
       Total liabilities and stockholders' equity    $97,481,191  $97,890,795
                                                     ===========  ===========

The notes to consolidated financial statements are an integral part of these
statements.
                                        15
<PAGE>

<PAGE>
                        CNS BANCORP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

INTEREST INCOME                             1995         1996        1997

  Mortgage loans                         $3,495,637   $4,316,254   $5,070,798
  Consumer and other loans                   88,003      120,164      202,896
  Investment securities                     449,461      644,656      537,151
  Mortgage-backed securities                964,295      804,073      692,680
  Other interest-earning assets             640,105      666,226      553,648
                                         ----------   ----------   ----------
         Total interest income            5,637,501    6,551,373    7,057,173
                                         ----------   ----------   ----------
INTEREST EXPENSE
  Deposits                                3,616,877    3,752,985    3,636,701
  Borrowed funds (Note 11)                       92          222       10,298
                                         ----------   ----------   ----------
         Total interest expense           3,616,969    3,753,207    3,646,999
                                         ----------   ----------   ----------
         Net interest income              2,020,532    2,798,166    3,410,174
PROVISION FOR LOAN LOSSES (Note 3)          123,719       63,668        5,000
         Net interest income after       ----------   ----------   ----------
          provision for loan losses       1,896,813    2,734,498    3,405,174
                                         ----------   ----------   ----------
NON-INTEREST INCOME
  Loan servicing fees                        56,257       51,980       64,389
  Income from real estate owned (Note 5)     71,807      189,960       11,790
  Net gain (loss) on sale of assets
   (Note 16)                                (53,632)      34,451       17,714
  Other (Note 17)                            88,270      112,014      107,059
                                         ----------   ----------   ----------
         Total non-interest income          162,702      388,405      200,952
                                         ----------   ----------   ----------
NON-INTEREST EXPENSE
  Compensation and benefits                 897,840    1,065,289    1,343,923
  Occupancy and equipment                   236,525      241,374      246,300
  Deposit insurance premiums (Note 19)      179,920      677,395       46,873
  Other (Note 17)                           461,633      510,416      659,466
                                         ----------   ----------   ----------
         Total non-interest expense       1,775,918    2,494,474    2,296,562
                                         ----------   ----------   ----------
         Income before income taxes         283,597      628,429    1,309,564

PROVISION FOR INCOME TAXES (Note 7)          93,300      205,643      445,264
                                         ----------   ----------   ----------
            Net income                   $  190,297   $  422,786   $  864,300
                                         ==========   ==========   ==========
            Earnings per share (Note 18) $        -   $        -   $     0.56
                                         ==========   ==========   ==========
            Diluted earnings per share
            (Note 18)                    $        -   $        -   $     0.52
                                         ==========   ==========   ==========
The notes to consolidated financial statements are an integral part of these
statements.
                                        16
<PAGE>

<TABLE>
                                        CNS BANCORP, INC. AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997

                                                                          Stock
                                                                          Held in
                                                                          Trust for  Unrealized
                                                                          Executive  Loss on
                          Add-                   Deferred     Deferred    Deferred   Securities
           Common Stock   tional                 Compen-      Compen-     Compen-    Available-
        ----------------- Paid-in     Retained   sation       sation      sation     for-
        Shares    Amount  Capital     Earnings   ESOP         MRDP        Plan       Sale, Net   Total
        --------  ------- ----------  ---------- -----------  ----------  ---------  ---------   --------
---
<S>     <C>       <C>     <C>         <C>        <C>          <C>        <C>        <C>          <C>
Balance,
 December
 31,
 1994           - $     - $         - $9,506,821 $         -  $       -  $       -  $(1,273,248)
$8,233,573

Net income      -       -           -    190,297           -          -          -            -
190,297

Net
 change
 in unrea-
 lized loss
 on securi-
 ties avail-
 able-for-
 sale, net
 of deferred
 taxes          -       -           -          -           -          -          -      756,001
756,001
        --------- ------- ----------- ---------- -----------  ---------  ---------  -----------  --------
--
Balance,
 December
 31,
 1995           -       -           -  9,697,118           -          -          -     (517,247)
9,179,871

Net
 proceeds
 from
 common
 stock
 issued in
 conver-
 sion   1,653,125  16,531  15,983,295          -  (1,322,500)         -          -            -
14,677,326

Compensa-
 tion
 expense
 recognized
 for ESOP       -       -      20,207          -      73,089          -          -            -
93,296

Value of
 Company
 stock
 acquired
 for exe-
 cutive
 deferred
 compensa-
 tion
 plan           -       -           -          -           -          -   (127,428)           -
(127,428)

Dividends
 ($.05 per
 share)         -       -           -    (75,624)          -          -          -            -
(75,624)

Net income      -       -           -    422,786           -          -          -            -
422,786

Net change
 in unrea-
 lized loss
 on securi-
 ties avail-
 able-for-
 sale, net
 of de-
 ferred
 taxes          -       -           -          -           -          -          -       29,051
29,051
        --------- ------- ----------- ---------- -----------  ---------  ---------  -----------  --------
--
Balance,
 December
 31
 1996   1,653,125  16,531  16,003,502  10,044,280 (1,249,411)         -   (127,428)    (488,196)
24,199,278

Establishment
 of MRDP        -       -           -          -           - (1,033,203)         -            -
(1,033,203)

Compensation
 expense
 recognized
 for ESOP       -       -     117,389          -     166,771          -          -            -
284,160

Compensation
 expense
 recognized
 for MRDP       -       -           -         -            -    103,320          -           -
103,320

Valuation
 adjustment
 for MRDP
 trust
 receivable     -       -     (97,741)         -           -          -          -            -
(97,741)

Earnings
 on the
 executive
 deferred
 compensa-
 tion plan      -       -           -          -           -          -    (34,968)           -
(34,968)

Dividends
 ($ .22 per
 share)         -       -           -   (363,688)          -          -          -            -
(363,688)

Net income      -       -           -    864,300          -           -          -            -
864,300

Net change
 in unrea-
 lized loss
 on securi-
 ties
 available-
 for-sale,
 net of
 deferred
 taxes          -       -           -          -           -          -          -        2,668
2,668
        --------- ------- ----------- ---------- -----------  ---------  ---------  -----------  --------
---
Balance,
 December
 31,
 1997   1,653,125 $16,531 $16,023,150 $10,544,89 $(1,082,640) $(929,883) $(162,396) $  (485,528)
$23,924,126
        ========= ======= =========== ========== ===========  =========  =========  ===========
===========

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, 1995, 1996, AND 1997

CASH FLOWS FROM OPERATING ACTIVITIES           1995        1996        1997
                                           ----------  ----------  ----------
  Net income                               $  190,297  $  422,786  $  864,300
  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     284,160
     Compensation expense - MRDP                    -           -     103,320
     Amortization of premiums on
      securities available-for-sale            47,488      15,060      23,666
     Proceeds from the sale of loans
      held-for-sale                         1,679,504   4,081,012   1,523,816
     Origination of loans held-for-sale    (1,541,642) (5,295,676) (1,057,990)
     Depreciation                             147,541     133,872     127,900
     Provision for losses on loans and
      real estate owned                       123,719      63,668       5,000
     Loss on sale of securities
      available-for-sale                      113,845      45,617           -
     Gain on sale of real estate owned        (83,560)   (200,716)          -
     Gain on sales of loans held-for-sale     (10,983)    (41,752)    (17,714)
   Adjustments for (increases) decreases
    in operating assets and increases
    (decreases) in operating liabilities:
     Other assets                             (40,581)    (60,746)   (484,187)
     Accrued expenses and other
      liabilities                              35,837      84,397     115,055
      Income taxes receivable                  (5,987)     70,847     184,568
        Net cash provided (used) by        ----------  ----------  ----------
         operating activities                 636,978    (588,335)  1,671,894
                                           ----------  ----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Loan (originations), net of principal
   repayments                              (3,682,555) (1,690,300) (1,545,170)
  Purchases of:
     Loans receivable                      (4,200,000) (5,591,255) (4,315,320)
     Securities available-for-sale                  - (14,889,757) (2,401,243)
     Securities held-to-maturity           (1,225,000)          -           -
  Proceeds from maturity of:
     Securities available-for-sale          1,664,513   9,027,877   8,285,624
     Securities held-to-maturity            7,375,000           -           -
  Proceeds from sales of securities
   available-for-sale                       4,262,354   3,655,781           -
  Purchase of real estate held for
   investment                                       -           -    (897,543)
  Proceeds from sales of real estate owned    318,121     358,421     244,748
  Cash outflows for premises and equipment    (32,622)    (27,574)    (95,616)
        Net cash provided (used) by        ----------  ----------  ----------
         investing activities               4,479,811  (9,156,807)   (724,520)
                                           ----------  ----------  ----------

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, 1995, 1996, AND 1997

CASH FLOWS FROM FINANCING ACTIVITIES           1995        1996        1997
                                           ----------  ----------  ----------

Net (decrease) increase in deposits        (3,561,888) (3,050,486)      2,379
Net increase in borrowed funds                      -           -     595,985
Net increase (decrease) in advance
 payments by borrowers                          4,447      (5,742)    (28,470)
Net proceeds from stock issuance                    -  14,677,326           -
Acquisition of Company stock held in trust
 for executive  deferred compensation plan          -     (84,250)    (34,968)
Funding provided to MRDP trust                      -           -  (1,200,000)
Dividends                                           -     (75,624)   (363,688)
     Net cash (used) provided by          ----------- ----------- -----------
      financing activities                 (3,557,441) 11,461,224  (1,028,762)
                                          ----------- ----------- -----------
     Increase (decrease) in cash and
      cash equivalents                      1,559,348   1,716,082     (81,388)

Cash and cash equivalents at beginning of
 year                                       1,296,596   2,855,944   4,572,026
                                          ----------- ----------- -----------
Cash and cash equivalents at end of year  $ 2,855,944 $ 4,572,026 $ 4,490,638
                                          =========== =========== ===========
Cash paid for:
 Interest                                 $ 3,595,388 $ 3,784,173 $ 3,831,630
 Income taxes                             $    99,335 $   131,988 $   235,328
Non-cash transactions:
 Valuation adjustment for MRDP trust
  receivable                              $         - $         - $    97,741
 Transfer from investment securities
  held-to-maturity to investment          $ 4,002,833 $         - $         -
  securities available-for-sale
 Exchange of common stock for loan
  receivable from ESOP                    $         - $ 1,322,500 $         -
     ESOP

The notes to consolidated financial statements are an integral part of these
statements.
                                        19
<PAGE>

                 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) daily time deposits, certificates of deposit and
due from depository institutions. The Bank considers all highly

                                        20
<PAGE>

liquid debt instruments with original maturities when purchased of three
months or less to be cash equivalents.

Securities Available-For-Sale:  Securities available-for-sale consist of
mutual funds, bonds, notes, debentures, and mortgage-backed securities not
classified as trading securities nor as held-to-maturity securities.

Unrealized gains and losses, net of tax, on available-for-sale securities are
reported as a net amount in a separate component of stockholders' equity until
realized.

Any declines in the fair value of individual 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.

Premiums and discounts are recognized in interest income using the interest
method over the period to maturity.

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, 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

                                        21
<PAGE>

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).
Effective January 1, 1997, the Company adopted SFAS No. 125, Accounting For
Transfers and Servicing of Financial Assets and Extinquishment of Liabilities,
which superceded SFAS No. 122. The adoption of these statements did not have a
material effect on the Company's financial condition or operating results for
1996 or 1997. These pronouncements require 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 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

                                        22
<PAGE>

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: Earnings per share of common stock have been computed on
the basis of the weighted average number of shares of common stock
outstanding, including committed ESOP shares. Uncommitted ESOP shares and
granted stock options are included in the weighted average number of common
shares outstanding for computing diluted earnings per share.

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

                                        23
<PAGE>

2.    INVESTMENT SECURITIES

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

        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 govern-
 ment 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
                                   ===========  =======  ======== ===========


        1997                                     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  $     -  $613,549 $ 5,376,451
U.S. government and federal agency   5,800,037    7,792     2,123   5,805,706
Mortgage-backed securities of U.S.
 government agencies                10,690,092   25,759   227,095  10,488,756
                                   -----------  -------  -------- -----------
                                   $22,480,129  $33,551  $842,767 $21,670,913
                                   ===========  =======  ======== ===========

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:

                                            1995          1996        1997
                                        -----------   -----------  ---------

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

                                        24
<PAGE>

Gross unrealized gains                  $   29,125    $  48,778   $   33,551
Gross unrealized losses                   (801,140)    (862,438)    (842,767)
                                        ----------    ----------   ---------
   Net unrealized losses                  (772,015)    (813,660)    (809,216)
Deferred tax asset (Note 7)                254,768      325,464      323,688
    Unrealized loss on                  ----------    ----------   ---------
     securities available-
     for-sale, net of deferred
     taxes                              $ (517,247)   $(488,196)  $ (485,528)
                                        ==========    ==========   =========

The amortized cost and fair value of securities available-for-sale at December
31, 1997, 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                            $  5,800,037     $  5,805,706
Mortgage-backed securities                    10,690,092       10,488,756
Mutual funds                                   5,990,000        5,376,451
                                            ------------     ------------
                                            $ 22,480,129     $ 21,670,913
                                            ============     ============

The investment in FHLB stock of $939,300 at December 31, 1996 and 1997 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 outstanding advances from the FHLB at December
31, 1996 and $595,985 at December 31, 1997. At December 31, 1996 and 1997,
these pledged assets had a carrying value of $2,039,311 and $1,814,862,
respectively.

                                        25
<PAGE>

3.    LOANS RECEIVABLE

Loans receivable at December 31 are summarized as follows:

                                                  1996          1997
                                              -----------    -----------
Mortgage loans (principally conventional):
  One-to four-family residences               $48,318,129    $52,265,708
  Other properties                              9,259,133     12,269,200
  Construction loans                            2,685,238      1,619,797
  Land                                            134,343        108,699
                                              -----------    -----------
                                               60,396,843     66,263,404
Less:
  Undisbursed portion of mortgage loans         1,727,679      1,287,231
  Net deferred loan-origination fees                9,831         14,125
                                              -----------    -----------
Net mortgage loans                             58,659,333     64,962,048
                                              -----------    -----------
Commercial loans                                1,205,687        424,669
                                              -----------    -----------
Consumer and other loans:
  Automobile                                      325,540        401,483
  Manufactured home                                     -         47,595
  Share loans                                     485,522        651,273
  Other                                           687,193        412,823
                                              -----------    -----------
                                                1,498,255      1,513,174
                                              -----------    -----------
Net loans before allowance for loan losses     61,363,275     66,899,891

Less allowance for loan losses                    382,449        387,449
                                              -----------    -----------
Loans receivable, net                         $60,980,826    $66,512,442
                                              ===========    ===========

Loans held-for-sale of $570,986 and $446,748 at December 31, 1996 and 1997,
respectively, are carried at cost, which approximated market value at year
end.

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

                                             1995         1996         1997
                                           ---------    ---------    ---------

Beginning balance                          $ 195,062    $ 318,781    $ 382,449
Provision charged to income                  123,719       63,668        5,000
                                           ---------    ---------    ---------
Ending balance                             $ 318,781    $ 382,449    $ 387,449
                                           =========    =========    =========

Loans to directors and executive officers approximated $462,000 and $451,000
as of December 31, 1996 and 1997, respectively.

                                        26
<PAGE>

The following information relates to impaired loans as of and for the years
ended December 31, 1996 and 1997:

                                                  1996          1997
                                              -----------    -----------
Recorded investment in impaired loans for
 which a valuation allowance of $10,000
 is provided for both 1996 and 1997,
 based upon the measure of  the loan's
 fair value of underlying collateral          $    19,766    $    18,970

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       493,050        198,495
                                              -----------    -----------
     Total recorded investment in impaired
      loans                                   $   512,816    $   217,465
                                              ===========    ===========
Average recorded investment in impaired
 loans                                        $   474,889    $   336,780
                                              ===========    ===========

Interest income recognized for cash payments received on impaired loans during
1996 and 1997 totaled $14,879 and $15,187, respectively.

4.  ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at December 31 is summarized as follows:

                                                  1996          1997
                                              -----------    -----------
Investment securities                         $   190,041    $   158,292
Mortgage-backed securities                         89,798         78,632
Loans receivable and loans held-for-sale          339,615        379,151
                                              -----------    -----------
                                              $   619,454    $   616,075
                                              ===========    ===========
5.  REAL ESTATE OWNED

Real estate owned consisted of the following at December 31:

                                                  1996          1997
                                              -----------    -----------
Real estate acquired for investment           $ 1,250,000    $   652,795
Allowance for losses                           (1,250,000)             -
                                              -----------    -----------
Real estate acquired for investment, net      $         -    $   652,795
                                              ===========    ===========

The real estate acquired for investment in 1997 consists of an equity interest
in a joint venture engaged in the development of residential real estate.

                                        27
<PAGE>

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

                                             1995         1996         1997
                                           ---------    ---------    ---------
Income (loss) from real estate owned, net  $ (11,753)   $ (10,756)   $  11,790
Net gain on sale of real estate owned         83,560      200,716            -
                                           ---------    ---------    ---------
                                            $ 71,807    $ 189,960    $  11,790
                                            ========    =========    =========

Depreciation expense on foreclosed real estate held for the production of
income for the years ended December 31, 1995, 1996, and 1997 totaled
$25,607,$4,282, and $0, respectively.

Activity in the allowance for losses for real estate owned for the years ended
December 31 is as follows:

                                           Fore-     Real Estate
                                           closed    Acquired
                                           Real      for
                                           Estate    Investment      Total
                                           --------  -----------  -----------
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
Elimination of allowance due to sale of
 real estate owned                                -   (1,250,000)  (1,250,000)
                                           --------  -----------  -----------
Balance at December 31, 1997               $      -  $         -  $         -
                                           ========  ===========  ===========
6.  PREMISES AND EQUIPMENT

Premises and equipment at December 31 are summarized as follows:

                                                  1996          1997
                                              -----------    -----------
Land                                          $   237,356    $   237,356
Buildings                                       2,115,372      2,115,372
Furniture, fixtures and equipment                 414,718        510,255
                                              -----------    -----------
                                                2,767,446      2,862,983
Accumulated depreciation                       (1,110,025)    (1,237,846)
                                              -----------    -----------
                                              $ 1,657,421    $ 1,625,137
                                              ===========    ===========

Depreciation expense for the years ended December 31, 1995, 1996, and 1997
totaled $121,934, $129,590, and $127,900, respectively.

                                        28
<PAGE>

7.  INCOME TAXES

The Company and its subsidiaries file consolidated federal income tax and
individual state tax returns on a calendar year basis. Historically, the Bank
was allowed a special bad-debt deduction based on a percentage of taxable
income (8 percent for 1995) or on specified experience formulas. The Bank used
the percentage method in 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 1996,
the Bank was required to compute its bad debt deduction based on specified
experience formulas.

The Small Business Job Protection Act of 1996 also required the Bank to bring
into taxable income post-1987 tax bad debt reserves. Tax on this income will
be  payable over a six year period beginning in 1998 and is included in
deferred taxes 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, 1997. 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:

                                                  1996          1997
                                               ----------    ----------
Current                                        $  (82,998)   $ (156,219)
Deferred                                          569,319       456,003
                                               ----------    ----------
   Income taxes receivable                     $  486,321    $  299,784
                                               ==========    ==========

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

                                            1995         1996        1997
                                         ---------    ---------    ---------
Federal:
  Current                                $ 107,300    $ 218,678    $ 293,982
  Deferred                                 (26,000)     (39,564)     111,541
                                         ---------    ---------    ---------
                                            81,300      179,114      405,523
State:
  Current                                   12,000       26,529       39,741
                                         ---------    ---------    ---------
  Provision for income taxes             $  93,300    $ 205,643    $ 445,264
                                         =========    =========    =========

                                        29
<PAGE>

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

                                               1995       1996        1997
                                              ------     ------      ------
Statutory federal income tax rates            34.0%       34.0%      34.0%
Increase (decrease) resulting from:
  State income taxes                           2.8%        4.5%       6.2%
  Tax-exempt interest                         (2.6)%      (3.6)%     (1.4)%
  Other                                       (1.3)%      (2.2)%     (4.8)%
                                             -----       -----      -----
                                              32.9%       32.7%      34.0%
                                             =====       =====      =====

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:

                                                    1996          1997
                                                  ---------     ----------
Deferred tax assets:
  Allowances for losses on loans                  $  74,644     $   67,162
  Real estate investment                            425,000              -
  Deferred compensation                              27,493         55,216
  Unrealized loss on securities available-
   for-sale (Note 2)                                325,464        323,688
  Contribution carryforward                               -        290,335
  Other                                               7,308          6,521
                                                  ---------     ----------
     Total deferred tax assets                      859,909        742,922
                                                  ---------     ----------
Deferred tax liabilities:
  FHLB stock dividends                              111,671        111,671
  Cash/accrual differences                           13,194          9,806
  Involuntary conversion                            157,097        151,656
  Mortgage servicing rights                           8,628         13,786
                                                  ---------     ----------
     Total deferred tax liabilities                 290,590        286,919
                                                  ---------     ----------
     Net deferred tax asset                       $ 569,319     $  456,003
                                                  =========     ==========
8.  OTHER ASSETS

Other assets at December 31 are summarized as follows:

                                                    1996          1997
                                                  ---------     ----------
Equity interest in joint venture
 partnership (residential
 construction)                                    $       -     $  382,418
Receivable from MRDP revocable trust (Note 14)            -         69,056
Mortgage servicing rights, net (Note 9)              25,376         33,156
Miscellaneous                                        54,965        152,333
                                                  ---------     ----------
                                                  $  80,341     $  636,963
                                                  =========     ==========

                                        30
<PAGE>

9.  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 $21,852,453 and $20,755,283 at
December 31, 1996 and 1997, respectively.

Custodial escrow balances maintained in connection with the foregoing loan
servicing were $24,079 and $11,253 at December 31, 1996 and 1997,
respectively.

Mortgage servicing rights of $28,421 and $12,129 were capitalized in 1996 and
1997, respectively. Amortization of mortgage servicing rights totaled $3,045
and $4,349 in 1996 and 1997, respectively. The unamortized balance of $25,376
and $33,156 approximated the fair value of such rights at December 31, 1996
and 1997, respectively, and is included in other assets in the accompanying
consolidated statement of financial condition.

10.  DEPOSITS

Deposits at December 31 are summarized as follows:

                                                 1996            1997
                                              -----------    -----------

Demand deposits                               $   649,140    $   480,426
Savings deposits                               15,073,728     16,093,089
Time deposits                                  57,157,563     56,309,295
                                              -----------    -----------
                                              $72,880,431    $72,882,810
                                              ===========    ===========

The aggregate amount of short-term certificates of deposit with a minimum
denomination of $100,000 was approximately $2,597,000 and $2,967,000 at
December 31, 1996 and 1997, respectively. The portions of deposits which
exceed $100,000 are not federally insured.

At December 31, 1997, scheduled maturities of time deposits are as follows:

                                 Year Ending December 31,
               ---------------------------------------------------------------
Interest Rates:    1998         1999         2000         2001        Total
               -----------   ----------   ----------   ----------  -----------
 0.0 to 3.99%   $   13,005   $        -   $        -   $        -  $    13,005
 4.0 to 4.99%      470,993            -            -            -      470,993
 5.0 to 5.99%   37,322,752    5,233,861    4,709,573    2,007,154   49,273,340
 6.0 to 6.99%    2,582,307    3,416,807      306,733      168,437    6,474,284
 7.0 to 7.99%            -       77,673            -            -       77,673
               -----------   ----------   ----------   ----------  -----------
               $40,389,057   $8,728,341   $5,016,306   $2,175,591  $56,309,295
               ===========   ==========   ==========   ==========  ===========

                                        31
<PAGE>

11.  BORROWED FUNDS

Borrowed funds at December 31 are summarized as follows:

                                                         1996         1997
                                                       ---------  ----------
Advances from FHLB                                     $       -  $  595,985
                                                       =========  ==========

Information concerning advances from the FHLB is summarized as follows:

                                                         1996         1997
                                                       ---------  ----------

Average balance during the year                        $   4,110  $  149,499
Maximum month end balance during the year              $       -  $  600,000

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

                                           1994         1996        1997
                                         --------     --------   --------
Advances from the FHLB                   $     92     $    222   $ 10,298
                                         ========     ========   ========

The Bank has signed a blanket pledge agreement with the FHLB under which it
can draw advances of unspecified amounts from the FHLB. The outstanding
advance at December 31, 1997, is a 15 year advance with a fixed interest rate
of 6.35%. 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.

The following represents amounts due on the advance from the FHLB as of
December 31, 1997:

            1998                                $ 25,002
            1999                                  26,636
            2000                                  28,378
            2001                                  30,233
            2002                                  32,212
            Thereafter                           453,524
                                                --------
                                                $595,985
                                                ========

12.  REGULATORY CAPITAL

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 amounts and classification
are 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 minimum amounts and ratios (set forth in the
table below) of Tangible, Tier I, and Risk-based capital (as defined in the

                                        32
<PAGE>



regulations). Management believes, as of December 31, 1997, the Bank meets all
capital adequacy requirements to which it is subject.

As of December 31, 1997, 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.

                                      (Dollars in thousands)
                                                             To Be Well
                                           Minimum           Capitalized For
                                           For Capital       Prompt Corrective
                                           Adequacy Purposes Action Provisions
                         ---------------   ----------------- -----------------
                         Ratio  Amount     Ratio  Amount     Ratio  Amount
                         -----  --------   -----  ---------  -----  ---------

As of December 31, 1996:
 Stockholders' equity,
  and ratio to total
  assets                  19.1%  $ 17,616
                          ====
 Unrealized loss on
  securities
  available-for-sale                  488
                                 --------
 Tangible capital, and
  ratio to adjusted
  total assets            19.5%  $ 18,104   1.5%   $  1,390
                          ====   ========  ====    ========
 Tier 1 (core) capital,
  and ratio to adjusted
  total assets            19.5%  $ 18,104   3.0%   $  2,779    5.0%  $  4,632
                          ====   ========  ====    ========   ====   ========
 Tier 1 capital, and
  ratio to risk-
  weighted assets         40.6%  $ 18,104                      6.0%  $  2,678
                          ====                                ====   ========
 Allowance for loan and
  lease losses                        367
                                 --------
 Total risk-based
  capital, and ratio to
  risk-weighted assets    41.4%  $ 18,471   8.0%   $  3,570   10.0%  $  4,463
                          ====   ========  ====    ========   ====   ========
 Total assets                    $ 92,150
                                 ========
 Adjusted total assets           $ 92,645
                                 ========
 Risk-weighted assets            $ 44,628
                                 ========

                                        33
<PAGE>

                                      (Dollars in thousands)
                                                             To Be Well
                                           Minimum           Capitalized For
                                           For Capital       Prompt Corrective
                                           Adequacy Purposes Action Provisions
                         ---------------   ----------------- -----------------
                         Ratio  Amount     Ratio  Amount     Ratio  Amount
                         -----  --------   -----  ---------  -----  ---------
As of December 31, 1997:
 Stockholders' equity,
  and ratio to total
  assets                  19.8%  $ 18,557
                          ====
 Unrealized loss on
   securities
   available-for-sale                 486

 Disallowed servicing
  assets                              (33)
                                 --------
 Tangible capital, and
  ratio to adjusted
  total assets            20.1%  $ 19,010   1.5%   $  1,416
                          ====   ========  ====    ========
 Tier 1 (core) capital,
  and ratio to adjusted
  total assets            20.1%  $ 19,010   3.0%   $  2,832    5.0%  $  4,719
                          ====   ========  ====    ========   ====   ========
 Tier 1 capital, and
  ratio to risk-
  weighted assets         40.6%  $ 19,010                      6.0%  $  2,811
                          ====                                ====   ========
 Allowance for loan and
  lease losses                        373
                                 --------
 Total risk-based
  capital, and ratio to
  risk-weighted assets    41.4%  $ 19,383   8.0%   $  3,748   10.0%  $  4,685
                          ====   ========  ====    ========   ====   ========
 Total assets                    $ 93,933
                                 ========
 Adjusted total assets           $ 94,386
                                 ========
 Risk-weighted assets            $ 46,853
                                 ========

13.  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. As of December
31, 1997, no shares of preferred stock have 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.

                                        34
<PAGE>

Except for such restrictions, the existence of the liquidation account does
not restrict the use or application of retained earnings.

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.

14.  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.

                                        35
<PAGE>

The following table sets forth the plan's funded status at the plan's year end
of December 31:

                                                      (Dollars in thousands)
                                                         1996          1997
                                                       -------       -------
Actuarial present value of benefit obligations:
 Accumulated benefit obligation, including vested
  benefits of $447 and $518                            $  (454)      $  (522)
 Projected benefit obligation for services rendered    =======       =======
  to date                                              $  (539)      $  (607)
 Plan assets at fair value, primarily insurance
  contracts                                                489           559
                                                       -------       -------
 Projected benefit obligation in excess of plan assets     (50)          (48)
 Unrecognized net (gain) from past experience
  different from that assumed                              (99)          (97)
 Unrecognized net obligation being recognized over 15
  years                                                    118           108
                                                       -------       -------
Accrued pension cost                                   $   (31)      $   (37)
                                                       =======       =======

Net pension cost included the following components for each of the years ended
December 31:
                                                   (Dollars in thousands)
                                                1995         1996        1997
                                                -----        -----       -----
Service cost - benefits earned during
 the period                                     $  40        $  54      $  57
Interest cost on projected benefit                 46           35         38
 obligation
Actual return on plan assets                      (34)         (29)       (58)
Net amortization and deferral                      11            3         27
                                                -----        -----      -----
Net periodic cost                               $  63        $  63      $  64
                                                =====        =====       =====

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 7.0% and 3.5%, respectively. The expected long-term
rate of return on assets was 7.25%.

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, 1996 and 1997, the
Bank had an accrued liability with respect to the plan of $149,485 and
$185,229, 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. The balance outstanding on this debt was
$1,249,411 and $1,132,443 at December 31, 1996 and 1997, respectively. 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 and interest to
the total principal and interest outstanding. Deferred compensation relating
to the ESOP was $1,249,411 and $1,082,640 at December 31, 1996 and 1997,
respectively, and is reported as a reduction of stockholders' equity.
Compensation expense totaled

                                        36
<PAGE>

$93,296 and $284,160 for 1996 and 1997, respectively.

The following is a summary of ESOP shares at December 31, 1997:

                                                     1996         1997
                                                 ----------   ----------
        Allocated shares                              7,309       23,986
        Uncommitted shares                          124,941      108,264
                                                 ----------   ----------
           Total ESOP shares                        132,250      132,250
                                                 ==========   ==========
           Fair value of uncommitted shares      $1,889,733   $2,057,016
                                                 ==========   ==========

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.

Management Recognition and Development Plan: In conjunction with the Bank's
conversion, the Company formed an MRDP which is authorized to award 4% of the
total shares of common stock issued in the conversion. During 1997, a trust
was established to purchase the MRDP shares from the open market with
$1,200,000 in funds transferred from the Company. The trust is revocable by
the Company upon completion of its intended purpose. As of December 31, 1997,
48,025 shares have been purchased by the trust with 18,100 shares still to be
acquired. Because the funds remaining in the trust exceed the market value of
the shares remaining to be purchased as of December 31, 1997, the Company has
recorded a receivable of $69,056, from the trust, which is included in other
assets in the accompanying statements of financial condition.

As of December 31, 1997, the Company has awarded a total of 66,125 shares of
common stock to directors and employees in key management positions in order
to provide them with a proprietary interest in the Company in a manner
designed to encourage such employees to remain with the Company. As of
December 31, 1997, there are no common shares remaining to be awarded under
the Plan.

Deferred compensation, representing the shares' fair market value at the date
of award, is charged to income on a straight-line basis over the five year
vesting period as the Bank's directors and employees perform the related
future services. The unamortized balance of $929,883 as of December 31, 1997,
is reflected as a reduction of stockholders' equity. The Company recognized
$103,320 as compensation and benefits expense relating to this plan for the
year ended December 31, 1997.

Stock Option and Incentive Plan: In conjunction with the Bank's conversion,
the Company established a stock option and incentive plan for the benefit of
directors and employees of the Company and Bank. The plan became effective
upon its adoption by the Board of Directors of the Company and approval of the
plan by the stockholders' of the Company in June, 1997. The number of
authorized but unissued shares reserved under the plan is 165,313. Granted
stock options are regarded as common stock equivalents and are considered in
earnings per share calculations. At December 31, 1997, no options have been
exercised nor stock issued for this plan.

The stock options may be either incentive stock options or nonqualified stock
options. Incentive stock options can be granted only to participants who are
employees of the Company or its subsidiaries. The exercise price of an
incentive stock option must not be less than the market value of the Company's
stock on the date of the grant. All options expire no later than 10 years from
the date of grant. The options vest at the rate of 20% per year over a five
year period.

A summary of the status of the plan at December 31, 1997, and changes during
the period since inception in June

                                        37
<PAGE>

1997, are presented below:
                                                             Weighted
                                                          Average Exercise
                                            Shares            Price
                                           --------       ----------------
Stock options:
  Granted                                   132,590           $15.625

  Exercised                                       -

  Forfeited                                       -
                                            -------
Outstanding, December 31, 1997              132,590           $15.625
                                            =======
Options exercisable, December 31, 1997            -
                                            =======

The fair value of each option granted is estimated on the date of the grant
using the Black Scholes pricing model with the following weighted-average
assumptions:

           Expected dividend yield                                1.75%
           Risk-free interest rate                                5.63%
           Expected life of options                             5 years
           Expected volatility                                    0.195

The following table summarizes information about stock options under the plan
outstanding at December 31, 1997:

                  Options Outstanding           Options Exercisable
              -----------------------------   ------------------------
  Range of
  Exercise    Number       Remaining          Number         Exercise
  Prices      Outstanding  Contractual Life   Exercisable    Price
  ---------   -----------  ----------------   -----------    --------

  $15.625     132,590         9.5 years            -            -

The Company applies APB Opinion 25 and related Interpretations in accounting
for its plans, and no compensation cost has been recognized for the plan. Had
compensation cost for the Company's plan been determined based on the fair
value at the grant dates using Statement of Financial Accounting Standards No.
123, the Company's net income would have decreased by approximately $35,000
for 1997, and basic and diluted earnings per share would each have decreased
by $.02 for 1997. The effects of applying this statement for either
recognizing compensation cost or providing pro forma disclosures are not
likely to be representative of the effects on reported net income for future
years because options vest over several years.

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, 1997 pursuant to a change in control, he
would be entitled to receive a severance payment amounting to approximately
$293,000.


                                        38
<PAGE>

15.  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 and,
combined with miscellaneous cash funds in the trust, results in a value of
$127,428 and $162,396 as of December 31, 1996 and 1997, respectively, which is
reported as a reduction of stockholders' equity in the accompanying
consolidated statements of financial condition.

16.  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:

                                                1995         1996        1997
                                             ----------    ---------  --------
Net (loss) on sale of securities (Note 2)    $(113,845)   $(45,617)   $      -
Net gain on sale of loans held-for-sale         10,983      41,752      17,714
Net gain on sale of other assets                49,230      38,316           -
                                             ---------    --------    --------
                                             $ (53,632)   $ 34,451    $ 17,714
                                             =========    ========    ========

17.  OTHER NON-INTEREST INCOME AND EXPENSES

Other non-interest income and expense amounts are summarized as follows for
each of the years ended December 31:

                                                1995         1996        1997
                                            ---------    ---------   ---------
Other non-interest income:
  Banking service charges and other fees    $  57,900    $  69,874   $  59,904
  Loan late charges                            14,482       17,113      15,629
  Commission income                            11,984        5,681       6,433
  Other miscellaneous                           3,904       19,346      25,093
                                            ---------    ---------   ---------
                                            $  88,270    $ 112,014   $ 107,059
                                            =========    =========   =========
Other non-interest expense:
  Stationery, printing and other supplies   $  27,440    $  35,000   $  54,425
  Telephone and postage                        36,037       38,490      41,729
  Insurance and surety bond premiums           46,573       44,940      34,757
  Professional fees                            25,906       33,790      72,650
  Supervisory examinations                     23,868       31,901      29,962
  Other operating expenses                     64,562       76,243     177,849
  Data processing                             125,965      138,748     136,904
  Advertising and promotions                  111,282      111,304     111,190
                                            ---------    ---------   ---------
                                            $ 461,633    $ 510,416   $ 659,466
                                            =========    =========   =========

18.  EARNINGS PER SHARE (EPS)

                                        39
<PAGE>

Earnings per share for the year ended December 31, 1997, were calculated as
follows:

                                                Weighted
                                                Average
                                                Shares     Per-share
                                             (denominator)  amount
                                             ------------- ---------
Basic EPS                                       1,536,096   $0.56
                                                            -----
Effect of dilutive shares
   Unallocated ESOP shares                        117,029
   Stock options                                    4,534
                                                ---------
Diluted EPS                                     1,657,659   $0.52
                                                =========   =====

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.

19.  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.

20.  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.

                                        40
<PAGE>

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

At December 31, 1997, the Company had approximate outstanding commitments to
originate loans of $433,000. Fixed rate loan commitments were $218,000 in
first mortgage loans committed at interest rates ranging from 7.25% to 7.50%.
Variable-rate loan commitments were $215,000 in first mortgage loans with
interest rates ranging from 7.95% to 8.75%.

Other commitments, as of December 31, 1997, are summarized as follows:

         Home equity lines of credit            $ 41,000
         Overdraft lines of credit               161,510
         Commercial lines of credit              250,000
                                                --------
                                                $452,510
                                                ========

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

                                                 (Dollars in thousands)
                                                1996                 1997
                                         -----------------   ----------------
        FINANCIAL ASSETS                 Carrying  Fair       Carrying  Fair
                                         Amount    Value      Amount    Value
                                        --------- -------    --------- -------
Cash and due from depository            $ 4,572   $ 4,572    $ 4,490   $ 4,490
 institutions
Mutual funds                              5,452     5,452      5,376     5,376
Investment securities                    10,112    10,112      5,806     5,806
Mortgage-backed securities               12,010    12,010     10,489    10,489
Stock in FHLB                               939       939        939       939
Loans held-for-sale, net                    571       571        447       447
Loans receivable, net                    60,980    61,445     66,512    67,403
Accrued interest receivable                 619       619        616       616

       FINANCIAL LIABILITIES
Transaction accounts                     15,723    15,723     16,574    16,574
Certificates of deposit                  57,157    57,361     56,309    56,460
Borrowed funds                                -         -        596       596
Advances from borrowers for taxes            57        57         29        29
 and insurance
 All other liabilities                      344       344        459       459

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.

Stock in FHLB: 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

                                        41
<PAGE>

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.

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.

                                        42
<PAGE>

21.      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 and 1997

                                                        (Dollars in thousands)
                                                            1996     1997
                                                        ---------  ---------
                             ASSETS
        Cash and due from depository institutions        $  2,749   $ 1,784
        Securities available-for-sale                       4,107     1,201
        Investment in subsidiary                           17,492    18,557
        Other assets                                        1,321     2,389
                                                         --------  --------
              Total assets                               $ 25,669   $23,931
                                                         ========   =======

             LIABILITIES AND STOCKHOLDERS' EQUITY
        Accrued liabilities                              $    102   $     7
        Due to subsidiary                                   1,368         -
        Stockholders' equity                               24,199    23,924
                                                         --------  --------
              Total liabilities and stockholders'
               equity                                    $ 25,669   $23,931
                                                         ========   =======

Condensed Statement of Income

From Inception (January 16, 1996) through December 31, 1996 and the year ended
December 31, 1997

                                                        (Dollars in Thousands)
                                                             1996      1997
                                                             ----      ----
        Income

           Interest from securities available-for-sale       $156      $156
           Other interest                                      58       197
           Other non-interest income                            -         5
                                                             ----      ----
                                                              214       358
        Expenses                                               15       258
        Income before income taxes and equity in             ----      ----
         undistributed earnings of subsidiary                 199       100
        Provision for income taxes                            (96)      (40)
        Equity in undistributed earnings of subsidiary        320       804
                                                             ----      ----
        Net income                                           $423      $864
                                                             ====      ====

                                        43
<PAGE>

Condensed Statement of Cash Flows
From Inception (January 16, 1996) through December 31, 1996 and the year ended
December 31, 1997

                                                       (Dollars in thousands)
                                                            1996     1997
                                                        ---------  ---------
        Cash Flows From Operating Activities
           Net income                                    $    423   $   864
           Adjustments to reconcile net income to net
            cash provided by operating activities:
              Equity in undistributed earnings of
               subsidiary                                    (320)     (804)
              Accretion of discounts on securities
               available-for-sale                               -        (8)
              Compensation expense - MRDP                       -       103
              Change in other assets                          (72)   (1,116)
              Change in accrued liabilities                   135       (89)
              Change in due to subsidiary                       -    (1,368)
                                                         --------   -------
                 Net cash provided by operating
                  activities                                  166    (2,418)
                                                         --------   -------
        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     2,900
                                                         --------   -------
                 Net cash (used) provided by
                  investing activities                    (12,091)    2,900
                                                         --------   -------
        Cash Flows From Financing Activities
           Net proceeds from stock issuance                14,677         -
           Payment received on loan to ESOP (other
            asset)                                             73       117
           Funding provided to MRDP trust                       -    (1,200)
           Dividends paid                                     (76)     (364)
                                                         --------   -------
                 Net cash provided (used) by
                  financing activities                     14,674    (1,447)
                                                         --------   -------
                 Net change in cash and cash
                  equivalents                               2,749      (965)

           Cash and cash equivalents, beginning of
            period                                              -     2,749
                                                         --------   -------
           Cash and cash equivalents, end of period      $  2,749   $ 1,784
                                                         ========   =======
       Supplemental Disclosure of Non-Cash
        Transactions:

           Exchange of common stock for loan
            receivable from ESOP (other asset)           $  1,322   $     -
                                                         ========   =======
           Write down of MRDP trust receivable after
            establishment of the MRDP                    $      -   $    98
                                                         ========   =======

                                        44
<PAGE>

22.      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, except per share data)
                                June 30,      September 30,    December 31,
                                 1996             1996            1996
                                --------      -------------    ------------
Total interest income           $1,623           $1,737          $1,730
Total interest expense             983              925             907
                                ------           ------          ------
Net interest income                640           ------             823
Provision for loan losses            7              812              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
                                ======           ======          ======
Earnings (loss) per share                        $(0.11)         $ 0.09
                                                 ======          ======
Diluted earnings (loss) per
 share                                           $(0.11)         $ 0.08
                                                 ======          ======

                            (Dollars in thousands, except per share data)
                          March 31,    June 30,   September 30,   December 31,
                            1997         1997         1997            1997
                          ---------    --------   -------------   ------------
Total interest income     $1,742       $1,774       $1,767          $1,775
Total interest expense       892          908          922             925
                          ------       ------       ------          ------
Net interest income          850          866          845             850
(Benefit) provision for
 loan losses                 (27)          22           16              (6)
Net interest income after ------       ------       ------          ------
 provision for loan losses   877          844          829             856
Total non-interest income     52           42           45              62
Total non-interest expense   544          527          555             671
                          ------       ------       ------          ------
Income before income taxes   385          359          319             247
Provision for income taxes   154          144          128              20
                          ------       ------       ------          ------
Net income                $  231       $  215       $  191          $  227
                          ======       ======       ======          ======
Earnings per share        $ 0.15       $ 0.14       $ 0.12          $ 0.15
                          ======       ======       ======          ======
Diluted earnings per
 share                    $ 0.14       $ 0.13       $ 0.11          $ 0.14
                          ======       ======       ======          ======

                                        45
<PAGE>

                                CNS BANCORP, INC
                             STOCKHOLDER INFORMATION

ANNUAL MEETING

The annual meeting of stockholders will be held at 2:00 p.m., Tuesday, April
21, 1998 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
symbol "CNSB".

PRICE RANGE OF COMMON STOCK

The table below shows the price range of common stock for the calendar year of
1997, 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                                     FISCAL 1997
   -------------------                              -----------------
 High        Low      Dividends    QUARTER       High     Low     Dividends

n/a         n/a          n/a        First       $17.75   $15.00      $.05
$12.00      $10.50       $.00       Second      $16.75   $15.00      $.05
$13.125     $11.00       $.00       Third       $17.75   $16.25      $.06
$15.00      $12.75       $.05       Fourth      $21.625  $17.25      $.06

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 on Note 13 of
the Notes to Consolidated Financial Statements included in this report.

As of March 2, 1998 the Company had approximately 427 stockholders of record
and 1,644,598 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, 1997 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

                                        46
<PAGE>

                                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's Inc., a mens'
  specialty retailer.

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

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

James E. Whaley
  Director since 1975. Majority owner of Whaley's East End Drug, a retail
  pharmacy.

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

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

Michael A. Dallmeyer
  Director since 1993. Partner in the law firm of Hendren and Andrae,
  Jefferson City, Missouri.

OFFICERS OF CNS BANCORP, INC.

Robert E. Chiles                          David L. Jobe
     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
     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, NW
Jefferson City, Missouri   65101          Suite 470 East
                                          Washington, DC 20005

                                        47
<PAGE>

                            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.

<PAGE>

                               Exhibit 23

                      Consent of Independent Auditors

<PAGE>


WILLIAMS               107 Adams * Jefferson City, MO 651201 * 573/635/6196 *
KEEPERS LLP                                                  573/635-8394 fax
------------------------------------------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

JEFFERSON CITY
COLUMBIA
MEXICO

                        INDEPENDENT AUDITORS' CONSENT

We hereby consent to the incorporation by reference in the Registration
Statement of CNS Bancorp, Inc. on Form S-8 (File No. 333-29861), of our
report, dated February 13, 1998, accompanying the consolidated financial
statements incorporated by reference in CNS Bancorp, Inc.'s Annual Report on
Form 10-KSB for the year ended December 31, 1997.

/s/ Williams-Keepers LLP

Jefferson City, Missouri
March 30, 1998

<PAGE>