SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                 FORM 10-K

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

     For the Fiscal Year Ended March 31, 2000

                                OR

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

                   Commission File Number: 0-22953

                     OREGON TRAIL FINANCIAL CORP., INC.
------------------------------------------------------------------------------
         (Exact name of registrant as specified in its charter)

                  Oregon                                    91-1829481
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(State or other jurisdiction of incorporation            (I.R.S. Employer
or organization)                                           I.D. Number)


   2055 First Street, Baker City, Oregon                      97814
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 (Address of principal executive offices)                  (Zip Code)


Registrant's telephone number, including area code:       (541) 523-6327
                                                    --------------------------
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)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  YES   X    NO
                                                    -----     -----
     Indicate by check mark whether disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
other information statements incorporated by reference in Part III of this
Form 10-K or any amendments to this Form 10-K.  YES   X    NO
                                                    -----     -----

     As of June 19, 2000, there were issued and outstanding 3,317,006 shares
of the Registrant's Common Stock.  The Registrant's voting stock is traded
over-the-counter and is listed on the Nasdaq National Market under the symbol
"OTFC."  The aggregate market value of the voting stock held by nonaffiliates
of the Registrant, based on the closing sales price of the Registrant's common
stock as quoted on the Nasdaq National Market on June 19, 2000 of $10.94, was
$36,281,000.

                   DOCUMENTS INCORPORATED BY REFERENCE

     1.   Portions of Registrant's Annual Report to Shareholders for the
Fiscal Year Ended March 31, 2000 ("Annual Report") (Parts I and II).

     2.   Portions of Registrant's Definitive Proxy Statement for the 2000
Annual Meeting of Shareholders (Part III).

<PAGE>

                                   PART I

Item 1.  Business
-----------------

General

     Oregon Trail Financial Corp. ("Company"), an Oregon corporation, was
organized on June 9, 1997 for the purpose of becoming the holding company for
Pioneer Bank, A Federal Savings Bank ("Bank") upon the Bank's conversion from
a federal mutual to a federal stock savings bank ("Conversion").  The
Conversion was completed on October 3, 1997.  At March 31, 2000, the Company
had total assets of $370.6 million, total deposits of $237.7 million and
shareholders' equity of $53.1 million.  All references to the Company herein
include the Bank where applicable.

     The Bank was organized in 1901.  The Bank is regulated by the Office of
Thrift Supervision ("OTS") and its deposits are insured up to applicable
limits under the Savings Association Insurance Fund ("SAIF") of the Federal
Deposit Insurance Corporation ("FDIC").  The Bank also is a member of the
Federal Home Loan Bank ("FHLB") System.

     The Bank is a community oriented financial institution whose principal
business is attracting retail deposits from the general public and using these
funds to originate one- to- four family residential mortgage loans and
consumer loans within its primary market area.  The Bank also actively
originates home equity and second mortgage loans.  Beginning in 1996, the Bank
began supplementing its traditional lending activities with commercial
business loans, agricultural loans, and the purchase of dealer-originated
automobile contracts.

     In addition to its lending activities, the Bank invests excess liquidity
in short to long term U.S. Government and government agency securities and
mortgage-backed and related securities issued by U.S. Government agencies.
Investment securities and mortgage-backed and related securities constituted
32.9% of total assets at March 31, 2000.  See "-- Investment Activities."

Market Area

     The Bank's primary market area encompasses those regions surrounding its
offices in Baker, Grant, Harney, Malheur, Union, Wallowa, Wheeler and Umatilla
Counties in Oregon and Payette and Washington Counties in Idaho.  The Bank's
home office is located in Baker City, Oregon with branches in Ontario, John
Day, Burns, Enterprise, La Grande, Island City, Vale, and its newest location
Pendleton, Oregon, which opened May 30, 2000.

     The principal industries of the market area are agriculture and timber
products.  The Bank's market area is largely rural, with most of the farms and
ranches being relatively small and family owned.  The local economies are also
dependent on retail trade with lumber, recreation and tourism providing
substantial contributions.  Major employers in the market area include
Confederated Tribes of the Umatilla Indians, Eastern Oregon Correctional
Institute, Fleetwood Homes, St. Anthony's Hospital, U.S. Forest Service,
Bureau of Land Management, Snake River Correctional Institute, Oregon
Department of Transportation, Boise Cascade, Ore-Ida, Grande Ronde Hospital,
Holy Rosary Hospital, Powder River Correctional Facility, Treasure Valley
Community College, Eastern Oregon University, local school districts and local
government.

Lending Activities

     General.  The Bank's loan portfolio totaled $220.6 million at March 31,
2000, representing 59.5% of total assets at that date.  The Bank concentrates
its lending activities within its primary market area.  Historically, the
Bank's primary lending activity has been the origination of one- to- four
family residential mortgage loans.  To a lesser extent, the Bank makes
mortgage loans for the purpose of constructing primarily single-family
residences.

     As a result of management's desire to diversify its lending portfolio and
satisfy local demand for credit, the Bank has significantly increased its
origination of agricultural, indirect dealer and commercial business loans
since July

                                       1
<PAGE>

1996.  Commercial business and agricultural loans primarily include operating
lines of credit and term loans for fixed asset acquisitions.

     The Bank has also been active in the origination of consumer loans, which
primarily consist of home equity loans, secured and unsecured and, to a lesser
extent, automobile loans, credit card loans, home improvement loans, mobile
home loans and loans secured by savings deposits.  More recently, the Bank has
expanded its purchase of dealer-originated contracts to include those secured
by automobiles, motorcycles, all terrain vehicles and recreational vehicles.
During the fiscal year ended March 31, 2000, the Bank purchased $80,000 of
dealer originated contracts secured by recreational vehicles.

                                       2
<PAGE>

<TABLE>

     Loan Portfolio Analysis.  The following table sets forth the composition of the Bank's loan portfolio
(excluding loans held-for-sale) at the dates indicated. The Bank had no concentration of loans exceeding 10%
of total gross loans other than as presented below.

                                             At March 31,                                   At June 30,
             ---------------------------------------------------------------------------  ---------------
                   2000                1999               1998               1997               1996
          -----------------   -----------------  -----------------  -----------------  ---------------
             Amount    Percent   Amount    Percent  Amount    Percent  Amount   Percent   Amount  Percent
             ------    -------   ------    -------  ------    -------  ------   -------   ------  -------
                                                   (Dollars in thousands)
<S>          <C>        <C>      <C>       <C>     <C>       <C>     <C>      <C>       <C>       <C>
Mortgage Loans:
One-to-four-
 family..... $127,589    57.13%  $109,089  58.00%  $100,740  64.65%  $101,792   71.99%  $101,199   74.71%
Multi-family    2,989     1.34      2,810   1.49      1,194   0.77      1,844    1.30      1,927    1.42
Commercial .   14,808     6.63     13,703   7.29      7,906   5.07      4,768    3.37      4,724    3.49
Agricultural    2,420     1.08      2,240   1.19        725    .47         --      --         --      --
 Construction   3,648     1.63      2,825   1.50      1,616   1.04        853    0.60      1,745    1.29
 Land.......      158      .07        330    .17        297   0.19        223    0.16         14    0.01
  Total      --------   ------   -------- ------   -------- ------   --------  ------   --------  ------
   mortgage
   loans....  151,612    67.88    130,997  69.64    112,478  72.18    109,480   77.42    109,609   80.92
             --------   ------   -------- ------   -------- ------   --------  ------   --------  ------
Consumer Loans:
 Home equity
  and second
  mortgage..   14,983     6.71     16,262   8.65     19,231  12.34     17,514   12.39     12,751    9.41
 Credit card    1,026      .46        949    .50        854   0.55        844    0.60        791    0.58
 Automobile(1) 21,547     9.65     11,843   6.30      5,719   3.67      2,064    1.46      1,405    1.04
 Loans secured
  by deposit
  accounts..      452      .20        416    .22        648   0.42        731    0.52        593    0.44
 Unsecured..    3,414     1.53      2,836   1.50      2,047   1.31      1,611    1.14      4,580    3.38
 Other......    3,190     1.43      2,985   1.59      4,623   2.97      2,627    1.85      2,587    1.91
             --------   ------   -------- ------   -------- ------   --------  ------   --------  ------
  Total
   consumer
   loans....   44,612    19.98     35,291  18.76     33,122  21.26     25,391   17.96     22,707   16.76
             --------   ------   -------- ------   -------- ------   --------  ------   --------  ------
Commercial
 business
 loans......   13,853     6.20     12,031   6.40      5,968   3.83      4,066    2.88      3,142    2.32
             --------   ------   -------- ------   -------- ------   --------  ------   --------  ------
Agricultural
 loans......   13,275     5.94      9,781   5.20      4,254   3.19      2,466    1.74         --      --
             --------   ------   -------- ------   -------- ------   --------  ------   --------  ------
  Total loans 223,352   100.00%   188,100 100.00%   155,822 100.00%   141,403  100.00%   135,458  100.00%
                        ======            ======            ======             ======             ======
Less:
 Undisbursed
  portion of
  loans in
  process...        0                   0               102               769              1,585
 Net deferred
  loan fees.    1,365               1,125             1,035             1,028                985
 Allowance
  for loan
  losses....    1,396               1,228               847               725                541
             --------            --------          --------          --------           --------
  Total
   loans
   receiv-
   able,
   net...... $220,591            $185,747          $153,838          $138,881           $132,347
             ========            ========          ========          ========           ========
------------------
(1) Includes dealer-originated automobile contracts of $17.4 million, $9.3 million and $5.1 million at March
31, 2000, 1999 and 1998, respectively.

                                                         3
</TABLE>
<PAGE>

     One- to- Four Family Real Estate Lending.  Historically, the Bank has
concentrated its lending activities on the origination of loans secured by
first mortgages on existing one- to- four family residences located in its
primary market area.  At March 31, 2000, $127.6 million, or 57.1%, of the
Bank's total loan portfolio, consisted of such loans, with an average loan
balance of $59,000.

     Generally, the Bank's fixed-rate one- to- four family mortgage loans have
maturities of 15 to 30 years and are fully amortizing with monthly payments
sufficient to repay the total amount of the loan with interest by the end of
the loan term.  Generally, they are originated under terms, conditions and
documentation which permit them to be sold to private investors.  The Bank's
fixed-rate loans customarily include "due on sale" clauses, which give the
Bank the right to declare a loan immediately due and payable in the event the
borrower sells or otherwise disposes of the real property subject to the
mortgage and the loan is not paid.

     At March 31, 2000, $98.6 million, or 44.1%, of the total loans before net
items were fixed rate one- to- four family loans and $29.0 million, or 13.0%,
were adjustable rate mortgage loans ("ARM loans").  The Bank currently offers
an ARM product for its portfolio which adjusts on the anniversary date of the
origination based on the one year Treasury constant maturity index.  The
Bank's ARMs are typically based on a 30-year amortization schedule.  The Bank
offers discounted ARM loans where the initial interest rate is up to 2.00
percentage points below the prevailing interest rate.   The Bank, however,
qualifies the borrowers on its ARM loans based on the fully indexed rate.  The
Bank's current ARM loans do not provide for negative amortization and
generally provide for annual and lifetime interest rate adjustment limits of
2.0% and 6.0%, respectively.

     At March 31, 2000, $18.7 million, or 27.7% of the Bank's total ARM loans
had interest rates that adjusted annually based on the Eleventh District Cost
of Funds Index ("COFI").  The COFI is a lagging index which, together with the
periodic and overall interest rate caps, may cause the yield on such loans to
adjust more slowly than the cost of interest-bearing liabilities especially in
a rapidly rising rate environment.  In November 1995, the Bank discontinued
using the COFI index and began using the one year Treasury constant maturity
index.

     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 retention of ARM loans in the Bank's loan portfolio helps reduce the
Bank'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.
In addition, although ARM loans allow the Bank  to increase the sensitivity of
its asset base to changes in the interest rates, the extent of this interest
sensitivity is limited by the annual and lifetime interest rate adjustment
limits.  Because of these considerations, the Bank has no assurance that
yields on ARM loans will be sufficient to offset increases in the Bank's cost
of funds.  The Bank believes these risks, which have not had a material
adverse effect on the Bank to date, generally are less than the risks
associated with holding fixed-rate loans in portfolio during a rising interest
rate environment.

     The Bank requires title insurance insuring the status of its lien on all
loans where real estate is the primary source of security.  The Bank also
requires the maintenance of fire and casualty insurance (and, if appropriate,
flood insurance).

     The Bank's one- to- four family residential mortgage loans typically do
not exceed 80% of the lower of cost or appraised value of the security
property.  Pursuant to underwriting guidelines adopted by the Bank's Board of
Directors, the Bank can lend up to 97% of the lower of cost or appraised value
of the property securing a one- to- four family residential loan; however, the
Bank obtains private mortgage insurance on the portion of the principal amount
that exceeds 80% of the appraised value of the security property.

                                       4
<PAGE>

     Agricultural Lending.  Agriculture is a major industry in the Bank's
market area.  Subject to market conditions, the Bank intends to continue to
emphasize agricultural loans.  In 1996, the Bank began originating a
significant number of loans to finance agricultural needs.  This includes
collateral secured agricultural loans for the purchase of farmland and
equipment.  At March 31, 2000, agricultural loans amounted to $15.7 million,
or 7.0%, of the total loan portfolio; $2.4 million of these loans were secured
by real estate.  The Bank has sought to limit its agricultural lending to
borrowers with a strong capital base, sufficient management depth, proven
ability to operate through agricultural business cycles, reliable cash flow
and a willingness to provide the Bank with the necessary financial reporting.

     Agricultural operating loans are made to finance farm operating expenses
over the course of a growing season with such loans being typically made in
amounts of $500,000 or less.  However, the Bank's largest agricultural
operating loan had an original commitment of $1.7 million (with $145,000
outstanding at March 31, 2000) which was provided to finance a farming
operation that grows mint, grain, and potatoes.  This loan was performing in
accordance with its terms at March 31, 2000.  Agricultural operating loans
generally are made as a percentage of the borrower's anticipated income to
support budgeted operating expenses.  These loans generally are secured by a
blanket lien on all crops, livestock, equipment, accounts and products and
proceeds thereof.  The variables that effect income during the year are pounds
of grain and the fluctuating market prices.  In the case of crops,
consideration is given to projected yields and prices from each commodity.
The interest rate is normally adjusted monthly based on the prime rate as
published in The Wall Street Journal, plus a negotiated margin of up to 2%.
Because such loans are made to finance a farm's or ranch's annual operations,
they are written on a one-year review and renewable basis.  The renewal is
dependent upon prior year's performance and the forthcoming year's projections
as well as overall financial strength of the borrower.  The Bank carefully
monitors these loans and prepares monthly variance reports on income and
expenses.  To meet the seasonal operating needs of a farm, borrowers may
qualify for single payment notes, revolving lines of credit and/or
non-revolving lines of credit.

     In underwriting agricultural operating loans, the Bank considers the cash
flow of the borrower based upon the expected income stream as well as the
value of collateral used to secure the loan.  Collateral generally consists of
cattle or cash crops produced by the farm, such as grains, grass seed, peas,
sugar beets, mint, onions, potatoes, corn and alfalfa.  In addition to
considering cash flow and obtaining a blanket security interest in the farm's
cash crop, the Bank may also collateralize an operating loan with the farm's
operating equipment, breeding stock, real estate, and federal agricultural
program payments to the borrower.

     The Bank also originates loans to finance the purchase of farm equipment
and will continue to pursue this type of lending in the future.  Loans to
purchase farm equipment are made for terms of up to seven years.  On loans not
exceeding five years, fixed rates are established at inception with margins
set from 2% to 3.5% above the five-year Treasury Note.  On loans in excess of
five years, rates are established at inception with margins set from 2% to
3.5% above the five year Treasury Note with adjustments set at three to five
years.

     Agricultural real estate loans primarily are secured by first liens on
farmland and improvements thereon located in the Bank's market area, to
service the needs of the Bank's existing customers.  The largest such loan
totalled $957,000 at March 31, 2000.  Loans are generally written in amounts
up to 50% to 75% of the tax assessed or appraised value of the property at
terms ranging from 10 to 20 years. Such loans have interest rates that
generally adjust at least every five years based upon the current five year
Treasury Note, plus a negotiated margin up to 3.5%.  Fixed rate loans are
granted on terms generally not to exceed five years with rates established at
inception based on margins set from 2.0% to 3.5% above the current five year
Treasury Note.  In originating an agricultural real estate loan, the Bank
considers the debt service coverage of the borrower's cash flow, the appraised
value of the underlying property, the experience and knowledge of the
borrower, and the borrower's past performance with the Bank and/or market
area.

     Payments on an agricultural real estate loan depend, to a large degree,
on the results of operation of the related farm entity.  The repayment is also
subject to both economic and weather conditions as well as market prices for
agricultural products, which can be highly volatile at times.  Such loans are
not made to start up businesses but are

                                       5
<PAGE>

generally reserved for profitable operators with substantial equity and proven
history.  At March 31, 2000, agricultural real estate loans totalled $2.4
million, or 1.1%, of the loan portfolio.

     Among the greatest and more common risks to agricultural lending can be
weather conditions and disease.  This risk can be mitigated through multi-
peril crop insurance.  Commodity prices also present a risk which may be
reduced by the use of set price contracts.  Required beginning and projected
operating margins provide for reasonable reserves to offset unexpected yield
and price deficiencies.

     In addition to the above mentioned risks, the Bank also considers
management succession, life insurance and business continuation plans.

     Construction Lending.  On a limited basis, the Bank also offers
construction loans to qualified borrowers for construction of single-family
residences in the Bank's primary market area.  Typically, the Bank limits its
construction lending to a local builder for the construction of a
single-family dwelling where a permanent purchase commitment has been obtained
or individuals are building their primary residences.  On a limited basis, the
Bank lends to contractors for housing construction where the house is not
presold.  The ability of a developer to sell developed lots or completed
dwelling units will depend on, among other things, demand, pricing,
availability of comparable properties and economic conditions.  Construction
loans generally have a six-month term with only interest being paid during the
term of the loan, and convert at the end of six months to permanent financing
and are underwritten in accordance with the same standards as the Bank's
mortgages on existing properties. Construction loans generally have a maximum
loan-to-value ratio of 80%. Borrowers must satisfy all credit requirements
which would apply to the Bank's permanent mortgage loan financing for the
subject property.

     Construction financing generally is considered to involve a higher degree
of risk of loss than long-term financing on improved, occupied real estate.
Risk of loss on a construction loan is dependent largely upon the accuracy of
the initial estimate of the property's value at completion of construction or
development and the estimated cost (including interest) of construction.
During the construction phase, a number of factors could result in delays and
cost overruns.  If the estimate of construction costs proves to be inaccurate,
the borrower may be required to fund the cost overruns or the Bank may advance
funds beyond the amount originally committed to permit completion of the
development.  The Bank has sought to minimize this risk by limiting
construction lending to qualified borrowers in the Bank's market area and by
limiting the aggregate amount of outstanding construction loans.  At March 31,
2000, construction loans amounted to $3.6 million, or 1.6%, of the loan
portfolio.

     Multi-Family and Commercial Real Estate Lending.  The multi-family
residential loan portfolio consists primarily of loans secured by small
apartment buildings and the commercial real estate loan portfolio includes
loans to finance the construction or acquisition of small office buildings,
retail stores, car dealerships.  The largest such loan totalled $632,000 at
March 31, 2000.  At March 31, 2000, the Bank had $3.0 million of multi-family
residential and $14.8 million of commercial real estate loans, all of which
amounted to 1.3% and 6.6%, respectively, of the total loan portfolio at such
date.  Multi-family and commercial real estate loans are generally
underwritten with loan-to-value ratios of up to 75% of the lesser of the
appraised value or the purchase price of the property.  Such loans generally
are granted on 15 to 20 year terms on an adjustable rate equal to the five
year Treasury Note plus a negotiated margin up to 3 1/2% generally with
established floors.  On fixed rate loans where terms generally do not exceed
ten years, rates are established at inception with margins set from 2.0% to
3.5% above the current five year Treasury Note.  Because of the inherent risk
involved in this type of lending, the Bank generally limits its multi-family
and commercial real estate lending to borrowers within its market area who
have proven financial histories.

     Multi-family residential and commercial real estate lending entails
significant additional risks as compared with single-family residential
property lending.  Multi-family residential and commercial real estate loans
typically involve large loan balances to single borrowers or groups of related
borrowers. The payment experience on such loans typically is dependent on the
successful operation of the real estate project.  These risks can be
significantly impacted by supply and demand conditions in the market for
office, retail and residential space, and, as such, may be subject to a
greater extent to adverse conditions in the economy generally.  To minimize
these risks, the Bank generally limits itself to its

                                       6
<PAGE>

market area or to borrowers with which it has had prior experience or who are
otherwise well known to the Bank.  In addition, in the case of commercial
mortgage loans made to a partnership or a corporation, the Bank seeks,
whenever possible, to obtain personal guarantees and annual financial
statements of the principals of the partnership or corporation.  The Bank
reviews all significant commercial real estate loans on an annual basis to
ensure that the loan meets current underwriting standards.  In addition, the
Bank underwrites commercial real estate loans at a rate of interest
significantly above that carried on the loan at the time of origination to
evaluate the borrower's ability to meet principal and interest payments on the
loan in the event of upward adjustments to the interest rate on the loan.

     Consumer and Other Lending.  The Bank originates a variety of consumer
loans.  Such loans generally have shorter terms to maturity and higher
interest rates than mortgage loans.  At March 31, 2000, the Bank's consumer
loans totaled approximately $44.6 million, or 20.0%, of the Bank's total
loans.  The Bank's consumer loans consist primarily of home improvement and
equity loans, automobile loans, boat and recreational vehicle loans, unsecured
loans, credit card loans and deposit account loans.  The growth of the
consumer loan portfolio in the current year consisted primarily of an increase
in the origination of indirect dealer automobile loans, as discussed below.

     In recent periods, the Bank has emphasized the origination of consumer
loans, and, in particular, automobile loans due to their shorter terms and
higher yields than residential mortgage loans.  The Bank anticipates that it
will continue to be an active originator of automobile and other consumer
loans.  Factors that may affect the ability of the Bank to increase its
originations in this area include the demand for such loans, interest rates
and the state of the local and national economy.

     The Bank offers open-ended "preferred" lines of credit on either a
secured or unsecured basis.  Secured lines of credit are generally secured by
a second mortgage on the borrower's primary residence.  Secured lines of
credit have an interest rate that is one to two percentage points above the
prime lending rate, as published in The Wall Street Journal, while the rate on
unsecured lines is two to three percentage points above this prime lending
rate.  In both cases, the rate adjusts monthly. The majority of the approved
lines of credit at March 31, 2000 were equal to or less than $25,000.  The
Bank requires repayment of at least 2% of the unpaid principal balance
monthly.  At March 31, 2000, approved lines of credit totaled $17.0 million,
of which $5.5 million was outstanding.

     The Bank offers closed-end, fixed-rate home equity loans that are made on
the security of primary residences.  Loans normally do not exceed 80% of the
appraised or tax assessed value of the residence, less the outstanding
principal of the first mortgage, and have terms of up to 15 years requiring
monthly payments of principal and interest.  At March 31, 2000, fixed rate
home equity loans and second mortgage loans amounted to $11.6 million, or
5.2%, of total loans.

     At March 31, 2000, the Bank's automobile loan portfolio amounted to $21.5
million, or 48.3%, of consumer loans and 9.7% of total loans at such date.
Since January 1997, a substantial portion of the Bank's automobile loans have
been originated indirectly by a network of approximately 26 automobile dealers
located in the Bank's market area and adjacent markets in Oregon and Idaho.
Indirect automobile loans accounted for approximately 52.2% of the Bank's
total consumer loan originations during the year ended March 31, 2000.  The
applications for such loans are taken by employees of the dealer, the loans
are written on the dealer's contract pursuant to the Bank's underwriting
standards using the dealer's loan documents with terms substantially similar
to the Bank's.  All indirect loans must be approved by specific loan officers
of the Bank who have experience with this type of lending.  In addition to
indirect automobile lending, the Bank also originates automobile loans
directly.

     The maximum term for the Bank's automobile loans is 72 months with the
amount financed based upon a percent of purchase price.  The Bank generally
requires all borrowers to maintain automobile insurance, including collision,
fire and theft, with a maximum allowable deductible and with the Bank listed
as loss payee.

     At March 31, 2000, unsecured consumer loans amounted to $3.4 million, or
1.5%, of total loans.  These loans are made for a maximum of 36 months or less
with fixed rates of interest and are offered primarily to existing customers
of the Bank.

                                       7
<PAGE>

     Since December 1992, the Bank has offered credit card loans through its
participation as a VISA card issuer.  The Bank does not actively solicit
credit card business beyond its customer base and market area and has not
engaged in mailing of pre-approved credit cards.  The rate currently charged
by the Bank on its credit card loans is the prime rate, as published in The
Wall Street Journal, plus 7%, and the Bank is permitted to change the interest
rate quarterly.  Processing of bills and payments is contracted to an outside
servicer.  At March 31, 2000, the Bank had a commitment to fund an aggregate
of $5.3 million of credit card loans, which represented the aggregate credit
limit on credit cards, and had $1.0 million of credit card loans outstanding,
representing .5% of its total loan portfolio. The Bank intends to continue
credit card lending and estimates that at current levels of credit card loans,
it makes a small monthly profit net of service expenses and write-offs.

     Consumer loans potentially have a greater risk than do residential
mortgage loans, particularly in the case of loans that are unsecured or
secured by rapidly depreciating assets such as automobiles and other vehicles.
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
March 31, 2000, the Bank had $24,000 in consumer loans accounted for on a
nonaccrual basis.

     Commercial Business Lending.  The Bank originates commercial business
loans to small and medium sized businesses in its primary market area.
Commercial business loans are generally made to finance the purchase of
seasonal inventory needs, new or used equipment, and for short-term working
capital.  Such loans are generally secured by equipment, accounts receivable
and inventory, although commercial business loans are sometimes granted on an
unsecured basis.  Loans are normally made for terms of five years or less,
depending on the purpose of the loan and the collateral.  Loans to finance
operating expenses are made for one year or less.  Interest rates adjust at
least annually at a rate equal to the prime rate, as published in The Wall
Street Journal, plus a margin of up to 3%.  Loans to finance the purchase of
equipment are made for terms generally five years or less at a fixed rate
established at inception with margins set from 2% to 3.5% above the five-year
Treasury Note.  Loans in excess of five years are established at inception
with margins set from 2% to 3.5% above the five-year Treasury Note with
adjustments set at three to five years.  At March 31, 2000, the commercial
business loans amounted to $13.9 million, or 6.2%, of the total loan
portfolio.

     At March 31, 2000, the largest outstanding commercial business loan was a
$1.2 million operating line of credit to a manufacturing company with a
balance of $953,000.  Such loan was performing according to its terms at March
31, 2000.

     The Bank is an approved Small Business Administration ("SBA") lender and
at March 31, 2000, had two SBA loans that totalled $307,000.  The Bank also
entered into an agreement with the Oregon Economic Development Department in
October 1999 to provide loan guarantees on small business loans.  As of March
31, 2000, no loans had been made under this program.  The Bank intends to
continue to originate loans to local businesses within its primary market area
using these programs.

     The Bank underwrites its commercial business loans on the basis of the
borrower's cash flow and ability to service the debt from earnings rather than
on the basis of underlying collateral value.  The Bank seeks to structure such
loans to have more than one source of repayment.  The borrower is required to
provide the Bank with sufficient information to allow the Bank to make its
lending determination.  In most instances, this information consists of at
least three years of financial statements, tax returns, a statement of
projected cash flows, current financial information on any guarantor and any
additional information on the collateral.  Generally, for loans with balances
exceeding $250,000, the Bank requires that borrowers and guarantors provide
updated financial information at least annually.

                                       8
<PAGE>

     The Bank's commercial business loans may be structured as term loans or
as lines of credit.  Commercial business term loans are generally made to
finance the purchase of fixed assets and have maturities of five years or
less.  Commercial business lines of credit are typically made for the purpose
of providing working capital and are usually approved with a term of between
six months and one year.

     Commercial business loans are often larger and may involve greater risk
than other types of lending.  Because payments on such loans are often
dependent on successful operation of the business involved, repayment of such
loans may be subject to adverse conditions in the economy.  The Bank seeks to
minimize these risks through its underwriting guidelines, which require that
the loan be supported by adequate cash flow of the borrower, profitability of
the business, collateral, and personal guarantees of the individuals in the
business.  In addition, the Bank limits this type of lending to its market
area and to borrowers with which it has prior experience or who are otherwise
well known to the Bank.

     Maturity of Loan Portfolio.  The following table sets forth certain
information at March 31, 2000, regarding the dollar amount of loans maturing
in the Bank's portfolio based on their contractual terms to maturity, but does
not include scheduled payments or potential prepayments.  Demand loans, loans
having no stated schedule of repayments and no stated maturity, and overdrafts
are reported as becoming due within one year.  Loan balances do not include
undisbursed loan proceeds, unearned discounts, unearned income and allowance
for loan losses.

                                       9
<PAGE>

                                       After    After
                                       One Year 3 Years
                             Within    Through  Through    Over
                             One Year  3 Years  5 Years  Five Years   Total
                             --------  -------  -------  ----------   -----
                                           (Dollars in thousands)
Mortgage loans:
 One- to- four family....... $    35   $  515   $ 1,256   $125,783   $127,589
 Multi-family...............      --       --       421      2,568      2,989
 Commercial.................      57      120     1,437     13,194     14,808
 Agricultural...............      --       --        44      2,376      2,420
 Construction...............      --       --        --      3,648      3,648
 Land.......................      --       24        49         85        158

Consumer loans:
 Home equity and second
  mortgage..................     100      929     1,244     12,710     14,983
 Automobile.................      99    2,707    11,156      7,585     21,547
 Credit card................      22       69       102        833      1,026
 Loans secured by deposit
 accounts...................     140      193       104         15        452
 Unsecured..................     204      346       311      2,553      3,414
 Other......................      63      326       694      2,107      3,190

Commercial business loans...   4,260    1,821     3,842      3,930     13,853
Agricultural loans..........   7,491    1,341     2,226      2,217     13,275
                             -------   ------   -------   --------   --------
     Total.................. $12,471   $8,391   $22,886   $179,604   $223,352
                             =======   ======   =======   ========   ========

     The following table sets forth the dollar amount of all loans due after
March 31, 2001, which have fixed interest rates and have floating or
adjustable interest rates.

                                      Fixed         Floating or
                                      Rates      Adjustable Rates
                                      -----      ----------------
                                           (In thousands)
Mortgage loans:
One- to- four family..............  $ 98,572         $28,982
 Multi-family.....................       677           2,312
 Commercial.......................     5,731           9,020
 Agricultural.....................       138           2,282
 Construction.....................     2,863             785
 Land.............................       158              --

Consumer loans:
 Home equity and second mortgage..    11,525           3,358
 Automobile.......................    21,448              --
 Credit card......................        --           1,004
 Loans secured by deposit
  accounts........................       312              --
 Unsecured........................       161           3,049
 Other............................     2,964             163

Commercial business loans.........     6,550           3,043
Agricultural loans................     3,065           2,719
                                    --------         -------
    Total.........................  $154,164         $56,717
                                    ========         =======

                                       10
<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 Bank 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.  Furthermore, management believes that a significant number of the
Bank's residential mortgage loans are outstanding for a period less than their
contractual terms because of the transitory nature of many of the borrowers
who reside in its primary market area.

     Loan Solicitation and Processing.  The Bank's lending activities are
subject to the written, non-discriminatory, underwriting standards and loan
origination procedures established by the Bank's Board of Directors and
management.  The customary sources of loan originations are realtors, walk-in
customers, referrals and existing customers.  The Bank also advertises its
loan products by radio and newspaper.  The Bank does not employ commissioned
loan originators.

     Mortgage loan applications are initiated, underwritten and preliminarily
approved by loan officers before they are recommended for final review and
approval. Individual lending limits and credit approval limits are established
for  branch and loan center personnel up to $175,000.  Commercial lenders' and
administrative credit approval limits are established up to $750,000 depending
on position and lending knowledge. Loans to borrowers with an aggregate
borrowing relationship over $750,000 but less than $1.5 million requires
approval of a quorum of the Level 1 Executive Loan Committee.  The Loan
Committee consists of the President/Chief Executive Officer, Executive Vice
President, Senior Commercial Credit Manager, Senior Credit Manager, Credit
Manager and six Board members.  A quorum of the Level 1 committee consists of
one of the President/Chief Executive Officer or Executive Vice President; one
of the Senior Commercial Credit Managers, Senior Credit Manager, or Credit
Manager and two Board members.  Loans to borrowers with an aggregate borrowing
relationship in excess of $1.5 million but less than $3 million require the
approval of the Level 2 Board Loan Committee, which consists of the same
members as the Level 1 Executive Loan Committee, but requires one additional
board member.  Loans to borrowers with an aggregate borrowing relationship
exceeding $3 million require approval by the same Level 1 committee, but with
two additional board members.

     Loan Originations, Sales and Purchases.  Historically, the Bank's primary
lending activity has been the origination of one- to- four family residential
mortgage loans. In recent periods, the Bank has increased its origination of
consumer, commercial business and agricultural loans.

     During the year ended March 31, 2000, the Bank did not sell a material
amount of its loans.  At March 31, 2000, the Bank was not servicing any loans
for investors.

                                       11
<PAGE>

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

                                                                       Nine
                                                                      Months
                                                                       Ended
                                           Year Ended March 31,      March 31,
                                    -------------------------------  ---------
                                       2000       1999       1998      1997
                                       ----       ----       ----      ----
                                                  (In thousands)
Loans originated:
 Mortgage loans:
  One- to- four family............  $ 30,112    $ 38,178   $13,718    $ 8,966
  Multi-family....................     1,575       1,736       400         --
  Commercial......................     3,101       4,371       393         --
  Construction....................     6,697       6,713     4,448      2,216
  Land............................        26         155        19        173
 Consumer.........................    13,293      11,611    19,122      8,769
 Commercial business loans........    18,076      20,096     7,860      2,346
 Agricultural loan................    28,519      25,800    10,631      6,352
                                    --------    --------   -------    -------
    Total loans originated........   101,399     108,660    56,591     28,822

Loans purchased:
 One-to four family mortgage......        --          --       203        183
 Dealer-originated automobile
  contracts.......................    14,533       7,338     5,574        389
 Commercial real estate...........        --         366        --         --
                                    --------    --------   -------    -------
     Total loans purchased .......    14,533       7,693     5,777        572

Loans sold:
  Total whole loans sold..........        --          --        --      1,149
                                    --------    --------   -------    -------
     Total loans sold.............        --          --        --      1,149

Loan principal repayments.........    81,088      84,444    47,411     21,711
                                    --------    --------   -------    -------
Net increase in loans receivable,
 net..............................  $ 34,844    $ 31,909   $14,957    $ 6,534
                                    ========    ========   =======    =======

     Loan Commitments.  The Bank issues commitments for loans and lines of
credit 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 approval, depending on the type of transaction.  At March 31,
2000, the Bank had loan commitments of $39.7 million.  See Note 18 of Notes to
Consolidated Financial Statements.

     Loan Fees.  In addition to interest earned on loans, the Bank receives
income from fees in connection with loan originations, loan modification, late
payments and for miscellaneous service related to its loans.  Income from
these activities varies from period to period depending upon the volume and
type of loans made and competitive conditions.

     The Bank charges loan origination fees which are calculated as a minimum
fee or as a percentage of the amount borrowed.  In accordance with applicable
accounting procedures, loan origination fees and discount points in excess of
loan origination costs are deferred and recognized over the contractual
remaining lives of the related loans on a level yield basis.  Discounts and
premiums on loans purchased are accredited and amortized in the same manner.
The Bank recognized $107,000, $248,000 and $184,000 of deferred loan fees
during the years ended March 31, 2000, 1999 and 1998, respectively, in
connection with loan refinancings, payoffs, sales and ongoing amortization of
outstanding loans.

     Nonperforming Assets and Delinquencies.  Generally, the borrowers are
allowed to pay up to the 15th day following the due date before the Bank
initiates collection procedures.  When a borrower fails to make a required
payment on a loan, the Bank attempts to cure the deficiency by contacting the
borrower and seeking the payment.

                                       12
<PAGE>

Contacts are generally made 16 days after the due date.  In most cases,
delinquencies are cured promptly.  If a delinquency continues, additional
contact is made through a telephone call by the 20th day.  The Bank prefers to
work with borrowers to resolve such problems, however, after the 90th day of
delinquency, foreclosure or other action is taken in an effort to minimize any
potential loss to the Bank.

     When loans are contractually 90 days or more delinquent, they are placed
on nonaccrual status.  Payments to such nonaccrual loans are applied to
principal when collection of the loan principal's doubtful.  Loans are
reinstated to accrual status when current and collectibility of principal and
interest is no longer doubtful.

                                       13
<PAGE>

     The following table sets forth information with respect to the Bank's
nonperforming assets and restructured loans at the dates indicated.

                                                                    At June
                                              At March 31,             30,
                                   -------------------------------- --------
                                   2000     1999     1998     1997    1996
                                   ----     ----     ----     -----   ----
                                              (Dollars in thousands)
Loans accounted for on a
 nonaccrual basis:
 Mortgage loans:
  One- to- four family.........    $ 131    $ 133    $ 258    $ 167    $ 111
 Consumer loans................       24        5       17       23       52
                                   -----    -----    -----    -----    -----
      Total....................      155      138      275      190      163

Accruing loans which are
 contractually past due 90
 days or more..................       --       --       --       --       --
                                   -----    -----    -----    -----    -----
      Total....................       --       --       --       --       --

Total of nonaccrual and 90 days
 past due loans................      155      138      275      190      163

Foreclosed real estate.........       --       37       --       --       13

Other repossessed assets.......        8       --      313       10       34
                                   -----    -----    -----    -----    -----
     Total nonperforming assets    $ 163    $ 175    $ 588    $ 200    $ 210
                                   =====    =====    =====    =====    =====

Restructured loans.............    $  --    $  --    $  --    $  --    $  --
                                   -----    -----    -----    -----    -----

Nonaccrual and 90 days or more
 past due loans as a percentage
 of loans receivable, net......     0.07%    0.07%    0.18%    0.14%    0.12%

Nonaccrual and 90 days or more
 past due loans as a percentage
 of total assets...............     0.04%    0.04%    0.10%    0.09%    0.08%

Nonperforming assets as a
 percentage of total assets....     0.04%    0.06%    0.22%    0.10%    0.10%

Loans receivable, net.......... $220,591 $185,747 $153,838 $138,881 $132,347

Total assets................... $370,612 $313,473 $263,224 $204,213 $203,457

     An additional $2,000 of interest income would have been recorded for the
year ended March 31, 2000, had nonaccruing loans been current in accordance
with their original terms.

     Real Estate Acquired in Settlement of Loans.  See Note 1 of Notes to
Consolidated Financial Statements regarding the Bank's accounting for
foreclosed real estate.  At March 31, 2000, the Bank had no foreclosed real
estate.

     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,

                                       14
<PAGE>

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 can 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 designated "watch" and monitored by the Bank.

     The aggregate amounts of the Bank's classified and watch assets, and of
the Bank's general and specific loss allowances at the dates indicated, were
as follows:

                                                    At March 31,
                                      --------------------------------------
                                         2000          1999           1998
                                         ----          ----           ----
                                                 (In thousands)

Loss..............................    $    --        $    10       $     15
Doubtful..........................         --              7             --
Substandard assets................      1,656            671            568
Watch.............................      8,545          8,438          1,501

General loss allowances...........      1,396          1,218            832
Specific loss allowances..........         --             10             15

     At March 31, 2000, substandard assets consisted of four one- to- four
family mortgage loans, four consumer/dealers loans and 13 commercial/
agricultural loans (four borrowers).

     At March 31, 2000, watch assets consisted of six one- to- four family
mortgage loans, eight consumer/dealer loans and 49 commercial/agricultural
loans (27 borrowers).

     Allowance for Loan Losses.  The Bank 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 Bank 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 Bank increases its allowance for loan losses
by charging provisions for loan losses against the Bank's income.

     Allowances for losses on specific problem loans and real estate owned are
charged to earnings when it is determined that the value of these loans and
properties, in the judgement of management, is impaired.  In addition to
specific reserves, the Bank also maintains general provisions for loan losses
based on the evaluation of known and inherent risks in the loan portfolio,
including management's continuing analysis of the factors and trends
underlying the quality of the loan portfolio.  These factors include changes
in the size and composition of the loan portfolio, actual loan loss
experience, current and anticipated economic conditions, detailed analysis of
individual loans for which full collectibility may not be assured, and
determination of the existence and realizable value of the collateral and
guarantees securing the loans.  The ultimate recovery of such loans is
susceptible to future market factors beyond the Bank's control, which may
result in losses or recoveries differing significantly from those provided in
the consolidated financial

                                       15
<PAGE>

statement.  In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Bank's valuation allowance
on loans and real estate owned.  Generally, a provision for losses is charged
against income quarterly to maintain the allowance for loan losses.

     At March 31, 2000, the Bank had an allowance for loan losses of $1.4
million, which management believes is adequate to absorb losses inherent in
the portfolio.  Although management is confident that the basis for making the
allowance is sound, 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.  Furthermore, while the Bank believes it has
established its existing allowance for loan losses in accordance with GAAP,
there can be no assurance that regulators, in reviewing the Bank's loan
portfolio, will not request the Bank 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 Bank's financial condition
and results of operations.

                                       16
<PAGE>

     The following table sets forth an analysis of the Bank's allowance for
possible loan losses for the periods indicated.
                                                                        Year
                                                              Nine      Ended
                                                         Months Ended   June
                                 Year Ended March 31,       March 31,    30,
                                ----------------------   -------------  -----
                                2000     1999    1998    1997    1996    1996
                                ----     ----    ----    ----    ----    ----
                                          (Dollars in thousands)

Allowance at beginning of
 period.....................   $1,228   $  847   $725    $541    $455    $455
Provision (credit) for loan    ------   ------   ----    ----    ----    ----
 losses.....................      178      483    138     216      91     115
Recoveries:
 Mortgage loans:
  One- to- four family......       23       --      4      --       9      12
 Consumer loans:
  Credit card...............        7        9      4       4       1       1
  Other.....................        2        4     25       3      --       1
                               ------   ------   ----    ----    ----    ----
   Total recoveries.........       32       13     33       7      10      14
                               ------   ------   ----    ----    ----    ----
Charge-offs:
 Mortgage loans:
  One- to- four family......       --        4      5       5      --      --
 Consumer loans:
  Credit card...............       37       82     36      26      25      41
  Automobile................        1       15      8      --      --      --
  Unsecured.................       --       --     --      --      --      --
  Other.....................        4       14     --       8      --       2
                               ------   ------   ----    ----    ----    ----
   Total charge-offs........       42      115     49      39      25      43
                               ------   ------   ----    ----    ----    ----
   Net charge-offs..........       10      102     16     (32)    (15)    (29)
                               ------   ------   ----    ----    ----    ----
    Allowance at end of
     period.................   $1,396   $1,228   $847    $725    $531    $541
                               ======   ======   ====    ====    ====    ====
Allowance for loan losses as
 a percentage of total loans
 outstanding at the end of
 the period.................    0.63%    0.66%   0.55%   0.52%   0.41%   0.41%

Net charge-offs as a percentage
 of average loans outstanding
 during the period..........    0.00%    0.06%   0.01%   0.03%   0.02%   0.02%

Allowance for loan losses as
 a percentage of nonperforming
 loans at end of period.....  900.65%  889.86% 308.07% 381.58% 424.80% 331.90%

                                       17
<PAGE>


<TABLE>

     The following table sets forth the breakdown of the allowance for loan losses by loan category at the
dates indicated.  Management feels 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 March 31,                         At June 30,
                            ------------------------------------------------------------ ---------------
                                   2000           1999         1998           1997            1996
                            ---------------- ------------- -------------- -------------- ---------------
                                     Percent        Percent       Percent        Percent         Percent
                                     of             of            of             of              of
                                     Loans in       Loans in      Loans in       Loans in        Loans in
                                     Category       Category      Category       Category        Category
                                     to             to            to             to              to
                                     Total          Total         Total          Total           Total
                            Amount   Loans  Amount  Loans Amount  Loans   Amount Loans   Amount  Loans
                            ------   -----  ------  ----- ------  -----   ------ -----   ------  -----
                                                       (Dollars in thousands)
<S>                         <C>     <C>      <C>   <C>      <C>  <C>       <C>   <C>     <C>     <C>
Mortgage loans:
 One- to- four
  family..................  $  338   24.21% $  381  31.03%  $329  66.65%   $357   74.05%  $354   80.92%
Non-mortgage loans........     355   25.43     265  21.58    236  20.29     173   16.84    174   18.06
Commercial business and
 real estate..............     360   25.79     300  24.43    164   8.90     105    6.25     --      --
Agricultural loans........     314   22.49     250  20.36     87   3.19      61    1.74     --      --
 Credit cards.............      26    1.86      29   2.36     26    .55      24    0.60      9    0.58
 Loans secured by deposit
  accounts................       3     .22       3    .24      5    .42       5    0.52      4    0.44
   Total allowance          ------  ------  ------ ------   ---- ------    ----  ------   ----  ------
      for loan losses.....  $1,396  100.00% $1,228 100.00%  $847 100.00%   $725  100.00%  $541  100.00%
                            ======  ======  ====== ======   ==== ======    ====  ======   ====  ======

                                                        18
</TABLE>
<PAGE>

Investment Activities

     The Bank is permitted under federal 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-
Seattle, certificates of deposit of federally insured institutions, certain
bankers' acceptances and federal funds.  Subject to various restrictions, the
Bank may also invest a portion of its assets in commercial paper and corporate
debt securities.  The Bank is required to maintain an investment in FHLB
stock.  The Bank is also required under federal regulations to maintain a
minimum amount of liquid assets.  See "REGULATION" herein and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Liquidity and Capital Resources" in the Annual Report.

     Although the Bank generally purchases investment securities with excess
liquidity, during the years ended March 31, 2000 and March 31, 1999, the Bank
engaged in a leveraging strategy using funds borrowed from the Federal Home
Loan Bank to purchase investment securities.  Total purchases amounted to
$34.9 million and $68.8 million in the years ended March 31, 2000 and 1999,
respectively.  Purchases were funded by borrowing an additional $26.5 million
in the year ended March 31, 2000 and an additional $50.2 million in the year
ended March 31, 1999.  The Bank's investment securities purchases have
generally been limited to U.S. Government and government agency securities
with contractual maturities of between one and ten years and mortgage-backed
and related securities issued by the Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") and Government
National Mortgage Association ("GNMA") with maturities of up to 30 years.
During the year ended March 31, 1999, the Bank began purchasing AAA rated
municipal bonds of various local Oregon governmental units with maturities
ranging from 10 to 19 years.  Such municipal bonds totalled $10.1 million at
March 31, 2000.

     At March 31, 2000, the Bank held securities classified as
available-for-sale under SFAS 115.  There were no trading securities at March
31, 2000.  See Note 2 of Notes to Consolidated Financial Statements.  Trading
of investment securities is not part of the Bank's operating strategy.

     The Bank's investment policies generally limit investments to U.S.
Government and government agency securities, municipal bonds, certificates of
deposits, marketable corporate debt obligations, mortgage-backed and related
securities and certain types of mutual funds.  The Bank's investment policy
does not permit engaging directly in hedging activities or purchasing high
risk mortgage derivative products or non-investment grade corporate bonds.
Investments are made based on certain considerations, which include the
interest rate, yield, settlement date and maturity of the investment, the
Bank'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 Bank's credit and interest rate risk and
risk-based capital is also considered.

     At March 31, 2000, the Bank did not have any securities (other than U.S.
government and agency securities) which had an aggregate book value in excess
of 10% of the Bank's shareholders' equity at that date.

                                       19
<PAGE>

     The following table sets forth the amortized cost and fair value of the
Bank's debt and mortgage-backed and related securities, by accounting
classification and by type of security, at the dates indicated.

                                               At March 31,
                        ------------------------------------------------------
                               2000               1999              1998
                        -----------------  ----------------- -----------------
                                  Percent            Percent           Percent
                        Carrying   of      Carrying   of     Carrying   of
                        Value(1)  Total    Value(1)  Total   Value(1)  Total
                        --------  -----    --------  -----   --------  -----
                                           (Dollars in thousands)
Held to Maturity:
  Mortgage-backed and
   related securities.. $     --      --%  $ 9,338    8.67%  $12,805   16.46%
Total held to maturity  --------  ------   -------  ------   -------  ------
 securities............       --      --     9,338    8.67    12,805   16.46

Available for Sale:
U.S. Government agency
 obligations..........    37,436   30.70    37,965   35.26    37,175   47.78
Mortgage-backed and
 related securities...    84,615   69.30    60,371   56.07    27,778   35.70
Other.................        --      --        --      --        50     .06
                        --------  ------   -------  ------   -------  ------
  Total available for
   sale securities....   122,051  100.00    98,336   91.33    65,003   83.54
                        --------  ------   -------  ------   -------  ------
Total.................  $122,051  100.00% $107,674  100.00%  $77,808  100.00%
                        ========  ======  ========  =======  =======  ======
-----------------
(1)  The market value of the Bank's investment portfolio amounted to $122.1
     million, $107.8 million and $78.2 million at March 31, 2000, 1999 and
     1998, respectively.  At March 31, 2000, the market value of the principal
     components of the Bank's investment securities portfolio was as follows:
     U.S. Government securities, $39.9 million; mortgage-backed and related
     securities, $87.4 million.

     The following table sets forth the maturities and weighted average yields
of the debt and mortgage-backed and related securities in the Bank's
investment securities portfolio at March 31, 2000.

<TABLE>


                          Less Than         One to           Five to             Over Ten
                           One Year       Five Years        Ten Years             Years
                        ---------------  --------------   ----------------   ----------------
                        Amount    Yield  Amount   Yield   Amount     Yield   Amount     Yield    Total
                        ------    -----  ------   -----   ------     -----   ------     -----    -----
                                                          (Dollars in thousands)
<S>                     <C>        <C>    <C>       <C>    <C>        <C>     <C>       <C>     <C>
Available for Sale:
 U.S. Government agency
  obligations.........  $    --     --%   $ 514     7.00%   $22,202   6.44%   $14,720    5.39%  $ 37,436
 Mortgage-backed and
  related securities..       --     --      162     6.56         70   9.44     84,383    6.91     84,615
     Total available    -------           -----             -------           -------           --------
      for sale
      securities......  $    --           $ 676             $22,272           $99,103           $122,051
                        =======           =====             =======           =======           ========

                                                        20
</TABLE>
<PAGE>

Deposit Activities and Other Sources of Funds

     General.  Deposits are the major external source of funds for the Bank's
lending and other investment activities.  In addition, the Bank also generates
funds internally from loan principal repayments and prepayments and maturing
investment securities.  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 from the FHLB-Seattle may be used on a short-term
basis to compensate for reductions in the availability of funds from other
sources.  The Bank also has an overnight credit line with Key Bank amounting
to $15.0 million and  a $50.0 million reverse repurchase credit line with
Merrill Lynch.

     Deposit Accounts.  A substantial number of the Bank's depositors reside
in Oregon.  The Bank's deposit products include a broad selection of deposit
instruments, including NOW accounts, demand deposit accounts, money market
accounts, statement savings accounts and term certificate accounts.  Deposit
account terms vary with the principal differences being the minimum deposit to
open, early withdrawal penalties and the interest rate.  The Bank reviews its
deposit mix and pricing weekly.  The Bank does not utilize brokered deposits,
nor has it aggressively sought jumbo certificates of deposit.  The Bank has
also begun to seek business checking accounts in connection with its community
banking activities.

     The Bank believes it is competitive in the type of accounts and interest
rates it offers on its deposit products.  The Bank does not seek to pay the
highest interest rates on deposits but a competitive rate.  The Bank, in its
attempt to be competitive, does not however seeks to pay the highest interest
rates in the market areas it serves.  The Bank determines the rates paid based
on a number of conditions, including rates paid by competitors, rates on U.S.
Treasury securities, rates offered on various FHLB-Seattle lending programs,
and the deposit growth rate the Bank is seeking to achieve.

     In the unlikely event the Bank is liquidated, depositors will be entitled
to full payment of their deposit accounts before any payments are made to the
Company as the sole stockholder of the Bank.

                                       21
<PAGE>

     The following table sets forth information concerning the Bank's time
deposits and other interest-bearing deposits at March 31, 2000.

Weighted
Average                                                             Percentage
Interest                                                    Minimum  of Total
Rate   Term         Category                      Amount    Balance  Deposits
----   ----         --------                      ------    -------  --------
                                                     (In thousands except
                                                        minimum balance)

N/A%   N/A          Non-interest-bearing          $ 14,960       10     6.29%
1.36   N/A          NOW accounts                    36,758       10    15.46
4.14   N/A          Money market accounts           50,102    1,000    21.08
2.35   N/A          Statement savings accounts      19,425        5     8.17

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

5.72   3 to 5 years Fixed-term, fixed-rate          19,154    1,000     8.06
4.90   91 day       Fixed-term, fixed-rate           1,558    1,000      .66
5.34   182 day      Fixed-term, fixed-rate          14,299    1,000     6.01
5.62   1 year       Fixed-term, variable-rate       34,456    1,000    14.49
5.44   2 1/2 year   Fixed-term, variable-rate        8,378    1,000     3.52
5.99   5 year       Fixed-term, variable-rate        2,255    1,000      .95
4.31   18 month     Fixed-term, adjustable- rate     1,553        5      .65
5.18   20 month     Fixed-term, adjustable-rate     15,750    1,000     6.63
5.25   6 year       Fixed-term, adjustable-rate        647        0      .27
5.72   Varies       Various term, fixed-rate         1,821    1,000      .77
5.73   Varies       Jumbo certificates              16,618  100,000     6.99
                                                  --------            ------
                           TOTAL                  $237,735            100.00%
                                                  ========            ======

     The following table indicates the amount of the Bank's jumbo certificates
of deposit by time remaining until maturity as of March 31, 2000.  Jumbo
certificates of deposit generally have principal amounts of $96,000 or more
and have negotiable interest rates.

                                          Certificates
Maturity Period                           of Deposits
---------------                           ------------
                                         (In thousands)

Three months or less.................       $ 6,304
Over three through six months........         3,523
Over six through twelve months.......         3,630
Over twelve months...................         3,161
                                            -------
    Total............................       $16,618
                                            =======

                                       22
<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 Bank between the dates
indicated.

                                                                At March 31,
                      -----------------------------------------------------------------------------------
                                   2000                             1999                       1998
                      -----------------------------   --------------------------------  -----------------
                                  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>
Non-interest-bearing $ 14,961      6.29%   $ 3,367    $ 11,594      5.81%    $ 2,946    $  8,648    4.49%
NOW checking........   36,758     15.46         82      36,676     18.38       3,311      33,365   17.31
Statement savings
 accounts...........   19,425      8.17     (1,658)     21,083     10.56      (2,658)     23,741   12.32
Money market deposit   50,102     21.07     19,616      30,486     15.27       8,405      22,081   11.46
Fixed-rate certificates
 which mature:
  Within 1 year.....   90,932     38.25     20,399      70,533     35.34      (1,746)     72,279   37.50
  After 1 year, but
   within 3 years...   18,611      7.83     (6,123)     24,734     12.39      (1,262)     25,996   13.49
  After 3 years, but
   within 5 years...    5,528      2.33      3,094       2,434      1.22      (2,147)      4,581    2.37
  Certificates
   maturing
   thereafter.......    1,418       .60       (631)      2,049      1.03           5       2,044    1.06
                     --------    ------    -------    --------    ------      ------    --------  ------
     Total.......... $237,735    100.00%   $38,146    $199,589    100.00%     $6,854    $192,735  100.00%
                     ========    ======    =======    ========    ======      ======    ========  ======

</TABLE>

     Time Deposits by Rates.  The following table sets forth the amount of
time deposits in the Bank categorized by rates at the dates indicated.

                                                  At March 31,
                                     ------------------------------------
                                       2000          1999         1998
                                       ----          ----         ----
                                                (In thousands)

2.00 - 3.99%....................     $     --      $     --      $    229
4.00 - 4.99%....................       10,028        42,960        23,094
5.00 - 5.99%....................       81,566        49,460        74,946
6.00 - 6.99%....................       23,702         6,490         5,390
7.00% and over..................        1,193           840         1,241
                                     --------      --------      --------
Total...........................     $116,489      $ 99,750      $104,900
                                     ========      ========      ========

     Deposit Activity.  The following table sets forth the deposit activity of
the Bank for the periods indicated.

                                               Year Ended March 31,
                                     ------------------------------------
                                       2000          1999         1998
                                       ----          ----         ----
                                                (In thousands)

Beginning balance...............     $199,589      $192,735      $179,158
                                     --------      --------      --------
Net (withdrawals) deposits
  before interest credited......       29,645          (366)        5,964
Interest credited...............        8,501         7,221         7,613
                                     --------      --------      --------
Net increase (decrease)
  in deposits...................       38,146         6,855        13,577
                                     --------      --------      --------
Ending balance..................     $237,735      $199,589      $192,735
                                     ========      ========      ========

     Borrowings.  The Bank utilizes advances from the FHLB-Seattle to
supplement its supply of investable funds and to meet deposit withdrawal
requirements.  The FHLB-Seattle functions as a central reserve bank providing
credit for savings associations and certain other member financial
institutions.  As a member of the FHLB-Seattle, the Bank

                                       23
<PAGE>

is required to own capital stock in the FHLB-Seattle 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, all of which have their own interest rate guidelines 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.  The Bank is
currently authorized to borrow from the FHLB up to an amount equal to 30% of
total assets.  The Bank may increase the amount of its FHLB advances if loan
demand exceeds deposit growth.

     During the year ended March 31, 2000, the Bank opened a $15 million
overnight line of credit with Key Bank and a $50 million reverse repurchase
agreement with Merrill Lynch.  Prior to December 1997, the Bank also used
retail repurchase agreements due within one day as a source of funds, but
discontinued their use in December 1997.  See Note 8 of Notes to Consolidated
Financial Statements.

     The following table sets forth certain information regarding borrowings
by the Bank at the end of and during the periods indicated:
                                                                    At or For
                                                                    the Nine
                                                                    Months
                                            At or For the           Ended
                                         Year Ended March 31,       March 31,
                                     ----------------------------   --------
                                        2000       1999      1998      1997
                                        ----       ----      ----      ----
                                               (Dollars in thousands)
Maximum amount of borrowings
 outstanding at any month end:
 Securities sold under agreements
  to repurchase...................   $    --   $    --   $1,473       $1,459
 FHLB advances....................    70,750    50,250    8,000        2,850

Approximate average borrowings
 outstanding with respect to:
   Securities sold under agreements
    to repurchase..................       67        --      924        1,396
   FHLB advances...................   60,418    17,108    3,024          861

Approximate weighted average
 rate paid on:
 Securities sold under agreements
  to repurchase....................     5.97%       --%    3.55%        3.50%
 FHLB advances.....................     5.37      5.03     5.85         4.88

Potential Adverse Impact of Changes in Interest Rates

     The financial condition and results of operations of the Bank, and of
savings institutions in general, are significantly influenced by general
economic conditions, by the related monetary and fiscal policies of the
federal government, and by the regulations of the OTS, the FDIC and the Board
of Governors of the Federal Reserve System ("Federal Reserve").  Deposit flows
and the cost of funds are influenced by interest rates of competing
investments and general market rate conditions.  Lending activities are
affected by the demand for mortgage financing and for consumer and other types
of loans, which in turn are affected by the interest rates at which such
financing may be offered and by other factors affecting the supply of housing
and the availability of funds.

     The Bank's profitability is substantially dependent on its net interest
income, which is the difference between the interest income received from its
interest-earning assets and the interest expense incurred in connection with
its

                                       24
<PAGE>

interest-bearing liabilities.  When an institution's interest-bearing
liabilities exceed its interest-earning assets which mature within a given
period of time, material and prolonged increases in interest rates generally
would adversely affect net interest income, while material and prolonged
decreases in interest rates generally would have a favorable effect on net
interest income.  Like most of the savings industry, the interest-earning
assets of the Bank have longer effective maturities than its deposits, which
largely mature or are subject to repricing within a shorter period of time.
As a result, a material and prolonged increase in interest rates generally
would adversely affect net interest income, while material and prolonged
decreases in interest rates generally would have a more favorable effect on
net interest income.

     The mismatch between maturities and interest rate sensitivities of
balance sheet items results in interest rate risk.  The extent of interest
rate risk to which the Bank is subject is monitored by management by modeling
the change in net portfolio value ("NPV") over a variety of interest rate
scenarios.   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 which management might take to counter the effect of that interest
rate movement.  At March 31, 2000, there was a $20.6 million, or 55.4%,
decrease in the Bank's NPV as a percent of the present value of assets,
assuming a 200 basis point increase in interest rates.  See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Asset and Liability Management and Interest Rate Risk" for a discussion of the
NPV methods of analyzing interest rate risk and for an illustration of the
effect of an increase in interest rates on the Bank's earnings.

     Consequently, the Bank's net interest income could be adversely affected
during periods of rising interest rates.   Further increases in market rates
of interest could have a material adverse effect on the Bank's net interest
income.  See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- Asset and Liability Management and Interest Rate
Risk.".  Furthermore, there has been increased scrutiny by the regulatory
agencies as to financial institutions levels of interest rate risk and Pioneer
Bank has not been examined by the OTS since it increased its review of this
area.

     Changes in interest rates can affect the amount of loans originated by an
institution, as well as the value of its loans and other interest-earning
assets and the resultant ability to realize gains on the sale of such assets.
Changes in interest rates also can result in disintermediation, which is the
flow of funds away from savings Banks into direct investments, such as U.S.
Government and corporate securities, and other investment vehicles which,
because of the absence of federal insurance premiums and reserve requirements,
generally can pay higher rates of return than savings associations.

                                  REGULATION

General

     The 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 and, in certain respects, the Federal Deposit Insurance
Act, 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 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 Bank's mortgage documents.  The Bank is required to 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 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

                                       25
<PAGE>

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 Bank and their operations.

Federal Regulation of Savings Associations

     Office of Thrift Supervision.  The OTS is an office in the Department of
the Treasury subject to the general oversight of the Secretary of the
Treasury.  The OTS has extensive authority over the operations of savings
associations.  Among other functions, the OTS issues and enforces regulations
affecting federally insured savings associations and regularly examines these
institutions.

     All savings associations are required to pay assessments to the OTS to
fund the agency's operations.  The general assessments, paid on a semi-annual
basis, are determined based on the savings association's total assets,
including consolidated subsidiaries.  The Bank's OTS assessment for the fiscal
year ended March 31, 2000 was $103,000.

     Federal Home Loan Bank System.  The FHLB System, consisting of 12 FHLBs,
is under the jurisdiction of the Federal Housing Finance Board ("FHFB").  The
designated duties of the FHFB are to  supervise the FHLBs, to ensure that the
FHLBs carry out their housing finance mission, to ensure that the FHLBs remain
adequately capitalized and able to raise funds in the capital markets, and to
ensure that the FHLBs operate in a safe and sound manner.

     The Bank, as a member of the FHLB-Seattle, is required to acquire and
hold shares of capital stock in the FHLB-Seattle 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 (i.e., borrowings)
from the FHLB-Seattle. The Bank is in compliance with this requirement with an
investment in FHLB-Seattle stock of $3.9 million at March 31, 2000.

     Among other benefits, the FHLB provides a central credit facility
primarily for member institutions.  It is funded primarily from proceeds
derived from the sale of consolidated obligations of the FHLB System.  It
makes advances to members in accordance with policies and procedures
established by the FHFB and the Board of Directors of the FHLB-Seattle.

     Federal Deposit Insurance Corporation.  The FDIC is an independent
federal agency established originally to insure the deposits, up to prescribed
statutory limits, of federally insured banks and to preserve the safety and
soundness of the banking industry.  The FDIC maintains two separate insurance
funds: the Bank Insurance Fund ("BIF") and the SAIF.  The Bank's deposit
accounts are insured by the FDIC under the SAIF to the maximum extent
permitted by law.  As insurer of the Bank's deposits, the FDIC has
examination, supervisory and enforcement authority over all savings
associations.

     Under applicable regulations, the FDIC assigns an institution to one of
three capital categories based on the institution's financial information, as
of the reporting period ending seven months before the assessment period.
The capital categories are: (i) well-capitalized, (ii) adequately capitalized,
or (iii) undercapitalized.  An institution is also placed in one of three
supervisory subcategories within each capital group.  The supervisory subgroup
to which an institution is assigned is based on a supervisory evaluation
provided to the FDIC by the institution's primary federal regulator and
information that the FDIC determines to be relevant to the institution's
financial condition and the risk posed to the deposit insurance funds.  An
institution's assessment rate depends on the capital category and supervisory
category to which it is assigned with the most well-capitalized, healthy
institutions receiving the lowest rates.

     Effective January 1, 1997, the premium schedule for BIF and SAIF insured
institutions ranged from 0 to 27 basis points.  However, SAIF insured
institutions and BIF insured institutions are required to pay a Financing
Corporation assessment in order to fund the interest on bonds issued to
resolve thrift failures in the 1980s.  This amount is currently equal to about
six basis points for each $100 in domestic deposits for SAIF members while BIF
insured institutions pay an assessment equal to about 1.50 basis points for
each $100 in domestic deposits.  These assessments,

                                       26
<PAGE>

which may be revised based upon the level of BIF and SAIF deposits, will
continue until the bonds mature in the year 2015.

     The FDIC is authorized to raise the assessment rates in certain
circumstances.  The FDIC has exercised this authority several times in the
past and may raise insurance premiums in the future.  If such action is taken
by the FDIC, it could have an adverse effect on the earnings of the Bank.

     Under the Federal Deposit Insurance Act ("FDIA"), insurance of deposits
may be terminated by the FDIC upon a finding that the institution has engaged
in unsafe or unsound practices, is in an unsafe or unsound condition to
continue operations or has violated any applicable law, regulation, rule,
order or condition imposed by the FDIC or the OTS.  Management of the Bank
does not know of any practice, condition or violation that might lead to
termination of deposit insurance.

     Liquidity Requirements.  Under OTS regulations, each savings institution
is required to maintain an average daily balance of specified liquid assets
equal to a monthly average of not less than a specified percentage of its net
withdrawable accounts deposit plus short-term borrowings.  This liquidity
requirement is currently 4%, but may be changed from time to time by the OTS
to any amount within the range of 4% to 10%.  Monetary penalties may be
imposed for failure to meet liquidity requirements. The Bank has never been
subject to monetary penalties for failure to meet its liquidity requirements.

     Prompt Corrective Action. The OTS is required to take certain supervisory
actions against undercapitalized savings associations, the severity of which
depends upon the institution's degree of undercapitalization.  Generally, an
institution that has a ratio of total capital to risk-weighted assets of less
than 8%, a ratio of Tier I (core) capital to risk-weighted assets of less than
4%, or a ratio of core capital to total assets of less than 4% (3% or less for
institutions with the highest examination rating) is considered to be
"undercapitalized."  An institution that has a total risk-based capital ratio
less than 6%, a Tier I capital ratio of less than 3% or a leverage ratio that
is less than 3% is considered to be "significantly undercapitalized" and an
institution that has a tangible capital to assets ratio equal to or less than
2% is deemed to be "critically undercapitalized."  Subject to a narrow
exception, the OTS is required to appoint a receiver or conservator for a
savings institution that is "critically undercapitalized."  OTS regulations
also require that a capital restoration plan be filed with the OTS within 45
days of the date a savings institution receives notice that it is
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized."  Compliance with the plan must be guaranteed by any parent
holding company in an amount of up to the lesser of 5% of the institution's
assets or the amount which would bring the institution into compliance with
all capital standards.  In addition, numerous mandatory supervisory actions
become immediately applicable to an undercapitalized institution, including,
but not limited to, increased monitoring by regulators and restrictions on
growth, capital distributions and expansion.  The OTS also could take any one
of a number of discretionary supervisory actions, including the issuance of a
capital directive and the replacement of senior executive officers and
directors.

     At March 31, 2000, the 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 quality; (vii)
earnings; and (viii) compensation, fees and benefits ("Guidelines").  The
Guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired.  If the OTS determines that the
Bank fails to meet any standard prescribed by the Guidelines, the agency may
require the Bank to submit to the agency an acceptable plan to achieve
compliance with the standard.  Management is aware of no conditions relating
to these safety and soundness standards which would require submission of a
plan of compliance.

                                       27
<PAGE>

     Qualified Thrift Lender Test.  All savings associations, including the
Bank, are required to meet a qualified thrift lender ("QTL") test to avoid
certain restrictions on their operations.  This test requires a savings
association to have at least 65% of its portfolio assets (as defined by
regulation) in qualified thrift investments on a monthly average for nine out
of every 12 months on a rolling basis.  As an alternative, the savings
association may maintain 60% of its assets in those assets specified in
Section 7701(a)(19) of the Internal Revenue Code ("Code").  Under either test,
such assets primarily consist of residential housing related loans and
investments.  At March 31, 2000, the Bank met the test and its QTL percentage
was 86%.

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

     Capital Requirements. Federally insured savings associations, such as the
Bank, are required to maintain a minimum level of regulatory capital. The OTS
has established capital standards, including a tangible capital requirement, a
leverage ratio (or core capital) requirement and a risk-based capital
requirement applicable to such savings associations.

     The capital regulations require tangible capital of at least 1.5% of
adjusted total assets (as defined by regulation). At March 31, 2000, the Bank
had tangible capital of $52.4 million, or 14.0% of adjusted total assets,
which is approximately $46.8 million above the minimum requirement of 1.5% of
adjusted total assets in effect on that date. At March 31, 2000, the Bank did
not have any intangible assets.

     The capital standards also require core capital equal to at least 3% to
4% of adjusted total assets, depending on an institution's supervisory rating.
Core capital generally consists of tangible capital. At March 31, 2000, the
Bank had core capital equal to $52.4 million, or 14.0% of adjusted total
assets, which is $41.2 million above the minimum leverage ratio requirement of
3% as in effect on that date.

     The OTS risk-based requirement requires savings associations to have
total capital of at least 8% of risk-weighted assets. Total capital consists
of core capital, as defined above, and supplementary capital.  Supplementary
capital consists of certain permanent and maturing capital instruments that do
not qualify as core capital and general valuation loan and lease loss
allowances up to a maximum of 1.25% of risk-weighted assets. Supplementary
capital may be used to satisfy the risk-based requirement only to the extent
of core capital.

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

     On March 31, 2000, the Bank had total risk-based capital of approximately
$53.8 million, including $52.4 million in core capital and $1.4 million in
qualifying supplementary capital, and risk-weighted assets of $188.9 million,
or total capital of 28.5% of risk-weighted assets. This amount was $38.7
million above the 8% requirement in effect on that date.

                                       28
<PAGE>

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

     The OTS is also generally authorized to reclassify an association into a
lower capital category and impose the restrictions applicable to such category
if the institution is engaged in unsafe or unsound practices or is in an
unsafe or unsound condition.

     The imposition by the OTS or the FDIC of any of these measures on the
Company or the Bank may have a substantial adverse effect on their operations
and profitability.

     Limitations on Capital Distributions. The OTS imposes various
restrictions on savings associations with respect to their ability to make
distributions of capital, which include dividends, stock redemptions or
repurchases, cash-out mergers and other transactions charged to the capital
account. The OTS also prohibits a savings association from declaring or paying
any dividends or from repurchasing any of its stock if, as a result of such
action, the regulatory capital of the association would be reduced below the
amount required to be maintained for the liquidation account established in
connection with the association's mutual to stock conversion.

     The Bank may make a capital distribution without OTS approval provided
that the Bank notify the OTS 30 days before it declares the capital
distribution and that the  following requirements are met: (i) the Bank has a
regulatory rating in one of the two top examination categories, (ii) the Bank
is not of supervisory concern, and will remain adequately or well capitalized,
as defined in the OTS prompt corrective action regulations, following the
proposed distribution, and (iii) the distribution does not exceed the Bank's
net income for the calendar year-to-date plus retained net income for the
previous two calendar years (less any dividends previously paid).  If the Bank
does not meet these stated requirements, it must obtain the prior approval of
the OTS before declaring any proposed distributions.

     In the event the Bank's capital falls below its regulatory requirements
or the OTS notifies it that it is in need of more than normal supervision, the
Bank's ability to make capital distributions will be restricted.  In addition,
no distribution will be made if the Bank is notified by the OTS that a
proposed capital distribution would constitute an unsafe and unsound practice,
which would otherwise be permitted by the regulation.

     Loans to One Borrower.  Federal law provides that savings institutions
are generally subject to the national bank limit on loans to one borrower. A
savings institution may not make a loan or extend credit to a single or
related group of borrowers in excess of 15% of its unimpaired capital and
surplus.  An additional amount may be lent, equal to 10% of unimpaired capital
and surplus, if secured by specified readily-marketable collateral.  At March
31, 2000, the Bank's limit on loans to one borrower was $5.9 million.  At
March 31, 2000, the Bank's largest aggregate loans to one borrower was $3.9
million, which was performing according to its original terms.

     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.

                                       29
<PAGE>

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

     Certain transactions with directors, officers or controlling persons are
also subject to conflict of interest regulations enforced by the OTS.  These
conflict of interest regulations and other statutes also impose restrictions
on loans to such persons and their related interests.  Among other things,
such loans must be made on terms substantially the same as for loans to
unaffiliated individuals.

     Community Reinvestment Act.  Under the federal Community Reinvestment Act
("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 Bank received a "satisfactory" rating as a
result of its latest evaluation.

     Regulatory and Criminal Enforcement Provisions.  The OTS has primary
enforcement responsibility over savings institutions and has the authority to
bring action against all "institution-affiliated parties," including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on
an insured institution.  Formal enforcement action may range from the issuance
of a capital directive or cease and desist order to removal of officers or
directors, receivership, conservatorship or termination of deposit insurance.
Civil penalties cover a wide range of violations and can amount to $27,500 per
day, or $1.1 million per day in especially egregious cases.  Under the FDIA,
the FDIC has the authority to recommend to the Director of the OTS that
enforcement action be taken with respect to a particular savings institution.
If action is not taken by the Director, the FDIC has authority to take such
action under certain circumstances.  Federal law also establishes criminal
penalties for certain violations.

Savings and Loan Holding Company Regulations

     The Company is a unitary savings and loan company subject to regulatory
oversight of the OTS.  Accordingly, the Company is required to register and
file reports with the OTS and is subject to regulation and examination by the
OTS.  In addition, the OTS has enforcement authority over the Company and its
non-savings association subsidiaries which also permits the OTS to restrict or
prohibit activities that are determined to a serious risk to the subsidiary
savings association.

                                       30
<PAGE>

     Acquisitions.  Federal law 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.

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

     Qualified Thrift Lender Test. If the Bank fails the qualified thrift
lender test, within one year the Company must register as, and will become
subject to, the significant activity restrictions applicable to bank holding
companies.  See "-- Federal Regulation of Savings Associations -- Qualified
Thrift Lender Test" for information regarding the Bank's qualified thrift
lender test.

                                  TAXATION

Federal Taxation

     General.  The Company and the 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 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
Bank or the Company.

     Bad Debt Reserve.  Historically, savings institutions such as the 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 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 Bank's actual loss experience, or a percentage equal to 8% of the 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 Bank's
loss experience, the Bank generally recognized a bad debt deduction equal to
8% of taxable income.

     The thrift bad debt rules were revised by Congress in 1996.  The new
rules eliminated 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 required 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 Bank has no post-1987
reserves subject to recapture.

                                       31
<PAGE>

For taxable years beginning after December 31, 1995, the 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. The unrecaptured base
year reserves will not be subject to recapture as long as the institution
continues to carry on the business of banking.  In addition, the balance of
the pre-1988 bad debt reserves continue to be subject to 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 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 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 Bank's taxable income.  Nondividend distributions include
distributions in excess of the 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 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 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, after the
Conversion, the 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 Bank.  The 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 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 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 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 Bank will not file a consolidated tax return,
except that if the Company or the Bank owns more than 20% of the stock of a
corporation distributing a dividend, then 80% of any dividends received may be
deducted.

     Audits.  The Bank's federal income tax returns have not been audited
within the past five years.

State Taxation

     The Bank is subject to an Oregon corporate excise tax at a statutory rate
of 6.6% of income.  The Bank's state income tax returns have not been audited
during the past five years.

Competition

     The Bank faces strong competition in its primary market area 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 commercial banks, credit unions, other thrifts
operating in its market area.  As of March 31, 2000, there were nine
commercial banks and two other thrifts operating in the Bank's primary market
area.   Particularly in times of high interest rates, the Bank has faced
additional significant competition for investors' funds from short-term money
market securities and other corporate and government securities.  The Bank's
competition for loans comes from

                                       32
<PAGE>

commercial banks, thrift institutions, credit unions and mortgage bankers.
Such competition for deposits and the origination of loans may limit the
Bank's growth in the future.

Subsidiary Activities

     The Bank has two subsidiaries, Pioneer Development Corporation ("PDC")
and Pioneer Bank Investment Corporation ("PBIC").  PDC's primary interest was
to purchase land sale contracts until March 31, 1998.  Currently, its primary
interest is in servicing those contractors.  PBIC's primary interest is to
hold the Bank's non-conforming assets.  At March 31, 2000, the Bank's equity
investment in PDC and PBIC was $2.0 million and $181,000, respectively.

     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 1% is used primarily for community, inner-city and community
development projects.  The Bank's investment in its subsidiaries did not
exceed these limits at March 31, 2000.

Personnel

     As of March 31, 2000, the Bank had 122 full-time and 21 part-time
employees, none of whom is represented by a collective bargaining unit.  The
Bank believes its relationship with its employees is good.

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

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

Berniel L. Maughan     57      President and Chief Executive Officer

Zane F. Lockwood       45      Executive Vice President

----------------
(1) At March 31, 2000.

     Berniel L. Maughan has served as President and Chief Executive Officer of
the Company and the Bank since May 25, 2000, replacing Jerry F. Aldape who
resigned in January 2000.  Mr. Maughan previously served with U.S. Bank, Utah
being appointed President and Chief Executive Officer in February 1997,
serving the bank until January 1999.  Prior to that, Mr. Maughan served in the
capacity of Senior Vice President and Regional Manager, and Executive Vice
President with U.S. Bank, Oregon from January 1996 to February 1997.  Prior to
that, he served as Executive Vice President and Manager of the Retail Division
of West One Bank, Oregon from November 1993 through December 1995; and as
Senior Vice President and Regional Manager, West One Bank, Idaho from August
1986 through November 1993.  Mr. Maughan has 32 years of experience in
commercial and retail banking, and has been an active member of numerous civic
and community organizations.

     Zane F. Lockwood has served as the Bank's Executive Vice President since
March of 1999 and Senior Vice President from March 1998 to March 1999.  Prior
to that time, he served as Senior Commercial Lender after joining the Bank in
October 1997.  Mr. Lockwood was employed by U.S. Bank for over 24 years in
various capacities before joining the Bank.  During his last ten years with
U.S. Bank, he was a team leader in their Regional Business Loan Center located
in Pendleton, Oregon.  In that position he supervised the commercial and
agricultural lending in Union, Baker, Wallowa, Grant and Malheur counties.
Mr. Lockwood was very involved in the communities he has resided in having
held numerous board memberships, including president of the La Grande/Union
County Chamber of Commerce.

                                       33
<PAGE>

Item 2.  Properties
-------------------

     The following table sets forth certain information regarding the Bank's
offices at March 31, 2000, all of which are owned.

Current                                      Approximate
Location                  Year Opened       Square Footage      Deposits
--------                  -----------       --------------      --------
                                                             (In thousands)
Corporate Office:

2055 First Street            1979               10,700          $  1,440
Baker City, Oregon 97814

Branch Offices:

Baker City Branch(2)         2000               12,653            67,806
1990 Washington
Baker City, Oregon 97814

La Grande Branch             1975                6,758            50,338
1215 Adams Avenue
La Grande, Oregon 97850

Ontario Branch               1960                3,700            32,652
225 SW Fourth Avenue
Ontario, Oregon 97914

John Day Branch              1973                2,420            15,658
150 West Main Street
John Day, Oregon 97845

Burns Branch                 1975                3,968            19,950
77 W. Adams Street
Burns, Oregon  97720

Enterprise Branch            1976                3,360            22,761
205 West Main Street
Enterprise, Oregon  97828

Island City Branch           1997                4,200            18,791
3106 Island Avenue
La Grande, Oregon 97850

Vale Branch                  1999                3,512             8,339
150 Longfellow Street North
Vale, Oregon 97818

Pendleton Branch (1)         2000                3,748                -0-
1701 SW Court Avenue
Pendleton, Oregon 97801

----------------
(1)  The Pendleton Branch office was acquired on May 26, 2000.
(2)  The Baker City branch and Centralized Lending Center relocated to their
     new office on April 23, 2000.

                                       34
<PAGE>

     The Bank uses the services of an in-house data processing system.  At
March 31, 2000, the Bank had 13 proprietary automated teller machines, eight
of which were located in existing branches.  At March 31, 2000, the net book
value of the Bank's office properties and the Bank's fixtures, furniture and
equipment was $9.9 million or 2.7% of total assets.  See Note 6 of the
Consolidated Financial Statements in the Annual Report.

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

     Periodically, there have been various claims and lawsuits involving the
Bank, mainly as a defendant, such as claims to enforce liens, condemnation
proceedings on properties in which the Bank holds security interests, claims
involving the making and servicing of real property loans and other issues
incident to the Bank's business.  The Bank is not a party to any pending legal
proceedings that it believes would have a material adverse effect on the
financial condition or operations of the Bank.

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 March 31, 2000.

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Shareholder
--------------------------------------------------------------------------
         Matters
         -------

     The information contained under the section captioned "Stock Listing" on
the inside back cover of the Annual Report is incorporated herein by
reference.

Item 6.  Selected Financial Data
--------------------------------

     The information contained under the section captioned "SELECTED
CONSOLIDATED FINANCIAL DATA" on pages 13 and 14 of the Annual Report is
incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
         Results of Operations
         ---------------------

     The information contained in the section captioned "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
beginning on page 15 of the Annual Report is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------

     The information contained in the section captioned "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Market Risk and Asset and Liability Management" on pages 23 and 24 of the
Annual Report are incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------

     (a)  Financial Statements
          Independent Auditors' Reports*
          Consolidated Balance Sheets as of March 31, 2000 and 1999*
          Consolidated Statements of Income for the Year Ended March 31, 2000,
            1999 and 1998*
          Consolidated Statements of Shareholders' Equity for the Year Ended
            March 31, 2000, 1999 and 1998*
          Consolidated Statements of Cash Flows for the Year Ended March 31,
            2000, 1999 and 1998*
          Notes to the Consolidated Financial Statements*

                                       35
<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.

     (b)  Supplementary Data

     The information contained in Note 22 to the Consolidated Financial
Statements included in the Annual Report is incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
------------------------------------------------------------------------
         Financial Disclosure
         --------------------

     Not applicable.

                                  PART III

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

     The information contained under the section captioned "Proposal I -
Election of Directors" contained in the Company's Proxy Statement, and "Part I
-- Business -- Personnel -- Executive Officers" of this report, 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 11.  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 12.  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 "Proposal I - Election of
          Directors" and "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.

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

                                       36
<PAGE>

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

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

                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
--------------------------------------------------------------------------

     (a)  Exhibits

          3(a)   Articles of Incorporation of the Registrant*
          3(b)   Bylaws of the Registrant*
          10(a)  Employment Agreement with Jerry F. Aldape**
          10(b)  Severance Agreement with Nadine J. Johnson**
          10(c)  Severance Agreement with William H. Winegar**
          10(d)  Employment Agreement with Zane Lockwood****
          10(e)  Severance Agreement with Thomas F. Bennett****
          10(f)  Severance Agreement with Jerry Kincaid****
          10(g)  Employee Severance Compensation Plan**
          10(h)  Pioneer Bank, a Federal Savings Bank Employee Stock Ownership
                 Plan**
          10(i)  Pioneer Bank, a Federal Savings Bank 401(k) Plan*
          10(j)  Pioneer Bank Director Emeritus Plan***
          10(k)  1998 Stock Option Plan***
          10(l)  1998 Management Recognition and Development Plan***
          10(m)  Form of Severance Agreement with Marvin L. Sumner
          13     Annual Report to Shareholders****
          21     Subsidiaries of the Registrant****
          23     Consent of Independent Auditors****
          27     Financial Data Schedule
          99     Former Independent Auditor's Report****

-----------------
 *   Incorporated by reference to the Registrant's Registration Statement on
     Form S-1 (333-30051), as amended.
**   Incorporated by reference to the Registrant's Form 10-Q for the quarter
     ended September 30, 1997.
***  Incorporated by reference to the Registrant's Definitive Proxy Statement
     for the 1998 Annual Meeting of Shareholders.
**** Incorporated by reference to the Registrant's Form 10-Q for the quarter
     ended September 30, 1998.

     (b)  Reports on Form 8-K

          Two Current Reports Form 8-K were filed during the year ended March
31, 2000.  The first Form 8-K, which was filed on February 8, 2000, announced
the resignation of Jerry F. Aldape as President and Chief Executive Officer,
effective January 24, 2000.  The second Form 8-K, which was filed on March 16,
2000, announced the resignation of Nadine J. Johnson as Chief Financial
Officer, effective June 30, 2000.

                                       37
<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.

                                OREGON TRAIL FINANCIAL CORP.


Date:  June 29, 2000            By: /s/ Berniel L. Maughan
                                    ----------------------------------------
                                    Berniel L. Maughan
                                    President and Chief Executive Officer
                                    (Duly Authorized Representative)

     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/ Berniel L. Maughan    President and Chief Executive   June 29, 2000
------------------------- Officer and Director
Berniel L. Maughan        (Principal Executive Officer)

/s/ Nadine J. Johnson     Chief Financial Officer         June 29, 2000
------------------------- (Principal Financial Officer)
Nadine J. Johnson

/s/ Stephen R. Whittemore Chairman of the Board           June 29, 2000
-------------------------
Stephen R. Whittemore

/s/ John Gentry           Director                        June 29, 2000
-------------------------
John Gentry

/s/ Albert H. Durgan      Director                        June 29, 2000
-------------------------
Albert H. Durgan

/s/ Edward H. Elms        Director                        June 29, 2000
-------------------------
Edward H. Elms

/s/ John A. Lienkaemper   Director                        June 29, 2000
-------------------------
John A. Lienkaemper

/s/ Charles Rouse         Director                        June 29, 2000
-------------------------
Charles Rouse


<PAGE>

                               EXHIBIT 10(m)

              Form of Severance Agreement with Marvin L. Sumner
<PAGE>

                               AGREEMENT
                               ---------

     THIS AGREEMENT is made effective as of February 1, 2000 by and between
PIONEER BANK, FSB (the "BANK"); OREGON TRAIL FINANCIAL CORP. ("COMPANY"); and
MARVIN L. SUMNER ("EXECUTIVE").

     WHEREAS, EXECUTIVE serves in the position of Vice President/Senior
Commercial Lending Officer of the BANK, a position of substantial
responsibility; and

     WHEREAS, the BANK wishes to protect his position therewith for the period
provided in this Agreement in the event of a Change in Control (as defined
herein);

     NOW, THEREFORE, in consideration of the foregoing and upon the other
terms and conditions herein provided, the parties hereto agree as follows:

1.   Term Of Agreement.

     The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of eighteen (18) full
calendar months thereafter.  Commencing on the first anniversary date of this
Agreement and continuing at each anniversary date thereafter, the Board of
Directors of the BANK ("Board") may extend the Agreement for an additional
year.  The Board will conduct a performance evaluation of EXECUTIVE for
purposes of determining whether to extend the Agreement, and the results
thereof shall be included in the minutes of the Board's meeting.

2.   Payments to EXECUTIVE Upon Change in Control.

     (a)  Upon the occurrence of a Change in Control (as herein defined)
followed within twelve (12) months of the effective date of the Change in
Control by the voluntary or involuntary termination of EXECUTIVE's employment,
other than for Cause, as defined in Section 2(c) hereof, the provisions of
Section 3 shall apply.  For purposes of this Agreement, "voluntary
termination" shall be limited to the circumstances in which EXECUTIVE elects
to voluntarily terminate his employment within twelve (12) months of the
effective date of a Change n Control following any demotion, loss of title,
office or significant authority, reduction in his annual compensation or
benefits (other than a reduction affecting the Bank's personnel generally), or
relocation of his principal place of employment by more than 35 miles from its
location immediately prior to the Change in Control.

     (b)  A "Change in Control" of the COMPANY or the BANK shall be deemed to
occur if and when (a) an offeror other than the Corporation purchases shares
of the stock of the Corporation or the Bank pursuant to a tender or exchange
offer for such shares, (b) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly
or indirectly, of securities of the Corporation or the Bank representing
twenty-five percent (25%) or more of the combined voting power of the
Corporation's or the Bank's then outstanding securities, (c) the membership of
the board of directors of the Corporation or the Bank changes as the result of
a contested election, such that individuals who

<PAGE>

were directors at the beginning of any twenty-four (24) month period (whether
commencing before or after the date of adoption of this Agreement) do not
constitute a majority of the Board at the end of such period, or (d)
shareholders of the Corporation or the Bank approve a merger, consolidation,
sale or disposition of all or substantially all of the Corporation's or the
Bank's assets, or a plan of partial or complete liquidation.

     (c)  EXECUTIVE shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon Termination for Cause.  The term
"Termination for Cause" shall mean termination because of EXECUTIVE's
intentional failure to perform stated duties, personal dishonesty,
incompetence, willful misconduct, any breach of fiduciary duty involving
personal profit, willful violation of any law, rule, regulation (other than
traffic violations or similar offenses) or final cease and desist order, or
any material breach of any material provision of this Agreement.  In
determining incompetence, the act or omissions shall be measured against
standards generally prevailing in the savings institution industry.
Notwithstanding the foregoing, EXECUTIVE shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to EXECUTIVE and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, EXECUTIVE was guilty of conduct
justifying Termination for Cause and specifying the particulars thereof in
detail.  EXECUTIVE  shall not have the right to receive compensation or other
benefits for any period after Termination for Cause.

3.   Termination

     (a)  Upon the occurrence of a Change in Control, followed within twelve
(12) months of the effective date of a Change in Control by the voluntary or
involuntary termination of EXECUTIVE's employment other than Termination for
Cause, the BANK shall be obligated to pay EXECUTIVE, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be, as severance pay, a sum equal to one and one-half (1.5) times
EXECUTIVE's "base amount," within the meaning of Section 280G(b)(3) of the
Internal Revenue Code of 1986 ("Code"), as amended.  Such payment shall be made
in a lump sum paid within ten (10) days of EXECUTIVE's date of termination.

     (b)  Upon the occurrence of a Change in Control of the BANK followed
within twelve (12) months of the effective date of a Change in Control by
EXECUTIVE's voluntary or involuntary termination of employment, other than
Termination for Cause, the BANK shall cause to be continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the BANK for EXECUTIVE prior to his severance.  Such coverage
and payments shall cease upon expiration of eighteen (18) months from the date
of EXECUTIVE's termination.

     (c)  Notwithstanding the preceding paragraphs of this Section 3, in the
event that the aggregate payments or benefits to be made or afforded to
EXECUTIVE under this Section, together with any other payments or benefits
received or to be received by EXECUTIVE in connection with a Change in
Control, would be deemed to include an "excess parachute payment" under Section
280G of the Code, then at the election of EXECUTIVE, (i) such payments or

                                       2
<PAGE>

benefits shall be payable or provided to EXECUTIVE over the minimum period
necessary to reduce the present value of such payments or benefits to an
amount which is one dollar ($1.00) less than three (3) times EXECUTIVE's "base
amount" under Section 280G(b)(3) of the Code or (ii) the payments or benefits
to be provided under this Section 3 shall be reduced to the extent necessary to
avoid treatment as an excess parachute payment with the allocation of the
reduction among such payments and benefits to be determined by EXECUTIVE.

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

4.   Effect On Prior Agreement And Existing Benefit Plans

     This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the BANK and EXECUTIVE,
except that this Agreement shall not affect or operate to reduce any benefit
or compensation inuring to EXECUTIVE of a kind elsewhere provided.  No
provision of this Agreement shall be interpreted to mean that EXECUTIVE is
subject to receiving fewer benefits than those available to him without
reference to this Agreement, except that the parties agree EXECUTIVE shall not
be eligible for severance benefits under the BANK's Employee Severance
Compensation Plan.

5.   No Attachment

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

     (b)  This Agreement shall be binding upon, and inure to the benefit of,
EXECUTIVE, the COMPANY, the BANK and their respective successors and assigns.

6.   Modification And Waiver

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

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

7.   Required Provisions

     (a)  The BANK may terminate EXECUTIVE's employment at any time, but any
termination by the BANK, other than Termination for Cause, shall not prejudice
EXECUTIVE's

                                       3
<PAGE>

right to compensation or other benefits under this Agreement.  EXECUTIVE shall
not have the right to receive compensation or other benefits for any period
after Termination for Cause as defined in Section 2(c) herein.

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

     (c)  If EXECUTIVE is removed and/or permanently prohibited from
participating in the conduct of the BANK's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all
obligations of the BANK under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall not be affected.

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

     (e)  All obligations under this Agreement may be terminated:  (i) by the
Director of the Office of Thrift Supervision (the "Director") or his or her
designee at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the BANK under the authority contained in Section 13(c) of the
FDIA and (ii) by the Director, or his or her designee at the time the Director
or such designee approves a supervisory merger to resolve problems related to
operation of the BANK or when the BANK is determined by the Director to be in
an unsafe or unsound condition.  Any rights of the parties that have already
vested, however, shall not be affected by such action.

8.   Severability

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

9.   Headings For Reference Only

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

                                       4
<PAGE>

10.  Governing Law

     The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Oregon, unless
preempted by Federal law as now or hereafter in effect.  In the event that any
provision of this Agreement conflicts with 12 C.F.R. Section 563.39(b), the
latter provision shall prevail.

     Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the employee
within fifty (50) miles from the location of the BANK, in accordance with the
rules of the American Arbitration Association then in effect.

11.  Source of Payments

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

12.  Payment Of Legal Fees

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

13.  Successor To The BANK or the COMPANY

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

                                       5
<PAGE>

14.  Signatures

     IN WITNESS WHEREOF, the BANK and the COMPANY have caused this Agreement
to be executed and their seal to be affixed hereunto by a duly authorized
officer, and EXECUTIVE has signed this Agreement, all as of the date
referenced above.


ATTEST                             PIONEER BANK, FSB


/s/ Zane F. Lockwood               /s/ Zane F. Lockwood, Acting Pres/CEO
-----------------------------      -------------------------------------
     [SEAL]


ATTEST                             OREGON TRAIL FINANCIAL CORP.


/s/ Zane F. Lockwood               /s/ Zane F. Lockwood, Acting Pres/CEO
-----------------------------      -------------------------------------

     [SEAL]


WITNESS:


/s/ Zane F. Lockwood               /s/ Marvin L. Sumner
-----------------------------      -------------------------------------
                                   Marvin L. Sumner



                                       6
<PAGE>

                                 EXHIBIT 13

                     2000 Annual Report to Shareholders

<PAGE>

OREGON TRAIL
    FINANCIAL CORPORATION




                                       2000
                                      Annual
                                      Report


<PAGE>

The view
 from
 here.

Pioneer Bank has been
part of the Eastern Oregon
landscape for nearly one
hundred years.  The Bank
has maintained its
pioneering spirit and
commitment to progress,
becoming one of the top
three banks in each of our
market areas for deposit
            market share.

Dear Shareholders

[picture of Stephen R. Whittemore]

  In 1999, Pioneer Bank continued its transition from a well established
mutual savings and loan to a progressive savings bank. The tradition of
mortgage-based products is still evident in a time when careful tailoring of
an additional selection of products and services is being emphasized. The
strengths of our heritage are demonstrated daily with the strong relationships
within the communities we serve and familiarity of the marketplace and the
individuals in it. Customers can be assured of consistency in maintaining
traditional services while being given the opportunity for technologically
advanced products and services.
   Since our conversion to stock ownership, significant investments have been
made to improve facilities, technology and recruitment and retention of
quality employees.  Attention has continued to be given at all levels of
management to maintaining safe, secure investments. This now positions us to
more effectively deliver needed financial services.
  Significantly, the most dynamic change in the year is our attraction and
placement of new leadership. We are pleased to have Berniel Maughan as
President and CEO utilizing his broad based commercial banking experience and
knowledge of the banking industry, as a whole, to take this company to new
levels of performance.
  As Pioneer Bank continues its evolution, we continue to assess everything we
do or do not do by a major test of measurement: Is it in the best interest of
our shareholders? To that end, we look forward to the coming years and new
markets.

Sincerely,

/s/ Stephen R. Whittemore

Stephen R. Whittemore
Chairman, Board of Directors

<PAGE>

[picture of Berniel L. Maughan]

  We have just ended the decade of the 90's, an era where we have seen many
changes and much growth in the economy. With this has come new opportunity,
but not without some challenges along the way. Growing concerns of inflation,
sparked a sharp rise in interest rates, heavily impacting our margins. The
combination of the investment portfolio mix with both rate and maturities,
coupled with a variety of existing fixed-rate mortgage loans in our portfolio
have provided little flexibility to our opportunity for better earnings.
  Expenses grew this past year as the Bank invested in facility improvements,
positioning for long-term growth. The infrastructure was expanded to allow for
additional growth in our markets with consumer, commercial and agricultural
loan products and services. The Bank also provided expansion and improvement
to product and delivery lines such as internet banking. Our expanded branch
network and talented, dedicated employees, coupled with cost-savings
technologies, have postured us to be the dominant community bank in the
markets we serve.
  Our customer base and our markets represent a substantial profit potential.
To ensure their lasting loyalty, Pioneer Bank's strategy will be to
proactively serve existing customers by recognizing their increased needs for
new and existing products and by continuing to provide cost-effective delivery
methods that maintain our commitment to providing high quality service.
  The forward strategy for Pioneer Bank will be to boost profitability and
market value of the company through restructuring our operating policies,
striving for a greater proportion of variable-priced loans to maintain a
proper relationship to our variable-rate deposit structure, and improving the
return and flexibility from our investment portfolio by taking advantage of
shorter average maturities, benefited by higher rates. Expense management will
be an important strategy implemented to stimulate earnings and maximize
shareholder value. This will be accomplished by  a consistent focus on costs,
identifying outlays that produce more strategic benefits.
  Our objective for the future will be to provide banking services to a
diverse variety of customers in our markets and to do so in a manner that will
maintain and grow our share of business, while retaining quality and improving
the profitability of the Bank and return to shareholders. I am pleased to be
working with my associates at Pioneer Bank, and am extremely impressed with
their dedication and teamwork. I recognize in them a strong commitment to
embracing the change process necessary to facilitate the new direction and
innovation called for in today's financial marketplace.
  Building a strong management team to meet the challenges of maintaining
quality standards with profitable returns is of the highest priority. Our
Directors are dedicated individuals whose interests are aligned with those of
our shareholders. Their continued guidance, along with that of our key
leadership and management team, will ensure the improved and steady ongoing
financial performance needed, that will fulfill our mission of creating
stronger shareholder value by delivering superior service to our customers.

Sincerely,

/s/ Berniel L. Maughan

Berniel L. Maughan
President and Chief Executive Officer

                                                                            3
<PAGE>

   Expanding
     our
  territories.


                                          People and technology
                                              are the keys to our
                                                deposit and
                                                   loan growth.


  Throughout Pioneer's service territory, people and technology have been the
keys to the deposit and loan growth achieved by every branch. Our new online
banking service has given customers additional banking options, while our
growing ATM network, 24-hour Telebanking and fully staffed branches allow
customers easy access to a wider range of services. Relationship banking,
onsite local loan decisions, and customized deposit services continue to be
central to the Bank's style, making banking with Pioneer "doing business with
a friend." Above all, community banking Pioneer style is about people.
Encouraging and building our staff through intensive training and strategic
hiring has allowed the Bank to become a leader in innovation, and customer
service.

4
<PAGE>

[picture]

  Where other banks saw obstacles, Pioneer saw opportunity. Vale, Oregon is
home to a stable agricultural and growing food products economy; a natural fit
for Pioneer's own growing agricultural lending expertise.
  The new Vale branch building symbolizes the Bank's commitment to Malheur
County and attracts new customers in a region where population and wage growth
is expected to continue at above state averages over the next few years. The
branch itself, located at 150 Longfellow Avenue North in Vale is a 3,512
square foot facility with a staff of seven offering full consumer and business
services. The branch also features safe deposit boxes, 24-hour ATM and a
two-lane drive up facility.


The new branch
   symbolized our
commitment to
Malheur County
and attracts
  new customers.

                                          Unveiling
                                           the new
                                         Vale branch.
                                                                            5
<PAGE>

New branch.
  Familiar
territory.


  Pioneering style means thinking ahead. In Baker City, we seized opportunity
in the form of an available former bank building across the street from the
Bank's headquarters and main branch. Moving to this facility will bring
greater customer convenience and operational cost savings. With an additional
teller window, more safe deposit boxes, easier drive-through access,
additional loan-making capacity, and faster teller transactions with updated
technology, the 12,000 square foot building delivers improved customer
service. The facility's additional space also enables the Bank to bring loan
processing functions into one cost-saving, centralized setting.


                      Our new facility
                 will bring greater customer
                 convenience and operational
[picture]                 cost savings.

6
<PAGE>

  The Pendleton branch increases
the total population exposure
to Pioneer's brand of relationship
[picture]    banking by 72%.


  Fiscal Year 2000 saw the Bank forge ahead with a strategic move into
Umatilla County.  With the purchase of Western Bank's Pendleton branch
facility and accounts, Pioneer opened its ninth branch May 30, 2000 and
positioned the Bank to grow in a dynamic adjacent market area. Located in
Eastern Oregon's largest county and one of the fastest growing counties in the
state, the Pendleton branch increases the total population exposure to
Pioneer's brand of relationship banking by 72%, positioning us for growth in
one of the state's most vibrant regions.

                                         Breaking
                                           new
                                          ground.
                                                                           7
<PAGE>

    We
 understand
the business
 landscape.

When it comes to commercial lending for businesses large and small throughout
Eastern Oregon, Pioneer's lending experts walk the walk. In the three years
since its inception, the Bank's commercial lending has grown to more than $31
million in business loans supporting a diverse group of growing organizations
across the region. This increase also includes a one-year $3.5 million or 29%
increase in agriculture loans. It's a winning combination: experienced local
lenders working hand in hand with customers who have a business vision. It's a
roadmap for business success.

                                In three years, the
                                  Bank's small business
                                 lending has grown to
                                   more than $31 million.

8
<PAGE>

Our auto dealer center
  business has nearly
doubled during the
  past year.


  Pioneer continues to move forward with product and service innovations like
the Auto Dealer Loan Center. New in fiscal year 1998, this auto dealer finance
program has nearly doubled during the past year, growing from $9.3 million at
March 31, 1999 to $17.4 million at March 31, 2000. It now includes a network
of nearly 30 Oregon and Idaho auto dealers representing nearly $20 million in
loans. While the program offers a significant new source of income to the
Bank, it also allows the Bank to build relationships with dealers and  their
customers by providing a full range of banking products.

                                                [picture]

                                                          Moving
                                                          Eastern
                                                          Oregon.

                                                                           9
<PAGE>

   Pioneering
    a solid
    future.

We're forging future
   growth and
     profitability
 with leadership,
  progress, and
innovation.

Board of Directors
(Standing left to right)

     Albert H. Durgan
Stephen R. Whittemore
     Charles H. Rouse               [picture]
       Edward H. Elms
       John W. Gentry
  John A. Lienkaemper

                             Leadership. Progress. Innovation.
                      Just a few key ingredients make a true Pioneer.

<PAGE>

                                FINANCIAL INDEX

                                Selected Consolidated
                                Financial and Other Data                 13

                                Management's Discussion and Analysis     15

                                Independent Auditors' Report             26

                                Consolidated Financial Statements        27

                                Notes to Consolidated
                                Financial Statements                     32

                                                                            11
<PAGE>

                           [This page left blank]
<PAGE>

Oregon Trail Financial Corp. and Subsidiary
Selected Consolidated Financial and Other Data

Financial Condition Data
(in thousands)

                                         At March 31,                June 30,
                        ------------------------------------------  ---------
                            2000       1999      1998       1997       1996
                        ---------  ---------  ---------  ---------  ---------
Total assets            $ 370,612  $ 313,473  $ 263,224  $ 204,213  $ 203,457

Loans receivable, net     220,591    185,747    153,838    138,881    132,347
Loans held for sale             0          0          0        428          0
Investment securities
 held to maturity           3,897      3,221      2,985      2,763      2,609
Investment securities
 available for sale        37,436     37,965     37,225     15,907     19,950
Mortgage-backed and
 related securities
 held for trading               0          0          0          0      2,569
Mortgage-backed and
 related securities
 available for sale        84,615     60,371     27,778     19,745     19,451
Mortgage-backed and
 related securities
 held to maturity               0      9,338     12,805     15,302     17,011
Cash and cash
 equivalents                9,261      6,276     20,311      4,976      3,416
Deposits                  237,735    199,589    192,734    179,158    176,619
Advances from FHLB         76,750     50,250          0      2,231      4,082
Total shareholders'
 equity                    53,104     60,083     67,301     21,027     20,004
Shares outstanding
 excluding unearned
 restricted shares
 held in ESOP               3,317      3,764      4,346        N/A        N/A


<TABLE>
Operating Data
(in thousands except per share data)
                                      Year Ended                        Nine Months Ended     Year Ended
                                       March 31,                             March 31,         June 30,
                          ------------------------------------------- ---------------------  ------------
                             2000        1999       1998       1997       1997       1996        1996
                          ---------  ---------  ---------  ---------  ---------- ---------    ---------
<S>                       <C>        <C>        <C>        <C>        <C>        <C>          <C>
Interest income          $  24,548  $  20,582  $  18,511  $  16,082  $  12,030 $  11,960    $  16,012
Interest expense            11,776      8,064      7,824      7,475      5,553     6,134        8,057
                          ---------  ---------  ---------  ---------  ---------- ---------    ---------
Net interest income         12,772     12,518     10,687      8,607      6,477     5,826        7,955
                          ---------  ---------  ---------  ---------  ---------- ---------    ---------
Provision for loan losses      178        483        138        226        216        91          115
Net interest income after
 provision for loan losses  12,594     12,035     10,549      8,381      6,261     5,735        7,840
Gains (losses) from sale
 of securities                   0          0          0        (51)         0        34           34
Noninterest income           1,602      1,098      1,046        828        661       563          677
Noninterest expense (1)     10,115      8,182      6,533      6,454      5,074     3,647        5,009
                          ---------  ---------  ---------  ---------  ---------- ---------    ---------
Income before income taxes   4,081      4,951      5,062      2,704      1,848     2,685        3,542
Provision for income taxes   1,472      1,797      2,026      1,080        750     1,033        1,363
                          ---------  ---------  ---------  ---------  ---------- ---------    ---------
Net income               $   2,609  $   3,154  $   3,036  $   1,624  $   1,098 $   1,652    $   2,179
                          =========  =========  =========  =========  ========== =========    =========
Basic earnings per
 share (2)               $    0.74  $    0.78  $    0.38        N/A        N/A       N/A          N/A
Weighted average common
 shares outstanding (2)      3,547      4,065      4,326        N/A        N/A       N/A          N/A
Diluted earnings per
 share                   $    0.70  $    0.76  $    0.38        N/A        N/A       N/A          N/A
Weighted average common
 dilutive shares             3,724      4,160      4,326        N/A        N/A       N/A          N/A

                                                                                                     13
</TABLE>
<PAGE>

Selected Consolidated Financial and Other Data

Other Data                                                               At
                                             At March 31,             June 30,
                                -----------------------------------   -------
                                  2000      1999      1998     1997     1996
Number of:                      ------    ------    ------   ------   ------
Real estate loans outstanding    2,298     2,346     2,245    2,381    2,493
Deposit accounts                31,384    28,820    28,781   29,455   30,524
Full-service offices                 8         7         7        7        7

                                                                        At or
                                                                       for the
                                                                         Year
                                                        At or for Nine  Ended
                          At or for the Year Ended       Months Ended    June
Selected Financial                 March 31,               March 31,      30,
 Ratios                -------------------------------  --------------- ------
                         2000    1999    1998    1997    1997    1996    1996
                       ------   -----   -----   -----   -----   -----   -----
Performance Ratios: (3)
Return on average
 assets (4)              0.76%   1.14%   1.25%   0.80%   0.72%   1.06%   1.06%
Return on average
 equity (5)              4.60    4.90    6.65    7.96    7.09   11.67   11.40
Interest rate spread (6) 3.10    3.85    3.73    3.89    3.90    3.45    3.56
Net interest margin (7)  3.89    4.70    4.60    4.37    4.40    3.87    3.97
Average interest-
 earning assets to
 average interest-
 bearing liabilities   122.02  128.10  125.92  112.74  113.20  110.33  110.64
Noninterest expense
 as a percent of
 average total assets    2.95    2.96    2.69    3.16    3.31    1.76    2.43
Efficiency ratio (8)    70.37   60.09   55.68   68.77   71.09   56.78   57.80
Dividend payout
 ratio (9)              42.14   28.95   13.16     N/A     N/A     N/A     N/A

Asset Quality Ratios:
Nonaccrual and 90
 days or more past
 due loans as a
 percent of total
 loans, net              0.07    0.07    0.18    0.14    0.14    0.10    0.12
Nonperforming assets
 as a percent of
 total assets            0.04    0.01    0.22    0.10    0.10    0.06    0.10
Allowance for losses
 as a percent of gross
 loans receivable        0.63    0.66    0.55    0.52    0.52    0.41    0.41
Allowance for losses
 as a percent of
 nonperforming loans   900.65  889.86  308.07  381.58  381.58  424.80  331.90
Net charge-offs to
 average outstanding
 loans                   0.00    0.06    0.01    0.02    0.03    0.02    0.02
Capital Ratios:
Total equity-to-
 assets ratio           14.33   19.17   25.57   10.30   10.30    8.68    9.83
Average equity to
 average assets (10)    16.55   23.27   18.82   10.01   10.14    9.11    9.26

---------------------
(1)  Includes FDIC SAIF assessment of $1.1 million during the nine months and
     year ended March 31, 1997.
(2)  Weighted average shares outstanding for fiscal year 1998 included shares
     from conversion on October 3, 1997 to year end.  Earnings per share
     include only earnings from date of conversion to year end.
(3)  Annualized, where appropriate for the nine months ended March 31, 1997
     and 1996.
(4)  Net earnings divided by average total assets.
(5)  Net earnings divided by average equity.
(6)  Difference between weighted average yield on interest-earning assets and
     weighted average cost of interest-bearing liabilities.
(7)  Net interest income as a percentage of average interest-earning assets.
(8)  Other expenses divided by the sum of net interest income and other
     income.  Efficiency ratio without FDIC SAIF assessment was 56.75% and
     57.95% for the nine and twelve months ended March 31, 1997, respectively.
(9)  Dividends declared per share divided by net income per share.
(10) Average total equity divided by average total assets.

14
<PAGE>

Management's Discussion and Analysis of
Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS
  Management's Discussion and Analysis and other portions of the report
contain certain "forward-looking statements" of Financial Condition and
Results of Operations concerning the expected future operations of Oregon
Trail Financial Corp. (the "Company"). Management wishes to take advantage of
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995 and is including this statement for the express purpose of availing
the Company of the protections of such safe harbor with respect to all
"forward-looking statements" contained in our Annual Report. "Forward-looking
statements" are used to describe future plans and strategies, including
expectations of the Company's future financial results. Management's ability
to predict results or the effect of future plans or strategies is inherently
uncertain. Factors which could affect actual results include interest rate
trends, the general economic climate in the Company's market area and the
country as a whole, the ability of the Company to control costs and expenses,
competitive products and pricing, loan delinquency rates, and changes in
federal and state regulation.  These factors should be considered in
evaluating the forward-looking statements, and undue reliance should not be
placed on such statements.

GENERAL
  Management's Discussion and Analysis of Financial Condition and Results of
Operations is intended to assist in understanding the financial condition and
results of operations of the Company. The information contained in this
section should be read in conjunction with the Consolidated Financial
Statements and accompanying Notes thereto contained in this Annual Report.
  The Company, an Oregon Corporation, became the unitary savings and loan
holding company of Pioneer Bank, a Federal Savings Bank ( the "Bank") upon the
Bank's conversion from a federally chartered mutual to a federally chartered
stock savings bank (the "Conversion") on October 3, 1997. Accordingly, the
Company is primarily engaged in the business of planning, directing and
coordinating the business activities of the Bank, the deposits of which are
insured by the Federal Deposit Insurance Corporation ("FDIC") under the
Savings Association Insurance Fund ("SAIF"). The Bank conducts business from
its main office in Baker City, Oregon and its nine branch offices located in
Eastern Oregon.  On May 26, 2000 the Bank acquired its ninth branch, the
Pendleton branch of Western Bank, a division of Washington Mutual, Inc.
Management chose Pendleton as a new location because it is in an adjacent
market area and in the Columbia Basin, a more rapidly growing economic region.
Pendleton is located in Umatilla County with a county population of
approximately 67,000.
  The Bank operates as a community oriented financial institution devoted to
serving the needs of its customers. The Bank's business consists primarily of
attracting retail deposits from the general public and using those funds to
originate one-to-four family residential and consumer loans in its primary
market area.  To a lesser but growing extent the Bank also originates
agricultural loans, commercial business loans and indirect automobile loans.
In the past year the Bank has expanded the origination of indirect automobile
loans to 25 dealer relationships and into several adjacent market areas in
Idaho and Eastern Oregon.
  The Bank's results of operations depend primarily on its net interest
income, which is the difference between the income earned on its
interest-earning assets, such as loans and investments, and the cost of its
interest-bearing liabilities, consisting of deposits and Federal Home Loan
Bank of Seattle ("FHLB") borrowings. The Bank's net income is also affected
by, among other things, fee income, provisions for loan losses, operating
expenses and income tax provisions. The Bank's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government legislation and
policies concerning monetary and fiscal affairs, housing and financial
institutions and the attendant actions of the regulatory authorities.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND MARCH 31, 1999
  Total assets at March 31, 2000 amounted to $370.6 million compared to $313.5
million at March 31, 1999.  The primary reason for the $57.1 million or 18.2%
increase in total assets was a $34.9 million increase in net loans receivable
and a $14.4 million increase in securities.
  Loans receivable, net, were $220.6 million at March 31, 2000 compared to
$185.7 million at March 31, 1999, an 18.8% increase. A substantial portion of
the Bank's loan portfolio is secured by real estate, either as primary or
secondary collateral, located in its primary market area. In addition, during
the year ended March 31, 2000 there was a continuing trend in the growth of
the consumer, commercial business and agricultural loans as the Bank
emphasized the origination of loans with shorter maturities for asset and
liability management purposes.  Total consumer loans increased $9.3 million or
26.4% from $35.3 million at March 31, 1999 to $44.6 million at fiscal year end
2000, primarily due to the purchase of $14.5 million of indirect automobile
loans.  The indirect automobile dealer program has been very successful with
ten dealers joining the program during fiscal 2000, bringing total dealer
relationships to 25.  The total indirect portfolio increased to $17.4 million
at March 31, 2000 with delinquencies of only .34% of total loans. Consumer
loans other than indirect automobile loans

                                                                          15
<PAGE>

increased $1.2 million from March 31, 1999 to March 31, 2000.  Commercial
business loans increased $1.8 million or 15.1% from $12.0 million to $13.9
million, while commercial real estate loans increased $1.1 million or 8.0%,
from $13.7 million to $14.8 million.  The development of the agricultural loan
portfolio including agricultural real estate loans continued with a $3.7
million or 30.6% increase for the year from $12.0 million at March 31, 1999 to
$15.7 million at March 31, 2000.  Management continued its efforts to balance
the interest rate risk of a fixed rate portfolio of primarily long term real
estate loans, with the fulfillment of local demand for shorter term
agricultural, commercial business and indirect automobile dealer loans. There
is greater credit risk associated with these types of loans than with
traditional residential mortgage lending.  However, mortgage loans on
one-to-four family dwellings increased $18.5 million or 17.0% from $109.1
million at March 31, 1999 to $127.6 million at March 31, 2000.  Residential
mortgage loans as a percentage of total gross loans receivable decreased from
58.0% at March 31, 1999 to 57.1% at March 31,  2000.
  Cash and cash equivalents were $9.3 million at March 31, 2000 compared to
$6.3 million at March 31, 1999.  The $3.0 million increase was primarily the
result of a change in float requirements with correspondent banks.
  Available-for-sale securities were $122.1 million at March 31, 2000 compared
to $98.3 million at March 31, 1999, an increase of $23.8 million or 24.2%.
The increase was primarily due to the purchase of approximately $28.3 million
of U.S. government agency mortgage-backed and related securities, $5.4 million
of U.S. government agency obligations and $1.3 million of AAA rated municipal
bonds of various local Oregon governmental units. In addition, effective April
1, 1999, in accordance with Statement of Financial Accounting Standards
("SFAS") 133, Accounting for Derivative Instruments and Hedging Activities,
$9.3 million of securities classified as held-to-maturity at March 31, 1999
were reclassified to available-for- sale.  The transfer was recorded as a
direct increase to other comprehensive income of $111,000 (net of income tax
of $69,000). See Note 1 of Notes to Consolidated Financial Statements.  The
purchases and the transfer of held-to-maturity securities were partially
offset by $5.0 million of U.S. government securities called by the issuer due
to a lower interest rate environment, principal pay-downs of $10.4 million on
U.S. government agency mortgage-backed and related securities and by an
increase of $5.1 million in the unrealized holding losses on securities
available for sale.
  Premises and equipment, net, increased to $9.9 million at March 31, 2000
from $7.8 million at March 31, 1999 primarily as a result of the completion of
the Vale branch office in October 1999 with a total cost of approximately $1.0
million, construction in process on the new Baker branch office of
approximately $1.5 million and purchases of technological equipment and
software of approximately $500,000. The new Baker branch was occupied in April
2000 and also includes space for the central lending staff.  The increases
were partially offset by the sale of $200,000 of land in August 1999 at a gain
of $173,000 and depreciation expense of $686,000.
  Total deposits were $237.7 million at March 31, 2000, compared to $199.6
million at March 31, 1999. Management attributes the $38.1 million increase
primarily to successful efforts to attract core deposits, i.e. statement
savings accounts and checking accounts, which grew $21.4 million or 21.4%.
Efforts to grow deposits were aided by consolidation of larger banks in the
Bank's marketplace and the Bank's commitment to personal customer service
enhanced by technological advances. As large national banks have consolidated
and reduced staff at branches in the Bank's marketplace, many customers have
demonstrated their preference for personalized customer service by moving
their banking relationships to the Bank.  The Bank has also been able to
attract the core deposits of its new agricultural and commercial lending
clients and has offered very competitive certificate of deposit rates during
the past year.
  The Bank had $76.8 million in outstanding advances from the FHLB at March
31, 2000 compared to $50.3 million at March 31, 1999. The increase in
borrowings was used to fund net loan growth of $34.9 million as well as the
net growth in the investment portfolio of $14.4 million.
  Total shareholders' equity decreased to $53.1 million at March 31, 2000 from
$60.1 million at March 31, 1999 primarily due to the repurchase of 534,228 of
the Company's common stock at an average price of $11.90 per share totaling
$6.4 million. Shares repurchased were retired.  Cash dividends paid on the
common stock of $1.1 million also decreased total shareholders' equity, as did
the $3.2 million decrease in the market valuation of securities net of taxes.
The decreases were partially offset by net income of $2.6 million, a $612,000
increase due to the release of Employee Stock Ownership Plan (the "ESOP")
shares and $373,000 due to the accrual of Management Recognition and
Development Plan (the "MRDP") shares which vest ratably over a five to six
year period.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
  Net Income.  Net income was $2.6 million for the year ended March 31, 2000
compared to $3.2 million for the year ended March 31, 1999. The 18.8% decrease
resulted primarily from an increase in non-interest (other) expense of $1.9
million partially offset by a $504,000 increase in noninterest income, a
$305,000 decrease in the loan loss provision, a $254,000 increase in net
interest income and a $325,000 decrease in the provision for income taxes.
  Net Interest Income. Net interest income increased 2.4% to $12.8 million for
the year ended March 31, 2000 from $12.5 million for the year ended March 31,
1999.  Interest income increased 18.9% to $24.5 million for the year ended
March 31, 2000 compared to $20.6 million for the same period ended March 31,
1999.  The increase was primarily due to increases in earning assets, as loans
outstanding increased $34.9 million and investments increased $14.4 million.
Interest expense

16
<PAGE>

increased 45.7% from $8.1 million for the year ended March 31, 1999 to $11.8
million for the year ended March 31, 2000.  The increase is primarily due to
an increase of $42.5 million in average outstanding FHLB advances for the year
ended March 31, 2000 compared to March 31, 1999 which resulted in an increase
of $2.4 million in interest expense related to the advances.  The average cost
of FHLB advances increased from 5.03% for the year ended March 31, 1999 to
5.37% for the year ended March 31, 2000, as a result of the increase in short
term interest rates.  During the fiscal year ended March 31, 2000, the Federal
Reserve Open Market Committee increased the Fed Funds rate five times,
beginning in July 1999 and ending in March 2000 for a total increase of 1.25%.
Interest expense on deposits  increased only $1.3 million year over year while
the average balance of deposits increased $29.5 million.  The average balance
of lower costing core deposits consisting of statement savings, checking and
money market accounts increased $20.1 million while the average balance of
certificates of deposit increased only $9.4 million.  Even with the rising
short term interest rates, the average cost of deposits increased only
slightly from 4.00% for the year ended March 31, 1999 to 4.07% for the year
ended March 31, 2000, primarily as a result of the positive change in the
deposit mix. The interest rate spread decreased to 3.10% for the year ended
March 31, 2000 from 3.65% for the year ended March 31, 1999.  The decrease is
attributed to a 25 basis point decrease in the yield on the Bank's loan
portfolio and a 99 basis point decrease in the yield on the investment
securities portfolio, as well as a 38 basis point increase in the cost of FHLB
advances.
  Provision for Loan Losses.  The provision for loan losses are charges to
earnings to bring the total allowance for loan losses to levels considered by
management as adequate to provide for known and inherent risks in the loan
portfolio, including management's continuing analysis of factors underlying
the quality of the loan portfolio.  These factors include changes in portfolio
size and composition, actual loan loss experience, current and anticipated
economic conditions, detailed analysis of individual loans for which full
collectibility may not be assured, and determination of the existence and
realizable value of the collateral and guarantees securing the loans. See Note
1 of Notes to Consolidated Financial Statements.
  The provision for loan losses was $178,000 for the year ended March 31, 2000
compared to $483,000 for the same period in 1999.  In the year ended March 31,
1999 management deemed a greater provision necessary due to a very high
percentage of growth in agricultural, commercial business and consumer loans,
which are inherently riskier than one-to-four family mortgage loans.  Although
the same categories of loans experienced strong growth in the year ended March
31, 2000, a larger base of more seasoned loans existed in those categories at
the beginning of the year, and accordingly, the growth was not as significant
to the total loan portfolio as in the prior year.  Management believes the
allowance for loan losses is adequate at March 31, 2000.
  Other Income.  Other income was $1.6 million for the year ended March 31,
2000, compared to $1.1 million for the year ended March 31, 1999.  This 45.5%
increase resulted primarily from increased core deposit fees and fees related
to lending activities, as well as a $173,000 gain on the sale of land.
  Other Expenses.  Other expenses were $10.1 million for the year ended March
31, 2000 compared to $8.2 million for the year ended March 31, 1999.  The
increase from the prior year was primarily due to a $1.2 million increase in
compensation and benefits expense. Increases in this area were due to an
increase of $184,000 in non-cash expense related to the MRDP, partially offset
by an $111,000 decrease in non-cash expense related to the ESOP when compared
to the prior year. (See Note 1 and Note 12 of Notes to Consolidated Financial
Statements.)  Total non-cash compensation expense related to stock based
compensation and benefits amounted to $985,000 for the year.  These expenses,
when incurred, result in an increase in expense and an increase in shareholder
equity rather than a cash outlay. Additional increases in other expense
related to increased compensation and benefits expense of $1.1 million due to
an increase in the number of employees and regular salary increases as well as
severance paid to the Chief Executive Officer who resigned in January 2000.
Depreciation expense increased $193,000 due to additional buildings and other
capital expenditures.  For the year ended March 31, 2000 compared to the year
ended March 31, 1999, other expense changes included a $271,000 increase in
supplies, postage and telephone expense, primarily due to increased core
deposit accounts, providing telephone service to the new centralized lending
center, supplies for an increased number of employees, and a general increase
in business activity associated with loan and deposit growth. Occupancy and
equipment maintenance expense increased $159,000 due to the new branch
building in Vale, the placement of additional ATM's in new locations, and
maintenance of technological upgrades, as well as general increases in
utilities and other expense levels.  Customer accounts expense for servicing
deposit accounts increased $134,000 due to the growth in deposit accounts.
  Income Taxes. The provision for income taxes was $1.5 million for the year
ended March 31, 2000 compared to $1.8 million for the year ended March 31,
1999 decreasing the effective tax rate from 36.3% for the prior year to 36.1%
for the current year.  The decrease in the effective tax rate was due to an
increase of $290,000 of tax-exempt interest earned on Oregon municipal bonds.
In the prior year the effective tax rate was decreased to 36.3% due to a
$125,000 rebate received from the State of Oregon because the statutory rate
paid on taxable income for the year ended March 31, 1998 was reduced from 6.6%
to 3.3% by legislative action in the final quarter of the fiscal year ended
March 31, 1999.

                                                                           17
<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
  Net Income. Net income was $3.2 million for the year ended March 31, 1999
compared to $3.0 million for the year ended March 31, 1998.  This 3.9%
increase resulted primarily from an increase in net interest income of $1.8
million and a $52,000 increase in non interest income partially offset by a
$345,000 increase in the loan loss provision and a $1.6 million increase in
non interest expense.
  Net Interest Income. Net interest income increased 16.8% to $12.5 million
for the year ended March 31, 1999 from $10.7 million for the year ended March
31, 1998. Interest income increased 11.4% to $20.6 million for the year ended
March 31, 1999 compared to $18.5 million for the same period ended March 31,
1998.  The increase was primarily due to increases in earning assets as loans
outstanding increased $31.9 million and investments increased $29.9 million.
Interest expense increased 3.8% from $7.8 million for the year ended March 31,
1998 to $8.1 million for the year ended March 31, 1999. The increase was
relatively small as a result of a change in the mix of deposits used to fund
interest-earning assets with core deposits increasing $12.0 million from the
prior year. Such deposits have a lower interest cost than time deposits.  The
average cost of deposits decreased from 4.22% for the year ended March 31,
1998 to 4.00% for the year ended March 31, 1999, primarily as a result of a
higher average balance of lower cost core deposits compared to higher cost
time deposits. As of March 31, 1999 the Bank had been able to maintain its
deposit base without resorting to aggressive deposit pricing.  The average
rate paid on FHLB advances decreased from 5.85% for the year ended March 31,
1998 to 5.03% for the year ended March 31, 1999, as a result of the decline in
short term interest rates.  The interest rate spread decreased to 3.65% for
the year ended March 31, 1999 from 3.73% for the year ended March 31, 1998.
The decrease is attributed to a 31 basis point decrease in the yield on the
Bank's loan portfolio and a 29 basis point decrease in the yield on the
mortgage-backed securities portfolio, partially offset by the decrease in the
cost of deposits.
  Provision for Loan Losses. The provision for loan losses are charges to
earnings to bring the total allowance for loan losses to levels considered by
management as adequate to provide for known and inherent risks in the loan
portfolio, including management's continuing analysis of factors underlying
the quality of the loan portfolio.  These factors include changes in portfolio
size and composition, actual loan loss experience, current and anticipated
economic conditions, detailed analysis of individual loans for which full
collectibility may not be assured, and determination of the existence and
realizable value of the collateral and guarantees securing the loans.  See
Note 1 of Notes to Consolidated Financial Statements.
  The provision for loan losses was $483,000 for the year ended March 31, 1999
compared to $138,000 for the same period in 1998.  This increase was primarily
attributable to the growth of the loan portfolio, particularly in
agricultural, commercial business and consumer loans, which are inherently
riskier than one-to-four family mortgage loans.
  Other Income. Other income was $1.1 million for the year ended March 31,
1999, compared to $1.0 million for the year ended March 31, 1998. This 10.0%
increase resulted primarily from increased core deposit fees and fees related
to lending activities.
  Other Expenses. Other expenses were $8.2 million for the year ended March
31, 1999 compared to $6.5 million for the year ended March 31, 1998. The
increase from the prior year was primarily due to an $884,000 increase in
compensation and benefits expense.  Increases in this area were due to an
additional $252,000 of expense related to the ESOP (See Note 1 and Note 12 of
Notes to Consolidated Financial Statements) when compared to the prior year.
An increase of $189,000 was due to a non-cash expense related to the MRDP.
Total non-cash compensation expense related to stock based compensation and
benefits amounted to $912,000 for the year. These expenses, when incurred,
result in an increase in expense and an increase in shareholder equity rather
than a cash outlay.  Additional increases in other expense related to
increased compensation and benefits expense of $443,000 due to an increase in
the number of employees and regular salary increases.  Depreciation expense
increased $93,000 due to additional buildings and other capital expenditures.
Advertising expense increased $210,000 due to increased advertising on radio
and in local newspapers and increased costs associated with shareholder
communication.  For the year ended March 31, 1999 compared to the year ended
March 31, 1998, other expense fluctuations included a $67,000 increase in
supplies, postage and telephone expense, primarily due to increased core
deposit accounts and upgrading of several telephone systems, as well as a
general increase in business activities.  Occupancy and equipment maintenance
expense increased $76,000 due to the new branch building in Burns and the
placement of additional ATM's in new locations, as well as general increases
in janitorial and other expense levels. Other expenses increased $232,000
primarily due to increased staff training efforts and moving costs associated
with new employees.
  Income Taxes. The provision for income taxes was $1.8 million for the year
ended March 31, 1999 compared to $2.0 million for the year ended March 31,
1998 decreasing the effective tax rate from 40.0% for the prior year to 36.3%
for the current year.  The decrease in the effective tax rate was due to a
$125,000 rebate received from the State of Oregon because the statutory rate
paid on fiscal year end March 31, 1998 income was reduced from 6.6% to 3.3%.
Legislative action to reduce the rate did not occur until well after March 31,
1998, and accordingly, the credit was taken in the year ended March 31, 1999.
Tax expense was also reduced in 1999 because of the tax-exempt interest earned
on the $8.8 million of municipal bonds purchased.

18
<PAGE>

AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS/COSTS
The following table sets forth certain information for the periods indicated
regarding average balances of assets and liabilities as well as the total
dollar amounts of interest income from average interest-earning assets and
interest expense on average interest-bearing liabilities and average yields
and costs.  Such yields and costs for the periods indicated are derived by
dividing income or expense by the average balances of assets or liabilities,
respectively, for the periods presented. Average balances are derived from
daily balances for the years ended March 31, 2000 and March 31, 1999. For
other years presented average balances are derived from monthly balances.
Management does not believe that the use of month-end balances instead of
daily balances has caused any material inconsistencies in the information
presented.  Certain month-end balances were adjusted to approximate daily
balances for the months of September 1997 through November 1997 due to the
cash position and investment activity related to the $45.7 million of net
proceeds from the stock conversion and the over subscription proceeds of $78.0
million.

                                                                           19
<PAGE>

<TABLE>

Oregon Trail Financial Corp. and Subsidiary
Analysis of Net Interest Spread
(Dollars in thousands)


                                       Year Ended March 31, 2000             Year Ended March 31, 1999
                                   --------------------------------     ---------------------------------
                                   Average     Interest &    Yield/     Average      Interest &    Yield/
                                   Balance     Dividends      Cost      Balance      Dividends      Cost
                                   -------     ----------    ------     -------      ----------    ------
<S>                                <C>         <C>           <C>        <C>          <C>           <C>
Interest-earning assets
Loans receivable, net (1)          $206,006    $ 16,709      8.11%      $168,226     $ 14,072      8.36%
Mortgage-backed securities           76,393       5,208      6.82%        55,786        3,819      6.85%
Investment securities                37,573       2,379      6.33%        31,475        2,304      7.32%
FHLB stock                            3,373         239      7.09%         3,073          236      7.68%
Federal funds sold and overnight
 interest-bearing deposits            5,402          13      0.24%         7,607          151      1.99%
                                   --------    --------      7.47%      --------     --------
  Total interest-earning assets     382,747      24,548                  266,167       20,582      7.73%
                                   --------    --------                 --------     --------
Non-interest-earning assets          14,167                               10,557
                                   --------                             --------
  Total assets                     $342,914                             $276,724
                                   ========                             ========
Interest-bearing liabilities
Passbook accounts                  $ 19,986    $    472      2.36%      $ 21,800     $    579      2.66%
Money market accounts                44,500       1,922      4.32%        24,412          889      3.64%
NOW accounts                         37,341         460      1.29%        35,537          532      1.50%
Certificates of deposit             107,912       5,672      5.26%        98,533        5,203      5.28%
                                   --------    --------                 --------     --------
  Total interest-bearing deposits   209,739       8,526      4.07%       180,282        7,203      4.00%
                                   --------    --------                 --------     --------
Securities sold under
 agreements to repurchase                67           4      5.97%             -            -       N/A

FHLB advances                        59,609       3,246      5.37%        17,108          861      5.03%
  Total interest-bearing           --------    --------                 --------     --------
   liabilities                      269,415      11,776      4.37%       197,390        8,064      4.09%
                                   --------    --------                 --------     --------
Non-interest-bearing
 liabilities                         16,755                               14,938
                                   --------                             --------
  Total liabilities                 286,170                              212,328
                                   --------                             --------
Shareholders' equity                 56,744                               64,396
                                   --------                             --------
  Total liabilities and
   shareholders' equity            $342,914                             $276,724
                                   ========                             ========

Net interest income                            $ 12,772                              $ 12,518
                                               ========                              ========

Interest rate spread                                         3.10%                                 3.65%

Net interest margin                                          3.89%                                 4.70%

Ratio of average interest-
 earning assets to average
 interest-bearing liabilities        122.02%                              134.84%

----------------------
(1) Does not include interest on loans 90 days or more past due.  Includes loans originated for sale.

20
</TABLE>
<PAGE>

<TABLE>

  Year Ended March 31, 1998            Year Ended March 31, 1997        Nine Months Ended March 31, 1997
------------------------------     --------------------------------     ---------------------------------
Average    Interest &   Yield/     Average     Interest &    Yield/     Average      Interest &    Yield/
Balance    Dividends    Cost       Balance     Dividends      Cost      Balance      Dividends      Cost
-------    ----------   ------     -------     ----------    ------     -------      ----------    ------
<C>        <C>          <C>        <C>         <C>           <C>        <C>          <C>           <C>

$146,043   $ 12,661      8.67%      $134,478    $ 11,788     8.77%      $135,768     $   8,916     8.75%
  38,251      2,733      7.14%        37,720       2,803     7.43%        36,942         2,058     7.42%
  35,171      2,345      6.67%        17,833       1,194     6.70%        17,181           860     6.67%
   2,855        222      7.78%         2,646         203     7.67%         2,672           154     7.69%

   9,946        550      5.53%         4,222          94     2.23%         3,584            42     1.55%
--------   --------                 --------    --------                --------      --------
 232,266     18,511      7.97%       196,899      16,082     8.17%       196,147        12,030     8.17%
--------   --------                 --------    --------                --------      --------
  10,497                               7,039                               7,161
--------                            --------                            --------
$242,763                            $203,938                            $203,308
========                            ========                            ========

$ 27,236   $    779      2.86%        24,393    $    705     2.89%      $ 24,245      $    525     2.89%
  18,972        687      3.62%        15,228         539     3.54%        15,195           404     3.54%
  30,516        519      1.70%        27,156         424     1.56%        27,102           318     1.56%
 103,790      5,628      5.42%       104,619       5,658     5.41%       104,480         4,238     5.40%
--------   --------                 --------    --------                --------      --------
 180,514      7,613      4.22%       171,396       7,325     4.27%       171,022         5,485     4.27%
--------   --------                 --------    --------                --------      --------

    924          34      3.68%         1,399          48     3.43%         1,396            36     3.47%

  3,024         177      5.85%         1,860         102     5,48%           862            32     4.88%
--------   --------                 --------    --------                --------      --------
 184,462      7,824      4.24%       174,655       7,475     4.28%       173,280         5,553     4.27%
--------   --------                 --------    --------                --------      --------

  12,618                               8,872                               9,418
--------                            --------                            --------
 197,080                             183,527                             182,698
--------                            --------                            --------
  45,683                              20,411                              20,610
--------                            --------                            --------
$242,763                            $203,938                            $203,308
========                            ========                            ========

           $ 10,687                             $  8,607                              $  6,477
           ========                             ========                              ========

                         3.73%                               3.89%                                 3.90%

                         4.60%                               4.37%                                 4.40%

  125.92%                             112.74%                             113.20%

                                                                                                      21
</TABLE>
<PAGE>


The following table sets forth the effects of changing rates and volumes on
net interest income of the Bank.  Information is provided with respect to (i)
effects on interest income attributable to changes in rate (changes in rate
multiplied by prior volume); (ii) effects on interest income attributable to
changes in volume (changes in volume multiplied by prior rate); (iii) the net
change attributable to the combined impact of volume and rate; and (iv) the
total change (the sum of the prior columns).

                   Year Ended March 31, 2000       Year Ended March 31, 1999
                    Compared to Year Ended           Compared to Year Ended
                       March 31, 1999                    March 31, 1998
                   Increase (Decrease) Due to      Increase (Decrease) Due to
                  ----------------------------    ----------------------------
Rate/Volume                      Rate/                            Rate/
 Analysis         Rate    Volume Volume  Total    Rate    Volume  Volume Total
(Dollars in       ----    ------ ------  -----    ----    ------  ------ -----
 Thousands)

Interest-earning
 assets:
 Loans receiv-
  able (1)       $ (421) $3,158 $ (96) $ 2,641   $(453) $1,923  $ (59) $1,411
 Mortgage-backed
  and related
  securities         (17)  1,412    (6)   1,389    (111)  1,252    (56) 1,085
 Investment
  securities        (312)    446   (62)      72     229    (247)   (23)   (41)
 FHLB stock          (18)     23    (2)       3      (3)     17      -     14
 Federal funds
  sold and
  overnight
  interest-bearing
  deposits          (133)    (44)   38     (139)   (352)   (129)    83   (398)
                  ------  ------ -----  -------  ------  ------  -----  -----
  Total net
   change in
   income on
   interest-earning
   assets           (901)  4,995  (128)   3,966    (690)  2,816    (55) 2,071
                  ------  ------ -----  -------  ------  ------  ----- ------
Interest-bearing
 liabilities:
 Passbook accounts   (65)    (48)    5     (108)   (54)    (155)     9   (200)
 Money market
  accounts           144     731   131    1,006      4      197      1    202
 NOW accounts        (75)     27    (4)     (52)   (61)      85    (11)    13
 Certificate
  accounts           (20)    495    (2)     473   (145)    (285)     5   (425)
 Securities sold
  under agreements
  to repurchase        -       -     4        4    (34)     (34)    34    (34)
 FHLB advances        65   2,138   186    2,389    (25)     824   (115)   684
                  ------  ------ -----  -------  ------  ------  ----- ------
  Total net change
   in expense on
   interest-bearing
   liabilities        49   3,343   320    3,712    (315)    632    (77)   240
                  ------  ------ -----  -------  ------  ------  ----- ------
Net change in net
 interest income  $  950  $1,652 $(448) $   254  $ (375) $2,184  $  22 $1,831
                  ======  ======= ===== =======  ======  ======  ===== ======

-----------------
(1) Does not include interest on loans 90 days or more past due. Includes
    loans originated for sale.

22
<PAGE>

YEAR 2000 ISSUES
  The Year 2000 issue existed because many computer systems and applications
used two-digit fields to designate a year. As the century date change
occurred, date-sensitive systems could have recognized the Year 2000 as 1900,
or not at all.  This inability to recognize or properly treat the Year 2000
could have caused systems to fail or to process financial and operational
information incorrectly.  The Bank systematically addressed the Year 2000
issue beginning with the establishment of a committee in 1997. As a result of
management's efforts, the Year 2000 issue did not present any operational
problems for the Bank as the century date change occurred.  Management is
cognizant that other dates may present problems as the Year 2000 progresses
and has established systems and procedures to detect them as they may arise.
The total cost of systems renovations related to the Year 2000 issue
approximated $385,000.

MARKET RISK AND ASSET AND LIABILITY MANAGEMENT
  Market risk is the risk of loss from adverse changes in market prices and
rates. The Bank's market risk arises principally from interest rate risk
inherent in its lending, investment, deposit and borrowing activities.
Management actively monitors and manages its interest rate risk exposure.
Although the Bank manages other risks, such as credit quality and liquidity
risk, in the normal course of business, management considers interest rate
risk to be its most significant market risk that could potentially have the
largest material effect on the Bank's financial condition and results of
operations.  Other types of market risks, such as foreign currency exchange
rate risk and commodity price risk, do not arise in the normal course of the
Bank's business activities.
  The Bank's principal financial objective is to achieve long-term
profitability while reducing its exposure to fluctuating market interest
rates. The Bank has sought to reduce the 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
Bank's interest-earning assets by originating for its portfolio an increasing
proportion of loans with interest rates subject to periodic adjustment to
market conditions (including commercial business, agricultural and consumer
loans). In the year ended March 31, 2000, however, the change in the loan mix
was not sufficient to mitigate the effects of the increase in short term
interest rates as the prime rate increased by 1.25% during the period July
1999 to March 2000.  The Bank relies on retail deposits as its primary source
of funds.  Management believes retail deposits and in particular core deposits
(checking and passbook savings accounts), compared to brokered deposits,
reduce the effects of interest rate risk. The Bank promotes transaction
accounts and management was successful in attempts to change the deposit mix
during the year ended March 31, 2000 by increasing core deposits to 51.0% of
total deposits at March 31, 2000 compared to 50% of total deposits at March
31, 1999.  However, an increased reliance upon short term advances from the
FHLB more than offset the positive effects of increased core deposits.  At
March 31, 2000 the Bank had $64.3 million in fixed rate advances due within
one year. The effect of the rising rates coupled with short-term advances and
primarily a fixed rate loan and investment portfolio combined to greatly
increase the Bank's interest rate risk in the year ended March 31, 2000.
  The Bank's primary monitoring tool for assessing interest rate risk is
asset/liability simulation modeling, which is performed for the Bank by the
FHLB.  The modeling process is designed to capture the dynamics of balance
sheet, interest rate and spread movements and to quantify variations in net
interest income resulting from those movements under different rate
environments. The interest rate sensitivity analysis performed by the FHLB for
the Bank incorporates end of period rate, balance and maturity data compiled
by the Bank's management using various levels of aggregation of that data.
  The following table is provided by the FHLB and sets forth the change in the
Bank's net portfolio value ("NPV") at March 31, 2000, based on FHLB
assumptions, that would occur in the event of an immediate change in interest
rates, with no effect given to any steps that management might take to
counteract that change.  NPV is defined as the present value of expected net
cash flows from existing assets minus the present value of expected net cash
flows from existing liabilities plus the present values of net expected cash
inflows from existing off-balance sheet contracts.

                                Estimated Change in
 Basis Point ("bp")             Net Portfolio Value
 Change in Rates               (Dollars in Thousands)

      400                     $(39,594)      (106.62)%
      300                      (30,150)       (81.19)
      200                      (20,574)       (55.40)
      100                      (10,515)       (28.32)
      -0-                           -0-        -0-
     -100                        8,421         22.68
     -200                       14,224         38.30
     -300                       16,099         43.35
     -400                       17,589         47.37

                                                                          23
<PAGE>

  The above table illustrates, for example, that an instantaneous 200 basis
point increase in market interest rates at March 31, 2000 would reduce the
Bank's NPV by approximately $20.6 million, or 55.4% at that date.
  Certain assumptions utilized by the FHLB in assessing the interest rate risk
of savings associations within its region were utilized in preparing the
preceding table. These assumptions relate to interest rates, loan prepayment
rates, deposit decay rates, and the market values of certain assets under
differing interest rate scenarios, among others.
  As with any method of measuring interest rate risk, certain shortcomings are
inherent in the method of analysis presented in the foregoing table.  In the
event of a change in interest rates, expected rates of prepayments on loans
and early withdrawals from certificates could deviate significantly from those
assumed in calculating the table. The model assumes a parallel change in
rates, whereas actual market interest rates would not necessarily react in a
parallel manner.  Further, call provisions of certain securities, which
shorten the actual term to maturity if exercised, are not taken into account
in the model.
  The following table presents the Bank's financial instruments that are
sensitive to changes in interest rates, categorized by expected maturity, and
the instruments' fair value at March 31, 2000.  Market risk sensitive
instruments are generally defined as on- and off-balance sheet derivatives and
other financial instruments.

<TABLE>
                                                             After Three
                        Average     Within     One Year to      Years to      Beyond               Fair
                         Rate      One Year    Three Years     Five Years   Five Years   Total     Value
                         ----      --------    -----------     ----------   ----------   -----     -----
(Dollars in Thousands)
<S>                     <C>       <C>           <C>            <C>         <C>        <C>       <C>
INTEREST SENSITIVE
 ASSETS:
Loans receivable        8.03%     $79,234       $43,439        $30,875     $67,043    $220,591  $216,008
Mortgage-backed
 securities             6.93%      17,736        13,517         11,092      42,270      84,615    84,615
Tax free municipal
 bonds                  4.54%           -             -              -       9,291       9,291     9,291
Investments and other
 interest-earning
 assets                 6.44%           -             -              -      28,145      28,145    28,145
FHLB stock              6.50%           -             -              -       3,897       3,897     3,897

INTEREST SENSITIVE
 LIABILITIES:
NOW checking            1.25%      11,027        13,123          6,430       6,178      36,758    36,758
Passbook savings        2.35%       5,828         6,935          3,398       3,264      19,425    19,425
Money market deposits   4.22%      39,779         9,720            486         117      50,102    50,102
Time certificates       5.53%      90,937        18,611          5,528       1,413     116,489   116,425

OFF-BALANCE SHEET
 ITEMS:
Commitments to
 extend credit         10.19%      14,275          7,826         5,562      12,078      39,741    39,741

                                                                                                      24
</TABLE>
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
  The Bank's primary sources of funds are customer deposits, proceeds from
principal and interest payments on loans, maturing securities and FHLB
advances.  While maturities and scheduled amortization of loans are a
predictable source of funds, deposit flows, mortgage prepayments and maturing
securities, cash flows and anticipated maturities of mortgage-backed bonds and
agency securities are greatly influenced by general interest rates, economic
conditions and competition.
  The Bank must maintain an adequate level of liquidity to ensure sufficient
funds to fund loan originations and deposit withdrawals, to satisfy other
financial commitments and to take advantage of investment opportunities.  The
Bank generally maintains sufficient cash and short-term investments to meet
short-term liquidity needs. At March 31, 2000 cash and cash equivalents
totaled $9.3 million or 2.5% of total assets.  The Bank also maintained an
uncommitted credit facility with the FHLB which provided for immediately
available advances up to an aggregate amount of $111.2 million, under which
$76.8 million in advances were outstanding at March 31, 2000.  In addition to
the FHLB credit facility, at March 31, 2000 the Bank had a $50.0 million
reverse repurchase line of credit available with Merrill Lynch and a $15.0
million overnight line of credit with Key Bank.  At March 31, 2000 the Bank
could also have used the Federal Reserve discount window if all other
liquidity sources had been exhausted.
  Office of Thrift Supervision regulations require savings institutions to
maintain an average balance of liquid assets (cash and eligible investments)
equal to at least 4.0% of the average daily balance of its net withdrawable
deposits and short-term borrowings. The Bank's liquidity ratio at March 31,
2000 was 9.9%.
  The Bank's primary investing activity is the origination of one-to-four
family mortgage loans within its primary market area.  During the years ended
March 31, 2000, 1999 and 1998 the Bank originated $30.1 million, $38.8
million, and $21.8 million of such loans, respectively. At March 31, 2000, the
Bank had commitments to extend credit totaling $39.7 million.  The Bank
anticipates that it will have sufficient funds available to meet current loan
commitments. Certificates of deposit that are scheduled to mature in less than
one year from March 31, 2000 totaled $90.9 million.  Historically, the Bank
has been able to retain a significant amount of its deposits as they mature.
  Office of Thrift Supervision regulations require the Bank to maintain
specific amounts of regulatory capital. As of March 31, 2000, the Bank
complied with all regulatory capital requirements as of that date with
tangible, core and total capital ratios of 14.0%, 14.0% and 28.5%,
respectively. See Note 16 of Notes of Consolidated Financial Statements.

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, 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 Bank's
operations.  Unlike most industrial companies, virtually all the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates generally have a more significant impact on a financial
institution's performance than do general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the
prices of goods and services.

                                                                           25
<PAGE>

Independent Auditors' Report

To the Board of Directors
Oregon Trail Financial Corp. and Subsidiary
Baker City, Oregon

     We have audited the accompanying consolidated balance sheets of Oregon
Trail Financial Corp. and Subsidiary (the "Company", formerly known as Pioneer
Bank, a Federal Savings Bank, prior to the October 3, 1997 conversion
discussed in Note 11) as of March 31, 2000 and 1999, and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the three years in the period ended March 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Oregon Trail Financial Corp.
and Subsidiary as of March 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period
ended March 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.

/s/ Deloitte & Touche LLP

Portland, Oregon
May 3, 2000

26
<PAGE>

Oregon Trail Financial Corp. and Subsidiary
Consolidated Balance Sheets
March 31, 2000 and 1999
(In thousands, except share data)

Assets                                                   2000         1999
                                                         ----         ----
Cash and due from banks                                $1,673       $1,756
Interest-bearing deposits                               7,588        4,520
                                                     --------     --------
    Total cash and cash equivalents                     9,261        6,276
Securities:
  Investment securities available for sale, at
   fair value (amortized cost of $39,937 and
   $38,249)                                            37,436       37,965
  Mortgage-backed and related securities
   available for sale, at fair value (amortized
   cost of $87,436 and $60,278)                        84,615       60,371
  Mortgage-backed and related securities held to
   maturity, at amortized cost (fair value of
   zero and $9,518)                                         -        9,338
Loans receivable, net of allowance for loan
 losses of $1,396 and $1,228                          220,591      185,747
Accrued interest receivable                             2,452        2,012
Premises and equipment, net                             9,902        7,825
Stock in FHLB of Seattle, at cost                       3,897        3,221
Real estate owned                                           -           37
Net deferred tax asset                                  1,507            -
Other assets                                              951          681
                                                     --------     --------
TOTAL ASSETS                                         $370,612     $313,473
                                                     ========     ========
Liabilities and shareholders' equity
LIABILITIES:
  Deposits:
    Interest-bearing                                 $106,285      $88,245
    Noninterest-bearing                                14,961       11,594
    Time certificates                                 116,489       99,750
                                                     --------     --------
           Total deposits                             237,735      199,589

  Accrued expenses and other liabilities                2,333        2,399
  Advances from FHLB of Seattle                        76,750       50,250
  Net deferred tax liability                                -          455
  Advances from borrowers for taxes and
   insurance                                              690          697
                                                     --------     --------
           Total liabilities                          317,508      253,390
                                                     --------     --------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Preferred stock, $.01 par value; 1,000,000
   shares authorized; no shares issued or
   outstanding                                              -            -
  Common stock, $.01 par value; 8,000,000
    shares authorized;
    March 31, 2000, 4,694,875 issued,
     3,317,006 outstanding;
    March 31, 1999, 4,694,875 issued,
     3,763,564 outstanding                                 36           42
  Additional paid-in capital                           31,743       38,357
  Retained earnings (substantially restricted)         27,759       26,206
  Unearned shares issued to the ESOP                   (2,415)      (2,951)
  Unearned shares issued to the MRDP                     (740)      (1,453)
  Accumulated other comprehensive loss                 (3,279)        (118)
                                                     --------     --------
           Total shareholders' equity                  53,104       60,083
                                                     --------     --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $370,612     $313,473
                                                     ========     ========
See Notes to Consolidated Financial Statements.
                                                                           27
<PAGE>

Oregon Trail Financial Corp. and Subsidiary
Consolidated Statements of Income
Years Ended March 31, 2000, 1999 and 1998
(In thousands, except share data)

                                                  2000      1999      1998
INTEREST INCOME:                                -------   -------   -------
  Interest and fees on loans receivable         $16,709   $14,072   $12,661
  Securities:
    Mortgage-backed and related securities        5,208     3,819     2,734
    U.S. government and government agencies
     and other                                    2,392     2,455     2,894
    FHLB of Seattle dividends                       239       236       222
                                                -------   -------   -------
           Total interest income                 24,548    20,582    18,511
                                                -------   -------   -------
INTEREST EXPENSE:
  Deposits                                        8,526     7,203     7,613
  Securities sold under agreements to
   repurchase                                         4         -        34
  FHLB of Seattle advances                        3,246       861       177
                                                -------   -------   -------
           Total interest expense                11,776     8,064     7,824
                                                -------   -------   -------
           Net interest income                   12,772    12,518    10,687

PROVISION FOR LOAN LOSSES                           178       483       138
                                                -------   -------   -------
           Net interest income after
            provision for loan losses            12,594    12,035    10,549
                                                -------   -------   -------
NONINTEREST INCOME:
  Service charges on deposit accounts             1,088       757       687
  Loan servicing fees                               284       294       244
  Other income                                      230        47       115
                                                -------   -------   -------
           Total noninterest income               1,602     1,098     1,046
                                                -------   -------   -------
NONINTEREST EXPENSE:
  Employee compensation and benefits              6,022     4,862     3,978
  Supplies, postage, and telephone                  850       579       512
  Depreciation                                      686       493       400
  Occupancy and equipment                           618       459       383
  Customer accounts                                 426       292       274
  Advertising                                       449       442       232
  Professional fees                                 267       295       213
  FDIC insurance premium                            103       120       133
  Other                                             694       640       408
                                                -------   -------   -------
           Total noninterest expense             10,115     8,182     6,533
                                                -------   -------   -------
           Income before income taxes             4,081     4,951     5,062

PROVISION FOR INCOME TAXES                        1,472     1,797     2,026
                                                -------   -------   -------
NET INCOME                                       $2,609    $3,154    $3,036
                                                 ======    ======    ======
Basic earnings per share                          $0.74     $0.78     $0.38
Diluted earnings per share                        $0.70     $0.76     $0.38
Weighted average common shares outstanding:
  Basic                                       3,546,873 4,065,423 4,326,066
  Diluted                                     3,723,600 4,159,540 4,326,066
See Notes to Consolidated Financial Statements.

28
<PAGE>

<TABLE>

Oregon Trail Financial Corp. and Subsidiary
Consolidated Statements of Shareholders' Equity
Years Ended March 31, 2000, 1999 and 1998
(In thousands, except share data)
                                                           Unearned   Unearned
                                                           Shares     Shares
                                                           Issued to  Issued to           Accumu-
                                                           Employee   Management          lated
                                                           Stock      Recogni-            Other
                    Common Stock    Additional             Owner-     tion and  Compre-   Compre-
                 ------------------- Paid-In   Retained    ship       Develop-  hensive   hensive
                  Shares     Amount  Capital   Earnings    Trust      ment Plan Income    Income   Total
<S>               <C>        <C>     <C>       <C>         <C>        <C>       <C>       <C>      <C>

BALANCE, APRIL 1,
 1997                    -      $-        $-    $21,149         $-         $-           $(122)   $21,027
Net income               -       -         -      3,036          -          -  $3,036       -      3,036
Cash dividends
 paid                    -       -         -       (217)         -          -       -       -       (217)
Issuance of
 common stock,
 net             4,694,875      47    45,682          -          -          -       -       -     45,729
Unearned ESOP
 shares           (375,590)      -         -          -     (3,756)         -       -       -     (3,756)
Earned ESOP
 shares             26,828       -       203          -        268          -       -       -        471
Unrealized gain
 on securities
 available for
 sale, net of
 tax                     -       -         -          -          -          -   1,011   1,011      1,011
Comprehensive                                                                  ------
 income                  -       -         -          -          -          -  $4,047       -          -
                 ---------     ---   -------   --------    -------    -------  ====== -------   --------
BALANCE, MARCH 31,
 1998            4,346,113      47    45,885     23,968     (3,488)         -             889     67,301
Net income               -       -         -      3,154          -          -  $3,154       -      3,154
Cash dividends
 paid                    -       -         -       (916)         -          -       -       -       (916)
Stock repurchased (488,883)     (6)   (9,355)         -          -          -       -       -     (9,361)
Stock repurchased
 and issued to
 MRDP trust       (147,322)      1     1,641          -          -     (1,642)      -       -          -
Earned ESOP
 shares             53,656       -       186          -        537          -       -       -        723
Earned MRDP
 shares                  -       -         -          -          -        189       -       -        189
Unrealized loss
 on securities
 available for
 sale, net of tax        -       -         -          -          -          -  (1,007) (1,007)    (1,007)
Comprehensive                                                                  ------
 income                  -       -         -          -          -          -  $2,147       -          -
                 ---------     ---   -------   --------    -------    -------  ====== -------   --------
BALANCE, MARCH
 31, 1999        3,763,564      42    38,357     26,206     (2,951)    (1,453)           (118)    60,083
Net income               -       -         -      2,609          -          -  $2,609       -      2,609
Cash dividends
 paid                    -       -         -     (1,056)         -          -       -       -     (1,056)
Stock
 repurchased      (534,228)     (6)   (6,350)         -          -          -       -       -     (6,356)
Earned ESOP
 shares             53,656       -        76          -        536          -       -       -        612
New MRDP
 shares granted          -       -        71          -          -        (71)      -       -          -
Earned MRDP shares  34,014       -         -          -          -        373       -       -        373
Forfeitures of
 MRDP shares             -       -      (411)         -          -        411       -       -          -
Unrealized loss
 on securities
 available for
 sale, net of tax        -       -         -          -          -          -  (3,161) (3,161)    (3,161)
Comprehensive                                                                  ------
 income                  -       -         -          -          -          -   $(552)      -          -
                 ---------     ---   -------   --------    -------    -------  ====== -------   --------
BALANCE, MARCH
 31, 2000        3,317,006     $36   $31,743    $27,759    $(2,415)     $(740)        $(3,279)   $53,104
                 =========     ===   =======   ========    =======    =======         =======   ========

See Notes to Consolidated Financial Statements.
                                                                                                      29
</TABLE>
<PAGE>

Oregon Trail Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
Years Ended March 31, 2000, 1999 and 1998
(In thousands)

                                                  2000       1999       1998
                                              --------   --------   --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                    $  2,609   $  3,154   $  3,036
Adjustments to reconcile net income to
 net cash provided by operating activities:
  Depreciation                                     686        493        400
  Compensation expense related to ESOP             612        723        471
  Compensation expense related to MRDP             373        189          -
  Amortization of deferred loan fees, net         (107)      (248)      (184)
  Provision for loan losses                        178        483        138
  Deferred income taxes                           (264)       (60)        41
Amortization and accretion of premiums and
 discounts on investments and loans purchased      191       (319)      (126)
Federal Home Loan Bank of Seattle dividends       (239)      (236)      (222)
Gain on sale of real estate owned                  (22)       (11)         -
(Gain) Loss on sale of premises and equipment     (158)         4        (48)
Change in assets and liabilities:
   Trading securities
   Loans held for sale                                          -        428
   Accrued interest receivable                    (440)      (336)      (351)
   Other assets                                     (6)        30       (466)
   Accrued expenses and other liabilities          (66)     1,140        621
                                              --------   --------   --------
    Net cash provided by operating activities    3,347      5,006      3,738
                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Loan originations                           (101,399)  (108,660)   (56,591)
  Loan principal repayments                     80,611     84,090     47,175
  Loans purchased                              (14,533)    (7,693)    (5,777)
  Proceeds from maturity of securities
   available for sale                            5,027     25,223     77,427
 Principal repayments of securities
  available for sale                            13,362      8,916      2,986
  Purchase of securities available for sale    (37,939)   (68,781)  (108,049)
  Principal repayments of securities held
   to maturity                                       -      3,533      2,545
  Purchase of securities held to maturity         (437)         -        (33)
  Purchase of premises and equipment            (2,990)    (2,898)    (1,511)
  Proceeds from sale of premises and
   equipment                                       385        153        225
  Proceeds from sale of real estate owned          324        340          -
                                              --------   --------   --------
    Net cash used in investing activities      (57,589)   (65,777)   (41,603)
                                              --------   --------   --------
                                                                  (Continued)

30
<PAGE>

Oregon Trail Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
Years Ended March 31, 2000, 1999 and 1998
(In thousands)

                                                  2000       1999       1998
                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits, net of withdrawals      $ 38,146   $  6,855   $ 13,577
Decrease in securities sold under
 agreements to repurchase                            -          -     (1,431)
Change in advances from borrowers for
 taxes and insurance                                (7)       (92)        98
Proceeds from FHLB of Seattle advances         938,208    127,950     41,600
Repayment of FHLB of Seattle advances         (911,708)   (77,700)   (42,400)
Proceeds from issuance of common stock,
 net of conversion expenses                          -          -    123,779
Repayment of stock over subscription                 -          -    (78,050)
Funding provided to ESOP for purchase
 of common stock                                     -          -     (3,756)
Payment of cash dividend                        (1,056)      (916)      (217)
Stock repurchase                                (6,356)    (9,361)         -
                                              --------   --------   --------

Net cash provided by financing activities       57,227     46,736     53,200
                                              --------   --------   --------
NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                2,985    (14,035)    15,335

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR     6,276     20,311      4,976
                                              --------   --------   --------
CASH AND CASH EQUIVALENTS, END OF YEAR        $  9,261   $  6,276   $ 20,311
                                              ========   ========   ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
  Cash paid during the year for:
   Interest on deposits and other borrowings  $  3,275   $    903   $    308
   Income taxes                                  1,385      2,409      2,192
  Noncash investing activities:
   Transfer of loans to foreclosed real
    estate                                         264         51        313
   Unrealized gain (loss) on securities
    available for sale, net of tax              (3,161)    (1,007)     1,011

See Notes to Consolidated Financial Statements.

                                                                           31
<PAGE>

Oregon Trail Financial Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended March 31, 2000, 1999 and 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Principles of Consolidation The consolidated financial statements include
the accounts of Oregon Trail Financial Corp. and its wholly-owned subsidiary,
Pioneer Bank, a Federal Savings Bank (the "Bank"), collectively (the
"Company"). Oregon Trail Financial Corp. became the holding company of the
Bank upon conversion of the Bank from a federally-chartered mutual savings and
loan association to a federally-chartered capital stock savings and loan
association on October 3, 1997. All intercompany accounts and transactions
have been eliminated in consolidation. Certain prior period amounts have been
reclassified to conform to current period presentation.

   Nature of Operations - The Company is engaged in the business of accepting
savings and demand deposits and providing mortgage, consumer, and commercial
loans, and to a lesser extent, agricultural loans to its customers in Eastern
Oregon.

   Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make assumptions. These assumptions result in estimates
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 revenue and expense during the reporting period.
Actual results could differ from those estimates.

   Cash and Cash Equivalents - The Company considers all cash on hand and due
from banks, all interest-bearing deposits held at domestic banks, and
investment securities with an original term to maturity of three months or
less to be cash equivalents.

   Securities - The Company accounts for securities in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Securities
are classified as held to maturity where the Company has the ability and
positive intent to hold them to maturity. Securities held to maturity are
carried at cost, adjusted for amortization of premiums and accretion of
discounts to maturity. Securities bought and held principally for the purpose
of sale in the near term are classified as trading securities and are carried
at fair value. There were no trading securities at March 31, 2000 and 1999.
Securities not classified as trading, or as held to maturity, are classified
as available for sale. Unrealized holding gains and losses on securities
available for sale are excluded from earnings and are reported net of tax as a
separate component of equity until realized. These unrealized holding gains
and losses net of tax are also included as a component of comprehensive
income. Unrealized losses on securities resulting from an other than temporary
decline in fair value are recognized in earnings when incurred. Realized and
unrealized gains and losses are determined using the specific identification
method.

   Federal Home Loan Bank Stock - The Company's investment in Federal Home
Loan Bank of Seattle ("FHLB") stock is carried at cost, which approximates its
fair value. As a member of the FHLB system, the Company is required to
maintain a minimum level of investment in FHLB stock based on specified
percentages of its outstanding mortgages, total assets or FHLB advances. At
March 31, 2000, the Company's minimum investment requirement was approximately
$3,387,000. The Company may request redemption at par value of any stock in
excess of the amount the Company is required to hold. Stock redemptions are
granted at the discretion of the FHLB.

   Loans Receivable - Loans are stated at unpaid principal less net deferred
loan origination fees. Interest income on loans is recognized based on the
principal and the stated interest rates and includes the amortization of net
deferred loan origination fees based on the level yield method over the
contractual life of the loans adjusted on a prospective basis for prepayments
and delinquencies. Net deferred loan origination fees on loans held for sale
are recognized in earnings when sold. Recognition of interest income is
discontinued and accrued interest is reversed when a loan is placed on
nonaccrual status. A loan is generally placed on nonaccrual status when the
loan becomes contractually past due more than 90 days. Delinquent interest on
loans past due 90 days or more is charged off or an allowance is established
by a charge to income equal to all interest previously accrued. Interest
payments received on nonaccrual loans are applied to principal if collection
of principal is doubtful. Loans are removed from nonaccrual status only when
the loan is deemed current and collectibility of principal and interest is no
longer doubtful.

   Loans Held for Sale - To mitigate interest rate sensitivity, from time to
time certain fixed rate loans are identified as held for sale in the secondary
market. Accordingly, such loans are classified as held for sale in the
consolidated balance sheets and are carried at the lower of aggregate cost or
net realizable value. At March 31, 2000 and 1999, there were no loans held for
sale.

32
<PAGE>

   Allowance for Loan Losses - Allowances for losses on specific problem loans
and real estate owned are charged to earnings when it is determined that the
value of these loans and properties, in the judgment of management, is
impaired. In addition to specific reserves, the Company also maintains a
general allowance for loan losses based on evaluating known and inherent risks
in the loan portfolio, including management's continuing analysis of the
factors underlying the quality of the loan portfolio. These factors include
changes in the size and composition of the loan portfolio, actual loan loss
experience, current and anticipated economic conditions, detailed analysis of
individual loans for which full collectibility may not be assured, and
determination of the existence and realizable value of the collateral and
guarantees securing the loans. The reserve is an estimate based upon factors
and trends identified by management at the time financial statements are
prepared. The ultimate recovery of loans is susceptible to future market
factors beyond the Company's control, which may result in losses or recoveries
differing significantly from those provided in the consolidated financial
statements.
   The Company accounts for impaired loans in accordance with SFAS No. 114,
Accounting by Creditors for Impairment of a Loan, as amended by SFAS No. 118,
Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures. These statements address the disclosure requirements and
allocations of the allowance for loan losses for certain impaired loans. A
loan within the scope of these statements is considered impaired when, based
on current information and events, it is probable that a creditor will be
unable to collect all amounts due according to the contractual terms of the
loan agreement, including scheduled interest payments. Smaller balance
homogeneous loans, including single family residential and consumer loans, are
excluded from the scope of this statement.
   When a loan has been identified as being impaired, the amount of the
impairment is measured by using discounted cash flows, except when it is
determined that the sole source of repayment for the loan is the operation or
liquidation of the underlying collateral. In such case, impairment is measured
at current fair value of the collateral, reduced by estimated selling costs.
When the measurement of the impaired loan is less than the recorded investment
in the loan (including accrued interest, net deferred loan fees or costs, and
premium or discount), loan impairment is recognized by establishing or
adjusting an allocation of the allowance for loan losses. The Company
generally considers these loans on a nonaccrual status to be impaired. SFAS
No. 114, as amended, does not change the timing of charge-offs of loans to
reflect the amount ultimately expected to be collected. At March 31, 2000 and
1999, respectively, the Company had no loans deemed to be impaired as defined
by SFAS No. 114.

   Real Estate Owned - Real estate acquired through foreclosure is stated at
the lower of cost (principal balance of the former mortgage loan plus costs of
obtaining title and possession) or estimated fair value at the time of
foreclosure less estimated selling costs. Costs of development and improvement
of property are capitalized, and holding costs and market adjustments are
charged to expense as incurred.

   Premises and Equipment are stated at cost less accumulated depreciation.
Depreciation is recognized on the straight-line method over the estimated
useful lives of the assets ranging from 3 to 40 years. Major renewals and
betterments are capitalized and repairs are expensed. Gains or losses from
disposals of premises and equipment are reflected in other noninterest
expenses.

   Income Taxes - The Company accounts for income taxes in accordance with the
provisions of SFAS No. 109, Accounting For Income Taxes, which requires the
use of the asset and liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.

   Employee Stock Ownership Plan - The Company sponsors an Employee Stock
Ownership Plan ("ESOP"). The ESOP is accounted for in accordance with the
American Institute of Certified Public Accountants Statement of Position 93-6,
Employer's Accounting for Employee Stock Ownership Plans. Accordingly, the
shares held by the ESOP are reported as unearned shares issued to the employee
stock ownership plan in the balance sheet. As shares are committed to be
released, compensation expense is recorded equal to the then current market
price of the shares, and the shares become outstanding for earnings per share
calculations. The Company is allocating the shares ratably over a seven-year
period beginning with the first allocation on December 31, 1997.

   Management Recognition and Development Plan - The Company sponsors a
Management Recognition and Development Plan ("MRDP"). The MRDP is accounted
for in accordance with SFAS No. 123, Accounting for Stock-Based Compensation,
and a modification of Financial Accounting Standards Board Interpretation No.
28, Accounting for Stock Appreciation Rights and Other Variable Stock Option
or Award Plans. The plan authorizes the grant of common stock shares to
certain officers and directors, which vest over a five to six year period in
equal installments. The Company recognizes compensation expense based on the
fair value of the common stock at the grant date, as granted shares become
vested. Granted MRDP shares that have not yet vested are considered to be
contingently issuable shares and are only included in diluted earnings per
share. When the MRDP shares vest, they are included in basic earnings per
share.

                                                                          33
<PAGE>

   Stock-Based Compensation - The Company accounts for stock compensation
using the intrinsic value method as prescribed in Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Under the intrinsic value based method, compensation cost for
stock options is measured as the excess, if any, of the quoted market price of
stock at grant date over the amount an employee must pay to acquire the stock.
Stock options granted by the Company have no intrinsic value at the grant date
and, under APB No. 25, there is no compensation expense to be recorded.
   SFAS No. 123 encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value.
The fair value approach measures compensation costs based on factors such as
the term of the option, the market price at grant date, and the option
exercise price, with expense recognized over the vesting period. See Note 15
for the pro forma effect on net income and earnings per share as if the fair
value method had been used.

   Operating Segments - The Company has only one operating segment as defined
by SFAS No. 131, Disclosures About Segments of an Enterprise and Related
Information.

   Recently Issued/Adopted Accounting Pronouncements - Effective April 1,
1999, the Company adopted SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, which establishes accounting and disclosure
requirements for derivative instruments, including certain instruments
embedded in other financial instruments, and for hedging activities. The
Company does not have any derivative instruments that meet the scope of this
statement. The statement also allows, on the date of initial application, an
entity to transfer any held to maturity securities into the available for sale
or trading categories. The Company transferred all held to maturity securities
with a book value and fair value of $9,338,000 and $9,518,000, respectively,
to its available for sale portfolio on April 1, 1999. The transfer was
recorded as a direct increase to other comprehensive income of $111,000 (net
of income tax of $69,000), which was recorded in the first quarter of fiscal
year 2000.

34
<PAGE>

2. SECURITIES

   The amortized cost, gross unrealized gains and losses, and estimated fair
value of securities classified as available for sale and held to maturity at
March 31, 2000 and 1999 are summarized as follows (in thousands):

                                                 Gross     Gross
                                                  Un-        Un-
March 31, 2000                       Amortized  realized  realized    Fair
                                        Cost     Gains     Losses     Value
Available for sale:                  ---------  --------  --------    -----
U.S. government and government
 agency obligations:
  Maturing after one year through
   five years                        $     520   $   -    $    (6)  $    514
  Maturing after five years through
   ten years                            23,427      10     (1,235)    22,202
  Maturing after ten years              15,990       -     (1,270)    14,720
                                     ---------   -----    -------   --------
                                        39,937      10     (2,511)    37,436
                                     ---------   -----    -------   --------
Mortgage-backed and related
 securities:
  GNMA maturing after one year
   through five years                      165       -         (3)       162
  GNMA maturing after five years
   through ten years                        67       3          -         70
  GNMA maturing after ten years         41,461     426     (1,242)    40,645
  FHLMC maturing after ten years        23,626       1     (1,084)    22,543
  FNMA maturing after ten years         22,117      10       (932)    21,195
                                     ---------   -----    -------   --------
                                        87,436     440     (3,261)    84,615
                                     ---------   -----    -------   --------
   Total available for sale          $ 127,373   $ 450    $(5,772)  $122,051
                                     =========   =====    =======   ========

March 31, 1999

Available for sale:
 U.S. government and government
  agency obligations:
   Maturing after one year through
    five years                       $   5,027   $  16    $     -   $  5,043
   Maturing after five years
    through ten years                   19,404      17       (188)    19,233
   Maturing after ten years             13,818      10       (139)    13,689
                                     ---------   -----    -------   --------
                                        38,249      43       (327)    37,965
                                     ---------   -----    -------   --------
Mortgage-backed and related
 securities:
   GNMA maturing after one year
    through five years                     221       2          -        223
   GNMA maturing after five years
    through ten years                        4       -          -          4
   GNMA maturing after ten years        22,840     490       (202)    23,128
   FHLMC maturing after ten years       18,757       3       (229)    18,531
   FNMA maturing after ten years        18,456     113        (84)    18,485
                                     ---------   -----    -------   --------
                                        60,278     608       (515)    60,371
                                     ---------   -----    -------   --------
    Total available for sale         $  98,527   $ 651    $  (842)  $ 98,336

                                     =========   =====    =======   ========
Held to maturity:
 Mortgage-backed and related
  securities:
   GNMA maturing after ten years     $   8,230   $ 171    $     -   $  8,401
   FNMA maturing after ten years           839       1          -        840
   FHLMC maturing after ten years          269       8          -        277
                                     ---------   -----    -------   --------
    Total held to maturity           $   9,338   $ 180    $     -   $  9,518
                                     =========   =====    =======   ========

   Expected maturities of mortgage-backed and related securities will differ
from contractual maturities because borrowers may have the right to prepay
obligations with or without prepayment penalties.

   Investments and mortgage-backed and related securities totaling $59,377,000
and $33,815,000 were pledged against public funds and other deposits at March
31, 2000 and 1999, respectively.

                                                                          35
<PAGE>

3. LOANS RECEIVABLE

                                                             March 31,
                                                     -----------------------
Loans receivable are summarized as follows               2000        1999
 (in thousands):                                     ----------   ----------

Mortgage loans:
 One-to-four family                                  $  127,589   $  109,089
 Multi-family                                             2,989        2,810
 Commercial                                              14,808       13,703
 Agricultural                                             2,420        2,240
 Construction                                             3,648        2,825
 Land                                                       158          330
                                                     ----------   ----------
   Total mortgage loans                                 151,612      130,997
                                                     ----------   ----------
Consumer loans:
 Unsecured                                                3,414        2,836
 Home equity and second mortgage                         14,983       16,262
 Auto loans                                              21,547       11,843
 Credit card                                              1,026          949
 Loans secured by savings deposits                          452          416
 Other secured                                            3,190        2,985
                                                     ----------   ----------
   Total consumer loans                                  44,612       35,291
                                                     ----------   ----------
Commercial loans:
 Business                                                13,853       12,031
 Agricultural                                            13,275        9,781
                                                     ----------   ----------
   Total commercial loans                                27,128       21,812
                                                     ----------   ----------
   Total loans                                          223,352      188,100

Less:
 Net deferred loan fees                                   1,365        1,125
 Allowance for loan losses                                1,396        1,228
                                                     ----------   ----------
Total loans receivable, net                          $  220,591   $  185,747
                                                     ==========   ==========


   The weighted average interest rate on loans at March 31, 2000 and 1999 was
8.03% and 7.92%, respectively.

   Allowance for loan loss activity is summarized as follows for the years
ended March 31, 2000, 1999 and 1998 (in thousands):

                                                 2000      1999      1998
                                              --------   -------   -------
Balance, beginning of year                    $  1,228   $   847   $   725
Provision for loan losses                          178       483       138
Charge-offs                                        (42)     (115)      (49)
Recoveries                                          32        13        33
                                              --------   -------   -------
                                              $  1,396   $ 1,228   $   847
                                              ========   =======   =======

Nonaccrual loans were $155,000 and $138,000 at March 31, 2000 and 1999,
respectively. Interest income that would have been recorded under the original
terms of nonaccrual loans totaled $8,000 for the year ended March 31, 2000 and
$7,000 for the years ended March 31, 1999 and 1998.

36
<PAGE>

4. TRANSACTIONS WITH AFFILIATES

   Loans - Certain directors and executive officers of the Company are
customers of, and have had transactions with, the Bank in the ordinary course
of business. An analysis of activity with respect to loans receivable from
directors and executive officers of the Company for the years ended March 31,
2000, 1999, and 1998 is summarized as follows (in thousands):

                                                 2000      1999      1998
                                              --------   -------   -------
Beginning balance                             $  1,362   $   576   $   326
  Additions                                        132       928       491
  Reductions                                      (278)     (142)     (241)
                                              --------   -------   -------
Ending balance                                $  1,216   $ 1,362   $   576
                                              ========   =======   =======

   At March 31, 2000, all loans to directors and executive officers of the
Company were current.

5. ACCRUED INTEREST RECEIVABLE

   Accrued interest receivable is summarized as follows (in thousands):

                                                             March 31,
                                                     -----------------------
                                                         2000        1999
                                                     ----------   ----------

Loans receivable                                     $    1,316   $    1,086
Mortgage-backed and related securities                      505          391
U.S. government and government agencies                     631          535
                                                     ----------   ----------

                                                     $    2,452   $    2,012
                                                     ==========   ==========

6. PREMISES AND EQUIPMENT

   Premises and equipment are summarized as follows (in thousands):

                                                             March 31,
                                                     -----------------------
                                                         2000        1999
                                                     ----------   ----------

Land                                                 $      967   $      836
Land held for development                                     -          200
Buildings and improvements                                6,838        5,633
Furniture, fixtures and equipment                         3,601        3,202
Construction in process                                   1,602          676
                                                     ----------   ----------

                                                         13,008       10,547
Less accumulated depreciation                             3,106        2,722
                                                     ----------   ----------
                                                     $    9,902   $    7,825
                                                     ==========   ==========

                                                                           37
<PAGE>

7. DEPOSITS

   Deposits at March 31 are summarized as follows (dollars in thousands):

                                     2000                      1999
                          -------------------------- ------------------------
                          Weighted                   Weighted
                          Average                    Average
                          Interest                   Interest
                            Rate   Balance   Percent   Rate  Balance  Percent

Non-interest bearing           -%  $ 14,961    6.29%      -% $ 11,594   5.81%
NOW checking                1.25     36,758   15.46    1.36    36,676  18.38
Passbook savings accounts   2.35     19,425    8.17    2.35    21,083  10.56
Money market deposit        4.22     50,102   21.08    4.14    30,486  15.27
Time certificates           5.53    116,489   49.00    5.15    99,750  49.98
                            ----   --------  ------    ----  -------- ------
                            3.98   $237,735  100.00%   3.70% $199,589 100.00%
                            ====   ========  ======    ====  ======== ======

   At March 31, 2000, time certificate maturities are as follows (in
thousands):

Within one year                                                 $  90,932
One year to two years                                              11,541
Two years to three years                                            7,070
Three years to four years                                           1,498
Four years to five years                                            4,030
Thereafter                                                          1,418
                                                                ---------
                                                                $ 116,489
                                                                =========

   The aggregate amount of time certificates with a minimum denomination of
$100,000 was $28,544,000 and $20,021,000 at March 31, 2000 and 1999,
respectively. Deposit accounts in excess of $100,000 are not insured by the
Federal Deposit Insurance Corporation ("FDIC").
   Interest expense on deposits is summarized as follows for the years ended
March 31, 2000, 1999, and 1998 (dollars in thousands):

                                                 2000      1999      1998
                                              --------   -------   -------
NOW checking                                  $    480   $   532   $   519
Passbook savings accounts                          472       579       779
Money market deposit                             1,922       889       687
Time certificates                                5,652     5,203     5,628
                                              --------   -------   -------
                                              $  8,526   $ 7,203   $ 7,613
                                              ========   =======   =======

8. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

   Information concerning securities sold under agreements to repurchase is
summarized as follows (in thousands):

                                                           2000      1999
                                                         -------   -------
Average balance                                          $    67   $     -
Maximum month end balance                                      -         -
Average interest rate at year end                            N/A       N/A

   The average balance is computed on a daily average method. During the year,
the Company established a $50 million line of credit with Merrill Lynch. The
line was used for one borrowing of $3.5 million for seven days. There were no
amounts outstanding at any month end. The Company maintains control of the
securities pledged as collateral.

38
<PAGE>

9. FHLB BORROWINGS

   The Bank has entered into borrowing arrangements with the FHLB to borrow
funds under a short-term cash management advance program and long-term loan
agreements. All borrowings are secured by stock of, and cash deposits in, the
FHLB. Additionally, mortgage loans receivable and securities issued, insured,
or guaranteed by the U.S. Government or agencies thereof are pledged as
security for the loans.

   At March 31, 2000, FHLB advances were scheduled to mature as follows
(dollars in thousands):

                              Adjustable          Fixed
                             Rate Advances    Rate Advances   Total Advances
                             --------------   --------------  ----------------
                             Rate*   Amount   Rate*  Amount   Rate*   Amount

Due in less than one year     N/A   $    -    6.06%  $64,250  6.06%  $ 64,250
One to two years              N/A        -    4.93     5,000  4.93      5,000
Four to five years            N/A        -    5.24     7,500  5.24      7,500
                             ----   ------    ----   -------  ----   --------
                              N/A   $    -    5.91%  $76,750  5.91%  $ 76,750
                             ====   ======    ====   =======  ====   ========
* Weighted average interest rate

   The maximum and average outstanding balances and average interest rates on
advances from the FHLB were as follows for the years ended March 31, 2000,
1999 and 1998 (dollars in thousands):

                                                 2000      1999       1998
                                              --------   --------    -------
Maximum outstanding at any month end          $ 76,750   $ 50,250   $ 8,000
Daily average outstanding                       60,418     17,108     3,024
Weighted average interest rates:
  Annual                                          5.37%      5.03%     5.85%
  End of year                                     5.91%      5.15%      N/A
Interest expense during the year              $  3,246   $    861   $   177

10. INCOME TAXES

   A reconciliation of the tax provision based on statutory corporate tax
rates and the provision shown in the accompanying consolidated statements of
income for the years ended March 31, 2000, 1999 and 1998 is summarized as
follows (dollars in thousands):

                                     2000            1999           1998
                                Amount  Percent Amount  Percent Amount Percent
                                --------------- --------------- --------------
Federal income taxes at
 statutory rate                 $ 1,388  34.0%  $ 1,683  34.0%  $1,721  34.0%
State income taxes at
 statutory rate, net
 of related federal
 tax effect                         180   4.4       218   4.4      223   4.4
Other, net                          (96) (2.3)     (104) (2.1)      82   1.6
                                -------  ----   -------  ----   ------  ----
                                $ 1,472  36.1%  $ 1,797  36.3%  $2,026  40.0%
                                =======  ====   =======  ====   ======  ====

                                                                          39
<PAGE>

   Provision (benefit) for income taxes for the years ended March 31, 2000,
1999 and 1998 is summarized as follows (in thousands):

                                                 2000      1999      1998
                                              --------   -------   -------
Current:
 Federal                                      $  1,436   $ 1,538   $ 1,643
State                                              300       319       342
                                              --------   -------   -------

Total current                                    1,736     1,857     1,985
                                              --------   -------   -------
Deferred:
 Federal                                          (219)      (50)       34
 State                                             (45)      (10)        7
                                              --------   -------   -------
   Total deferred                                 (264)      (60)       41
                                              --------   -------   -------
   Total provision for income taxes           $  1,472   $ 1,797   $ 2,026
                                              ========   =======   =======


   The components of net deferred income assets and liabilities at March 31,
2000 and 1999 are summarized as follows (in thousands):

                                                           2000      1999
                                                         -------   -------
Deferred tax assets:
 Deferred loan fees                                      $   319   $   150
 Allowance for loan losses                                   549       464
 Vacation accrual                                            114       118
 Unrealized losses on securities available for sale        1,851       123
 Other                                                       151        65
                                                         -------   -------
   Total deferred tax assets                               2,984       920
                                                         -------   -------
Deferred tax liabilities:
 FHLB stock dividends                                     (1,045)    ( 897)
 Accumulated depreciation                                   (117)    ( 180)
 Other                                                      (106)        -
 Tax bad debt reserve in excess of base-year reserve        (209)    ( 298)
                                                         -------   -------
   Total deferred tax liabilities                         (1,477)  ( 1,375)
                                                         -------   -------
   Net deferred tax asset (liability)                    $ 1,507   $ ( 455)
                                                         =======   =======

   For the fiscal year ended June 30, 1996 and years prior, the Company
determined bad debt expense deducted from taxable income based on 8% of
taxable income before such deduction or based on the experience method as
provided by the Internal Revenue Code ("IRC"). In August 1996, the provision
in the IRC allowing the 8% of taxable income deduction was repealed.
Accordingly, the Company is required to use the experience method to record
bad debt expense, and must also recapture the excess reserve accumulated from
use of the 8% method ratably over a six-taxable-year period for all years
subsequent to 1987. The income tax provision from 1987 to 1996 included an
amount for the tax effect of such reserves. At March 31, 2000, the Company had
recaptured approximately $1,038,000 of bad debt deductions taken in prior
periods. At March 31, 2000, remaining bad debt deductions to be recaptured
approximated $515,000.

   As a result of the bad debt deductions taken in years prior to 1988,
retained earnings include accumulated earnings of approximately $2,500,000, on
which federal income taxes have not been provided. If, in the future, this
portion of retained earnings is used for any purpose other than to absorb
losses on loans or on property acquired through foreclosure, federal income
taxes may be imposed at the then prevailing corporate tax rates. The Company
does not contemplate that such amounts will be used for any purpose which
would create a federal income tax liability; therefore, no provision has been
made.

40
<PAGE>

11. SHAREHOLDERS' EQUITY

   Oregon Trail Financing Corp. ("OTFC") was incorporated under Oregon law in
June 1997 to acquire and hold all of the outstanding capital stock of the
Bank, as part of the Bank's conversion from a federally chartered mutual
savings and loan association. In connection with the conversion, which was
consummated on October 3, 1997, OTFC issued and sold 4,694,875 shares of
common stock including the shares allocated to the ESOP (par value of $.01 per
share) at a price of $10.00 per share for net total proceeds of $45,729,000
after conversion expenses of $1,220,000. OTFC retained one-half of the net
proceeds and used the remaining net proceeds to purchase the newly issued
capital stock of the Bank. The net conversion proceeds of $45,729,000 were
held in withdrawable accounts at the Bank at September 30, 1997. Since, among
other things, all required regulatory approvals to consummate the conversion
were received prior to September 30, 1997, the conversion has been accounted
for as being effective as of September 30, 1997. The oversubscription proceeds
of $78,050,000 were refunded, with accrued interest on October 3, 1997.

   At the time of conversion, the Company established a liquidation account in
an amount equal to its retained earnings as of March 31, 1997, the date of the
latest balance sheet used in the final conversion prospectus. The liquidation
account will be maintained for the benefit of eligible withdrawable account
holders who have maintained their deposit accounts in the Bank after
conversion. In the event of a complete liquidation of the Bank (and only in
such event), eligible depositors who have continued to maintain accounts will
be entitled to receive a distribution from the liquidation account before any
liquidation may be made with respect to common stock. The Bank may not declare
or pay cash dividends if the effect thereof would reduce its regulatory
capital below the amount required for the liquidation account.

   In August 1998, the Company received approval from the Office of Thrift
Supervision ("OTS") to repurchase 9%, or 422,539, of its outstanding shares.
The repurchase was completed by August 27, 1998. The shares were purchased at
a weighted average price of $15.51. In October 1998, the Company received a
non-objection response from the OTS to a request to repurchase an additional
5%, or 213,666, of its outstanding shares which was completed in February
1999. The shares were purchased at a weighted average price of $13.14. The
repurchase programs resulted in a 636,205 reduction of shares outstanding and
reduced equity by $9.4 million. The shares were used to fund the MRDP and the
Employee Stock Option Plan. These plans were approved by shareholders in
August 1998 and were implemented in October 1998.

   In March 1999, the Company received a non-objection response from the OTS
to a request to repurchase 5%, or 210,666, of its outstanding shares. The
repurchase was completed in May and June 1999 at a weighted average price of
$13.03 per share. In September 1999, the Company received another non-
objection response from the OTS to a request to repurchase 5%, or 199,785, of
its outstanding shares. The repurchase was completed in November 1999 at a
weighted average price of $12.03 per share. In December 1999, the Company made
a special application to the OTS for an exception to policy to be allowed to
repurchase another 5%, or 179,005, of its outstanding shares. Approval was
received on February 24, 2000. As of March 31, 2000, 123,777 shares had been
repurchased under the program at a weighted average price per share of $11.18.
During the year ended March 31, 2000, the repurchase programs resulted in a
534,228 reduction of shares outstanding and reduced equity by $6.4 million.

12. EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")

   As part of the conversion discussed in Note 11, an ESOP was established for
all employees. The ESOP borrowed $3,756,000 from the Company and used the
funds to purchase 375,590 shares of the common stock of the Company issued in
the conversion. The loan will be repaid by the Bank over a seven-year period.
The loan had an outstanding balance of $2,658,000 and $3,123,000 at March 31,
2000 and 1999, respectively, at an interest rate of 8.5%. The shares included
in the ESOP are held in a suspense account and released to participants
quarterly over a seven-year period. Compensation expense is recognized to the
extent of the fair value of shares committed to be released. The Company
recorded compensation expense related to the ESOP of $612,000, $723,000, and
$471,000 during the years ended March 31, 2000, 1999, and 1998, respectively.

                                                                           41
<PAGE>

   ESOP share activity is summarized in the following table:

                                                              Committed to
                                               Unreleased     be Released
                                               ESOP Shares      Shares
                                               -----------      ------

Balance, April 1, 1997                                 -              -
Issuance October 3, 1997                         375,590              -
1998 release                                     (26,828)        26,828
                                                --------       --------
Balance, March 31, 1998                          348,762         26,828
1999 release                                     (53,656)        53,656
                                                --------       --------
Balance, March 31, 1999                          295,106         80,484
2000 release                                     (53,656)        53,656
                                                --------       --------
Balance, March 31, 2000                          241,450        134,140
                                                ========       ========

13. MANAGEMENT RECOGNITION AND DEVELOPMENT PLAN ("MRDP")

   In May 1998, the Board of Directors approved an MRDP for the benefit of
officers and non-employee directors which authorizes the grant of 187,795
common stock shares. Shareholders approved the plan in July 1998. On October
8, 1998, 147,322 shares were granted to eligible participants covered under
the plan at a share price of $11.15. Those eligible to receive benefits under
the MRDP are determined by members of a committee appointed by the Board of
Directors of the Company. MRDP awards vest ratably over a five- to six-year
period beginning on October 8, 1999 (the first anniversary of the effective
date of the MRDP) or upon the participant's death or disability. The Company
recognizes compensation expense based on the fair value of the common stock on
the grant date in accordance with the vesting schedule during the years in
which the shares are payable. Compensation expense for the years ended March
31, 2000 and 1999 was $373,000 and $189,000, respectively. During the year
ended March 31, 2000, 36,871 of the shares granted on October 8, 1998 were
forfeited. On October 8, 1999, an additional 6,350 shares were granted to
eligible participants under the plan at a share price of $11.18.

14. EARNINGS PER SHARE ("EPS")

   EPS is computed in accordance with SFAS No. 128, Earnings Per Share. Basic
EPS is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding during the period,
without considering any dilutive items. Diluted EPS is computed using the
treasury stock method, giving effect to potential additional common shares
that were outstanding during the period. Potential dilutive common shares
include shares awarded but not released under the Company's MRDP Plan and
stock options granted under the stock option plan. Shares held by the
Company's ESOP that are committed for release are included in the basic and
diluted EPS calculations. The following is a summary of the effect of dilutive
securities in weighted average number of shares (denominator) for the basic
and diluted EPS calculations for the years ended March 31, 2000, 1999, and
1998. There are no resulting adjustments to net earnings:

                                                 2000       1999      1998
                                             ---------  ---------  ---------
Weighted average common shares
 outstanding-basic                           3,546,873  4,065,423  4,326,066
Effect of dilutive securities on number
 of shares:
  MRDP shares                                  127,596     70,635          -
  Stock options                                 49,131     23,482          -
                                             ---------  ---------  ---------
Total dilutive securities                      176,727     94,117          -

Weighted average common shares
 outstanding-assuming dilution               3,723,600  4,159,540  4,326,066

15. STOCK OPTION PLAN

   In May 1998, the Board of Directors approved a stock option plan for
officers, directors, and employees, which authorizes the granting of stock
options. Shareholders approved the Plan in July 1998. The maximum number of
shares which may be issued under this plan is 469,488 with a maximum term of
ten years for each option from the date of grant. The initial 356,500 stock
options were granted on October 8, 1998 at the fair value of the common stock
on that date ($11.15), and at March 31, 2000 had a

42
<PAGE>

weighted average remaining contractual life of 8.5 years. On October 8, 1999,
an additional 5,047 stock options were granted at the fair value of the common
stock on that date ($11.18) and at March 31, 2000 had a weighted average
remaining contractual life of 9.5 years. All awards vest in equal installments
over a five- to six- year period. Unvested options become immediately
exercisable in the event of death or disability.

   Stock option activity is summarized as follows:

                                                                  Weighted
                                                                  Average
                                                  Number of       Exercise
                                                   Shares           Price
                                                  --------        --------
Outstanding, April 1, 1998                               -        $      -

  Granted                                          356,500           11.15
                                                  --------        --------

Outstanding, March 31, 1999                        356,500           11.15

  Granted                                            5,047           11.18
  Canceled                                         (80,551)          11.15
                                                  --------        --------
Outstanding, March 31, 2000                        280,996           11.15
                                                  ========        ========

   Additional Stock Plan Information   As discussed in Note 1, the Company
continues to account for its stock-based awards using the intrinsic value
method in accordance with APB No. 25 and its related interpretations.
Accordingly, no compensation expense has been recognized in the financial
statements for employee stock arrangements.

   SFAS No. 123 requires the disclosure of pro forma net income and earnings
per share had the Company adopted the fair value method as of the beginning of
fiscal year 1999. Under SFAS No. 123, the fair value of stock-based awards to
employees is calculated through the use of option pricing models, even though
such models were developed to estimate fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock option awards. These models also require subjective
assumptions, including future stock price volatility and expected time to
exercise, which greatly affect the calculated values.

   The Company's calculations were made using the Black-Scholes option pricing
model with the following weighted average assumptions for the October 1999
grant:

Risk-free interest rate               5.95%
Expected dividend                     2.61%
Expected lives, in years               5.0
Expected volatility                     19%

   The estimated weighted average grant-date fair value of options granted
during fiscal year 1999 was $4.85 per share and for options granted during
fiscal year 2000 was $2.39 per share. Had compensation cost for these awards
been determined in accordance with SFAS No. 123, the Company's net income and
earnings per share would have been reduced to the following pro forma amounts
for the years ended March 31, 2000 and 1999 (dollars in thousands):

                                        2000         1999
                                      ------       ------
Net income:
  As reported                         $2,609       $3,154
  Pro forma                            2,534        3,057

Earnings per common share - basic:
  As reported                          $0.74        $0.78
  Pro forma                             0.71         0.75

Earnings per common share - diluted:
  As reported                          $0.70        $0.76
  Pro forma                             0.68         0.73

                                                                          43
<PAGE>

16. REGULATORY MATTERS AND CAPITAL REQUIREMENTS

   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. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. The Bank's capital
amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.

   Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of total and Tier I
capital to risk weighted assets, of Core I capital to total assets, and
tangible capital to tangible assets (set forth in the table below). Management
believes that the Bank meets all capital adequacy requirements to which it is
subject as of March 31, 2000.

   As of March 31, 2000, the most recent notification from OTS categorized the
Bank as "well capitalized" under the regulatory framework for prompt
corrective action. To be categorized as "well capitalized," the Bank must
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the table below. There are no conditions or events,
since the notification, that management believes have changed the Bank's
category.

   The Bank's actual and required capital amounts and ratios are presented in
the table below (dollars in thousands):

                                                           Categorized as
                                                         "Well Capitalized"
                                          For Capital       Under Prompt
                                            Adequacy        Corrective
As of March 31, 2000       Actual           Purposes     Action Provision
                       ---------------  ---------------  ----------------
                        Amount   Ratio   Amount   Ratio   Amount    Ratio
Total Capital
 (To risk weighted
   assets)             $ 53,812  28.5%  $ 15,114   8.0%  $ 18,892   10.0%

Tier I Capital
 (To risk weighted
   assets)             $ 52,416  27.7%       N/A   N/A   $ 11,335    6.0%

Core Capital
 (To total assets)     $ 52,416  14.0%  $ 14,934   4.0%  $ 18,667    5.0%

Tangible Capital
 (To tangible assets)  $ 52,416  14.0%  $  5,600   1.5%       N/A    N/A

As of March 31, 1999

Total Capital
 (To risk weighted
   assets)             $ 51,516  33.1%  $ 12,455   8.0%  $ 15,569   10.0%

Tier I Capital
 (To risk weighted
   assets)             $ 50,288  32.3%       N/A   N/A   $  9,342    6.0%

Core Capital
 (To total assets)     $ 50,288  16.1%  $ 12,521   4.0%  $ 15,652    5.0%

Tangible Capital
 (To tangible assets)  $ 50,288  16.1%  $  4,695   1.5%       N/A    N/A

44
<PAGE>

   The following table is a reconciliation of the Bank's capital, calculated
according to generally accepted accounting principles, to regulatory tangible
and risk-based capital at March 31, 2000 (in thousands):

Equity                                   $   49,316
Unrealized securities gains                   3,279
Equity of non-includable subsidiaries          (179)
                                         ----------
Tangible capital                             52,416
General valuation allowance                   1,396
                                         ----------
Total capital                            $   53,812
                                         ==========

   At periodic intervals, the OTS and the FDIC routinely examine the Bank as
part of their legally prescribed oversight of the thrift industry. Based on
these examinations, the regulators can direct that the Bank's financial
statements be adjusted in accordance with their findings. A future examination
by the OTS or the FDIC could include a review of certain transactions or other
amounts reported in the Bank's 2000, 1999, and 1998 financial statements. In
view of the uncertain regulatory environment in which the Bank operates, the
extent, if any, to which a forthcoming regulatory examination may ultimately
result in adjustments to the accompanying financial statements cannot
presently be determined.

17. EMPLOYEE BENEFIT PLAN

   The Company sponsors a contributory defined contribution plan pursuant to
Section 401(k) of the IRC covering substantially all employees. Under the
plan, the Company made contributions limited to 3.33% for the years ended
March 31, 2000 and 1999 and 6.67% for the year ended March 31, 1998 of
participating employees' salaries. Contributions and plan administration
expenses aggregated to $100,000, $88,000, and $92,000 for the years ended
March 31, 2000, 1999, and 1998, respectively.

18. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
    CREDIT RISK

   The Company is a party to certain financial instruments with off-balance
sheet risk to meet the financing needs of customers. Commitments to extend
credit were $39,741,000 and $31,619,000 at March 31, 2000 and 1999,
respectively, which include fixed rate loan commitments of $3,333,000 and
$1,414,000 at March 31, 2000 and 1999, respectively. The ranges of interest
rates for these loan commitments are 6.625% to 15.75% and 6.0% to 14.75% at
March 31, 2000 and 1999, respectively.

   Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee by the customer. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
Bank evaluates creditworthiness on an individual customer basis.

   The Bank originates residential real estate loans and, to a lesser extent,
commercial, agriculture, and consumer loans. Greater than 75% of all loans in
the Bank's portfolio are secured by properties located in communities of
Eastern Oregon.
                                                                          45
<PAGE>

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

   A summary of carrying value and estimated fair value of financial
instruments is summarized as follows (in thousands):

                                   March 31, 2000         March 31, 1999
                                --------------------   --------------------
                                Carrying               Carrying
                                 Value    Fair Value    Value    Fair Value
Financial assets:
 Cash and cash equivalents     $   9,261  $   9,261   $   6,276  $   6,276
 Securities                      122,051    122,051     107,674    107,854
 Loans receivable, net of
  allowance for loan losses      220,591    216,008     185,747    189,930
 FHLB stock                        3,897      3,897       3,221      3,221

Financial liabilities:
 Demand and savings deposits     121,246    121,246      99,839     99,839
 Time certificates of deposit    116,489    116,425      99,750     99,965
 FHLB advances                    76,750     76,750      50,250     50,250


   Financial assets and liabilities other than investment securities are not
traded in active markets. Estimated fair values require subjective judgments
and are approximate. The above estimates of fair value are not necessarily
representative of amounts that could be realized in actual market
transactions, nor of the underlying value of the Company. Changes in the
following methodologies and assumptions could significantly affect the
estimates.

   Financial Assets - The estimated fair value approximates the carrying value
of cash and cash equivalents. For securities, the fair value is based on
quoted market prices. The fair value of loans is estimated by discounting
future cash flows using current rates at which similar loans would be made.
The fair value of FHLB stock approximates the carrying amount.

   Financial Liabilities - The estimated fair value of demand and savings
deposits and FHLB advances approximates carrying amounts. The fair value of
time certificates of deposit is estimated by discounting the future cash flows
using current rates offered on similar instruments. The value of long-term
relationships with depositors is not reflected.

   Off-Balance Sheet Financial Instruments - Commitments to extend credit
represent all off-balance-sheet financial instruments. The fair value of these
commitments is not significant. See Note 18 to the consolidated financial
statements.

20. DIRECTORS' PENSION PLAN

   The Company established a director emeritus plan (the "Plan") effective
February 25, 1997. The purpose of the Plan is to reward and retain directors
of experience and ability in key positions of responsibility by providing such
directors with a benefit upon their retirement from the Board of Directors, as
compensation for their past services to the Bank and as an incentive to
perform such services in the future. The Plan is funded through current
operations and no assets are specifically identified to fund future benefit
payments.

46
<PAGE>

   Following are disclosures related to the Plan (in thousands):

                                                     2000          1999
                                                  ---------    ----------
Change in benefit obligation:
 Benefit obligation, beginning of year            $     313    $      330
 Service cost                                             8             8
 Interest cost                                           23            23
 Benefits paid                                          (41)          (48)
                                                  ---------    ----------
 Benefit obligation, end of year                  $     303    $      313
                                                  =========    ==========

Unrecognized prior service cost                   $     281    $      304
                                                  =========    ==========

Weighted average assumption - discount rate               7%            7%
                                                  =========    ==========

Components of net periodic benefit cost:
 Service cost                                     $       8    $        8
 Interest cost                                           23            23
 Amortization of prior service cost                      22            22
                                                  ---------    ----------
Net periodic benefit cost                         $      53    $       53
                                                  =========    ==========


21. PARENT COMPANY FINANCIAL INFORMATION

   The Parent company financial information at March 31, 2000 and 1999 is as
follows (in thousands):

                                                     2000          1999
                                                  ---------    ----------
Assets:
 Cash                                             $     823    $    6,198
 Investment in subsidiary                            49,316        50,383
 Other assets                                         3,054         3,502
                                                  ---------    ----------
   Total                                          $  53,193    $   60,083
                                                  =========    ==========
Liabilities and Shareholders' Equity:
 Other liabilities                                $      89    $        -
 Shareholders' equity                                53,104        60,083
                                                  ---------    ----------
   Total                                          $  53,193    $   60,083
                                                  =========    ==========

                                                                          47
<PAGE>

   The statements of income for the years ended March 31, 2000, 1999, and 1998
are as follows (in thousands):

                                                 2000       1999      1998
                                             ---------  ---------  ---------
Other income:
 Equity in undistributed income of
  subsidiary                                 $   3,015  $   3,239  $   1,987
 Interest on loan to ESOP                            -        288        154
                                             ---------  ---------  ---------
   Subtotal                                      3,015      3,527      2,141

Other expense:
 Interest and other                                651        426        282
 Income tax benefit                               (245)       (53)       (49)
                                             ---------  ---------  ---------
   Net income                                $   2,609  $   3,154  $   1,908
                                             =========  =========  =========


   The statements of cash flows for the year ended March 31, 2000, 1999 and
1998 are as follows (in thousands):

                                                 2000       1999      1998
                                             ---------  ---------  ---------
Cash flows from operating activities:
 Net income                                  $   2,609  $   3,154  $   1,908
 Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
   Equity in undistributed income of
    subsidiary                                  (3,015)    (3,239)    (1,987)
   Compensation expense related to ESOP            612        723        471
   Compensation expense related to MRDP            373        189          -
 Change in assets and liabilities:
   Other assets                                    448        398     (3,900)
   Other liabilities                                89        (27)        76
   Income tax accrual                                -          -        (49)
                                             ---------  ---------  ---------
   Net cash provided by (used in)
    operating activities                         1,116      1,198     (3,481)
                                             ---------  ---------  ---------
Cash flows from investing activities -
   Investment in subsidiary                        921        (94)   (22,904)
                                             ---------  ---------  ---------
Cash flows from financing activities:
   Proceeds from stock oversubscription              -          -     78,050
   Repayment of stock oversubscription               -          -    (78,050)
   Proceeds from issuance stock                      -          -     45,729
   Repurchase of common stock                   (6,356)    (9,361)         -
   Payment of cash dividend                     (1,056)      (916)      (217)
   Funding provided to ESOP for purchase
    of common stock                                  -          -     (3,756)
                                             ---------  ---------  ---------
   Net cash provided by (used in) financing
    activities                                  (7,412)   (10,277)    41,756
                                             ---------  ---------  ---------
Net increase (decrease) in cash                 (5,375)    (9,173)    15,371

Cash:
   Beginning of year                             6,198     15,371          -
                                             ---------  ---------  ---------
   End of year                               $     823  $   6,198  $  15,371
                                             =========  =========  =========

48
<PAGE>

22. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

Year ended March 31, 2000 (in thousands, except share data):

                              June 30   September 30   December 31   March 31
                              -------   ------------   -----------   --------
Total interest income         $ 5,621     $ 6,026        $ 6,360     $  6,541
Total interest expense          2,523       2,810          3,123        3,320
                              -------     -------        -------     --------
Net interest income             3,098       3,216          3,237        3,221
Provision for loan losses          71          59            (12)          60
                              -------     -------        -------     --------
Net interest income after
 provision                      3,027       3,157          3,249        3,161
Noninterest income                342         523            406          331
Noninterest expense             2,343       2,477          2,658        2,637
                              -------     -------        -------     --------
Income before income taxes      1,026       1,203            997          855
Provision for income taxes        388         431            355          298
                              -------     -------        -------     --------
Net income                    $   638     $   772        $   642     $    557
                              =======     =======        =======     ========

Basic earnings per share      $  0.17     $  0.22        $  0.18     $   0.17

Diluted earnings per share    $  0.16     $  0.20        $  0.18     $   0.16


Year ended March 31, 1999 (in thousands, except share data):

                              June 30   September 30   December 31   March 31
                              -------   ------------   -----------   --------
Total interest income         $ 4,786     $ 4,923        $ 5,540     $  5,332
Total interest expense          1,817       1,812          2,155        2,279
                              -------     -------        -------     --------
Net interest income             2,969       3,111          3,385        3,053
Provision for loan losses          86         111             82          205
                              -------     -------        -------     --------
Net interest income after
 provision                      2,883       3,000          3,303        2,848

Noninterest income                238         245            301          313
Noninterest expense             1,794       1,871          2,037        2,479
                              -------     -------        -------     --------
Income before income taxes      1,327       1,374          1,567          682
Provision for income taxes        551         544            616           86
                              -------     -------        -------     --------
Net income                    $   776     $   830        $   951     $    596
                              =======     =======        =======     ========
Basic earnings per share      $  0.18     $  0.20        $  0.24     $   0.16

Diluted earnings per share    $  0.18     $  0.20        $  0.23     $   0.15

                                                                          49
<PAGE>

Corporate Information

Corporate Headquarters:
  2055 First Street
  PO Box 846
  Baker City, OR 97814
  541.523.6327

Subsidiaries
  Pioneer Bank, a FSB

Transfer Agent and Registrar
  Registrar &Transfer Company
  10 Commerce Drive
  Cranford, NJ 07016

Independent Public Accountants and Auditors
  Deloitte &Touche LLP
  3900 US Bancorp Tower
  111 S.W. Fifth Avenue
  Portland, OR 97204

Special Counsel
  Breyer & Associates, PC
  1100 New York Avenue N.W.
  Suite 700 East
  Washington, DC 20005-3934

Annual Meeting of Stockholders
  10:00 a.m., Tuesday, August 8, 2000
  Quality Inn
  810 Campbell Street
  Baker City, OR 97814

Executive Officers
  Berniel Maughan, President and CEO
  Zane F. Lockwood, Executive Vice President

Investor Relations
  Berniel Maughan, President and CEO
  Zane F. Lockwood, Executive Vice President

Investor Information

A copy of the Form 10-k, including consolidated financial statements, as filed
with the Securities and Exchange Commission, will be furnished without charge
to stockholders as of the record date for voting at the annual meeting of
stockholders upon written request to the Secretary, Oregon Trail Financial
Corp., 2055 First Street, PO Box 846, Baker City, Oregon 97814.

Board of Directors

Stephen R. Whittemore
Chairman of the Board
Owner, BesTruss, Inc. and
Partner, Wallowa Lake Tramway, Inc.

John W. Gentry
President and General Manager,
Gentry Ford Sales, Inc.

John A. Lienkaemper
Consultant and U.S. Safety Coordinator,
The Loewen Group

Albert H. Durgan
Retired President, Pioneer Bank

Edward H. Elms
Owner, P&E Distributing

Charles H. Rouse
Sears Authorized Dealer and Property Developer

Stock Listing

Oregon Trail Financial Corp. common stock is traded over-the-counter on the
Nasdaq National Market under the symbol "OTFC." Stockholders of record at
March 31, 2000 totaled 972. This total does not reflect the number of persons
or entities who hold stock in nominee or "street" name through various
brokerage firms. The following table shows the reported high and low sale
prices of the Company's common stock and declared dividends for each quarter
since the initial offering on October 3, 1997.

                            Sale Price
                          ---------------   Dividends
                          High        Low    Declared
-----------------------------------------------------
Fiscal 2000
First quarter            13 3/8     12 3/8     $0.06
Second quarter           12 7/8     11        $0.075
Third quarter            12 1/8      9 7/8     $0.08
Fourth quarter           10 3/8      8 1/2     $0.08

Fiscal 1999
First quarter            18         15 3/4     $0.05
Second quarter           16         11         $0.05
Third quarter            14 1/8     11         $0.06
Fourth quarter           13 1/4     12 1/16    $0.06

Fiscal 1998
Initial offering price   --         10           --
Third quarter            17 3/8     15 1/2       --
Fourth quarter           18 1/2     16         $0.05


                                                  Do business
                                                     with a
                                                    friend.
<PAGE>



                                 www.pioneerbankfsb.com

     OREGON               ADMINISTRATIVE              BURNS BRANCH
        TRAIL             OFFICES                     524 W. Monroe Street
   FINANCIAL CORP.        2055 First Street           Burns, Oregon 97720
                          Baker City, Oregon 97814    541.573.2121
                          541.523.6327
                                                      ENTERPRISE BRANCH
                          BAKER CITY BRANCH           205 W. Main Street
                          1990 Washington Avenue      Enterprise, Oregon 97828
                          Baker City, Oregon 97814    541.426.4529
                          541.523.5884
                                                      ISLAND CITY
                          LA GRANDE                   BRANCH
                          BRANCH                      3106 Island Avenue
                          1215 Adams Avenue           La Grande, Oregon 97850
                          La Grande, Oregon 97850     541.963.2200
                          541.963.4126
                                                      VALE BRANCH
                          ONTARIO BRANCH              150 Longfellow Street N.
                          225 S.W. Fourth Avenue      Vale, Oregon 97918
                          Ontario, Oregon 97914       541.473.3831
                          541.889.3154
                                                      PENDLETON BRANCH
                          JOHN DAY BRANCH             1701 SW Court
                          150 W. Main Street          Pendleton, Oregon 97801
                          John Day, Oregon 97845      541.276.1000
                          541.575.0257

<PAGE>

                                 Exhibit 21

                        Subsidiaries of Registrant



                                      Percentage         Jurisdiction or
Subsidiary (1)                          Owned        State of Incorporation
--------------                          -----        ----------------------

Pioneer Bank, A Federal Savings Bank      100%           United States
Pioneer Development Corporation(2)        100%               Oregon
Pioneer Bank Investment Corporation(2)    100%               Oregon

------------------
(1)  The operations of the Company's subsidiary are included in the Company's
     consolidated financial statements.
(2)  Wholly-owned subsidiary of Pioneer Bank, A Federal Savings Bank.

<PAGE>

                                 Exhibit 23

                      Consent of Deloitte & Touche LLP

<PAGE>


                   [Letterhead of Deloitte & Touche LLP]



INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in Registration Statements Nos.
333-67541 and 333-37427 of Oregon Trail Financial Corp. on Form S-8, of our
report dated May 3, 2000, appearing in the Annual Report on Form 10-K of
Oregon Trail Financial Corp. for the year ended March 31, 2000.

/s/ Deloitte & Touche LLP

Portland, Oregon
June 28, 2000

<PAGE>