SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934
                    For the Fiscal Year Ended March 31, 2000
                                       OR
[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF
                                      1934

For the transaction period from ___________________ to ______________________



                         Commission File Number: 0-22951
                                                 -------

                            LANDMARK FINANCIAL CORP.
       -------------------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)

               Deleware                                       16-1531343
-----------------------------------------            ---------------------------
    (State or Other Jurisdiction of                        (I.R.S. Employer
     Incorporation or Organization)                        Identification No.)

211 Erie Boulevard, Canajoharie, New York                      13317
-----------------------------------------                    ---------
 (Address of Principal Executive Office)                     (Zip Code)

                                 (518) 673-2012
               --------------------------------------------------
               (Registrant's Telephone Number including area code)

           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 $.10 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  twelve  months (or for such shorter  period that the
Registrant  was required to file such  reports) and (2) has been subject to such
requirement for the past 90
days. YES      x/          NO
           ----------          ---------

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

         As of March 31, 2000, the issuer's revenues\losses were $33,710.

         As of June 8, 2000, there were issued and outstanding 154,508 shares of
the  Registrant's  Common Stock. The aggregate value of the voting stock held by
non-affiliates  of the Registrant,  computed by reference to the average bid and
asked prices of the Common Stock as of June 8, 2000 ($20.88) was $2,513,012.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Sections of Annual Report to  Stockholders  for the fiscal year ended March
     31, 2000 (Parts II and IV).



<PAGE>



                                     PART I
                                     ------

ITEM 1.           Business
--------------------------

Landmark Financial Corp.

     Landmark Financial Corp. (the "Company") was organized in June 1997 for the
purpose of serving as the  holding  company  for  Landmark  Community  Bank (the
"Bank").  The Company has not engaged in any material  operations  to date.  The
Company has no significant  assets other than the  outstanding  capital stock of
the Bank, net proceeds from its mutual-to-stock conversion and a note evidencing
its loan to the Bank's  Employee Stock  Ownership  Plan ("ESOP").  The Company's
principal  business is  overseeing  and  directing  the business of the Bank and
investing the net conversion proceeds retained by it.

     At March 31,  2000,  the Company had  consolidated  assets of  $25,436,355,
deposits of $21,922,502 and stockholders' equity of $1,944,752.

     The  executive  office of the  Company is  located  at 211 Erie  Boulevard,
Canajoharie,  New York  13317  Its  telephone  number at that  address  is (518)
673-2012.

Landmark Community Bank

     The Bank is a federally  chartered  stock  savings  bank  headquartered  in
Canajoharie,  New York. The Bank was chartered in 1925 as a New York savings and
loan  association   under  the  name  Canajoharie   Building  Savings  and  Loan
Association.  In 1997,  the Bank  converted  to a federal  mutual  savings  bank
charter and  changed  its name to Landmark  Community  Bank.  Its  deposits  are
insured up to the maximum  allowable  amount by the FDIC.  Through its office it
serves communities located in Montgomery County, New York.

     The Bank has been,  and  intends to  continue  to be, a  community-oriented
financial  institution offering selected financial services to meet the needs of
the  communities it serves.  The Bank attracts  deposits from the general public
and through brokers and historically has used such deposits, together with other
funds,  to originate  one- to four-family  residential  mortgage  loans,  and in
recent periods to originate  commercial real estate loans,  commercial  business
loans and  consumer  loans  consisting  primarily of personal  loans  secured by
automobiles. At March 31, 2000, the B total loan portfolio was $21.9 million, of
which $11.6  million,  or 53.2% were one- to  four-family  residential  mortgage
loans,  $2.2 million,  or 10.1% were commercial real estate loans, $6.0 million,
or 27.6% were consumer loans, and $1.7 million, or 7.7% were commercial business
loans.

     During the year ended March 31, 2000, the Bank  originated  $6.4 million of
fixed-rate and $2.6 million of adjustable rate loans, all of which were retained
in the Bank's portfolio.

     The Bank's executive office is located at 211 Erie Boulevard,  Canajoharie,
New York 13317-1117. Its telephone number at that address is (518) 673-2012.

Market Area and Competition

     The Bank conducts its  operations  through its office in  Canajoharie,  New
York which is located in Montgomery County.  Montgomery  County's population has
remained  relatively  stable  over the last 10 years.  Th local  economy  is not
expected to produce a large number of one- to four-family  residential  mortgage
lending  opportunities.  Unemployment  in  Montgomery  County is higher than the
average  nationally  and in New York State.  At April 30, 2000 the  unemployment
rate in Montgomery County was 6.4%.

     The Bank faces  competition in attracting  deposits and originating  loans.
Such competition  consists of two commercial banks, one savings  association and
one credit union.





<PAGE>



Lending Activities

     General.  The Bank has emphasized and, subject to market  conditions,  will
continue  to  emphasize  the  origination  of  one- to  four-family  residential
mortgage  loans.  However,  to a lesser extent,  the Bank intends to continue to
focus  additional   resources  and  lending  efforts  in  consumer  lending  and
commercial  business lending. At March 31, 2000, the Bank's portfolio of one- to
four-family  residential mortgage loans totaled $11.6 million, or 53.2% of total
loans.  At March 31, 2000, the  commercial  real estate  portfolio  totaled $2.2
million,  or 10.1% of total  loans,  all of which  were  secured  by  properties
located in the Bank's market area. The Bank's  consumer loans consist  primarily
of  personal  loans  (primarily  secured  by  automobiles),  passbook  loans and
property  improvement  loans.  At March 31, 2000  consumer  loans  totaled  $6.0
million,  or  27.6%  of  total  loans.  The  Bank  has  recently  commenced  the
origination  of commercial  business  loans which at March 31, 2000 totaled $1.7
million, or 7.7% of total loans.

     Under  Office  of  Thrift  Supervision   ("OTS")   regulations,   a  thrift
institution's  loans-to-one  borrower li generally limited to the greater of 15%
of unimpaired  capital and surplus or $500,000.  At March 31, 2000,  the maximum
amount  which the Bank could have lent under this limit to any one  borrower and
the borrower's related entities was approximately  $500,000.  At March 31, 2000,
the Bank had no loans or groups of loans to related  borrowers with  outstanding
balances in excess of this amount.  The Bank's largest  lending  relationship at
March 31, 2000 was approximately $300,000,  which was secured by commercial real
estate, and commercial vehicles.  At March 31, 2000, this loan was performing in
accordance with its terms.

     Loan  Portfolio  Composition.  The  following  information  concerning  the
composition  of the Bank's loan  portfolio in dollar  amounts and in percentages
(before  deductions  for loans in process,  deferred fees and dan allowances for
losses) as of the dates indicated.

<TABLE>
<CAPTION>
                                                                                    March 31,
                                                                  --------------------------------------------
                                                                          2000                    1999
                                                                  --------------------    --------------------
                                                                    Amount     Percent      Amount     Percent
                                                                  ---------  ---------    ---------  ---------
                                                                             (Dollars in Thousands)
Real Estate Loans:
-----------------
<S>                                                               <C>           <C>       <C>           <C>
   One- to four-family........................................    $11,638       53.2%     $10,613       54.76%
   Commercial.................................................      2,215       10.1        1,256        6.48
                                                                  -------    -------      -------    --------
     Total real estate loans..................................     13,853       63.3       11,869       61.24
                                                                  -------    -------      -------    --------

Other Loans:
-----------
   Consumer Loans:
   Property improvement.......................................        155        0.7          113         .58
   Passbook loans.............................................        142        0.7           74         .38
   Personal loans (1).........................................      6,035       27.6        6,243       32.21
                                                                  -------    -------      -------    --------
     Total consumer loans.....................................      6,332       29.0        6,430       33.17
   Commercial business loans..................................      1,686        7.7        1,080        5.59
                                                                  -------    -------      -------    --------

   Total loans................................................    $21,871      100.00%    $19,380      100.00%
                                                                  =======    ========     -------    ========

Less:
----
   Loans in process...........................................    $    --                 $    --
   Allowance for losses.......................................        227                    (191)
                                                                  -------                 --------
   Total loans receivable, net................................    $21,644                 $19,189
                                                                  =======                 =======
</TABLE>
----------
(1)  Personal loans are primarily comprised of loans secured by automobiles.




                                        2

<PAGE>



     The following  table shows the  composition of the Bank's loan portfolio by
fixed- and adjustable-rate at the dates indicated.

<TABLE>
<CAPTION>
                                                                                    March 31,
                                                                  --------------------------------------------
                                                                          2000                    1999
                                                                  --------------------    --------------------
                                                                    Amount     Percent      Amount     Percent
                                                                  ---------  ---------    ---------  ---------
                                                                             (Dollars in Thousands)
Fixed-Rate Loans:
----------------
 Real estate:
<S>                                                               <C>           <C>       <C>           <C>
  One- to four-family.........................................    $ 7,269       33.24%    $ 7,336       37.85%
  Commercial..................................................        952        4.35         691        3.57
                                                                  -------    --------     -------    --------
    Total real estate loans...................................      8,221       37.59       8,027       41.42
  Consumer....................................................      6,273       28.68       6,431       33.18
  Commercial..................................................      1,077        4.92         844        4.36
                                                                  -------    --------     -------    --------
    Total fixed-rate loans....................................     15,571       71.19      15,302       78.96

Adjustable-Rate Loans:
---------------------
 Real estate:
  One- to four-family.........................................      4,369       19.98       3,277       16.91
  Commercial..................................................      1,287        5.88         565        2.92
                                                                  -------    --------     -------    --------
    Total real estate loans...................................      5,656       25.86       3,842       19.83
  Commercial..................................................        585        2.67         236        1.22
  Consumer....................................................         59         .27
    Total adjustable-rate loans...............................      6,300       28.81       4,078       21.04
                                                                  -------    --------     -------    --------
    Total loans...............................................    $21,871      100.00%    $19,380      100.00%
                                                                  -------    ========     -------    ========

Less:
----
  Loans in process............................................    $    --                 $    --
  Allowance for loan losses...................................        227                    (191)
                                                                                          --------
  Total loans receivable, net.................................    $21,644                 $19,189
                                                                  -------                 =======
</TABLE>

     One- to Four-Family  Mortgage Loans. The Bank's primary lending activity is
the  origination  for its  portfolio  of one-  to  four-family,  owner-occupied,
residential  mortgage  loans  secured by property  located in the Bank's  market
area.  Loans are generated  through the Bank's marketing  efforts,  its existing
customers and referrals, real estate brokers, builders and local businesses. The
Bank  generally has limited its real estate loan  originations  tth financing of
properties  located within its market area. The average principle balance of the
loans in the Bank's one- to four-family  residential mortgage loan portfolio was
approximately  $35,500 at March 31, 2000. At March 31, 2000,  the Bank had $11.6
million,  or 53.2% of its total  loan  portfolio,  invested  in  mortgage  loans
secured by one- to four- family residences.

     The Bank originates  fixed-rate  residential one- to four-family loans with
terms of up to 20 years.  As of March 31, 2000,  $7.3  million,  or 33.2% of the
Bank's loan portfolio,  consisted of fixed-rate residential one- to four- family
loans. The Bank's fixed-rate  mortgage loans amortize monthly with principal and
interest due each m Residential  real estate loans often remain  outstanding for
significantly shorter periods than their contractual terms because borrowers may
refinance or prepay loans at their option. The Bank also originates a fixed-rate
residential balloon loan with either a five or ten year term and which amortizes
over 30 years.

     The Bank also offers ARM loans with maturities  ranging up to 30 years. The
Bank  currently  offers ARM loans that adjust  every year,  with  interest  rate
adjustment  limitations  up to  two  percentage  points  per  year  and  ut  six
percentage  points  over  the  life  of the  loan.  In a  rising  interest  rate
environment,  such rate  limitations  may  prevent ARM loans from  repricing  to
market  interest  rates,  which  would  have an adverse  effect on net  interest
income.  The Bank has used different interest indices for ARM loans in the past,
and  currently  uses the one year U.S.  Treasury  Index  adjusted  to a constant
maturity, with a margin of 350 basis points for agency-conforming ARM loans. ARM
loans  secured by  residential  one- to  four-family  real estate  totaled  $4.4
million,  or 20.0% of the Bank's total loan  portfolio  at March 31,  2000.  The
origination  of  fixed-rate  mortgage  loans versus ARM loans is monitored on an
ongoing  basis and is  affected  significantly  by the level of market  interest
rates,  customer  preference,  the Bank's  interest  rate gap  position and loan
products  offered by the Bank's  competitors.  Particularly  in a relatively low
interest  rate  environment,  borrowers  prefer  fixed-rate  loans to ARM loans.
During fiscal 2000, the Bank originated  $1.0 million in fixed-rate  residential
mortgage loans and $900,000 in ARM loans.



                                        3

<PAGE>



     The  primary  purpose  of  offering  ARM loans is to make the  Bank's  loan
portfolio more interest rate sensitive.  However,  as the interest income earned
on ARM loans varies with prevailing  interest rates, such loans do not offer the
Bank  predictable  cash flows as would  long-term,  fixed-rate  loans. ARM loans
carry increased credit risk associated with potentially  higher monthly payments
by  borrowers  as  general  market  interest  rates  increase.  It is  possible,
therefore,   during  periods  of  rising  interest  rates,   that  the  risk  of
delinquencies  and  defaults  on ARM  loans  may  increase  due  to  the  upward
adjustment  of interest  costs to the  borrower,  resulting  in  increased  loan
losses.

     The Bank's residential first mortgage loans customarily include due-on-sale
clauses,  which  are  provisions  giving  the Bank the  right to  declare a loan
immediately due and payable in the event, among other things,  that the borrower
sells or otherwise  disposes of the underlying real property serving as security
for the loan.  Due-on-sale  clauses are a means of imposing  assumption fees and
increasing the interest rate on the Bank's mortgage  portfolio during periods of
rising interest rates.

     Regulations  limit the amount that a savings  association may lend relative
to the appraised value of the real estate securing the loan, as determined by an
appraisal at the time of loan  origination.  Such  regulations  permit a maximum
loan-to-value  ("LTV") ratio of 95% for residential property (and 100% for loans
guaranteed  by the  Veterans  Administration)  and 90% for all other real estate
loans.  The Bank's lending  policies,  however,  generally limit the maximum LTV
ratio to 80% of the lesser of the appraised  value or the purchase  price of the
property  securing the loan in the case of loans secured by one- to  four-family
owner-occupied  properties.  On conventional one- to four-family loans, the Bank
will lend up to a 95% LTV ratio; however, loans with LTV ratios in excess of 80%
may require  private  mortgage  insurance and loans with LTV ratios in excess of
90%, with rare  exceptions,  require  private  mortgage  insurance or additional
readily marketable collateral.

     When underwriting residential real estate loans, the Bank reviews each loan
applicant's  employment,  income and  credit  history.  The Bank's  policy is to
obtain credit reports and financial  statements on all borrowers and guarantors.
Properties  securing  real estate loans are  appraised by the Bank's  directors.
Appraisals  are  subsequently  reviewed by the Bank's chief  executive  officer.
Management  believes that stability of income,  past credit history and adequacy
of the  proposed  security  are  integral  parts  in the  underwriting  process.
Generally, the applicant's total monthly mortgage payment,  including all escrow
amounts, is limited to 28% of the applicant's total monthly income. In addition,
total monthly obligations of the applicant,  including mortgage payments, should
not generally exceed 36% of total monthly income.  Written appraisals are always
required on real estate property offered to secure an applicant's loan. The Bank
requires  fire and casualty  insurance on all  properties  securing  real estate
loans, as well as title insurance or a certified abstract and written attorney's
title opinion.

     Commercial  Real  Estate  Lending.  The Bank  originates  loans  secured by
commercial real estate. At March 31, 2000, $2.2 million, or 10.1%, of the Bank's
loan portfolio  consisted of 38 commercial real estate loans. At March 31, 2000,
the Bank's  commercial real estate loans were all performing  according to their
terms.

     Commercial real estate loans originated by the Bank may be either fixed- or
adjustable-rate loans with terms to maturity and amortization schedules of up to
20 years.  Commercial  real estate  loans are written in amounts of up to 75% of
the lesser of the appraised value of the property or the sales price.

     Appraisals  on  properties  which secure  commercial  real estate loans are
performed by an independent  appraiser designated by the Bank before the loan is
made. All appraisals on commercial  real estate loans are reviewed by the Bank's
chief  executive  officer.  In  underwriting  such  loans,  the  Bank  primarily
considers  the cash  flows  generated  by the real  estate to  support  the debt
service, the financial resources and income level of the borrower and the Bank's
experience with the borrower.  In addition,  the Bank's underwriting  procedures
require  verification  of the  borrower's  credit  history,  an  analysis of the
borrower's income,  financial statements and banking relationships,  a review of
the borrower's  property management  experience and references,  and a review of
the property,  including cash flow projections and historical operating results.
The Bank seeks to ensure  that the  property  securing  the loans will  generate
sufficient  cash flow to adequately  cover  operating  expenses and debt service
payments.



                                        4

<PAGE>



     Commercial  real estate lending  affords the Bank an opportunity to receive
interest at rates higher than those generally available from one- to four-family
residential  lending.  Nevertheless,   loans  secured  by  such  properties  are
generally  larger,  more  difficult  to  evaluate  and monitor  and,  therefore,
generally  involve a greater  degree  of rtha  one- to  four-family  residential
mortgage loans.  Because payments on loans secured by commercial real estate are
often  dependent on the  successful  operation or management of the  properties,
repayment of such loans may be subject to adverse  conditions in the real estate
market or the  economy.  If the cash  flow  from the  project  is  reduced,  the
borrower's  ability to repay the loan might be impaired.  The Bank has attempted
to  minimize  these  risks by  lending  primarily  to the  ultimate  user of the
property or on existing income-producing properties.

     Consumer  and Other  Lending.  The Bank  originates  a limited  variety  of
consumer  loans,  primarily  property  improvement  loans,  passbook  loans  and
personal loans which are secured by automobiles.  The Bank currently  originates
substantially all of its consumer loans in its primary market area.

     The primary  component of the Bank's  consumer loan  portfolio  consists of
personal  loans  secured by  automobiles.  The Bank  generally  will not make an
automobile loan with a loan-to-value ratio in excess of 80% of the invoice price
or the automobile's National Automobile Dealers Association "yellow book" value.
The Bank's  personal loans are generally fixed rate loans and have terms that do
not exceed 66 months.

     Finally,  the Bank has  originated  a small  number of loans  for  property
improvement.  Such loans are  generally  secured by a second  mortgage  or UCC-1
filing on  improvements,  and are  originated as fixed-rate  loans with terms of
less than 66 months.

     Consumer  loan terms vary  according  to the type and value of  collateral,
length of  contract  and  creditworthiness  of the  borrower.  The  underwriting
standards  employed  by the  Bank  for  originated  consumer  loans  include  an
application,  a determination of the applicant's  payment history on other debts
and an assessment of ability to meet  existing  obligations  and payments on the
proposed  loan.  Although   creditworthiness  of  the  applicant  is  a  primary
consideration,  the underwriting process also includes a comparison of the value
of the security, if any, in relation to the proposed loan amount.

     Consumer  loans entail  greater  credit risk than do  residential  mortgage
loans,  particularly  in the case of consumer  loans which are  unsecured or are
secured  by  rapidly  depreciable  assets,  such as  automobiles.  Further,  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.   In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability,  and
thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
bankruptcy and  insolvency  laws, may limit the amount which can be recovered on
such  loans.   At  March  31,  2000,  two  consumer  loans  were  classified  as
non-performing. Aggregate balances of non-performing consumer loans were $7,700.

     Commercial Business Lending. The Bank originates  commercial business loans
to borrowers  located in its market area which are secured by  collateral  other
than real  estate.  Such  commercial  business  loans are  generally  secured by
equipment,  inventory  and accounts  receivable.  At March 31, 2000,  the Bank's
commercial business loan portfolio totaled $1.7 million, or 7.7% of total loans.
At that date, all of the Bank's  commercial  business  loans were  performing in
accordance with their terms.

     The underwriting  standards used by the Bank for commercial  business loans
include a determination of the borrower's  ability to meet existing  obligations
and  payments on the  proposed  loan from normal  cash flow  generated  from the
borrower's business. The financial strength of each borrower is assessed through
a review of tax returns and credit reports.

     Commercial business loans generally bear higher interest rates than one- to
four-family  residential  lbu they also  involve a higher risk of default  since
their  repayment  is  dependent on the  successful  operation of the  borrower's
business.


                                        5

<PAGE>



Loan Maturity Schedule

     The following table illustrates the interest rate sensitivity of the Bank's
loan  portfolio  at  March  31,  2000.   Mortgages   which  have  adjustable  or
renegotiable interest rates are shown as maturing in the period during which the
contract is due. The schedule  does not rth effects of possible  prepayments  or
enforcement of due-on-sale clauses.

<TABLE>
<CAPTION>
                                                  Commercial                                  Commercial
                        One- to Four-Family       Real Estate            Consumer              Business                Total
                        -------------------   -------------------  --------------------  --------------------  --------------------
                                   Weighted              Weighted              Weighted              Weighted              Weighted
                                    Average               Average               Average               Average               Average
                         Amount      Rate      Amount      Rate      Amount      Rate      Amount      Rate      Amount      Rate
                        --------   --------   --------   --------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                   (Dollars in Thousands)
Due During Years
Ending March 31,

<S>                     <C>           <C>     <C>           <C>    <C>            <C>    <C>           <C>     <C>           <C>
2001................... $   --          --%   $   --          --%  $   471        8.95%  $   228        9.59%  $   699       9.15%
2002 ..................    174        8.53        --          --       693        9.99        27        7.93       894       9.65
2003 to 2005...........    526        8.52        --          --     4,956        9.16       767        8.40     6,249       9.01
2005 to 2009...........  2,324        8.37       492        8.71       149        8.89       470        8.55     3,435       8.54
2010 to 2024...........  7,354        8.32     1,646        9.15        62        8.20        --          --     9,062       8.47
2025 and following.....  1,260        8.04        77        7.5         --          --       194        8.75     1,532       8.14
                        ------                ------               -------               -------               -------
     Total Amount Due   $11,638               $2,215               $ 6,332               $ 1,686               $21,871
                        =======               ======               =======               =======               =======
</TABLE>

(1) Includes demand loans, loans having no stated maturity and overdraft loans.


     The total amount of loans due after March 31, 2001 which have predetermined
interest rates is $16.3 million,  while the total amount of loans due after such
date which has floating or adjustable interest rates is $4.9 million.








                                        6

<PAGE>



Loan Originations

     Loan  originations  are developed from continuing  business with depositors
and borrowers,  soliciting realtors, builders, walk-in customers and third-party
sources.  The Board of Directors of the Bank has authorized  certain officers to
originate  loans  within  specified  underwriting  limits.  Specifically,   Bank
officers may originate loans secured by single-family, owner occupied residences
up to  $150,000.  All loans over  $75,000 or with a loan to value ratio over 80%
require  action by the Bank's Loan  Committee.  In  addition,  the full Board of
Directors  meets on a monthly  basis to review all loans made by officers of the
Bank.

     While the Bank originates both  adjustable-rate  and fixed-rate  loans, its
ability to originate  loans to a certain  extent is dependent  upon the relative
customer demand for loans in its market,  which is affected by the interest rate
environment,  among other  factors.  For fiscal 2000, the Bank  originated  $6.4
million in fixed-rate loans and $2.6 in adjustable-rate loans.

     The following table shows the loan origination and repayment  activities of
the Bank for the periods indicated.  The Bank did not purchase or sell any loans
during the periods indicated.

                                                        Years Ended March 31,
                                                          2000         1999
                                                       ---------    ---------
                                                           (In Thousands)
Originations by Type:
--------------------
   Adjustable rate real estate:
     - one- to four-family...........................  $   985      $   219
     - multi-family..................................       --           --
     - commercial....................................    1,242          175
Non-real estate-consumer.............................      205           30
   Commercial business...............................      127          455
                                                       -------      -------
       Total adjustable-rate.........................    2,559          879
                                                       -------      -------
   Fixed-rate real estate:
     - one- to four-family...........................    1,527        3,450
     - multi-family..................................       --           --
     - commercial....................................       --          236
   Non-real estate-- consumer........................    3,963        6,379
   Commercial business...............................      908           --
                                                       -------      -------
       Total fixed-rate..............................    6,398       10,065
                                                       -------      -------
       Total loans originated........................    8,957       10,944
                                                       -------      -------

Principal repayments.................................    6,466        5,326
                                                       -------      -------
       Total reductions..............................    6,466        5,326
                                                       -------      -------
Net increase (decrease)..............................  $ 2,491      $ 5,618
                                                       =======      =======

Asset Quality

     The Bank's  collection  procedures  provide that when a real estate loan is
past due 15 days, a delinquent  notice is sent  requesting  payment.  Prior to a
loan  becoming 30 days past due,  personal  contact is  attempted  by the Bank's
collection  officer. If the loan document provides for a right to cure, then the
required  notice is  mailed by  certified  mail and  regular  mail when the loan
becomes 30 days past due.  Personal  contact is continued on all delinquent real
estate loans until the loan is completely current.

     With  respect to consumer  loans,  a delinquent  notice is sent  requesting
payment 15 days after the due date. If payment is not made by the 30th day after
it is due, the Bank sends a certified  letter  requesting that the borrower cure
the  delinquency.  If consumer loans are not resolved by 90 days, the account is
put on  non-accrual  status and  repossession  and/or  legal  action is normally
initiated.  Real estate loans and consumer loans of 30 or more days past due are
reported  monthly to the Board of Directors.  For both  consumer  loans and real
estate  loans,  the Bank  officer  has  authority  to begin  foreclosure  and/or
repossession  procedures at any time it is necessary or advisable.  At March 31,
2000, the total loans delinquent 90 days or more was $99,000 and the total loans
delinquent 60 to 89 days was $59,000.



                                        7

<PAGE>



     Delinquent Loans and Non-performing Assets. Loans are reviewed on a regular
basis and are placed on non- accrual  status when, in the opinion of management,
the  collection  of  additional  interest is doubtful.  Loans are also placed on
non-accrual  status when principal is 90 days or more past due. Interest accrued
and unpaid at the time a loan is placed on non-accrual status is charged against
interest  income.  The loan will remain on non-accrual  status until the loan is
brought current.

     Real estate acquired through  foreclosure or by deed-in-lieu of foreclosure
is  classified  as real estate  owned  until such time as it is sold.  When real
estate  owned is acquired,  it is recorded at the lower of the unpaid  principal
balance of the related loan, or its fair value, less estimated selling expenses.
Any further  write-down  of real estate owned is charged  against  earnings.  At
March 31, 2000, the Bank had no properties classified as real estate owned.

     The following  table sets forth the Bank's loan  delinquencies  by type, by
amount and by percentage of type at March 31, 2000.

<TABLE>
<CAPTION>
                                                 Loans Delinquent For:
                           ---------------------------------------------------------------
                                     60-89 Days                    90 Days and Over              Total Delinquent Loans
                           -------------------------------  ------------------------------   ------------------------------
                                                  Percent                          Percent                          Percent
                                                  of Loan                          of Loan                          of Loan
                            Number     Amount    Category    Number     Amount    Category    Number     Amount    Category
                           ---------  ---------  ---------  ---------  ---------  --------   --------   --------   --------

Real Estate:
<S>                          <C>        <C>       <C>          <C>       <C>        <C>         <C>      <C>          <C>
  One- to four-family....    1          22        0.19         4         91         0.78        5        113          0.97
  Commercial.............    1          23        1.04        --         --           --        1         23          1.04
Consumer.................    4          14        0.22         2          8         0.13        6         22          0.35
   Total.................    6          59        0.27         6         99         0.45       12        158          0.72
</TABLE>

     The table  below sets forth the amounts and  categories  of  non-performing
assets in the Bank's loan portfolio. Loans are placed on non-accrual status when
the  collection of principal  and/or  interest  become  doubtful.  For all years
presented,  the Bank has had no  troubled  debt  restructurings  (which  involve
forgiving a portion of interest or  principal  on any loans or making loans at a
rate  materially  less than that of market  rates).  Foreclosed  assets  include
assets acquired in settlement of loans. At March 31, 2000 and 1999, the Bank did
not have any accruing loans that were delinquent more than 90 days. The Bank did
have foreclosed assets in the aggregate amount of $3,000.

                                                               March 31,
                                                      --------------------------
                                                        2000             1999
                                                      --------         ---------
                                                        (Dollars In Thousands)

Non-accruing loans:
   One- to four-family............................    $   91           $    88
   Commercial real estate.........................        --                --
   Consumer.......................................         8                18
   Commercial business............................        --                --
                                                      ------           -------
     Total........................................        99               106
                                                      ------           -------
Foreclosed Assets.................................         3               119
                                                      ------           -------
Total non-performing assets.......................    $  102           $   225
                                                      ------           =======
Total as a percentage of total assets.............      0.40%             1.00%
                                                      ======           =======

     For the year ended March 31, 2000,  gross interest  income which would have
been recorded had the non- accruing loans been current in accordance  with their
original terms amounted to $5,000.  No amounts were included in interest  income
on such loans for the year ended March 31, 2000.

     Classified Assets.  Federal  regulations  provide for the classification of
loans and other assets,  such as debt and equity  securities,  considered by the
OTS to be of lesser quality, as "substandard," "doubtful" or "loss." An asset is
considered  "substandard"  if it is  inadequately  protected  by the current net
worth and paying  capacity of the  obligor or the  collateral  pledged,  if any.
"Substandard"  assets include those characterized by the "distinct  possibility"
that


                                        8

<PAGE>



the insured  institution  will sustain "some loss" if the  deficiencies  are not
corrected.  Assets classified as "doubtful" have all of the weaknesses  inherent
in  those  classified  "substandard"  with  the  added  characteristic  that the
weaknesses  present make  "collection  or  liquidation  in full" on the basis of
currently  existing  facts,  conditions  and values,  "highly  questionable  and
improbable."  Assets  classified as "loss" are those considered  "uncollectible"
and  of  such  little  value  that  their  continuance  as  assets  without  the
establishment of a specific loss reserve is not warranted.

     When an insured institution classifies problem assets as either substandard
or doubtful,  it may establish general allowances for losses in an amount deemed
prudent by management.  General allowances  represent loss allowances which have
been  established  to  recognize  the  inherent  risk  associated  with  lending
activities,  but which, unlike specific  allowances,  have not been allocated to
particular problem assets. When an insured institution classifies problem assets
as "loss," it is required  either to establish a specific  allowance  for losses
equal to 100% of that portion of the asset so classified  or to charge-off  such
amount.  An institution's  determination as to the  classification of its assets
and  the  amount  of its  valuation  allowances  is  subject  to  review  by the
regulatory authorities, who may order the establishment of additional general or
specific loss allowances.

     In connection  with the filing of its periodic  reports with the OTS and in
accordance with its  classification of assets policy,  the Bank reviews loans in
its portfolio quarterly to determine whether such assets require  classification
in accordance with applicable regulations.

     On the basis of management's  review of its assets,  at March 31, 2000, the
Bank had  classified  a total of  $149,000  of its  loans  and  other  assets as
follows:

                                                         March 31, 2000
                                                       -----------------
                                                         (In Thousands)

           Special Mention...........................      $    51
           Substandard...............................           --
           Doubtful assets...........................           98
           Loss assets...............................           --
             Total...................................          149
           General loss allowance....................          227
           Specific loss allowance...................           --
           Charge-offs...............................           13

     Other Loans of Concern. In addition to the non-performing  assets set forth
in the tables above, as of March 31, 2000, there were no loans classified by the
Bank with respect to which known  information about the possible credit problems
of the  borrowers  or the cash  flows of the  security  properties  have  caused
management to have some doubts as to the ability of the borrowers to comply with
present  loan  repayment  terms and which may result in the future  inclusion of
such items in the non-performing asset categories.

     Allowance for Loan Losses.  The  allowance  for loan losses is  established
through a provision for loan losses based on management's evaluation of the risk
inherent in its loan  portfolio and changes in the nature and volume of its loan
activity,  including  those  loans  which are being  specifically  monitored  by
management.  Such  evaluation,  which  includes a review of loans for which full
collectibility may not be reasonably assured, considers among other matters, the
loan classifications discussed above, the estimated fair value of the underlying
collateral, economic conditions,  historical loan loss experience, the amount of
loans outstanding and other factors that warrant recognition in providing for an
adequate loan loss allowance.

     Real estate  properties  acquired  through  foreclosure are recorded at the
lower of cost or fair value minus  estimated  cost to sell. If fair value at the
date of  foreclosure  is  lower  than  the  balance  of the  related  loan,  the
difference  will be  charged-off to the allowance for loan losses at the time of
transfer.  Valuations  are  periodically  updated by management and if the value
declines,  a specific  provision for losses on such property is established by a
charge to operations.  At March 31, 2000,  the Bank had no properties  that were
acquired through foreclosure.



                                        9

<PAGE>



     Although management believes that it uses the best information available to
determine  the  allowance,   unforeseen   market   conditions  could  result  in
adjustments and net earnings could be  significantly  affected if  circumstances
differ   substantially   from  the   assumptions   used  in  making   the  final
determination.  Future additions to the Bank's allowance for loan losses will be
the result of periodic loan,  property and collateral reviews and thus cannot be
predicted in advance. In addition,  federal regulatory agencies,  as an integral
part of the examination  process,  periodically  review the Bank's allowance for
loan losses.  Such agencies may require the Bank to increase the allowance based
upon their  judgment of the  information  available to them at the time of their
examination.  At March 31, 2000, the Bank had a total  allowance for loan losses
of $227,000, representing 222.6% of total non-performing assets and 1.05% of the
Bank's loans receivable, net.

     The  distribution of the Bank's  allowance for losses on loans at the dates
indicated is summarized as follows:

<TABLE>
<CAPTION>
                                                                             March 31,
                                                 ---------------------------------------------------------------
                                                              2000                             1999
                                                 -------------------------------  ------------------------------
                                                                        Percent                          Percent
                                                                       of Loans                         of Loans
                                                              Loan      in Each                Loan      in Each
                                                 Amount of  Amounts    Category   Amount of  Amounts    Category
                                                 Loan Loss  by         to Total   Loan Loss  by         to Total
                                                 Allowance  Category     Loans    Allowance  Category     Loans
                                                 --------------------  ---------  -------------------   --------
                                                                      (Dollars in Thousands)

<S>                                              <C>        <C>          <C>      <C>        <C>         <C>
One- to four-family............................. $  120     $11,638      53.2%    $  105     $10,613     54.77%
Commercial real estate..........................     23      2,215       10.1         --      1,256       6.48
Consumer........................................     66      6,332       29.0         67      6,431      33.18
Commercial business.............................     18      1,686        7.7         --      1,080       5.57
Unallocated.....................................     --         --         --         19         --         --
                                                 ------     ------     ------     ------     ------     ------
  Total......................................... $  227     $21,871       100%    $  191     $19,380    100.00%
                                                 ======     =======    ======     ======     =======    ======
</TABLE>

     The following table sets forth an analysis of the Bank's allowance for loan
losses.

                                                       Years Ended March 31,
                                                    --------------------------
                                                       2000            1999
                                                    -----------    -----------
                                                      (Dollars In Thousands)

Balance at beginning of period..................    $  191         $   122

Charge-offs:
   One- to four-family..........................        (2)            (25)
   Commercial real estate.......................        --              --
   Consumer.....................................       (11)            (27)
   Commercial business..........................        --              --
                                                    ------         -------
      Total charge-offs.........................       (13)            (52)
                                                    -------        -------

Recoveries:
   One- to four-family..........................        --              --
   Commercial real estate.......................        --              --
   Consumer.....................................         1              --
   Commercial business..........................        --              --
                                                    ------         -------
      Total recoveries..........................         1              --
                                                    ------         -------

Net charge-offs.................................       (12)            (52)
Provision for loan losses.......................        48             121
                                                    ------         -------
Balance at end of period........................    $  227         $   191
                                                    ======         =======

Ratio of net charge-offs during the period to
average loans outstanding during the period....       0.03%           0.31%
                                                      ====         =======

Ratio of net charge-offs during the period to
average non-performing assets..................       7.34%          28.49%
                                                    ======         =======


                                       10

<PAGE>



Investment Activities

     General.  The Bank must maintain minimum levels of investments that qualify
as liquid  assets  under OTS  regulations.  Liquidity  may  increase or decrease
depending upon the  availability of funds and comparative  yields on investments
in  relation  to the  return  on  loans.  Historically,  the Bank has  generally
maintained liquid assets at levels above the minimum requirements imposed by the
OTS  regulations  and at levels  believed  adequate to meet the  requirements of
normal operations,  including  repayments of maturing debt and potential deposit
outflows.  Cash flow  projections  are regularly  reviewed and updated to assure
that adequate  liquidity is maintained.  At March 31, 2000, the Bank's liquidity
ratio (liquid assets as a percentage of net  withdrawable  savings  deposits and
current borrowings) was 14.99%.

     Federally  chartered  savings  institutions have the authority to invest in
various types of liquid assets, including U.S. Treasury obligations,  securities
of various  federal  agencies,  certain  certificates  of deposit of insured ban
savings institutions,  certain bankers'  acceptances,  repurchase agreements and
federal funds.  Subject to various  restrictions,  federally  chartered  savings
institutions may also invest their assets in commercial  paper,  igrad corporate
debt securities and mutual funds whose assets conform to the investments  that a
federally  chartered  savings  institution  is  otherwise   authorized  to  make
directly.

     Generally,  the investment  policy of the Bank, as established by the Board
of Directors,  is to invest funds among various  categories of  investments  and
maturities  based upon the Bank's liquidity  needs,  asset/liability  management
policies, investment quality, marketability and performance objectives.

     Mortgage-backed Securities. The Bank historically purchased mortgage-backed
securities primarily to supplement its lending activities,  to generate positive
interest rate spreads on principal balances with minimal administrative expense,
to lower the credit risk of the Bank as a result of the  guarantees  provided by
Government  National  Mortgage  Administration  ("GNMA")  and  Federal  National
Mortgage  Association  ("FNMA") and to generally assist in managing the interest
rate  risk of the  Bank.  The Bank has  invested  primarily  in  federal  agency
securities,  principally  GNMA  obligations.  At  March  31,  2000,  the  Bank's
investment in mortgage-backed securities totaled $374,000, or 1.47% of its total
assets. At March 31, 2000, $24,000 of the Bank's mortgage-backed securities were
classified as held to maturity.

     The GNMA and FNMA  certificates are modified  pass-through  mortgage-backed
securities that represent undivided interests in underlying pools of fixed-rate,
or certain types of adjustable-rate,  single-family residential mortgages issued
by these  government-sponsored  entities.  As a result,  the interest  rate risk
characteristics  of the  underlying  pool  of  mortgages,  i.e.,  fixed-rate  or
adjustable  rate, as well as prepayment  risk, are passed on to the  certificate
holder.  GNMA's  guarantee  to the holder of timely  payments of  principal  and
interest is backed by the full faith and credit of the United States Government.
All of the  Bank's  GNMA  certificates  are  fixed-rate  securities,  $53,000 in
principal amount of FNMA certificates are adjustable-rate securities.

     Mortgage-backed  securities  generally  yield  less  than  the  loans  that
underlie such  securities  because of the cost of payment  guarantees and credit
enhancements.  In addition,  mortgage-backed  securities are usually more liquid
than  individual  mortgage  loans  and  may be  used  to  collateralize  certain
liabilities and  obligations of the Bank.  These types of securities also permit
the  Bank to  optimize  its  regulatory  capital  because  they  have  low  risk
weighting.

     All of the Bank's $374,000  mortgage-backed  securities  portfolio at March
31, 2000 had  contractual  maturities  over 10 years.  The actual  maturity of a
mortgage-backed  security  may be less  than  its  contractual  maturity  due to
prepayments  of the  underlying  mortgages.  Prepayments  that are  faster  than
anticipated may shorten the life of the security and may result in a loss of any
premiums  paid and  thereby  reduce the net yield on such  securities.  Although
prepayments of underlying  mortgages depend on many factors,  including the type
of mortgages,  the coupon rate, the age of mortgages,  the geographical location
of the underlying real estate  collateralizing  the mortgages and general levels
of market  interest  rates,  the  difference  between the interest  rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most  significant  determinant  of the rate of  prepayments.  During  periods of
declining  mortgage  interest  rates,  if the  coupon  rate  of  the  underlying
mortgages exceeds the prevailing market interest


                                       11

<PAGE>



rates  offered  for  mortgage  loans,   refinancing   generally   increases  and
accelerates the prepayment of the underlying mortgages and the related security.
Under such circumstances,  the Bank may be subject to reinvestment risk because,
to the extent  that the Bank's  mortgage-backed  securities  amortize  or prepay
faster than  anticipated,  the Bank may not be able to reinvest  the proceeds of
such repayments and prepayments at a comparable rate.

     The  guaranteed  portion of a given pool must be all fixed or all  variable
rate. The certificates  purchased by the Bank are both fixed and adjustable rate
mortgage backed securities.

     The   following   table   sets   forth  the   composition   of  the  Bank's
mortgage-backed securities at the dates indicated.

<TABLE>
<CAPTION>
                                                                                    March 31,
                                                                ------------------------------------------------
                                                                         2000                      1999
                                                                ----------------------    ----------------------
                                                                   Book         % of         Book         % of
                                                                   Value        Total        Value        Total
                                                                ---------    ---------    ---------     --------
                                                                             (Dollars in Thousands)
Mortgage-backed securities available for sale:
<S>                                                             <C>             <C>       <C>             <C>
   FNMA.....................................................    $     52        13.90%    $    198        36.33%
   GNMA.....................................................         293        78.35          300        55.04
                                                                --------     --------     --------      -------
Mortgage-backed - held to maturity .........................          23         6.15           36         6.61
Unamortized premium (discounts), net........................           6         1.60%          11         2.02%
                                                                --------     --------     --------      -------
     Total mortgage-backed securities.......................    $    374       100.00%    $    545       100.00%
                                                                ========     ========     ========      =======
</TABLE>


     The following table shows  mortgage-backed  securities repayment activities
of the Bank for the  periods  indicated.  The Bank did not  purchase or sell any
mortgage-backed securities during fiscal 2000.

                                                          Years Ended March 31,
                                                            2000         1999
                                                          --------     --------
                                                             (In Thousands)
Purchases:
---------
   Adjustable-rate (1).................................   $    --      $   300
   Fixed-rate (1)......................................        --          300
                                                          -------      -------
     Total purchases...................................        --          600
                                                          -------      -------

Sales  ................................................        --           --

Principal Repayments:
--------------------
   Principal repayments................................      (166)        (129)
   Amortization of premiums............................        (5)          --
                                                          --------     -------
     Net increase (decrease)...........................   $  (171)     $   471
                                                          ========     =======
-------------------------
(1)     Consists of pass-through securities.

     Other  Investments.  At March 31, 2000,  the Bank's  investment  securities
other than  mortgage-backed  securities consisted of federal agency obligations,
U.S. Government securities and FHLB stock.

     OTS  regulations   restrict   investments  in  corporate  debt  and  equity
securities  by  the  Bank.  These  restrictions   include  prohibitions  against
investments  in the debt  securities  of any one  issuer in excess of 15% of the
Bank's  unimpaired   capital  and  unimpaired  surplus  as  defined  by  federal
regulations,  plus an  additional  10% if the  investments  are fully secured by
readily  marketable  collateral.  At March 31, 2000,  the Bank was in compliance
with this regulation.


                                       12

<PAGE>



     The following  table sets forth the  composition  of the Bank's  investment
securities at the dates indicated.

<TABLE>
<CAPTION>
                                                                                  At March 31,
                                                                ------------------------------------------------
                                                                         2000                      1999
                                                                ----------------------    ----------------------
                                                                   Book         % of         Book         % of
                                                                   Value        Total        Value        Total
                                                                ---------    ---------    ---------     --------
                                                                             (Dollars in Thousands)
Investment securities held to maturity:
<S>                                                                  <C>        <C>       <C>             <C>
   Federal agency obligations.................................       24         0.96      $    38         1.86%
Investment securities available for sale:
   U.S. government securities.................................       --           --          400        19.55
   Federal agency obligations.................................    2,363        94.07        1,507        73.65
   Equity securities..........................................       --           --           --           --
                                                                -------      -------      -------       ------
     Subtotal.................................................    2,387        95.03        1,945        95.06
                                                                -------      -------      -------       ------
FHLB stock....................................................      125         4.97          101         4.94
                                                                -------      -------      -------       ------
     Total investment securities and FHLB stock...............  $ 2,512       100.00%     $ 2,046       100.00%
                                                                =======      =======      =======       ======
Average remaining life of debt securities.....................  6.0 years                 2.6 years

Other interest-earning assets:
   Interest-bearing deposits with banks.......................  $    50        50.00%     $    11       100.00%
   Federal funds sold.........................................       50        50.00           --           --
                                                                -------      -------      -------       ------

     Total....................................................  $   100       100.00%     $    11       100.00%
                                                                =======      =======      =======       ======
</TABLE>


     Investment  Portfolio  Maturities.  The  composition  and maturities of the
investment securities portfolio and mortgage-backed  securities are indicated in
the following table.

<TABLE>
<CAPTION>
                                                                         At March 31, 2000
                                                 ---------------------------------------------------------------
                                                 Less Than  1 to 5      5 to 10     Over      Total Investment
                                                  1 Year      Years      Years    10 Years       Securities
                                                 ---------  ---------  ---------  --------   -------------------
                                                 Amortized  Amortized  Amortized  Amortized  Amortized  Fair
                                                   Cost       Cost       Cost       Cost       Cost     Value
                                                 ---------  ---------  ---------  --------   --------   --------
                                                                      (Dollars in Thousands)

<S>                                              <C>        <C>        <C>        <C>        <C>        <C>
U.S. government securities..................     $   --     $   --     $   --     $   --     $   --     $   --
Federal agency obligations..................        250        100      1,368        295      2,013      1,951
Mortgage-backed securities..................         --         --         --        374        374        356

Total investment securities.................        250        100      1,368        669      2,387      2,307

Weighted average yield......................       5.58%      6.29%      6.62%      7.27%      6.69%        --%
</TABLE>

Sources of Funds

     General.  The  Bank's  primary  sources of funds are  deposits,  receipt of
principal and interest on loans and securities,  FHLB advances,  and other funds
provided from operations.

     FHLB advances are used to support  lending  activities and to assist in the
Bank's  asset/liability  management strategy.  Typically,  the Bank does not use
other forms of borrowings. At March 31, 2000, the Bank had FHLB advances of $1.4
million.

     Deposits. The Bank offers deposit accounts having a range of interest rates
and terms.  The Bank's  deposits  consist of passbook,  checking and certificate
accounts.  The certificate  accounts currently range in terms from 91 days to 10
years.

     The Bank relies primarily on advertising,  competitive pricing policies and
customer service to attract and retain these deposits.  In fiscal 1998, the Bank
began obtaining  brokered jumbo CD deposits from out of market customers.  These
deposits  are a more  volatile  source  of funds  than  transaction  or  savings
accounts,  or certificate of deposit  accounts  obtained from  depositors in the
Bank's market area. At March 31, 2000, the Bank had $5.9 million


                                       13

<PAGE>



in out of market  certificates of deposit  compared to $5.8 million at March 31,
1999.  Out of  market  certificates  of  deposit  represented  36.03%  of  total
certificates of deposit at March 31, 2000 compared to 38.41% at March 31, 1999.
The flow of deposits is influenced significantly by general economic conditions,
changes in money market and prevailing  interest rates and  competition.  During
fiscal 1997, the Bank introduced an interest  bearing  checking account product.
At March 31, 2000, $326,000, or 1.49% of total deposits were in interest bearing
checking accounts.

     The Bank has become more susceptible to short-term  fluctuations in deposit
flows as customers have become more interest-rate  conscious. The Bank endeavors
to  manage  the  pricing  of its  deposits  in  keeping  with its  profitability
objectives   giving    consideration   to   its   asset/liability    management.
Notwithstanding the foregoing,  a significant  percentage of the Bank's deposits
are for terms of less than one year. At March 31, 2000, $9.3 million,  or 56.63%
of the Bank's certificates of deposit were in certificates of deposit with terms
of 12  months  or less.  The Bank  believes  that  upon  maturity  most of these
deposits  will  remain at the  Bank.  The  ability  of the Bank to  attract  and
maintain  savings  accounts and  certificates of deposit,  and the rates paid on
these  deposits,  has been and will  continue  to be  significantly  affected by
market conditions.

Savings Portfolio

     The following table sets forth the dollar amount of savings deposits in the
various types of deposit programs offered by the Bank as of the dates indicated.

<TABLE>
<CAPTION>
                                                                                  At March 31,
                                                                ------------------------------------------------
                                                                         2000                      1999
                                                                ----------------------    ----------------------
                                                                  Amount       Percent      Amount       Percent
                                                                ---------    ---------    ---------     --------
                                                                             (Dollars in Thousands)
Transactions and savings deposits:
---------------------------------

<S>                                                             <C>             <C>       <C>             <C>
Non-interest bearing checking accounts.......................   $   863         3.94%     $   303         1.57%
Interest-bearing checking accounts 1.75%.....................       326         1.49          492         2.55
Passbook accounts 3.00%......................................     4,359        19.88        3,395        17.61
                                                                -------      -------      -------       ------

Total transactions and savings deposits......................     5,548        25.31        4,190        21.73
                                                                -------      -------      -------       ------

Certificates of deposit:
-----------------------

  0.00 -  3.99%..............................................        --           --           --           --
  4.00 -  5.99%..............................................     8,738        39.86        7,870        40.83
  6.00 -  7.99%..............................................     7,637        34.83        7,214        37.44
                                                                -------      -------      -------       ------

Total certificates of deposit................................    16,375        64.69       15,084        78.27
                                                                -------      -------      -------       ------
Accrued Interest.............................................        --           --           --           --
                                                                -------      -------      -------       ------
Total Deposits...............................................   $21,923       100.00%     $19,274       100.00%
                                                                =======      =======      =======       ======
</TABLE>



                                       14

<PAGE>



Deposit Activity

     The  following  table sets forth the  savings  flows at the Bank during the
periods indicated.

                                                    Years Ended March 31,
                                               -------------------------------
                                                    2000             1999
                                               -------------     -------------
                                                   (Dollars In Thousands)

Opening balance..............................    $  19,274          $ 14,629
Deposits.....................................       37,071            30,553
Withdrawals..................................      (35,469)          (26,803)
Interest credited............................        1,047               895
                                                 ---------          --------

Ending balance...............................    $  21,923          $ 19,274
                                                 =========          ========

Net increase (decrease)......................    $   2,649          $  4,645
                                                 =========          ========

Percent increase (decrease)..................        13.74%            31.75%
                                                 =========          ========

Time Deposit Maturity Schedule

         The  following   table  shows   weighted   average  rate  and  maturity
information for the Bank's certificates of deposit as of March 31, 2000.

<TABLE>
<CAPTION>
                                                                              Weighted
                 Certificate accounts maturing in             Total            Average        Percent of
                         quarter endings:                    Balance            Rate             Total
              ---------------------------------------     -------------    -------------     -------------
                                                          (In Thousands)

<S>                                                       <C>                  <C>                 <C>
              June 30, 2000............................   $    414             6.21                2.53%
              September30, 2000........................      2,700             5.77               16.49
              December 31,2000.........................      1,869             5.63               11.41
              March 31, 2001...........................      2,262             5.67               13.82
              June 30, 2001............................      1,363             5.87                8.32
              September 30, 2001.......................      2,324             6.15               14.20
              December 31, 2001........................        942             5.83                5.75
              March 31, 2002...........................        901             6.05                5.50
              June 30, 2002............................        305             5.86                1.86
              Thereafter...............................      3,295             6.32               20.12
                                                          --------           ------              ------
                  Total................................   $ 16,375             5.93              100.00%
                                                          ========           ======              ======
</TABLE>

     The  following  table  indicates the amount of the Bank's  certificates  of
deposit and other  deposits  by time  remaining  until  maturity as of March 31,
2000.

<TABLE>
<CAPTION>
                                                                              Maturity
                                                   -------------------------------------------------------------
                                                                   Over         Over
                                                   3 Months       3 to 6       6 to 12       Over
                                                    Or Less       Months       Months      12 Months    Total
                                                   ---------    ---------    ---------    ----------------------
                                                                             (In Thousands)

<S>                                                <C>          <C>          <C>          <C>           <C>
Certificates of deposit less than $100,000.....    $   192      $  2,363     $ 3,494      $ 8,213       $14,262

Certificates of deposit of $100,000 or more....        222           337         637          917        2,113
                                                   -------      --------     -------      -------       ------

Total certificates of deposit..................    $   414      $  2,700     $ 4,131      $ 9,130       $16,375
                                                   =======      ========     =======      =======       =======
</TABLE>


     Borrowings. Federal law limits an institution's borrowings from the FHLB to
20 times the amount paid for capital  stock in the FHLB,  subject to  regulatory
collateral  requirements.  At March 31,  2000,  the Bank had an  unused  line of
credit at the FHLB for up to $2.4 million.  At March 31, 2000, the Bank had $1.4
million in advances from the FHLB.



                                       15

<PAGE>



Employees

     At March 31, 2000, the Bank had 7 full-time and 4 part-time  employee.  The
Bank's  employees  are  not  represented  by any  collective  bargaining  group.
Management considers its employee relations to be good.

Legal Proceedings

     The Bank is  involved,  from time to time,  as  plaintiff  or  defendant in
various legal actions  arising in the normal course of their  businesses.  While
the ultimate outcome of these proceedings cannot be predicted with certainty, it
is the opinion of management,  after consultation with counsel  representing the
Bank in the proceedings,  that the resolution of these  proceedings which are in
the normal course of business should not have a material effect on the Company's
financial position or results of operations on a consolidated basis.

     On February 21, 2000,  the Company's  Board of Directors'  and the Board of
Directors' of TrustCo Bank Corp NY and Landmark Acquisition Co. ( a wholly-owned
subsidiary  of TrustCo  Bank Corp.  NY) entered  into an  Agreement  and Plan of
Merger  subject to the approval of the Company's  shareholders  and the required
regulatory approvals.

     Subsequent  to the  Company's  fiscal year end of March 31,  2000,  Private
Mortgage Investment Services, Inc. (PMIS) and its President,  Charles F. Cefalu,
on April 17,  2000,  filed  legal  action  against  the Company and its Board of
Directors.  The suit alleges that (1) the Company's Board of Directors  violated
its fiduciary  duties to its  stockholders  by entering into a merger  agreement
with  TrustCo  Bank  Corp NY and (2) the  Agreement  to vote in favor  that each
Company  Board  member  entered  into with  TrustCo Bank Corp NY is subject to a
voting limitation contained in the Company's Certificate of Incorporation. Based
upon these  allegations,  the  plaintiffs  sought a  preliminary  and  permanent
injunction  preventing  any action in  furtherance  of the TrustCo  Bank Corp NY
merger agreement, a declaration that the merger agreement is void, damages in an
amount not less than $1,000,000 and costs and attorney's fees. Also on April 17,
2000,  the court  ordered an order to show  cause  temporarily  restraining  any
action on the Agreement and Plan of Merger.

     On May 10, 2000, PMIS and a wholly-owned subsidiary, Investors and Lenders,
LLC (Investors) filed a Schedule 14D with the Securities and Exchange  Commissar
formally commencing a tender offer. The tender offer is for a minimum of 100,000
shares or approximately  65% of the Company's  outstanding  shares at a price of
$25.00 per  share.  The  tender  offer is subject to a number of  contingencies,
including  the ability of Investors  and PMIS to obtain  financing and to obtain
regulatory approval from the Office of Thrift Supervision.

     On May 16, 200, a modified  temporary  restraining  order was entered  that
permits the  Company's  Board of  Directors'  to respond to the tender  offer in
compliance  with their  duties and  obligations  under state and federal law, to
issue a  recommendation  statement to the Company's  stockholders  comparing the
Investors/PMIS  offer with the Agreement and Plan of Merger,  and to communicate
with TrustCo Bank Corp NY about the Merger and the tender offer.

     On May 31, 2000,  the  temporary  restraining  order was  dissolved and the
plaintiff's  request  for a  preliminary  injunction  was denied,  allowing  the
Company to schedule a vote on the TrustCo merger

     On June 9, 2000,  the  plaintiff's  sought to have the New  York's  Supreme
Court ruling  overturned in Appellate  Court.  In the opinion of management  and
counsel at this  stage of the  litigation,  it is not  possible  to predict  the
outcome of the action or the pending  appeal.  The Company intends to vigorously
oppose any efforts by plaintiffs to interfere  with the ability of the Company's
stockholders  to vote on the Agreement and Plan of Merger with TrustCo Bank Corp
NY and to defend the action.

     In the  opinion  of  management,  the  costs of  defending  the  litigation
referred to above will have a man  adverse  impact on the  Company's  operations
during the fiscal year ending March 31, 2001. Also, in the opinion of


                                       16

<PAGE>



management  the total actual costs  associatied  with the  litigation can not be
reasonably estimated as of the filing date of the 10-KSB.

Service Corporation Activities

     As a federally chartered savings association,  the Bank is permitted by OTS
regulations to invest up to 2% of its assets, or approximately $500,000 at March
31, 2000, in the stock of, or loans to, service  corporation  subsidiaries.  The
Bank may invest an  additional  1% of its assets in service  corporations  where
such additional funds are used for inner-city or community  development purposes
and up to 50% of its total capital in conforming  loans to service  corporations
in which it owns more than 10% of the capital stock.  In addition to investments
in  service  corporations,  federal  associations  are  permitted  to  invest an
unlimited amount in operating subsidiaries engaged solely in activities in which
a federal association may engage.

REGULATION

General

     The Bank is a federally  chartered  savings  association,  the  deposits of
which are  federally  insured  and  backed by the full  faith and  credit of the
United  States  Government.  Accordingly,  the Bank is subject to broad  federal
regulation and oversight  extending to all its operations.  The Bank is a member
of the FHLB of New York and is  subject  to certain  limited  regulation  by the
Federal  Reserve Board. As the savings and loan holding company of the Bank, the
Company also is subject to federal regulation and oversight.  The purpose of the
regulation of the Company and other holding  companies is to protect  subsidiary
savings and loan associations. The Bank is a member of the SAIF. The deposits of
the Bank are insured by the SAIF of the FDIC. As a result,  the FDIC has certain
regulatory and examination authority over the Bank.

     Certain of these  regulatory  requirements  and  restrictions are discussed
below or elsewhere in this document.

Federal Regulation of Savings Associations

     The  OTS  has   extensive   authority   over  the   operations  of  savings
associations.  As part of this authority,  the Bank is required to file periodic
reports with the OTS and is subject to periodic  examinations by the OTS and the
FDIC.  When  these  examinations  are  conducted  by the OTS and the  FDIC,  the
examiners  may require the Bank to provide for higher  general or specific  loan
loss reserves. All savings associations are subject to a semi-annual assessment,
based upon the savings and loan association's total assets.

     The  OTS  also  has  extensive   enforcement  authority  over  all  savings
institutions  and their holding  companies,  including the Bank and the Company.
This enforcement  authority includes,  among other things, the ability to assess
civil  money  penalties,  to issue  cease-and-desist  or  removal  orders and to
initiate  injunctive  actions. In gthes enforcement actions may be initiated for
violations  of laws and  regulations  and  unsafe or  unsound  practices.  Other
actions or inactions  may provide the basis for  enforcement  action,  including
misleading  or  untimely  reports  filed  with the  OTS.  Except  under  certain
circumstances,  public  disclosure  of final  enforcement  actions by the OTS is
required.

     In addition, the investment, lending and branching authority of the Bank is
prescribed  by federal laws and  regulations,  and the Bank is  prohibited  from
engaging in any  activities  not  permitted by such laws and r For  example,  no
savings   institution  may  invest  in   non-investment   grade  corporate  debt
securities.  In  addition,  the  permissible  level  of  investment  by  federal
associations  in loans secured by  non-residential  real property may not exceed
400% of  total  capital,  except  with  approval  of the  OTS.  Federal  savings
associations are also generally authorized to branch nationwide.  The Bank is in
compliance with the noted restrictions.

     OTS regulations limit a thrift institution's  loans-to-one  borrower to the
greater of $500,000 or 15% of unimpaired  capital and surplus  (except for loans
fully secured by certain readily marketable collateral, in which case this limit
is increased to 25% of unimpaired  capital and surplus).  At March 31, 2000, the
Bank's lending limit under


                                       17

<PAGE>



this restriction was approximately  $500,000. The Bank is in compliance with the
loans-to-one borrower limitation.

     The  OTS,  as well as the  other  federal  banking  agencies,  has  adopted
guidelines  establishing  safety and soundness standards on such matters as loan
underwriting and  documentation,  internal controls and audit systems,  interest
rate risk exposure and compensation and other employee benefits. Any institution
which fails to comply  with these  standards  must  submit a capital  compliance
plan. A failure to submit a plan or to comply with an approved plan will subject
the  institution to further  enforcement  action.  The OTS and the other federal
banking  agencies have also adopted  additional  guidelines on asset quality and
earnings standards. The guidelines were designed to enhance early identification
and resolution of problem assets.

Insurance of Accounts and Regulation by the FDIC

     The Bank is a  member  of the  SAIF,  which is  administered  by the  FDIC.
Deposits are insured up to applicable  limits by the FDIC and such  insurance is
backed by the full faith and credit of the U.S. Government. As insurer, the FDIC
imposes deposit insurance premiums and is authorized to conduct  examinations of
and to require reporting by FDIC-insured institutions.  It also may prohibit any
FDIC-insured  institution  from engaging in any activity the FDIC  determines by
regulation  or order to pose a serious  risk to the FDIC.  The FDIC also has the
authority to initiate enforcement actions against savings and loan associations,
after giving the OTS an opportunity  to take such action,  and may terminate the
deposit  insurance  if it  determines  that the  institution  has  engaged or is
engaging  in  unsafe  or  unsound  practices,  or  is in an  unsafe  or  unsound
condition.

Regulatory Capital Requirements

     Federal Savings Associations.  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  at such savings and loan  associations.  Generally,  these  capital
requirements   must  be  generally  as  stringent  as  the  comparable   capital
requirements  for national  banks.  The OTS is also authorized to impose capital
requirements  in excess  of these  standards  on  individual  associations  on a
case-by-case basis.

     The  capital  regulations  require  tangible  capital  of at least  1.5% of
adjusted total assets (as defined by  regulation).  Tangible  capital  generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible capital for calculating  compliance with
the requirement.  Further,  the valuation allowance applicable to the write-down
of investments and mortgage-  backed  securities in accordance with SFAS No. 115
is excluded from the regulatory capital calculation. At March 31, 2000, the Bank
had no intangible  assets and an unrealized  loss, net of tax under SFAS No. 115
of $67,897.

Limitation on Capital Distributions

     Under current OTS  regulations,  a savings  institution  may make a capital
distribution  without notice to the OTS,  unless it is a subsidiary of a holding
company,  provided that it has a regulatory rating in the two top categories, is
not of supervisory concern, and would remain adequately capitalized,  as defined
in  the  OTS  prompt  corrective  action  regulations,  following  the  proposed
distribution.  Savings  institutions  that would remain  adequately  capitalized
following the proposed distribution but do not meet the other noted requirements
must notify the OTS 30 days prior to declaring a capital  distribution.  The OTS
stated  it  will  generally   regard  as  permissible  that  amount  of  capital
distributions  that do not exceed  50% of the  institution's  excess  regulatory
capital plus net income to date during the calendar year. A savings  institution
may not make a capital  distribution  without prior  approval of the OTS and the
FDIC if it is  undercapitalized  before, or as a result of, such a distribution.
The OTS may object to a capital distribution if it would constitute an unsafe or
unsound practice.



                                       18

<PAGE>




Liquidity

     All savings  associations,  including the Bank, are required to maintain an
average daily balance of liquid assets equal to a certain  percentage of the sum
of its average daily balance of net withdrawable deposit accounts and borrowings
payable in one year or less.  This liquid asset ratio  requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings associations. At the present time, the minimum liquid asset
ratio is 5%.

     In addition,  short-term liquid assets (e.g.,  cash, certain time deposits,
certain bankers acceptances and short- term U.S. Treasury obligations) currently
must  constitute  at  least  1% of  the  Bank's  average  daily  balance  of net
withdrawable  deposit accounts and current borrowings.  Penalties may be imposed
upon associations for violations of either liquid assets ratio  requirement.  At
March 31, 2000, the Bank was in compliance with both requirements, with a liquid
assets ratio of 14.99% and a short-term liquid assets ratio of 3.43%.

Accounting

     An OTS policy statement  applicable to all savings  associations  clarifies
and re-emphasizes that the investment  activities of a savings  association must
be  in  compliance  with  approved  and  documented   investment   policies  and
strategies,  and must be accounted for in  accordance  with  generally  accepted
accounting principles.  Under the policy statement,  management must support its
classification  of and accounting for loans and securities  (i.e.,  whether held
for investment, sale or trading) with appropriate documentation.

     The OTS has adopted an amendment to its accounting  regulations,  which may
be made more stringent than generally accepted accounting  principles to require
that  transactions  be reported in a manner that best reflects their  underlying
economic substance and inherent risk and that financial reports must incorporate
any other accounting regulations or orders prescribed by the OTS. The Bank is in
compliance with these amended rules.

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.  Such assets
primarily consist of residential housing related loans and investments. At March
31, 2000, the Bank met the test.

     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 aha 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  hstate  In  addition,  the  savings  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.



                                       19

<PAGE>



Transactions with Affiliates

     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  Binclud 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.

     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.

Holding Company Regulation

     The  Company  is a unitary  savings  and loan  holding  company  subject to
regulatory  oversight  by the OTS. As such,  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 be a serious risk to the subsidiary
savings association.

     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, it would become a multiple savings
holding  company,  and the activities of the Company and any of its subsidiaries
(other than the Bank or any other  SAIF-insured  savings  and loan  association)
would become subject to such  restrictions  unless such other  associations each
qualify as a QTL and were acquired in a supervisory acquisition.

     If the Bank fails the QTL test, the Company must obtain the approval of the
OTS prior to  continuing  after such  failure,  directly  or  through  its other
subsidiaries,  any  business  activity  other than those  approved  for multiple
savings and loan holding companies or their  subsidiaries.  In addition,  within
one year of such failure the Company must  register as, and will become  subject
to, the  restrictions  applicable  to bank  holding  companies.  The  activities
authorized  for a bank holding  company are more limited than are the activities
authorized for a unitary or multiple savings and loan holding company.

     The Company must obtain approval from the OTS before  acquiring  control of
any other SAIF-insured  association.  Such acquisitions are generally prohibited
if they  result in a  multiple  savings  and loan  holding  company  controlling
savings and loan associations in more than one state.  However,  such interstate
acquisitions  are  permitted  based  on  specific  state  authorization  or in a
supervisory acquisition of a failing savings and loan association.

Federal Reserve System

     The Federal Reserve Board requires all depository  institutions to maintain
noninterest-bearing  reserves at  specified  levels  against  their  transaction
accounts  (primarily  checking,  NOW and Super NOW checking a At March 31, 2000,
the Bank  was in  compliance  with  these  reserve  requirements.  The  balances
maintained to meet the reserve requirements imposed by the Federal Reserve Board
may be used to satisfy liquidity requirements that may be imposed by the OTS.

     Savings associations are authorized to borrow from the Federal Reserve Bank
"discount window," but Federal Reserve Board regulations require associations to
exhaust  other  reasonable   alternative   sources  of  funds,   including  FHLB
borrowings, before borrowing from the Federal Reserve Bank.



                                       20

<PAGE>



Federal Home Loan Bank System

     The Bank is a member of the FHLB of New York,  which is one of 12  regional
FHLBs,   that   administers  the  home  financing  credit  function  of  savings
associations.  Each FHLB  serves as a reserve  or central  bank for its  members
within its assigned  region.  It is funded  primarily from proceeds derived from
the sale of  consolidated  obligations  of the FHLB  System.  It makes  loans to
members (i.e.,  advances) in accordance with policies and procedures established
by the board of directors of the FHLB. These policies and procedures are subject
to the  regulation  and  oversight of the Federal  Housing  Finance  Board.  All
advances from the FHLB are required to be fully secured by sufficient collateral
as determined by the FHLB.

     As a member,  the Bank is required to purchase  and  maintain  stock in the
FHLB of New York.  At March 31, 2000,  the Bank had  $125,000 of FHLB stock.  In
past years,  the Bank has  received  dividends  on its FHLB stock.  The dividend
yield from FHLB stock was 6.74% for fiscal 2000.  No assurance can be given that
such dividends will continue in the future at such levels.

     Under  federal  law,  the  FHLBs  are  required  to  provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low  and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction  in value of the  Bank's  FHLB  stock may  result  in a  corresponding
reduction in the Bank's capital.

Federal and State Taxation

     Federal Taxation.  Savings  associations such as the Bank that meet certain
definitional  tests relating to the  composition of assets and other  conditions
prescribed by the Code are permitted to establish  reserves for bad debts and to
make annual  additions  thereto which may, within specified  formula limits,  be
taken as a  deduction  in  computing  taxable  income  for  federal  income  tax
purposes.  The amount of the bad debt reserve deduction for "non-quali loans" is
computed under the experience  method.  For tax years beginning  before December
31, 1995,  the amount of the bad debt reserve  deduction  for  "qualifying  real
property  loans"  (generally  loans  secured by  improved  real  estate)  may be
computed under either the experience  method or the percentage of taxable income
method  (based on an annual  election).  If a savings  association  elected  the
latter method,  it could claim,  each year, a deduction based on a percentage of
taxable income, without regard to actual bad debt experience.

     Under the experience  method,  the bad debt reserve  deduction is an amount
determined under a formula based generally upon the bad debts actually sustained
by the savings and loan association over a period of years.

     Pursuant to certain  legislation  which was enacted and which is  effective
for tax years  beginning  after 1995,  a small thrift  institution  (one with an
adjusted basis of assets of less than $500 million), such as the Bank, no longer
is permitted to make  additions to its tax bad debt reserve under the percentage
of taxable income method.  Such institutions are permitted to use the experience
method in lieu of  deducting  bad debts  only as they  occur.  Such  legislation
requires the Bank to realize  increased tax liability  over a period of at least
six years,  beginning in 1996.  Specifically,  the legislation  requires a small
thrift  institution  to  recapture  (i.e.,  take into  income) over a multi-year
period the  balance of its bad debt  reserves in excess of the lesser of (i) the
balance of such  reserves as of the end of its last taxable  year ending  before
1988 or (ii) an amount that would have been the balance of such reserves had the
institution  always  computed its additions to its reserves using the experience
method.  The  recapture  requirement  is  suspended  for each of two  successive
taxable years  beginning  January 1, 1996 in which the Bank originates an amount
of certain  kinds of  residential  loans which in the  aggregate are equal to or
greater than the average of the principal amounts of such loans made by the Bank
during  its six  taxable  years  preceding  1996.  It is  anticipated  that  any
recapture of the Bank's bad debt reserves  accumulated after 1987 would not have
a material  adverse  effect on the Bank's  financial  condition  and  results of
operations.



                                       21

<PAGE>



     If an association ceases to qualify as a "bank" (as defined in Code Section
581) or converts to a credit union,  the pre-1988  reserves and the supplemental
reserve are restored to income ratably over a six-year period,  beginning in the
tax year the  association  no longer  qualifies  as a bank.  The  balance of the
pre-1988  reserves are also  subject to recapture in the case of certain  excess
distributions to (including  distributions on liquidation and  dissolution),  or
redemptions of, shareholders.

     In addition  to the regular  federal  income tax,  corporations,  including
savings  and loan  associations  such as the Bank,  generally  are  subject to a
minimum tax. An alternative  minimum tax is imposed at a minimum tax rate of 20%
on  alternative  minimum  taxable  income,  which is the sum of a  corporation's
regular taxable income (with certain adjustments) and tax preference items, less
any available exemption. The alternative minimum tax is imposed to the extent it
exceeds the corporation's regular income tax and net operating losses can offset
no more than 90% of  alternative  minimum  taxable  income.  For  taxable  years
beginning after 1986 and before 1996,  corporations,  including savings and loan
associations such as the Bank, are also subject to an environmental tax equal to
0.12% of the excess of alternative  minimum  taxable income for the taxable year
(determined  without  regard to net  operating  losses and the deduction for the
environmental tax) over $2 million.

     The Bank  files its  federal  income tax  returns on a calendar  year basis
using the cash method of accounting.  The Company  intends to file  consolidated
federal income tax returns with the Bank. Savings and loan associations, such as
the Bank,  that file federal income tax returns as part of a consolidated  group
are required by applicable  Treasury  regulations to reduce their taxable income
for  purposes  of  computing  the  percentage  bad  debt  deduction  for  losses
attributable to activities of the non-savings  and loan  association  members of
the consolidated  group that are  functionally  related to the activities of the
savings association member.

     The Bank has not been audited by the IRS with respect to federal income tax
returns  during  the  past  five  years.  In  the  opinion  of  management,  any
examination  of still open returns would not result in a deficiency  which could
have a material adverse effect on the financial condition of the Bank.

     State Taxation.  The Bank is subject to the New York State Franchise Tax on
Banking  Corporations  in an annual amount equal to the greater of (i) 9% of the
Bank's "entire net income"  allocable to New York State during the taxable year,
or (ii) the applicable  alternative  minimum tax. The alternative minimum tax is
generally the greatest of (a) .01% of the value of the taxable assets  allocable
to New York State with certain modifications,  (b) 3% of the Bank's "alternative
entire net income" allocable to New York State or (c) $250. Entire net income is
similar to federal taxable income,  subject to certain modifications  (including
that net  operating  losses  cannot be  carried  back or  carried  forward)  and
alternative  entire net income is equal to entire  net  income  without  certain
adjustments.

     Delaware Taxation.  As a Delaware holding company,  the Company is exempted
from Delaware corporate income tax but is required to file an annual report with
and pay an annual fee to the State of  Delaware.  The Company is also subject to
an annual franchise tax imposed by the State of Delaware.



                                       22

<PAGE>



ITEM 2. Properties
------------------

     The Bank conducts its business through its main and branch offices, located
in Canajoharie, New York. The following table sets forth information relating to
the  offices  as of March  31,  2000.  The total  net book  value of the  Bank's
premises and equipment (including land, buildings and leasehold improvements and
furniture, fixtures and equipment) at March 31, 2000 was $552,000.

<TABLE>
<CAPTION>
                                                               Total              Net Book Value
                                                            Approximate          of Real Estate at
     Location                     Date Acquired           Square Footage          March 31, 2000
------------------              -----------------       -----------------       -----------------

<S>                                   <C>                      <C>                   <C>
Main Office:                          1998                     3,200                 $283,000
211 Erie Boulevard
Canajoharie, New York

26 Church Street
Canajoharie, New York                 1973                     3,600                 $112,000
</TABLE>

ITEM 3. Legal Proceedings
-------------------------

     There are various claims and lawsuits to which the Company is  periodically
involved incident to the Company's business.  In the opinion of management,  the
defense of the lawsuit filed by PMIS will result in a  significant  material and
adverse impact on the Company's  operations  during the fiscal year ending March
31, 2001. The information  contained under "Item 1. Business" Legal  Proceedings
is incorporated by reference.

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

     No  matters  were  submitted  to a vote of  stockholders  during the fourth
quarter of the year under report.

                                     PART II

ITEM 5. Market for Company's Common Stock and Related Security Holder Matters
-----------------------------------------------------------------------------

     The "Market for Common  Stock"  section of the  Company's  Annual Report to
Stockholders is incorporated herein by reference.

ITEM 6. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations
--------------------------------------------------------------------------------

     The  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations" section of the Company's Annual Report to Stockholders is
incorporated herein by reference.

ITEM 7. Financial Statements
----------------------------

     The financial  statements  are contained in the Company's  Annual Report to
Stockholders and is incorporated herein by reference.

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

         None.




                                       23

<PAGE>



                                    PART III


ITEM 9. Directors and Executive Officers of the Company; Compliance with Section
       16(a) of the Exchange Act
--------------------------------------------------------------------------------

The following  table sets forth certain  information  regarding the directors of
the Company:

Name                               Title                              Age

Leila N. Salmon                    Director                           70

F. Richard Ferraro                 Director                           75

Edward R. Jacksland                Director                           47

Patricia A. Symolon                Director                           65

Frederick W. Lee                   Director                           64

Frederick P. LaCoppola             Director and Treasurer             57

Carl J. Rockefeller                Director                           48

John R. Francisco                  Chairman of the Board              49

Gordon E. Coleman                  President, Chief Executive         45
                                   Officer and Director
-----------------------
(1)    At March 31, 2000.

     The business  experience of each director is set forth below. All directors
have held their  present  position  for at least the past five years,  except as
otherwise indicated.

     John  R.  Francisco  is the  Chairman  of the  Board  of the  Company.  Mr.
Francisco is a retired attorney and a private investor.

     Gordon E.  Coleman  is the  President  and Chief  Executive  Officer of the
Company.  Prior to joining the Bank in 1996,  Mr.  Coleman was the  Agricultural
Loan Officer for Central  National Bank from 1993 until 1996. Prior to that time
Mr. Coleman was an Assistant Vice President of Citizens National Bank of Malone.

     Leila N. Salmon is a consultant  for  not-for-profit  organizations  in the
area of mental health administration.

     F.  Richard  Ferraro  is a Leasing  Manger for R.  Brown & Sons,  Inc.,  an
automobile dealership.

     Frederick P. LaCoppola is the Bank's  Treasurer.  Mr. LaCoppola is retired.
Mr. LaCoppola was a District Agent for Prudential Insurance Corp.

     Carl J.  Rockefeller  serves  as the  business  manager  of the Fort  Plain
Central School in Ft. Plain,  New York. Mr.  Rockefeller is also  bookkeeper for
the town of Minden.

     Patricia A. Symolon is retired.  Until her  retirement in 1996, she was the
former  Chief  Executive  Officer  of  Canajoharie  Buildings  Savings  and Loan
Association.


                                       24

<PAGE>



     Edward R. Jacksland is the President and Manager of The Hearn Agency,  Inc.
an insurance brokerage.

     Frederick  W.  Lee is the  President  and  Chairman  of  the  Board  of Lee
Publications, Inc., a publisher and printer.

     The Common  Stock of the  Company is  registered  with the  Securities  and
Exchange  Commission  (the "SE")  pursuant  to Section  12(g) of the  Securities
Exchange Act of 1934 (the  "Exchange  Act").  The officers and  directors of the
Company and beneficial  owners of greater than 10% of the Company's Common Stock
("10%  beneficial  owners") are required to file reports on Forms 3,4 and 5 with
the SEC disclosing  beneficial  ownership and changes in beneficial ownership of
the Common Stock. SEC rules require  disclosure in the Company's Proxy Statement
or Annual  Report on Form 10-KSB of the  failure of an officer,  director or 10%
beneficial  owner of the  Company's  Common Stock to file a Form 3, 4, or 5 on a
timely basis. All of the Company's officers and directors filed these reports on
a timely basis.

ITEM 10. Executive Compensation
-------------------------------

Executive Compensation

     The  following  table sets forth for the years ended March 31, 1998,  1999,
and 2000,  certain  information as to the total remuneration paid by the Company
to Mr. Coleman, the Company's chief executive officer. No officer of the Company
received cash compensation exceeding $100,000 in 2000.


<TABLE>
<CAPTION>
                                                SUMMARY COMPENSATION TABLE
==========================================================================================================================
                                                                                     Long-Term
                          Annual Compensation                                   Compensation Awards

                         Fiscal                               Other      Restricted
                          Years                               Annual        Stock     Options/                All Other
       Name and           Ended      Salary      Bonus     Compensation   Award(s)      SARs                Compensation
Principal Position (1)  March 31,      ($)        ($)         ($)(2)         ($)        (#)      Payouts       ($)(3)
--------------------------------------------------------------------------------------------------------------------------
<S>                       <C>          <C>        <C>           <C>         <C>       <C>         <C>           <C>
Gordon E. Coleman         2000         $64,700    $300          $1,941      --
President and Chief       1999          63,300     250          24,204      --        3,800       --            --
Executive Officer         1998          54,600   4,400           1,940      --         --         --            --

==========================================================================================================================

<FN>
(1)  No  other  executive  officer  received  salary  and  bonuses  that  in the
     aggregate exceeded $100,000.
(2)  Includes 1,520 shares allocated to Mr. Coleman under the Landmark Financial
     Corp. 1998 Recognition and Retention Plan.
(3)  The aggregate  amount of such benefits did not exceed the lesser of $50,000
     or 10% of cash compensation for tname individuals.
</FN>
</TABLE>

Benefits

     Employee  Stock  Ownership Plan and Trust.  The Company has  established an
Employee Stock Ownership Plan and Related Trust ("ESOP") for eligible employees.
The ESOP is a  tax-qualified  plan subject to the  requirements of ERISA and the
Code.  Employees  with a 12-month  period of employment  with the Company during
which they worked at least 1,000 hours and who have attained age 21 are eligible
to participate. The ESOP has borrowed funds and has purchased 12,160 shares. The
Common Stock  purchased by the ESOP serves as collateral  for the loan. The loan
will be repaid  principally from the Company's  contributions to the ESOP over a
period  of up to 15 years.  The  interest  rate for the loan is the prime  rate.
Shares  purchased by the ESOP will be held in a suspense  account for allocation
among participants as the loan is repaid.

     Contributions  to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan will be allocated among
participants on the basis of  compensation  in the year of allocation,  up to an
annual adjusted maximum level of compensation.  Benefits generally become vested
after five years of credited  service.  Forfeitures  will be  reallocated  among
remaining participating employees in the same


                                       25

<PAGE>



proportion  as  contributions.  Benefits may be payable upon death,  retirement,
early  retirement,   disability  or  separation  from  service.   The  Company's
contributions  to the ESOP will not be fixed, so benefits payable under the ESOP
cannot be estimated.

     In connection with the establishment of the ESOP, a committee consisting of
all nonemployee Directors was selected by the Company to administer the ESOP and
the Company's  other stock benefit plans (the "Stock  Benefits  Committee").  An
unrelated  corporate  trustee for the ESOP  initially was  appointed.  The Stock
Benefits  Committee  may  instruct  the trustee  regarding  investment  of funds
contributed  to the ESOP.  The ESOP  trustee  generally  will vote all shares of
Common Stock held under the ESOP in accordance with the written  instructions of
the Stock  Benefits  Committee.  In  certain  circumstances,  however,  the ESOP
trustee must vote all allocated  shares held in the ESOP in accordance  with the
instructions of the participating  employees,  and unallocated shares and shares
held in the suspense account in a manner  calculated to most accurately  reflect
the instructions the ESOP trustee has received from  participants  regarding the
allocated  stock,  subject to and in accordance with the fiduciary  duties under
ERISA  owed by the ESOP  trustee  to the ESOP  participants.  Under  ERISA,  the
Secretary of Labor is authorized to bring an action against the ESOP trustee for
the failure of the ESOP trustee to comply with its fiduciary responsibilities.

Stock Option Plan

     The Company  adopted the Landmark  Financial  Corp.  1998 Stock Option Plan
(the  "Option  Plan"),  which  provides  for  discretionary  awards to officers,
directors  and key employees  with a  proprietary  interest in the Company as an
incentive  to  contribute  to the  success  of the  Company  and to  reward  key
employees for  outstanding  performance  and attainment of targeted  goals.  The
grant  of  awards  under  the  Option  Plan  is   determined  by  the  Company's
Compensation  Committee  (the  "Committee"),  the  members of which are the full
Board of  Directors  or at least two  non-employee  directors.  The Option  Plan
authorizes the granting of incentive and  non-statutory  stock options for up to
15,200 shares of Common Stock (as adjusted to reflect the Stock  Dividends),  to
such officers and full-time employees of the Company and any subsidiaries as the
Committee  may  determine.  Mr.  Coleman did not receive any stock option grants
during fiscal year 2000.  Directors Salmon,  Jacksland and Lee were each granted
options to purchase 400 shares of common stock at a price of $13.00 per share.

     Set forth in the table that follows certain information  concerning options
outstanding  to the chief  executive  officer at March 31, 2000. No options were
exercised by the chief executive officer during fiscal 2000.


<TABLE>
<CAPTION>
                                AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND
                                             FISCAL YEAR-END OPTION VALUES
========================================================================================================================
                                                                       Number of Unexercised   Value of Unexercised In-
                                                                        Options at Year-End      The-Money Options at
                                                                                                     Year-End (2)
                          Shares Acquired Upon                        ------------------------ -------------------------
         Name                   Exercise         Value Realized(1)    Exercisable\Unexercisable Exercisable\Unexercisable
                                                                                (#)                       ($)
------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                  <C>                  <C>                      <C>
Gordon E. Coleman                  -0-                  -0-                  -0-\3,800                 $-0-\$-0-
=======================  ======================= ==================  ========================= =========================
</TABLE>

(1)      Equals  to  difference  between  the  aggregate  exercise  price of the
         options  exercised and the aggregate fair market value of the shares of
         common stock received upon exercise  computed using the price of common
         stock as quoted on the National  Quotation  System "Pink Sheets" at the
         time of exercise.
(2)      Equals the  difference  between the  aggregate  exercise  price of such
         options and the  aggregate  fair  market  value of the shares of common
         stock that would be received  upon  exercise,  assuming  such  exercise
         occurred  on March 31,  1999,  at which date the  closing  price of the
         common stock as quoted on the  National  Daily  Quotation  System "Pink
         Sheets" was at $7.50.



                                       26

<PAGE>



Recognition and Retention Plan

     The Company  adopted the Landmark  Financial  Corp.  1998  Recognition  and
Retention  Plan (the "RRP") as a method of providing  certain key  employees and
non-employee  directors of the Company and Bank with a  proprietary  interest in
the Company and the Bank and to provide these  individuals  with an incentive to
increase  the value of the Company and the Bank and  contribute  to its success.
The RRP is administered by the Company's Compensation Committee,  the members of
which are the full Board of  Directors or at least two  non-employee  directors.
The RRP  provides for the award of 6,080 shares which will vest at a rate of 20%
per year over the five years following the date of grant.. Under the RRP, shares
of  common  stock  have  been  awarded  in the  following  amounts  to the Chief
Executive Officer,  Executive Group and Non-Executive  Director group. Gordon E.
Coleman  received an award of 1,520  shares of common  stock,  H. Stuart  Larson
received  an award of 380  shares  of  common  stock,  Directors  Francisco  and
Rockefeller  received  awards of 304 and 304.  During the year  ended  March 31,
2000, no awards were made under the RRP.

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

                  BENEFICIAL OWNERSHIP OF LANDMARK COMMON STOCK
                   BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     We have  154,508  shares  of  common  stock  issued  and  outstanding.  The
following  table sets  forth  information  regarding  share  ownership  of those
persons or  entities  known by  management  to  beneficially  own more than five
percent of our  common  stock,  and all  directors  and  executive  officers  of
Landmark as a group.

                                       Amount of Shares
                                       Owned and Nature       Percent of Shares
  Name and Address of                    of Beneficial         of Common Stock
   Beneficial Owners                       Ownership             Outstanding

Directors and Officers (1):

Frederick W. Lee                           3,500(4)               2.27%
Edward R. Jacksland                        2,000                  1.29%
Gordon E. Coleman                          5,009(5)               3.21%
John R. Francisco                          6,365(6)               4.11%
F. Richard Ferraro                           280(7)               0.18%
Frederick P. LaCoppola                       580(8)               0.38%
Carl J. Rockefeller                          641(9)               0.41%
Leila N. Salmon                            1,100(10)              0.71%
Patricia A. Symolon                          580(11)              0.38%
Paul Hofmann                               1,500                  0.97%
H. Stuart Larson                             576                  0.37%
                                        --------                ------
All Directors and Executive Officers      22,131                 14.28%
                                        ========                ======
  as a Group (11 persons)

Landmark Community Bank                   12,160(3)                 7.87%
Employee Stock Ownership Plan
211 Erie Boulevard
Canajoharie, New York 13126

Unvested RRP shares                        2,006                  1.30
-----------------
(1) The mailing address of all named persons is 211 Erie Boulevard, Canajoharie,
     New York.
(2)  Excludes  unvested  shares awarded under the Recognition and Retention Plan
     and Stock Option  Plan,  but  includes  1,232  shares  subject to currently
     exercisable  options or options exercisable at any time within 60 days from
     the Record Date.
(3)  The amount reported represents 12,160 shares held by the ESOP, 1,824 of the
     original  12,160 have been  allocated  to accounts of  participants  as the
     Record  Date  (June,  2000).  The  trustee  of the  ESOP,  may be deemed to
     beneficially  own the shares held by the ESOP that have not been  allocated
     to accounts of participants. Unallocated shares held in the ESOP's suspense
     account or allocated  shares for which no voting  instructions are received
     are voted by the trustee in the same  proportion as allocated  shares voted
     by participants.
(4)  Mr. Lee claims shared investment and voting power over all reported shares.
(5)  Mr. Coleman claims shared investment and voting power over 75 shares.  Also
     includes 1,520 shares underlying options  exercisable within 60 days of the
     record date.


                                       27

<PAGE>


(6)  Includes 304 shares underlying  options  exercisable  within 60 days of the
     record date.
(7)  Includes 80 shares  underlying  options  exercisable  within 60 days of the
     record date.
(8)  Includes 80 shares  underlying  options  exercisable  within 60 days of the
     record date.
(9)  Includes 80 shares  underlying  options  exercisable  within 60 days of the
     record date.
(10) Includes  1,000 shares of common stock as to which Ms. Salmon claims shares
     investment and voting power.
(11) Includes 80 shares  underlying  options  exercisable  within 60 days of the
     record date.


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

Transactions With Certain Related Persons

     All transactions between the Company and its executive officers, directors,
holders of 10% or more of the shares of its Common Stock and affiliates thereof,
are on terms no less  favorable to the Company than could have been  obtained by
it in arm's-length  negotiations  with unaffiliated  persons.  Such transactions
must be approved by a majority of independent  outside  directors of the Company
not having any interest in the transaction.

                                     PART IV

ITEM 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------------------------------------------------------------------------

         (a)(1)  Financial Statements

     The exhibits and financial statement schedules filed as a part of this Form
10-KSB are as follows:

            (A)      Independent Auditors' Report;

            (B)      Consolidated  Statements  of  Financial  Condition  -
                     March 31, 2000 and 1999.

            (C)      Consolidated Statements of Operations - years ended March
                     31, 2000 and 1999;

            (D)      Consolidated Statements of Changes in Stockholders' Equity
                     - years ended March 31, 2000 and 1999;

            (F)      Consolidated Statements of Cash Flows - years ended March
                     31, 2000 and 1999; and

            (G)      Notes to Consolidated Financial  Statements.

      (a)(2)  Financial Statement Schedules

     All  financial  statement  schedules  have  been  omitted  as the  required
information is  inapplicable  or has been included in the Notes to  Consolidated
Financial Statements.

         (b)      Reports on Form 8-K

     The Company  filed a Form 8-K Current  Report on March 3, 2000 to report on
"Item 5-Other Events" the Company's Agreement to be acquired by TrustCo Bank NY.

         (c)      Exhibits

          3.1  Certificate  of   Incorporation   of  Landmark   Financial  Corp.
               Incorporated  herein by reference to the  Company's  registration
               statement on Form SB-2, file No. 333-29793 (the "Form SB-2")


                                       28

<PAGE>



          3.2  Bylaws  of  Landmark  Financial  Corp.  (Incorporated  herein  by
               reference to the Company's Form SB-2)

          4    Form  of  Stock   Certificate   of  Landmark   Financial   Corp.,
               incorporated from Form SB-2

          10   Agreement  and  Plan of  Merger  (Incorporated  by  reference  to
               Current Report on Form 8-K filed via EDGAR on March 3, 2000)

          13   Annual Report to Stockholders

          21   Subsidiaries of Company

          27   Financial Data Schedule


                                       29

<PAGE>


                                   Signatures

     Pursuant to the  requirements of Section 13 of the Securities  Exchange Act
of 1934,  the  Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.



                                           Landmark Financial Corp.



Date: June 26, 2000                    By:\s\ Gordon E. Coleman
                                          --------------------------------------
                                           Gordon E. Coleman
                                           President and Chief Executive Officer

         Pursuant to the  requirements of the Securities  Exchange 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.



By:\s\ Gordon E. Coleman                           By:\s\ Frederick W. Lee
   -----------------------------------------          --------------------------
   Gordon E. Coleman                                 Frederick W. Lee
   President, Chief Executive Officer and            Director
   Director (Principal Executive Officer)

Date: June 26, 2000                                Date: June 26, 2000


By:\s\ Paul Hofmann                                By:\s\ Patricia A. Symolon
   -----------------------------------------          --------------------------
   Paul Hofmann                                      Patricia A. Symolon
   Chief Financial Officer (Principal                Director
   Financial and Accounting Officer)

Date: June 26, 2000                                Date: June 26, 2000


By:\s\ John R. Francisco                           By:\s\ Carl J. Rockefeller
   -----------------------------------------          --------------------------
   John R. Francisco                                 Carl J. Rockefeller
   Chairman of the Board                             Vice Chairman of the Board

Date: June 26, 2000                                Date: June 26, 2000


By:\s\ Frederick LaCoppola                         By:\s\ Edward R. Jacksland
   -----------------------------------------          --------------------------
   Frederick LaCoppola                               Edward R. Jacksland
   Director                                          Director

Date: June 26, 2000                                Date: June 26, 2000


By:\s\ Leila N. Salmon
   -----------------------------------------
   Leila N. Salmon
   Director

Date: June 26, 2000


                                       31

<PAGE>



                                   EXHIBIT 13

                          ANNUAL REPORT TO STOCKHOLDERS



<PAGE>

                            Landmark Financial Corp.



                               2000 Annual Report



















<PAGE>





Table Of Contents
--------------------------------------------------------------------------------

                                                                     Page


Selected Consolidated Financial Information                           1-2

Management's Discussion and Analysis of Financial Condition
         And Results of Operations                                   3-13

Independent Auditors' Report                                           14

Consolidated Financial Statements                                   15-18

Notes to Consolidated Financial Statements                          19-42

Common Stock Information                                               43

Directors and Officers                                                 44

Corporate Information                                                  45












<PAGE>



                            LANDMARK FINANCIAL CORP.
                      211 Erie Blvd., Canajoharie, NY 13317
                                 (518) 673 2012




June 8, 2000

The Board of Directors, Officers, and Staff of Landmark Financial Corp., and its
wholly owned  subsidiary,  Landmark  Community Bank, are pleased to provide you,
our fellow shareholders, with this year's annual report.

I would  like to take a moment and review  the past  fiscal  year with you,  the
owners of Landmark  Financial  Corp.  The Company ended its fiscal year on March
31, 2000 with $25,436,355 in total assets.  This compares to the previous fiscal
year-end of $22,453,323,  which represents 8.8% growth.  The company's  earnings
also  showed  tremendous  improvement  ending  the  year  with a net  profit  of
$33,710.00,   this  net  number  includes  the  extraordinary  expense  item  of
$71,133.00  in merger  and  acquisition  fees.  This  compares  to a net loss of
$96,404.00 the previous year.

This  past  year  has  been  one of many  changes  for the  Company.  We saw the
turnaround in the profitability of your  organization  occur, as we anticipated.
We entered into a merger  agreement  with TRUSTCO Bank Corp NY, a well  regarded
community  bank  throughout  the  capital  district  of New York  Unfortunately,
following the  announcement  of the TRUSTCO  merger,  a local  business  filed a
lawsuit against the Board of Directors to stop the pending merger.  That lawsuit
is still pending at this time.  Management and the Board, in  consultation  with
our advisors,  have concluded that the lawsuit is without merit and we intend to
vigorously oppose this attempt to harm your company.

The pending merger and  acquisition of Landmark  Financial Corp. and it's wholly
owned  subsidiary  Landmark  Community  Bank by TRUSTCO  represents  a wonderful
opportunity  for  you,  the  shareholder.  The  $21.00  per  share  offer  is  a
substantial  premium over the current per share book value of $12.55.  For those
shareholders  who  participated  in the initial stock offering during the fourth
calendar  quarter of 1997,  the TRUSTCO  offer  represents a 210% return on your
initial investment.

I would welcome the opportunity to further discuss any aspect of this letter, or
any other  questions or concerns that you may have about our Company,  with each
of you  privately.  Please  don't  hesitate to contact me by  telephone at (518)
673-2012, e-mail at cbsl@telenet.net,  or in person at our banking office at 211
Erie Blvd., Canajoharie, NY.

Sincerely,

/s/ Gordon E. Coleman

Gordon E. Coleman
President and CEO


<PAGE>


                    SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

Set forth  below  are  selected  consolidated  financial  and other  data of the
Company.  The  financial  data is derived  in part  from,  and should be read in
conjunction  with,  the  Consolidated  Financial  Statements  and Notes  thereto
presented elsewhere in this Annual Report.


<TABLE>
<CAPTION>
                                                               At March 31,
                                        --------------------------------------------------------
                                        2000          1999        1998         1997         1996
                                        ----          ----        ----         ----         ----
                                                             (In Thousands)

Selected Financial Condition Data:

<S>                                    <C>            <C>       <C>          <C>          <C>
Total Assets                           $  25,436      22,453    $  16,811    $  11,326    $  7,606
Cash and cash equivalents                    568         296        1,530          709       1,351
Loans receivable, net                     21,644      19,189       13,640        9,392       5,528
Trading Account Securities                -            -            -               69       -
Mortgage Backed Securities:
       Held to maturity                       24          38           74          257         340
Investment Securities
       Held to maturity                   -            -            -              200       -
       Available for sale                  2,283       1,901        1,104          398         241
FHLB Stock                                   125         101           87           59          64
Deposits                                  21,923      19,274       14,629       10,237       6,465
Advances by borrowers for taxes
       and insurance                          85         108           97          107          95
Total stockholders' equity                 1,945       1,928        2,059          956         993
</TABLE>


<TABLE>
<CAPTION>
                                                                At March 31,
                                        --------------------------------------------------------
                                        2000          1999        1998         1997         1996
                                        ----          ----        ----         ----         ----
                                                             (In Thousands)
Selected Operations Data:
<S>                                   <C>              <C>      <C>           <C>          <C>
Total interest income                 $    1,980       1,596    $   1,293     $    688     $   622
Total interest expense                    (1,157)       (912)        (726)        (326)       (270)
                                      ----------    --------    ---------     --------     -------
      Net interest income                    823         684          567          362         352
Provision for loan losses                    (49)       (121)         (12)         (78)          -
                                      ----------    --------    ---------     --------     -------
Net interest income after
      provision for loan losses              774         563          555          284         352
Fees and service charges                      54          35           29           29          10
Other non-interest income                     35          10           38           67           -
                                      ----------    --------    ---------     --------     -------
Total non-interest income                     89          44           67           96          10
Total non-interest expense                  (821)       (731)        (610)        (434)       (239)
                                      ----------    --------    ---------     --------     -------
Income (loss) before taxes                    42        (123)          12          (54)        123
Income tax (provision) benefit                (9)         27           (5)          18         (38)
                                      ----------    --------    ---------     --------     -------
Net income (loss)                     $       34         (96)   $       7     $    (36)    $    85
                                      ==========   =========    =========     ========     =======
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                                                            SELECTED RATIOS DATA


                                                                                    Years Ended March 31,
                                                          -----------------------------------------------------------------
                                                            2000          1999          1998           1997         1996
                                                          ----------    ---------    ----------      ---------    ---------
Perfomance Ratios:
  Return on assets (ratio of net income to
<S>                                                            <C>          <C>            <C>           <C>          <C>
    average total assets)                                      0.14%       -0.48%          0.05%        -0.41%        1.08%
  Return on retained earnings (ratio of
    net income to average equity)                              1.74%       -4.85%          0.56%        -3.67%        8.83%
  Interest rate spread information:
    Average during period                                      3.18%        3.30%          3.37%         3.77%        4.13%
    End of period                                              3.39%        3.53%          2.81%         3.34%        4.25%

  Net interest margin (1)                                      3.59%        3.64%          3.71%         4.23%        4.59%
  Ratio of operating expense to average total assets           3.43%        3.68%          3.83%         4.89%        3.04%
  Ratio of average interest-earning assets to average
    interest-bearing liabilities                             108.05%      106.93%        107.16%       111.97%      114.46%


Asset Quality Ratios:
  Non-performing assets to total assets
    at end of period                                           0.40%        1.00%          0.86%         0.41%        0.00%
  Allowance for loan losses to non-performing loans          231.86%      179.90%         84.72%       235.32%        0.00%
  Allowance for loan losses to loans receivable                1.04%        0.99%          0.89%         1.17%        0.58%

Capital Ratios:
  Stockholder's equity to total assets at end of period        7.65%        8.59%         12.25%         8.43%       13.56%
    (Previously net worth to total assets 1997-1996)
  Average net worth to average assets                          8.09%       10.00%          8.31%        11.06%       12.27%

Other Data:
  Number of full-service offices                                   1            1              1             1            1
</TABLE>

(1)  Net interest income divided by average interest earning assets.



<PAGE>

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



Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations is intended to assist in understanding  the financial  conditions 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.

Certain statements in this annual report and throughout  Management's Discussion
and  Analysis of  Financial  Condition  and Results of  Operations  are "forward
looking  statements"  within the  meaning of the Private  Securities  Litigation
Reform  Act  of  1995.  These   statements   involve  known  and  unknown  risk,
uncertainties  and other  factors that may cause the Company's  actual  results,
performance  or  achievements  to be  materially  different  from  the  results,
performance  or  achievements  expressed  or  implied  by any  "forward  looking
statement."  "Forward looking  statements" are generally  identifiable by use of
the words "believe," "expect," "intend," "anticipate," "estimate," "project," or
similar  expressions.  Factors that may impact such "forward looking statements"
include,  among  others,  changes in  general  economic  conditions,  changes in
interest rates, the legislative and regulatory environment,  monetary and fiscal
policies of the United States government,  the quality and/or composition of the
loan and/or  investment  portfolios,  demand for loan  products,  deposit flows,
changes in accounting principles or policies and changes in competition.


The Company does not  undertake,  and  specifically  declines any  obligation to
publicly  release the result of any  revisions  which may be made to any forward
looking  statements  to convey  events or  circumstances  after the date of such
statements  or to  reflect  events  or  circumstances  after  the  date  of such
statements or to reflect the occurrence of anticipated or unanticipated events.


GENERAL

Landmark Financial Corp. (the "Company") is a Delaware corporation, which is the
holding  company  for  Landmark  Community  Bank (the  "Bank").  The Company was
organized by the Bank for the purpose of acquiring  all of the capital  stock of
the Bank in  connection  with the  conversion  of the Bank from  mutual to stock
form,  which was  completed  on November 13, 1997 (the  "Conversion").  The only
significant  assets  of the  Company  are the  capital  stock of the  Bank;  the
Company's  loan to the Bank's  Employee  Stock  Ownership  Plan (ESOP),  and the
remaining net proceeds of the conversion  retained by the Company.  The business
of the Company consists solely of the business of the Bank.

The Bank was originally chartered in 1925 as a New York-chartered mutual savings
and  loan  association  under  the  name  Canajoharie  Building  Savings  & Loan
Association.  The Bank is  headquartered  in  Canajoharie,  New  York.  The Bank
amended its mutual  charter in 1997 to become a federal  mutual savings bank. At
March  31,  2000,  the  Bank  had  total  assets  of  $25,414,772,  deposits  of
$21,922,503, and stockholders' equity of $1,905,862.

In  February  2000,  the Company  entered  into an  agreement  to be acquired by
TrustCo Bank Corp. NY.  Pursuant to the agreement each share of Landmark  common
stock will be converted into the right to

<PAGE>


receive $21.00 in cash.  Landmark  shareholders will be given the opportunity to
vote  on  the  agreement  to be  acquired  by  TrustCo.  A  special  meeting  of
shareholders  is scheduled to be held during the third  calendar  quarter  2000.
Detailed  information  regarding the acquisition will be included in the special
meeting proxy statement.

The  Bank  conducts  its  business  through  its  main  office  in  Canajoharie,
Montgomery County, New York. The Bank has been, and intends to continue to be, a
community oriented financial institution offering selected financial services to
meet the needs of the communities it serves. The Bank attracts deposits from the
general public and from deposit brokers and historically has used such deposits,
together with other funds, to originate  one-to-four family residential mortgage
loans,  construction and land loans for  single-family  residential  properties,
commercial  loans and consumer  loans  consisting  primarily of loans secured by
automobiles.  While the Bank's  primary  business has been that of a traditional
thrift institution, originating one-to-four family mortgage loans in its primary
market area for  retention  in its  portfolio,  the Bank also has been an active
participant in the origination of consumer loans,  primarily for the purchase of
automobiles, and of commercial loans for small business and agriculture.

SUBSEQUENT EVENTS

On April 17, 2000, Private Mortgage  Investment  Services,  Inc. (PMIS), and its
President,  Charles F.  Cefalu  filed legal  action  against the Company and its
Board of Directors.  The suit alleges that (1) the Company's  Board of Directors
violated its  fiduciary  duties to its  stockholders  by entering  into a merger
agreement with TrustCo Bank Corp NY, and (2) the agreement to vote in favor that
each Company Board member entered into with TrustCo Bank Corp NY is subject to a
voting limitation contained in the Company's Certificate of Incorporation. Based
upon these  allegations,  the  plaintiffs  sought a  preliminary  and  permanent
injunction  preventing  any action in  furtherance  of the TrustCo  Bank Corp NY
merger agreement, a declaration that the merger agreement is void, damages in an
amount not less than $1,000,000 and costs and attorney's fees. Also on April 17,
2000,  the court  ordered an order to show  cause  temporarily  restraining  any
action  on the  Agreement  and Plan of the  Merger.  On May 10,  2000 PMIS and a
wholly-owned subsidiary. Investors and Lenders, LLC (Investors) filed a Schedule
14D with the  Securities  and Exchange  Commissar  formally  commencing a tender
offer. The tender offer is for a minimum of 100,000 shares or approximately  65%
of the Company's  outstanding  shares at a price of $25.00 per share. The tender
offer  is  subject  to a number  of  contingencies,  including  the  ability  of
Investors and PMIS to obtain  financing and to obtain  regulatory  approval from
the Office of Thrift Supervision.

On May 16,  2000,  a  modified  temporary  restraining  order was  entered  that
permitted  the  Company's  Board of  Directors to respond to the tender offer in
compliance  with their  duties and  obligations  under state and federal law, to
issue a  recommendation  statement to the Company's  stockholders  comparing the
Investors/PMIS  offer with the Agreement and Plan of Merger,  and to communicate
with TrustCo Bank Corp NY about the Merger and tender offer.

On May 31, 2000,  New York State Supreme Court Justice  Robert P. Best signed an
order  dissolving  the  Temporary  Restraining  Order entered on April 17, 2000.
Judge Best also denied a request for a Preliminary  Injunction made the same day
by  Investors/PMIS.  The Company  intends to proceed to  schedule a  stockholder
meeting to vote on the Merger agreement with TrustCo Bank Corp NY.

The  Company  intends to  vigorously  oppose any  efforts by  Investors/PMIS  to
interfere  with  the  ability  of the  Company's  stockholders  to  vote  on the
Agreement and Plan of Merger with TrustCo Bank Corp NY.

<PAGE>


OPERATING STRATEGY

The  Company  conducts no  business  other than to hold the common  stock of the
Bank. The business of the Bank consists  principally of attracting  deposits and
using  those  deposits  to  fund  consumer  loans,  mortgage  loans  secured  by
one-to-four family residences and commercial or agricultural  properties,  small
business loans,  and investment  securities.  The Bank's net income is primarily
dependent on 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,  which are primarily  deposits.  The
Bank's net income is also  effected by its  provision  for loan losses and other
operating  income and expenses.  Other income is derived from service charges on
deposit  accounts,  late fees on loans,  and the sale of investment  securities.
Other expenses  include  employee  compensation  and benefits,  occupancy costs,
legal, accounting and regulatory costs and deposit insurance premiums.  Earnings
of the Bank are also  affected  by  general  economic  conditions,  particularly
changes in market interest rates, government legislation, monetary policies, and
policies and actions of the regulatory authorities.

Management has  implemented  various  strategies  designed to enhance the Bank's
profitability  while  maintaining  its safety and  soundness.  These  strategies
include  reducing  the Bank's  exposure  to  interest  rate risk by  originating
shorter-term  consumer loans and adjustable rate business loans and by investing
in adjustable rate mortgage backed securities.  Additionally,  the Bank has been
working to extend the maturity of interest bearing liabilities,  including using
FHLB  advances to fund assets,  and to increase  its demand and savings  deposit
bases by offering a variety of checking and saving  account  products.  The Bank
maintains the asset  quality of its loan  portfolio by adhering to internal loan
underwriting  policies.  The Bank also generally limits its investment portfolio
and its  investment  in mortgage  backed  securities to securities of the United
States government,  and its Agencies and to mortgage-backed securities issued by
or guaranteed by the United States government or agencies thereof.

The Bank is subject to certain minimum capital requirements, which are monitored
by The Office of Thrift Supervision. It is management's intention to continue to
surpass the minimum levels and to maintain its capital  strength.  The Company's
ratio of equity to assets at March 31, 2000 was 7.65%.


FINANCIAL CONDITION

Total Assets.  Total assets  increased $2.98 million or 13.3%, to $25.44 million
at March 31, 2000 from $22.45  million at March 31, 1999. The increase in assets
was primarily due to increases in loans receivable,  investment securities,  and
cash on hand.

Loans Receivable, Net. Loans receivable, net increased by $2.45 million or 12.8%
to $21.64  million at March 31,  2000 from  $19.19  million  at March 31,  1999,
primarily due to increases in commercial loans of $1.54 million,  an increase in
one-to-four  family loans of  $700,000,  and an increase in home equity loans of
$366,000.

Mortgage-Backed   Securities.   Mortgage-backed   securities  held  to  maturity
decreased by $14,000 or 37.6% to $24,000 at March 31, 2000 from $38,000 at March
31, 1999. The decrease was due to amortization and prepayments on the loans that
secure the Bank's mortgage-backed securities.

Investment  Securities.   Investment  securities   available-for-sale  increased
$382,000 or 20.1% to $2.3  million at March 31, 2000 from $1.9  million at March
31, 1999.

<PAGE>


Premises and Equipment.  Premises and equipment decreased $31,000 to $552,000 at
March 31, 2000 compared to $583,000 at March 31, 1999.

Deposits. Deposits increased $2.65 million, or 13.7%, to $21.92 million at March
31,  2000 from $19.27  million at March 31,  1999.  The  increase in deposits is
primarily  attributable  to an increase in local  certificates  of deposit (with
maturities  of one to three  years) of $1.2  million  and an  increase in out of
market  certificates of deposit of $100,000,  an increase in savings deposits of
$964,000,  and an increase in checking  deposits of $395,000.  The Bank had $5.9
million in out of market certificates of deposit at March 31, 2000.

Advances from FHLB. The Bank had $1.37 million of outstanding  advances from the
Federal  Home  Loan  Bank at  March  31,  2000  compared  to  $1.08  million  of
outstanding  advances on March 31, 1999. The advances are being used by the Bank
to fund both short and long term cash  needs and to help  manage  interest  rate
risk.

Equity.  Total stockholders' equity increased $17,000 or 0.87%, to $1.94 million
at March 31, 2000 from $1.93 million at March 31, 1999.

Comparison of Operating Results for the Years Ended March 31, 2000 and March 31,
1999.

Performance Summary. Net income increased $130,114 to $33,710 for the year ended
March 31, 2000, compared to a net loss of ($96,404) for the year ended March 31,
1999.  The increase in earnings was  primarily  due to increases in net interest
income and non-interest  income and a decrease in the provision for loan losses.
Partially  offsetting  these  increases to income were increases in non-interest
expense and income tax  expense.  Earnings  per share  increased to $0.24 from a
loss of ($0.69) for the previous year.

Net  Interest  Income.  Net  interest  income  increased  $138,719 or 20.3%,  to
$822,908  for the year ended March 31,  2000,  from  $684,189 for the year ended
March 31,  1999.  The increase in net  interest  income  reflects an increase of
$383,782 in interest  income,  to $1,980,130 from $1,596,348 and a corresponding
increase of $245,063 in interest  expense,  to $1,157,222  from $912,159 for the
year ended March 31, 2000 as  compared  to the year ended  March 31,  1999.  The
increase in interest income reflects  increased balances of loans receivable and
investment securities. Interest expense increased primarily due to the increases
in interest bearing deposits and advances from the Federal Home Loan Bank.

For the year ended March 31, 2000, the average yield on interest-earning  assets
was 8.64%  compared to 8.49% for the year ended March 31, 1999. The average cost
of  interest-bearing  liabilities  was 5.45% for the year ended  March 31,  2000
which was an increase from 5.19% for the year ended March 31, 1999.  The average
balance of  interest-earning  assets  increased $4.1 million or 22.0%,  to $22.9
million for the year ended  March 31, 2000 as compared to $18.8  million for the
year ended  March 31,  1999.  During the same  period,  the  average  balance of
interest-bearing  liabilities  increased $3.6 million or 20.7%, to $21.2 million
from $17.6 million in the year ended March 31, 1999.

Due to funding costs  increasing more rapidly than earning  yields,  the average
interest  rate  spread  declined  to 3.18% for the year  ended  March  31,  2000
compared  to 3.30% for  fiscal  1999.  The  average  net  interest  margin  also
decreased to 3.59% at March 31, 2000  compared to 3.64% for the year ended March
31, 1999.


<PAGE>

Provision  for Loan  Losses.  During the year  ended  March 31,  2000,  the Bank
charged  $48,500  against  earnings as a provision for loan losses compared to a
provision  of $121,000  charged  against  earnings  for the year ended March 31,
1999. During fiscal 2000, the Bank's loan portfolio  experienced  charge-offs of
$13,267  compared  with  $51,981  charged  off during  the  previous  year.  The
allowance  for loan  losses at March 31,  2000 was  increased  to 1.04% of loans
receivable  as  compared to 0.99% of loans  receivable  at March 31,  1999.  The
allowance for loan losses as a percentage of non-performing assets was 224.2% at
March 31,  2000 as compared to 179.9% at March 31,  1999.  Total  non-performing
assets  at March  31,  2000  were  $101,000,  or 0.46% of loans  receivable,  as
compared to total  non-performing  assets at March 31, 1999 of $225,000 or 1.03%
of  loans  receivable.  The  increase  in the  allowance  for loan  losses  as a
percentage of loans is due to  management's  recognition  of the increased  risk
associated with the increased  balances of the commercial loan portfolio as well
as the overall  increase  in the dollar  value of loans  receivable.  The Bank's
allowance  for loan losses at March 31, 2000 and March 31, 1999 was $227,218 and
$191,019, respectively.

Management  regularly  reviews the loan portfolio,  including problem loans, and
changes in the relative  makeup of the loan  portfolio to determine  whether any
loans  require  classification  or the  establishment  of  additional  reserves.
Management  will  continue  to monitor  its  allowance  for loan losses and make
future additions to the allowance as economic conditions  dictate.  Although the
Bank maintains its allowance for loan losses at a level which it considers to be
adequate to provide for potential losses,  there can be no assurance that future
losses will not exceed estimated amounts or that additional  provisions for loan
losses will not be required in future  periods.  Based on historical  experience
with loan losses,  the Bank believes that the current  allowance for loan losses
is adequate to cover any potential losses.

Non-interest  Income.  For the year ended March 31,  2000,  non-interest  income
increased  $44,850 or 100.8%,  to $89,362  from $44,512 for the year ended March
31, 1999.  The increase was primarily due to increases in service charge income,
late fees on loans,  and insurance  commissions in the amount of $20,109 for the
year ended  March 31,  2000,  and an increase  in other  income from  MasterCard
programs, lease of the 26 Church St. facility, and gain on sale of securities in
the amount of $24,741.

Non-interest  Expense.  Non-interest  expense  increased  $90,784  or 12.4%,  to
$821,494 for the year ended March 31, 2000 from  $730,710 for the same period in
1999.  The  majority of the  increase,  $71,133 or 78.4% of the increase was the
expense  incurred in  relation  to the  proposed  merger  with  TrustCo.  Of the
remaining increase of $19,651, compensation expense increased $31,000, occupancy
expenses  increased $21,000,  data processing  expense increased $10,000,  while
professional and legal fees decreased  $12,000,  FDIC premiums decreased $4,000,
and other operating expenses decreased $31,000.

Income Taxes.  Income tax expense increased $35,171 to $8,566 for the year ended
March 31, 2000 from a benefit of $26,605 for the year ended March 31, 1999.  The
increase is due to the increase in pre-tax income.  The Company's  effective tax
rate was 34% for the years ended March 31, 2000 and March 31, 1999.



<PAGE>


<TABLE>
<CAPTION>
                                                       AVERAGE YIELDS EARNED AND RATES PAID

                                                                            Years Ended March 31,
                                                    2000                            1999                          1998
                                     ------------------------------   -------------------------------  -----------------------------
                                      Average     Interest              Average    Interest             Average    Interest
                                     Outstanding   Earned/            Outstanding   Earned/            Outstanding  Earned/
                                      Balance       Paid   Yield/Rate   Balance      Paid   Yield/Rate  Balance      Paid Yield/Rate
                                     -----------  -------- ---------- -----------  -------- ---------- ----------- ------ ----------
                                                                              (Dollars in Thousands)

Interest-earning assets:
<S>                                     <C>          <C>       <C>       <C>     <C>           <C>     <C>        <C>          <C>
  Loans receivable (1) (2)              $  20,626    1,823     8.84%     16,515  $   1,453     8.80%   $  13,250  $  1,174     8.86%
  Mortgage-backed securities                   31        3     9.68%         52          4     7.69%         117        10     8.55%
  Investment securities                     2,092      143     6.84%      1,409         87     6.17%         849        53     6.24%
  FHLB stock                                  113        8     7.08%         89          6     6.74%          74         7     9.46%
  Interest bearing deposits                    56        3     5.41%        725         46     6.34%         978        49     5.01%
                                        ---------  -------            ---------  ---------             ---------  --------
    Total interest-earning assets       $  22,917    1,980     8.64%     18,790  $   1,596     8.49%   $  15,268  $  1,293     8.47%
                                        =========  =======            =========  =========             =========  ========


Interest-bearing liabilities:
  Interest-bearing checking             $     378        8     2.12%        816  $       9     1.10%         463  $      3     0.65%
  Passbook accounts                         3,877      117     3.02%      3,391        102     3.01%       3,965       118     2.98%
  Certificate accounts                     15,730      931     5.92%     12,913        781     6.05%       9,820       605     6.16%
  FHLB advances                             1,226      101     8.24%        452         20     4.42%
                                        ---------  -------            ---------  ---------             ---------  --------
  Total interest-bearing liabilities    $  21,210    1,157     5.45%     17,572  $     912     5.19%   $  14,248  $    726     5.10%
                                        =========  =======            =========  =========             =========  ========

Net interest income                               $    823                       $     684                        $    567
                                                  ========                       =========                        =========
Net interest rate spread                                       3.18%                           3.30%                           3.37%
                                                            ========                      =========                         =======
Net earning assets                      $   1,707                         1,218                        $   1,020
                                        =========                    ==========                        =========
Net yield on average
  interest-earning assets                                      3.59%                           3.64%                           3.71%
                                                           ========                       =========                         =======
Ratio of average interest-earning assets to
  average interest-bearing liabilities             108.05%                         106.93%                           107.16%
                                                =========                       =========                         =========
</TABLE>
(1)  Calculated net of deferred loan fees, loan discounts, and loans in process.
(2)  In  computing  average  balances and average  yield on loans,  non-accruing
     loans have been included.


<PAGE>


                                               SPREAD AND MARGIN

<TABLE>
<CAPTION>
                                                                                 Years Ended March 31,
                                                                    -----------------------------------------------
                                                                       2000              1999               1998
                                                                    ----------        ----------         ----------
<S>                                                                    <C>               <C>                <C>
Average yield on loans                                                 8.84%             8.80%              8.86%
Average yield on mortgage-backed securities                            9.68%             7.69%              8.55%
Average yield on investment securities                                 6.84%             6.17%              6.24%
Average yield on FHLB stock                                            7.08%             6.74%              9.46%
Average yield on other interest-bearing deposits                       5.41%             6.34%              5.01%
Average yield on all interest-earning assets                           8.64%             8.49%              8.47%

Average rate paid on interest-bearing checking                         2.12%             1.10%              0.65%
Average rate paid on passbook accounts                                 3.02%             3.01%              2.98%
Average rate paid on certificate accounts                              5.92%             6.05%              6.16%
Average rate paid on FHLB advances                                     8.24%             4.42%
Average rate paid on all interest-bearing liabilities                  5.45%             5.19%              5.10%

Interest rate spread (spread between weighted average
  rate on all interest-earning assets and all interest-bearing
  liabilities)                                                         3.18%             3.30%              3.37%

Net interest margin (net interest income as a percentage
  of average interest-earning assets)                                  3.59%             3.64%              3.71%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                               RATE VOLUME ANALYSIS

                                               2000 Compared to 1999                        1999 Compared to 1998
                                            Increase (Decrease) Due to                   Increase (Decrease) Due to
                                       -------------------------------------      ---------------------------------------
                                          Volume         Rate        Net             Volume         Rate           Net
                                                                          (In thousands)



Interest-earning assets:
<S>                                    <C>           <C>         <C>               <C>          <C>           <C>
  Loans Receivable                     $     362     $      8    $    370          $    291     $     (10)    $     281
  Mortgage-backed securities                  (2)           1          (1)               (6)           (0)           (6)
  Investment Securities                       42           14          56                35            (1)           34
  FHLB stock                                   2            0           2                 1            (2)           (1)
  Interest bearing deposits                  (42)          (1)        (43)              (15)           10            (5)
                                       ---------     --------    --------          --------     ---------     ---------
   Total net change in income on
     interest-earning assets           $     361     $     23    $    384          $    307     $      (4)    $     303
                                       =========     ========    ========          ========     =========     =========


Interest-bearing liabilities:
  Passbook accounts                    $      (5)    $      4    $     (1)         $      2     $       4     $       6
  Interest-bearing checking                   15            0          15               (17)            1           (16)
  Certificates of deposit                    170          (20)        150               191           (15)          176
   FHLB advances                              34           47          81                 0            20            20
                                       ---------     --------    --------          --------     ---------     ---------
   Total net change in income on
    interest-bearing liabilities       $     214     $     31    $    245          $    176     $      10     $     186
                                       =========     ========    ========          ========     =========     =========

Net change in net interest income                                $    139                                     $     117
                                                                 ========                                     =========
</TABLE>



<PAGE>


Market Risk Analysis
As a holding  company for the Bank,  the Company's  primary  component of market
risk is interest  rate  volatility.  Changes in interest  rates will affect both
income and expenses  associated  with a large  portion of the Bank's  assets and
liabilities,  and the market value of all interest earning assets. Management of
the Bank  measures  and  evaluates  interest  rate risk on a  regular  basis and
actively  strives  to reduce  such  risk.  The Bank is not  subject  to  foreign
currency  exchange risk or commodity  price risk.  The Bank's loan  portfolio is
concentrated  in  Montgomery  County,  New  York and the  immediate  surrounding
counties and is therefore  subject to risks  associated  with the local economy.
The Company and the Bank do not have any hedging  transactions  in place such as
interest rate swaps and caps.

Asset and Liability Management

One of  the  Bank's  principal  financial  objectives  is to  achieve  long-term
profitability while reducing its exposure to fluctuations in interest rates. The
Bank has sought to reduce exposure of its earnings to changes in market rates by
managing the mismatch between asset and liability maturities and interest rates.
The principal  elements in achieving  this  objective  have been to increase the
interest-rate  sensitivity  of the Bank's assets by  originating  business loans
with  maturities  of five  years and less and by  extending  the  maturities  of
certain  of its  liabilities  by  utilizing  FHLB term loans to fund some of the
asset growth and by promoting longer term certificates of deposit.  The Bank has
also increased its core deposit base by increasing DDA account balances 49.7% to
$1,189,247  from $794,652 at March 31, 2000 and 1999  respectively  and passbook
balances 28.4% to $4,358,743  from $3,395,145  during the same period.  However,
the Bank continues to retain longer term fixed rate  residential  mortgage loans
in the  portfolio.  During the fiscal  year,  fixed rate  residential  mortgages
increased  7.7% to  $7.1  million  from  $6.6  million,  while  adjustable  rate
residential mortgages increased 4.1% from $2.5 million to $2.6 million. A gap is
considered  negative  when the amount of  interest  rate  sensitive  liabilities
exceeds the amount of interest rate sensitive assets.  During a period of rising
interest rates a negative gap would tend to adversely  affect  interest  income.
During a period  of  falling  interest  rates,  a  negative  gap  would  tend to
positively affect net interest income. At March 31, 2000, total interest-bearing
liabilities   maturing   or   repricing   within   one   year   exceeded   total
interest-earning  assets  maturing  or  repricing  during  the  same  period  by
$6,757,167, representing a one-year gap of (27.99)%.











<PAGE>





<TABLE>
<CAPTION>
Interest Rate Gap Analysis                             Cumulatively Repriced Within
                                        12 months        1 to 3 Years        3 to 5 years        After 5 yrs        Total
                                      --------------   ------------------    --------------   ---------------    -------------
<S>                                <C>              <C>                  <C>               <C>               <C>
Interest Earning Cash              $        135,996 $                  0 $               0 $               0 $        135,996
Securities                                  302,281                    0           372,594         1,690,846        2,365,721
Loans                                     3,930,597            3,616,011         4,933,212         9,164,032       21,643,852
Non-int rate sensitive assets                                                                      1,269,204        1,269,203
                                      --------------   ------------------    --------------------------------    -------------
     Total assets                  $      4,368,597 $          3,616,011 $       5,305,806 $      12,124,082  $    25,414,772

Deposits:
   Demand                                   237,590              237,590           237,590           475,179        1,187,949
   Savings                                1,090,011              523,205           523,205         2,223,622        4,360,043
   Time                                   9,272,990            6,185,033           247,503           668,986       16,374,512
                                      --------------   ------------------    --------------------------------    -------------
     Total deposits                $     10,600,590 $          6,945,828 $       1,008,298 $       3,367,787  $    21,922,504
Borrowing                          $        525,450 $            460,216 $         273,854 $         107,058  $     1,366,578
Non-int sensitive liabilities                                                                        219,828          219,828
Equity                                                                                             1,905,862        1,905,862
                                      --------------   ------------------    --------------   ---------------    -------------
     Total liabilities and equity  $     11,126,041 $          7,406,043 $       1,282,152 $       5,600,535  $    25,414,772


Incremental gap:
   Interest sensitivity gap        $  (6,757,167)    $       (3,790,033) $       4,023,654 $       6,523,547
   Gap as a % of earn. assets            (27.99%)               (15.70%)            16.66%            27.02%
   Int sensitive                            39.27                  48.83            413.82            193.82
assets/liabilities

Cumulative gap:
   Interest sensitivity gap        $  (6,757,167)    $      (10,547,200)        (6,523,546)                0
   Gap as a % of earn. assets            (27.99%)               (43.68%)           (27.02%)                0
   Int sensitive assets/liabilities         39.27                  43.09             67.08             95.01
</TABLE>


The Company has historically  relied upon retail deposit accounts in the form of
savings  accounts and  certificates  of deposit as its primary  source of funds.
Although  management  believes that these retail deposits may reduce the effects
of interest rate  fluctuations  because  these  deposits  generally  represent a
stable source of funds from within and around the surrounding  communities,  the
Bank has historically  supplemented these deposits with brokered certificates of
deposit  from out of area  customers.  Management  has  strived  to  reduce  the
relative dependence on out-of-market deposits due to their higher cost and lower
stability.  At March 31, 2000 out-of-market  deposits were $5.7 million or 26.0%
of total  deposits,  compared to $5.8  million or 30.1% of total  deposits as of
March 31, 1999.

The Bank's Board of  Directors  has  formulated  an Asset  Liability  Management
Policy designed to promote long-term  profitability while managing interest-rate
risk.  The  Company  recognizes  the  inherent  risk in its  interest  rate  gap
position, particularly in periods of rising interest rates.

Liquidity and Capital Resources

The Bank's  principal  sources of funds are  deposits,  principal  and  interest
payments on loans,  and investment  securities.  While scheduled loan repayments
and maturing  investments  are relatively  predictable,  deposit flows and early
loan  prepayments  are more  influenced  by  interest  rates,  general  economic
conditions and competition. Additional sources of funds may be obtained from the
Federal Home Loan Bank of New York by utilizing  numerous  available products to
meet funding  needs.  The Bank has a credit line with the Federal Home Loan Bank
of New York in the amount of $2,400,600, which expires on September 13, 2000. It
is management's intention to renew the credit line prior to its


<PAGE>

expiration. The Bank also has available collateralized borrowing capacity at the
FHLB of  approximately  $5 million.  At March 31, 2000,  the Bank had borrowings
outstanding to the FHLB of $1,366,577.

The Bank is required to maintain  minimum  levels of liquid assets as defined by
regulations.  The  required  percentage  is currently  4.0% of net  withdrawable
savings  deposits and  borrowings  payable on demand or in one year or less. The
Bank  has  maintained  its  liquidity  ratio at  levels  exceeding  the  minimum
requirement.  The eligible liquidity ratios at March 31, 2000 and March 31, 1999
were 14.99% and 12.95%, respectively.

The Bank's most liquid assets are cash and cash equivalents. For these purposes,
all  short-term  investments  with a maturity of three months or less at date of
purchase are considered  cash  equivalents.  Cash and cash  equivalents  for the
periods  ended  March 31,  2000 and March 31, 1999 were  $568,080  and  $295,827
respectively.

At March 31, 2000 the Bank had outstanding  loan  commitments and loans awaiting
disbursement  of  $195,000.  It is  anticipated  that  sufficient  funds will be
available to meet loan commitments  including loan applications  received and in
process.

Certificates  of deposit,  which are  scheduled to mature in one year or less at
March 31, 2000,  were $9.27  million.  Management  believes  that a  significant
portion of such deposits will remain with the Bank.

At March 31, 2000, the Company had tangible  capital of  $2,029,336,  or 8.0% of
total assets, which is approximately $1,520,636 above the minimum requirement of
2.0% of  adjusted  total  assets in effect on that date.  The  Company  had core
capital of $2,029,336,  or 8.0% of total adjusted assets, which is approximately
$1,011,936  above the minimum leverage ratio of 4.0% in effect on that date. The
Company  had total  risk  based  capital of  $2,256,554  which is  approximately
$862,654 above the 8.0% requirement in effect on that date.

Management is aware that the Company's capital ratios will be adversely affected
by the ongoing merger and  acquisition  expenses and those  expenses  related to
defending  the Company from a lawsuit filed  subsequent to the Company's  fiscal
year end.

Impact of Inflation and Changing Prices

The Consolidated Financial Statements and Notes thereto,  presented herein, have
been prepared in accordance with generally accepted accounting principles, which
generally  requires the measurement of financial  position and operating results
in terms of historical  dollars  without  considering the change in the relative
purchasing power of money over time due to inflation. The impact of inflation is
reflected  in the  increased  cost  of the  Company's  operations.  Unlike  most
industrial  companies,  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.


<PAGE>





                           HARVAZINSKI & MONTANYE, LLP
                          Certified Public Accountants
                                Albany, New York








               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Landmark Financial Corp. and Subsidiary

     We have  audited the  accompanying  consolidated  statements  of  financial
condition of Landmark  Financial  Corp. (the Company) and subsidiary as of March
31,  2000 and 1999,  and the  related  consolidated  statements  of  operations,
changes in stockholders'  equity, and cash flows for the years then ended. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  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 our audits  provide a reasonable
basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Landmark
Financial Corp. and subsidiary as of March 31, 2000 and 1999, and the results of
their  operations  and their cash  flows for the years then ended in  conformity
with generally accepted accounting principles.






Albany, New York
May 16, 2000








<PAGE>


                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                                                         March 31,
                                                                                                  2000              1999
                                                                                                  ----              ----

                             ASSETS
<S>                                                                                     <C>                  <C>
Cash (including interest bearing deposits
     $100,000, 2000; $10,600, 1999)                                                     $        568,080    $       295,827
Mortgage-backed securities, held-to-maturity (fair value
     approximates $23,312; 2000; $38,336, 1999)                                                   23,997             38,468
Investment securities, available-for-sale                                                      2,283,184          1,900,992
Loans receivable, net of allowance for loan losses of $227,218
     in 2000 and $191,019 in 1999                                                             21,643,852         19,189,257
Investments required by law - stock in Federal Home Loan
     Bank of New York, at cost                                                                   125,000            100,900
Accrued interest receivable                                                                      126,119            107,805
Premises and equipment, net of accumulated depreciation                                          552,385            583,401
Foreclosed real estate                                                                                --            118,815
Deferred tax asset                                                                                44,462             39,597
Other assets                                                                                      69,276             78,261
                                                                                          --------------          ----------


              Total Assets                                                              $     25,436,355    $    22,453,323
                                                                                        ================    ===============


     LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
     Deposits, non-interest bearing                                                     $        862,774    $       302,641
     Deposits, interest bearing                                                               21,059,728         18,971,236
     Advance payments by borrowers for property taxes and
         insurance                                                                                84,745            108,174
     Advances from the Federal Home Loan Bank of New York
         Short-term                                                                                   --            250,000
         Long-term                                                                             1,366,577            834,586
     Accrued expenses and other liabilities                                                      117,779             58,752
                                                                                        ----------------    ---------------
         Total liabilities                                                                    23,491,603         20,525,389
                                                                                        ----------------    ---------------


COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' EQUITY
     Preferred stock of $.10 par value; 100,000 shares authorized,
         none issued                                                                                  --                 --
     Common stock of $.10 par value; 400,000 shares authorized;
         154,508 and 152,000 shares issued and outstanding in
         2000 and 1999, respectively                                                              15,451             15,200
     Additional paid-in capital                                                                1,225,186          1,192,833
     Retained earnings, substantially restricted                                                 901,058            867,348
     Accumulated other comprehensive income (loss)                                               (67,897)            (5,403)
     Unearned stock based compensation                                                           (27,713)           (32,604)
     Unearned ESOP shares                                                                       (101,333)          (109,440)
                                                                                        ----------------    ---------------
                                                                                               1,944,752          1,927,934
                                                                                        ----------------    ---------------


              Total Liabilities and Stockholders' Equity                                $     25,436,355    $    22,453,323
                                                                                        ================    ===============

---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

<PAGE>


                           LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                            CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                                                        Years Ended
                                                                                                         March 31,
                                                                                                  2000              1999
                                                                                                  ----              ----
INTEREST INCOME
<S>                                                                                         <C>                <C>
     Loans receivable
         First mortgage loans                                                               $    827,967       $    742,642
         Other loans                                                                             995,352            700,384
     Investment securities and interest bearing deposits                                         156,811            153,322
                                                                                            ------------       ------------
           Total interest income                                                               1,980,130          1,596,348
                                                                                            ------------       ------------

INTEREST EXPENSE
     Deposits                                                                                  1,047,291            892,587
     Short-term advances, Federal Home Loan Bank of New York                                       2,797                242
     Long-term advances, Federal Home Loan Bank of New York                                      107,134             19,330
                                                                                            ------------       ------------
                                                                                               1,157,222            912,159
                                                                                            ------------       ------------

              Net interest income                                                                822,908            684,189

PROVISION FOR LOAN LOSSES                                                                         48,500            121,000
                                                                                            ------------       ------------

              Net interest income after provision for loan losses                                774,408            563,189
                                                                                            ------------       ------------

NON-INTEREST INCOME
     Loan fees and service charges                                                                54,389             34,280
     Net gain on sales of available-for-sale securities                                            2,925                 --
     Other non-interest income                                                                    32,048             10,232
                                                                                            ------------       ------------
           Total non-interest income                                                              89,362             44,512
                                                                                            ------------       ------------

NON-INTEREST EXPENSE
     General and administrative expenses
         Compensation, payroll taxes and fringe benefits                                         358,759            327,751
         Advertising and business promotion                                                        7,084              7,785
         Building occupancy and equipment expenses,
           including depreciation                                                                 66,226             45,228
         Federal insurance premiums                                                               10,618             14,758
         Data processing expenses                                                                 55,690             45,609
         General office and supply expense                                                        56,726             50,701
         Professional and regulatory fees                                                         74,160             86,518
         Merger and acquisition expense                                                           71,133                 --
         Other operating expenses                                                                121,098            152,360
                                                                                            ------------       ------------
           Total non-interest expense                                                            821,494            730,710
                                                                                            ------------       ------------

              Income (loss) before income taxes                                                   42,276           (123,009)

PROVISION FOR INCOME TAX BENEFIT (EXPENSE)                                                        (8,566)            26,605
                                                                                            ------------       ------------

              Net income (loss)                                                             $     33,710       $    (96,404)
                                                                                            ============       =============

NET INCOME (LOSS) PER COMMON SHARE
     Basic                                                                                  $       .24        $       (.69)
                                                                                            ===========        =============

     Diluted                                                                                $       .22        $       (.69)
                                                                                            ===========        =============
----------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>



<TABLE>
<CAPTION>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CHANGES IN
                              STOCKHOLDERS' EQUITY
                       Years Ended March 31, 2000 and 1999
----------------------------------------------------------------------------------------------------------------------------


                                                                                   Accumulated      Unearned
                                    Common Stock         Additional                   Other          Stock      Unearned     Total
                                    ------------           paid-in    Retained    Comprehensive      Based        ESOP  stockholders
                                Shares        Amounts      capital    earnings    income (loss)  Compensation    Shares     equity
                                ------        -------      -------    --------    -------------  ------------    ------     ------
BALANCES AT
<S>                            <C>         <C>          <C>          <C>           <C>            <C>         <C>        <C>
March 31, 1998                 152,000     $   15,200   $1,192,833   $ 963,752     $   5,036      $     --    $(117,466) $ 2,059,355

Comprehensive Income (loss)
Net income  (loss)                 --             --           --     (96,404)            --            --         --      (96,404)
Change in unrealized
   gain (loss) on
 securities available
   for-sale, net of tax
  effects                          --             --           --          --       (10,439)            --         --      (10,439)

Total comprehensive
income (loss)                                                                                                              (106,843)
                                                                                                                        ------------

Unearned stock
based compensation                 --             --           --          --            --       (32,604)         --       (32,604)

ESOP shares earned                 --             --           --          --            --             --         8,026       8,026
                              ------------------------------------------------------------------------------------------------------

BALANCES AT
March 31, 1999                 152,000         15,200     1,192,833    867,348        (5,403)     (32,604)      (109,440)  1,927,934
                               =====================================================================================================

Comprehensive Income (loss)
Net income (loss)                   --             --           --      33,710            --             --           --      33,710
Change in unrealized
  gain (loss) on
 securities available
 for sale, net of reclassification
 adjustment and tax effects          --            --           --          --       (62,494)            --           --    (62,494)
                                -------

Total comprehensive
income (loss)                                                                                                               (28,784)
                                                                                                                         -----------

Shares granted for
stock based compensation         2,508            251       32,353          --            --            --            --      32,604

Amortization of stock
based compensation                   --            --           --          --             --        4,891            --       4,891

ESOP shares earned                   --            --           --          --             --           --          8,107      8,107
                              ------------------------------------------------------------------------------------------------------


BALANCES AT
March 31, 2000                  154,508        $ 15,451   $1,225,186   $ 901,058 $      (67,897)    $(27,713)  $(101,333) $1,944,752
                                ====================================================================================================
----------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>



<PAGE>





<TABLE>
<CAPTION>
                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------

                                                                                                          Years Ended
                                                                                                           March 31,
                                                                                                     2000           1999
                                                                                                     ----           ----
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
<S>                                                                                          <C>             <C>
     Net income (loss)                                                                       $      33,710   $      (96,404)
     Adjustments to reconcile net income to net cash provided by (used in)
      operating activities
         Depreciation                                                                               52,621           32,189
         Amortization (accretion), net                                                               5,319            4,134
         Realized gain on sale of available-for-sale securities, net                                (2,925)              --
         Amortization of stock based compensation                                                    4,891               --
         Provision for loan losses                                                                  48,500          121,000
         Deferred income taxes                                                                       7,117          (32,497)
         Allocation of ESOP shares                                                                   8,107            8,026
         Decrease (increase) in
              Accrued interest receivable                                                          (18,314)         (21,662)
              Other assets                                                                           8,985            6,526
         Increase (decrease) in
              Accrued expenses and other liabilities                                                91,631              774
                                                                                             -------------   --------------
                                                                                                   239,642           22,086
                                                                                             -------------   --------------

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
     Net increase in loans receivable                                                           (2,473,260)      (5,788,930)
     Proceeds from sale of available-for-sale securities                                           202,925               --
     Proceeds from maturities and calls of available-for-sale securities                           200,000          600,000
     Purchases of available-for-sale securities                                                 (1,013,068)      (1,505,434)
     Proceeds from principal repayments of mortgage-backed securities                              165,552          129,397
     Purchase of premises and equipment                                                            (21,605)        (418,356)
     Purchase of investments required by law, FHLB stock                                           (24,100)         (13,500)
     Proceeds from sale foreclosed real estate                                                      88,980               --
                                                                                             -------------   --------------
                                                                                                (2,874,576)      (6,996,823)

CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
     Net increase in deposits                                                                    2,648,625        4,645,021
     Net increase (decrease) in short-term advances, FHLB                                         (250,000)         250,000
     Proceeds from long-term advances, FHLB                                                        750,000          850,000
     Payments on long-term advances, FHLB                                                         (218,009)         (15,414)
     Increase (decrease) in advances from borrowing taxes and insurance                            (23,429)          10,721
                                                                                             -------------   --------------
                                                                                                 2,907,187        5,740,328

              Net increase (decrease) in cash and cash equivalents                                 272,253       (1,234,409)

CASH AND CASH EQUIVALENTS, beginning of year                                                       295,827        1,530,236
                                                                                             -------------   --------------

CASH AND CASH EQUIVALENTS, end of year                                                       $     568,080   $      295,827
                                                                                             =============   ==============

SUPPLEMENTAL DISCLOSURES:
     Cash paid for:
         Income taxes                                                                        $         820   $          125
                                                                                             =============   ==============

         Interest on deposits and borrowings                                                 $   1,157,222   $      912,159
                                                                                             =============   ==============

     Decrease on unrealized loss on securities available-for-sale, net of tax                $     (62,494)  $      (10,439)
                                                                                             =============   ==============

     Transfer of loans receivable to foreclosed real estate                                  $          --   $      118,815
                                                                                             =============   ==============

     Insurance of common stock for stock based compensation                                  $      32,604   $           --
                                                                                             =============   ==============

     Loans originated to finance the sale of real estate acquired
         through foreclosure                                                                 $      29,835   $           --
                                                                                             =============   ==============

----------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>

<PAGE>




                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999





NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     1.  Organization

     On November 13, 1997,  Landmark  Community Bank (the Bank) converted from a
     federally  chartered  mutual  savings bank to a federally  chartered  stock
     savings bank, at which time all of the capital stock of the converted  bank
     was  acquired  by  Landmark  Financial  Corp.  (the  Company),  a  Delaware
     Corporation.  The Company was  organized to acquire all of the stock issued
     by the Bank upon  consummation of the stock  conversion.  Prior to November
     13, 1997, the Company had no assets or  liabilities  and had not engaged in
     any business other than as necessary to complete its  organization  and the
     conversion.  On November 13, 1997, in connection with the stock conversion,
     the company issued and sold 152,000 shares of its common stock,  par value,
     $0.10 per share, in a subscription and community  offering to the Company's
     Employee Stock  Ownership  Plan (ESOP),  the Bank's members and the general
     public.  Total net proceeds of the  subscription  and  community  offering,
     after conversion  expenses of approximately  $311,967,  were  approximately
     $1,208,033.  The  transaction  was accounted  for in a manner  similar to a
     pooling-of-interests  method. Accordingly, the accounting basis for assets,
     liabilities  and  equity  accounts  remained  the  same  as  prior  to  the
     conversion.

     The only  business of the Company is the  ownership  of the Bank.  The Bank
     provides a variety of financial  services to the greater  Canajoharie,  New
     York  area.  The  Bank's  primary  sources  of  revenue  are  single-family
     residential mortgages and consumer loans.

     A summary of the significant  accounting policies  consistently  applied in
     the  preparation  of the  accompanying  consolidated  financial  statements
     follows.

     2.  Basis of Presentation and Consolidation

     The consolidated  financial statements include the accounts of the Landmark
     Financial  Corp.  (the Company) and its  wholly-owned  subsidiary  Landmark
     Community  Bank (the Bank).  All material  intercompany  balances have been
     eliminated in consolidation.

     3.  Cash and Time Deposits

     Cash is defined to include all  checking  and demand  deposits,  as well as
     certificates  of deposit with an original  maturity when purchased of three
     months or less.  Time  deposits  include  certificates  of deposit  with an
     original maturity in excess of three months.

     The Company maintains cash and time deposits at one financial  institution,
     totaling  $270,353 at March 31,  2000.  These  balances  are insured by the
     Federal Deposit Insurance Corporation up to $100,000.

     4.  Investment Securities

     Trading  Securities:  Securities  that are held for  short-term  resale are
     classified as trading account securities and recorded at their fair values.
     Realized and unrealized gains and losses on trading account  securities are
     included in noninterest income.



<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     4.  Investment Securities - continued

     Securities Held-to-Maturity:  Government and Federal agency securities that
     management  has the  positive  intent and ability to hold to  maturity  are
     reported at cost,  adjusted for  amortization  of premiums and accretion of
     discounts that are recognized in interest  income using the interest method
     over  the  period  to  maturity.   Mortgage-backed   securities   represent
     participating   interests  in  pools  of  long-term  first  mortgage  loans
     originated  and  serviced  by  issuers of the  securities.  Mortgage-backed
     securities  are  carried  at  unpaid  principal   balances,   adjusted  for
     unamortized  premiums and unearned  discounts.  Premiums and  discounts are
     amortized  using  the  interest   method  over  the  remaining   period  to
     contractual maturity, adjusted for anticipated prepayments.

     Securities  Available-for-Sale:  Available-for-sale  securities  consist of
     investment   securities  not  classified  as  trading   securities  nor  as
     held-to-maturity  securities.  Unrealized  holding gains and losses, net of
     tax, on  available-for-sale  securities  are  reported as a net amount in a
     separate component of stockholders' equity until realized. Gains and losses
     on the sale of  available-for-sale  securities  are  determined  using  the
     specific-identification  method.  The  amortization  of  premiums  and  the
     accretion of discounts are recognized in interest income using the interest
     method over the period of maturity.

     Declines   in  the  fair   value   of   individual   held-to-maturity   and
     available-for-sale   securities  below  their  cost  that  are  other  than
     temporary result in write-downs of the individual  securities to their fair
     value. The related write-downs are included in earnings as realized losses.
     The Company recognized no write downs in 2000 or 1999.

     5.  Loans Receivable

     Loans are stated at unpaid principal balances,  less the allowance for loan
     losses.


     On April 1, 1995,  the  Company  adopted the  provisions  of  Statement  of
     Financial Accounting Standards (SFAS) No. 114, Accounting for Creditors for
     Impairment of a Loan,  as amended by SFAS No. 118,  Accounting by Creditors
     for  Impairment  of a  Loan  -  Income  Recognition  and  Disclosures.  The
     Statements  provide guidance in defining and measuring loan  impairment.  A
     loan is  considered  impaired  when it is probable that the Company will be
     unable to collect all amounts of principal and interest  under the original
     terms of the agreement.  Accordingly,  the Company  measures all nonaccrual
     and  restricted  commercial  real  estate  and  commercial  loans  (if any)
     individually,  based on the present  value of  expected  future cash flows,
     discounted  at  the  loans  effective  interest  rate  or,  at  the  loan's
     observable market price or the fair value of collateral.  The statements do
     not  apply to large  groups of small  balance,  homogeneous  loans  such as
     residential  real  estate,   installment  and  consumer  loans,   that  are
     collectively  evaluated  for  impairment.  The adoption of SFAS No. 114 and
     No.118  resulted in no  prospective  adjustment  to the  allowance for loan
     losses.

     SFAS No. 91, Accounting for  Non-refundable  Fees and Costs Associated with
     Originating or Acquiring  Loans and Initial Direct Costs of Leases,  states
     that loan fees and  certain  direct  loan  origination  costs are  normally
     deferred and the net fee or cost is recognized as an adjustment to interest
     income using the interest  method,  over the contractual life of the loans,
     adjusted  for  estimated  prepayments  based  on the  Company's  historical
     prepayment  experience.  Commitment  fees and costs relating to commitments
     whose likelihood of exercise is remote should be recognized


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     5.  Loans Receivable - continued


     over the commitment  period on a straight-line  basis. If the commitment is
     subsequently   exercised  during  the  commitment   period,  the  remaining
     unamortized  commitment  fee at the time of exercise  should be  recognized
     over the life of the loan as an adjustment of yield.  Loan fees and certain
     direct loan origination costs are not deferred at the Company, however, due
     to immateriality.  These fees are recognized in the period  collected.  The
     Company does not charge commitment fees.


     Interest  income  generally is not  recognized on specific  impaired  loans
     unless the likelihood of further loss is remote. Interest payments received
     on such loans are applied as a  reduction  of the loan  principal  balance.
     Interest income on other impaired loans is recognized only to the extent of
     interest payments received.

     The  allowance  for  loan  losses  is  maintained  at  a  level  which,  in
     management's  judgment, is adequate to absorb credit losses inherent in the
     loan  portfolio.  The  amount  of the  allowance  is based on  management's
     evaluation  of the  collectibility  of the loan  portfolio,  including  the
     nature of the portfolio,  credit concentrations,  trends in historical loss
     experience,  specific impaired loans,  economic  conditions and other risks
     inherent in the  portfolio.  Allowances  for impaired  loans are  generally
     determined  based on  collateral  values or the present  value of estimated
     cash flows.  The  allowance is  increased  by a provision  for loan losses,
     which is charged to expense, and reduced by charge-offs, net of recoveries.

     6.  Premises and Equipment

     Premises and equipment are reported at cost, less accumulated depreciation.
     Expenditures for acquisitions,  renewals,  and betterments are capitalized,
     whereas  maintenance  and  repair  costs are  expensed  as  incurred.  When
     equipment is retired or otherwise disposed of, the appropriate accounts are
     relieved of costs and  accumulated  depreciation  and any resultant gain or
     loss is credited or charged to income.

     Depreciation  is provided for in amounts  sufficient  to relate the cost of
     depreciable  assets to operations  over their  estimated  useful lives on a
     straight-line  basis. The estimated lives used in determining  depreciation
     vary from five (5) to thirty-nine (39) years.

7.       Foreclosed Real Estate

     Foreclosed  real estate  includes  both  formally  foreclosed  property and
     in-substance  foreclosed property.  In-substance  foreclosed properties are
     those  properties for which the institution has taken physical  possession,
     regardless of whether formal foreclosure proceedings have taken place.

     At the time of foreclosure, foreclosed real estate is recorded at the lower
     of the carrying  amount or fair value less cost to sell,  which becomes the
     property's new basis.  Any  write-downs  based on the asset's fair value at
     date of  acquisition  are charged to the allowance  for loan losses.  After
     foreclosure,  these assets are carried at the lower of their new cost basis
     or fair value less cost to sell.  Costs incurred in maintaining  foreclosed
     real  estate  and  subsequent  adjustments  to the  carrying  amount of the
     property are included in income (loss) on foreclosed real estate.


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     8.   Income Taxes

     Income taxes are provided for the tax effects of the transactions  reported
     in the  financial  statements  and  consist  of  taxes  currently  due plus
     deferred  taxes  related  primarily  to  differences  between  the basis of
     investments,  allowance  for loan losses,  and the use of the modified cash
     basis for  income  tax  reporting  purposes.  The  deferred  tax assets and
     liabilities   represent  the  future  tax  return   consequences  of  those
     differences, which will either be taxable or deductible when the assets and
     liabilities  are recovered or settled.  Deferred tax assets and liabilities
     are  reflected  at income tax rates  applicable  to the period in which the
     deferred tax assets or liabilities  are expected to be realized or settled.
     As  changes  in tax laws or rates are  enacted,  deferred  tax  assets  and
     liabilities  are  adjusted  through the  provision  for income  taxes.  The
     Company and its  subsidiary  file  consolidated  federal and separate state
     income tax  returns.  Income  taxes are  allocated  to the  Company and its
     Subsidiary as though separate federal tax returns are being filed.

     9.   Use of Estimates

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

     Material estimates that are particularly  susceptible to significant change
     relate to the determination of the estimated losses on loans and foreclosed
     real  estate,  if  any.  Management  obtains  independent   appraisals  for
     significant properties.

     While  management uses available  information to recognize  losses on loans
     and foreclosed real estate,  further  reductions in the carrying amounts of
     loans and  foreclosed  assets  may be  necessary  based on changes in local
     economic conditions. In addition,  regulatory agencies, as an integral part
     of their examination  process,  periodically review the estimated losses on
     loans and foreclosed real estate.  Such agencies may require the Company to
     recognize  additional  losses based on their  judgments  about  information
     available  to them at the  time of  their  examination.  Because  of  these
     factors,  it is reasonably  possible that the estimated losses on loans and
     foreclosed real estate may change materially in the near term. However, the
     amount of the change that is reasonably possible cannot be estimated.

     10.  Fair Value of Financial Instruments

     Effective  April 1, 1995 the Company  implemented  Statement  of  Financial
     Accounting  Standards  No. 107,  Disclosures  about Fair Value of Financial
     Instruments,  which  requires  disclosure of fair market value  information
     about financial instruments,  whether or not recognized in the statement of
     financial condition. In cases where quoted market prices are not available,
     fair values are based on estimates  using present value or other  valuation
     techniques.  Those techniques are significantly affected by the assumptions
     used,  including the discount  rate and estimates of future cash flows.  In
     that regard,  the derived fair value estimates  cannot be  substantiated by
     comparison to independent markets and, in many cases, could not be realized
     in immediate  settlement  of the  instruments.  Statement  No. 107 excludes
     certain financial instruments and all nonfinancial instruments from its

<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




        NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     10.  Fair Value of Financial Instruments - continued

     disclosure  requirements.  Accordingly,  the  aggregate  fair value amounts
     presented do not represent the underlying value of the Company.

     The  following  methods  and  assumptions  were  used  by  the  Company  in
     estimating its fair value disclosures for financial instruments:

         Cash  and  cash  equivalents:  The  carrying  amounts  reported  in the
         statement  of  financial   condition  for  cash  and  cash  equivalents
         approximate those assets' fair values.

         Time  deposits:  Fair values for time  deposits are  estimated  using a
         discounted  cash flow analysis that applies  interest  rates  currently
         being offered on certificates  to a schedule of aggregated  contractual
         maturities on such time deposits.

         Investment securities including trading account securities: Fair values
         for  investment  securities  are based on quoted market  prices,  where
         available.  If quoted market prices are not available,  fair values are
         based on quoted market prices of comparable instruments.

         Loans:  For  variable-rate  loans that reprice  frequently  and with no
         significant  change in credit  risk,  fair values are based on carrying
         amounts. The fair values for other loans (for example,  fixed rate real
         estate) are estimated  using  discounted  cash flow analysis,  based on
         interest rates  currently being offered for loans with similar terms to
         borrowers of similar credit quality.  Loan fair value estimates include
         judgments   regarding   future   expected  loss   experience  and  risk
         characteristics.  Fair values for impaired  loans are  estimated  using
         discounted cash flow analysis or underlying  collateral  values,  where
         applicable.   The  carrying  amount  of  accrued  interest   receivable
         approximates its fair value.

         Deposits:  The fair values  disclosed for demand deposits (for example,
         interest-bearing  passbook  accounts) are, by definition,  equal to the
         amount payable on demand at the reporting date (that is, their carrying
         amounts).  The fair values for  certificates  of deposit are  estimated
         using a discounted cash flow  calculation  that applies  interest rates
         currently  being  offered on  certificates  to a schedule of aggregated
         contractual maturities on such time deposits.

         Advance  payments by borrowers for taxes and insurance  (escrows):  The
         carrying amount of escrow accounts approximate fair value.

         Advances  from the  Federal  Home Loan  Bank:  The fair  value of these
         advances is  estimated  by  discounting  the future cash flows of these
         advances  using the current rates at which similar term advances  could
         be obtained.

         Accrued interest: The carrying  amounts of accrued interest approximate
         the fair values.

         Loan commitments: Fees charged for commitments to extend credit are not
         significant  and are offset by  associated  credit risk with respect to
         certain amounts expected to be funded.  Accordingly,  the fair value of
         the financial instruments is immaterial.



<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     11.  Statements of Cash Flows

     The Company considers all cash and amounts due from depository institutions
     and  interest-bearing  deposits in other banks to be cash  equivalents  for
     purposes of the statements of cash flows.

     12.  Interest Rate Risk

     The Bank is engaged  principally  in providing  first  mortgage loans (both
     adjustable  rate and fixed  rate  mortgage  loans)  and  consumer  loans to
     individuals  (See Note C for the composition of the loan portfolio at March
     31, 2000 and 1999).  Mortgage and consumer loans and investment  securities
     are funded primarily with short-term  liabilities which have interest rates
     that vary with market rates over time.  Net interest  income and the market
     value of net  interest-earning  assets will  fluctuate  based on changes in
     interest rates and changes in the levels of  interest-sensitive  assets and
     liabilities.   The  actual   duration   of   interest-earning   assets  and
     interest-bearing  liabilities  may  differ  significantly  from the  stated
     duration as a result of prepayment, early withdrawals, and similar factors.

     13.  Employee Stock Ownership Plan

     The cost of  common  shares  issued  to the ESOP but not yet  allocated  to
     participants is presented in the consolidated  balance sheet as a reduction
     of  stockholders'  equity.  Compensation  expense is recorded  based on the
     market  price  of the  shares  as they are  committed  to be  released  for
     allocation to participant accounts. The difference between the market price
     and  the  cost  of  shares  committed  to be  released  is  recorded  as an
     adjustment to paid-in capital.

     Shares are considered  outstanding  for earnings per share  calculations as
     they are committed to be released;  unallocated  shares are not  considered
     outstanding.

     14.  Earnings Per Common Share

     Earnings per common share is computed  under the provisions of Statement of
     Financial  Accounting  Standards  No. 128,  "Earnings  Per Share."  Amounts
     reported  as earnings  per Common  Share for the years ended March 31, 2000
     and 1999  reflect  earnings  available to the common  stockholders  for the
     year,  divided by the weighted average number of common shares  outstanding
     during the year.  Diluted  earnings per share  reflects  additional  common
     shares that would have been outstanding if dilutive potential common shares
     had been issued, as well as any adjustment to income that would result from
     assumed issuance. Potential common shares that may be issued by the Company
     relate to outstanding stock options,  and are determined using the treasury
     stock method.

     15.  Comprehensive Income

     The Company has adopted  SFAS No. 130,  "Reporting  Comprehensive  Income,"
     which establishes  standards for the reporting and display of comprehensive
     income and its  components in financial  statements.  Comprehensive  income
     represents the sum of net income and items of "other comprehensive income,"
     which are reported  directly in stockholders'  equity,  net of tax, such as
     the change in the net unrealized  gain or loss on securities  available for
     sale. While SFAS No. 130 does not require a specific  reporting  format, it
     does  require  that an  enterprise  display  an amount  representing  total
     comprehensive income for each period for which an income statement is

<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     15.  Comprehensive Income - continued

     presented.  In  accordance  with SFAS No. 130,  the  Company  has  reported
     comprehensive  income  and  its  components  for  2000  and  1999,  in  the
     consolidated  statements of changes in  stockholders'  equity.  Accumulated
     other comprehensive  income, which is included in stockholders' equity, net
     of tax, represents the net unrealized gain or loss on securities  available
     for sale.

     The components of other comprehensive income and related tax effects are as
follows:

<TABLE>
<CAPTION>
                                                                                                          Years Ended
                                                                                                           March 31,
                                                                                                     2000           1999
                                                                                                     ----           ----

         Unrealized gains (losses) on securities
<S>                                                                                            <C>            <C>
              available-for-sale                                                               $ (71,551)     $   (10,439)
         Reclassification adjustment for gains
              realized in income                                                                  (2,925)             --
                                                                                               ---------         ---------

                Net Unrealized losses                                                            (74,476)         (10,439)

         Tax benefit                                                                              11,982                --
                                                                                               ---------      ------------

              Net-of-tax-amount                                                                $ (62,494)     $    (10,349)
                                                                                               =========      ============
</TABLE>

     16.  Stock Compensation Plans

      Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
      Stock-Based  Compensation,  encourages  all entities to adopt a fair value
      based method of accounting for employee stock compensation plans,  whereby
      compensation  cost is measured at the grant date based on the value of the
      award and is  recognized  over the  service  period,  which is usually the
      vesting period.  However,  it also allows an entity to continue to measure
      compensation  cost for those plans using the intrinsic  value based method
      of accounting  prescribed by Accounting  Principles  Board Opinion No. 25,
      Accounting for Stock Issued to Employees, whereby compensation cost is the
      excess,  if any, of the quoted market price of the stock at the grant date
      over the amount an employee must pay to acquire the stock. The Company has
      elected to continue with the accounting methodology in Opinion No. 25 and,
      as a result, has provided pro forma disclosures of net income and earnings
      per share and other  disclosures,  as if the fair  value  based  method of
      accounting had been applied.

     17.  Reclassification

     Certain  1999  accounts  have been  reclassified  to conform  with the 2000
     presentation.


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE B - INVESTMENT AND MORTGAGED-BACKED SECURITIES

     Investment and mortgage-backed securities have been classified according to
     management's intent. The amortized cost of securities and their approximate
     fair values are as follows:

     Securities available-for-sale
     -----------------------------
<TABLE>
<CAPTION>
                                          March 31, 2000                                   March 31, 1999
                           ------------------------------------------       ------------------------------------------
                                        Gross      Gross                                  Gross      Gross
                           Amortized Unrealized  Unrealized   Fair            Amortized Unrealized Unrealized   Fair
                             Cost       Gains      Losses     Value             Cost       Gains     Losses     Value
                             ----       -----      ------     -----             ----       -----     ------     -----

         U.S.
         government
         and federal
<S>                       <C>         <C>        <C>        <C>              <C>         <C>       <C>       <C>
         agencies         $2,012,685  $      --  $ (61,805) $1,950,880       $1,399,476  $  2,137  $     --  $1,401,613


         Mortgage-
         backed
         securities          350,378         --    (18,074)    332,304          506,919        --    (7,540)    499,379
                          ----------  ---------  ---------  ----------       ----------  --------  --------  ----------

                          $2,363,063  $      --  $ (79,879) $2,283,184       $1,906,395  $  2,137  $ (7,540) $1,900,992
                          ==========  =========  =========  ==========       ==========  ========  ========  ==========
</TABLE>


     Securities held-to-maturity
     ---------------------------
<TABLE>
<CAPTION>
                                          March 31, 2000                                    March 31, 1999
                           ------------------------------------------      --------------------------------------------
                                        Gross       Gross                                  Gross      Gross
                           Amortized Unrealized  Unrealized   Fair            Amortized Unrealized Unrealized   Fair
                             Cost       Gains      Losses     Value             Cost       Gains     Losses     Value
                             ----       -----      ------     -----             ----       -----     ------     -----

         Mortgage-
         backed
<S>                       <C>         <C>        <C>        <C>              <C>         <C>       <C>       <C>
         securities       $   23,997  $      --  $    (685) $   23,312       $  38,468   $     --  $   (132) $  38,336
                          ==========  =========  =========  ==========       =========   ========  ========  =========
</TABLE>

     The following is a summary of maturities of securities held-to-maturity and
     available-for-sale as of March 31, 2000:

<TABLE>
<CAPTION>
                                                      Securities held-to-maturity       Securities  available-for-sale
                                                      ---------------------------       -------------------------------
         Amounts maturing in:                         Amortized                            Amortized
                                                        Cost          Fair Value             Cost             Fair Value

<S>                                                <C>               <C>                <C>                <C>
         One year or less                          $         --      $         --       $       250,000    $      247,735
         After one year through five years                   --                --               350,000           335,119
         After five years through ten years                  --                --             1,117,836         1,078,965
         After ten years                                 23,997            23,312               645,227           621,365
                                                   ------------      ------------       ---------------    --------------
                                                   $     23,997      $     23,312       $     2,363,063    $    2,283,184
                                                   ============      ============       ===============    ==============
</TABLE>



<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE B - INVESTMENT AND MORTGAGED-BACKED SECURITIES - Continued

     The  amortized  cost  and  fair  value of  mortgage-backed  securities  are
     presented in the  held-to-maturity  category by contractual maturity in the
     preceding   table.   Expected   maturities  will  differ  from  contractual
     maturities  because  borrowers  may  have  the  right  to  call  or  prepay
     obligations without call or prepayment penalties.

     For the years  ended  March  31,  2000 and 1999  proceeds  from the sale of
     securities held-to-maturity amounted to $-0-. Gross realized gain (loss) on
     securities  available-for-sale  amounted  to $2,925  and $-0- for the years
     ended March 31, 2000 and 1999, respectively.

NOTE C - LOANS RECEIVABLE, NET

     The Company's loans receivable are summarized as follows:
<TABLE>
<CAPTION>
                                                                                                           March 31,
                                                                                                     2000            1999
                                                                                                     ----            ----


<S>                                                                                         <C>              <C>
         Conventional first mortgages on real estate (1-4 family)                           $   10,218,106   $    9,481,327
         Property improvement loans                                                                154,814          112,782
         Home equity loans                                                                       1,277,395          911,501
         Construction loans                                                                        166,669          219,992
         Loans to depositors, secured by savings                                                   142,062           74,098
         Consumer loans                                                                          6,034,776        6,242,686
         Commercial                                                                              3,877,248        2,337,890
                                                                                            --------------   --------------

                                                                                            $   21,871,070   $   19,380,276

         Allowance for loan losses                                                                (227,218)        (191,019)
         Loans in process                                                                               --               --
                                                                                            --------------   --------------
              Total loans receivable, net                                                   $   21,643,852   $   19,189,257
                                                                                            ==============   ==============


     An analysis of the allowance for loan losses is as follows:
                                                                                                           March 31,
                                                                                                     2000            1999
                                                                                                     ----            ----

         Balance, beginning of year                                                           $    191,019     $    122,000
         Loans charged off                                                                         (13,267)         (51,981)
         Recoveries                                                                                    966               --
         Provision for losses                                                                       48,500          121,000
                                                                                              ------------     ------------

         Balance, end of year                                                                 $    227,218     $    191,019
                                                                                              ============     ============
</TABLE>

     At March 31,  2000 and 1999,  the total  recorded  investment  in  impaired
     loans,  all of which had allowances  determined in accordance with SFAS No.
     114  and  No.  118   amounted  to   approximately   $78,000  and   $59,000,
     respectively. The average recorded investment in impaired loans amounted to
     approximately  $19,600  and  $34,000 for the years ended March 31, 2000 and
     1999, respectively. The allowance for loan losses related to impaired loans
     amounted to $-0- at March 31, 2000 and 1999, respectively.  Interest income
     on impaired  loans of $6,723 and $2,050 was  recognized  for cash  payments
     received in 2000 and 1999, respectively.


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE C - LOANS RECEIVABLE, NET - Continued

     The Company has no  commitments to loan  additional  funds to the borrowers
     whose loans have been modified.

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

              Balance, beginning of year                      $     460,035
              Additions                                             466,093
              Payments                                             (152,730)
              Change in status                                     (258,753)
                                                              -------------

              Balance, end of year                            $     514,645
                                                              =============

     Loans  with  carrying  amounts of $-0- and  $118,815  were  transferred  to
     foreclosed real estate in 2000 and 1999, respectively.


NOTE D - STOCK IN FEDERAL HOME LOAN BANK OF NEW YORK

     The Company has its savings shares insured by the Federal  Savings and Loan
     Insurance   Corporation.   The  Federal   Home  Loan  Bank   requires   all
     participating  savings and loan  associations to purchase Federal Home Loan
     Bank stock in an amount  equal to one  percent  (1%) of  outstanding  first
     mortgage loans.


NOTE E - ACCRUED INTEREST RECEIVABLE

     Accrued interest receivable is summarized as follows:
                                                             March 31,
                                                       2000            1999
                                                       ----            ----

         Loans                                  $     96,262     $     87,836
         Mortgage-backed securities                    1,949            3,173
         Investments and other                        27,908           16,796
                                                ------------     ------------

                                                $    126,119     $    107,805
                                                ============     ============


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE F - PREMISES AND EQUIPMENT

     A summary of the Company's premises and equipment is as follows:

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

         Land and building                      $    307,917     $    307,917
         Improvements                                130,894          130,294
         Equipment                                   299,618          285,666
                                                ------------     ------------
                                                     738,429          723,877
         Less accumulated depreciation               186,044          140,476
                                                ------------     ------------

                                                $    552,385     $    583,401
                                                ============     ============

     Depreciation   expense  for  2000  and  1999  was   $52,621  and   $32,189,
respectively.


NOTE G - FORECLOSED REAL ESTATE

     At March 31, 2000 and 1999, the Company had foreclosed real estate expected
     to be disposed of in the near term of $-0- and $118,815,  respectively.  In
     2000 and  1999,  foreclosure  losses  in the  amount  of $-0- and  $30,000,
     respectively, were charged off to the allowance for loan losses.


NOTE H - DEPOSITS

     Deposit  account  balances at March 31, 2000 and 1999,  are  summarized  as
follows:

<TABLE>
<CAPTION>
                                                                                        March 31,
                                                                           2000                            1999
                                                                -----------------------         --------------------------
                                                                   Amount           %             Amount             %
                                                                   ------           -             ------             -

         Balance by interest rate:
<S>                                                         <C>                    <C>       <C>                    <C>
              Interest-bearing checking accounts            $       326,473        1.49%     $       492,011        2.55%
              Non-interest bearing checking accounts                862,774        3.94%             302,641        1.57%
              Passbook accounts                                   4,358,743       19.88%           3,395,145       17.62%
              Certificates of deposit                            16,374,512       74.69%          15,084,080       78.26%
                                                            ---------------       ------     ---------------       ------

                                                            $    21,922,502      100.00%     $    19,273,877      100.00%
                                                            ===============      =======     ===============      =======
</TABLE>


     The aggregate amount of certificates of deposit with a minimum denomination
     of $100,000 was  approximately  $1,333,000 and $1,362,000 at March 31, 2000
     and 1999,  respectively.  Deposit  amounts  in excess of  $100,000  are not
     Federally insured.

     Deposits  from  related  parties  held by the Company at March 31, 2000 and
     1999 amounted to $583,487 and $486,649, respectively.


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE H - DEPOSITS - Continued

     At march 31, 2000 scheduled  maturities of  certificates  of deposit are as
follows:

              March 31,    2001                               $     9,272,990
                           2002                                     4,606,695
                           2003                                     1,578,338
                           2004                                       238,512
                           2005                                         8,991
                           Thereafter                                 668,986
                                                              ---------------

                                                              $    16,374,512
                                                              ===============

     Interest expense for 2000 and 1999 was $11,407 and $7,352, respectively for
     interest-bearing checking accounts, $116,194 and $101,707, respectively for
     passbook accounts, and $919,690 and $783,528, respectively for certificates
     of deposit.



NOTE I - ADVANCES FROM THE FEDERAL HOME LOAN BANK

     Short-term Advances

        The Bank has short-term advances  outstanding from the Federal Home Loan
        Bank as of March 31, 2000 and 1999 of $-0- and  $250,000,  respectively.
        The advance was paid on June 21, 1999 and interest was charged at a rate
        of 4.98%.

     Long-term Advances

       The Bank has long-term  advances  outstanding  from the Federal Home Loan
       Bank  as  of  March  31,  2000  and  1999  of  $1,366,577  and  $834,586,
       respectively.  The advances bear interest ranging from 5.08% to 6.29% and
       have due dates  ranging from  December 18, 2000 to October 29, 2008.  The
       long-term advances at March 31, 2000 are repayable as follows:

       Years ending March 31, 2001                         $       525,450
                              2002                                 281,158
                              2003                                 179,057
                              2004                                 190,388
                              2005                                  83,465
                              2006 - 2009                          107,059
                                                           ---------------

                                                           $     1,366,577
                                                           ===============

     The  advances are  collateralized  by  qualifying  one to four family first
mortgage loans (see note C).


NOTE J - INCOME TAXES

     The Company  files  federal and state income tax returns on a calendar year
     basis. If certain  conditions are met in determining  taxable  income,  the
     Company is allowed a special bad debt

<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE J - INCOME TAXES - Continued

     deduction  based on  specified  experience  formulas.  The Company used the
     experience formula in 1999 and anticipates using the same method in 2000.

     Income tax expense (benefit) is summarized as follows:


                                                      Years Ended
                                                       March 31,
                                                 2000            1999
                                                 ----            ----

         Federal
              Current                        $        --    $    (2,206)
              Deferred                            12,129        (18,960)
                                             -----------    -----------
                                                  12,129        (21,166)

         State
              Current                        $     1,449    $     8,098
              Deferred                            (5,012)       (13,537)
                                             -----------    -----------
                                                  (3,563)        (5,439)
                                             -----------    -----------

                                             $     8,566    $   (26,605)
                                             ===========    ===========


     Taxes paid during the years  ended  March 31, 2000 and 1999,  were $820 and
$125, respectively.

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

                                                             Years Ended
                                                              March 31,
                                                         2000           1999
                                                         ----           ----

    Expected tax provision (benefit) at 34%          $    14,373   $    (41,823)
    State franchise tax, net of federal tax benefit       (2,351)         7,307
    Other, net                                            (3,456)         7,911
                                                     -----------   ------------

                                                     $     8,566   $    (26,605)
                                                     ===========   ============


     Effective tax rate (benefit) for 2000 and 1999 was 34%.

     Deferred  tax  liabilities   have  been  provided  for  taxable   temporary
     differences  related  to  depreciation  and  accrued  interest  receivable.
     Deferred tax assets have been provided for deductible temporary differences
     related to the allowance for loan losses,  unrealized  losses on securities
     available-for-sale,

<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE J - INCOME TAXES - Continued

     interest   receivable,   other   liabilities   and  a  net  operating  loss
     carryforward. The components of the net deferred tax asset is as follows:

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

     Deferred tax asset
         Net operating loss                  $         --   $     25,067
         Unrealized loss on securities
              available-for-sale                   11,982             --
         Allowance for loan losses                 51,607         45,845
                                             ------------   ------------
                                                   63,589         70,912

     Deferred tax liabilities
         Interest receivable                      (14,347)       (25,873)
         Other                                     (4,780)        (5,442)
                                             ------------   ------------
                                                  (19,127)       (31,315)
                                             ------------   ------------

              Net deferred tax asset         $     44,462   $     39,597
                                             ============   ============

     Included in retained  earnings at March 31, 2000 and 1999 is  approximately
     $141,000  in bad debt  reserves  for which no deferred  federal  income tax
     liability has been recorded.  These amounts represent allocations of income
     to bad debt  deductions for tax purposes only.  Reduction of these reserves
     for purposes  other than tax  bad-debt  losses or  adjustment  arising from
     carryback of net  operating  losses would create  income for tax  purposes,
     which would be subject to the  then-current  corporate income tax rate. The
     unrecorded deferred liability on these amounts was approximately $48,000 at
     March 31, 2000 and 1999, respectively.

NOTE K - REGULATORY MATTERS

     The  Company  and the  Bank  are  subject  to  various  regulatory  capital
     requirements  administered by its primary federal regulator,  the Office of
     Thrift  Supervision  (OTS).  Failure to meet the minimum regulatory capital
     requirements  can  initiate  certain  mandatory,  and  possible  additional
     discretionary  actions  by  regulators,  that if  undertaken,  could have a
     direct  material  affect  on the  Company  and the  consolidated  financial
     statements.  Under  the  regulatory  capital  adequacy  guidelines  and the
     regulatory framework for prompt corrective action, the Company and the Bank
     must meet specific capital guidelines  involving  quantitative  measures of
     the   Company   and   the   Bank's   assets,   liabilities,   and   certain
     off-balance-sheet   items  as  calculated   under   regulatory   accounting
     practices.  The Company and the Bank's capital  amounts and  classification
     under  the  prompt   corrective  action  guidelines  are  also  subject  to
     qualitative  judgments by the regulators and components,  risk  weightings,
     and other factors.

     Quantitative  measures established by regulation to ensure capital adequacy
     require the Company and the Bank to maintain minimum amounts and ratios of:
     total  risk-based  capital and Tier I capital to  risk-weighted  assets (as
     defined in the  regulations),  Tier I capital to adjusted  total assets (as
     defined),  and  tangible  capital to adjusted  total  assets (as  defined).
     Management  believes,  as of March 31, 2000,  that the Company and the Bank
     meets all capital adequacy requirements to which they are subject.


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE K - REGULATORY MATTERS - Continued

     As of March  31,  2000,  the most  recent  notification  from the OTS,  the
     Company  and the  Bank  was  categorized  as  well  capitalized  under  the
     regulatory framework for prompt corrective action. To remain categorized as
     well  capitalized,   the  Company  will  have  to  maintain  minimum  total
     risk-based,  Tier I risk-based,  and Tier I leverage ratios as disclosed in
     the table below.  There are no  conditions  or events since the most recent
     notification,  except as disclosed in Note V, that management believes have
     changed the Company and the Bank's prompt corrective action category.


<TABLE>
<CAPTION>
                                                                                                 To Be Well Capitalized
                                                                         For Capital             Under Prompt Corrective
                                             Actual                  Adequacy Purposes              Action Provisions
                                        -----------------           --------------------         ------------------------
                                         Amount     Ratio            Amount       Ratio             Amount        Ratio
                                        -----------------           --------------------         ------------------------
As of March 31,2000:
   Total Risk-Based Capital
<S>                                    <C>            <C>             <C>            <C>           <C>              <C>
     (to Risk-Weighted Assets)         $  2,256,554   13.0%         >=$1,393,900   >=8.0%        >=$1,742,300     >=10.0%
   Tier I Capital
     (to Risk-Weighted Assets)         $  2,029,336   11.6%         >=$ 696,900    >=4.0%        >=$1,045,400     >=6.0%
   Tier I Capital
     (to Adjusted Total Assets)        $  2,029,336    8.0%         >=$1,017,400   >=4.0%        >=$1,271,800     >=5.0%
   Tangible Capital
     (to Adjusted Total Assets)        $  2,029,336    8.0%         >=$ 508,700    >=2.0%        >=$508,700       >=2.0%
</TABLE>


<TABLE>
<CAPTION>
                                                                                                 To Be Well Capitalized
                                                                         For Capital             Under Prompt Corrective
                                             Actual                  Adequacy Purposes              Action Provisions
                                        -----------------           --------------------         ------------------------
                                         Amount     Ratio            Amount       Ratio             Amount        Ratio
                                        -----------------           --------------------         ------------------------
As of March 31, 1999:
   Total Risk-Based Capital
<S>                                    <C>            <C>             <C>            <C>           <C>             <C>
     (to Risk-Weighted Assets)         $  2,221,400   14.3%         >=$1,240,300   >=8.0%        >=$1,550,400    >=10.0%
   Tier I Capital
     (to Risk-Weighted Assets)         $  2,030,381   13.1%         >=$ 620,200    >=4.0%        >=$930,300      >=6.0%
   Tier I Capital
     (to Adjusted Total Assets)        $  2,030,381    9.0%         >=$ 906,800    >=4.0%        >=$1,133,500    >=5.0%
   Tangible Capital
     (to Adjusted Total Assets)        $  2,030,381    9.0%         >=$ 453,400    >=2.0%        >=$453,400      >=2.0%
</TABLE>

     On  November  13,  1997,  the  date  of the  Bank's  conversion  to a stock
     institution,  the Bank established a liquidation account totaling $956,000.
     The  liquidation   account  is  maintained  for  the  benefit  of  eligible
     depositors  who continue to maintain  their  accounts at the Bank after the
     conversion.  The liquidation account will be reduced annually to the extent
     that eligible depositors have reduced their qualifying deposits. Subsequent
     increases  will not restore an eligible  account  holder's  interest in the
     liquidation account. In the event of a complete liquidation,  each eligible
     depositor will be entitled to receive a distribution  from the  liquidation
     account  in an amount  proportionate  to the  current  adjusted  qualifying
     balances for accounts then held.  The  liquidation  account  balance is not
     available for payment of dividends.


<PAGE>




                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE L - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

     The Company is a party to financial instruments with off-balance-sheet risk
     in the  normal  course  of  business  to meet  the  financing  needs of its
     customers.  These  financial  instruments  include  commitments  to  extend
     credit. These instruments  involve, to varying degrees,  elements of credit
     and  interest  rate  risk  in  excess  of  the  amounts  recognized  in the
     statements of financial condition.

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

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there is no  violation of any  condition  established  in the  contract.
     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses and may require payment of a fee. Since some of the commitments may
     expire  without  being  drawn  upon,  the total  commitment  amounts do not
     necessarily represent future cash requirements.  The Company evaluates each
     customer's creditworthiness on a case-by-case basis. The amount and type of
     collateral  obtained,  if deemed necessary by the Company upon extension of
     credit,  varies  and is  based on  management's  credit  evaluation  of the
     counterparty.

     The Company has not  incurred  any losses on its  commitments  in the years
     ended March 31, 2000 and 1999.


NOTE M - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTION

     In the  ordinary  course of business,  the Company has various  outstanding
     commitments  and  contingent  liabilities  that  are not  reflected  in the
     accompanying  financial  statements.  Subsequent to March 31, 2000, certain
     shareholders  of the Company  filed a legal action  against the Company and
     its Board of Directors. See Subsequent Events Note V for description of the
     litigation  and the  impact  it may have  upon the  Company.  In  addition,
     various  other  legal  claims  also  arise  from time to time in the normal
     course of  business  which,  in the  opinion  of  management,  will have no
     material effect on the Company's consolidated financial statements.

     The Company had outstanding commitments to originate loans as follows:

<TABLE>
<CAPTION>
                                               March 31, 2000                                   March 31, 1999
                                               --------------                                   --------------
                                 Fixed-Rate      Variable-Rate       Total        Fixed Rate      Variable Rate     Total
                                 ----------      -------------       -----        ----------      -------------     -----

<S>                            <C>               <C>             <C>             <C>            <C>            <C>
         First-mortgage        $    195,000      $         --    $    195,000    $    794,303   $         --   $    794,303
                               ============      ============    ============    ============   ============   ============
</TABLE>

     The interest rate on outstanding  fixed-rate commitments at March 31, 2000,
ranges between 7.9% and 8.38%.



<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE M - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTION -
         Continued

     At March  31,  2000,  the  Company  had an unused  line of credit  with the
     Federal Home Loan Bank as follows:

         Companion (DRA) Commitment                         $    1,200,300
         Overnight line of credit                                1,200,300
                                                            --------------
                                                            $    2,400,600

     The  Company's  line of credit with the Federal  Home Loan Bank  expires on
     September 13, 2000.

     Related Party Transaction

     Customers  (borrowers)  of the Bank  have  obtained  title  insurance  from
     Landmark  Title  Company.  The Company's  chairman of the Board is the sole
     owner of Landmark Title Company.  During the years ended March 31, 2000 and
     1999,  Landmark  Title Company  received $-0- and $15,162  respectively  in
     title insurance premiums as a result of mortgage closings at the Bank.


NOTE N - FAIR VALUES OF FINANCIAL INSTRUMENTS

     The  estimated  fair values of the  Company  financial  instruments  are as
follows:

<TABLE>
<CAPTION>
                                                                           March 31,
                                                           2000                                        1999
                                            ---------------------------------           -------------------------------
                                              Carrying               Fair                 Carrying        Fair
                                               Amount                Value                 Amount         Value
                                            ----------------   --------------           ----------   ------------------

     Financial assets:
<S>                                         <C>                <C>                 <C>                   <C>
           Cash                             $568,080           $568,080            $    295,582          $295,827
           Securities held-to-maturity        23,997             23,312                  38,468            38,336
           Securities available-for-sale   2,283,184          2,283,184               1,900,992         1,900,992
           Loans receivable, net          21,643,842         21,752,000              19,189,257        19,284,000
           Accrued interest receivable       126,119            126,119                 107,805           107,805

Financial liabilities:
            Deposits                      21,922,502         21,736,000              19,273,877        19,552,000
         Advance payments by
           borrowers for taxes
           and insurance                      84,745             84,745                 108,174           108,174
         Advances from the
           Federal Home Loan Bank          1,366,577          1,309,000               1,084,586         1,066,000
</TABLE>


     The carrying  amounts in the preceding  table are included in the statement
     of  financial  condition  under the  applicable  captions.  The contract or
     notional   amounts   of   the   Company's   financial    instruments   with
     off-balance-sheet  risk are  disclosed in Notes L and M and their  carrying
     values


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE N - FAIR VALUES OF FINANCIAL INSTRUMENTS - Continued


     represent fair value.  No derivatives  were held by the Company for trading
     purposes.  It is not practicable to estimate the fair value of Federal Home
     Loan Bank (FHLB) stock because it is not marketable. The carrying amount of
     that investment is reported in the statements of financial condition.



NOTE O - CONCENTRATION OF CREDIT

     The majority of the  Company's  loans have been granted to customers in the
     Company's   market  area,  which  is  primarily   Canajoharie,   New  York.
     Canajoharie is a largely rural area and relies heavily on the  agricultural
     industry and a certain  manufacturer.  The concentrations of credit by type
     of loan are set forth in the note on loans  receivable  (see  Note C).  The
     Company,  as a matter of policy, does not extend credit to any borrowers in
     excess of its legal lending limit.


NOTE P - EMPLOYEE STOCK OWNERSHIP PLAN

     Qualified  employees  of the  Company and Bank  participate  in an Employee
     Stock  Ownership  Plan  (the  ESOP).  In  connection  with  the  conversion
     described in note A1, the ESOP has borrowed from the Company,  the proceeds
     of which were used to acquire 12,160 shares of the Company's  common stock.
     The  outstanding  loan  balance at March 31, 2000 and 1999 was $101,333 and
     $109,440, respectively. Interest charged on the loan is at the Bank's prime
     lending  rate (9.00% at March 31,  2000).  Contributions  from the Bank are
     used by the ESOP to make  payments of  principal  and interest on the loan.
     Under the terms of the ESOP,  contributions  are allocated to  participants
     using a formula  based upon  compensation.  Employees  of the  Company  are
     eligible  to  participate  in the  ESOP  after  one  year  of  service  and
     attainment of twenty-one  (21) years of age providing  they worked at least
     1,000 hours during the prior  twelve (12) month  period.  Participants  are
     fully vested after five years.  Because the Company has provided the ESOP's
     borrowing,  the  unearned  compensation  is  presented  as a  reduction  of
     stockholders'  equity in the accompanying  consolidated  balance sheets. On
     March 31,  2000 and 1999,  811 shares and 808  shares,  respectively,  were
     allocated to participants. ESOP contributions to the Bank, representing the
     fair value of  allocated  shares,  charged  to  compensation  and  benefits
     expense  in  2000  and  1999  were   approximately   $8,107   and   $8,026,
     respectively.  The fair value of the remaining  unallocated shares at March
     31, 2000 aggregated approximately $200,000.

     Dividends,  if any, will be allocated among the participant's  accounts and
     the  unallocated  shares in accordance  with their holdings of the stock on
     which the  dividends  were paid.  If  dividends  are used to repay the ESOP
     borrowings  then stock with a fair market value equal to the dividends will
     be allocated to the Participant's Accounts in lieu of the dividends.


NOTE Q - EMPLOYEE BENEFIT PLAN

     The Bank has a 401(k) Plan whereby  substantially all employees participate
     in  the  Plan.   Employees  may  contribute  up  to  15  percent  of  their
     compensation  subject to certain  limits  based on  federal  tax laws.  The
     Company makes  matching  contributions  equal to 100 percent of the first 3
     percent of an employee's  compensation  contributed  to the Plan.  Matching
     contributions vest to the employee

<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE Q - EMPLOYEE BENEFIT PLAN - Continued

     equally  over a  five-year  period.  For the years ended March 31, 2000 and
     1999,  expense  attributable  to the Plan  amounted  to $8,861 and  $5,011,
     respectively.


NOTE R -       IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In June,  1998,  the FASB issued SFAS No. 133  "Accounting  for  Derivative
     Instruments  and  Hedging  Activities"  which  establishes  accounting  and
     reporting standards for derivative  instruments and for hedging activities.
     The Statement  requires that an entity  recognize all derivatives as either
     assets or  liabilities  in the  balance  sheet at fair  value.  If  certain
     conditions are met, a derivative may be  specifically  designated as a fair
     value hedge, a cash flow hedge, or a foreign  currency hedge.  Entities may
     reclassify   securities   from  the   held-to-maturity   category   to  the
     available-for-sale  category at the time adopting SFAS No. 133 is effective
     for all fiscal  quarters of fiscal years beginning after June 15, 1999 and,
     accordingly,  would apply to the Company  beginning  on April 1, 2000.  The
     Company  plans to adopt the  standard  at that time and does not  presently
     intend to reclassify  securities  between  categories.  The Company has not
     engaged in derivatives and hedging  activities covered by the new standard,
     and does not expect to do so in the foreseeable future.  Accordingly,  SFAS
     No.  133  is not  expected  to  have a  material  impact  on the  Company's
     financial statements.


NOTE S - EARNINGS PER COMMON SHARE

     A reconciliation of the numerators and denominators for earnings per common
     share  computations  for the  years  ended  March  31,  2000 and 1999 is as
     follows:

<TABLE>
<CAPTION>
                                                                                       Years Ended March 31,
                                                                                      2000              1999
                                                                                      ----              ----
     Basic Earnings Per Share
<S>                                                                               <C>              <C>
         Net income (loss) available to common shareholders                       $     33,710     $    (96,404)
                                                                                  ============     ============

         Weighted average common shares outstanding                                    143,146          140,247
                                                                                  ============     ============

              Basic Earnings Per Share                                            $        .24     $      (.69)
                                                                                  ============     ===========

     Earnings Per Share Assuming Dilution
         Net income (loss) available to common shareholders                       $     33,710     $    (96,404)
                                                                                  ============     ============

         Weighted average common and dilutive
          potential common shares outstanding                                          150,806          140,247
                                                                                  ============     ============

                    Diluted Earnings Per Share                                         $   .22         $   (.69)
                                                                                       =======         ========
</TABLE>


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE T - STOCK COMPENSATION PLANS

     During the year ended March 31, 1999,  shareholders approved a Stock Option
     Plan and a Recognition  and Retention Plan for directors and key employees.
     Under the Stock Option Plan, the Company may grant options for up to 15,200
     shares of authorized but currently  unissued  common stock.  Both incentive
     stock and  non-qualified  stock options may be granted under the Plan.  All
     options  have a ten (10) year term and vest and became  exercisable  over a
     five (5) year  period.  Activity in the Stock Option Plan for 2000 and 1999
     is as follows:

<TABLE>
<CAPTION>
                                                             Options            Option Price
                                                           Outstanding            Per Share

<S>                                                              <C>             <C>
         Outstanding at March 31, 1999                           6,860           $     13.00
              Granted (September 23, 1999)                       1,600                 13.00
              Exercised                                             --                    --
              Forfeited                                             --                    --
                                                           -----------           -----------
         Outstanding at March 31, 2000                           8,460           $     13.00
                                                           ===========           ===========
</TABLE>

     In July 1998,  the  Shareholders  approved  an option plan with an exercise
     price  equal to the  market  value of the  Company's  shares at the date of
     grant.  The excess of market value over exercise price for approved options
     approximated  $54,000.  Compensation  expense for the years ended March 31,
     2000 and 1999 was $-0-. Options exercisable at March 31, 2000 and 1999 were
     2,561 and 1,029, respectively.

     During  1999,  the Company  awarded  2,508  shares  (6,080  authorized)  of
     restricted stock under the Recognition and Retention Plan. The market value
     of shares  awarded at the date of grant  approximated  $32,604 and has been
     recognized  in the  accompanying  statement of condition as unearned  stock
     based compensation. Compensation expense for the years ended March 31, 2000
     and 1999 was $4,891  and $-0-,  respectively.  The  market  value of shares
     awarded will be recognized as compensation  expense ratably over the 5-year
     restriction period, beginning one year after the grant date (July 22, 1998)
     as defined within the Plan.

     The Company has elected to account for its stock option plan in  accordance
     with  Accounting   Principles  Board  Opinion  No.  25.   Accordingly,   no
     compensation  cost  has  been  recognized.  Had  compensation  cost for the
     Company's  stock option plan been  determined  based upon the fair value at
     the  grant  dates for  awards  under the plan  consistent  with the  method
     prescribed  by  Statement  of  Financial  Accounting  Standard No. 123, the
     Company's  net income and earnings per share would have adjusted to the Pro
     forma amounts as follows:


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE T - STOCK COMPENSATION PLANS - Continued

                                                       Years Ended March 31,
                                                      2000              1999
                                                      ----              ----

       Net income (loss)         As reported      $   33,710       $    (96,404)
                                 Pro forma        $   27,151       $   (100,548)

       Net income (loss)
            per share            As reported      $   .24          $    (.69)
                                 Pro forma        $   .19          $    (.72)

       Net income (loss)
            per share -          As reported      $   .22          $    (.69)
            assuming dilution    Pro forma        $   .18               (.72)

     The fair value of these  options was estimated on the date of grant using a
     Black-Scholes  option-pricing  model  with the  following  weighted-average
     assumptions:

                                                        Years Ended March 31,
                                                        2000            1999
                                                        ----            ----

         Dividend yield                                  --%            --%
         Expected life                                5 years         5 years
         Expected volatility                          48.40%          24.57
         Risk-free interest rate                       5.80%           5.79%

     For the purposes of pro forma disclosures,  the estimated fair value of the
     options is amortized to expense over the options vesting period. Therefore,
     the  foregoing  pro forma  results are not likely to be  representative  of
     reported net income  (loss) of future  periods due to  additional  years of
     vesting.  The  weighted-average  fair  value per share of  options  granted
     during  the  years  ended  March 31,  2000 and 1999 was  $6.46  and  $4.03,
     respectively.


NOTE U - AGREEMENT AND PLAN OF MERGER

     On February 21, 2000,  the Company's  Board of Directors'  and the Board of
     Directors'  of  TrustCo  Bank  Corp  NY and  Landmark  Acquisition  Co.  (a
     wholly-owned subsidiary of TrustCo Bank Corp. NY) entered into an Agreement
     and Plan of Merger  (Agreement),  subject to the approval of the  Company's
     shareholders and the required regulatory approvals.

     The Agreement specifies that Landmark  Acquisition Co. shall merge with and
     into  the  Company.  Landmark  Acquisition  Company  shall  be the  merging
     corporation  in the  Merger  and  its  corporate  identity  and  existence,
     separate and apart from the Company,  shall cease upon  consummation of the
     Merger. The Company shall be the surviving corporation in the Merger.


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE U - AGREEMENT AND PLAN OF MERGER - Continued

     By virtue of the Merger and without any action on the part of TrustCo  Bank
     Corp.  NY,  Landmark  Acquisition  Co. and the Company or their  respective
     shareholders,  each  share  of  common  stock  of the  Company  issued  and
     outstanding  immediately  prior to the merger shall be  converted  into the
     right to secure merger  consideration  in the amount of twenty-one  dollars
     ($21.00). All of the common shares of the Company, outstanding prior to the
     merger,  shall no longer be  outstanding  and shall be canceled and retired
     and shall cease to exist.

     Stock options issued and outstanding in accordance with the Company's Stock
     Option Plan shall,  by reason of the Merger,  cease to be  outstanding  and
     shall be converted  into the right to secure cash in an amount equal to the
     difference  between  the merger  consideration  of $21.00 per share and the
     exercise price of the option.

     Restricted  stock  awards  granted  under  the  Company's  Recognition  and
     Retention  Plan,  by reason of the Merger shall cease to exist and shall be
     converted into the right to secure the merger  consideration  of $21.00 per
     share.

     In connection with the execution of the Agreement,  the Company and TrustCo
     Bank Corp NY entered  into a Stock  Option  Agreement,  dated  February 21,
     2000,  pursuant to which the Company granted TrustCo Bank Corp NY an option
     to purchase,  subject to certain terms and conditions contained therein, up
     to an aggregate of 19.9% of the outstanding  shares of the Company's common
     stock.

     In the  opinion  of  management  costs  associated  with  the  Merger  will
     approximate  $150,000.  Merger expenses  incurred as of March 31, 2000 were
     $71,133.


NOTE V - SUBSQUENT EVENTS

     Private  Mortgage  Investment  Services,  Inc.  (PMIS)  and its  President,
     Charles F. Cefalu,  are  stockholders of the Company who last November 1999
     approached the Company with a proposal to acquire a controlling interest in
     the Company in exchange  for an  unspecified  amount of cash and a group of
     mortgages.  That proposal was rejected by the Company's Board of Director's
     in December 1999.

     On April 17,  2000,  Mr.  Cefalu and PMIS filed  legal  action  against the
     Company and its Board of Directors. The suit alleges that (1) the Company's
     Board of Directors  violated its fiduciary  duties to its  stockholders  by
     entering into a merger agreement with TrustCo Bank Corp NY (see Note U) and
     (2) the Agreement to vote in favor that each Company  Board member  entered
     into with TrustCo Bank Corp NY is subject to a voting limitation  contained
     in  the  Company's   Certificate   of   Incorporation.   Based  upon  these
     allegations,  the plaintiffs sought a preliminary and permanent  injunction
     preventing  any action in  furtherance  of the TrustCo  Bank Corp NY merger
     agreement,  a declaration that the merger agreement is void,  damages in an
     amount not less than $1,000,000 and

<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE V - SUBSQUENT EVENTS - Continued

     costs and  attorney's  fees.  Also on April 17, 2000,  the court ordered an
     order to show cause temporarily restraining any action on the Agreement and
     Plan of the Merger (see Note U). On May 10, 2000,  PMIS and a  wholly-owned
     subsidiary,  Investors and Lenders,  LLC  (Investors)  filed a Schedule 14D
     with the Securities  and Exchange  Commissar  formally  commencing a tender
     offer. The tender offer is for a minimum of 100,000 shares or approximately
     65% of the Company's outstanding shares at a price of $25.00 per share. The
     tender offer is subject to a number of contingencies, including the ability
     of Investors and PMIS to obtain financing and to obtain regulatory approval
     from the Office of Thrift Supervision.

     On May 16, 2000, a modified  temporary  restraining  order was entered that
     permits the Company's Board of Directors' to respond to the tender offer in
     compliance with their duties and  obligations  under state and federal law,
     to issue a recommendation statement to the Company's stockholders comparing
     the  Investors/PMIS  offer with the  Agreement and Plan of Merger (see Note
     U), and to  communicate  with TrustCo Bank Corp NY about the Merger and the
     tender offer.

     In the opinion of management and counsel at this  preliminary  stage of the
     litigation,  it is not possible to predict the outcome of the action or the
     pending  motions.  The Company intends to vigorously  oppose any efforts by
     plaintiffs to interfere with the ability of the Company's  stockholders  to
     vote on the  Agreement  and Plan of Merger with  TrustCo  Bank Corp NY (see
     note U) and to defend the action.

     In the  opinion  of  management,  the  costs of  defending  the  litigation
     referred to above will have a material and adverse  impact on the Company's
     operations  during the fiscal  year ending  March 31,  2001.  Also,  in the
     opinion of management the total actual costs associated with the litigation
     can not be reasonably estimated as of the statement date (May 16, 2000).

NOTE W - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

     The following  condensed  statements of financial condition as of March 31,
     2000 and 1999 and the condensed  statement of  operations  and statement of
     cash flows for the two years then ended should be read in conjunction  with
     the Consolidated Financial Statements and related notes.

<TABLE>
<CAPTION>
                                                                                                   March 31,
                                                                                           2000               1999
                                                                                           ----               ----
STATEMENT OF FINANCIAL CONDITION
         Assets:
<S>                                                                                   <C>              <C>
              Cash                                                                    $       13,121   $       12,359
              Investment in and advances to (from) Bank                                    1,881,720        1,939,139
              Other assets                                                                    51,509            9,987
                                                                                      --------------   --------------

                 Total assets                                                         $    1,946,350   $    1,961,485
                                                                                      ==============   ==============

         Liabilities                                                                  $        1,598   $       33,551
         Stockholders' Equity                                                              1,944,752        1,927,934
                                                                                      --------------   --------------

                 Total liabilities and stockholders' equity                           $    1,946,350   $    1,961,485
                                                                                      ==============   ==============
</TABLE>


<PAGE>

                     LANDMARK FINANCIAL CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2000 and 1999




NOTE W - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS -
      Continued

<TABLE>
<CAPTION>
                                                                                                  Years Ended March 31,
                                                                                                 2000               1999
                                                                                                 ----               ----
     STATEMENT OF OPERATIONS
         Income:
              Income, including dividend from bank subsidiary of
<S>                                                                                         <C>              <C>
                  $-0- in 2000 and $120,000- in 1999                                        $        8,704   $      132,903
              Expenses                                                                             130,772           46,444
              Income (loss) before income taxes and equity in earnings of Bank                    (122,068)          86,459
              Provision for income tax benefit                                                      42,284            7,056
                                                                                            --------------   --------------
              Income before equity in earnings of Bank                                             (79,784)          93,515
              Equity in earnings (loss) of Bank                                                    113,494          (69,922)
                                                                                            --------------   ---------------

                  Net income                                                                $       33,710   $       23,593
                                                                                            ==============   ==============

     STATEMENT OF CASH FLOWS
         Cash flows provided (used) by operating activities:
              Net income                                                                    $       33,710   $       23,593
              Adjustments to reconcile net income (loss) to
                  net cash used for operating activities
                      Equity in (earnings) loss of Bank                                           (113,494)          69,922
                      Amortization of stock based compensation                                       4,891               --
                      Other assets                                                                 (41,522)          (9,987)
                      Liabilities                                                                      651              947
                                                                                            --------------   --------------
                                                                                                  (115,764)          84,475
                                                                                            -------------- ----------------
         Cash flows provided (used) by investing activities:
              Investment in and advances from (to) Bank                                            108,419          (84,276)
              Principal payments on ESOP loan                                                        8,107            8,026
                                                                                            --------------   --------------
                                                                                                   116,526          (76,250)
                                                                                            --------------   --------------

                  Net increase in cash                                                                 762            8,225

         Cash, beginning of year                                                                    12,359            4,134
                                                                                            --------------   --------------

         Cash, end of year                                                                  $       13,121   $       12,359
                                                                                            ==============   ==============
</TABLE>


<PAGE>


Common Stock Information

The Common  Stock of Landmark  Financial  Corp.  is traded on the "pink  sheets"
under the  symbol  "LMFC.OB"  At March 31,  2000 there  were  approximately  125
stockholders of record,  including  brokers,  and 154,208 shares  outstanding of
which 12,160 are held by the Landmark  Community Bank Employee  Stock  ownership
Plan.


The following table sets forth the closing market price of the Company's  Common
Stock for the year ended March 31, 2000.  At the current time the Company has no
intention to pay dividends.


Fiscal 2000                                 High                        Low
-----------                                 ----                        ---

First Quarter                               $13.00                      $ 7.00

Second Quarter                              $13.25                      $11.87

Third Quarter                               $14.25                      $11.75

Fourth Quarter                              $20.00                      $13.25













<PAGE>









Directors and Officers



Directors                              Officers

John R. Francisco                      Gordon E. Coleman
Chairman of the Board                  President & Chief Executive Officer

Gordon E. Coleman                      Paul S. Hofmann
                                       Vice President & Chief Financial Officer

Carl J. Rockefeller                    H. Stuart Larson
                                       Vice President - Consumer Lending

Patricia A. Symolon


F. Richard Ferraro


Frederick P. LaCoppola


Leila N. Salmon


Edward R. Jacksland


Frederick W. Lee





<PAGE>

Corporate Information


Corporate Headquarters                             Transfer Agent

Landmark Financial Corp.                           Registrar & Transfer Company
211 Erie Blvd.                                     10 Commerce Drive
Canajoharie, New York 13317                        Cranford, New Jersey 07016
(518) 673-2012                                     (800) 456-0596


Special Counsel                                    Independent Auditors

Luse Lehman Gorman Pomerenk & Schick, P.C.         Harvazinski & Montanye, LLP
5335 Wisconsin Avenue, N.W.                        21 Everett Road Extension
Suite 400                                          Albany, New York  12205
Washington, D.C.  20015                            (518) 453-0636
(202) 274-2000

General Inquiries

A copy of the  Company's  Annual  Report to the SEC on Form 10-K may be obtained
without  charge by written  request of  stockholders  to Gordon E. Coleman or by
calling the Company at (518) 673-2012.


SEC Disclaimer

This Annual  Report has not been reviewed or confirmed for accuracy or relevance
by the SEC.




<PAGE>


                                   EXHIBIT 21

                           SUBSIDIARIES OF THE COMPANY


Company                                     Percent Owned

Landmark Community Bank                     100%