[LOGO]

                                      1996
                                      ----

                                 ANNUAL REPORT
<PAGE>


                           Landmark Bancshares, Inc.


CONTENTS

Message to our Stockholders ................................    1


Corporate Profile and Stock Price Information...............    4


Five-Year Financial Summary.................................    5


Management's Discussion and Analysis........................    7


Report of Independent Accountants...........................  F-1

Consolidated Financial Statements...........................  F-2

Notes to Consolidated Financial Statements .................  F-7

Corporate Information.......................................   18

<PAGE>


MESSAGE TO OUR STOCKHOLDERS:

This  past  fiscal  year was a good  year for  Landmark  Bancshares,  Inc.  (the
"Company").  The date of September  30,  1996,  the last day of our fiscal year,
will be remembered as significant,  not only for our Company, but for the entire
thrift  industry.  On that date  President  Clinton  signed into law the Omnibus
Appropriations  Bill,  earlier passed by Congress.  Included in this legislation
was a one-time assessment to recapitalize the Savings Association Insurance Fund
("SAIF"). This special assessment, based on March 31, 1995 deposits, resulted in
a charge to expense of approximately  $937,000  (pre-tax),  which was charged in
the  fourth  quarter.  The  Company  still  reflected  net  income  for  1996 of
$1,404,226,  a decrease of $358,297 compared to fiscal 1995, after the charge to
expense as a result of the assessment.

While the one-time  SAIF  assessment  depleted  substantially  all of the fourth
quarter earnings,  it is viewed as a positive step for the future of the Company
and the thrift industry.  Future SAIF payments will be reduced,  resulting in an
expected $300,000 annual pre-tax savings in future periods.

Landmark  Federal  Savings Bank (the "Bank"),  a wholly-owned  subsidiary of the
Company,  is a community oriented financial  institution that continues to serve
southwest and central Kansas with a full range of deposit and loan products. The
Bank  continues  to  specialize  in one to four  family  residential  loans  and
consumer lending. The Bank increased loans receivable by over $30 million during
the past year. Landmark Federal Savings Bank is committed to meeting the savings
and housing needs of the communities we serve.

                     [PLOTTING POINTS FOR GRAPH ARE BELOW]

                                 Loans Receivable
                                 ----------------
                          150                              
                          125
                          100                                     
                           75                                             
                           50
                           25
                            0

                              1996  1995  1994  1993  1992


Chart  1: bar  graph  showing  the size of the  loans  receivable  portfolio  in
dollars.  The  horizontal  axis shows 1996 to 1992 and the  vertical  axis shows
amounts from 0 to 150 (in thousands).  Graph values are 129,903, 98,934, 71,253,
62,620, and 62,879, for 1996, 1995, 1994, 1993, and 1992, respectively.

Our 1996 success was accomplished through the continued effective application of
our basic  business  philosophies.  These  philosophies  include a commitment to
strong credit  quality for lending and prudent  interest  rate risk  management.
Landmark  Federal  Savings  Bank has  consistently  maintained  excellent  asset
quality  throughout the last five years.  Strong asset quality reduces operating
costs,  by minimizing  loan loss reserve  requirements  and  operating  expenses
associated  with  non-performing  assets.  Total  non-performing  assets  as  of
September 30, 1996, were 0.24% of net loans and 0.15% of total assets, far lower
than industry averages.

                     [PLOTTING POINTS FOR GRAPH ARE BELOW]

                            Non non-performing Assets/Total Assets
                            --------------------------------------

                            1.00%
                            0.80%
                            0.60%
                            0.40%
                            0.20%
                            0.00%

                                 1996  1995  1994 1993  1992

Chart 2: bar graph showing the ratio of  non-performing  assets to total assets,
expressed  as a  percentage.  The  horizontal  axis  shows  1996 to 1992 and the
vertical axis shows  percentages  amounts from 0.00% to 1.00%.  Graph values are
0.15%,  0.22%,  0.22%,  0.36%,  and 0.80%, for 1996, 1995, 1994, 1993, and 1992,
respectively.

Our employees continue to be our most valuable  resource.  Through their efforts
Landmark  Federal Savings Bank's  efficiency  ratio for the year ended September
30, 1996 was 52.03% (without the effect of the one-time SAIF assessment).

                     [PLOTTING POINTS FOR GRAPH ARE BELOW]

                                   Efficiency Ratio
                                   ----------------

                           60.00% 
                           40.00%
                           20.00%
                            0.00%

                                    1996   1995   1994   1993

Chart 3: bar graph showing an efficiency ratio,  expressed as a percentage.  The
horizontal  axis shows  1996 to 1993 and the  vertical  axis  shows  percentages
amounts  from 0.00% to 60.00%.  Graph  values are 52.03%,  54.30%,  53.60%,  and
50.80, for 1996, 1995, 1994, and 1993, respectively.

A financial institution's  efficiency ratio is a measurement of how much expense
is incurred to generate each dollar of pre-tax profit.  The lower the efficiency
ratio,  the more efficient the generation of profit. A ratio of less than 60% is
considered good in the industry,  and it remains management's goal to reduce the
ratio to 50% or less.

Fully  diluted  earnings per share,  based on 1,953,774  shares  outstanding  at
September  30,  1996,  was $0.72 as compared  to $0.81 at  September  30,  1995.
Earnings per share, without the one-time SAIF assessment,  would have been $1.02
for the year ended September 30, 1996.

Continued earnings growth is the key to any successful business.  This growth is
fueled by growth in assets.  The  Company  has grown by  leveraging  its equity,
mainly  through  advances  from the  Federal  Home Loan Bank of  Topeka.  Theses
advances  have  been  used to fund  for  portfolio,  adjustable  rate  mortgages

                                      -2-
<PAGE>

originated  in our trade area,  as well as the  purchase of mortgage  loans from
other lenders in Kansas and other states.

                     [PLOTTING POINTS FOR GRAPH ARE BELOW]

                                   Total Assets
                                   ------------
                          250,000
                          200,000
                          150,000
                          100,000
                           50,000
                                0
                                  1996  1995  1994  1993  1992

Chart 4: bar graph showing total assets in thousands of dollars.  The horizontal
axis shows 1996 to 1992 and the  vertical  axis shows  amounts from 0 to 250 (in
thousands).  Graph values are 213,734,  208,632,  188,727, 164,694, and 161,365,
for 1996, 1995, 1994, 1993, and 1992, respectively.

The Bank will begin  construction  of a new full service  branch office in early
1997,  to be  located in the  northwest  area of Dodge  City.  It will have four
drive-thru teller lanes to relieve backup traffic in our downtown  location.  In
addition,  the Bank will issue debit cards next year and locate our first ATM at
the new branch location to enhance our commitment to customer service.

We are enthusiastic about the future potential of Landmark Bancshares,  Inc. and
feel we are  positioning  the  Company to be a larger and more  profitable  full
service  financial  institution.  The  continued  implementation  of  our  basic
business  plan is the  core to our  future  success.  We will  continue  to work
diligently to generate the returns our stockholders deserve.

Thank you for your confidence and continued support!

Personal regards,


/s/Larry Schugart
Larry Schugart
President and
Chief Executive Officer

                                      -3-
<PAGE>
================================================================================

CORPORATE PROFILE AND RELATED INFORMATION

Landmark  Bancshares,  Inc. (the  "Company") is the parent  company for Landmark
Federal  Savings  Bank  (the  "Bank").  The  Company  was  formed  as  a  Kansas
corporation in November 1993 at the direction of the Bank in connection with the
Bank's  conversion from a mutual to stock form of ownership (the  "Conversion").
The  Company  acquired  all of the  capital  stock that the Bank issued upon its
conversion.  On March 28, 1994, the Bank completed it's conversion in connection
with a $22.8 million initial public  offering.  The Company is a unitary savings
and loan holding company which, under existing laws, generally is not restricted
in the types of business  activities  in which it may engage  provided  that the
Bank retains a specified amount of its assets in housing-related investments. At
the present time,  since the Company does not conduct any active  business,  the
Company does not intend to employ any persons  other than  officers but utilizes
the support staff and facilities of the Bank from time to time.

Landmark  Federal  Savings  Bank is a federally  chartered  stock  savings  bank
headquartered in Dodge City, Kansas. The Bank was founded in 1920 with a charter
from Kansas  under the name of "Dodge City Savings and Loan  Association"  which
later became a federal  association under the name of "First Federal Savings and
Loan of Dodge City".  First Federal  Savings and Loan of Dodge City became known
as "Landmark  Federal  Savings  Association" in 1983 when it changed its name at
the time it merged with Peoples Savings and Loan of Sterling, Kansas. The Bank's
deposits have been federally insured since 1943 and are currently insured by the
Federal Deposit Insurance Corporation (the "FDIC") under the Savings Association
Insurance Fund (the "SAIF"). The Bank conducts its business from its main office
in Dodge City, Kansas and four branch offices located in Barton, Finney and Rush
Counties, Kansas.

STOCK PRICE INFORMATION

There were 1,852,996  shares (net of treasury stock) of common stock of Landmark
Bancshares,  Inc.  outstanding on September 30, 1996, held by approximately  337
stockholders  of record  (not  including  the  number  of  persons  or  entities
holdingthe  stock in nominee or street name through  various  brokerage  firms).
Since its issuance in March 1994, the Company's  common stock has been traded on
the Nasdaq National Market.  The daily stock quotation for Landmark  Bancshares,
Inc.  is listed in the  Nasdaq  National  Market  published  in The Wall  Street
Journal and other leading  newspapers  under the trading  symbol of "LARK".  The
following table reflects stock price  information based on sales as published by
the Nasdaq National Market  statistical  report for each quarter for fiscal year
1996 and 1995.

                                       Year Ended September 30,
                        --------------------------------------------------------
                                 1996                            1995
                        -----------------------          -----------------------
                         HIGH             LOW             HIGH              LOW
                         ----             ---             ----              ---

 FIRST QUARTER          14 3/4           13 1/2          11 1/2            9 3/4
 Second Quarter         15 1/4           13 1/2          11 3/4           10 1/4
 Third Quarter            16             14 1/2          12 3/4           11 3/8
 Fourth Quarter         16 1/2           15 1/4          14 1/2             12

The following  table sets forth,  for each quarter the dividends paid or payable
on the common stock for the indicated  fiscal years ending  September  30th. The
Company's ability to pay dividends to shareholders is largely dependent upon the
dividends it receives from the Bank. The Bank is subject to regulatory
limitations on the amount of cash dividends it may pay.

                                                  Year Ended September 30,
                                            ------------------------------------

Dividends per share                              1996                 1995
-------------------                         ---------------      ---------------

 First Quarter                              $         0.10       $         0.55
 Second Quarter                                       0.10                 0.05
 Third Quarter                                        0.10                 0.05
 Fourth Quarter                                       0.10                 0.10

                                      -4-
<PAGE>
================================================================================
FIVE-YEAR FINANCIAL SUMMARY
SELECTED FINANCIAL CONDITION DATA (DOLLARS IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>
At September 30,                                         1996            1995            1994            1993            1992
--------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>             <C>             <C>             <C>          
Total assets                                           $213,734        $208,632        $188,727        $164,694        $161,365
Loans receivable                                        129,903          98,934          71,253          62,620          62,879
Investments held-to-maturity                             29,399          34,825          39,922          24,579          33,712
Investments available-for-sale                            4,138           1,693           1,743
Mortgaged-backed securities
   held-to-maturity                                      45,877          68,207          70,470          69,986          59,300
Cash and cash equivalents                                   474             462           1,061           2,432             287
Deposits                                                143,815         144,957         136,858         147,428         145,408
FHLB borrowings                                          33,467          25,533          13,580               -               -
Stockholders' equity                                     32,389          34,667          36,606          15,144          13,360

SUMMARY OF OPERATIONS (DOLLARS IN THOUSANDS)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended September 30,                                 1996            1995            1994            1993            1992
--------------------------------------------------------------------------------------------------------------------------------
Interest income                                   $      14,575   $      13,652   $      10,671   $      10,964   $      13,041
Interest expense                                          8,678           8,224           5,917           6,424           8,390
                                                  -------------   -------------   -------------   -------------   -------------
  Net interest income                                     5,897           5,428           4,754           4,540           4,651
Provision for loan losses                                   135               9            (85)             184             225
Provision for losses on corporate
  securities and municipal obligations                        -               -           (128)              42              32
  Net interest income after provision
   for losses on loans and investments                    5,762           5,419           4,967           4,314           4,394
Non-interest income                                         745             684             450             896           1,165
Non-interest expense (1)                                  4,323           3,315           2,907           2,651           2,525
                                                  -------------   -------------   -------------   -------------   -------------
Income before income taxes and
  cumulative effect of change
  in accounting principle                                 2,184           2,788           2,510           2,559           3,034
Provision for income taxes                                  780           1,025             926             944           1,130
                                                  -------------   -------------   -------------   -------------   -------------
Income before cumulative effect of
  change in accounting principle                          1,404           1,763           1,584           1,615           1,904
Cumulative effect of October 31, 1992
  change in accounting for income taxes                       -               -               -             117               -
                                                  -------------   -------------   -------------   -------------   -------------
Net income                                        $       1,404   $       1,763   $       1,584   $       1,732   $       1,904
                                                  =============   =============   =============   =============   =============
Primary earnings per share (2)                    $        0.72   $        0.82   $        0.38   $           -   $           -
                                                  =============   =============   =============   =============   =============
Fully diluted earnings per share (2)              $        0.72   $        0.81   $        0.38   $           -   $           -
                                                  =============   =============   =============   =============   =============
Dividends per share (2)                           $        0.40   $        0.75   $        0.05   $           -   $           -
                                                  =============   =============   =============   =============   =============
Book value per common share 
  outstanding at September 30                     $       17.48   $       16.62   $       16.05   $           -   $           -
                                                  =============   =============   =============   =============   =============
</TABLE>

(*)  Data  presented  prior to March 28, 1994,  the date of  conversion,  is for
     Landmark Federal Savings Bank only.
(1)  Includes  one-time  SAIF special  assessment of $973,073 for the year ended
     September 30, 1996.
(2)  For  periods  following  conversion  from mutual to stock on March 28, 1994
     (1994 - March 28 through September 30).

                                      -5-
<PAGE>
================================================================================
FIVE-YEAR FINANCIAL SUMMARY
SELECTED RATIOS AND OTHER DATA(*)
================================================================================
<TABLE>
<CAPTION>
At or For the Year Ended September 30,           1996      1995      1994      1993         1992
--------------------------------------------------------------------------------------------------

<S>                                            <C>       <C>       <C>       <C>          <C>   
Return on average assets                         0.70 %    0.88 %    0.90 %    1.08 %       1.17 %

Return on average equity                         4.14      4.92      6.06     12.14        15.21

Average equity to average assets                17.00     17.88     14.93      8.89         7.69

Equity to assets at period end                  15.15     16.62     19.40      9.20         8.28

Net interest spread                              2.11      1.88      2.18      2.51         2.53

Net yield on average interest-earning assets     3.01      2.76      2.77      2.89         2.92

Non-performing assets to total assets            0.15      0.22      0.22      0.36         0.80

Non-performing loans to net loans                0.24      0.39      0.29      0.38         0.75

Allowance for loan losses to total loans         0.57      0.65      0.87      1.14         0.91

Dividend payout                                 53.58     90.93     13.02         -            -

Number of:

  Loans outstanding                             5,439     4,561     3,859     3,624        3,703

  Deposit accounts                             13,443    13,731    12,582    13,074       13,377

  Full service offices                              5         5         5         5            5
</TABLE>

(*)  Data  presented  prior to March 28, 1994,  the date of  conversion,  is for
     Landmark Federal Savings Bank only.

                                      -6-
<PAGE>
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LANDMARK BANCSHARES, INC.

The  following  is a  discussion  of the  financial  condition  and  results  of
operations of the Company and its subsidiary, Landmark Federal Savings Bank (the
"Bank"),  and should be read in conjunction with the  accompanying  Consolidated
Financial Statements.

GENERAL

The Bank is primarily  engaged in the business of  attracting  deposits from the
general public and using those deposits, together with other funds, to originate
mortgage  loans for the  purchase  and  refinancing  of  residential  properties
located in central and southwestern  Kansas.  In addition,  the Bank also offers
and purchases loans through correspondent lending relationships in Kansas and in
other states.  The Bank also makes  automobile  loans,  second  mortgage  loans,
equity loans and deposit loans. The Bank's market has  historically  provided an
excess of  savings  deposits  over loan  demand.  Accordingly,  in  addition  to
originating  loans  in  its  market  the  Bank  also  purchases  mortgage-backed
securities and investment securities.

The Company's  operations,  as with those of the entire  banking  industry,  are
significantly affected by prevailing economic conditions,  competition,  and the
monetary and fiscal policies of governmental  agencies.  Lending  activities are
influenced by the demand for loans,  competition  among lenders,  the prevailing
market  rates  of  interest,   primarily  on  competing   investments,   account
maturities, and the levels of personal income and savings in the market area.

FINANCIAL CONDITION

Consolidated  total assets  increased  2.45% from  $208,631,862 at September 30,
1995, to $213,733,690 at September 30, 1996. The principal  factor  contributing
to the  growth in assets  was the  increase  in the loans  receivable  portfolio
during the year, which more than offset a decrease in investment  securities and
mortgage-backed securities.

Net loans receivable held for investment  increased  $29,396,503 or 29.81%, from
$98,616,725 at September 30, 1995, to  $128,013,228  at September 30, 1996. This
growth in the loan portfolio is attributed to increased  lending  throughout the
year and the purchase of $16,398,206 in mortgage loan packages  during the year.

Investment securities  held-to-maturity decreased $5,426,532 from $34,825,052 at
September  30, 1995 to  $29,398,520  at September  30, 1996.  This  decrease was
directly  related to the  increase in the loan  portfolio  discussed  above,  as
securities  matured or were  called,  excess  funds were used to  originate  and
purchase loans.  Investment securities  available-for-sale at September 30, 1996
experienced an increase of $2,445,087  from  $1,692,550 at September 30, 1995 to
$4,137,637  at  September  30,  1996.   

                                       -7-
<PAGE>

Mortgage-backed  securities decreased $22,329,449 or 32.74%, from $68,206,569 at
September 30, 1995 to  $45,877,120  at September  30, 1996.  The Company did not
have any mortgage-backed  securities  available-for-sale  at September 30, 1996.
The Bank purchases mortgage-backed  securities when loan demand decreases and it
has excess liquidity to invest.

On  November  15,  1995,   the  FASB  adopted  a  special  report  "A  Guide  to
Implementation  of Statement 115 on Accounting  for Certain  Investments in Debt
and Equity  Securities".  The guide  includes,  along with other  implementation
guidance,  a  transition  provision  that  allowed  for a  reassessment  of  the
appropriateness of the  classifications of all securities and allowed a one-time
reclassification  of securities  which will not call into question the intent of
an  enterprise to hold other debt  securities  to maturity in the future.  Those
reclassifications  were to be made after the adoption  date of November 15, 1995
and no later than December 31, 1995. In  accordance  with the guide,  management
transferred  $11,355,417 of  mortgage-backed  securities  from  held-to-maturity
classification to available-for-sale classification.  These securities were sold
after being transferred.

The Company had net unrealized losses on investment securities held-to-maturity,
not reflected on the consolidated financial statements, of $285,153 and $209,133
at September  30, 1996 and 1995,  respectively.  The Company had net  unrealized
losses on  mortgage-backed  securities  held-to-maturity,  not  reflected on the
consolidated  financial  statements,  of $351,113 and $132,059 at September  30,
1996 and 1995, respectively.  This overall decline in fair market value belowthe
amortized cost of these  securities  held-to-maturity  at September 30, 1996 and
1995 is deemed to be due to temporary  changes in the interest rate environment.
The Bank has capital  sufficient to support  these net  unrealized  losses.  The
Company has  experienced  increases in the net unrealized  losses on investments
and mortgage-backed securities held-to-maturity due to the current interest rate
environment.

There were no foreclosed  assets ("REO") at September 30, 1996. At September 30,
1995,  the  balance  in  REO  was  $66,320,  which  consisted  of  single-family
residences.  This REO  balance  continues  to be  substantially  lower than that
experienced  by the  Bank in prior  years.  Additionally,  non-performing  loans
totaled $317,000 and $386,000 at September 30, 1996 and 1995,  respectively.  At
September  30,  1996 the Bank's  ratio of total  non-performing  assets to total
assets was 0.15%,  far lower than the industry  average.  The Bank will continue
with its  aggressive  collection  policies  to keep  non-performing  assets to a
minimum,  but no assurance can be given that  negotiations  with  borrowers will
continue to be successful.

Deposits   decreased  slightly  from  $144,957,084  at  September  30,  1995  to
$143,814,910  at September  30, 1996.  This  resulted in a 0.79%  decrease.  The
modest decline was attributable to normal changes in outstanding  deposits.  The
Bank continues to offer rates  competitive with other financial  institutions in
the area.

Of the $119,510,219 in certificates of deposit held by the Bank at September 30,
1996,  $94,575,804 of these deposits will mature during the year ended September
30, 1997. The majority of the Bank's time deposits  consist of regular  deposits
from consumers within the Bank's surrounding community rather than institutional
or  brokered  deposit  accounts.  As a result,  most of these  accounts of local
customers are expected to be renewed.

The Bank has  continued  to utilize  advances  from the  Federal  Home Loan Bank
("FHLB")   as  a  source  of  funds.   Fixed   term   advances   from  the  FHLB
totaled$14,466,668 and $9,733,334 at September 30, 1996 and 1995,  respectively.
The Bank also established a line of credit with the FHLB during the year ended

                                      -8-
<PAGE>

September 30, 1995.  The Bank had an outstanding balance of $19,000,000 at
September 30, 1996.  This resulted in a $7,933,334 or 31.07% increase in
advances and other borrowings from the FHLB from September 30, 1995 to September
30, 1996.  The funds provided by these borrowings were used primarily to fund
lending activity throughout the year.  The weighted average cost of these
borrowings from the FHLB was 6.37% during fiscal 1996.  Of the advances and
other borrowings outstanding at September 30, 1996, $28,166,668 matures during
the year ended September 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Office of Thrift  Supervision  ("OTS")  establishes  the  minimum  liquidity
requirements for institutions such as the Bank. Current OTS regulations  require
that the Bank  maintain  liquid  assets of not less than 5% of its average daily
balance of net withdrawable  deposit accounts and borrowings payable in one year
or less, of which short-term liquid assets must consist of not less than 1%. The
Bank met its liquidity  requirement  during fiscal 1996 and expects to meet this
requirement in the future.

OTS has also set minimum capital requirements for institutions such as the Bank.
The capital standards require the maintenance of regulatory  capital  sufficient
to meet a tangible capital  requirement,  a core capital requirement and a risk-
based  capital  requirement.  At September 30, 1996 the Bank exceeded all of the
minimum capital  requirements as currently required.  Please refer to Note 12 of
the accompanying Notes to Consolidated Financial Statements for more information
regarding the Bank's regulatory capital position at September 30, 1996.

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements and related data presented herein have been prepared in
accordance  with generally  accepted  accounting  principles,  which require the
measurement of financial  position and operating  results in terms of historical
dollars without considering the change in the relative purchasing power of money
over time due to inflation.  Unlike most  industrial  companies,  nearly all the
assets and  liabilities  of the Bank are monetary.  As a result,  interest rates
have a greater impact on the Bank's  performance  than do the effects of general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or to the same extent as the price of goods and services.

ASSET/LIABILITY MANAGEMENT

The Bank has established an  Asset/Liability  Management  Committee ("ALCO") for
the purpose of monitoring  and managing  interest rate risk.  Interest rate risk
represents  the earnings  variation that could occur due to changes in the level
of interest  rates.  Interest rate  sensitivity  is a measure of the  difference
between amounts of interest-earning assets and interest-bearing liabilities that
either reprice or mature within a given period of time. The  difference,  or the
interest rate repricing  "gap,"  provides an indication of the extent to which a
Bank's interest rate spread will be affected by changes in interest rates over a
period  of  time.  The  Bank  utilizes  internally  generated  gap  reports  and
externally prepared interest rate sensitivity of the net portfolio value reports
to monitor and manage its interest rate risk.

Quarterly, the OTS prepares a report on the interest rate sensitivity of the net
portfolio  value ("NPV") from  information  provided by Bank.  The OTS adopted a
rule in August 1993  incorporating an interest
   
                                       -9-
<PAGE>

rate risk ("IRR") component into the risk-based capital rules. Implementation of
the rule has been  delayed  until the OTS has tested  the  process  under  which
institutions may appeal such capital  deductions.  The IRR component is a dollar
amount that will be deducted from total  capital for the purpose of  calculating
an institution's  risk-based capital requirement and is measured in terms of the
sensitivity of its NPV to changes  ininterest  rates.  The NPV is the difference
between  incoming and outgoing  discounted cash flows from assets,  liabilities,
and off-balance sheet contracts.  An institution's IRR is measured as the change
to its NPV as the  result of a  hypothetical  200 basis  point  change in market
interest  rates.  A  resulting  change in NPV of more  than 2% of the  estimated
market  value of its assets  will  require  the  institution  to deduct from its
capital 50% of that excess change. The rule provides that the OTS will calculate
the IRR component  quarterly for each institution.  The following tables present
the Bank's NPV as well as other data as of September  30, 1996, as calculated by
the OTS, based on information provided to the OTS by the Bank.
<TABLE>
<CAPTION>
    Change in Interest
   Rates in Basis
    Points (Rate Shock)            Net Portfolio Value       NPV as % of Present Value of Assets
------------------------    ------------------------------   -----------------------------------
                            $ Amount   $ Change   % Change   NPV  Ratio                  Change
                            --------   --------   --------   ----------                  ------
                                 (Dollars in Thousands)

<S>     <C>                 <C>        <C>         <C>         <C>                      <C>     
        +400 bp             $ 10,804   $(16,751)   (61) %       5.67 %                  (741) bp
        +300 bp             $ 15,215    (12,340)   (45) %       7.77 %                  (531) bp
        +200 bp (1)         $ 19,585     (7,970)   (29) %       9.75 %                  (334) bp
        +100 bp             $ 23,789     (3,766)   (14) %      11.55 %                  (153) bp
           0 bp             $ 27,555                           13.08 %
        -100 bp             $ 30,695      3,140     11  %      14.30 %                   121  bp
        -200 bp             $ 32,498      4,943     18  %      14.94 %                   186  bp
        -300 bp             $ 33,832      6,277     23  %      15.39 %                   231  bp
        -400 bp             $ 35,515      7,960     29  %      15.96 %                   287  bp
</TABLE>

 (1) Denotes rate shock used to compute interest rate risk capital component.

                                                              September 30, 1996
                                                              ------------------

Risk  Measures (200 Basis Point Rate Shock):

   Pre-Shock NPV Ratio:  NPV as % of Present Value of Assets         13.08 %
   Exposure Measure:  Post-Shock NPV Ratio                            9.75 %
   
   Sensitivity Measure:  Change in NPV Ratio                          (334) bp

Calculation of Capital Component:

   Change NPV as % of Present Value of Assets                        (3.78)%


Utilizing  the data above,  the Bank,  at September  30,  1996,  would have been
considered by the OTS to have been subject to "above normal"  interest rate risk
and a deduction from risk-based capital would have been required.

                                      -10-
<PAGE>

Set forth below is a breakout, by basis points of the Bank's NPV as of September
30, 1996 by assets, liabilities, and off balance sheet items.
<TABLE>
<CAPTION>
                                                                 No
Net Portfolio Value   -400 bp   -300 bp   -200 bp   -100 bp    Change   +100 bp   +200 bp    +300 bp   +400 bp
                     --------   --------  --------  --------  --------  --------  --------   --------  --------

<S>                  <C>        <C>       <C>       <C>       <C>       <C>       <C>        <C>       <C>     
Assets               $222,585   $219,853  $217,494  $214,701  $210,631  $205,985  $200,956   $195,803  $190,637
- Liabilities         187,422    186,330   185,253   184,195   183,160   182,136   181,133    180,151   179,183
+ Off Balance Sheet       352        309       257       189        84       (60)     (238)      (437)     (650)
                     --------   --------  --------  --------  --------  --------  --------   --------  --------

Net Portfolio Value  $ 35,515   $ 33,832  $ 32,498  $ 30,695  $ 27,555  $ 23,789  $ 19,585   $ 15,215  $ 10,804
                     ========   ========  ========  ========  ========  ========  ========   ========  ========

</TABLE>

Certain  assumptions  utilized by the OTS in assessing the interest rate risk of
savings  associations  were  employed in  preparing  the previous  table.  These
assumptions  related to interest  rates,  loan prepayment  rates,  deposit decay
rates,  and the market values of certain assets under the various  interest rate
scenarios.  It was also  assumed  that  delinquency  rates  will not change as a
result of changes in interest rates although there can be no assurance that this
will be the case. Even if interest rates change in the designated amounts, there
can be no assurance that the Bank's assets and liabilities  would perform as set
forth above.

Certain  shortcomings  are inherent in the preceding NPV tables because the data
reflect  hypothetical  changes in NPV based upon  assumptions used by the OTS to
evaluate the Bank as well as other  institutions.  However,  net interest income
should decline with instantaneous increases in interest rates while net interest
income should increase with instantaneous declines in interest rates. Generally,
during periods of increasing  interest rates, the Bank's interest rate sensitive
liabilities would reprice faster than its interest rate sensitive assets causing
a decline in the Bank's interest rate spread and margin.  This would result from
an increase in the Bank's cost of funds that would not be immediately  offset by
an  increase  in its yield on earning  assets.  An increase in the cost of funds
without an  equivalent  increase  in the yield on earning  assets  would tend to
reduce net interest income.

In times of decreasing interest rates, fixed rate assets could increase in value
and the lag in repricing of interest rate sensitive  assets could be expected to
have a positive effect on the Bank's net interest income.


RESULTS OF OPERATIONS

Net income  decreased  $358,279 or 20.33%,  from  $1,762,523  for the year ended
September 30, 1995 to  $1,404,226  for the year ended  September 30, 1996.  This
decrease relates primarily to a special one-time SAIF assessment of $937,073.

On September 30, 1996,  President  Clinton  signed into law a bill that provided
for a special  assessment of SAIF insured  institutions  amounting to 65.7 basis
points  applied to the Bank's  deposit base  measured as of March 31, 1995.  The
total amount of the special  assessment for the Bank was accrued as of September
30, 1996 and  included in expense for the year ended  September  30,  1996.  The
after tax effect of the  assessment  was to reduce  net income by  approximately
$600,000  for the year  ended  September  30, 

                                      -11-
<PAGE>

1996.  Without  the  effect  of  the  assessment  net  income  would  have  been
approximately  $2,000,000  for the year ended  September 30, 1996.  Earnings per
share without the effect of the assessment would have been  approximately  $1.02
for the year ended September 30, 1996.

Beginning January 1, 1997,  deposit  insurance  assessments for SAIF members are
expected  to be reduced to  approximately  6.4 basis  points of  deposits  on an
annual basis through the end of 1999 from the previous level of 23 basis points.
Assuming this reduction  occurs,  beginning January 1, 1997, the rate of deposit
insurance  assessed the Bank will decline by approximately 70%. Through 1999 BIF
members  are  expected  to be  assessed  at  approximately  1.3 basis  points on
deposits.  Thereafter,  assessments  for BIF and SAIF members should be the same
and SAIF and BIF may be merged. It is expected that these continuing assessments
for  both  SAIF and BIF  members  will be used to  repay  outstanding  Financing
Corporation bond obligations.

The  disparity in insurance premiums between those required for the Bank and BIF
members could allow BIF members to attract and retain deposits at higherinterest
rates and at a lower  effective cost than the Bank.  This could put  competitive
pressure  on the  Bank to  raise  its  interest  rates  paid on  deposits,  thus
increasing its cost of funds and possibly reducing net interest income. Although
the Bank has other  sources of funds,  these other sources may have higher costs
than those of deposits.

Net income  increased  $178,538  or 11.27%  from  $1,583,985  for the year ended
September 30, 1994 to $1,762,523 for the year ended  September 30, 1995 which is
primarily attributable to an increase in net interest income.

The  operating  results  of the  Company  depend  to a great  degree  on its net
interest   income,   which  is  the  difference   between   interest  income  on
interest-earning  assets,  primarily  loans,   mortgage-backed   securities  and
investment  securities,  and interest expense on  interest-bearing  liabilities,
primarily deposits and borrowings.  The Company's net income is also affected by
the level of its  provision  for losses on loans and  corporate  securities  and
municipal obligations, non-interest income and non-interest expense.

                                      -12-
<PAGE>

NET INTEREST INCOME

The  following  table sets forth certain  information  relating to the Company's
average  balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid.  Such yields and costs are  derived by  dividing  income or expense by the
average  balance  of  assets  or  liabilities,  respectively,  for  the  periods
presented. Average balances are derived from month-end balances. Management does
not believe that the use of month-end balances instead of daily average

balances has caused any material difference in the information presented. 
<TABLE>
<CAPTION>

                                                                            For Year Ended September 30,
                                      At     ---------------------------------------------------------------------------------------
                                 September 30,
                                     1996                1996                         1995                         1994
                                 ------------ --------------------------   --------------------------   ----------------------------
                                                                 Average                      Average                        Average
                                     Yield/   Average            Yield/    Average             Yield/   Average               Yield/
                                     Cost     Balance  Interest   Cost     Balance  Interest    Cost    Balance   Interest    Cost
                                     ----     -------  --------   ----     -------  --------    ----    -------   --------    ----
                                (Dollars in Thousands)
Interest-earning assets:
<S>                                 <C>       <C>      <C>        <C>      <C>      <C>       <C>       <C>       <C>        <C>
  Loans receivable                   8.17 %   $110,084 $  9,077     8.25   $ 81,236 $  6,449    7.94 %  $ 64,245  $ 5,007      7.79%
  Mortgage-backed securities         6.46 %     54,647    3,557     6.51 %   70,947    4,359    6.14 %    70,479    3,683      5.23%
  Investment securities              6.56 %     29,936    1,863     6.22 %   42,936    2,744    6.39 %    31,392    1,742      5.55%
Other interest-earning assets        6.86 %      1,085       78     7.19 %    1,216      100    8.22 %     5,636      239      4.24%
                                     ----     -------- --------     ----   -------- --------    ----    --------  -------      ---- 
     Total interest earning assets   7.54 %   $195,752 $ 14,575     7.45 % $196,335 $ 13,652    6.95 %  $171,752  $10,671      6.21%
                                     ====     ======== ========     ====   ======== ========    ====    ========  =======      ==== 
Non-interest earning assets:                     3,764                        3,903                        3,380
                                              --------                     --------                     --------
     Total assets                             $199,516                     $200,238                     $175,132
                                              ========                     ========                     ========
Interest-bearing liabilities:
  Demand deposits                    2.86 %   $ 14,249 $    365     2.56 % $ 12,279 $    267    2.17 %  $ 15,872  $   370      2.33%
  Savings deposits and certificates
    of deposit                       5.39 %    128,899    7,077     5.49 %  129,319    6,633    5.13 %   127,772    5,382      4.21%
  Other liabilities                  6.17 %     19,429    1,237     6.37 %   20,473    1,324    6.47 %     3,278      165      5.03%
                                     ----     -------- --------     ----   -------- --------    ----    --------  -------      ---- 
     Total interest-
       bearing liabilities           5.27 %   $162,577 $  8,679     5.34 % $162,071 $  8,224    5.07 %  $146,922  $ 5,917      4.03%
                                     ====     ======== ========     ====   ======== ========    ====    ========  =======      ==== 
Non-interest bearing liabilities                 3,015                        2,371                        2,062
     Total liabilities                        $165,592                     $164,442                     $148,984
                                              ========                     ========                     ========
Stockholder's equity                            33,924                       35,796                       26,148
     Total liabilities and                    --------                     --------                     --------
       stockholders' equity                   $199,516                     $200,238                     $175,132      
                                              ========                     ========                     ========    
Net interest income                                    $  5,896                     $  5,428                      $ 4,754
                                                       ========                     ========                      =======
Interest rate spread                 2.27 %                         2.11 %                      1.88 %                         2.88%
                                     ====                           ====                                                       ==== 
Net yield on interest-earning assets                                3.01 %                      2.76 %                         2.77%
                                                                    ====                        ====                           ==== 
Ratio of interest-earning assets
    to interest-bearing liabilities                               120.41 %                    121.14 %                       116.90%
                                                                  ======                      ======                         ====== 
</TABLE>

                                      -13-
<PAGE>

The following Rate/Volume Analysis table presents, for the periods indicated,
information regarding changes in interest income and interest expense (in
thousands) of the Company.  For each category of interest-earning assets and
interest-bearing liabilities, information is provided on the changes
attributable to (i) changes in volume (changes in average daily  balances of the
portfolio multiplied by the prior year rate), (ii) changes in rate (changes in
rate multiplied by prior year volume), and (iii) changes in rate/volume (changes
in rate multiplied by the change in average volume). 
<TABLE>
<CAPTION>

                                                                        Years Ended March 31,
                                       ---------------------------------------------------------------------------------------
                                                     1996 vs. 1995                                1995 vs. 1994
                                       ------------------------------------------   ------------------------------------------
                                               Increase (Decrease) Due to                  Increase (Decrease) Due to
                                       ------------------------------------------   ------------------------------------------
                                                               Rate/                                         Rate/
                                         Volume      Rate      Volume      Net        Volume      Rate      Volume       Net
                                         ------      ----      ------      ---        ------      ----      ------       ---
                                                                           (In Thousands)

Interest income:
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>    
 Loans receivable                       $ 2,291    $   252    $    85    $ 2,628    $ 1,324    $    96    $    22    $ 1,442
 Mortgage-backed securities              (1,000)       263        (65)      (802)        24        641         11        676
 Investment securities                     (832)       (73)        24       (881)       635        264        103      1,002
 Other interest-earning assets              (11)       (13)         2        (22)      (187)       224       (176)      (139)
                                        -------    -------    -------    -------    -------    -------    -------    -------
   Total interest-earning assets        $   448    $   429    $    46    $   923    $ 1,796    $ 1,225    $   (40)   $ 2,981
                                        =======    =======    =======    =======    =======    =======    =======    =======

Interest expense:
 Demand deposits                        $    43    $    48    $     7    $    98    $   (84)   $   (25)   $     6    $  (103)
 Savings deposits and
   certificates of deposits                 (22)       466          -        444         65      1,176         10      1,251
 Other liabilities                          (68)        (2)       (17)       (87)       865         47        247      1,159
                                        -------    -------    -------    -------    -------    -------    -------    -------
   Total interest-bearing liabilities   $   (47)   $   512    $   (10)   $   455    $   846    $ 1,198    $   263    $ 2,307
                                        =======    =======    =======    =======    =======    =======    =======    =======
Net change in interest income           $   495    $   (83)   $    56    $   468    $   950    $    27    $  (303)   $   674
                                        =======    =======    =======    =======    =======    =======    =======    =======
</TABLE>


Total interest income increased $922,628,  or 6.76%, to $14,574,868 for the year
ended  September 30, 1996,  from  $13,652,240  for the year ended  September 30,
1995.  This increase is primarily the result of an increase in loans  receivable
during  the year ended  September  30,  1996,  this is  reflected  in the Bank's
rate/volume  analysis  as the  increase in interest  income  resulting  from the
volume of loans receivable was $2,291,000. Income resulting from the increase in
loan volume was partially  offset by decreases in the volume of  mortgage-backed
and investment securities during the year.

Interest  expense for the year ended September 30, 1996 increased  $454,579,  or
5.53%,  to $8,678,368  from  $8,223,789 at September 30, 1995.  This increase is
primarily due to an increase in market  interest  rates paid on deposits and the
relatively rapid repricing of the deposit base. The Bank's rate/volume  analysis
reflects  approximately  $512,000 of the increase in interest expense  resulting
from  interest  rate  changes.  Although this results in an increase in interest
expense,  there was a $47,000  reduction in interest  expense  resulting  from a
decrease in the volume of interest-bearing liabilities, including $68,000 due to
a reduction in the average balance outstanding of FHLB borrowings.

As a result of the above, net interest income increased $468,049, or 8.62%, from
$5,428,451  for the year ended  September  30, 1995 to  $5,896,500  for the year
ended September 30, 1996. The net interest spread

                                      -14-
<PAGE>

of the Bank increased from 1.88% for the year ended  September 30, 1995 to 2.11%
for the year ended  September 30, 1996.  The increase in net interest  income is
also attributable to a shift in the composition of interest-earning  assets from
generally  lower yielding  mortgage-backed  and investment  securities to loans,
resulting  in an  increase  in net  interest  income  attributable  to volume of
$495,000.

Interest costs on liabilities  increase or decrease  faster than interest yields
on assets, as shorter term liabilities reprice or adjust for changes in interest
rates quicker than longer maturity assets. The change in interest rate spreadfor
the year ended  September 30, 1996 in comparison to the year ended September 30,
1995 relates to the continued  overall increase in interest rates. As rates have
continued   to  rise  during  the  last  three  years,   the  slower   repricing
interest-earning  assets have began to catch up with the more rapidly increasing
interest rates on  liabilities;  therefore,  increasing the interest rate spread
during the year ended September 30, 1996.

Interest income  increased  $2,981,644,  or 27.94%,  to $13,652,240 for the year
ended  September 30, 1995,  from  $10,670,596  for the year ended  September 30,
1994. This increase resulted from the average yield on  interest-earning  assets
increasing to 6.95% for the year ended  September 30, 1995 compared to 6.21% for
the year ended  September 30, 1994. This increase was the result of the maturity
of lower yielding  investments  and the prepayment of loans and  mortgage-backed
securities and the reinvesting of those funds into higher  yielding  investments
and loans.  The higher yield is primarily due to an increase in market  interest
rates  for all  types  of  interest-earning  assets.  The  rate/volume  analysis
reflects this increase,  the change in interest income due to interest rates was
an increase of $1,225,000.  In addition,  there was a corresponding  increase of
$1,796,000  in  interest  income due to the volume of  interest-earning  assets.
Interest-earning assets increased as discussed previously due to the increase in
the Bank's loan portfolio. Market interest rates continued to gradually increase
during the fiscal  year.  As a result,  the  average  yield on  interest-earning
assets held at  September  30, 1995 was 7.12%,  up from 6.49% at  September  30,
1994.

Interest expense for the year ended September 30, 1995 increased $2,307,336,  or
39.00%,  to $8,223,789  from $5,916,453 at September 30, 1994. This increase was
also  due  to the  increase  in  interest  rates  throughout  the  fiscal  year.
Approximately $1,198,000 of the increase in interest expense was due to interest
rates. In addition,  there was an $865,000  increase in interest  expense due to
the increased volume of other interest-bearing liabilities,  mainly advances and
other borrowings from the FHLB. The average cost for interest-bearing

liabilities  increased  from  4.03% for the year  ended  September  30,  1994 to
5.07%for the year ended September 30, 1995.

As a result of the above,  net interest income  increased  $674,308,  or 14.18%,
from $4,754,143 for the year ended September 30, 1994 to $5,428,451 for the year
ended  September 30, 1995.  The net interest  spread of the Bank  decreased from
2.18%  for the  year  ended  September  30,  1994 to 1.88%  for the  year  ended
September 30, 1995.  Interest costs on liabilities  increase or decrease  faster
than interest yields on assets,  as shorter term  liabilities  reprice or adjust
for changes in interest  rates  quicker than longer  maturity  assets.  Interest
rates during the year started an upward swing,  and as the liabilities  repriced
the net interest spread began to shrink. This increase in interest rates related
to overall market increases and although  interest-earning assets reprice slower
than  interest-bearing  liabilities a continued decline in interest rate spreads
is expected to reverse as interest rates stabilize or begin to decline.

                                      -15-
<PAGE>

PROVISION FOR LOSSES ON LOANS

The Bank maintains, and the Board of Directors monitors, allowances for possible
losses on loans.  These  allowances  are  established  based  upon  management's
periodic evaluation of known and inherent risks in the loan portfolio, review of
significant  individual loans and collateral,  review of delinquent  loans, past
loss experience,  adverse  situations that may affect the borrowers'  ability to
repay,  current and expected  market  conditions,  and other factors  management
deems important.  Determining the appropriate  level of reserves involves a high
degree of management  judgment and is based upon historical and projected losses
in the  loan  portfolio  and the  collateral  value of  specifically  identified
problem loans.  Additionally,  allowance  strategies and policies are subject to
periodic review and revision in response to current market conditions, actual

loss experience and management's  expectations.The allowance for loan losses was
$740,346  and  $643,547  at  September  30,  1996 and  1995,  respectively.  The
provision for losses on loans is the method by which the allowance for losses is
adjusted  during the period.  The provision for losses on loans  increased  from
$9,124 for the year ended  September  30,  1995 to  $134,743  for the year ended
September  30, 1996.  The $125,619  increase in the provision for the year ended
September  30, 1996 was based on  management's  evaluation  of the  allowance in
relation  to the  increase  in the Bank's  loan  portfolio,  including  a 57.44%
increase in loans other than first  mortgage  loans.  Non-performing  loans were
$317,000 and $386,000 at September 30, 1996 and 1995,  respectively.  Historical
non-performing  loan ratios are presented with the five-year  financial  summary
information.  While management maintains its allowance for loan losses at levels
which it considers  adequate to provide for  potential  losses,  there can be no
assurance  that  additions will not be made to the allowance in future years and
that such losses will not exceed the estimated amounts.

The  allowance  for loan losses was $643,547 and $619,218 at September  30, 1995
and 1994,  respectively.  The  provision  for losses on loans was $9,124 for the
year ended  September 30, 1995 and a credit,  or recovery of amounts  previously
charged  against  income,  of $84,933 for the year ended September 30, 1994. The
increase in the  allowance  for the year ended  September  30, 1995 was based on
management's  evaluation  of the  allowance  in relation to the  increase in the
Bank's loan portfolio and the slight increase in non-performing loans.

PROVISION FOR INVESTMENT LOSSES

The Bank had maintained,  and the Board of Directors monitored, an allowance for
possible losses on investments,  primarily corporate  securities,  private issue
collateralized mortgage obligations and municipal obligations. The allowance was
based on management's periodic evaluation of known and inherent risks associated
with the  investment  portfolio.  The allowance had been  established  to absorb
potential   credit  losses   associated   with  the  above   mentionedinvestment
securities.  The allowance for investment losses was $0 as of September 30, 1996
and 1995.  The  provision  was a credit of amounts  previously  charged  against
income,  of $128,106 for the year ended  September  30, 1994.  The provision for
investment  losses is the method by which the  allowance  for losses is adjusted
during the period.  In effect,  management has  discontinued  its policy for the
establishment of allowances for potential  losses on investments,  primarily due
to the fact that no credit  losses had to be charged  against the  allowance and
the level of these types of  investments  is down from previous  periods.  While
management has  discontinued  the policy for the  establishment of allowance for
potential  credit  losses on  investments,  there can be no assurance  that such
losses will not occur in future years.

                                      -16-
<PAGE>

NON-INTEREST INCOME

Non-interest  income  increased  $61,896,  or 9.06%,  from $683,464 for the year
ended September 30, 1995 to $745,360 for the year ended September 30, 1996. This
was  primarily  due to the net gain on the sale of  mortgage-backed  securities,
after they were reclassified  from  held-to-maturity  to available-for-  sale in
accordance  with the FASB Guide to  Implementation  of Statement 115,  discussed
earlier.  The Bank reclassified  $11,355,417 of mortgage-backed  securities from
held-to-maturity  to  available-for-sale  and  subsequently  sold  all of  these
securities for a net realized gain of $135,208. Net gains on sales of investment
securities  and loans  decreased  from during 1996 in  comparison to 1995 due to
reduced  sales  volume of  available-for-sale  investment  securities  and lower
levels of gain  recognized  on sales of loans  held-for-sale.  Service  and late
charges  increased  from 1995 to 1996  primarily  due to increases in charges on
demand accounts.

Non-interest  income  increased  $233,278 or 51.82%,  from $450,186 for the year
ended  September 30, 1994 to $683,464 for the year ended September 30, 1995. The
main reason for this increase was due to the net gain on sale of  investments of
$122,900, primarily corporate equity securities, which is a $216,399 increase

from  the net loss on the  sale of  investments  of  $(93,499)  realized  during
theyear ended September 30, 1994.  Additionally,  gain on sale of loans declined
by 35.72%  due to a decline  in the  volume of loan sales from 1994 to 1995 as a
result of a less favorable interest rate environment.  Loans originated for sale
decreased from $18.4 million  during 1994 to $5.9 million for 1995.  Service and
late charges also increased from 1994 to 1995.

NON-INTEREST EXPENSE

Non-interest  expense  increased  $1,008,266,  or 30.41% from $3,315,033 for the
year ended  September  30, 1995 to $4,323,299  for the year ended  September 30,
1996. This increase relates primarily to the one-time SAIF special assessment of
$937,073 discussed earlier.

Non-interest  expense increased  $407,304 or 14.01% from $2,907,729 for the year
ended  September 30, 1994 to $3,315,033  for the year ended  September 30, 1995.
Compensation and related expenses  increased  $333,881 or 21.17% during the year
ended  September 30, 1995.  This increase was primarily the result of additional
compensation  expense related to the Employees Stock Ownership Plan (the "ESOP")
and the Management  Stock Bonus Plan (the "MSBP") which were in place throughout
the year.  Other expenses also increased  $111,545 or 21.49% to $630,677 for the
year  ended  September  30,  1995.  This  increase  relates  to an  increase  in
professional fees as a result of the conversion and general increases in expense
of operations as a result of inflation and increased asset size.

INCOME TAXES

Income tax expense decreased  $245,643,  or 23.96%, from $1,025,235 for the year
ended  September 30, 1995 to $779,592 for the year ended September 3, 1996. This
decrease  in income tax  resulted  from a decrease  in  pre-tax  income  largely
attributable  to the  accrual  of  the  special  SAIF  assessment.  Tax  benefit
attributable to the SAIF  assessment was  approximately  $335,000.

The Company's  income tax expense  increased  $99,581 from $925,654 for the year
ended  September 30, 1994 to $1,025,235  for the year ended  September 30, 1995.
The principal reason for the increase was the increase in pre-tax income.

                                      -17-

<PAGE>

                                [CORPORATE LOGO]



                          INDEPENDENT AUDITOR'S REPORT




To the Board of Directors and Stockholders of
Landmark Bancshares, Inc.
Dodge City, Kansas


We have audited the accompanying consolidated statements of financial condition
of Landmark Bancshares, Inc. and subsidiary as of September 30, 1996 and 1995,
and the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended September
30, 1996.  These financial statements are the responsibility of the
Corporation's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Landmark Bancshares,
Inc. and subsidiary as of September 30, 1996 and 1995, and the results of  their
operations and cash flows for each of the three years in the period ended
September 30, 1996 in conformity with generally accepted accounting principles.





                              /s/Regier Carr & Monroe, L.L.P.
                              Regier Carr & Monroe, L.L.P.

October 24, 1996
Wichita, Kansas

                                      F-1
<PAGE>

                            LANDMARK BANCSHARES, INC.

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>


ASSETS                                                               1996             1995
                                                              -------------    -------------

Cash and cash equivalents:
<S>                                                           <C>              <C>        
      Interest bearing                                        $       3,063    $        --
      Non-interest bearing                                          470,647          462,021
                                                              -------------    -------------
      Total cash and cash equivalents                               473,710          462,021
Time deposits in other financial institutions                       479,949          579,000
Investment securities held-to-maturity (estimated market
      value of $29,113,367 and $34,615,919 at September 30,
      1996 and 1995, respectively)                               29,398,520       34,825,052
Investment securities available-for-sale                          4,137,637        1,692,550
Mortgage-backed securities held-to-maturity (estimated
      market value of $45,526,007 and $68,074,510 at
      September 30, 1996 and 1995, respectively)                 45,877,120       68,206,569
Loans receivable, net                                           128,013,228       98,616,725
Loans held-for-sale                                               1,890,007          316,991
Accrued income receivable                                         1,518,640        1,671,075
Foreclosed real estate, net                                                           66,320
Office properties and equipment, at cost
  less accumulated depreciation                                     949,786        1,005,908
Prepaid expenses and other assets                                   973,383        1,175,524
Deferred income taxes                                                21,710
Income taxes receivable, current                                                      14,127
                                                              -------------    -------------
           Total assets                                       $ 213,733,690    $ 208,631,862
                                                              -------------    -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
      Deposits                                                $ 143,814,910    $ 144,957,084
      Outstanding checks in excess of bank balance                  143,808        1,050,816
      Borrowings from Federal Home Loan Bank                     33,466,668       25,533,334
      Advances from borrowers for taxes and insurance             1,673,142        1,340,156
      Accrued expenses and other liabilities                      2,193,296          935,531
      Income taxes payable, current                                  52,691
      Deferred income taxes                                                          147,495
                                                              -------------    -------------
           Total liabilities                                    181,344,515      173,964,416
                                                              -------------    -------------
Commitments and contingencies
Stockholders' equity:
      Preferred stock, no par value; 5,000,000 shares
        authorized; no shares outstanding
      Common stock, $0.10 par value; 10,000,000 shares
        authorized; 2,281,312 shares issued and outstanding         228,131          228,131
      Additional paid-in capital                                 21,944,175       21,893,499
      Retained income, substantially restricted                  17,468,325       16,816,492
      Unrealized gain on available-for-sale securities,
        net of deferred taxes                                       253,057           37,454
      Unamortized stock acquired by Employee Stock
        Ownership Plan                                             (994,695)      (1,131,573)
      Unamortized compensation related to Management
        Stock Bonus Plan                                           (482,612)        (675,657)
      Treasury stock, at cost, 428,316 and 195,980
        shares at September 30, 1996 and 1995, respectively      (6,027,206)      (2,500,900)
                                                              -------------    -------------
           Total stockholders' equity                            32,389,175       34,667,446
                                                              -------------    -------------
           Total liabilities and stockholders' equity         $ 213,733,690    $ 208,631,862
                                                              =============    =============

</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements.

                                      F-2
<PAGE>


                            LANDMARK BANCSHARES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                 1996                  1995                 1994
                                                            -------------         -------------        -------------
Interest income:
<S>                                                         <C>                   <C>                  <C>          
  Interest on loans                                         $   9,076,880         $   6,448,797        $   5,007,261
  Interest and dividends on investment securities               1,940,908             2,844,191            1,980,787
  Interest on mortgage-backed securities                        3,557,080             4,359,252            3,682,548
                                                            -------------         -------------        -------------
       Total interest income                                   14,574,868            13,652,240           10,670,596
                                                            -------------         -------------        -------------
Interest expense:
  Deposits                                                      7,441,797             6,899,764            5,751,386
  Borrowed funds                                                1,236,571             1,324,025              165,067
                                                            -------------         -------------        -------------
       Total interest expense                                   8,678,368             8,223,789            5,916,453
                                                            -------------         -------------        -------------
       Net interest income                                      5,896,500             5,428,451            4,754,143
Provision for losses on loans                                     134,743                9,124               (84,933)
Provision for losses on corporate
  securities and municipal obligations                                                                      (128,106)
                                                            -------------         -------------        -------------
  Net interest income after provisions for losses               5,761,757             5,419,327            4,967,182
                                                            -------------         -------------        -------------

Non-interest income:
  Service charges and late charges                                217,317               192,213              120,666
  Net gain (loss) on sale of investments                           27,107               122,900              (93,499)
  Net gain on sale of loans                                        82,208               114,246              177,730
  Net gain on sale of mortgage-backed securities                  135,208                                     15,000
  Service fees on loans sold                                      161,329               173,020              179,537
  Other                                                           122,191                81,085               50,752
                                                            -------------         -------------        -------------
       Total non-interest income                                  745,360               683,464              450,186
                                                            -------------         -------------        -------------
Non-interest expense:
  Compensation and related expenses                             1,893,458             1,911,205            1,577,324
  Occupancy expense                                               169,780               146,162              150,098
  Advertising                                                      63,371                68,876               72,438
  Federal insurance premium                                       389,986               379,086              382,314
  SAIF special assessment                                         937,073
  Loss from real estate operations                                  4,289                 3,425               13,970
  Data processing                                                 187,237               175,602              192,453
  Other expense                                                   678,105               630,677              519,132
                                                            -------------         -------------        -------------
       Total non-interest expense                               4,323,299             3,315,033            2,907,729
                                                            -------------         -------------        -------------
       Income before income taxes                               2,183,818             2,787,758            2,509,639
                                                            -------------         -------------        -------------
Income taxes:
  Currently payable                                             1,085,774               872,163              826,485
  Deferred tax expense (benefit)                                (306,182)               153,072               99,169
                                                            -------------         -------------        -------------
                                                                  779,592             1,025,235              925,654
                                                            -------------         -------------        -------------
       Net income                                           $   1,404,226         $   1,762,523        $   1,583,985
                                                            =============         =============        =============
Income per common share
Primary:
  Earnings per share (for period subsequent to initial
  issuance of common stock on March 28, 1994)               $        0.72         $        0.82        $        0.38
                                                            =============         =============        =============
  Weighted average common and common
    shares outstanding                                          1,937,820             2,141,214            2,305,048
                                                            =============         =============        =============

Fully diluted:
  Earnings per share (for period subsequent to initial
    issuance of common stock on March 28, 1994)             $        0.72                  0.81                 0.38
                                                            =============         =============        =============
  Weighted average common and common
    shares outstanding                                          1,953,774             2,175,546            2,316,046
                                                            =============         =============        =============
</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements. 
                                      F-3
<PAGE>

                           LANDMARK BANCSHARES, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                                        
                                                                          Unrealized    
                                           Additional                       Gain on     
                              Common        Paid-In         Retained      Available-for 
                              Stock         Capital          Income     Sale Securities 
                              -----         -------          ------     --------------- 

Balance, 
<S>                         <C>          <C>              <C>           <C>             
  September 30, 1993        $      -     $         -      $15,186,659   $          -    
Net proceeds on 
  common stock issued 
  in stock conversion        228,131      21,883,578                                    
Allocation of shares
  by Employees'
   Stock Ownership Plan                                                                 
Amortization of
  compensation related 
  to Management Stock
  Bonus Plan                                                                            
Net income for the
  year ended
  September 30, 1994                                        1,583,985                   
Cash dividend paid
 ($0.05 per share)                                           (114,065)                   
Net change in
  unrealized 
  depreciation
  on marketable-
  equity securities                                                                     
                              -------     ----------       ----------         ------    
Balance,
  September 30, 1994          228,131     21,883,578       16,656,579              -    
Cumulative effect of
October 1, 1995
  change in accounting 
  for certain investment 
  securities                                                                  15,569    
Allocation of shares
by Employees'
   Stock Ownership Plan                        9,921                                    
Amortization of
compensation  related 
  to Management Stock
  Bonus Plan                                                                            
Net income for the
  year ended 
  September 30, 1995                                        1,762,523                   
Cash dividend paid
  ($0.75 per share)                                        (1,602,610)                  
Net change in
  unrealized gain on
  available-for-sale 
  investment securities                                                       21,885                   
Purchase of 195,980
  treasury shares                                                                                                    
                              -------     ----------       ----------         ------    
Balance, 
  September 30, 1995          228,131     21,893,499       16,816,492         37,454    
Allocation of shares
  by Employees'
  Stock Ownership Plan                        50,676                                    
Amortization of
  compensation related 
  to Management Stock
  Bonus Plan                                                                            
Net income for the year
   ended September 30, 1996                                 1,404,226                   
Cash dividend paid
  ($0.40 per share)                                          (752,393)                    
Net change in
  unrealized gain on
  available-for-sale 
  investment securities                                                      215,603    
Purchase of 232,336
  treasury shares                                                                       
                            --------     -----------      -----------   ------------    
Balance, 
  September 30, 1996        $228,131     $21,944,175      $17,468,325   $    253,057    
                            ========     ===========      ===========   ============    
</TABLE>

<TABLE>
<CAPTION>
                                Unrealized     Unamortized           
                             Depreciation on     Common       Unamortized
                                Marketable        Stock      Compensation                   Total
                                  Equity       Acquired by    Related to   Treasury      Stockholders'
                                 Securities        ESOP          MSB         Stock          Equity
                                 ----------        ----        -------     --------      -----------

Balance, 
<S>                             <C>            <C>          <C>            <C>           <C>                 
  September 30, 1993            $  (42,302)    $         -  $         -    $             $15,144,357  
Net proceeds on 
  common stock issued 
  in stock conversion                           (1,368,780)    (965,224)                  19,777,705
Allocation of shares
  by Employees'
   Stock Ownership Plan                             75,239                                    75,239
Amortization of
  compensation related 
  to Management Stock
  Bonus Plan                                                     96,522                       96,522
Net income for the
  year ended
  September 30, 1994                                                                       1,583,985
Cash dividend paid
 ($0.05 per share)                                                                          (114,065)   
Net change in
  unrealized 
  depreciation
  on marketable-
  equity securities                42,302                                                     42,302
                               -----------      ----------     --------     ----------    ----------
Balance,
  September 30, 1994                      -     (1,293,541)    (868,702)             -    36,606,045
Cumulative effect of
October 1, 1995
  change in accounting 
  for certain investment 
  securities                                                                                  15,569
Allocation of shares
by Employees'
   Stock Ownership Plan                            161,968
Amortization of
compensation  related 
  to Management Stock
  Bonus Plan                                                    193,045                      193,045
Net income for the
  year ended 
  September 30, 1995                                                                       1,762,523
Cash dividend paid
  ($0.75 per share)                                                                       (1,602,610)
Net change in
  unrealized gain on
  available-for-sale 
  investment securities                                                                       21,885
Purchase of 195,980
  treasury shares                                                           (2,500,900)   (2,500,900)                               
                               -----------      ----------      --------    ----------    ----------
Balance, 
  September 30, 1995                     -      (1,131,573)    (675,657)    (2,500,900)   34,667,446
Allocation of shares
  by Employees'
  Stock Ownership Plan                             136,878                                   187,554
Amortization of
  compensation related 
  to Management Stock
  Bonus Plan                                                    193,045                      193,045
Net income for the year
   ended September 30, 1996                                                                1,404,226
Cash dividend paid
  ($0.40 per share)                                                                         (752,393)    
Net change in
  unrealized gain on
  available-for-sale 
  investment securities                                                                      215,603
Purchase of 232,336
  treasury shares                                                           (3,526,306)   (3,526,306)
                               -----------      ----------      --------    ----------    ----------
Balance, 
  September 30, 1996            $        -     $  (994,695) $  (482,612)  $ (6,027,206)  $32,389,175
                                =========      ===========  ===========   ============   ===========
</TABLE>


The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements.
                                      F-4
<PAGE>

                            LANDMARK BANCSHARES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                                   1996           1995             1994
                                                                               ------------    ------------    ------------

CASH FLOWS FROM OPERATING
ACTIVITIES
<S>                                                                            <C>             <C>             <C>         
   Net income                                                                  $  1,404,226    $  1,762,523    $  1,583,985
   Adjustments to reconcile net
   income to net cash
       provided by operating
       activities:
          Depreciation                                                              116,278         109,413         120,986
          Loss (gain) on sale of investment                                         (27,107)       (122,900)         93,499
            securities available-for-sale
          Decrease (increase) in accrued interest
          receivable                                                                152,435        (325,534)       (290,516)
          Increase (decrease) in outstanding checks
            in excess of bank balance                                             1,050,816        (907,008)           --
          Increase (decrease) in accrued and deferred
            income taxes                                                           (239,364)        168,159         (82,261)
          Increase (decrease) in accounts payable
            and accrued expenses                                                  1,257,765         395,949        (194,146)
          Amortization of premiums and discounts
            on investments and loans                                               (171,438)       (261,601)        (88,619)
          Provision for losses on loans and investments                             134,743           9,124        (213,039)
          Proceeds from sale of mortgage-backed
            securities held-for-sale                                                  --              --          1,015,000  
          Sale of loans held-for-sale                                             9,679,305       6,294,625      27,312,466
          Gain on sale of mortgage-backed securities
           available-for-sale                                                      (135,208)          --            (15,000)
          Gain on sale of loans held-for-sale                                       (82,208)       (114,246)       (177,730)
          Origination of loans held-for-sale                                     (9,643,647)     (5,886,469)    (18,395,219)
          Purchase of loans held-for-sale                                        (2,803,645)       (701,310)           --
          Amortization related to MSBP and ESOP                                     329,923         355,013         171,761
          Other non-cash items, net                                                 293,135         (34,981)        (61,145)
                                                                               ------------    ------------    ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                         1,460,520       3,399,891       7,976,377
                                                                               ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Loan originations and principal payments
     on loans held-for-investment                                               (14,007,163)    (13,940,760)     (4,369,147)
   Loans purchased for investment                                               (16,398,206)    (13,959,464)    (10,086,155)
   Principal repayments on mortgage-backed securities                            12,396,168       8,046,547      28,280,853
   Proceeds from sale of mortgage-backed securities
     available-for-sale                                                          11,490,625           --               --
   Acquisition of mortgage-backed securities
     held-to-maturity                                                            (1,482,865)     (5,875,830)    (30,148,425)
   Acquisition of investment securities held-to-maturity                        (16,295,500)     (6,451,406)    (28,866,068)
   Acquisition of investment securities available-for-sale                       (2,373,880)       (748,625)           --
   Proceeds from sale of investment securities
     available-for-sale                                                             308,479         733,382            --
   Proceeds from maturities or calls of investment
     securities held-to-maturity                                                 21,862,135      11,830,000      11,593,000
   Proceeds from sale of marketable
     equity securities                                                                 --             --            654,458
   Net decrease in time deposits                                                     99,051         285,000         955,000
   Proceeds from sale of foreclosed real estate                                     130,923         125,554         205,179
   Acquisition of fixed assets                                                      (60,156)       (188,533)        (24,569)
   Other investing activity, net                                                     36,111             181        (147,729)
                                                                               ------------    ------------    ------------

NET CASH USED IN INVESTING ACTIVITIES                                            (4,294,278)    (20,143,954)    (31,953,603)
                                                                               ------------    ------------    ------------
</TABLE>

The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements.
                                      F-5
<PAGE>
                            LANDMARK BANCSHARES, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
              FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>

                                                                          1996            1995           1994
                                                                     ------------    ------------    ------------                   
CASH FLOWS FROM FINANCING ACTIVITIES
<S>                                                                  <C>             <C>             <C>                            
  Net increase (decrease) in deposits                                $ (1,142,174)   $  8,098,871    $(10,569,540)                  
  Net increase (decrease) in escrow accounts                              332,986         196,850         (68,615)
  Proceeds from FHLB advances and other borrowings                     53,600,000      62,500,000      50,030,000
  Repayment of FHLB advances and other borrowings                     (45,666,666)    (50,546,666)    (36,450,000)
  Purchase of treasury stock                                           (3,526,306)     (2,500,900)
  Proceeds from stock issuance, net of conversion                                                      
    costs and stock acquired by ESOP                                         --              --        20,742,929
  Purchase of company stock for MSBP                                         --              --          (965,224)
  Dividends paid                                                         (752,393)     (1,602,610)       (114,065)
                                                                     ------------    ------------    ------------                   
                                                                                                                  
NET CASH PROVIDED BY FINANCING ACTIVITIES                               2,845,447      16,145,545      22,605,485
                                                                     ------------    ------------    ------------                   
                                                                                                                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                       11,689        (598,518)     (1,371,741)
                                                                     
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                            462,021       1,060,539       2,432,280
                                                                     ------------    ------------    ------------                   
                                                                     
CASH AND CASH EQUIVALENTS AT END OF YEAR                             $    473,710    $    462,021    $  1,060,539
                                                                     ============    ============    ============
                                                                                                     
SUPPLEMENTAL DISCLOSURES                                             
  Cash paid during the year for:                                     
    Interest on deposits, advances and other                         
      borrowings                                                     $  8,519,955    $  7,718,438    $  5,924,494
                                                                     
    Income taxes                                                        1,018,956         857,076       1,007,915
                                                                     
  Transfers from loans to foreclosed real estate                           27,411          42,658         214,629
                                                                     
  Loans to finance sale of foreclosed real estate                          25,954            --            75,450
                                                                     
  Transfer of held-to-maturity mortgage-backed                       
    securities to available-for-sale                                   11,355,417            --              --
                                                                     
</TABLE>                                                             
                                                                     
                                                                     
The Notes to  Consolidated  Financial  Statements  are an integral part of these
statements.

                                      F-6
<PAGE>

                            LANDMARK BANCSHARES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1996, 1995 AND 1994


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    NATURE OF OPERATIONS:
    Landmark Bancshares, Inc. (the Company) is a Kansas corporation and is the
    parent company of its wholly-owned subsidiary, Landmark Federal Savings
    Bank (the Bank).  At the present time, the Company does not conduct any
    active business.

    Landmark Federal Savings Bank is primarily engaged in attracting deposits
    from the general public and using those deposits, together with other
    funds, to originate real estate loans on one- to  four- family residences,
    and, to a lesser extent, consumer and commercial loans.  The Bank conducts
    its business from its main office in Dodge City and also has four branch
    offices located in Barton, Finney and Rush Counties, Kansas.  In addition,
    the Bank invests in mortgage-backed securities and investment securities.
    The Bank offers its customers fixed rate and adjustable rate mortgage
    loans, as well as consumer loans, including auto, home equity and savings
    account loans.

    PRINCIPLES OF CONSOLIDATION:
    The accompanying consolidated financial statements include the accounts of
    Landmark Bancshares, Inc. and its wholly-owned subsidiary, Landmark Federal
    Savings Bank.  Significant intercompany transactions and balances have been
    eliminated.

    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 significantly
    from those estimates.

    Material estimates that are particularly susceptible to significant change
    in the near-term relate to the determination of the allowance for loan
    losses and the valuation of assets acquired in connection with foreclosures
    or in satisfaction of loans.  In connection with the determination of the
    allowances for loan losses and the valuation of assets acquired by
    foreclosure, management obtains independent appraisals for significant
    properties.

    Management believes that the allowances for losses on loans and valuations
    of assets acquired by foreclosure are adequate and appropriate.  While
    management uses available information to recognize losses on loans and
    assets acquired by foreclosure, future loss may be accruable based on
    changes in economic conditions.  In addition, various regulatory agencies,
    as an integral part of their examination process, periodically review the
    Company's allowances for losses on loans and valuations of assets acquired
    by foreclosure.  Such agencies may require the Bank to recognize additional
    losses based on their judgment of information available to them at the time
    of their examination.

                                      F-7
<PAGE>

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    CASH AND CASH EQUIVALENTS:
    Cash and cash equivalents include unrestricted cash on hand, demand
    deposits maintained in depository institutions and other readily
    convertible investments with original maturities when purchased of three
    months or less.  All time deposits in other depository institutions are
    treated as non-cash equivalents.

    INVESTMENT AND MORTGAGE-BACKED SECURITIES:
    Regulations require the Bank to maintain liquidity for maturities of
    deposits and other short-term borrowings in cash, U.S. Government and other
    approved securities.

    In May, 1993, the Financial Accounting Standards Board issued SFAS
    Statement No. 115, Accounting for Certain Investments in Debt and Equity
    Securities.  This standard establishes three categories of investments,
    including mortgage-backed securities; held-to-maturity, trading, and
    available-for-sale.  Under SFAS No. 115, held-to-maturity securities are
    reported at amortized cost.  Trading securities are reported at fair value,
    with unrealized changes in value reported in the Company's income statement
    as part of its earnings.  Available-for-sale securities are also reported
    at fair value, but any unrealized appreciation or depreciation, net of tax
    effects are reported as a separate component of equity.  The Company
    adopted SFAS No. 115 with an effective adoption date of October 1, 1994.

    Prior to the adoption of SFAS No. 115, bonds, notes and debentures were
    carried at cost, adjusted for premiums and discounts that were recognized
    in interest income using the interest method over the period to maturity.
    Mortgage-backed and related securities held for investment were stated at
    cost, adjusted for amortization of premiums and accretion of discounts
    using the interest method.  The Company had the positive intent and ability
    to hold such assets to maturity.  Equity securities that were non-
    marketable were carried at cost.  All other equity securities were carried
    at the lower of cost or estimated market value in the aggregate.  In the
    event the carrying amount was reduced below market, a valuation account was
    established by a charge to equity representing the net unrealized loss.

    In accordance with the provisions of the Financial Accounting Standards
    Board A Guide to Implementation of Statement 115 on Accounting for Certain
    Investments in Debt and Equity Securities (the Guide), the management of
    the Company in December of 1995 transferred $11,355,417 of mortgage-backed
    securities from held-to-maturity classification to available-for-sale
    classification.  These securities were sold subsequent to the transfer.
    The transfer was a one-time transaction as provided for in the Guide in an
    effort to restructure and enhance the yield and rate sensitivity of the
    Company's portfolio of held-to-maturity securities.

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

    Gains and losses on the sale of investment and mortgage-backed securities
    are determined using the specific-identification method.  All sales are
    made without recourse.

    LOANS RECEIVABLE:
    Loans receivable that management has intent and ability to hold for the
    foreseeable future or until maturity or pay-off are reported at their
    outstanding principal balances, net of undisbursed loan proceeds, the
    allowance for loan losses, any deferred fees or costs on originated loans
    and unamortized premiums or discounts on purchased loans.

                                      F-8
<PAGE>

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    The allowance for loan losses is increased by charges to income and
    decreased by charge-offs (net of recoveries).  Management's periodic
    evaluation of the adequacy of the allowance is based on the Bank's past
    loan loss experience, known and inherent risks in the portfolio, adverse
    situations that may affect the borrower's ability to repay, the estimated
    value of any underlying collateral, the current level of non-performing
    assets and current economic conditions.

    Premiums and discounts on purchased residential real estate loans are
    amortized to income using the interest method over the estimated remaining
    period to maturity.

    Loan origination fees and certain direct costs are capitalized and
    recognized as an adjustment of the yield of the related loan.

    The accrual of interest on impaired loans is discontinued when in
    management's opinion, the borrower may be unable to meet payments as they
    become due.  When interest accrual is discontinued, all unpaid accrued
    interest is reversed.  Interest income is subsequently recognized only to
    the extent cash payments are received.

    LOANS HELD-FOR-SALE:
    Mortgage loans originated and intended for sale in the secondary market are
    carried at the lower of cost or estimated market value in the aggregate.
    Net unrealized losses are recognized through a valuation allowance by
    charges to income.

    FORECLOSED REAL ESTATE:
    Real estate properties acquired through, or in lieu of, foreclosure are to
    be sold and are initially recorded at fair value at the date of foreclosure
    establishing a new cost basis.  Valuations are periodically performed by
    management, and an allowance for losses is established by a charge to
    operations if the carrying value of a property exceeds the fair value less
    estimated costs to sell.  Revenue and expenses from operations and changes
    in the valuation allowance are included in gain or loss on foreclosed real
    estate.  The historical average holding period for such property is
    approximately one year.

    EXCESS SERVICING FEES RECEIVABLE:
    Additional funds for lending are provided by selling participating
    interests in real estate loans.  When participating interests in loans sold
    have an average contractual interest rate, adjusted for normal servicing
    fees, that differs from the agreed yield to the purchaser, gains or losses
    are recognized equal to the present value of such differential over the
    estimated remaining life of such loans.  The resulting "excess servicing
    fees receivable" is amortized over the estimated life using the interest
    method.  The excess servicing fees receivable is included in prepaid
    expenses and other assets on the consolidated statements of financial
    condition.

    The excess servicing fees receivable and the amortization thereon is
    periodically evaluated in relation to estimated future net servicing
    revenues, taking into consideration changes in interest rates, current
    prepayment rates and expected future cash flows.  The Bank evaluates the
    carrying value of the excess servicing receivables by estimating the future
    net servicing income of the excess servicing receivable based on
    management's best estimate of remaining loan lives.

                                      F-9
<PAGE>

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    FINANCIAL INSTRUMENTS:
    All derivative financial instruments held or issued by the Bank are held or
    issued for purposes other than trading.

    Off-balance sheet instruments:  In the ordinary course of business the Bank
    has entered into off-balance sheet financial instruments consisting of
    commitments to extend credit, commitments under credit card arrangements,
    commercial letters of credit, and standby letters of credit.  Such
    financial instruments are recorded in the financial statements when they
    are funded or related fees are incurred or received.

    OFFICE PROPERTIES AND EQUIPMENT:
    Office properties and equipment are stated at cost less accumulated
    deprecation.  Depreciation is computed on a straight-line basis or
    accelerated methods over the estimated useful lives of five to fifty years
    for buildings and improvements and three to twenty years for furniture,
    fixtures, equipment and automobiles.

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

    IMPACT OF NEW ACCOUNTING STANDARDS:
    In April, 1995, the FASB issued SFAS No. 121, Accounting for the Impairment
    of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
    Statement No. 121 establishes standards for recognizing and measuring the
    impairment of long-lived assets, certain identifiable intangibles, and
    goodwill, when an entity is unable to recover the carrying amount of those
    assets.  This statement is effective for fiscal years beginning after
    December 15, 1995.  SFAS No. 121 would not have a material effect on the
    Company's financial statements.

    In May, 1995, the FASB issued SFAS No. 122, Accounting for Mortgage
    Servicing Rights.  This Statement amends SFAS No. 65, Accounting for
    Certain Mortgage Banking Activities, to require that a mortgage banking
    enterprise recognize as separate assets rights to service mortgage loans
    for others, however those servicing rights are acquired.  This Statement
    requires that a mortgage banking enterprise assess its capitalized mortgage
    servicing rights for impairment based on the fair value of those rights.
    SFAS No. 122 is effective for fiscal years beginning after December 15,
    1995.  SFAS No. 122 is to be applied prospectively effective October 1,
    1996, and is not expected to have a material effect on the Company's
    financial statements.  This Statement was superseded by SFAS No. 125 which
    was issued in June 1996, SFAS No. 125 is discussed below.

    In October, 1995, the FASB issued SFAS No. 123, Accounting  for Stock-Based
    Compensation.  This Statement establishes a fair-value-based method of
    accounting for stock compensation plans with employees and others.  It
    applies to all arrangements under which employees receive shares of stock
    or other equity instruments of the employer, or the employer incurs
    liabilities to employees in amounts based on the price of the employer's
    stock.  The objective of the measurement process is to estimate the fair
    value of options or other equity instruments based on the stock price at
    the grant date, to which employees will become entitled when they have
    
                                      F-10
<PAGE>

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    rendered the requisite service and satisfy all other conditions necessary
    to earn the right to benefit from the options or other equity instruments.
    Although encouraged to do so, entities are not required to adopt the
    recognition and measurement aspects of SFAS No. 123, and may continue to
    account for stock-based compensation plans in accordance with APB Opinion
    25.  However, entities that continue to apply Opinion 25 must comply with
    the disclosure requirements of SFAS No. 123.  Whichever method is used must
    be applied for all stock-based employee compensation arrangements.  Once
    the recognition and measurement provisions of SFAS No. 123 are adopted,
    that election may not be reversed.  SFAS No. 123 will be effective for the
    fiscal year beginning October 1, 1996.  SFAS No. 123 will effect the
    Company's stock options granted after October 1, 1996.  These options will
    be recognized and measured in accordance with the fair-value-based method
    of accounting, this Statement is not expected to have a material effect on
    the Company's financial statements

    In June, 1996, the FASB issued SFAS No. 125, Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities.  This
    Statement established revised standards for recognition, measurement, and
    disclosure of transfers and servicing of financial assets and
    extinguishment of debt.  Those standards are based on consistent
    application of a financial-components approach that focuses on control.
    Under that approach, after a transfer of financial assets, an entity
    recognizes the financial and servicing assets it controls and the
    liabilities it has incurred, derecognizes financial assets when control has
    been surrendered, and derecognizes liabilities when extinguished.  This
    Statement provides consistent standards for distinguishing transfers of
    financial assets that are sales from transfers that are secured borrowings.
    A transfer of financial assets in which the transferor surrenders control
    over those assets is accounted for as a sale to the extent that
    consideration other than beneficial interests in the transferred assets is
    received in exchange.  As issued, Statement No. 125 is effective for
    transfers and servicing of financial assets and extinguishment of
    liabilities occurring after December 31, 1996, and is to be applied
    prospectively.  An exposure draft of a proposed SFAS was issued in November
    1996 titled "Deferral of the Effective Date of Certain Provisions of FASB
    Statement No. 125" , an amendment of FASB Statement No. 125.  This proposed
    statement would defer the effective date of SFAS No. 125 for one year.
    This exposure draft was issued after the Board was made aware of the volume
    and variety of certain transactions and the related changes to information
    systems and accounting processes that are necessary to comply with the
    requirements of SFAS No. 125.  Earlier application of the Statement is not
    allowed.  The Statement's impact on the Bank is not determinable since it
    will be based on future transfers of financial assets.

    EARNINGS PER SHARE:
    Primary earnings per common and common equivalent share and fully diluted
    earnings per common and common equivalent share are computed using the
    weighted average number of shares outstanding adjusted for unallocated ESOP
    shares and for incremental shares related to outstanding options to
    purchase common stock.

    Earnings per share of common stock for 1994 was computed by dividing net
    income subsequent to conversion by the weighted average number of common
    and common equivalent shares outstanding subsequent to conversion on March
    28, 1994.

    FINANCIAL STATEMENT PRESENTATION:
    Certain items in prior year financial statements have been reclassified to
    conform to the 1996 presentation.

                                      F-11
<PAGE>

2.  INVESTMENT SECURITIES

    Effective October 1, 1994, the Company adopted the Financial Accounting
    Standards Board Statement SFAS No. 115, Accounting for Certain Investments
    in Debt and Equity Securities.  This statement is not retroactively
    applied.  In conjunction with the adoption of SFAS No. 115, investment
    securities as of October 1, 1994 were designated as held-to-maturity or
    available-for-sale.  The cumulative effect of classifying securities
    previously accounted for at the lower of cost or market in the aggregate as
    available-for-sale was to reflect an unrealized gain, net of tax effect, as
    a component of retained income of $15,569 as of October 1, 1994.

    The amortized cost and estimated market values of investment securities at
    September 30 are summarized as follows:
<TABLE>
<CAPTION>
                                                             September 30, 1996
                                           ---------------------------------------------------
                                                            Gross       Gross       Estimated
                                             Amortized    Unrealized  Unrealized     Market
                                                Cost        Gains       Losses       Value
                                            -----------    --------   --------    ------------


  Held-to-maturity:
<S>                                         <C>            <C>        <C>         <C>         
    Government Agency Securities            $27,168,520    $ 53,398   $363,467    $ 26,858,451
    Municipal Obligations                     2,230,000      30,291      5,375       2,254,916
                                            -----------    --------   --------    ------------
                                            $29,398,520    $ 83,689   $368,842    $ 29,113,367
                                            ===========    ========   ========    ============
                                                                 
  Available-for-sale:
    Common Stock                            $ 1,982,407    $420,600   $  6,770    $  2,396,237
    Stock in Federal Home Loan
      Bank, at cost                           1,731,400                              1,731,400
    Other, at cost                               10,000                                 10,000
                                            -----------    --------   --------    ------------
                                            $ 3,723,807    $420,600   $  6,770    $  4,137,637
                                            ===========    ========   ========    ============
</TABLE>

<TABLE>
<CAPTION>
                                                             September 30, 1995
                                           ---------------------------------------------------
                                                            Gross       Gross       Estimated
                                             Amortized    Unrealized  Unrealized     Market
                                                Cost        Gains       Losses       Value
                                            -----------    --------   --------    ------------
  Held-to-maturity:
<S>                                         <C>            <C>        <C>         <C>         
    United States Treasury Securities       $ 2,887,463    $      -   $ 24,692    $ 2,862,771
                                                                                     
    Corporate Securities                        250,000       2,578    379,938        252,578
    Government Agency Securities             29,157,953     137,427      5,712     28,915,442
    Municipal Obligations                     2,529,636      61,204                 2,585,128
                                            -----------    --------   --------    -----------
                                            $34,825,052    $201,209   $410,342    $34,615,919
                                            ===========    ========   ========    ===========

  Available-for-sale:
    Common Stock                            $   145,000    $ 61,250   $      -    $   206,250
    Stock in Federal Home Loan
      Bank, at cost                           1,476,300                             1,476,300
    Other, at cost                               10,000                                10,000
                                            -----------    --------   --------    -----------
                                            $ 1,631,300    $ 61,250   $      -    $ 1,692,550
                                            ===========    ========   ========    ===========
</TABLE>

    Government agency securities  above include bonds and notes issued by
    various government agencies.  Those agencies include the following:
    Federal Farm Credit, Fannie Mae, Freddie Mac, Sallie Mae, Federal Home Loan
    Bank, Resolution Trust Corporation, and the Tennessee Valley Authority.

                                      F-12
<PAGE>

2.  INVESTMENT SECURITIES (CONTINUED)

    Federal Home Loan Bank members are required to maintain an investment in
    stock at an amount equal to a percentage of outstanding home loans.  For
    disclosure purposes such stock, which is carried at cost, is assumed to
    have a market value which is equal to cost.

    The amortized cost and estimated market value of debt securities, all of
    which are classified as held-to-maturity, at September 30, 1996, by
    contractual maturity are shown below.  Expected maturities will differ from
    contractual maturities because borrowers may have the right to call or
    prepay obligations with or without call or prepayment penalties.  The
    equity securities have been excluded from the maturity table below because
    they do not have contractual maturities associated with debt securities.
<TABLE>
<CAPTION>

                                                                 Amortized             Estimated
                                                                    Cost              Market Value
                                                              ----------------      ----------------
Held-to-maturity:
<S>                                                           <C>                   <C>             
  Due in one year or less                                     $      2,100,000      $      2,104,531
  Due after one year through five years                              5,999,613             5,952,725
  Due after five years through ten years                            18,198,907            18,094,923
  Due after ten years                                                3,100,000             2,961,188
                                                              ----------------      ----------------
     Total held-to-maturity                                   $     29,398,520      $     29,113,367
                                                              ================      ================
</TABLE>


    Gross realized gains and (losses) on sales of investment securities during
    the years ended September 30 are as follows:

                                          1996       1995         1994   
                                       ---------   ---------    -------- 
    Available-for-sale securities:                       
       Realized gains                  $  27,107   $ 122,900    $   --
       Realized losses                     --          --        (93,499)
                                        --------    --------     ------- 
                                       $  27,107   $ 122,900    $(93,499)
                                       =========   =========    ======== 
                        


    Proceeds from sales of available-for-sale or marketable equity securities
    were $308,479, $733,382 and $654,458 for the years ended September 30,
    1996, 1995 and 1994, respectively.  During the year ended September 30,
    1994, sales consisted of mutual funds.  During the year ended September 30,
    1996 and 1995, sales consisted of common stock of unrelated financial
    corporations.

    There were no proceeds from sales of debt securities for the years ended
    September 30, 1996, 1995 and 1994.

    Investment securities with a carrying amount of $0 and $500,000 as of
    September 30, 1996 and 1995, respectively, were pledged as collateral for
    public funds as discussed in Note 9.

                                      F-13


<PAGE>

3.  MORTGAGE-BACKED SECURITIES

    Mortgage-backed securities, all of which were classified as held-to-
    maturity at September 30, 1996 and 1995, consist of the following:
<TABLE>
<CAPTION>

                                             September 30, 1996
                           -----------------------------------------------------
                                                          Gross         Gross  
                              Amortized    Unrealized   Unrealized      Market
                                Cost         Gains        Losses        Value
                           -----------   -----------   -----------   -----------

<S>                        <C>           <C>           <C>           <C>        
GNMA - fixed rate          $   552,879   $    11,524   $      --     $   564,403
FNMA - ARMs                 15,516,459       147,235       137,645    15,526,049
FHLMC - ARMs                 6,257,007        77,661        12,704     6,321,964
FHLMC - fixed rate             401,275        10,550         2,561       409,264
FNMA - fixed rate              812,750        66,092          --         878,842
Collateralized mortgage
  obligations-government
  agency issue              16,681,922        14,183       402,707    16,293,398

Collateralized mortgage
  obligations-private
  issues                     5,654,828         4,899       127,640     5,532,087
                           -----------   -----------   -----------   -----------
                           $45,877,120   $   332,144   $   683,257   $45,526,007
                           ===========   ===========   ===========   ===========
</TABLE>

<TABLE>
<CAPTION>

                                           September 30, 1995
                           -----------------------------------------------------
                                                         Gross         Gross  
                             Amortized    Unrealized   Unrealized      Market
                               Cost         Gains        Losses        Value
                           -----------   -----------   -----------   -----------

<S>                        <C>           <C>           <C>           <C>        
GNMA - ARMs                $11,989,312   $      --     $    43,189   $11,946,123

FNMA - ARMs                 19,889,225        23,127          --      19,912,352

FHLMC - ARMs                 7,024,892        18,722          --       7,043,614
GNMA - fixed rate              771,308        24,587          --         795,895
FNMA - fixed rate              954,025          --           1,067       952,958
FHLMC - fixed rate             540,546        10,807          --         551,353
Collateralized mortgage
  obligations-government
  agency issue              19,616,992          --         111,781    19,505,211

Collateralized mortgage
  obligations-private
  issues                     7,420,269          --          53,265     7,367,004
                           -----------   -----------   -----------   -----------
                           $68,206,569   $    77,243   $   209,302   $68,074,510
                           ===========   ===========   ===========   ===========

</TABLE>


    Collateralized mortgage obligations consist of floating rate and fixed rate
    notes with varying contractual principal maturities.  The Bank has no
    principal only, interest only, or residual collateralized mortgage
    obligations.

    Proceeds from sales of mortgage-backed securities available-for-sale or
    held-for-sale were $11,490,625, $0 and $1,015,000 for years ended September
    30, 1996, 1995 and 1994, respectively.  Sales for the year ended September
    30, 1996 consisted of mortgage-backed securities that were transferred from
    held-to-maturity to available-for-sale in December, 1995.  These securities
    were transferred in accordance with the one-time transaction allowed under
    the FASB Implementation Guide, see Note 1 for further discussion.  These
    securities were subsequently sold.

                                      F-14
<PAGE>

3.  MORTGAGE-BACKED SECURITIES (CONTINUED)

    Gross realized gains and (losses) on sales of mortgage-backed securities
    during the years ended September 30 are as follows:

                                     1996        1995         1994
                                  ---------    --------    ---------
Realized gain                     $ 144,885    $    --     $  15,000
Realized losses                      (9,677)        --          --
                                  ---------    -------     ---------
                                  $ 135,208    $    --     $  15,000
                                  =========    =======     =========


    Mortgage-backed securities with a carrying amount of $7,001,787 and
    $2,173,413 at September 30, 1996 and 1995, respectively, were pledged as
    collateral for public funds as discussed in Note 9.


4.  LOANS RECEIVABLE

    Loans receivable at September 30 are summarized as follows:
<TABLE>
<CAPTION>

                                                                           September 30,
                                                              -----------------------------------------
                                                                         1996                   1995
                                                              ------------------     ------------------
First mortgage loans:
<S>                                                           <C>                    <C>               
  Secured by one to four family residences                    $       99,579,583     $       79,162,144
  Secured by other properties                                          3,726,333              4,040,156
  Construction loans                                                   1,129,915                202,177
  Other                                                                1,852,243              1,781,074
                                                              ------------------     ------------------
                                                                     106,288,074             85,185,551
  Less:  Unamortized premium on loan purchase                             46,617                 69,170
            Unearned discounts and loan fees                            (304,237)              (362,021)
            Undisbursed loan proceeds                                          -                (45,648)
            Allowance for loan losses                                   (531,749)              (530,956)
                                                              ------------------     ------------------
  Total first mortgage loans                                         105,498,705             84,316,096
                                                              ------------------     ------------------

Consumer and other loans:
  Automobile                                                           9,783,677              5,985,574
  Commercial                                                           3,600,888              1,752,796
  Loans on deposits                                                      554,550                604,555
  Home equity and second mortgage                                      8,139,668              5,784,158
  Mobile homes                                                            27,791                  7,051
  Other                                                                  616,546                279,086
                                                              ------------------     ------------------
                                                                      22,723,120             14,413,220
                                                              ------------------     ------------------
  Less:  Allowance for loan losses                                      (208,597)              (112,591)
                                                              ------------------     ------------------
  Total consumer and other loans                                      22,514,523             14,300,629
                                                              ------------------     ------------------
                                                               $     128,013,228     $       98,616,725
                                                               =================     ==================
</TABLE>

    The following is analysis of the change in the allowance for loss on loans:

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

Balance, beginning                $ 643,547    $ 619,218    $ 715,810
Provision charged to operations     134,743        9,124      (84,933)
Loans charged off                   (38,631)      (2,200)     (22,657)
Recoveries                              687       17,405       10,998
                                  ---------    ---------    ---------
Balance, ending                   $ 740,346    $ 643,547    $ 619,218
                                  =========    =========    =========

                                      F-15
<PAGE>

4.  LOANS RECEIVABLE (CONTINUED)

    Impairment of loans having recorded investments of $0 at September 30, 1996
    and $243,587 at September 30, 1995 , has been recognized in conformity with
    FASB Statement No. 114, as amended by FASB Statement No. 118.  The average
    recorded investment in impaired loans during the years ended September 30,
    1996 and 1995 was $60,897 and $269,555, respectively.  Allowances for loss
    on these loans are included in the above analysis of the overall allowance
    for loss on loans.  There are no specific loss provisions associated with
    impaired loans as of September 30, 1996 and 1995.  Interest income on
    impaired loans of $0 and $15,049 was recognized for cash payments received
    for the year ended September 30, 1996 and 1995, respectively.

    It is Bank policy not to modify interest rates below the then current
    market rate on loans associated with troubled debt restructuring.  The Bank
    is not committed to lend additional funds to debtors whose loans have been
    modified.

    See Note 17 for disclosure of loans to related parties.


5.  LOAN SERVICING

    Mortgage loans serviced for others are not included in the accompanying
    statements of financial condition.  The unpaid principal balances of these
    loans at September 30 are summarized as follows:
<TABLE>
<CAPTION>
                                    1996                  1995                  1994
                              ----------------      ----------------      ----------------
<S>                           <C>                   <C>                   <C>             
FHLMC                         $     52,343,707      $     54,326,611      $     57,964,741
Other investors                      1,396,481             1,721,703             2,012,952
                              ----------------      ----------------      ----------------

                              $     53,740,188      $     56,048,314      $     59,977,693
                              ================      ================      ================
</TABLE>


    The following is an analysis of the changes in excess servicing fees
    retained asset balances for the years ending September 30, 1994, 1995 and
    1996:
                                                           Retained
                                                           --------

Balance, October 1, 1993                                   $ 13,604
Amortization                                                 (7,775)

Balance, September 30, 1994                                   5,829
Amortization                                                 (3,627)

Balance, September 30, 1995                                   2,202
Amortization                                                 (2,202)
                                                           --------

Balance, September 30, 1996                                $      -
                                                           ========

                                      F-16
<PAGE>


6.  ACCRUED INCOME RECEIVABLE

    Accrued interest receivable at September 30 is summarized as follows:

                                                     1996                 1995
                                              -------------         ------------

Mortgage-backed securities                    $     290,900         $    422,503
Loans receivable                                    762,588              552,178
Investments                                         465,152              696,394
                                              -------------         ------------
                                              $   1,518,640         $  1,671,075
                                              =============         ============



7.  FORECLOSED REAL ESTATE

    Real estate owned or in judgment and other repossessed assets consist of
    the following:
<TABLE>
<CAPTION>
                                                                       September
                                                                   1996                1995
                                                                 -------             -------

<S>                                                              <C>                 <C>    
Real estate acquired by foreclosure                              $     -             $     -
Real estate loans in judgment
  and subject to redemption                                            -              66,320
Loans accounted for as in-substance foreclosures
                                                                 -------             -------

                                                                 $     -             $66,320
                                                                 =======             =======
</TABLE>

    There was no activity in the allowance for loss account for the years ended
    September 30, 1996, 1995 and 1994.


8.  OFFICE PROPERTIES AND EQUIPMENT

    Office properties and equipment are stated at cost less accumulated
    depreciation as follows:
<TABLE>
<CAPTION>
                                                                  September 30,
                                                             1996                 1995
                                                          ----------          ------------

<S>                                                       <C>                 <C>         
Land                                                      $  298,366          $    298,366
Office building and improvements                           1,272,632             1,250,516
Furniture, fixtures and equipment                            835,874               799,816
Automobiles                                                    9,642                 9,642
                                                          ----------          ------------
                                                           2,416,514             2,358,340
Less accumulated depreciation                              1,466,728             1,352,432
                                                          ----------          ------------
                                                          $  949,786          $  1,005,908
                                                          ==========          ============
                                                             
Depreciation expense ($120,986 for 1994)                  $  116,278          $    109,413
                                                          ==========          ============
</TABLE>

                                      F-17
<PAGE>

9.  DEPOSITS

    Deposits at September 30 are summarized as follows:

                                   1996          1995
                               ------------   ------------
                                  Amount         Amount
                               ------------   ------------

Demand  accounts:
   Interest bearing            $ 15,273,551   $  9,789,501
   Non-interest bearing           3,233,958      2,564,548
                               ------------   ------------
       Total demand accounts     18,507,509     12,354,049
Savings deposits                  5,797,182      6,680,784
Certificates of deposit         119,510,219    125,922,251
                               ------------   ------------
                               $143,814,910   $144,957,084
                               ============   ============


    The aggregate amount of jumbo certificates of deposit with a minimum
    denomination of $100,000 as of September 30, 1996 and 1995 was approximately
    $7,032,053 and $9,014,468, respectively.  Demand and NOW accounts as of
    September 30, 1996 included public funds of $2,533,407.  Public funds were
    collateralized by investment securities and mortgage-backed securities as
    discussed in Notes 2 and 3.

    At September 30, 1996, scheduled maturities of certificates of deposit are
    as follows:

      Year Ending September 30,
      -------------------------
                1997                       $       94,575,804
                1998                               17,856,209
                1999                                3,827,400
                2000                                2,537,974
                2001                                  712,832
                                           ------------------
                                           $      119,510,219
                                           ==================



10. ADVANCES AND OTHER BORROWINGS FROM FEDERAL HOME LOAN BANK

    Advances and other borrowings from the Federal Home Loan Bank at September
    30 are summarized as follows:
                                                  1996                  1995
                                           ---------------       ---------------

Advances                                  $    14,466,668      $      9,733,334
Line of credit                                 19,000,000            15,800,000
                                          ---------------       ---------------
                                          $    33,466,668       $    25,533,334
                                          ===============       ===============

                                      F-18
<PAGE>

10. ADVANCES AND OTHER BORROWINGS FROM FEDERAL HOME LOAN BANK (CONTINUED)

    Advances and other borrowings from the Federal Home Loan Bank at September
    30 consist of the following:

                       1996                          1995
  Fiscal    ----------------------------   ---------------------------    
   Year                       Weighted                      Weighted
 Maturity       Amount      Average Rate       Amount     Average Rate
 --------       ------      ------------       ------     ------------

  1996      $      --           --%        $16,800,000        6.60%
  1997       28,166,668       6.06           2,333,334        6.93
  1998        5,000,000       6.74           2,000,000        7.19
                                            
  1999          300,000       7.18             400,000        7.18
  2000                -          -           4,000,000        7.71          
            -----------       ----         -----------        ---- 
            $33,466,668       6.17%        $25,533,334        6.86%
            ===========       ====         ===========        ==== 
                                         
                                         
                                         
    At September 30,1996 the Company had $19,000,000 outstanding under a
    $24,000,000 line of credit with the Federal Home Loan Bank.  All amounts
    outstanding under the line of credit are payable on February 5, 1997 and
    bear interest at the line of credit rate established by the Federal Home
    Loan Bank. This rate is adjusted from time to time, the rate as of
    September 30, 1996 was 6.03%.  At September 30, 1995 the Company had
    $15,800,000 outstanding under a $17,000,000 line of credit, due February 6,
    1996.

    The advances and line of credit are collateralized as of September 30, 1996
    and 1995 by a blanket pledge agreement, including all stock in Federal Home
    Loan Bank, qualifying first mortgage loans, certain mortgage-related
    securities and other investment securities.


11. INCOME TAXES

    The company and subsidiary file consolidated federal income tax returns.
    The company's effec-tive income tax rate was different than the statutory
    federal income tax rate for the following reasons:

                                                     September 30,
                                       -----------------------------------------
                                        1996             1995             1994
                                       -----            -----             -----
Statutory federal income tax           34.0 %           34.0 %            34.0 %
Increase (reductions) resulting from:
   Kansas Privilege Tax                 4.3              5.8               4.3
   Other                               (2.6)            (3.0)             (1.4)
                                       ----             ----              ----  
                                       35.7 %           36.8 %            36.9 %
                                       ====             ====              ====  

                                      F-19
<PAGE>


11. INCOME TAXES (CONTINUED)

    Deferred taxes are included in the accompanying Statements of Financial
    Condition at September 30, 1996 and 1995 for the estimated future tax
    effects of differences between the financial statement and federal income
    tax basis of assets and liabilities given the provisions of currently
    enacted tax laws.  The net deferred tax asset (liability) at September 30,
    1996 and 1995 were comprised of the following:

                                                         1996         1995
                                                      ---------    --------- 
Deferred tax assets:
   Deferred loan fees and costs                       $  53,143    $  69,188
   Allowance for loan losses                            282,590      245,642
   FDIC special assessment                              357,681
   Deferred compensation and accrued salaries           105,913       69,301
   Capital loss carryover
                                                         12,976       23,323
                                                      ---------    --------- 
                                                        812,303      407,454
                                                      ---------    --------- 
 Deferred tax liabilities:
   Accumulated depreciation
                                                         (6,063)     (10,207)
   Special bad debt deduction                          (347,550)    (283,561)
   FHLB stock dividends                                (276,207)    (237,385)
   Unrealized gain on available-for-sale securities    (160,773)     (23,796)
                                                      ---------    --------- 
                                                       (790,593)    (554,949)
                                                      ---------    --------- 
                                                      $  21,710    $(147,495)
                                                      =========    ========= 


    No valuation allowance was recorded against deferred tax assets at
    September 30, 1996 or 1995.

    The Bank is allowed a special bad debt deduction based on a percentage of
    taxable income (8%) or on specified experience formulas, subject to certain
    limitations based upon aggregate loan balances at the end of the year.  The
    Bank used the percentage-of-taxable income method in 1996, 1995, and 1994.
    Effective with the tax year beginning October 1, 1996, the Bank will no
    longer be able to use the percentage of taxable income method and will
    begin to recapture tax bad debt reserves of approximately $910,000 over a
    six year period.  The reserves to be recaptured consist of bad debt
    deductions after December 31, 1987.  If the amounts deducted prior to
    December 31, 1987 are used for purposes other than for loan losses, such as
    in a distribution in liquidation or otherwise, the amounts deducted would
    be subject to federal income tax at the then current corporate tax rate.
    The Bank has recorded a deferred tax asset related to the allowance for
    loan losses reported for financial reporting purposes and a deferred tax
    liability for special bad debt deductions after December 31, 1987.  The
    Bank, in accordance with SFAS No. 109, has not recorded a deferred tax
    liability of approximately $1,907,000 related to approximately $5,610,000
    of cumulative special bad debt deductions prior to December 31, 1987.

12. REGULATORY MATTERS

    The Bank is subject to various regulatory capital requirements administered
    by the federal banking agencies.  Failure to meet minimum capital
    requirements can initiate certain mandatory--and possibly additional
    discretionary--actions by regulators that, if undertaken, could have a
    direct material effect on the Bank's financial statements.  Under capital
    adequacy guidelines and the

                                      F-20
<PAGE>

12. REGULATORY MATTERS (CONTINUED)

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

    Quantitative measures established by regulation to ensure capital adequacy
    require the Bank to maintain minimum amounts and ratios (set forth in the
    table below) of core and tangible capital (as defined in the regulations)
    to assets (as defined) and core and total capital to risk weight assets (as
    defined).  Management believes, as of September 30, 1996, that the Bank
    meets all capital adequacy requirements to which it is subject.

    As of September 30, 1996, the most recent notification from the Office of
    Thrift Supervision (OTS) categorized the Bank as well capitalized under the
    regulatory framework for prompt corrective action.  To be categorized as
    well capitalized the Bank must maintain minimum total risk-based, Tier I
    risk-based, and Tier I leverage ratios as set forth in the table.  There
    are no conditions or events since that notification that management
    believes have changed the Bank's category.

    The Bank's actual capital amounts (in thousands) and ratios are also
    presented in the following table:
<TABLE>
<CAPTION>

                                                                              To Be Well
                                                                          Capitalized Under
                                                       For Capital        Prompt Corrective
                                      Actual        Adequacy Purposes:    Action Provisions:
                                Amount     Ratio     Amount    Ratio       Amount       Ratio  
                                ------     -----     ------    -----       ------       -----
                                                                                     
As of September 30, 1996:                                                            
<S>                            <C>         <C>      <C>       <C>         <C>           <C>               
Tangible Capital               $28,112     13.3%    $ 3,167   $  1.5%        N/A            
(to Assets)                                                                          
Total (Risk-Based)                                                                   
Capital                                                                              
   (to Risk Weighted Assets)    28,852     31.1%      7,433      8.0%      9,292        10.0%
                                                                                     
Core (Tier I)                                                                        
Capital                                                                              
   (to Risk Weighted Assets)    28,112     30.3%        N/A                5,575         6.0%
                                                                                     
Core (Tier I)                                                                        
Capital - leverage                                                                   
   (to Assets)                  28,112     13.3%      6,335      3.0%     10,558         5.0%
                                                                                     
                                                                                     
As of September 30, 1995:                                                            
Tangible Capital (to Assets)    26,400     12.7%      3,116      1.5%        N/A            
                                                                                     
Total (Risk-Based)                                                                   
Capital                                                                              
   (to Risk Weighted Assets)    27,044     35.8%      6,048      8.0%      7,561        10.0%
                                                                                     
Core (Tier I)                                                                        
Capital                                                                              
   (to Risk Weighted Assets)    26,400     34.9%        N/A                4,536         6.0%
                                                                                     
Core (Tier I)                                                                        
Capital - leveraged                                                                  
   (to Assets)                  26,400     12.7%      6,233      3.0%     10,388         5.0%
                                                                                     
</TABLE>

                                      F-21
<PAGE>


12. REGULATORY MATTERS (CONTINUED)

    The following is a reconciliation of net worth to regulatory capital as
    reported in the September 30, 1996 and 1995 reports to the Office of Thrift
    Supervision:

<TABLE>
<CAPTION>
                                                               September 30,
                                                     ----------------------------------
                                                       1996                 1995
                                                     -------------        -------------

Bank net worth per report
<S>                                                  <C>                  <C>          
  to Office of Thrift Supervision                    $  28,112,000        $  26,401,000
Rounding                                                        45                (576)
                                                     -------------        -------------
Net worth as reported in accompanying
  financial statements (Bank only)                      28,112,045           26,400,424
Adjustments to arrive at Core (Tier I)
  and Tangible Capital                                           -                    -
                                                     -------------        -------------
Core (Tier I) and Tangible Capital                      28,112,045           26,400,424
Adjustments to arrive at Total Capital:
           Allowable portion of general
                allowance for loan losses                  740,000              644,000
                                                     -------------        -------------
Total Capital                                        $  28,852,045        $  27,044,424
                                                     =============        =============
Risk weight assets                                   $  92,918,000        $  75,606,000
                                                     =============        =============

</TABLE>

    Effective October 1, 1996 the Bank declared a dividend payable to the
    Company as of October 4, 1996 in the amount of $2,500,000.


13. COMMITMENTS AND CONTINGENCIES

    In the ordinary course of business, the Company has various outstanding
    commitments and contingent liabilities that are not reflected in the
    accompanying consolidated financial statements.  In addition, the Company
    is a defendant in certain claims and legal actions arising in the ordinary
    course of business.  In the opinion of management, after consultation with
    legal counsel, the ultimate disposition of these matters is not expected to
    have a material adverse effect on the consolidated financial condition of
    the Company.


14. EMPLOYEE BENEFIT PLANS

    EMPLOYEE RETIREMENT PLAN:
    The Bank has adopted a 401(k) defined contribution savings plan.
    Substantially all employees are covered under the contributory plan.
    Pension costs attributable to the years ended September 30, 1996, 1995 and
    1994 were $26,218, $24,296 and $23,261, respectively, including all current
    service costs.

    DEFERRED COMPENSATION AGREEMENTS:
    The Bank has entered into deferred compensation agreements with certain key
    employees which provide for cash payments to be made after their
    retirement.  The liabilities under the agreements have been recorded at the
    present values of accrued benefits using a 7% interest rate.  The balance
    of estimated accrued benefits was $128,306 and $76,397 at September 30,
    1996 and 1995, respectively.

                                      F-22
<PAGE>

14. EMPLOYEE BENEFIT PLANS (CONTINUED)

    In connection with the deferred compensation agreements, the Bank has
    purchased life insurance policies on covered employees in which the Bank is
    the beneficiary to assist in funding benefits.  At September 30, 1996 and
    1995, the cash surrender values on the policies were $379,857 and $339,945,
    respectively.

    EMPLOYEE STOCK OWNERSHIP PLAN:
    Upon conversion from mutual to stock form, the Bank established an employee
    stock ownership plan (ESOP).  The original acquisition of 136,878 shares of
    Company stock by the plan was funded by a loan from the Company to the
    ESOP, in the amount of $1,368,780.  The loan, together with interest, is to
    be repaid over a ten year period through annual contributions by the Bank.

    The Bank makes annual contributions to the ESOP equal to the ESOP's debt
    service less dividends received by the ESOP.  All dividends received by the
    ESOP are used to pay debt service.  The ESOP shares initially were pledged
    as collateral for its debt.  As the debt is repaid, shares are released
    from the collateral and will be allocated to active employees, based on the
    proportion of debt service paid in the year.  The Bank accounts for its
    ESOP shares in accordance with Statement of Position No. 93-6.
    Accordingly, the debt of the ESOP is recorded as debt of the Bank and the
    shares pledged as collateral are reported as unearned ESOP shares in the
    statement of financial condition. As of September 30, l996, the balance of
    indebtedness from the ESOP to the Company was $994,695, which is shown as a
    deduction from stockholders' equity on the consolidated balance sheet.  The
    debt, which is accounted for as a liability of the Bank and a receivable
    for the Company, has been eliminated in consolidation.  As shares are
    released from collateral, the Company reports compensation expense equal to
    the current market price of the shares, and the shares become outstanding
    for earnings per share (EPS) computations.  Dividends on allocated ESOP
    shares are recorded as a reduction of retained earnings; dividends on
    unallocated ESOP shares are recorded as compensation expense.  ESOP
    compensation expense was $133,817 and $69,187 for the years ended September
    30, 1996 and 1995, respectively.  As of September 30, 1996, of the 134,469
    shares acquired by the ESOP, 35,000 shares were allocated and 99,469 shares
    were unallocated.  The 99,469 unallocated shares had an estimated market
    value of $1,628,800 at September 30, 1996.

    MANAGEMENT STOCK BONUS PLAN:
    In connection with the stock  conversion,  the Bank adopted three Management
    Stock Bonus Plans  (collectively  the MSBP),  the  objective  of which is to
    enable  the Bank to  retain  personnel  of  experience  and  ability  in key
    positions  of  responsibility.  All  employees  of the Bank are  eligible to
    receive  benefits  under  the  MSBP.  Benefits  may be  granted  at the sole
    discretion of a committee  appointed by the Board of Directors.  The MSBP is
    managed  by  trustees  who  are  non-employee  directors  and who  have  the
    responsibility  to invest  all funds  contributed  by the Bank to the trusts
    created for the MSBP.

    The MSBP has purchased 91,252 shares of the Company's stock for $965,224.
    These shares were granted in the form of restricted stock payable over a
    five-year period at the rate of one-fifth of such shares per year following
    the date of grant of the award.  Compensation expense, in the amount of the
    fair market value of the common stock at the date of the grant to the
    employee, will be recognized pro rata over the five years during which the
    shares are payable.  A recipient of such restricted stock will be entitled
    to all voting and other stockholder rights, except that the

                                      F-23
<PAGE>


14. EMPLOYEE BENEFIT PLANS (CONTINUED)

    shares, while restricted, may not be sold, pledged or otherwise disposed of
    and are required to be held in escrow.  If a holder of such restricted
    stock terminates employment for reasons other than death, disability or
    retirement, the employee forfeits all rights to the allocated shares under
    restriction.  If the participant's service terminates as a result of death,
    disability, retirement or a change in control of the Bank, all restrictions
    expire and all shares allocated become unrestricted.  The Board of
    Directors can terminate the MSBP at any time, and if it does so, any shares
    not allocated will revert to the Company.


15. FINANCIAL INSTRUMENTS

    The Bank is a party to financial instruments with off-balance-sheet risk in
    the normal course of business to meet the financial needs of its customers
    and to reduce its own exposure to fluctuations in interest rates.  These
    financial instruments include commitments to extend credit and commitments
    to sell loans.  Those instruments involve, to varying degrees, elements of
    credit and interest rate risk in excess of the amount recognized in the
    statement of financial condition.  The contract or notional amounts of
    those instruments reflect the extent of involvement the Bank has in
    particular classes of financial instruments.

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

    At September 30, 1996 and 1995, the Bank had outstanding commitments to
    fund real estate loans of $2,054,583 and $1,110,268, respectively.  Of the
    commitments outstanding at September 30, 1996, $898,573 were for fixed rate
    loans at rates of 7.625% to 9.50%.  Commitments for adjustable rate loans
    amounted to $1,156,010 with initial rates of  6.50% to 8.75% at September
    30, 1996.  Of the commitments outstanding at September 30, 1995, $924,268
    were for fixed rate loans at rates of 7.25% to 8.75%.  Commitments for
    adjustable rate loans outstanding at September 30, 1995 amounted to
    $186,000 with initial rates of 7.625% to 9.125%.

    Loan commitments 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 many of the commitments are expected to
    expire without being drawn upon, the total commitment amounts do not
    necessarily represent future cash requirements.  The Bank evaluates each
    customer's creditworthiness on a case-by-case basis.  The amount of
    collateral obtained if deemed necessary by the Bank upon extension of
    credit is based on management's credit evaluation of the counter-party.
    Collateral held is primarily residential real estate, but may include
    autos, accounts receivable, inventory, property, plant and equipment.

    The Bank had outstanding commitments from mortgage banking concerns to
    purchase $234,792 and $100,137 of loans yet to be originated at September
    30, 1996 and 1995, respectively.  The Bank has outstanding commitments to
    originate or has applications pending approval at approximately equivalent
    interest rates.

    The Bank had no commitments to purchase mortgage-backed securities or
    investments at September 30, 1996 and 1995.

                                      F-24
<PAGE>

15. FINANCIAL INSTRUMENTS (CONTINUED)

    At September 30, 1996 and 1995, loans with a carrying value of $1,890,007
    and $316,991, respectively, have been classified by management as held for
    sale.  The carrying value of these loans is at the lower of cost or market
    value as of September 30, 1996 and 1995.


16. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

    The Bank grants mortgage, consumer and business loans primarily to
    customers within the state.  Although the bank has a diversified loan
    portfolio, a substantial portion of its customers' ability to honor their
    contracts is dependent upon the agribusiness and energy sectors of the
    economy.  The Bank's net investment in loans is subject to a significant
    concentration of credit risk given that the investment is primarily within
    a specific geographic area.

    As of September 30, 1996, the Bank had a net investment of $129,903,235 in
    loans receivable.  These loans possess an inherent credit risk given the
    uncertainty regarding the borrower's compliance with the terms of the loan
    agreement.  To reduce credit risk, the loans are secured by varying forms
    of collateral, including first mortgages on real estate, liens on personal
    property, savings accounts, etc.  It is generally Bank policy to file liens
    on titled property taken as collateral on loans, such as real estate and
    autos.  In the event of default, the Bank's policy is to foreclose or
    repossess collateral on which it has filed liens.

    In the event that any borrower completely failed to comply with the terms
    of the loan agreement and the related collateral proved worthless, the Bank
    would incur a loss equal to the loan balance.


17. RELATED PARTY TRANSACTIONS

    Directors and primary officers of the company were customers of, and had
    transactions with, the Bank in the ordinary course of business during the
    two years ended September 30, 1996 and 1995, and similar transactions are
    expected in the future.  All loans included in such transactions were made
    on substantially the same terms, including interest rates and collateral,
    as those prevailing at the time for comparable transactions with other
    persons and did not involve more than normal risk of loss or present other
    unfavorable features.

    The following analysis is of loans made to principal officers and directors
    which individually exceeded $60,000 in aggregate during the year ended
    September 30, 1996:

           Balance, September 30, 1995           $    1,182,566
           New loans                                  1,526,419
           Repayments                                   568,481
                                                  --------------
           Balance September 30, 1996             $   2,140,504
                                                  ==============
           
                                      F-25

<PAGE>

18. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

    Cash:
    For those short-term instruments, the carrying amount is a reasonable
    estimate of fair value.

    Time deposits in financial institutions:
    The fair value of fixed maturity certificate of deposits are estimated
    using the rates currently offered for deposits of similar remaining
    maturities.

    Investment securities and mortgage-backed securities:
    For marketable equity securities held for investment purposes, fair values
    are based on quoted market prices or dealer quotes.  For other securities
    held as investments, fair value equals quoted market price, if available.
    If a quoted market price is not available, fair value is estimated using
    quoted market prices for similar securities.

    Loans receivable:
    The fair value of loans is estimated by discounting the future cash flows
    using the current rates at which similar loans would be made to borrowers
    with similar credit ratings and for the same remaining maturities.

    Deposit liabilities:
    The fair value of demand deposits, savings accounts, and certain money
    market deposits is the amount payable on demand at the reporting date.  The
    fair value of fixed-maturity certificates of deposit are estimated using
    the rates currently offered for deposits of similar remaining maturities.

    Advances and other borrowings from Federal Home Loan Bank:
    The fair value of advances from the Federal Home Loan Bank are estimated
    using the rates offered for similar borrowings.

    Commitments to extend credit:
    The fair value of commitments is estimated using the fees currently charged
    to enter into similar agreements, taking into account the remaining terms
    of the agreements and the present creditworthiness of the counterparties.
    For fixed rate loan commitments, fair value also considers the difference
    between current levels of interest rates and the committed rates.

                                      F-26
<PAGE>



18. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

    The estimated fair values of the Bank's financial instruments are as
    follows:

<TABLE>
<CAPTION>
                                                 September 30, 1996    September 30, 1995
                                                 ------------------    ------------------
                                                 Carrying     Fair      Carrying     Fair
                                                  Amount      Value      Amount      Value
                                                  ------      -----      ------      -----
                                                                (In Thousands)

Financial assets:
   Cash and cash equivalents:
<S>                                              <C>        <C>        <C>        <C>        
       Interest bearing ......................   $      3   $      3   $     --   $     --   
       Non-interest bearing ..................        471        471        462        462
   Time deposits in other
     financial institutions ..................        480        480        579        579
   Investment securities held-to-maturity ....     29,399     29,113     34,825     34,616
   Investment securitiesavailable-for-sale ...      4,138      4,138      1,693      1,693
   Mortgage-backed securities held-to-maturity     45,877     45,526     68,207     68,075

   Loans receivable ..........................    128,013    126,244     98,617     99,325
   Loans held-for-sale .......................      1,890      1,890        317        317

Financial liabilities:
   Deposits ..................................    143,815    143,548    144,957    144,970

   Advances and other borrowings from
       the Federal Home Loan Bank ............     33,467     33,377     25,533     25,698

                                               
                                                     Par       Fair        Par      Fair
                                                    Value      Value      Value     Value
                                                    -----      -----      -----     -----
   Unrecognized Financial instruments:
       Commitments to extend credit              $  2,055   $  2,040   $  1,110   $  1,121

</TABLE>


19. STOCK CONVERSION / RESTRICTIONS ON RETAINED EARNINGS

    On August 24, 1993, the Board of Directors of the Bank adopted a Plan of
    Conversion to convert from a federally chartered mutual savings and loan
    association to a federally chartered stock savings bank with the concurrent
    formation of Landmark Bancshares, Inc. to act as a holding company of the
    Bank (the "Conversion").

    At the date of conversion, March 28, 1994, the Company completed the sale
    of 2,281,312 shares of common stock, $0.10 par value, through concurrent
    subscription and community offerings at $10.00 per share.  Included in the
    total shares outstanding are 91,252 shares which were purchased by the
    Bank's MSBP at an average price of $10.58 per share and 136,878 shares
    which were purchased by the Bank's ESOP at $10.00 per share.  Net proceeds
    from the conversion, after recognizing conversion expenses and underwriting
    costs of $701,411, were $22,111,709.  From the net proceeds, the company
    used $11,055,855 to purchase all of the capital stock of the Bank, $965,224
    to fund the purchase of 91,252 shares of the company stock by the MSBP
    (Note 14) and $1,368,780 to fund the purchase of 136,878 shares of the
    company stock by the ESOP (Note 14).

                                      F-27
<PAGE>

19. STOCK CONVERSION / RESTRICTIONS ON RETAINED EARNINGS (CONTINUED)

    The Bank may not declare or pay a cash dividend to the Company if the
    effect would cause the net worth of the Bank to be reduced below either the
    amount required for the "liquidation account" or the net worth requirement
    imposed by the OTS.  If all capital requirements continue to be met, the
    Bank may not declare or pay a cash dividend in an amount in excess of the
    Bank's net earnings for the fiscal year in which the dividend is declared
    plus one-half of the surplus over the capital requirements, without prior
    approval of the OTS.

    Office of Thrift Supervision regulations require that upon conversion from
    mutual to stock form of ownership, a liquidation account be established by
    restricting a portion of net worth for the benefit of eligible savings
    account holders who maintain their savings accounts with the Bank after
    conversion.  In the event of complete liquidation (and only in such event)
    each savings account holder who continues to maintain their savings account
    shall be entitled to receive a distribution from the liquidation account
    after payment to all creditors but before any liquidation distribution with
    respect to common stock.  The initial liquidation account was established
    at $15,489,000.  This account may be proportionately reduced for any
    subsequent reduction in the eligible holder's savings accounts.


20. STOCK OPTION PLAN

    In connection with the stock conversion, the Bank's Board of Directors
    adopted the 1994 Stock Option Plan (the Option Plan).  Pursuant to the
    Option Plan, 228,131 shares of common stock are reserved for issuance by
    the Company upon exercise of stock options granted to officers, directors
    and employees of the Bank from time to time under the Option Plan.  The
    purpose of the Option Plan is to provide additional incentive to certain
    officers, directors and key employees by facilitating their purchase of a
    stock interest in the Company.  The Option Plan provides for a term of ten
    years, after which no awards may be made, unless earlier terminated by the
    Board of Directors pursuant to the Option Plan.

    The Option Plan will be administered by a committee of at least three non-
    employee directors designated by the Board of Directors (the Option
    Committee).  The Option Committee will select the employees to whom options
    are to be granted and the number of shares to be granted.  The option price
    may not be less than 100% of the fair market value of the shares on the
    date of the grant, and no option shall be exercisable after the expiration
    of ten years from the grant date.  In the case of any employee who owns
    more than 10% of the outstanding common stock at the time the option is
    granted, the option price may not be less than 110% of the fair market
    value of the shares on the date of the grant, and the option shall not be
    exercisable after the expiration of five years from the grant date.  The
    exercise price may be paid in cash, shares of the common stock, or a
    combination of both.

    As of the date of conversion, the Option Committee granted 228,131 shares
    of common stock, at an exercise price of $10 per share, contingent upon
    stockholder approval of the Option Plan which was ratified June 22, 1994.
    All such options are exercisable immediately following stockholder
    ratification.  As of September 30, 1996, no options have been exercised and
    all options granted remain outstanding.

                                      F-28
<PAGE>

21. PARENT COMPANY FINANCIAL INFORMATION

    Condensed financial statements of Landmark Bancshares, Inc. (Parent
    Company) are shown below.  The Parent Company has no significant operating
    activities.

                   CONDENSED STATEMENTS OF FINANCIAL CONDITION
                        AS OF SEPTEMBER 30, 1996 AND 1995
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                 1996       1995
                                                              --------    --------
ASSETS
<S>                                                           <C>         <C>     
   Cash and cash equivalents                                  $    666    $    551
   Time deposits in other financial institutions                    95        --
   Investment securities available-for-sale                      2,396         206
   Investment in subsidiary                                     12,217      10,506
   Loans receivable                                              1,236       7,106
   Other assets                                                     54         477
                                                              --------    --------
       Total assets                                           $ 16,664    $ 18,846
                                                              ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Liabilities                                                $    169    $     74
   Stockholders' equity:
       Common stock                                                228         228
       Additional paid-in capital                               21,944      21,893
       Retained income                                           1,574         922
       Net unrealized gain on available-for-sale securities        253          37
       Unamortized amounts related to ESOP and MSBP             (1,477)     (1,807)
                                                              --------    --------
                                                                22,522      21,273
       Treasury stock, at cost                                  (6,027)     (2,501)
                                                              --------    --------
       Total stockholders' equity                               16,495      18,772
                                                              --------    --------
       Total liabilities and stockholders' equity             $ 16,664    $ 18,846
                                                              ========    ========
</TABLE>



               CONDENSED STATEMENTS OF OPERATIONS
        FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>

<S>                                                          <C>          <C>     
Equity earnings of subsidiary                                $  1,331     $  1,587
Interest and dividend income                                      221          343
Net gain on sale of investments                                    27          123
Other                                                               3            3
                                                                         
    Total income                                                1,582        2,056
                                                             --------       ------
Operating expenses                                                129          190
                                                             --------       ------
    Income before income taxes                                  1,453        1,866 
Income tax expense                                                 49          103
                                                             --------       ------ 
    Net income                                               $  1,404       $1,763
                                                             ========       ======
</TABLE>

                                      F-29
<PAGE>
                                                                    

21. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

                       CONDENSED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
                                 (IN THOUSANDS)

                                                          1996       1995
                                                        -------    -------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                           $ 1,404    $ 1,763
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Equity in net income of subsidiary                (1,331)    (1,587)
       Gain on sale of investments                          (27)      (123)
       Decrease in other assets                             449         32
       Increase in other liabilities                         71         28
       Other                                               (137)       (24)
                                                        -------    -------
       Net cash provided by operating activities            429         89
                                                        -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES
   Investment in subsidiary                                --         1140
   Acquisition of investment securities
     available-for-sale, including deposits              (2,214)      (748)
   Proceeds from sale of investment securities
     available-for-sale                                     308        733
   Decrease in loans to subsidiary and ESOP, net          5,837      3,463
   Other loans, net                                          33       (275)
                                                        -------    -------
       Net cash provided by investing activities          3,964      4,313
                                                        -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES
   Purchase of treasury stock                            (3,526)    (2,501)
   Cash dividends paid                                     (752)    (1,603)
                                                        -------    -------
       Net cash used by financing activities             (4,278)    (4,104)
                                                        -------    -------
       Increase in cash and cash equivalents                115        298
       Cash and cash equivalents at beginning of year       551        253
                                                        -------    -------
       Cash and cash equivalents at end of year         $   666    $   551
                                                        =======    =======
                                                         


22. RECENT DEVELOPMENTS

    Deposits of the Bank are insured by the SAIF as administered by the FDIC.
    As a member of the SAIF, the Bank paid an insurance premium to the FDIC
    equal to a minimum of 0.23% of its total deposits.  The FDIC also maintains
    another insurance fund, the Bank Insurance Fund (BIF), which primarily
    insures commercial bank deposits.  Effective September 30, 1995, the FDIC
    lowered the insurance premium of BIF insured deposits to range of between
    0.04% and 0.31% of deposits, with the result that most commercial banks
    would pay the lower rate of 0.04%.  Effective January 1, 1996, the annual
    insurance premium for most BIF members was lowered to $2,000.  These
    reductions in insurance premiums for BIF members placed SAIF members at a
    competitive disadvantage to BIF members.

                                      F-30
<PAGE>


22. RECENT DEVELOPMENTS (CONTINUED)

    Effective September 30, 1996, federal law was revised to mandate a one-time
    special assessment of SAIF members such as the Bank of approximately .657%
    of deposits held on March 31, 1995.  The Bank recorded a $937,073 pre-tax
    expense for this assessment at September 30, 1996.  Beginning January 1,
    1997, deposit insurance assessments for SAIF members are expected to be
    reduced to approximately .064% of deposits on an annual basis through the
    end of 1999.  During this same period, BIF members are expected to be
    assessed approximately .013% of deposits.  Thereafter, assessments for BIF
    and SAIF members should be the same and SAIF and BIF may be merged.  It is
    expected that theses continuing assessments for both SAIF and BIF members
    will be used to repay outstanding Financing Corporation bond obligations.
    Assuming this reduction, beginning January 1, 1997, the rate of deposit
    insurance assessed the Bank will decline by approximately 70%.

                                      F-31
<PAGE>


Corporate Information
---------------------

<TABLE>
<CAPTION>

<S>                                               <C> 
Landmark Bancshares, Inc.                         Form 10-K
                                                  A copy of the Company's annual report on Form 10-K
Central and Spruce                                for fiscal year ended September 30, 1996, including
Dodge City, Kansas 67801                          financial statements schedules, as filed with the
(316) 227-8111                                    Securities and Exchange Commission, will be finished
                                                  without charge to stockholders, as of the record date
Board of Directors                                upon written request to:  Corporate Secretary,
                                                  Landmark Bancshares, Inc., Central and Spruce,
C. Duane Ross                                     Dodge City, Kansas 67801.
Chairman of the Board
President, High Plains Publishers, Inc.
                                                  Annual Meeting
Larry Schugart                                    The annual meeting of Landmark Bancshares, Inc.
President and Executive Officer                   will be held on January 15, 1997 at 1:30 p.m. at the
                                                  offices of the Company, located at Central and
David H. Snapp                                    Spruce, Dodge City, Kansas 67801
Partner, Waite, Snapp & Doll, Attorneys at Law    

Richard Ball                                      Independent Accountants
CPA/Shareholder, Adams, Brown,                    Regier Carr & Monroe, L.L.P.
  Beran & Ball, Chtd.                             300 West Douglas, Suite 100
                                                  Wichita, Kansas 67202
Jim W. Lewis
Owner, Auto Dealerships
                                                  Special Counsel
Executive Officers                                Malizia, Spidi, Sloane and Fisch, P.C.
                                                  1301 K. Street, N.W., Suite 700 East
Larry Schugart                                    Washington, D.C. 20005
President and Chief Executive Officer

James F. Strovas                                  Stock Transfer Agent
Treasurer and Chief Financial Officer             American Securities Transfer & Trust, Inc.
                                                  1825 Lawrence Street, Suite 444
Gary L. Watkins                                   Denver, Colorado 80201
Secretary and Chief Operating Officer

</TABLE>
                                      -18-