1998 ANNUAL REPORT TO SHAREHOLDERS

                               TABLE OF CONTENTS
                                                                            Page

Company Profile................................................................1
Financial Highlights of Northwest Equity Corp..................................2
Letter to Shareholders.........................................................3
Financial Table of Contents....................................................4
Selected Consolidated Financial and Other Data of Northwest Equity Corp........5
Management's Discussion and Analysis of Financial Condition
  and Results of Operations of Northwest Equity Corp...........................7
Independent Auditor's Report..................................................25
Consolidated Financial Statements of Northwest Equity Corp.
   Consolidated Balance Sheets of the Company at March 31, 1998 and 1997......26
   Consolidated Statements of Operations of the Company for the Years Ended
      March 31, 1998, 1997 and 1996...........................................27
   Consolidated Statements of Shareholders' Equity of the Company for the
     Years Ended March 31, 1998, 1997 and 1996................................28
   Consolidated Statements of Cash Flows of the Company for the Years Ended
     March 31, 1998, 1997 and 1996............................................29
Notes to Consolidated Financial Statements of Northwest Equity Corp...........31
Shareholder Information.......................................................51


                                 COMPANY PROFILE


     Northwest  Equity Corp. is the holding company for Northwest  Savings Bank.
The  Bank  converted  from  a  Wisconsin-chartered  mutual  savings  bank  to  a
Wisconsin-chartered stock savings bank on October 7, 1994 (the "Conversion"). In
connection with the Conversion,  Northwest Equity Corp. sold 1,032,517 shares of
its Common  Stock at $8.00 per share and used a portion of the net  proceeds  to
purchase all of the issued and outstanding capital stock of the Bank.

         Northwest Savings Bank was established in 1936, and is regulated by the
Wisconsin Department of Financial Institutions and the Federal Deposit Insurance
Corporation.   The  Bank  is  a   community-oriented,   full-service   financial
institution offering a variety of retail financial services to meet the needs of
the communities it serves.  The Bank's principal business consists of attracting
funds in the form of deposits and investing such funds  primarily in residential
real estate loans,  mortgage-backed and related securities, and various types of
commercial and consumer loans. The Bank has three  full-service  offices located
in Polk,  St. Croix and Burnett  Counties,  Wisconsin.  At March 31,  1998,  the
Company had total assets of $98.7  million,  total deposits of $62.3 million and
shareholders' equity of $11.5 million.

      Northwest  Equity Corp.'s common stock trades on The Nasdaq SmallCap Stock
Market under the symbol "NWEQ."

         The Nasdaq Stock Market,  which began operation in 1971, is the world's
first electronic  securities  market and the fastest growing stock market in the
U.S.   Nasdaq   utilizes   today's   information   technologies--computers   and
telecommunications--to  unite  its  participants  in a  screen-based,  floorless
market.  It enables market  participants to compete with each other for investor
orders in each Nasdaq security and, through the use of Nasdaq Workstation II and
other automated  systems,  facilitates the trading and surveillance of thousands
of securities.  This competitive  marketplace,  along with the many products and
services available to issuers and their  shareholders,  attracts today's largest
and fastest  growing  companies to Nasdaq.  These  include  industry  leaders in
computers,  pharmaceuticals,  telecommunication,  biotechnology,  and  financial
services.  More domestic and foreign  companies list on Nasdaq than on all other
U.S. stock markets combined.



                                       1
<PAGE>




                 FINANCIAL HIGHLIGHTS OF NORTHWEST EQUITY CORP.


<TABLE>



                                                          At or For the Fiscal Year Ended March 31,
<CAPTION>
                                                1998                        1997                        1996
                                                ----                        ----                        ----
                                                  (Dollars in thousands, except per share data and ratios)

<S>                                             <C>                        <C>                         <C> 

Total Assets...............................      98,739                     95,097                      86,355

Loans Receivable, Net......................      78,297                     77,240                      70,680

Securities Available For Sale..............           0                      2,752                       2,859

Mortgage-Backed Securities.................       6,398                      7,421                       5,373

Deposits...................................      62,278                     61,557                      57,256

Shareholders' Equity.......................      11,514                     10,859                      11,864

Net Interest Income After
  Provision for Loan Losses................       3,420                      3,339                       3,138

Total Other Income.........................         608                        531                         476

Total General and
  Administrative Expenses..................       2,298                      2,643                       2,175

Net Income.................................       1,120                        710                         842

Earnings Per Share.........................       $1.44                      $0.84                        $.90

Return on Average Assets...................       1.15%                        .76%                       1.06%

Return on Average Equity...................       9.85%                       6.18%                       6.95%

Interest Rate Spread.......................       3.50%                       3.51%                       3.77%

Net Interest Margin........................       3.85%                       3.88%                       4.26%

Non-Performing Loans
  to Gross Loans...........................       1.76                        1.37                        0.97
</TABLE>




                                       2
<PAGE>



                             LETTER TO SHAREHOLDERS

         The Board of Directors  and employees of Northwest  Equity  Corp.,  the
holding  company of  Northwest  Savings  Bank,  are proud to present  the fourth
annual report since the stock  conversion  consummated  on October 7, 1994.  The
Board adopted the Plan of Conversion to provide substantially  increased capital
to strengthen,  expand and diversify the operations of the Bank,  provide future
access to capital markets, and attract and retain personnel through the employee
stock  ownership  plan and other stock  benefit  programs.  It also provided the
ability  for the Board,  employees,  depositors  and others the  opportunity  to
become  shareholders  of the  Company and  thereby  participate  directly in the
future  growth and success of the Bank.  That  participation  became a practical
reality  when the Board of  Directors  declared  the first  dividend of $.07 per
share to  shareholders  of record on April 28, 1995, and has continued from that
date to the latest  declaration of $0.16 per share to  shareholders of record on
April 24, 1998.

         The  conversion  is  another  step in a program  undertaken  to enhance
opportunities  for the Bank. The Board of Directors  opened a new home office in
1988 and  implemented  a  strategy  to  expand  the  services  it  offered  as a
traditional  thrift  institution,  including  checking  accounts,  ATM's,  night
depositories, safe deposit boxes, drive-through banking and investment products;
in order to create broad banking  relationships  with its  customers.  The Board
believes  the  expansion of the product base will enable the Bank to develop and
retain  its  customer  base and  enable it to compete  more  effectively  in its
primary market area.  This strategy  continued with the grand opening in June of
1996 of the  recently  remodeled  and  expanded  branch  office  facility in New
Richmond,  Wisconsin.  The expansion included a new lobby and teller area; a new
drive-up  area  with  additional  lanes  and an  ATM;  a night  depository;  and
safety-deposit boxes.

         The  extensive  financial  data that's  included in this annual  report
indicates  record  high  balances in assets,  loans and  deposits as well as net
income.  The  amortization for the expense of the Company's stock incentive plan
will decrease by $64,000 for the upcoming year compared to the last fiscal year.
Although  full  employment  conditions  in the Bank's  market area will increase
compensation costs in the next fiscal year, the Bank has instituted certain fees
to offset  this  increased  expense.  The  Bank's  service  corporation  will be
liquidating the remaining  investment in a real estate project that will produce
a gain-on-sale of approximately  $50,000. The investment subsidiary  established
in Nevada on May 30, 1997 will act to reduce state  income  expense and increase
net income for the entire  fiscal year.  Considering  all of the above,  I fully
expect  that  the  solid  performance  of the  Bank  will  continue  and will be
reflected in next year's annual report.

         The  pursuit  of  growth,  an  aggressive   dividend  policy,  and  the
repurchase of stock are the primary  techniques  employed in the overall plan to
improve  the  return on  equity.  During  the  current  fiscal  year,  one stock
repurchase  program was initiated and a total of 14,100 shares were  repurchased
to date. The return on average equity has increased from 6.95% during the fiscal
year ended March 31, 1996, to 10.0% during the fiscal year ended March 31, 1998.
The Board and the employees will continue to pursue the  opportunities  provided
by the capital from the stock conversion.

                                 Brian L. Beadle
                                 President and Chief Executive Officer



                                       3
<PAGE>




                           FINANCIAL TABLE OF CONTENTS


                                                                            Page

Selected Consolidated Financial and Other Data of Northwest Equity Corp. ......5

Management's Discussion and Analysis of Financial Condition and
Results of Operations of Northwest Equity Corp.:

         General...............................................................7

         Management Strategy...................................................8

         Comparison of Operating Results for the Years Ended
           March 31, 1998 and March 31, 1997..................................10

         Comparison of Operating Results for the Years Ended
           March 31, 1997 and March 31, 1996..................................13

         Financial Condition..................................................15

         Liquidity, Capital Resources and Regulatory Capital..................16

         Impact of Inflation and Changing Prices..............................17

         Current Accounting Developments......................................18

         Asset/Liability Management...........................................19

         Average Balance Sheet................................................22

         Rate/Volume Analysis.................................................24

Independent Auditor's Report..................................................25

Consolidated Financial Statements of Northwest Equity Corp.:

         Consolidated Balance Sheets at March 31, 1998 and 1997...............26

         Consolidated Statements of Operations for the Years Ended
            March 31, 1998, 1997 and 1996.....................................27

         Consolidated Statements of Shareholders' Equity for the Years Ended
            March 31, 1998, 1997 and 1996.....................................28

         Consolidated Statements of Cash Flows for the Years Ended
            March 31, 1998, 1997 and 1996.....................................29

Notes to Consolidated Financial Statements of Northwest Equity Corp...........31



                                       4
<PAGE>




                SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF
                             NORTHWEST EQUITY CORP.

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

<TABLE>

                                                                             At March 31,
                                                           ---------------------------------------------------
<CAPTION>
                                                                1998              1997              1996
                                                           ---------------   ---------------   ---------------
                                                                             (In thousands)
Selected Financial Data:
<S>                                                             <C>               <C>               <C> 
Total assets                                                     $ 98,739          $ 95,097           $86,355
Loans receivable, net                                              78,297            77,240            69,963
Loans held for sale                                                   142               415               717
Cash and cash equivalents                                           6,047             2,980             3,412
Securities available-for-sale                                           -             2,752             2,859
Mortgage-backed and related securities                              6,398             7,421             5,373
FHLB stock                                                          1,159               912               803
Deposits                                                           62,278            61,557            57,256
FHLB advances and other borrowings                                 24,320            22,097            16,912
Shareholder's Equity - substantially restricted                    11,514            10,859            11,864
</TABLE>

<TABLE>
                                                                           Fiscal Year Ended March 31,
<CAPTION>
                                                                1998              1997              1996
                                                           ---------------   ---------------   ---------------
                                                                              (In thousands)

<S>                                                              <C>               <C>               <C>
Selected Operating Data:

Total interest income                                              $7,763            $7,492            $6,473
Total interest expense                                              4,243             4,072             3,311
                                                           ---------------   ---------------   ---------------
   Net interest income                                              3,520             3,420             3,162
Provision for loan losses                                             100                81                24
                                                           ---------------   ---------------   ---------------
   Net interest income after provision for loan
     losses                                                         3,420             3,339             3,138
Non-interest income:
   Mortgage servicing fees                                             77                77                72
   Service charges on deposits                                        251               220               226
   Loss on sale of investments                                        (24)                -                 -
   Gain on sale of mortgage loans                                     130                59                61
   Other non-interest income                                          174               175               117
                                                           ---------------   ---------------   ---------------
      Total other non-interest income                                 608               531               476

Total general and administrative expenses                           2,298             2,643             2,175
Income before income tax expense                                    1,730             1,227             1,439
Income tax expense                                                    610               517               597
                                                           ---------------   ---------------   ---------------

   Net Income                                                       1,120               710               842


</TABLE>


                                       5
<PAGE>


<TABLE>
                                 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF
                                          NORTHWEST EQUITY CORP. (CONT.)

Selected Financial Ratios and Other Data:                              At or For the Fiscal Year
                                                                            Ended March 31,
                                                           ---------------------------------------------------
<CAPTION>
Performance Ratios                                                  1998              1997              1996
                                                                  -----------       -----------        ----------
<S>                                                                  <C>               <C>               <C> 

   Return on average assets                                             1.15%             0.89%             1.06%
   Return on average equity                                            10.02%             5.86%             6.95%
   Interest rate spread during period(1)                                3.50%             3.77%             3.77%
   Net interest margin(1)                                               3.85%             4.26%             4.26%
   Non-interest expense to average assets                               2.37              3.33              2.74
   Non-interest income to average assets                                0.63              0.67              0.60
   Average interest-earning assets to
      average interest-bearing liabilities                              1.07x             1.11x             1.11x

Asset Quality Ratios

   Non-performing loans to gross loans(2)                               1.76%             0.97%             0.97%
   Non-performing assets to total assets(2)                             1.57%             0.95%             0.95%
   Allowance for loan losses to non-performing
       loans(2)                                                        34.87%            43.04%            62.48%
   Classified assets to total assets                                    1.91%             0.82%             0.90%
   Net charge-offs to average gross loans                               0.11%             0.03%             0.03%

Capital Ratios

   Average Equity to average assets                                    11.51%            15.25%            15.25%
   Equity to total assets at end of period                             11.66%            11.42%            13.74%

Other Data

   Number of deposit accounts                                          9,519             9,440             8,967
   Number of real estate loans outstanding                             1,652             1,670             1,532
   Number of real estate loans serviced                                2,318             2,206             2,031
   Number of consumer loans outstanding                                1,092             1,108             1,084
   Mortgage loan originations (in thousands)                         $29,720           $29,086           $25,179
   Full-service facilities                                                 3                 3                 3

-------------------------------
<FN>

(1) Interest rate spread represents the difference  between the weighted average
    yield  on   interest-earning   assets  and  the  weighted  average  cost  of
    interest-bearing  liabilities.  Net interest margin  represents net interest
    income as a percentage of average interest-earning assets.

(2) Non-performing  loans consist of non-accrual  loans.  Non-performing  assets
    consists of non-performing loans and foreclosed properties.
</FN>
</TABLE>



                                       6
<PAGE>



                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS OF
                             NORTHWEST EQUITY CORP.

General

         Northwest Equity Corp., a Wisconsin  corporation (the "Company"),  is a
holding company that owns all of the issued and  outstanding  stock of Northwest
Savings Bank, a  Wisconsin-chartered  stock  savings bank (the "Bank").  In this
discussion and analysis,  reference to the operations and financial condition of
the Company includes the operations and financial condition of the Bank.

         The Company was  incorporated  on November 3, 1993, at the direction of
the Bank to become a bank  holding  company  and own all of the  Bank's  capital
stock to be issued upon its conversion  from mutual form to stock ownership (the
"Conversion").  On October 7, 1994, the Bank completed the  Conversion.  On that
date, the Company issued and sold 1,032,517  shares of its Common Stock at $8.00
per share.  The gross  proceeds from the sale of the shares of Common Stock were
$8.3 million. Net proceeds to the Company were $6.9 million,  after deduction of
Conversion expenses of $0.6 million and after lending $0.8 million to the Bank's
Employee Stock Ownership Plan. The Company used $3.4 million of the net proceeds
to acquire all of the issued and outstanding stock of the Bank.

         The Company's  business currently consists of the business of the Bank.
The Bank is a community-oriented,  full-service financial institution offering a
variety of retail  financial  services to meet the needs of the  communities  it
serves.  The Bank's principal  business consists of attracting funds in the form
of  deposits  and  other  borrowings  and  investing  such  funds  primarily  in
residential  real estate loans,  mortgage-backed  securities,  mortgage  related
securities,  including collateralized mortgage obligations, and various types of
commercial and consumer loans. The Bank's primary sources of funds are deposits,
repayment on loans and mortgage-backed and related securities, and advances from
the Federal Home Loan Bank of Chicago ("FHLB-Chicago").  The Bank utilizes these
funds to invest  primarily  in  mortgage  loans  secured by  one-to-four  family
properties, and to a lesser extent, consumer, commercial and other loans, and to
invest  in   mortgage-backed   and  related   securities  and  other  investment
securities.  The Bank is  regulated  by the  Wisconsin  Department  of Financial
Institutions ("DFI") and the Federal Deposit Insurance Corporation ("FDIC"), and
its  deposits  are insured up to  applicable  limits by the Savings  Association
Insurance Fund ("SAIF"). The Bank also is a member of the Federal Home Loan Bank
System.

         The  earnings  of the  Company  depend  primarily  on its  level of net
interest   income,   which  is  the  difference   between   interest  earned  on
interest-earning assets, consisting primarily of mortgage loans, mortgage-backed
and related securities and other investment securities, and the interest paid on
interest-bearing liabilities, consisting primarily of deposits and advances from
the FHLB-Chicago.  Net interest income is a function of the Company's  "interest
rate  spread,"  which is the  difference  between  the average  yield  earned on
interest-earning   assets  and  the  average   rate  paid  on   interest-bearing
liabilities,  as well as a function of the average  balance of  interest-earning
assets  as  compared  to  interest  bearing-liabilities.  Many of the  Company's
assets, including mortgage loans and mortgage-backed and related securities, are
subject to reinvestment  risk. During periods of falling interest rates,  higher
yielding loans and mortgage-backed securities are more likely to prepay, and the
Company may not be able to reinvest the proceeds  from  prepayments  in loans or
securities  with yields  similar to those  prepaying.  The  Company's  operating
results also are affected to a lesser  extent by the amount of its  non-interest
income,  including  loan  servicing  and loan  related  fees,  gains on sales of
mortgage loans, as well as transactional and other fee income. Additionally, net
income may be affected by gains or losses on the sale of  investment  securities
and mortgage-backed and related securities.  The Company's  non-interest expense
consists  principally  of employee  compensation,  occupancy  expenses,  federal
deposit insurance  premiums and other general and administrative  expenses.  The
Company's  operating  results are  significantly  affected  by general  economic
conditions,  and the monetary,  fiscal and regulatory  policies of  governmental
agencies.  Lending  activities  are  influenced  by the demand for and supply of
housing,  competition  among  lenders,  the  level  of  interest  rates  and the
availability  of funds.  Deposit  flows and costs of funds  likewise are heavily
influenced  by  prevailing  market  rates of  interest on  competing  investment
alternatives,  account  maturities and the levels of personal income and savings
in the Company's market areas.



                                       7
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

Regulatory Developments Related to Deposit Insurance

         The FDIC is an independent federal agency that insures the deposits, up
to  prescribed   statutory  limits,  of  federally  insured  banks  and  savings
institutions  and safeguards the safety and soundness of the banking and savings
industries.  Two separated  insurance funds, the Bank Insurance Fund ("BIF") and
the Savings Associations Insurance Fund ("SAIF") are maintained and administered
by the FDIC. The Bank is a member of SAIF and the FDIC has examination authority
over the Bank. The FDIC is authorized to establish  separate  annual  assessment
rates for  deposit  insurance  for  members  of the BIF and  SAIF.  The FDIC may
increase  assessment  rates for either fund if  necessary  to restore the fund's
ratio of reserves to insured  deposits to it target  level  within a  reasonable
time and may decrease such  assessment  rates if such target level has been met.
The FDIC has  established a risk-based  assessment  system for both SAIF and BIF
members,  Under this system,  assessments  are set within a range,  based on the
risk the  institution  poses to its deposit  insurance  fund. This risk level is
determined  based on the  institution's  capital  level and the FDIC's  level of
supervisory concern about the institution.

Management Strategy

         Management's  strategy has focused on managing the  Company's  interest
rate risk and  maintaining  credit quality by emphasizing  residential  lending,
primarily loans secured by one-to-four family, owner-occupied dwellings.

         Residential Mortgage Lending Emphasis.  The Company's primary investing
activity is the  origination of one-to-four  family  residential  mortgage loans
secured by owner-occupied  properties. At March 31, 1998, $58.0 million or 73.6%
of gross loans consisted of such loans. Mortgage loan originations totaled $29.3
million,  $29.0  million and $22.7  million for the fiscal years ended March 31,
1998, 1997 and 1996,  respectively.  The Company generally  originates ARM loans
for retention in its loan  portfolio  and  generally  sells all fixed rate loans
originated into the secondary market.

         Management of Interest  Rate Risk.  The Company has attempted to reduce
its interest rate risk by emphasizing the origination of ARM loans for retention
in its loan portfolio and by selling  substantially  all of its fixed rate loans
originated.  At March 31, 1998,  $61.4 million or 78.4% of net loans  receivable
were ARM loans.  Management  believes  this  strategy has reduced  income due to
lower initial yields on these  investments  in comparison to  longer-term  fixed
rate investments. However, management believes reducing its exposure to interest
rate  fluctuations  tends to reduce the volatility of the Company's net interest
income over the long-term.

         To  maintain  the  Company's  net  interest  margin,   satisfy  certain
requirements  for favorable tax  treatment  and manage  interest rate risk,  the
Company has  maintained a portfolio of  mortgage-backed  and related  securities
held-to-maturity.   The  Company's   mortgage-backed   and  related   securities
held-to-maturity  at March 31, 1998,  were $6.4 million or 6.5% of total assets,
and at March 31, 1997, were $7.4 million or 7.8% of total assets.

         Management has adopted a strategy designed to achieve acceptable levels
of matching of its assets and liabilities  and there repricing  characteristics.
The primary  elements of this strategy  involve  emphasizing the origination and
purchase of  adjustable-rate  assets,  and  utilizing  FHLB-Chicago  advances to
purchase  participation  interests in loans with similar terms to maturities and
higher yields.  Over the last five fiscal years,  the Company has emphasized the
matching of interest rate sensitivities  through the sale of fixed rate mortgage
loans  originated,  the  origination  of ARM loans,  the repayment of fixed rate
mortgage   assets,   and  the  purchase  of   short-term   and   adjustable-rate
mortgage-backed  and  related  securities.  At March  31,  1998,  the  Company's
one-year  interest  rate  sensitivity  gap as a percentage of total assets was a
negative  0.29%.  During  periods of rising  interest  rates,  a  negative  rate
sensitivity gap would tend to negatively  affect net interest  income;  however,
during periods of falling  interest rates, a negative  interest rate sensitivity
gap would tend to positively affect net interest income.

         In fiscal  1998,  the Company  leveraged  its capital base by using the
proceeds  of  borrowings  from  the   FHLB-Chicago  and  deposits  to  originate
additional  loans.  FHLB advances  increased to $19.1 million at March 31, 1998,
compared  to  $17.6  million  at  March  31,  1997.  This  leveraging   strategy
contributed  to the  increase in the  Company's  total loan  portfolio  to $78.3
million at March 31, 1998,  from $77.2  million at March 31,  1997.  The Company
intends to continue to leverage  its  capital  base by using the  proceeds  from
additional FHLB-advances to originate loans.



                                       8
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

         Asset Quality.  The Company  emphasizes  high asset quality in both its
investment portfolio and lending activities.  Non-performing  assets have ranged
between  .95% and 1.57% of total  assets  during the last  three  years and were
1.57% of total assets at March 31, 1998.  Cumulative gross  charge-offs over the
last  three  fiscal  years  totaled  $193,000  and were  offset  by  $38,000  in
recoveries.  The last three years  cumulative  gross  charge-offs  of commercial
loans  totaled  $19,000.  Of the  cumulative  gross  charge-offs,  $169,000 were
installment loans and were offset by $9,000 in recoveries.  The remaining $5,000
in  cumulative  gross  charge-offs  were real  estate  loans and were  offset by
$29,000 in recoveries.

         On  October  16,  1996,  the Bank  learned  that a  Minnesota  Bank had
commenced  a  repleven  lawsuit  against a  borrower  of the Bank that  involves
several parties claiming  interests in collateral  secured by a General Business
Security  Agreement of the Bank. On November 20, 1996, the Bank filed its answer
and a third  party  complaint  seeking  repleven  of its  collateral  and  money
judgments against its borrowers,  the guarantors,  and other interested parties.
Repleven  judgment was entered in favor of the Bank on January 15, 1997. A money
judgment  was  filed  against a  guarantor  on  December  30,  1996.  One of the
guarantors  has  since  filed  personal  bankruptcy  and the Bank was  awarded a
non-dischargable  judgment  against  the  guarantor  in the  amount of  $80,000.
Depending upon the non-exempt assets of the parties  involved,  the Bank's legal
counsel  believes  the Bank  should  have  sufficient  legal  grounds  to expect
recovery from the Bank's collateral,  personal guarantees, and the other parties
involved.  The Board of  Directors  at its meeting  October 8, 1996,  decided to
increase the  quarterly  loss  allowance to $25,000  until more  information  is
available to make a reasonable  estimate of any losses that may occur. The Board
continued  this policy at its meeting held  December 10,  1996,  and  subsequent
meetings  because a reasonable  estimate  cannot be  determined  until the legal
issues are  resolved.  As soon as the Board can identify and quantify the amount
of the loss,  it will book the loss.  An auction of the business  inventory  and
equipment  was held March 26, 1998.  Proceeds of the auction and the recovery of
other equipment total $220,435 and will be held by the court appointed receiver.
Of that amount,  approximately  $72,000 is from the sale of property that is not
disputed by any third parties and should be recovered by the Bank. The remaining
$148,000 will continue to be held by the receiver  pending  further order of the
court.  A trial is  scheduled  for  November  9, 1998.  An attempt to settle the
dispute  amongst a limited number of the parties was held April 28, 1998, but no
agreements  were reached.  The trial court ordered a mediation  session for July
10, 1998.  Various  motions for summary  judgment have been filed with the court
and the court's  decision is expected by July 1, 1998.  In order to establish an
order of magnitude of the loss  potential,  a worst case scenario of no recovery
on a loan  of  $602,000  plus  an  overdraft  of  $83,000  less  $72,000  of the
undisputed auction proceeds and less the current amount in the loan loss reserve
of $300,000  allocated or available to be allocated to this loan,  would produce
an after-tax loss of approximately $206,000.

         During  the fiscal  years  ended  March 31,  1998,  1997 and 1996,  the
Company recorded provisions for loan losses of $100,000,  $81,000,  and $24,000,
respectively,  to its  allowance  for loan  losses  and had net  charge-offs  of
$77,000, $53,000, $25,000, respectively. The Company's allowance for loan losses
at March 31, 1998,  totaled  $484,000 or 312.2% of  cumulative  net  charge-offs
during the last three fiscal years.  Management currently believes the allowance
for loan  losses at March 31,  1998,  is at an  adequate  level and that  future
provisions  for loan  losses will be  maintained  at current  levels  until more
information  is  available   concerning  the  large  commercial  loan  mentioned
previously under Asset Quality.

         Total loans delinquent 90 days or more increased from 45 loans totaling
$1.1 million at March 31, 1997,  to 50 loans  totaling $1.4 million at March 31,
1998. Total loans delinquent 31-89 days decreased from $3.3 million at March 31,
1997,  to $1.7  million at March 31,  1998.  Management  views the decrease as a
favorable trend  indicating  improved future  performance.  The latest available
peer group comparison of the average  nonperforming  loans and real estate owned
as a percentage  of total loans as prepared by America's  Community  Bankers was
1.44% for the Company at September 30, 1997,  compared to 1.43% on a nation wide
basis,  0.90% on a geographic basis,  1.25% on an asset size basis, and 1.70% on
an owner type basis.  Considering  the commercial  loan  mentioned  above with a
delinquent  balance of $602,000,  total loans  delinquent  90 days or more would
compare very favorably with the peer group.



                                       9
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

         Management and Development of Customer Base. The Company has focused on
managing  deposits to maintain its capital  ratios and improve the  stability of
its deposit base. In this regard,  management has emphasized an increased  level
of service to its customers to retain and attract core  deposits.  In 1988,  the
Bank built and opened a new home office and implemented a strategy to expand the
services  it  offers  beyond  those  services  traditionally  offered  by thrift
institutions,  including  checking  accounts,  ATMs,  night  depositories,  safe
deposit  boxes,  drive-through  banking,  and  investment  products  through its
subsidiary,  in order to create broad banking  relationships with its customers.
This expansion of services continued with the grand opening of the remodeled and
expanded branch office in New Richmond, Wisconsin in June 1996.

Comparison  of  Operating  Results for the Fiscal Years Ended March 31, 1998 and
March 31, 1997

     General

         Net income for the fiscal year ended March 31, 1998, increased $410,000
or 57.7% to $1.1 million from $710,000 for the fiscal year ended March 31, 1997.
Return on average assets  increased to 1.15% for the fiscal year ended March 31,
1998,  from 0.76% for the prior year and return on average  equity  increased to
9.85%  from  6.18% for the same  years.  The  increase  in the return on average
assets was primarily due to the $389,000 decrease in federal insurance  premiums
from $428,000 for the fiscal year ended March 31, 1997 to $39,000 for the fiscal
year ended March 31, 1998. The decrease resulted from the absence in the current
fiscal year of the one-time $350,000 special assessment to recapitalize the SAIF
insurance  fund paid to the FDIC in the quarter ended  September  30, 1996.  Net
interest income before provision for loan losses  increased  $100,000 or 2.9% to
$3.5 million for the fiscal year ended March 31, 1998, from $3.4 million for the
fiscal year ended March 31, 1997. This increase was primarily due to an increase
in  interest  income of  $271,000,  partially  offset by an increase in interest
expense of $171,000.  Provision for loan losses  increased 23.5% to $100,000 for
the fiscal year ended  March 31,  1998,  from  $81,000 for the fiscal year ended
March 31, 1997.  The increase  reflects a full fiscal  year's  provisions  for a
large  commercial  loan discussed  previously  under Asset Quality.  Total other
income  increased  by $77,000 to  $608,000  for the fiscal  year ended March 31,
1998,  from $531,000 for the fiscal year ended March 31, 1997,  primarily due to
an  increase  gain on sale of  mortgage  loans of $71,000  from  $59,000 for the
fiscal year ended March 31,  1997,  to $130,000  for the fiscal year ended March
31, 1998.  General and  administrative  expenses for the fiscal year ended March
31, 1998,  decreased $345,000 or 13.1% to $2.3 million from $2.6 million for the
prior fiscal year. The decrease was due to a $389,000 decrease federal insurance
premiums  that was offset by an  increase of $10,000 in  salaries  and  employee
benefits, and a $14,000 increase in net occupancy expense and a $16,000 increase
in other expense.

     Net Interest Income

         Net interest income for the fiscal year ended March 31, 1998, increased
$100,000 or 2.9% to $3.5  million  from $3.4  million  for the prior  year.  The
increase was due to an increase in interest income of $271,000, partially offset
by an increase in interest expense of $171,000.  The improvement in net interest
income  primarily  reflects an increase  in the average  outstanding  balance of
total  interest-earning  assets to $91.4 million for the fiscal year ended March
31, 1998  compared to $88.1  million for the prior fiscal year.  The increase in
the  Company's  net earning  asset  position  was  attributable  primarily to an
increase  in the  average  outstanding  balance  of total  loans  funded  by the
increase in total deposits and advances and other borrowings.

Interest Income

         Interest  income  increased  $271,000  or 3.6% to $7.8  million for the
fiscal  year ended  March 31,  1998 from $7.5  million for the fiscal year ended
March 31, 1997. The increase is partially due to a $267,000 increase in interest
income on loans from $6.7 million for the fiscal year ended March 31,  1997,  to
$7.0 million for the fiscal year ended March 31, 1998.  The increase in interest
income  on  loans  results  from an  increase  of $2.9  million  in the  average
outstanding balance of mortgage loans to $67.1 million for the fiscal year ended
March 31, 1998 from $64.2  million  for the fiscal  year ended  March 31,  1997.
Interest on commercial loans decreased $46,000 from $417,000 for the fiscal year
ended March 31, 1997, to $371,000 for the fiscal year ended March 31, 1998.  The
decrease is due to the non-accrual status of the large commercial loan discussed
under  Asset  Quality.  As a  result,  the  average  yield on  commercial  loans
decreased  from 9.19% for the fiscal year ended March 31, 1997, to 7.80% for the
fiscal year ended



                                       10
<PAGE>


MANAGEMENT'S DISCUSSION (CONT.)

 March 31, 1998.  Interest on consumer loans increased $18,000 from $731,000 for
the fiscal year ended  March 31,  1997,  to  $749,000  for the fiscal year ended
March 31, 1998. The increase results from an increase in the average outstanding
balance of consumer loans to $7.7 million during the fiscal year ended March 31,
1998, from $7.5 million during the fiscal year ended March 31, 1997. Interest on
mortgage-backed  and related  securities  decreased  $62,000 to $494,000 for the
fiscal year ended March 31, 1998,  from $556,000 for the prior fiscal year.  The
decrease is the result of the decrease in the average balance of mortgage-backed
and  related  securities  from $7.6  million for the fiscal year ended March 31,
1997, to $6.9 million for the fiscal year ended March 31, 1998.  The decrease in
mortgage-backed   securities  was  due  to  scheduled   principal  payments  and
prepayments.   Interest  on  interest   bearing   deposits  in  other  financial
institutions  increased $52,000 from $23,000 for the fiscal year ended March 31,
1997,  to  $75,000  for the  fiscal  year  ended  March 31,  1998.  The  average
outstanding balance of interest bearing deposits in other financial institutions
increased from $461,000  during the fiscal year ended March 31, 1997 to $818,000
during the fiscal year ended March 31, 1998.  The  increase  reflects the larger
cash balances  held as a result of the  establishment  of the Nevada  investment
subsidiary.  Interest and dividends on investments increased $66,000 to $300,000
for the fiscal  year ended March 31,  1998,  from  $234,000  for the fiscal year
ended  March 31,  1997.  The  increase  was  partially  due to a increase in the
average yield of investment  securities to 5.95% for the fiscal year ended March
31,  1998 from 5.53% for the fiscal  year ended March 31,  1997.  This  increase
resulted from the  restructuring  of the  investment  portfolio  which created a
$24,000 loss on the sale of investments, but acted to increase the current yield
of the  remaining  investments.  Dividends  on  Federal  Home  Loan  Bank  stock
increased  $14,000 to $68,000  for the fiscal year ended  March 31,  1998,  from
$54,000 for the fiscal year ended March 31,  1997.  The  increase  was due to an
increase of the average outstanding balance of Federal Home Loan Bank stock from
$837,000  during the fiscal year ended March 31,  1997,  to $996,000  during the
fiscal  year ended  March 31,  1998.  The  increase  in the stock  balance was a
requirement of the Federal Home Loan Bank due to the increase in advances during
the fiscal year ended March 31, 1998.  The average yield on all of the Company's
total interest-earning assets of 8.50% for the fiscal year ended March 31, 1998,
remained relatively unchanged from the 8.51% for the fiscal year ended March 31,
1997. The increase in average balances of loans and  mortgage-backed and related
securities  were  principally  funded by increases in deposits and advances from
the FHLB-Chicago.

Interest Expense

         Interest  expense  increased  $171,000 or 4.2% to $4.2  million for the
fiscal year ended March 31,  1998,  from $4.1  million for the fiscal year ended
March 31, 1997.  The increase is due to the increase in the average  outstanding
balance of  interest-bearing  liabilities of $3.7 million from $81.4 million for
the fiscal year ended March 31, 1997 to $85.1  million for the fiscal year ended
March 31, 1998. The average rate paid on interest-bearing  liabilities decreased
slightly  from 5.00% for the fiscal year ended March 31, 1997,  to 4.99% for the
fiscal year ended March 31, 1998.  Interest on savings increased $9,000 or 0.31%
to $2.9 million for the fiscal year ended March 31, 1998,  from $2.9 million for
the fiscal  year ended March 31,  1997.  The  increase  in  interest  expense on
deposits was the result of an increase in average  deposits to $62.3 million for
the fiscal year ended  March 31,  1998,  from $60.8  million for the fiscal year
ended March 31, 1997. The increase in interest on the increased savings balances
was  offset by an almost  identical  decrease  in  interest  expense  due to the
average yield during the fiscal year ended March 31, 1997, decreasing from 4.74%
to 4.65%  during the fiscal year ended March 31,  1998.  Interest on  borrowings
increased  $162,000 or 13.5% to $1.4 million for the fiscal year ended March 31,
1998,  from $1.2 million for the fiscal year ended March 31, 1997.  The increase
in interest on borrowings was the result of an increase in the average  balances
of advances  from $20.6  million for the fiscal  year ended March 31,  1997,  to
$22.8  million for the fiscal year ended March 31, 1998,  and an increase in the
average rate on advances and other borrowings to 5.91% for the fiscal year ended
March 31,  1998,  from  5.78% for the  fiscal  year ended  March 31,  1997.  The
increase in the average rate was the result  higher  interest  rates  offered by
FHLB during the fiscal year.

Provision for Loan Losses

         The  provision for loan losses  increased  $19,000 or 23.5% to $100,000
for the fiscal year ended March 31, 1998, from $81,000 for the fiscal year ended
March 31, 1997.  The desired level of allowance for loan losses is determined by
the Company's historical loan loss experience,  the condition and composition of
the Company's  loan  portfolio  and general  conditions.  The higher  provisions
during the fiscal year ended March 31,  1998,  reflects  provisions  for a large
commercial loan discussed previously under Asset Quality. The allowance for loan
losses  totaled  $461,000 at March 31, 1997, and $484,000 at March 31, 1998, and
represented 0.59% and 0.61% of gross loans and 43.0% and 34.9% of non-performing
loans, respectively. Management currently believes the allowance for



                                       11
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

loan losses is at an adequate  level to provide  for  potential  loan losses and
that  future  provisions  for loan  losses will be remain at $25,000 per quarter
until the status of the above-mentioned commercial loan is determined.

     Other Income

         Total  other  income  increased  $77,000 or 14.5% to  $608,000  for the
fiscal year ended March 31, 1998,  from $531,000 for the fiscal year ended March
31,  1997.  The  increase  is  partially  due to an  increase in gain on sale of
mortgage loans of $71,000 from $59,000 for the fiscal year ended March 31, 1997,
to $130,000 for the fiscal year ended March 31, 1998. The decrease in the market
level of mortgage interest during the fiscal year acts to generate gains on sale
of mortgage  loans.  An increase in service  charges on deposits of $31,000 from
$220,000  for the fiscal year ended  March 31,  1997 to $251,000  for the fiscal
year ended March 31, 1998,  was offset by a $24,000  increase in loss on sale of
investments from $0 for the fiscal year ended March 31, 1997, to $24,000 for the
fiscal year ended March 31, 1998. The losses were incurred  while  restructuring
the investment portfolio to eliminate assets classified as  "available-for-sale"
to investments classified as "held-to-maturity".

     General and Administrative Expenses

         General and administrative expenses decreased $345,000 or 13.3% to $2.3
million  for the fiscal  year ended March 31,  1998,  from $2.6  million for the
prior  fiscal  year.  The  decrease is due to an decrease of $389,000 in federal
insurance  premiums  from  $428,000 for the fiscal year ended March 31, 1997, to
$39,000 for the fiscal year ended March 31, 1998. The decrease resulted from the
absence in the current fiscal year of the one-time  $350,000 special  assessment
to  recapitalize  the SAIF  insurance fund paid to the FDIC in the quarter ended
September 30, 1996. The increase in salaries and employee benefit expense due to
cost of living salary increases,  additional personnel,  and the initiation of a
loan production  incentive  program to enhance loan officer  salaries was almost
exactly  offset by a decrease in expense from  accounting  for  Company's  stock
incentive  plan of $115,000 to $89,000 for the fiscal year ended March 31, 1998,
from  $204,000 for the fiscal year ended March 31, 1997.  Applicable  accounting
standards  required that 61.1% of the three-year  cost be amortized in the first
year,  27.8% in the second year and 11.1% in the third year.  The accounting for
this expense began with the approval of the Company's  stock  incentive  plan in
October 1995, and will be fully expensed the in the quarter ending September 30,
1998.  The expense  associated  with the Bank's  Employee  Stock  Ownership Plan
(`ESOP')  increased  $28,000  from  $141,000 for the fiscal year ended March 31,
1997, to $169,000 for the fiscal year ended March 31, 1998.  The expense for the
ESOP  reflects the ESOP loan payments made by the Bank to the Company which vary
each year and also reflect the application of dividends of the ESOP stock to the
balance of the note.  Dividends on the ESOP stock increased $0.14 per share from
$0.40 per share for the fiscal year ended March 31, 1997, to $0.54 per share for
the fiscal year ended March 31, 1998. Net occupancy expense increased $14,000 or
4.2% from $336,000 for the fiscal year ended March 31, 1997, to $350,000 for the
fiscal year ended March 31, 1998.  Other  expense  increased  $16,000 or 2.8% to
$581,000 for the fiscal year ended March 31, 1998,  from $565,000 for the fiscal
year ended March 31,  1997.  General and  administrative  expenses as a ratio of
average  assets  decreased  to 2.36% for the fiscal year ended  March 31,  1998,
compared to 2.84% for the fiscal year ended March 31, 1997,  due to the decrease
in Federal insurance premiums over the period..

     Income Tax Expense

         Income  tax  expense  increased  $93,000 or 18.0% to  $610,000  for the
fiscal year ended March 31, 1998,  from $517,000 for the fiscal year ended March
31, 1997. The increase  reflects the increase in income before taxes of $503,000
from $1.2 million for the fiscal year ended March 31, 1997,  to $1.7 million for
the fiscal year ended March 31,  1998.  The  effective  tax rates were 35.3% and
42.1% for the fiscal years ended March 31,  1998,  and 1997,  respectively.  The
decrease in effective rate is due to the  establishment  of a Nevada  investment
subsidiary of the Bank which acts to eliminate  the  Wisconsin  state income tax
obligation of 7.9% of net income.  Because  state income tax is  deductible  for
federal  income tax  purposes,  the state income tax savings is reduced by about
the federal tax rate of 34% or an effective state tax rate savings of 5.2%


                                       12
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

Comparison  of  Operating  Results for the Fiscal Years Ended March 31, 1997 and
March 31, 1996

     General

         Net income for the fiscal year ended March 31, 1997, decreased $132,000
or 15.7% to $710,000  from  $842,000  for the fiscal year ended March 31,  1996.
Return on average assets  decreased to 0.76% for the fiscal year ended March 31,
1997,  from 1.06% for the prior year and return on average  equity  decreased to
6.18% from 6.95% for the same  years.  Return on  average  assets was  adversely
affected by the decrease in the  interest  rate spread from 3.77% for the fiscal
year ended March 31,  1996,  to 3.51% for the fiscal year ended March 31,  1997.
Net interest income before provision for loan losses increased  $258,000 or 8.1%
to $3.4 million for the fiscal year ended March 31, 1997,  from $3.2 million for
the fiscal year ended March 31,  1996.  This  increase was  primarily  due to an
increase in interest income of $1.0 million,  partially offset by an increase in
interest expense of $0.8 million.  Provision for loan losses increased 237.5% to
$81,000 for the fiscal year ended March 31,  1997,  from  $24,000 for the fiscal
year  ended  March  31,  1996.  The  increase  reflects  provisions  for a large
commercial  loan discussed  previously  under Asset Quality.  Total other income
increased by $55,000 to $531,000 for the fiscal year ended March 31, 1997,  from
$476,000 for the fiscal year ended March 31, 1996,  primarily due to an increase
in other  income of $58,000  from  $117,000  for the fiscal year ended March 31,
1996 to $175,000 for the fiscal year ended March 31, 1997. The increase in other
income  reflected  the  increase in the sale of  condominium  lots in the Bank's
subsidiary.  General and administrative expenses for the fiscal year ended March
31, 1997,  increased $468,000 or 21.3% to $2.6 million from $2.2 million for the
prior fiscal year. The increase was due to a $302,000 increase federal insurance
premiums (See Regulatory Developments Related to Deposit Insurance), an increase
of $134,000 in salaries and  employee  benefits,  and a $52,000  increase in net
occupancy  expense.  The increase in salaries and employee benefits reflects the
expenses  associated  with the  Company's  stock  incentive  plan and the Bank's
Employee Stock Ownership Plan ("ESOP") and the increase in net occupancy expense
that reflects the expenses  related to the remodeling of the New Richmond office
and the purchase of the related furniture, fixtures and equipment.

     Net Interest Income

         Net interest income for the fiscal year ended March 31, 1997, increased
$258,000 or 8.1% to $3.4  million  from $3.2  million  for the prior  year.  The
increase was due to an increase in interest  income of $1.0  million,  partially
offset by an increase in interest  expense of $761,000.  The  improvement in net
interest income primarily reflects an increase in total interest-earning  assets
to $88.1  million for the fiscal  year ended  March 31,  1997  compared to $74.3
million for the prior fiscal year.  The  increase in the  Company's  net earning
asset  position  was  attributable  primarily  to an increase in gross loans and
mortgage-backed   securities  funded  by  the  increase  in  advances  from  the
FHLB-Chicago.

Interest Income

         Interest income increased $1.0 million or 15.4% to $7.5 million for the
fiscal  year ended  March 31,  1997 from $6.5  million for the fiscal year ended
March 31,  1996.  The  increase is a result of an  increase of $13.8  million in
average interest-earning assets to $88.1 million for the fiscal year ended March
31, 1997 offset by an decrease of 20 basis points in the average yield on all of
the  Company's  major  categories  of  interest-earning  assets to 8.51% for the
fiscal  year ended March 31, 1997 from 8.71% for the fiscal year ended March 31,
1996.  Interest income on loans increased  $791,000 or 13.4% to $6.7 million for
the fiscal  year ended  March 31,  1997,  from $5.9  million for the fiscal year
ended    March   31,    1996.    The    increase   in   the    origination    of
adjustable-rate-one-to-four-family  mortgage  loans  from $9.6  million  for the
fiscal year ended  March 31,  1996,  to $13.4  million for the fiscal year ended
March 31, 1997,  acted to lower the average yield  because  market forces demand
that the loans be  originated  at "teaser  rates" which are generally one to two
percent  below the  fully  indexed  rate.  In  addition,  the  average  yield on
commercial loans decreased from 11.64% for the fiscal year ended March 31, 1996,
to 9.19% for the fiscal year ended March 31,  1997,  as a result of the interest
adjustment required when the large commercial loan discussed under Asset Quality
was  categorized as a  non-performing  asset.  Average loans  increased to $76.2
million  during the fiscal year ended March 31, 1997,  from $65.6 million during
the fiscal year ended March 31, 1996.  Interest on  mortgage-backed  and related
securities  increased  $203,000 to $556,000  for the fiscal year ended March 31,
1997,  from  $353,000 for the prior fiscal year due to a increase in the average
balance of  mortgage-backed  and related  securities  from $4.8  million for the
fiscal year ended March 31, 1996 to $7.6 million for the fiscal year ended March
31, 1997.  The  increase in average  balances of loans and  mortgage-backed  and
related securities were principally funded by an


                                       13
<PAGE>


MANAGEMENT'S DISCUSSION (CONT.)

increase in advances from the  FHLB-Chicago.  Interest on investments  increased
$25,000 to $234,000 for the fiscal year ended March 31, 1997,  from $209,000 for
the fiscal year ended March 31, 1996.  The increase was due to a increase in the
average yield of investment  securities to 5.33% for the fiscal year ended March
31, 1997 from 5.11% for the fiscal year ended March 31, 1996.

Interest Expense

         Interest  expense  increased  $761,000 or 23.1% to $4.1 million for the
fiscal year ended March 31,  1997,  from $3.3  million for the fiscal year ended
March 31, 1996.  The increase is due to the increase in the average  outstanding
balance of interest-bearing  liabilities of $17.3 million from $67.0 million for
the fiscal year ended March 31, 1996 to $81.4  million for the fiscal year ended
March 31, 1997. The average rate paid on interest-bearing  liabilities increased
slightly  from 4.94% for the fiscal year ended March 31, 1996,  to 5.00% for the
fiscal year ended March 31,  1997.  Interest  on savings  increased  $270,000 or
10.4% to $2.9  million  for the fiscal  year  ended  March 31,  1997,  from $2.6
million  for the fiscal  year ended  March 31,  1996.  The  increase in interest
expense on deposits  was the result of an increase in average  deposits to $60.8
million  for the fiscal year ended March 31,  1997,  from $55.7  million for the
fiscal year ended March 31, 1996.  Interest on borrowings  increased $491,000 or
70.4% to $1.2  million for the fiscal year ended March 31, 1997,  from  $697,000
for the fiscal year ended March 31,  1996.  The was the result of an increase in
the average  balances of advances  from $11.3  million for the fiscal year ended
March 31, 1996, to $20.6  million for the fiscal year ended March 31, 1997.  The
increase was partially  offset by a decrease in the average rate on advances and
other  borrowings to 5.78% for the fiscal year ended March 31, 1997,  from 6.19%
for the fiscal year ended March 31,  1996.  The  decrease  was the result  lower
interest rates offered by FHLB during the fiscal year.

Provision for Loan Losses

         The  provision for loan losses  increased  $57,000 or 237.5% to $81,000
for the fiscal year ended March 31, 1997, from $24,000 for the fiscal year ended
March 31, 1996.  The desired level of allowance for loan losses is determined by
the Company's historical loan loss experience,  the condition and composition of
the Company's  loan  portfolio  and general  conditions.  The higher  provisions
during the fiscal year ended March 31,  1997,  reflects  provisions  for a large
commercial loan discussed previously under Asset Quality. The allowance for loan
losses  totaled  $433,000 at March 31, 1996, and $461,000 at March 31, 1997, and
represented  .61% and .59% of gross loans and 62.5% and 43.0% of  non-performing
loans, respectively. Management currently believes the allowance for loan losses
is at an  adequate  level to provide for  potential  loan losses and that future
provisions  for loan  losses  will be remain at $25,000  per  quarter  until the
status of the above-mentioned commercial loan is determined.

     Other Income

         Total  other  income  increased  $55,000 or 11.6% to  $531,000  for the
fiscal year ended March 31, 1997,  from $476,000 for the fiscal year ended March
31, 1996,  due to an increase in other  income of $58,000 from  $117,000 for the
fiscal year ended March 31,  1996,  to $175,000  for the fiscal year ended March
31, 1997. This increase was primarily due to an increase in the gains on sale of
real  estate  lots owned by the Bank's  wholly  owned  subsidiary  of $46,000 to
$84,000 for the fiscal year ended March 31,  1997,  from  $38,000 for the fiscal
year ended March 31, 1996.

     General and Administrative Expenses

         General and administrative expenses increased $468,000 or 21.3% to $2.6
million  for the fiscal  year ended March 31,  1997,  from $2.2  million for the
prior fiscal year.  The increase is primarily  due to an increase of $302,000 in
federal  insurance  premiums  (See  Regulatory  Developments  Related to Deposit
Insurance),  an increase of $134,000 in salaries  and employee  benefits,  and a
$52,000 increase in net occupancy expense. The increase in salaries and employee
benefits  is  partially  due to the  increase  in expense  from  accounting  for
Company's  stock incentive plan of $64,000 to $204,000 for the fiscal year ended
March 31,  1997,  from  $l40,000  for the  fiscal  year  ended  March 31,  1996.
Applicable  accounting  standards  require that 61.1% of the three-year  cost be
amortized in the first year. The accounting for this expense did not begin until
the  approval  of the  Company's  stock  incentive  plan in  October  1995,  and
therefore  an expense was  recorded for only the last two quarters of the fiscal
;year ended March 31,  1996.  The expense  associated  with the Bank's  Employee
Stock  Ownership  Plan (`ESOP')  increased  $14,000 from $127,000 for the fiscal
year ended March 31, 1996, to $141,000 for the fiscal year ended March 31, 1997.
The expense for the ESOP reflects the ESOP loan payments made by the Bank to the
Company  which vary each year and also reflect the  application  of dividends of
the ESOP stock to the balance of the note.  The  remaining  $56,000  increase in
salaries  and  employee  benefits  is due to cost of  living  salary  increases,
additional personnel,  and the initiation of a loan production incentive program
to enhance loan officer salaries. Net occupancy expense


                                       14
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

increased  $52,000 from  $284,000  for the fiscal year ended March 31, 1996,  to
$336,000  for the fiscal year ended March 31,  1997.  The  increase is due to an
increase in furniture and fixtures  expenses  associated with the remodeling and
refurbishing  of the New Richmond  Office that was completed at the beginning of
the  fiscal  year ended  March 31,  1997.  Other  expense  decreased  $14,000 to
$565,000 for the fiscal year ended March 31, 1997,  from $579,000 for the fiscal
year ended  March 31,  1996,  due  primarily  to a decrease  in holding  company
expenses of $39,000  from  $107,000  for the fiscal year ended March 31, 1996 to
$68,000  for the fiscal year ended March 31,  1997.  General and  administrative
expenses  as a ratio of average  assets  increased  to 2.84% for the fiscal year
ended  March 31,  1997,  compared  to 2.74% for the fiscal  year ended March 31,
1996, due to the large increase in Federal  insurance  premiums over the period.
Allowing  for  the  one-time  $350,000  FDIC  Special  Assessment,  general  and
administrative  expenses  as a ratio of  average  assets  would be 2.46% for the
fiscal year ended  March 31,  1997.  The  Company's  general and  administrative
expenses  as a  percentage  of  average  assets  are  higher  than many  similar
institutions  for  several   reasons,   including  the  need  to  support  three
full-service  branches,  service-related costs on loans sold to secondary market
investors,  the  amortization of the  stock-related  benefit  programs,  and the
support of its insurance and investment activities through its subsidiary.

     Income Tax Expense

         Income  tax  expense  decreased  $80,000 or 13.4% to  $517,000  for the
fiscal year ended March 31, 1997,  from $597,000 for the fiscal year ended March
31, 1996.  The decrease  reflects the decrease in income  before taxes from $1.4
million for the fiscal year ended March 31, 1996, to $1.2 million for the fiscal
year ended March 31, 1997.  The effective tax rates were 42.1% and 41.5% for the
fiscal years ended March 31, 1997, and 1996, respectively.


Financial Condition

        The  following  table  summarizes  certain  information  relating to the
Company's consolidated balance sheets at the dates indicated.
                                                    At March 31,       
                                                  --------------- 
                                               1998               1997
                                               ----               ----         
                                                (dollars in thousands)
Assets
Cash and cash equivalents                     6,047              2,980
Securities available-for-sale                   -                2,752
Mortgage-backed securities                    6,398              7,421
FHLB stock                                    1,159                912
Loans receivable, net                        78,297             77,240

Liabilities
Deposits                                     62,278             61,557
Advances and other borrowings                24,320             22,097

Equity, substantially restricted             11,514             10,859

        Cash and cash  equivalents  increased  $3.0  million to $6.0  million at
March 31, 1998 from $3.0  million at March 31, 1997.  The increase  reflects the
higher cash and interest  bearing deposit  balances  maintained by the Bank with
the operation of its Nevada investment subsidiary.  Dividends on investments and
loans are allowed to accumulate  in the  subsidiary  and when material  balances
achieved,  the cash  balances  are  transferred  back to the Bank in the form of
loans to the Bank.

        Securities  available-for-sale decreased $2.8 million to $0 at March 31,
1998 from $2.8  million at March 31,  1997.  The  decrease  reflects the sale of
securities  held  in the  "available-for-sale"  category  and  the  purchase  of
securities in the "held-to-maturity" category.

        Mortgage-backed and related securities  held-to-maturity  decreased $1.0
million to $6.4 million at March 31, 1998,  from $7.4 million at March 31, 1997.
The decrease was due to scheduled  principal  payments and  pre-payments  of the
securities.  Some mortgage-backed  securities are used to provide collateral for
deposits in excess of the $100,000 insurance limit through the retail repurchase
agreements program found under Other Borrowed Money.


                                       15
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

        Net loans  receivable  was $78.3  million and $77.2 million at March 31,
1998,  and 1997,  respectively.  One to four family real estate loans  increased
from $55.2  million at March 31, 1997 to $55.6  million at March 31, 1998,  as a
result of the  Company's  ability to originate  ARM loans that it retains in its
loan portfolio. Consumer loans increased to $7.6 million at March 31, 1998, from
$7.2  million at March 31,  1997.  Other real  estate  loans  decreased  to $8.6
million at March 31, 1998, from $10.7 million at March 31, 1997.

        Deposits  were $62.3  million  and $61.6  million at March 31,  1998 and
1997,  respectively.  Deposits are the  Company's  primary  source of externally
generated funds. The level of deposits is heavily  influenced by factors such as
the general level of short- and long-term  interest rates as well as alternative
yields that  investors may obtain on competing  investment  instruments  such as
money  market  mutual  funds.  Non-certificate  of deposit  average  outstanding
balances  totaled  $21.1  million and $19.5  million at March 31, 1998 and 1997,
respectively  and  reflect the  Company's  marketing  efforts to build  multiple
relationships with its customers through an emphasis on checking  accounts.  The
average  outstanding  balance of certificates of deposit  balances totaled $41.2
million and $41.3 million, at March 31, 1998 and 1997,  respectively The Company
attempts to maintain  relationships with customers  withdrawing  certificates of
deposit by providing brokerage services for alternative  investments through its
subsidiary.

        Advances from the Federal Home Loan Bank and other borrowings  increased
to $24.3 million at March 31, 1998 from $22.1 million at March 31, 1997, and the
average rate increased 13 basis points to 5.91% at March 31, 1998, from 5.78% at
March 31, 1997.  The Company uses  FHLB-Chicago  advances as a funding source in
periods when market rates on certificates of deposit exceed those offered by the
FHLB-Chicago or when the growth in the loan portfolio exceeds the ability of the
Bank to attract  deposits.  FHLB-Chicago  advances  generally are fixed-rate and
short-term  with  maturities  of less  than 10  years.  The Open  Line of Credit
Program at the  FHLB-Chicago  adjusts the rate on a daily basis,  so in a rising
interest rate environment such borrowings may present the risk that the interest
rates of these  borrowings will increase.  The Company also uses borrowings from
the FHLB-Chicago to manage the total  asset/liability  portfolio of the Company.
In future periods,  the Company intends to continue to leverage its capital base
by using  the  proceeds  from  additional  FHLB-Chicago  advances  to  originate
additional loans.

        Shareholders'  equity  increased  to $11.5  million  at March  31,  1998
compared to $10.9 million at March 31, 1997. The increase from March 31, 1997 to
March 31, 1998 results from net income of $1.1 million for the fiscal year ended
March 31,  1998.  This  increase  was  offset by the  payment  of  dividends  to
shareholders  of $451,000 for the fiscal year ended March 31, 1998. In addition,
14,100  shares of Company  stock were  repurchased  under an ongoing  repurchase
program at a cost of $301,000 for the fiscal year ended March 31, 1998.  The net
unrealized loss on securities  available for sale increased $29,000 from $29,000
as of March 31,  1997,  to $0 as of March 31,  1998.  The  Company's  securities
available-for-sale are accounted for at fair value, with any unrealized gains or
losses  accounted for as an adjustment to retained  earnings  rather than to the
statement of operations. The balance of the unearned restricted stock plan award
increased $89,000 from $(115,000) as of March 31, 1997, to $(26,000) as of March
31, 1998. The balance of the unearned Employee Stock Ownership Plan compensation
increased  $169,000 from $(558,000) as of March 31, 1997, to $(389,000) as March
31, 1998.

Liquidity, Capital Resources and Regulatory Capital

        The  Company's  primary  sources of funds are  deposits,  proceeds  from
principal and interest  payments on loans,  principal  and interest  payments on
mortgage-backed  and related  securities  and  FHLB-Chicago  advances.  Although
maturity and scheduled  amortization of loans are predictable  sources of funds,
deposit flows,  mortgage  prepayments  and  prepayments on  mortgage-backed  and
related  securities  are influenced  significantly  by general  interest  rates,
economic conditions and competition.  Principal collected on long-term loans for
the fiscal year ended  March 31,  1998  increased  to $28.0  million  from $24.0
million  for the fiscal  year  ended  March 31,  1997.  Principal  collected  on
mortgage-backed securities for the fiscal year ended March 31, 1998 increased to
$1.0 million from $724,000 for the fiscal year ended March 31, 1997.

        The primary  investing  activity of the  Company is the  origination  of
mortgage loans.  For the fiscal years ended March 31, 1998 and 1997, the Company
originated or acquired  long-term loans in the amount of $29.5 million and $31.3
million,  respectively.  The Company  purchased  $0 million and $2.8  million of
mortgage-backed  securities and $1.3 million and $127,000 of investments  during
the fiscal years ended March 31, 1998 and 1997, respectively. For


                                       16
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

the fiscal  years ended March 31, 1998 and 1997,  these  activities  were funded
primarily  by  principal  repayments  on  long-term  loans and  mortgage  backed
securities of $29.0 million and $24.8 million,  respectively;  net proceeds from
short-term borrowings of $795,000 and $(1.6) million, respectively; and proceeds
from long-term financing of $9.0 million, and $8.7 million,  respectively offset
by  repayments  of  long-term   financing  of  $7.6  million  and  $2.0  million
respectively.

        The  Company is required to  maintain  minimum  levels of liquid  assets
under the DFI's regulations for  state-chartered  mutual savings banks.  Savings
banks are  required  to  maintain  an average  daily  balance  of liquid  assets
(including cash, certain time deposits,  certain bankers'  acceptances,  certain
corporate  debt  securities  and highly rated  commercial  paper,  securities of
certain mutual funds and specified  United States  government,  state or federal
agency  obligations)  of not less than 8% of its  average  daily  balance of net
withdrawal accounts plus short-term  borrowings.  The Company's liquidity ratios
were  15.2% and 15.1% at March 31,  1998 and  1997,  respectively.  The  Company
adjusts its liquidity levels to meet various funding needs and to meet its asset
and liability management objectives.

        The Company's  most liquid assets are cash and cash  equivalents,  which
include  investments in highly  liquid,  short-term  investments.  The levels of
these assets are dependent on the Company's  operating,  financing,  lending and
investing  activities  during any given period. At March 31, 1998 and 1997, cash
and cash  equivalents  were $6.0  million and $3.0  million,  respectively.  The
increase  in cash and cash  equivalents  was due to the  operation  of an Nevada
investment  subsidiary which collects dividends on investments,  mortgage-backed
securities,  and a participation loan portfolio and accumulates material amounts
before lending the funds back to the Bank in the form of loans.

        Liquidity  management  for the Company is both an ongoing and  long-term
function of the Company's asset/liability  management strategy. Excess funds are
generally  invested in short-term  investments such as a cash management account
or overnight  deposits at the FHLB-Chicago.  Whenever the Company requires funds
beyond its ability to generate them internally,  additional sources of funds are
available  and  obtained  from  borrowings  from the  FHLB-Chicago.  The Company
utilizes  its  borrowing  capabilities  on a regular  basis.  At March 31, 1998,
FHLB-Chicago  advances were $19.1 million or 21.9% of total  liabilities  and at
March 31,  1997,  FHLB-Chicago  advances  were  $17.6  million or 20.9% of total
liabilities.  The Company also had other  borrowings  consisting  of  repurchase
agreements  amounting  to $5.3  million  and $4.5  million at March 31, 1998 and
1997,  respectively.  The Company did not have any reverse repurchase agreements
outstanding  at any of the  aforementioned  periods.  In a rising  interest rate
environment, such short-term borrowings present the risk that upon maturity, the
borrowings will have to be replaced with higher rate borrowings.

        At March 31, 1998, the Company had outstanding  loan commitments of $4.9
million. The Company had no commitments to purchase  mortgage-backed and related
securities at that date. The Company  anticipates it will have sufficient  funds
available  to meet its current loan  commitments,  including  loan  applications
received and in process prior to the issuance of firm commitments.  Certificates
of deposit  that are  scheduled  to mature in one year or less at March 31, 1998
were $29.4 million. Based on its historical experience, management believes that
a significant portion of such deposits will remain with the Company.

        Effective  June 30,  1993,  the Bank,  as a Wisconsin  chartered  mutual
savings bank, is subject to regulation by the FDIC and the DFI.  Applicable FDIC
regulations  require  institutions to meet three capital standards:  (i) "Tier 1
capital" in an amount not less than 3% of total assets; (ii) "Tier 1 capital" in
an amount not less than 4% of risk-weighted assets; and (iii) "total capital" in
an amount not less than 8% of risk-weighted assets.  Wisconsin chartered savings
banks also are required to maintain a minimum capital to assets ratio of 6%. The
percentage of assets for Wisconsin regulatory capital purposes is based on total
unconsolidated   assets.   Note  14  of  the  Notes  to  the  Company's  Audited
Consolidated  Financial  Statements  contains a summary of the Bank's compliance
with its regulatory capital standards at March 31, 1998.

Impact of Inflation and Changing Prices

        The Company's  Consolidated  Financial Statements and Notes thereto have
been  prepared  in  accordance  with GAAP,  which  require  the  measurement  of
financial  position and operating results in terms of historical dollars without
considering the changes in the relative  purchasing power of money over time due
to inflation. The impact of


                                       17
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

inflation is reflected in the increased cost of the Company's operations. Unlike
most  industrial  companies,  nearly all of the assets  and  liabilities  of the
Company  are  monetary  in nature.  As a result,  interest  rates have a greater
impact on the  Company'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.

Current Accounting Developments

        See Note 1,  Future  Accounting  Changes,  in the Notes to  Consolidated
Financial Statements on page 34.

Forward-Looking Statements

        The discussion in this Annual Report may include certain forward-looking
statements based on current management  expectations.  Factors which could cause
future results to differ from these expectations include the following:  general
economic conditions; legislative and regulatory initiatives; monetary and fiscal
policies of the federal  government;  deposit flows; the cost of funds;  general
market rates of interest;  interest rates on competing  investments;  demand for
loan products; demand for financial services;  changes in accounting policies or
guidelines;  and changes in the quality or composition of the Company's loan and
investment  portfolios.  Additional factors are described in the Company's other
reports filed with the Securities and Exchange Commission.

Disclosures Involving Year 2000 Issues

        Issues  related to the  century  date  change and the impact on computer
systems and business operations are receiving prominent publicity and attention.
Depositors,   business   partners,   investors,   and  the  general  public  are
specifically  interested  in the  effect  on the  financial  condition  of  each
depository  institution.  The FDIC has advised state savings banks that safe and
sound banking practices require them to address Year 2000 issues. The Securities
and Exchange  Commission  (SEC) issued a revised  Staff Legal  Bulletin NO. 5 to
provide  specific  guidance on disclosure  associated with Year 2000 obligations
for companies registered under federal securities laws.

        Computer programs generally abbreviated dates by eliminating the century
digits of the year.  Many  resources,  such as software;  hardware;  telephones;
voicemail;  heating; ventilating and air conditioning;  alarms, etc. ("Systems")
are  affected.  These Systems were designed to assume a century value of "19" to
save memory and disk space within their programs. In addition,  many Systems use
a value of "99" in a year or  "99/99/99" in a date to indicate "no date" or "any
date" or even a  default  expiration  date.  As the year 2000  approaches,  this
abbreviated date mechanism  within Systems  threatens to disrupt the function of
computer  software at nearly every  business  which  relies  heavily on computer
systems for account and other recordkeeping  functions.  If the millennium issue
is ignored,  system failures or miscalculations could occur, causing disruptions
of operations and a temporary inability to process business transactions.

        The Bank has an  inventory  of  personal  computers  that  access a data
processing system provided by EDS in Des Moines, Iowa. If the personal computers
and data  processing  systems fail to process the century  date  change,  it may
impair the Bank's ability to process loan payments, accept deposits, and address
other operational  issues. The Bank's customers,  suppliers,  other constituents
may also be impaired to meet their  contractual  obligations  with the Bank. The
Bank has  developed  a Year 2000 (the  "Plan").  The  Bank's  Plan  attempts  to
identify the systems,  assess the risk, and conduct  inventories as necessary to
assure  compliance  with the Plan. The Plan calls for identifying all systems in
need of  remediation  by June 30,  1999,  and  remedying  all systems in need of
remediation  by September 30, 1999. As of March 31, 1998,  the Bank estimates it
will have to purchase  hardware and equipment in the amount of $17,000 (pre-tax)
to address the Y2K  issues.  The  expenditures  would be  amortized  over 5 year
period, and would add approximately  $3,400 in furniture and fixture expense per
year for the next 5 years.

        On February 24, 1998,  the FDIC  conducted an on-site  visitation of the
Bank's Year 2000 process.  The examiner followed  guidelines and recommendations
contained in the FFIEC  Interagency  Statement  on Year 2000 Project  Management
Awareness,  dated May 5, 1997,  and subsequent  publications.  In a letter dated
March  17,  1998,  the FDIC  stated  that the  Bank's  Year  2000  Committee  is
adequately monitoring Year 2000 compliance.

                                       18
<PAGE>


        Asset/Liability Management

        The Company's  profitability,  like that of most financial institutions,
depends to a large extent upon its net interest income,  which is the difference
between  interest  earned  on   interest-earning   assets,  such  as  loans  and
investments, and interest paid on interest-bearing liabilities, such as deposits
and  borrowings.  Net interest  income is  significantly  affected by changes in
market interest rates.  During periods of rising interest rates,  the Company is
required to pay higher rates to attract deposits that can result in a decline in
net  interest  income if the  Company  is unable  to  increase  the yield on its
interest-earning  assets sufficiently to compensate for the increase in its cost
of funds.  Conversely,  during periods of declining  interest rates, the Company
may  experience  prepayments  of its fixed  rate  earning  assets  and  downward
adjustments on its adjustable  rate assets which can result in a decrease in net
interest income if the Company is unable to lower its cost of funds sufficiently
to compensate for the decrease in its asset yields.

        The matching of assets and  liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest rate sensitive within a specific time period if
it matures or reprices  within that time period.  The interest rate  sensitivity
gap is defined as the difference between the amount of  interest-earning  assets
anticipated,  based upon  certain  assumptions,  to mature or  reprice  within a
specific time period and the amount of interest-bearing liabilities anticipated,
based  upon  certain  assumptions,  to mature or reprice  within  that same time
period. An interest rate sensitivity gap is considered  positive when the amount
of interest rate sensitive  assets exceeds the amount of interest rate sensitive
liabilities  that mature or reprice within a specified time period.  An interest
rate  sensitivity  gap is  considered  negative when the amount of interest rate
sensitive  liabilities exceeds the amount of interest rate sensitive assets that
mature or reprice within a specified time period.

        In  an  attempt  to  manage  vulnerability  to  interest  rate  changes,
management  closely  monitors the Company's  interest rate risk. The Company has
established  an  investment  strategy  through  its  Asset/Liability  Committee.
Management  continually  reviews  the  Company's  interest  rate risk  position,
maturing  securities  and  borrowings,  interest  rates and programs for raising
deposits and originating  loans, and develops  policies  regarding these issues.
The  Board  of  Directors  reviews  quarterly  asset/liability   management  and
investment strategy reports prepared by management.

        The  Company  utilizes  basic  strategies  in  managing  its  assets and
liabilities  by managing or  maximizing  the net interest  income under  various
interest rate scenarios. More complex techniques such as hedging through the use
of options,  financial  futures,  and interest rate swaps are not  utilized.  In
addition to  monitoring  interest  rate risk on a continual  basis,  the Company
reviews  deposit  rates  weekly.  The  emphasis  has been on prudent  pricing as
opposed to  increasing  market  share,  and the  Company  has  supplemented  and
substituted  deposits using  FHLB-Chicago  advances in past periods when advance
rates are more attractive than those obtainable on retail deposits.

        Generally,  the Company utilizes the following  strategies to manage its
interest rate risk:  (i) the Company sells  substantially  all of its fixed rate
loans  originated;  (ii) the Company seeks to originate and retain ARM loans and
mortgage-backed  and related  securities  with short- to medium-term  periods to
re-pricing; (iii) the Company attempts to extend the maturities of deposits when
deemed cost  effective  through the pricing and  promotion  of  certificates  of
deposit with longer terms, and periodically  utilizes deposit marketing programs
offering maturity and repricing terms structured to complement the repricing and
maturity  characteristics  of the  existing  asset/liability  mix;  and (iv) the
Company  utilizes  longer-term  borrowings  from the  FHLB-Chicago to manage its
assets  and   liabilities   and   enhance   earnings.   One  of  the   Company's
asset/liability  management  techniques involves borrowing from the FHLB-Chicago
and utilizing  proceeds thereof to invest in assets that mature at the same time
or close to the same  time as the  advances  are due.  This use of  FHLB-Chicago
advances is part of the overall  interest rate risk  management  strategy of the
company. At March 31, 1998, FHLB-Chicago advances were $19.1 million or 19.3% of
total  assets,  compared to $17.6 million or 18.5 % of total assets at March 31,
1997.



                                       19
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

        Originating   ARM  rate   loans   and   investing   in   adjustable-rate
mortgage-backed  and related security has enabled the Company to reduce interest
rate risk by more closely  matching the terms and repricing  characteristics  of
its assets and liabilities.  In addition,  because of the relative  liquidity of
mortgage-backed  and  related  securities,   the  Company  can  restructure  its
interest-earning  asset  portfolios  more quickly and  effectively in a changing
interest rate environment.  The Company's ARM loans and ARM  mortgage-backed and
related  securities  typically have annual and lifetime  interest rate caps that
reduce their ability to protect the Company  against a prolonged and significant
increase in interest rates. Further,  mortgage-backed and related securities are
subject to reinvestment  risk. For example,  during periods of falling  interest
rates, mortgage-backed and related securities are more likely to prepay, and the
Company may not be able to reinvest the proceeds from  prepayments in securities
or other assets with yields  similar to those of the  prepaying  mortgage-backed
and related securities. However, mortgage-backed and related securities also are
subject to extension risk, which is the risk that the effective  maturity of the
security may increase in a rising interest rate environment. The market value of
a security  with a longer  maturity  typically  is more  sensitive to changes in
market rates of interest,  and rising  interest rates may have a more pronounced
adverse  effect on the market value of  mortgage-backed  and related  securities
than on other types of investment securities.

        At March 31, 1998, total  interest-bearing  liabilities repricing within
one year exceeded total interest-bearing  assets repricing in the same period by
$0.3  million,   representing  a  negative  cumulative  one-year  interest  rate
sensitivity  gap  equal to  0.29% of total  assets.  During  periods  of  rising
interest  rates,  a  positive  interest  rate  sensitivity  gap  would  tend  to
positively affect net interest income while a negative interest rate sensitivity
gap would tend to negatively  affect net interest  income.  Notwithstanding  the
negative  effect on net  interest  income  anticipated  as a result  of  falling
interest  rates due to the Company's  one-year gap  position,  the Company could
experience  substantial  prepayments  of its fixed rate  mortgage  loans  during
periods of falling interest rates,  which may result in the reinvestment of such
proceeds at market rates which are lower than current rates.



                                       20
<PAGE>

MANAGEMENT'S DISCUSSION (CONT.)

        The  following  table  sets  forth at March  31,  1998  the  amounts  of
interest-earning  assets and interest-bearing  liabilities maturing or repricing
within the time periods indicated,  based on the information and assumptions set
forth in the notes thereto.
<TABLE>

                                                Amount Maturing or Repricing as of March 31, 1998
                                          ---------------------------------------------------------------
<CAPTION>
                                                               More Than   More Than
                                            Within    Four to   One Year  Three years
                                             Three    Twelve    to Three    to Five   Over five   
                                            Months    Months     Years      Years      Years       Total

                                                      (Dollars in thousands)
<S>                                        <C>        <C>        <C>        <C>        <C>         <C>
Interest-earning assets(1)
Mortgage loans:
  Fixed rate                               $   341    $   991    $ 1,803    $ 2,130    $ 3,625     $ 8,890
  Adjustable rate                            9,821     25,017     20,810      2,164       - -       57,812
Consumer loans                                 698        541      2,760      3,645        183       7,827
Commercial loans                             2,105      1,676        447        169       - -        4,397
Mortgage-backed securities:
  Fixed rate                                  - -        - -        - -        - -       5,833       5,833
  Adjustable rate                              349        216       - -        - -        - -          565
Interest bearing deposits                    3,405       - -        - -        - -        - -        3,405
Investment securities                         - -         500        600      1,900      1,159       4,159
   Total interest-earning assets           $16,719    $28,941    $26,420    $10,008    $10,800     $92,888

Interest-bearing liabilities:
Deposits(2):  
  Certificates of deposit                   12,227     17,176      9,435      1,430        201      40,469
  Money  market                                603      1,807      1,446      1,714        456       6,026
  NOW accounts                                 970      2,908      2,327      2,757        733       9,695
  Passbook savings                             609      1,826      1,461      1,731        460       6,088
Borrowings(3)                                6,534      1,290      7,353      7,000      2,143      24,320
   Total interest-bearing liabilities      $20,943    $25,008    $22,022    $14,632    $ 3,993     $86,598
Excess (deficiency) of interest-earning
 assets over interest-bearing liabilities  $(4,224)   $ 3,993    $ 4,398    $(4,624)   $ 6,807     $ 6,290
Cumulative excess (deficiency) of interest-
 earning assets over interest-bearing
 liabilities                               $(4,224)   $  (291)   $ 4,107    $  (517)   $ 6,290     $ 6,290
Cumulative excess (deficiency) of interest-
 earning assets over interest-bearing
 liabilities as a percent of total assets    -4.28%     -0.29%      4.16%     -0.52%      6.37%       6.37%
<FN>


     (1)  Adjustable  and floating  rate assets are included in the period in
     which interest rates are next scheduled to adjust rather than in the period
     in which they are due, and fixed rate assets are included in the periods in
     which they are scheduled to be repaid based on scheduled amortization.
     (2)  Although  the  Company's  negotiable  order of  withdrawal  ("NOW")
     accounts and passbook savings  accounts  generally are subject to immediate
     withdrawal,  management  considers  a  certain  historical  amount  of such
     accounts  to  be  core  deposits  having   significantly  longer  effective
     maturities  and  times  to  repricing  based  on the  Company's  historical
     retention of such deposits in changing  interest rate  environments.  Money
     market,  NOW  accounts,  and  passbook  savings  accounts are assumed to be
     withdrawn  at  annual  rates  of 40%,  40% and  79%,  respectively,  of the
     declining  balance of such accounts during the period shown. The withdrawal
     rates  used  are  higher  than  the  Company's  historical  rates  but  are
     considered by management to be more indicative of expected withdrawal rates
     currently.  Much of the recent growth in these deposit  accounts is assumed
     to be the result of low interest  rates and it is assumed that the accounts
     are  more  susceptible  to  withdrawal  than  in  the  past.  If all of the
     Company's NOW accounts,  passbook savings accounts and money market deposit
     accounts had been assumed to be subject to repricing  within one year,  the
     one-year   cumulative   deficiency   of   interest-earning    assets   over
     interest-bearing  liabilities  would  have been  $13.4  million or 13.6% of
     total assets.
     (3) Adjustable  and floating rate  borrowings are included in the period
     in which their  interest  rates are next scheduled to adjust rather than in
     the period in which they are due.
</FN>
</TABLE>

                                       21
<PAGE>

MANAGEMENT'S DISCUSSION (CONT.)

Certain  shortcomings  are  inherent in the method of analysis  presented in the
foregoing table.  For example,  although certain assets and liabilities may have
similar maturities or periods to repricing,  they may react in different degrees
to changes in market  interest  rates.  The interest  rates on certain  types of
assets and  liabilities  may fluctuate in advance of changes in market  interest
rates,  while  interest  rates on other  types may lag behind  changes in market
rates.  Additionally,  certain assets, such as ARM loans and mortgage-backed and
related  securities,  have features that restrict changes in interest rates on a
short-term basis and over the life of the asset. In addition,  the proportion of
ARM loans and mortgage-backed and related securities in the Company's portfolios
could decrease in future periods if market  interest rates remain at or decrease
below  current  levels due to  refinance  activity.  Further,  in the event of a
change in interest rates,  prepayment and early  withdrawal  levels would likely
deviate  significantly from those assumed in the table.  Finally, the ability of
many borrowers to service their  adjustable  rate debt may decrease in the event
of an interest rate increase.

Average Balance Sheet

      The  following  table  sets  forth  certain  information  relating  to the
Company's consolidated average balance sheets and the consolidated statements of
operations at and for the fiscal years ended March 31, 1996,  1997 and 1998, and
reflects  the average  yields on  interest-earning  assets and average  rates on
interest-bearing  liabilities for the periods  indicated.  Such yields and rates
are  derived  by  dividing   income  or  expense  by  the  average   balance  of
interest-earning assets or interest-bearing liabilities,  respectively,  for the
periods shown.  Average  balances are derived  principally  from average monthly
balances and include non-accruing loans. Interest income on non-accrual loans is
reflected in the period it is collected and not in the period it is earned. Such
amounts are not  material to net  interest  income or net change in net interest
income in any period.  Non-accruing  loans are included in the average  balances
and do not have a material effect on the average yield.



                                       22
<PAGE>



MANAGEMENT' S DISCUSSION(CONT.)
<TABLE>
                                                                            Fiscal Years Ended March 31,
                                              -------------------------------------------------------------------------------------
                                              -------------------------------------------------------------------------------------
                                                             1998                        1997                        1996
                                              -------------------------------------------------------------------------------------
<CAPTION>
                                                Average    Interest Average  Average   Interest Average  Average   Interest Average
                                              Outstanding   Earned/  Yield/ Outstanding Earned/  Yield/ Outstanding Earned/  Yield/
                                                Balance      Paid     Rate   Balance     Paid     Rate   Balance     Paid     Rate
<S>                                               <C>        <C>      <C>     <C>        <C>      <C>     <C>        <C>     <C>
Assets
    Interest-earning assets:
       Mortgage loans                             $67,052    $5,849   8.72%   $64,208    $5,554   8.65%   $55,624    $4,858   8.73%
       Commercial loans                             4,754       371   7.80      4,539       417   9.19      3,969       462  11.64
       Consumer loans                               7,665       749   9.77      7,493       731   9.76      6,022       591   9.81 
           Total loans                             79,471     6,969   8.77     76,240     6,702   8.79%    65,615     5,911   9.01
       Mortgage-backed securities                   6,938       494   7.12      7,603       556   7.31      4,794       353   7.36
       Interest bearing deposits in other
           financial institutions                   1,377        76   5.52        461        23   5.06        430        25   5.81
       Investment securities                        2,665       156   5.87      2,938       157   5.33      2,937       150   5.11
       Federal Home Loan Bank stock                   996        68   6.77        837        54   6.46        501        34   6.79 
           Total interest-earning assets           91,448    $7,763   8.49%    88,079    $7,492   8.51    %74,277    $6,473   8.71%
       Non-interest earning assets                  5,681                       4,976                                 5,191 
           Total assets                           $97,128                     $93,055                     $79,468 

Liabilities and retained earnings:
    Deposits:
       NOW accounts(1)                              9,491       138   1.45%     8,934       149   1.66%  $ 10,649     $ 169   1.59%
       Money market deposit accounts                5,552       260   4.68      4,109       194   4.72      1,517        54   3.56
       Passbook                                     6,013       129   2.15      6,440       147   2.28      6,956       174   2.50
       Certificates of deposit                     41,194     2,366   5.74     41,314     2,395   5.80     36,626     2,217   6.05 
           Total deposits                          62,250     2,893   4.65     60,798     2,884   4.74     55,748     2,614   4.69
    Advances and other borrowings                  22,849     1,350   5.91     20,559     1,188   5.78     11,263       697   6.19 
                                                   ------     -----   ----     ------     -----   ----     ------     -----   ----
       Total interest-bearing liabilities          85,099     4,243   4.99%    81,356     4,072   5.00%    67,011     3,311   4.94%
    Non-interest bearing liabilities                  655                         202                         337
    Equity                                         11,374                      11,497                      12,121 
                                                   ------                      ------                      ------
       Total liabilities and retained earnings    $97,128                     $93,055                     $79,469 
                                                  -------                     -------                     -------
    Net interest income/interest rate spread(2)              $3,520   3.50%              $3,420   3.51%             $ 3,162   3.77%
                                                             ------   ----               ------   ----              -------   ----
    Net earning assets/net interest margin(3)     $ 6,348             3.85%   $ 6,723             3.88%   $ 7,266             4.26%
                                                  -------             ----    -------             ----    -------             ----
    Average interest-earning assets to
       average interest-bearing liabilities          1.07                        1.08                        1.11
                                                     ----                        ----                        ----
<FN>
       ________________________
       (1)  Includes non-interest bearing NOW accounts.

       (2)  Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate
            on interest-bearing liabilities.

       (3)  Net interest margin represents net interest income divided by average interest-earning assets.
</FN>
</TABLE>

                                       23
<PAGE>



MANAGEMENT'S DISCUSSION (CONT.)

     Rate/Volume Analysis

         The  following  table  presents the extent to which changes in interest
rates and changes in the volume of interest-earning  assets and interest-bearing
liabilities  have affected the Company's  interest  income and interest  expense
during the periods  indicated.  Information  is provided in each  category  with
respect to (i)  changes  attributable  to changes in volume  (changes  in volume
multiplied by prior rate), (ii) changes  attributable to changes in rate (change
in rate  multiplied  by prior  volume),  and (iii) the net  change.  The changes
attributable  to the  combined  impact  of volume  and rate have been  allocated
proportionately to the changes due to volume and the changes due to rate.

<TABLE>
                                                Fiscal Year Ended March 31, 1998         Fiscal Year Ended March 31, 1997
                                                          Compared to                             Compared to
                                                Fiscal Year Ended March 31, 1997         Fiscal Year Ended March 31, 1996
                                                       Increase(Decrease)                       Increase(Decrease)
                                                            Due to                                    Due to
                                                  
                                                --------------------------------         ----------------------------------------
<CAPTION>
                                                   Rate      Volume        Total              Rate      Volume      Total
                                                --------------------------------         ----------------------------------------
                                                       (In thousands)                             (In thousands)
<S>                                              <C>         <C>          <C>               <C>         <C>        <C>
Interest-earning assets:
    Loans                                        $  (15)     $  282       $  267            $ (141)        932     $  791
    Mortgage-backed and related securities          (14)        (48)         (62)               (2)        205        203
    Deposits                                          2          51           53                (4)          2         (2)
    Securities                                       16         (17)          (1)                -           7
    FHLB stock                                        3          11           14                (3)         23         20
       Total                                         (8)        279          271              (143)      1,162      1,019

Interest-bearing liabilities:
    Deposits                                        (57)         66            9                29         241        270
    Borrowings                                       27         135          162               (49)        540        491
       Total                                        (30)        201          171               (20)        781        761

       Net change in net interest income          $  22       $  78       $  100            $ (123)     $  381     $  258

</TABLE>

                                       24
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Northwest Equity Corp.

     We have audited the  accompanying  consolidated  balance sheet of Northwest
Equity Corp. and  Subsidiary as of March 31, 1998, and the related  consolidated
statements of operations,  stockholders' equity and cash flows for the year then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit. The consolidated financial statements as of March
31, 1997 and 1996 were audited by other  accountants  who  combined  with Wipfli
Ullrich  Bertelson  LLP as of January 1, 1998 and whose  report  dated April 24,
1997  expressed an  unqualified  opinion on those  statements.  We conducted our
audit in accordance with generally accepted auditing standards.  Those standards
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audit  provides  a  reasonable  basis  for  our  opinion.  In our  opinion,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material respects, the consolidated financial position of Northwest Equity Corp.
and  Subsidiary  at  March  31,  1998,  and the  consolidated  results  of their
operations  and their  cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.

                                     ___/s/Wipfli Ullrich Bertelson LLP__
                                     Wipfli Ullrich Bertelson LLP

Wisconsin Rapids, Wisconsin
April 30, 1998


                                       25
<PAGE>
<TABLE>
                                         NORTHWEST EQUITY CORP. AND SUBSIDIARY
                                              CONSOLIDATED BALANCE SHEETS
                                                March 31, 1998 and 1997
                                                    (In Thousands)


                                                        ASSETS
<CAPTION>
                                                                                                 1998           1997
                                                                                                 ----           ----
<S>                                                                                           <C>            <C>>
Cash and cash equivalents:
      Cash and due from banks                                                                 $  2,642       $  1,259
      Interest-bearing deposits with financial institutions                                      3,405          1,721
                                                                                                 -----          -----
         Total cash and cash equivalents                                                         6,047          2,980
Investment securities - available-for-sale - at fair value                                         - -          2,752
Investment securities - held-to-maturity - fair
      value of $2,999 at March 31, 1998                                                          3,000            - -
Mortgage backed securities - fair value of $6,546 at
      March 31, 1998 and $7,308 at March 31, 1997                                                6,398          7,421
Loans held for sale                                                                                142            415
Loans receivable - net                                                                          78,297         77,240
Foreclosed properties and properties subject to foreclosure                                        159            - -
Investment in Federal Home Loan Bank stock - at
      cost - which approximates fair value                                                       1,159            912
Premises and equipment                                                                           2,250          2,341
Accrued interest receivable                                                                        578            656
Prepaid expenses and other assets                                                                  709            380
                                                                                                ------         ------
TOTAL ASSETS                                                                                  $ 98,739       $ 95,097
                                                                                                ======         ======

                                         LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
      Savings accounts                                                                        $ 62,278       $ 61,557
      Advances from Federal Home Loan Bank                                                      19,062         17,634
      Other borrowed money                                                                       5,258          4,463
      Accounts payable and accrued expenses                                                        627            584
                                                                                                ------         ------
                 Total liabilities                                                              87,225         84,238
                                                                                                ------         ------

Stockholders' equity:
      Preferred stock - $1 par value; 2,000,000 shares
         authorized; none issued                                                                   - -            - -
      Common stock - $1 par value; 4,000,000 shares authorized;
         1,032,517 shares issued; 824,654 shares outstanding
         at March 31, 1998 and 838,754 shares outstanding at
         March 31, 1997                                                                          1,033          1,033
      Additional paid-in capital                                                                 6,584          6,584
      Net unrealized loss on securities available-for-sale                                         - -            (29)
      Less unearned restricted stock plan award                                                    (26)          (115)
      Less unearned Employee Stock Ownership Plan                                                 (389)          (558)
      Less treasury stock - at cost                                                             (2,557)        (2,256)
      Retained earnings - substantially restricted                                               6,869          6,200
                                                                                                ------         ------
                 Total stockholders' equity                                                     11,514         10,859
                                                                                                ------        ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                    $ 98,739       $ 95,097
                                                                                              ========       ========

                              See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       26
<PAGE>
<TABLE>
                                         NORTHWEST EQUITY CORP. AND SUBSIDIARY
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                       Years Ended March 31, 1998, 1997 and 1996
                                      (In Thousands except for per share amounts)



<CAPTION>
                                                                                  1998            1997           1996
                                                                                  ----            ----           ----
<S>                                                                            <C>             <C>            <C>   
Interest income:
      Interest and fees on loans                                               $ 6,969         $ 6,702        $ 5,911
      Interest on mortgage-backed and related securities                           494             556            353
      Interest and dividends on investments                                        300             234            209
                                                                                 -----           -----          -----
         Total interest income                                                   7,763           7,492          6,473
                                                                                 -----           -----          -----

Interest expense:
      Interest on deposits                                                       2,893           2,884          2,614
      Interest on borrowings                                                     1,350           1,188            697
                                                                                 -----           -----          -----
         Total interest expense                                                  4,243           4,072          3,311
                                                                                 -----           -----          -----
                 Net interest income                                             3,520           3,420          3,162
Provision for loan losses                                                          100              81             24
                                                                                 -----           -----          -----

Net interest income after provision for loan losses                              3,420           3,339          3,138
                                                                                 -----           -----          -----

Other income (deductions):
      Mortgage servicing fees                                                       77              77             72
      Service charges on deposits                                                  251             220            226
      Loss on sale of investments                                                  (24)            - -            - -
      Gain on sale of mortgage loans                                               130              59             61
      Other                                                                        174             175            117
                                                                                   ---             ---            ---
         Total other income                                                        608             531            476
                                                                                   ---             ---            ---

General and administrative expenses:
      Salaries and employee benefits                                             1,193           1,183          1,049
      Net occupancy expense                                                        350             336            284
      Data processing                                                              135             131            137
      Federal insurance premiums                                                    39             428            126
      Other                                                                  
                                                                                 -----           -----          -----
         Total general and administrative expense                                2,298           2,643          2,175
                                                                                 -----           -----          -----

Income before provision for income taxes                                         1,730           1,227          1,439

         Provision for income taxes                                                610             517            597
                                                                                   ---             ---            ---


Net income                                                                     $ 1,120          $  710         $  842
                                                                               =======          ======         ======

      Basic earnings per share                                                 $  1.44          $ 0.84         $ 0.90
                                                                               =======          ======         ======

      Diluted earnings per share                                               $  1.37          $ 0.83         $ 0.90
                                                                               =======          ======         ======

                              See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       27
<PAGE>
<TABLE>
                                                                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
                                                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                                    Years Ended March 31, 1998, 1997 and 1996
                                                                                 (In Thousands)

                                                                                           
<CAPTION>                                                                                       
                                                                         Unrealized          
                                                                         Gain (Loss)             Unearned
                                                             Additional on Securities  Unearned    ESOP
                                                     Common   Paid-In    Available    Restricted  Compen-  Treasury Retained
                                                     Stock    Capital     For Sale      Stock     sation    Stock   Earnings  Total
                                                     ------  ----------  ------------ ---------- --------  -------- --------  -----

<S>                                                  <C>       <C>         <C>          <C>       <C>      <C>      <C>     <C>    
Balance - March 31, 1995                             $1,033    $6,584      $(107)       $ - -     $ (826)  $ - -    $5,354  $12,038
  Net income                                           - -       - -        - -           - -       - -      - -       842      842
  Adjustment of carrying value of securities
   available for sale, net of deferred taxes of $48    - -       - -         73           - -       - -      - -      - -        73
  Acquisition of common stock for awards               - -       - -        - -           (459)     - -      - -      - -      (459)
  Amortization of unearned ESOP and restricted stock
   award                                               - -       - -        - -            140       127     - -      - -       267
  Purchase of treasury stock - 51,625 shares           - -       - -        - -           - -       - -      (561)    - -      (561)
  Cash dividends - $.33 per share                      - -       - -        - -           - -       - -      - -      (336)    (336)
                                                      -----     -----      -----         -----     -----    -----   ------   -------
  
Balance - March 31, 1996                              1,033     6,584        (34)         (319)     (699)    (561)   5,860   11,864
  Net income                                           - -       - -        - -           - -       - -      - -       710      710
  Adjustment of carrying value of securities
   available for sale, net of deferred taxes of $2     - -       - -           5          - -       - -      - -      - -         5
  Amortization of unearned ESOP and restricted stock
   award                                               - -       - -        - -            204       141     - -       - -      345
  Purchase of treasury stock - 142,138 shares          - -       - -        - -           - -       - -    (1,695)     - -   (1,695)
  Cash dividends - $.40 per share                      - -       - -        - -           - -       - -      - -      (370)    (370)
                                                      -----     -----      -----         -----      ----   ------     -----  -------

Balance - March 31, 1997                              1,033     6,584        (29)         (115)     (558)  (2,256)   6,200   10,859
  Net income                                           - -       - -        - -           - -       - -      - -     1,120    1,120
  Adjustment of carrying value of securities 
   available for sale, net of deferred taxes of $19    - -       - -          29          - -       - -      - -      - -        29
  Amortization of unearned ESOP and restricted stock
   award                                               - -       - -        - -             89       169     - -      - -       258
  Purchase of treasury stock - 14,100 shares           - -       - -        - -           - -       - -      (301)    - -      (301)
  Cash dividends - $.54 per share                      - -       - -        - -           - -       - -      - -      (451)    (451)
                                                      -----     -----      -----         -----     -----   -------    -----    -----

Balance - March 31, 1998                             $1,033    $6,584      $- -          $ (26)    $(389) $(2,557)   $6,869 $11,514
                                                     ======    ======      =====         ======    ====== ========   ====== =======







                                         See accompanying Notes to Consolidated Financial Statements
</TABLE>
                                       28
<PAGE>
<TABLE>
                                         NORTHWEST EQUITY CORP. AND SUBSIDIARY
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       Years Ended March 31, 1998, 1997 and 1996
                                                    (In Thousands)


<CAPTION>

                                                                                 1998            1997           1996
                                                                                 ----            ----           ----
<S>                                                                           <C>               <C>           <C>   
Cash flows from operating activities:
      Net income                                                              $  1,120          $  710        $   842
         Adjustments to reconcile net income to net cash
             provided by operating activities:
                 Provision for depreciation                                        145             152            115
                 Provision for loan losses                                         100              81             24
                 Loss on sale of investments                                        24             - -            - -
                 Deferred income taxes                                              49             (43)            16
                 Amortization of ESOP and restricted stock awards                  258             345            267
                 Proceeds from sales of mortgage loans                          11,216           4,533          5,974
                 Loans originated for sale                                     (10,813)         (4,172)        (6,630)
                 Changes in operating assets and liabilities:
                     Accrued interest receivable                                    78             (54)          (141)
                     Prepaid expenses and other assets                            (329)            (80)           (92)
                     Accrued interest payable                                       83             (92)           (34)
                     Accrued income taxes payable                                 (112)             97            (83)
                     Other accrued liabilities                                      72             256            125
                                                                                 -----           -----            ---

         Net cash provided by operating activities                               1,891           1,733            383
                                                                                 -----           -----            ---

Cash flows from investing activities:
      Available for sale securities:
          Proceeds from sales                                                    2,776             - -            - -
      Held to maturity securities:
          Proceeds from maturity                                                   - -             114            - -
          Payments for purchase                                                 (3,286)           (127)          (593)
          Purchases of mortgage-backed securities                                  - -          (2,772)        (3,923)
          Principal collected on mortgage-backed securities                      1,023             724            551
      Principal collected on long-term loans                                    28,006          24,044         18,922
      Long-term loans originated or acquired                                   (29,481)        (31,275)       (30,636)
      Purchase of office properties and equipment                                  (54)           (294)          (761)
                                                                                -------         -------       --------

         Net cash (used in) investing activities                                (1,016)         (9,586)       (16,440)
                                                                                -------         -------       --------






                              See accompanying Notes to Consolidated Financial Statements

</TABLE>
                                       29
<PAGE>
<TABLE>
                                        NORTHWEST EQUITY CORP. AND SUBSIDIARY
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
                                       Years Ended March 31, 1998, 1997 and 1996
                                                    (In Thousands)


<CAPTION>

                                                                                 1998            1997           1996
                                                                                 ----            ----           ----
<S>                                                                          <C>             <C>            <C>   
Cash flows from financing activities:
      Net increase (decrease) in savings accounts                                  721           4,301          6,629
      Net increase (decrease) in short-term borrowings                             795          (1,543)         2,282
      Repayments of long-term financing                                         (7,572)         (1,972)          (622)
      Proceeds from long-term financing                                          9,000           8,700          9,450
      Purchases of treasury stock                                                 (301)         (1,695)          (561)
      Acquisition of common stock for incentive plan                               - -             - -           (459)
      Dividends paid                                                              (451)           (370)          (336)
                                                                                 -----           -----         ------

         Net cash provided by financing activities                               2,192           7,421         16,383
                                                                                 -----           -----         ------

Increase (decrease) in cash and equivalents                                      3,067            (432)           326
      Cash and cash equivalents at beginning                                     2,980           3,412          3,086
                                                                                 -----           -----          -----

      Cash and cash equivalents at end                                         $ 6,047         $ 2,980        $ 3,412
                                                                               =======         =======        =======




Supplemental disclosures of cash flow information:

      Loans receivable transferred to foreclosed properties
         and properties subject to foreclosure                                 $   159          $   72         $  127

      Loans charged off                                                             87              62             28

      Interest paid                                                              4,160           4,164          3,345

      Income taxes paid                                                            739             517            680









                              See accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       30
<PAGE>





                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1.   Summary of Significant Accounting Policies:

          Northwest  Equity Corp. (the "Company")  is  the  holding company for
          Northwest  Savings  Bank  (the "Bank"), a Wisconsin  state-chartered  
          savings bank.  The Company provides a wide range of financial services
          to individual customers through the Bank with Wisconsin locations in
          Polk, St. Croix and  Burnett  Counties.  The Bank is  subject  to the
          regulations  of  certain  federal  and state  agencies and undergoes 
          periodic examinations by  those  regulatory  authorities.   The  Bank
          holds  a  variety  of securities   through   it's   wholly   owned  
          Subsidiary,   Northwest  Investments, Inc.,  a  Nevada investment
          corporation.
 
          Basis of Financial Statement Presentation:

          The  consolidated  financial  statements  have been  prepared in
          accordance with generally accepted accounting principles and include
          the accounts of the Company and its wholly-owned subsidiary, Northwest
          Savings Bank, and its wholly-owned subsidiaries, Amery Service Agency,
          Inc.and Northwest Investments,  Inc. Significant intercompany accounts
          and transactions have been eliminated.

          Cash and Cash Equivalents:
     
          For purposes of reporting cash flows,  cash and cash  equivalents 
          include cash on hand,  interest-bearing and  non-interest-bearing 
          deposits in banks.

          Investments and Mortgage-Backed and Related Securities:

          Management determines the appropriate classification  of securities at
          the time of purchase. If  management has the intent and the Bank has
          the ability at the time of purchase to hold securities until maturity
          or on a long-term basis, they are classified as held-to-maturity  and
          carried at amortized  historical  cost,  adjusted for  amortization of
          premium or accretion of discount  using the  effective  yield  method,
          plus accrued interest. Securities to be held for indefinite periods of
          time and not  intended to be held to maturity or on a long-term  basis
          are classified as available-for-sale and carried at fair value.

          Securities held for  indefinite  periods of time  include  securities
          that management intends to use as part of its  asset/liability  
          management strategy and may be sold in response to changes in interest
          rates, changes in prepayment risk, the need to increase regulatory 
          capital or similar factors. Gains and losses on sales are  determined 
          by the specific identification method.

          Loans Held for Sale:

          Loans held for sale in the secondary market are recorded at lower of 
          cost  or  market and  generally  consist of current  production of 
          fixed-rate mortgage  loans.  Fees  received  from the  borrower  are
          deferred and  recorded as an adjustment of the sales price.
     
          Loans Receivable:

          Loans receivable are stated at unpaid principal  balances,  less  the
          allowance for loan losses,  and net of deferred loan  origination fees
          and  discounts.  Interest on loans is recorded as income as borrowers'
          monthly payments become due. Generally, allowances are established for
          uncollected  interest on which any  payments are more than ninety days
          past due.

                                       31
<PAGE>

                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 1.   Summary of Significant Accounting Policies - Continued:

          Allowance for Loan Losses:

          The allowance for credit losses includes specific allowances related
          to commercial loans which have been judged to be impaired.  A loan is
          impaired when, based on current  information,  it is probable that the
          Bank  will  not  collect  all  amounts  due  in  accordance  with  the
          contractual terms of the loan agreement. These specific allowances are
          based on discounted  cash flows of expected  future payments using the
          loan's  initial  effective  interest  rate or the  fair  value  of the
          collateral if the loan is collateral dependent.

          The  Bank  continues to maintain a general allowance for credit losses
          for loans not considered impaired. The allowance  for credit losses is
          maintained at a level which management believes is adequate to provide
          for possible  credit  losses.  Management  periodically  evaluates the
          adequacy  of  the  allowance   using  the  Company's  past  loan  loss
          experience, known and inherent risks in the portfolio,  composition of
          the  portfolio,   current  economic  conditions,  and  other  relevant
          factors.  This evaluation is inherently  subjective  since it requires
          material estimates that may be susceptible to significant change.
           
          Foreclosed Properties and Properties Subject to Foreclosure: 

          Real estate owned which was acquired by foreclosure or by deed in lieu
          of foreclosure is initially recorded at the lower of cost or fair 
          value less estimated costs to sell at date of foreclosure.  Costs 
          related  to  the  development and  improvement  of  property are 
          capitalized,  whereas costs  related  to  holding  property  are  
          expensed.  Valuations  are periodically  performed by management, and 
          an allowance for losses is established  by a charge  to  operations if
          the  carrying  value of a  property  exceeds its fair value less 
          estimated  costs to sell.  Real estate in judgment and subject to  
          redemption  is carried at cost less an allowance for estimated losses.

          Loan Fees:

          Loan origination and commitment fees and certain direct loan costs 
          are being deferred and the  net amount amortized as an adjustment of 
          the related loan's yield by the level yield method over the
          contractual life of the loan.

          Income Taxes:

          The Company and its subsidiary file a consolidated federal income tax
          return and separate state income tax returns.  Financial statement
          provisions are made in the income tax expense accounts for deferred 
          taxes applicable to income and expense items reported in different
          periods than for income tax purposes.  The Company accounts for 
          income taxes on the liability method.  Deferred income tax assets and
          liabilities are adjusted regularly to amounts estimated to be
          receivable or payable based on current tax law.


                                       32
<PAGE>

                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 1.   Summary of Significant Accounting Policies - Continued:

          Premises and Equipment:

          Premises and equipment are stated at cost.  Maintenance and repair
          costs are charged to expense as incurred. Gains or losses on 
          disposition of premises and equipment are reflected in income. 
          Depreciation is computed on the straight-line method and is based on
          the estimated useful lives of the assets which range from three to
          thirty-five years.

          Accounting Changes:


          The FASB issued SFAS No. 122 in July, 1995 relative to accounting and
          reporting for mortgage servicing rights. The Statement requires that a
          mortgage banking enterprise recognize as a separate asset the rights 
          to service mortgage loans for others, whether those rights are 
          purchased or originated. The Company adopted the Statement on April 1,
          1996 which did not have a material effect on the financial condition 
          or results of operation.

          In February 1997, the FASB issued SFAS No. 128, which became effective
          for the Company for reporting periods ending after December 15, 1997.
          Under the provisions of SFAS No. 128, primary and fully-diluted 
          earnings per share were replaced with basic and diluted earnings per
          share in an effort to simplify the computation of these measures and
          align them more closely with the methodology used internationally.
          Basic earnings per share is arrived at by dividing net income
          available to common stockholders by the weighted-average number of 
          common shares outstanding and does not include the impact of any 
          potentially dilutive common stock equivalents. The diluted earnings
          per share calculation method is arrived at by dividing net  income by
          the weighted-average number of shares outstanding, adjusted for the
          dilutive effect of outstanding stock options. For purposes of
          comparability, all prior-period earnings per share data have been 
          restated.

          In October 1995, the Financial Accounting  Standards Board (FASB)
          issued Statement of Financial Accounting Standards (SFAS) No. 123
          relative to accounting   and   reporting   standards  for  stockbased 
          employee compensation plans. SFAS No.123 is effective for transactions
          entered into in fiscal years  beginning after December 15, 1995. The
          Statement defines a fair value based method of accounting for employee
          stock options or similar equity  instruments  and encourages all
          entities to adopt that  method for all  employee  stock  compensation 
          plans.  The Company has adopted the  disclosure  only  provisions of 
          SFAS No. 123, but applies  Accounting  Principles  Board  Opinion 
          No. 25 and related interpretations in accounting for its Plan. 


                                       33
<PAGE>

                     NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 1.   Summary of Significant Accounting Policies - Continued:

          Future Accounting Changes:

          In June 1997,  the Financial Accounting Standards  Board (FASB) issued
          Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
          Comprehensive   Income."  This  statement  establishes  standards  for
          reporting  and  display  of  comprehensive  income  in a  full  set of
          general-purpose financial statements. This statement requires that all
          items that are required to be recognized under accounting standards as
          components  of  comprehensive   income  be  reported  in  a  financial
          statement  that  is  displayed  with  the  same  prominence  as  other
          financial  statements.  This  statement  requires  that an  enterprise
          display  an amount  representing  total  comprehensive  income for the
          period in a  financial  statement,  but does not  require  a  specific
          format for that financial statement. This statement also requires that
          an  enterprise  (a) classify  items of other  comprehensive  income by
          their nature in a financial  statement and (b) display the accumulated
          balance  of  other  comprehensive   income  separately  from  retained
          earnings and additional  paid-in  capital in the equity section of the
          consolidated  balance  sheet.  The  statement is effective  for fiscal
          years   beginning  after  December  15,  1997.   Reclassification   of
          consolidated  financial  statements for earlier  periods  provided for
          comparative  purposes is required.  Management,  at this time,  cannot
          determine the effect that  adoption of this  statement may have on the
          consolidated  financial  statements  of the  Company as  comprehensive
          income is dependent on the amount and nature of assets and liabilities
          held which generate nonincome changes to equity.


          In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments
          of an Enterprise and Related  Information." This statement establishes
          standards  for  the  way  that  public  business   enterprises  report
          information  about operating  segments in annual financial  statements
          and requires that those enterprises report selected  information about
          operating   segments   in   interim   financial   reports   issued  to
          stockholders.   This  statement  supersedes  SFAS  No.  14,  Financial
          Reporting  for  Segments  of a Business  Enterprise,"  but retains the
          requirement  to report  information  about  major  customers.  It also
          amends   SFAS   No.   94,   "Consolidation   of   All   Majority-Owned
          Subsidiaries,"  to remove  the  special  disclosure  requirements  for
          previously unconsolidated subsidiaries. The statement is effective for
          fiscal years beginning after December 15, 1997. In the initial year of
          application,  comparative  information  for  earlier  years  is  to be
          restated.  The  statement  is not  expected  to have an  effect on the
          financial  position  or  operating  results  of the  Company,  but may
          require   additional   disclosures  in  the   consolidated   financial
          statements.

          Use of Estimates in Preparation of Financial Statements:
      
          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  at the date of the financial  statements and the reported
          amounts of revenue and expenses  during the reporting  period.  Actual
          results may differ from these estimates.


                                       34
<PAGE>



                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 1.   Summary of Significant Accounting Policies - Continued:

          Advertising:

          The Company expenses advertising costs as incurred.

          Reclassifications:

          Certain amounts in the 1997 and 1996 consolidated financial statements
          have been reclassified to conform to the 1998 reporting classification


Note 2.   Investment Securities:

   <TABLE>
          Securities available-for-sale consist of the following at March 31:
   <CAPTION>

                                                       Gross           Gross
                                                     Amortized      Unrealized      Unrealized        Fair
                                                        Cost          Gains           Losses         Value
                                                    -------------  -------------   -------------  -------------
<S>                                                <C>               <C>             <C>          <C>  
                                                                         (In Thousands)
                     1997
           -------------------------
           U.S. Treasury and agency obligations       $ 2,800          $ - -            $ 49        $ 2,751
             Other                                          1            - -             - -              1
                                                     ----------      -----------      ----------    ---------
                                                      $ 2,801          $ - -            $ 49        $ 2,752
                                                     ==========      ===========      ==========   ==========

          Securities held-to-maturity consist of the following at March 31:
                                                                      Gross            Gross
                                                     Amortized      Unrealized       Unrealized        Fair
                                                       Cost           Gains            Losses         Value
                                                    -------------  -------------   -------------  -------------
                                                                          (In Thousands)
                     1998
           ---------------------------

           U.S. Treasury and agency obligations       $ 3,000          $ - -             $ 1        $ 2,999
                                                    =============  =============      ==========   ==========
</TABLE>


          During the year ended March 31, 1998, the Company sold securities 
          available-for-sale for total proceeds of $2,776,000 resulting in 
          realized gains of $2,000 and realized losses of $26,000.

          The following is a summary of the maturities of securities 
          held-to-maturity at March 31, 1998:

                                                     Amortized        Fair
           Amounts maturing in:                         Cost          Value
                                                   -------------  -------------

           One year or less                           $ 500          $ 500
           After one year through five years          2,500          2,499
                                                   -------------  -------------

                                                    $ 3,000        $ 2,999
                                                   =============  =============

                                       35
<PAGE>
                   
                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 3.   Mortgage-Backed Securities:

          The carrying values and estimated market values of mortgage-backed 
          securities are summarized as follows at:
<TABLE>

<CAPTION>
                                                                             Gross           Gross
                                                            Amortized      Unrealized      Unrealized        Fair
                                                               Cost          Gains           Losses         Value
                                                            ---------      ----------      ----------       -----                  
<S>                                                          <C>            <C>             <C>            <C>  
                     
              March 31, 1998                                                     (In Thousands)
           ---------------------------

           FNMA certificates                                 $ 3,868        $  59            $   1         $ 3,926
           GNMA certificates                                   2,153           83              - -           2,236
           FHLMC certificates                                    377            7              - -             384
                                                             -------        -----            -----         -------

                                                             $ 6,398        $ 149            $   1         $ 6,546
                                                             =======        =====            =====         =======

                                                                             Gross           Gross
                                                            Amortized      Unrealized      Unrealized        Fair
                                                               Cost          Gains           Losses         Value
                                                            ---------      ----------      ----------       -----
              March 31, 1997                                                     (In Thousands)
            ---------------------------

            FNMA certificates                                $ 4,622        $ - -            $  98         $ 4,524
            GNMA certificates                                  2,365            2                3           2,364
            FHLMC certificates                                   434          - -               14             420
                                                             -------        -----            -----         ------- 
                                                             $ 7,421        $   2            $ 115         $ 7,308
                                                             =======        =====            =====         =======

</TABLE>

Note 4.   Loans Receivable:

          Loans receivable are summarized as follows as of March 31:

                                                       1998           1997
                                                       ----           ----
            Real estate mortgage loa                     (In Thousands)
             One to four families                    $ 57,975       $ 55,158
             Other                                      8,582         10,673
             Commercial loans                           4,397          4,663
             Consumer loans                             7,827          7,207
                                                     --------       --------
                Totals                                 78,781         77,701
             Less: Allowance for losses                  (484)          (461)
                                                     --------       --------
                Total loans receivable               $ 78,297       $ 77,240
                                                     ========       ========

          The following is an analysis of the allowance for loan losses for the 
          years ended March 31:

                                               1998            1997        1996
                                              ------          ------      ------
                                                          (In Thousands)
          Balance - beginning                 $ 461           $ 433       $ 434
          Provision charged to income           100              81          24
          Loans charged off - net of recoveries (77)            (53)        (25)
                                              ------           ------     ------
          Balance - ending                    $ 484           $ 461       $ 433
                                              ======           ======     ======
    
                                       36
<PAGE>
                                    

                     NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 4.   Loans Receivable:

          Loans serviced  for others are not included in the above mounts. They
          totaled  $30,691,000,  $25,250,000  and $22,874,000 at March 31, 1998,
          1997 and 1996, respectively.
          
          The  allowance for credit losses includes  specific  allowances  
          related to loans which have been judged to be impaired and which fall
          within the scope of SFAS No.  114.  A loan is  impaired when, based on
          current information, it is probable that the Company will not collect
          all amounts due in accordance with the contractual  terms of the loan
          agreement.  These  specific  allowances  are based on discounted  cash
          flows of expected future  payments using the loan's initial  effective
          interest  rate or the  fair  value  of the  collateral  if the loan is
          collateral dependent. There were no loans considered impaired as of or
          during the years  ended March 31,  1997 and March 31,  1996.  Impaired
          loans at March 31, 1998 consisted of:
                 
          Impaired loans - nonaccrual                           $685,000
          Less - allowance for credit losses                      90,000
                                                                 -------

          Net investment in impaired loans                      $595,000
                                                                ========

          There was no interest income recognized on the impaired loans during 
          the year ended March 31, 1998.

          The Company, in the ordinary course of business, grants  loans to the
          Company's  executive officers and directors,  including their families
          at terms  comparable  to  transactions  with other  customers.  In the
          opinion of management,  such loans do not involve more than the normal
          risk of collectibility or present other unfavorable features.

          Activity in related party loans during the year ended March 31, 1998 
          is summarized below:

               Loans outstanding, April 1,                   $132,915
               Repayments                                     (93,430)
                                                              -------
                                                    
               Loans outstanding, March 31,                  $ 39,485
                                                              =======


Note 5.   Premises and Equipment:

          Premises and equipment are summarized by major classification as 
          follows at  March 31:

                                                       1998           1997
                                                       ----           ----
                                                         (In Thousands)
           Land and improvements                      $ 569          $ 569
           Buildings and improvements                 1,543          1,543
           Furniture, fixtures and equipment          1,043            995
                                                      -----          -----
              Total                                   3,155          3,107
           Less accumulated depreciation                905            766
                                                      -----          -----
                                                    $ 2,250        $ 2,341
                                                      =====          =====

                                       37
<PAGE>
                                         
                     NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 6.   Foreclosed Properties and Properties Subject to Foreclosure:

          Properties subject to  foreclosure  were $159,000 at March 31, 1998.
          There were no foreclosed properties at March 31, 1998 and 1997 and no
          properties subject to foreclosure at March 31, 1997.


Note 7.   Accrued Interest Receivable:

          Accrued interest receivable is comprised of the following at March 31:

                                                      1998           1997
                                                      ----           ----
                                                          (In Thousands)
          Loans receivable                           $ 493          $ 544
          Mortgage backed obligations                   39             45
          Investments                                   46             67
                                                      ----            ---

                                                     $ 578          $ 656
                                                      ====           ====

          The Bank has provided an allowance for uncollected interest on loans
          at March 31, 1998 and 1997 of $17,000 and $10,000, respectively.


Note 8.   Savings Accounts:

          Savings accounts are summarized as follows at March 31:
                                          
<TABLE>
                                                                      1998                           1997
                                                              ----------------------         ----------------------
<CAPTION>
                                                                            Weighted                       Weighted
                                                                            Average                        Average
                                                              Amount          Rate           Amount          Rate
                                                              ------        --------         ------        --------
<S>                                                          <C>             <C>            <C>              <C>   
   
                                                                                 (In Thousands)

          Noninterest bearing demand deposit                 $ 3,823                        $ 2,792
                                                             -------                        -------
             Interest bearing deposits
                 Passbook rates                                6,091          2.15%           5,905          2.16%
                 Money market accounts                         6,026          4.87%           5,029          4.61%
                 NOW accounts                                  5,910          2.31%           5,989          2.26%
                 Demand deposits
                 Certificates of deposit                      40,428          5.73%          41,842          5.75%
                                                              ------          ----          ------          ----

                 Total interest bearing deposits              58,455          4.62%          58,765          4.71%
                                                              ------          ====           ------          ====

                 Total deposits                              $62,278                        $61,557
                                                              ======                         ======
</TABLE>

                                       38
<PAGE>
                                        
                     NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 8.   Savings Accounts - Continued:

          Certificates of deposit have scheduled maturity dates as follows at
          March 31, 1998 (in thousands):

                       1999                 $ 29,403
                       2000                    6,496
                       2001                    2,939
                       2002                    1,113
                       2003                      477

          The  total amount of certificates of deposits with balances in excess
          of $100,000 was $3,243,000 and $3,160,000 at March 31, 1998 and 1997,
          respectively.

          Deposits from Company directors, executive officers, and related firms
          in which they are principal owners totaled $302,000 at March 31, 1998.
          
          Interest on savings deposits is summarized as follows for the years
          ended March 31:

                                            1998          1997        1996
                                            ----          ----        ----
                                                     (In Thousands)
           MMDA and NOW accounts           $ 398         $ 343       $ 268
           Savings deposits                  130           132         174
           Certificates of deposit         2,365         2,409       2,172
                                           -----         -----       -----
                       Total             $ 2,893       $ 2,884     $ 2,614
                                           =====         =====       =====


Note 9.   Advances From Federal Home Loan Bank:

          Pursuant to collateral agreements with the Federal Home Loan Bank 
          ("FHLB"), advances are secured by all stock in the FHLB and qualifying
          first mortgage loans aggregating 170% of the amount of outstanding
          advances. The following is a summary of these advances at March 31:
<TABLE>
 <CAPTION>
                                                                                 1998           1997
                                                                                 ----           ----
                                                                                   (In Thousands)
<S>                                                                            <C>            <C>  
     
           Advances due in the following years with rates from
             4.00% to 8.31%                               1998                 $  - -         $ 7,550
                                                          1999                   5,050          5,050
                                                          2000                   4,450          4,450
                                                          2001                     419            419
                                                          2003                   7,000           - -
                                                          2004                    - -             165
                                                          2005                   2,143           - -
                                                                                 -----         ------
                                                                               $19,062        $17,634
                                                                                ======         ======
</TABLE>
                                       39
<PAGE>

                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 10.  Other Borrowed Money:

          Other borrowed money is summarized as follows at March 31:
<TABLE>
<CAPTION>
                                                                                              1998           1997
                                                                                              ----           ----
<S>                                                                                        <C>           <C>
                       
                                                                                                  (In Thousands)
                 Note payable from a bank due with interest at 2% over prime
                    in August, 1997, unsecured.                                             $ - -          $   58
                 Retail security repurchase agreements with weighted-average
                    interest rates of 6.08% and  6.13% at March 31, 1998 and
                    1997, respectively.                                                      5,258          4,405
                                                                                             -----          -----

                                                                                            $5,258         $4,463
                                                                                             =====          =====
</TABLE>

          The retail repurchase agreements are generally for terms of less than
          one year and are collateralized by investments and loans with carrying
          values  of  $6,780,000  and  $7,059,000  at March  31,  1998 and 1997,
          respectively.

          The following information relates to securities sold under repurchase
          agreements for the years ended March 31:
                                                  1998        1997       1996
                                                  ----        ----       ----
                                                       (In Thousands)
          For the year:
          Highest month-end balance              $ 6,501    $ 5,761    $ 4,442
          Daily average balance                  $ 4,936    $ 4,808    $ 3,634
          Weighted average rate                    6.94%      5.74%      6.60%


Note 11.     Income Taxes:

          The provision for income taxes differs from that computed at the
          federal and state statutory corporate rates as follows for the years
          ended  March 31:
<TABLE>
<CAPTION>

                                                                              1998            1997           1996
                                                                              ----            ----           ----
<S>                                                                        <C>              <C>            <C>

                                                                                         (In Thousands)
             Tax at federal statutory rate (34%)                             $ 588           $ 417          $ 489

             Increases (decreases) in taxes:
               State income taxes net of federal benefit                        25              68             79
               Other                                                            (3)             32             29
                                                                              ----            ----           ----

                      Federal and state income taxes                         $ 610           $ 517          $ 597
                                                                              ====            ====           ====
</TABLE>

                                       40
<PAGE>
                     
                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 11.  Income Taxes - Continued:

          The provision for income taxes consists of the following for the years
          ended March 31:
                                        1998            1997           1996
                                        ----            ----           ----
                                                   (In Thousands)
              Current                  $ 678           $ 474          $ 613
              Deferred                   (68)             43            (16)
                                        ----            ----           ----

                                       $ 610           $ 517          $ 597
                                        ====            ====           ====

          The Bank has qualified under the provisions of the Internal Revenue 
          Code which permit as a deduction from taxable income an allowance for
          bad debts which differs from the provision for such losses charged to
          income.  Accordingly,  retained  earnings at March 31,  1998  includes
          approximately  $1,295,000  for which no provision for income taxes has
          been made. If in the future this portion of retained  earnings is used
          for any  purpose  other than to absorb bad debt  losses,  federal  and
          state income taxes may be imposed at the then applicable rates.

          The tax effects of temporary differences that give rise to deferred
          tax assets and deferred tax liabilities are summarized as follows at
          March 31:
<TABLE>
<CAPTION>
                
                                                                               1998            1997           1996
                                                                               ----            ----           ----
<S>                                                                         <C>              <C>            <C>  
                                                                                         (In Thousands)
                 Allowance for loan losses                                    $ 102            $ 70           $ 80
                 Valuation allowance for securities held for sale               - -              20             22
                 Accrued compensation                                            22              22             22
                 Deferred compensation                                           56              32            - -
                 Stock incentive plan                                            43              82             56
                 Other                                                          - -             - -              1
                                                                                ---             ---            ---
                      Total deferred tax assets                                 223             226            181
                                                                                ---             ---            ---
                 Premises and equipment                                        (137)           (124)          (121)
                 Dividends on ESOP Plan                                         (52)            - -            - -
                 FHLB common stock dividends                                    (17)            (17)           (17)
                                                                                ---             ---            ---
                      Total deferred tax liabilities                           (206)           (141)          (138)
                                                                                ---             ---            ---

                                                                               $ 17            $ 85           $ 43
                                                                               ====            ====           ====
</TABLE>


Note 12.  Financial Instruments With Off-Balance Sheet Risk:

          The Financial Accounting Standards Board has issued three statements
          concerning financial  instruments.  SFAS No. 105 requires that certain
          information be disclosed about financial  instruments with off-balance
          sheet risk and financial  instruments  with  concentrations  of credit
          risk.  SFAS No. 107 requires  such entities to disclose the fair value
          of financial  instruments.  SFAS No. 119 requires certain  disclosures
          for derivative financial  instruments.  The Company does not presently
          have  nor  has  it  had  any  derivative  type  instruments  requiring
          disclosure.

                                       41
<PAGE>
                                       
                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 12.  Financial Instruments With Off-Balance Sheet Risk - Continued:

          The  Company is party to financial instruments with off-balance sheet
          risk in the normal course of business to meet the financing needs of
          its customers.  These financial instruments consist of commitments to
          extend  credit.  Commitments  to extend  credit  involve,  to  varying
          degrees,  elements of credit and  interest  rate risk in excess of the
          amount  recognized in the balance sheet.  The contract amount reflects
          the extent of involvement the Company has in this particular financial
          instrument.

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

          The Company generally extends credit only on a secured basis.
          Collateral obtained  varies, but consists  primarily  of  one-to-four
          family residences  located in  Northwestern  Wisconsin.  Commitments 
          to sell mortgage loans  represent  commitments to sell mortgage loans 
          to other entities  at a future date and at a specified  price. 
          Commitments  to sell  mortgage  loans and  commitments  to extend
          credit are generally exercised and fulfilled within ninety days. The 
          fair value of mortgage loans held for sale plus the  commitments to
          extend credit  generally offset the commitments to sell mortgage
          loans. Both the commitments to extend  credit and the commitments to
          sell  mortgage  loans  are at current market rates.
             
          At March 31, 1998, the Company was committed to originate 
          approximately $1,948,000  of first  mortgage  loans.  In addition,
          the  undisbursed portion of other credit lines were $3,035,000 at
          March 31, 1998.

          In the normal course of business, various legal proceedings involving
          the Company are pending. Management, based upon advice from legal 
          counsel, does not anticipate any significant losses as a result of 
          these actions.

Note 13.  Employee Benefit Plans:

          The  Company  has  a  qualified defined  contribution  plan  covering
          substantially  all full-time  employees who have completed one year of
          service  and are at least 21 years old.  During the years  ended March
          31, 1998,  1997 and 1996, the Bank  contributed  $53,000,  $39,000 and
          $29,000, respectively, to this plan.

                                       42
<PAGE>
                               
                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 13.  Employee Benefit Plans - Continued:


          On April 1, 1994, the Company established an Employee Stock Ownership
          Plan ("ESOP") for  substantially  all of its full-time  employees.  As
          part of the stock  conversion,  the ESOP  borrowed  $826,000  from the
          Company and purchased  103,250  shares of the Company's  common stock.
          The debt bears interest at 8% and is  collateralized  by the shares of
          common  stock  held by the ESOP.  The Bank is  committed  to make cash
          payments  to the ESOP in  amounts  sufficient  for it to meet the debt
          service  requirements over a seven year term. Cash dividends on common
          stock held by the ESOP are applied to debt principal and interest. The
          unpaid balance of the ESOP loan has been  eliminated in  consolidation
          and the amount of  unearned  ESOP  compensation  expense is shown as a
          reduction  of  stockholders'  equity.  ESOP expense for the year ended
          March  31,  1998 ,  1997  and  1996  totaled  $163,000,  $160,000  and
          $135,000,  respectively.  At March  31,  1998  the  number  of  shares
          allocated,  committed to be released and suspense  shares were 29,500,
          14,750 and 59,000, respectively.  The fair value of unearned shares at
          March 31, 1998 was $1,558,000.

          The Bank established an employee stock incentive plan on October 10, 
          1995. The Bank purchased 41,300 shares for $459,000 and awarded them
          to officers and employees of the Bank. The shares awarded vest 33.33%
          per year  commencing  October, 1996. The aggregate purchase price of
          the shares is being amortized to compensation expense as the
          participants become vested.  The unamortized cost is being reflected 
          as a reduction of shareholders' equity as unearned  restricted  stock.
          Compensation expense of $89,000, $204,000 and $140,000 was recognized
          for the years ended March 31,  1998,  1997 and 1996,  respectively.  
          During the year ended March 31, 1997,  the Bank  established  a 
          deferred  compensation agreement  with  it's  President  to defer the 
          amounts due until his retirement. Amounts deferred under the deferred
          compensation plan were $79,000 for the year ended March 31, 1997.


Note 14.  Stock Options:

          On October 10, 1995, the Company adopted a Stock Option Plan and
          granted options for 103,251 shares of common stock for a non-qualified
          stock option plan for directors and a qualified incentive stock option
          plan for employees.  All such options are currently  exercisable at
          $10.44 per share and expire in October 2005.

          A summary of the status of the stock option plan as of March 31, 1998
          and 1997 is as follows:

                                                      1998            1997
                                                      ----            ----

          Options outstanding - April 1,            103,251         103,251
            Granted                                    - -             - -
            Exercised                                  (542)           - -
            Forfeited                                (1,082)           - -
                                                    -------         -------
                                            
          Options outstanding - March 31,           101,627         103,251
                                                    =======         =======

                                       43
<PAGE>
                                         
                     NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 14.  Stock Options - Continued:

          The Company applies Accounting Principles Board (APB) Opinion No. 25
          and related interpretations in accounting for its plans. Accordingly,
          no compensation  cost has been recognized for its stock option plans.
          Had compensation cost for the Company's stock option plans been
          determined based on the fair value at the grant dates for awards under
          those plans consistent with the method of Statement of Financial 
          Accounting Standards (SFAS) No. 123, Accounting for Stock-Based 
          Compensation, the Company's net income and earnings per share would
          have been reduced to the pro forma amounts indicated below:

                                                  1998     1997      1996
                                                  ----     ----      ----

           Net income (In Thousands)            $ 1,066   $ 656     $ 788
           Basic earnings per share             $  1.38   $0.77     $0.85
           Diluted earnings per share           $  1.31   $.076     $0.85


Note 15.  Stockholders' Equity:

          On September 1, 1993, the Board of Directors of the Bank adopted a 
          plan under which the Bank would convert from a mutual savings bank to
          a stock savings bank with the concurrent formation of a holding 
          company. On October 7, 1994, the Company sold 1,032,517 shares of
          common stock at  $8.00  per  share.  Net proceeds from the conversion,
          after recognizing conversion expenses and underwriting costs of 
          $643,000, were $6,791,000.
           
          At the time of conversion, the Bank established a "Liquidation
          Account" in an amount equal to the Bank's net worth as of the date of
          the latest consolidated financial statements. The Liquidation Account
          will be maintained  for the benefit of depositors  who continue to 
          maintain their deposits in the Bank after conversion. The liquidation
          account will be reduced  annually to the extent that eligible account
          holders have reduced their qualifying  deposits.  In the event of a 
          complete liquidation, and only in such an event, each eligible  
          depositor will be entitled to receive a liquidation distribution from
          the liquidation account, in the proportionate amount of the 
          then-current  adjusted balance for deposits then held,  before any 
          liquidation distribution may be made with respect to the stockholders.
          Except for the repurchase  of  stock  and  payment  of  dividends  by 
          the  Bank, the existence of the liquidation account will not restrict
          use or application of stockholders' equity.
     
          Deposits of the Bank are insured to the maximum allowable amounts by 
          the Savings Association Insurance Fund ("SAIF") as administered by the
          Federal   Deposit   Insurance   Corporation   ("FDIC").   FDIC-insured
          institutions   are  required  to  follow  certain   capital   adequacy
          guidelines which prescribe  minimum levels of capital and require that
          institutions   meet   certain    risk-based   and   leverage   capital
          requirements. Under the FDIC capital regulations, the Bank is required
          to meet the  following  capital  standards:  (1) Tier 1 capital  in an
          amount  not less than 3% of total  assets;  (2) Tier 1  capital  in an
          amount not less than 4% of risk-weighted assets; and (3) total capital
          in an amount not less than 8% of risk-weighted  assets. Tier 1 capital
          is defined to include the Bank's common  shareholders'  equity.  Total
          capital is defined to include  Tier 1 capital plus the  allowance  for
          loan losses and the  adjustment  of the carrying  value of  securities
          available-for-sale.

                                       44
<PAGE>


                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 15.  Stockholders' Equity - Continued:

          The risk-based capital requirements presently address credit risk
          related to both recorded assets and off balance sheet commitments and
          obligations. Risk weighted assets for regulatory purposes at March 31,
          1998  totaled  $62,644,000.  The  Bank's  various  regulatory  capital
          measurements are summarized below at March 31, 1998:
                 
          Stockholder's equity - Tier 1 Capital                         $ 8,752
          Add: Qualifying general loan loss allowance                       484
                                                                         ------
          Total capital ratio and risk-weighted capital ration          $ 9,236
                                                                         ======

          The following table summarizes the Bank's capital amounts and ratios 
          and the respective amounts required by the FDIC and the state of 
          Wisconsin at March 31, 1998:
        
             Amounts (In Thousands)    Actual         Required        Excess
                                       ------         --------        ------

          Tier 1 capital ratio        $ 8,752         $ 2,852        $ 5,900
          Total capital ratio           9,236           3,803          5,433
          Risk-weighted capital ratio   9,236           5,012          4,224
          State of Wisconsin            9,236           6,119          3,117

             Ratios                    Actual         Required        Excess
                                       ------         --------        ------

          Tier 1 capital ratio           9.21%           3.00%          6.21%
          Total capital ratio            9.72%           4.00%          5.72%
          Risk-weighted capital ratio   14.74%           8.00%          6.74%
          State of Wisconsin             9.06%           6.00%          3.06%


Note 16.  Fair Values of Financial Instruments:

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

          Cash and cash equivalents: The carrying amounts reported in the
          balance sheet for cash and  short-term  instruments approximate those
          assets fair values.

          Investments and mortgage-backed securities:Fair values for investments
          and mortgage-backed  securities are based on quoted market prices,  
          where available. If quoted market prices are not available, fair 
          values are based on quoted market prices of comparable instruments.
          
          Loans receivable:  For variable-rate  mortgage loans that reprice
          frequently and with no significant  change in credit risk, fair values
          are based on carrying values. The fair values for residential mortgage
          loans are based on quoted  market  prices of similar  loans sold in 
          conjunction with securitization transactions, adjusted for differences
          in loan characteristics.  The fair values for  commercial  real estate
          loans, rental property  mortgage loans and  consumer and  other  loans
          are estimated using  discounted  cash flow analysis,  using interest 
          rates currently being offered for loans with similar terms to 
          borrowers of similar credit quality.  The  carrying amount of interest
          approximates  its fair value.

                                       45
<PAGE>

                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 16.  Fair Values of Financial Instruments - Continued:

          Deposits: The fair values  disclosed for interest and noninterest 
          checking accounts, passbook accounts and money market accounts are, by
          definition,  equal to the amount  payable  on demand at the  reporting
          date.  The fair  values of  fixed-rate  certificates  of  deposit  are
          estimated  using a  discounted  cash  flow  calculation  that  applies
          interest rates  currently  being offered on certificates to a schedule
          of  aggregated   expected   monthly   maturities  of  the  outstanding
          certificates of deposit.

          Federal Home Loan Bank Advances: The Bank's long-term borrowings  are
          estimated using the discounted cash flow analysis, based on the Bank's
          current  incremental  borrowing  rates for similar  types of borrowing
          arrangements.

<TABLE>
          The  carrying amounts and fair values of the Bank's financial
          instruments consisted of the following at March 31: 
                                                         1998                           1997
                                                 ----------------------         ----------------------
<CAPTION>
                                                 Carrying         Fair          Carrying         Fair
                                                  Value          Value           Value          Value
                                                 --------        -----          --------        ------
<S>                                               <C>            <C>          <C>         <C> 
          Financial assets: 
           Cash and cash equivalents              $ 6,047        $ 6,047         $ 2,980        $ 2,980
           Investment securities                    4,159          4,158           3,664          3,664
           Mortgage-backed securities               6,398          6,546           7,421          7,308
           Loans receivable:
            Real estate - one-to-four family       58,117         58,617          55,573         55,995
            Real estate - other                     8,582          8,656          10,673         10,737
            Other loans                            12,224         12,228          11,870         11,960
                                                   ------         ------          ------         ------
                                                  $89,480        $90,205         $89,201        $89,664
                                                   ======         ======          ======         ======

                                                          1998                           1997
                                                -----------------------        ----------------------
                                                Carrying         Fair          Carrying         Fair
                                                  Value          Value           Value          Value
                                                --------         -----         --------         -----
          Financial liabilities:
           Savings deposits and checking accounts $18,027       $ 18,027         $19,715        $19,715
           Certificates of deposit                 40,428         40,395          41,842         41,887
           Federal Home Loan Bank Advances         19,062         18,616          17,634         17,518
           Other borrowed money                     5,258          5,251           4,463          4,406
                                                   ------         ------          ------         ------
                                                  $82,775        $82,289         $83,654        $83,526
                                                   ======         ======          ======         ======
</TABLE>


                                       46
<PAGE>


                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 17.  Earnings Per Share:

          Earnings per share are based upon the weighted average number of 
          shares outstanding. The following shows the computation of the basic
          and diluted earnings per share.
                                                            Weighted
                                                            Average    Earnings
                                                   Net     Number of     Per
                                                 Income      Shares     Share
                                                 ------    ---------   --------
          Year Ended March 31, 1998:
       
                 Earnings Per Share - Basic      $1,120     775,112     $ 1.44
                                                                          ====
                 Effect of Stock Options     \     - -       39,603
                                                  -----      ------

                 Earnings Per Share - Diluted    $1,120     814,715    $ 1.37
                                                  =====     =======      ====

          Year Ended March 31, 1997:

                 Earnings Per Share - Basic      $  710     847,090    $ 0.84
                                                                         ====
                 Effect of Stock Options           - -       11,198
                                                   ----      ------

                 Earnings Per Share - Diluted    $  710     858,288    $ 0.83
                                                    ===     =======      ====

          Year Ended March 31, 1996:

                 Earnings Per Share - Basic      $  842     930,863    $ 0.90
                                                                         ====
                 Effect of Stock Options           - -         - -
                                                   ----     -------

                 Earnings Per Share - Diluted    $  842     930,863    $ 0.90
                                                    ===     =======      ====

Note 18.  Condensed Parent Company Only Financial Information:

          Balance Sheets - at March 31:                    1998           1997
                                                           ----           ----
                                                             (In Thousands)
                  Assets:
                      Cash and cash equivalents         $ 2,653        $ 3,176
                      Investment in subsidiary            8,752          7,630
                      Deferred income tax assets             93            112
                      Other current assets                  161             82
                                                         ------         ------
                                                        $11,659        $11,000
                                                         ======         ======

                 Liabilities                            $   145        $   141
                 Stockholders' Equity                    11,514         10,859
                                                         ------         ------
                                                        $11,659        $11,000
                                                         ======         ======

                                       47
<PAGE>


                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 19.  Condensed Parent Company Only Financial Information - Continued:

          Statements of Operations - for the years ended March 31:
                                                      1998     1997       1996
                                                      ----     ----       ----
                                                          (In Thousands)

            Interest income                           $ 197   $ 271      $ 198
            Equity in net income of subsidiary        1,092     712        968
                                                      -----     ---      -----
               Total income                           1,289     983      1,166
            Other expense                               148     273        277
                                                      -----     ---      -----
            Income before provision for income taxes  1,141     710        889
            Income taxes                                 21     - -        (26)
                                                      -----     ---      -----
               Net income                           $ 1,120   $ 710      $ 915
                                                      =====     ===      =====


          Statements of Cash Flows - for the years ended March 31:
<TABLE>
<CAPTION>
                                                                                  1998            1997           1996
                                                                               ------------   -------------  -------------
                                                                                        (In Thousands)
<S>                                                                           <C>              <C>            <C>   
          
          Cash flows from operating activities:    
           Net income                                                           $ 1,120          $ 710          $ 915
           Adjustments to reconcile net income to net cash
             provided by operating activities:
             Equity in net income of subsidiary                                  (1,092)          (712)          (968)
             Deferred income taxes                                                   19            (57)           (55)
             Amortization of ESOP and restricted stock awards                       258            345            267
             Change in operating assets and liabilities:
               Other current assets                                                 (79)           (74)            52
               Other liabilities                                                      3            120             22
                                                                               -------------  -------------  -------------
                   Net cash provided by operating activities                        229             332            233
                                                                               -------------  -------------  -------------

           Cash flows from investment activities:
            Maturity of investment securities                                       - -             - -          3,300
            Cash dividends from subsidiary                                          - -           2,670            - -
                                                                               -------------   -------------  -------------
                   Net cash provided by investment activities                       - -           2,670          3,300
                                                                               -------------   -------------  -------------

           Cash flows from financing activities:
            Purchase of common stock for the treasury                              (301)         (1,695)          (561)
            Purchase of common stock for incentive plan                             - -             - -           (460)
            Cash dividends                                                         (451)           (370)          (336)
                                                                               -------------   -------------  -------------
                   Net cash used in financing activities                           (752)         (2,065)        (1,357)
                                                                               -------------   -------------  -------------
                   Net increase (decrease) in cash                                 (523)            937          2,176
            Cash and cash equivalents at beginning                                3,176           2,239             63
                                                                               -------------   -------------  -------------

            Cash and cash equivalents at end                                    $ 2,653         $ 3,176        $ 2,239
                                                                               =============   =============  =============
</TABLE>

                                       48
<PAGE>

                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 19.  Quarterly Consolidated Financial Information (Unaudited):
<TABLE>
<CAPTION>

                                                               1997                                          1998
                                                           --------------------------------------------  -------------
                                                             June 30,       Sept. 30,        Dec. 31,      March 31,
                                                           -------------  -------------   -------------  -------------
                                                                                 (In Thousands)
<S>                                                        <C>            <C>             <C>            <C>    
                 Interest and dividend income                $ 1,911        $ 1,928          $ 1,959        $ 1,965
                 Interest expense                              1,050          1,066            1,075          1,052
                                                          -------------  -------------   -------------  -------------
                    Net interest income                          861            862             884            913
                 Provision for loan losses                        25             25              25             25
                                                          -------------  -------------   -------------  -------------
                    Net interest income after provision
                         for loan losses                         836            837             859            888
                 Non-interest income                             130            136             135            207
                 Non-interest expense                            561            582             560            595
                                                          -------------  -------------   -------------  -------------
                    Income before income taxes                   405            391             434            500
                 Income taxes                                    153            135             149            173
                                                          -------------  -------------   -------------  -------------
                    Net income                                 $ 252          $ 256           $ 285          $ 327
                                                          =============  =============   =============  =============

                 Earnings per share                           $ 0.33         $ 0.33          $ 0.37         $ 0.42
                 Dividends                                    $ 0.12         $ 0.13          $ 0.14         $ 0.15
                 Market information:
                    Trading range -  high                    $ 13.63        $ 16.75         $ 20.75        $ 22.25
                                     low                     $ 15.00        $ 14.63         $ 16.13        $ 20.75
                                     close                   $ 15.00        $ 16.13         $ 20.75        $ 21.13


                                                               1996                                          1997
                                                           --------------------------------------------  -------------
                                                             June 30,       Sept. 30,        Dec. 31,      March 31,
                                                           -------------  -------------   -------------  -------------
                                                                                 (In Thousands)
                 Interest and dividend income                 $1,802         $1,868          $1,903         $1,919
                 Interest expense                                972          1,010           1,052          1,038
                                                           -------------  -------------   -------------  -------------
                    Net interest income                          830            858             851            881
                 Provision for loan losses                         6             25              25             25
                                                           -------------  -------------   -------------  -------------
                    Net interest income after provision
                         for loan losses                         824            833             826            856
                 Non-interest income                             140            141             146            104
                 Non-interest expense                            577            954             547            565
                                                           -------------  -------------   -------------  -------------
                    Income before income taxes                   387             20             425            395
                 Income taxes                                    164              8             177            168
                                                           -------------  -------------   -------------  -------------
                    Net income                                  $223            $12            $248           $227
                                                           =============  =============   =============  =============

                 Earnings per share                            $0.25          $0.01           $0.29          $0.29
                 Dividends                                     $0.09          $0.10           $0.10          $0.11
                 Market information:
                    Trading range -   high                    $10.38         $11.25          $12.50         $14.50
                                      low                     $10.25         $10.25          $11.25         $13.50
                                      close                   $10.38         $11.25          $12.13         $14.13
</TABLE>

                                       49
<PAGE>


                      NORTHWEST EQUITY CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 19.   Quarterly Consolidated Financial Information (Unaudited) - Continued:
<TABLE>
<CAPTION>

                                                             June 30,      Sept. 30,        Dec. 31,      March 31,
                                                             --------      ---------        --------      ---------
                                                                                 (In Thousands)
<S>                                                           <C>            <C>             <C>            <C>   
                 Interest and dividend income                 $1,469         $1,596          $1,694         $1,714
                 Interest expense                                707            815             889            900
                                                                 ---            ---             ---            ---
                    Net interest income                          762            781             805            814
                 Provision for loan losses                         6              6               6              6
                                                                 ---            ---             ---            ---
                    Net interest income after provision
                         for loan losses                         756            775             799            808
                 Non-interest income                             112            137             118            109
                 Non-interest expense                            480            506             605            584
                                                                 ---            ---             ---            ---
                    Income before income taxes                   388            406             312            333
                 Income taxes                                    154            177             141            125
                                                                 ---            ---             ---            ---
                    Net income                                  $234           $229            $171           $208
                                                                 ===            ===             ===            ===

                 Earnings per share                            $0.23          $0.22           $0.18          $0.23
                 Dividends                                     $0.07          $0.08           $0.09          $0.09
                 Market information:
                    Trading range -   high                     $9.50         $10.68          $11.32         $10.50
                                      low                      $8.68          $9.00          $10.00         $10.00
                                      close                    $8.75         $10.32          $10.62         $10.32

</TABLE>

                                       50
<PAGE>

SHAREHOLDER INFORMATION

Board of Directors of Northwest Equity Corp. and Northwest Savings Bank         
Brian L. Beadle
President,  Chief Executive Officer, Chief Financial Officer and Director of the
Company;  President, Chief Executive Officer, Chief Financial Officer and
Director of the Bank since 1976.

Gerald J. Ahlin
Director of the Company; Director of the Bank since 1985; prior to his
retirement in 1992, business and economics teacher at Amery Public Schools,
Amery, Wisconsin.

Vern E. Albrecht
Director of the Company; Director of the Bank since 1989; prior to his 
retirement in 1991,  President and principal owner of Nova Tran Corporation,  
an electronics and medical manufacturing company, Clear Lake, Wisconsin.

Michael D. Jensen
Director of the Company; Director of the Bank since 1986; President of Amery
Telcom, Inc., a communications company.

Donald M. Michels
Director of the Company; Director of the Bank since 1987; prior to his
retirement in 1991, President of Holy Family Hospital, New Richmond, Wisconsin
 .
Norman M. Osero
Director of the Company;  Director of the Bank since 1992; President of
Dynatronix,  Inc., Amery,  Wisconsin,  an electronic  manufacturing company,
and Vice President of Amery Technical Products, Inc., Amery, Wisconsin,   a 
subcontractor manufacturing company.

Executive Officers of Northwest Equity Corp. and Northwest Savings Bank         
Brian L. Beadle
President,  Chief Executive Officer, Chief Financial Officer and Director of the
Company;  President,  Chief Executive Officer, Chief Financial Officer and
Director of the Bank since 1976.

James L. Moore
Vice President and Secretary of the Company; Senior Vice President and Secretary
of the Bank since 1990.

Headquarters                      

Northwest Equity Corp.        Northwest Savings Bank-
234 Keller Avenue South       Bank Office Locations 
Amery, Wisconsin 54001
(715) 268-7105                Home Office:
                              234 Keller Avenue South
Northwest Savings Bank        Amery, Wisconsin 54001
234 Keller Avenue South       (715) 268-7105
Amery, Wisconsin 54001
(715) 268-7105                Branch Offices:

Northwest Savings Bank        New Richmond Office
234 Keller Avenue South       532 Knowles Avenue South
Amery, Wisconsin 54001        New Richmond, Wisconsin 54017
(715) 268-7105
                              Siren Office
                              24082 Highway 35 North
                              Siren, Wisconsin 54872
                              234 Keller Avenue South
                              Amery, Wisconsin 54001

Shareholder/Media Relations          
Shareholders,  investors,  analysts,  the news media and others interested in
additional  information may contact Brian L. Beadle,  President and Chief
Executive Officer of the Company, at the Company's headquarters.

Annual Report on Form 10-KSB      
A copy of Northwest Equity Corp.'s Form 10-KSB filed with the Securities and
Exchange Commission is available without charge by writing:
    Brian L. Beadle, President
    Northwest Equity Corp.
    234 Keller Avenue South
    Amery, Wisconsin 54001

Annual Meeting                   
The third annual meeting of shareholders of Northwest  Equity Corp. will be held
at 2:00 p.m.,  Amery time, July 14, 1998, at Centennial  Hall, 608 Harriman Ave.
South,  Amery, Wisconsin 54001

Auditors                           
Wipfli Ullrich Bertelson LLP
400 Daly Avenue, Suite 200
Wisconsin Rapids, WI 54495

Legal Counsel                      
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Transfer Agent                    
Firstar Trust Co.
615 East Michigan Avenue
Milwaukee, Wisconsin 53201
Telephone:        (414) 276-3737
Toll-Free:        (800) 637-7549

Stock Listing Information             
Northwest Savings Bank converted from a mutual to a stock company,  effective 
October 7, 1994, at which time Northwest Equity Corp.  consummated the sale of 
1,032,517 shares of its Common Stock to the public.  The shares of Common Stock
of Northwest  Equity Corp. are publicly traded in the National  Association of 
Securities  Dealers,  Inc.  Automated Quotation "Small-Cap" Market under the
symbol "NWEQ."

Stock Price Information             
                   Share Pricing        
                  1998           1997     
Quarter Ended  Low    High    Low    High

March 31      20.63   22.25  11.50  14.50
June 30                      13.75   15.00
September 30                 14.38    16.75
December 31                  16.00    20.75

NWEQ completed its initial public offering of shares in October 1994

Shareholders and Shares Outstanding               
As of May 31, 1998, there were 163 registered  shareholders of record and 286 
estimated additional  beneficial  shareholders for an approximate total of 449.
Shares outstanding at May 31, 1997 were 825,301.

                                       51
<PAGE>