<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
                             --------------------
                                  FORM 10-KSB

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

For the Fiscal Year Ended September 30, 1999

                                      OR

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

For the transition period from ______________ to _______________

                        Commission File Number: 0-22441

                          ROCKY FORD FINANCIAL, INC.
                  ------------------------------------------
                (Name of Small Business Issuer in Its Charter)

           Delaware                                      84-1413346
-------------------------------                      -------------------
(State or Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                       Identification No.)

801 Swink Avenue, Rocky Ford, Colorado                   81067-0032
--------------------------------------               -------------------
(Address of Principal Executive Offices)                  (Zip Code)

Issuer's Telephone Number, Including Area Code: (719) 254-7642
                                                --------------

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act:

                    Common Stock, par value $.01 per share
                    --------------------------------------
                               (Title of Class)

     Check whether the issuer: (l) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days.
YES  X  NO ___
    ---

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]

     State registrant's revenues for its most recent fiscal year: $1,672,451

     The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the last sale of which the registrant was aware ($10.63
per share on December 10, 1999), was approximately $3,583,405. Solely for
purposes of this calculation, the term "affiliate" refers to all directors and
executive officers of the registrant and all stockholders beneficially owning
more than 5% of the registrant's common stock.

     As of December 10, 1999, there were issued and outstanding 379,803 shares
of the registrant's common stock, of which 42,700 shares were held by affiliates
(as defined above).

     Transitional Small Business Disclosure Format (check one): YES ___  NO X
                                                                           ---

                      DOCUMENTS INCORPORATED BY REFERENCE

     1.   Portions of Annual Report to Stockholders for the Fiscal Year Ended
September 30, 1999 (Part II)

     2.   Portions of Proxy Statement for the 2000 Annual Meeting of
Stockholders (Part III)
<PAGE>

                                     PART I


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

General

     Rocky Ford Financial, Inc.  Rocky Ford Financial, Inc. (the "Company") was
incorporated under the laws of the State of Delaware in March 1997 for the
purpose of becoming a savings and loan holding company for Rocky Ford Federal
Savings and Loan Association ("Rocky Ford" or the "Association").  On May 21,
1997, the Association consummated its conversion from mutual to stock form (the
"Conversion") and the Company completed its offering of Common Stock through the
sale and issuance of 423,200 shares of Common Stock at a price of $10.00 per
share, realizing gross proceeds of $4.23 million and net proceeds of $3.83
million.  The Company purchased all of the capital stock of the Association with
$1.9 million of the offering proceeds.

     Prior to the Conversion, the Company did not engage in any material
operations. Currently, the Company's principal business is the business of the
Association. The Company has no significant assets other than the outstanding
capital stock of the Association, $1.4 million in cash and cash equivalents and
a note receivable from the Company's Employee Stock Ownership Plan. Accordingly,
the information set forth in this report, including financial statements and
related data, relates primarily to the Association and its subsidiaries.

     The Company's executive offices are located at 801 Swink Avenue, Rocky
Ford, Colorado. Its telephone number is (719) 254-7642.

     Rocky Ford Federal Savings and Loan Association. The Association is a
federal stock savings and loan association operating through a single office
located in Rocky Ford, Colorado and serving Otero County, Colorado. The
Association was chartered as a federal mutual savings and loan association and
received federal insurance of its deposit accounts in 1934 under its current
name of Rocky Ford Federal Savings and Loan Association. Effective May 21, 1997,
the Association became a stock savings and loan association. At September 30,
1999, the Association had total assets of $22.0 million, total deposits of $16.2
million and equity of $5.2 million.

     The principal business of the Association consists of attracting deposits
from the general public and investing these deposits in loans secured by first
mortgages on single-family residences in the Association's market area. The
Association derives its income principally from interest earned on loans and, to
a lesser extent, interest earned on mortgage-backed securities and investment
securities and noninterest income. Funds for these activities are provided
principally by operating revenues, deposits and repayments of outstanding loans
and investment securities and mortgage-backed securities.

     The Association is subject to examination and comprehensive regulation by
the Office of Thrift Supervision ("OTS") and the Association's savings deposits
are insured up to applicable limits by the Savings Association Insurance Fund
("SAIF"), which is administered by the Federal Deposit Insurance Corporation
("FDIC"). The Association is a member of, and owns capital stock in the Federal
Home Loan Bank ("FHLB") of Topeka, which is one of 12 regional banks in the FHLB
System. The Association is further subject to regulations of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") governing
reserves to be maintained and certain other matters.

     The Association's executive offices are located at 801 Swink Avenue, Rocky
Ford, Colorado 81067-0032 and its main telephone number is (719) 254-7642.

                                       1
<PAGE>

Recent Regulatory and Legislative Changes

     On November 12, 1999, the Gramm-Leach-Bliley Act was signed into law.  The
Act calls for the modernization of the banking system and could have far-
reaching effects on the financial services industry and the Company's and the
Association's operations.  For additional information on the provisions of this
legislation, see "Regulation of the Association -- Recently Enacted
Legislation."

Lending Activities

     General. The Association's net loan portfolio totaled $13.4 million at
September 30, 1999, representing 57.3% of total assets at that date.
Substantially all loans are originated in the market area. At September 30,
1999, $13.3 million, or 99.3% of the Association's net loan portfolio consisted
of single-family, residential mortgage loans. Other loans secured by real estate
include non-residential real estate loans which amounted to $74,500 or .55% of
the Association's net loan portfolio at September 30, 1999. To a lesser extent,
the Association also originates consumer loans secured by deposits. At September
30, 1999, consumer loans totaled $100,800, or .75% of the Association's net loan
portfolio.

Analysis of Loan Portfolio

   Set forth below is selected data relating to the composition of the
Association's loan portfolio by type of loan at the dates indicated.  At
September 30, 1999, the Association had no concentrations of loans exceeding 10%
of total loans other than as disclosed below.

<TABLE>
<CAPTION>
                                               At September 30,
                                      ----------------------------------
                                             1999            1998
                                      ----------------  ----------------
                                      Amount      %     Amount      %
                                      -------  -------  -------  -------
                                            (Dollars in thousands)
<S>                                   <C>      <C>      <C>      <C>
Mortgage Loans:
  One- to four-family...............  $13,352   99.30%  $13,914   98.73%
  Non-residential...................       74     .55       102     .72
                                      -------  ------   -------  ------
     Total real estate loans........   13,426   99.85    14,016   99.45
Consumer loans on savings accounts..      101     .75       171    1.22
                                      -------  ------   -------  ------
     Total loans....................   13,527  100.60    14,187  100.67
                                      -------  ------   -------  ------

Less:
  Deferred fees and discounts.......       21     .16        34     .24
  Allowance for losses..............       60     .44        60     .43
                                      -------  ------   -------  ------
Loan portfolio, net.................  $13,446  100.00%  $14,093  100.00%
                                      =======  ======   =======  ======
</TABLE>

                                       2
<PAGE>

Loan Maturity Schedule

     The following table sets forth certain information at September 30, 1999
regarding the dollar amount of loans maturing in the Association's portfolio
based on their contractual terms to maturity, including scheduled repayments of
principal.  Demand loans, loans having no stated schedule of repayments and no
stated maturity and overdrafts are reported as due in one year or less.

<TABLE>
<CAPTION>
                                 Under      One to      Three to      Five to       Ten to          Over
                               One Year  Three Years   Five Years    Ten Years   Twenty Years   Twenty Years      Total
                              ---------  -----------   ----------    ---------   ------------   ------------     -------
                                                                   (In thousands)
<S>                           <C>        <C>           <C>           <C>         <C>            <C>              <C>
Mortgage loans:
  One- to four-family..           $ 91       $   434      $   401      $ 2,997        $ 7,918        $ 1,511      $13,352
  Non-residential......              7            22           22           23             --             --           74
Consumer loans on
  savings accounts.....             65            36           --           --             --             --          101
                               -------       -------      -------      -------        -------        -------      -------
     Total.............        $   163       $   492      $   423      $ 3,020        $ 7,918        $ 1,511      $13,527
                               =======       =======      =======      =======        =======        =======      =======
</TABLE>

     The next table sets forth at September 30, 1999, the dollar amount of all
loans due one year or more after September 30, 1999 which have predetermined
interest rates and have floating or adjustable interest rates.

                                             Predetermined       Floating or
                                                  Rate        Adjustable Rates
                                             -------------    ----------------
                                                    (In thousands)

        Mortgage loans
            One- to four-family.............        $13,352           $    --
            Non-residential.................             74                --
        Consumer loans on savings accounts..            101                --
                                                    -------           -------
                Total.......................        $13,527           $    --
                                                    =======           =======

                                       3
<PAGE>

     Scheduled contractual principal repayments of loans do not reflect the
actual life of such assets. The average life of loans is substantially less than
their contractual terms because of prepayments. In addition, due-on-sale clauses
on loans generally give the Association the right to declare a loan immediately
due and payable in the event, among other things, that the borrower sells the
real property subject to the mortgage and the loan is not repaid. The average
life of mortgage loans tends to increase when current mortgage loan market rates
are substantially higher than rates on existing mortgage loans and, conversely,
decrease when current mortgage loan market rates are substantially lower than
rates on existing mortgage loans.

Origination, Purchase and Sale of Loans

     The Association generally has authority to originate and purchase loans
secured by real estate located throughout the United States.  Consistent with
its emphasis on being a community-oriented financial institution, the
Association conducts substantially all of its lending activities in its market
area.

     The following table sets forth certain information with respect to the
Association's loan origination activity for the periods indicated.  The
Association has not purchased or sold any loans in the periods presented.

<TABLE>
<CAPTION>
                                           Year Ended September 30,
                                           -------------------------
                                               1999         1998
                                           ------------  -----------
                                                (In thousands)
<S>                                        <C>           <C>
Net loans, beginning of period...........      $14,093       $13,530

Origination by type:
-------------------
One- to four-family......................      $ 3,625       $ 3,441
Non-residential..........................           --            --
Consumer loans on savings accounts.......           16           102
                                               -------       -------
     Total loans originated..............        3,641         3,543
                                               -------       -------

Repayments...............................        3,007         2,993
                                               -------       -------

Decrease (increase) in other items, net..           13            13
                                               -------       -------
   Net increase (decrease) in loans
    receivable, net......................         (647)          563
                                               -------       -------
Net loans, end of period.................      $13,446       $14,093
                                               =======       =======
</TABLE>

     The Association's loan originations are derived from a number of sources,
including referrals by realtors, depositors and borrowers and advertising, as
well as walk-in customers. The Association's solicitation programs consist of
advertisements in local media, in addition to occasional participation in
various community organizations and events. Real estate loans are originated by
the Association's loan personnel. All of the Association's loan personnel are
salaried, and the Association does not compensate loan personnel on a commission
basis for loans originated. Loan applications are accepted at the Association's
office.

     Loan Underwriting Policies. The Association's lending activities are
subject to the Association's written, non-discriminatory underwriting standards
and to loan origination procedures prescribed by the Association's Board of
Directors and its management. Detailed loan applications are obtained to
determine the borrower's ability to repay, and the more significant items on
these applications are verified through the use of credit reports, financial
statements and confirmations. All loans must be reviewed by the Association's
loan committee, which is comprised of the Association's

                                       4
<PAGE>

Board of Directors, for which a quorum is required to approve a loan. In
addition, the full Board of Directors reviews and approves all loans on a
monthly basis.

     Applications for single-family real estate loans are underwritten and
closed in accordance with the standards of the Federal Home Loan Mortgage
Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA") except
that, consistent with banking practice in Colorado, title opinions rather than
title insurance are obtained. Generally, upon receipt of a loan application from
a prospective borrower, a credit report and verifications are ordered to confirm
specific information relating to the loan applicant's employment, income and
credit standing.  If a proposed loan is to be secured by a mortgage on real
estate, an appraisal of the real estate is usually undertaken by an appraiser
approved by the Association's Board of Directors and licensed or certified (as
necessary) by the State of Colorado.  In the case of single-family residential
mortgage loans, except when the Association becomes aware of a particular risk
of environmental contamination, the Association generally does not obtain a
formal environmental report on the real estate at the time a loan is made.  A
formal environmental report may be required in connection with nonresidential
real estate loans.

     It is the Association's policy to record a lien on the real estate securing
a loan and to obtain a title opinion from Colorado counsel which provides that
the property is free of prior encumbrances and other possible title defects.
Borrowers must also obtain hazard insurance policies prior to closing and, when
the property is in a flood plain as designated by the Department of Housing and
Urban Development, pay flood insurance policy premiums.

     The Association is permitted to lend up to 100% of the appraised value of
the real property securing a mortgage loan. The Association is required by
federal regulations to obtain private mortgage insurance on that portion of the
principal amount of any loan that is greater than 90% of the appraised value of
the property. The Association will make a single-family residential mortgage
loan for owner-occupied property with a loan-to-value ratio of up to 80% on such
loans. For residential properties that are not owner-occupied, the Association
generally does not lend more than 80% of the appraised value. For all
residential mortgage loans, the Association may go up to 90% of appraised value
with private mortgage insurance. The federal banking agencies, including the
OTS, have adopted regulations that would establish new loan-to-value ratio
requirements for specific categories of real estate loans. See "Regulation of
the Association -- Uniform Lending Standards."

     Under applicable law, with certain limited exceptions, loans and extensions
of credit by a savings institution to a person outstanding at one time shall not
exceed 15% of the institution's unimpaired capital and surplus. Loans and
extensions of credit fully secured by readily marketable collateral (having a
market value at least equal to the funds outstanding) may comprise an additional
10% of unimpaired capital and surplus. Applicable law additionally authorizes
savings institutions to make loans to one borrower, for any purpose, in an
amount not to exceed the lesser of $30 million or 30% of unimpaired capital and
surplus to develop residential housing, provided certain requirements are
satisfied. Under these limits, the Association's loans to one borrower were
limited to $725,500 at September 30, 1999. At that date, the Association had no
lending relationships in excess of the loans-to-one-borrower limit. At September
30, 1999, the Association's largest lending relationship was a $317,500
relationship consisting of single-family residence which serves as the
borrowers' primary residence and another property which serves as his office
building. All loans within this relationship were current and performing in
accordance with their terms at September 30, 1999.

     Interest rates charged by the Association on loans are affected principally
by competitive factors, the demand for such loans and the supply of funds
available for lending purposes. These factors are, in turn, affected by general
economic conditions, monetary policies of the federal government, including the
Federal Reserve Board, legislative tax policies and government budgetary
matters.

     Single-Family Residential and Commercial Real Estate Lending. The
Association historically has been and continues to be an originator of single-
family, residential real estate loans in its market area. At September 30, 1999,
single-family residential mortgage loans, totaled approximately $13.3 million,
or 99% of the Association's net loan portfolio. The Association has no loans
secured by nonowner-occupied investment properties, no construction

                                       5
<PAGE>

loans, and only $74,500 in loans on non-residential real estate. All loans
originated by the Association are maintained in its portfolio rather than sold
in the secondary market.

     The Association only originates fixed-rate loans substantially all of which
have 10 years or 15 years to maturity. In each case, such loans are secured by
first mortgages on single-family, owner-occupied residential real property
located in the Association's market area. The Association's lending policy does
increase the Association's exposure to interest rate risk during periods of
rising interest rates. To reduce its interest rate risk associated with such
loans, the Association maintains a relatively high level of liquid assets.

     The Association's commercial real estate portfolio generally consists of
fixed-rate loans secured by first mortgages on commercial real estate including
industrial properties, professional buildings and small retail establishments.
All properties are located in Otero County, Colorado. At September 30, 1999, the
Association had $74,500 of commercial real estate loans, which comprised .55% of
its loan portfolio. Commercial real estate loans are originated on a fixed-rate
basis with terms of up to 15 years and are underwritten with loan-to-value
ratios of up to 70% of the lesser of the appraised value or the purchase price
of the property.

     Consumer and Other Lending. The consumer loans currently in the
Association's loan portfolio consist of loans secured by savings deposits. Such
savings account loans are usually made for up to 90% of the depositor's savings
account balance. The interest rate is normally 2.0% above the rate paid on such
deposit account serving as collateral, and the account must be pledged as
collateral to secure the loan. Interest generally is billed on a quarterly
basis. At September 30, 1999, loans on deposit accounts totaled $100,800 or .75%
of the Association's net loan portfolio.

     Loan Fees and Servicing. The Association receives fees in connection with
late payments and for miscellaneous services related to its loans. The
Association also charges a $150 document preparation fee and a $350 appraisal
fee for loan originations. The Association does not service loans for others.

     Nonperforming Loans and Other Problem Assets. It is management's policy to
continually monitor its loan portfolio to anticipate and address potential and
actual delinquencies. When a borrower fails to make a payment on a loan, the
Association takes immediate steps to have the delinquency cured and the loan
restored to current status. Loans which are delinquent 26 days incur a late fee
of 4.0% of principal and interest due. As a matter of policy, the Association
will contact the borrower after the loan has been delinquent 30 days. If payment
is not promptly received, the borrower is contacted again, and efforts are made
to formulate an affirmative plan to cure the delinquency. Generally, after any
loan is delinquent 90 days or more, formal legal proceedings are commenced to
collect amounts owed. Loans are placed on nonaccrual status if the loan becomes
past due more than 90 days unless such loans are well-secured and in the process
of collection. Loans are charged off when management concludes that they are
uncollectible. See Note 1 of Notes to Financial Statements contained in the
Annual Report to Stockholders for the Fiscal Year Ended September 30, 1999 (the
"Annual Report").

     Real estate acquired by the Association as a result of foreclosure is
classified as real estate acquired through foreclosure until such time as it is
sold. When such property is acquired, it is initially recorded at estimated fair
value and subsequently at the lower of book value or fair value, less estimated
costs to sell. Costs relating to holding such real estate are charged against
income in the current period, while costs relating to improving such real estate
are capitalized until a saleable condition is reached. Any required write-down
of the loan to its fair value less estimated selling costs upon foreclosure is
charged against the allowance for loan losses. See Note 1 of Notes to Financial
Statements in the Annual Report.

                                       6
<PAGE>

     The following table sets forth information with respect to the
Association's nonperforming assets at the dates indicated. Further, no loans
were recorded as restructured loans within the meaning of SFAS No. 15 at the
dates indicated.

                                                          At September 30,
                                                     -------------------------
                                                        1999          1998
                                                     ----------    -----------
                                                      (Dollars in thousands)

Total loans accounted for on a non-accrual basis:(1)..   $   33         $   54
                                                         ======         ======

Total accruing loans which are contractually
  past due 90 days or more............................   $   --         $   --
                                                         ======         ======

    Total nonperforming loans.........................   $   33         $   54
                                                         ======         ======

Percentage of total loans.............................      .24%           .38%
                                                         ======         ======

Other nonperforming assets (2)........................   $   --         $   --
                                                         ======         ======

_______________

(1)  Nonaccrual status denotes loans on which, in the opinion of management, the
     collection of additional interest is unlikely. Payments received on a
     nonaccrual loan are either applied to the outstanding principal balance or
     recorded as interest income, depending on management's assessment of the
     collectibility of the loan.
(2)  Other nonperforming assets includes property acquired by the Association
     through foreclosure or repossession.  This property is carried at the lower
     of its fair value less estimated selling costs or the principal balance of
     the related loan, whichever is lower.  Other nonperforming assets also
     includes real estate developed and held for sale.

     At September 30, 1999, the Association had $33,200 of loans outstanding
that were classified as nonaccrual, 90 days past due, no restructured loans, and
no loans outstanding that were not classified as non-accrual, 90 days past due
or restructured, but as to which known information about possible credit
problems of borrowers caused management to have serious concerns as to the
ability of the borrowers to comply with present loan repayment terms and may
result in disclosure as nonaccrual, 90 days past due or restructured.

     Federal regulations require savings institutions to classify their assets
on the basis of quality on a regular basis. An asset meeting one of the
classification definitions set forth below may be classified and still be a
performing loan. An asset is classified as substandard if it is determined to be
inadequately protected by the current retained earnings and paying capacity of
the obligor or of the collateral pledged, if any. An asset is classified as
doubtful if full collection is highly questionable or improbable. An asset is
classified as loss if it is considered uncollectible, even if a partial recovery
could be expected in the future. The regulations also provide for a special
mention designation, described as assets which do not currently expose a savings
institution to a sufficient degree of risk to warrant classification but do
possess credit deficiencies or potential weaknesses deserving management's close
attention. Such assets designated as special mention may include nonperforming
loans consistent with the above definition. Assets classified as substandard or
doubtful require a savings institution to establish general allowances for loan
losses. If an asset or portion thereof is classified loss, a savings institution
must either establish a specific allowance for loss in the amount of the portion
of the asset classified loss, or charge-off such amount. Federal examiners may
disagree with a savings institution's classifications. If a savings institution
does not agree with an examiner's classification of an asset, it may appeal this
determination to the OTS Regional Director. The Association regularly reviews
its assets to determine whether any assets require classification or
reclassification. At September 30, 1999, the Association had $116,000 in assets
classified as special mention, $33,200 in assets classified as substandard, no
assets classified as doubtful and no assets classified as loss. The special
mention classification is primarily used by management as a "watch list" to
monitor loans that exhibit any potential deviation in performance from the
contractual terms of the loan.

                                       7
<PAGE>

     Allowance for Loan Losses. In originating loans, the Association recognizes
that credit losses will be experienced and that the risk of loss will vary with,
among other things, the type of loan being made, the creditworthiness of the
borrower over the term of the loan, general economic conditions and, in the case
of a secured loan, the quality of the security for the loan. It is management's
policy to maintain an adequate allowance for loan losses based on, among other
things, the Association's and the industry's historical loan loss experience,
evaluation of economic conditions, regular reviews of delinquencies and loan
portfolio quality and evolving standards imposed by federal bank examiners. The
Association increases its allowance for loan losses by charging provisions for
loan losses against the Association's income.

     Management will continue to actively monitor the Association's asset
quality and allowance for loan losses. Management will charge off loans and
properties acquired in settlement of loans against the allowances for losses on
such loans and such properties when appropriate and will provide specific loss
allowances when necessary. Although management believes it uses the best
information available to make determinations with respect to the allowances for
losses and believes such allowances are adequate, future adjustments may be
necessary if economic conditions differ substantially from the economic
conditions in the assumptions used in making the initial determinations.

     The Association's methodology for establishing the allowance for loan
losses takes into consideration probable losses that have been identified in
connection with specific assets as well as losses that have not been identified
but can be expected to occur. Management conducts regular reviews of the
Association's assets and evaluates the need to establish allowances on the basis
of this review. Allowances are established by the Board of Directors on a
quarterly basis based on an assessment of risk in the Association's assets
taking into consideration the composition and quality of the portfolio,
delinquency trends, current charge-off and loss experience, loan concentrations,
the state of the real estate market, regulatory reviews conducted in the
regulatory examination process and economic conditions generally. Specific
reserves will be provided for individual assets, or portions of assets, when
ultimate collection is considered improbable by management based on the current
payment status of the assets and the fair value of the security. At the date of
foreclosure or other repossession, the Association would transfer the property
to real estate acquired in settlement of loans initially at the lower of cost or
estimated fair value and subsequently at the lower of book value or fair value
less estimated selling costs. Any portion of the outstanding loan balance in
excess of fair value less estimated selling costs would be charged off against
the allowance for loan losses. If, upon ultimate disposition of the property,
net sales proceeds exceed the net carrying value of the property, a gain on sale
of real estate would be recorded.

     Banking regulatory agencies, including the OTS, have adopted a policy
statement regarding maintenance of an adequate allowance for loan and lease
losses and an effective loan review system. This policy includes an arithmetic
formula for determining the reasonableness of an institution's allowance for
loan loss estimate compared to the average loss experience of the industry as a
whole. Examiners will review an institution's allowance for loan losses and
compare it against the sum of: (i) 50% of the portfolio that is classified
doubtful; (ii) 15% of the portfolio that is classified as substandard; and (iii)
for the portions of the portfolio that have not been classified (including those
loans designated as special mention), estimated credit losses over the upcoming
12 months given the facts and circumstances as of the evaluation date. This
amount is considered neither a "floor" nor a "safe harbor" of the level of
allowance for loan losses an institution should maintain, but examiners will
view a shortfall relative to the amount as an indication that they should review
management's policy on allocating these allowances to determine whether it is
reasonable based on all relevant factors.

                                       8
<PAGE>

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

                                                     Year Ended September 30,
                                                    --------------------------
                                                        1999          1998
                                                    ------------  ------------
                                                          (In thousands)

Balance at beginning of period....................        $  60         $  60
                                                          =====         =====

Total charge-offs.................................           --            --
                                                          -----         -----

Total recoveries..................................           --            --
                                                          -----         -----

Net loan charge-offs..............................           --            --
                                                          -----         -----

Provision (credits to provision) for loan losses..           --            --
                                                          -----         -----

Balance at end of period..........................        $  60         $  60
                                                          =====         =====

Allowance for loan losses to total nonperforming
  loans at end of period..........................          181%          111%
                                                          =====         =====

Allowance for loan losses to net loans
  outstanding at end of period....................          .44%          .43%
                                                          =====         =====

     The following table allocates the allowance for loan losses by loan
category at the dates indicated. The allocation of the allowance to each
category is not necessarily indicative of future losses and does not restrict
the use of the allowance to absorb losses in any category.

<TABLE>
<CAPTION>
                                                      At September 30
                                      -------------------------------------------------
                                              1999                     1998
                                      ----------------------   ------------------------
                                                   Percent                    Percent
                                                   of Loans                   of Loans
                                                 in Category                in Category
                                                   to Total                   to Total
                                       Amount       Loans        Amount        Loans
                                      --------   -----------   ----------   -----------
                                                    (Dollars in thousands)
<S>                                   <C>        <C>           <C>          <C>
Real estate - mortgage:
    Single-family residential........   $   60        100.00%     $    60        100.00%
    Non-residential..................       --            --           --            --
Consumer loans on savings accounts...       --            --           --            --
                                       -------       -------      -------       -------
    Total allowance for loan losses..   $   60        100.00%     $    60        100.00%
                                       =======       =======      =======       =======
</TABLE>

                                       9
<PAGE>

Investment Activities

     General. The Association is permitted under federal law to make certain
investments, including investments in securities issued by various federal
agencies and state and municipal governments, deposits at the FHLB of Topeka,
certificates of deposit in federally insured institutions, certain bankers'
acceptances and federal funds. It may also invest, subject to certain
limitations, in commercial paper rated in one of the two highest investment
rating categories of a nationally recognized credit rating agency, and certain
other types of corporate debt securities and mutual funds. Federal regulations
require the Association to maintain an investment in FHLB stock and a minimum
amount of liquid assets which may be invested in cash and specified securities.
From time to time, the OTS adjusts the percentage of liquid assets which savings
banks are required to maintain. See "Regulation of the Association -- Liquidity
Requirements."

     The Association makes investments in order to maintain the levels of liquid
assets required by regulatory authorities and manage cash flow, diversify its
assets, obtain yield and to satisfy certain requirements for favorable tax
treatment.  The investment activities of the Association consist primarily of
investments in mortgage-backed securities and other investment securities,
consisting primarily of securities issued or guaranteed by the U.S. government
or agencies thereof.  Typical investments include federally sponsored agency
mortgage pass-through and federally sponsored agency and mortgage-related
securities.  Investment and aggregate investment limitations and credit quality
parameters of each class of investment are prescribed in the Association's
investment policy.  The Association performs analyses on mortgage-related
securities prior to purchase and on an ongoing basis to determine the impact on
earnings and market value under various interest rate and prepayment conditions.
Under the Association's current investment policy, securities purchases must be
approved by the Association's President.  The Board of Directors reviews all
securities transactions on a monthly basis.

     Pursuant to SFAS No. 115, the Association has classified securities with an
amortized cost of $11,300 and an approximate market value of $601,500 at
September 30, 1999 as available for sale.  Management of the Association
presently does not intend to sell such securities and, based on the
Association's current liquidity level and the Association's access to borrowings
through the FHLB of Topeka, management currently does not anticipate that the
Association will be placed in a position of having to sell securities with
material unrealized losses.

     Securities designated as "held to maturity" are those assets which the
Association has the ability and intent to hold to maturity. Upon acquisition,
securities are classified as to the Association's intent, and a sale would only
be effected due to deteriorating investment quality. The held to maturity
investment portfolio is not used for speculative purposes and is carried at
amortized cost. In the event the Association sells securities from this
portfolio for other than credit quality reasons, all securities within the
investment portfolio with matching characteristics may be reclassified as assets
available for sale. Securities designated as "available for sale" are those
assets which the Association may not hold to maturity and thus are carried at
market value with unrealized gains or losses, net of tax effect, recognized in
retained earnings.

     Investment Securities. The following table sets forth the carrying value of
the Company's investment securities at the dates indicated.

                                               At September 30,
                                           -----------------------
                                              1999         1998
                                           ----------   ----------
                                                (In thousands)

U.S. Treasury securities.................      $  249       $  249
Interest-bearing deposits................       6,199        5,299
Mortgage-backed securities through GNMA..       1,667        1,806
Federal Home Loan Bank stock.............         166          210
Federal Home Loan Mortgage Corp. stock...         602          574
                                               ------       ------
      Total..............................      $8,883       $8,138
                                               ======       ======

                                       10
<PAGE>

     The following table sets forth information in the scheduled maturities,
amortized cost, market values and average yields for the Association's
investment portfolio at September 30, 1999.

<TABLE>
<CAPTION>
                                                                                                              Total
                                   One Year or Less       One to Five Years        Over Five Years      Investment Portfolio
                                ----------------------  ----------------------  ----------------------  ----------------------
                                 Carrying    Average     Carrying    Average     Carrying    Average     Carrying     Average
                                  Value       Yield       Value       Yield        Value      Yield       Value        Yield
                                ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
<S>                             <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
                                                                    (Dollars in thousands)
U.S. Treasury securities.....       $   --          --%     $  249        6.25%     $   --          --%     $  249        6.25%
Interest-bearing deposits....        6,199        5.28          --          --          --          --       6,199        5.28
Mortgage-backed securities...          231        7.98         114        7.98       1,530        7.98       1,667        7.98
Federal Home Loan Bank
 stock.......................           --          --          --          --         166        6.18         166        6.18
Federal Home Loan
 Mortgage Corp. stock........           --          --          --          --         602         .83         602         .83
                                    ------                  ------                  ------                  ------
Total investment securities..       $6,222                  $  363                  $2,298                  $8,883
                                    ======                  ======                  ======                  ======
</TABLE>

     Mortgage-Backed and Related Securities. Mortgage-backed securities
represent a participation interest in a pool of single-family or multi-family
mortgages, the principal and interest payments on which are passed from the
mortgage originators through intermediaries that pool and repackage the
participation interest in the form of securities to investors such as the
Association. Such intermediaries may include quasi-governmental agencies such as
FHLMC, FNMA and GNMA which guarantee the payment of principal and interest to
investors, although all of the Association's mortgage-backed securities are
originated through GNMA. Mortgage-backed securities generally increase the
quality of the Association's assets by virtue of the guarantees that back them,
are more liquid than individual mortgage loans and may be used to collateralize
borrowings or other obligations of the Association.

     Mortgage-related securities typically are issued with stated principal
amounts and the securities are backed by pools of mortgages that have loans with
interest rates that are within a range and have similar maturities.  The
underlying pool of mortgages can be composed of either fixed-rate or adjustable-
rate mortgage loans.  Mortgage-backed securities generally are referred to as
mortgage participation certificates or pass-through certificates.  As a result,
the interest rate risk characteristics of the underlying pool of mortgages,
i.e., fixed-rate or adjustable-rate, as well as prepayment risk, are passed on
to the certificate holder.  The life of a mortgage-backed pass-through security
is equal to the life of the underlying mortgages.

     The actual maturity of a mortgage-backed security varies, depending on when
the mortgagors prepay or repay the underlying mortgages. Prepayments of the
underlying mortgages may shorten the life of the investment, thereby adversely
affecting its yield to maturity and the related market value of the mortgage-
backed security. The yield is based upon the interest income and the
amortization of the premium or accretion of the discount related to the
mortgage-backed security. Premiums and discounts on mortgage-backed securities
are amortized or accredited over the estimated term of the securities using a
level yield method. The prepayment assumptions used to determine the
amortization period for premiums and discounts can significantly affect the
yield of the mortgage-backed security, and these assumptions are reviewed
periodically to reflect the actual prepayment. The actual prepayments of the
underlying mortgages depend on many factors, including the type of mortgage, the
coupon rate, the age of the mortgages, the geographical location of the
underlying real estate collateralizing the mortgages and general levels of
market interest rates. The difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates is an important
determinant in the rate of prepayments. During periods of falling mortgage
interest rates, prepayments generally increase, and, conversely, during periods
of rising mortgage interest rates, prepayments generally decrease. If the coupon
rate of the underlying mortgage significantly exceeds the prevailing market
interest rates offered for mortgage loans, refinancing generally increases and
accelerates the prepayment of the underlying mortgages. Prepayment experience is
more difficult to estimate for adjustable-rate mortgage-backed securities.

                                       11
<PAGE>

     The Association's mortgage-backed securities portfolio consists solely of
seasoned fixed-rate, mortgage-backed securities.  The Association makes such
investments in order to manage cash flow, mitigate interest rate risk, diversify
assets, obtain yield, to satisfy certain requirements for favorable tax
treatment and to satisfy the qualified thrift lender test.  See "Regulation of
the Association -- Qualified Thrift Lender Test."

Deposit Activity and Other Sources of Funds

     General. Deposits are the primary source of the Association's funds for
lending, investment activities and general operational purposes. In addition to
deposits, the Association derives funds from loan principal and interest
repayments, maturities of investment securities and mortgage-backed securities
and interest payments thereon. Although loan repayments are a relatively stable
source of funds, deposit inflows and outflows are significantly influenced by
general interest rates and money market conditions. Borrowings may be used on a
short-term basis to compensate for reductions in the availability of funds, or
on a longer term basis for general operational purposes. The Association has
access to borrow from the FHLB of Topeka.

     Deposits. The Association attracts deposits principally from within its
market area by offering competitive rates on its deposit instruments, including
money market accounts, passbook savings accounts, Individual Retirement
Accounts, and certificates of deposit which range in maturity from six months to
six years. Deposit terms vary according to the minimum balance required, the
length of time the funds must remain on deposit and the interest rate.
Maturities, terms, service fees and withdrawal penalties for its deposit
accounts are established by the Association on a periodic basis. The Association
reviews its deposit mix and pricing on a weekly basis. In determining the
characteristics of its deposit accounts, the Association considers the rates
offered by competing institutions, lending and liquidity requirements, growth
goals and federal regulations. The Association does not accept brokered
deposits.

     The Association attempts to compete for deposits with other institutions in
its market area by offering competitively priced deposit instruments that are
tailored to the needs of its customers. Additionally, the Association seeks to
meet customers' needs by providing convenient customer service to the community,
efficient staff and convenient hours of service. Substantially all of the
Association's depositors are Colorado residents who reside in the Association's
market area.

                                       12
<PAGE>

     Savings deposits in the Association at September 30, 1999 were represented
by the various types of savings programs described below.

<TABLE>
<CAPTION>
Interest     Minimum                                                                           Percentage of
Rate (1)      Term                      Category                                Balances       Total Deposits
--------     -------                    --------                                --------       --------------
                                                                                (In Thousands)
<S>          <C>                        <C>                                     <C>            <C>
                                        Savings and transactions accounts
                                        ---------------------------------

3.00%        None                       Passbook accounts                       $ 1,321                  8.15%
3.75         None                       Money market accounts                     2,570                 15.85
                                                                                -------                ------
                                                                                  3,891                 24.00
                                                                                -------                ------

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

4.82         3 months or less           Fixed term, fixed rate                    3,733                 23.02
5.17         4 months to 12 months      Fixed term, fixed rate                    6,267                 38.65
5.30         13 months to 36 months     Fixed term, fixed rate                    2,324                 14.33
 --          Greater than 36 months     Fixed term, fixed rate                       --                    --
                                                                                -------                ------
                                           Total certificates of deposit         12,324                 76.00
                                                                                -------                ------
                                              Total deposits                    $16,215                100.00%
                                                                                =======                ======
</TABLE>

-----------------
(1)  Indicates weighted average interest rate at September 30, 1999.

     The following table sets forth the change in dollar amount of deposits in
the various types of accounts offered by the Association between the dates
indicated.

<TABLE>
<CAPTION>
                                Balance at                          Balance at
                                 September     % of      Increase    September     % of
                                 30, 1999    Deposits   (Decrease)   30, 1998    Deposits
                                ----------   --------   ----------  ----------   --------
                                                  (Dollars in thousands)
<S>                             <C>          <C>        <C>         <C>          <C>
Money market deposit..........  $   2,570      15.85%      $  68     $   2,502      16.04%
Savings deposits -- passbook..      1,321       8.15         256         1,065       6.83
Certificates of deposit.......     10,819      66.72         483        10,336      66.26
Jumbo certificates............      1,505       9.28        (190)        1,695      10.87
                                ---------     ------       -----     ---------     ------
                                $  16,215     100.00%      $ 617     $  15,598     100.00%
                                =========     ======       =====     =========     ======
</TABLE>

                                       13
<PAGE>

     The following table sets forth the time deposits in the Association
classified by rates at the dates indicated.

<TABLE>
<CAPTION>
                                           At September 30,
                              -------------------------------------------
                                       1999                    1998
                              --------------------    --------------------
                                Amount        %         Amount        %
                              ----------   -------    ----------   -------
                                        (Dollars in thousands)
<S>                           <C>          <C>        <C>          <C>
Certificates

2.00 - 4.00.................     $   303      1.87%      $    --        --%
4.01 - 5.00.................       5,420     33.42           210      1.35
5.01 - 6.00.................       6,601     40.71        11,788     75.57
6.01 - 7.00.................          --        --            --        --
Over 7.00%..................          --        --            33       .21
                                 -------    ------       -------    ------

Total certificates..........      12,324     76.00        12,031     77.13
                                 -------    ------       -------    ------

Total transaction accounts..       3,891     24.00         3,567     22.87

Total deposits..............     $16,215    100.00%      $15,598    100.00%
                                 =======    ======       =======    ======
</TABLE>

     The following table sets forth the amount and maturities of time deposits
at September 30, 1999.

<TABLE>
<CAPTION>
                                        Amount Due
                     ----------------------------------------
                     Less Than                         After
Rate                 One Year   1-2 Years  2-3 Years  3 Years  Total
----                 ---------  ---------  ---------  -------  ------
                                      (In thousands)
<S>                  <C>        <C>        <C>        <C>      <C>
 2.00 - 4.00%......    $   303     $   --  $      --  $    --  $   303
 4.01 - 5.00%......      4,662        447        311       --    5,420
 5.01 - 7.00%......      5,035      1,240        326       --    6,601
                       -------     ------  ---------  -------  -------
                       $10,000     $1,687  $     637  $    --  $12,324
                       =======     ======  =========  =======  =======
</TABLE>

     The following table indicates the amount of the Association's certificates
of deposit of $100,000 or more by time remaining until maturity as of September
30, 1999.

<TABLE>
<CAPTION>
                                                  Certificates
               Maturity Period                    of Deposits
               ---------------                   --------------
                                                 (In thousands)

               <S>                               <C>
               Three months or less...........           $  312
               Over three through six months..              317
               Over six through 12 months.....              224
               Over 12 months.................              652
                                                         ------
                  Total.......................           $1,505
                                                         ======
</TABLE>

                                      14
<PAGE>

     The following table sets forth the savings activities of the Association
for the periods indicated.

                                   Year Ended September 30,
                                  --------------------------
                                      1999          1998
                                  -----------   ------------
                                        (In thousands)

Opening balance.................      $15,598        $16,139
Net increase (decrease) before
  interest credited.............          (33)        (1,307)
Interest credited...............          650            766
                                      -------        -------
    Ending balance..............      $16,215        $15,598
                                      =======        =======
Net increase (decrease).........      $   617        $  (541)
                                      =======        =======

Percent increase (decrease).....         3.96%         (3.35)%
                                      =======        =======


     Borrowings. Savings deposits historically have been the primary source of
funds for the Association's lending, investments and general operating
activities. The Association is authorized, however, to use advances from the
FHLB of Topeka to supplement its supply of lendable funds and to meet deposit
withdrawal requirements. The FHLB of Topeka functions as a central reserve bank
providing credit for savings institutions and certain other member financial
institutions. As a member of the FHLB System, the Association is required to own
stock in the FHLB of Topeka and is authorized to apply for advances. Advances
are pursuant to several different programs, each of which has its own interest
rate and range of maturities. The Association has a Blanket Agreement for
advances with the FHLB of Topeka under which the Association may borrow up to
25% of assets (approximately $5.1 million), subject to normal collateral and
underwriting requirements. Advances from the FHLB of Topeka are secured by the
Association's stock in the FHLB of Topeka and first mortgage loans.

     As of September 30, 1999, the Association had no advances outstanding.

Subsidiary Activities

     As a federally chartered savings and loan association, the Association is
permitted to invest an amount equal to 2% of its assets in subsidiaries, with an
additional investment of 1% of assets where such investment serves primarily
community, inner-city and community development purposes.  Under such
limitations, as of September 30, 1999, the Association was authorized to invest
up to approximately $661,000 in the stock of or loans to subsidiaries, including
the additional 1% investment for community inner-city and community development
purposes.  Institutions meeting their applicable minimum regulatory capital
requirements may invest up to 50% of their regulatory capital in conforming
first mortgage loans to subsidiaries in which they own 10% or more of the
capital stock.

     The Association does not have any subsidiaries.

Competition

     The Association faces strong competition both in originating real estate
and consumer loans and in attracting deposits.  The Association competes for
real estate and other loans principally on the basis of interest rates, the
types of loans it originates, the deposit products it offers and the quality of
services it provides to borrowers.  The Association also competes by offering
products which are tailored to the local community.  Its competition in
originating real estate loans comes primarily from other savings institutions,
commercial banks and mortgage bankers making loans secured by real estate
located in the Association's market area.  Commercial banks, credit unions and
finance companies provide vigorous competition in consumer lending.  Competition
may increase as a result of the continuing reduction of restrictions on the
interstate operations of financial institutions.

                                       15
<PAGE>

          The Association attracts its deposits through its sole office
primarily from the local community. Consequently, competition for deposits is
principally from other savings institutions, commercial banks and brokers in the
local community as well as from the corporate credit unions sponsored by the
large private employers in the Association's market area. The Association
competes for deposits and loans by offering what it believes to be a variety of
deposit accounts at competitive rates, convenient business hours, a commitment
to outstanding customer service and a well-trained staff. The Association
believes it has developed strong relationships with local realtors and the
community in general.

          Management considers its market area for gathering deposits to be
Otero County in Colorado. The Association estimates that it competes with 16
banks, and 4 credit unions for deposits and loans. Based on data provided by a
private marketing firm, the Association estimates that at June 30, 1995, the
latest date for which information was available, it had 7.1% of deposits held by
all financial institutions in its market area.

Employees

          As of September 30, 1999, the Association had four full-time and no
part-time employees, none of whom were represented by a collective bargaining
agreement. Management considers its relationship with its employees to be good.

Executive Officers

          The following table sets forth certain information with respect to the
executive officers of the Company.

<TABLE>
<CAPTION>
                             Age at
                          September 30,
Name                          1999       Position
----                          ----       --------
<S>                       <C>            <C>
Donald F. Gause                68        Chairman of the Board of Directors
Keith E. Waggoner (1)          53        President and Chief Executive Officer
Wayne W. Whittaker             68        Vice President
Francis E. Clute               62        Secretary and Treasurer
</TABLE>
---------------------
(1) Mr. Waggoner is the only "full-time" executive officer of the Company.

          Donald F. Gause currently serves as Chairman of the Board the
Association and Company. Mr. Gause was elected to the Board of Directors in 1972
and served as President of the Association from 1990 to May 1997. In May 1997,
Mr. Gause became Chairman of the Board of Directors of the Association and the
Company. He is owner of Don's for Lad and Dad, Inc., a family owned and operated
men's clothing store.

          Keith E. Waggoner currently serves as President and Chief Executive
Officer of the Company and the Association. Mr. Waggoner became President of the
Association in May 1997 and was Executive Vice President of the Association from
1985 to May 1997. His past and current civic activities include being President
of the Lion's Club, member of the Otero Junior College Advisory Board, President
and member of the La Junta Catholic Parish Counsel, President of the La Junta
Catholic Parish Finance Board and member of the Otero County Planning
Commission.

          Wayne W. Whittaker has served as a Director and Vice President of the
Association since 1981 and has been a self-employed real estate and insurance
agent since 1953. He also serves as Corporate Secretary and Treasurer of Catlin
Canal Company, the Pisqah Reservoir and Ditch Company and Larkspur, Inc. Mr.
Whittaker's civic activities include being a block solicitor for the Leukemia
Society of America, Finance Chairman for the local Shrine Circus, active
membership in a local Methodist church, committee member for the Sunshine
District of Methodist Church Building Committee, Chairman of the Finance
Committee of the Arkansas Valley Board of Realtors and involvement with the
Shrine Children's Clinic.

                                       16
<PAGE>

          Francis E. Clute has served as a Director and Treasurer of the
Association since 1987. He is the owner of Edco Metal Works, a machine shop
specializing in heating and air conditioning. Mr. Clute's civic involvement
includes membership in the Rocky Ford Lion's Club, Elks Lodge and Chamber of
Commerce. He is also active with the Rocky Ford Zoning Board and School
District.

Regulation of the Association

          General. As a federally-chartered savings association, Rocky Ford is
subject to extensive regulation by the OTS. The Association's lending activities
and other investments must comply with various federal regulatory requirements.
The OTS periodically examines the Association for compliance with various
regulatory requirements and the FDIC has the authority to conduct special
examinations of the Association. The Association must file reports with OTS
describing its activities and financial condition, and is subject to certain
reserve requirements promulgated by the Federal Reserve Board. This supervision
and regulation is intended primarily for the protection of depositors. Certain
of these regulatory requirements are referred to in the following paragraphs or
appear elsewhere herein.

          Recently Enacted Legislation. On November 12, 1999, the Gramm-Leach-
Bliley ("G-L-B") Act was signed into law. The G-L-B Act authorizes affiliations
between banking, securities and insurance firms and authorizes bank holding
companies and national banks to engage in a variety of new financial activities.
Among the new activities that will be permitted to bank holding companies are
securities and insurance brokerage, securities underwriting, insurance
underwriting and merchant banking. The Federal Reserve Board, in consultation
with the Department of Treasury, may approve additional financial activities.
National bank subsidiaries will be permitted to engage in similar financial
activities but only on an agency basis unless they are one of the 50 largest
banks in the country. National bank subsidiaries will be prohibited from
insurance underwriting, real estate development and merchant banking. The G-L-B
Act, however, prohibits future acquisitions of existing unitary savings and loan
holding companies, like the Company, by firms that are engaged in commercial
activities and prohibits the formation of new unitary holding companies.

     The G-L-B Act also imposes new requirements on financial institutions with
respect to customer privacy. The G-L-B Act generally prohibits disclosure of
customer information to non-affiliated third parties unless the customer has
been given the opportunity to object and has not objected to such disclosure.
Financial institutions are further required to disclose their privacy policies
to customers annually. Financial institutions, however, will be required to
comply with state law if it is more protective of customer privacy than the G-L-
B Act. The G-L-B Act directs the federal banking agencies, the National Credit
Union Administration, the Secretary of the Treasury, the Securities and Exchange
Commission and the Federal Trade Commission, after consultation with the
National Association of Insurance Commissioners, to promulgate implementing
regulations within six months of enactment. The privacy provisions will become
effective six months thereafter.

          The G-L-B Act contains significant revisions to the Federal Home Loan
Bank System. The G-L-B Act imposes new capital requirements on the Federal Home
Loan Banks and authorizes them to issue two classes of stock with differing
dividend rates and redemption requirements. The G-L-B Act deletes the current
requirement that the Federal Home Loan Banks annually contribute $300 million to
pay interest on certain government obligations in favor of a 20% of net earnings
formula. The G-L-B Act expands the permissible uses of Federal Home Loan Bank
advances by community financial institutions (under $500 million in assets) to
include funding loans to small businesses, small farms and small agri-
businesses. The G-L-B Act makes membership in the Federal Home Loan Bank System
voluntary for federal savings associations.

          The G-L-B Act contains a variety of other provisions including a
prohibition against ATM surcharges unless the customer has first been provided
notice of the imposition and amount of the fee. The G-L-B Act reduces the
frequency of Community Reinvestment Act examinations for smaller institutions
and imposes certain reporting requirements on depository institutions that make
payments to non-governmental entities in connection with the Community
Reinvestment Act. The G-L-B Act also eliminates the SAIF special reserve and
authorizes a federal savings association that converts to a national or state
bank charter to continue to use the term "federal" in its name and to retain any
interstate branches.

                                       17
<PAGE>

          The Company is unable to predict the impact of the G-L-B Act on its
and the Association's operations and competitive environment at this time.
Although the G-L-B Act reduces the range of companies with which the Company may
affiliate, it may facilitate affiliations with companies in the financial
services industry.

          Federal Home Loan Bank System. The Association is a member of the FHLB
System, which consists of 12 regional Federal Home Loan Banks and which are
subject to supervision and regulation by the Federal Housing Finance Board
("FHFB"). The FHLB's provide a central credit facility primarily for member
institutions. As a member of the FHLB of Topeka, the Association is required to
acquire and hold shares of capital stock in the FHLB of Topeka in an amount at
least equal to 1% of the aggregate unpaid principal of its home mortgage loans,
home purchase contracts, and similar obligations at the beginning of each year,
or 1/20 of its advances (borrowings) from the FHLB of Topeka, whichever is
greater. The Association was in compliance with this requirement with an
investment in FHLB of Topeka stock at September 30, 1999, of $166,400. The FHLB
of Topeka serves as a reserve or central bank for its member institutions within
its assigned region. It is funded primarily from proceeds derived from the sale
of consolidated obligations of the FHLB System. It offers advances to members in
accordance with policies and procedures established by the FHFB and the Board of
Directors of the FHLB of Topeka. Long-term advances may only be made for the
purpose of providing funds for residential housing finance. As of September 30,
1999, Rocky Ford had no advances outstanding from the FHLB of Topeka. See "--
Deposit Activity and Other Sources of Funds -- Borrowings."

          Liquidity Requirements. The Association is required to maintain
average daily balances of liquid assets (cash, deposits maintained pursuant to
Federal Reserve Board requirements, time and savings deposits in certain
institutions, obligations of the United States and political subdivisions
thereof, shares in mutual funds with certain restricted investment policies,
highly rated corporate debt and mortgage loans and mortgage-related securities)
equal to the monthly average of not less than a specified percentage (currently
4%) of its net withdrawable savings deposits plus short-term borrowings.
Monetary penalties may be imposed for failure to meet liquidity requirements.
The Association's liquidity ratio for September 1999 was 34%.

          Qualified Thrift Lender Test. The Association is currently subject to
OTS regulations which use the concept of a qualified thrift lender ("QTL") to
determine eligibility for Federal Home Loan Bank advances and for certain other
purposes. A savings institution that does not meet the QTL Test must either
convert to a bank charter or comply with the following restrictions on its
operations: (i) the institution may not engage in any new activity or make any
new investment, directly or indirectly, unless such activity or investment is
permissible for both a national bank and a savings institution; (ii) the
branching powers of the institution are restricted to those of a national bank
located in the institution's home state; (iii) the institution shall not be
eligible to obtain any advances from its Federal Home Loan Bank; and (iv)
payment of dividends by the institution shall be subject to the rules regarding
payment of dividends by a national bank. In addition, any company that controls
a savings institution that fails to qualify as a QTL will be required to
register as and be deemed a bank holding company subject to all of the
provisions of the Bank Holding Company Act of 1956 ("BHCA") and other statutes
applicable to bank holding companies. Upon the expiration of three years from
the date the institution ceases to be a QTL, it must cease any activity, and not
retain any investment not permissible for both a national bank and a savings
institution and immediately repay any outstanding Federal Home Loan Bank
advances (subject to safety and soundness considerations).

          To qualify as a QTL, a savings institution must either qualify as a
"domestic building and loan association" under the Internal Revenue Code or
maintain at least 65% of its "portfolio" assets in Qualified Thrift Investments.
Portfolio assets are defined as total assets less intangibles, the value of
property used by a savings institution in its business and liquidity investments
in an amount not exceeding 20% of total assets. All of the following may be
included as Qualified Thrift Investments: investments in residential mortgages,
home equity loans, loans made for educational purposes, small business loans,
credit card loans and shares of stock issued by a Federal Home Loan Bank.
Subject to a 20% of portfolio assets limit, savings institutions are also able
to treat the following as Qualified Thrift Investments: (i) 50% of the dollar
amount of residential mortgage loans subject to sale under certain conditions,
(ii) investments, both debt and equity, in the capital stock or obligations of
and any other security issued by a service corporation or operating

                                       18
<PAGE>

subsidiary, provided that such subsidiary derives at least 80% of its annual
gross revenues from activities directly related to purchasing, refinancing,
constructing, improving or repairing domestic residential housing or
manufactured housing, (iii) 200% of investments in loans to finance "starter
homes" and loans for construction, development or improvement of housing and
community service facilities or for financing small businesses in "credit-needy"
areas, (iv) loans for the purchase, construction, development or improvement of
community service facilities, (v) loans for personal, family or household
purposes, and (vi) shares of stock issued by the FNMA or FHLMC.

          A savings institution must maintain its status as a QTL on a monthly
basis in nine out of every 12 months. A savings institution that fails to
maintain QTL status will be permitted to requalify once, and if it fails the QTL
Test a second time, it will become immediately subject to all penalties as if
all time limits on such penalties had expired. At September 30, 1999,
approximately 97% of the Association's "portfolio" assets were invested in
Qualified Thrift Investments.

          Regulatory Capital Requirements. Under the OTS's regulatory capital
requirements, savings associations must maintain "tangible" capital equal to
1.5% of adjusted total assets, "core" capital equal to 4% (or 3% if the
association is rated 1 CAMELS under the OTS examination rating system) of
adjusted total assets and a combination of core and "supplementary" capital
equal to 8% of "risk-weighted assets." In addition, OTS regulations impose
certain restrictions on savings associations that have a total risk-based
capital ratio that is less than 8.0%, a ratio of Tier 1 capital to risk-weighted
assets of less than 4.0% or a ratio of Tier 1 capital to adjusted total assets
of less than 4.0% (or 3.0% if the institution is rated 1 CAMELS). For purposes
of these regulations, Tier 1 capital has the same definition as core capital.
See "--Prompt Corrective Regulatory Action."

          Core capital is defined as common stockholders' equity (including
retained earnings), noncumulative perpetual preferred stock and related surplus,
minority interests in the equity accounts of fully consolidated subsidiaries,
certain nonwithdrawable accounts and pledged deposits and "qualifying
supervisory goodwill." Core capital is generally reduced by the amount of the
savings association's intangible assets for which no market exists. Limited
exceptions to the rule requiring deduction of intangible assets are provided for
mortgage servicing rights, purchased credit card relationships and qualifying
supervisory goodwill held by an eligible savings institution. Tangible capital
is given the same definition as core capital but does not include qualifying
supervisory goodwill and is reduced by the amount of all the savings
association's intangible assets with only a limited exception for subscribed for
mortgage servicing rights and subscribed for credit card relationships. Both
core and tangible capital are further reduced by an amount equal to a savings
association's debt and equity investments in subsidiaries engaged in activities
not permissible to national banks, other than subsidiaries engaged in activities
undertaken as agent for customers or in mortgage banking activities and
subsidiary depository institutions or their holding companies. At September 30,
1999, the Association had no investments in or extensions of credit to a
subsidiary engaged in activities not permitted to national banks.

          Adjusted total assets are a savings association's total assets as
determined under generally accepted accounting principles increased by certain
goodwill amounts and by a pro rated portion of the assets of unconsolidated
includable subsidiaries in which the savings association holds a minority
interest. Adjusted total assets are reduced by the amount of assets that have
been deducted from capital, the savings institution's investments in includible
subsidiaries that must be netted against capital under the capital rules, and
for purposes of the core capital requirement, qualifying supervisory goodwill.
At September 30, 1999, the Association's adjusted total assets for the purposes
of the core and tangible capital requirements were approximately $22.1 million.

          In determining compliance with the risk-based capital requirement, a
savings association is allowed to include both core capital and supplementary
capital in its total capital provided the amount of supplementary capital
included does not exceed the savings association's core capital. Supplementary
capital is defined to include certain preferred stock issues, nonwithdrawable
accounts and pledged deposits that do not qualify as core capital, certain
approved subordinated debt, certain other capital instruments, a portion of the
savings association's general loan and lease loss allowances and up to 45% of
unrealized gains on equity securities. Total core and supplementary capital are
reduced by the amount of capital instruments held by other depository
institutions pursuant to reciprocal arrangements, all equity investments and
that portion of the institution's land loans and nonresidential construction
loans in excess of an 80%

                                       19
<PAGE>

loan-to-value ratio. As of September 30, 1999, the Association had no equity
investments for which OTS regulations required a deduction from total capital.

          The risk-based capital requirement is measured against risk-weighted
assets which equals the sum of each asset and the credit-equivalent amount of
each off-balance sheet item after being multiplied by an assigned risk weight.
Under the OTS risk-weighting system, one- to four-family first mortgages not
more than 90 days past due with loan-to-value ratios under 80% are assigned a
risk weight of 50%. Consumer and construction loans are assigned a risk weight
of 100%. Mortgage-backed securities issued, or fully guaranteed as to principal
and interest, by the FNMA or FHLMC are assigned a 20% risk weight. Cash and U.S.
Government securities backed by the full faith and credit of the U.S. Government
are given a 0% risk weight. As of September 30, 1999, the Bank's risk-weighted
assets were approximately $8.9 million.

          The table below presents the Association's capital position relative
to its various minimum statutory and regulatory capital requirements at
September 30, 1999.

<TABLE>
<CAPTION>
                                                     Percent of
                                   Amount            Assets (1)
                                  --------           ----------
                                  (Dollars in thousands)
<S>                               <C>                <C>
Tangible Capital................    $4,837               22.35%
Tangible Capital Requirement....       325                1.50
                                    ------               -----
Excess..........................    $4,512               20.85%
                                    ======               =====

Core Capital....................    $4,837               22.35%
Core Capital Requirement (2)....       650                3.00
                                    ------               -----
Excess..........................    $4,187               19.35%
                                    ======               =====

Risk-Based Capital..............    $5,163               57.78%
Risk-Based Capital Requirement..       715                8.00
                                    ------               -----
Excess..........................    $4,448               49.78%
                                    ======               =====
</TABLE>
-------------------------
(1)       Based upon adjusted total assets for purposes of the tangible capital
          and core capital requirements and risk-weighted assets for purposes of
          the risk-based capital requirement.
(2)       Reflects the capital requirement which the Bank must satisfy to avoid
          regulatory restrictions that may be imposed pursuant to prompt
          corrective action regulations.

          The OTS's risk-based capital requirements require savings institutions
with more than a "normal" level of interest rate risk to maintain additional
total capital. A savings institution's interest rate risk is measured in terms
of the sensitivity of its "net portfolio value" to changes in interest rates.
Net portfolio value is defined, generally, as the present value of expected cash
inflows from existing assets and off-balance sheet contracts less the present
value of expected cash outflows from existing liabilities. A savings institution
is considered to have a "normal" level of interest rate risk exposure if the
decline in its net portfolio value after an immediate 200 basis point increase
or decrease in market interest rates (whichever results in the greater decline)
is less than two percent of the current estimated economic value of its assets.
A savings institution with a greater than normal interest rate risk is required
to deduct from total capital, for purposes of calculating its risk-based capital
requirement, an amount (the "interest rate risk component") equal to one-half
the difference between the institution's measured interest rate risk and the
normal level of interest rate risk, multiplied by the economic value of its
total assets. Management does not believe the implementation of the interest
rate risk requirement will have a material effect on the Association.

          The OTS calculates the sensitivity of a savings institution's net
portfolio value based on data submitted by the institution in a schedule to its
quarterly Thrift Financial Report and using the interest rate risk measurement
model

                                       20
<PAGE>

adopted by the OTS. The amount of the interest rate risk component, if any, that
is deducted from a savings institution's total capital is based on the
institution's Thrift Financial Report filed two quarters earlier. Savings
institutions with less than $300 million in assets and a risk-based capital
ratio above 12% are generally exempt from filing the interest rate risk schedule
with their Thrift Financial Reports. However, the OTS requires any exempt
savings institution that it determines may have a high level of interest rate
risk exposure to file such schedule on a quarterly basis and may be subject to
an additional capital requirement based upon its level of interest rate risk as
compared to its peers. The Association has determined that, on the basis of
current financial data, it will not be deemed to have more than normal level of
interest rate risk under the rule and believes that it will not be required to
increase its total capital as a result of the rule.

          In addition to requiring generally applicable capital standards for
savings associations, the Director of OTS is authorized to establish the minimum
level of capital for a savings association at such amount or at such ratio of
capital-to-assets as the Director determines to be necessary or appropriate for
such association in light of the particular circumstances of the association.
Such circumstances would include a high degree of exposure of interest rate
risk, prepayment risk, credit risk and concentration of credit risk and certain
risks arising from nontraditional activities. The Director may treat the failure
of any savings association to maintain capital at or above such level as an
unsafe or unsound practice and may issue a directive requiring any savings
association which fails to maintain capital at or above the minimum level
required by the Director to submit and adhere to a plan for increasing capital.
Such an order may be enforced in the same manner as an order issued by the FDIC.

          Transactions with Affiliates. Transactions between savings
associations and any affiliate are governed by Sections 23A and 23B of the
Federal Reserve Act. An affiliate of a savings association is any company or
entity which controls, is controlled by or is under common control with the
savings association. In a holding company context, the parent holding company of
a savings association (such as the Company) and any companies which are
controlled by such parent holding company are affiliates of the savings
association. Generally, Sections 23A and 23B (i) limit the extent to which the
savings association or its subsidiaries may engage in "covered transactions"
with any one affiliate to an amount equal to 10% of such institution's capital
stock and surplus, and contain an aggregate limit on all such transactions with
all affiliates to an amount equal to 20% of such capital stock and surplus, and
(ii) require that all such transactions be on terms substantially the same, or
at least as favorable, to the institution or subsidiary as those provided to a
nonaffiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and similar other types of
transactions. In addition to the restrictions imposed by Sections 23A and 23B,
OTS regulations provide that no savings association may (i) loan or otherwise
extend credit to an affiliate, except for any affiliate which engages only in
activities which are permissible for bank holding companies, or (ii) purchase or
invest in any stocks, bonds, debentures, notes or similar obligations of any
affiliate, except for affiliates which are subsidiaries of the savings
association. Section 106 of the Bank Holding Company Act which also applies to
the Association, prohibits the Association from extending credit to or offering
any other services, or fixing or varying the consideration for such extension of
credit or service, on the condition that the customer obtain some additional
service from the institution or certain of its affiliates or not obtain services
of a competitor of the institution, subject to certain exceptions.

          Loans to Officers, Directors and Principal Stockholders. Savings
associations are also subject to the restrictions contained in Section 22(h) and
Section 22(g) of the Federal Reserve Act on loans to executive officers,
directors and principal stockholders. Under Section 22(h), loans to a director,
executive officer or greater than 10% stockholder of a savings association and
certain affiliated entities of the foregoing, may not exceed, together with all
other outstanding loans to such person and affiliated entities, the
association's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus and an additional 10% of such
capital and surplus for loans fully secured by certain readily marketable
collateral) and all loans to such persons may not exceed the institution's
unimpaired capital and unimpaired surplus. Section 22(h) also prohibits loans,
above amounts prescribed by the appropriate federal banking agency, to
directors, executive officers and greater than 10% stockholders of a savings
association, and their respective affiliates, unless such loan is approved in
advance by a majority of the board of directors of the association with any
"interested" director not participating in the voting. The Federal Reserve Board
has prescribed the loan amount (which includes all other outstanding loans to
such person), as to which such prior board

                                       21
<PAGE>

of director approval is required, as being the greater of $25,000 or 5% of
capital and surplus (up to $500,000). Further, the Federal Reserve Board
pursuant to Section 22(h) requires that loans to directors, executive officers
and principal stockholders be made on terms substantially the same as offered in
comparable transactions to other persons. Section 22(h) also prohibits a
depository institution from paying the overdrafts of any of its executive
officers or directors.

          Section 22(g) of the Federal Reserve Act requires that loans to
executive officers of depository institutions not be made on terms more
favorable than those afforded to other borrowers, requires approval for such
extensions of credit by the board of directors of the institution, and imposes
reporting requirements for and additional restrictions on the type, amount and
terms of credits to such officers. In addition, Section 106 of the BHCA
prohibits extensions of credit to executive officers, directors, and greater
than 10% stockholders of a depository institution by any other institution which
has a correspondent banking relationship with the institution, unless such
extension of credit is on substantially the same terms as those prevailing at
the time for comparable transactions with other persons and does not involve
more than the normal risk of repayment or present other unfavorable features.

          Prompt Corrective Regulatory Action. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), the federal banking
regulators, including the OTS, are required to take prompt corrective action if
an insured depository institution fails to satisfy certain minimum capital
requirements. All institutions, regardless of their capital levels, are
restricted from making any capital distribution or paying any management fees if
the institution would thereafter fail to satisfy the minimum levels for any of
its capital requirements. An institution that fails to meet the minimum level
for any relevant capital measure (an "undercapitalized institution") may be: (i)
subject to increased monitoring by the appropriate federal banking regulator;
(ii) required to submit an acceptable capital restoration plan within 45 days;
(iii) subject to asset growth limits; and (iv) required to obtain prior
regulatory approval for acquisitions, branching and new lines of businesses. The
capital restoration plan must include a guarantee by the institution's holding
company that the institution will comply with the plan until it has been
adequately capitalized on average for four consecutive quarters, under which the
holding company would be liable up to the lesser of 5% of the institution's
total assets or the amount necessary to bring the institution into capital
compliance as of the date it failed to comply with its capital restoration plan.
A "significantly undercapitalized" institution, as well as any undercapitalized
institution that did not submit an acceptable capital restoration plan, may be
subject to regulatory demands for recapitalization, broader application of
restrictions on transactions with affiliates, limitations on interest rates paid
on deposits, asset growth and other activities, possible replacement of
directors and officers, and restrictions on capital distributions by any bank
holding company controlling the institution. Any company controlling the
institution could also be required to divest the institution or the institution
could be required to divest subsidiaries. The senior executive officers of a
significantly undercapitalized institution may not receive bonuses or increases
in compensation without prior approval and the institution is prohibited from
making payments of principal or interest on its subordinated debt. In their
discretion, the federal banking regulators may also impose the foregoing
sanctions on an undercapitalized institution if the regulators determine that
such actions are necessary to carry out the purposes of the prompt corrective
action provisions. If an institution's ratio of tangible capital to total assets
falls below a "critical capital level," the institution will be subject to
conservatorship or receivership within 90 days unless periodic determinations
are made that forbearance from such action would better protect the deposit
insurance fund. Unless appropriate findings and certifications are made by the
appropriate federal bank regulatory agencies, a critically undercapitalized
institution must be placed in receivership if it remains critically
undercapitalized on average during the calendar quarter beginning 270 days after
the date it became critically undercapitalized.

          Under regulations jointly adopted by the federal banking regulators,
including the OTS, a depository institution's capital adequacy for purposes of
the prompt corrective action rules is determined on the basis of the
institution's total risk-based capital ratio (the ratio of its total capital to
risk-weighted assets), Tier 1 risk-based capital ratio (the ratio of its core
capital to risk-weighted assets) and leverage ratio (the ratio of its core
capital to adjusted total assets). Under the regulations, a savings association
that is not subject to an order or written directive to meet or maintain a
specific capital level is deemed "well capitalized" if it also has: (i) a total
risk-based capital ratio of 10% or greater; (ii) a Tier 1 risk-based capital
ratio of 6% or greater; and (iii) a leverage ratio of 5% or greater. An
"adequately capitalized" savings association is a savings association that does
not meet the definition of well capitalized and has:

                                       22
<PAGE>

(i) a total risk-based capital ratio of 8% or greater; (ii) a Tier 1 capital
risk-based ratio of 4% or greater; and (iii) a leverage ratio of 4% or greater
(or 3% or greater if the savings association has a composite 1 CAMELS rating).
An "undercapitalized" institution is a savings association that has (i) a total
risk-based capital ratio less than 8%; or (ii) a Tier 1 risk-based capital ratio
of less than 4%; or (iii) a leverage ratio of less than 4% (or 3% if the
association has a composite 1 CAMELS rating). A "significantly undercapitalized"
institution is defined as a savings association that has: (i) a total risk-based
capital ratio of less than 6%; or (ii) a Tier 1 risk-based capital ratio of less
than 3%; or (iii) a leverage ratio of less than 3%. A "critically
undercapitalized" savings association is defined as a savings association that
has a ratio of "tangible equity" to total assets of less than 2%. Tangible
equity is defined as core capital plus cumulative perpetual preferred stock (and
related surplus) less all intangibles other than qualifying supervisory goodwill
and certain purchased mortgage servicing rights. The OTS may reclassify a well-
capitalized savings association as adequately capitalized and may require an
adequately capitalized or undercapitalized association to comply with the
supervisory actions applicable to associations in the next lower capital
category (but may not reclassify a significantly undercapitalized association as
critically undercapitalized) if the OTS determines, after notice and an
opportunity for a hearing, that the savings association is in an unsafe or
unsound condition or that the association has received and not corrected a less-
than-satisfactory rating for any CAMELS rating category. The Association is
classified as "well capitalized" under these regulations.

     Dividend Limitations.  Under OTS regulations, the Association is not
permitted to pay dividends on its capital stock if its regulatory capital would
thereby be reduced below the amount then required for the liquidation account
established for the benefit of certain depositors of the Association at the time
of its conversion to stock form.  In addition, savings institution subsidiaries
of savings and loan holding companies are required to give the OTS 30 days'
prior notice of any proposed declaration of dividends to the holding company.

     OTS regulations require that savings institutions submit notice to the OTS
prior to making a capital distribution if (a) they would not be well-capitalized
after the distribution, (b) the distribution would result in the retirement of
any of the institution's common or preferred stock or debt counted as its
regulatory capital, or (c) the institution is a subsidiary of a holding company.
A savings institution must make application to the OTS to pay a capital
distribution if (x) the institution would not be adequately capitalized
following the distribution, (y) the institution's total distributions for the
calendar year exceeds the institution's net income for the calendar year to date
plus its net income (less distributions) for the preceding two years, or (z) the
distribution would otherwise violate applicable law or regulation or an
agreement with or condition imposed by the OTS.  If neither the savings
institution nor the proposed capital distribution meet any of the foregoing
criteria, then no notice or application is required to be filed with the OTS
before making a capital distribution.  The OTS may disapprove or deny a capital
distribution if in the view of the OTS, the capital distribution would
constitute an unsafe or unsound practice.

     Under the OTS' prompt corrective action regulations, the Association is
also prohibited from making any capital distributions if, after making the
distribution, the Association would have: (i) a total risk-based capital ratio
of less than 8.0%; (ii) a Tier 1 risk-based capital ratio of less than 4.0%; or
(iii) a leverage ratio of less than 4.0%. However, the OTS, after consultation
with the FDIC, may permit an otherwise prohibited stock repurchase if it is made
in connection with the issuance of additional shares in an equivalent amount,
and the repurchase will reduce the institution's financial obligations or
otherwise improve the institution's financial condition.

     In addition to the foregoing, earnings of the Association appropriated to
bad debt reserves and deducted for Federal income tax purposes are not available
for payment of cash dividends or other distributions to stockholders without
payment of taxes at the then current tax rate by the Association on the amount
of earnings removed from the reserves for such distributions.  See "Taxation."

     Safety and Soundness Standards.  Under FDICIA, as amended by the Riegle
Community Development and Regulatory Improvement Act of 1994 (the "CDRI Act"),
each Federal banking agency is required to establish safety and soundness
standards for institutions under its authority.  The Federal banking agencies,
including the OTS, have released Interagency Guidelines Establishing Standards
for Safety and Soundness establishing deadlines for submission

                                       23
<PAGE>

and review of safety and soundness compliance plans. The guidelines require
savings institutions to maintain internal controls, information systems and
audit systems that are appropriate for the size, nature and scope of the
institution's business. The guidelines also establish certain basic standards
for loan documentation, credit underwriting, interest rate risk exposure and
asset growth. The guidelines further provide that savings institutions should
maintain safeguards to prevent the payment of compensation, fees and benefits
that are excessive or that could lead to material financial loss, and should
take into account factors such as comparable compensation practices at
comparable institutions. If the OTS determines that a savings institution is not
in compliance with the safety and soundness guidelines, it may require the
institution to submit an acceptable plan to achieve compliance with the
guidelines. A savings institution must submit an acceptable compliance plan to
the OTS within 30 days of receipt of a request for such a plan. Failure to
submit or implement a compliance plan may subject the institution to regulatory
sanctions. Management believes that the Association already meets substantially
all the standards adopted in the interagency guidelines, and therefore, does not
believe that implementation of these regulatory standards will materially affect
the Association's operations.

     Additionally, under FDICIA, as amended by the CDRI Act, the Federal banking
agencies have established standards relating to the asset quality and earnings
that the agencies determined to be appropriate.  Under these guidelines, a
savings institution should maintain systems, commensurate with its size and the
nature and scope of its operations, to identify problem assets and prevent
deterioration in those assets, as well as to evaluate and monitor earnings and
ensure that earnings are sufficient to maintain adequate capital and reserves.
Management believes that the asset quality and earnings standards will not have
a material effect on the Association's operations.

     The Federal banking agencies, including the OTS, have also established Year
2000 readiness safety and soundness guidelines requiring all insured depository
institutions to implement procedures by specified key dates to ensure the
institution can continue business operations after January 1, 2000.  Every
institution must identify its  internal and external "mission-critical" systems
(i.e., those systems vital to the continuance of a core business activity) and
develop a written plan establishing priorities, oversight and reasonable
deadlines to complete the testing and renovation of mission-critical systems.
In  addition, an institution must prepare a written business resumption
contingency plan that defines scenarios where mission-critical systems might
fail, evaluates contingency options to keep business operations going and
provides for testing of the contingency plan by an independent party. Every
depository institution must also identify among its customers those persons that
represent a material risk to the institution in the event the customer is not
Year 2000 compliant and implement appropriate risks controls to manage and
mitigate the customer's Year 2000 risk to the institution.  The federal banking
agencies will examine the institution's overall progress in meeting the Year
2000 readiness guidelines.  In the event an institution has failed to renovate
its mission-critical systems or is not on schedule with key dates, the
institution must draft a remediation contingency plan outlining alternative
strategies to comply with the guidelines and locate available third party
providers.  The agencies, in their sole discretion, may take actions under the
FDICIA, the safety and soundness guidelines or any other action available to
them, including enforcement action, to ensure an institution's Year 2000
readiness.  For additional information, see "Management's Discussion and
Analysis or Plan of Operation --Year 2000 Readiness Disclosure" in the Annual
Report.

     Deposit Insurance.  The Association is required to pay assessments based on
a percent of its insured deposits to the FDIC for insurance of its deposits by
the FDIC through the SAIF.  Under the Federal Deposit Insurance Act, the FDIC is
required to set semi-annual assessments for SAIF-insured institutions at a level
necessary to maintain the designated reserve ratio of the SAIF at 1.25% of
estimated insured deposits or at a higher percentage of estimated insured
deposits that the FDIC determines to be justified for that year by circumstances
raising a significant risk of substantial future losses to the SAIF.

     Under the FDIC's risk-based assessment system, the assessment rate for an
insured depository institution depends on the assessment risk classification
assigned to the institution by the FDIC, which is determined by the
institution's capital level and supervisory evaluations.  Based on the data
reported to regulators for the date closest to the last day of the seventh month
preceding the semi-annual assessment period, institutions are assigned to one of
three capital groups -- well capitalized, adequately capitalized or
undercapitalized -- using the same percentage criteria as under the prompt
corrective action regulations.  See "-- Prompt Corrective Regulatory Action."
Within each capital group, institutions are assigned to one of three subgroups
on the basis of supervisory evaluations by the institution's

                                       24
<PAGE>

primary supervisory authority and such other information as the FDIC determines
to be relevant to the institution's financial condition and the risk posed to
the deposit insurance fund. Subgroup A will consist of financially sound
institutions with only a few minor weaknesses. Subgroup B consists of
institutions that demonstrate weaknesses which, if not corrected, could result
in significant deterioration of the institution and increased risk of loss to
the deposit insurance fund. Subgroup C consists of institutions that pose a
substantial probability of loss to the deposit insurance fund unless effective
corrective action is taken.

     SAIF deposit insurance assessment rates are zero for well capitalized
institutions with the highest supervisory ratings and 0.27% of insured deposits
for institutions in the highest risk-based premium category.   Until December
31, 1999, SAIF-insured institutions will be required to pay assessments to the
FDIC at the rate of 6.5 basis points to help fund interest payments on certain
bonds issued by the Financing Corporation ("FICO"), an agency of the federal
government established to finance takeovers of insolvent thrifts.  During this
period, Bank Insurance Fund ("BIF") members will be assessed for these
obligations at the rate of 1.3 basis points.  After December 31, 1999, both BIF
and SAIF members will be assessed at the same rate for FICO payments.

     Uniform Lending Standards.  Under OTS regulations, savings association must
adopt and maintain written policies that establish appropriate limits and
standards for extensions of credit that are secured by liens or interests in
real estate or are made for the purpose of financing permanent improvements to
real estate.  These policies must establish loan portfolio diversification
standards, prudent underwriting standards, including loan-to-value limits, that
are clear and measurable, loan administration procedures and documentation,
approval and reporting requirements.  The real estate lending policies must
reflect consideration of the Interagency Guidelines for Real Estate Lending
Policies (the "Interagency Guidelines") that have been adopted by the federal
bank regulators.

     The Interagency Guidelines, among other things, call upon depository
institutions to establish internal loan-to-value limits for real estate loans
that are not in excess of the following supervisory limits: (i) for loans
secured by raw land, the supervisory loan-to-value limit is 65% of the value of
the collateral; (ii) for land development loans (i.e., loans for the purpose of
improving unimproved property prior to the erection of structures), the
supervisory limit is 75%; (iii) for loans for the construction of commercial,
multifamily or other nonresidential property, the supervisory limit is 80%; (iv)
for loans for the construction of one- to four-family properties, the
supervisory limit is 85%; and (v) for loans secured by other improved property
(e.g., farmland, completed commercial property and other income-producing
property including nonowner-occupied, one- to four-family property), the limit
is 85%.  Although no supervisory loan-to-value limit has been established for
owner-occupied, one- to four-family and home equity loans, the Interagency
Guidelines state that for any such loan with a loan-to-value ratio that equals
or exceeds 90% at origination, an institution should require appropriate credit
enhancement in the form of either mortgage insurance or readily marketable
collateral.

     The Interagency Guidelines state that it may be appropriate in individual
cases to originate or purchase loans with loan-to-value ratios in excess of the
supervisory loan-to-value limits, based on the support provided by other credit
factors.  The aggregate amount of loans in excess of the supervisory loan-to-
value limits, however, should not exceed 100% of total capital and the total of
such loans secured by commercial, agricultural, multifamily and other non-one-
to-four family residential properties should not exceed 30% of total capital.
The supervisory loan-to-value limits do not apply to certain categories of loans
including loans insured or guaranteed by the U.S. government and its agencies or
by financially capable state, local or municipal governments or agencies, loans
backed by the full faith and credit of a state government, loans that are to be
sold promptly after origination without recourse to a financially responsible
third party, loans that are renewed, refinanced or restructured without the
advancement of new funds, loans that are renewed, refinanced or restructured in
connection with a workout, loans to facilitate sales of real estate acquired by
the institution in the ordinary course of collecting a debt previously
contracted in good faith and loans where the real estate is not the primary
collateral.

     Management believes that the Association's current lending policies conform
to the Interagency Guidelines and does not anticipate that the Interagency
Guidelines will have a material effect on its lending activities.

                                       25
<PAGE>

     Federal Reserve System.  Pursuant to regulations of the Federal Reserve
Board, a savings institution must maintain average daily reserves transaction
accounts.  Reserves equal to 3% must be maintained on transactions accounts
between $5.0 million and $44.3 million, plus 10% on the remainder.  This
percentage is subject to adjustment by the Federal Reserve Board.  Because
required reserves must be maintained in the form of vault cash or in a non-
interest bearing account at a Federal Reserve Bank, the effect of the reserve
requirement is to reduce the amount of the institution's interest-earning
assets.  As of September 30, 1999, the Association is a non-reporting
institution due to the fact they do not have transaction accounts subject to the
reserve requirements.

     Activities Restrictions.  The Board of Directors of the Corporation
presently intends to operate the Corporation as a unitary savings and loan
holding company.  There are generally no restrictions on the activities of a
unitary savings and loan holding company.  However, if the director of OTS
determines that there is reasonable cause to believe that the continuation by a
savings and loan holding company of an activity constitutes a serious risk to
the financial safety, soundness, or stability of its subsidiary savings
institution, the Director of OTS may impose such restrictions as deemed
necessary to address such risk and limiting (i) payment of dividends by the
savings institution, (ii) transactions between the savings institution and its
affiliates, and (iii) any activities of the savings institution that might
create a serious risk that the liabilities of the holding company and its
affiliates may be imposed on the savings institution.

     Notwithstanding the above rules as to permissible business activities of
unitary savings and loan holding companies, if the savings institution
subsidiary of such a holding company fails to meet the QTL Test, then within one
year after the institution ceased to be a QTL, such unitary savings and loan
holding company shall register as and be deemed to be a bank holding company and
will become subject to the activities restrictions applicable to bank holding
companies.  See "Regulation of the Association -- Qualified Thrift Lender Test."

     If the Company were to acquire control of another savings institution,
other than through merger or other business combination with the Association,
the Company would thereupon become a multiple savings and loan  holding company.
Except where such acquisition is pursuant to the authority to approve emergency
acquisitions and where each subsidiary savings institution meets the QTL Test,
the activities of the Company and any of its subsidiaries (other than the
Association, or other subsidiary savings institutions) would thereafter be
subject to further restrictions.  The Home Owners' Loan Act provides that, among
other things, no multiple savings and loan holding company or subsidiary thereof
which is not a savings institution shall commence or continue for a limited
period of time after becoming a multiple savings and loan holding company or
subsidiary thereof, any business activity, upon prior notice to, and no
objection by the OTS, other than (i) furnishing or performing management
services for a subsidiary savings institution, (ii) conducting an insurance
agency or escrow business, (iii) holding, managing, or liquidating assets owned
by or acquired from a subsidiary savings institution, or (iv) holding or
managing properties used or occupied by a subsidiary savings institution, (v)
acting as trustee under deeds of trust, (vi) those activities previously
authorized by regulation on March 5, 1987 to be directly engaged in by multiple
savings and loan holding companies, or (vii) those activities authorized by the
Federal Reserve Board as permissible for bank holding companies, unless the
Director of OTS by regulation prohibits or limits such activities for savings
and loan holding companies.  Those activities described in (vii) above must also
be approved by the Director of OTS prior to being engaged in by a multiple
savings and loan holding company.

     The Director of OTS may also approve acquisitions resulting in the
formation of a multiple savings and loan holding company which controls savings
institutions in more than one state, if (i) the multiple savings and loan
holding company involved controls a savings institution which operated a home or
branch office in the state of the institution to be acquired as of March 5,
1987;  (ii) the acquiror is authorized to acquire control of the savings
institution pursuant to the emergency acquisition provisions of the Federal
Deposit Insurance Act; or (iii) the laws of the state in which the institution
to be acquired is located specifically permit institutions to be acquired by
state-chartered institutions or savings and loan holding companies located in
the state where the acquiring entity is located (or by a holding company that
controls such state-chartered savings institutions).

                                       26
<PAGE>

Regulation of the Company

     General.  The Corporation is a savings and loan holding company within the
meaning of the Home Owners' Loan Act.  As such, the Corporation is registered
with the OTS and is subject to OTS regulations, examinations, supervision and
reporting requirements.  As a subsidiary of a savings and loan holding company,
the Association is subject to certain restrictions in its dealings with the
Corporation and affiliates thereof.   The Company is also required to file
certain reports with, and otherwise comply with the rules and regulations of the
SEC under federal securities laws.

     Restrictions on Acquisitions.  The Home Owners' Loan Act generally
prohibits a savings and loan holding company, without prior approval of the
Director of OTS, from (i) acquiring control of any other savings institution or
savings and loan holding company or controlling the assets thereof or (ii)
acquiring more than 5% of the voting shares of a savings institution or holding
company thereof which is not a subsidiary.  Under certain circumstances a
registered savings and loan holding company is permitted to acquire, with the
approval of the Director of OTS, up to 15% of the voting shares of an under-
capitalized savings association pursuant to a "qualified stock issuance" without
that savings association being deemed controlled by the holding company.  In
order for the shares acquired to constitute a "qualified stock issuance," the
shares must consist of previously unissued stock or treasury shares, the shares
must be acquired for cash, the savings institution holding company's other
subsidiaries must have tangible capital of at least 6 1/2% of total assets,
there must not be more than one common director or officer between the savings
institution holding company and the issuing savings institution and transactions
between the savings institution and the savings institution holding company and
any of its affiliates must conform to Sections 23A and 23B of the Federal
Reserve Act.  Except with the prior approval of the Director of OTS, no director
or officer of a savings institution holding company or person owning or
controlling by proxy or otherwise more than 25% of such company's stock, may
also acquire control of any savings institution, other than a subsidiary savings
institution, or of any other savings and loan holding company.

     OTS regulations permit federal savings institutions to branch in any state
or states of the United States and its territories.  Except in supervisory cases
or when interstate branching is otherwise permitted by state law or other
statutory provision, a federal savings institution may not establish an out-of-
state branch unless (i) the federal institution qualifies as a QTL or as a
"domestic building and loan association" under (S)7701(a)(19) of the Internal
Revenue Code and the total assets attributable to all branches of the
institution in the state would qualify such branches taken as a whole for
treatment as a QTL or as a domestic building and loan association and (ii) such
branch would not result in (a) formation of a prohibited multi-state multiple
savings and loan holding company or (b) a violation of certain statutory
restrictions on branching by savings institution subsidiaries of banking holding
companies.  Federal savings institutions generally may not establish new
branches unless the institution meets or exceeds minimum regulatory capital
requirements.  The OTS will also consider the institution's record of compliance
with the Community Reinvestment Act of 1977 in connection with any branch
application.

Taxation

     Federal Income Taxation.   The Company and the Association will file
individual federal income tax returns.

     Thrift institutions are subject to the provisions of the Code in the same
general manner as other corporations. Prior to recent legislation, institutions
such the Association which met certain definitional tests and other conditions
prescribed by the Code benefitted from certain favorable provisions regarding
their deductions from taxable income for annual additions to their bad debt
reserve.  For purposes of the bad debt reserve deduction, loans were separated
into "qualifying real property loans," which generally are loans secured by
interests in certain real property, and nonqualifying loans, which are all other
loans.  The bad debt reserve deduction with respect to nonqualifying loans was
based on actual loss experience, however, the amount of the bad debt reserve
deduction with respect to qualifying real property loans could be based upon
actual loss experience (the "experience method") or a percentage of taxable
income determined without regard to such deduction (the "percentage of taxable
income method").  Legislation repealed the percentage of taxable income method
of calculating the bad debt reserve.  The Association historically had elected
to use the percentage method.

                                       27
<PAGE>

     Earnings appropriated to an institution's bad debt reserve and claimed as a
tax deduction were not available for the payment of cash dividends or for
distribution to shareholders (including distributions made on dissolution or
liquidation), unless such amount was included in taxable income, along with the
amount deemed necessary to pay the resulting federal income tax.

     Beginning with the first taxable year beginning after December 31, 1995,
savings institutions, such as the Association, will be treated the same as
commercial banks.  Institutions with $500 million or more in assets will only be
able to take a tax deduction when a loan is actually charged off.  Institutions
with less than $500 million in assets will still be permitted to make deductible
bad debt additions to reserves, but only using the experience method.

     The Association's federal corporate income tax returns have not been
audited in the last five years.

     Under provisions of the Revenue Reconciliation Act of 1993 ("RRA"), enacted
on August 10, 1993, the maximum federal corporate income tax rate was increased
from 34% to 35% for taxable income over $10.0 million, with a 3% surtax imposed
on taxable income over $15.0 million.  Also under provisions of RRA, a separate
depreciation calculation requirement has been eliminated in the determination of
adjusted current earnings for purposes of determining alternative minimum
taxable income, rules relating to payment of estimated corporate income taxes
were revised, and certain acquired intangible assets such as goodwill and
customer-based intangibles were allowed a 15-year amortization period.
Beginning with tax years ending on or after January 1, 1993, RRA also provides
that securities dealers must use mark-to-market accounting and generally reflect
changes in value during the year or upon sale as taxable gains or losses.  The
IRS has indicated that financial institutions which originate and sell loans
will be subject to the rule.

     State Income Taxation.  The State of Delaware imposes no income or
franchise taxes on savings institutions. The State of Colorado taxes the
Association's federal taxable income, adjusted for interest income received
directly from federal agencies, at a 5% rate.


Item 2.  Description of Property
--------------------------------

     The following table sets forth information regarding the Association's sole
office at September 30, 1999.


                                               Book Value at
                         Year     Owned or     September 30,   Approximate
                        Opened     Leased          1999       Square Footage
                        ------     ------      -------------  --------------


Main office:              1975      Owned          $22,600        3,000
801 Swink Avenue
Rocky Ford, Colorado 81067


     The book value of the Association's investment in premises and equipment
totaled approximately $89,700 at September 30, 1999.  See Note 5 of Notes to
Financial Statements in the Annual Report.


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

     From time to time, the Association is a party to various legal proceedings
incident to its business.  At September 30, 1999, there were no legal
proceedings to which the Company or the Association was a party, or to which any
of their property was subject, which were expected by management to result in a
material loss to the Company or the Association.  There are no pending
regulatory proceedings to which the Company, the Association or its subsidiaries
is a party or to which any of their properties is subject which are currently
expected to result in a material loss.

                                       28
<PAGE>

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

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended September 30, 1999.

                                    PART II


Item 5.  Market for Common Equity and Related Stockholder Matters
-----------------------------------------------------------------

     The information contained under the section captioned "Market Price and
Dividend Information"  in the Annual Report is incorporated herein by reference.

Item 6.  Management's Discussion and Analysis or Plan of Operation
------------------------------------------------------------------

     The information contained in the section captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

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

     The financial statements contained in the Annual Report which are listed
under Item 13 herein are incorporated herein by reference.

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

     None.


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
----------------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------

     The information contained under the section captioned "Proposal I --
Election of Directors" in the Proxy Statement is incorporated herein by
reference.  Information required by Item 405 of Regulation S-B is incorporated
by reference from the section captioned "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Proxy Statement.

Item 10.  Executive Compensation
--------------------------------

     The information contained under the section captioned "Executive
Compensation and Other Benefits" in the Proxy Statement is incorporated herein
by reference.

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

     (a) Security Ownership of Certain Beneficial Owners

         The information required by this item is incorporated herein by
         reference to the section captioned "Voting Securities and Principal
         Holders Thereof" in the Proxy Statement.

     (b) Security Ownership of Management

                                       29
<PAGE>

         Information required by this item is incorporated herein by reference
         to the sections captioned "Proposal I -- Election of Directors" and
         "Voting Securities and Principal Holders Thereof" in the Proxy
         Statement.

     (c) Changes in Control

         Management of the Company knows of no arrangements, including any
         pledge by any person of securities of the Company, the operation of
         which may at a subsequent date result in a change of control of the
         registrant.

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

     The information required by this item is incorporated herein by reference
to the section captioned "Transactions with Management" in the Proxy Statement.

Item 13.  Exhibits List and Reports on Form 8-K
-----------------------------------------------

     (a) List of Documents Filed as Part of This Report.
         ----------------------------------------------

         (1) Consolidated Financial Statements. The following financial
             statements of the registrant are included herein under Item 7. The
             remaining information appearing in the Annual Report is not deemed
             to be filed as part of this Annual Report on Form 10-KSB, except as
             expressly provided herein.

             1.   Independent Auditors' Report

                  (a) Statements of Financial Condition as of September 30,
                      1999 and 1998
                  (b) Statements of Income for the Years Ended September 30,
                      1999 and 1998
                  (c) Statements of Equity for the Years Ended September 30,
                      1999 and 1998
                  (d) Statements of Cash Flows for the Years Ended September 30,
                      1999 and 1998
                  (e) Notes to Financial Statements

          (2) Financial Statement Schedules.  None
              -----------------------------

          (3) Exhibits.  The following exhibits are either filed as part of this
              --------
                         Annual Report on Form 10-KSB or incorporated herein
                         by reference:


Exhibit No.         Description
-------------       -----------

  * 3.1        Certificate of Incorporation of Rocky Ford Financial, Inc.

  * 3.2        Bylaws of Rocky Ford Financial, Inc.

  * 10.1       Proposed Employment Agreement between Rocky Ford Federal
               Savings and Loan Association and Keith E. Waggoner +

  * 10.2       Proposed Employment Agreement between Rocky Ford Financial,
               Inc. and Keith E. Waggoner +

  * 10.3       Proposed Rocky Ford Financial, Inc. 1997 Stock Option and
               Incentive Plan +

  * 10.4       Proposed Rocky Ford Financial, Inc. Management Recognition Plan +

                                       30
<PAGE>

  * 10.5       Rocky Ford Federal Savings and Loan Association Retirement Plan
               for Directors and Senior Officer +

  * 10.6       Proposed Rocky Ford Federal Savings and Loan Association
               Incentive Compensation Plan +

     13        Annual Report to Stockholders

     23        Consent of Grimsley, White & Company

     27        Financial Data Schedule

(b) Reports on Form 8-K.  No current reports on Form 8-K have been filed during
    -------------------
    the last quarter of the fiscal year covered by this report.

_____________
*    Incorporated by reference from Registration Statement on Form SB-2 filed
     January 27, 1997 (File No. 333-20489).
+    Management contract or compensation plan arrangement.

                                       31
<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                 ROCKY FORD FINANCIAL, INC.


Date:  December 20,1999          By:  /s/ Keith E. Waggoner
                                      --------------------------------------
                                       Keith E. Waggoner
                                       President and Chief Executive Officer
                                       (Duly Authorized Representative)

   In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


By: /s/ Keith E. Waggoner                             Date:  December 20, 1999
   -----------------------------------------------
    Keith E. Waggoner
    President and Chief Executive Officer
    (Principal Executive, Financial and Accounting
    Officer)


By: /s/ Donald F. Gause                               Date: December 20, 1999
   -----------------------------------------------
    Donald F. Gause
    Chairman of the Board of Directors


By: /s/ Norman Bailey                                 Date: December 20, 1999
   -----------------------------------------------
    Norman Bailey
    Director


By: /s/ William E. Burrell                            Date: December 20, 1999
   -----------------------------------------------
    William E. Burrell
    Director

By: /s/ Francis E. Clute                              Date: December 20, 1999
   -----------------------------------------------
    Francis E. Clute
    Director


By: /s/ Brian H. Hancock                              Date: December 20, 1999
   -----------------------------------------------
    Brian H. Hancock
    Director


By: /s/ R. Dean Jones                                 Date: December 20, 1999
   -----------------------------------------------
    R. Dean Jones
    Director


By: /s/ Wayne W. Whittaker                            Date: December 20, 1999
   -----------------------------------------------
    Wayne W. Whittaker
    Director

                                      32