EXHIBIT 13

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             [Background of the following repeated on entire page]

                     [STRATEGIC PLAN FOR FUTURE DIRECTION]

                              [Picture of a ship]

                             [Charting the course.]

                              [Picture of Sextant]
                           [Lakeview Financial Corp.]
                              [1996 Annual Report]
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ABOUT THE COMPANY
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Lakeview  Financial  Corp.  (the  "Corporation")  is a  New  Jersey  corporation
organized as the Holding  Company for Lakeview  Savings Bank, on March 25, 1994.
The Bank converted  from a Mutual  Savings Bank to a publicly  traded Company on
December 22, 1993.

Lakeview  Savings Bank is a New Jersey  chartered  stock savings bank located in
Paterson, New Jersey. The Bank operates eight (8) offices located in Passaic and
Bergen  Counties,  New  Jersey.  The  principal  business  of  the  Bank  is the
acceptance of savings  deposits from the general public and the  origination and
purchase  of  mortgage  loans for the  purpose  of  constructing,  financing  or
refinancing of one-to-four  family  residences,  multi-family  buildings and the
purchase of  government  and agency  securities.  The Bank is also active in the
origination of home equity loans, and to a lesser extent,  mortgages  secured by
commercial properties.

Lakeview's common stock is traded over-the-counter on the NASDAQ National Market
System appearing under the symbol "LVSB". As of July 31, 1996,  2,265,704 shares
of common stock were outstanding.


                                    CONTENTS

To our Shareholders...................................................        2

Planning For The Year 2000............................................        4

Management's Discussion and Analysis of Financial Condition
  and Results of Operation............................................        9

Consolidated Financial Statements.....................................       14

Independent Auditors' Report..........................................       40
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                                          Charting The Course [Picture of Ship]
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Selected Financial Data

The following table sets forth certain  information  concerning the consolidated
financial  position  and  operating  data  of the  Savings  Bank  at  the  dates
indicated:
<TABLE>
<CAPTION>


                                                                                              July 31

                                                                                        (Dollars in Thousands)

                                                                1992          1993          1994        1995            1996
------------------------------------------------------------------------------------------------------------------------------
Selected Financial Condition Data:

<S>                                                           <C>           <C>          <C>          <C>            <C>      
Assets....................................................    $198,400      $207,462     $ 413,725    $419,212       $ 457,860
Loans Receivable, Net.....................................     145,277       137,301       136,143     142,123         163,457
Mortgage-Backed securities................................      32,137        43,579       173,067     175,375         121,462
Investments...............................................       1,015            16        62,637      55,738          40,821
Investments and Mortgage-Backed Securities held for sale...      8,359        12,898        11,269       8,567          89,967
Excess of Cost Over Fair-Value of Net Assets Acquired......        898           825        12,817      11,497          10,176
Savings Deposits...........................................    166,668       164,130       344,915     343,489         354,247
Other Borrowings...........................................      8,500        18,500        19,021      19,859          54,721
Stockholders' equity.......................................     19,872        22,211        46,982      49,440          45,760
Selected Operating Data:                                       
                                                               
Gross Interest Income......................................     16,469        15,179        18,947      28,430          30,972
Net Interest Income........................................      6,795         8,025        11,212      14,892          14,423
Other Income...............................................      1,251         2,010         2,608       7,206           7,030
Net Income.................................................      1,624         2,339         4,571       6,295           6,274
Return on Average Assets...................................        .84%         1.13%         1.16%'      1.50%           1.42%
Cash Dividend Per Common Share.............................        N/A           N/A         .0625         .25             .25
Asset Quality Data:                                            
                                                               
Non-Performing Loans.......................................     16,377        13,540         8,928       3,372           2,417
Other Non-Performing.......................................        N/A           N/A           N/A         850             494
Real Estate Owned (REO)....................................      4,234         6,575         3,762       3,608           1,667
------------------------------------------------------------------------------------------------------------------------------
Total Non-Performing Assets................................     20,611        20,115        12,690       7,830           4,578
------------------------------------------------------------------------------------------------------------------------------
Non-Performing Assets to Assets Ratio......................      10.39%         9.70%         3.07%       1.87%           1.00%
Loan Allowances............................................      2,493         2,638         1,714       2,535           3,073
REO Allowances.............................................        709           823           188           -               -
------------------------------------------------------------------------------------------------------------------------------
Total Allowances...........................................   $  3,202        $3,461        $1,902      $2,535          $3,073
------------------------------------------------------------------------------------------------------------------------------
Total Allowances to Non-Performing Assets                                                                              
(Coverage Ratio)...........................................      15.54%        17.21%        14.99%       32.4%           67.1%

</TABLE>

     [GRAPH of ASSETS (in millions) 1992-1996 amounts are shown above in the
                    Selected Financial Condition Data Table]

   [GRAPH of NET INCOME (in millions) 1992-1996 amounts are shown above in the
                    Selected Financial Condition Data Table]]

       [GRAPH of NON-PERFORMING ASSETS (in millions) 1992-1996 amounts are
          shown above in the Selected Financial Condition Data Table]]



1    Calculated  exclusion  of $1.315 million from accounting changes related to
     FASB 109. 1
                                                                              1
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[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
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To Our Shareholders:

The past fiscal year was an exceptional one for Lakeview Financial Corp. and our
subsidiaries. Perhaps the most symbolic fact was that every goal in our Business
Plan was either met or surpassed. Our Plan calls for us to be a full provider of
financial  services  to  our  whole  community;   individuals,   businesses  and
professionals.  We shall  continue to work to  strengthen  this  position in the
future.

"Charting the Course" is the theme that is so appropriate  for this years Annual
Report,  your  management and directors have spent endless hours  developing and
executing a Plan to bring Lakeview into the 21st Century. As you review the next
few  pages of  discussion  you will  find  that  the Plan is well  thought  out,
designed  specifically for Lakeview,  Charting the Course that will successfully
bring us to our destination. Quoting another banker, "If you choose to sail upon
the seas of banking,  build your bank as you would your ship,  strong  enough to
sail safely through the heaviest seas".

Allow me to review some of the accomplishments during the year:

o During the past twelve (12) months our stock price went from $16.02 to $20.50,
  an increase of 27.9%, adjusting for January's 10% stock dividend.

o Price to stated  book  value is 103% and the price to  tangible  book value is
  134%.

o Loans went from $142  million to $163  million an increase of 15%,  which is a
  major  component  of our plan,  to convert  securities  available  for sale to
  higher yielding loans.

o Non-performing  assets  decreased to $4.6 million from $7.8 million during the
  past  year,  reaching  our goal of  reducing  non-performing  assets  to 1% of
  assets.  This was a primary focus for  management  during the past twelve (12)
  months.

o Reserves for loan losses now total 105.6% of  nonperforming  loans,  a goal we
  set one year ago and have successfully achieved.

o Checking and savings accounts grew 12% for the year.  Providing a stable  fee 
  based source of funds that will enhance future earnings.

o As a result of loan growth,  gross interest  income went from $28.4 million to
  $30.9 million, an increase of 8.9%.

o Net interest spread  increased to 3.89% from 3.68% a year earlier.  This trend
  should  continue if rates remain stable and we continue to  successfully  grow
  the loan portfolio.

o Return on assets once again was over 1% and our return on average  equity  was
  11.43%.

2

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                                          Charting The Course [Picture of Ship]
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Unquestionably,  the most exciting  business day during our fiscal year was June
25, 1996, when Industry Mortgage Company ("IMC") went public. Branchview, Inc, a
subsidiary of Lakeview  Financial Corp.  received 545,455 shares of common stock
of IMC in exchange for its  partnership  interest,  coupled  with an  additional
investment  in IMC of 285,473  shares,  providing a total  investment of 830,928
shares of common stock in IMC.  Although it is not reflected in our current book
value the significant  unrecognized gain on our investment will enhance earnings
sailing into the future.

Lakeview  Mortgage Depot,  Inc., a subsidiary of Lakeview  Financial Corp., that
originates and sells loans in the secondary market,  began operations during the
fiscal year. The forecast is that this subsidiary will be profitable  during the
1996-1997  fiscal  year and  bring  significant  recurring  non-interest  income
cruising into future years.

Lakeview Credit Card Services, Inc., a subsidiary of Lakeview Savings Bank, will
be operational in October 1996.  Your bank has entered into a joint venture with
a nationally  recognized  mortgage company that will market secured credit cards
through its customer base. We remain cautiously optimistic as to the results for
this year and  expect to  communicate  our  achievements  in future  shareholder
correspondence.

Looking ahead I am confident that our high performance  goals are attainable and
that we have the right team in place that will reach them.  Our outlook  remains
focused on serving  the needs of our whole  community.  At  Lakeview  we want to
continue to give outstanding service, polite attention and efficient delivery of
financial services to our community.

On behalf of the Board of Directors,  management and employees, please accept my
deepest appreciation for the confidence in investing in Lakeview Financial Corp.
stock. Enhancing the value of your stock continues to be our PRIME INTEREST.

Very truly yours,



/s/Kevin J. Coogan
Kevin J. Coogan
President and
Chief Executive Officer

                                                                              3
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[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

                       Strategic Plan For Future Direction

Planning for the year 2000

In our Annual Report last year we identified  four primary areas of strength and
performance.  They were: 1)high capital levels; 2) lending capacity;  3)improved
asset quality; and 4) operating capacity.  Building on this solid foundation,  a
Strategic Plan (the "Plan"),  has been  developed to guide Lakeview  through Its
evolution from a traditional  thrift (primarily lender for 1 to 4 family housing
units),  to a full service  community  bank  servicing the banking needs of both
individuals and businesses in our neighborhood area.

These expanded  services include lending and providing deposit services (such as
merchant  banking and business  checking  accounts) to  retailers,  professional
firms  and  small  businesses.  As a result of the  continued  consolidation  of
commercial  banks in our market  area,  we identify  this market as being under-
served.

The emphasis of this Plan focuses on three  different  areas:  growth and mix of
our  loan  portfolio,   increased  transaction  accounts,  and  building  equity
investments.  Success in each of these areas will  further  enhance  shareholder
value through increased earnings, franchise value and book value.

Lending

Lending  activity will be  concentrated  on both increasing the size of our loan
portfolio  as well as  changing  the  loan  mix  from  primarily  1 to 4  family
mortgages  and  equity  loans,  to a more  balanced  portfolio  made up of first
mortgages,  equity loans, multi-family and commercial mortgages. We believe this
strategy will take advantage of the  opportunities in our market area as well as
diversify the portfolio, while enhancing interest income.

               [GRAPH of NET INTEREST INCOME on a Quarterly Basis
              Jul 95, Oct 95, Jan 96, Apr 96, Jul 96 amounts shown on p39 -
          Note 24, Quarterly Financial Data (unaudited)(in thousands)]



4
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                                          Charting The Course [Picture of Ship]
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During the fiscal year,  total loans  outstanding have increased by $21 million,
from $142  million to $163  million,  a 15%  increase.  As a result of this loan
growth,  net interest  income has increased in each of the last three  quarters.
This growth has been  accomplished at the same time  Non-Performing  Assets have
declined by 41%, from $7.8 million to $4.6 million.  It's  important to remember
that 1 to 4 family first mortgages,  and equity loans,  will continue to make up
the largest part of our loan portfolio,  representing approximately 70% of loans
outstanding.

Equity  loans have been a key  component  of the bank's  portfolio  since  first
offered in 1987. With last year's addition of a seasoned  consumer loan officer,
increased  marketing  efforts  and  the  introduction  of a  fixed  rate  second
mortgage, fiscal year 1996 has been our most successful year for equity lending.
Over $21.6 million of loans were approved,  while outstanding balances increased
from $37.2 million to $46.7 million,  an increase of $9.5 million.  Equity loans
outstanding now total  approximately  28% of total loans and it is expected that
this portfolio will grow to  approximately  33% of total loans over the next few
years.

Lending  for  multi-family  housing  units has always  been a part of the Bank's
portfolio,  representing  7.85% of loans  outstanding on July 31, 1996. The Plan
calls  for the  further  expansion  of this  portfolio.  As a result of the high
density  population and housing stock of our market area,  which includes a high
percentage  of  small  multi-family  dwellings,  the  Bank  sees  a  significant
opportunity for portfolio growth in the areas we service and know the best.

                [GRAPH of EQUITY LOANS OUTSTANDING (in millions)
                     amounts are shown on a Quarterly basis
               Jul 95 (37,200), Oct 95 (39,464), Jan 96 (42,553),
                        Apr 96 (45,646), Jul 96 (46,700)]

                                                                              5
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[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
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Multi-family  loans outstanding have grown from $9.9 million,  to $12.9 million,
an increase of $3.0  million,  during the fiscal  year.  The Plan calls for this
portfolio to be carefully  increased to approximately  15% of the loan portfolio
over the next four years.

Commercial Mortgages  (non-residential)  are an important part of our commitment
of changing to a full service community bank. This includes lending to the local
business  community which we believe will provide  opportunities  for developing
and expanding transaction account relationships. Success in this area depends on
the encouragement of these  relationships  and developing  products that address
the  specific  needs of these  businesses.  As many of the small and medium size
commercial banks are being  consolidated  with regional banks,  opportunities in
this market area have increased significantly.

Commercial mortgages  outstanding increased from $13.3 million to $19.6 million,
a $6.3 million  increase for the fiscal year. To ensure quality,  the commercial
lending  growth will  intentionally  be slow and closely  monitored.  Commercial
lending  will  be  primarily  within  our  neighborhood   communities  to  local
businesses who employ local  residents.  Over the next four years this portfolio
is expected to grow to 15% of the loan portfolio.

Funding Sources

The  funding of the Bank's  loan  growth is  expected  to come from two  primary
sources,  growth in  transaction  accounts,  i.e.  "NOW'  accounts  and business
checking accounts,  as well as a reduction of our securities  available for sale
portfolio. The result of this strategy will be to increase the percentage of our
assets in higher yielding loans while reducing the percentage of assets in lower
yielding  government  securities.  This  strategy  will result in increased  net
interest income and core earnings.

                    [GRAPH of CHECKING ACCOUNTS (in millions)
                     amounts are shown on a Quarterly basis
               Jul 95 (44,360), Oct 95 (43,940), Jan 95 (45,208),
                        Apr 96 (48,518), Jul 96 (48,550)]

6

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                                          Charting The Course [Picture of Ship]
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             [PICTURE IN CENTER OF PAGE WITH FOLLOWING CAPTION]

[Having built a solid  foundation in the past year,  management has developed an
achievable  Strategic Plan that will guide Lakeview to solid success through the
year 2000 and beyond.]

The attraction of transaction  accounts,  which provide low cost stable funding,
has been one of the primary focuses of our Branch  personnel for over two years.
During our recently  completed  fiscal year, 40% of our total deposit growth was
in  transaction  accounts.  The  bank  has had  initial  success  in  attracting
non-interest  bearing  business  checking  accounts,  and has over 575  business
accounts open at year end, totaling $5.8 million.

As of July 31, 1996,  transaction  accounts totaled $50 million,  an increase of
12% over the prior year's total.  The value of these accounts is easy to see; as
a result of these  "lower  interest  rate"  accounts,  the cost of deposits  was
reduced from 4.00% to 3.88% for the fiscal year.

Equity Investments

     The one area that separates Lakeview from typical financial institutions is
our equity  investments.  These  investments have ranged from stock positions in
Freddie  Mac  and  Fannie  Mae to  partnerships  in  mortgage  companies.  These
investments  have proven to be very  valuable in  enhancing  both book value and
earnings.  Prior  successes have included  substantial  gains in Freddie Mac and
Fannie Mae stock,  as well as last fiscal year's $3.0 million gain from the sale
of our subsidiary investment in residential Money Centers, Inc. (RMC).

Management  believes that banks (like many  industries)  need to leverage  their
talents  and  capabilities  with  others  through   partnerships  and  strategic
alliances.  Lakeview  currently  has three such  investments,  each in different
stages of development and implementation. These are:

1.   Industry  Mortgage Company (IMC) concluded an Initial Public Offering (IPO)
     in June 1996. Lakeview Financial Corp., through its subsidiary  Branchview,
     Inc., was one of eleven limited partners in IMC. As a

                                                                              7
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[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

  result of the IPO, the Company  received  545,455 shares of the new IMC common
  stock in exchange for Its  partnership  interest.  This investment was further
  increased through the purchase of an additional 285,473 shares of common stock
  of IMC.  As of July  31,  1996,  these  shares  had a value in  excess  of $19
  million.  Due to a  restriction  on the sale or  transfer  of these  shares of
  common stock,  Lakeview is required to carry the stock at the historical  cost
  basis of $7.8 million,  until the restrictions are removed, or within one year
  of the restriction  expiring, at which time the shares will be carried at fair
  value.  The  investment in IMC (whose  purpose is to originate and  securitize
  equity  mortgage  products)  offers  opportunity for high rates of return in a
  high growth  industry,  although there is no assurance that such high rates of
  return will be attained.


2.Lakeview  Mortgage  Depot,  Inc.  (LMD),  is a mortgage  company  which  began
  operations in October 1995, which  is  90%  owned by Lakeview  Financial Corp.
  Although the company  had  a  net loss of $124,000,  for the 1996 fiscal year,
  they  reached  a  "break-even" point in May 1996. It is expected, though there
  is no assurance, that LMD will contribute to fiscal year 1997 earnings.

3.Lakeview Credit Card Services,  Inc.  (LCCS),  is a newly formed company which
  has  entered  into a  Joint   Venture   Agreement,  with  a  nationally  known
  mortgage company,  to offer a co-branded  secured credit  card  through  their
  280 broker relationship  network.  This company is wholly  owned  by  Lakeview
  Savings Bank,  and is expected,  though there is  no  assurance,  to  reach  a
  "break-even"  point by early next  year  and  contribute  towards  earnings in
  1998.

The Plan calls for management to continue to seek  opportunities  in the future,
through  participation  in strategic  alliances and  partnerships in high growth
businesses.

Summary

Having built a solid  foundation in the past year,  management  has developed an
achievable  Strategic Plan that will guide Lakeview to solid success through the
year 2000 and  beyond.  Our focus is on building  relationships  with all of our
customers,   providing  full  service  to  our  entire  neighborhood  community,
including  individuals,  professionals  and small  businesses.  We continue  our
progress into the future with  confidence,  based upon the cooperation of all of
our staff members, management team, directors and stockholders.

We continue to chart our course into the future...

8
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                                          Charting The Course [Picture of Ship]
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Management Discussion and Analysis of
Financial Condition and Results of Operation

Comparison of Financial Condition at July 31, 1996 and July 31, 1995

Total assets  increased  $38.7  million,  or 9.2% to $457.9  million at July 31,
1996,  from $419.2  million at July 31, 1995.  The increase was primarily due to
increases  in  loans  receivable,  net,  of  $21.4  million,  $81.4  million  in
investment  securities  available  for sale,  $7.8 million in equity  securities
restricted  for  sale  offsetting  declines  in  investment  securities  held to
maturity of $14.9 million,  mortgage-backed securities held to maturity of $53.9
million,  $1.9 million in real estate  owned,  and  amortization  of  intangible
assets of $1.3 million from the comparison period.

Loans  receivable,  net increased $21.4 million,  or 15.0%, to $163.5 million at
July 31, 1996,  from $142.1  million at July 31,  1995.  Loan  originations  and
purchases  of loans  during the fiscal  year ended July 31, 1996  totaled  $40.8
million and $2.7 million  respectively.  Offsetting  originations in fiscal 1996
were a  combination  of  principal  and  interest  payments  of  $19.7  million,
reclassification  of $332  thousand of loans to real estate owned  ("REO"),  and
$925 thousand from sale of loans.

Loans delinquent 90 days or more decreased to $2.9 million at July 31, 1996 from
$4.2 million at July 31, 1995. The decrease in loan  delinquencies  reflects the
Savings  Bank's  continued  effort  to  resolve  non-performing  loans  and  the
stabilization  of the  economy and real  estate  values in Northern  New Jersey.
Loans  delinquent  90 days or more totaled 1.8% of gross loans at July 31, 1996,
compared to 3.0% at July 31, 1995.

REO, net,  decreased $1.9 million,  or 53.8%,  to $1.7 million at July 31, 1996,
from $3.6 million at July 31, 1995.  The decrease was mainly  attributed to sale
of REO  during  the  twelve  months of $1.6  million,  and  charge  offs of $654
thousand.  Offsetting  the decrease was $332 thousand of loans  receivable  were
transferred into REO.

Non-performing assets (loans 90 days or more delinquent,  non-accrual loans, and
real estate owned) totaled $4.6 million or 1.0% of total assets at July 31, 1996
as compared to $7.8 million or 1.9% of total assets at July 31, 1995.

The investment  securities available for sale portfolio increased $81.4 million,
or  950.2%,  during  the year  ended  July 31,  1996.  The  increase  was mainly
attributed  to the  reclassification  at December 31, 1995,  of $81.3 million of
investment  securities  held to maturity  and $31.5  million of  mortgage-backed
securities  held to maturity to investment  securities  available for sale. This
was done pursuant to the guidelines of the FASB Special Report for SFAS No. 115,
A Guide To Implementation Of Statement 115 On Accounting For Certain Investments
In Debt And Equity Securities. The special report provided that between November
15, 1995, but no later than December 31, 1995, an enterprise  could reaccess the
classification of all securities held at that time and account for any resulting
reclassification  at fair  value.  Reclassification  from the  held to  maturity
category  that  resulted  from  this one time  reassessment  would not call into
question the intent of the enterprise to hold debt securities to maturity in the
future.

Investment  securities  held to maturity  declined $14.9 million,  or 26.7%,  to
$40.8 million at July 31, 1996, from $55.7 million at July 31, 1995. The decline
was mainly attributed to the reclassification as discussed above. Offsetting the
decrease were purchases of investment securities totaling $107.0 million.

Mortgage-backed  securities held to maturity decreased $53.9 million,  or 30.7%,
to $121.5  million at July 31,  1996,  from  $175.4  million  at July 31,  1995.
Purchases of $2.8 million of mortgage-backed securities were offset by principal
repayments  of $25.2  million  from the  portfolio  and the  transfer  discussed
previously.

Equity  securities  restricted for sale increased $7.8 million,  or 100% to $7.8
million at July 31, 1996. In July 1995, Branchview,  a subsidiary of the Savings
Bank,  became  the  sole  owner of  Residential  Money  Center,  Inc.  (RMC),  a
residential mortgage company in Montvale,  New Jersey. RMC owned a 9.09% limited
partnership  interest in Industry  Mortgage Company,  L.P. ("IMC").  On June 25,
1996, IMC completed a reorganization  plan whereby the limited partners received
restricted common stock in exchange for their partnership interest in connection
with a public offering of unrestricted common stock.  Immediately,  prior to the
reorganization,  Branchview purchased a limited partner's half share interest in
IMC for  $4,778,000.  As a result  of the  reorganization,  Branchview  received
830,928  shares  of  restricted   common  stock  in  exchange  for  its  limited
partnership  interest. As of July 31, 1996, Branchview owns 8.87% of IMC and the
market value of such investment was  approximately  $19.9 million,  based on the
quoted market price per share of  unrestricted  stock.  In accordance  with SFAS
115,  Accounting for Certain  Investments in Debt and Equity Securities,  due to
restrictions on the sale or transfer of these shares of common stock under

                                                                              9
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[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

Rule 144 of the 1933 Securities Act,  Lakeview is required to carry the stock at
the historical cost basis of $7.8 million,  until the  restrictions are removed,
or within one year of the restriction expiring, at which time the shares will be
carried at fair value.

Excess of cost over fair value of net assets acquired  decreased $1.3 million or
11.4% to $10.2  million at July 31, 1996,  from $11.5  million at July 31, 1995.
The $1.3 million represents  amortization  during the fiscal year ended July 31,
1996.

Deposits  increased $10.7 million,  or 3.1%, to $354.2 million at July 31, 1996,
from $343.5  million at July 31, 1995.  The increase  was mainly  attributed  to
interest  credited  to  deposits of $14.0  million  offset by a net  decrease in
deposits before interest of $3.3 million.

Borrowings  increased  $35.0  million,  or 184.2%,  to $54.0 million at July 31,
1996,  from $19.0  million at July 31,  1995.  The increase was used to fund the
asset growth.

Shareholders'  equity decreased $3.7 million,  or 7.4%, during the twelve months
ended July 31, 1996, to $45.8  million.  This was primarily due to the charge to
equity  of  $1.8  million  representing  the  change  in  unrealized  losses  on
securities  available for sale, purchase of treasury stock of $6.7 million,  and
purchase of common stock  acquired by ESOP of $1.6  million.  In addition,  cash
dividends  of $582  thousand  were paid  during the year  ended  July 31,  1996.
Offsetting  declines,  net  income for the year  ended  July 31,  1996,  of $6.3
million,  and  amortization  of the employee and management  stock plans of $758
thousand.

Shareholders'  equity averaged $45.6 million during the twelve months ended July
31, 1996, a decrease of $2.5 million,  or 5.2%, compared to $48.1 million during
the twelve  months ended July 31, 1995.  Book value per common share rose $1.49,
or 8.0% to $20.20 at July 31, 1996 from $18.71 at July 31, 1995.

As a result of continued  earnings  progress,  there has been a $.0625 per share
dividend since the 3rd fiscal quarter in 1994. In addition, on January 11, 1996,
the  Company  declared  a special  10% stock  dividend  on the  common  stock to
shareholders  of record  January 23,  1996.  This  resulted  in the  issuance of
227,670 shares of common stock.

The market price of the common stock was $20.50 at July 31, 1996,  compared with
$16.03 the prior year end.  The common  stock of  Lakeview  Financial  Corp.  is
traded on the NASDAQ  National  Market under the symbol of LVSB.  The  quarterly
market  price  ranges  per  common  share  since  conversion  to a stock form of
organization are listed in the table that follows.


For the quarters ended:
<TABLE>
<CAPTION>

                                                  1994                         1995                              1996   
-----------------------------------------------------------------------------------------------------------------------------------
Prices                                             Oct.            Jan.     Apr     Jul.     Oct.       Jan       Apr.     Jul.
<S>                                               <C>             <C>      <C>     <C>      <C>        <C>       <C>      <C>  
High....................................          15.91           13.53    14.44   16.59    17.39      17.88     19.88    21.00
Low.....................................          12.19           11.98    12.95   13.18    15.80      16.02     17.25    17.75
Closing.................................          13.02           12.95    13.98   16.03    16.25      17.25     19.63    20.50
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                        
Comparison of Operating Results 
for the Year Ended July 31, 1996 and 1995

Net  Income:  Net  income for the year ended  July 31,  1996 was  $6,274,000,  a
decrease  of $21  thousand or .3% from net income of  $6,295,000  for the fiscal
year  ended  July 31,  1995.  The  decrease  in net income was due to a $469,000
decrease in net  interest  income,  $176,000  increase in other  expense,  and a
$177,000  decrease in other income,  which was offset by a $712,000  decrease in
provision for loan losses.


Interest  Income:  Total interest income increased $2.6 million or 9.1% to $31.0
million for the year ended July 31,  1996 from $28.4  million for the year ended
July 31,  1995.  The increase  was due  primarily to growth in  interest-earning
assets and an  increase in the average  yield on  interest  earning  assets from
7.37% to 7.53%  due to  generally  increased  market  rates of  interest.  Total
average interest-earning assets for the year ended July 31, 1996 increased $25.7
million or 6.6% to $411.3  million  from $385.6  million for the year ended July
31,  1995.  The increase in  interest-earning  assets was due to the increase in
loan originations and purchases for year ended July 31, 1996.

10
<PAGE>

                                          Charting The Course [Picture of Ship]
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Interest  Expense:  Total interest expense  increased $3.0 million or 22.2% from
$13.5  million  for the year ended July 31,  1995 to $16.5  million for the year
ended July 31, 1996.  The  increase  was due to an increase in  interest-bearing
liabilities.  Total average interest bearing liabilities increased $25.3 million
or 6.9% from $366.8  million for the year ended July 31, 1995 to $392.1  million
for the year ended July 31,  1996.  The  increase  in average  interest  bearing
liabilities  during the year ended July 31, 1996 was coupled with an increase in
average cost for the same period.  Average cost on interest bearing  liabilities
increased  from 3.69% for the year  ended  July 31,  1995 to 4.22 % for the year
ended July 31, 1996 due to generally increased market rates of interest.

Net Interest  Income:  Net interest  income  decreased  3.3% or $469 thousand to
$14.4 million for the year ended July 31, 1996,  from $14.9 million for the year
ended July 31,  1995.  Interest  rate spread  which  represents  the  difference
between the average  yield on interest  earning  assets and the average  cost on
interest  bearing  liabilities  was 3.68% and 3.31% for the years ended July 31,
1995 and 1996, respectively.  The reduced spread was in part due to the interest
rate  sensitivity  of  the  Corporation's  balance  sheet  as  interest  bearing
liabilities repriced faster than  interest-carrying  assets in a rising interest
rate environment.

Other Income: Total other income decreased $177 thousand or 2.7% to $7.0 million
for the year ended July 31,  1996 from $7.2  million for the year ended July 31,
1995. The Bank's  realized gains on investments  increased from $2.1 million for
the year ended July 31, 1995 to $2.8  million for the year ended July 31,  1996.
This  increase  resulted  from the sale of FNMA,  SLMA,  FHLMC and other  equity
securities during 1996. Other operating income decreased $756 thousand from $3.9
million for the year ended July 31, 1995 to $3.1 million for the year ended July
31,  1996.  This  was  mainly  attributed  to a  decrease  of  income  from  the
Branchview,  Inc.  subsidiary from $3.6 million for the year ended July 31, 1995
to $3.5 million for the year ended July 31, 1996.

Other  Expense:  Total other  expenses  increased $176 thousand or 1.6% to $10.9
million for the year ended July 31, 1996 from $10.7  million for the same period
last year. The growth was attributed to an increase in employee  compensation of
$282 thousand or 6.5% to $4.6 million for the year ended July 31, 1996 from $4.4
million for the year ended July 31, 1995.  The increase is mainly  attributed to
the increase in subsidiary  activity of Lakeview Mortgage Depot, Inc. Net losses
from REO  operation  increased  $270  thousand or 41.7% to $921 thousand for the
year ended July 31, 1996 from $650  thousand  for the year ended July 31,  1995.
The increase was mainly  attributed to an increase in provisions  for REO losses
of $152  thousand or 30.3% to $654  thousand  for the year ended July 31,  1996,
from $502  thousand  for the year  ended July 31,  1995.  These  increases  were
partially offset by a decrease in other operating expenses.

     Provision for Losses on Loans:  The Provision for losses on loans decreased
from $1.4 million for the year ended July 31, 1995 compared to $664 thousand for
the year ended July 31,  1996,  due to a reduction in  non-performing  loans and
improved market conditions.  Management of the Savings Bank regularly assess the
credit risk of the loan  portfolio  based on the  information  available at such
times including trends in the local real estate market and levels of the Savings
Bank's non-performing loans and assets. Additional provision for loan losses may
be required as the result of this assessment.

Comparison of Operating Results
for the Year Ended July 31, 1995 and 1994

Net  Income:  Net income for the year ended July  31, 1995 was $6.3 million,  an
increase of $1.7 million or 37.7% from net income of $4.6 million for the fiscal
year ended July 31, 1994. The increase in net income was primarily due to a $3.7
million, or 32.8% increase in net interest income. Net income for the year ended
July 31, 1994  included $1.3 million due to the effect of a change in accounting
for  income  taxes  as a  result  of the  adoption  of  Statement  of  Financial
Accounting Standards No. 109.

Interest Income:  Total interest income increased $9.5 million or 50.1% to $28.4
million for the year ended July 31,  1995 from $18.9  million for the year ended
July 31,  1994.  The increase  was due  primarily to growth in  interest-earning
assets and to a lesser  extent,  an increase  in the  average  yield on interest
earning assets from 7.28% to 7.37%.  Total average  interest-earning  assets for
the year ended July 31, 1995 increased $125.2 million or 48.1% to $385.6 million
from  $260.4  million  for the  year  ended  July  31,  1994.  The  increase  in
interest-eaming assets was due to the investing of the

                                                                             11
<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

proceeds from the  Conversion  and the funds  received from the  Acquisition  in
mortgage-backed securities and investments securities.

Interest  Expense:  Total interest expense  increased $5.8 million or 75.0% from
$7.7  million  for the year ended July 31,  1994 to $13.5  million  for the year
ended July 31, 1995.  The  increase  was due to an increase in  interest-bearing
liabilities. Total average interest bearing liabilities increased $125.9 million
or 52.3% from $240.9  million for the year ended July 31, 1994 to $366.8 million
for the year ended July 31,  1995.  The  increase  in average  interest  bearing
liabilities  during the year ended July 31, 1995 was coupled with an increase in
average cost for the same period.  Average cost on interest bearing  liabilities
increased  from  3.21% for the year  ended  July 31,  1994 to 3.69% for the year
ended July 31, 1995 as market rates  continued to increase  through  April 1995,
offset by a slight decrease in market rates subsequent to April 1995.

Net Interest  Income:  Net interest  income  increased  32.8% or $3.7 million to
$14.9 million for the year ended July 31, 1995,  from $11.2 million for the year
ended July 31, 1994. The increase was due primarily to the growth of the Savings
Bank from the Conversion and the Acquisition mitigated by a decrease in interest
rate spread  during the year ended July 31,  1995.  Interest  rate spread  which
represents the difference  between the average yield on interest  earning assets
and the average cost on interest bearing liabilities was 3.68% and 4.07% for the
years ended July 31, 1995 and 1994, respectively.

Non-Interest Income: Total other income increased $4.6 million or 176.9% to $7.2
million  for the year ended July 31,  1995 from $2.6  million for the year ended
July 31, 1994. Loan fees and service charges increased $420 thousand or 51.6% to
$1.2  million for the year ended July 31, 1995 from $815  thousand  for the year
ended July 31, 1994. The increase was due to an increase in the average  balance
of  deposits  during  the year  ended July 31,  1995.  Additionally,  the Bank's
realized  gains on  investments  increased from $866 thousand for the year ended
July 31, 1994 to $2.1  million for the year ended July 31, 1995.  This  increase
resulted  from  the sale of FNMA  stock  during  1995.  Other  operating  income
increased  $2.9 million  from $927  thousand for the year ended July 31, 1994 to
$3.9  million for the year ended July 31,  1995.  This was due to an increase of
income from the Branchview, Inc. of $3.1 million from $488 thousand for the year
ended  July 31,  1994 to $3.6  million  for the year ended  July 31,  1995.  The
increase  in  income  from  Branchview,  Inc.,  was  due to the  gain on sale of
Residential Money Centers, Inc. ("RMC").

Non-Interest  Expense:  Total other expenses  increased $4.0 million or 59.5% to
$10.7  million for the year ended July 31,  1995 from $6.7  million for the same
period last year. Employee compensation  increased $1.8 million or 71.9% to $4.4
million  for the year ended July 31,  1995 from $2.5  million for the year ended
July 31,  1994.  The  increase  was due  primarily  to the increase in personnel
resulting  from the  Acquisition.  Net losses from REO operation  decreased $669
thousand  or 50.7% to $650  thousand  for the year ended July 31, 1995 from $1.3
million  for the year ended July 31,  1994,  due to a  stabilizing  real  estate
market.  Office occupancy and equipment  expense increased $350 thousand to $830
thousand for the year ended July 31, 1995 from $480  thousand for the year ended
July 31, 1994.  The increase was due  primarily to the  expansion of the Savings
Bank from two branches to eight. The increase in other operating expense for the
year ended July 31, 1995 is attributable to an increase of $253 thousand of FDIC
insurance  expense and an increase of $200 thousand in computer  service expense
which  represents  a full  year of  insurance  assessments  and data  processing
expenses on the deposits  acquired in April 1994.  An increase of $882  thousand
for the year ended July 31, 1995  represents a full year of  amortization of the
deposit premium paid for the acquisition.

Provision  for Losses on Loans:  The  Provision  for  losses on loans  decreased
slightly  from $2.0  million for the year ended July 31,  1994  compared to $1.4
million  for the  year  ended  July  31,  1995 due to  improved  asset  quality.
Management  of the  Savings  Bank  regularly  assess the credit risk of the loan
portfolio based on the information  available at such times including  trends in
the local real  estate  market and level of the  Savings  Bank's  non-performing
loans and assets.  Additional  provisions for loan losses may be required as the
result of this assessment.

Income Taxes:  Income before taxes and cumulative  effect of accounting  changes
increased $4.9 million to $10 million for the year ended July 31, 1995 from $5.1
million  for the year ended July 31,  1994.  Income tax expense  increased  $1.9
million for the year ended July 31, 1995 to $3.7  million  from $1.8 million for
the same period a year earlier. The increase was due primarily to higher pre-tax
income.  Income tax expense as a percentage  of pre-tax  income  increased  from
35.8% for the year  ended  July 31,  1994,  to 37.2% for the year ended July 31,
1995.  The slight  increase in the percentage of tax expense is primarily due to
the higher state tax rate associated with the income from the sale of the assets
of RMC.

12
<PAGE>
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Liquidity and Capital  Resources 

The Bank's primary sources of funds includes savings  deposits,  loan repayments
and prepayments,  cash flow from operations and borrowings from the Federal Home
Loan Bank of New York ("FHLB").  The Bank uses its capital resources principally
to  fund  loan  origination  and  purchases,   repay  maturing   borrowings  for
investments, and for short and long-term liquidity needs. The Bank expects to be
able to fund or refinance,  on a timely  basis,  its  commitments  and long-term
liabilities.

The Bank's liquid  assets  consist of cash and cash  equivalents,  which include
investments  in highly  short-term  investments.  The level of these  assets are
dependent on the Bank's  operating,  financing and investment  activities during
any given  period.  At July 31,  1996,  cash and cash  equivalents  totaled $6.9
million.

The Bank  anticipates  that it will have sufficient  funds available to meet its
current  commitments.  As of July 31, the Bank had  commitments to fund loans of
$13,295,000.

The Bank has completed the repurchase of 662,372 shares as of July 31, 1996. The
repurchased  shares  have been held as  treasury  stock  and are  available  for
general  corporate  purposes. 

The Bank had leverage,  Tier 1 and risk-based  capital ratios of 7.5%, 15.4% and
16.7%,  at  July  31,  1996,  which  exceeded  the  FDIC's  respective   minimum
requirements of 4.00%, 4.00% and 8.00% respectively.


Impact of Inflation  and  Changing  Prices

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

Recent  Legislation

Capitalization of the Savings Association Insurance Fund.

On September 30, 1996, H.R. 1362 was signed into law by the President.  Title II
of H.R. 1362 is titled the Economic  Growth and Paperwork  Reduction Act of 1996
(the "Act").  Among its many  provisions,  the Act provides  for  resolving  the
BIF/SAIF premium disparity.

The BIF/SAIF  legislation provides for a one-time assessment to recapitalize the
SAIF. The  assessment  will be based on the amount of  SAIF-assessable  deposits
held by an  institution  as of March 31,  1995 (with  certain  exceptions).  The
assessment  is effective  on  September  30, 1996 and is payable on the later of
1996,  October 1, 1996 or such date within 60 days as the FDIC shall decide. The
FDIC has made the special assessment payable by November 27, 1996.

The BIF/SAIF  legislation does not specify an actual  assessment but states that
the total  assessment will be equal to the amount  necessary to recapitalize the
SAIF as of October 1, 1996. A recent report of the America's  Community  Bankers
estimated  the  assessment  at  approximately  65.7  basis  points  per  $100 of
SAIF-assessable deposits as of March 31, 1995.


The BIF/SAIF  legislation  provides that the amount of the special assessment is
deductible  under  section 162 of the Internal  Revenue Code (the "Code") in the
year in which the  assessment is paid.  The BIF/SAIF  legislation  also provides
that  section  172 (f) of the Code  will not  apply to  deductions  taken  under
section  162 of the  Code  for the  special  assessment.  The  Savings  Bank has
estimated the amount of assessment to be approximately $2.2 million,  before tax
benefit, and such amount was accrued on September 30, 1996.



     Certain   portions  of  this  document   concerning   future   performance,
developments or events, concerning growth in lending and equity investments, and
any other guidance on future  periods,  constitute  forward-looking  statements,
which are subject to a number of risks and uncertainties including interest rate
fluctuations  and  government  and  regulatory  actions which might cause actual
results to differ materially from stated expectations.
                                                                             13
<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT

--------------------------------------------------------------------------------

      Lakeview Financial Corp. and Subsidiaries
      Consolidated Balance Sheets
      July 31, 1995 and 1996
<TABLE>
<CAPTION>

                                                                                       1995            1996
------------------------------------------------------------------------------------------------------------------
         Assets                                                                   
<S>                                                                               <C>               <C>        
         Cash on hand and in banks.............................................   $  8,021,666      $ 6,902,040
         Investment securities held to maturity, market value of                  
         $55,457,430 and $40,083,449 at July 31, 1995 and 1996,                   
         respectively (note 4).................................................     55,737,605       40,821,195
         Investment securities available for sale (note 5).....................      8,567,375       89,967,424
         Equity securities restricted, market value of $19,942,272                
         at July 31, 1996 (note 7).............................................              -        7,806,358
         Mortgage-backed securities held to maturity, market value of             
         $173,500,278 and $119,471,910 at July 31, 1995 and 1996,                 
         respectively (notes 6 and 13).........................................    175,375,296      121,461,936
         Loans receivable, net (notes 8 and 13)................................    142,122,945      163,457,374
         Real estate owned, net (note 9).......................................      3,608,392        1,666,533
         Investments required by law - stock in the Federal Home                  
         Loan Bank of New York, at cost (note 13)..............................      2,587,400        2,587,400
         Accrued interest receivable (note 10).................................      2,718,349        3,646,512
         Office properties and equipment, net (note 11)........................      4,299,594        4,182,639
         Excess of cost over fair value of net assets acquired,                   
         net (note 3)..........................................................     11,496,712       10,176,424
         Other assets (note 14)................................................      4,676,663        5,184,150
-----------------------------------------------------------------------------------------------------------------
           Total assets........................................................   $419,211,997     $457,859,985
-----------------------------------------------------------------------------------------------------------------
                                                                                  
        Liabilities and Stockholders' Equity                                      
                                                                                  
        Deposits (note 12).....................................................    343,489,328      354,246,770
        Borrowings (note 13)...................................................     19,000,000       54,000,000
        ESOP debt (note 16)....................................................        858,929          721,429
        Advance payments by borrowers for taxes and insurance..................      1,501,453        1,711,930
        Other liabilities......................................................      4,922,053        1,420,176
-----------------------------------------------------------------------------------------------------------------
         Total liabilities.....................................................    369,771,763      412,100,305
-----------------------------------------------------------------------------------------------------------------
        Common stock - $2.00 par value; authorized 10,000,000                     
        shares, issued 2,928,076 shares and outstanding 2,265,704                 
        shares at July 31, 1996................................................      5,323,920        5,856,152
        Additional paid-in capital.............................................     21,733,849       26,186,632
        Retained income substantially restricted...............................     28,982,735       29,984,480
        Unrealized losses on securities available for sale, net of tax.........        (55,054)      (1,884,921)
        Treasury stock at cost, 662,372 shares.................................     (3,970,106)     (10,655,120)
        Unallocated ESOP shares................................................       (834,910)      (2,306,895)
        Unallocated MSBP shares................................................     (1,740,200)      (1,420,648)
-----------------------------------------------------------------------------------------------------------------
        Total stockholders' equity (notes 2, 14, 16, 18, and 19)...............     49,440,234       45,759,680
         Total liabilities and stockholders' equity............................   $419,211,997     $457,859,985
-----------------------------------------------------------------------------------------------------------------    
</TABLE>

          See accompanying notes to consolidated financial statements.
                                                                               
14


<PAGE>
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Lakeview Financial Corp. and Subsidiaries
Consolidated Statements of Income
Years ended July 31, 1994, 1995 and 1996
<TABLE>
<CAPTION>

                                                                                        1994          1995            1996
-----------------------------------------------------------------------------------------------------------------------------------
Interest income:                                                                
<S>                                                                                <C>            <C>             <C>         
Loans receivable................................................................   $ 11,749,136   $ 12,509,446    $ 14,131,327
Mortgage-backed securities......................................................      5,513,480     11,162,655       9,604,671
Investment securities, held to maturity and Federal funds.......................      1,366,865      4,535,201       3,004,345
Investment securities available for sale........................................        317,353        222,924       4,232,012
-----------------------------------------------------------------------------------------------------------------------------------
  Total interest income.........................................................     18,946,834     28,430,226      30,972,355
-----------------------------------------------------------------------------------------------------------------------------------
Interest expense:                                                                  
Interest on Deposits (note 12)..................................................      6,859,922     11,943,596      14,064,295
Interest on borrowings..........................................................        874,711      1,594,984       2,485,475
-----------------------------------------------------------------------------------------------------------------------------------
  Total interest expense........................................................      7,734,633     13,538,580      16,549,770
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income ............................................................     11,212,201     14,891,646      14,422,585
Provision for losses on loans (note 8)..........................................      2,047,121      1,376,404         13,221
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for losses on loans.........................      9,165,080     13,515,242      13,758,364
-----------------------------------------------------------------------------------------------------------------------------------
Other income:                                                                      
Loan fees and service charges...................................................        814,956      1,235,073       1,153,266     
Net realized  gains on sales of investment  securities                             
available for sale .............................................................        866,399      2,107,244       2,768,781
Other operating income (note 7).................................................        927,021      3,864,028       3,107,539
-----------------------------------------------------------------------------------------------------------------------------------
Total other income..............................................................      2,608,376      7,206,345       7,029,586
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses:                                                                    
Compensation  and  employee  benefits  (notes 15 and 16)........................      2,540,536      4,366,722       4,648,774
Office  occupancy  and equipment  expense.......................................        479,497        829,861         871,113     
Net  loss on real  estate  owned  activities  (note 9)..........................      1,319,692        650,194         920,917
Other operating  expenses.......................................................      1,926,816      3,524,382       3,106,738
Amortization  of the  excess of cost over fair value of net                        
assets acquired.................................................................        438,288      1,320,288       1,320,288
-----------------------------------------------------------------------------------------------------------------------------------
Total other expenses............................................................      6,704,829     10,691,447      10,867,830
-----------------------------------------------------------------------------------------------------------------------------------
Income before Federal and state income tax and                                     
cumulative effect of accounting change..........................................      5,068,627     10,030,140       9,920,120
-----------------------------------------------------------------------------------------------------------------------------------
Federal and state income tax expense (note 14):                                    
Current.........................................................................        942,978      3,889,513       4,112,206  
Deferred........................................................................        869,693       (154,000)       (466,000)   
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                      1,812,671      3,735,513       3,646,206   
-----------------------------------------------------------------------------------------------------------------------------------
Income  before  cumulative  effect of  accounting  change.......................      3,255,956      6,294,627       6,273,914 
Cumulative  effect of accounting change (note 14)...............................      1,315,011           --              --  
-----------------------------------------------------------------------------------------------------------------------------------
Net income......................................................................   $  4,570,967   $  6,294,627    $  6,273,914 
-----------------------------------------------------------------------------------------------------------------------------------
Earnings per common share.......................................................            N/A   $       2.21    $       2.48
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.
                                                                             15
                                                                           


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------


Lakeview Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years ended July 31, 1994, 1995 and 1996
<TABLE>
<CAPTION>
                                                                         1994           1995           1996
-------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S>                                                                  <C>             <C>            <C>        
Net income.......................................................    $ 4,570,967     $ 6,294,627    $ 6,273,914
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of the excess of cost over fair
value of net assets acquired.....................................        438,288       1,320,288       1,320,288
Amortization  of discounts and  premiums,  net...................       (130,276)       (259,384)       (473,518)
Provision for losses on loans and real  estate  owned............      2,760,441       2,303,781       1,318,710
Gain on sale of loans............................................        (54,428)         (6,040)         (9,598)  
Net  realized  gains  on  investment securities 
available for sale...............................................       (866,399)     (2,107,244)     (2,768,781)
Net loss  (gain) on sale of real  estate  owned..................        228,344        (223,884)        (26,043)
(Increase)  decrease in accrued interest  receivable.............     (1,643,413)          2,695        (928,163) 
Net decrease in deferred loan fees...............................       (153,386)       (137,479)        (67,691)
Decrease in other assets.........................................     (1,241,786)     (1,654,851)       (507,487)
Amortization of ESOP shares......................................        116,000         297,881         312,708
Amortization of MSBP shares......................................        217,000         505,454         445,564
Increase  (decrease) in other liabilities........................         92,640       3,556,573      (2,473,471)
Depreciation, net................................................        122,051         264,081         288,225
-------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities........................      4,456,043      10,156,498       2,704,657
-------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Originations of loans............................................    (30,842,434)    (31,274,312)    (40,782,321)
Principal payments on loans......................................     23,302,088      19,582,717      20,366,983
Purchase of loans................................................     (1,122,754)       (136,946)     (2,686,962)
Proceeds from the sale of loans..................................      5,334,175       1,171,675         924,888
Net  increase  in  office  properties  and  equipment............     (3,039,776)       (402,733)       (171,270)  
Principal   payments  on mortgage-backed  securities.............     17,391,871      16,629,760      25,230,317
Purchases  of  mortgage-backed  securities  
held to maturity.................................................   (146,941,142)    (18,762,454)     (2,773,214) 
Maturities  of  investment  securities  held to  maturity........         --          10,975,000      41,096,117 
Purchase of investment  securities  held  to  maturity...........    (62,631,562)     (4,057,500)   (107,027,312) 
Proceeds  from  sale  of  investment securities  
available for sale...............................................      3,891,839      20,864,634      53,587,858
Purchases of investment  securities available for sale...........     (1,379,904)    (16,141,726)    (50,034,792)
Proceeds from maturity of investment securities 
available for sale...............................................          --               --        18,319,150
Principle  payments on  investment  securities  
available  for sale..............................................          --               --         1,534,201 
Increase in Federal Home Loan Bank stock.........................       (345,300)       (731,100)           --
</TABLE>

16
   
                                                                     (continued)
<PAGE>

                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------
Lakeview Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Years ended July 31, 1994, 1995 and 1996 continued


<TABLE>
<CAPTION>
                                                                        1994             1995             1996
-------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities, cont.:
<S>                                                               <C>              <C>              <C>                     
Net decrease in certificates of deposit..........................       99,000             --              --
Proceeds from sale of real estate owned..........................    4,078,047        2,771,608        1,644,527
Premium on deposit acquisition...................................  (12,430,000)            --              --
-------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by, investing activities............. (204,635,852)         488,623      (40,771,830)
-------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits..............................  (10,643,875)      (1,425,210)      10,757,443
Proceeds from acquisition of deposits............................  191,428,005             --              --
Net increase in borrowings.......................................      521,429          837,500       34,862,500
Net increase in advance payments by borrowers
for taxes and insurance..........................................       10,172           61,161          210,477
Proceeds from stock offering.....................................   23,319,374             --               --
Purchase of treasury stock.......................................         --         (3,970,106)      (6,685,014)
Purchase of shares by ESOP.......................................   (1,100,000)            --         (1,615,985)
Purchase of shares by MSBP.......................................    (2,200,00)            --               --  
Dividends paid...................................................     (151,250)        (615,430)        (581,874)
-------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities..............  201,183,855       (5,112,085)      36,947,547
-------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents.................    1,004,046        5,533,036       (1,119,626)
Cash and cash equivalents at beginning of year...................    1,484,584        2,488,630        8,021,666
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year.........................$   2,488,630    $   8,021,666    $   6,902,040
-------------------------------------------------------------------------------------------------------------------
Cash paid during the year for:
Interest.........................................................    7,785,386       12,923,418       14,055,717
Income Taxes.....................................................      625,000        3,995,000        4,767,992
Supplemental disclosure of noncash investing 
and financing activities:
Transfer of loans receivable to real estate owned................    2,842,067        3,084,247          331,114
Transfer of investment securities held to maturity to
investments securities available for sale........................         --         11,579,750       80,858,447
Transfer of Federal Funds Deposit to Loans.......................         --            850,000             --
Transfer of mortgage-backed securities held to maturity
to investment securities available for sale......................         --               --         31,746,557
-------------------------------------------------------------------------------------------------------------------
</TABLE>
          See accompanying notes to consolidated financial statements.

                                                                             17


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

Lakeview Financial Corp. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Years ended July 31, 1994, 1995 and 1996

<TABLE>
<CAPTION>
                                                                               Common Stock                                    
-------------------------------------------------------------------------------------------------------------------
                                                                           Number                    Additional 
                                                                             of         Dollar        Paid-in
                                                                           shares       amount        capital
-------------------------------------------------------------------------------------------------------------------
<S>             <C> <C>                                                    <C>           <C>          <C>                
Balance at July 31, 1993.............................................      $     -       $  --        $      --             
-                                                                          
Net proceeds of stock offering (note 2)..............................       2,420,000     4,840,000    18,479,374
Common stock acquired by ESOP and                                          
MSBP (note 2)........................................................            -          --               --
Amortization of ESOP shares..........................................            -          --             32,000
Amortization of MSBP shares..........................................            -          --             63,000
Dividends paid.......................................................            -          --               --
Net income...........................................................            -          --               --
-------------------------------------------------------------------------------------------------------------------           
Balance at July 31, 1994.............................................       2,420,000     4,840,000    18,574,374
-------------------------------------------------------------------------------------------------------------------
Amortization of ESOP shares..........................................            -          --            116,791
Amortization of MSBP shares..........................................            -          --            199,654
Net income...........................................................            -          --               --
Cash dividend ($0.25 per common share)...............................            -          --               --
Purchase of treasury stock...........................................        (259,508)      --               --
Stock dividend.......................................................         241,960       483,920     2,843,030
Cumulative effect of accounting change -                            
Adoption of FASB 115, net of tax (note 1)............................            -          --               --
Change in unrealized loss on                                               
securities available for sale, net of tax............................            -          --               --
-------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1995.............................................      $2,402,452   $ 5,323,920   $21,733,849
-------------------------------------------------------------------------------------------------------------------
Common stock acquired by ESOP........................................            -          --               --
Amortization of ESOP shares..........................................            -          --            168,708

Amortization of MSBP shares..........................................            -          --            126,012
                                                                           
Net income...........................................................            -          --               --
                                                                           
Cash dividend ($0.25 per common share)...............................            -          --               --
Purchase of treasury stock...........................................        (321,991)      --               --
                                                                           
Stock dividend distribution..........................................         185,243       532,232     4,158,063
Change in unrealized loss on securities available for sale, 
net of tax...........................................................            -          --               --
-------------------------------------------------------------------------------------------------------------------
Balance at July 31, 1996.............................................      $2,265,704   $ 5,856,152   $26,186,632
-------------------------------------------------------------------------------------------------------------------
</TABLE>
                                                                           
                                                                                
                                                                               
18                                                                         
                                                                           
                                                                     
<PAGE>
                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Net unrealized loss on         Total
          Treasury               Retained                     Unallocated shares          securities available       Stockholders'
             stock                 income                        ESOP            MSBP     for sale, net of tax         Equity
------------------------------------------------------------------------------------------------------------------------------------

<S>                            <C>                        <C>             <C>                    <C>                  <C>         
                   -           $ 22,210,771               $           -   $           -          $              -     $ 22,210,771
                   -                      -                           -               -                         -       23,319,374

                   -                      -                  (1,100,000)     (2,200,000)                        -       (3,300,000)
                   -                      -                      84,000               -                         -          116,000
                   -                      -                           -         154,000                         -          217,000
                   -               (151,250)                          -               -                         -         (151,250)
                                  4,570,967                           -               -                         -        4,570,967
------------------------------------------------------------------------------------------------------------------------------------
                   -           $ 26,630,488               $  (1,016,000)   $ (2,046,000)                        -     $ 46,982,862
------------------------------------------------------------------------------------------------------------------------------------
                   -                      -                     181,090               -                         -          297,881
                   -                      -                           -         305,800                         -          505,454
                   -              6,294,627                           -               -                         -        6,294,627
                   -               (615,430)                          -               -                         -         (615,430)
          (3,970,106)                     -                           -               -                         -       (3,970,106)
                   -             (3,326,950)                          -               -                         -                -

                   -                      -                           -               -                   198,920          198,920
    
                   -                      -                           -               -                  (253,974)        (253,974)
------------------------------------------------------------------------------------------------------------------------------------
         ($3,970,106)          $ 28,982,735                  ($ 834,910)    ($1,740,200)                ($ 55,054)     $49,440,234
------------------------------------------------------------------------------------------------------------------------------------
                   -                      -                  (1,615,985)              -                         -       (1,615,985)
                   -                      -                     144,000               -                         -          312,708
                   -                      -                           -         319,552                         -          445,564

                   -              6,273,914                           -               -                         -        6,273,914

                   -               (581,874)                          -               -                         -         (581,874)
          (6,685,014)                                                 -               -                         -       (6,685,014

                   -             (4,690,295)                          -               -                         -                -

                   -                      -                           -               -               (1,829,867)       (1,829,867)

------------------------------------------------------------------------------------------------------------------------------------
        ($10,655,120)          $ 29,984,480                ($ 2,306,895)   ($ 1,420,648)             ($ 1,884,921)    $ 45,759,680
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

           See accompanying notes to consolidated financial statements

                                                                             19


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

    Lakeview Financial Corp. and Subsidiaries
    Notes to Consolidated Financial Statements
    July 31, 1995 and 1996

    Notel
    Summary of Significant Accounting Policies

    The following  items  comprise the  significant  accounting  policies  which
    Lakeview  Financial Corp. and subsidiaries  (the Bank) followed in preparing
    and presenting these consolidated financial statements:

    Business:

    The Bank  provides  a full  range of retail  banking  services  through  its
    branches in Passaic and Bergen Counties,  New Jersey. The Bank is subject to
    competition  from other financial  institutions.  The Bank is subject to the
    regulations   of  certain   regulatory   agencies  and  undergoes   periodic
    examinations  by  those  regulatory  agencies.  The  consolidated  financial
    statements  have  been  prepared  in  conformity  with  generally   accepted
    accounting  principles.  In preparing the consolidated financial statements,
    management  is required to make  estimates and  assumptions  that affect the
    reported  amounts  of  assets  and  liabilities  as  of  the  dates  of  the
    consolidated  balance  sheets,  and revenues and expenses for the years then
    ended.  Actual results could differ  significantly  from those estimates and
    assumptions.

    Material  estimates that are particularly  susceptible to significant change
    in the near-term relate to the  determination of the allowance for losses on
    loans  and  the  valuation  of  real  estate  acquired  in  connection  with
    foreclosures or in settlement of loans. It is management's judgment that the
    allowance  for loan and real  estate  losses are  adequate  to  provide  for
    potential loan and real estate losses.

    Principles of Consolidation:

    The accompanying  consolidated financial statements include the accounts of
    Lakeview  Financial  Corp.  and its  wholly  owned  subsidiaries,  Lakeview
    Savings Bank (LSB), LVS, Inc. (LVS),  Lakeview  Investment  Services,  Inc.
    (LISI),  Branchview,  Inc. (Branchview),  and Lakeview Mortgage Depot, Inc.
    (LMD).

    In May 1993,  Lakeview  Savings Bank, SLA converted  from a  state-chartered
    savings and loan association to a statechartered savings bank. In connection
    with the conversion,  the Bank changed its name from Lakeview  Savings Bank,
    SLA and subsidiaries to Lakeview Savings Bank and subsidiaries.

    On August 25,  1994,  the Bank  completed  a  reorganization  into a holding
    company form of ownership,  and the Bank became a wholly-owned subsidiary of
    Lakeview Financial Corp. The stockholders of the Bank exchanged their shares
    of the Bank for the same number of shares of Lakeview Financial Corp.

Investment Securities
and Mortgage-Backed Securities

Effective  August 1, 1994,  the Bank adopted  Statement of Financial  Accounting
Standards No. 115 (SFAS 115),  "Accounting  for Certain  Investments  in Debt or
Equity  Securities".  Under  SFAS 115,  the Bank is  required  to  report  debt,
readily-marketable equity and mortgage-backed securities in one of the following
categories (i) "held-to-maturity"  (management has a positive intent and ability
to hold to maturity)  which are to be reported at amortized cost; (ii) "trading"
(held for current resale) which are to be reported at fair value with unrealized
gains and losses included in earnings and (iii)  "available-for-sale  (all other
debt, readily marketable equity and mortgage-backed  securities) which are to be
reported at fair value,  with unrealized gains and losses excluded from earnings
and reported, net of income tax, as a separate component of equity. The adoption
of SFAS 115 resulted in a net increase of $198,920 to stockholders' equity.

In November  1995, the Financial  Accounting  Standards  Board  ("FASB")  issued
"Special Report - A Guide to  Implementation  of Statement 115 on Accounting for
Certain  Investments  in Debt  Equity  Securities,"  which  provided  transition
guidance  permitting  an  enterprise  to  reassess  the  appropriateness  of the
classifications of all its securities before December 31, 1995. The Savings Bank
reassessed its  classifications,  and on December 31, 1995,  transferred  $112.6
million in amortized cost of investment and mortgage-backed securities from held
to maturity to the available for sale classification. The related net unrealized
gain after tax effect as of the date of transfer was $157,000.

Premiums and discounts on debt and  mortgage-backed  securities are amortized to
expense  and  accreted  to  income  over the  estimated  life of the  respective
security using a method that approximates the level yield method.

Gains and losses on the sale of securities available for sale are based upon the
amortized cost of the security using the specific identification method.

Office Properties and Equipment

Premises,   furniture  and  equipment  are  stated  at  cost,  less  accumulated
depreciation  and  amortization.   Depreciation  and  amortization  charges  are
computed using the straight-line method.  Premises,  furniture and equipment are
depreciated over the estimated  useful life of the assets,  except for leasehold
improvements,  which are  amortized  over the term of the lease or the estimated
useful life of the asset,  if shorter.  Estimated  useful lives are ten to forty
years for premises, and three to ten years for furniture and equipment.

Expenditures for maintenance and repairs are expensed as incurred.  The costs of
major renewals and  improvements  are  capitalized.  Premises and major items of
furniture and equipment are removed from the property  accounts upon 

20
<PAGE>
                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------

disposition at their carrying amount,  and gains or losses on such  transactions
are included in other non-interest income or expense.

Income Taxes

The Bank files a  consolidated  federal  income tax return.  In accordance  with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes"  (SFAS  109),  deferred  income tax expense or benefit is  determined  by
recognizing  deferred tax assets and  liabilities  for the estimated  future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled. The realization of deferred
tax assets is assessed and a valuation allowance provided,  when necessary,  for
that  portion  of the  asset  which is not  likely  to be  realized.  Management
believes,  based upon current facts,  that it is more likely than not there will
be sufficient taxable income in future years to realize the deferred tax assets.
The effect on deferred  tax assets and  liabilities  of a change in tax rates is
recognized in earnings in the period that includes the enactment date.

Loans

Loans are stated at principal amounts outstanding,  net of unearned discount and
net  deferred  loan  origination  fees and  costs.  Interest  income on loans is
accrued and credited to interest income as earned.

Loan origination and commitment fees and certain direct loan  origination  costs
are deferred and the net fee or cost is recognized in interest  income using the
level-yield  method over the  contractual  life of the  specifically  identified
loans or  recognized  as the loans are sold or prepaid.  Discounts  and premiums
relating to mortgage  loans  purchased are deferred and accreted or amortized to
income  using  straight-line  method  over the  life of the  loan or ten  years,
whichever is shorter.

Loans are generally placed on nonaccrual status when a loan becomes more than 90
days past due or it appears that interest is uncollectible.  Previously  accrued
and unpaid  interest is  reversed  when a loan is placed on  nonaccrual  status.
Interest income on nonaccrual loans is recognized only in the period in which it
is ultimately collected. After principal and interest payments have been brought
current and future  collectibility is reasonably assured,  loans are returned to
accrual status.

Statement of Financial  Accounting  Standards  ("SFAS") No. 114,  "Accounting by
Creditors for Impairment of a Loan" (SFAS 114), and SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures"  ("SFAS
118")  were  adopted  prospectively  by the  Bank  on  January  1,  1995.  These
statements  address the accounting for impaired loans and specify how allowances
for loan  losses  related to these  impaired  loans  should be  determined.  The
adoption of these  statements did not affect the level of the overall  allowance
or the operating results.  Income  recognition and charge-off  policies were not
changed  as a result of SFAS 114 and SFAS 118.  The  Savings  Bank  defines  the
population  of impaired  loans to be all  non-accrual  commercial  real  estate,
multi-family  and land  loans.  Impaired  loans  are  individually  assessed  to
determine  that the loan's  carrying value is not in excess of the fair value of
the  collateral or the present value of the loan's  expected  future cash flows.
Smaller  balance   homogeneous   loans  that  are  collectively   evaluated  for
impairment,  such as  residential  mortgage  loans and  installment  loans,  are
specifically  excluded from the impaired loan portfolio.  There were $645,184 of
impaired loans requiring no valuation  allowance at July 31, 1996, as defined by
SFAS 114 and SFAS 118.

Real Estate Owned

Real estate owned,  acquired or deemed acquired  through  foreclosure or deed in
lieu of  foreclosure,  is  carried  at the lower of  estimated  fair  value less
estimated  disposition  costs or the balance of the loan on the property at date
of  acquisition.  Costs relating to the  development and improvement of property
are  capitalized,  whereas  those  relating to holding  property  are charged to
expense.  Losses are charged to  operations as incurred or when it is determined
that the  investment  in real estate  owned is greater  than its  estimated  net
realizable value.

Allowances For Losses On Loans And Real Estate Owned

The  allowances  for  losses  on  loans  and  real  estate  owned  are  based on
management's  evaluations of the adequacy of the allowances  based on the Bank's
past  loss  experience,  known  and  inherent  risks in the  portfolio,  adverse
situations that may affect the borrower's  ability to repay,  estimated value of
any underlying collateral,  and current economic conditions.  Additions are made
to the allowance through periodic provisions which are charged to earnings.  All
losses of principal are charged to the allowance  when the loss actually  occurs
or when a determination is made that a loss is probable.  Subsequent recoveries,
if any, are added back to the allowance.



Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand and in banks,  and Federal  funds sold with a maturity  of three  months or
less.

Earnings Per Share

Income per common share is  calculated  by dividing  net income,  by the average
number of shares of common stock

                                                                             21

<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

and average number of common stock  equivalents  outstanding  during the period.
The weighted average number of shares outstanding during the year ended July 31,
1996 used in the earnings per share  calculation  was 2,527,172.  Per share data
has been adjusted to reflect the 10% stock dividend paid during 1995 and 1996.

Reclassification's

Certain  reclassification's  have  been  made to the 1994 and  1995  amounts  to
conform to the 1996 presentation.

Note 2
Conversion from Mutual
to Stock Form of Ownership

On December 22, 1993, the Bank completed its conversion  from a state  chartered
mutual  savings bank to a state  chartered  stock savings bank.  The Bank issued
2,420,000  shares at $10 per share for a total of $24,200,000.  The net proceeds
of the stock offering,  after  reflecting  offering  expenses of $880,626,  were
$23,319,374.  The proceeds were added to the Bank's general funds to be used for
general corporate purposes.

As part of the  reorganization  to the stock  form of  ownership,  the  Lakeview
Savings Bank Employee Stock  Ownership Plan (ESOP)  purchased  110,000 shares of
the Bank's common stock at $10 per share,  or $1,100,000,  which was funded by a
loan from an unaffiliated  lender.  The Bank intends to make  discretionary cash
contributions   to  the  ESOP   sufficient  to  service  the  amount   borrowed.
Additionally,  the  Lakeview  Savings  Bank  Management  Stock Bonus Plan (MSBP)
purchased 220,000 shares at $10 per share totaling $2,200,000. The funds used to
acquire the MSBP shares were contributed by the Bank. The Bank has allocated 66%
of the shares to  directors,  officers and other key  employees of the Bank (see
Note 16).

Note 3
Excess of Cost Over Fair Value 
of Net Assets Acquired, Net

On December  31, 1989,  the Bank  acquired a savings and loan  association.  The
acquisition  has been accounted for as a purchase and,  accordingly,  all assets
and  liabilities  acquired were adjusted to and recorded at their fair values as
of December 31, 1989. The excess of cost over fair value of net assets  acquired
(goodwill)  amounted to $1,084,373 and was allocated to core deposit value to be
amortized on a straightline basis over 15 years.  Total amortization  charged to
date amount to $475,949, at July 31, 1996.

On April  22,  1994,  the Bank  acquired  certain  assets  and  assumed  certain
liabilities of Prospect Park Federal  Savings Bank, a failed savings bank,  from
the Resolution Trust Corporation.  The excess of cost over the fair value of the
assets and liabilities  acquired  amounted to $12,430,000 and is being amortized
on a  straight-line  basis over ten years.  Total  amortization  charged to date
amounts to $2,862,000 at July 31, 1996.

Note 4
Investment Securities Held to Maturity

The amortized cost and estimated market values of investment  securities held to
maturity as of July 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>


                                                                  Gross             Gross      Estimated
                                                               Amortized         unrealized    unrealized           market
                                                                  cost              gains       losses              value
----------------------------------------------------------------------------------------------------------------------------------
        July 31, 1995:
<S>                                                           <C>                 <C>          <C>                <C>         
        FHLB structured notes...........................      $ 36,960,980        $ 74,895     ($ 262,500)        $ 36,773,375
        FHLMC structured notes..........................         8,000,000          11,250       (116,250)           7,895,000
        FNMA structured notes...........................        10,776,625          81,805        (69,375)          10,789,055
----------------------------------------------------------------------------------------------------------------------------------
                                                              $ 55,737,605       $ 167,950     ($ 448,125)         $55,457,430
----------------------------------------------------------------------------------------------------------------------------------
        July 31, 1996:
        FHLB obligations................................      $ 20,741,938          $8,062     ($ 518,850)         $20,231,150
        FHLMC obligations...............................        14,079,257         115,743       (264,225)          13,930,775
        FNMA obligations................................         6,000,000               0        (78,476)           5,921,524
----------------------------------------------------------------------------------------------------------------------------------
                                                              $ 40,821,195       $ 123,805     ($ 861,551)         $40,083,449
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The yield on the structured  notes increases  periodically  over the contractual
five or ten-year  term of the  security.  However,  the issuer has the option to
repay these  securities as the yield adjusts.  As of July 31, 1996, the Bank had
no structured notes in its held to maturity portfolio.

22


<PAGE>

                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------

     The  amortized  cost and estimated  market values of investment  securities
     held to maturity  at July 31,  1996,  by  contractual  maturity,  are shown
     below:
<TABLE>
<CAPTION>

                                                                                                                 Estimated
                                                                                             Amortized             market
                                                                                               cost                value
----------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                        <C>                    <C>        
           Due in one year or less.....................................................    $         -            $         -
           Due after one year through five years.......................................              -                      -
           Due after five years through ten years......................................     18,329,257              18,298,489
           Due after ten years.........................................................     22,491,938              21,784,960
----------------------------------------------------------------------------------------------------------------------------------
                                                                                           $40,821,195             $40,083,449
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

           Note 5
           Investments Available for Sale

           The  amortized  cost  and  estimated  market  values  of  investments
           available for sale at July 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>

                                                                                              Gross         Gross          Estimated
                                                                              Amortized     unrealized    unrealized        market
                                                                                 cost         gains         losses          value
------------------------------------------------------------------------------------------------------------------------------------
           July 31, 1995:
<S>                                                                         <C>               <C>         <C>            <C>        
           SLMA stock...................................................    $ 4,689,121              -     ($ 379,121)   $ 4,310,000
           Equity Securities............................................      3.964,250        293,125             -       4,257,375
------------------------------------------------------------------------------------------------------------------------------------
                                                                            $ 8,653,371       $293,125     ($ 379,121)    $8,567,375
------------------------------------------------------------------------------------------------------------------------------------
           July 31, 1996:

           U.S. Agency Securities.......................................    $59,899,079              -    ($1,853,868)   $58,045,211
           GNMA MBS.....................................................      4,520,361        163,406              -      4,683,767
           FNMA\FHLMC REMICS............................................      1,994,239         41,499         (2,067)     2,033,671
           Private issue REMICS.........................................      9,999,368                      (477,784)     9,521,584
           Municipal Bonds..............................................      3,229,386                      (146,776)     3,082,610
           FNMA Stock...................................................      8,999,430                      (172,930)     8,826,500
           Equity Securities............................................      4,269,830        121,670       (617,419)     3,774,081
------------------------------------------------------------------------------------------------------------------------------------
                                                                           $ 92,911,693       $326,575    ($3,270,844)   $89,967,424
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     The amortized cost and estimated market values of investments available for
     sale at July 31, 1996, by contractual maturities are shown below: 
<TABLE>
<CAPTION>
                                                                                                          Estimated
                                                                                            Amortized       market
                                                                                               cost         value
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>              <C>        
           Due in one year or less                                                       $ 13,269,260     $12,600,580
           Due after one year through five years                                            8,000,000       7,917,328
           Due after five years through ten years                                          26,224,929      25,514,693
           Due after ten years                                                             45,417,504      43,934,823
----------------------------------------------------------------------------------------------------------------------------------
                                                                                         $ 92,911,693     $89,967,424
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                             23
                                                                       


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------
Equity  securities have been  classified as maturing in one year or less,  since
they have no stated maturity.

During  the years  ended July 31,  1994,  1995 and 1996,  proceeds  from sale of
securities  available  for sale of  $3,891,839,  $20,864,634,  and  $53,587,858,
respectively,  were received,  resulting in gross gains of $866,399,  $2,107,244
and $2,768,781, respectively.

Note 6
Mortgage-backed Securities Held to Maturity

The amortized  cost and estimated  market values of  mortgage-backed  securities
held to maturity at July 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>

                                                                                           Gross          Gross         Estimated
                                                                          Amortized      unrealized      unrealized      market
                                                                            cost           gains          losses         value
----------------------------------------------------------------------------------------------------------------------------------
        July 31, 1995:
<S>                                                                    <C>               <C>          <C>            <C>          
        GNMA......................................................     $  5,183,091        $245,752   $          -   $   5,428,843
        FHLMC.....................................................       57,167,299         456,105       (519,100)     57,104,304
        FNMA......................................................       47,540,422         201,718       (623,001)     47,119,139
        REMICs....................................................       48,887,166         216,859     (1,394,830)     47,709,195
        Other.....................................................       16,597,318          11,359       (469,880)     16,138,797
----------------------------------------------------------------------------------------------------------------------------------
                                                                       $175,375,296      $1,131,793    ($3,006,811)   $173,500,278
----------------------------------------------------------------------------------------------------------------------------------

        July 31, 1996:

        FHLMC.....................................................     $ 47,954,027       $ 130,680     $ (944,332)   $ 47,140,375
        FNMA......................................................       38,922,756         253,491       (584,785)     38,591,462
        FNMA/FHLMC/REMICS.........................................       34,585,153         265,693     (1,110,773)     33,740,073
----------------------------------------------------------------------------------------------------------------------------------
                                                                       $121,461,936        $649,864    ($2,639,890)   $119,471,910
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

The  amortized  cost and  market  value of  mortgage-backed  securities  held to
maturity at July 31, 1996, are shown below. The expected  maturities will differ
from  contractual  maturities  because  borrowers  may have the right to call or
prepay obligations with or without penalties.
<TABLE>
<CAPTION>

                                                                                                         Estimated
                                                                                       Amortized           market
                                                                                         cost               value
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                <C>         
        Due in one year or less................................................      $  4,184,585       $  4,157,764
        Due after one year through five years..................................        45,466,530         44,332,136
        Due after five years through ten years.................................        20,470,754         20,178,036
        Due after ten years....................................................        51,340,067         50,803,974
----------------------------------------------------------------------------------------------------------------------------------
                                                                                     $121,461,936       $119,471,910
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

24
<PAGE>
                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------
Note 7
Investments Held By Subsidiary

On February 6, 1995,  Branchview Inc., a subsidiary of the Savings Bank sold the
majority  of its  equity  interest  in  Residential  Money  Centers  ("RMC"),  a
residential  mortgage company which  originates  mortgages and sells them in the
secondary  market,  to an unrelated  third party for a gain of $3.8 million,  of
which $3.4  million  was  recorded as a gain in 1995 and is  reflected  in other
operating income. Under the terms of the sale, the balance has been deferred and
will remain in escrow for 18 months pending resolution of normal  contingencies.
In July 1995,  Branchview  purchased the remaining  partnership interest of RMC,
for $1.5 million,  and became the sole owner of RMC. RMC's only remaining  asset
was a 9.09% limited  partnership  interest in Industry  Mortgage  Company,  L.P.
("IMC").

IMC  is  a  specialized   consumer   finance   company  engaged  in  purchasing,
originating,  servicing and selling home equity loans secured primarily by first
liens on one-to-four family residential properties.

On June 25,  1996,  IMC  completed  a  reorganization  plan  whereby the limited
partners  received  restricted  common stock in exchange  for their  partnership
interest in  connection  with a public  offering of  unrestricted  common stock.
Immediately  prior  to  the  reorganization,   Branchview  purchased  a  limited
partner's  half  share  interest  in IMC  for  $4,778,000.  As a  result  of the
reorganization, Branchview received 830,928 shares of restricted common stock in
exchange for its limited partnership interest.  The offering price of the common
stock was $18.00 per share.

Upon  completion of the public  offering,  IMC had  outstanding  an aggregate of
11,065,092 shares of common stock. Of these shares, the 3,100,000 shares sold in
the public  offering  will be freely  tradable  without  restriction  or further
registration  under the Securities Act. The remaining  7,965,092  shares held by
existing stockholders of IMC (including Branchview) are "restricted  securities"
within the meaning of Rule 144.  None of the  restricted  shares of common stock
have been held for more than two years by stockholders who are not affiliates of
the  Company  and  will be  eligible  for  sale in the  public  market  upon the
expiration of the  restrictions  in reliance on Rule 144(k) under the Securities
Act.

In general,  under Rule 144 the Securities Act as currently in effect, a person,
including an affiliate,  may sell an amount of restricted  securities which were
last  purchased  from the issuer or an  affiliate of the issuer a minimum of two
years  prior to such  sale,  such  that,  within any  three-month  period,  such
person's sales do not exceed the greater of 1% of the then outstanding shares of
the Company's  common stock,  or the average weekly trading volume in the Common
Stock on Nasdaq  during  the four  calendar  weeks  preceding  the date on which
notice of such sale is filed under Rule 144(k) of the  Securities  Act, or if no
such  notice  is  required,  the date of  receipt  of the order to  execute  the
transaction.  In addition, under Rule 144(k), a stockholder who is not deemed an
affiliate,  and has not been an affiliate for at least three months prior to the
sale, is entitled to sell restricted  securities  which were last purchased from
the issuer or an  affiliate of the issuer a minimum of at least 3 years prior to
such sale without complying with the foregoing requirements.  In calculating the
two and three year  holding  periods  described  above,  a holder of  restricted
securities  can include  the  holding of a prior owner who was no an  affiliate.
Notwithstanding  the limitations on sale described above,  otherwise  restricted
securities may be sold at any time through an effective  registration  statement
pursuant to the Securities Act.

As of July 31, 1996,  the carrying  value of  Branchview's  investment in IMC is
$7,806,000  represented by the 830,928 shares of restricted common stock of IMC.
Although  the  investment  in IMC is  represented  by equity  securities,  it is
carried at cost  because the  restriction  period is in excess of one year.  The
market value of such  investment  at July 31, 1996,  based on the quoted  market
price per share of the unrestricted  common stock is $19.9 million.  Included in
other income in 1996 is approximately $2.3 million representing the Bank's share
of partnership earnings in IMC prior to its reorganization.

Note 8
Loans Receivable, Net

A  comparative  summary  of loans  receivable  at July  31,  1995 and 1996 is as
follows:
<TABLE>
<CAPTION>
                                                                                              1995                       1996
-----------------------------------------------------------------------------------------------------------------------------------
           Loan balances by type:
<S>                                                                                       <C>                        <C>         
           Real estate loans....................................................          $142,043,522               $163,279,564
           Construction loans...................................................               915,000                    762,715
           Consumer loans.......................................................             1,136,811                  1,517,033
           Other................................................................               850,000                  1,191,082
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                           144,945,333                166,750,394
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                                                             25


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
           Less:

<S>                                                                                       <C>                        <C>      
           Allowance for loan losses............................................             2,534,836                  3,073,158
           Deferred loan fees...................................................               287,552                    219,862
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                          $142,122,945               $163,457,374
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Bank serviced  loans for others in the  approximate  amount of  $17,142,812,
$17,927,900  and  $13,792,727  at July 31,  1994,  1995 and 1996,  respectively.
Servicing income earned in the year ended July 31, 1994, 1995, and 1996 amounted
to $21,530, $15,211, and $42,173, respectively.

A  comparative  summary  of  non-accrual  loans at July 31,  1995 and 1996 is as
follows:
<TABLE>
<CAPTION>

                                                                                      1995                          1996
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                 No.         Amount            No.         Amount  
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>      <C>                  <C>      <C>       
Real estate and other loans..................................................... 56       $ 4,222,259          40       $2,910,953

Percent of real estate and other loans..........................................                  3.0%                         1.8%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

An analysis of the  allowance for loan losses for the years ended July 31, 1994,
1995 and 1996 is as follows:
<TABLE>
<CAPTION>
                                                                                      1994             1995              1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>              <C>               <C>       
Balance at beginning of year....................................................  $2,638,365       $1,713,590        $2,534,836
Provision charged to operations.................................................   2,047,121        1,376,404           664,221
Charge-offs.....................................................................  (3,070,734)      (1,405,037)         (429,341)
Recoveries......................................................................      98,838          849,879           303,442
-----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year..........................................................  $1,713,590       $2,534,836        $3,073,158
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>                                                                      
                                                                             
                                                                               
Included in loans is a secured  loan  amounting  to $2.4  million,  which was on
non-accrual  during a  portion  of  fiscal  1996.  In 1996,  the Bank  signed an
agreement with the guarantor of the loan ("Forbearance  Agreement")  whereby all
past-due  principal and interest was brought  current and principal and interest
payments  were prepaid  through the date of the loan,  December  16,  1996.  The
Forbearance Agreement provides the guarantor an option to extend the due date of
the loan to  December  16,  1997,  with  approvals  of the  participating  banks
including  the Bank.  If the option is granted,  the  guarantor  must prepay all
interest and principal to such due date.

For the years ended July 31, 1994,  1995 and 1996,  additional  interest  income
before  taxes  amounting  to  approximately  $703,000,  $234,000  and  $201,000,
respectively,  would have been  recognized  if interest on loans three months or
more in arrears had been  recorded  based on original  terms.  At July 31, 1996,
there were no commitments to lend additional  funds to borrowers whose loans are
classified as nonperforming.

The Bank uses the same credit  policies and  collateral  requirements  in making
commitments and conditional  obligations as it does for on-balance-sheet  loans.
Commitments  to extend  credit are  agreements  to lend to  customers as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since the  commitments may expire without being drawn
upon, the total  commitment  amounts do not  necessarily  represent  future cash
requirements.   The  Bank  evaluates  each  customer's   creditworthiness  on  a
case-by-case  basis. The amount of collateral  obtained,  if deemed necessary by
the Bank upon extension of credit, is based on management's credit evaluation of
the  borrower.   Collateral  held  varies  but  primarily  includes  residential
properties.  Outstanding loan commitments,  primarily  fixed-rate loans, at July
31, 1995 and 1996 amounted to $2,274,900 and $13,295,000, respectively.

26
<PAGE>
                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------
Note 9
Real Estate Owned, Net

Activity in the  allowance  for losses on real estate  owned for the years ended
July 31, 1994, 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
                                                                                1994           1995           1996
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>          <C>             <C>        
Balance at beginning of year..............................................    $823,125   $    188,119    $         -
Provision for losses......................................................     713,320        502,377        654,489
Charge-offs, net .........................................................  (1,348,326)      (690,496)      (654,489)
-----------------------------------------------------------------------------------------------------------------------
Balance at end of year....................................................    $188,119   $          -    $         -
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Net loss on real estate owned activities for the years ended 
July 31, 1994, 1995 and 1996 consists of the following:
<TABLE>
<CAPTION>

                                                                                1994           1995           1996
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>             <C>        
Provision for real estate owned losses....................................    $713,320   $    502,377    $   654,489
Net loss on sale of real estate owned and
related expenses..........................................................     606,372        147,817        266,428
-----------------------------------------------------------------------------------------------------------------------
                                                                           $ 1,319,692   $    650,194    $   920,917
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Note 10
Accrued Interest Receivable

Accrued interest receivable for the years ended July 31, 1995 and 1996,
respectively, are summarized as follows:
<TABLE>
<CAPTION>

                                                                                       1995             1996
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                 <C>       
Investment securities held to maturity..........................................  $   894,180         $1,021,063
Investment securities available for sale........................................  $    25,249         $  961,514
Mortgage-backed securities......................................................      987,697            668,487
Loans receivable................................................................      811,223            995,448
-----------------------------------------------------------------------------------------------------------------------
                                                                                  $ 2,718,349         $3,646,512
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Note 11
Office Properties and Equipment, net

Office properties and equipment,  net, at July 31, 1995 and 1996 
consists of the following:
<TABLE>
<CAPTION>

                                                                                       1995             1996
-----------------------------------------------------------------------------------------------------------------------
Cost:
<S>                                                                               <C>                 <C>       
Land............................................................................  $    793,158        $  793,158
Parking lot improvements........................................................        26,913            26,913
Building and building improvements..............................................     3,513,101         3,600,269
Furniture and equipment.........................................................     1,234,000         1,290,631
Automobiles.....................................................................        75,165           102,636
-----------------------------------------------------------------------------------------------------------------------
                                                                                     5,642,337         5,813,607 
-----------------------------------------------------------------------------------------------------------------------
Less accumulated depreciation...................................................     1,342,743         1,630,968
-----------------------------------------------------------------------------------------------------------------------
                                                                                  $  4,299,594        $4,182,639
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Non-interest  expense  includes  rentals for premises and  equipment of $73,000,
$156,000  and  $177,000  for the  years  ended  July  31,  1994,  1995  and 1996
respectively.                                                    
                                                                             27
<PAGE>

[Picture of Sextant]
                  LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT

--------------------------------------------------------------------------------
    Note 12
    Deposits

    Deposit balances at July 31. 1995 and 1996 are summarized as follows:
<TABLE>
<CAPTION>

                                                              1995                                          1996
                                           Interest    Weighted                       Interest      Weighted
                                             Rate       average                          Rate       average
                                            Ranges        rate        Amount       %    Ranges        rate          Amount      %
-----------------------------------------------------------------------------------------------------------------------------------
        NOW accounts and money
<S>                                       <C>  <C>       <C>    <C>              <C>    <C> <C>      <C>      <C>             <C> 
        market deposits....................0 - 2.85      2.10%  $ 66,225,465     19.3   0 - 2.85     1.86%    $ 69,588,989    19.6
        Savings deposits...................0 - 2.85      2.39%    73,586,111     21.4   0 - 2.85     2.38%      74,612,769    21.1
        Certificates of deposit............2 - 10        5.27%   203,677,752     59.3   0 - 8        5.11%     210,045,012    59.3
-----------------------------------------------------------------------------------------------------------------------------------
                                                                $343,489,328    100.0                        $ 354,246,770   100.0
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

    Certificates   of  deposit   greater  than  $100,000   total   approximately
    $14,310,083 and $17,512,390 at July 31, 1995 and 1996, respectively.

    The  contractual  maturities of certificates of deposit at July 31, 1995
    and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>

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

<S>                                                                                                  <C>              <C>      
        Within one year...................................................................           $163,745         $ 170,389
        One to three years................................................................             33,282            35,069
        Thereafter........................................................................              6,651             4,587
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     $203,678         $ 210,045
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

        Interest expense on deposits for the years ended July 31, 1994, 1995 and
        1996 consists of the following:
<TABLE>
<CAPTION>

                                                                                    1994               1995              1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                <C>               <C>        
        Certificates of deposit...........................................     $ 4,962,138        $ 8,429,880       $10,880,983
        Passbook and club accounts........................................       1,425,258          2,695,257         2,384,500
        NOW and money market accounts.....................................         472,526            818,459           798,812
-----------------------------------------------------------------------------------------------------------------------------------
                                                                               $ 6,859,922        $11,943,596       $14,064,295
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

        Note 13
        Borrowings

        Borrowings at July 31, 1995 and 1996 consists of the following:
<TABLE>
<CAPTION>
                                                                                           Interest
                                                             1995            1996            Rate       Maturity
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>                   <C>        <C>    
        FHLB of New York Advance                      $19,000,000               -           6.13%      Aug. 1, 1995
        FHLB of New York Advance                                -     $10,000,000           5.44%      Aug.22,1996
        FHLB of New York Advance                                -     $10,000,000           5.44%      Aug.26,1996
        FHLB of New York Line of Credit                         -     $14,000,000           6.00%      Aug. 1, 1996
        Reverse Repurchase Agreement                            -     $20,000,000           5.60%      Aug. 8, 1996
-----------------------------------------------------------------------------------------------------------------------------------
                                                      $19,000,000     $54,000,000
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

28
<PAGE>
                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------
The line of credit  and  advances  from the  Federal  Home Loan Bank of New York
("FHLB") are secured by stock in the FHLB of New York and a blanket  pledge over
the Bank's Agency securities,  qualifying loans and mortgage-backed  securities.
At July 31, 1996, the Bank had a credit line available of $41,961,400,  from the
Federal Home Loan Bank of New York.

At July 31, 1996, the Savings Bank had entered into repurchase agreements with 1
major national  broker/dealer which totaled $20 million.  During the years ended
July 31,  1995  and  1996,  the  maximum  month-end  balance  of the  repurchase
agreements  was  $0  and  $20  million,  respectively.  The  average  amount  of
repurchase  agreements held during the years ended July 31, 1995 and 1996 was $0
and $5.1 million,  respectively.  Interest paid on secured  borrowings in fiscal
1995 and 1996 was $0 and $282,124, respectively.

Note 14
Federal and State Income Taxes

As  discussed  in note 1, the Bank  adopted  SFAS 109 as of August 1, 1993.  The
cumulative effect of this change in accounting for income taxes of $1,315,011 is
reported  separately in the consolidated  statement of income for the year ended
July 31, 1994.

Income tax expense (benefit) for the years ended July 31, 1994, 1995 and 1996 is
comprised of the following:
<TABLE>
<CAPTION>

                                                                             1994                1995             1996
-----------------------------------------------------------------------------------------------------------------------------------
Current:
<S>                                                                        <C>                <C>              <C>       
Federal............................................................        $ 809,121          $3,377,513       $3,582,788
State..............................................................          133,857             512,000          529,418
-----------------------------------------------------------------------------------------------------------------------------------
                                                                            $942,978          $3,889,513       $4,112,206
-----------------------------------------------------------------------------------------------------------------------------------
Deferred:
Federal............................................................          806,436            (141,000        (428,000)
State..............................................................           63,257            (13,000)         (38,000)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                             869,693           (154,000)        (466,000)
-----------------------------------------------------------------------------------------------------------------------------------
Total income tax expense...........................................       $1,812,671          $3,735,513       $3,646,206
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

If certain  conditions  are met,  savings  and loan  associations  are allowed a
special bad debt  deduction in  determining  income for tax  purposes,  based on
specified  experience  formulas or a percentage  of taxable  income  before such
deduction.  The Bank used the experience  method in 1995. It is anticipated that
the experience method will be used in preparing the 1996 tax return.

On August 21, 1996 legislation was signed into law which repealed the percentage
of taxable income method for tax bad debt deduction. The repeal is effective for
the Bank's taxable year beginning  August 1, 1996. In addition,  the legislation
requires the Company to include in taxable  income its tax bad debt  reserves in
excess  of its base  year  reserves  over a six,  seven,  or eight  year  period
depending upon the attainment of certain loan origination levels.

Since the percentage of taxable income method for tax bad debt deduction and the
corresponding  increase  in the tax bad debt  reserve in excess of the base year
have been recorded as temporary differences pursuant to SFAS 109, this change in
the tax law is not expected to have a material effect on the Company's statement
of operations.

Retained income at July 31, 1996 includes approximately  $3,600,000 for which no
provision for income tax has been made. This amount  represents an allocation of
income to bad debt  deductions  for tax purposes  only.  Reduction of amounts so
allocated  by other  than  tax bad  debt  losses  or  recomputation  of bad debt
deductions resulting from an operating loss carryback to prior years will create
income  for tax  purposes  only,  which  will be  subject  to the  then  current
corporate income tax rate.
                                        
                                                                             29


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

A  reconciliation  of expected  income tax expense  (computed by multiplying the
U.S. Federal corporate income tax rate of 34% to income before income taxes) and
total income tax expense for the years ended July 31, 1994,  1995 and 1996 is as
follows:
<TABLE>
<CAPTION>

                                                                                  1994          1995              1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>           <C>               <C>       
Expected income tax expense.............................................       $1,723,333    $3,410,248        $3,372,841
Dividends received deduction............................................          (77,512)      (52,263)          (88,246)
State income taxes, net of Federal tax benefit..........................          130,095       337,920           324,336
Amortization of goodwill and other, net.................................           36,755        39,608            37,275
-----------------------------------------------------------------------------------------------------------------------------------
Total income tax expense................................................       $1,812,671    $3,735,513        $3,646,206
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The tax effects of temporary  differences  that give rise to significant
portions  of the  deferred  tax  asset at July 31,  1994 and 1995 are as
follows:
<TABLE>
<CAPTION>

Deferred tax assets:
                                                                                    1995                           1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                             <C>       
Allowance for loan losses...............................................         $938,000                      $1,059,000
Loan fees...............................................................          106,000                          81,000
Uncollected interest....................................................           54,000                          93,000
Accrued bonus...........................................................           65,000                          65,000
Goodwill................................................................          189,000                         344,000
Unrealized loss or securities available for sale........................           31,000                       1,059,348
Other...................................................................          129,000                         239,000
-----------------------------------------------------------------------------------------------------------------------------------
 ........................................................................       $1,512,000                      $2,940,348
-----------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Intangible assets.......................................................          245,000                         225,000
Depreciation............................................................          117,000                          85,000
Other...................................................................           67,000                          53,000
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                  429,000                         363,000
-----------------------------------------------------------------------------------------------------------------------------------
Net deferred asset......................................................       $1,083,000                      $2,577,348
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Management  believes,  based upon current facts, that it is more likely than not
that there will be sufficient  taxable income in future years to realize the net
deferred  tax  asset.  However  there can be no  assurances  about the levels of
future earnings.

30


<PAGE>
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Note 15
Employee Benefit Plan

The  Bank  has  in  effect  a  noncontributory  defined  benefit  plan  covering
substantially  all of its employees upon their becoming  eligible.  The benefits
are based on years of service and  compensation.  Total pension expense (income)
was $35,276, ($14,488) and ($52,664) for the years ended July 31, 1994, 1995 and
1996, respectively.

Net pension cost for the years ended July 31, 1994,  1995 and 1996  includes the
following:
<TABLE>
<CAPTION>

                                                                                 1994              1995             1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                <C>             <C>     
Service cost - benefits earned during the period........................      $ 53,235           $39,095         $ 36,915
Interest cost on projected benefit obligation...........................        37,699            35,103           38,638
Return on plan assets...................................................      (445,761)          (98,518)         (83,128)
Net amortization and deferral loss......................................       390,103             9,832          (45,089)
-----------------------------------------------------------------------------------------------------------------------------------
Total pension cost (benefit)............................................      $ 35,276         ($ 14,488)        ($52,664)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

           The  following  table sets forth the plan's funded status at July 31,
1995 and 1996:
<TABLE>
<CAPTION>

                                                                                                 1995              1996
-----------------------------------------------------------------------------------------------------------------------------------
Actuarial present value of obligations - accumulated benefit
obligation, including vested benefits of $372,867 and $519,641
<S>                                                                                            <C>             <C>     
at July 31, 1995 and 1996, respectively.........................................               $ 458,188         $527,475
Projected benefit obligation....................................................                 608,112          569,452
Plan assets at fair value.......................................................               1,210,917        1,223,715
Plan assets in excess of projected benefit obligation...........................                 602,805          654,263
Unrecognized net transition obligation..........................................                 (76,711)         (68,187)
Unrecognized prior service cost.................................................                       -          (40,748)
Unrecognized deferred loss......................................................                (530,649)        (497,219)
-----------------------------------------------------------------------------------------------------------------------------------
Prepaid pension cost............................................................                 ($4,555)         $48,109
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The weighted  average  discount rate used in determining  the actuarial  present
value of the projected benefit obligation was 6.50% in fiscal 1995 and 1996. The
assumed long-term rate of return on plan assets was 7.25% in both years, and the
assumed rate of increase in future compensation levels was 5.5% in both years.

Supplemental Executive Retirement Plan ("SERP")

During  fiscal  year  1996,  the  Bank  implemented  a  Supplemental   Executive
Retirement  Plan  ("SERP"),   which  provides  a  post-employment   supplemental
retirement benefit to the eligible  participant's  Pension Plans Annual Benefit.
The SERP is not a  tax-qualified  employee  benefit  plan.  The SERP expense was
$84,006, for the year ended July 31, 1996.

                                                                             31


<PAGE>

 [Picture of Sextant]               LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

Note 16
Stock Benefit Plans

Stock Option Plan

The Bank has adopted a stock option and incentive plan (Option  Plan).  Pursuant
to the Option Plan,  stock options of 439,200 common shares,  adjusted for stock
dividends, may be granted to directors and officers of the Bank. Options granted
under the Option Plan may be either  options  that  qualify as  Incentive  Stock
Options  as defined in Section  422 of the  Internal  Revenue  Code of 1986 (the
Code), as amended, or options that do not qualify.

Exercise prices of the options range from $8.26 to $16.02 per share. All options
have been adjusted to reflect stock dividends. At July 31, 1996, 418,157 granted
qualified stock options were outstanding,  and none of the stock options granted
were exercised during this period.

Employee Stock Ownership Plan

The Bank has an ESOP  for the  benefit  of  employees  who meet the  eligibility
requirements  which include  having  completed one year of service with the Bank
and having  attained age 2 1. The ESOP Trust purchased 1 10,000 shares of common
stock in the Bank's  initial  public  offering with proceeds from a loan from an
unaffiliated  lender.  On July 31, 1996 the ESOP Trust  purchased an  additional
84,744 shares for $1,615,985.  The Bank makes cash  contributions to the ESOP on
an annual basis sufficient to enable the ESOP to make the required loan payments
to the  unaffiliated  lender.  Dividends  declared  on ESOP  shares  are used to
purchase  additional  common  shares of the Bank,  for inclusion in the Plan, as
Plan assets.

The note payable  referred to above bears  interest at Federal funds plus 3.25%,
with  interest  payable   quarterly  and  principal   payable  in  equal  annual
installments  over eight  years.  The loan is secured by the shares of the stock
purchased.

As the debt is repaid,  shares are released  from  collateral  and  allocated to
qualified  employees  based on the  proportion of debt service paid in the year.
The Bank accounts for its ESOP in accordance  with  Statement of Position  93-6.
Accordingly,  the shares  pledged as  collateral  are reported as deferred  ESOP
shares in the  statement of  financial  position.  As shares are  released  from
collateral,  the Bank reports  compensation  expense equal to the current market
price of the shares,  and the shares become  outstanding  for earnings per share
computations.

Management Stock Bonus Plans

The Bank has adopted MSBPs for  directors  and  management to enable the Bank to
attract  and retain  experienced  and  capable  personnel  in key  positions  of
responsibility.  A total of 220,000 shares of restricted stock were purchased on
the  conversion  date.  Allocated  restricted  stock is payable over a five-year
vesting period,  at 20% per year,  beginning in the year of the award.  The Bank
will  recognize  compensation  expense in the amount of the fair market value of
the common  stock at the grant date,  pro rata over the years  during  which the
shares are payable and recorded as an addition to stockholders'  equity equal to
the compensation  expense  recorded.  Compensation  expense  attributable to the
MSBPs  amounted to  $154,000,  $305,800  and  $319,552  in 1994,  1995 and 1996,
respectively.  The shares  are  entitled  to all  voting  and other  stockholder
rights,  except that the shares,  while restricted,  cannot be sold,  pledged or
otherwise disposed of, and are required to be held in escrow.

If a holder  of  restricted  stock  under the MSBPs  terminated  employment  for
reasons other than death, disability, retirement following five years of service
or change of  control  in the Bank,  such  employee  forfeits  all rights to any
allocated shares which are still restricted.  If termination is caused by death,
disability,  retirement or change in control of the Bank,  all allocated  shares
become unrestricted.

Note 17
Commitments and Contingencies

At July 31, 1996, the Bank was obligated under  noncancelable  operating  leases
for premises and equipment as follows (in thousands):

--------------------------------------------------------------------------------
            1997............................................$137,311
            1998.............................................124,459
            1999.............................................116,985
            2000..............................................94,560
            Thereafter........................................94,560
--------------------------------------------------------------------------------

In  the  normal  course  of  business,   there  are  various  outstanding  legal
proceedings and claims.  In the opinion of management,  after  consultation with
legal counsel,  the  disposition of such legal  proceedings  and claims will not
materially  affect  the  Bank's  consolidated  financial  position,  results  of
operations or liquidity.

32
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                                          Charting The Course [Picture of Ship]
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Note 18
Regulatory Matters

The Bank is subject to various regulatory capital  requirements  administered by
the Federal banking agencies.  Failure to meet minimum capital  requirements can
initiate certain mandatory - and possibly  additional  discretionary  actions by
regulators  that,  if  undertaken,  could have a direct  material  effect on the
Bank's consolidated financial statements.  Under capital adequacy guidelines and
the  regulatory  framework  for  prompt  corrective  action,  the Bank must meet
specific capital guidelines that involve quantitative measures of Bank's assets,
liabilities,  and certain off-balance sheet items as calculated under regulatory
accounting  practices.  The Bank's capital amounts and  classification  are also
subject to  qualitative  judgements by the  regulators  about  components,  risk
weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier  I  Capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined).  Management  believes,  as of July 31, 1996,  that the Bank
meets all capital adequacy requirements to which it is subject.

As of July 31,  1996,  the most recent  notification  from the  Federal  Deposit
Insurance  Corporation  categorized  the  Bank as  well  capitalized  under  the
regulatory  framework for prompt  corrective  action.  To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
Tier 1 leverage ratios as set forth in the table below.  There are no conditions
or events since that  notification  that  Management  believes  have changed the
Bank's category.

The Bank's actual capital amounts and ratios are also presented in the table.
<TABLE>
<CAPTION>

                                                                                       Required             To be well capitalized 
                                                                                     for capital            under prompt corrective
                                                               Actual                adequacy purposes         action provision
-----------------------------------------------------------------------------------------------------------------------------------
                                                         Amount       Ratio         Amount        Ratio        Amount     Ratio
-----------------------------------------------------------------------------------------------------------------------------------
As of July 31, 1996:
<S>                                                   <C>              <C>        <C>              <C>      <C>            <C>  
Total capital (to risk-weighted assets)...............$41,540,507      19.3%      $17,211,156      8.0%     $ 21,513,945   10.0%
                                                                                                           
Tier I capital (to risk-weighted assets)...............33,200,112      15.4%        8,605,578      4.0%       12,908,367      6.0%
Tier 1 capital (to average assets).....................33,200,112       7.5%       17,630,520      4.0%       22,038,150      5.0%
-----------------------------------------------------------------------------------------------------------------------------------
As of July 31, 1995:                                                                                       
                                                                                                           
Total capital (to risk-weighted assets)................49,400,232      25.5%       15,495,517      8.0%       19,369,396     10.0%
Tier 1 capital (to risk-weighted assets)...............37,875,170      19.6%        7,747,758      4.0%       11,621,637      6.0%
Tier 1 capital (to average assets).....................37,875,170       9.1%       16,702,240      4.0%       20,877,800      5.0%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                        
 

                                                                            33


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

Note 19
Stock Repurchase Program

On October 28, 1994 the Bank  announced that the Board of Directors had approved
a 5% stock repurchase  program. On April 10, 1995 the Company announced that the
Board of Directors had approved a 10% stock repurchase  program. On November 30,
1995, March 25, 1996, and July 29, 1996, the Company announced that the Board of
Directors had approved  additional 5% stock repurchase  programs.  On January 9,
1995 and January 2, 1996, the Company  announced that the Board of Directors had
approved an additional 10% stock dividend of its outstanding  common stock.  The
repurchased  shares  have been held as  treasury  stock  and are  available  for
general  corporate  purposes.  The Bank has completed the  repurchase of 662,372
shares of common stock as of July 31, 1996.

Note 20

Fair Value of Financial Instruments

The fair  value of a  financial  instrument  is the amount at which the asset or
obligation could be exchanged in a current  transaction between willing parties,
other than in a forced or liquidation  sale.  Fair value estimates are made at a
specific  point in time based on relevant  market  information  and  information
about the  financial  instrument.  Such  estimates do not include any premium or
discount  that could result from offering for sale at one time the Bank's entire
holdings of a particular  financial  instrument.  Because no market value exists
for a significant portion of the financial instruments, fair value estimates are
based on judgments  regarding future expected loss experience,  current economic
conditions,  risk  characteristics of various financial  instruments,  and other
assumptions,  many  of  which  involve  circumstances  outside  the  control  of
management.   Because  of  the  uncertainties   surrounding  these  factors  and
assumptions,  the reported fair values represent  estimates only and, therefore,
cannot be compared to the historical accounting model. Changes in assumptions or
methodologies could significantly affect the estimates of fair value.

Fair value estimates  presented are based on financial  instruments both on- and
off-balance-sheet,  and no  attempt  has  been  made to  estimate  the  value of
anticipated  future  business,  and the value of assets and liabilities that are
not considered financial instruments.  In addition, the tax consequences related
to the  realization  of the  unrealized  gains and losses  can have a  potential
effect  on fair  value  estimates  and have not  been  considered  in any of the
estimates. The fair value information supplements the basic financial statements
and  other  traditional   financial  data  presented  throughout  the  financial
statements, and the aggregate fair value of financial instruments presented does
not represent the  underlying  value of the Bank taken as a whole and should not
be  compared  with the fair  value of other  financial  institutions,  which may
differ depending on the assumptions used and the valuation techniques employed.

The following  methods and  assumptions  were used to estimate the fair value of
significant financial instruments at July 31, 1995 and 1996:

Financial Assets

The carrying  amount of cash and cash  equivalents  is considered to approximate
fair  value.  The fair  values  of  securities  held  for  sale  and  investment
securities  are  based on  quoted  market  prices.  The fair  values  of  equity
securities restricted is based on the quoted market price of unrestricted shares
without  discount for the  restriction.  The fair value of loans  represents the
present  value of the  estimated  future cash flows  discounted  at estimates of
market  interest  rates  adjusted for criteria  discussed  above.  Fair value of
significant  nonperforming  loans is generally based on the estimated cash flows
which are discounted employing a rate that incorporates the risk associated with
such cash  flows.  The fair value of the FHLB stock is the same as its  carrying
value.

Financial Liabilities

The carrying amounts of deposit  liabilities payable on demand are considered to
approximate fair value. The fair value of fixed maturity  deposits was estimated
by discounting  estimated  future cash flows using rates  currently  offered for
deposit products with similar  maturities.  Long-term  borrowing fair values are
discounted   using  rates   available  on  borrowings  with  similar  terms  and
maturities.

34
<PAGE>

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--------------------------------------------------------------------------------

Off-balance-sheet Financial Instruments

The fair  value of  commitments  to extend  credit is  estimated  using the fees
currently charged to enter into similar arrangements.

The  carrying  amounts and related  fair values at July 31, 1995 and 1996 are as
follows:
<TABLE>
<CAPTION>

                                                                              Carrying amount              Fair value
-----------------------------------------------------------------------------------------------------------------------------------
1995:
Financial assets:
<S>                                                                             <C>                        <C>        
Cash and cash equivalents...........................................            $ 8,021,666                $ 8,021,666
Investment securities...............................................             55,737,605                 55,457,430
Investments held for sale...........................................              8,567,375                  8,567,375
Mortgage-backed securities..........................................            175,375,296                173,500,278
Loans receivable, net...............................................            142,122,945                145,896,430
Federal Home Loan Bank of New York stock............................              2,587,400                  2,587,400
Financial liabilities:

Deposits............................................................            343,489,328                344,688,499
Borrowings..........................................................             19,000,000                 19,000,000
-----------------------------------------------------------------------------------------------------------------------------------
1996:
Financial assets:
Cash and cash equivalents...........................................            $ 6,902,040                $ 6,902,040
Investment securities held to maturity..............................             40,821,195                 40,083,449
Investments available for sale......................................             89,967,424                 89,967,424
Mortgage-backed securities held to maturity.........................            121,461,936                119,471,910
Equity securities restricted........................................              7,806,358                 19,942,272
Loans receivable, net...............................................            163,457,374                163,873,689
Federal Home Loan Bank of New York stock............................              2,587,400                  2,587,400
Financial liabilities:
Deposits............................................................            354,246,770                355,068,772
Borrowings..........................................................             54,000,000                 54,000,000
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>








                                                                             35


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

Note 21
Recent Accounting Pronouncements

Statement of Financial  Accounting  Standards No. 122,  "Accounting for Mortgage
Servicing Rights" (SFAS 122), was issued by the Financial  Accounting  Standards
Board  (FASB) in May 1995.  SFAS 122  amends  certain  provisions  of SFAS 65 to
eliminate the accounting  distinction  between rights to service  mortgage loans
for others that are  acquired  through  loan  origination  activities  and those
acquired  through  purchase  transactions.  SFAS 122  generally  would require a
mortgage  banking  enterprise that purchases or originates loans to allocate the
cost of  acquiring  those loans to the mortgage  servicing  rights and the loans
based on their  relative fair values if it is practicable to estimate those fair
values.

Any costs  allocated  to  mortgage  servicing  rights  should be  recognized  as
separate  asset and  amortized in proportion to and over the period of estimated
net servicing  income and should be evaluated for impairment based on their fair
value. SFAS 122 is effective for fiscal years beginning after December 15, 1995.
Management has determined that the adoption of SFAS 122 will not have a material
impact on the Bank's consolidated financial statements.

In October 1995, the Financial  Accounting  Standards Board issued  Statement of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation" (SFAS 123). This statement  establishes  financial  accounting and
reporting  standards for  stock-based  employees  compensation  plans.  SFAS 123
encourages  all entities to adopt the "fair value base method" of accounting for
employee stock compensation  plans.  However,  SFAS 123 also allows an entity to
continue  to measure  compensation  cost under such plans  using the  "intrinsic
value based  method."  Under the fair value based method,  compensation  cost is
measured  at the grant  date  based on the value of the award and is  recognized
over the service period,  usually the vesting  period.  Fair value is determined
using an option  pricing  model that takes into  account  the stock price at the
grant date, the exercise price, the expected life of the option,  the volatility
of the  underlying  stock and the expected  dividends  on it, and the  risk-free
interest  rate over the expected life of the option.  Under the intrinsic  value
based  method,  compensation  cost is the excess,  if any, of the quoted  market
price of the stock at the grant date or other  measurement  date over the amount
an employee  must pay to acquire the stock.  Most stock plans have no  intrinsic
value at date of grant, and under previous accounting guidance,  no compensation
cost was to be recognized.

The accounting  requirements  of this  statement are effective for  transactions
entered  into in fiscal  years that begin  after  December  15,  1995.  The Bank
intends to continue  accounting for compensation  cost under the intrinsic value
based method and will provide pro forma disclosures for all awards granted after
July 31, 1996. Such disclosures  include net income and earnings per share as if
the fair value based method of accounting has been applied.

In June 1996, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial  Accounting  Standards  No. 125,  "Accounting  for  Transfers  and
Servicing of Financial  Assets and  Extinguishments  of Liabilities"  SFAS 125).
SFAS 125 amends portions of SFAS 115, amends and extends to all servicing assets
and liabilities the accounting  standards for mortgages  servicing rights now in
SFAS 65, and supercedes SFAS 122. The 

36
<PAGE>
                                          Charting The Course [Picture of Ship]
--------------------------------------------------------------------------------

statement  provides  consistent   standards  for  distinguishing   transfers  of
financial  assets that are sales from  transfers  that are  secured  borrowings.
Those standards are based upon consistent  application of a financial components
approach  that  focuses  on  control.  The  statement  also  defines  accounting
treatment for servicing  assets and other  retained  interest in the assets that
are transferred.  SFAS 125 is effective for transfers and servicing of financial
assets and extinguishments of liabilities  occurring after December 31, 1996 and
is to be applied prospectively. The adoption of the statement is not expected to
have  a  material  effect  on the  Bank's  financial  condition  or  results  of
operation.

Note 22
Subsequent Event (Unaudited)

Recapitalization  of the Savings  Association  Insurance  Fund  ("SAIF") and its
Impact on Insurance Premiums

On September 30, 1996 the President signed into law the Deposit  Insurance Funds
Act of 1996 (the Act).  Among other  provisions,  the Act  empowers  the FDIC to
impose a special  assessment on deposits of institutions  insured by the Savings
Association  Insurance Fund (SAIF) including the Bank. This special  assessment,
which is based on deposits at March 31, 1995,  is intended to  recapitalize  the
SAIF.

Based on information  issued by the FDIC, the special  assessment is expected to
be 65.7 basis points per $100 of insured deposits and was accrued by the Bank on
September 30, 1996. The amount of the assessment is expected to approximate $2.2
million before tax benefit and is payable on November 27, 1996.

It is  expected  that  annual  insurance  premium  rates  will  be  reduced  for
institutions  in the lowest risk category,  including the Bank, to a level which
approximates  those  paid by  institutions  insured by the Bank  Insurance  Fund
(BIF). In addition to the annual insurance  premiums,  the Bank will be assessed
approximately  6.5 basis points on eligible  deposits to cover FICO  obligations
beginning on January 1, 1997.  The Bank paid  insurance  premiums to the FDIC of
$794,011 during fiscal 1996.

Note 23
Parent Company Only

At fiscal year end 1996,  Lakeview  Financial  Corp.  (Parent  only),  which was
formed  in  August  1994,  had  three   subsidiaries:   Lakeview  Savings  Bank,
Branchview,  Inc.,  and  Lakeview  Mortgage  Depot,  Inc.  The  earnings  of the
subsidiaries  are  recognized  by the Parent  Company using the equity method of
accounting.  Accordingly, earnings of the subsidiaries are recorded as increases
in the Parent Company's investment in the subsidiaries and dividends paid reduce
the Parent Company's investment in the subsidiaries.  The following  information
should be read in  conjunction  with other Notes to the  Consolidated  Financial
Statements.

                                                                             37


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------

Condensed financial statements of the Parent Company only are presented below.

Condensed Balance Sheet
<TABLE>
<CAPTION>

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

Assets
<S>                                                                                     <C>            <C>    
Cash on hand and in banks.......................................................             152,855        244,371
Investments in subsidiaries.....................................................          49,291,953     45,515,234
Other assets....................................................................                   -             75
-----------------------------------------------------------------------------------------------------------------------------------
Total assets....................................................................        $ 49,444,808   $ 45,759,680
-----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Liabilities.....................................................................               4,574              -
Stockholders' equity............................................................          49,440,234     45,759,680
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and Stockholders' equity......................................          49,444,808     45,759,680
-----------------------------------------------------------------------------------------------------------------------------------
Condensed Statement of Income

Equity in earnings of subsidiaries..............................................         $ 6,279,834    $ 6,310,835
Interest income.................................................................              16,127              -
Securities gains................................................................              20,709              -
-----------------------------------------------------------------------------------------------------------------------------------
Total income....................................................................           6,316,670      6,310,835
Total other expenses............................................................              17,431         34,957
-----------------------------------------------------------------------------------------------------------------------------------
Net income before taxes.........................................................           6,299,239      6,275,878
Taxes expense...................................................................               4,612          1,964
-----------------------------------------------------------------------------------------------------------------------------------
Net income......................................................................         $ 6,294,627    $ 6,273,914
-----------------------------------------------------------------------------------------------------------------------------------
Condensed Statements of Cash Flows

Cash flows from operating activities:
 Net income.....................................................................         $ 6,294,627    $ 6,273,914
Adjustments to reconcile net income to net cash
provided by operating activities
 Equity in earnings of subsidiaries.............................................          (6,279,834)    (6,310,835)
 Investment in subsidiaries.....................................................              99,997       (250,180)
 Change in other assets.........................................................                   -            (75)
 Change in other liabilities....................................................               4,574         (4,574)
 Dividends from subsidiaries....................................................           4,619,027       7,650,154
-----------------------------------------------------------------------------------------------------------------------------------
 Net cash provided by operating activity........................................           4,738,391       7,358,404
Cash flows from financing activities:

 Purchase of treasury stock.....................................................          (3,970,106)     (6,685,014)

 Dividend paid..................................................................            (615,430)       (581,874)
-----------------------------------------------------------------------------------------------------------------------------------
 Net cash used in investing activities..........................................          (4,585,536)     (7,266,888)
Net change in cash and cash equivalents.........................................             152,855          91,516
Cash and cash equivalents at beginning of period................................                   -         152,855
Cash and cash equivalents at end of period......................................            $152,855      $  244,371
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

38


<PAGE>
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Note 24
Quarterly Financial Data (Unaudited)

The following table contains  quarterly  financial data for the years ended July
31, 1995 and 1996 (dollars in thousands)-
<TABLE>
<CAPTION>

                                                       First          Second        Third      Fourth
Year Ended July 31, 1995                              Quarter         Quarter       Quarter    Quarter  Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>          <C>        <C>      <C>     
Total Interest Income...........................      $ 6,968          $7,094       $ 7,060    $ 7,308  $ 28,430
Total Interest Expense..........................        3,053           3,278         3,394      3,814    13,539
-----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income Before Provision
for Loan Losses.................................        3,915           3,816         3,666      3,494    14,891
Provision for Loan Losses.......................          121             443           651        161     1,376
-----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision
for Loan Losses.................................        3,794           3,373         3,015      3,333    13,515
Total Other Income..............................          668             769         5,001        769     7,207
Total Other Expense.............................        2,678           2,490         2,875      2,648    10,691
Net Income Before Taxes.........................        1,784           1,652         5,141      1,454    10,031
Federal and State Income Taxes..................          626             542         2,070        498     3,736
-----------------------------------------------------------------------------------------------------------------------------------
Net Income......................................      $ 1,158          $1,110       $ 3,071    $   956   $ 6,295
-----------------------------------------------------------------------------------------------------------------------------------
 ................................................        First          Second         Third    Fourth
Year Ended July 31, 1996........................      Quarter         Quarter       Quarter    Quarter    Total
-----------------------------------------------------------------------------------------------------------------------------------
Total Interest Income...........................      $ 7,482          $7,533       $ 7,697    $ 8,260  $ 30,972
Total Interest Expense..........................        4,078           4,024         4,151      4,297    16,550
-----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income Before Provision
for Loan Losses.................................        3,404           3,509         3,546      3,963    14,422
Provision for Loan Losses.......................          184             175           184        121       664
Net Interest Income After Provision
for Loan Losses.................................        3,220           3,334         3,362      3,842    13,758
Total Other Income..............................          968           1,708         1,697      2,657     7,030
Total Other Expense.............................        2,648           2,679         2,616      2,925    10,868
Net Income Before Taxes.........................        1,540           2,363         2,443      3,574     9,920
Federal and State Income Taxes..................          519             863           936      1,328     3,646
-----------------------------------------------------------------------------------------------------------------------------------
Net Income......................................      $ 1,021         $ 1,500       $ 1,507    $ 2,246   $ 6,274
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</TABLE>



                                                                             39


<PAGE>

[Picture of Sextant]
                   LAKEVIEW FINANCIAL CORP. 1996 ANNUAL REPORT
--------------------------------------------------------------------------------



Independent Auditors' Report



[KPMG Peat Marwick LLP Letterhead]



The Board of Directors and Stockholders
Lakeview Financial Corp. and Subsidiaries
Paterson, New Jersey:

We have  audited  the  accompanying  consolidated  balance  sheets  of  Lakeview
Financial  Corp. and  subsidiaries as of July 31, 1995 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year  period ended July 31, 1996.  These  consolidated
financial statements are the responsibility of the Corporation's management. Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based on our audits. 

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Lakeview Financial
Corp.  and  subsidiaries  as of July 31, 1995 and 1996, and the results of their
operations  and their cash flows for each of the years in the three year  period
ended July 31, 1996 in conformity with generally accepted accounting principles.

As discussed in notes 1 and 14 to the consolidated  financial statements,  as of
August 1, 1993 the Corporation  adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," and as of August 1,
1994,  Statement of Financial  Accounting  Standards  No. 115,  "Accounting  for
Certain Investments in Debt and Equity Securities."


                                     /s/KPMG Peat Marwick LLP
Short Hills, New Jersey
September 5, 1996

40

<PAGE>

        Lakeview Financial Corp.        CORPORATE 
           and Subsidiaries             INFORMATION

                DIRECTORS               TRANSFER AGENT AND REGISTRAR
                                        Registrar and Transfer Company
             Leo J. Costello            10 Commerce Drive
         Chairman of the Board          Cranford, NJ  07016
             Kevin J. Coogan            
          Robert J. Davenport           CORPORATE ADDRESS
               Leo J. Dean              1117 Main Street
             Dennis D. Pedra            Paterson, NJ  07503
             Michael R. Rowe            
             Vincent A. Scola           SHAREHOLDER INFORMATION
                                        Sandy L. Coulthart
                                        Corporate Administrator

                                        FINANCIAL INFORMATION
                                        Anthony G. Gallo
               OFFICERS                 Chief Financial Officer

             Kevin J. Coogan            MARKET INFORMATION
              President/CEO             NASDAQ National Marketing System

            Kevin M. McCloskey          CORPORATE SYMBOL "LVSB"
            Vice President/COO

             Anthony G. Gallo           COUNSEL
            Vice President/CFO          Salvatore Borrelli, Esq.
                                        989 McBride Avenue
               Annette Barrone          West Paterson, NJ  07424
          Vice President/Treasurer      
                                        WASHINGTON COUNSEL
               Helen Saco               Malizia, Spidi, Sloane & Fisch, P.C.
          Vice President/Secretary      One Franklin Square
                                        1301 K Street, N.W.
               Jeanine Kachele          Suite 700 East
       Vice President/Branch Manager    Washington, D.C. 20005

               Robert Campbell
            Assistant Comptroller       INDEPENDENT AUDITORS
                                        KPMG Peat Marwick, LLP
               Mary Requena             150 John F. Kennedy Parkway
          Assistant Secretary/Trearurer Short Hills, NJ  07078

--------------------------------------------------------------------------------

10-K INFORMATION A copy of the Corporation's  Annual Report on Form 10-K for the
fiscal  year  ended  July 31,  1996 as filed with the  Securities  and  Exchange
Commission  will be furnished  without charge to  Stockholders  as of the record
date upon written request to the Secretary.  
Lakeview Financial Corp., 989 McBride Avenue, West Paterson, NJ  07424.


<PAGE>
                       [The following at bottom of page]

                     [Charting the course. Picture of Ship]

    [Lakeview Financial Corp. - 989 McBride Avenue - West Paterson, NJ 07424
                                (201) 890-1234]
                 [Design: Studio Inc/Printing: Millburn Press]