<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-Q


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

         For the quarter ended March 31, 2000

                                       OR

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

         For the transition period from _________________ to _________________

                             Commission File Number:
                                    001-13949

                           LOCAL FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

         DELAWARE                                              65-0424192
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

    3601 N.W. 63RD, OKLAHOMA CITY, OK                           73116
----------------------------------------------------           -------
 (Address of principal executive offices)                      (Zip Code)

     Registrant's telephone number, including area code:    (405) 841-2298

     Indicate by check mark whether the registrant (1) has filed all reports
     required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
     of 1934 during the preceding 12 months (or for such shorter period that the
     registrant was required to file such reports, and (2) has been subject to
     such filing requirements for the past 90 days.

                                 Yes [X] No [ ]

     Number of shares outstanding of the registrant's $0.01 par value common
     stock as of May 1, 2000 were as follows:

                                NUMBER OF SHARES
                          -----------------------------
                                   20,537,209


<PAGE>   2



                           LOCAL FINANCIAL CORPORATION
                                      INDEX
<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>               <C>                                                                                         <C>
PART I.  FINANCIAL INFORMATION

     Item 1.      Financial Statements

                  Consolidated Statements of Financial Condition-
                  March 31, 2000 (unaudited) and December 31, 1999...............................................1

                  Consolidated Statements of Income-
                  For the Three Months Ended March 31, 2000 and 1999 (unaudited).................................2

                  Consolidated Statements of Cash Flows-
                  For the Three Months Ended March 31, 2000 and 1999 (unaudited).................................3

                  Notes to Consolidated Financial Statements.....................................................4

     Item 2.      Management's Discussion and Analysis of Financial Condition
                  and Results of Operations......................................................................7

     Item 3.      Quantitative and Qualitative Disclosures about Market Risk....................................13

PART II. OTHER INFORMATION

     Item 1.      Legal Proceedings.............................................................................13

     Item 6.      Exhibits and Reports on Form 8-K..............................................................13

Signatures        ..............................................................................................14

Index to Exhibits...............................................................................................15
</TABLE>







<PAGE>   3





PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   LOCAL FINANCIAL CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    (Dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                March 31, 2000   December 31, 1999
                                                                                --------------   -----------------
                                                                                 (unaudited)
<S>                                                                              <C>             <C>
                                ASSETS

Cash and due from banks                                                          $      41,208    $      48,122
Interest bearing deposits with other banks                                              80,900            7,700
Securities available for sale                                                          378,238          529,230
Loans receivable, net of allowance for loan losses of $28,727 at
   March 31, 2000 and $28,297 at December 31, 1999                                   1,709,885        1,685,550
Federal Home Loan Bank of Topeka stock
   and Federal Reserve Bank stock, at cost                                              24,820           24,820
Premises and equipment, net                                                             36,954           31,805
Assets acquired through foreclosure and repossession, net                                  564              723
Intangible assets, net                                                                  17,892           18,227
Deferred tax asset                                                                      14,113           14,217
Other assets                                                                            20,143           21,213
                                                                                 -------------    -------------

       Total assets                                                              $   2,324,717    $   2,381,607
                                                                                 =============    =============

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
   Deposits:
     Demand                                                                      $     483,965    $     458,824
     Savings                                                                            74,487           73,546
     Time                                                                            1,300,319        1,315,970
                                                                                 -------------    -------------

       Total deposits                                                                1,858,771        1,848,340

Advances from the Federal Home Loan Bank of Topeka                                     235,030          302,035
Senior Notes                                                                            43,160           75,250
Other liabilities                                                                       56,526           27,688
                                                                                 -------------    -------------

       Total liabilities                                                             2,193,487        2,253,313
                                                                                 -------------    -------------

Commitments and contingencies

Stockholders' equity:
   Common stock, $0.01 par value, 25,000,000 shares authorized; 20,537,269
     shares issued and 20,537,209 shares outstanding at
     March 31, 2000 and December 31, 1999                                                  205              205
   Preferred stock, $0.01 par value, 5,000,000 shares authorized;
     none outstanding                                                                       --               --
   Additional paid-in capital                                                          206,758          206,758
   Retained earnings                                                                    77,298           72,189
   Treasury stock, 60 shares, at cost                                                 (151,274)        (151,274)
   Accumulated other comprehensive income (loss)                                        (1,757)             416
                                                                                 -------------    -------------

       Total stockholders' equity                                                      131,230          128,294
                                                                                 -------------    -------------

       Total liabilities and stockholders' equity                                $   2,324,717    $   2,381,607
                                                                                 =============    =============
</TABLE>



        The accompanying notes are an integral part of these consolidated
                              financial statements.




                                       1
<PAGE>   4





                   LOCAL FINANCIAL CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                    (Dollars in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                                    March 31,
                                                                         -------------    -------------
                                                                             2000              1999
                                                                         -------------    -------------
<S>                                                                      <C>              <C>
Interest and dividend income:
   Loans                                                                 $      36,239    $      29,748
   Securities available for sale                                                 8,848            8,492
   Federal Home Loan Bank of Topeka
     and Federal Reserve Bank stock                                                423              665
   Other investments                                                               290              295
                                                                         -------------    -------------
Total interest and dividend income                                              45,800           39,200
                                                                         -------------    -------------

Interest expense:
   Deposit accounts                                                             20,400           17,184
   Advances from the Federal Home Loan Bank of Topeka                            4,109            2,624
   Notes payable                                                                 2,253            2,363
                                                                         -------------    -------------
Total interest expense                                                          26,762           22,171
                                                                         -------------    -------------

Net interest and dividend income                                                19,038           17,029
Provision for loan losses                                                         (500)            (500)
                                                                         -------------    -------------
Net interest and dividend income after provision for loan losses                18,538           16,529
                                                                         -------------    -------------

Noninterest income:
   Deposit related income                                                        3,209            3,124
   Loan fees and loan service charges                                              458              673
   Net gains on sale of assets                                                     164              327
   Other                                                                           434              257
                                                                         -------------    -------------
Total noninterest income                                                         4,265            4,381
                                                                         -------------    -------------

Noninterest expense:
   Compensation and employee benefits                                            7,758            6,847
   Deposit insurance premiums                                                       92              238
   Equipment and data processing                                                 1,478            1,243
   Occupancy                                                                       884              826
   Advertising                                                                     156              344
   Professional fees                                                               351              501
   Other                                                                         2,723            2,842
                                                                         -------------    -------------
Total noninterest expense                                                       13,442           12,841
                                                                         -------------    -------------

Income before income taxes and extraordinary item                                9,361            8,069

Provision for income taxes                                                       3,381            2,930
                                                                         -------------    -------------

Income before extraordinary item                                                 5,980            5,139

Extraordinary item - purchase and retirement of 11% Senior Notes,
   net of tax                                                                     (871)              --
                                                                         -------------    -------------

Net income                                                               $       5,109    $       5,139
                                                                         =============    =============

Earnings per share:
   Income before extraordinary item
     Basic                                                               $        0.29    $        0.25
                                                                         =============    =============
     Diluted                                                             $        0.29    $        0.25
                                                                         =============    =============

   Net income
     Basic                                                               $        0.25    $        0.25
                                                                         =============    =============
     Diluted                                                             $        0.25    $        0.25
                                                                         =============    =============

Average shares outstanding
     Basic                                                                  20,537,209       20,537,209
                                                                         =============    =============
     Diluted                                                                20,537,209       20,537,209
                                                                         =============    =============
</TABLE>



        The accompanying notes are an integral part of these consolidated
                             financial statements.





                                       2
<PAGE>   5





                   LOCAL FINANCIAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                    Three Months Ended
                                                                                                          March 31,
                                                                                               -------------    -------------
                                                                                                   2000               1999
                                                                                               -------------    -------------
                                                                                                        (unaudited)
<S>                                                                                            <C>              <C>
CASH PROVIDED BY OPERATING ACTIVITIES:

Net income                                                                                     $       5,109    $       5,139
Adjustments to reconcile net income to net cash provided by operating activities:
   Provision for losses on loans                                                                         500              500
   Deferred income tax expense                                                                           714            2,563
   Accretion of discounts on loans acquired                                                             (439)            (579)
   Net amortization (accretion) of premium (discount) on securities available for sale                  (389)            (789)
   Depreciation and amortization                                                                         966            1,251
   Net change in loans held for sale                                                                    (548)          15,702
   Net gains on sale of assets                                                                          (164)            (327)
   Stock dividends received from Federal Home Loan Bank stock                                             --             (665)
   Change in other assets                                                                              3,737             (888)
   Change in all other liabilities                                                                    (6,839)          (6,304)
                                                                                               -------------    -------------

       Net cash provided by operating activities                                                       2,647           15,603
                                                                                               -------------    -------------

CASH PROVIDED (ABSORBED) BY INVESTING ACTIVITIES:

   Proceeds from sales of securities available for sale                                              150,480               --
   Proceeds from principal collections on securities available for sale                               14,496          111,663
   Purchases of securities available for sale                                                        (16,838)              --
   Proceeds from the sale of Federal Home Loan Bank and Federal Reserve Bank stock                        --            8,782
   Change in loans receivable, net                                                                   (23,903)        (110,225)
   Proceeds from disposal of assets acquired through foreclosure and repossession                        490              355
   Purchases of premises and equipment                                                                (6,003)          (2,478)
   Proceeds from sales of premises and equipment                                                          11              134
                                                                                               -------------    -------------

       Net cash provided by investing activities                                                     118,733            8,231
                                                                                               -------------    -------------

CASH PROVIDED (ABSORBED) BY FINANCING ACTIVITIES:

   Change in transaction accounts                                                                     26,082          (10,390)
   Change in time deposits                                                                           (15,651)         (18,999)
   Proceeds from advances from the Federal Home Loan Bank                                            535,186           18,950
   Repayments of advances from the Federal Home Loan Bank                                           (602,191)         (18,950)
   Change in advances by borrowers for taxes and insurance                                             1,480            1,206
                                                                                               -------------    -------------

       Net cash (absorbed) by financing activities                                                   (55,094)         (28,183)
                                                                                               -------------    -------------

Net change in cash and cash equivalents                                                               66,286           (4,349)

Cash and cash equivalents at beginning of period                                                      55,822           54,880
                                                                                               -------------    -------------

Cash and cash equivalents at end of period                                                     $     122,108    $      50,531
                                                                                               =============    =============

Supplemental disclosures of cashflow information:
   Cash paid (received) during the period for:
     Interest                                                                                  $      29,754    $      24,321
                                                                                               =============    =============
     Income taxes                                                                              $         100    $        (109)
                                                                                               =============    =============

Supplemental schedule of noncash investing and financing activities:
   Transfers of loans to assets acquired through foreclosure and repossession                  $         331    $         109
                                                                                               =============    =============

   Payable on Senior Notes purchased                                                           $      32,090    $          --
                                                                                               =============    =============
</TABLE>





        The accompanying notes are an integral part of these consolidated
                             financial statements.




                                       3
<PAGE>   6





                   LOCAL FINANCIAL CORPORATION AND SUBSIDIARY


                   Notes to Consolidated Financial Statements

                      March 31, 2000 and December 31, 1999

(1)  BASIS OF PRESENTATION

     The accompanying unaudited Consolidated Financial Statements were prepared
     in accordance with the instructions for Form 10-Q and, therefore, do not
     include all disclosures necessary for a complete presentation of financial
     condition, results of operations, and cash flows in conformity with
     generally accepted accounting principles. All adjustments (consisting of
     only normal recurring adjustments) that are necessary, in the opinion of
     management, for a fair presentation of the interim financial statements
     have been included. The interim financial information should be read in
     conjunction with the audited Consolidated Financial Statements and Notes
     included in Local Financial Corporation and Subsidiary's (the "Company")
     Form 10-K for the year ended December 31, 1999 as filed with the Securities
     and Exchange Commission ("SEC").

(2)  LOANS RECEIVABLE

     Loans receivable are summarized below at amortized cost:

<TABLE>
<CAPTION>
                                                March 31, 2000   December 31, 1999
                                                --------------   -----------------
                                                      (Dollars in Thousands)
<S>                                             <C>              <C>
     Residential real estate loans               $     352,402    $     362,351

     Commercial                                      1,214,710        1,183,368

     Held for sale                                       7,349            6,801

     Consumer loans                                    164,151          161,327
                                                 -------------    -------------

                       Total loans                   1,738,612        1,713,847
     Less:
          Allowance for loan losses                    (28,727)         (28,297)
                                                 -------------    -------------

                       Loans receivable, net     $   1,709,885    $   1,685,550
                                                 =============    =============
</TABLE>

(3) ADVANCES FROM THE FEDERAL HOME LOAN BANK OF TOPEKA ("FHLB")

    Advances from the FHLB are summarized as follows:

<TABLE>
<CAPTION>
                                March 31, 2000                   December 31, 1999
                       -------------------------------   --------------------------------
                                          Weighted                           Weighted
                                          Average                            Average
                          Balance     Contractual Rate      Balance      Contractual Rate
                       -------------  ----------------   -------------   ----------------
                                            (Dollars in Thousands)
<S>                    <C>            <C>                <C>             <C>
    Variable rate      $      50,000             6.09%   $     237,005             5.86%
    Fixed rate               185,030             5.80           65,030             5.50
                       -------------                     -------------

                       $     235,030             5.86%   $     302,035             5.78%
                       =============    =============    =============    =============
</TABLE>






                                       4




<PAGE>   7

     Although no specific assets are pledged, the FHLB requires the Company to
     hold eligible assets with a lending value, as defined, at least equal to
     FHLB advances, which can include such items as first mortgage loans,
     investment securities, federal funds sold and interest bearing deposits
     which are not already pledged or encumbered.

     Scheduled principal repayments to the FHLB at March 31, 2000 are as
     follows:

<TABLE>
<CAPTION>
                                                                WEIGHTED
                                                                AVERAGE
                                               AMOUNT       CONTRACTUAL RATE
                                            -------------   ----------------
                                                 (Dollars in Thousands)
<S>                                         <C>             <C>
     Year Ending December 31,
     2000                                   $     210,000             6.05%
     2001                                              --               --
     2002                                              --               --
     2003                                          25,000             4.29
     2004 and thereafter                               30               --
                                            -------------    -------------
                                            $     235,030             5.86%
                                            =============    =============
</TABLE>

(4)  COMPREHENSIVE INCOME

     Comprehensive income for the periods ended March 31, 2000 and 1999 consists
     of:

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                   March 31,
                                                      ------------------------------
                                                           2000             1999
                                                      -------------    -------------
                                                            (Dollars in Thousands)
<S>                                                   <C>              <C>
     Net income                                       $       5,109    $       5,139

     Other comprehensive income (loss), net of tax:
       Unrealized gains or (losses) on securities,
         net of reclassification adjustment                  (2,173)              37
                                                      -------------    -------------

     Comprehensive income                             $       2,936    $       5,176
                                                      =============    =============
</TABLE>

(5)  NET INCOME PER SHARE

     Stock options and warrants to purchase 2,287,005 and 2,051,005 shares of
     common stock were outstanding as of March 31, 2000 and 1999, respectively,
     but were not included in the computation of diluted net income per share
     because they were antidilutive.

(6)  SENIOR NOTES

     During the first quarter of 2000, the Company purchased and retired
     approximately $32.1 million of Senior Notes which had been issued in
     connection with the Company's recapitalization in 1997. As a result, there
     is an extraordinary item charge to income amounting to $871,000, net of
     tax.







                                       5
<PAGE>   8


(7)  SEGMENTS

     The Company operates as one segment. The operating information used by the
     Company's chief operating decision maker for purposes of assessing
     performance and making operating decisions about the Company is the
     consolidated financial statements presented herein. The Company has one
     active operating subsidiary, namely, Local Oklahoma Bank, National
     Association, a national banking association (the "Bank"). The Bank, in
     turn, has one active operating subsidiary, Local Securities Corporation
     ("Local Securities"), which is a registered broker-dealer under the
     Securities Exchange Act of 1934 and provides retail investment products to
     customers of the Bank. While Local Securities qualifies as a separate
     operating segment, it is not considered material to the consolidated
     financial statements for the purposes of making operating decisions and
     does not meet the 10% threshold for disclosure under Statement of Financial
     Accounting Standards ("SFAS") No. 131 "Disclosure About Segments of an
     Enterprise and Related Information".









                                       6

<PAGE>   9



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

         During the first quarter, the Company continued the strategic growth
initiatives which increased its commercial and consumer lending and expects
further growth in those areas. Also, during the first quarter, the Company
purchased $32.1 million of Senior Notes which had been issued in connection with
the Company's recapitalization in 1997. Although this action, reported as an
extraordinary item, reduced net income for the quarter by 4 cents per share, it
will have a positive impact going forward.

         In this Form 10-Q, the Company, when discussing the future, may use
words like "anticipate", "believe", "estimate", "expect", "intend", "should" and
similar expressions, or the negative thereof. These words represent
forward-looking statements. In addition, any analysis of the adequacy of the
allowance for loan losses or the interest rate sensitivity of the Bank's assets
and liabilities represent attempts to predict future events and circumstances
and also represent forward-looking statements.

         Many factors could cause future results to differ from what is
anticipated in the forward-looking statements. For example, future financial
results could be affected by (i) the Bank's shift from a savings institution to
a commercial bank; (ii) deterioration in local, regional, national or global
economic conditions which could cause an increase in loan delinquencies or a
decrease in collateral values; (iii) changes in market interest rates or changes
in the speed at which market interest rates change; (iv) changes in laws and
regulations affecting the financial service industry; (v) changes in competition
and (vi) changes in consumer preferences.

         Please do not place unjustified or excessive reliance on any
forward-looking statements. They speak only as of the date made and are not
guarantees, promises or assurances of what will happen in the future. Various
factors, including those described above and those described in the Company's
Form 10-K for the year ended December 31, 1999, could affect the Company's
financial performance and could cause the Company's actual results or
circumstances for future periods to be materially different from what has been
anticipated or projected.


CHANGES IN FINANCIAL CONDITION FROM DECEMBER 31, 1999 TO MARCH 31, 2000


         During the three months ended March 31, 2000, total assets decreased
$56.9 million or 2.4%. The $56.9 million decrease was due primarily to
reductions in the Bank's investment portfolio where the Bank took proactive
measures to counter further interest rate increases and the margin compression
that could result from such increases by shedding lower yielding investments.
The Bank's loan growth occurred in the commercial and consumer loan portfolios
where loan balances during the three months ended March 31, 2000 rose $31.3
million or 2.65% and $2.8 million or 1.75%, respectively.

         Total liabilities decreased for the three months ended March 31, 2000
primarily due to decreases in FHLB advances which decreased $67.0 million or
22.2%. During the first quarter, the Company purchased and retired $32.1 million
of Senior Notes which had been issued in connection with the Company's
recapitalization in 1997. The Bank's total deposit portfolio remained relatively
stable at $1.9 billion as of March 31, 2000.

         Total stockholders' equity increased $2.9 million during the three
months ended March 31, 2000 which represented net income during the period of
$5.1 million adjusted for a $2.2 million decline in unrealized holding gains on
securities net of tax.









                                       7
<PAGE>   10

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31,
1999


         Net Income. The Company reported income before extraordinary item of
$6.0 million or $0.29 basic earnings per share for the three months ended March
31, 2000 (based on 20.5 million average shares outstanding), compared to net
income of $5.1 million or $0.25 basic earnings per share (based on 20.5 million
average shares outstanding) for the three months ended March 31, 1999. The
extraordinary item charge to income amounting to $871,000, net of tax, occurred
in the first quarter as a result of the Company's purchase and retirement of
$32.1 million of Senior Notes.

         Net Interest and Dividend Income. Net interest and dividend income is
determined by the Company's net interest spread (i.e., the difference between
the yields earned on its interest-earning assets and the rates paid on its
interest-bearing liabilities) and the relative amounts of interest-earning
assets and interest-bearing liabilities.

         Net interest and dividend income totaled $19.0 million in the three
months ended March 31, 2000 as compared to $17.0 million during the same period
in the prior year. The $2.0 million increase in the current period was
principally due to the net change in income on interest earning assets as volume
increases in commercial and consumer loan originations drove interest income up
$6.6 million. This increase was partially offset by a $4.6 million increase in
interest expense on interest-bearing liabilities as a result of volume increases
and, to a lesser extent, rate increases paid on those liabilities.

         Interest Income. Total interest and dividend income increased by $6.6
million or 16.8% during the three months ended March 31, 2000 as compared to the
same period in the prior year The increase in interest income during the
comparative periods was due primarily to growth in the Bank's loan portfolio
where average balances rose from $1.42 billion at March 31, 1999 to $1.72
billion at March 31, 2000.

         Interest Expense. Total interest expense increased $4.6 million or
20.7% during the three months ended March 31, 2000 as compared to the same
period in the prior year. This increase was driven primarily by increases in
interest paid on deposit accounts and advances which rose $3.2 million or 18.7%
and $1.5 million or 56.6%, respectively, during the three months ended March 31,
2000.

         Provision for Loan Losses. The Bank established provisions for loan
losses of $500,000 during the three months ended March 31, 2000 and 1999. During
such respective periods, loan charge-offs (net of recoveries) amounted to
$70,000 and $91,000. The Company's basis for provisions was a function of
management's credit risk monitoring process that considers several factors,
including among other things, current economic conditions affecting the
Company's customers, the payment performance of individual large loans and pools
of homogeneous small loans, portfolio seasoning, change in collateral values,
and detailed review of specific large loan relationships.

         Noninterest Income. The components of noninterest income consist of
deposit-related income, loan fees and loan service charges, net gains on sale of
assets and other miscellaneous income. Total noninterest income fell $116,000 or
2.6% during the three months ended March 31, 2000 as compared to the same period
in the prior year. The decrease was due to decreases in loan fees and loan
service charges of $215,000 or 32.0% and a decrease in net gains on sale of
assets of $163,000 or 49.8%. The decrease in loan fees was due to a decline in
residential loan originations. The decrease in gain on sale of assets was due to
a lower volume of residential loan sales into the secondary market.

         Noninterest Expense. Total noninterest expense rose $601,000 or 4.7%
during the three months ended March 31, 2000 as compared with the same period in
the prior year. This increase resulted primarily from additional compensation
and benefits associated with the Company's continued efforts to hire experienced
commercial lending officers to grow its Oklahoma-based commercial portfolio.
However, the Company remains committed to holding its noninterest expense costs
to a minimum as evidenced by the noninterest expense reductions which occurred
in advertising, professional fees and other noninterest expense. Equipment and
data processing expenses increased $235,000 or 18.9% during






                                        8
<PAGE>   11

the quarter ended March 31, 2000 as compared with the prior quarter. On February
18, 2000 and April 7, 2000, the Bank completed a successful system conversion of
two recently acquired institutions, Guthrie Federal Savings Bank and Green
Country Bank, respectively. A similar system migration is planned for Local
Oklahoma Bank in the second quarter as it consolidates all its current systems
into one integrated platform on the Alltel Horizon processing system.

ASSET AND LIABILITY MANAGEMENT


         Asset and liability management is concerned with the timing and
magnitude of the repricing of assets and liabilities. It is the objective of the
Company to attempt to control risks associated with interest rate movements. In
general, management's strategy is to match asset and liability balances within
maturity categories to limit the Company's exposure to earnings variations and
variations in the value of assets and liabilities as interest rates change over
time.

         Management's methods for evaluating interest rate risk include an
analysis of the Company's interest rate sensitivity "gap", which is defined as
the difference between interest-earning assets and interest-bearing liabilities
maturing or repricing within a given time period. A gap is considered positive
when the amount of interest-rate sensitive assets exceeds the amount of
interest-rate sensitive liabilities. A gap is considered negative when the
amount of interest-rate sensitive liabilities exceeds interest-rate sensitive
assets. During a period of falling interest rates, a negative gap would tend to
result in an increase in net interest income, while a positive gap would tend to
affect net interest income adversely. Because different types of assets and
liabilities with the same or similar maturities may react differently to changes
in overall market rates or conditions, changes in interest rates may affect net
interest income positively or negatively even if an institution were perfectly
matched in each maturity category.





                                       9
<PAGE>   12
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID

     The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income of the Company from
interest-earning assets and the resultant average yields, (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average rates, (iii) net interest income, (iv) interest rate spread, and (v) net
interest margin. Information is based on average daily balances during the
indicated periods.

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31,
                                             ----------------------------------------------------------------------------
                                                             2000                                   1999
                                             ------------------------------------    ------------------------------------
                                                                        Average                                 Average
                                              Average                    Yield/        Average                   Yield/
                                              Balance      Interest       Cost         Balance     Interest       Cost
                                             ----------   ----------   ----------    ----------   ----------   ----------
                                                                        (Dollars in Thousands)
<S>                                          <C>          <C>          <C>           <C>          <C>          <C>
Interest-earning assets:
   Loans receivable(1)                       $1,721,363   $   36,239         8.42%   $1,421,342   $   29,748         8.37%
   Securities(2)                                506,044        8,848         6.99%      525,886        8,492         6.46%
   Other earning assets(3)                       46,117          713         6.18%       71,840          960         5.35%
                                             ----------   ----------                 ----------   ----------
     Total interest-earning assets            2,273,524       45,800         8.06%    2,019,068       39,200         7.76%
                                                          ----------   ----------                 ----------   ----------
Noninterest-earning assets                       95,849                                  91,555
                                             ----------                              ----------
     Total assets                            $2,369,373                              $2,110,623
                                             ==========                              ==========
Interest-bearing liabilities:
   Deposits:
     Transaction accounts(4)                 $  411,182        3,348         3.27%   $  323,007        1,987         2.49%
     Term certificates of deposit             1,311,855       17,052         5.23%    1,202,361       15,197         5.13%
                                             ----------   ----------                 ----------   ----------
       Total interest bearing deposits        1,723,037       20,400         4.76%    1,525,368       17,184         4.57%
   Borrowings:
     FHLB advances                              284,412        4,109         5.72%      220,578        2,624         4.82%
     Senior Notes                                67,178        2,253        11.81%       80,000        2,363        11.81%
                                             ----------   ----------                 ----------   ----------
       Total interest-bearing liabilities     2,074,627       26,762         5.18%    1,825,946       22,171         4.92%
                                                          ----------   ----------                 ----------   ----------
Noninterest-bearing liabilities                 166,080                                 163,721
                                             ----------                              ----------
       Total liabilities                      2,240,707                               1,989,667
Stockholders' equity                            128,666                                 120,956
                                             ----------                              ----------
       Total liabilities and stockholders'
              equity                         $2,369,373                              $2,110,623
                                             ==========                              ==========
Net interest-earning assets                  $  198,897                              $  193,122
                                             ==========                              ==========
Net interest income/interest rate spread                  $   19,038         2.88%                $   17,029         2.84%
                                                          ==========   ==========                 ==========   ==========
Net interest margin                                                          3.35%                                   3.37%
                                                                       ==========                              ==========
Ratio of average interest-earning assets
   to average interest-bearing liabilities                                 109.59%                                 110.58%
                                                                       ==========                              ==========
</TABLE>

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

(1)  The average balance of loans receivable includes nonperforming loans,
     interest on which is recognized on a cash basis, and excludes the allowance
     for loan losses which is included in noninterest-earning assets.
(2)  Includes all securities classified as available for sale, including the
     market valuation accounts.
(3)  Includes cash and due from banks, interest-bearing deposits, and Federal
     Home Loan Bank of Topeka and Federal Reserve Bank stock.
(4)  Includes passbook, NOW and money market accounts.


                                       10
<PAGE>   13


     The following table summarizes the anticipated maturities or repricing of
the Company's interest-earning assets and interest-bearing liabilities as of
March 31, 2000, based on the information and assumptions set forth in the notes
below:

<TABLE>
<CAPTION>
                                                                               More Than
                                                 Three to       More Than     Three Years
                                 Within Three     Twelve       One Year to      to Five     Over Five
                                    Months        Months       Three Years       Years         Years        Total
                                  ----------    ----------     ----------     ----------    ----------    ----------
                                                                (Dollars in Thousands)
<S>                               <C>           <C>            <C>            <C>           <C>           <C>
Interest-earning assets(1):
   Loans receivable(2)            $  528,842    $  217,271     $  333,175     $  416,419    $  239,820    $1,735,527
   Securities(3)                      93,685        38,292         99,998         88,451        60,516       380,942
   Other interest-earning
     assets(4)                       143,145         3,783             --             --            --       146,928
                                  ----------    ----------     ----------     ----------    ----------    ----------
         Total                    $  765,672    $  259,346     $  433,173     $  504,870    $  300,336    $2,263,397
                                  ==========    ==========     ==========     ==========    ==========    ==========

Interest-bearing liabilities:
   Deposits(5):
    Money market and NOW
      accounts                    $  134,098    $   20,111     $   41,005     $   29,622    $  120,733    $  345,569
    Passbook accounts                  4,425        13,274         23,780         13,822        19,186        74,487
    Certificates of deposit          366,547       669,016        239,205         24,621           930     1,300,319

   Borrowings:
    FHLB advances(6)                 210,000        25,000             --             --            30       235,030
    Senior Notes                          --            --             --         43,160            --        43,160
                                  ----------    ----------     ----------     ----------    ----------    ----------
         Total                    $  715,070    $  727,401     $  303,990     $  111,225    $  140,879    $1,998,565
                                  ==========    ==========     ==========     ==========    ==========    ==========

Excess (deficiency) of
   interest-earning assets over
   interest-bearing liabilities   $   50,602    $ (468,055)    $  129,183     $  393,645    $  159,457    $  264,832
                                  ==========    ==========     ==========     ==========    ==========    ==========
Cumulative excess
   (deficiency) of interest-
   earning assets over
   interest-bearing liabilities   $   50,602    $ (417,453)    $ (288,270)    $  105,375    $  264,832    $  264,832
                                  ==========    ==========     ==========     ==========    ==========    ==========
Cumulative excess
   (deficiency) of interest-
   earning assets over
   interest-bearing liabilities
   as a percent of total assets         2.18%       (17.96)%       (12.40)%         4.53%        11.39%        11.39%
                                  ==========    ==========     ==========     ==========    ==========    ==========
</TABLE>


(1)  Adjustable-rate loans and securities are included in the period in which
     interest rates are next scheduled to adjust rather than in the period in
     which they mature and fixed-rate loans and securities are included in the
     periods in which they are scheduled to be repaid, based on scheduled
     amortization, in each case as adjusted to take into account estimated
     prepayments based on, among other things, historical performance.
(2)  Balances have been reduced for nonaccrual loans.
(3)  Does not include unrealized gain on securities classified as available for
     sale.
(4)  Comprised of cash and due from banks, deposits with other banks, FHLB stock
     and Federal Reserve Bank stock.
(5)  Adjusted to take into account assumed annual decay rates, which were
     applied against money market, NOW and passbook accounts.
(6)  Maturity based on projected call date rather than actual maturity date.

LIQUIDITY AND CAPITAL RESOURCES


     Liquidity. Liquidity refers to the Company's ability to generate sufficient
cash to meet the funding needs of current loan demand, savings deposit
withdrawals, principal and interest payments with respect to outstanding
borrowings and to pay operating expenses. It is management's policy to maintain
greater liquidity than required in order to be in a position to fund loan
originations, to meet withdrawals from deposit accounts, to make principal and
interest payments with respect to outstanding borrowings


                                       11
<PAGE>   14


and to make investments that take advantage of interest rate spreads. The
Company monitors its liquidity in accordance with guidelines established by the
Company and applicable regulatory requirements. The Company's need for liquidity
is affected by loan demand, net changes in deposit levels and the scheduled
maturities of its borrowings. The Company can minimize the cash required during
the times of heavy loan demand by modifying its credit policies or reducing its
marketing effort. Liquidity demand caused by net reductions in deposits are
usually caused by factors over which the Company has limited control. The
Company derives its liquidity from both its assets and liabilities. Liquidity is
derived from assets by receipt of interest and principal payments and
prepayments, by the ability to sell assets at market prices and by utilizing
unpledged assets as collateral for borrowings. Liquidity is derived from
liabilities by maintaining a variety of funding sources, including deposits,
advances from the FHLB and other short and long-term borrowings.

     The Company's liquidity management is both a daily and long-term function
of funds management. Liquid assets are generally placed in short-term
investments such as overnight money funds and short-term government agency
securities. If the Company requires funds beyond its ability to generate them
internally, various forms of both short and long-term borrowings provide an
additional source of funds. At March 31, 2000, the Company had $617.0 million in
borrowing capacity with the FHLB, of which $300.0 million was available under a
collateralized line of credit. Borrowings as of that date totaled $235.0
million.

     At March 31, 2000, the Bank had approximately $237.1 million of outstanding
loan commitments consisting of residential real estate, commercial real estate
and commercial business loans approved but unfunded. Certificates of deposit
which are scheduled to mature within one year totaled $1.0 billion at March 31,
2000, and borrowings which are scheduled to mature or reprice within the same
period amounted to $235.0 million. The Bank anticipates that it will have
sufficient funds available to meet its current loan commitments and that, based
upon past experience and current pricing policies, it can adjust the rates of
certificates of deposit to retain a substantial portion of its maturing
certificates and also, to the extent deemed necessary, refinance the maturing
borrowings.

     On September 8, 1997 and in connection with the Company's recapitalization,
the Company issued $80.0 million of Senior Notes. Since that time, the Company
has purchased and retired $36.8 million of those outstanding Senior Notes. This
move will reduce future interest costs associated with those notes. The
remaining $43.2 million of Senior Notes have an annual debt service requirement
of $4.8 million (or $2.4 million for each semi-annual period).

     Capital Resources. Bank holding companies are required to maintain capital
ratios in accordance with guidelines adopted by the FRB. The guidelines are
commonly known as Risk-Based Capital Guidelines.

     On March 31, 2000, the Company exceeded all applicable capital requirements
by having a total risk-based capital ratio of 8.24%, a Tier I risk-based capital
ratio of 6.99% and a leverage ratio of 4.86%.

INFLATION AND CHANGING PRICES


     The Consolidated Financial Statements and related data presented herein
have been prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating results in
terms of historical dollars (except with respect to available for sale
securities which are carried at market value), without considering changes in
the relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of the assets and liabilities of the
Company are monetary in nature. As a result, interest rates have a more
significant impact on the Company's performance than the effects of general
levels of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services.


                                       12
<PAGE>   15


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Asset and Liability Management" for Quantitative and
Qualitative Disclosures about Market Risk.


PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     In its Annual Report on Form 10-K for the year ended December 31, 1999, the
Company disclosed legal proceedings between the Bank and the Federal Deposit
Insurance Corporation. No material developments have occurred since the Annual
Report. Management, after consultation with legal counsel, and based on
available facts and proceedings to date, believes the ultimate liability, if
any, arising from such legal actions or complaints, will not have a material
adverse effect on the Company's consolidated financial position or future
results of operations. In the ordinary course of business, the Company is
subject to other legal actions and complaints.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a.   Exhibits

     27   Financial Data Schedule

     b.   Reports on Form 8-K


     We filed the following Form 8-K's during the quarter ended March 31, 2000:

     1. A Form 8-K dated January 26, 2000, including information relating to our
2000 annual shareholders' meeting;

     2. A Form 8-K dated February 4, 2000, including information relating to our
1999 earnings.


                                       13
<PAGE>   16


                                   SIGNATURES

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


                                              LOCAL FINANCIAL CORPORATION


Date:  May 9, 2000                            By /s/ Edward A. Townsend
                                              ----------------------------------
                                              Edward A. Townsend
                                              Chairman of the Board
                                              Chief Executive Officer


                                              LOCAL FINANCIAL CORPORATION


Date:  May 9, 2000                            By /s/ Richard L. Park
                                              ----------------------------------
                                              Richard L. Park
                                              Chief Financial Officer


                                       14
<PAGE>   17


                                    FORM 10-Q
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION
------            -----------
<S>               <C>
27                Financial Data Schedule
</TABLE>