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

                                    FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

                  For the quarterly period ended June 30, 1998

[ ]  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 000-23277

                                CITIZENS BANCORP
             (Exact name of registrant as specified in its charter)

                   Oregon                         91-1841688
         (State of Incorporation)  (I.R.S. Employer Identification Number)

                           275 Southwest Third Street
                            Corvallis, Oregon 97339
                    (Address of principal executive offices)

                                 (541) 752-5161
              (Registrant's telephone number, including area code)

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

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

      3,891,137 shares as of July 28, 1998, no par.

<PAGE>   2

                                CITIZENS BANCORP
                                    FORM 10-Q
                                  JUNE 30, 1998
                                      INDEX

<TABLE>
<CAPTION>
                                                                                             Page
PART I.                                                                                    Reference

<S>                                                                                          <C>
ITEM 1. - FINANCIAL INFORMATION - UNAUDITED

  Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997                        1

  Consolidated Statements of Income and Comprehensive Income for the three                     2
    months and six months ended June 30, 1998 and 1997

  Consolidated Statements of Changes in Shareholders' Equity                                   3

  Consolidated Statements of Cash Flows for six months ended June 30, 1998 and 1997            4

  Notes to Consolidated Financial Statements                                                   5

ITEM 2. - Management's Discussion and Analysis of Financial Condition                          6
and Results of Operations

ITEM 3. - Quantitative and Qualitative Disclosure about Market Risk                            11

PART II. - OTHER INFORMATION

ITEM 1. - Legal Proceedings                                                                    12

ITEM 2. - Changes in Securities                                                                12

ITEM 3. - Defaults Upon Senior Securities                                                      12

ITEM 4. - Submission of Matters to a Vote of Security Holders                                  12

ITEM 5. - Other Information                                                                    12

ITEM 6. - Exhibits and Reports on Form 8-K                                                     12

SIGNATURES                                                                                     13
</TABLE>

<PAGE>   3

                          PART I FINANCIAL INFORMATION
ITEM 1
CITIZENS BANCORP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
                                                                    JUNE 30, 1998   DECEMBER 31, 1997
<S>                                                                   <C>               <C>      
ASSETS
     Cash and due from banks                                          $   8,476         $   9,268
     Interest bearing deposits in banks                                  14,614            15,299
     Federal funds sold                                                   1,000             2,800
     Securities available for sale                                       38,843            36,258
     Securities held to maturity                                          8,796             9,984

     Loans, net of unearned discount and prepaid fees                   134,700           121,470
     Allowance for credit losses                                         (1,294)           (1,201)
                                                                      ---------         ---------
     NET LOANS                                                        $ 133,406         $ 120,269

     Premises and equipment                                               2,732             2,756
     Accrued interest receivable                                          1,788             1,667
     Other assets                                                         1,459             1,816

     TOTAL ASSETS                                                     $ 211,114         $ 200,117
                                                                      =========         =========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
     Deposits:
       Demand                                                         $  35,853         $  35,683
       Savings and interest bearing demand                               73,896            70,562
       Time                                                              58,302            55,455
                                                                      ---------         ---------
     TOTAL DEPOSITS                                                   $ 168,051         $ 161,700

     Repurchase agreements                                               13,727            14,086
     Other borrowings                                                     6,939             2,814
     Dividends declared                                                       0             1,307
     Accrued interest and other liabilities                                 547               799

     TOTAL LIABILITIES                                                $ 189,264         $ 180,706
                                                                      ---------         ---------

SHAREHOLDERS' EQUITY
     Common stock (no par value); authorized 5,000,000 shares;
       issued and outstanding:  1998 - 3,891,137 shares;
       1997 - 1,922,321 shares                                            9,798             9,245
     Surplus                                                              4,715             4,715
     Undivided Profits                                                    7,289             5,388
     Valuation Allowance                                                     48                63
     TOTAL SHAREHOLDERS' EQUITY                                       $  21,850         $  19,411
                                                                      ---------         ---------

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $ 211,114         $ 200,117
                                                                      =========         =========
</TABLE>


See accompanying notes


                                                                               1
<PAGE>   4

CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME 
(Unaudited) 
(Dollars in thousand, except per share amounts)

<TABLE>
<CAPTION>
                                                                   SIX MONTHS ENDED            THREE MONTHS ENDED
                                                                        JUNE 30,                    JUNE 30,
                                                                1998           1997           1998           1997
<S>                                                             <C>            <C>            <C>            <C>  
INTEREST INCOME:
Loans                                                           6,535          5,961          3,380          3,003
Interest on deposits and federal funds sold                       401            205            145            111
Securities available for sale                                   1,118            796            568            373
Securities held to maturity                                       239            496            120            273
                                                                -----          -----          -----          -----
TOTAL INTEREST INCOME                                           8,293          7,458          4,213          3,760

INTEREST EXPENSE:
Deposits                                                        2,493          2,337          1,269          1,176
Short term borrowings                                              48             29             32             15
Repurchase agreements                                             269            196            129            112
                                                                -----          -----          -----          -----
TOTAL INTEREST EXPENSE                                          2,810          2,562          1,430          1,303

NET INTEREST INCOME                                             5,483          4,896          2,783          2,457

PROVISIONS FOR CREDIT LOSSES                                      104             90             59             45

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES           5,379          4,806          2,724          2,412

NON-INTEREST INCOME:
Service charges on deposit accounts                               431            411            227            210
Origination fees and gains on loans sold                           29             88             12             70
Gain(loss) on sales of securities available for sale               20              0              1              0
Other                                                             612            484            365            276
                                                                -----          -----          -----          -----
TOTAL NON-INTEREST INCOME                                       1,092            983            605            556

NON-INTEREST EXPENSE:
Salaries and employee benefits                                  1,834          1,644            911            840
Occupancy and equipment                                           481            467            252            244
Other                                                           1,197            908            631            498
                                                                -----          -----          -----          -----
TOTAL NON-INTEREST EXPENSE                                      3,512          3,019          1,794          1,582

INCOME BEFORE INCOME TAXES                                      2,959          2,770          1,535          1,386
                                                                -----          -----          -----          -----
INCOME TAXES                                                   (1,058)        (1,050)          (575)          (560)

NET INCOME                                                      1,901          1,720            960            826
                                                                =====          =====          =====          =====
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on available for sale
securities arising during the period                              (14)           (23)            (6)           (46)

COMPREHENSIVE INCOME                                            1,887          1,697            954            780
                                                                =====          =====          =====          =====

Per share data:
Basic earnings per share                                   $     0.49     $     0.45     $     0.25     $     0.21
Weighted average number of common
shares outstanding                                          3,889,607      3,842,868      3,889,607      3,842,868
</TABLE>


                                                                               2
<PAGE>   5

CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in Thousands)

<TABLE>
<CAPTION>
                                                               SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                          NUMBER OF                                                 NET UNREALIZED
                                           COMMON         COMMON                                    GAINS (LOSSES)         
                                           SHARES         STOCK                        UNDIVIDED      SECURITIES     
                                         OUTSTANDING      AMOUNT         SURPLUS        PROFITS   AVAILABLE FOR SALE     TOTAL  
<S>                                       <C>            <C>            <C>            <C>            <C>             <C>      
Balance, at December 31, 1996             1,798,397      $   8,992      $   4,349      $   3,436      $      28       $  16,805

Net Income                                       --             --             --          1,720             --           1,720

Valuation adjustment, net                        --             --             --             --            (23)            (23)

Issuance of common stock                     32,385            162            366             --             --             528
                                          ---------      ---------      ---------      ---------      ---------       ---------

BALANCE, AT JUNE 30, 1997                 1,830,782      $   9,154      $   4,715      $   5,156      $       5       $  19,030

Balance, at December 31, 1997             1,922,321      $   9,245      $   4,715      $   5,388      $      62       $  19,410

Net Income                                       --             --             --          1,901             --           1,901

Valuation adjustment, net                        --             --             --             --            (14)            (14)

Issuance of common stock                     23,247            553             --             --             --             553

2 for 1 stock split (April 21, 1998)      1,945,569             --             --             --             --              --
                                          ---------      ---------      ---------      ---------      ---------       ---------

BALANCE, AT JUNE 30, 1998                 3,891,137      $   9,798      $   4,715      $   7,289      $      48       $  21,850
</TABLE>


                                                                               3
<PAGE>   6

CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                   SIX MONTHS ENDED
                                                                                       JUNE 30,
                                                                                 1998           1997
<S>                                                                             <C>            <C>   
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                      $1,901         $1,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for credit losses                                                        104             90
Depreciation and amortization                                                      215            193
Stock dividends received                                                           (24)           (20)
Increase in interest receivable                                                   (121)           (98)
Decrease in interest payable                                                        (6)           (10)
Other                                                                             (135)            47
                                                                              --------         ------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                       $1,934         $1,922

CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing deposits in banks                                 685          4,967
Net decrease in federal funds sold                                               1,800           (100)
Proceeds from maturities of available for sale securities                        1,000         13,000
Proceeds from sales of available for sale securities                            11,520              0
Proceeds from maturities of securities held to maturity                          2,974            751
Purchases of securities available for sale                                     (15,126)        (7,991)
Purchases of securities held to maturity                                        (1,770)             0
Increase in loans made to customers, net of principal collections              (13,266)        (2,430)
Purchases of premises and equipment and other                                       95           (330)
                                                                              --------         ------
NET CASH PROVIDED BY INVESTING ACTIVITIES                                     ($12,088)        $7,867

CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits                                                         6,351        (11,601)
Net (increase) decrease in repurchase agreements and other borrowings            3,766          2,524
Payment of dividends                                                              (755)          (541)
                                                                              --------         ------
NET CASH USED IN FINANCING ACTIVITIES                                           $9,362        ($9,618)


NET DECREASE IN CASH AND DUE FROM BANKS                                           (792)           171

CASH AND DUE FROM BANKS
Beginning of year                                                                9,268          8,416

END OF YEAR                                                                     $8,476         $8,587
                                                                              ========         ======


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                                    2,816          2,572
Income taxes paid                                                                1,100          1,038
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Unrealized losses on securities available for sale, net of tax                     (14)           (23)
Issuance of common stock through dividend reinvestment plan                        553            528
</TABLE>


                                                                               4
<PAGE>   7

CITIZENS BANCORP
Notes to Consolidated Financial Statements

 1.  BASIS OF PRESENTATION

     The interim condensed consolidated financial statements include the
accounts of Citizens Bancorp ("Bancorp"), a bank holding company and its wholly
owned subsidiary, Citizens Bank ("Bank") after elimination of intercompany
transactions and balances.

     The interim financial statements are unaudited but have been prepared in
accordance with generally accepted accounting principles for interim condensed
financial statements. Accordingly, the condensed interim financial statements do
not include all of the information and footnotes required by generally accepted
financial statements. In the opinion of management, all adjustments including
operations for the interim periods included herein have been made.

     The interim condensed consolidated financial statements should be read in
conjunction with the December 31, 1997 consolidated financial statements,
including notes there to, included in Bancorp's 1997 Annual Report to
shareholders.

 2.  USE OF ESTIMATES IN THE PREPARATION OF FINANCIALS

     The preparation of financial statements, in conformity with general
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

 3.  SHAREHOLDERS EQUITY AND NET INCOME PER COMMON SHARE

     The Board of Directors declared a 2 for 1 stock split on April 21, 1998, to
Bancorp shareholders of record on that date. The weighted average sale price of
Bancorp's stock for the month of April was $29.00 per share. The split resulted
in an increase of shares outstanding from 1,945,568 to 3,891,137.

     All per share amounts have been restated to retroactively reflect stock
dividends, stock purchased and stock splits previously reported.

 4.  CONTINGENCIES

     Unfunded loan commitments totaled $17,389,000 as of June 30, 1998 and
$18,716,000 as of December 31, 1997.

 5.  YEAR 2000

     Citizens Bancorp has initiated a program to prepare the Company's computer
systems and applications for the year 2000. The Board of Directors has
established the time frame for year 2000 compliance company-wide. The Account
Service Center has been working on this effort for several months. The Company
is to have all products, services and supporting technical systems year 2000
compliant by the fourth quarter of 1998. The testing and conversion of system
applications is not expected to result in a material cost to the Company.

     Citizens Bancorp is communicating with its large depositors and borrowers
to ensure that these customers will be year 2000 compliant in their respective
businesses.


                                                                               5
<PAGE>   8

ITEM 2

                           MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

ORGANIZATION

Citizens Bancorp ("Bancorp"), an Oregon Corporation, is the parent corporation
and holding company of Citizens Bank (the "Bank"), which is its sole subsidiary.
The Bank is an Oregon State-chartered banking corporation with headquarters in
Corvallis, Oregon. Bancorp was incorporated on September 18, 1996 and became the
holding company of the Bank effective July 1, 1997.

OVERVIEW OF FINANCIAL RESULTS

Bancorp reported net income of $1,901,000, or $0.49 per share for the six months
ended June 30, 1998. This was a 10.5% increase in net income as compared to
$1,720,000 or $0.45 per share for the three months ended June 30, 1997. The
foregoing per share information is adjusted for an increase in outstanding
shares acquired through the Dividend Reinvestment Plan, stock dividends and
stock splits.

The increased earnings described above were primarily the result of growth in
the Bank's interest earning assets and net interest income.

LOAN PORTFOLIO

The composition of the loan portfolio was as follows (in thousands):

<TABLE>
<CAPTION>
                                               June 30, 1998     December 31, 1997
                                               -------------     -----------------
<S>                                              <C>                <C>      
Commercial                                       $  27,168          $  23,507
Agriculture                                         13,386             10,992
Real Estate
  Construction                                       7,656          $   5,459
  1-4 Family                                        32,616             34,625
  Other                                             49,326             42,142
Consumer Loans                                       5,251              5,423

Less:  unearned income and deferred fees              (703)              (678)

TOTAL LOANS                                      $ 134,700          $ 121,470

Less:  allowance for credit losses                  (1,294)            (1,201)
                                                 ---------          ---------
NET LOANS                                        $ 133,406          $ 120,269
                                                 =========          =========
</TABLE>


INVESTMENT SECURITIES

The amortized cost and estimated book value of the investment securities held by
the Bank, including unrealized gains and losses, at June 30, 1998 and December
31, 1997, are as follows (in thousands):

<TABLE>
<CAPTION>
June 30, 1998                                         Amortized Cost   Estimated Fair Value   Unrealized Gains, net
<S>                                                       <C>                  <C>                  <C>    
AVAILABLE FOR SALE
U.S. Treasury Securities
  (Including securities of government agencies
  and corporations)                                       $38,136              $38,206              $    70
Other                                                         637                  637                    0
                                                          -------              -------              -------
                                                          $38,773              $38,843              $    70
</TABLE>


                                                                               6
<PAGE>   9

<TABLE>
<CAPTION>
June 30, 1998                                             Amortized Cost     Estimated Fair Value   Unrealized Gains, net
<S>                                                            <C>                   <C>                   <C>   
HELD TO MATURITY
U.S. Treasury Securities
  (Including securities of government agencies
  and corporations)                                            $4,499                $4,537                $   38
Obligations of State and Political Subdivisions                 4,297                 4,346                    49
                                                               ------                ------                ------
                                                               $8,796                $8,883                $   87
</TABLE>


<TABLE>
<CAPTION>
December 31, 1997                                       Amortized Cost      Estimated Fair Value   Unrealized Gains, net
<S>                                                         <C>                    <C>                    <C>    
AVAILABLE FOR SALE
U.S. Treasury Securities
  (Including securities of government agencies
  and corporations)                                         $35,554                $35,645                $    91
Other                                                           613                    613                      0
                                                            -------                -------                -------
                                                            $36,167                $36,258                $    91

HELD TO MATURITY
U.S. Treasury Securities
  (Including securities of government agencies
  and corporations)                                         $ 6,482                $ 6,536                $    54
Obligations of State and Political Subdivisions               3,502                  3,561                     59
                                                            -------                -------                -------
                                                            $ 9,984                $10,097                $   113
</TABLE>


                                                                               7
<PAGE>   10

MATERIAL CHANGES IN FINANCIAL CONDITION

Changes in financial condition for the six months ended June 30, 1998 include
an overall increase in total assets. At June 30, 1998 total assets increased
5.5%, or approximately $10,997,000 over total assets at December 31, 1997.
Interest bearing bank deposits decreased approximately $685,000 and Federal
funds sold decreased $1,800,000. The overall decrease in cash was effected by
growth in loans to $134,700,000 at June 30, 1998 from $121,470,000 at December
31, 1997, an increase of $13,230,000 or 10.9 percent.

The increase in loans was primarily due to strong loan demand as a result of
favorable economic conditions, increased marketing of loan products and
increased calling activity of the Bank's loan officers. The Bank's diversified
loan portfolio lessens the impact of seasonality, and concentration of debt by
borrower type.

At June 30, 1998, the Bank held $1,000,000 in federal funds sold in comparison
to $2,800,000 for the period ending December 31, 1997. The decrease in this
category was due to the placement of funds into the interest bearing account
held at the Federal Home Loan Bank due to a more favorable interest rate.
Federal funds sold represents overnight investments of surplus funds which can
fluctuate widely on a day to day basis. A majority of the Banks liquid funds are
held in an interest bearing account at the Federal Home Loan Bank. The balances
at the Federal Home Loan Bank at June 30, 1998 were $14,614,000 in interest
bearing demand accounts. At December 31, 1997 the balances were $5,296,000 in
interest bearing demand accounts and $10,000,000 in certificates of deposits.

The Bank experienced a net increase in total deposits to $168,051,000 at June
30, 1998 from $161,700,000 at December 31, 1997 which represents an increase of
$6,351,000 or 3.9 percent. The increase was primarily due to a growth in the
number of deposit accounts. The net increase in the number of deposit accounts
was approximately 626 over the number of deposit accounts at December 31, 1997.
Average total deposits for six months ending June 30, 1998 was $162,952,000
compared to $154,013,000 for the year ending December 31, 1997.

Management's deposit strategy continues to emphasize personal service and
long-term customer relationships. The Bank strives to increase and retain core
non-interest bearing deposits. The Bank is not dependent on large rate sensitive
deposits. The Bank's goal is to keep its rate sensitivity neutral to increasing
or declining interest rates.


                                                                               8
<PAGE>   11
MATERIAL CHANGES IN RESULTS OF OPERATIONS

The Company reported net income of $1,901,000 or $.49 per share, for the six
months ended June 30, 1998, compared to net income of approximately $1,720,000,
or $.45 per share for the same period in 1997. This represents an increase in
net income of 10.5 percent. Net income for the quarter ended June 30, 1998 was
approximately $954,000, or $.25 per share, compared to net income of
approximately $780,000, or $.21 per share, for the same period in 1997, up 22.3
percent.

Net interest income increased $587,000 or 11.9 percent for the six months ending
June 30, 1998 and $326,000 or 13.3 percent for the three months ended June 30,
1998. The net increases during these periods resulted from increases in interest
income exceeding the increases in interest expense.

Total interest income increased approximately $835,000 for the six months and
approximately $435,000 for the quarter ended June 30, 1998 as compared to the
same 1997 periods. These increases are primarily due to increases in loan
volume. For the six month period ending June 30, 1998 total loans increased by
$13,230,000 or 10.9 percent as compared to the same period in 1997.

Non-interest income increased approximately $109,000 for the six months ended
June 30, 1998 as compared to the same six month period in 1997. For the quarter
ending June 30, 1998 non-interest income increase approximately $49,000 as
compared to the same quarter in 1997. These increases are attributable to the
growth in service charge income as a result of deposit growth and increases in
the volume of bankcard services over last year for the same periods.

Earnings per share increased to $.49 per share for the period ending June 30,
1998 as compared to $.45 for the same period in 1997. For the quarter ending
June 30, 1998 earnings per share increased to $.25 as compared to $.21 for the
same period in 1997.

Other non-interest expense increased approximately $493,000 for the six months
ended June 30, 1998 as compared to the same six month period in 1997. This
increase was primarily due to increases in expense relative to growth of the
merchant bankcard and debit card products, an increase in depreciation expense
due to the continuous updating of equipment relative to technology and
computers, and increases in professional fees due to the holding company for new
reporting processes.

Salaries and employee benefits increased approximately $190,000 for the six
month period ending June 30, 1998 compared to the same six month period in 1997.
These increases were primarily due to routine adjustments in officer and staff
salaries and staff increases in the areas of financial management, human
resources, and calling officers.


                                                                               9
<PAGE>   12

CREDIT LOSS PROVISION

The Bank maintains an allowance for credit losses on loans that occur from time
to time as an incidental part of the business of banking. Loans are charged
against this allowance for credit losses which is adjusted periodically to
reflect changing loan volumes, risk potential in the portfolio and general
economic conditions. Additions to the allowance for credit losses are made
through a charge against income.

During the first six months ended June 30, 1998 the Bank funded the allowance
for credit losses $104,000 from operations and $90,000 for the same six month
period during 1997. The increase in the provision for credit losses was incurred
to match the increased loan growth. The Bank experienced $11,000 in credit
losses for the six months ended June 30, 1998 and no credit losses for the same
period ended June 30, 1997. The historical level of charge offs has been very
low for the Bank. Based on low credit losses and managements knowledge of the
loan portfolio, the Bank is satisfied that the allowance for credit losses at
June 30, 1998 of $1,294,000 or .96% of total loan is an appropriate amount.


                                                                              10
<PAGE>   13

LIQUIDITY AND CAPITAL RESOURCES

Bancorp's subsidiary, the Bank, has adopted policies to maintain a relatively
liquid position to enable it to respond to changes in the Bank's financial
environment. In general, the Bank's major sources of liquidity are customer
deposits, sales and maturities of securities, the use of borrowing lines with
correspondent banks including Federal Home Loan Bank borrowings, loan repayments
and net cash provided by operating activities.

The analysis of liquidity should also include a review of the changes that
appear in the consolidated statement of cash flows for the first six months of
1998. The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income which is adjusted for
non-cash items and increases or decreases in cash due to certain changes in
assets and liabilities. Investing activities consisted primarily of both
proceeds from and purchases of securities, and the net growth in loans.
Financing activities present the cash flows associated with the Bank's deposit
accounts.

Management believes that the Bank's existing sources of liquidity will enable
the Bank to fund its requirements in the normal course of business.

As of June 30, 1998, shareholders' equity totaled $21,850,000 as compared to
$19,030,000 for the same six month period in 1997, an increase of $2,820,000 or
14.8%. This increase in equity was primarily due to the Company's increased net
income.

Capital ratios for the Company were as follows as of the dates indicated:

<TABLE>
<CAPTION>
                                                                                  Bancorp
                                       Adequately        Well                
                                       Capitalized   Capitalized       June 30, 1998    December 31, 1997
                                        Standards     Standards
<S>                                         <C>           <C>               <C>               <C>   
Tier 1 Leverage Ratio                       4%             5%                9.50%             9.69%
Tier 1 Risk Based Capital Ratio             4%             6%               15.77%            15.60%
Total Risk Based Capital Ratio              8%            10%               16.72%            16.30%
</TABLE>


ITEM 3.     QUANTITATIVE & QUALITATIVE ANALYSIS ABOUT MARKET RISK

No material changes have occurred in market risk since reported on December 31,
1997. 


                                                                              11
<PAGE>   14

                           PART II. OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS
               None

ITEM 2.     CHANGES IN SECURITIES
               None

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES
               None

ITEM 4.     SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

            (a)  April 21, 1998, Annual Meeting
 
            (b)  Need not be completed

            (c) The following matter was voted upon at the Annual Meeting of
Shareholders on April 21, 1998


                (1) The re-election of two (2) Directors for terms expiring in
                    2001 or until their successors have been elected and 
                    qualified.


                    Director:

                    WILLIAM V. HUMPHREYS
                        Votes cast for:     1,458,122
                        Votes cast against:       175
                        Votes withheld:         3,286
                        Abstain:                  167

                    JOHN TRUAX
                        Votes cast for:     1,458,297
                        Votes cast against:         0
                        Votes withheld:         3,286
                        Abstain:                  167

            (d)  None

ITEM 5.     OTHER INFORMATION
               None

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)  Exhibits

                 The following exhibit is filed as part of this report.

                 27.0 Financial Data Schedule for the six months ended June 30,
                 1998.

            (b)  Reports on Form 8-K

                 None


                                                                              12
<PAGE>   15

                                   SIGNATURES

     Pursuant to the requirements 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.

             Date: July 28,1998                        /s/ William V. Humphreys
                                                       ------------------------
                                                   By: William V. Humphreys
                                                       President and
                                                       Chief Executive Officer

             Date: July 28,1998                        /s/ Lark E. Wysham
                                                       ------------------------
                                                   By: Lark E. Wysham
                                                       Senior Vice President and
                                                       Chief Financial Officer

                                                                              13