<PAGE>
 
--------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                            ______________________

                                   FORM 10-K


           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED JUNE 30, 1998  OR

        [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
               FOR THE TRANSITION PERIOD FROM _______ TO ______



                     Commission file number       0-27098
                                            ------------------            


                          FIRST SAVINGS BANCORP, INC.
        --------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

             NORTH CAROLINA                              56-1842701
         ---------------------                           ----------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)

     205 S.E. BROAD STREET, P.O. BOX 1657
        SOUTHERN PINES, NORTH CAROLINA                       28388
    --------------------------------------                ----------
   (Address of principal executive office)                (Zip Code)
                                       
Registrant's telephone number, including area code    (910) 692-6222
                                                      --------------
 
     Securities Registered Pursuant to Section 12(b) of the Act:     NONE
                                                                 -----------

          Securities Registered Pursuant to Section 12(g) of the Act:

                          COMMON STOCK, NO PAR VALUE
                       --------------------------------       
                               (Title of class)

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  _____
                                              -----                   

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.  The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing.    $78,216,180 COMMON STOCK, NO PAR
                                             ----------------------------------
VALUE, BASED ON THE CLOSING PRICE OF SUCH COMMON STOCK ON AUGUST 31, 1998.
-------------------------------------------------------------------------- 

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
3,724,580 SHARES OF COMMON STOCK, NO PAR VALUE, OUTSTANDING AT AUGUST 31, 1998.
--------------------------------------------------------------------------------
<PAGE>
 
DOCUMENTS INCORPORATED BY REFERENCE.  Portions of the Annual Report of First
Savings Bancorp, Inc. for the year ended June 30, 1998, are incorporated by
reference into Part I, Part II and Part IV.

Portions of the Proxy Statement for the 1998 Annual Meeting of Shareholders of
First Savings Bancorp, Inc. to be held on October 29, 1998, are incorporated by
reference into Part III.

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.         [X]

                                       2
<PAGE>
 
                                     PART I


ITEM 1.  BUSINESS

GENERAL

          First Savings Bancorp, Inc. (the "Holding Company" or the "Company")
is a savings bank holding company registered with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), and the savings bank holding company laws
of North Carolina.  The Holding Company's office is located at 205 S.E. Broad
Street, Southern Pines, North Carolina.  The Holding Company's activities
primarily consist of the ownership of First Savings Bank of Moore County, Inc.,
SSB (the "Bank").  The Holding Company's principal sources of income are
earnings on its investments.  In addition, the Holding Company receives any
dividends which are declared and paid by the Bank on its capital stock.

          The Bank was originally chartered in 1922.  It is a member of the
Federal Home Loan Bank ("FHLB") system and its accounts are federally insured up
to allowable limits.  The Bank is primarily engaged in soliciting deposit
accounts from the general public, making loans primarily secured by residential
real estate and making limited types of consumer loans.

          The operations of the Bank and depository institutions in general are
significantly influenced by general economic conditions and by related monetary
and fiscal policies of depository institution regulatory agencies, including the
Federal Reserve, the Federal Deposit Insurance Corporation (the "FDIC") and the
North Carolina Administrator, Savings Institutions Division, North Carolina
Department of Commerce (the "Administrator").  Deposit flows and cost of funds
are influenced by interest rates on competing investments and general market
rates of interest.  Lending activities are affected by the demand for financing
of real estate and other types of loans, which in turn are affected by the
interest rates at which such financing may be offered and other factors
affecting local demand and availability of funds.

          The Bank conducts its business through five offices in Southern Pines,
Pinehurst, Carthage and West End, North Carolina.

          The Holding Company and the Bank are collectively referred to herein
as "First Savings."

MARKET AREA

          First Savings' primary market area consists of Moore County, North
Carolina.  Moore County is home to many retirement communities and, with its
many renowned golf courses in Pinehurst and Southern Pines, has an active
tourist and convention business.  As a result, the economy of Moore County is
primarily service oriented.  However, there is also employment in manufacturing,
agricultural and governmental activities.  Major employers in First Savings'
market area include Resorts of Pinehurst, Firsthealth Moore Regional Hospital,
Gulstan Carpets, Perdue, Inc. and Stanly Furniture Company.

LENDING ACTIVITIES

          First Savings' primary source of revenue is interest and fee income
from its real estate lending activities, consisting primarily of mortgage loans
for the purchase, refinancing or construction of one-to-four family residential
real property located in its primary market area.  First Savings also makes
loans secured by multi-family residential and non-residential real estate, home
equity and home improvement loans, savings account loans, installment loans and
credit card loans.  As a result, over 98% of First Savings' loan portfolio is
secured by real estate.  As of June 30, 1998, over 99% of the net amount of
First Savings' real estate loan portfolio was secured by properties in North
Carolina.  On June 30, 1998, the largest amount First Savings had outstanding to
any one borrower and its affiliates

                                       3
<PAGE>
 
was approximately $2,324,000.  This loan was performing in accordance with its
original terms as of that date.  In addition to interest earned on loans, First
Savings receives fees in connection with loan originations, loan modifications,
late payments, loan assumptions and other miscellaneous services.

          The Bank's general policy is to place a loan on nonaccrual status when
the loan becomes 90 days delinquent.  Interest on loans that are contractually
90 days or more past due is reserved through an allowance account. The allowance
is established by a charge to interest income equal to all interest previously
accrued, and income is subsequently recognized only to the extent cash payments
are received, and in management's judgement, the borrower's ability to make
periodic interest and principal payments is back to normal, in which case the
loan is returned to accrual status.  As of June 30 1998, 1997 and 1996, the
reserve for uncollected interest was $7,945, $6,419 and $2,308, respectively.

          First Savings does not originate its loans with the intention that
they will be sold in the secondary market.  Loans generally are not originated
in conformity with purchase requirements of the Federal Home Loan Mortgage
Corporation ("FHLMC") or Federal National Mortgage Association ("FNMA").  First
Savings originates loans which satisfy its underwriting requirements which are
tailored for its local community.  As a result, many of such loans do not
satisfy various requirements imposed by the FHLMC or the FNMA.  Accordingly,
such loans are not readily saleable in the secondary market.  Such loans could
be sold only after incurring certain costs, such as costs for surveys and title
insurance and/or discounting the purchase price.

          First Savings purchased loan participations totaling $95,000, $145,000
and $1,570,000 during the years ended June 30, 1998, 1997 and 1996,
respectively.  All such loan participations are secured by real property located
in North Carolina.

          First Savings' ratio of loan loss allowances to nonperforming assets
at June 30, 1998, 1997 and 1996, was 109.36%, 241.60%, and 454.48%,
respectively.

INVESTMENTS AND MORTGAGE-BACKED SECURITIES

          Interest income from mortgage-backed securities and investment
securities generally provides the second largest source of income to First
Savings after interest on loans.  In addition, First Savings receives interest
income from interest-bearing deposits in other financial institutions.  On June
30, 1998, First Savings' investment securities portfolio consisted of U.S.
government and U.S. agency obligations, North Carolina and municipal obligations
and FHLB of Atlanta stock.

          As of June 30, 1998, $6.0 million of investment securities were
pledged as collateral for individual and public deposits.

          As a member of the FHLB of Atlanta, First Savings is required to
maintain an investment in stock of the FHLB of Atlanta equal to the greater of
1% of First Savings' outstanding home loans or 5% of its outstanding advances
from the FHLB of Atlanta.  No ready market exists for such stock, which is
carried at cost.  As of June 30, 1998, First Savings' investment in stock of the
FHLB of Atlanta was approximately $1.9 million.

          North Carolina regulations require First Savings to maintain a minimum
amount of liquid assets which may be invested in specified short-term
securities.  See "SUPERVISION AND REGULATION - Liquidity."  As is described
above, First Savings is also permitted to make certain other securities
investments.  First Savings has adopted an investment policy which is
implemented by First Savings' investment committee, which meets at least
monthly.  First Savings' investment strategy is intended, among other things, to
(i) provide and maintain liquidity, (ii) maintain a balance of high quality,
diversified investments to minimize risk, (iii) provide collateral for pledging
requirements, (iv) serve as a countercyclical balance to earnings from lending
operations, (v) maximize returns, and (vi) manage interest rate risk.  In terms
of priorities, safety is considered more important than liquidity or return on
investment.  First Savings does not engage in hedging activities.

                                       4
<PAGE>
 
          The following table sets forth certain information regarding First
Savings' cash investments and the carrying and market values of First Savings'
mortgage-backed securities and investment portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                  AT JUNE 30,
                                       ---------------------------------------------------------------
                                                1998                 1997                 1996
                                         -------------------  -------------------  -------------------
                                         AMORTIZED   MARKET   AMORTIZED   MARKET   AMORTIZED   MARKET
                                           COST      VALUE      COST      VALUE      COST      VALUE
                                         ---------  --------  ---------  --------  ---------  --------
                                                                (IN THOUSANDS) 
<S>                                      <C>        <C>       <C>        <C>       <C>        <C>
  Interest-bearing deposits in other
    financial institutions.............    $ 3,991   $ 3,991    $ 6,301   $ 6,301    $   713   $   713
                                           =======   =======    =======   =======    =======   =======
Securities available-for-sale/1/:
  U.S. government and agency
     securities........................    $71,164   $71,695    $78,881   $79,282    $63,919   $63,889
  Obligations of states and political
     subdivisions......................        950       987        950       975      2,150     2,180
  Federal Home Loan Bank stock.........      1,930     1,930      1,930     1,930      1,930     1,930
  Other................................         50        50
                                           -------   -------    -------   -------    -------   -------
Total securities available-for-sale....    $74,094   $74,662    $81,760   $82,187    $67,999   $67,999
                                           =======   =======    =======   =======    =======   =======
Securities held-to-maturity/1/:
  U.S. government and agency
     securities........................    $         $          $         $          $         $
  Obligations of states and political
     subdivisions......................
  Federal Home Loan Bank stock.........
  Mortgage-backed securities...........      9,737     9,821      6,572     6,672      2,965     3,016
                                           -------   -------    -------   -------    -------   -------
Total securities held-to-maturity......    $ 9,737   $ 9,821    $ 6,572   $ 6,672    $ 2,965   $ 3,016
                                           =======   =======    =======   =======    =======   =======
</TABLE>
________________________________
/1/  The Financial Accounting Standards Board has issued Statement of Financial
     Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain
     Investments in Debt and Equity Securities" which addresses the accounting
     and reporting for investments in equity securities that have readily
     determinable fair values and for all investments in debt securities. These
     investments are to be classified in three categories and accounted for as
     follows: (i) debt securities that the entity has the positive intent and
     ability to hold to maturity are classified as held-to-maturity and reported
     at amortized cost; (ii) debt and equity securities that are bought and held
     principally for the purpose of selling them in the near term are classified
     as trading securities and reported at fair value, with net unrealized gains
     and losses included in earnings; and (iii) debt and equity securities not
     classified as either held-to-maturity or trading securities are classified
     as securities available-for-sale and reported at fair value, with
     unrealized gains and losses excluded from earnings and reported as a
     separate component of equity. First Savings has no trading securities.
     First Savings adopted SFAS 115 on July 1, 1994.
      

                                       5
<PAGE>
 
     The following table sets forth certain information regarding First Savings'
cash investments and the carrying value, weighted average yields and contractual
maturities of First Savings' mortgage-backed and investment securities as of
June 30, 1998.

<TABLE>
<CAPTION>
                                                    AFTER ONE THROUGH     AFTER FIVE THROUGH
                               ONE YEAR OR LESS         FIVE YEARS            TEN YEARS          AFTER TEN YEARS     
                             --------------------  --------------------  --------------------  --------------------  
                                        WEIGHTED              WEIGHTED              WEIGHTED              WEIGHTED   
                             CARRYING    AVERAGE   CARRYING    AVERAGE   CARRYING    AVERAGE   CARRYING    AVERAGE   
                               VALUE      YIELD      VALUE      YIELD      VALUE      YIELD      VALUE      YIELD    
                             ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  
                                                                           (IN THOUSANDS)                            
<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        
Interest-bearing deposits                                                                                            
 in other financial         
 institutions..............    $ 3,991      6.10%    $                %    $                %                     %  
                               -------    -------    -------    -------    -------     ------    -------    -------   
                                                                                                                     
Securities                                                                                                           
 available-for-sale:                                                                                                 
  U.S. government and          
   agency                                                                                                            
      securities...........    $26,198      6.77%    $20,468      6.54%    $14,014      6.85%    $11,015      7.24%      
  N.C. State and municipal                                                                               
      obligations(1).......                                                    987      5.35 
  Federal Home Loan Bank       
   stock...................      1,930      7.50                                 
  Other....................    $    50      4.19     
                               -------    -------    -------    -------    -------     ------    -------    ------- 

Total securities               
 available-for-sale.           $28,178      6.82%    $20,468      6.54%    $15,001      6,74%    $11,015      7.24%  
                               -------    -------    -------    -------    -------     ------    -------    -------    
Securities                                                                                                           
 held-to-maturity:             
  Mortgage-backed              
   securities..............    $                     $   340      9.31%    $   148      9.81%    $ 9,249      7.52% 
                               -------    -------    -------    -------    -------     ------    -------    -------    

Total investments, at                                                                                                
 carrying  
   value...................    $28,178               $20,808               $15,149               $20,264             
                               -------               -------               -------               -------              

Total interest-bearing                                                                                               
 deposits and                
   investments.............    $32,169               $20,808               $15,149               $20,264             
                               =======               =======               =======               =======             

<CAPTION>
                                             TOTAL             
                                       -------------------     
                                                 WEIGHTED      
                                       ARRYING    AVERAGE      
                                        VALUE      YIELD       
                                       --------  ---------     
<S>                                    <C>        <C>           
Interest-bearing deposits                                      
 in other financial                                            
 institutions..............             $ 3,991      6.10%     
                                        -------    -------     
                                                               
Securities                                                     
 available-for-sale:                                           
  U.S. government and                                          
   agency                                                      
      securities...........             $71,695      6.78%     
  N.C. State and municipal                                     
      obligations(1).......                 987      5.35      
  Federal Home Loan Bank                                       
   stock...................               1,930      7.50      
  Other....................                  50      4.19       
                                        -------    ------      
                                                               
Total securities                                               
 available-for-sale.                    $74,662      6.93%     
                                        -------    -------     
                                                               
Securities                                                     
 held-to-maturity:                                             
  Mortgage-backed                                              
   securities..............             $ 9,737     7.617%      
                                        -------    -------     
                                                               
Total investments, at                                          
 carrying                                                      
   value...................             $84,399                
                                        -------                
Total interest-bearing                                         
 deposits and                                                  
   investments.............             $88,390                
                                        =======                 
</TABLE> 

(1) Yields on obligations of states and political subdivisions are not
    calculated on a tax-equivalent basis.

                                       6
<PAGE>
 
DEPOSITS AND BORROWINGS

     DEPOSITS.  Deposits are the primary source of First Savings' funds for
lending and other investment purposes.  On June 30, 1998, 1997 and 1996, First
Savings' deposits totalled $211.9 million, $204.3 million and $187.4 million,
respectively.  In addition to deposits, First Savings derives funds from loan
principal repayments, interest payments, interest income from mortgage-backed
securities, investment income, interest from its own interest-bearing deposits,
and otherwise from its operations. Loan repayments are a relatively stable
source of funds while deposit inflows and outflows may be significantly
influenced by general interest rates and money market conditions.  Borrowings
may be used on a short-term basis to compensate for reductions in the
availability of funds from other sources.  They may also be used on a longer
term basis for general business purposes.

     First Savings attracts both short-term and long-term deposits from the
general public by offering a variety of accounts and rates.  First Savings
offers passbook savings accounts, checking accounts, money market accounts and
fixed interest rate certificates with varying maturities.  All deposit flows are
greatly influenced by economic conditions, the general level of interest rates,
competition and other factors, including the restructuring of the thrift
industry.  First Savings' deposits traditionally have been obtained primarily
from its market area.  First Savings utilizes traditional marketing methods to
attract new customers and savings deposits, including print media advertising
and direct mailings.  First Savings does not advertise for deposits outside of
its local market area and it has no brokered deposits.

     As of June 30, 1998, the aggregate amount outstanding of certificates of
deposit in amounts of $100,000 or more was approximately $28.9 million.  Some of
these deposits were deposits of state and local governments which are subject to
rebidding from time to time and to securitization requirements.  The following
table presents the maturity of these time certificates of deposit at the dates
indicated.

<TABLE>
<CAPTION>
                                                                     JUNE 30,
                                                                       1998
                                                                  --------------
                                                                  (IN THOUSANDS)
<S>                                                               <C>
3 months or less..................................................... $ 5,399
Over 3 months through 6 months.......................................   7,300
Over 6 months through 12 months......................................   6,940
Over 12 months.......................................................   9.276
                                                                      -------
     Total........................................................... $28,915
                                                                      =======
</TABLE>

     BORROWINGS.   First Savings is a member of the FHLB of Atlanta.  The FHLB
system functions in a reserve credit capacity for savings institutions.  As a
member, First Savings is required to own capital stock in the FHLB of Atlanta
and is authorized to apply for advances from the FHLB of Atlanta on the security
of that stock and a floating lien on certain of its real estate secured loans
and other assets.  Each credit program has its own interest rate and range of
maturities.  Depending on the program, limitations on the amount of advances are
based either on a fixed percentage of an institution's net worth or on the FHLB
of Atlanta's assessment of the institution's creditworthiness.   As of June 30,
1998, First Savings had $20.0 million in borrowings outstanding to the FHLB of
Atlanta.

     Upon First Savings' conversion to the stock form of ownership, the First
Savings Bank of Moore County, Inc., SSB Employee Stock Ownership Plan ("ESOP")
became effective.  As part of the conversion, the ESOP borrowed $648,000 from an
independent third party lender and First Savings contributed $72,000 to the
ESOP.  This $720,000 was used to purchase 72,000 shares of common stock issued
in the conversion.  The note was assumed by the Holding Company in January 1997.
The note payable is collateralized by the common shares purchased by the ESOP
with the proceeds.  The note will be repaid principally from First Savings'
discretionary contributions to the ESOP over a period not to exceed ten years.
Dividends paid on shares held by the ESOP may also be used to reduce the note.
The note is not guaranteed by First Savings.  Unearned compensation related to
the ESOP note payable is amortized on a straight-line basis over ten years.

                                       7
<PAGE>
 
SUBSIDIARIES

     The Bank has one wholly-owned subsidiary, Moore Service Corporation ("Moore
Service").  Moore Service, a North Carolina corporation, serves as the trustee
for deeds of trust securing loans made by First Savings.  The financial
statements of Moore Service are consolidated with those of First Savings.  Moore
Service has the same Board of Directors as the Bank, and William E. Samuels, Jr.
is its Chief Executive Officer.

COMPETITION

     First Savings faces strong competition both in attracting deposits and
making real estate and other loans.  Its most direct competition for deposits
has historically come from other savings institutions, credit unions and
commercial banks located in its primary market area, including large financial
institutions which have greater financial and marketing resources available to
them.  First Savings has also faced additional significant competition for
investors' funds from short-term money market securities and other corporate and
government securities.  The ability of First Savings to attract and retain
savings deposits depends on its ability to generally provide a rate of return,
liquidity and risk comparable to that offered by competing investment
opportunities.  As of June 30, 1998, there were at least twelve other financial
institutions with offices in Moore County, North Carolina.  Based upon
comparative data as of June 30, 1998, First Savings had the second largest share
of deposits in Moore County, totaling approximately 21% of all deposits in the
county.

EMPLOYEES

     As of June 30, 1998, First Savings had 42 full-time employees and two part-
time employees.  First Savings provides its employees with a comprehensive
benefits program, including basic and major medical insurance, life and
disability insurance, sick leave, education cost sharing, and payment of certain
civic club dues.  In addition, First Savings maintains an employee profit
sharing plan covering all eligible employees.  Under this plan, First Savings
annually contributes an amount equal to at least 5% of participants' salaries.
During the fiscal years ended June 30, 1998, 1997 and 1996, contributions to
this plan were  $112,910, $97,539, and $93,402, respectively.  In addition,
First Savings pays discretionary bonuses to all of its employees based upon its
after-tax earnings.  In recent years, these bonuses have equalled 4% of after-
tax earnings.  In addition, First Savings has an ESOP, a stock based management
recognition plan and stock option plans.  Employees are not represented by any
union or collective bargaining group, and First Savings considers its employee
relations to be good.

FEDERAL INCOME TAXATION

     Savings institutions such as First Savings are subject to the taxing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), for
corporations, as modified by certain provisions specifically applicable for
financial or thrift institutions.  Income is reported using the accrual method
of accounting.  The maximum corporate federal income tax rate is 35%.

     For fiscal years beginning prior to December 31, 1995, thrift institutions
which qualified under certain definitional tests and other conditions of the
Code were permitted certain favorable provisions regarding their deductions from
taxable income for annual additions to their bad debt reserve.  A reserve could
be established for bad debts on qualifying real property loans (generally loans
secured by interests in real property improved or to be improved) under (i) a
method based on a percentage of the institution's taxable income, as adjusted
(the "percentage of taxable income method") or (ii) a method based on actual
loss experience (the "experience method").  The reserve for nonqualifying loans
was computed using the experience method.

     The percentage of taxable income method was limited to 8% of taxable
income.  This method could not raise the reserve to exceed 6% of qualifying real
property loans at the end of the year.  Moreover, the additions for qualifying
real property loans, when added to nonqualifying loans, could not exceed 12% of
the amount by which total deposits or withdrawable accounts exceed the sum of
surplus, undivided profits and reserves at the beginning of the year.  The
experience method was the amount necessary to increase the balance of the
reserve

                                       8
<PAGE>
 
at the close of the year to the greater of (i) the amount which bore the same
ratio to loans outstanding at the close of the year as the total net bad debts
sustained during the current and five preceding years bore to the sum of the
loans outstanding at the close of such six years or (ii) the balance in the
reserve account at the close of the last taxable year beginning before 1988
(assuming that the loans outstanding have not declined since such date).

     In order to qualify for the percentage of income method, an institution had
to have at least 60% of its assets as "qualifying assets" which generally
included, cash, obligations of the United States government or an agency or
instrumentality thereof or of a state or political subdivision, residential real
estate-related loans, or loans secured by savings accounts and property used in
the conduct of its business.  In addition, it had to meet certain other
supervisory tests and operate principally for the purpose of acquiring savings
and investing in loans.

     Institutions which became ineligible to use the percentage of income method
had to change to either the reserve method or the specific charge-off method
that applied to banks.  Large thrift institutions, those generally exceeding
$500 million in assets, had to convert to the specific charge-off method.  In
computing its bad debt reserve for federal income taxes, First Savings elected
to use the experience method in fiscal years 1995, 1996, and 1997.

     Bad debt reserve balances in excess of the balance computed under the
experience method or amounts maintained in a supplemental reserve built up prior
to 1962 ("excess bad debt reserve") require inclusion in taxable income upon
certain distributions to shareholders.  Distributions in redemption or
liquidation of stock or distributions with respect to its stock in excess of
earnings and profits accumulated in years beginning after December 31, 1951, are
treated as a distribution from the excess bad debt reserve. When such a
distribution takes place and it is treated as from the excess bad debt reserve,
the thrift is required to reduce its reserve by such amount and simultaneously
recognize the amount as an item of taxable income increased by the amount of
income tax imposed on the inclusion.  Dividends not in excess of earnings and
profits accumulated since December 31, 1951 will not require inclusion of part
or all of the bad debt reserve in taxable income.  First Savings has accumulated
earnings and profits since December 31, 1951 and has an excess in its bad debt
reserve.  Distributions in excess of current and accumulated earnings and
profits will increase taxable income.  Net retained earnings at June 30, 1998
includes approximately $5.3 million for which no provision for federal income
tax has been made.

     Legislation passed by the U.S. Congress and signed by the President in
August 1996 contains a provision that repeals the percentage of taxable income
method of accounting for thrift bad debt reserves for tax years beginning after
December 31, 1995.  The legislation will trigger bad debt reserve recapture for
post-1987 excess reserves over a six-year period.  At June 30, 1998, First
Savings' post-1987 excess reserves amounted to approximately $1.3 million.  A
special provision suspends recapture of post-1987 excess reserves for up to two
years if, during those years, the institution satisfies a "residential loan
requirement."  This requirement will be met if the principal amount of the
institution's residential loans exceeds a base year amount, which is determined
by reference to the average of the institution's residential loans during the
six taxable years ending before January 1, 1996.  However, notwithstanding this
special provision, recapture must begin no later than the first taxable year
beginning after December 31, 1997.

     First Savings may also be subject to the corporate alternative minimum tax
("AMT").  This tax is applicable only to the extent it exceeds the regular
corporate income tax.  The AMT is imposed at the rate of 20% of the
corporation's alternative minimum taxable income ("AMTI") subject to applicable
statutory exemptions.  AMTI is calculated by adding certain tax preference items
and making certain adjustments to the corporation's regular taxable income.
Preference items and adjustments generally applicable to financial institutions
include, but are not limited to, the following:  (i) the excess of the bad debt
deduction over the amount that would have been allowable on the basis of actual
experience; (ii) interest on certain tax-exempt bonds issued after August 7,
1986; and (iii) 75% of the excess, if any, of a corporation's adjusted earnings
and profits over its AMTI (as otherwise determined with certain adjustments).
Net operating loss carryovers, subject to certain adjustments, may be utilized
to offset up to 90% of the AMTI.  Credit for AMT paid may be available in future
years to reduce future regular federal income tax liability.  First Savings has
not been subject to the AMT in recent years.

                                       9
<PAGE>
 
     First Savings' federal income tax returns have not been audited in the last
ten tax years.

STATE TAXATION

     Under North Carolina law, the corporate income tax is 7.75% of federal
taxable income as computed under the Code, subject to certain prescribed
adjustments.  An annual state franchise tax is imposed at a rate of 0.15%
applied to the greatest of the institution's (i) capital stock, surplus and
undivided profits, (ii) investment in tangible property in North Carolina or
(iii) appraised valuation of property in North Carolina.

     The North Carolina corporate tax rate dropped to 7.25% in 1998, and will
drop to 7.00% in 1999 and 6.90% thereafter.


                          SUPERVISION AND REGULATION

REGULATION OF THE HOLDING COMPANY

     Bank holding companies and state savings banks are extensively regulated
under both federal and state law.  The following is a brief summary of certain
statutes and rules and regulations that affect or will affect the Company and
the Bank.  This summary is qualified in its entirety by reference to the
particular statute and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the business of the Company and the Bank.  Supervision, regulation
and examination of the Company and the Bank by the regulatory agencies are
intended primarily for the protection of depositors rather than shareholders of
the Company.

     GENERAL.  The Holding Company was organized for the purpose of acquiring
and holding all of the capital stock of the Bank.  As a bank holding company
subject to the Bank Holding Company Act of 1956, as amended (the "BHCA"), the
Holding Company is subject to certain regulations of the Federal Reserve Board
(the "Federal Reserve").  Under the BHCA, the Holding Company's activities and
those of its subsidiaries are limited to banking, managing or controlling banks,
furnishing services to or performing services for its subsidiaries or engaging
in any other activity which the Federal Reserve determines to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto.  The BHCA prohibits the Holding Company from acquiring direct or
indirect control of more than 5% of the outstanding voting stock or
substantially all of the assets of any bank or savings bank or merging or
consolidating with another bank holding company or savings and loan holding
company without prior approval of the Federal Reserve.

     Additionally, the BHCA prohibits the Holding Company from engaging in, or
acquiring ownership or control of, more than 5% of the outstanding voting stock
of any company engaged in a nonbanking business unless such business is
determined by the Federal Reserve to be so closely related to banking as to be
properly incident thereto.  The BHCA generally does not place territorial
restrictions on the activities of such nonbanking related activities.

     Similarly, Federal Reserve approval (or, in certain cases, non-disapproval)
must be obtained prior to any person acquiring control of the Holding Company.
Control is conclusively presumed to exist if, among other things, a person
acquires more than 25% of any class of voting stock of the Holding Company or
controls in any manner the election of a majority of the directors of the
Holding Company.  Control is presumed to exist if a person acquires more than
10% of any class of voting stock and the stock is registered under Section 12 of
the Exchange Act or the acquiror will be the largest shareholder after the
acquisition.

     The Holding Company is also registered under the savings bank holding
company laws of North Carolina.  Accordingly, the Holding Company is also
subject to regulation and supervision by the Administrator of North Carolina
Savings Institutions Division (the "Administrator").

                                       10
<PAGE>
 
     CAPITOL MAINTENANCE.  There are a number of obligations and restrictions
imposed on bank holding companies and their depository institution subsidiaries
by law and regulatory policy that are designed to minimize potential loss to the
depositors of such depository institutions and the Federal Deposit Insurance
Corporation (the "FDIC") insurance funds in the event the depository institution
becomes in danger of default or in default.  For example, under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("1991 Banking Law"), to
avoid receivership of an insured depository institution subsidiary, a bank
holding company is required to guarantee the compliance of any insured
depository institution subsidiary that may become "undercapitalized" with the
terms of any capital restoration plan filed by such subsidiary with its
appropriate federal banking agency up to the lesser of (i) an amount equal to 5%
of the institution's total assets at the time the institution became
undercapitalized or (ii) the amount which is necessary (or would have been
necessary) to bring the institution into compliance with all acceptable capital
standards as of the time the institution fails to comply with such capital
restoration plan.  Under a policy of the Federal Reserve with respect to bank
holding company operations, a bank holding company is required to serve as a
source of financial strength to its subsidiary depository institutions and to
commit resources to support such institutions in circumstances where it might
not do so absent such policy.  The Federal Reserve, under the BHCA, also has the
authority to require a bank holding company to terminate any activity or to
relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a
bank) upon the Federal Reserve's determination that such activity or control
constitutes a serious risk to the financial soundness and stability of any bank
subsidiary of the bank holding company.

     In addition, the "cross-guarantee" provisions of the Federal Deposit
Insurance Act, as amended ("FDIA") require insured depository institutions under
common control to reimburse the FDIC for any loss suffered by either the Savings
Association Insurance Fund (the "SAIF") or the Bank Insurance Fund (the "BIF")
as a result of the default of a commonly controlled insured depository
institution or for any assistance provided by the FDIC to a commonly controlled
insured depository institution in danger of default.  The FDIC may decline to
enforce the cross-guarantee provisions if it determines that a waiver is in the
best interest of the SAIF or the BIF or both.  The FDIC's claim for damages is
superior to claims of stockholders of the insured depository institution or its
holding company but is subordinate to claims of depositors, secured creditors
and holders of subordinated debt (other than affiliates) of the commonly
controlled insured depository institutions.

     In connection with the Administrator's approval of the Holding Company's
application to acquire control of the Bank, the Holding Company was required to
execute a Capital Maintenance Agreement whereby it has agreed to maintain the
Bank's capital in an amount sufficient to enable the Bank to satisfy all
regulatory capital requirements.


     CAPITAL ADEQUACY GUIDELINES FOR HOLDING COMPANIES.  The Federal Reserve has
adopted capital adequacy guidelines for bank holding companies and banks that
are members of the Federal Reserve system and have consolidated assets of $150
million or more.  Bank holding companies subject to the Federal Reserve's
capital adequacy guidelines are required to comply with the Federal Reserve's
risk-based capital regulations.  Under these regulations, the minimum ratio of
total capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) is 8%.  At least half of the
total capital is required to be "Tier I capital," principally consisting of
common stockholders' equity, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less certain goodwill
items.  The remainder ("Tier II capital") may consist of a limited amount of
subordinated debt, certain hybrid capital instruments and other debt securities,
perpetual preferred stock, and a limited amount of the general loan loss
allowance.  In addition to the risk-based capital guidelines, the Federal
Reserve has adopted a minimum Tier I (leverage) capital ratio, under which a
bank holding company must maintain a minimum level of Tier I capital to average
total consolidated assets of at least 3% in the case of a bank holding company
which has the highest regulatory examination rating and is not contemplating
significant growth or expansion.  All other bank holding companies are expected
to maintain a Tier I (leverage) capital ratio of at least 1% to 2% above the
stated minimum.  For bank holding companies with less than $150 million in
consolidated assets, the guidelines are applied on a bank-only basis unless the
parent bank holding company (i) is engaged in nonbank activity involving
significant leverage or (ii) has a significant amount of outstanding debt that
is held by the general public.

                                       11
<PAGE>
 
     DIVIDEND AND REPURCHASE LIMITATIONS.  The Holding Company must obtain
Federal Reserve approval prior to repurchasing common stock for in excess of 10%
of its net worth during any twelve-month period unless the Company (i) both
before and after the redemption satisfies capital requirements for "well
capitalized" state member banks; (ii) received a one or two rating in its last
examination; and (iii) is not the subject of any unresolved supervisory issues.
First Saving is also subject to limits on dividend payments.  First Savings is
prohibited, under the North Carolina Business Corporation Act, from paying a
dividend if such payment would (i) cause First Savings to be unable to pay its
debts as they become due in the ordinary course of business or (ii) reduce First
Savings' total assets below the sum of First Savings' total liabilities plus any
amounts which would be needed, if First Savings were to be dissolved at the time
of distribution, to satisfy the preferential rights that are superior to holders
of the common stock.  Although the payment of dividends and repurchase of stock
by the Company are subject to the requirements and limitations of North Carolina
corporate law, except as set forth in this paragraph, neither the Administrator
nor the FDIC have promulgated any regulations specifically limiting the right of
the Company to pay dividends and repurchase shares.  However, the ability of the
Company to pay dividends or repurchase shares may be dependent upon the
Company's receipt of dividends from the Bank.  The Bank's ability to pay
dividends is limited.  See " -- Regulation of the Bank -- Restrictions on
Dividends and Other Capital Distributions."

     FEDERAL SECURITIES LAW OF 1934, AS AMENDED (THE "EXCHANGE ACT").  The
Company has registered its Common Stock with the SEC pursuant to Section 12(g)
of the Securities Exchange Act and will not deregister the Common Stock for a
period of three years following the completion of the Conversion.  As a result
of such registration, the proxy and tender offer rules, insider trading
reporting requirements, annual and periodic reporting and other requirements of
the Exchange Act are applicable to the Company.

     The registration under the Securities Act of 1933, as amended (the
"Securities Act") of the Common Stock does not cover the resale of such shares.
Shares of the Common Stock purchased by persons who are not affiliates of the
Company may be resold without registration.  Shares purchased by an affiliate of
the Company are subject to the resale provisions of Rule 144 under the
Securities Act.  So long as the Company meets the current public information
requirements of Rule 144 under the Securities Act, each affiliate of the Company
who complies with the other conditions of Rule 144 (including those that require
the affiliate's sale to be aggregated with those of certain other persons) will
be able to sell in the public market, without registration, a number of shares
not to exceed, in any three-month period, the greater of (i) 1% of the
outstanding shares of the Company or (ii) the average weekly volume of trading
in such shares during the preceding four calendar weeks.  Provision may be made
in the future by the Company to permit affiliates to have their shares
registered for sale under the Securities Act under certain circumstances.  There
are currently no demand registration rights outstanding.  However, in the event
the Company at some future time determines to issue additional shares from its
authorized but unissued shares, the Company might offer registration rights to
certain of its affiliates who want to sell their shares.

REGULATION OF THE BANK

     GENERAL.  Federal and state legislation and regulation significantly affect
the operations of federally insured savings institutions and other federally
regulated financial institutions.  The operation of regulated depository
institutions, including the Bank, is subject to changes in applicable statutes
and regulations from time to time.  Such changes may or may not be favorable to
the Bank.

     The Bank is a North Carolina-chartered savings bank, is a member of the
Federal Home Loan Bank ("FHLB") system, and its deposits are insured by the FDIC
through the Savings Association Insurance Fund ("SAIF"). It is subject to
examination and regulation by the FDIC and the Administrator and to regulations
governing such matters as capital standards, mergers, establishment of branch
offices, subsidiary investments and activities, and general investment
authority.  Such examination and regulation is intended primarily for the
protection of depositors and the federal deposit insurance funds.

                                       12
<PAGE>
 
     The Bank  is subject to various regulations promulgated by the Federal
Reserve including, without limitation, Regulation B (Equal Credit Opportunity),
Regulation D (Reserves), Regulation E (Electronic Fund Transfers), Regulation O
(Loans to Executive Officers, Directors and Principal Shareholders), Regulation
Z (Truth in Lending), Regulation CC (Availability of Funds) and Regulation DD
(Truth in Savings). As holders of loans secured by real property and as owners
of real property, financial institutions, including the Bank, may be subject to
potential liability under various statutes and regulations applicable to
property owners generally, including statutes and regulations relating to the
environmental condition of real property.

     The FDIC has extensive enforcement authority over the Bank. This
enforcement authority includes, among other things, the ability to assess civil
money penalties, to issue cease and desist or removal orders and to initiate
injunctive actions. In general, these enforcement actions may be initiated in
response to violations of laws and regulations and unsafe or unsound practices.

     The grounds for appointment of a conservator or receiver for a North
Carolina savings bank on the basis of an institution's financial condition
include: (i) insolvency, in that the assets of the savings bank are less than
its liabilities to depositors and others; (ii) substantial dissipation of assets
or earnings through violations of law or unsafe or unsound practices; (iii)
existence of an unsafe or unsound condition to transact business; (iv)
likelihood that the savings bank will be unable to meet the demands of its
depositors or to pay its obligations in the normal course of business; and (v)
insufficient capital or the incurring or likely incurring of losses that will
deplete substantially all of the institution's capital with no reasonable
prospect of replenishment of capital without federal assistance.

     TRANSACTIONS WITH AFFILIATES.  Under current federal law, transactions
between savings institutions and any affiliate are governed by Sections 23A and
23B of the Federal Reserve Act.  An affiliate of a savings institution is any
company or entity that controls, is controlled by or is under common control
with the savings institution.  In a holding company context, the parent holding
company of a savings institution and any companies which are controlled by such
parent holding company are affiliates of the savings institution.  Generally,
Sections 23A and 23 B (i) establish certain collateral requirements for loans to
affiliates; (ii) limit the extent to which the savings institution or its
subsidiaries may engage in "covered transactions" with any one affiliate to an
amount equal to 10% of such savings institution's capital stock and surplus, and
contain an aggregate limit on all such transactions with all affiliates to an
amount equal to 20% of such capital stock and surplus and (iii) require that all
such transactions be on terms substantially the same, or at least as favorable
to the savings institution or the subsidiary, as those provided to a
nonaffiliate.  The term "covered transaction" includes the making of loans or
other extensions of credit to an affiliate, the purchase of assets from an
affiliate, the purchase of, or an investment in, the securities of an affiliate,
the acceptance of securities of an affiliate as collateral for a loan or
extension of credit to any person, or issuance of a guarantee, acceptance or
letter of credit on behalf of an affiliate.

     Further, current federal law has extended to savings institutions the
restrictions contained in Section 22(h) of the Federal Reserve Act with respect
to loans to directors, executive officers and principal stockholders.  Under
Section 22(h), loans to directors, executive officers and stockholders who own
more than 10% of a savings institution and certain affiliated entities of any of
the foregoing, may not exceed, together with all other outstanding loans to such
person and affiliated entities, the savings institution's loans-to-one borrower
limit as established by federal law (generally equal to 15% of the institution's
unimpaired capital and surplus).  Section 22(h) also prohibits loans above
amounts prescribed by the appropriate federal banking agency to directors,
executive officers and stockholders who own more than 10% of a savings
institution, and their respective affiliates, unless such loan is approved in
advance by a majority of the board of directors of the savings institution.  Any
"interested" director may not participate in the voting.  The Federal Reserve
has prescribed the loan amount (which includes all other outstanding loans to
such person), as to which such prior board of director approval is required, as
being the greater of $25,000 or 5% of unimpaired capital and unimpaired surplus
(up to $500,000).  Further, pursuant to Section 22(h) the Federal Reserve
requires that loans to directors, executive officers, and principal stockholders
be made on terms substantially the same as offered in comparable transactions to
other persons and not involve more than the normal risk of repayment or present
other unfavorable features.

                                       13
<PAGE>
 
     DEPOSIT INSURANCE.  The Bank's deposit accounts are insured by the FDIC
through the SAIF to the maximum extent permitted by law.  The Bank pays deposit
insurance premiums to the FDIC based on a risk-based assessment system
established by the FDIC for all SAIF-member institutions.  Under applicable
regulations, institutions are assigned to one of three capital groups that are
based solely on the level of an institution's capital ("well capitalized,"
"adequately capitalized" or "undercapitalized"), which are defined in the same
manner as the regulations establishing the prompt corrective action system
discussed below.  The matrix so created results in nine assessment risk
classifications, with rates that, until September 30, 1996, ranged from 0.23%
for well capitalized, financially sound institutions with only a few minor
weaknesses to 0.31% for undercapitalized institutions that pose a substantial
risk to the SAIF unless effective corrective action is taken.

     Pursuant to the Deposit Insurance Fund Act (the "DIF Act"), which was
enacted on September 30, 1996, the FDIC imposed a special assessment on each
depository institution with SAIF-assessable deposits which resulted in the SAIF
achieving its designated reserve ratio.  In connection therewith, the FDIC
reduced the assessment schedule for SAIF members, effective January 1, 1997, to
a range of 0% to 0.27%, with most institutions, including the Bank, paying 0%.
This assessment schedule is the same as that for the BIF, which reached its
designated reserve ratio in 1995.  As of July, 1998, SAIF members are charged an
assessment of 0.061% of SAIF-assessable deposits for the purpose of paying
interest on the obligations issued by the Financing Corporation ("FICO") in the
1980s to help fund the thrift industry cleanup.  BIF-assessable deposits will be
charged an assessment to help pay interest on the FICO bonds at a rate of
approximately .012% until the earlier of December 31, 1999 or the date upon
which the last savings association ceases to exist, after which time the
assessment will be the same for all insured deposits.

     The DIF Act provides for the merger of the BIF and the SAIF into the
Deposit Insurance Fund on January 1, 1999, but only if no insured depository
institution is a savings association on that date.  The DIF Act contemplates the
development of a common charter for all federally chartered depository
institutions and the abolition of separate charters for national banks and
federal savings associations.  It is not known what form the common charter may
take and what effect, if any, the adoption of a new charter would have on the
operation of the Bank.

     The FDIC may terminate the deposit insurance of any insured depository
institution if it determines after a hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, order or
any condition imposed by an agreement with the FDIC.  It also may suspend
deposit insurance temporarily during the hearing process for the permanent
termination of insurance, if the institution has no tangible capital.  If
insurance of accounts is terminated, the accounts at the institution at the time
of termination, less subsequent withdrawals, shall continue to be insured for a
period of six months to two years, as determined by the FDIC.  Management is
aware of no existing circumstances that could result in termination of the
deposit insurance of the Bank.

     COMMUNITY REINVESTMENT ACT.  The Bank, like other financial institutions,
is subject to the Community Reinvestment Act, as amended ("CRA"). A purpose of
this Act is to encourage financial institutions to help meet the credit needs of
its entire community, including the needs of low- and moderate-income
neighborhoods.  A savings bank is evaluated and rated under three categories: a
lending test, an investment test and a service test.  For each of these three
tests, the savings bank is given a rating of either "outstanding," "high
satisfactory," "low satisfactory," "needs to improve" or "substantial non-
compliance."  A set of criteria for each rating is included in the regulation.
If an institution disagrees with a particular rating, the institution has the
burden of rebutting the presumption by clearly establishing that the quantative
measures do not accurately present its actual performance, or that demographics,
competitive conditions or economic or legal limitations peculiar to the service
area should be considered.  The ratings received under the three tests are used
to determine the overall composite CRA rating or "outstanding," "satisfactory,"
"needs to improve" or "substantial non-compliance."

     During the Bank's last compliance examination, which was performed by the
FDIC on February 13, 1996, the Bank received a "satisfactory" rating with
respect to CRA compliance.  The Bank's rating with respect to CRA

                                       14
<PAGE>
 
compliance would be a factor to be considered by the Federal Reserve and FDIC in
considering applications submitted by the Bank to acquire branches or to acquire
or combine with other financial institutions and take other actions and could
result in the denial of such applications.

     The federal banking regulatory agencies have issued a revision of the CRA
regulations, which became effective on January 1, 1996, to implement a new
evaluation system that rates institutions based on their actual performance in
meeting community credit needs.  Under the regulations, a savings bank will
first be evaluated and rated under three categories:  a lending test, an
investment test and a service test.  For each of these three tests, the savings
bank will be given a rating of either "outstanding," "high satisfactory," "low
satisfactory," "needs to improve" or "substantial non-compliance."  A set of
criteria for each rating has been developed and is included in the regulation.
If an institution disagrees with a particular rating, the institution has the
burden of rebutting the presumption by clearly establishing that the
quantitative measures do not accurately present its actual performance, or that
demographics, competitive conditions or economic or legal limitations peculiar
to its service area should be considered.  The ratings received under the three
tests will be used to determine the overall composite CRA rating.  The composite
ratings will be the same as those that are currently given:  "outstanding,"
"satisfactory," "needs to improve" or "substantial non-compliance."

     CAPITAL REQUIREMENTS.  The FDIC requires the Bank to have a minimum
leverage ratio of Tier I capital (principally consisting of common stockholders'
equity, noncumulative perpetual preferred stock and minority interests in
consolidated subsidiaries, less certain intangible and goodwill items), to total
assets of at least 3%; provided, however that all institutions, other than those
(i) receiving the highest rating during the examination process and (ii) not
anticipating or experiencing any significant growth, are required to maintain a
ratio of 1% or 2% above the stated minimum, with an absolute minimum leverage
ratio of not less than 4%. The FDIC also requires the Bank to have a ratio of
total capital to risk-weighted assets, including certain off-balance sheet
activities, such as standby letters of credit, of at least 8%. At least half of
the total capital is required to be Tier I capital. The remainder (Tier II
capital) may consist of a limited amount of subordinated debt, certain hybrid
capital instruments, other debt securities, certain types of preferred stock and
a limited amount of general loan loss allowance.

     An institution which fails to meet minimum capital requirements may be
subject to a capital directive which is enforceable in the same manner and to
the same extent as a final cease and desist order, and must submit a capital
plan within 60 days to the FDIC.  If the leverage ratio falls to 2% or less, the
institution may be deemed to be operating in an unsafe or unsound condition,
allowing the FDIC to take various enforcement actions, including possible
termination of insurance or placement of the institution in receivership.

     The Administrator requires that net worth equal at least 5% of total
assets. Intangible assets must be deducted from net worth and assets when
computing compliance with this requirement.

     At June 30, 1998, the Bank complied with each of the capital requirements
of the FDIC and the Administrator. For a description of the Bank's required and
actual capital levels on June 30, 1998, see Note 11 captioned "Regulatory
Restrictions" on pages 33 and 34 of the 1998 Annual Report.

     Each federal banking agency was required by law to revise its risk-based
capital standards to ensure that those standards take adequate account of
interest rate risk, concentration of credit risk, and the risk of nontraditional
activities, as well as reflect the actual performance and expected risk of loss
on multi-family mortgages.  On August 2, 1995, the federal banking agencies
issued a joint notice of adoption of final risk-based capital rules to take
account of interest rate risk.  The final regulation required an assessment of
the need for additional capital on a case-by-case basis, considering both the
level of measured exposure and qualitative risk factors.  The final rule also
stated an intent to, in the future, establish an explicit minimum capital charge
for interest rate risk based on the level of a bank's measured interest rate
risk exposure.  The final regulation has not had a material impact on the Bank's
capital requirements.

                                       15
<PAGE>
 
     Effective June 26, 1996, the federal banking agencies issued a joint policy
statement announcing the agencies' election not to adopt a standardized measure
and explicit capital charge for interest rate risk at that time.  Rather, the
policy statement (i) identifies the main elements of sound interest rate risk
management, (ii) describes prudent principles and practices for each of those
elements, and (iii) describes the critical factors affecting the agencies'
evaluation of a bank's interest rate risk when making a determination of capital
adequacy.  The joint policy statement has not had a material impact on the
Bank's management of interest rate risk.

     In December 1994, the FDIC adopted a final rule changing its risk-based
capital rules to recognize the effect of bilateral netting agreements in
reducing the credit risk of two types of financial derivatives - interest and
exchange  rate  contracts.   Under the rule, savings banks are permitted to net
positive and  negative mark-to-market values of rate contracts with the same
counterparty, subject to legally enforceable bilateral netting contracts that
meet certain criteria.  This represents a change from the prior rules which
recognized only a very limited form of netting.  This rule has not had a
material effect upon its financial condition or results of operations.

     LOANS-TO-ONE-BORROWER.  The Bank is subject to the Administrator's loans-
to-one-borrower limits.  Under these limits, no loans and extensions of credit
to any borrower outstanding at one time and not fully secured by readily
marketable collateral shall exceed 15% of the net worth of the savings bank.
Loans and extensions of credit fully secured by readily marketable collateral
may comprise an additional 10% of net worth.  These limits also authorize
savings banks to make loans to one borrower, for any purpose, in an amount not
to exceed $500,000.  A savings institution also is authorized to make loans to
one borrower to develop domestic residential housing units, not to exceed the
lesser of $30 million, or 30% of the savings institution's net worth, provided
that (i) the purchase price of each single-family dwelling in the development
does not exceed $500,000; (ii) the savings institution is in compliance with its
fully phased-in capital requirements; (iii) the loans comply with applicable
loan-to-value requirements; (iv) the aggregate amount of loans made under this
authority does not exceed 150% of net worth; and (v) the institution's regulator
issues an order permitting the savings institution to use this higher limit.
These limits also authorize a savings bank to make loans to one borrower to
finance the sale of real property acquired in satisfaction of debts in an amount
up to 50% of net worth.

     As of June 30, 1998, the largest aggregate amount of loans which the Bank
had to any one borrower was $2.3 million.  The Bank had no loans outstanding
which management believes violate the applicable loans-to-one-borrower limits.

     FEDERAL HOME LOAN BANK SYSTEM.  The FHLB system provides a central credit
facility for member institutions.  As a member of the FHLB of Atlanta, the Bank
is required to own capital stock in the FHLB of Atlanta in an amount at least
equal to the greater of 1% of the aggregate principal amount of its unpaid
residential mortgage loans, home purchase contracts and similar obligations at
the end of each calendar year, or 5% of its outstanding advances (borrowings)
from the FHLB of Atlanta. On June 30, 1998, the Bank was in compliance with this
requirement with an investment in FHLB of Atlanta stock of $1.9 million.

     FEDERAL RESERVE SYSTEM.  Federal Reserve regulations require savings banks,
not otherwise exempt from the regulations, to maintain reserves against their
transaction accounts (primarily negotiable order of withdrawal accounts) and
certain nonpersonal time deposits. The reserve requirements are subject to
adjustment by the Federal Reserve.  As of June 30, 1998, the Bank was in
compliance with the applicable reserve requirements of the Federal Reserve.

     RESTRICTIONS ON ACQUISITIONS.  Federal law generally provides that no
"person," acting directly or indirectly or through or in concert with one or
more other persons, may acquire "control," as that term is defined in FDIC
regulations, of a state savings bank without giving at least 60 days' written
notice to the FDIC and providing the FDIC an opportunity to disapprove the
proposed acquisition.  Pursuant to regulations governing acquisitions of
control, control of an insured institution is conclusively deemed to have been
acquired, among other  things, upon the acquisition of more than 25% of any
class of voting stock.  In addition, control is presumed to have been acquired,
subject to rebuttal, upon the acquisition of more than 10% of any class of
voting stock, and the issuer's securities are registered under Section 12 of the
Exchange Act or the person would be the single largest

                                       16
<PAGE>
 
shareholder.  Such acquisitions of control may be disapproved if it is
determined, among other things, that (i) the acquisition would substantially
lessen competition; (ii) the financial condition of the acquiring person might
jeopardize the financial stability of the savings bank or prejudice the
interests of its depositors; or (iii) the competency, experience or integrity of
the acquiring person or the proposed management personnel indicates that it
would not be in the interest of the depositors or the public to permit the
acquisition of control by such person.

     For three years following the Bank's conversion from mutual to stock form,
North Carolina conversion regulations require the prior written approval of the
Administrator before any person may directly or indirectly offer to acquire or
acquire the beneficial ownership of more than 10% of any class of an equity
security of the Bank.  If any person were to so acquire the beneficial ownership
of more than 10% of any class of any equity security without prior written
approval, the securities beneficially owned in excess of 10% would not be
counted as shares entitled to vote and would not be voted or counted as voting
shares in connection with any matter submitted to stockholders for a vote.
Approval is not required for (i) any offer with a view toward public resale made
exclusively to the Bank or its underwriters or the selling group acting on its
behalf or (ii) any offer to acquire or acquisition of beneficial ownership of
more than 10% of the common stock of the Bank by a corporation whose ownership
is or will be substantially the same as the ownership of the Bank, provided that
the offer or acquisition is made more than one year following the consummation
of the conversion.  During the second and third years after the conversion, the
Administrator may approve such an acquisition of more than 10% of beneficial
ownership upon a finding that (i) the acquisition is necessary to protect the
safety and soundness of the Holding Company and the Bank or the Boards of
Directors of the Holding Company and the Bank support the acquisition and (iii)
the acquiror is of good character and integrity and possesses satisfactory
managerial skills, the acquiror will be a source of financial strength to the
Holding Company and the Bank and the public interests will not be adversely
affected.

     LIQUIDITY.  The Bank is subject to the Administrator's requirement that the
ratio of liquid assets to total assets equal at least 10%. The computation of
liquidity under North Carolina regulation allows the inclusion of mortgage-
backed securities and investments which, in the judgment of the Administrator,
have a readily marketable value, including investments with maturities in excess
of five years. At June 30, 1998, the Bank's liquidity ratio, calculated in
accordance with North Carolina regulations, was approximately 25.9%.

     ADDITIONAL LIMITATIONS ON ACTIVITIES.  FDIC law and regulations generally
provide that the Bank may not engage as principal in any type of activity, or in
any activity in an amount, not permitted for national banks, or directly acquire
or retain any equity investment of a type or in an amount not permitted for
national banks.  The FDIC has authority to grant exceptions from these
prohibitions (other than with respect to non-service corporation equity
investments) if it determines no significant risk to the insurance fund is posed
by the amount of the investment or the activity to be engaged in and if the Bank
is and continues to be in compliance with fully phased-in capital standards.
National banks are generally not permitted to hold equity investments other than
shares of service corporations and certain federal agency securities. Moreover,
the activities in which service corporations for savings banks are permitted to
engage are limited to those of service corporations for national banks.

     Savings banks are also required to notify the FDIC at least 30 days prior
to the establishment or acquisition of any subsidiary, or at least 30 days prior
to conducting any such new activity. Any such activities must be conducted in
accordance with the regulations and orders of the FDIC and the Administrator.
Savings banks are also generally prohibited from directly or indirectly
acquiring or retaining any corporate debt security that is not of investment
grade (generally referred to as "junk bonds").

     PROMPT CORRECTIVE REGULATORY ACTION.  Federal law provides the federal
banking agencies with broad powers to take corrective action to resolve problems
of insured depository institutions.  The extent of these powers depends upon
whether the institutions in question are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," or
"critically undercapitalized."  Under the FDIC regulations applicable to the
Bank, an institution is considered "well capitalized" if it has (i) a total
risk-based capital ratio of 10% or greater, (ii) a Tier I risk-based capital
ratio of 6% or greater, (iii) a leverage ratio of 5% or greater and (iv) is not
subject to any order or written directive to meet and maintain a specific
capital level for any capital

                                       17
<PAGE>
 
measure.  An "adequately capitalized" institution is defined as one that has (i)
a total risk-based capital ratio of 8% or greater, (ii) a Tier I risk-based
capital ratio of 4% or greater and (iii) a leverage ratio of 4% or greater (or
3% or greater in the case of an institution with the highest examination rating
and which is not experiencing or anticipating significant growth).  An
institution is considered (A) "undercapitalized" if it has (i) a total risk-
based capital ratio of less than 8%, (ii) a Tier I risk-based capital ratio of
less than 4% or (iii) a leverage ratio of less than 4% (or 3% in the case of an
institution with the highest examination rating and which is not experiencing or
anticipating significant growth); (B) "significantly undercapitalized" if the
institution has (i) a total risk-based capital ratio of less than 6%, or (ii) a
Tier I risk-based capital ratio of less than 3% or (iii) a leverage ratio of
less than 3% and (C) "critically undercapitalized" if the institution has a
ratio of tangible equity to total assets equal to or less than 2%.

     INTERSTATE BANKING. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Act"), effective September 29,
1995, permits adequately capitalized bank and savings bank holding companies to
acquire control of banks and savings banks in any state.

     Such interstate acquisitions are subject to certain restrictions.  States
may require the bank or savings bank being acquired to have been in existence
for a certain length of time but not in excess of five years. In addition, no
bank or saving bank may acquire more than 10% of the insured deposits in the
United States or more than 30% of the insured deposits in any one state, unless
the state has specifically legislated a higher deposit cap. States are free to
legislate stricter deposit caps.

     The Interstate Banking Act also provides for interstate branching,
effective June 1, 1998, allowing interstate branching in all states, provided
that a particular state has not specifically denied interstate branching by
legislation prior to such time.  Unlike interstate acquisitions, a state may
deny interstate branching if it specifically elects to do so by June 1, 1997.
States may choose to allow interstate branching prior to June 1, 1997 by opting-
in to a group of states that permits these transactions.  These states generally
allow interstate branching via a merger of an out-of-state bank with an in-state
bank, or on a de novo basis.  North Carolina has enacted legislation permitting
branching transactions.

     RESTRICTIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS.  A North
Carolina-chartered stock savings bank may not declare or pay a cash dividend on,
or repurchase any of, its capital stock if the effect of such transaction would
be to reduce the net worth of the institution to an amount which is less than
the minimum amount required by applicable federal and state regulations. In
addition, a North Carolina-chartered stock savings bank, for a period of five
years after its conversion from mutual to stock form, must obtain the written
approval from the Administrator before declaring or paying a cash dividend on
its capital stock in an amount in excess of one-half of the greater of (i) the
institution's net income for the most recent fiscal year end, or (ii) the
average of the institution's net income after dividends for the most recent
fiscal year end and not more than two of the immediately preceding fiscal year
ends, if applicable.  A source of the Holding Company's funds are dividends
received from the Bank.  In fiscal 1999, the amount of dividends that can be
paid without prior approval from regulators is approximately $2.0 million.
These funds should be adequate to cover the Holding Company's needs.  Also,
without the prior written approval of the Administrator, a North Carolina-
chartered stock savings bank, for a period of five years after its conversion
from mutual to stock form, may not repurchase any of its capital stock. The
Administrator will give approval to repurchase only upon a showing that the
proposed repurchase will not adversely affect the safety and soundness of the
institution.

     In addition, the Bank is not permitted to declare or pay a cash dividend or
repurchase any of its capital stock if the effect thereof would be to cause its
net worth to be reduced below the amount required for the liquidation account
established in connection with the Bank's conversion from mutual to stock
ownership.

     OTHER NORTH CAROLINA REGULATION.  As a North Carolina-chartered savings
bank, the Bank derives its authority from, and is regulated by, the
Administrator. The Administrator has the right to promulgate rules and
regulations necessary for the supervision and regulation of North Carolina
savings banks under his jurisdiction and for the protection of the public
investing in such institutions. The regulatory authority of the Administrator

                                       18
<PAGE>
 
includes, but is not limited to:  the establishment of reserve requirements; the
regulation of the payment of dividends; the regulation of stock repurchases, the
regulation of incorporators, stockholders, directors, officers and employees;
the establishment of permitted types of withdrawable accounts and types of
contracts for savings programs, loans and investments; and the regulation of the
conduct and management of savings banks, chartering and branching of
institutions, mergers, conversions and conflicts of interest. North Carolina law
requires that the Bank maintain federal deposit insurance as a condition of
doing business.

     The Administrator conducts regular examinations of North Carolina-chartered
savings banks. The purpose of such examinations is to assure that institutions
are being operated in compliance with applicable North Carolina law and
regulations and in a safe and sound manner. These examinations are usually
conducted on a joint basis with the FDIC.  In addition, the Administrator is
required to conduct an examination of any institution when he has good reason to
believe that the standing and responsibility of the institution is of doubtful
character or when he otherwise deems it prudent. The Administrator is empowered
to order the revocation of the license of an institution if he finds that it has
violated or is in violation of any North Carolina law or regulation and that
revocation is necessary in order to preserve the assets of the institution and
protect the interests of its depositors. The Administrator has the power to
issue cease and desist orders if any person or institution is engaging in, or
has engaged in, any unsafe or unsound practice or unfair and discriminatory
practice in the conduct of its business or in violation of any other law, rule
or regulation.

     A North Carolina-chartered savings bank must maintain net worth, computed
in accordance with the Administrator's requirements, of 5% of total assets and
liquidity of 10% of total assets, as discussed above. Additionally, a North
Carolina-chartered savings bank is required to maintain general valuation
allowances and specific loss reserves in the same amounts as required by the
FDIC.

     Subject to limitation by the Administrator, North Carolina-chartered
savings banks may make any loan or investment or engage in any activity which is
permitted to federally chartered institutions. However, a North Carolina-
chartered savings bank cannot invest more than 15% of its total assets in
business, commercial, corporate and agricultural loans.  In addition to such
lending authority, North Carolina-chartered savings banks are authorized to
invest funds, in excess of loan demand, in certain statutorily permitted
investments, including but not limited to (i) obligations of the United States,
or those guaranteed by it; (ii) obligations of the State of North Carolina;
(iii) bank demand or time deposits; (iv) stock or obligations of the federal
deposit insurance fund or a FHLB; (v) savings accounts of any savings
institution as approved by the board of directors; and (vi) stock or obligations
of any agency of the State of North Carolina or of the United States or of any
corporation doing business in North Carolina whose principal business is to make
education loans.

     North Carolina law provides a procedure by which savings institutions may
consolidate or merge, subject to approval of the Administrator. The approval is
conditioned upon findings by the Administrator that, among other things, such
merger or consolidation will promote the best interests of the members or
stockholders of the merging institutions. North Carolina law also provides for
simultaneous mergers and conversions and for supervisory mergers conducted by
the Administrator.

     FUTURE REQUIREMENTS.  Statutes and regulations are regularly introduced
which contain wide-ranging proposals for altering the structures, regulations
and competitive relationships of financial institutions.  It cannot be predicted
whether or what form any proposed statute or regulation will be adopted or the
extent to which the business of the Company and the Bank may be affected by such
statute or regulation.

                                       19
<PAGE>
 
ITEM 2.   PROPERTIES

     At June 30, 1998, First Savings conducted its business from the
headquarters office in Southern Pines, North Carolina, and its four branch
offices in Southern Pines, Pinehurst, Carthage and West End, North Carolina.
The following table sets forth certain information regarding First Savings'
properties as of June 30, 1998.  All properties are owned by First Savings, with
the exception of the Pinehurst Office which has been leased for a term of 15
years with an expiration date of 2003.  Rentals paid by First Savings under that
lease totalled $9,300 for the fiscal year ended June 30, 1998.


                                                   NET BOOK
                                                   VALUE OF
        ADDRESS                                    PROPERTY
        -------                                    --------

Headquarters Office                               $  525,386
  205 S.E. Broad Street                  
  Southern Pines, North Carolina 28387   

Pinecrest Plaza Office                             1,007,514
  46 Pinecrest Plaza                     
  Southern Pines, North Carolina 28387   

Pinehurst Office                                      22,189
  10 Chinquapin Road                     
  Pinehurst, North Carolina 28374        

Carthage Office                                      106,542
  109 Monroe Street                      
  Carthage, North Carolina  28327        

Seven Lakes Office                                   112,900
  200 Grant Street
  Seven Lakes Shopping Center
  West End, North Carolina 27376


The total net book value of First Savings' furniture, fixtures and equipment on
June 30, 1998 was $134,323.  The properties are considered by First Savings'
management to be in good condition.

ITEM 3.   LEGAL PROCEEDINGS

     In the opinion of management, First Savings is not involved in any pending
legal proceedings other than routine, non-material proceedings occurring in the
ordinary course of business.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted to a vote of the Holding Company's stockholders
during the quarter ended June 30, 1998.

                                       20
<PAGE>
 
                                    PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The information required by this Item is set forth under the section
captioned "Capital Stock" on page 40 of First Savings' 1998 Annual Report which
is incorporated herein by reference.

ITEM 6.   SELECTED FINANCIAL DATA

     The information required by this Item is set forth in the table captioned
"Five Year Summary" on the inside cover of First Savings' 1998 Annual Report
which is incorporated herein by reference.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATION

     See the information set forth under Item 1 above and the information set
forth under the sections captioned "Financial Highlights" on page 2 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" on pages 4 through 17 in First Savings' 1998 Annual Report, which
sections are incorporated herein by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information required by this item is set forth under the caption
"Market Risk" on page 5 of "Management's Discussion and Analysis" in First
Savings' 1998 Annual Report.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements of First Savings and supplementary
data set forth on pages 19 through 38 of First Savings' 1998 Annual Report are
incorporated herein by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     There were no changes in or disagreements with accountants on accounting
and financial disclosures during the fiscal year ended June 30, 1998 and the
interim subsequent period. See the information set forth under the section
captioned "Proposal 2 - Ratification of Selection of Independent Auditor" on
page 14 of the Proxy Statement.

                                       21
<PAGE>
 
                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item is set forth in the tables on pages 5
and 6 under the section captioned "Proposal 1 - Election of Directors" of the
Proxy Statement for the 1998 Annual Meeting of Shareholders of First Savings
Bancorp, Inc. to be held on October 29, 1998 (the "Proxy Statement") and the
section captioned "Section 16(a) Beneficial Ownership Reporting Compliance" on
page 4 of the Proxy Statement, which sections are incorporated herein by
reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item is set forth under the sections
captioned "Proposal 1 - Election of Directors - Directors' Compensation" and " -
Management Compensation" on page 8 and pages 9 through 12, respectively, of the
Proxy Statement, which sections are incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated herein by reference
from the section captioned "Security Ownership of Certain Beneficial Owners" on
pages 2 through 4 of the Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     There have been no reportable transactions since the beginning of the
Holding Company's last fiscal year nor are any reportable transactions proposed
as of the date of this Form 10-K.  See also the section captioned "Proposal 1 -
Election of Directors - Certain Indebtedness and Transactions of Management" on
page 14 of the Proxy Statement, which section is incorporated herein by
reference.

                                       22
<PAGE>
 
                                    PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

14(a)1.   Consolidated Financial Statements (contained in First Savings' 1998
          Annual Report attached hereto as Exhibit (13) and incorporated herein
          by reference)

          (a)  Independent Auditors' Report

          (b)  Consolidated Statements of Financial Condition as of June 30,
               1998 and 1997

          (c)  Consolidated Statements of Income for the Years Ended June 30,
               1998, 1997 and 1996

          (d)  Consolidated Statements of Shareholders' Equity for the Years
               Ended June 30, 1998, 1997, and 1996

          (e)  Consolidated Statements of Cash Flows for the Years Ended June
               30, 1998, 1997 and 1996

          (f)  Notes to Consolidated Financial Statements

14(a)2.   Financial Statement Schedules

          All schedules have been omitted as the required information is either
          inapplicable or included in the Notes to Consolidated Financial
          Statements.
 
14(a)3.   Exhibits
 
          Exhibit (3)(i)           Certificate of Incorporation, incorporated
                                   herein by reference to Exhibit (2), Appendix
                                   C, to the Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
 
          Exhibit (3)(ii)          Bylaws, incorporated herein by reference to
                                   Exhibit (2), Appendix D, to the Registration
                                   Statement on Form 8-A, Registration No. 0-27-
                                   098, dated October 26, 1995
 
          Exhibit (4)              Specimen Stock Certificate, incorporated
                                   herein by reference to Exhibit (5) to the
                                   Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
 
          Exhibit (10)(i)          First Savings Bank of Moore County, Inc., SSB
                                   Pinehurst Office Lease, incorporated herein
                                   by reference to Exhibit (10)(i) to the
                                   Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
 
          Exhibit (10)(ii)(a)      Employee Stock Option Plan of First Savings
                                   Bank of Moore County, Inc., SSB, incorporated
                                   herein by reference to Exhibit (10)(ii)(a) to
                                   the Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
 
          Exhibit (10)(ii)(b)      Director Stock Option Plan of First Savings
                                   Bank of Moore County, Inc., SSB, incorporated
                                   herein by reference to Exhibit (10)(ii)(b) to

                                       23
<PAGE>
 
                                   the Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
                                    
          Exhibit (10)(ii)(c)      Management Recognition Plan of First Savings
                                   Bank of Moore County, Inc., SSB, incorporated
                                   herein by reference to Exhibit (10)(ii)(c) to
                                   the Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
                                    
          Exhibit (10)(ii)(d)      Bonus Compensation Plan of First Savings Bank
                                   of Moore County, Inc., SSB, incorporated
                                   herein by reference to Exhibit (10)(ii)(d) to
                                   the Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
 
          Exhibit (10)(ii)(e)      Employment Agreement between First Savings
                                   Bank of Moore County, Inc., SSB and William
                                   E. Samuels, Jr., incorporated herein by
                                   reference to Exhibit (10)(ii)(e) to the
                                   Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995 
 
          Exhibit (10)(ii)(f)      Employment Agreement between First Savings
                                   Bank of Moore County, Inc., SSB and John F.
                                   Burns, incorporated herein by reference to
                                   Exhibit (10)(ii)(f) to the Registration
                                   Statement on Form 8-A, Registration No. 0-27-
                                   098, dated October 26, 1995
 
          Exhibit (11)             Statement Regarding Computation of Per Share
                                   Earnings
 
          Exhibit (12)             Statement Regarding Computation of Ratios
 
          Exhibit (13)             1998 Annual Report to Security Holders
 
          Exhibit (16)             Deloitte & Touche LLP Letter of Concurrence,
                                   incorporated herein by reference to Exhibit
                                   16 to the Registrant's Form 10-K for the year
                                   ended June 30, 1997
 
          Exhibit (21)             Subsidiaries of the Registrant, incorporated
                                   herein by reference to Exhibit (21) to the
                                   Registration Statement on Form 8-A,
                                   Registration No. 0-27-098, dated October 26,
                                   1995
 
          Exhibit (27)             Financial Data Schedule

14(b)     First Savings filed no reports on Form 8-K during the last quarter of
          the fiscal year ended June 30, 1998.

                                       24
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                    FIRST SAVINGS BANCORP, INC.

Date:     September 24, 1998        By:   /s/ William E. Samuels, Jr.
          ------------------              -------------------------------

                                    William E. Samuels, Jr.
                                    President and Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature                                     Title                        Date
-----------------------------  -----------------------------------  ------------------
<S>                            <C>                                  <C>
/s/ William E. Samuels, Jr.    President, Chief Executive           September 24, 1998
-----------------------------
William E. Samuels, Jr.        Officer and Director
 
/s/ John F. Burns              Executive Vice President, Secretary  September 24, 1998
-----------------------------
John F. Burns                  and Director
 
/s/ Timothy S. Maples          Vice President and                   September 24, 1998
-----------------------------
Timothy S. Maples              Principal Financial Officer
 
/s/ Virginia C. Brandt         Director                             September 24, 1998
-----------------------------
Virginia C. Brandt
 
/s/ H. David Bruton            Director                             September 24, 1998
-----------------------------
H. David Bruton
 
/s/ Felton J. Capel            Director                             September 24, 1998
-----------------------------
Felton J. Capel
 
/s/ J. E. Causey               Director                             September 24, 1998
-----------------------------
J. E. Causey
 
/s/ Henry A. Clayton           Director                             September 24, 1998
-----------------------------
Henry A. Clayton
 
/s/ Frank G. Hardister         Director                             September 24, 1998
-----------------------------
Frank G. Hardister
 
/s/ W. Harrell Johnson         Director                             September 24, 1998
-----------------------------
W. Harrell Johnson
 
/s/ Joe Montesanti, Jr.        Director                             September 24, 1998
-----------------------------
Joe Montesanti, Jr.
 
/s/ Thomas F. Phillips         Director                             September 24, 1998
-----------------------------
Thomas F. Phillips
</TABLE>

                                       25
<PAGE>
 
                               INDEX TO EXHIBITS



EXHIBIT NO.              DESCRIPTION
-----------              -----------

(11)           Statement Regarding Computation of Per Share Earnings

(12)           Statement Regarding Computation of Ratios

(13)           1998 Annual Report to Security Holders

(27)           Financial Data Schedule

                                       26