CNS BANCORP INC, 424B2, 1996-05-22

CNS BANCORP INC
424B2, 1996-05-22
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-1880

PROSPECTUS

CNS BANCORP, INC.
----------------------------------------------------------------------
(PROPOSED HOLDING COMPANY FOR CITY NATIONAL SAVINGS BANK, FSB)
UP TO 1,437,500 SHARES OF COMMON STOCK

CNS Bancorp, Inc. (the "Holding Company"), a Delaware corporation, is
offering between 1,062,500 and 1,437,500 shares of its common stock, $.01 par
value per share (the "Common Stock"), in connection with the conversion of City
National Savings Bank, FSB (the "Savings Bank") from a federally chartered
mutual savings bank to a federally chartered capital stock savings bank and the
simultaneous issuance of the Savings Bank's capital stock to the Holding
Company. The simultaneous conversion of the Savings Bank to stock form, the
issuance of the Savings Bank's capital stock to the Holding Company and the
offer and sale of the Common Stock by the Holding Company are being undertaken
pursuant to a plan of conversion ("Plan" or "Plan of Conversion") and are
referred to herein as the "Conversion."

(Cover continued on following page)
-------------------

FOR INFORMATION ON HOW TO SUBSCRIBE FOR SHARES OF COMMON STOCK, CALL THE STOCK
INFORMATION
CENTER AT (573) 634-2465.
-------------------

FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED BY EACH PROSPECTIVE
INVESTOR, SEE "RISK FACTORS" BEGINNING ON PAGE 1.
-------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR ACCOUNTS AND WILL NOT BE
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
("FDIC"), THE SAVINGS ASSOCIATION INSURANCE
FUND ("SAIF") OR ANY
OTHER GOVERNMENT AGENCY.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"), THE OTS, THE FDIC OR ANY OTHER FEDERAL
AGENCY OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC, THE
OTS, THE FDIC OR ANY OTHER AGENCY OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

[CAPTION]
<TABLE>
<S> <C> <C> <C>
ESTIMATED UNDERWRITING
COMMISSIONS AND
PURCHASE OTHER FEES AND ESTIMATED NET
PRICE(1) EXPENSES(2) PROCEEDS(3)
<S> <C> <C> <C>
Minimum Price Per Share................................. $10.00 $0.52 $9.48
Midpoint Price Per Share................................ $10.00 $0.44 $9.56
Maximum Price Per Share................................. $10.00 $0.38 $9.62
Maximum Price Per Share, as adjusted(4)................. $10.00 $0.33 $9.67
Minimum Total(5)........................................ $10,625,000 $551,000 $10,074,000
Midpoint Total(6)....................................... $12,500,000 $551,000 $11,949,000
Maximum Total(7)........................................ $14,375,000 $551,000 $13,824,000
Maximum Total, as adjusted(4)(8)........................ $16,531,250 $551,000 $15,980,250
</TABLE>

(1) Determined in accordance with an independent appraisal prepared by RP
Financial, LC. ("RP Financial") as of February 23, 1996, which states that
the estimated aggregate pro forma market value of the Holding Company and
the Savings Bank as converted ranged from $10,625,000 to $14,375,000, with a
midpoint of $12,500,000 ("Estimated Valuation Range"). Based on the
Estimated Valuation Range, the Board of Directors of the Savings Bank
established the estimated aggregate price range of $10,625,000 to
$14,375,000, or between 1,062,500 and 1,437,500 shares of Common Stock at
the $10.00 price per share (the "Purchase Price") to be paid for each share
of Common Stock subscribed for or purchased in the Offerings (as hereinafter
defined). The final aggregate Purchase Price, which will be determined at
the time of the closing of the Offerings, is subject to change due to
material changes in the financial condition or performance of the Savings
Bank or in market conditions or general financial or economic conditions. RP
Financial's appraisal is based upon estimates and projections that are
subject to change, and the valuation must not be construed as a
recommendation as to the advisability of purchasing such shares or that a
purchaser will thereafter be able to sell such shares at or above the
Purchase Price. See "THE CONVERSION--Stock Pricing and Number of Shares to
be Issued."
(2) Includes estimated costs to the Holding Company and the Savings Bank arising
from the Conversion, including fees to be paid to Trident Securities in
connection with the Offerings. Trident Securities will receive a management
fee in the amount of $175,000. Such fees may be deemed to be underwriting
fees and Trident Securities may be deemed to be an underwriter. Expenses of
the Conversion, other than fees to be paid to Trident Securities, are
estimated to total approximately $376,000. Actual expenses, and thus net
proceeds, may be more or less than estimated amounts. The Holding Company
and the Savings Bank have agreed to indemnify Trident Securities against
certain liabilities, including liabilities that may arise under the
Securities Act of 1933, as amended ("Securities Act"). See "USE OF PROCEEDS"
and "THE CONVERSION--Plan of Distribution for the Subscription, Direct
Community and Syndicated Community Offerings."
(3) Actual net proceeds may vary substantially from the estimated amounts
depending upon the relative number of shares sold in the Subscription,
Direct Community and Syndicated Community Offerings (as hereinafter
defined). See "USE OF PROCEEDS" and "PRO FORMA DATA."
(4) Gives effect to an increase in the number of shares that could be sold in
the Offerings due to an increase in the pro forma market value of the
Holding Company and the Savings Bank as converted up to 15% above the
maximum of the Estimated Valuation Range, without the resolicitation of
subscribers or any right of cancellation. The ESOP shall have a first
priority right to subscribe for such additional shares up to an aggregate of
8% of the Common Stock issued in the Conversion. The issuance of such
additional shares will be conditioned on a determination of RP Financial
that such issuance is compatible with its determination of the estimated pro
forma market value of the Holding Company and the Savings Bank as converted.
See "THE CONVERSION--Stock Pricing and Number of Shares to be Issued."
(5) Assumes the issuance of 1,062,500 shares at $10.00 per share.
(6) Assumes the issuance of 1,250,000 shares at $10.00 per share.
(7) Assumes the issuance of 1,437,500 shares at $10.00 per share.
(8) Assumes the issuance of 1,653,125 shares at $10.00 per share.

TRIDENT SECURITIES, INC.

The date of this Prospectus is May 8, 1996.
<PAGE>
(Continued from cover)

Pursuant to the Plan of Conversion, nontransferable rights to subscribe for
the Common Stock ("Subscription Rights") have been granted, in order of
priority, to (i) depositors with $50.00 or more on deposit at the Savings Bank
as of September 30, 1994 ("Eligible Account Holders"), (ii) the Savings Bank's
employee stock ownership plan ("ESOP"), a tax-qualified employee benefit plan,
(iii) depositors with $50.00 or more on deposit at the Savings Bank as of March
31, 1996 ("Supplemental Eligible Account Holders"), and (iv) depositors of the
Savings Bank as of April 24, 1996 ("Voting Record Date") and borrowers of the
Savings Bank with loans outstanding as of March 1, 1995 which continue to be
outstanding as of the Voting Record Date ("Other Members"), subject to the
priorities and purchase limitations set forth in the Plan of Conversion
("Subscription Offering"). SUBSCRIPTION RIGHTS ARE NONTRANSFERABLE. PERSONS
SELLING OR OTHERWISE TRANSFERRING THEIR RIGHTS TO SUBSCRIBE FOR COMMON STOCK IN
THE SUBSCRIPTION OFFERING OR SUBSCRIBING FOR COMMON STOCK ON BEHALF OF ANOTHER
PERSON WILL BE SUBJECT TO FORFEITURE OF SUCH RIGHTS AND POSSIBLE FURTHER
SANCTIONS AND PENALTIES IMPOSED BY THE OFFICE OF THRIFT SUPERVISION ("OTS") OR
ANOTHER AGENCY OF THE U.S. GOVERNMENT. THE SUBSCRIPTION OFFERING WILL EXPIRE AT
9:00 A.M., CENTRAL TIME, ON MAY 28, 1996 ("EXPIRATION DATE"), UNLESS EXTENDED BY
THE SAVINGS BANK AND THE HOLDING COMPANY FOR UP TO 24 DAYS TO JUNE 21, 1996.
SUCH EXTENSION MAY BE GRANTED WITHOUT ADDITIONAL NOTICE TO SUBSCRIBERS. See "THE
CONVERSION--The Subscription, Direct Community and Syndicated Community
Offerings" and "--Limitations on Purchases of Shares."

Any shares of Common Stock not subscribed for in the Subscription Offering
may be offered for sale to members of the general public through a direct
community offering ("Direct Community Offering") with preference being given to
natural persons and trusts of natural persons who are permanent residents of
Cole, Moniteau or Pulaski Counties of Missouri ("Local Community"), subject to
the right of the Holding Company to accept or reject orders in the Direct
Community Offering in whole or in part. The Direct Community Offering, if one is
held, is expected to begin immediately after the Expiration Date, but may begin
at anytime during the Subscription Offering. The Direct Community Offering may
terminate on or after the Expiration Date, but not later than July 12, 1996 (or
August 5, 1996 if the Subscription Offering is fully extended), unless further
extended with the consent of the OTS. It is anticipated that shares of Common
Stock not subscribed for or purchased in the Subscription and Direct Community
Offerings will be offered to eligible members of the general public on a best
efforts basis by a selling group of broker-dealers managed by Trident
Securities, Inc. ("Trident Securities") in a syndicated offering ("Syndicated
Community Offering") (the Subscription Offering, Direct Community Offering and
Syndicated Community Offering are referred to collectively as the "Offerings").

With the exception of the ESOP, which is expected to subscribe for 8% of the
shares of Common Stock issued in the Conversion, no person or entity may
purchase shares with an aggregate purchase price of more than $150,000 (or
15,000 shares based on the Purchase Price); and no person or entity, together
with associates of and persons acting in concert with such person or entity, may
purchase in the aggregate shares with an aggregate purchase price of more than
$200,000 (or 20,000 shares based on the Purchase Price). Under certain
circumstances, the maximum purchase limitation may be increased or decreased at
the sole discretion of the Savings Bank and the Holding Company subject to any
required regulatory approval. See "THE CONVERSION--The Subscription, Direct
Community and Syndicated Community Offerings," "--Limitations on Purchases of
Shares" and "--Procedure for Purchasing Shares in the Subscription and Direct
Community Offerings" for other purchase and sale limitations. The minimum order
is 25 shares.

The Holding Company must receive a properly completed and signed stock order
form and certification ("Order Form") along with full payment (or appropriate
instructions authorizing a withdrawal of the full payment from a deposit account
at the Savings Bank) of $10.00 per share for all shares subscribed for or
ordered. Funds so received will be placed in segregated accounts created for
this purpose at the Savings Bank, and interest will be paid at the Savings
Bank's passbook rate from the date payment is received until the Conversion is
consummated or terminated; these funds will be otherwise unavailable to the
depositor until such time. Payments authorized by withdrawals from deposit
accounts will continue to earn interest at the contractual rate until the
Conversion is consummated or terminated, although such funds will be unavailable
for withdrawal until the Conversion is consummated or terminated. ONCE TENDERED,
SUBSCRIPTION ORDERS CANNOT BE REVOKED WITHOUT THE CONSENT OF THE SAVINGS BANK
AND THE HOLDING COMPANY. The Holding Company is not obligated to accept orders
submitted on photocopied or telecopied Order Forms. If the Conversion is not
consummated within 45 days after the last day of the Subscription Offering
(which date will be no later than August 5, 1996) and the OTS consents to an
extension of time to complete the Conversion, subscribers will be given the
right to increase, decrease or rescind their orders. Such extensions may not go
beyond June 4, 1998.

The Savings Bank and the Holding Company have engaged Trident Securities as
their financial advisor and to assist the Holding Company in the sale of the
Common Stock in the Offerings. In addition, in the event the Common Stock is not
fully subscribed for in the Subscription and Direct Community Offerings, Trident
Securities will manage the Syndicated Community Offering. Neither Trident
Securities nor any other registered broker-dealer is obligated to take or
purchase any shares of Common Stock in the Offerings. The Holding Company and
the Savings Bank reserve the right, in their absolute discretion, to accept or
reject, in whole or in part, any or all orders in the Direct Community or
Syndicated Community Offerings either at the time of receipt of an order or as
soon as practicable following the termination of the Offerings. See "THE
CONVERSION--Plan of Distribution for the Subscription, Direct Community and
Syndicated Community Offerings." Trident Securities is a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc. ("NASD").

Offering materials for the Subscription Offering initially will be
distributed to certain persons by mail, with copies also available by request or
at the Savings Bank's offices. The Savings Bank has established a Stock
Information Center for purposes of coordinating the Offerings, including
tabulating orders and answering questions about the Offerings by telephone. All
subscribers for or purchasers of the shares to be offered in the Subscription
Offering will be instructed to send payment directly to the Savings Bank, where
such funds will be held in a segregated account and not released until all
shares are sold or the Offerings are terminated. See "THE CONVERSION."

Prior to the Offerings, the Holding Company has not issued any capital stock
and accordingly there has been no market for the shares offered hereby. There
can be no assurance that an active and liquid trading market for the Common
Stock will develop or, if developed, will be maintained. The Holding Company has
received conditional approval to have its Common Stock listed on the Nasdaq
SmallCap Market under the symbol "CNSB." Trident Securities has agreed to act as
a market maker for the Common Stock following consummation of the Conversion.
See "RISK FACTORS--Absence of Prior Market for the Common Stock" and "MARKET FOR
COMMON STOCK."
<PAGE>
CITY NATIONAL SAVINGS BANK, FSB
JEFFERSON CITY, MISSOURI

[Insert Map Here]

THE CONVERSION IS CONTINGENT UPON APPROVAL OF THE SAVINGS BANK'S PLAN OF
CONVERSION BY AT LEAST A MAJORITY OF THE ELIGIBLE VOTING MEMBERS, THE SALE OF AT
LEAST 1,062,500 SHARES OF COMMON STOCK PURSUANT TO THE PLAN OF CONVERSION, AND
RECEIPT OF ALL REGULATORY APPROVALS.

<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK)

<PAGE>

THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR ACCOUNTS
AND WILL NOT BE INSURED OR GUARANTEED BY THE FDIC, THE SAIF
OR ANY OTHER GOVERNMENT AGENCY.

PROSPECTUS SUMMARY

The information set forth below should be read in conjunction with and
is qualified in its entirety by the more detailed information and Consolidated
Financial Statements (including the Notes thereto) presented elsewhere in this
Prospectus. The purchase of Common Stock is subject to certain risks. See
"RISK FACTORS."

CNS Bancorp, Inc.

The Holding Company is a Delaware corporation organized in January
1996 at the direction of the Savings Bank to acquire all of the capital stock
that the Savings Bank will issue upon its conversion from the mutual to stock
form of ownership. The Holding Company has not engaged in any significant
business to date. The Holding Company has received the approval of the OTS to
become a savings and loan holding company and to acquire 100% of the capital
stock of the Savings Bank. Immediately following the Conversion, the only
significant assets of the Holding Company will be the capital stock of the
Savings Bank, that portion of the net proceeds of the Offerings permitted by the
OTS to be retained by the Holding Company and a note receivable from the ESOP
evidencing a loan from the Holding Company to fund the Savings Bank's ESOP. The
Holding Company has received approval from the OTS to retain 50% of the net
proceeds of the Offerings. Funds retained by the Holding Company will be used
for general business activities, including a loan by the Holding Company
directly to the ESOP to enable the ESOP to purchase 8% of the Common Stock
issued in the Conversion. See "USE OF PROCEEDS." Upon Conversion, the Holding
Company will be classified as a unitary savings and loan holding company subject
to regulation by the OTS. See "REGULATION -- Savings and Loan Holding Company
Regulations." Management believes that the holding company structure and
retention of proceeds may facilitate the expansion and diversification of its
operations, should it decide to do so. The holding company structure will also
enable the Holding Company to repurchase its stock without adverse tax
consequences, subject to applicable regulatory restrictions and waiting periods.
There are no present plans, arrangements, agreements, or understandings, written
or oral, regarding any such activities or repurchases. The main office of the
Holding Company is located at 427 Monroe Street, Jefferson City, Missouri 65101
and its telephone number is (573) 634-3336.

City National Savings Bank, FSB

The Savings Bank, founded in 1921, is a federally chartered mutual
savings bank located in Jefferson City, Missouri. The Savings Bank amended its
charter from that of a state-chartered mutual savings and loan association to
become a federal mutual savings bank in March 1995. In connection with the
Conversion, the Savings Bank will convert to a federally chartered capital stock
savings bank and will become a subsidiary of the Holding Company. The Savings
Bank is regulated by the OTS, its primary federal regulator, and the FDIC, the
insurer of its deposits. The Savings Bank's deposits have been federally
insured since 1949 by the FDIC (under the SAIF) and its predecessor, the Federal
Savings and Loan Insurance Corporation ("FSLIC"). The Savings Bank has been a
member of the Federal Home Loan Bank ("FHLB") System since 1932. At December
31, 1995, the Savings Bank had total assets of $85.4 million, total deposits of
$75.9 million and retained earnings of $9.2 million on a consolidated basis.

(i)

<PAGE>
invests in U.S. Government and agency obligations, mutual funds and mortgage-
backed securities. The Savings Bank's investment securities and mutual funds
totalled $11.5 million (at carrying value) at December 31, 1995 and mortgage-
backed securities totalled $13.9 million (at carrying value) at that date. The
Savings Bank has four branch offices located in Jefferson City, California,
Tipton and Waynesville, Missouri. The main office of the Savings Bank is
located at 427 Monroe Street, Jefferson City, Missouri 65101, and its telephone
number is (573) 634-3336.

The Conversion

The Savings Bank is in the process of converting from a federally
chartered mutual savings bank to a federally chartered capital stock savings
bank and, in connection with the Conversion, has formed the Holding Company. As
part of the Conversion, the Savings Bank will issue all of its capital stock to
the Holding Company in exchange for 50% of the net proceeds of the Offerings.
Simultaneously, the Holding Company will sell its Common Stock in the Offerings.
The Conversion is subject to the approval of the OTS, as well as the Savings
Bank's members at a special meeting to be held on June 4, 1996. After
consummation of the Conversion, depositors and borrowers of the Savings Bank
will have no voting rights in the Holding Company unless they become
stockholders.

The Plan of Conversion requires that the aggregate purchase price of
the Common Stock to be issued in the Conversion be based upon an independent
appraisal of the estimated pro forma market value of the Holding Company and the
Savings Bank as converted. RP Financial has advised the Savings Bank that in
its opinion, at February 23, 1996, the aggregate estimated pro forma market
value of the Holding Company and the Savings Bank as converted ranged from
$10,625,000 to $14,375,000 or from 1,062,500 shares to 1,437,500 shares,
assuming a $10.00 per share Purchase Price. The appraisal of the pro forma
market value of the Holding Company and the Savings Bank as converted is based
on a number of factors and should not be considered a recommendation to buy
shares of the Common Stock or any assurance that after the Conversion shares of
Common Stock will be able to be resold at or above the Purchase Price. The
appraisal will be updated or confirmed prior to consummation of the Conversion.

The Board of Directors and management believe that the Conversion is
in the best interests of the Savings Bank's members and its communities. The
Conversion is intended: (i) to improve the competitive position of the Savings
Bank in its market area and support possible future expansion and
diversification of operations (currently, there are no specific plans,
arrangements or understandings, written or oral, regarding any such activities);
(ii) to afford members of the Savings Bank and others the opportunity to become
stockholders of the Holding Company and thereby participate more directly in,
and contribute to, any future growth of the Holding Company and the Savings
Bank; and (iii) to provide future access to capital markets. See "THE
CONVERSION."

The Subscription, Direct Community and Syndicated Community Offerings

The Holding Company is offering up to 1,437,500 shares of Common Stock
at $10.00 per share to holders of Subscription Rights in the following order of
priority: (i) Eligible Account Holders; (ii) the Savings Bank's ESOP;
(iii) Supplemental Eligible Account Holders; and (iv) Other Members. In the
event the number of shares offered in the Conversion is increased above the
maximum of the Estimated Valuation Range, the Savings Bank's ESOP shall have a
priority right to purchase any such shares exceeding the maximum of the
Estimated Valuation Range up to an aggregate of 8% of the Common Stock. Orders
submitted are irrevocable until consummation of the Conversion. Any shares of
Common Stock not subscribed for in the Subscription Offering may be offered in
the Direct Community Offering to the general public with preference being given
to natural persons and trusts of natural persons who are permanent residents of
the Local Community. The Savings Bank has engaged Trident Securities to consult
with and advise the Holding Company and the Savings Bank in the Offerings, and
Trident Securities has agreed to use its best efforts to assist the Holding
Company with the solicitation of subscriptions and purchase orders for shares of
Common Stock in the Offerings. Trident Securities is not obligated to take or
purchase any shares of Common Stock in the Offerings. If all shares of Common
Stock to be issued in the Conversion are not sold through the Subscription and
Direct Community Offerings, then the Holding Company expects to offer the
remaining shares in a Syndicated Community Offering managed by Trident
Securities, which would occur as soon as practicable following the close of the
Subscription and Direct Community Offerings. All shares of Common Stock will be
sold

(ii)

<PAGE>
at the same price per share in the Syndicated Community Offering as in the
Subscription and Direct Community Offerings. See "USE OF PROCEEDS," "PRO FORMA
DATA" and "THE CONVERSION -- Stock Pricing and Number of Shares to be Issued."
The Subscription Offering will expire at 9:00 a.m., Central Time, on the
Expiration Date, unless extended by the Savings Bank and the Holding Company for
up to 24 days. The Direct Community Offering and Syndicated Community Offering,
if any, may terminate on the Expiration Date or on any date thereafter, however,
in no event later than August 5, 1996, unless further extended with the consent
of the OTS.

Benefits of the Conversion to Management

ESOP. In connection with the Conversion, the Savings Bank will adopt
the ESOP, a tax-qualified employee benefit plan for officers and employees of
the Holding Company and the Savings Bank, which intends to purchase 8% of the
shares of Common Stock issued in the Offerings (115,000 shares of Common Stock,
based on the issuance of the maximum of the Estimated Valuation Range). In the
event the number of shares offered in the Conversion is increased above the
maximum of the Estimated Valuation Range, the Savings Bank's ESOP shall have a
priority right to purchase any such shares exceeding the maximum of the
Estimated Valuation Range up to an aggregate of 8% of the Common Stock. In the
event that the ESOP's subscription is not filled in its entirety, the ESOP may
purchase additional shares in the open market or may purchase additional
authorized but unissued shares with cash contributed to it by the Savings Bank.
For additional information concerning the ESOP, see "MANAGEMENT OF THE SAVINGS
BANK -- Benefits -- Employee Stock Ownership Plan." As a result of the adoption
of the ESOP, the Holding Company will recognize compensation expense in an
amount equal to the fair market value of the ESOP shares when such shares are
committed to be released to participants' accounts. See "PRO FORMA DATA."

MRP. The Holding Company expects to seek approval of the Management
Recognition Plan and Trust ("MRP") at a meeting of stockholders occurring no
earlier than six months following consummation of the Conversion. The MRP,
which will be funded with a number of shares equal to 4% of the number of shares
issued in the Conversion, is a non-tax-qualified restricted stock plan intended
for the benefit of key employees and directors of the Holding Company and the
Savings Bank. If stockholder approval of the MRP is obtained, it is expected
that shares of Common Stock of the Holding Company will be awarded pursuant to
such plan to key employees and directors of the Holding Company and the Savings
Bank (which shares will be awarded at no cost to such recipients). Subject to
approval by stockholders and vesting provisions, key employees and directors are
initially intended to be granted 57,500 restricted shares of Common Stock under
the MRP (based on the issuance of the maximum of the Estimated Valuation Range),
with an aggregate value of $575,000 based on the Purchase Price of $10.00 per
share. It is presently intended that Robert E. Chiles, President of the Holding
Company and the Savings Bank, receive an award of restricted stock equal to 1%
of the number of shares of Common Stock issued in the Conversion, or 14,375
shares (based on the issuance of the maximum of the Estimated Valuation Range)
with an aggregate value of $143,750 based on the Purchase Price. Other officers
and employees are intended to be awarded an aggregate number of shares equal to
1.8% of the shares of Common Stock issued in the Conversion, or 25,875 shares at
the maximum of the Estimated Valuation Range. Each nonemployee director is
intended to receive an award equal to 0.2% of the number of shares issued in the
Conversion, or 2,875 shares at the maximum of the Estimated Valuation Range.
See "MANAGEMENT OF THE SAVINGS BANK -- Benefits -- Management Recognition Plan."
As a result of the adoption of the MRP, compensation expense in the amount of
the fair market value of the Common Stock at the date of the grant to the
recipient will be recognized during the years in which the shares vest. See
"PRO FORMA DATA."

Stock Option Plan. The Holding Company expects to seek stockholder
approval of the 1996 Stock Option Plan ("Stock Option Plan"), which will reserve
a number of shares equal to 10% of the number of shares issued in the
Conversion, at a meeting of stockholders occurring no earlier than six months
following consummation of the Conversion. If stockholder approval of the Stock
Option Plan is obtained, it is expected that options to acquire up to 143,750
shares of Common Stock of the Holding Company will be awarded to key employees
and directors of the Holding Company and the Savings Bank (based on the issuance
of the maximum of the Estimated Valuation Range). The exercise price of such
options will be 100% of the fair market value of the Common Stock on the date
the option is granted. It is presently intended that Mr. Chiles will be granted
options to purchase a number of shares equal to 2% of the number of shares of
Common Stock issued in the Offerings, or 28,750 shares based upon the maximum of
the Estimated Valuation Range. Other officers and employees are intended to be
granted options

(iii)

<PAGE>
covering an aggregate of 3% of the number of shares of Common Stock issued in
the Conversion, or 43,125 shares at the maximum of the Estimated Valuation
Range. Each nonemployee director is intended to receive an option for 0.5% of
the shares of Common Stock issued in the Conversion, or 7,187 shares at the
maximum of the Estimated Valuation Range. The remaining shares will be reserved
for future option grants. Options granted to officers and directors are
valuable only to the extent that such options are exercisable and the market
price for the underlying share of Common Stock is in excess of the exercise
price. An option effectively eliminates the market risk of holding the
underlying security since no consideration is paid for the option until it is
exercised. Therefore, the recipient may, within the limits of the term of the
option, wait to exercise the option until the market price exceeds the exercise
price. For additional information concerning the Stock Option Plan, see
"MANAGEMENT OF THE SAVINGS BANK -- Benefits -- 1996 Stock Option Plan."

Employment Agreements. The Holding Company and the Savings Bank have
agreed to enter into an employment agreement with Mr. Chiles which provides
certain benefits in the event of his termination following a change in control
of the Holding Company or the Savings Bank. In the event of a change in control
of the Holding Company or the Savings Bank, as defined in the agreement, Mr.
Chiles will be entitled to a cash severance payment equal to 2.99 times his
average annual compensation during the five-year period preceding the change in
control. Assuming a change of control occurred as of December 31, 1995, the
aggregate amount payable to Mr. Chiles under the agreement would have been
approximately $235,000. See "MANAGEMENT OF THE SAVINGS BANK -- Executive
Compensation -- Employment Agreements."

For information concerning the possible voting control of officers,
directors and employees following the Conversion, see "RISK FACTORS -- Anti-
takeover Considerations -- Voting Control by Insiders."

Purchase Limitations

With the exception of the ESOP, which is expected to subscribe for 8%
of the shares of Common Stock issued in the Conversion, no person or entity may
purchase shares with an aggregate purchase price of more than $150,000 (or
15,000 shares based on the Purchase Price); and no person or entity, together
with associates of and persons acting in concert with such person or entity, may
purchase in the aggregate shares with an aggregate purchase price of more than
$200,000 (or 20,000 shares based on the Purchase Price). This maximum purchase
limitation may be increased or decreased as consistent with OTS regulations in
the sole discretion of the Holding Company and the Savings Bank subject to any
required regulatory approval.

The term "acting in concert" is defined in the Plan to mean: (i)
knowing participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express agreement; or
(ii) a combination or pooling of voting or other interests in the securities of
an issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. The
Holding Company and the Savings Bank may presume that certain persons are acting
in concert based upon, among other things, joint account relationships and the
fact that such persons have filed joint Schedules 13D with the SEC with respect
to other companies. The term "associate" of a person is defined in the Plan to
mean: (i) any corporation or organization (other than the Savings Bank or a
majority-owned subsidiary of the Savings Bank) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities; (ii) any trust or other estate in which
such person has a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity (excluding tax-qualified
employee plans); and (iii) any relative or spouse of such person, or any
relative of such spouse, who either has the same home as such person or who is a
director or officer of the Savings Bank or any of its parents or subsidiaries.

The minimum purchase is 25 shares. In addition, stock orders received
either through the Direct Community Offering or the Syndicated Community
Offering, if one is held, may be accepted or rejected, in whole or in part, at
the discretion of the Holding Company and the Savings Bank. See "THE CONVERSION
- -- Limitations on Purchases of Shares." If an order is rejected in part, the
purchaser does not have the right to cancel the remainder of the order. In the
event of an oversubscription, shares will be allocated in accordance with the
Plan of Conversion. See "THE CONVERSION -- The Subscription, Direct Community
and Syndicated Community Offerings."

(iv)

<PAGE>
Stock Pricing and Number of Shares to be Issued in the Conversion

The Purchase Price in the Subscription Offering is a uniform price for
all subscribers, including members of the Holding Company's and the Savings
Bank's Boards of Directors, their management and tax-qualified employee plans,
and was set by the Board of Directors. The number of shares to be offered at
the Purchase Price is based upon an independent appraisal of the aggregate pro
forma market value of the Holding Company and the Savings Bank as converted.
The aggregate pro forma market value was estimated by RP Financial to range from
$10,625,000 to $14,375,000 as of February 23, 1996, or from 1,062,500 to
1,437,500 shares based on the Purchase Price. See "THE CONVERSION -- Stock
Pricing and Number of Shares to be Issued." The appraisal of the pro forma
value of the Holding Company and the Savings Bank as converted will be updated
or confirmed at the completion of the Offerings. The maximum of the Estimated
Valuation Range may be increased by up to 15% and the number of shares of Common
Stock to be issued in the Conversion may be increased to 1,653,125 shares due to
material changes in the financial condition or performance of the Savings Bank
or changes in market conditions or general financial and economic conditions.
No resolicitation of subscribers will be made and subscribers will not be
permitted to modify or cancel their subscriptions unless the gross proceeds from
the sale of the Common Stock are more than 15% above the maximum of the current
Estimated Valuation Range. The appraisal is not intended to be and should not
be construed as a recommendation of any kind as to the advisability of
purchasing Common Stock in the Offerings nor can assurance be given that
purchasers of the Common Stock in the Offerings will be able to sell such shares
after consummation of the Conversion at a price that is equal to or above the
Purchase Price. Furthermore, the pro forma stockholders' equity is not intended
to represent the fair market value of the Common Stock and may be greater than
amounts that would be available for distribution to stockholders in the event of
liquidation.

Use of Proceeds

The net proceeds from the sale of the Common Stock are estimated to
range from $10.1 million to $13.8 million, or to $16.0 million if the Estimated
Valuation Range is increased by 15%, depending upon the number of shares sold
and the expenses of the Conversion. The Holding Company has received the
approval of the OTS to purchase all of the capital stock of the Savings Bank to
be issued in the Conversion in exchange for 50% of the net proceeds of the
Offerings. This will result in the Holding Company retaining approximately $5.0
million to $6.9 million of the net proceeds, or up to $8.0 million if the
Estimated Valuation Range is increased by 15%, and the Savings Bank receiving an
equal amount.

Receipt of 50% of the net proceeds of the sale of the Common Stock
will increase the Savings Bank's capital and will support the expansion of the
Savings Bank's existing business activities. The Savings Bank will use the
funds contributed to it for general corporate purposes, including, initially,
local lending and investment in short-term U.S. Government and agency
obligations. The Savings Bank may consider using a portion of the proceeds to
improve its facilities and to expand its consumer lending business. Shares of
Common Stock may be purchased with funds on deposit at the Savings Bank, which
will reduce deposits by the amounts of such purchases. As a result, the net
amount of funds available to the Savings Bank for investment following receipt
of the Conversion proceeds will be reduced by the amount of deposit withdrawals
used to fund stock purchases.

A portion of the net proceeds retained by the Holding Company will be
used for a loan by the Holding Company to the Savings Bank's ESOP to enable it
to purchase 8% of the shares of Common Stock issued in the Conversion. Such
loan would fund the entire purchase price of the ESOP shares ($1,150,000 at the
maximum of the Estimated Valuation Range) and would be repaid principally from
the Savings Bank's contributions to the ESOP and from dividends payable on the
Common Stock held by the ESOP. The remaining proceeds retained by the Holding
Company initially will be invested primarily in short-term U.S. Government and
agency obligations. Such proceeds will be available for additional
contributions to the Savings Bank in the form of debt or equity, to support
future growth and diversification activities, as a source of dividends to the
stockholders of the Holding Company and for future repurchases of Common Stock
(including possible repurchases to fund the MRP or to provide shares to be
issued upon exercise of stock options) to the extent permitted under Delaware
law and OTS regulations. Currently, as discussed below under "USE OF PROCEEDS,"
there are no specific plans, arrangements, agreements or understandings, written
or oral, regarding any of such activities.

(v)

<PAGE>
Market for Common Stock

The Holding Company has never issued capital stock to the public and,
consequently, there is no existing market for the Common Stock. The Holding
Company has received conditional approval to have the Common Stock listed on the
Nasdaq SmallCap Market under the symbol "CNSB." Trident Securities has agreed
to act as a market maker for the Holding Company's Common Stock following
consummation of the Conversion. No assurance can be given that an active and
liquid trading market for the Common Stock will develop. Further, no assurance
can be given that purchasers will be able to sell their shares at or above the
Purchase Price after the Conversion. See "RISK FACTORS -- Absence of Prior
Market for the Common Stock" and "MARKET FOR COMMON STOCK."

Dividends

The Board of Directors of the Holding Company has not formulated a
dividend policy, but intends to consider a policy of paying cash dividends in
the future. Declarations and payments of dividends by the Board of Directors
will depend upon a number of factors, including the amount of the net proceeds
retained by the Holding Company, capital requirements, regulatory limitations,
the Savings Bank's and the Holding Company's financial condition and results of
operations, tax considerations and general economic conditions. In order to pay
such cash dividends, however, the Holding Company must have available cash
either from the net proceeds raised in the Offerings and retained by the Holding
Company, dividends received from the Savings Bank or earnings on Holding Company
assets. In addition, from time to time in an effort to manage capital to a
reasonable level, the Board of Directors may determine to pay periodic special
cash dividends. Periodic special cash dividends, if paid, may be paid in
addition to, or in lieu of, regular cash dividends. As with regular cash
dividends, there can be no assurance that periodic special cash dividends will
be paid or that, if paid, will continue to be paid. There are certain
limitations on the payment of dividends from the Savings Bank to the Holding
Company. See "REGULATION -- Federal Regulation of Savings Associations --
Limitations on Capital Distributions." No assurances can be given that any
dividends will be declared or, if declared, what the amount of dividends will be
or whether such dividends, once declared, will continue. See "DIVIDEND POLICY."

Officers' and Directors' Common Stock Purchases and Beneficial Ownership

Officers and directors (including directors emeriti) of the Savings
Bank (11 persons) are expected to subscribe for an aggregate of approximately
132,500 shares of Common Stock, or 12.5% and 9.2% of the shares based on the
minimum and the maximum of the Estimated Valuation Range, respectively. See
"SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS." In
addition, purchases by the ESOP, allocations under the MRP, and the exercise of
stock options issued under the Stock Option Plan, will increase the number of
shares beneficially owned by officers, directors and employees. Assuming (i)
the receipt of stockholder approval for the MRP and the Stock Option Plan, (ii)
the open market purchase of shares on behalf of the MRP, (iii) the purchase by
the ESOP of 8% of the Common Stock sold in the Offerings, and (iv) the exercise
of stock options equal to 10% of the number of shares of Common Stock issued in
the Conversion, directors, officers and employees of the Holding Company and the
Savings Bank would have voting control, on a fully diluted basis, of 31.3% and
28.4% of the Common Stock, based on the issuance of the minimum and maximum of
the Estimated Valuation Range, respectively. See "RISK FACTORS -- Anti-takeover
Considerations -- Voting Control by Insiders." The MRP and Stock Option Plan
are subject to approval by the stockholders of the Holding Company at a meeting
to be held no earlier than six months following consummation of the Conversion.

Risk Factors

See "RISK FACTORS" beginning on page 1 for a discussion of certain
risks related to the Offerings that should be considered by all prospective
investors.

(vi)

<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following tables set forth certain information concerning the
consolidated financial position and results of operations of the Savings Bank
and its subsidiaries at the dates and for the periods indicated. This
information is qualified in its entirety by reference to the detailed
information contained in the Consolidated Financial Statements and Notes
thereto presented elsewhere in this Prospectus.

<TABLE><CAPTION>
At December 31,
-----------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DATA:

Total assets . . . . . . . . . . . $94,072 $94,300 $90,335 $87,966 $85,390
Loans receivable, net (1) . . . . . 59,080 47,979 40,674 44,853 52,611
Mortgage-backed securities . . . . 8,480 22,172 24,173 18,966 13,926
Cash and due from depository
institutions, mutual funds
and investment securities . . . . 13,162 17,230 19,922 18,911 14,400
Deposits . . . . . . . . . . . . . 86,047 85,712 81,035 79,493 75,931
Borrowings . . . . . . . . . . . . 50 -- -- -- --
Retained earnings, substantially
restricted . . . . . . . . . . . 7,424 8,329 9,079 8,234 9,180

Year Ended December 31,
--------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:

Interest income . . . . . . . . . . $8,273 $7,008 $5,787 $5,224 $5,638
Interest expense . . . . . . . . . 5,951 4,570 3,411 3,032 3,617
------ ------ ------- ------ ------
Net interest income . . . . . . . 2,322 2,438 2,376 2,192 2,021
Provision for loan losses . . . . .
30 26 24 7 124
------- ------- -------- ------- -------
Net interest income
after provision for loan losses . 2,292 2,412 2,352 2,185 1,897
Noninterest income . . . . . . . . 400 616 421 274 162
Noninterest expense . . . . . . . . 1,647 1,750 1,751 1,818 1,776
------ ------ ------- ------ ------
Income before federal income tax
provision and extraordinary item 1,045 1,278 1,022 641 283
Provision for income taxes . . . . 345 373 335 213 93
------ ------ ------- ------ -------
Income before cumulative effect
of accounting change . . . . . . 700 905 687 428 190
Cumulative effect of accounting
change . . . . . . . . . . . . . -- -- 63 -- --
-------- -------- -------- -------- --------
Net income . . . . . . . . . . . . $ 700 $ 905 $ 750 $ 428 $ 190
====== ====== ======= ====== ======

(footnotes on following page)
</TABLE>
(vii)

<PAGE>

At December 31,
-------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OTHER DATA:

Number of:
Real estate loans outstanding . . 2,068 1,587 1,331 1,298 1,369
Deposit accounts . . . . . . . . 12,532 11,764 11,048 10,831 10,279
Full-service offices . . . . . . 5 5 5 5 5

<CAPTION>
At or For
the Year Ended
December 31,
--------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----

KEY FINANCIAL RATIOS:

Performance Ratios:
Return on assets(2) . . . . . . . 0.74% 0.95% 0.81% 0.48% 0.22%
Return on retained earnings(3) . . 9.92 11.45 8.61 4.99 2.14
Retained earnings-to-assets
ratio(4) . . . . . . . . . . . . 7.41 8.32 9.38 9.63 10.23
Interest rate spread (5) . . . . . 2.13 2.54 2.48 2.29 2.02
Net interest margin(6) . . . . . . 2.51 2.73 2.69 2.54 2.40
Average interest-earning assets
to average interest-bearing
liabilities . . . . . . . . . . 105.93 103.64 105.53 107.23 108.73
Noninterest expense as a
percent of average total assets . 1.73 1.84 1.89 2.04 2.05

Asset Quality Ratios:
Nonaccrual and 90 days or more
past due loans as a percent
of total loans, net . . . . . . 0.76 0.53 0.40 -- 0.17
Nonperforming assets as a
percent of total assets . . . . 2.74 1.48 0.98 0.48 0.29
Allowance for losses as a
percent of total assets . . . . 0.17 0.20 0.23 0.22 0.37
Allowance for losses as a
percent of nonperforming loans . 35.19 72.73 127.61 N/A 362.50
Net charge-offs to average
outstanding loans . . . . . . . . -- -- -- 0.05 --

</TABLE>
- ------------------
(1) Does not include loans held for sale.
(2) Net earnings divided by average total assets.
(3) Net earnings divided by average retained earnings.
(4) Average retained earnings divided by average total assets.
(5) Difference between weighted average yield on interest-earning assets and
weighted average rate on interest-bearing liabilities.
(6) Net interest income as a percentage of average interest-earning assets.

(viii)

<PAGE>

RISK FACTORS

Before investing in shares of the Common Stock offered hereby,
prospective investors should carefully consider the matters presented below, in
addition to matters discussed elsewhere in this Prospectus.

Return on Equity After Conversion

Return on equity (net income for a given period divided by
average equity during that period) is a ratio used by many investors to compare
the performance of a particular financial institution to its peers. The Savings
Bank's return on equity for the year ended December 31, 1995 was, and the
Holding Company's post-Conversion return on equity will be, less than the
average return on equity for publicly traded thrift institutions and their
holding companies. See "SELECTED CONSOLIDATED FINANCIAL INFORMATION" for
numerical information regarding the Savings Bank's historical return on equity
and "CAPITALIZATION" for a discussion of the Holding Company's estimated pro
forma consolidated capitalization as a result of the Conversion. In addition,
the expenses associated with the ESOP and the MRP (see "PRO FORMA DATA"), along
with other post-Conversion expenses, are expected to contribute initially to
reduced earnings levels. The Savings Bank intends to deploy the net proceeds of
the Offerings to increase earnings per share and book value per share, without
assuming undue risk, with the goal of achieving a return on equity comparable to
the average for publicly traded thrift institutions and their holding companies.
This goal will likely take a number of years to achieve and no assurances can be
given that this goal can be attained. Consequently, for the foreseeable future,
investors should not expect a return on equity which will meet or exceed the
average return on equity for publicly traded thrift institutions.

Dependence on Local Economy and Competition Within Market Area

The Savings Bank has been and intends to continue to operate as a
community-oriented financial institution, with a focus on servicing customers in
Cole, Moniteau and Pulaski Counties, Missouri. At December 31, 1995, most of
the Savings Bank's loan portfolio consisted of loans made to borrowers and
collateralized by properties located in its market area. Most of the Savings
Bank's depositors also reside in its market area. The three-county market area
in which the Savings Bank operates has a population of less than 120,000 people,
of which 36,000 live in Jefferson City, Missouri. Because the Savings Bank
operates in a market area with a small population and limited growth prospects,
the Savings Bank's ability to achieve loan and deposit growth is limited.
Future growth opportunities for the Savings Bank depend largely on market area
growth and the Savings Bank's ability to compete effectively within its market
area. Moreover, a downturn in the economy of the Savings Bank's market area
could have an adverse effect on the quality of the Savings Bank's loan
portfolio.

The Savings Bank faces intense competition both in originating
loans and attracting deposits. The Savings Bank's competition comes primarily
from commercial banks and other savings institutions in the Savings Bank's
market area and, to a lesser extent, from credit unions and other financial
institutions. Most of these financial institutions are locally-owned community
oriented banks and thrifts; however, there are also two subsidiaries of larger
regional holding companies in the market area. In the face of this
competition, the Savings Bank's total deposits have decreased from $86.0 million
at December 31, 1990 to $75.9 million at December 31, 1995. During the year
ended December 31, 1995, total deposits decreased $3.6 million. As a result of
the competitive nature of the Savings Bank's local market, funding costs have
been kept high which has reduced the Savings Bank's net interest margin. In
recent years, the Savings Bank has experienced an increased level of competition
for deposits from securities firms, insurance companies and other investment
vehicles, such as money market and mutual funds. As a result of strong
competition for loan originations, the Savings Bank has supplemented
originations with loan purchases. In the years ended December 31, 1993, 1994
and 1995, the Savings Bank purchased loans totalling $2.2 million, $3.3 million
and $4.2 million, respectively. In addition, competition for loan originations
has limited the ability of the Savings Bank to charge loan origination fees,
which has negatively impacted noninterest income. This competition could
adversely affect the Savings Bank's future growth prospects.

<PAGE>
Certain Lending Risks

During 1995, the Savings Bank began to increase its multi-family
and commercial real estate lending activities. For the year ended December 31,
1995, the Savings Bank originated $168,000 and purchased $1.3 million of multi-
family real estate loans and originated $1.9 million and purchased $1.0 million
of commercial real estate loans. All of the properties securing these loans are
located in Missouri. At December 31, 1995, the Savings Bank's loan portfolio
included multi-family real estate loans totalling $3.6 million, or 6.6% of total
loans, and commercial real estate loans totalling $3.8 million, or 7.0% of total
loans. Multi-family and commercial real estate loans are generally viewed as
exposing the lender to greater credit risk than one- to four-family residential
loans and typically involve higher loan principal amounts. Repayment of multi-
family and commercial real estate loans is dependent, in large part, on
sufficient income from the property to cover operating expense and debt service.
Economic events and government regulations, which are outside the control of the
borrower or lender, could impact the value of the security for such loans or the
future cash flow of the affected properties. Due, in part, to the increase in
the Savings Bank's multi-family and commercial real estate portfolio, the
Savings Bank increased its allowance for loan losses during 1995. The Savings
Bank intends to increase its activity in this lending area, primarily in the
local Jefferson City market area. The Savings Bank intends to focus on
extending loans to borrowers who have secured leases with the state government,
which the Savings Bank believes reduces the risk inherent in these types of
loans. See "BUSINESS OF THE SAVINGS BANK -- Lending Activities."

The Savings Bank also originates mortgage loans secured by non-
owner-occupied one- to four-family homes. At December 31, 1995, out of $43.6
million of loans secured by one- to four-family homes, loans secured by non-
owner-occupied residences totalled $13.7 million. Loans secured by non-owner-
occupied residences generally involve greater risks than loans secured by owner-
occupied residences. As with loans secured by multi-family properties, payments
on loans secured by non-owner-occupied residences are often dependent on the
successful operation or management of the properties. Repayment of such loans
may be subject to a greater extent to adverse conditions in the local real
estate market or the economy generally.

Anti-takeover Considerations

Provisions in the Holding Company's Governing Instruments and
Delaware and Federal Law. Certain provisions included in the Holding Company's
Certificate of Incorporation and in the Delaware General Corporation Law
("DGCL") might discourage potential proxy contests and other potential takeover
attempts, particularly those which have not been negotiated with the Board of
Directors. As a result, these provisions might preclude takeover attempts which
certain stockholders may deem to be in their best interest and might tend to
perpetuate existing management. These provisions include, among other things, a
provision limiting voting rights of beneficial owners of more than 10% of the
Common Stock and supermajority voting requirements for certain business
combinations. In addition, the Certificate of Incorporation provides for the
election of directors to staggered terms of three years, eliminates cumulative
voting for directors, and permits the removal of directors without cause only
upon the vote of holders of 80% of the outstanding voting shares. Certain
provisions of the Certificate of Incorporation of the Holding Company cannot be
amended by stockholders unless an 80% stockholder vote is obtained. The
Certificate of Incorporation of the Holding Company also contains provisions
regarding the timing and content of stockholder proposals and nominations and
limiting the calling of special meetings. The existence of these anti-takeover
provisions could result in the Holding Company being less attractive to a
potential acquiror and in stockholders receiving less for their shares than
otherwise might be available in the event of a takeover attempt. Furthermore,
federal regulations prohibit for three years after consummation of the
Conversion the ownership of more than 10% of the Savings Bank or the Holding
Company without prior OTS approval. Federal law also requires OTS approval
prior to the acquisition of "control" (as defined in OTS regulations) of an
insured institution. For a more detailed discussion of these provisions, see
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY."

Voting Control by Insiders. Directors (including directors
emeriti) and officers of the Savings Bank and the Holding Company expect to
purchase 132,500 shares of Common Stock, or 12.5% and 9.2% of the shares issued
in the Offerings at the minimum and the maximum of the Estimated Valuation
Range, respectively. Directors and

<PAGE>
officers are also expected to control indirectly the voting of approximately 8%
of the shares of Common Stock issued in the Conversion through the ESOP
(assuming shares have been allocated under the ESOP). Under the terms of the
ESOP, the unallocated shares will be voted by the ESOP trustees in the same
proportion as the votes cast by participants with respect to the allocated
shares.

At a meeting of stockholders to be held no earlier than six
months following the consummation of the Conversion, the Holding Company expects
to seek approval of the Holding Company's MRP, which is a non-tax-qualified
restricted stock plan for the benefit of key employees and directors of the
Holding Company and the Savings Bank. Assuming the receipt of stockholder
approval, the Holding Company expects to acquire common stock of the Holding
Company on behalf of the MRP in an amount equal to 4% of the Common Stock issued
in the Conversion, or 42,500 and 57,500 shares at the minimum and the maximum of
the Estimated Valuation Range, respectively. These shares will be acquired
either through open market purchases or from authorized but unissued shares of
Common Stock. Under the terms of the MRP, the MRP committee or the MRP trustees
will have the power to vote unallocated and unvested shares. In addition, the
Holding Company intends to reserve for future issuance pursuant to the Stock
Option Plan a number of authorized shares of Common Stock equal to 10% of the
Common Stock issued in the Conversion (106,250 and 143,750 shares at the minimum
and the maximum of the Estimated Valuation Range, respectively). The Holding
Company also intends to seek approval of the Stock Option Plan at a meeting of
stockholders to be held no earlier than six months following the consummation of
the Conversion.

Assuming (i) the receipt of stockholder approval for the MRP and
the Stock Option Plan, (ii) the open market purchase of shares on behalf of the
MRP, (iii) the purchase by the ESOP of 8% of the Common Stock sold in the
Offerings, and (iv) the exercise of stock options equal to 10% of the number of
shares of Common Stock issued in the Conversion, directors, officers and
employees of the Holding Company and the Savings Bank would have voting control,
on a fully diluted basis, of 31.3% and 28.4% of the Common Stock, based on the
issuance of the minimum and maximum of the Estimated Valuation Range,
respectively. Management's potential voting control alone, as well as together
with additional stockholder support, might preclude or make more difficult
takeover attempts that certain stockholders deem to be in their best interest
and might tend to perpetuate existing management.
Provisions of Employment Agreements. The employment agreement
with Mr. Chiles provides for a cash severance payment in the event of a change
in control of the Holding Company or the Savings Bank in an amount equal to 2.99
times his average annual compensation during the five-year period preceding the
change in control. Such agreement also provides for the continuation of certain
employee benefits for a three-year period following the change in control.
These provisions may have the effect of increasing the cost of acquiring the
Holding Company, thereby discouraging future attempts to take over the Holding
Company or the Savings Bank.

See "MANAGEMENT OF THE SAVINGS BANK -- Benefits," "DESCRIPTION OF
CAPITAL STOCK OF THE HOLDING COMPANY" and "RESTRICTIONS ON ACQUISITION OF THE
HOLDING COMPANY."

Recapitalization of SAIF and its Impact on SAIF Premiums

Effective January 1, 1996, the FDIC substantially reduced deposit
insurance premiums for well-capitalized, well-managed financial institutions
that are members of the Bank Insurance Fund ("BIF"). Under the new assessment
schedule, approximately 92% of BIF members pay the statutory minimum annual
assessment of $2,000. With respect to SAIF member institutions, the FDIC has
retained the existing rate schedule of 23 to 31 basis points. The Savings Bank
is, and after the Conversion will remain, a member of the SAIF rather than the
BIF. SAIF premiums may not be reduced for several years because the SAIF has
lower reserves than the BIF. Because deposit insurance premiums are often a
significant component of noninterest expense for insured depository
institutions, the reduction in BIF premiums may place the Savings Bank at a
competitive disadvantage since BIF-insured institutions (such as most commercial
banks) may be able to offer more attractive loan rates, deposit rates, or both.
The magnitude of the competitive advantage of BIF-insured institutions due to a
disparity in deposit insurance premiums and its impact on the Savings Bank's
results of operations cannot be determined at this time.

<PAGE>
Proposed federal legislation would recapitalize the SAIF and
resolve the current premium disparity by requiring savings institutions like the
Savings Bank to pay a one-time assessment to increase SAIF's reserves to $1.25
per $100 of deposits that is expected to be approximately 80 basis points on the
amount of deposits held by a SAIF-member institution at March 31, 1995. The
payment of a one-time fee would have the effect of immediately reducing the
capital and earnings of SAIF-member institutions by the amount of the fee.
Based on the Savings Bank's assessable deposits of $78.3 million at March 31,
1995, a one-time assessment of 80 basis points would equal approximately
$626,000. This charge, if incurred, would represent, on a pro forma basis, a
decrease in book value per share at December 31, 1995 of $.59 based upon the
sale of shares at the minimum of the Estimated Valuation Range and of $.44 based
upon the sale of shares at the maximum of the Estimated Valuation Range.
Management cannot predict whether any legislation, including legislation
imposing such a fee, will be enacted, or, if enacted, the amount of any one-time
fee or whether ongoing SAIF premiums will be reduced to a level equal to that of
BIF premiums. See "REGULATION."

Potential Adverse Impact of Changes in Interest Rates

The financial condition and operations of the Savings Bank, and
of savings institutions in general, are influenced significantly by general
economic conditions, by the related monetary and fiscal policies of the federal
government and by the regulations of the OTS and the FDIC. Deposit flows and
the cost of funds are influenced by interest rates of competing investments and
general market rates of interest. Lending activities are affected by the demand
for mortgage financing and for consumer and other types of loans, which in turn
is affected by the interest rates at which such financing may be offered and by
other factors affecting the supply of housing and the availability of funds.
The Savings Bank's profitability, like that of most financial institutions, is
dependent to a large extent on its net interest income, which is the difference
between the interest income received from its interest-earning assets and the
interest expense incurred in connection with its interest-bearing liabilities.
The Savings Bank's interest rate spread decreased to 2.02% for the year ended
December 31, 1995 from 2.29% for the year ended December 31, 1994 as a result of
a decrease in the difference between long- and short-term market interest rates
between the periods. Further changes in interest rates could result in further
decreases in the Savings Bank's interest rate spread, which would have an
adverse effect on the Savings Bank's net interest income.

The Savings Bank, like other savings institutions, is vulnerable
to an increase in interest rates to the extent that its interest-earning assets
have longer effective maturities or repricing periods than its interest-bearing
liabilities. Under such circumstances, material and prolonged increases in
interest rates generally would adversely affect net interest income, while
material and prolonged decreases in interest rates generally would have a
favorable effect on net interest income. At December 31, 1995, the change in
the Savings Bank's net portfolio value as a percent of the present value of its
assets was negative 10% in the event of a 200 basis point increase in interest
rates. As a result, the yield on the Savings Bank's interest-bearing
liabilities will adjust to changes in interest rates at a faster rate than the
cost of its interest-earning assets. Consequently, the Savings Bank's net
interest income could be adversely affected during periods of rapidly increasing
interest rates. To better control the impact of changes in interest rates, the
Savings Bank has sought to improve the match between asset and liability
maturities or repricing periods and rates by emphasizing the origination of
adjustable-rate mortgage ("ARM") loans, offering certificates of deposit with
terms of up to four years and maintaining an investment portfolio with laddered
maturities of up to two years. At December 31, 1995, out of total gross loans
of $54.0 million, the Savings Bank had $43.5 million of ARM loans in its loan
portfolio. The Savings Bank originates ARM loans at initial "teaser" rates
below the rate that would prevail were the market rate index used for repricing
applied initially. Furthermore, the Savings Bank's ARM loans contain periodic
and lifetime interest rate adjustment limits which, in a rising interest rate
environment, may prevent such loans from repricing to market interest rates.
While management anticipates that the Savings Bank's ARM loans will better
offset the adverse effects of an increase in interest rates as compared to
fixed-rate mortgages, the increased mortgage payments required of ARM borrowers
in a rising interest rate environment could potentially cause an increase in
delinquencies and defaults. The Savings Bank has not historically had an
increase in such delinquencies and defaults on ARM loans, but no assurance can
be given that such delinquencies or defaults would not occur in the future. The
marketability of the underlying property also may be adversely affected in a
high interest rate environment. Moreover, the Savings Bank's ability to
originate ARM loans may be affected by changes

<PAGE>
in the level of interest rates and by market acceptance of the terms of such
loans. For further information regarding the Savings Bank's asset and liability
management, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- Asset and Liability Management."

Changes in the level of interest rates also affect the amount of
loans originated by the Savings Bank and, thus, the amount of loan and
commitment fees, as well as the market value of the Savings Bank's investment
securities and other interest-earning assets. Changes in interest rates also
can affect the average life of loans. Decreases in interest rates may result in
increased prepayments of loans, as borrowers refinance to reduce borrowing
costs. Under these circumstances, the Savings Bank is subject to reinvestment
risk to the extent that it is not able to reinvest such prepayments at rates
which are comparable to the rates on the maturing loans or securities.
Moreover, volatility in interest rates also can result in disintermediation, or
the flow of funds away from savings institutions into direct investments, such
as U.S. Government and corporate securities and other investment vehicles which,
because of the absence of federal insurance premiums and reserve requirements,
generally pay higher rates of return than savings institutions.

Absence of Prior Market for the Common Stock

The Holding Company has never issued capital stock and,
consequently, there is no existing market for the Common Stock. Although the
Holding Company has received conditional approval to list the Common Stock on
the Nasdaq SmallCap Market under the symbol "CNSB," there can be no assurance
that the Holding Company will meet Nasdaq SmallCap Market listing requirements,
which include a minimum market capitalization, at least two market makers and a
minimum number of holders of record. While Trident Securities has agreed to act
as a market maker and will use its best efforts to assist the Holding Company in
encouraging another market maker to establish and maintain a market in the
Common Stock, there can be assurance that another market maker will make a
market in the Common Stock. Making a market in securities involves maintaining
bid and ask quotations and being able, as principal, to effect transactions in
reasonable quantities at those quoted prices, subject to various securities laws
and other regulatory requirements. The development of a public trading market
depends upon the existence of willing buyers and sellers, the presence of which
is not within the control of the Holding Company, the Savings Bank or any market
maker. Accordingly, there can be no assurance that an active and liquid trading
market for the Common Stock will develop, or once developed, will continue.
Furthermore, there can be no assurance that purchasers will be able to sell
their shares at or above the Purchase Price. See "MARKET FOR COMMON STOCK."

Possible Dilutive Effect of Benefit Programs

At a meeting to be held no earlier than six months following
consummation of the Conversion, the Holding Company intends to seek stockholder
approval of the MRP. If approved, the MRP intends to acquire an amount of
Common Stock of the Holding Company equal to 4% of the shares issued in the
Conversion. Such shares of Common Stock of the Holding Company may be acquired
by the Holding Company in the open market or from authorized but unissued shares
of Common Stock of the Holding Company. In the event that the MRP acquires
authorized but unissued shares of Common Stock from the Holding Company, the
voting interests of existing stockholders will be diluted and net income per
share and stockholders' equity per share will be decreased. See "PRO FORMA
DATA" and "MANAGEMENT OF THE SAVINGS BANK -- Benefits -- Management Recognition
Plan."

At a meeting to be held no earlier than six months following
consummation of the Conversion, the Holding Company intends to seek stockholder
approval of the Stock Option Plan. If approved, the Stock Option Plan will
provide for options for up to a number of shares of Common Stock of the Holding
Company equal to 10% of the shares issued in the Conversion. Such shares may be
authorized but unissued shares of Common Stock of the Holding Company and, upon
exercise of the options, will result in the dilution of the voting interests of
existing stockholders and may decrease net income per share and stockholders'
equity per share. See "MANAGEMENT OF THE SAVINGS BANK -- Benefits -- 1996 Stock
Option Plan."

5
<PAGE>

If the ESOP is not able to purchase 8% of the shares of Common
Stock issued in the Offerings, the ESOP may purchase newly issued shares from
the Holding Company. In such event, the voting interests of existing
stockholders will be diluted and net income per share and stockholders' equity
per share will be decreased. See "MANAGEMENT OF THE SAVINGS BANK -- Benefits --
Employee Stock Ownership Plan."

Possible Adverse Income Tax Consequences of the Distribution of Subscription
Rights

If the Subscription Rights granted to Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members of the Savings Bank are
deemed to have an ascertainable value, receipt of such rights may be a taxable
event (either as capital gain or ordinary income), to those Eligible Account
Holders, Supplemental Eligible Account Holders or Other Members who receive
and/or exercise the Subscription Rights in an amount equal to such value.
Additionally, the Savings Bank could be required to recognize a gain for tax
purposes on such distribution. Whether Subscription Rights are considered to
have ascertainable value is an inherently factual determination. The Savings
Bank has been advised by RP Financial that such rights have no value; however,
RP Financial's conclusion is not binding on the Internal Revenue Service
("IRS"). See "THE CONVERSION -- Effects of Conversion to Stock Form on
Depositors and Borrowers of the Savings Bank -- Tax Effects."

Regulatory Oversight and Possible Legislation

The Savings Bank is subject to extensive regulation, supervision
and examination by the OTS, as its chartering authority and primary federal
regulator, and by the FDIC, which insures its deposits up to applicable limits.
The Savings Bank is a member of the FHLB System and is subject to certain
limited regulations promulgated by the Board of Governors of the Federal Reserve
System ("Federal Reserve"). As the holding company of the Savings Bank, the
Holding Company also will be subject to regulation and oversight by the OTS.
Such regulation and supervision govern the activities in which an institution
can engage and is intended primarily for the protection of the insurance fund
and depositors. Regulatory authorities have been granted extensive discretion
in connection with their supervisory and enforcement activities which are
intended to strengthen the financial condition of the banking industry,
including the imposition of restrictions on the operation of an institution, the
classification of assets by the institution and the adequacy of an institution's
allowance for loan losses. Any change in such regulation and oversight, whether
by the OTS, the FDIC or Congress, could have a material impact on the Holding
Company, the Savings Bank and their respective operations. See "REGULATION."
Legislation proposing a comprehensive reform of the banking and thrift
industries has recently been discussed in the United States Congress. Under
such legislation, (i) the BIF and the SAIF would be merged, at which time
thrifts and banks would pay the same deposit insurance premiums, (ii) federal
savings associations would be required to convert to a national bank or a state-
chartered bank or thrift, (iii) thrifts' 8% bad-debt tax deduction would be
eliminated, (iv) all savings and loan holding companies would become bank
holding companies and (v) the OTS would be merged with the Office of the
Comptroller of the Currency. It is uncertain when or if such legislation may be
passed and, if passed, in what form such legislation may be passed.

CNS BANCORP, INC.

The Holding Company was organized as a Delaware corporation at
the direction of the Savings Bank in January 1996 to acquire all of the
outstanding capital stock of the Savings Bank to be issued in the Conversion.
The Holding Company has received the approval of the OTS to become a savings and
loan holding company and to acquire 100% of the capital stock of the Savings
Bank. Prior to the Conversion, the Holding Company will not engage in any
material operations. After the Conversion, the Holding Company will be
classified as a unitary savings and loan holding company subject to regulation
by the OTS, and its principal business will be the ownership of the Savings
Bank. Immediately following the Conversion, the only significant assets of the
Holding Company will be the capital stock of the Savings Bank, that portion of
the net proceeds of the Offerings to be retained by the Holding Company and a
note receivable from the ESOP evidencing a loan from the Holding Company to fund
the Savings Bank's ESOP. See "BUSINESS OF THE HOLDING COMPANY."

<PAGE>

The holding company structure will permit the Holding Company to
expand the financial services currently offered through the Savings Bank.
Management believes that the holding company structure and retention of a
portion of the proceeds of the Offerings will, should it decide to do so,
facilitate the expansion and diversification of its operations. The holding
company structure will also enable the Holding Company to repurchase its stock
without adverse tax consequences. There are no present plans, arrangements,
agreements, or understandings, written or oral, regarding any such activities or
repurchases. See "REGULATION -- Savings and Loan Holding Company Regulations."

CITY NATIONAL SAVINGS BANK, FSB

The Savings Bank, founded in 1921, is a federally chartered mutual
savings bank located in Jefferson City, Missouri. The Savings Bank amended its
mutual charter to become a federal mutual savings bank in March 1995. In
connection with the Conversion, the Savings Bank will convert to a federally
chartered capital stock savings bank and will become a subsidiary of the Holding
Company. The Savings Bank is regulated by the OTS. The Savings Bank's deposits
have been federally insured since 1949 by the FDIC under the SAIF and its
predecessor, the FSLIC. The Savings Bank has been a member of the FHLB System
since 1932. At December 31, 1995, the Savings Bank had total assets of $85.4
million, total deposits of $75.9 million and retained earnings of $9.2 million
on a consolidated basis.

The Savings Bank is a community oriented financial institution that
engages primarily in the business of attracting deposits from the general public
and using these funds to originate one- to four-family residential mortgage
loans within the Savings Bank's market area. The Savings Bank generally retains
for its portfolio the adjustable rate mortgage loans and sells the fixed-rate
mortgage loans that it originates. At December 31, 1995, one- to four-family
residential mortgage loans totalled $43.6 million, which represented 80.8% of
the Savings Bank's total gross loans at that date. To a lesser extent, the
Savings Bank's lending activities include the origination and purchase of multi-
family, commercial real estate, construction, land and consumer and other loans.
In addition, the Savings Bank invests in U.S. Government and agency obligations,
mutual funds and mortgage-backed securities. The Savings Bank's investment
securities and mutual funds totalled $11.5 million (at carrying value) at
December 31, 1995 and mortgage-backed securities totalled $13.9 million (at
carrying value) at that date. The Savings Bank has four branch offices located
in Jefferson City, California, Tipton and Waynesville, Missouri.

USE OF PROCEEDS

The net proceeds from the sale of the Common Stock offered hereby are
estimated to range from $10.1 million to $13.8 million, or up to $16.0 million
if the Estimated Valuation Range is increased by 15%. See "PRO FORMA DATA" for
the assumptions used to arrive at such amounts. The Holding Company has
received the approval of the OTS to purchase all of the capital stock of the
Savings Bank to be issued in the Conversion in exchange for 50% of the net
proceeds of the Offerings. This will result in the Holding Company retaining
approximately $5.0 million to $6.9 million of net proceeds, or up to $8.0
million if the Estimated Valuation Range is increased by 15%, and the Savings
Bank receiving an equal amount.

Receipt of 50% of the net proceeds of the sale of the Common Stock
will increase the Savings Bank's capital and will support the expansion of the
Savings Bank's existing business activities. The Savings Bank will use the
funds contributed to it for general corporate purposes, including, initially,
local lending or investment in short-term U.S. Government and agency
obligations. The Savings Bank may consider using a portion of the proceeds to
improve its facilities. The Savings Bank may also consider expanding its
consumer lending business. Shares of Common Stock may be purchased with funds
on deposit at the Savings Bank, which will reduce deposits by the amount of such
purchases. As a result, the net amount of funds available to the Savings Bank
for investment following receipt of the Conversion proceeds will be reduced by
the amount of deposit withdrawals used to fund stock purchases.

<PAGE>

In connection with the Conversion and the establishment of the ESOP,
the Holding Company intends to loan the ESOP the amount necessary to purchase 8%
of the shares of Common Stock sold in the Conversion. The Holding Company's
loan to fund the ESOP may range from $850,000 to $1,150,000 based on the sale of
85,000 shares to the ESOP (at the minimum of the Estimated Valuation Range) and
115,000 shares (at the maximum of the Estimated Valuation Range), respectively,
at $10.00 per share. If 15% above the maximum of the Estimated Valuation Range,
or 1,653,125 shares, are sold in the Conversion, the Holding Company's loan to
the ESOP would be approximately $1,322,500. It is anticipated that the ESOP
loan will have a ten-year term with interest payable at the prime rate as
published in The Wall Street Journal on the closing date of the Conversion. The
loan will be repaid principally from the Savings Bank's contributions to the
ESOP and from any dividends paid on shares of Common Stock held by the ESOP.

The remaining net proceeds retained by the Holding Company initially
will be invested primarily in short-term U.S. Government and agency obligations.
Such proceeds will be available for additional contributions to the Savings Bank
in the form of debt or equity, to support future diversification or acquisition
activities, as a source of dividends to the stockholders of the Holding Company
and for future repurchases of Common Stock to the extent permitted under
Delaware law and federal regulations. Currently, there are no specific plans,
arrangements, agreements or understandings, written or oral, regarding any
diversification activities.

Following consummation of the Conversion, the Board of Directors will
have the authority to adopt plans for repurchases of Common Stock or other
returns of capital to stockholders, subject to statutory and regulatory
requirements. Since the Holding Company has not yet issued stock, there
currently is insufficient information upon which an intention to repurchase
stock could be based. The facts and circumstances upon which the Board of
Directors may determine to repurchase stock in the future may include but are
not limited to: (i) market and economic factors such as the price at which the
stock is trading in the market, the volume of trading, the attractiveness of
other investment alternatives in terms of the rate of return and risk involved
in the investment, the ability to increase the book value and/or earnings per
share of the remaining outstanding shares, and the ability to improve the
Holding Company's return on equity; (ii) the avoidance of dilution to
stockholders by not having to issue additional shares to cover the exercise of
stock options or to fund employee stock benefit plans; and (iii) any other
circumstances in which repurchases would be in the best interests of the Holding
Company and its stockholders. Any stock repurchases or return of capital will
be subject to a determination by the Board of Directors that both the Holding
Company and the Savings Bank will be capitalized in excess of all applicable
regulatory requirements after any such repurchases or return of capital and that
capital will be adequate, taking into account, among other things, the level of
nonperforming and classified assets, the Holding Company's and the Savings
Bank's current and projected results of operations and asset/liability
structure, the economic environment and tax and other regulatory considerations.
See "THE CONVERSION -- Restrictions on Repurchase of Stock."

DIVIDEND POLICY

General

The Board of Directors of the Holding Company has not formulated a
dividend policy, but intends to consider a policy of paying cash dividends in
the future. Declarations or payments of dividends will be subject to
determination by the Holding Company's Board of Directors, which will take into
account the amount of the net proceeds retained by the Holding Company, the
Holding Company's financial condition, results of operations, tax
considerations, capital requirements, industry standards, economic conditions
and other factors, including the regulatory restrictions that affect the payment
of dividends by the Savings Bank to the Holding Company discussed below. In
addition, from time to time in an effort to manage capital to a reasonable
level, the Board of Directors may determine to pay periodic special cash
dividends. Periodic special cash dividends, if paid, may be paid in addition
to, or in lieu of, regular cash dividends. Under Delaware law, the Holding
Company will be permitted to pay cash dividends after the Conversion either out
of surplus or, if there is no surplus, out of net profits for the fiscal

<PAGE>

year in which the dividend is declared and/or the preceding fiscal year. In
order to pay such cash dividends, however, the Holding Company must have
available cash either from the net proceeds raised in the Offerings and retained
by the Holding Company, dividends received from the Savings Bank or earnings on
Holding Company assets. No assurances can be given that any dividends, either
regular or special, will be declared or, if declared, what the amount of
dividends will be or whether such dividends, once declared, will continue.

Current Regulatory Restrictions

Dividends from the Holding Company may depend, in part, upon receipt of
dividends from the Savings Bank because the Holding Company initially will have
no source of income other than dividends from the Savings Bank and earnings from
the investment of the net proceeds from the Offerings retained by the Holding
Company. OTS regulations require the Savings Bank to give the OTS 30 days'
advance notice of any proposed declaration of dividends to the Holding Company,
and the OTS has the authority under its supervisory powers to prohibit the
payment of dividends to the Holding Company. The OTS imposes certain
limitations on the payment of dividends from the Savings Bank to the Holding
Company which utilizes a three-tiered approach that permits various levels of
distributions based primarily upon a savings association's capital level. In
addition, the Savings Bank may not declare or pay a cash dividend on its capital
stock if the effect thereof would be to reduce the regulatory capital of the
Savings Bank below the amount required for the liquidation account to be
established pursuant to the Savings Bank's Plan of Conversion. See
"REGULATION -- Limitations on Capital Distributions," "THE CONVERSION -- Effects
of Conversion to Stock Form on Depositors and Borrowers of the Savings Bank --
Liquidation Account" and Note 15 of Notes to the Consolidated Financial
Statements included elsewhere herein.

The Savings Bank currently meets the criteria to be designated a Tier 1
association, as hereinafter defined, and consequently could at its option (after
prior notice to and no objection made by the OTS) distribute up to 100% of its
net income during the calendar year plus 50% of its surplus capital ratio at the
beginning of the calendar year less any distributions previously paid during the
year.

Tax Considerations

In addition to the foregoing, retained earnings of the Savings Bank
appropriated to bad debt reserves and deducted for federal income tax purposes
cannot be used by the Savings Bank to pay cash dividends to the Holding Company
without the payment of federal income taxes by the Savings Bank at the then
current income tax rate on the amount deemed distributed, which would include
the amount of any federal income taxes attributable to the distribution. See
"TAXATION -- Federal Taxation" and Note 9 of Notes to the Consolidated Financial
Statements included elsewhere herein. The Holding Company does not contemplate
any distribution by the Savings Bank that would result in a recapture of the
Savings Bank's bad debt reserve or create the above-mentioned federal tax
liabilities.

MARKET FOR COMMON STOCK

The Holding Company has never issued capital stock and, consequently,
there is no existing market for the Common Stock. Although the Holding Company
has received conditional approval to list the Common Stock on the Nasdaq
SmallCap Market under the symbol "CNSB," there can be no assurance that the
Holding Company will meet Nasdaq SmallCap Market listing requirements, which
include a minimum market capitalization, at least two market makers and a
minimum number of record holders. Trident Securities has agreed to make a
market for the Holding Company's Common Stock following consummation of the
Conversion and will assist the Holding Company in seeking to encourage at least
one additional market maker to establish and maintain a market in the Common
Stock. Making a market involves maintaining bid and ask quotations and being
able, as principal, to effect transactions in reasonable quantities at those
quoted prices, subject to various securities laws and other regulatory
requirements. While the Holding Company has attempted to obtain commitments
from broker-dealers to act as market makers, and anticipates that prior to the
completion of the Conversion it will be able to obtain the commitment from at
least one additional broker-dealer to act as market maker for the Common Stock,
there can be

<PAGE>

no assurance there will be two or more market makers for the Common Stock.
Additionally, the development of a liquid public market depends on the existence
of willing buyers and sellers, the presence of which is not within the control
of the Holding Company, the Savings Bank or any market maker. There can be no
assurance that an active and liquid trading market for the Common Stock will
develop or that, if developed, it will continue. The number of active buyers
and sellers of the Common Stock at any particular time may be limited. Under
such circumstances, investors in the Common Stock could have difficulty
disposing of their shares on short notice and should not view the Common Stock
as a short-term investment. Furthermore, there can be no assurance that
purchasers will be able to sell their shares at or above the Purchase Price or
that quotations will be available on the Nasdaq SmallCap Market as contemplated.

<PAGE>
CAPITALIZATION

The following table presents the historical capitalization of
the Savings Bank at December 31, 1995, and the pro forma consolidated
capitalization of the Holding Company after giving effect to the
assumptions set forth under "PRO FORMA DATA," based on the sale of the
number of shares of Common Stock set forth below in the Conversion at
the minimum, midpoint and maximum of the Estimated Valuation Range,
and based on the sale of 1,653,125 shares (representing the shares
that would be issued in the Conversion after giving effect to an
additional 15% increase in the maximum valuation in the Estimated
Valuation Range, subject to receipt of an updated appraisal confirming
such valuation and OTS approval). A change in the number of shares to
be issued in the Conversion may materially affect pro forma
consolidated capitalization.
<TABLE><CAPTION>
Holding Company
Pro Forma Consolidated Capitalization
Based Upon the Sale of
------------------------------------------------------
1,062,500 1,250,000 1,437,500 1,653,125
Capitalization Shares at Shares at Shares at Shares at
as of $10.00 $10.00 $10.00 $10.00
December 31, 1995 Per Share(1) Per Share(1) Per Share(1) Per Share(2)
----------------- ------------ ------------ ------------ ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Deposits(3) . . . . . . . . . . $75,931 $75,931 $75,931 $75,931 $75,931
FHLB advances and other
borrowings . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total deposits and
borrowed funds . . . . . . . . $75,931 $75,931 $75,931 $75,931 $75,931
======= ======= ======= ======= =======

Stockholders' equity:

Preferred stock:
1,000,000 shares, $.01
par value per share,
authorized; none issued
or outstanding . . . . . . $ -- $ -- $ -- $ -- $ --

Common Stock:
6,000,000 shares, $.01 par
value per share, authorized;
specified number of shares
assumed to be issued and
outstanding(4) . . . . . . -- 11 13 14 17

Additional paid-in capital . -- 10,063 11,936 13,810 15,963

Retained earnings(5) . . . . 9,180 9,180 9,180 9,180 9,180
Less:
Common Stock acquired
by ESOP(6) . . . . . . . -- (850) (1,000) (1,150) (1,323)
Common Stock to be acquired
by MRP(7) . . . . . . . -- (425) (500) (575) (661)
---------- -------- -------- -------- --------

Total stockholders' equity . . $ 9,180 $17,979 $19,629 $21,279 $23,176
======= ======= ======= ======= =======

(footnotes on following page)
</TABLE>
11

<PAGE>
_______________
(1) Does not reflect the possible increase in the Estimated Valuation Range to
reflect material changes in the financial condition or performance of the
Savings Bank or changes in market conditions or general financial and
economic conditions, or the issuance of additional shares under the Stock
Option Plan.
(2) This column represents the pro forma capitalization of the Holding Company
in the event the aggregate number of shares of Common Stock issued in the
Conversion is 15% above the maximum of the Estimated Valuation Range. See
"PRO FORMA DATA" and Footnote 1 thereto.
(3) Withdrawals from deposit accounts for the purchase of Common Stock are not
reflected. Such withdrawals will reduce pro forma deposits by the amounts
thereof.
(4) The Savings Bank's authorized capital will consist solely of 1,000 shares
of common stock, par value $1.00 per share, 1,000 shares of which will be
issued to the Holding Company, and 9,000 shares of preferred stock, no par
value per share, none of which will be issued in connection with the
Conversion.
(5) Retained earnings are substantially restricted by applicable regulatory
capital requirements. Additionally, the Savings Bank will be prohibited
from paying any dividend that would reduce its regulatory capital below the
amount in the liquidation account, which will be established for the
benefit of the Savings Bank's Eligible Account Holders and Supplemental
Eligible Account Holders at the time of the Conversion and adjusted
downward thereafter as such account holders reduce their balances or cease
to be depositors. See "THE CONVERSION -- Effects of Conversion to Stock
Form on Depositors and Borrowers of the Savings Bank -- Liquidation
Account."
(6) Assumes that 8% of the Common Stock sold in the Conversion will be acquired
by the ESOP in the Conversion with funds borrowed from the Holding Company.
In accordance with generally accepted accounting principles ("GAAP"), the
amount of Common Stock to be purchased by the ESOP represents unearned
compensation and is, accordingly, reflected as a reduction of capital. As
shares are released to ESOP participants' accounts, a corresponding
reduction in the charge against capital will occur. Since the funds are
borrowed from the Holding Company, the borrowing will be eliminated in
consolidation and no liability will be reflected in the consolidated
financial statements of the Holding Company. See "MANAGEMENT OF THE
SAVINGS BANK -- Benefits -- Employee Stock Ownership Plan."
(7) Assumes the purchase in the open market at the Purchase Price, pursuant to
the proposed MRP, of a number of shares equal to 4% of the shares of Common
Stock issued in the Conversion at the minimum, midpoint, maximum and 15%
above the maximum of the Estimated Valuation Range. The issuance of an
additional 4% of the shares of Common Stock for the MRP from authorized but
unissued shares of Holding Company Common Stock would dilute the ownership
interest of stockholders by 3.85%. The shares are reflected as a reduction
of stockholders' equity. See "RISK FACTORS -- Possible Dilutive Effect of
Benefit Programs," "PRO FORMA DATA" and "MANAGEMENT OF THE SAVINGS BANK --
Benefits -- Management Recognition Plan." The MRP is subject to
stockholder approval, which is expected to be sought at a meeting to be
held no earlier than six months following consummation of the Conversion.

12
<PAGE>

HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE

The following table presents the Savings Bank's
historical and pro forma capital position relative to its capital
requirements at December 31, 1995. The amount of capital infused into
the Savings Bank for purposes of the following table is 50% of the net
proceeds of the Offerings. For purpose of the table below, the amount
expected to be borrowed by the ESOP and the cost of the shares
expected to be acquired by the MRP are deducted from pro forma
regulatory capital. For a discussion of the assumptions underlying
the pro forma capital calculations presented below, see "USE OF
PROCEEDS," "CAPITALIZATION" and "PRO FORMA DATA." The definitions of
the terms used in the table are those provided in the capital
regulations issued by the OTS. For a discussion of the capital
standards applicable to the Savings Bank, see "REGULATION -- Federal
Regulation of Savings Associations -- Capital Requirements."

<TABLE><CAPTION>
PRO FORMA AT DECEMBER 31, 1995
--------------------------------------------------------------------------------------
15% above
Minimum of Estimated Midpoint of Estimated Maximum of Estimated Maximum of Estimated
Valuation Range Valuation Range Valuation Range Valuation Range
-------------------- -------------------- -------------------- --------------------
1,062,500 Shares 1,250,000 Shares 1,437,500 Shares 1,653,125 Shares
December 31, 1995 at $10.00 Per Share at $10.00 Per Share at $10.00 Per Share at $10.00 Per Share
-------------------- -------------------- -------------------- -------------------- --------------------
Percent of Percent of Percent of Percent of Percent of
Adjusted Adjusted Adjusted Adjusted Adjusted
Total Total Total Total Total
Amount Assets (1) Amount Assets (1) Amount Assets (1) Amount Assets(1) Amount Assets (1)
------ --------- ------ --------- ------ ---------- ------ --------- ------ ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital . . $ 9,180 10.75% $12,942 14.38% $13,655 15.03% $14,367 15.66% $15,186 16.38%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====

Tangible capital $ 9,697 11.26% $13,459 14.83% $14,172 15.47% $14,884 16.09% $15,703 16.80%
Tangible capital
requirement . . 1,292 1.50 1,362 1.50 1,375 1.50 1,387 1.50 1,402 1.50
-------- ------ -------- ----- -------- ------ -------- ------ -------- ------
Excess . . . . . $ 8,405 9.76% $12,097 13.33% $12,797 13.97% $13,497 14.59% $14,301 15.30%
======= ====== ======= ===== ======= ===== ======= ===== ======= =====

Core capital . . $ 9,697 11.26% $13,459 14.83% $14,172 15.47% $14,884 16.09% $15,703 16.80%
Core capital
requirement(2) 2,584 3.00 2,723 3.00 2,749 3.00 2,775 3.00 2,805 3.00
-------- ------ -------- ----- -------- ------ -------- ------ -------- ------
Excess . . . . . $ 7,113 8.26% $10,736 11.83% $11,423 12.47% $12,109 13.09% $12,898 13.80%
======= ====== ======= ===== ======= ===== ======= ===== ======= =====

Total capital(3) $10,010 27.08% $13,772 36.35% $14,485 38.06% $15,197 39.75% $16,016 41.67%
Risk-based
capital
requirement . . 2,957 8.00 3,031 8.00 3,045 8.00 3,059 8.00 3,075 8.00
-------- ------ -------- ----- -------- ------ -------- ------ -------- ------
Excess . . . . . $ 7,053 19.08% $10,741 28.35% $11,440 30.06% $12,138 31.75% $12,941 33.67%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====

___________________
(1) Based upon adjusted total assets for purposes of the tangible capital and core capital requirements, and risk-weighted assets
for purposes of the risk-based capital requirement.
(2) The current OTS core capital requirement for savings associations is 3% of total adjusted assets. The OTS has proposed
core capital requirements which would require a core capital ratio of 3% of total adjusted assets for thrifts that
receive the highest supervisory rating for safety and soundness and a core capital ratio of 4% to 5% for all other thrifts.
(3) Percentage represents total core and supplementary capital divided by total risk-weighted assets. Assumes net proceeds are
invested in assets that carry a 20% risk-weighting.
</TABLE>
13

<PAGE>

PRO FORMA DATA

Under the Plan of Conversion, the Common Stock must be sold at a price
equal to the estimated pro forma market value of the Holding Company and the
Savings Bank as converted, based upon an independent valuation. The Estimated
Valuation Range as of February 23, 1996 is from a minimum of $10,625,000 to a
maximum of $14,375,000 with a midpoint of $12,500,000 or, at a price per share
of $10.00, a minimum number of shares of 1,062,500, a maximum number of shares
of 1,437,500 and a midpoint number of shares of 1,250,000. The actual net
proceeds from the sale of the Common Stock cannot be determined until the
Conversion is completed. However, net proceeds set forth on the following table
are based upon the following assumptions: (i) Trident Securities will receive a
management fee of $175,000; (ii) all of the Common Stock will be sold in the
Subscription and Direct Community Offerings; and (iii) Conversion expenses,
excluding the fees paid to Trident Securities, will total approximately
$376,000. Actual expenses may vary from this estimate, and the fees paid will
depend upon the percentages and total number of shares sold in the Subscription,
Direct Community and Syndicated Community Offerings and other factors.

The pro forma consolidated net income of the Savings Bank for the year
ended December 31, 1995 has been calculated as if the Conversion had been
consummated at the beginning of the period and the estimated net proceeds
received by the Holding Company and the Savings Bank had been invested at 6.09%
at the beginning of the period, which represents the arithmetic average of the
Savings Bank's yield on interest-earning assets and interest-bearing deposits as
of December 31, 1995. As discussed under "USE OF PROCEEDS," the Holding Company
expects to retain 50% of the net proceeds of the Offerings from which it will
fund the ESOP loan. A pro forma after-tax return of 3.78% is used for both the
Holding Company and the Savings Bank for the period, after giving effect to an
incremental combined federal and state tax rate of 38%. Historical and pro
forma per share amounts have been calculated by dividing historical and pro
forma amounts by the number of shares of Common Stock indicated in the footnotes
to the table. Per share amounts have been computed as if the Common Stock had
been outstanding at the beginning of the period or at December 31, 1995, but
without any adjustment of per share historical or pro forma stockholders' equity
to reflect the earnings on the estimated net proceeds.

The following table summarizes the historical net income and retained
earnings of the Savings Bank and the pro forma consolidated net income and
stockholders' equity of the Holding Company for the period and at the date
indicated, based on the minimum, midpoint and maximum of the Estimated Valuation
Range and based on a 15% increase in the maximum of the Estimated Valuation
Range. No effect has been given to: (i) the shares to be reserved for issuance
under the Holding Company's Stock Option Plan, which is expected to be voted
upon by stockholders at a meeting to be held no earlier than six months
following consummation of the Conversion; (ii) withdrawals from deposit accounts
for the purpose of purchasing Common Stock in the Conversion; (iii) the issuance
of shares from authorized but unissued shares to the MRP, which is expected to
be voted upon by stockholders at a meeting to be held no earlier than six months
following consummation of the Conversion; or (iv) the establishment of a
liquidation account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders. See "MANAGEMENT OF THE SAVINGS BANK -- Benefits --
1996 Stock Option Plan" and "THE CONVERSION -- Stock Pricing and Number of
Shares Issued." Shares of Common Stock may be purchased with funds on deposit
at the Savings Bank, which will reduce deposits by the amounts of such
purchases. Accordingly, the net amount of funds available for investment will
be reduced by the amount of deposit withdrawals used to fund stock purchases.

The following pro forma information may not be representative of the
financial effects of the Conversion at the date on which the Conversion actually
occurs and should not be taken as indicative of future results of operations.
Stockholders' equity represents the difference between the stated amounts of
consolidated assets and liabilities of the Holding Company computed in
accordance with GAAP. Stockholders' equity has not been increased or decreased
to reflect the difference between the carrying value of loans and other assets
and market value. Stockholders' equity is not intended to represent fair market
value nor does it represent amounts that would be available for distribution to
stockholders in the event of liquidation.

<PAGE>
<TABLE><CAPTION>
At or For the Year Ended December 31, 1995
------------------------------------------------
Minimum of Midpoint of Maximum of 15% Above
Estimated Estimated Estimated Maximum of
Valuation Valuation Valuation Estimated
Range Range Range Valuation Range
--------- --------- --------- ---------------
1,062,500 1,250,000 1,437,500 1,653,125(1)
Shares Shares Shares Shares
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share
--------- --------- --------- ---------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds . . . . . . . . . . . $10,625 $12,500 $14,375 $16,531
Less: estimated expenses . . . . . . (551) (551) (551) (551)
-------- -------- -------- --------
Estimated net proceeds . . . . . . . 10,074 11,949 13,824 15,980
Less: Common Stock acquired by ESOP (850) (1,000) (1,150) (1,323)
Less: Common Stock to be acquired
by MRP . . . . . . . . . . . . . . (425) (500) (575) (661)
-------- -------- -------- --------
Net investable proceeds . . . . $ 8,799 $10,449 $12,099 $13,996
======= ======= ======= =======

Consolidated net income:
Historical . . . . . . . . . . . . . $190 $190 $190 $190
Pro forma income on net proceeds(2) 332 394 456 528
Pro forma ESOP adjustments(3) . . . (53) (62) (71) (82)
Pro forma MRP adjustments(4) . . . . (53) (62) (71) (82)
----- ----- ----- -----
Pro forma net income . . . . . . . $416 $460 $504 $554
==== ==== ==== ====

Consolidated net income per share (5)(6):
Historical . . . . . . . . . . . . . $0.19 $0.16 $0.14 $0.12
Pro forma income on net proceeds . . 0.34 0.34 0.34 0.34
Pro forma ESOP adjustments(3) . . . (0.05) (0.05) (0.05) (0.05)
Pro forma MRP adjustments(4) . . . . (0.05) (0.05) (0.05) (0.05)
----- ----- ----- -----
Pro forma net income per share . . $0.43 $0.40 $0.38 $0.36
===== ===== ===== =====

Consolidated stockholders' equity (book value):
Historical . . . . . . . . . . . . . $ 9,180 $ 9,180 $ 9,180 $ 9,180
Estimated net proceeds . . . . . . . 10,074 11,949 13,824 15,980
Less: Common Stock acquired by ESOP (850) (1,000) (1,150) (1,323)
Less: Common Stock to be acquired
by MRP(4) . . . . . . . . . . . . (425) (500) (575) (661)
-------- -------- -------- --------
Pro forma stockholders' equity(7) $17,979 $19,629 $21,279 $23,176
======= ======= ======= =======

Consolidated stockholders' equity per share(6)(8):
Historical(6) . . . . . . . . . . . $ 8.64 $ 7.34 $ 6.39 $ 5.55
Estimated net proceeds . . . . . . . 9.48 9.56 9.62 9.67
Less: Common Stock acquired by ESOP (0.80) (0.80) (0.80) (0.80)
Less: Common Stock to be acquired
by MRP(4) . . . . . . . . . . . . (0.40) (0.40) (0.40) (0.40)
------- ------- ------- -------
Pro forma stockholders' equity
per share(9) . . . . . . . . . $16.92 $15.70 $14.81 $14.02
====== ====== ====== ======

Purchase Price as a percentage of pro forma
stockholders' equity per share . . . 59.10% 63.69% 67.52% 71.33%

Purchase Price as a multiple of pro forma
net income per share . . . . . . . . 23.26x 25.00x 26.32x 27.78x

(footnotes on following page)

</TABLE>
15

<PAGE>
___________________
(1) Gives effect to the sale of an additional 215,625 shares in the Conversion,
which may be issued to cover an increase in the pro forma market value of
the Holding Company and the Savings Bank as converted, without the
resolicitation of subscribers or any right of cancellation. The issuance
of such additional shares will be conditioned on a determination of the
independent appraiser that such issuance is compatible with its
determination of the estimated pro forma market value of the Holding
Company and the Savings Bank as converted. See "THE CONVERSION -- Stock
Pricing and Number of Shares to be Issued."
(2) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing Common Stock in the Conversion.
(3) It is assumed that 8% of the shares of Common Stock offered in the
Conversion will be purchased by the ESOP. The funds used to acquire such
shares will be borrowed by the ESOP (at an interest rate equal to the prime
rate as published in The Wall Street Journal on the closing date of the
Conversion, which rate is currently 8.25%) from the net proceeds from the
Offerings retained by the Holding Company. The amount of this borrowing
has been reflected as a reduction from gross proceeds to determine
estimated net investable proceeds. The Savings Bank intends to make
contributions to the ESOP in amounts at least equal to the principal and
interest requirement of the debt. As the debt is paid down, stockholders'
equity will be increased. The Savings Bank's payment of the ESOP debt is
based upon equal installments of principal over a ten-year period, assuming
a combined federal and state tax rate of 38%. Interest income earned by
the Holding Company on the ESOP debt offsets the interest paid by the
Savings Bank on the ESOP loan. No reinvestment is assumed on proceeds
contributed to fund the ESOP. The ESOP expense reflects adoption of
Statement of Position ("SOP") 93-6, which will require recognition of
expense based upon shares committed to be released and the exclusion of
unallocated shares from earnings per share computations. The valuation of
shares committed to be released would be based upon the average market
value of the shares during the year, which, for purposes of this
calculation, was assumed to be equal to the $10.00 per share Purchase
Price. See "MANAGEMENT OF THE SAVINGS BANK -- Benefits -- Employee Stock
Ownership Plan."
(4) In calculating the pro forma effect of the MRP, it is assumed that the
required stockholder approval has been received, that the shares were
acquired by the MRP at the beginning of the period presented in open market
purchases at the Purchase Price and that 20% of the amount contributed was
an amortized expense during such period. The issuance of authorized but
unissued shares of the Common Stock instead of open market purchases would
dilute the voting interests of existing stockholders by approximately 3.85%
and pro forma net income per share would be $0.42, $0.40, $0.38 and $0.36
at the minimum, midpoint, maximum and 15% above the maximum of the
Estimated Valuation Range for the year ended December 31, 1995,
respectively, and pro forma stockholders' equity per share would be $16.66,
$15.48, $14.62 and $13.87 at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Valuation Range at December 31, 1995. Shares
issued under the MRP vest 20% per year and, for purposes of this table,
compensation expense is recognized on a straight-line basis over each
vesting period. In the event the fair market value per share is greater
than $10.00 per share on the date of stockholder approval of the MRP, total
MRP expense would increase. The total estimated MRP expense was multiplied
by 20% (the total percent of shares for which expense is recognized in the
first year) resulting in pre-tax MRP expense of $85,000, $100,000, $115,000
and $132,250 at the minimum, midpoint, maximum and 15% above the maximum of
the Estimated Valuation Range for the year ended December 31, 1995,
respectively. No effect has been given to the shares reserved for issuance
under the proposed Stock Option Plan. If stockholders approve the Stock
Option Plan following the Conversion, the Holding Company will have
reserved for issuance under the Stock Option Plan authorized but unissued
shares of Common Stock representing an amount of shares equal to 10% of the
shares sold in the Conversion. If all of the options were to be exercised
utilizing these authorized but unissued shares rather than treasury shares
which could be acquired, the voting and ownership interests of existing
stockholders would be diluted by approximately 9.1%. Assuming stockholder
approval of the Stock Option Plan and that all options were exercised at
the end of the period at an exercise price of $10.00 per share, pro forma
net earnings per share would be $0.38, $0.36, $0.34 and $0.33,
respectively, and pro forma stockholders' equity per share would be $16.07,
$15.00, $14.21 and $13.53, respectively at the minimum, midpoint, maximum
and 15% above the maximum of the Estimated Valuation Range. See
"MANAGEMENT OF THE SAVINGS BANK -- Benefits --

<PAGE>
1996 Stock Option Plan" and "-- Management Recognition Plan" and "RISK
FACTORS -- Possible Dilutive Effect of Benefit Programs."
(5) Per share amounts are based upon shares outstanding of 986,000, 1,160,000,
1,334,000, 1,534,100 at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range for the year ended December 31,
1995, respectively, which includes the shares of Common Stock sold in the
Conversion less the number of shares assumed to be held by the ESOP not
committed to be released within the first year following the Conversion.
(6) Historical per share amounts have been computed as if the shares of Common
Stock expected to be issued in the Conversion had been outstanding at the
beginning of the period or on the date shown, but without any adjustment of
historical net income or historical retained earnings to reflect the
investment of the estimated net proceeds of the sale of shares in the
Conversion, the additional ESOP expense or the proposed MRP expense, as
described above.
(7) "Book value" represents the difference between the stated amounts of the
Savings Bank's assets and liabilities. The amounts shown do not reflect
the liquidation account which will be established for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders in the
Conversion, or the federal income tax consequences of the restoration to
income of the Savings Bank's special bad debt reserves for income tax
purposes which would be required in the unlikely event of liquidation. See
"THE CONVERSION -- Effects of Conversion to Stock Form on Depositors and
Borrowers of the Savings Bank" and "TAXATION." The amounts shown for book
value do not represent fair market values or amounts distributable to
stockholders in the unlikely event of liquidation.
(8) Per share amounts are based upon shares outstanding of 1,062,500,
1,250,000, 1,437,500 and 1,653,125 at the minimum, midpoint, maximum and
15% above the maximum of the Estimated Valuation Range, respectively.
(9) Does not represent possible future price appreciation or depreciation of
the Common Stock.

<PAGE>
SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS

The following table sets forth certain information as to the approximate
purchases of Common Stock by each director (and director emeritus) and executive
officer of the Savings Bank, including their associates, as defined by
applicable regulations. No individual has entered into a binding agreement with
respect to such intended purchases. Directors and officers of the Savings Bank
and their associates may not purchase in excess of 34% of the shares sold in the
Conversion and, therefore, actual purchases could be more or less than indicated
below. For purposes of the following table, it has been assumed that sufficient
shares will be available to satisfy subscriptions in all categories. Directors,
officers and employees will pay the same price for the shares for which they
subscribe as the price that will be paid by all other subscribers.

<TABLE><CAPTION>
Percent of Percent of
Shares at Shares at
Anticipated Anticipated Maximum of Minimum of
Name and Number of Dollar Estimated Estimated
Position Shares Purchased Amount Purchased Valuation Range Valuation Range
-------- ---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Richard E. Caplinger 15,000 $ 150,000 1.41% 1.04%
Chairman of the Board
Robert E. Chiles 15,000 150,000 1.41 1.04
President and Director
Michael A. Dallmeyer 10,000 100,000 .94 0.70
Director
John C. Kolb 10,000 100,000 .94 0.70
Director
James F. McHenry 15,000 150,000 1.41 1.04
Director
Ronald D. Roberson 15,000 150,000 1.41 1.04
Director
James E. Whaley 15,000 150,000 1.41 1.04
Director
David L. Jobe 15,000 150,000 1.41 1.04
Treasurer
Delphine E. Prenger 2,500 25,000 .24 0.17
Vice President
Phil A. Dallmeyer 10,000 100,000 .94 0.70
Director Emeritus
Cletus A. Kolb 10,000 100,000 .94 0.70
------- ----------- ------ -----
Director Emeritus
Total 132,500 $1,325,000 12.46% 9.21%
======= ========== ===== ====
</TABLE>

- -----------------
(1) Excludes any shares awarded pursuant to the ESOP and MRP and options to
acquire shares pursuant to the Stock Option Plan. For a description of the
number of shares to be purchased by the ESOP and intended awards under the
MRP and Stock Option Plan, see "MANAGEMENT OF THE SAVINGS BANK --
Benefits -- Employee Stock Ownership Plan," "-- Benefits -- 1996 Stock
Option Plan" and "-- Benefits -- Management Recognition Plan."

<PAGE>

CITY NATIONAL SAVINGS BANK, FSB AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

The following Consolidated Statements of Income of City National Savings
Bank, FSB and Subsidiary for the fiscal years ended December 31, 1993, 1994 and
1995 have been audited by Williams-Keepers, LLP, Jefferson City, Missouri,
independent auditors, whose report thereon appears elsewhere in this Prospectus.
These statements should be read in conjunction with the Consolidated Financial
Statements and related Notes included elsewhere herein.

Year Ended December 31,
---------------------------------------
1993 1994 1995
----------- ---------- ----------
INTEREST INCOME:
Mortgage loans . . . . . . $3,725,856 $2,971,807 $3,495,637

Consumer and other loans . 76,980 64,901 88,003
Investment securities . . 560,434 586,434 449,461
Mortgage-backed securities 1,154,674 1,098,196 964,295
Other interest-earning
assets . . . . . . . . .
269,082 502,483 640,105
----------- ---------- ----------
Total interest income . 5,787,026 5,223,821 5,637,501
----------- ---------- ----------

INTEREST EXPENSE:
Deposits (Note 7) . . . . 3,410,701 3,023,153 3,616,877
Borrowed funds (Note 8) . -- 8,460 92

Total interest expense . 3,410,701 3,031,613 3,616,969
----------- ---------- ----------
Net interest income . . 2,376,325 2,192,208 2,020,532
Provision for loan
losses (Note 3) . . . . 23,912 6,746 123,719
----------- ---------- ----------
Net interest income after
provision for loan
losses . . . . . . . . 2,352,413 2,185,462 1,896,813
----------- ---------- ----------

NONINTEREST INCOME:
Loan servicing fees . . . 55,316 60,620 56,257
Income from real estate
owned (Note 5) . . . . . 101,754 117,549 71,807
Net gain (loss) on sale of
assets (Note 17) . . . . 81,363 2,242 (53,632)
Other (Note 11) . . . . . 182,811 93,403 88,270
----------- ---------- ----------
Total noninterest income 421,244 273,814 162,702
----------- ---------- ----------

NONINTEREST EXPENSE:
Compensation and benefits 861,243 915,461 897,840
Occupancy and equipment . 230,582 231,696 236,525
Deposit insurance premiums 164,262 185,717 179,920
Other (Note 11) . . . . . 495,091 485,690 461,633
----------- ---------- ----------
Total noninterest expense 1,751,178 1,818,564 1,775,918
----------- ---------- ----------
Income before income taxes
and cumulative effect of
accounting change . . 1,022,479 640,712 283,597

PROVISION FOR INCOME
TAXES (Note 9) . . . . . . 335,157 212,717 93,300
----------- ---------- ----------
Income before cumulative
effect of accounting
change . . . . . . . . . 687,322 427,995 190,297
Cumulative effect of accounting
change . . . . . . . . . 62,464 -- --
Net income . . . . . . . . $ 749,786 $ 427,995 $ 190,297
=========== ========== ==========

See accompanying Notes to Consolidated Financial Statements.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

General

Management's discussion and analysis of financial condition and results
of operations is intended to assist in understanding the financial condition and
results of operations of the Savings Bank. The information contained in this
section should be read in conjunction with the Consolidated Financial Statements
and accompanying Notes thereto and the other sections contained in this
Prospectus.

Operating Strategy

The business of the Savings Bank consists principally of attracting
deposits from the general public and using such deposits to originate mortgage
loans secured primarily by one- to four-family residences. To a lesser extent,
the Savings Bank also originates and purchases multi-family, commercial real
estate, construction, land and consumer and other loans. In addition, the
Savings Bank invests in U.S. Government and federal agency obligations, mutual
funds and mortgage-backed securities. The Savings Bank plans to continue to
fund its assets primarily with deposits, although FHLB advances may be used as a
supplemental source of funds.

The Savings Bank's profitability depends primarily on its net interest
income, which is the difference between the income it receives on its loan and
investment portfolio and its cost of funds, which consists of interest paid on
deposits. Net interest income is also affected by the relative amounts of
interest-earning assets and interest-bearing liabilities. When interest-earning
assets equal or exceed interest-bearing liabilities, any positive interest rate
spread will generate net interest income. The Savings Bank's profitability is
also affected by the level of other income and expenses. Other income includes
loan origination and commitment fees, loan servicing fees, income from real
estate owned and gain on sales of interest-earning assets. Other expenses
include compensation and benefits, occupancy and equipment expenses, deposit
insurance premiums, data servicing expenses and other operating costs. The
Savings Bank's results of operations are also significantly affected by general
economic and competitive conditions, particularly changes in market interest
rates, government legislation and policies concerning monetary and fiscal
affairs, housing and financial institutions and the attendant actions of the
regulatory authorities.

The Savings Bank strives to operate a conservative, well capitalized,
profitable thrift dedicated to providing quality service to its customers. The
Savings Bank believes that it has successfully implemented its strategy by: (i)
maintaining a strong capital level; (ii) maintaining a high level of asset
quality; (iii) limiting its exposure to fluctuations in market interest rates;
(iv) emphasizing local loan origination; and (v) emphasizing high quality
customer service with a competitive fee structure. The Savings Bank has
attempted to limit its interest rate risk by matching the interest rate
sensitivity of its interest-earning assets with its funding sources. The
Savings Bank has pursued this objective by selling substantially all of the
fixed-rate one- to four-family loans that it originates, retaining one- to four-
family ARM loans for portfolio, and promoting transaction accounts and
certificates of deposit with terms up to four years. The Savings Bank is
attempting to improve its interest rate spread, and thereby increase net
interest income, by reducing its mortgage-backed securities portfolio as market
conditions permit and investing such funds in higher yielding loans and by
diversifying its lending activities to achieve higher yields.

Results of Operations

The earnings of the Savings Bank depend primarily on its level of net
interest income, which is the difference between interest earned on the Savings
Bank's interest-earning assets and the interest paid on interest-bearing
liabilities. Net interest income is a function of the Savings Bank's interest
rate spread, which is the difference between the yield earned on interest-
earning assets and the rate paid on interest-bearing liabilities, as well as a
function of the average balance of interest-earning assets as compared to the
average balance of interest-bearing liabilities. The Savings Bank operates as a
community oriented financial institution, with a focus on servicing customers in
Cole, Moniteau and Pulaski Counties in Missouri. Because the Savings Bank
serves a limited growth

<PAGE>
market area with a relatively small population base, the Savings Bank's ability
to achieve loan and deposit growth is limited. Moreover, a downturn in the
economy of the Savings Bank's market area could have an adverse effect on the
quality of the Savings Bank's loan portfolio. See "RISK FACTORS -- Dependence
on Local Economy and Competition Within Market Area" and "BUSINESS OF THE
SAVINGS BANK -- Market Area."

Comparison of Operating Results for the Years Ended December 31, 1994 and 1995

Net Income. Net income decreased $238,000, or 55.6%, from $428,000 for
the year ended December 31, 1994 to $190,000 for the year ended December 31,
1995. Operating results were primarily influenced by the decline in long-term
interest rates, which resulted in a decrease in the Savings Bank's interest rate
spread from 2.29% for the year ended December 31, 1994 to 2.02% for the year
ended December 31, 1995. An increase in the provision for loan losses of
$117,000 and an increase in the net loss on sale of securities of $97,000 also
contributed to the decrease in net income. The Savings Bank's return on
retained earnings decreased from 4.99% for 1994 to 2.14% for 1995.

Net Interest Income. Net interest income decreased $172,000, or 7.8%,
from $2.2 million for the year ended December 31, 1994 to $2.0 million for the
year ended December 31, 1995 as the increase in total interest expense exceeded
the increase in total interest income. Total interest income increased $413,000
from $5.2 million for 1994 to $5.6 million for 1995. The increase in total
interest income was primarily due to an increase in interest on loans and mutual
funds, which was partially offset by a decrease in interest on mortgage-backed
and investment securities. Interest income on loans increased $546,000 from
$3.0 million in 1994 to $3.6 million in 1995 as a result of a higher average
balance of loans, which increased from $41.9 million in 1994 to $49.1 million in
1995. The average balance of loans increased in 1995 as the Savings Bank
purchased $4.2 million of loans during the year and because a larger portion of
loan originations in 1995 were ARM loans that were retained in the Savings
Bank's loan portfolio. Interest income on mutual funds increased $109,000
between the periods as a result of an increase in the average yield and because
the mutual funds, which were purchased in 1994, were held for the full year in
1995. Interest income on mortgage-backed securities decreased $134,000 from
$1.1 million in 1994 to $964,000 in 1995. Though the average yield on mortgage-
backed securities increased from 4.89% to 5.84% as a result of variable-rate
securities paying higher rates as interest rates for these products increased,
this was offset by a decline in the average balance of mortgage-backed
securities from $22.4 million to $16.5 million as mortgage-backed securities
were repaid and sold and the proceeds were invested in higher yielding loans.
During 1995, the Savings Bank implemented a strategy to improve its interest
rate spread and increase net interest income by investing the proceeds from the
sale and maturity of mortgage-backed and investment securities in higher
yielding mortgage loans. The Savings Bank anticipates that it may make further
sales of mortgage-backed securities for such purpose as market conditions
permit. Interest income on investment securities decreased $126,000 between the
periods as a result of the decline in the average balance from $11.2 million in
1994 to $7.7 million in 1995, which was partially offset by an increase in the
average yield from 4.53% in 1994 to 4.98% in 1995. Prior to 1995, the Savings
Bank had maintained a laddered portfolio of investment securities with
maturities extending to three years. As securities matured in 1995, the Savings
Bank reinvested the proceeds in higher yielding loans. As a result of
shortening the maturity ladder to two years, the average yield declined. Total
interest expense increased $585,000, or 19.5%, from $3.0 million for the year
ended December 31, 1994 to $3.6 million for the year ended December 31, 1995.
The increase in interest expense was the result of an increase in interest paid
on deposits. Interest paid on certificates of deposit increased $655,000
between the periods as average cost increased from 4.11% to 5.14% due to an
increase in market rates of interest and to a slight lengthening of maturities.
The increase in interest paid on certificates was partially offset by the
decrease in interest paid on passbook and money market deposit accounts
("MMDAs"). Interest paid on passbook and MMDAs decreased by $66,000 between the
periods due to a decrease in the average balances of such accounts, which was
partially offset by a increase in rates paid on MMDAs.

Provision for Loan Losses. Provisions for loan losses are charged to
earnings to bring the total allowance for loan losses to a level considered by
management to be adequate to provide for estimated losses based on management's
assessment of current economic conditions, past loss and collection experience,
and risk characteristics of the loan portfolio. Management also reviews
individual loans for which full collectibility may not be reasonably

<PAGE>
assured and considers, among other factors, the estimated fair value of the
underlying collateral. The provision for loan losses increased from $7,000 for
the year ended December 31, 1994 to $124,000 for the year ended December 31,
1995. The provision for loan losses was significantly larger for 1995 as
management's methodology for the determination of provisions for loan losses
produced an increase in the allowance for loan losses as a result of the growth
of the loan portfolio, which increased from $44.9 million at December 31, 1994
to $52.6 million at December 31, 1995, and the increase in the amount of multi-
family and commercial real estate loans in the portfolio, which are generally
considered to involve more risk than one- to four-family mortgage loans. Multi-
family and commercial real estate loans are generally viewed as exposing the
lender to greater credit risk than one-to four-family residential loans because
repayment of multi-family and commercial real estate loans is dependent, in
large part, on sufficient income from the property to cover operating expense
and debt service. See "RISK FACTORS -- Certain Lending Risks" and "BUSINESS OF
THE SAVINGS BANK -- Lending Activities -- Multi-Family Residential and
Commercial Real Estate Lending." The amount of multi-family and commercial
loans increased as the Savings Bank increased its emphasis on this type of
lending in order to improve its interest-rate spread through the higher yields
received on such loans. In addition, the Savings Bank recorded a specific
reserve of $39,000 for a commercial real estate loan that was classified as
"doubtful."

Noninterest Income. Noninterest income decreased $111,000, or 40.5%,
from $274,000 for the year ended December 31, 1994 to $163,000 for the year
ended December 31, 1995. Noninterest income decreased primarily due to the
decrease in income from real estate owned held for sale and a loss on the sale
of securities, which was partially offset by a gain on the sale of other assets.
Income from real estate owned held for sale decreased $46,000 between the
periods as a result of the sale of income producing properties in 1994 and 1995
and because of smaller gains on the sale of real estate owned in 1995. The
Savings Bank anticipates realizing a gain of approximately $138,000 in 1996 on
the sale of real estate owned under contract for sale, though such sales will
eliminate further income from these properties. The Savings Bank continues to
hold a hotel property that it acquired in 1989 as real estate held for
investment. The annual cost of holding the hotel, which is carried at a book
value of zero, is approximately $12,500. The hotel is offered for sale and,
although the Savings Bank has periodically engaged in discussions with
interested purchasers, it has been unable to find a buyer. See "BUSINESS OF THE
SAVINGS BANK -- Lending Activities -- Real Estate Owned and Held for
Investment." The Savings Bank incurred a net loss of $114,000 on the sale of
securities in 1995 as the Savings Bank sold mortgage-backed securities to fund
higher paying loans. Net loss on the sale of securities in 1994 was $17,000.
In 1995, the Savings Bank recognized a gain of $49,000 in connection with the
acquisition by a third party of the Savings Bank's data processor, in which the
Savings Bank held a cooperative interest. There was no comparable transaction
in 1994.

Noninterest Expense. Noninterest expense decreased $43,000, or 2.4%,
between the year ended December 31, 1994 and the year ended December 31, 1995.
Expenses for insurance and surety bond premiums decreased $20,000 and expenses
for supervisory examinations decreased $15,000 between the periods as a result
of the change from a state to a federal mutual charter. All other categories of
expenses were comparable between 1994 and 1995. The Savings Bank anticipates
that compensation and benefits expense will increase in 1996 as a result of the
adoption of the ESOP.

Income Taxes. The provision for income taxes decreased from $213,000
for the year ended December 31, 1994 to $93,000 for the year ended December 31,
1995 as a result of lower taxable income.

Comparison of Operating Results for the Years Ended December 31, 1993 and 1994

Net Income. Net income decreased $322,000, or 42.9%, from $750,000 for
the year ended December 31, 1993 to $428,000 for the year ended December 31,
1994. Operating results were influenced by the effects of the low interest rate
environment in 1993 followed by rising interest rates in 1994. Low interest
rates in 1993 adversely impacted the yield on interest-earning assets, as many
borrowers refinanced at lower rates, and contributed to the reduction in the
interest rate spread from 2.48% for the year ended December 31, 1993 to 2.29%
for the year ended December 31, 1994. The rising interest rate environment in
1994 resulted in fewer loan originations which led to

<PAGE>
decreased noninterest income from the sale of loans and loan origination fees.
The Savings Bank's return on retained earnings decreased from 8.61% for 1993 to
4.99% for 1994.

Net Interest Income. Net interest income decreased $184,000, or 7.7%,
from $2.4 million for the year ended December 31, 1993 to $2.2 million for the
year ended December 31, 1994. Total interest income decreased $563,000 from
$5.8 million for 1993 to $5.2 million for 1994. The decrease in total interest
income between the periods was primarily due to a decrease in interest income on
loans receivable. Interest income on loans receivable decreased $765,000
between the periods due to a smaller average balance, which decreased from $46.2
million in 1993 to $41.9 million in 1994, and to a lower average yield, which
decreased from 8.24% to 7.25%. Low interest rates in 1993 caused many of the
Savings Bank's borrowers to refinance their loans, which caused the decrease in
average yield in 1994. The refinancing boom in 1993 led to a high rate of
prepayments, which caused the Savings Bank's average balance of loans to
decrease between 1993 and 1994. Interest income on mortgage-backed securities
decreased $57,000 between the periods primarily as a result of a decrease in the
average yield from 5.17% to 4.89% as a result of the purchase of lower yielding
mortgage-backed securities in late 1993 and the repayment of higher yielding
mortgage-backed securities. Interest income on investment securities increased
$21,000 between the periods as a result of a higher average balance during 1994,
which was partially offset by a decrease in the average yield from 5.14% to
4.53% due to the purchase of lower yielding U.S. Government obligations in early
1994. Interest income on interest-bearing deposits decreased $184,000 between
the periods as the average balance decreased from $9.3 million to $2.7 million.
Average interest-bearing deposits decreased in 1994 as the Savings Bank used
these funds to purchase $8.0 million of mutual funds. Interest income on mutual
funds was $418,000 for 1994. The decrease in total interest income was offset
by a decrease of $379,000 in total interest expense from $3.4 million for 1993
to $3.0 million for 1994. The decrease in total interest expense was due, in
part, to a decrease in the rate paid on interest-bearing liabilities from 4.08%
in 1993 to 3.77%, which was due to lower market interest rates, and, in part, to
a decrease in the average balance of interest-bearing liabilities of $3.2
million, which management believes was a result of depositors seeking higher
returns in alternative investments.

Provision for Loan Losses. The Savings Bank's provision for loan losses
was $24,000 for the year ended December 31, 1993 compared to $7,000 for the year
ended December 31, 1994. Net loan charge-offs were $0 and $19,000 for fiscal
1993 and fiscal 1994, respectively. The Savings Bank's provision for loan
losses was small in 1994 as management determined to maintain the allowance at
its current level, based on the size and composition of the loan portfolio and
the decrease in the amount of nonperforming loans.

Noninterest Income. Noninterest income decreased $147,000 from $421,000
for the year ended December 31, 1993 to $274,000 for the year ended December 31,
1994. The decrease in noninterest income was primarily due to a decrease in
gain on sales of loans held for sale, banking service charges and other fees,
which was partially offset by an increase in income from real estate owned held
for sale. Gain on sales of loans held for sale decreased from $81,000 in 1993
to $19,000 in 1994. Banking service charges and other fees decreased from
$139,000 in 1993 to $61,000 in 1994 due to fewer loan originations in 1994 and
the competitive practice in the Savings Bank's market area to reduce loan
origination fees. Income from real estate owned held for sale increased from
$102,000 in 1993 to $118,000 in 1994 due to increased sales of real estate
owned.

Noninterest Expense. Noninterest expense increased $67,000, or 3.7%, to
$1.8 million for the year ended December 31, 1994. The increase in noninterest
expense between the periods was primarily the result of an increase in
compensation and benefits expense and deposit insurance premiums. Compensation
and benefits expense increased $54,000 from $861,000 in 1993 to $915,000 in 1994
primarily due to ordinary salary increases. Deposit insurance premiums
increased $22,000 between the periods as a result of having received a refund in
1993 from a secondary reserve formerly maintained by FSLIC. Other expenses were
comparable between the periods.

Income Taxes. The provision for income taxes decreased $122,000 from
$335,000 for the year ended December 31, 1993 to $213,000 for the year ended
December 31, 1994, due to a lower level of taxable earnings.

23
<PAGE>
Cumulative Effect of Accounting Change. Effective January 1, 1993, the
Savings Bank adopted Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes." This statement requires an asset and
liability approach to providing for deferred income taxes. The cumulative
effect of this accounting change on fiscal years prior to January 1, 1993
amounted to $62,000 and is reflected as an increase to net income for the year
ended December 31, 1993.

Average Balances, Interest and Average Yields/Cost

The following table sets forth certain information for the periods
indicated regarding average balances of assets and liabilities as well as the
total dollar amounts of interest income from average interest-earning assets and
interest expense on average interest-bearing liabilities and average yields and
costs. Such yields and costs for the periods indicated are derived by dividing
income or expense by the average monthly balance of assets or liabilities,
respectively, for the periods presented. Average balances are derived from
month-end balances. Management does not believe that the use of month-end
balances instead of daily balances has caused any material difference in the
information presented.

<PAGE>
<TABLE><CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------------------
1993 1994 1995
------------------------------ ------------------------------ -----------------------------
Average Average Average
Average Yield/ Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost Balance Interest Cost
------- -------- -------- ------- -------- -------- ------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net (1) . . . . .$46,157 $3,803 8.24% $41,877 $3,037 7.25% $49,054 $3,583 7.30%
Mortgage-backed securities
available for sale(2) . . . . . 22,348 1,155 5.17 22,444 1,098 4.89 16,515 964 5.84
Investment securities held
to maturity . . . . . . . . . . 9,492 487 5.13 11,239 509 4.53 -- -- --
Investment securities
available for sale(2) . . . . . . -- -- -- -- -- -- 7,685 383 4.98
Mutual funds . . . . . . . . . . . -- -- 7,000 418 5.97 8,000 527 6.59
FHLB stock . . . . . . . . . . . . 909 73 8.03 921 77 8.36 922 67 7.27
Interest-bearing deposits . . . . . 9,322 269 2.89 2,701 85 3.15 2,069 113 5.46
------- ------- ------- ------- ------- -------
Total interest-earning assets . . 88,228 5,787 6.56 86,182 5,224 6.06 84,245 5,637 6.69
------- ------- ------- ------- ------- -------
Noninterest-earning assets . . . . . 4,594 2,916 2,443
------- ------- -------

Total average assets . . . . . .$92,822 $89,098 $86,688
======= ======= =======

Interest-bearing liabilities:
Regular savings accounts . . . . .$ 8,837 246 2.78 $ 8,934 245 2.74 $7,626 211 2.77
MMDAs . . . . . . . . . . . . . . . 7,255 223 3.07 7,275 225 3.10 5,034 193 3.83
Demand and NOW accounts . . . . . . 3,673 85 2.31 3,911 87 2.22 4,047 92 2.27
Certificates of deposit . . . . . . 63,840 2,857 4.48 60,062 2,466 4.11 60,776 3,121 5.14
------- ------- ------- ------ ------- -------
Total average deposits . . . . . 83,605 3,411 4.08 80,182 3,023 3.77 77,483 3,617 4.67
------- ------- ------- ------ ------- -------
FHLB advances . . . . . . . . . . .
-- -- -- 188 9 4.79 1 -- 6.72
------- --------- ------- ------- ------- --------
Total interest-bearing
liabilities . . . . . . . . . . 83,605 3,411 4.08 80,370 3,032 3.77 77,484 3,617 4.67
------- ----- -----

Noninterest-bearing liabilities . . . 507 146 339
------- ------- -------

Total average liabilities . . . . 84,112 80,516 77,823
------- -------
Average retained earnings . . . . . .
8,710 8,582 8,865
------- ------- -------

Total liabilities and retained
earnings . . . . . . . . . . . .$92,822 $89,098 $86,688
======= ======= =======

Net interest income . . . . . . . . . $2,376 $2,192 $ 2,020
====== ====== =======
Interest rate spread . . . . . . . . 2.48% 2.29% 2.02%
Net interest margin . . . . . . . . . 2.69% 2.54% 2.40%
Ratio of average interest-earning
assets to average interest-bearing
liabilities . . . . . . . . . . . . 105.53% 107.23% 108.73%

- ---------------------------
(1) Average loans receivable includes nonperforming loans. Interest income does not include interest on loans 90 days
or more past due.
(2) In December 1995, all investment securities were reclassified as available for sale pursuant to a transfer grace
period allowed by the Financial Accounting Standards Board. Yields on average mortgage-backed and investment
securities available for sale have been calculated based upon the historical cost bases of the underlying
securities.
</TABLE>
25

<PAGE>

Yields Earned and Rates Paid

The following table sets forth (on a consolidated basis) for the
periods and at the dates indicated the weighted average yields earned on the
Savings Bank's assets and the weighted average interest rates paid on the
Savings Bank's liabilities, together with the net yield on interest-earning
assets.
<TABLE><CAPTION>
Year Ended December 31,
-------------------------------------- At December 31,
1993 1994 1995 1995
---- ---- ---- -----------
<S> <C> <C> <C> <C>
Weighted average yield on:
Loans receivable . . . . . . . . . . 8.24% 7.25% 7.30% 7.76%
Mortgage-backed securities
available for sale . . . . . . . 5.17 4.89 5.84 6.08
Investment securities held to maturity 5.13 4.53 --
Investment securities available for sale -- -- 4.98 5.26
Mutual funds . . . . . . . . . . . . -- 5.97 6.59 6.30
FHLB stock . . . . . . . . . . . . . 8.03 8.36 7.27 7.00
Interest-bearing deposits . . . . . 2.89 3.15 5.46 5.46

All interest-earning assets . . . . 6.56 6.06 6.69 7.15

Weighted average rate paid on:
Regular savings accounts . . . . . . 2.78 2.74 2.77 2.80
Money market deposit accounts . . . 3.07 3.10 3.83 3.82
Demand and NOW accounts . . . . . . 2.31 2.22 2.27 2.41
Certificate accounts . . . . . . . . 4.48 4.11 5.14 5.59
FHLB advances . . . . . . . . . . . -- 4.79 6.72 --

All interest-bearing liabilities . . 4.08 3.77 4.67 5.02

Interest rate spread (spread between
weighted average rate on all interest-
earning assets and all interest-
bearing liabilities) . . . . . . . . 2.48 2.29 2.02 2.13

Net interest margin (net interest income
as a percentage of average
interest-earning assets) . . . . . . 2.69 2.54 2.40 2.46

</TABLE>
26

<PAGE>
The following table sets forth the effects of changing rates and
volumes on the interest income and interest expense of the Savings Bank.
Information is provided with respect: (i) to effects attributable to changes in
volume (changes in volume multiplied by prior rate); (ii) to effects
attributable to changes in rate (changes in rate multiplied by prior volume);
and (iii) to changes in rate/volume (change in rate multiplied by change in
volume).
<TABLE><CAPTION>

Year Ended December 31, Year Ended December 31,
1993 Compared to Year 1994 Compared to Year
Ended December 31, 1994 Ended December 31, 1995
Increase (Decrease) Due to Increase (Decrease) Due to
------------------------------- -----------------------------
Rate/ Rate/
Rate Volume Volume Total Rate Volume Volume Total
---- ------ ------ ----- ---- ------ ------ -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income:
Loans receivable, net . . . $(457) $(353) $43 $(767) $ 21 $520 4 545
Mortgage-backed securities
available for sale . . . (63) 5 -- (58) 213 (290) (56) (133)
Investment securities
held to maturity . . . . (57) 90 (10) 23 -- -- -- --
Investment securities
available for sale . . . -- -- -- -- 51 (161) (16) (126)
Mutual funds . . . . . . . . -- -- 418 418 43 60 6 109
FHLB stock . . . . . . . . . 3 1 -- 4 (10) -- -- (10)
Interest-bearing deposits . 24 (191) (17) (184) 62 (20) (15) 27
------ ------ ------- ------ ---- ------ ---- ----

Total net change in income
on interest-earning assets (550) (448) 434 (564) 380 109 (77) 412
----- ----- --- ----- ---- ----- ---- ----

Interest-bearing liabilities:
Regular savings . . . . . . (4) 2 -- (2) 2 (36) -- (34)
MMDAs . . . . . . . . . . . 2 1 -- 3 53 (69) (16) (32)
Demand and NOW accounts . . (4) 5 -- 1 2 3 -- 5
Certificates of deposit . . (236) (169) 14 (391) 618 29 7 654
FHLB advances . . . . . . . -- -- 9 9 4 (9) (4) (9)
----- ----- ------- ----- ----- ----- ----- -----

Total net change in expense
on interest-bearing
liabilities . . . . . . . . (242) (161) 23 (380) 679 (82) (13) 584
------ ------ ----- ------ ----- ----- ----- -----

Net change in net interest
income . . . . . . . . . . $(308) $(287) $411 $(184) $(299) $191 $(64) $(172)
====== ====== ==== ====== ====== ==== ===== ======
</TABLE>

Asset and Liability Management

The Savings Bank's principal financial objective is to achieve long-term
profitability while reducing its exposure to fluctuatinginterest rates. The
Savings Bank has sought to reduce exposure of its earnings to changes in market
interest rates by attempting to manage the mismatch between asset and liability
maturities and interest rates. The principal element in achieving this
objective is to increase the interest-rate sensitivity of the Savings Bank's
interest-earning assets by retaining for its portfolio loans with interest rates
subject to periodic adjustment to market conditions and selling substantially
all of its fixed-rate one- to four-family mortgage loans. In addition, the
Savings Bank maintains an investment portfolio with adjustable-rate mortgage-
backed securities and laddered maturities in shorter-term debt securities. The
Savings Bank relies on retail deposits as its primary source of funds.
Management believes retail deposits, compared to brokered deposits, reduce the
effects of interest rate fluctuations because they generally represent a more
stable source of funds. As part of its interest rate risk management strategy,
the Savings Bank promotes transaction accounts and certificates of deposit with
terms up to four years.

<PAGE>

In order to encourage institutions to reduce their interest rate risk,
the OTS adopted a rule incorporating an interest rate risk ("IRR") component
into the risk-based capital rules. Using data from the Savings Bank's quarterly
reports to the OTS, the Savings Bank receives a report which measures interest
rate risk by modeling the change in Net Portfolio Value ("NPV") over a variety
of interest rate scenarios. This procedure for measuring interest rate risk was
developed by the OTS to replace the "gap" analysis (the difference between
interest-earning assets and interest-bearing liabilities that mature or reprice
within a specific time period). NPV is the present value of expected cash flows
from assets, liabilities and off-balance sheet contracts. The calculation is
intended to illustrate the change in NPV that will occur in the event of an
immediate change in interest rates of at least 200 basis points with no effect
given to any steps that management might take to counter the effect of that
interest rate movement. Under proposed OTS regulations, an institution with a
greater than "normal" level of interest rate risk will be subject to a deduction
from total capital for purposes of calculating its risk-based capital. An
institution with a "normal" level of interest rate risk is defined as one whose
"measured interest rate risk" is less than 2.0%. Institutions with assets of
less than $300 million and a risk-based capital ratio of more than 12.0% are
exempt. The Savings Bank meets these qualifications and therefore is exempt.
Assuming this proposed rule was in effect at December 31, 1995 and the Savings
Bank was not exempt from the rule, the Savings Bank's level of interest rate
risk would not have caused it to be treated as an institution with greater than
"normal" interest rate risk.

The following table is provided by the OTS and illustrates the change in
NPV at December 31, 1995, based on OTS assumptions, that would occur in the
event of an immediate change in interest rate, with no effect given to any steps
that management might take to counter the effect of that interest rate movement.

Net Portfolio as % of
Net Portfolio Value Portfolio Value of Assets
--------------------------------------------------
Basis Point ("bp")
Change in Rates $ Amount $ Change(1) % Change NPV Ratio(2) Change(3)
----------------- -------- ----------- -------- ------------ ---------
(Dollars in Thousands)

400 $7,037 $(2,972) (30)% 8.64% (291)bp
300 8,102 (1,908) (19) 9.76 (180)bp
200 8,995 (1,014) (10) 10.65 (91)bp
100 9,658 (351) (4) 11.27 (28)bp
0 10,010 -- -- 11.56 --
(100) 10,209 200 2 11.68 12bp
(200) 10,380 370 4 11.77 21bp
(300) 10,695 686 7 12.00 44bp
(400) 11,157 1,148 11 12.36 81bp

- --------------------
(1) Represents the increase (decrease) of the estimated NPV at the indicated
change in interest rates compared to the NPV assuming no change in interest
rates.
(2) Calculated as the estimated NPV divided by the portfolio value of total
assets ("PV").
(3) Calculated as the increase (decrease) of the NPV ratio assuming the
indicated change in interest rates over the estimated NPV ratio assuming no
change in interest rates.

28
<PAGE>

The following table is provided by the OTS and is based on the calculations
in the above table. It sets forth the IRR capital component that will be
deducted from risk-based capital in determining the level of risk-based capital.
At December 31, 1995, the change in NPV as a percentage of portfolio value of
total assets is negative 1.17%, which is less than negative 2.0%, indicating
that the Savings Bank has a "normal" level of interest rate risk.

At At At
December 31, September 30, December 31,
1995 1995 1994
--------------------------------------------

RISK MEASURES: 200 BP RATE SHOCK:

Pre-Shock NPV Ratio: NPV
as % of PV of Assets . . . . 11.56% 11.58% 9.66%
Exposure Measure: Post-Shock
NPV Ratio . . . . . . . . . . 10.65% 10.41% 7.46%
Sensitivity Measure: Change
in NPV Ratio . . . . . . . . (91)bp (117)bp (220)bp

CALCULATION OF CAPITAL COMPONENT:

Change in NPV as % of PV of
Assets . . . . . . . . . . . (1.17)% (1.45)% (2.46)%
Interest Rate Risk Capital
Component (1) . . . . . . . . -- -- --

- ------------------------
(1) No amounts are shown on the IRR capital component line because the Savings
Bank is exempt from the IRR capital component.

As with any method of measuring interest rate risk, certain shortcomings
are inherent in the method of analysis presented in the foregoing table. For
example, although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as ARM loans, have features which restrict
changes in interest rates on a short-term basis and over the life of the asset.
Further, in the event of a change in interest rates, expected rates of
prepayments on loans and early withdrawals from certificates could likely
deviate significantly from those assumed in calculating the table.

Liquidity and Capital Resources

The Savings Bank's primary sources of funds are customer deposits, proceeds
from principal and interest payments on and the sale of loans, maturing
securities and FHLB advances. While maturities and scheduled amortization of
loans are a predictable source of funds, deposit flows and mortgage prepayments
are greatly influenced by general interest rates, economic conditions and
competition.

The Savings Bank must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit withdrawals,
to satisfy financial commitments and to take advantage of investment
opportunities. The Savings Bank generally maintains sufficient cash and short-
term investments to meet short-term liquidity needs. At December 31, 1995, cash
and due from depository institutions totalled $2.9 million, or 3.4% of total
assets, and mutual funds and investment securities classified as available for
sale that matured in one year or less totalled $9.1 million, or 10.7% of total
assets. In addition, the Savings Bank maintains a credit facility with the
FHLB-Des Moines, which provides for immediately available advances.

The OTS requires a savings institution to maintain an average daily balance
of liquid assets (cash and eligible investments) equal to at least 5.0% of the
average daily balance of its net withdrawable deposits and short-term
borrowings. In addition, short-term liquid assets currently must constitute
1.0% of the sum of net withdrawable

<PAGE>
deposit accounts plus short-term borrowings. The Savings Bank's actual short-
and long-term liquidity ratios at December 31, 1995 were 11.6% and 14.9%,
respectively. The Savings Bank consistently maintains liquidity levels in
excess of regulatory requirements, and believes this is an appropriate strategy
for proper asset and liability management.

The primary investing activity of the Savings Bank is the origination and
purchase of mortgage loans. During years ended December 31, 1993, 1994 and
1995, the Savings Bank originated loans in the amounts of $19.6 million, $14.3
million, and $13.4 million, and purchased loans in the amounts of $2.2 million,
$3.3 million and $4.2 million, respectively. At December 31, 1995, the Savings
Bank had loan commitments totalling $1.9 million and undisbursed loans in
process totalling $1.0 million. The Savings Bank anticipates that it will have
sufficient funds available to meet its current loan origination commitments.
Certificates of deposit that are scheduled to mature in less than one year from
December 31, 1995 totalled $38.3 million. Historically, the Savings Bank has
been able to retain a significant amount of its deposits as they mature. From
December 31, 1991 to December 31, 1995, deposits at the Savings Bank decreased
from $86.0 million to $75.9 million. Deposits decreased during this period as
the Savings Bank faced significant competition from other financial institutions
in its market area and as customers sought higher yields in non-traditional
deposit vehicles, such as annuities, mutual funds and municipal bonds in
response to the low interest rate environment and the rising stock market. In
addition, in light of its high liquidity, the Savings Bank has not aggressively
sought to attract deposits by increasing rates paid on deposits. The Savings
Bank believes that this strategy helps it to maintain a cost of funds comparable
to that of its peers. To help reduce its cost of funds, the Savings Bank offers
checking and savings accounts, which constituted 21.6% of total deposits at
December 31, 1995. Because of its high level of liquidity, the Savings Bank
does not believe that a moderate decrease in deposits will have a significant
impact on its financial condition and results of operations. The Savings Bank
may determine to attempt to avoid decreases in deposits in the future by
matching or exceeding rates offered by its competitors.

The Savings Bank is required to maintain specific amounts of capital
pursuant to OTS requirements. As of December 31, 1995, the Savings Bank was in
compliance with all regulatory capital requirements which were effective as of
such date with tangible, core and risk-based capital ratios of 11.26%, 11.26%
and 27.08%, respectively. For a detailed discussion of regulatory capital
requirements, see "REGULATION -- Federal Regulation of Savings Associations --
Capital Requirements." See also "HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE."

Impact of New Accounting Pronouncements and Regulatory Policies

Accounting by Creditors for Impairment of a Loan. In May 1993, the
Financial Accounting Standards Board ("FASB") issued SFAS No. 114, "Accounting
by Creditors for Impairment of a Loan," which became effective for the Savings
Bank for the fiscal year beginning January 1, 1995. This statement requires a
lender to consider a loan to be impaired if the lender believes it is probable
that it will be unable to collect all principal and interest due according to
the contractual terms of the loan. If a loan is impaired, the lender will be
required to record a loan valuation allowance equal to the present value of the
estimated future cash flows discounted at the loan's effective rate or at the
loan's observable market price or fair value of the collateral. This accounting
change will significantly change the accounting by lenders presently allowed
under SFAS No. 15. In October 1994, FASB issued SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures," which
amends SFAS No. 114 to allow a creditor to use existing methods for recognizing
interest income on impaired loans and eliminates the income recognition
provisions in SFAS No. 114. SFAS No. 118 also requires disclosure of certain
information about the recorded investment in impaired loans and how the creditor
recognizes interest income related to impaired loans. SFAS No. 118 became
effective for the Savings Bank for the fiscal year beginning January 1, 1995.
The adoption of these statements did not have a material effect on the Savings
Bank's financial condition or results of operations at December 31, 1995.

Accounting for Employee Stock Ownership Plans. In November 1993, the
American Institute of Certified Public Accountants issued SOP 93-6, which
requires an employer to record compensation expense in an amount

<PAGE>
equal to the fair value of shares committed to be released to employees from an
employee stock ownership plan and to exclude unallocated shares from earnings
per share computations. The effect of SOP 93-6 on net income and book value per
share in 1996 and future periods cannot be predicted due to the uncertainty of
the fair value of the shares at the time they will be committed to be released.

Disclosure of Certain Significant Risks and Uncertainties. In December
1994, the Accounting Standards Executive Committee issued SOP 94-6, "Disclosure
of Certain Significant Risks and Uncertainties." This SOP applies to financial
statements prepared in conformity with GAAP by all nongovernmental entities.
The disclosure requirements in SOP 94-6 focus primarily on risks and
uncertainties that could significantly affect the amounts reported in the
financial statements in the near-term functioning of the reporting entity. The
risks and uncertainties discussed in SOP 94-6 stem from the nature of the
entity's operations, from the necessary use of estimates in the preparation of
the entity's financial statements and from significant concentrations in certain
aspects of the entity's operations. SOP 94-6 is effective for financial
statements issued for fiscal years ending after December 15, 1995 and did not
have a material impact on the financial condition or results of operations of
the Savings Bank.

Accounting for the Impairment of Long-Lived Assets. In March 1995, the
FASB issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. The statement does not apply to financial instruments, long-term
customer relationships of a financial institution (core deposits), mortgage and
other servicing rights and deferred tax assets. SFAS No. 121 requires the
review of long-lived assets and certain identifiable intangibles for impairment
whenever events or changes in circumstances include, for example, a significant
decrease in market value of an asset, a significant change in use of an asset,
or an adverse change in a legal factor that could effect the value of an asset.
If such an event occurs and it is determined that the carrying value of the
asset may not be recoverable, an impairment loss should be recognized as
measured by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Fair value can be determined by a current transaction,
quoted market prices or present value of estimated expected future cash flows
discounted at the appropriate rate. The statement is effective for fiscal years
beginning after December 15, 1995. The Holding Company does not anticipate that
implementation of SFAS No. 121 will have a material impact on its results of
operations or financial position.

Accounting for Mortgage Servicing Rights. In May 1995, the FASB issued
SFAS No. 122, "Accounting for Mortgage Servicing Rights." SFAS No. 122
eliminates distinctions between servicing rights that were purchased and those
that were retained upon the sale of loans. The statement requires mortgage
servicers to recognize as separate assets rights to service loans, no matter how
the rights were acquired. Institutions who sell loans and retain the servicing
rights will be required to allocate the total cost of the loans to servicing
rights and loans based on their relative fair values if that value can be
estimated. SFAS No. 122 is effective for fiscal years beginning after December
15, 1995. Furthermore, SFAS No. 122 requires that all capitalized mortgage
servicing rights be periodically evaluated for impairment based upon the current
fair value of these rights. Management believes that the implementation of this
statement will not have a material effect on the Savings Bank's financial
condition or results of operations.

Accounting for Stock-Based Compensation. In October 1995, the FASB issued
SFAS No. 123, "Accounting for Stock-Based Compensation," establishing financial
accounting and reporting standards for stock-based employee compensation plans.
This statement encourages all entities to adopt a new method of accounting to
measure compensation cost of all employee stock compensation plans based on the
estimated fair value of the award at the date it is granted. Companies are,
however, allowed to continue to measure compensation cost for those plans using
the intrinsic value based method of accounting, which generally does not result
in compensation expense recognition for most plans. Companies that elect to
remain with the existing accounting method are required to disclose in a
footnote to the financial statements pro forma net income and, if presented,
earnings per share, as if this statement had been adopted. The accounting
requirements of this statement are effective for transactions entered into in
fiscal years that begin after December 15, 1995; however, companies are required
to disclose information for

<PAGE>
awards granted in their first fiscal year beginning after December 15, 1994.
Management of the Savings Bank has not completed an analysis of the potential
effects of this statement on its financial condition or results of operations.

Effect of Inflation and Changing Prices

The consolidated financial statements and related financial data presented
herein have been prepared in accordance with GAAP, which require the measurement
of financial position and operating results in terms of historical dollars
without considering the change in the relative purchasing power of money over
time due to inflation. The primary impact of inflation is reflected in the
increased cost of the Savings Bank's operations. Unlike most industrial
companies, virtually all the assets and liabilities of a financial institution
are monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than do general
levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services.

RECENT DEVELOPMENTS

The following tables set forth selected financial condition data for the
Savings Bank at December 31, 1995 and March 31, 1996, selected operating data
for the Savings Bank for the three months ended March 31, 1995 and 1996 and
selected financial ratios for the Savings Bank at and for the three months ended
March 31, 1995 and 1996. The selected financial and operating data and
financial ratios at and for the three months ended March 31, 1995 and 1996 are
derived from the unaudited consolidated financial statements of the Savings
Bank, which, in the opinion of management, reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation. This
information should be read in conjunction with the Consolidated Financial
Statements and Notes thereto presented elsewhere in this Prospectus.

At At
December 31, March 31
1995 1996
-------------- ------------
(Unaudited)
(In Thousands)
FINANCIAL CONDITION DATA:
Assets . . . . . . . . . . . . . . . . $85,390 $86,819
Loans receivable, net(1) . . . . . . . 52,611 52,886
Mortgage-backed securities . . . . . . 13,926 13,527
Cash and due from depository
institutions, mutual funds
and investment securities . . . . . . 14,400 16,852
Deposits . . . . . . . . . . . . . . . 75,931 76,788
Borrowings . . . . . . . . . . . . . . -- --
Retained earnings,
substantially restricted . . . . . . 9,180 9,259

<PAGE>

Three Months
Ended March 31,
-------------------
1995 1996
---- ----
(Unaudited)
(In Thousands)
OPERATING DATA:
Interest income . . . . . . . . . . . . $1,364 $1,490
Interest expense . . . . . . . . . . . 816 946
------- ------
Net interest income . . . . . . . . . . 548 544
Provision (benefit) for loan losses . . 70 (5)
------- -------
Net interest income after provision
(benefit) for loan losses . . . . . . 478 549
Noninterest income (loss) . . . . . . . (81) 111
Noninterest expense . . . . . . . . . . 465 472
------ ------
Income before federal income tax
provision (benefit) . . . . . . . . . (68) 188
Provision (benefit) for income taxes . (22) 54
------ -------
Net income (loss) . . . . . . . . . . . $ (46) $ 134
====== ======

At or For the
Three Months
Ended March 31,
---------------------
1995 1996
---- ----

KEY OPERATING RATIOS:
Performance Ratios(2):
Return on assets (3) . . . . . . . . . (0.21)% 0.62%
Return on retained earnings (4) . . . (2.17) 5.81
Retained earnings-to-assets ratio (5) 9.65 10.71
Interest rate spread (6) . . . . . . . 2.43 2.39
Net interest margin (7) . . . . . . . 2.64 2.68
Average interest-earning assets to
average interest-bearing liabilities 105.31 106.26
Noninterest expense as a
percent of average total assets . . 2.12 2.19

Asset Quality Ratios:
Nonaccrual and 90 days or more past due loans
as a percent of total loans, net . . 0.00 0.04
Nonperforming assets as a percent
of total assets . . . . . . . . . . 0.51 0.19
Allowance for losses as a percent
of total assets . . . . . . . . . . 0.31 0.36
Allowance for losses as a percent of
nonperforming loans . . . . . . . . 0.00 1,422.73
Net charge-offs to average
outstanding loans . . . . . . . . . 0.00 0.00

- ------------------
(1) Does not include loans held for sale.
(2) Ratios for the three-month periods are annualized.
(3) Net income divided by average total assets.
(4) Net income divided by average retained earnings.
(5) Average retained earnings divided by average total assets.
(6) Difference between weighted average yield on interest-earning assets
and weighted average rate on interest-bearing liabilities.
(7) Net interest income as a percentage of average interest-earning
assets.

33
<PAGE>
Regulatory Capital

The table below sets forth the Savings Bank's capital position
relative to its OTS capital requirements at March 31, 1996.

At March 31, 1996
-----------------------------------
Percent of Adjusted
Amount Total or Risk-Weighted Assets
------ ------------------------------
(In Thousands)

Tangible capital level . . . . $ 9,831 11.21%
Tangible capital requirement . 1,315 1.50
------- ------
Excess . . . . . . . . . . $ 8,516 9.71%
======= ======

Core capital level . . . . . . $ 9,831 11.21%
Core capital requirement . . . 2,630 3.00
------- ------
Excess . . . . . . . . . . $ 7,201 8.21%
======= ======

Risk-based capital level . . . $10,139 26.68%
Risk-based capital requirement 3,040 8.00
-------- ------
Excess . . . . . . . . . . $ 7,099 18.68%
======== ======

Comparison of Financial Condition at December 31, 1995 and March 31, 1996

The Savings Bank's total assets increased by $1.4 million from December
31, 1995 to $86.8 million at March 31, 1996. Mortgage-backed securities
decreased by $399,000 from December 31, 1995 to March 31, 1996 as a result of
principal repayments. Cash, mutual funds and investment securities increased
$2.5 million as a result of the sale of approximately $1.3 million of loans to
the Federal Home Loan Mortgage Corporation ("FHLMC") and the sale of $500,000 of
participation interests in a commercial real estate loan. Loans receivable
increased by $275,000 from December 31, 1995 to March 31, 1996. Deposits
increased by $857,000 to $76.8 million at March 31, 1996 primarily due to a
single temporary deposit just prior to the end of the quarter, most of which was
subsequently withdrawn. Retained earnings increased $79,000 to $9.3 million at
March 31, 1996 as a result of the addition of net earnings for the quarter which
were partially offset by an increase in unrealized loss on securities available
for sale.

Nonperforming Assets and Delinquencies

Nonperforming loans decreased from $88,000 at December 31, 1995 to
$22,000 at March 31, 1996 as one loan was paid off and another was brought
current. At March 31, 1996, nonperforming loans consisted of two loans secured
by residential properties, and the allowance for loan losses was $313,000, or
0.59% of total loans. Real estate owned decreased from $162,000 at December 31,
1995 to $144,000, or 0.17% of total assets, at March 31, 1996, as the Savings
Bank completed the sale of two single family homes in Texas. At March 31, 1996,
the remaining real estate owned consisted of eight single family homes in Texas
and one small office building in Jefferson City, all of which were under
contract for sale.

Comparison of Operating Results for the Three Months Ended March 31, 1995 and
1996

Net Income. Net income improved from a loss of $46,000 for the three
months ended March 31, 1995 to net income of $134,000 for the three months ended
March 31, 1996. The increase in net income was due primarily to a decrease in
the provision for loan losses and a loss of $128,000 on the sale of securities
in 1995 with no comparable transaction in 1996.

<PAGE>
Net Interest Income. Net interest income decreased by $4,000 from
$548,000 for the three months ended March 31, 1995 to $544,000 for the three
months ended March 31, 1996, as the Savings Bank's rate paid on interest-bearing
liabilities increased faster than its yield on interest-earning assets.
Interest income increased by $126,000, or 9.2%, from $1.4 million for the three
months ended March 31, 1995 to $1.5 million for the comparable period in 1996.
The increase was the result of ARM loans adjusting upward and of recent loan
purchases and originations with interest rates higher than the Savings Bank's
average yield on interest earning assets. Interest expense increased $130,000,
or 15.9%, from $816,000 for the three months ended March 31, 1995 to $946,000
for the three months ended March 31, 1996. The increase in interest expense was
primarily the result of the increase in market rates of interest and of a slight
lengthening of maturities. The Savings Bank's interest rate spread decreased
from 2.43% for the three months ended March 31, 1995 to 2.39% for the same
period in 1996.

Provision for Loan Losses. The Savings Bank's provision for loan losses
was $70,000 for the three months ended March 31, 1995 compared to a recovery of
$5,000 for the three months ended March 31, 1996. There were no charge-offs or
recoveries during the three months ended March 31, 1996. During the first
quarter of 1995, the Savings Bank adjusted the timing of its loan loss provision
so that the provision is taken during the quarter to which it relates rather
than during the subsequent quarter. As a result, the provision for loan losses
for the three months ended March 31, 1995 includes both the provision related to
the three months ended December 31, 1994 and the provision related to the three
months ended March 31, 1995. For the three months ended March 31, 1996,
management's methodology for the determination of provision for loan losses
produced a decrease in the allowance for loan losses as a result of the decrease
in nonperforming loans.

Noninterest Income. Noninterest income improved from a loss of $81,000
for the three months ended March 31, 1995 to a gain of $111,000 for the three
months ended March 31, 1996. During the three months ended March 31, 1995, the
Savings Bank incurred a net loss of $128,000 on the sale of securities with no
comparable transaction in 1996. During the three months ended March 31, 1996,
the Savings Bank realized a gain of $54,000 on the sale of real estate owned
with no comparable gain in 1995. The remaining elements of noninterest income
were comparable between the periods.

Noninterest Expense. Noninterest expense increased by $7,000 from
$465,000 for the three months ended March 31, 1995 to $472,000 for the three
months ended March 31, 1996 as expenses were comparable between the periods.

Income Taxes. The provision for income taxes increased from a tax
benefit for the three months ended March 31, 1995 to a provision of $54,000 as a
result of a higher level of taxable earnings.

BUSINESS OF THE HOLDING COMPANY

General

The Holding Company was organized as a Delaware business corporation at
the direction of the Savings Bank in January 1996 for the purpose of becoming a
holding company for the Savings Bank upon completion of the Conversion. Upon
completion of the Conversion, the Savings Bank will be a wholly-owned subsidiary
of the Holding Company.

Business

Prior to the Conversion, the Holding Company will not engage in any
significant operations. Upon completion of the Conversion, the Holding
Company's sole business activity will be the ownership of the stock of the
Savings Bank. In the future, the Holding Company may acquire or organize other
operating subsidiaries, although there are no current plans, arrangements,
agreements or understandings, written or oral, to do so.

<PAGE>
Initially, the Holding Company will neither own nor lease any property but
will instead use the premises, equipment and furniture of the Savings Bank with
the payment of appropriate rental fees, as required by applicable law.

Since the Holding Company will only hold the capital stock of the Savings
Bank, the competitive conditions applicable to the Holding Company will be the
same as those confronting the Savings Bank. See "BUSINESS OF THE SAVINGS BANK -
- - Competition."

BUSINESS OF THE SAVINGS BANK

General

The Savings Bank operates as a community oriented financial institution and
is devoted to serving the needs of its customers in its market area. The
Savings Bank's business consists primarily of attracting deposits from the
general public and using those funds to originate and purchase real estate
loans.

Market Area

The Savings Bank conducts operations in central Missouri through its main
office in Jefferson City, Missouri (Cole County) and branch offices located in
the cities of Jefferson City (Cole County), California (Moniteau County), Tipton
(Moniteau County) and St. Robert (Pulaski County). Jefferson City is the state
capital of Missouri, resulting in a significant concentration of government
employment and an historically stable economy for the region. Moniteau County
is a more rural county with a much lower population base and overall smaller
economy. The Savings Bank's St. Robert branch is strategically located near
Fort Leonard Wood, a major military installation in south-central Missouri. The
counties of Cole, Moniteau and Pulaski represent the Savings Bank's market area
for deposit generation and lending activity as most of its depositors live in
these areas and the majority of the Bank's loans are secured by property in
these counties. Approximately two-thirds of the Savings Bank's deposits are
located in Jefferson City.

In general, the Savings Bank serves a limited growth market area with a
relatively small population base. The Cole County economy is based primarily on
the presence of the state capital and government, which has resulted in a high
level of state government employees. Manufacturing and services also constitute
a significant portion of the Cole County economy, with wholesale/retail trade,
finance, insurance, real estate and agriculture also contributing. Conversely,
Moniteau County is a much more rural county containing a number of small towns
with a historical agriculture base, although a large percentage of residents
also commute into Jefferson City or nearby Columbia or Sedalia for employment.
Pulaski County's economy is dominated by the operations of Fort Leonard Wood, a
major military installation and training center for all branches of the
military. In general, the economy of the Savings Bank's market area has been
relatively stable over the past decade.

The Savings Bank faces competition from many financial institutions for
deposits and loan originations. See "-- Competition" and "RISK FACTORS --
Dependence on Local Economy and Competition Within Market Area."

Lending Activities

General. The principal lending activity of the Savings Bank is the
origination and purchase of conventional mortgage loans for the purpose of
purchasing, constructing or refinancing owner-occupied, one- to four-family
residential property. To a lesser extent, the Savings Bank also originates and
purchases multi-family, commercial real estate, construction, land and consumer
and other loans. The Savings Bank's net loans receivable totalled $52.6 million
at December 31, 1995, representing 61.6% of consolidated total assets.

36
<PAGE>
Loan Portfolio Analysis. The following table sets forth the composition of
the Savings Bank's loan portfolio by type of loan at the dates indicated. The
Savings Bank had no concentration of loans exceeding 10% of total gross loans
other than as disclosed below.

At December 31,
--------------------------------------------------------
1993 1994 1995
------------------ ---------------- -----------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
(Dollars in Thousands)
Mortgage loans:
One- to four-family $36,249 88.09% $40,016 86.45% $43,609 80.79%
Multi-family . . . 2,017 4.90 2,162 4.67 3,584 6.64
Commercial . . . . 1,936 4.70 2,498 5.40 3,781 7.00
Construction . . . -- -- 650 1.40 1,720 3.19
Land . . . . . . . 101 .25 31 .07 159 .29
-------- ------- -------- ------- ------- ------
Total mortgage
loans . . . . 40,303 97.94 45,357 97.99 52,853 97.91
------- ------ ------- ------ ------ -----

Consumer and
other loans . . . 848 2.06 931 2 .01 1,128 2.09
-------- ------- -------- ------- ------- ------
Total loans . . 41,151 100.00% 46,288 100.00% 53,981 100.00%
------- ====== ------- ====== ======= ======

Less:
Loans in process . 260 1,235 1,049
Deferred loan
fees and
discounts . . . . 9 5 1
Allowance for loan
losses . . . . . 208 195 319
-------- -------- --------
Total loans
receivable, net $40,674 $44,853 $52,612
======= ======= =======

Residential Real Estate Lending. The primary lending activity of the
Savings Bank is the origination of mortgage loans to enable borrowers to
purchase existing one to four-family homes. The Savings Bank also originates
home equity loans and second mortgages secured by one- to four-family homes. At
December 31, 1995, $43.6 million, or 80.8% of the Savings Bank's total gross
loan portfolio, consisted of loans secured by one- to four-family residences.
Of this amount, $2.3 million were home equity or second mortgage loans. The
Savings Bank presently originates both ARM loans and fixed-rate mortgage loans.
The Savings Bank' loans are generally underwritten and documented in accordance
with the guidelines established by the FHLMC. The Savings Bank generally
retains in its portfolio all of the ARM loans that it originates and sells to
FHLMC the fixed-rate mortgage loans that it originates. Generally, the Savings
Bank sells whole loans on a servicing-retained basis. All loans are sold
without recourse. The Savings Bank's decision to hold or sell loans is based on
its asset/liability management policies and goals and the market conditions for
mortgages. Currently, fixed-rate residential loans with yields greater than
7.5% and terms of 15 years or less are retained in the Savings Bank's loan
portfolio to meet the Savings Bank's asset/liability management objectives. See
"-- Lending Activities -- Loan Originations, Sales and Purchases." At December
31, 1995, $43.5 million, or 80.6%, of the Savings Bank's total gross loans were
subject to periodic interest rate adjustments.

The Savings Bank offers ARM loans at rates and terms competitive with
market conditions. Substantially all of the ARM loans originated by the Savings
Bank meet the underwriting standards of FHLMC even though the Savings Bank
originates ARM loans primarily for its own portfolio. The Savings Bank offers
several ARM products that adjust annually after an initial period ranging from
one to five years. Certain ARM loans are originated with an option to convert
the loan to a 30-year fixed-rate loan at the then prevailing market interest
rate. These ARM products utilize the weekly average yield on one-year or three-
year U.S. Treasury securities adjusted to a constant maturity ("CMT") of one or
three years plus a margin of 2.75% to 3.0%. ARM loans held in the Savings
Bank's portfolio do not permit negative amortization of principal and carry no
prepayment restrictions. Prior to March 1, 1995, when the Savings Bank switched
from a state mutual charter to a federal mutual charter, the Savings Bank
offered ARM loans that were based on the Savings Bank's cost of funds. The
Savings Bank currently offers ARM

37
<PAGE>
loans with initial rates below those which would prevail under the foregoing
computations, determined by the Savings Bank based on market factors and
competitive rates for loans having similar features offered by other lenders for
such initial periods. At December 31, 1995, the initial interest rate on ARM
loans offered by the Savings Bank ranged from 1.0% to 1.625% below the fully
indexed rate for such loans. The periodic interest rate cap (the maximum amount
by which the interest rate may be increased or decreased in a given period) on
the Savings Bank's ARM loans is generally 1.0% to 2.0% per adjustment period and
the lifetime interest rate cap is generally 5.0% to 6.0% over the initial
interest rate of the loan. Borrower demand for ARM loans versus fixed-rate
mortgage loans is a function of the level of interest rates, the expectations of
changes in the level of interest rates and the difference between the initial
interest rates and fees charged for each type of loan. The relative amount of
fixed-rate mortgage loans and ARM loans that can be originated at any time is
largely determined by the demand for each in a competitive environment.

The Savings Bank also offers ARM loans for non-owner-occupied one- to
four-family homes. The rates on such loans are generally 25 to 125 basis points
higher than for a comparable loan for an owner-occupied residence and adjust to
a rate equal to 2.875% to 3.125% above the one-year or three-year CMT index.
Loans secured by non-owner-occupied residences generally involve greater risks
than loans secured by owner-occupied residences. Payments on loans secured by
such properties are often dependent on successful operation or management of the
properties. In addition, repayment of such loans may be subject to a greater
extent to adverse conditions in the real estate market or the economy. The
Savings Bank requires that borrowers with loans secured by non-owner-occupied
homes submit annual financial statements. See "RISK FACTORS -- Certain Lending
Risks."

The terms and conditions of the ARM loans offered by the Savings Bank,
including the index for interest rates, may vary from time to time. The Savings
Bank believes that the adjustment features of its ARM loans provide flexibility
to meet competitive conditions as to initial rate concessions while preserving
the Savings Bank's objectives by limiting the duration of the initial rate
concession.

The retention of ARM loans in the Savings Bank's loan portfolio helps
reduce the Savings Bank's exposure to changes in interest rates. There are,
however, unquantifiable credit risks resulting from the potential of increased
costs due to changed rates to be paid by the customer. It is possible that
during periods of rising interest rates the risk of default on ARM loans may
increase as a result of repricing and the increased payments required by the
borrower. See "RISK FACTORS -- Potential Adverse Impact of Changes in Interest
Rates." Furthermore, because the ARM loans originated by the Savings Bank
currently provide, as a marketing incentive, for initial rates of interest below
the rates which would apply were the adjustment index used for pricing initially
(discounting), these loans are subject to increased risks of default or
delinquency. To lessen this risk, borrowers are approved based on the lower of
the fully indexed rate or 2.0% above the initial rate. Another consideration is
that although ARM loans allow the Savings Bank to increase the sensitivity of
its asset base to changes in the interest rates, the extent of this interest
sensitivity is limited by the periodic and lifetime interest rate adjustment
limits. Because of these considerations, the Savings Bank has no assurance that
yields on ARM loans will be sufficient to offset increases in the Savings Bank's
cost of funds.

While single-family residential real estate loans are normally originated
with 15 to 30 year terms, such loans typically remain outstanding for
substantially shorter periods. This is because borrowers often prepay their
loans in full upon sale of the property pledged as security or upon refinancing
the original loan. In addition, substantially all mortgage loans in the Savings
Bank's loan portfolio contain due-on-sale clauses providing that the Savings
Bank may declare the unpaid amount due and payable upon the sale of the property
securing the loan. Typically, the Savings Bank enforces these due-on-sale
clauses to the extent permitted by law and as business judgment dictates. Thus,
average loan maturity is a function of, among other factors, the level of
purchase and sale activity in the real estate market, prevailing interest rates
and the interest rates payable on outstanding loans.

The Savings Bank generally requires title insurance insuring the status of
its lien or a title abstract and acceptable attorney's opinion on all loans
where real estate is the primary source of security. The Savings Bank also

<PAGE>
requires that fire and casualty insurance (and, if appropriate, flood insurance)
be maintained in an amount at least equal to the outstanding loan balance.

The Savings Bank's lending policies generally limit the maximum loan-to-
value ratio on mortgage loans secured by owner-occupied properties to 95% of the
lesser of the appraised value or the purchase price, with the condition that
private mortgage insurance is generally required on loans with loan-to-value
ratios greater than 80%. The maximum loan-to-value ratio on mortgage loans
secured by non-owner-occupied properties is generally 80%.

Multi-Family Residential and Commercial Real Estate Lending. The Savings
Bank has historically engaged in a moderate amount of multi-family residential
and commercial real estate lending. At December 31, 1995, the Savings Bank's
loan portfolio included $3.6 million in multi-family real estate loans and $3.8
million in commercial real estate loans.

Multi-family and commercial real estate loans originated by the Savings
Bank are predominately adjustable rate loans and are generally for terms of 15
years. The maximum loan-to-value ratio for multi-family and commercial real
estate loans is generally 75%. Multi-family loans generally are secured by
small to medium sized projects. The Savings Bank's commercial real estate loan
portfolio generally consists of loans secured by small office buildings and
small businesses, most of which are located in Missouri. The Savings Bank
intends to increase its activity in this lending area, primarily in the local
Jefferson City market area. The Savings Bank intends to focus on extending
loans to borrowers who have secured leases with the state government, which the
Savings Bank believes reduces the risk inherent in these types of loans. As
market conditions permit, the Savings Bank intends to sell participation
interests in the larger multi-family and commercial real estate loans that it
originates. The Savings Bank has also participated in multi-family and
commercial real estate loans with other Missouri financial institutions on in-
state properties and plans to continue this practice in the future. Appraisals
on properties which secure multi-family and commercial real estate loans are
performed by an independent appraiser engaged by the Savings Bank before the
loan is made. Underwriting of multi-family loans includes a thorough analysis
of the cash flows generated by the real estate to support the debt service and
the financial resources, experience, and income level of the borrowers. Annual
operating statements on each multi-family and commercial real estate loan are
required and reviewed by management. Multi-family and commercial real estate
loans and loan participations that are purchased by the Savings Bank are
underwritten to the Savings Bank's standards.

Multi-family and commercial real estate lending affords the Savings Bank
an opportunity to receive interest at rates higher than those generally
available from one- to four-family residential lending. However, loans secured
by such properties usually are greater in amount, more difficult to evaluate and
monitor and, therefore, involve a greater degree of risk than one- to four-
family residential mortgage loans. Because payments on loans secured by multi-
family and commercial properties are often dependent on the successful operation
and management of the properties, repayment of such loans may be affected by
adverse conditions in the real estate market or the economy. The Savings Bank
seeks to minimize these risks by limiting the maximum loan-to-value ratio to 75%
and strictly scrutinizing the financial condition of the borrower, the quality
of the collateral and the management of the property securing the loan. The
Savings Bank also obtains loan guarantees from financially capable parties based
on a review of personal financial statements.

Construction Lending. The Savings Bank originates residential
construction loans to individuals and, occasionally, to builders, to construct
one- to four-family homes. In addition, from time to time the Savings Bank
originates or participates in construction loans for multi-family or commercial
properties. At December 31, 1995, the Savings Bank's construction loan
portfolio totalled $1.7 million, or 3.2% of total gross loans. At such date,
the Savings Bank's construction loan portfolio consisted of 12 residential
construction loans totalling $659,000, one multi-family construction loan
totalling $360,000 and one commercial real estate construction loan totalling
$700,000.

Construction loans are generally made in connection with permanent
financing. Construction loans that are not made in connection with the granting
of permanent financing on the property are for terms of six to 12 months.

39
<PAGE>
Construction lending is considered to involve a higher level of risk as
compared to one- to four-family residential lending because of the inherent
difficulty in estimating both a property's value at completion of the project
and the estimated cost of the project. The nature of these loans is such that
they are more difficult to evaluate and monitor. If the estimate of value
proves to be inaccurate, the Savings Bank may be confronted at, or prior to, the
maturity of the loan, with a project the value of which is insufficient to
assure full repayment. The Savings Bank attempts to minimize these risks by
limiting the maximum loan-to-value ratio on construction loans to 85% for
residential construction loans and 80% for non-residential construction loans
and by conditioning disbursements on the presentation of itemized bills and an
inspection of the construction site. For non-residential construction loans,
the Savings Bank generally obtains personal guarantees and requires borrowers to
submit annual financial statements.

Land Lending. The Savings Bank occasionally originates loans for the
acquisition of land upon which the purchaser can then build or upon which the
purchaser makes improvements necessary to build upon or to sell as improved
lots. At December 31, 1995, the Savings Bank's land loan portfolio totalled
$159,000 and consisted of two loans. Land loans originated by the Savings Bank
have a term to maturity of up to three years and are based on a ten-year
amortization schedule.

Loans secured by undeveloped land or improved lots involve greater risks
than one- to four-family residential mortgage loans because such loans are more
difficult to evaluate. If the estimate of value proves to be inaccurate, in the
event of default and foreclosure the Savings Bank may be confronted with a
property the value of which is insufficient to assure full repayment. The
Savings Bank attempts to minimize this risk by limiting the maximum loan-to-
value ratio on land loans to 65%.

Consumer and Other Lending. Consumer lending traditionally has been a
small part of the Savings Bank's business. Consumer loans generally have
shorter terms to maturity and higher interest rates than mortgage loans. The
Savings Bank's consumer and other loans consist primarily of deposit account
loans, unsecured loans and automobile loans. The Savings Bank has in the past
originated student loans, though it ceased offering such loans in 1993. At
December 31, 1995, the Savings Bank's consumer and other loans totalled
approximately $1.1 million, or 2.1%, of the Savings Bank's total gross loans.
The Savings Bank makes deposit account loans with the account pledged as
collateral to secure the loan. Loans may be made up to 90% of the account
balance. Deposit account loans are payable in monthly payments of principal and
interest or in a single payment. At December 31, 1995, total loans on deposit
accounts amounted to $571,000. The Savings Bank makes unsecured loans to
individuals for personal, family or household purposes up to a maximum of
$5,000. Generally, unsecured loans are made to current customers with an
established relationship with the Savings Bank. Such loans may be for a term of
up to 24 months. At December 31, 1995, unsecured loans totalled $480,000.

Consumer loans entail greater risk than do residential mortgage loans,
particularly in the case of consumer loans that are unsecured or secured by
rapidly depreciating assets such as automobiles. In such cases, any repossessed
collateral for a defaulted consumer loan may not provide an adequate source of
repayment of the outstanding loan balance as a result of the greater likelihood
of damage, loss or depreciation. The remaining deficiency often does not
warrant further substantial collection efforts against the borrower beyond
obtaining a deficiency judgment. In addition, consumer loan collections are
dependent on the borrower's continuing financial stability, and thus are more
likely to be adversely affected by job loss, divorce, illness or personal
bankruptcy. Furthermore, the application of various federal and state laws,
including federal and state bankruptcy and insolvency laws, may limit the amount
that can be recovered on such loans. At December 31, 1995, the Savings Bank had
no material delinquencies in its consumer loan portfolio.

40
<PAGE>

Maturity of Loan Portfolio. The following table sets forth certain
information at December 31, 1995 regarding the dollar amount of principal
repayments becoming due during the periods indicated for loans. Demand
loans, loans having no stated schedule of repayments and no stated maturity,
and overdrafts are reported as becoming due within one year. The table
does not include any estimate of prepayments which significantly shorten
the average life of all loans and may cause the Savings Bank's actual
repayment experience to differ from that shown below.
<TABLE><CAPTION>
After After After
One Year 3 Years 5 Years
Within Through Through Through Beyond
One Year 3 Years 5 Years 10 Years 10 Years Total
-------- ------- ------- -------- -------- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
One- to four-family . . . . $ 323 $ 745 $1,000 $6,592 $34,949 $43,609
Multi-family . . . . . . . -- 1,173 861 -- 1,550 3,584
Commercial . . . . . . . . 15 257 529 1,632 1,349 3,782
Construction . . . . . . . 68 -- -- -- 1,652 1,720
Land . . . . . . . . . . . -- -- -- -- 159 159
Consumer and other loans . . 982 98 33 14 -- 1,127
------ ------ ------- ------- --------- --------
Total gross loans . . . . $1,388 $2,273 $2,423 $8,238 $39,659 $53,981
====== ====== ====== ====== ======= =======

The following table sets forth the dollar amount of all loans
due after December 31, 1996, which have fixed interest rates and have floating
or adjustable interest rates.

Fixed- Floating- or
Rates Adjustable-Rates Total
------- ---------------- -----
(In Thousands)

Mortgage loans:
One- to four-family . . . . $5,833 $37,453 $43,286
Multi-family . . . . . . . 254 3,330 3,584
Commercial . . . . . . . . 1,962 1,805 3,767
Construction . . . . . . . 1,652 -- 1,652
Land . . . . . . . . . . . -- 159 159
Consumer and other loans . . 123 23 146
------- --------- --------
Total gross loans . . . . $9,824 $42,770 $52,594
====== ======= =======
</TABLE>
41

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

Loan Solicitation and Processing. Loan applicants come primarily
through existing customers, referrals by realtors, previous and present
customers of the Savings Bank and business acquaintances, and walk-ins. The
Savings Bank also uses radio and newspaper advertising to create awareness of
its loan products. Upon receipt of a loan application from a prospective
borrower, a credit report and other data are obtained to verify specific
information relating to the loan applicant's employment, income and credit
standing. An appraisal of the real estate offered as collateral generally is
undertaken by an independent fee appraiser certified by the State of Missouri.

Mortgage loans up to $100,000 for owner-occupied residential
properties must be approved by the Savings Bank's Loan Committee, which consists
of the Chief Executive Officer and two officers, or by the Board of Directors'
Loan Committee, which consists of the Chief Executive Officer and three
directors. Loans of $100,000 to $250,000 must be approved by the Board of
Director's Loan Committee, and loans exceeding $250,000 must be approved by the
Board of Directors. Interest rates are subject to change if the approved loan
is not closed within the time of the commitment. The Savings Bank's loan
approval process allows mortgage loans to be approved in approximately 21 days
and closed in 30 days.

Loan Originations, Sales and Purchases. While the Savings Bank
originates both adjustable-rate and fixed-rate loans, its ability to generate
each type of loan is dependent upon relative customer demand for loans in its
market. For the years ended December 31, 1993, 1994 and 1995, the Savings Bank
originated $19.6 million, $14.3 million and $13.4 million of loans,
respectively. Of the $13.4 million of loans originated during 1995, 58.2% were
adjustable loans and 41.8% were fixed-rate loans.

The Savings Bank generally sells all of its 30-year and 20-year and a
portion of its 15-year fixed-rate single-family residential mortgage loans to
the FHLMC. Sales are made on a non-recourse basis. Sales of loans for the
years ended December 31, 1993, 1994, and 1995 totalled $14.8 million, $3.2
million and $1.7 million, respectively. Sales of whole loans generally are
beneficial to the Savings Bank since these sales may generate income at the time
of sale, provide funds for additional lending and other investments and increase
liquidity. The Savings Bank generally sells loans on a servicing-retained
basis. See "-- Lending Activities -- Loan Servicing." At December 31, 1995,
the Savings Bank had $466,000 in loans held for sale.

The Savings Bank also purchases whole loans and loan participation
interests, primarily during periods of reduced loan demand in its market area.
During the years ended December 31, 1993, 1994, and 1995, the Savings Bank
purchased loans totalling $2.2 million, $3.3 million and $4.2 million,
respectively. All of the real estate securing these loans is located in
Missouri. Of the $4.2 million of loans purchased in 1995, $1.9 million is
secured by one- to four-family properties, $1.0 million is secured by commercial
real estate and $1.3 million is secured by multi-family real estate. Any such
purchases are made in conformance with the Savings Bank's underwriting
standards.

42
<PAGE>
The following table shows total loans originated, purchased, sold and
repaid during the periods indicated.

Year Ended December 31,
-------------------------------------
1993 1994 1995
---- ---- ----
(In Thousands)
Loans originated:
Mortgage loans:
One- to four-family . . . $17,181 $ 8,643 $ 8,319
Multi-family . . . . . . -- 650 168
Commercial . . . . . . . 78 -- 1,850
Construction . . . . . . 1,459 4,197 1,721
Land . . . . . . . . . . -- 23 180
Consumer and other loans . 857 744 1,176
-------- -------- -------
Total loans originated 19,575 14,257 13,414
------- ------- -------

Loans purchased:
Mortgage loans:
One- to four-family . . . 514 1,143 1,918
Multi-family . . . . . . 1,709 1,747 1,272
Commercial . . . . . . . -- 392 1,010
--------- -------- -------
Total loans purchased . 2,223 3,282 4,200
------- -------- -------

Loans sold:
Total loans sold . . . . 14,757 3,186 1,669
------- -------- -------

Mortgage loan principal
repayments . . . . . . . . 14,346 10,175 8,186
-------- ------- -------

Net increase (decrease)
in loans receivable, net . $(7,305) $ 4,178 $ 7,759
======== ======= =======

Loan Commitments. The Savings Bank issues commitments to originate loans
conditioned upon the occurrence of certain events. Such commitments are made in
writing on specified terms and conditions and are honored for up to 45 days from
the date of loan approval. The Savings Bank had outstanding net loan
commitments of approximately $1.9 million at December 31, 1995.

Loan Origination and Other Fees. The Savings Bank, in some instances,
receives loan origination fees. Loan fees are a fixed dollar amount or a
percentage of the principal amount of the mortgage loan which is charged to the
borrower for funding the loan. The amount of fees charged by the Savings Bank
is currently $300 for loans secured by single-family homes and up to $500 for
larger loans. Current accounting standards require fees received (net of
certain loan origination costs) for originating loans to be deferred and
amortized into interest income over the contractual life of the loan. Net
deferred fees or costs associated with loans that are prepaid are recognized as
income at the time of prepayment. The Savings Bank had $1,000 of net deferred
mortgage loan fees at December 31, 1995.

Loan Servicing. The Savings Bank sells loans to FHLMC on a servicing
retained basis and receives fees from FHLMC in return for performing the
traditional services of collecting individual payments and managing the loans.
At December 31, 1995, the Bank was servicing $21.7 million of loans for FHLMC.
Loan servicing includes processing payments, accounting for loan funds and
collecting and paying real estate taxes, hazard insurance and other loan-related
items such as private mortgage insurance. When the Savings Bank receives
the gross mortgage

<PAGE>
payment from individual borrowers, it remits to the investor in the
mortgage a predetermined net amount based on the yield on that mortgage.
The difference between the coupon on the underlying mortgage and the
predetermined net amount paid to the investor is the gross loan servicing fee.
For the year ended December 31, 1995, loan servicing fees totalled $56,000. In
addition, the Savings Bank retains certain amounts in escrow for the benefit of
FHLMC for which the Savings Bank incurs no interest expense but is able to
invest. At December 31, 1995, the Savings Bank held $26,000 in escrow for its
portfolio of loans serviced for others.

Nonperforming Assets and Delinquencies. When a mortgage loan borrower
fails to make a required payment when due, the Savings Bank institutes
collection procedures. The first notice is mailed to the borrower approximately
ten days after the payment is due in order to permit the borrower to make the
payment before the imposition of a late fee. A second notice is generated when
a payment becomes 30 days past due. Attempts to contact the borrower by
telephone or letter generally begin soon after the first notice is mailed to the
borrower. If a satisfactory response is not obtained, continuous follow-up
contacts are attempted until the loan has been brought current. Before the 90th
day of delinquency, attempts to interview the borrower, preferably in person,
are made to establish (i) the cause of the delinquency, (ii) whether the cause
is temporary, (iii) the attitude of the borrower toward the debt, and (iv) a
mutually satisfactory arrangement for curing the default.

In most cases, delinquencies are cured promptly; however, if by the
91st day of delinquency, or sooner if the borrower is chronically delinquent and
all reasonable means of obtaining payment on time have been exhausted,
foreclosure, according to the terms of the security instrument and applicable
law, is initiated. Interest income on loans is reduced by the full amount of
accrued and uncollected interest.

The Savings Bank's Board of Directors is informed on a monthly basis
as to the status of all loans that are delinquent more than 30 days, the status
on all loans currently in foreclosure, and the status of all foreclosed and
repossessed property owned by the Savings Bank.

44
<PAGE>
The following table sets forth information with respect to the Savings
Bank's nonperforming assets and restructured loans within the meaning of SFAS
No. 15 at the dates indicated. It is the policy of the Savings Bank to cease
accruing interest on loans 90 days or more past due.

At December 31,
-----------------------------------
1993 1994 1995
---- ---- ----
(Dollars in Thousands)
Loans accounted for on
a nonaccrual basis:
Mortgage loans:
One- to four-family . . $ 93 $ -- $ 88
Land . . . . . . . . 70 -- --
---- ---- --
Total . . . . . . . . 163 -- 88
---- ---- --

Accruing loans which are
contractually past due
90 days or more . . . . . -- -- --
----- ----- -----

Total nonaccrual and
90 days past due loans . . 163 -- 88

Real estate owned, net . . 720 422 162
---- ---- ----

Total nonperforming
assets . . . . . . . . $883 $422 $250
==== ==== ====

Restructured loans . . . . $381 $337 $344

Nonaccrual and 90 days or more
past due loans as a percentage
of loans receivable, net . 0.40% --% 0.17%

Nonaccrual and 90 days or more
past due loans as a percentage
of total assets . . . . . 0.18 -- 0.10

Nonperforming assets as a
percentage of total assets 0.98 0.48 0.29

Interest income that would have been recorded for the year ended December
31, 1995 had nonaccruing loans been current in accordance with their original
terms amounted to approximately $3,000. The amount of interest included in
interest income on such loans for the year ended December 31, 1995 amounted to
approximately $1,000.

Real Estate Owned and Held for Investment. Real estate acquired by the
Savings Bank as a result of foreclosure or by deed-in-lieu of foreclosure is
classified as real estate owned ("REO") until it is sold. At December 31, 1995,
the Savings Bank's REO consisted of REO held for sale and REO held for the
production of income. When property is acquired it is recorded at the lower of
its cost, which is the unpaid principal balance of the related loan plus
foreclosure costs, or fair market value. Subsequent to foreclosure, REO held
for sale is carried at the lower of the foreclosed amount or fair value, less
estimated selling costs and REO held for the production of income is carried at
cost, less accumulated depreciation. At December 31, 1995, the Savings Bank had
$162,000 of REO, net of allowance for losses of $18,000 on REO held for sale and
accumulated depreciation of $199,000 on REO held for the production of income.
At that date, REO consisted of ten single family homes in Angleton, Texas and
one small office property in Jefferson City, Missouri. The Savings Bank
acquired 15 single family homes in Texas

<PAGE>
through foreclosure in the early 1980s during a downturn in the Texas economy
and has rented them since then. The Savings Bank was hampered in its attempts
to dispose of the Texas properties by Resolution Trust Corporation ("RTC")
ownership of a portion of the loans. The Savings Bank acquired the RTC's
portion in 1993 and has since been able to proceed with renovation and
disposition. Subsequent to December 31, 1995, the Savings Bank sold two of the
Texas properties. The remaining homes are under contract for sale.

Real estate held for investment ("REI") is carried at the lower of cost or
net realizable value. All costs of anticipated disposition are considered in
the determination of net realizable value. At December 31, 1995, the Savings
Bank's REI consisted of the former Governor Hotel in Jefferson City. The
Savings Bank acquired the Governor Hotel in 1989 for use as the Savings Bank's
main office and for development. Due to objections raised by the OTS, the
Savings Bank abandoned its plans for the Governor Hotel and has since offered it
for sale. The Savings Bank has periodically engaged in discussions with
interested purchasers, but has been unable to find a buyer. Because of limited
third party interest in the property, the presence of asbestos and a regulatory
prohibition on financing the sale, the $1.25 million book value has been fully
reserved and, therefore, is carried at a book value of $0. The Savings Bank
believes that it is currently under no obligation to abate the asbestos in the
building. In the remote possibility that the Savings Bank is required to remove
the asbestos, the Savings Bank would incur expenses estimated to equal or exceed
$300,000. Furthermore, in the remote possibility that the Savings Bank is
required to demolish the building, the Savings Bank estimates that expenses
associated with the demolition and asbestos removal could total $1 million. The
annual cost of holding the property, net of income from the lease of the hotel's
parking lot, is approximately $12,500.

Asset Classification. The OTS has adopted various regulations regarding
problem assets of savings institutions. The regulations require that each
insured institution review and classify its assets on a regular basis. In
addition, in connection with examinations of insured institutions, OTS examiners
have authority to identify problem assets and, if appropriate, require them to
be classified. There are three classifications for problem assets:
substandard, doubtful and loss. Substandard assets have one or more defined
weaknesses and are characterized by the distinct possibility that the insured
institution will sustain some loss if the deficiencies are not corrected.
Doubtful assets have the weaknesses of substandard assets with the additional
characteristic that the weaknesses make collection or liquidation in full on the
basis of currently existing facts, conditions and values questionable, and there
is a high possibility of loss. An asset classified as loss is considered
uncollectible and of such little value that continuance as an asset of the
institution is not warranted. If an asset or portion thereof is classified as
loss, the insured institution establishes specific allowances for loan losses
for the full amount of the portion of the asset classified as loss. All or a
portion of general loan loss allowances established to cover possible losses
related to assets classified substandard or doubtful may be included in
determining an institution's regulatory capital, while specific valuation
allowances for loan losses generally do not qualify as regulatory capital.
Assets that do not currently expose the insured institution to sufficient risk
to warrant classification in one of the aforementioned categories but possess
weaknesses are placed on a "watch list" and monitored by the Savings Bank.

At December 31, 1995, the Savings Bank had $1.3 million of assets
classified as loss, which included two consumer loans totalling $6,000 and the
Governor Hotel. Assets classified as doubtful or substandard totalled $612,000
and included one doubtful loan secured by a commercial property and 12
substandard loans which consisted of one consumer loan and 11 mortgage loans
secured by single family homes. The aggregate amounts of the Savings Bank's
classified assets, and of the Savings Bank's general and specific loss
allowances at the dates indicated, were as follows:

<PAGE>

At December 31,
----------------------
1994 1995
---- ----
(In Thousands)

Loss . . . . . . . . . . . . $1,250 $1,256
Doubtful . . . . . . . . . . -- 79
Substandard assets . . . . . 812 533
------ -------
Total classified assets . . $2,062 $1,868
====== ======

General loss allowances . . . $ 248 $ 337
Specific loss allowances . . 1,250 1,250
------ ------
Total allowances . . . . . $1,498 $1,587
====== ======

Allowance for Loan Losses. The Savings Bank has established a
systematic methodology for the determination of provisions for loan losses. The
methodology is set forth in a formal policy and takes into consideration the
need for an overall general valuation allowance as well as specific allowances
that are tied to individual loans.

In originating loans, the Savings Bank recognizes that losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the creditworthiness of the borrower over the term of
the loan, general economic conditions and, in the case of a secured loan, the
quality of the security for the loan. The Savings Bank increases its allowance
for loan losses by charging provisions for loan losses against the Savings
Bank's income.

The general valuation allowance is maintained to cover losses inherent
in the portfolio of performing loans. Management's periodic evaluation of the
adequacy of the allowance is based on the Savings Bank's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions. Specific valuation
allowances are established to absorb losses on loans for which full
collectibility may not be reasonably assured. The amount of the allowance is
based on the estimated value of the collateral securing the loan and other
analyses pertinent to each situation. Generally, a provision for losses is
charged against income on a quarterly basis to maintain the allowances.

At December 31, 1995, the Savings Bank had an allowance for loan
losses of $319,000. Management believes that the amount maintained in the
allowances will be adequate to absorb losses inherent in the portfolio. Although
management believes that it uses the best information available to make such
determinations, future adjustments to the allowance for loan losses may be
necessary and results of operations could be significantly and adversely
affected if circumstances differ substantially from the assumptions used in
making the determinations.

While the Savings Bank believes it has established its existing allowance
for loan losses in accordance with GAAP, there can be no assurance that
regulators, in reviewing the Savings Bank's loan portfolio, will not request the
Savings Bank to increase significantly its allowance for loan losses. In
addition, because future events affecting borrowers and collateral cannot be
predicted with certainty, there can be no assurance that the existing allowance
for loan losses is adequate or that substantial increases will not be necessary
should the quality of any loans deteriorate as a result of the factors discussed
above. Any material increase in the allowance for loan losses may adversely
affect the Savings Bank's financial condition and results of operations.

<PAGE>
The following table sets forth an analysis of the Savings Bank's allowance
for loan losses for the periods indicated. Where specific loan loss reserves
have been established, any differences between the loss allowances and the
amount of loss realized has been charged or credited to current income.

Year Ended December 31,
------------------------
1993 1994 1995
---- ---- ----
(Dollars in Thousands)

Allowance at beginning of
period . . . . . . . . . . $184 $208 $195
---- ---- ----
Provision for loan losses . 24 6 124
----- ----- ----

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

Charge-offs:
Mortgage loans:
One- to four-family . . . -- 19 --
------ ----- -----
Total charge-offs . . . -- 19 --
------ ----- -----

Net charge-offs . . . . . . -- 19 --
------ ----- -----

Balance at end of
period . . . . . . . . . $208 $195 $319
==== ==== ====

Allowance for loan losses as a
percentage of total loans outstanding
at the end of the period . 0.51% 0.43% 0.60%

Net charge-offs as a
percentage of average loans
outstanding during the
period . . . . . . . . . . -- 0.05 --

Allowance for loan losses as a
percentage of nonperforming
loans at end of period . . 127.61 -- 362.50

48
<PAGE>
The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated. Management believes that the
allowance can be allocated by category only on an approximate basis. The
allocation of the allowance to each category is not necessarily indicative of
future losses and does not restrict the use of the allowance to absorb losses
in any other category.

At December 31,
--------------------------------------------------
1993 1994 1995
----------------- ---------------- ---------------
% of % of % of
Loans Loans Loans
in Each in Each in Each
Category Category Category
to Total to Total to Total
Amount Loans Amount Loans Amount Loans
------ -------- ------ -------- ------ -------
(Dollars in Thousands)

Mortgage loans:
One- to four-family . $150 88.09% $140 86.45% $185 80.79%
Multi-family . . . . 22 4.90 16 4.67 36 6.64
Commercial . . . . . 33 4.70 34 5.40 77 7.00
Construction . . . . -- -- -- 1.40 7 3.19
Land . . . . . . . . -- .25 -- .07 2 .29
Consumer and other loans 3 2.06 5 2.01 12 2.09
Unallocated . . . . . . -- N/A -- N/A -- N/A
------ ----- ------ ----- ------ -----

Total allowance for
loan losses . . . $208 100.00% $195 100.00% $319 100.00%
==== ====== ==== ====== ==== ======

Investment Activities

The Savings Bank is permitted under federal and state law to
invest in various types of liquid assets, including U.S. Treasury obligations,
securities of various federal agencies and of state and municipal governments,
deposits at the FHLB-Des Moines, certificates of deposit of federally insured
institutions, certain bankers' acceptances and federal funds. Subject to
various restrictions, the Savings Bank may also invest a portion of its assets
in commercial paper and corporate debt securities. Savings institutions like
the Savings Bank are also required to maintain an investment in FHLB stock. The
Savings Bank is required under federal regulations to maintain a minimum amount
of liquid assets. See "REGULATION" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital
Resources."

It is the intention of management to classify all securities in
the Savings Bank's investment portfolio as available for sale. SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," requires the
investments be categorized as "held to maturity," "trading securities" or
"available for sale," based on management's intent as to the ultimate
disposition of each security. SFAS No. 115 allows debt securities to be
classified as "held to maturity" and reported in financial statements at
amortized cost only if the reporting entity has the positive intent and ability
to hold those securities to maturity. Securities that might be sold in response
to changes in market interest rates, changes in the security's prepayment risk,
increases in loan demand, or other similar factors cannot be classified as "held
to maturity." Debt and equity securities held for current resale are classified
as "trading securities." Such securities are reported at fair value, and
unrealized gains and losses on such securities would be included in earnings.
Debt and equity securities not classified as either "held to maturity" or
"trading securities" are classified as "available for sale." Such securities
are reported at fair value, and unrealized gains and losses on such securities
are excluded from earnings and reported as a net amount in a separate component
of equity. During 1995, pursuant to a transfer grace period allowed by the
FASB, the Savings Bank reclassified securities held to maturity

<PAGE>
with a book value of $4.0 million as securities available for sale. Such
reclassification resulted in an increase of $17,000 in the unrealized loss
on securities available for sale reported as a separate component of equity.

A committee consisting of the Chief Executive Officer, the
Chief Financial Officer and three outside Directors determines appropriate
investments in accordance with the Board of Directors' approved investment
policies and procedures. The Savings Bank's investment policies generally
limit investments to U.S. Government and agency securities, municipal bonds,
certificates of deposits, marketable corporate debt obligations,
mortgage-backed securities and certain types of mutual funds. The Savings
Bank's investment policy does not permit engaging directly in hedging
activities or purchasing high risk mortgage derivative products or
corporate bonds rated less than BBB. Mutual funds held by the Savings Bank
may from time to time engage in hedging activities and invest in derivative
securities. Investments are made based on certain considerations, which
include the interest rate, yield, settlement date and maturity of the
investment, the Savings Bank's liquidity position, and anticipated cash needs
and sources (which in turn include outstanding commitments, upcoming
maturities, estimated deposits and anticipated loan amortization and
repayments). The effect that the proposed investment would have on the
Savings Bank's credit and interest rate risk, and risk-based capital is also
given consideration during the evaluation.

The following table sets forth the composition of the Savings
Bank's investment and mortgage-backed securities portfolios at the dates
indicated.
<TABLE><CAPTION>
At December 31,
-----------------------------------------------------------------------------------------
1993 1994 1995
------------------------------ ---------------------------- -----------------------------
Carrying Fair Percent of Carrying Fair Percent of Carrying Fair Percent of
Value Value Portfolio Value Value Portfolio Value Value Portfolio
----- ----- --------- ---- ---- --------- ----- ----- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Available for sale:
Investment securities:
U.S. Government and federal
agency obligations . . . . . $11,237 $11,252 31.84% $ -- $ -- --% $3,986 $ 3,986 15.65%
Mutual funds . . . . . . . . . -- -- -- 7,458 7,458 20.55 7,558 7,558 29.67
--------- --------- -------- ------ ------ ------ ------ ------ -----
Total investment securities . 11,237 11,252 31.84 7,458 7,458 20.55 11,544 11,544 45.32

Mortgage-backed securities . . . -- -- -- 18,966 18,966 52.25 13,926 13,926 54.68
--------- --------- -------- ------ ------ ------ ------ ------ -----

Total available for sale . 11,237 11,252 31.84 26,424 26,424 72.80 25,470 25,470 100.00
--------- --------- -------- ------ ------ ------ ------ ------ -----

Held to maturity:
Investment securities:
U.S. Government and federal
agency obligations . . . . . -- -- -- 10,156 9,872 27.20 -- -- --

Mortgage-backed securities . . . 24,173 24,086 68.16 -- -- -- -- -- --
--------- --------- -------- ------ ------ ------ ------ ------ -----

Total held to maturity . . 24,173 24,086 68.16 10,156 9,872 27.20 -- -- --
--------- --------- -------- ------ ------ ------ ------ ------ -----

Total . . . . . . . . . . . $35,410 $35,338 100.00% $36,580 $36,296 100.00% $25,470 $25,470 100.00%
======= ======= ====== ======= ======= ====== ======= ======= ======
</TABLE>

<PAGE>
The table below sets forth certain information regarding the carrying
value, weighted average yields and maturities or periods to repricing of the
Savings Bank's investment and mortgage-backed securities at December 31, 1995.
<TABLE><CAPTION>
At December 31, 1995
------------------------------------------------------------------------------------------------
Amount Due or Repricing within:
Over One to Over Five
One Year or Less Five Years Ten Years Over Ten Years Totals
------------------- ------------------ ---------------- ------------------ ------------------
Weighted Weighted Weighted Weighted Weighted
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Average
Value Yield Value Yield Value Yield Value Yield Value Yield
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
federal agency obligations . .$ 1,500 5.24% $2,486 5.27% -- -- $ -- --% $ 3,986 5.26%
Mutual funds . . . . . . . . . . 7,558 6.30 -- -- -- -- -- -- 7,558 6.30
Mortgage-backed securities . . . 13,061 6.08 287 7.81 -- -- 579 7.99 13,926 6.08
------- ------- ---- -------
Total . . . . . . . . . . . . .$22,119 6.10 $2,773 5.53 $579 7.99 $25,470 6.01
======= ====== ==== =======
</TABLE>

Mutual Funds. The Savings Bank's portfolio of mutual funds consists of two
funds, an adjustable-rate mortgage-backed securities fund, which had a fair
value of $2.9 million ($3.0 million at amortized cost) and yielded 5.83% at
December 31, 1995, and a government securities fund, which had a fair value of
$4.6 million ($5.0 million at amortized cost) and yielded 6.72% at December 31,
1995.

U.S. Government and Federal Agency Obligations. The Savings Bank's
portfolio of U.S. Government and federal agency obligations had a fair value of
$4.0 million ($4.0 million at amortized cost) at December 31, 1995. The
portfolio consisted of short-term securities due within three years of December
31, 1995, all of which are held in the Savings Bank's available for sale
portfolio.

Mortgage-Backed Securities. At December 31, 1995, the Savings Bank's net
mortgage-backed securities totaled $13.9 million at fair value ($14.2 million at
amortized cost) and had a weighted average yield of 6.08%. At December 31,
1995, 95.8% of the mortgage-backed securities were adjustable-rate and 4.2% were
fixed-rate. The Savings Bank purchased most of its mortgage-backed securities
in 1991 through 1993 and has not purchased any mortgage-backed securities since
that time. The Savings Bank currently intends to use available funds to invest
in higher yielding loans and does not intend to increase its mortgage-backed
securities portfolio. During the year ended December 31, 1995, the Savings Bank
sold $2.4 million of mortgage-backed securities in order to reinvest the
proceeds in higher yielding loans. The Savings Bank anticipates that it may
make further sales for such purpose as market conditions permit.

Mortgage-backed securities (which also are known as mortgage participation
certificates or pass-through certificates) typically represent a participation
interest in a pool of single-family or multi-family mortgages. The principal
and interest payments on these mortgages are passed from the mortgage
originators, through intermediaries (generally U.S. Government agencies and
government sponsored enterprises) that pool and resell the participation
interests in the form of securities, to investors such as the Savings Bank.
Such U.S. Government agencies and government sponsored enterprises, which
guarantee the payment of principal and interest to investors, primarily include
the FHLMC, Fannie Mae (formerly the Federal National Mortgage Association) and
the Government National Mortgage Association. Mortgage-backed securities
typically are issued with stated principal amounts, and the securities are
backed by pools of mortgages that have loans with interest rates that fall
within a specific range and have varying maturities. Mortgage-backed securities
generally yield less than the loans that underlie such securities because of the
cost of payment guarantees and credit enhancements. In addition, mortgage-
backed securities are usually more liquid than individual mortgage loans and may
be used to collateralize certain liabilities and obligations

<PAGE>
of the Savings Bank. These types of securities also permit the Savings Bank to
optimize its regulatory capital because they have low risk weighting.

At December 31, 1995, all of the Savings Bank's mortgage-backed securities
had contractual maturities over ten years. However, the actual maturity of a
mortgage-backed security may be less than its stated maturity due to prepayments
of the underlying mortgages. Prepayments that are faster than anticipated may
shorten the life of the security and may result in a loss of any premiums paid
and thereby reduce the net yield on such securities. Although prepayments of
underlying mortgages depend on many factors, including the type of mortgages,
the coupon rate, the age of mortgages, the geographical location of the
underlying real estate collateralizing the mortgages and general levels of
market interest rates, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most significant determinant of the rate of prepayments. During periods of
declining mortgage interest rates, if the coupon rate of the underlying
mortgages exceeds the prevailing market interest rates offered for mortgage
loans, refinancing generally increases and accelerates the prepayment of the
underlying mortgages and the related security. Under such circumstances, the
Savings Bank may be subject to reinvestment risk because, to the extent that the
Savings Bank's mortgage-backed securities amortize or prepay faster than
anticipated, the Savings Bank may not be able to reinvest the proceeds of such
repayments and prepayments at a comparable rate.

Deposit Activities and Other Sources of Funds

General. Deposits and loan repayments are the major sources of the Savings
Bank's funds for lending and other investment purposes. Scheduled loan
repayments are a relatively stable source of funds, while deposit inflows and
outflows and loan prepayments are influenced significantly by general interest
rates and money market conditions. Borrowings through the FHLB-Des Moines may
be used on a short-term basis to compensate for reductions in the availability
of funds from other sources. Presently, the Savings Bank has no other borrowing
arrangements.

Deposit Accounts. Substantially all of the Savings Bank's depositors are
residents of the State of Missouri. Deposits are attracted from within the
Savings Bank's market area through the offering of a broad selection of deposit
instruments, including NOW accounts, money market deposit accounts, regular
savings accounts, certificates of deposit and retirement savings plans. Deposit
account terms vary, according to the minimum balance required, the time periods
the funds must remain on deposit and the interest rate, among other factors. In
determining the terms of its deposit accounts, the Savings Bank considers
current market interest rates, profitability to the Savings Bank, matching
deposit and loan products and its customer preferences and concerns. The
Savings Bank reviews its deposit mix and pricing weekly. The Savings Bank does
not accept brokered deposits, nor has it aggressively sought jumbo certificates
of deposit.

The Savings Bank currently offers certificates of deposit for terms not
exceeding 48 months. As a result, the Savings Bank believes that it is better
able to match the repricing of its liabilities to the repricing of its loan
portfolio. See, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Asset and Liability Management."

In the unlikely event the Savings Bank is liquidated after the Conversion,
depositors will be entitled to full payment of their deposit accounts prior to
any payment being made to the Holding Company, as the sole stockholder of the
Savings Bank.

<PAGE>
The following table sets forth information concerning the Savings Bank's
time deposits and other interest-bearing deposits at December 31, 1995.
<TABLE><CAPTION>
Weighted Percentage
Average Minimum of Total
Interest Rate Term Checking and Savings Deposits Amount Balance Deposits
- ------------- ------ ----------------------------- ------- ------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C>
- -- % None Non-interest bearing $ 100 $ 502 0.66%
2.75 None NOW 100 3,784 4.98
3.84 None Money Market Deposit 1,000 4,592 6.05
2.92 None Regular savings 10 7,554 9.95

Certificates of Deposit
-----------------------
2.75 7-31 Day Fixed term, fixed rate 500 10 0.01
4.99 32-181 Day Fixed term, fixed rate 500 1,216 1.60
5.34 182 Day Fixed term, fixed rate 500 9,694 12.77
5.37 9 Mo. Fixed term, fixed rate 500 111 0.15
5.76 12 Mo. Fixed term, fixed rate 500 14,793 19.48
5.50 15 Mo. Fixed term, fixed rate 500 3,578 4.71
6.35 18 Mo. Fixed term, fixed rate 500 5,051 6.65
5.22 24 Mo. Fixed term, fixed rate 500 7,080 9.32
5.89 30 Mo. Fixed term, fixed rate 500 5,973 7.87
5.17 36 Mo. Fixed term, fixed rate 500 3,517 4.63
5.48 48 Mo. Fixed term, fixed rate 500 8,476 11.17
------- ------

5.59 Total $75,931 100.00%
======= ======
</TABLE>

The following table indicates the amount of the Savings Bank's jumbo
certificates of deposit by time remaining until maturity as of December 31,
1995. Jumbo certificates of deposit are certificates in amounts of $100,000 or
more.

Maturity Period Amount
--------------- -------------
(In Thousands)

Three months or less . . . . . . $ 827
Over three through six months . . 831
Over six through 12 months . . . 401
Over 12 months . . . . . . . . . 409
-------
Total jumbo certificates
of deposit . . . . . . . . $2,468
======

53
<PAGE>

Deposit Flow. The following table sets forth the balances (inclusive
of interest credited) and changes in dollar amounts of deposits in the various
types of accounts offered by the Savings Bank between the dates indicated.
<TABLE><CAPTION>
At December 31,
-------------------------------------------------------------------------------------
1993 1994 1995
----------------- --------------------------- -----------------------------
Percent Percent Percent
of of Increase of Increase
Amount Total Amount Total (Decrease) Amount Total (Decrease)
------ ----- ------ ----- ---------- ------ ---- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing . . . . . . . . . $ 544 0.67% $ 523 0.66% $ (21) $ 502 0.66% $ (21)
NOW checking . . . . . . . . . . . . 3,190 3.94 3,438 4.33 248 3,784 4.98 346
Regular savings accounts . . . . . . 8,962 11.06 8,157 10.26 (805) 7,553 9.95 (604)
MMDAs . . . . . . . . . . . . . . . . 6,998 8.63 6,282 7.90 (716) 4,593 6.05 (1,689)
Fixed-rate certificates which
mature:
Within 1 year . . . . . . . . . . . 43,781 54.03 44,499 55.98 718 38,335 50.49 (6,164)
After 1 year, but within 2 years . 10,385 12.82 8,531 10.73 (1,854) 14,273 18.80 5,742
After 2 years, but within 5 years . 7,175 8.85 8,063 10.14 888 6,891 9.07 (1,172)
-------- ------ ------- ------ -------- ------- ----- --------

Total deposits . . . . . . . . . . $81,035 100.00% $79,493 100.00% $(1,542) $75,931 100.00% $(3,562)
======= ====== ======= ====== ======== ======= ====== ========
</TABLE>
54

<PAGE>
Time Deposits by Rates. The following table sets forth the time
deposits in the Savings Bank categorized by rates at the dates indicated.

At December 31,
----------------------------
1993 1994 1995
---- ---- ----
(In Thousands)

0.00 - 3.99% . . . . . $36,483 $14,969 $ 521
4.00 - 4.99% . . . . . 12,192 29,362 8,166
5.00 - 5.99% . . . . . 6,785 15,120 36,314
6.00 - 6.99% . . . . . 2,360 552 14,415
7.00 - 7.99% . . . . . 3,138 1,059 83
8.00% and over . . . . 383 31 --
--------- --------- ----------
Total . . . . . . . $61,341 $61,093 $59,499
======= ======= =======

The following table sets forth the amount and maturities of time
deposits at December 31, 1995.

Amount Due
------------------------------------------------
Less Than 1-2 2-3 3 Years
One Year Years Years and After Total
-------- ----- ----- --------- -----
(In Thousands)

0.00 - 3.99% . . $ 521 $ -- $ -- $ -- $ 521
4.00 - 4.99% . . 3,732 3,846 588 -- 8,166
5.00 - 5.99% . . 29,318 5,883 1,085 28 36,314
6.00 - 6.99% . . 4,749 4,544 2,216 2,906 14,415
7.00 - 7.99% . . 15 -- -- 68 83
8.00% and over . -- -- -- -- --
---------- ---------- -------- -------- ----------
Total . . . . . $38,335 $14,273 $3,889 $3,002 $59,499
======= ======= ====== ====== =======

Deposit Activity. The following table sets forth the deposit activities of
the Savings Bank for the periods indicated.

Year Ended December 31,
----------------------------
1993 1994 1995
---- ---- ----
(In Thousands)

Beginning balance . . . . . . $85,712 $81,035 $79,493
------- ------- -------
Net deposits (withdrawals)
before interest credited . . (7,294) (3,614) (6,470)
Interest credited . . . . . . 2,617 2,072 2,908
-------- -------- --------

Net increase (decrease) in
deposits . . . . . . . . . . (4,677) (1,542) (3,562)
-------- -------- --------

Ending balance . . . . . . . $81,035 $79,493 $75,931
======= ======= =======

<PAGE>
Borrowings. Savings deposits are the primary source of funds for the
Savings Bank's lending and investment activities and for its general business
purposes. The Savings Bank has the ability to use advances from the FHLB-Des
Moines to supplement its supply of lendable funds and to meet deposit withdrawal
requirements. The FHLB-Des Moines functions as a central reserve bank providing
credit for savings associations and certain other member financial institutions.
As a member of the FHLB-Des Moines, the Savings Bank is required to own capital
stock in the FHLB-Des Moines and is authorized to apply for advances on the
security of such stock and certain of its mortgage loans and other assets
(principally securities that are obligations of, or guaranteed by, the U.S.
Government) provided certain creditworthiness standards have been met. Advances
are made pursuant to several different credit programs. Each credit program has
its own interest rate and range of maturities. Depending on the program,
limitations on the amount of advances are based on the financial condition of
the member institution and the adequacy of collateral pledged to secure the
credit. At December 31, 1993, 1994 and 1995, the Savings Bank had no borrowings
from the FHLB-Des Moines outstanding.

The following tables sets forth certain information regarding short-
term borrowings by the Bank at the dates and for the periods indicated:

Year Ended December 31,
------------------------
1993 1994 1995
---- ---- ----
(Dollars in Thousands)

Maximum amount of FHLB advances outstanding
at any month end . . . . . . . . . . . . . -- $750 $ --
Approximate average FHLB advances
outstanding . . . . . . . . . . . . . . . . -- 188 1
Approximate weighted average rate paid on
FHLB advances . . . . . . . . . . . . . . . -- 4.79% 6.72%

Competition

The Savings Bank operates in a competitive market for the
attraction of savings deposits (its primary source of lendable funds) and in the
origination of loans. Its most direct competition for savings deposits has
historically come from local commercial banks, credit unions and other thrifts
operating in its market area. As of December 31, 1995, there were ten
commercial banks and five other thrifts operating in Cole County, Missouri.
Most of these financial institutions are locally-owned community oriented banks
and thrifts, however, there are two subsidiaries of larger regional holding
companies. As a result of this competition, the Savings Bank has suffered
deposit declines and loss of market share. The Savings Bank's branches in
California, Tipton and St. Robert, Missouri also face competition from other
financial institutions. Particularly in times of high interest rates, the
Savings Bank has faced additional significant competition for investors' funds
from short-term money market securities and other corporate and government
securities. The Savings Bank's competition for loans also comes from mortgage
bankers. Such competition for deposits and the origination of loans may limit
the Savings Bank's growth in the future.

Subsidiary Activities

Federal savings associations generally may invest up to 3% of
their assets in service corporations, provided that at least one-half of any
amount in excess of 1% is used primarily for community, inner-city and community
development projects. The Savings Bank's investment in its service corporation,
Cinsal Service Corporation ("Cinsal"), did not exceed these limits at December
31, 1995.

Cinsal is a wholly owned subsidiary of the Savings Bank. Cinsal
acts as the holding company for Parity Insurance Agency, Inc. ("Parity"), which
previously sold mortgage life and disability insurance to the Savings Bank's
borrowers and continues to collect commissions. Parity also owns City National
Real Estate, Inc., which holds the Governor Hotel but otherwise is inactive, and
Great Arrow Service Corporation, Inc., which was formerly involved

<PAGE>
in real estate development activities and currently is inactive. At December
31, 1995, the Savings Bank's investment in its subsidiaries was $400,000.

Properties

The Savings Bank operates five full service facilities, all of
which it owns. At December 31, 1995, the net book value of the property
(including land and building) and the Savings Bank's fixtures, furniture and
equipment was $1.8 million.

The following table sets forth certain information with respect
to the offices of the Savings Bank at December 31, 1995.

Approximate
Location Year Opened Square Footage
- -------- ----------- --------------

Main Office:

427 Monroe St. 1992 9,000
Jefferson City, MO

Branch Offices:

201 E. Main 1980 2,475
California, MO

3732 W. Truman Blvd. 1979 1,666
Jefferson City, MO

445 S. Moreau 1979 1,950
Tipton, MO

59 S. Missouri Ave. 1981 2,160
St. Robert, MO

Personnel

As of December 31, 1995, the Savings Bank had 27 full-time and no
part-time employees. The employees are not represented by a collective
bargaining unit and the Savings Bank believes its relationship with its
employees to be good.

Legal Proceedings

Periodically, there have been various claims and lawsuits
involving the Savings Bank, such as claims to enforce liens, condemnation
proceedings on properties in which the Savings Bank holds security interests,
claims involving the making and servicing of real property loans and other
issues incident to the Savings Banks' business. The Savings Bank is not a party
to any pending legal proceedings that it believes would have a material adverse
effect on the financial condition or operations of the Savings Bank.

57
<PAGE>

MANAGEMENT OF THE HOLDING COMPANY

The Board of Directors of the Holding Company consists of seven persons
divided into three classes, each of which contains approximately one third of
the Board. The Directors shall be elected by the stockholders of the Holding
Company for staggered three-year terms, or until their successors are elected
and qualified. One class of Directors, consisting of Messrs. McHenry, Whaley
and Roberson, has a term of office expiring at the first annual meeting of
stockholders, a second class, consisting of Messrs. Caplinger and Dallmeyer, has
a term of office expiring at the second annual meeting of stockholders, and a
third class, consisting of Messrs. Chiles and Kolb, has a term of office
expiring at the third annual meeting of stockholders. The executive officers of
the Holding Company are elected annually and hold office until their respective
successors have been elected and qualified or until death, resignation or
removal by the Board of Directors.

The following individuals hold the offices set forth opposite their names
below.

Name Position held with Holding Company
---- ----------------------------------

Richard E. Caplinger Chairman of the Board
Robert E. Chiles President and Chief Executive Officer
David L. Jobe Treasurer and Secretary

Since the formation of the Holding Company, none of the executive
officers, directors or other personnel has received remuneration from the
Holding Company. Information concerning the principal occupations, employment
and compensation of the directors and executive officers of the Holding Company
during the past five years is set forth under "MANAGEMENT OF THE SAVINGS BANK --
Biographical Information."

MANAGEMENT OF THE SAVINGS BANK

Directors and Executive Officers

The Board of Directors of the Savings Bank is presently composed of
seven members who are elected for terms of three years, approximately one third
of whom are elected annually in accordance with the Bylaws of the Savings Bank.
The executive officers of the Savings Bank are elected annually by the Board of
Directors and serve at the Board's discretion. The following table sets forth
information with respect to the Directors and executive officers of the Savings
Bank.

58
<PAGE>
Directors
Current
Director Term
Name Age(1) Position with Savings Bank Since Expires
- ---- ------- -------------------------- ------- -------

James F. McHenry 65 Director 1964 1997
James E. Whaley 59 Director 1975 1997
Ronald D. Roberson 57 Director 1983 1997
Richard E. Caplinger 62 Chairman of the Board 1975 1998
Michael A. Dallmeyer 43 Director 1994 1998
Robert E. Chiles 60 President and Chief Executive 1967 1999
Officer
John C. Kolb 47 Director 1989 1999

Executive Officers Who Are Not Directors

Name Age (1) Position with Savings Bank
- ---- ------- --------------------------

David L. Jobe 47 Secretary and Treasurer
Delphine E. Prenger 58 Vice President

- ---------------------
(1) As of December 31, 1995.

Biographical Information

Set forth below is certain information regarding the Directors and
executive officers of the Savings Bank. Unless otherwise stated, each Director
and executive officer has held his or her current occupation for the last five
years. There are no family relationships among or between the Directors or
executive officers.

Robert E. Chiles serves as President, Chief Executive Officer and Director
of the Savings Bank, positions he has held since 1974. Mr. Chiles is currently
a member of the Loan Review Committee, the Planning Committee, the Investment
Committee and the In-House Loan Committee. Mr. Chiles served as a member of the
FHLB-Des Moines Board from 1989 to 1994 and as Vice Chairman in 1994.

John C. Kolb is the President and part-owner of Jefferson City Oil Co.,
Inc., an oil and fuel distributor with which he has been associated since 1973.
Mr. Kolb has served as a Director of the Savings Bank since 1989. He is
currently a member of the Loan Review Committee, the Insurance Committee and the
Planning Committee. Mr. Kolb is also a member of the Jefferson City Chamber of
Commerce Committee of 50 and of the Helias High School Foundation Board.

James F. McHenry is a retired Circuit Court Judge for Cole County. Mr.
McHenry has served as a Director of the Savings Bank since 1964. Mr. McHenry is
currently a member of the Budget and Salary Committee.

James E. Whaley is the majority owner of Whaley's East End Drug, a retail
pharmacy in Jefferson City. Mr. Whaley has served as a Director of the Savings
Bank since 1975. He is currently a member of the Loan Review Committee, the
Planning Committee, and the Budget and Salary Committee. Mr. Whaley is also a
member of the Jefferson City Rotary.

<PAGE>
Ronald D. Roberson is the sole owner of R.D. Roberson & Associates, a
financial and management consulting firm that he founded in 1990. He previously
served as President of the Missouri Chamber of Commerce from 1974 to 1990. Mr.
Roberson has served as a Director of the Savings Bank since 1983. He currently
serves on the Loan Review Committee and the Investment Committee.

Richard E. Caplinger is co-owner of Caplinger's Inc., a mens' specialty
retailer, with which he has been associated since 1952. Mr. Caplinger has
served as a Director since 1975 and as Chairman of the Board of Directors of the
Savings Bank since 1993. He currently serves on the Planning Committee, the
Budget and Salary Committee and the Compliance Committee. Mr. Caplinger is also
chairman of the Jefferson Community Betterment Association and a member of the
small business task force of the Jefferson City Chamber of Commerce.

Michael A. Dallmeyer is a partner in the law firm of Hendren and Andrae,
Jefferson City, Missouri, with which he has been associated since 1977. Mr.
Dallmeyer has served as a Director of the Savings Bank since 1994. He is
currently a member of the Insurance Committee and the Compliance Committee.

David L. Jobe currently serves as the Treasurer and Secretary of the
Savings Bank, positions which he has held since 1984. Mr. Jobe is also the
Treasurer of the Jefferson City Chamber of Commerce.

Delphine E. Prenger has been associated with the Savings Bank since 1968
and has served as Vice-President since 1983. Ms. Prenger is also a member of
the Jefferson City Chamber of Commerce.

Meetings and Committees of the Board of Directors

The business of the Savings Bank is conducted through meetings and
activities of the Board of Directors and its committees. During the fiscal year
ended December 31, 1995, the Board of Directors held 19 meetings. No director
attended fewer than 75% of the total meetings of the Board of Directors and of
committees on which such director served.

The entire Board of Directors serves as the Audit Committee and meets with
the Savings Bank's outside auditor to discuss the results of the annual audit.

The Budget and Salary Committee, consisting of Directors McHenry
(Chairman), Whaley and Caplinger, is responsible for reviewing and approving the
annual operating budget and business plan of the Savings Bank. The Budget and
Salary Committee establishes the overall compensation budget and establishes the
compensation for the President, Secretary and Operations Officer. The Budget
and Salary Committee met three times during the fiscal year ended December 31,
1995.

The Savings Bank also maintains standing Loan Review, Compliance,
Insurance, Planning and Investment Committees.

Directors' Compensation

Directors received a fee of $500 per month during the year ended December
31, 1995. Members of the Loan Review Committee received a fee of $200 per
month, and members of the Compliance Committee received a fee of $50 per month.
The Chairman of the Board received an additional fee of $150 per month. During
1996, Directors will receive a fee of $1,000 per month and no separate fees will
be paid for service on committees. During 1995, Directors were eligible to
participate in the Savings Bank's medical and dental insurance plans and
premiums were paid on their behalf by the Savings Bank. Currently, directors
may participate in the Savings Bank's medical and dental insurance plans at
their own expense. It is currently anticipated that, after completion of the
Conversion, directors' fees will continue to be paid by the Savings Bank and no
separate fees will be paid for service on the Board of Directors of the Holding
Company.

<PAGE>
Executive Compensation

Summary Compensation Table. The following information is furnished for the
President of the Savings Bank for the year ended December 31, 1995. No
executive officers of the Savings Bank received salary and bonus in excess of
$100,000 during the year ended December 31, 1995.

SUMMARY COMPENSATION TABLE(1)

Annual Compensation
Other Annual All Other
Name and Salary Bonus Compensation Compensation
Position Year ($) ($) ($)(3) ($)

Robert E. Chiles 1995 92,400(2) 7,000 -- --
President and
Chief Executive
Officer

- ---------------------------------------
(1) Compensation information for fiscal years ended December 31, 1994 and 1993
has been omitted as the Savings Bank was not a public company nor a
subsidiary thereof at such time.
(2) Includes Board of Directors fees of $8,400.
(3) The aggregate amount of perquisites and other personal benefits was less
than 10% of the total annual salary and bonus reported.

Employment Agreements. In connection with the Conversion, the Holding
Company and the Savings Bank (collectively, the "Employers") will enter into a
three-year employment agreement with Mr. Chiles. Under the agreement, the
initial salary level for Mr. Chiles will be $93,600, which amount will be paid
by the Savings Bank and may be increased at the discretion of the Board of
Directors or an authorized committee of the Board. On each anniversary of the
commencement date of the agreement, the term of the agreement may be extended
for an additional year. The agreement is terminable by the Employers at any
time or upon the occurrence of certain events specified by federal regulations.

The employment agreement provides for severance payments and other benefits
in the event of involuntary termination of employment in connection with any
change in control of the Employers. Severance payments also will be provided on
a similar basis in connection with a voluntary termination of employment where,
subsequent to a change in control, Mr. Chiles is assigned duties inconsistent
with his position, duties, responsibilities and status immediately prior to such
change in control. The term "change in control" is defined in the agreement as
having occurred when, among other things, (a) a person other than the Holding
Company purchases shares of Common Stock pursuant to a tender or exchange offer
for such shares, (b) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended ("Exchange Act")) is
or becomes the beneficial owner, directly or indirectly, of securities of the
Holding Company representing 25% or more of the combined voting power of the
Holding Company's then outstanding securities, (c) the membership of the Board
of Directors changes as the result of a contested election, or (d) shareholders
of the Holding Company approve a merger, consolidation,

<PAGE>
sale or disposition of all or substantially all of the Holding Company's assets,
or a plan of partial or complete liquidation.

The severance payment from the Employers will equal 2.99 times Mr. Chiles'
average annual compensation during the five-year period preceding the change in
control. Such amount will be paid in a lump sum within ten business days
following the termination of employment. Assuming that a change in control had
occurred at December 31, 1995, Mr. Chiles would be entitled to a severance
payment of approximately $235,000. Section 280G of the Internal Revenue Code of
1986, as amended ("Code"), states that severance payments which equal or exceed
three times the base compensation of the individual are deemed to be "excess
parachute payments" if they are contingent upon a change in control.
Individuals receiving excess parachute payments are subject to a 20% excise tax
on the amount of such excess payments, and the Employers would not be entitled
to deduct the amount of such excess payments.

The agreement restricts Mr. Chiles' right to compete against the Employers
for a period of one year from the date of termination of the agreement if Mr.
Chiles voluntarily terminates employment, except in the event of a change in
control. The Board of Directors of the Holding Company or the Savings Bank may,
from time to time, also extend employment agreements to other senior executive
officers.

Benefits

General. The Savings Bank currently pays 75% of the premiums for medical,
life and disability insurance benefits for full-time employees, subject to
certain deductibles.

Deferred Compensation Plan. The Savings Bank maintains a nonqualified
deferred compensation plan for a select group of management employees. Under
the plan, eligible employees may elect to defer up to 30% of annual
compensation. Upon termination of employment, the balance of the employee's
deferred compensation account is distributable in a lump sum or in installments
over a number of years specified by the employee. At December 31, 1995, the
Savings Bank had an accrued liability with respect to the plan of $76,000. In
connection with the Conversion, the deferred compensation plan will be amended
to permit employees to direct the investment of all or a portion of their
deferred compensation account in the Common Stock and to receive a distribution
in the form of Common Stock. The Savings Bank will fund an irrevocable grantor
trust ("rabbi trust") to purchase Common Stock in the Conversion based on the
investment instructions of participating employees. The plan participants will
have only the rights of unsecured creditors to trust assets, which will be
considered part of the Savings Bank's general assets.

Defined Benefit Plan. The Savings Bank maintains a non-contributory
defined benefit retirement plan for the benefit of eligible employees. This
plan covers all employees who have completed one year of service and have
attained the age of 21 years and provides for monthly retirement benefits
determined on the basis of the employee's base salary and years of service. The
normal retirement age is 65 and the early retirement age is before age 65, but
generally after age 55. Normal retirement benefits are equal to the sum of 1.5%
of the average of a participant's highest three years of compensation plus .75%
of a participant's annual compensation in excess of $10,000 multiplied by the
participant's years of service to a maximum of 35. The normal form of benefit
distribution is a life annuity. Benefits under the plan are not subject to
offset for social security benefits. If a participant terminates employment
prior to the normal retirement date or early retirement date, and not as a
result of permanent disability, the participant will receive the vested
percentage of benefits at the participant's normal retirement date or early
retirement date. Under the plan, benefits vest at the rate of 20% per year
beginning with a participant's third year of service. Net periodic pension
costs for the fiscal year ended December 31, 1995 was $63,000. As of December
31, 1995, Mr. Chiles had 33 years of credited service under the plan.

<PAGE>
The following table illustrates annual pension benefits payable upon
retirement, based on various levels of compensation and years of service.

Highest Three-Year Years of Service
Average Annual --------------------------------------------
Compensation 5 10 15 25 35
- --------------- ----- ------ ------ ------ ------

$ 10,000 . . . 750 1,500 2,250 3,750 5,250
20,000 . . . 1,875 3,250 5,625 9,375 13,125
30,000 . . . 3,000 6,000 9,000 15,000 21,000
40,000 . . . 4,125 8,250 12,375 20,625 28,875
60,000 . . . 6,375 12,750 19,125 31,875 44,625
80,000 . . . 8,625 17,250 25,875 43,125 60,375
100,000 . . . 10,875 21,750 32,625 54,375 76,125
120,000 . . . 13,125 26,250 39,375 65,625 91,875

Employee Stock Ownership Plan. The Board of Directors has authorized the
adoption by the Savings Bank of an ESOP for employees of the Savings Bank to
become effective upon the completion of the Conversion. The ESOP is intended to
satisfy the requirements for an employee stock ownership plan under the Code and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Full-time employees of the Holding Company and the Savings Bank who have been
credited with at least 1,000 hours of service during a 12-month period and who
have attained age 21 will be eligible to participate in the ESOP.

In order to fund the purchase of up to 8% of the Common Stock to be issued
in the Conversion, it is anticipated that the ESOP will borrow funds from the
Holding Company. Such loan will equal 100% of the aggregate purchase price of
the Common Stock. The loan to the ESOP will be repaid principally from the
Savings Bank's contributions to the ESOP and dividends payable on Common Stock
held by the ESOP over the anticipated ten-year term of the loan. The interest
rate for the ESOP loan is expected to be the prime rate as published in The Wall
Street Journal on the closing date of the Conversion. See "PRO FORMA DATA." In
any plan year, the Savings Bank may make additional discretionary contributions
to the ESOP for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired through the purchase of outstanding shares
in the market or from individual stockholders or which constitute authorized but
unissued shares or shares held in treasury by the Holding Company. The timing,
amount, and manner of such discretionary contributions will be affected by
several factors, including applicable regulatory policies, the requirements of
applicable laws and regulations, and market conditions.

Shares purchased by the ESOP with the proceeds of the loan will be held in
a suspense account and released on a pro rata basis as the loan is repaid.
Discretionary contributions to the ESOP and shares released from the suspense
account will be allocated among participants on the basis of each participant's
proportional share of total compensation. Forfeitures will be reallocated among
the remaining plan participants.

Participants will vest in their accrued benefits under the ESOP upon the
completion of five years of service. Benefits may be payable upon a
participant's retirement, early retirement, death, disability, or termination of
employment. The Savings Bank's contributions to the ESOP are not fixed, so
benefits payable under the ESOP cannot be estimated.

It is anticipated that Messrs. Chiles, Kolb and Dallmeyer will be
appointed by the Board of Directors of the Savings Bank to serve as trustees of
the ESOP. Under the ESOP, the trustees must vote all allocated shares held in
the ESOP in accordance with the instructions of plan participants and allocated
shares for which no instructions are received must be voted in the same ratio on
any matter as those shares for which instructions are given.

<PAGE>
Pursuant to SOP 93-6, compensation expense for a leveraged ESOP is
recorded at the fair market value of the ESOP shares when committed to be
released to participants' accounts.

If the ESOP purchases newly issued shares from the Holding Company, total
stockholders' equity would neither increase nor decrease. However, on a per
share basis, stockholders' equity and per share net earnings would decrease
because of the increase in the number of outstanding shares.

The ESOP will be subject to the requirements of ERISA and the regulations
of the IRS and the Department of Labor issued thereunder. The Savings Bank
intends to request a determination letter from the IRS regarding the tax-
qualified status of the ESOP. Although no assurance can be given that a
favorable determination letter will be issued, the Savings Bank expects that a
favorable determination letter will be received by the ESOP.

1996 Stock Option Plan. The Board of Directors of the Holding Company
intends to adopt the Stock Option Plan and to submit the Stock Option Plan to
the stockholders for approval at a meeting held no earlier than six months
following consummation of the Conversion. The approval of a majority vote of
the Holding Company's outstanding shares is required prior to the implementation
of the Stock Option Plan within one year of the consummation of the Conversion.
The Stock Option Plan will comply with all applicable regulatory requirements.
However, the Stock Option Plan will not be approved or endorsed by the OTS.

The Stock Option Plan will be designed to attract and retain qualified
management personnel and nonemployee directors, to provide such officers, key
employees and nonemployee directors with a proprietary interest in the Holding
Company as a incentive to contribute to the success of the Holding Company and
the Savings Bank, and to reward officers and key employees for outstanding
performance. The Stock Option Plan will provide for the grant of incentive
stock options ("ISOs") intended to comply with the requirements of Section 422
of the Code and for nonqualified stock options ("NQOs"). Upon receipt of
stockholder approval of the Stock Option Plan, stock options may be granted to
key employees of the Holding Company and its subsidiaries, including the Savings
Bank. Unless sooner terminated, the Stock Option Plan will continue in effect
for a period of ten years from the date the Stock Option Plan is approved by
stockholders.

A number of authorized shares of Common Stock equal to 10% of the number
of shares of Common Stock issued in connection with the Conversion will be
reserved for future issuance under the Stock Option Plan (143,750 shares based
on the issuance of 1,437,500 shares at the maximum of the Estimated Valuation
Range). Shares acquired upon exercise of options will be authorized but
unissued shares or treasury shares. In the event of a stock split, reverse
stock split, stock dividend, or similar event, the number of shares of Common
Stock under the Stock Option Plan, the number of shares to which any award
relates and the exercise price per share under any option may be adjusted by the
Committee to reflect the increase or decrease in the total number of shares of
Common Stock outstanding.

The Stock Option Plan will be administered and interpreted by a committee
of the Board of Directors ("Committee") which is "disinterested" pursuant to
applicable regulations under the federal securities laws. Under the Stock
Option Plan, the Committee will determine which officers and key employees will
be granted options, whether such options will be ISOs or NQOs, the number of
shares subject to each option, and the exercisability of such options. The per
share exercise price of an option will equal at least 100% of the fair market
value of a share of Common Stock on the date the option is granted.

The number of options granted to nonemployee directors and the terms
thereof will be determined under a formula set forth in the Stock Option Plan.
The formula will provide that no individual nonemployee director may be awarded
an option covering in excess of 5% of the number of shares of Common Stock
reserved under the Plan. All options granted to nonemployee directors will be
NQOs and such options will be granted at an exercise price equal to 100% of the
fair market value of the Common Stock on the date the option is granted.
Options granted upon the effective date of the Stock Option Plan will become
exercisable ratably over a five-year period following the date of grant.
However, unvested options will be immediately exercisable in the event of the
recipient's death

<PAGE>
or disability. Unvested options will also be exercisable following a change in
control (as defined in the Stock Option Plan) of the Holding Company or the
Savings Bank to the extent authorized or not prohibited by applicable law or
regulations.

Each stock option that is awarded to an officer or key employee will
remain exercisable at any time on or after the date it vests through the earlier
to occur of the tenth anniversary of the date of grant or three months after the
date on which the optionee terminates employment (one year in the event of the
optionee's termination by reason of death or disability), unless such period is
extended by the Committee. Each stock option that is awarded to a nonemployee
director will remain exercisable through the earlier to occur of the tenth
anniversary of the date of grant or one year (two years in the event of a
nonemployee director's death or disability) following the termination of a
nonemployee director's service on the Board. All stock options are
nontransferable except by will or the laws of descent or distribution.

The Stock Option Plan will also provide that upon the payment of an
"extraordinary dividend" by the Holding Company, each optionee will receive a
cash payment equivalent to the dividends that would have been payable to such
optionee had the options been exercised on or before the record date of such
dividend. For purposes of the Stock Option Plan, an "extraordinary dividend" is
a dividend payable at a rate in excess of the Savings Bank's weighted average
cost of funds on interest-bearing liabilities for the 12-month period preceding
the record date of the dividend.

Under current provisions of the Code, the federal tax treatment of ISOs
and NQOs is different. With respect to ISOs, an optionee who satisfies certain
holding period requirements will not recognize income at the time the option is
granted or at the time the option is exercised. If the holding period
requirements are satisfied, the optionee will generally recognize capital gain
or loss upon a subsequent disposition of the shares of Common Stock received
upon the exercise of a stock option. If the holding period requirements are not
satisfied, the difference between the fair market value of the Common Stock on
the date of grant and the option exercise price, if any, will be taxable to the
optionee at ordinary income tax rates. A federal income tax deduction generally
will not be available to the Holding Company as a result of the grant or
exercise of an ISO, unless the optionee fails to satisfy the holding period
requirements. With respect to NQOs, the grant of an NQO generally is not a
taxable event for the optionee and no tax deduction will be available to the
Holding Company. However, upon the exercise of an NQO, the difference between
the fair market value of the Common Stock on the date of exercise and the option
exercise price generally will be treated as compensation to the optionee upon
exercise, and the Holding Company will be entitled to a compensation expense
deduction in the amount of income realized by the optionee.

Subject to stockholder approval of the Stock Option Plan, the Committee
intends to grant awards under the Stock Option Plan equal to the following
percentages of shares issued in the Offerings: Mr. Chiles -- 2%; other officers
and employees -- 3%. In addition, each current nonemployee director (six
persons) is intended to receive an award equal to 0.5% of the number of shares
issued in the Offerings. The balance of the shares reserved under the Stock
Option Plan, or a number of shares equal to 2% of the number of shares issued in
the Offerings, are expected to be allocated in the future to current and
prospective officers and employees.

Management Recognition Plan. Following the Conversion, the Board of
Directors of the Holding Company intends to adopt an MRP for officers,
employees, and nonemployee directors of the Holding Company and the Savings
Bank. The MRP will enable the Holding Company and the Savings Bank to provide
participants with a proprietary interest in the Holding Company as an incentive
to contribute to the success of the Holding Company and the Savings Bank.

The MRP will be submitted to stockholders for approval at a meeting to be
held no earlier than six months following consummation of the Conversion. The
approval of a majority vote of the Holding Company's stockholders is required
prior to implementation of the MRP within one year of the consummation of the
Conversion. The MRP will comply with all applicable regulatory requirements.
However, the OTS will not approve or endorse the MRP. The MRP expects to
acquire a number of shares of Common Stock equal to 4% of the Common Stock
issued in

<PAGE>
connection with the Conversion (57,500 shares based on the issuance of 1,437,500
shares in the Conversion at the maximum of the Estimated Valuation Range). Such
shares will be acquired on the open market, if available, with funds contributed
by the Holding Company to a trust which the Holding Company may establish in
conjunction with the MRP ("MRP Trust") or from authorized but unissued shares or
treasury shares of the Holding Company.

A committee of the Board of Directors of the Holding Company will
administer the MRP, the members of which will also serve as trustees of the MRP
Trust, if formed. The trustees will be responsible for the investment of all
funds contributed by the Holding Company to the MRP Trust.

Shares of Common Stock granted pursuant to the MRP will be in the form of
restricted stock payable ratably over a five-year period following the date of
grant. During the period of restriction, all shares will be held in escrow by
the Holding Company or by the MRP Trust. If a recipient terminates employment
for reasons other than death or disability, the recipient will forfeit all
rights to allocated shares that are then subject to restriction. In the event
of the recipient's death or disability, all restrictions will expire and all
allocated shares will become unrestricted. In addition, all allocated shares
will become unrestricted in the event of a change in control (as defined in the
MRP) of the Holding Company or the Savings Bank to the extent authorized or not
prohibited by applicable law or regulations. Compensation expense in the amount
of the fair market value of the Common Stock at the date of the grant to the
recipient will be recognized during the years in which the shares vest.

The Board of Directors of the Holding Company may terminate the MRP at any
time and, upon termination, all unallocated shares of Common Stock will revert
to the Holding Company.

A recipient of an MRP award in the form of restricted stock generally will
not recognize income upon an award of shares of Common Stock, and the Holding
Company will not be entitled to a federal income tax deduction, until the
termination of the restrictions. Upon such termination, the recipient will
recognize ordinary income in an amount equal to the fair market value of the
Common Stock at the time and the Holding Company will be entitled to a deduction
in the same amount after satisfying federal income tax withholding requirements.
However, the recipient may elect to recognize ordinary income in the year the
restricted stock is granted in an amount equal to the fair market value of the
shares at that time, determined without regard to the restrictions. In that
event, the Holding Company will be entitled to a deduction in such year and in
the same amount. Any gain or loss recognized by the recipient upon subsequent
disposition of the stock will be either a capital gain or capital loss.

Subject to stockholder approval of the MRP, the Committee intends to grant
awards under the MRP equal to the following percentages of shares issued in the
Offerings: Mr. Chiles -- 1%; other officers and employee -- 1.8%. In addition,
each nonemployee director (six persons) is intended to receive an award equal to
0.2% of the number of shares issued in the Offerings.

Transactions with the Savings Bank

Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and must not involve more than the
normal risk of repayment or present other unfavorable features. The Savings
Bank is therefore prohibited from making any new loans or extensions of credit
to the Savings Bank's executive officers and directors at different rates or
terms than those offered to the general public and has adopted a policy to this
effect. In addition, loans made to a director or executive officer in an amount
that, when aggregated with the amount of all other loans to such person and his
or her related interests, are in excess of the greater of $25,000 or 5% of the
Savings Bank's capital and surplus (up to a maximum of $500,000) must be
approved in advance by a majority of the disinterested members of the Board of
Directors. See "REGULATION -- Federal Regulation of Savings Associations --
Transactions with Affiliates." The aggregate amount of loans by the Savings
Bank to its executive officers and directors was $551,000 at December 31, 1995,
or approximately 2.6% of pro forma stockholders' equity (based on the issuance
of the maximum of the Estimated Valuation Range).

<PAGE>
REGULATION

General

The Savings Bank is subject to extensive regulation, examination and
supervision by the OTS as its chartering agency, and the FDIC, as the insurer of
its deposits. The activities of federal savings institutions are governed by
the Home Owners' Loan Act, as amended (the "HOLA") and, in certain respects, the
Federal Deposit Insurance Act ("FDIA") and the regulations issued by the OTS and
the FDIC to implement these statutes. These laws and regulations delineate the
nature and extent of the activities in which federal savings associations may
engage. Lending activities and other investments must comply with various
statutory and regulatory capital requirements. In addition, the Savings Bank's
relationship with its depositors and borrowers is also regulated to a great
extent, especially in such matters as the ownership of deposit accounts and the
form and content of the Savings Bank's mortgage documents. The Savings Bank
must file reports with the OTS and the FDIC concerning its activities and
financial condition in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with, or acquisitions of,
other financial institutions. There are periodic examinations by the OTS and
the FDIC to review the Savings Bank's compliance with various regulatory
requirements. The regulatory structure also gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities and examination policies, including policies with respect to the
classification of assets and the establishment of adequate loan loss reserves
for regulatory purposes. Any change in such policies, whether by the OTS, the
FDIC or Congress, could have a material adverse impact on the Holding Company,
the Savings Bank and their operations. The Holding Company, as a savings and
loan holding company, will also be required to file certain reports with, and
otherwise comply with the rules and regulations of, the OTS.

Federal Regulation of Savings Associations

Office of Thrift Supervision. The OTS is an office in the Department of
the Treasury subject to the general oversight of the Secretary of the Treasury.
The OTS generally possesses the supervisory and regulatory duties and
responsibilities formerly vested in the Federal Home Loan Bank Board. Among
other functions, the OTS issues and enforces regulations affecting federally
insured savings associations and regularly examines these institutions.

Federal Home Loan Bank System. The FHLB System, consisting of 12 FHLBs, is
under the jurisdiction of the Federal Housing Finance Board ("FHFB"). The
designated duties of the FHFB are to: supervise the FHLBs; ensure that the
FHLBs carry out their housing finance mission; ensure that the FHLBs remain
adequately capitalized and able to raise funds in the capital markets; and
ensure that the FHLBs operate in a safe and sound manner.

The Savings Bank, as a member of the FHLB-Des Moines, is required to
acquire and hold shares of capital stock in the FHLB-Des Moines in an amount
equal to the greater of (i) 1.0% of the aggregate outstanding principal amount
of residential mortgage loans, home purchase contracts and similar obligations
at the beginning of each year, or (ii) 1/20 of its advances (borrowings) from
the FHLB-Des Moines. The Savings Bank is in compliance with this requirement
with an investment in FHLB-Des Moines stock of $939,000 at December 31, 1995.

Among other benefits, the FHLB provides a central credit facility primarily
for member institutions. It is funded primarily from proceeds derived from the
sale of consolidated obligations of the FHLB System. It makes advances to
members in accordance with policies and procedures established by the FHFB and
the Board of Directors of the FHLB-Des Moines.

Federal Deposit Insurance Corporation. The FDIC is an independent federal
agency established originally to insure the deposits, up to prescribed statutory
limits, of federally insured banks and to preserve the safety and soundness of
the banking industry. In 1989 the FDIC also became the insurer, up to the
prescribed limits, of the deposit accounts held at federally insured savings
associations and established two separate insurance funds: the BIF

<PAGE>
and the SAIF. As insurer of deposits, the FDIC has examination, supervisory and
enforcement authority over all savings associations.

The Savings Bank's accounts are insured by the SAIF. The FDIC insures
deposits at the Savings Bank to the maximum extent permitted by law. The
Savings Bank currently 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," and
"undercapitalized" -- which are defined in the same manner as the regulations
establishing the prompt corrective action system under Section 38 of the FDIA,
as discussed below. These three groups are then divided into three subgroups
which reflect varying levels of supervisory concern, from those which are
considered to be healthy to those which are considered to be of substantial
supervisory concern. The matrix so created results in nine assessment risk
classifications, with rates currently ranging from .23% for well capitalized,
financially sound institutions with only a few minor weaknesses to .31% for
undercapitalized institutions that pose a substantial risk of loss to the SAIF
unless effective corrective action is taken. Until the second half of 1995, the
same matrix applied to BIF-member institutions. The FDIC is authorized to raise
assessment rates in certain circumstances. The Savings Bank's assessments
expensed for the year ended December 31, 1995, equaled $180,000.

Effective January 1, 1996, the FDIC substantially reduced deposit insurance
premiums for well-capitalized, well-managed financial institutions that are
members of the BIF. Under the new assessment schedule, rates were reduced to a
range of 0 to 27 basis points, with approximately 92% of BIF members paying the
statutory minimum annual assessment rate of $2,000. With respect to SAIF member
institutions, the FDIC has retained the existing rate schedule of 23 to 31 basis
points. The Savings Bank is, and after the Conversion will remain, a member of
the SAIF rather than the BIF. See "RISK FACTORS -- Recapitalization of SAIF and
Its Impact on SAIF Premiums."

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 Savings Bank.

Liquidity Requirements. Under OTS regulations, each savings institution is
required to maintain an average daily balance of liquid assets (cash, certain
time deposits and savings accounts, bankers' acceptances, and specified U.S.
Government, state or federal agency obligations and certain other investments)
equal to a monthly average of not less than a specified percentage (currently
5.0%) of its net withdrawable accounts plus short-term borrowings. OTS
regulations also require each savings institution to maintain an average daily
balance of short-term liquid assets at a specified percentage (currently 1.0%)
of the total of its net withdrawable savings accounts and borrowings payable in
one year or less. Monetary penalties may be imposed for failure to meet
liquidity requirements. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources."

Prompt Corrective Action. Under Section 38 of the FDIA, as added by the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), each
federal banking agency is required to implement a system of prompt corrective
action for institutions that it regulates. The federal banking agencies have
promulgated substantially similar regulations to implement this system of prompt
corrective action. Under the regulations, an institution shall be deemed to be
(i) "well capitalized" if it has a total risk-based capital ratio of 10.0% or
more, has a Tier I risk-based capital ratio of 6.0% or more, has a leverage
ratio of 5.0% or more and is not subject to specified requirements to meet and
maintain a specific capital level for any capital measure; (ii) "adequately
capitalized" if it has a total risk-based capital ratio of 8.0% or more, a
Tier I risk-based capital ratio of 4.0% or more and a leverage

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ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the
definition of "well capitalized;" (iii) "undercapitalized" if it has a total
risk-based capital ratio that is less than 8.0%, a Tier I risk-based capital
ratio that is less than 4.0% or a leverage ratio that is less than 4.0% (3.0%
under certain circumstances); (iv) "significantly undercapitalized" if it has a
total risk-based capital ratio that is less than 6.0%, a Tier I risk-based
capital ratio that is less than 3.0% or a leverage ratio that is less than 3.0%;
and (v) "critically undercapitalized" if it has a ratio of tangible equity to
total assets that is equal to or less than 2.0%.

Section 38 of the FDIA and the implementing regulations also provide that a
federal banking agency may, after notice and an opportunity for a hearing,
reclassify a well capitalized institution as adequately capitalized and may
require an adequately capitalized institution or an undercapitalized institution
to comply with supervisory actions as if it were in the next lower category if
the institution is in an unsafe or unsound condition or has received in its most
recent examination, and has not corrected, a less than satisfactory rating for
asset quality, management, earnings or liquidity. (The OTS may not, however,
reclassify a significantly undercapitalized institution as critically
undercapitalized.)

An institution generally must file a written capital restoration plan that
meets specified requirements, as well as a performance guaranty by each company
that controls the institution, with the appropriate federal banking agency
within 45 days of the date that the institution receives notice or is deemed to
have notice that it is undercapitalized, significantly undercapitalized or
critically undercapitalized. Immediately upon becoming undercapitalized, an
institution shall become subject to the provisions of Section 38 of the FDIA,
which sets forth various mandatory and discretionary restrictions on its
operations.

At December 31, 1995, the Savings Bank was categorized as "well
capitalized" under the prompt corrective action regulations of the OTS.

Standards for Safety and Soundness. The FDIA requires the federal banking
regulatory agencies to prescribe, by regulation, standards for all insured
depository institutions relating to: (i) internal controls, information systems
and internal audit systems; (ii) loan documentation; (iii) credit underwriting;
(iv) interest rate risk exposure; (v) asset growth; and (vi) compensation, fees
and benefits. The federal banking agencies recently adopted final regulations
and Interagency Guidelines Prescribing Standards for Safety and Soundness
("Guidelines") to implement safety and soundness standards required by the FDIA.
The Guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. The agencies also proposed asset
quality and earnings standards which, if adopted in final, would be added to the
Guidelines. Under the final regulations, if the OTS determines that the Savings
Bank fails to meet any standard prescribed by the Guidelines, the agency may
require the Savings Bank to submit to the agency an acceptable plan to achieve
compliance with the standard, as required by the FDIA. The final regulations
establish deadlines for the submission and review of such safety and soundness
compliance plans.

Qualified Thrift Lender Test. All savings associations are required to
meet a qualified thrift lender ("QTL") test set forth in Section 10(m) of the
HOLA and regulations of the OTS thereunder to avoid certain restrictions on
their operations. A savings institution that fails to become or remain a QTL
shall either become a national bank or be subject to the following restrictions
on its operations: (i) the association may not make any new investment or
engage in activities that would not be permissible for national banks; (ii) the
association may not establish any new branch office where a national bank
located in the savings institution's home state would not be able to establish a
branch office; (iii) the association shall be ineligible to obtain new advances
from any FHLB; and (iv) the payment of dividends by the association shall be
subject to the rules regarding the statutory and regulatory dividend
restrictions applicable to national banks. Also, beginning three years after
the date on which the savings institution ceases to be a QTL, the savings
institution would be prohibited from retaining any investment or engaging in any
activity not permissible for a national bank and would be required to repay any
outstanding advances to any FHLB. In addition, within one year of the date on
which a savings association controlled by a company ceases to be a QTL, the
company must register as a bank holding company and become subject to the rules
applicable to such companies. A savings institution may requalify as a QTL if
it thereafter complies with the QTL test.

<PAGE>
Currently, the QTL test requires that 65% of an institution's "portfolio
assets" (as defined) consist of certain housing and consumer-related assets on a
monthly average basis in nine out of every 12 months. Assets that qualify
without limit for inclusion as part of the 65% requirement are loans made to
purchase, refinance, construct, improve or repair domestic residential housing
and manufactured housing; home equity loans; mortgage-backed securities (where
the mortgages are secured by domestic residential housing or manufactured
housing); FHLB stock; and direct or indirect obligations of the FDIC. In
addition, the following assets, among others, may be included in meeting the
test subject to an overall limit of 20% of the savings institution's portfolio
assets: 50% of residential mortgage loans originated and sold within 90 days of
origination; 100% of consumer and educational loans (limited to 10% of total
portfolio assets); and stock issued by the FHLMC or Fannie Mae. Portfolio
assets consist of total assets minus the sum of (i) goodwill and other
intangible assets, (ii) property used by the savings institution to conduct its
business, and (iii) liquid assets up to 20% of the institution's total assets.
At December 31, 1995, the qualified thrift investments of the Savings Bank were
approximately 94.2% of its portfolio assets.

Capital Requirements. Under OTS regulations a savings association must
satisfy three minimum capital requirements: core capital, tangible capital and
risk-based capital. Savings associations must meet all of the standards in
order to comply with the capital requirements. The Holding Company is not
subject to any minimum capital requirements.

OTS capital regulations establish a 3% core capital or leverage ratio
(defined as the ratio of core capital to adjusted total assets). Core capital
is defined to include common stockholders' equity, noncumulative perpetual
preferred stock and any related surplus, and minority interests in equity
accounts of consolidated subsidiaries, less (i) any intangible assets, except
for certain qualifying intangible assets; (ii) certain mortgage servicing
rights; and (iii) equity and debt investments in subsidiaries that are not
"includable subsidiaries," which is defined as subsidiaries engaged solely in
activities not impermissible for a national bank, engaged in activities
impermissible for a national bank but only as an agent for its customers, or
engaged solely in mortgage-banking activities. In calculating adjusted total
assets, adjustments are made to total assets to give effect to the exclusion of
certain assets from capital and to account appropriately for the investments in
and assets of both includable and nonincludable subsidiaries. Institutions that
fail to meet the core capital requirement would be required to file with the OTS
a capital plan that details the steps they will take to reach compliance. In
addition, the OTS's prompt corrective action regulation provides that a savings
institution that has a leverage ratio of less than 4% (3% for institutions
receiving the highest CAMEL examination rating) will be deemed to be
"undercapitalized" and may be subject to certain restrictions. See "-- Federal
Regulation of Savings Associations -- Prompt Corrective Action."

As required by federal law, the OTS has proposed a rule revising its
minimum core capital requirement to be no less stringent than that imposed on
national banks. The OTS has proposed that only those savings associations rated
a composite one (the highest rating) under the CAMEL rating system for savings
associations will be permitted to operate at or near the regulatory minimum
leverage ratio of 3%. All other savings associations will be required to
maintain a minimum leverage ratio of 4% to 5%. The OTS will assess each
individual savings association through the supervisory process on a case-by-case
basis to determine the applicable requirement. No assurance can be given as to
the final form of any such regulation, the date of its effectiveness or the
requirement applicable to the Savings Bank.

Savings associations also must maintain "tangible capital" not less than
1.5% of the Savings Bank's adjusted total assets. "Tangible capital" is defined,
generally, as core capital minus any "intangible assets" other than purchased
mortgage servicing rights.

Each savings institution must maintain total risk-based capital equal to at
least 8% of risk-weighted assets. Total risk-based capital consists of the sum
of core and supplementary capital, provided that supplementary capital cannot
exceed core capital, as previously defined. Supplementary capital includes (i)
permanent capital instruments such as cumulative perpetual preferred stock,
perpetual subordinated debt and mandatory convertible subordinated debt, (ii)
maturing capital instruments such as subordinated debt, intermediate-term
preferred stock and mandatory

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convertible subordinated debt, subject to an amortization schedule, and (iii)
general valuation loan and lease loss allowances up to 1.25% of risk-weighted
assets.

The risk-based capital regulation assigns each balance sheet asset held by
a savings institution to one of four risk categories based on the amount of
credit risk associated with that particular class of assets. Assets not
included for purposes of calculating capital are not included in calculating
risk-weighted assets. The categories range from 0% for cash and securities that
are backed by the full faith and credit of the U.S. Government to 100% for
repossessed assets or assets more than 90 days past due. Qualifying residential
mortgage loans (including multi-family mortgage loans) are assigned a 50% risk
weight. Consumer, commercial, home equity and residential construction loans
are assigned a 100% risk weight, as are nonqualifying residential mortgage loans
and that portion of land loans and nonresidential construction loans that do not
exceed an 80% loan-to-value ratio. The book value of assets in each category is
multiplied by the weighing factor (from 0% to 100%) assigned to that category.
These products are then totalled to arrive at total risk-weighted assets. Off-
balance sheet items are included in risk-weighted assets by converting them to
an approximate balance sheet "credit equivalent amount" based on a conversion
schedule. These credit equivalent amounts are then assigned to risk categories
in the same manner as balance sheet assets and included risk-weighted assets.

The OTS has incorporated an interest rate risk component into its
regulatory capital rule. Under the rule, savings associations with "above
normal" interest rate risk exposure would be subject to a deduction from total
capital for purposes of calculating their risk-based capital requirements. A
savings association's interest rate risk is measured by the decline in the net
portfolio value of its assets (i.e., the difference between incoming and
----
outgoing discounted cash flows from assets, liabilities and off-balance sheet
contracts) that would result from a hypothetical 200 basis point increase or
decrease in market interest rates divided by the estimated economic value of the
association's assets, as calculated in accordance with guidelines set forth by
the OTS. A savings association whose measured interest rate risk exposure
exceeds 2% must deduct an interest rate risk component in calculating its total
capital under the risk-based capital rule. The interest rate risk component is
an amount equal to one-half of the difference between the institution's measured
interest rate risk and 2%, multiplied by the estimated economic value of the
association's assets. That dollar amount is deducted from an association's
total capital in calculating compliance with its risk-based capital requirement.
Under the rule, there is a two quarter lag between the reporting date of an
institution's financial data and the effective date for the new capital
requirement based on that data. A savings association with assets of less than
$300 million and risk-based capital ratios in excess of 12% is not subject to
the interest rate risk component, unless the OTS determines otherwise. The rule
also provides that the Director of the OTS may waive or defer an association's
interest rate risk component on a case-by-case basis. Under certain
circumstances, a savings association may request an adjustment to its interest
rate risk component if it believes that the OTS-calculated interest rate risk
component overstates its interest rate risk exposure. In addition, certain
"well-capitalized" institutions may obtain authorization to use their own
interest rate risk model to calculate their interest rate risk component in lieu
of the OTS-calculated amount. The OTS has postponed the date that the component
will first be deducted from an institution's total capital until savings
associations become familiar with the process for requesting an adjustment to
its interest rate risk component.

See "HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE" for a table that sets
forth in terms of dollars and percentages the OTS tangible, core and risk-based
capital requirements, the Savings Bank's historical amounts and percentages at
December 31, 1995 and pro forma amounts and percentages based upon the
assumptions stated therein.

Limitations On Capital Distributions. OTS regulations impose uniform
limitations on the ability of all savings associations to engage in various
distributions of capital such as dividends, stock repurchases and cash-out
mergers. In addition, OTS regulations require the Savings Bank to give the OTS
30 days' advance notice of any proposed declaration of dividends, and the OTS
has the authority under its supervisory powers to prohibit the payment of
dividends. The regulation utilizes a three-tiered approach which permits
various levels of distributions based primarily upon a savings association's
capital level.

<PAGE>
A Tier 1 savings association has capital in excess of its fully phased-in
capital requirement (both before and after the proposed capital distribution).
Tier 1 savings association may make (without application but upon prior notice
to, and no objection made by, the OTS) capital distributions during a calendar
year up to 100% of its net income to date during the calendar year plus one-half
its surplus capital ratio (i.e., the amount of capital in excess of its fully
----
phased-in requirement) at the beginning of the calendar year or the amount
authorized for a Tier 2 association. Capital distributions in excess of such
amount require advance notice to the OTS. A Tier 2 savings association has
capital equal to or in excess of its minimum capital requirement but below its
fully phased-in capital requirement (both before and after the proposed capital
distribution). Such an association may make (without application) capital
distributions up to an amount equal to 75% of its net income during the previous
four quarters depending on how close the association is to meeting its fully
phased-in capital requirement. Capital distributions exceeding this amount
require prior OTS approval. Tier 3 associations are savings associations with
capital below the minimum capital requirement (either before or after the
proposed capital distribution). Tier 3 associations may not make any capital
distributions without prior approval from the OTS.

The Savings Bank is currently meeting the criteria to be designated a Tier
1 association and, consequently, could at its option (after prior notice to, and
no objection made by, the OTS) distribute up to 100% of its net income during
the calendar year plus 50% of its surplus capital ratio at the beginning of the
calendar year less any distributions previously paid during the year.

Loans to One Borrower. Under the HOLA, savings institutions are generally
subject to the national bank limit on loans to one borrower. Generally, this
limit is 15% of the Savings Bank's unimpaired capital and surplus, plus an
additional 10% of unimpaired capital and surplus, if such loan is secured by
readily-marketable collateral, which is defined to include certain financial
instruments and bullion. The OTS by regulation has amended the loans to one
borrower rule to permit savings associations meeting certain requirements,
including capital requirements, to extend loans to one borrower in additional
amounts under circumstances limited essentially to loans to develop or complete
residential housing units. At December 31, 1995, the Savings Bank's limit on
loans to one borrower was $1.4 million. At December 31, 1995, the Savings
Bank's largest aggregate amount of loans to one borrower was $1.5 million, which
loans were made prior to the implementation of current regulations.

Activities of Associations and Their Subsidiaries. When a savings
association establishes or acquires a subsidiary or elects to conduct any new
activity through a subsidiary that the association controls, the savings
association must notify the FDIC and the OTS 30 days in advance and provide the
information each agency may, by regulation, require. Savings associations also
must conduct the activities of subsidiaries in accordance with existing
regulations and orders.

The OTS may determine that the continuation by a savings association of its
ownership control of, or its relationship to, the subsidiary constitutes a
serious risk to the safety, soundness or stability of the association or is
inconsistent with sound banking practices or with the purposes of the FDIA.
Based upon that determination, the FDIC or the OTS has the authority to order
the savings association to divest itself of control of the subsidiary. The FDIC
also may determine by regulation or order that any specific activity poses a
serious threat to the SAIF. If so, it may require that no SAIF member engage in
that activity directly.

Transactions with Affiliates. Savings associations must comply with
Sections 23A and 23B of the Federal Reserve Act ("Sections 23A and 23B")
relative to transactions with affiliates in the same manner and to the same
extent as if the savings association were a Federal Reserve member bank. A
savings and loan holding company, its subsidiaries and any other company under
common control are considered affiliates of the subsidiary savings association
under the HOLA. Generally, Sections 23A and 23B: (i) limit the extent to which
the insured association or its subsidiaries may engage in certain covered
transactions with an affiliate to an amount equal to 10% of such institution's
capital and surplus and place an aggregate limit on all such transactions with
affiliates to an amount equal to 20% of such capital and surplus, and (ii)
require that all such transactions be on terms substantially the same, or at
least as favorable to the institution or subsidiary, as those provided to a non-
affiliate. The term "covered

<PAGE>
transaction" includes the making of loans, the purchase of assets, the issuance
of a guarantee and similar types of transactions.

Three additional rules apply to savings associations: (i) a savings
association may not make any loan or other extension of credit to an affiliate
unless that affiliate is engaged only in activities permissible for bank holding
companies; (ii) a savings association may not purchase or invest in securities
issued by an affiliate (other than securities of a subsidiary); and (iii) the
OTS may, for reasons of safety and soundness, impose more stringent restrictions
on savings associations but may not exempt transactions from or otherwise
abridge Section 23A or 23B. Exemptions from Section 23A or 23B may be granted
only by the Federal Reserve Board, as is currently the case with respect to all
FDIC-insured banks. The Savings Bank has not been significantly affected by the
rules regarding transactions with affiliates.

The Savings Bank's authority to extend credit to executive officers,
directors and 10% shareholders, as well as entities controlled by such persons,
is currently governed by Sections 22(g) and 22(h) of the Federal Reserve Act,
and Regulation O thereunder. Among other things, these regulations require that
such loans be made on terms and conditions substantially the same as those
offered to unaffiliated individuals and not involve more than the normal risk of
repayment. Regulation O also places individual and aggregate limits on the
amount of loans the Savings Bank may make to such persons based, in part, on the
Savings Bank's capital position, and requires certain board approval procedures
to be followed. The OTS regulations, with certain minor variances, apply
Regulation O to savings institutions.

Regulatory and Criminal Enforcement Provisions. Under the FDIA, the OTS
has primary enforcement responsibility over savings institutions and has the
authority to bring action against all "institution-affiliated parties,"
including stockholders, and any attorneys, appraisers and accountants who
knowingly or recklessly participate in wrongful action likely to have an adverse
effect on an insured institution. Formal enforcement action may range from the
issuance of a capital directive or cease and desist order to removal of officers
or directors, receivership, conservatorship or termination of deposit insurance.
Civil penalties cover a wide range of violations and can amount to $25,000 per
day, or $1 million per day in especially egregious cases. Under the FDIA, the
FDIC has the authority to recommend to the Director of the OTS that enforcement
action be taken with respect to a particular savings institution. If action is
not taken by the Director, the FDIC has authority to take such action under
certain circumstances. Federal law also establishes criminal penalties for
certain violations.

Savings and Loan Holding Company Regulations

Holding Company Acquisitions. The HOLA and OTS regulations issued
thereunder generally prohibit a savings and loan holding company, without prior
OTS approval, from acquiring more than 5% of the voting stock of any other
savings association or savings and loan holding company or controlling the
assets thereof. They also prohibit, among other things, any director or officer
of a savings and loan holding company, or any individual who owns or controls
more than 25% of the voting shares of such holding company, from acquiring
control of any savings association not a subsidiary of such savings and loan
holding company, unless the acquisition is approved by the OTS.

Holding Company Activities. As a unitary savings and loan holding company,
the Holding Company generally is not subject to activity restrictions. If the
Holding Company acquires control of another savings association as a separate
subsidiary other than in a supervisory acquisition, it would become a multiple
savings and loan holding company. There generally are more restrictions on the
activities of a multiple savings and loan holding company than on those of a
unitary savings and loan holding company. The HOLA provides that, among other
things, no multiple savings and loan holding company or subsidiary thereof which
is not an insured association shall commence or continue for more than two years
after becoming a multiple savings and loan association holding company or
subsidiary thereof, any business activity other than: (i) furnishing or
performing management services for a subsidiary insured institution, (ii)
conducting an insurance agency or escrow business, (iii) holding, managing, or
liquidating assets owned by or acquired from a subsidiary insured institution,
(iv) holding or managing properties

<PAGE>
used or occupied by a subsidiary insured institution, (v) acting as trustee
under deeds of trust, (vi) those activities previously directly authorized by
regulation as of March 5, 1987 to be engaged in by multiple holding companies or
(vii) those activities authorized by the Federal Reserve Board as permissible
for bank holding companies, unless the OTS by regulation, prohibits or limits
such activities for savings and loan holding companies. Those activities
described in (vii) above also must be approved by the OTS prior to being engaged
in by a multiple holding company.

Qualified Thrift Lender Test. The HOLA requires any savings and loan
holding company that controls a savings association that fails the QTL test, as
explained under "-- Federal Regulation of Savings Associations -- Qualified
Thrift Lender Test," must, within one year after the date on which the
association ceases to be a QTL, register as and be deemed a bank holding company
subject to all applicable laws and regulations.

TAXATION

Federal Taxation

General. The Holding Company and the Savings Bank will report their income
on a fiscal year basis using the accrual method of accounting and will be
subject to federal income taxation in the same manner as other corporations with
some exceptions, including particularly the Savings Bank's reserve for bad debts
discussed below. The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax rules
applicable to the Savings Bank or the Holding Company.

Tax Bad Debt Reserves. Savings institutions such as the Savings Bank which
meet certain definitional tests primarily relating to their assets and the
nature of their business ("qualifying thrifts") are permitted to establish a
reserve for bad debts and to make annual additions thereto, which additions may,
within specified formula limits, be deducted in arriving at their taxable
income. The Savings Bank's deduction with respect to "qualifying loans," which
are generally loans secured by certain interests in real property, may be
computed using an amount based on the Savings Bank's actual loss experience, or
a percentage equal to 8% of the Savings Bank's taxable income, computed with
certain modifications and reduced by the amount of any permitted additions to
the nonqualifying reserve. The Savings Bank's deduction with respect to
nonqualifying loans must be computed under the experience method which
essentially allows a deduction based on the Savings Bank's actual loss
experience over a period of several years. Each year the Savings Bank selects
the most favorable way to calculate the deduction attributable to an addition to
the tax bad debt reserve. The Savings Bank used the percentage method bad debt
deduction for the years ended December 31, 1993, 1994 and 1995.

The Savings Bank currently satisfies the qualifying thrift definitional
tests. If the Savings Bank failed to satisfy such tests in any taxable year, it
would be unable to make additions to its bad debt reserve. Instead, the Savings
Bank would be required to deduct bad debts as they occur and would additionally
be required to recapture its bad debt reserve deductions ratably over a multi-
year period. Among other things, the qualifying thrift definitional tests
require the Savings Bank to hold at least 60% of its assets as "qualifying
assets." Qualifying assets generally include cash, obligations of the United
States or any agency or instrumentality thereof, certain obligations of a state
or political subdivision thereof, loans secured by interests in improved
residential real property or by savings accounts, student loans and property
used by the Savings Bank in the conduct of its banking business. The Savings
Bank's ratio of qualifying assets to total assets exceeded 60% through December
31, 1995. Although there can be no assurance that the Savings Bank will
continue to satisfy the 60% test, management believes that this level of
qualifying assets can be maintained by the Savings Bank.

The amount of the addition to the reserve for losses on qualifying real
property loans under the percentage-of-taxable-income method cannot exceed the
amount necessary to increase the balance of the reserve for losses on qualifying
real property loans at the close of the taxable year to 6% of the balance of the
qualifying real property loans outstanding. Also, if the qualifying thrift uses
the percentage of taxable income method, then the qualifying thrift's aggregate
addition to its reserve for losses on qualifying real property loans cannot,
when added to the

<PAGE>
addition to the reserve for losses on nonqualifying loans, exceed the amount by
which: (i) 12% of the amount that the total deposits or withdrawable accounts of
depositors of the qualifying thrift at the close of the taxable year exceeds
(ii) the sum of the qualifying thrift's surplus, undivided profits and reserves
at the beginning of such year. The Savings Bank does not expect this overall
limitation to restrict the Savings Bank's deduction for additions to its bad
debt reserve for the year ending December 31, 1995. At December 31, 1995, the
Savings Bank's total bad debt reserve for tax purposes was approximately $3.1
million.

Proposed legislation would eliminate future bad debt deductions and would
require thrifts to recapture into income over a six-year period their post-1987
additions to their bad debt tax reserves, thereby generating additional tax
liability. Under this proposal, the bad debt recapture would be suspended for
up to two years if, during those years, the institution satisfies a residential
loan requirement. At December 31, 1995, the Savings Bank's post-1987 reserves
totalled $140,000. It is uncertain when or if the proposed legislation will be
passed, and, if passed, in what form the legislation would be passed.

Distributions. To the extent that the Savings Bank makes "nondividend
distributions" to the Holding Company that are considered as made: (i) from the
reserve for losses on qualifying real property loans, to the extent the reserve
for such losses exceeds the amount that would have been allowed under the
experience method; or (ii) from the supplemental reserve for losses on loans
("Excess Distributions"), then an amount based on the amount distributed will be
included in the Savings Bank's taxable income. Nondividend distributions
include distributions in excess of the Savings Bank's current and accumulated
earnings and profits, distributions in redemption of stock, and distributions in
partial or complete liquidation. However, dividends paid out of the Savings
Bank's current or accumulated earnings and profits, as calculated for federal
income tax purposes, will not be considered to result in a distribution from the
Savings Bank's bad debt reserve. Thus, any dividends to the Holding Company
that would reduce amounts appropriated to the Savings Bank's bad debt reserve
and deducted for federal income tax purposes would create a tax liability for
the Savings Bank. The amount of additional taxable income attributable to an
Excess Distribution is an amount that, when reduced by the tax attributable to
the income, is equal to the amount of the distribution. Thus, if, after the
Conversion, the Savings Bank makes a "nondividend distribution," then
approximately one and one-half times the amount so used would be includable in
gross income for federal income tax purposes, assuming a 35% corporate income
tax rate (exclusive of state and local taxes). See "REGULATION" and "DIVIDEND
POLICY" for limits on the payment of dividends by the Savings Bank. The Savings
Bank does not intend to pay dividends that would result in a recapture of any
portion of its tax bad debt reserve.

Corporate Alternative Minimum Tax. The Code imposes a tax on alternative
minimum taxable income ("AMTI") at a rate of 20%. The excess of the tax bad
debt reserve deduction using the percentage of taxable income method over the
deduction that would have been allowable under the experience method is treated
as a preference item for purposes of computing the AMTI. In addition, only 90%
of AMTI can be offset by net operating loss carryovers. AMTI is increased by an
amount equal to 75% of the amount by which the Savings Bank's adjusted current
earnings exceeds its AMTI (determined without regard to this preference and
prior to reduction for net operating losses). For taxable years beginning after
December 31, 1986, and before January 1, 1996, an environmental tax of .12% of
the excess of AMTI (with certain modification) over $2.0 million is imposed on
corporations, including the Savings Bank, whether or not an Alternative Minimum
Tax ("AMT") is paid.

Dividends-Received Deduction and Other Matters. The Holding Company may
exclude from its income 100% of dividends received from the Savings Bank as a
member of the same affiliated group of corporations. The corporate dividends-
received deduction is generally 70% in the case of dividends received from
unaffiliated corporations with which the Holding Company and the Savings Bank
will not file a consolidated tax return, except that if the Holding Company or
the Savings Bank owns more than 20% of the stock of a corporation distributing a
dividend, then 80% of any dividends received may be deducted.

<PAGE>
There have not been any IRS audits of the Savings Bank's federal income tax
returns during the past five years.

State Taxation

Missouri. Missouri-based thrift institutions, such as the Savings Bank,
are subject to a special financial institutions tax, based on net income without
regard to net operating loss carryforwards, at the rate of 7% of net income.
This tax is in lieu of certain other state taxes on thrift institutions, on
their property, capital or income, except taxes on tangible personal property
owned by the Savings Bank and held for lease or rental to others and on real
estate, contributions paid pursuant to the Unemployment Compensation Law of
Missouri, social security taxes, sales taxes and use taxes. In addition, the
Savings Bank is entitled to credit against this tax all taxes paid to the State
of Missouri or any political subdivision, except taxes on tangible personal
property owned by the Savings Bank and held for lease or rental to others and on
real estate, contributions paid pursuant to the Unemployment Compensation Law of
Missouri, social security taxes, sales and use taxes, and taxes imposed by the
Missouri Financial Institutions Tax Law. Missouri thrift institutions are not
subject to the regular corporate income tax.

Delaware. As a Delaware holding company not earning income in Delaware,
the Holding Company is exempted from Delaware corporate income tax, but is
required to file an annual report with and pay an annual franchise tax to the
State of Delaware.

THE CONVERSION

The OTS has given approval to the Plan subject to the Plan's approval by
the members of the Savings Bank entitled to vote on the matter and subject to
the satisfaction of certain other conditions imposed by the OTS in its approval.
OTS approval, however, does not constitute a recommendation or endorsement of
the Plan.

General

On December 19, 1995, the Board of Directors of the Savings Bank
unanimously adopted the Plan of Conversion, pursuant to which the Savings Bank
will be converted from a federally chartered mutual savings bank to a federally
chartered stock savings bank to be held as a wholly-owned subsidiary of the
Holding Company, a newly formed Delaware corporation. The following discussion
of the Plan of Conversion is qualified in its entirety by reference to the Plan
of Conversion, which is attached as Exhibit A to the Savings Bank's Proxy
Statement and is available from the Savings Bank upon request. The OTS has
approved the Plan of Conversion subject to the Plan's approval by the members of
the Savings Bank entitled to vote on the matter at a Special Meeting called for
that purpose to be held on June 4, 1996, and subject to the satisfaction of
certain other conditions imposed by the OTS in its approval.

If the Board of Directors of the Savings Bank decides for any reason, such
as possible delays resulting from overlapping regulatory processing or policies
or conditions that could adversely affect the Savings Bank's or the Holding
Company's ability to consummate the Conversion and transact its business as
contemplated herein and in accordance with the Savings Bank's operating
policies, at any time prior to the issuance of the Common Stock, not to use the
holding company form of organization in implementing the Conversion, the Plan of
Conversion will be amended to not use the holding company form of organization
in the Conversion. In the event that such a decision is made, the Savings Bank
will promptly refund all subscriptions or orders received together with accrued
interest, withdraw the Holding Company's registration statement from the SEC and
will take all steps necessary to complete the Conversion and proceed with a new
offering without the Holding Company, including filing any necessary documents
with the OTS. In such event, and provided there is no regulatory action,
directive or other consideration upon which basis the Savings Bank determines
not to complete the Conversion, the Savings Bank will issue and sell the common
stock of the Savings Bank. There can be no assurance that the OTS would approve
the Conversion if

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the Savings Bank decided to proceed without the Holding Company. The following
description of the Plan assumes that a holding company form of organization will
be utilized in the Conversion. In the event that a holding company form of
organization is not utilized, all other pertinent terms of the Plan as described
below will apply to the Conversion of the Savings Bank from mutual to stock form
of organization and the sale of the Savings Bank's common stock.

The Conversion will be accomplished through adoption of a Federal Stock
Charter and Bylaws to authorize the issuance of capital stock by the Savings
Bank. Under the Plan, 1,062,500 to 1,437,500 shares of Common Stock are being
offered for sale by the Holding Company at the Purchase Price of $10.00 per
share. As part of the Conversion, the Savings Bank will issue all of its newly
issued common stock (1,000 shares) to the Holding Company in exchange for 50% of
the net proceeds from the sale of Common Stock by the Holding Company.

The Plan of Conversion provides generally that: (i) the Savings Bank will
convert from a federally chartered mutual savings bank to a federally chartered
stock savings bank; (ii) the Common Stock will be offered by the Holding Company
in the Subscription Offering to persons having Subscription Rights; (iii) if
necessary, shares of Common Stock not subscribed for in the Subscription
Offering will be offered in a Direct Community Offering to certain members of
the general public, with preference given to natural persons and trusts of
natural persons residing in the Local Community, and then to certain members of
the general public in a Syndicated Community Offering through a syndicate of
registered broker-dealers pursuant to selected dealers agreements; and (iv) the
Holding Company will purchase all of the capital stock of the Savings Bank to be
issued in connection with the Conversion. The Conversion will be effected only
upon completion of the sale of at least $10,625,000 of Common Stock to be issued
pursuant to the Plan of Conversion.

As part of the Conversion, the Holding Company is making a Subscription
Offering of its Common Stock to holders of Subscription Rights in the following
order of priority: (i) Eligible Account Holders (depositors with $50.00 or more
on deposit as of September 30, 1994); (ii) the Savings Bank's ESOP;
(iii) Supplemental Eligible Account Holders (depositors with $50.00 or more on
deposit as of March 31, 1996); and (iv) Other Members (depositors of the Savings
Bank as of April 24, 1996 and borrowers of the Savings Bank with loans
outstanding as of March 1, 1995 which continue to be outstanding as of April 24,
1996).

Shares of Common Stock not subscribed for in the Subscription Offering may
be offered for sale in the Direct Community Offering to members of the general
public, with priority being given to natural persons and trusts of natural
persons residing in the Local Community. The Direct Community Offering, if one
is held, is expected to begin immediately after the Expiration Date, but may
begin at anytime during the Subscription Offering. Shares of Common Stock not
sold in the Subscription and Direct Community Offerings may be offered in the
Syndicated Community Offering. Regulations require that the Direct Community
and Syndicated Community Offerings be completed within 45 days after completion
of the Subscription Offering unless extended by the Savings Bank or the Holding
Company with the approval of the regulatory authorities. If the Syndicated
Community Offering is determined not to be feasible, the Board of Directors of
the Savings Bank will consult with the regulatory authorities to determine an
appropriate alternative method for selling the unsubscribed shares of Common
Stock. The Plan of Conversion provides that the Conversion must be completed
within 24 months after the date of the approval of the Plan of Conversion by the
members of the Savings Bank.

No sales of Common Stock may be completed, either in the Subscription,
Direct Community or Syndicated Community Offerings, unless the Plan of
Conversion is approved by the members of the Savings Bank.

The completion of the Offerings, however, is subject to market conditions
and other factors beyond the Savings Bank's control. No assurance can be given
as to the length of time after approval of the Plan of Conversion at the Special
Meeting that will be required to complete the Direct Community or Syndicated
Community Offerings or other sale of the Common Stock. If delays are
experienced, significant changes may occur in the estimated pro forma market
value of the Holding Company and the Savings Bank as converted, together with
corresponding changes in the net proceeds realized by the Holding Company from
the sale of the Common Stock. In the event the

<PAGE>
Conversion is terminated, the Savings Bank would be required to charge all
Conversion expenses against current income.

Orders for shares of Common Stock will not be filled until at least
1,062,500 shares of Common Stock have been subscribed for or sold and the OTS
approves the final valuation and the Conversion closes. If the Conversion is
not completed within 45 days after the last day of the fully extended
Subscription Offering and the OTS consents to an extension of time to complete
the Conversion, subscribers will be given the right to increase, decrease or
rescind their subscriptions. Unless an affirmative indication is received from
subscribers that they wish to continue to subscribe for shares, the funds will
be returned promptly, together with accrued interest at the Savings Bank's
passbook rate from the date payment is received until the funds are returned to
the subscriber. If such period is not extended, or, in any event, if the
Conversion is not completed, all withdrawal authorizations will be terminated
and all funds held will be promptly returned together with accrued interest at
the Savings Bank's passbook rate from the date payment is received until the
Conversion is terminated.

Purposes of Conversion

The Savings Bank's Board of Directors has formed the Holding Company to
serve upon consummation of the Conversion as a holding company with the Savings
Bank as its subsidiary. The Savings Bank, as a mutual savings association, does
not have stockholders and has no authority to issue capital stock. By
converting to the stock form of organization, the Holding Company and the
Savings Bank will be structured in the form used by holding companies of
commercial banks and by a growing number of savings institutions. Management of
the Savings Bank believes that the Conversion offers a number of advantages
which will be important to the future growth and performance of the Savings Bank
in that it is intended: (i) to improve the overall competitive position of the
Savings Bank in its market area and to support possible future expansion and
diversification of operations (currently there are no specific plans,
arrangements or understandings, written or oral, regarding any such activities);
(ii) to afford members of the Savings Bank and others the opportunity to become
stockholders of the Holding Company and thereby participate more directly in,
and contribute to, any future growth of the Holding Company and the Savings
Bank; and (iii) to provide future access to capital markets.

Effects of Conversion to Stock Form on Depositors and Borrowers of the Savings
Bank

Voting Rights. Savings members and borrowers will have no voting rights in
the converted Savings Bank or the Holding Company and therefore will not be able
to elect directors of the Savings Bank or the Holding Company or to control
their affairs. Currently, these rights are accorded to savings members of the
Savings Bank. Subsequent to the Conversion, voting rights will be vested
exclusively in the Holding Company with respect to the Savings Bank and the
holders of the Common Stock as to matters pertaining to the Holding Company.
Each holder of Common Stock shall be entitled to vote on any matter to be
considered by the stockholders of the Holding Company. A stockholder will be
entitled to one vote for each share of Common Stock owned.

Savings Accounts and Loans. The Savings Bank's savings accounts, account
balances and existing FDIC insurance coverage of savings accounts will not be
affected by the Conversion. Furthermore, the Conversion will not affect the
loan accounts, loan balances or obligations of borrowers under their individual
contractual arrangements with the Savings Bank.

Tax Effects. The Savings Bank has received an opinion from Breyer &
Aguggia, Washington, D.C., that the Conversion will constitute a nontaxable
reorganization under Section 368(a)(1)(F) of the Code. Among other things, the
opinion states that: (i) no gain or loss will be recognized to the Savings Bank
in its mutual or stock form by reason of its Conversion; (ii) no gain or loss
will be recognized to its account holders upon the issuance to them of accounts
in the Savings Bank immediately after the Conversion, in the same dollar amounts
and on the same terms and conditions as their accounts at the Savings Bank in
its mutual form plus interest in the liquidation account; (iii) the tax basis of
account holders' accounts in the Savings Bank immediately after the Conversion
will be the same as the tax basis of their accounts immediately prior to
Conversion; (iv) the tax basis of each account holder's interest

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in the liquidation account will be zero; (v) the tax basis of the Common Stock
purchased in the Conversion will be the amount paid and the holding period for
such stock will commence at the date of purchase; and (vi) no gain or loss will
be recognized to account holders upon the receipt or exercise of Subscription
Rights in the Conversion, except to the extent Subscription Rights are deemed to
have value as discussed below. Unlike a private letter ruling issued by the
IRS, an opinion of counsel is not binding on the IRS and the IRS could disagree
with the conclusions reached therein. In the event of such disagreement, no
assurance can be given that the conclusions reached in an opinion of counsel
would be sustained by a court if contested by the IRS.

Based upon past rulings issued by the IRS, the opinion provides that the
receipt of Subscription Rights by Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members under the Plan will be taxable to the
extent, if any, that the Subscription Rights are deemed to have a fair market
value. RP Financial, a financial consulting firm retained by the Savings Bank,
whose findings are not binding on the IRS, has indicated that the Subscription
Rights do not have any value, based on the fact that such rights are acquired by
the recipients without cost, are nontransferable and of short duration and
afford the recipients the right only to purchase shares of the Common Stock at a
price equal to its estimated fair market value, which will be the same price
paid by purchasers in the Direct Community Offering for unsubscribed shares of
Common Stock. If the Subscription Rights are deemed to have a fair market
value, the receipt of such rights may only be taxable to those Eligible Account
Holders, Supplemental Eligible Account Holders and Other Members who exercise
their Subscription Rights. The Savings Bank could also recognize a gain on the
distribution of such Subscription Rights. Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members are encouraged to
consult with their own tax advisors as to the tax consequences in the event the
Subscription Rights are deemed to have a fair market value.

The Savings Bank has also received an opinion from Williams-Keepers, LLP,
Jefferson City, Missouri, that, assuming the Conversion does not result in any
federal income tax liability to the Savings Bank, its account holders, or the
Holding Company, implementation of the Plan of Conversion will not result in any
Missouri income tax liability to such entities or persons.

The opinions of Breyer & Aguggia and Williams-Keepers, LLP and the letter
from RP Financial are filed as exhibits to the Registration Statement. See
"ADDITIONAL INFORMATION."

PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS
REGARDING THE TAX CONSEQUENCES OF THE CONVERSION PARTICULAR TO THEM.

Liquidation Account. In the unlikely event of a complete liquidation of
the Savings Bank in its present mutual form, each depositor in the Savings Bank
would receive a pro rata share of any assets of the Savings Bank remaining after
payment of claims of all creditors (including the claims of all depositors up to
the withdrawal value of their accounts). Each depositor's pro rata share of
such remaining assets would be in the same proportion as the value of his
deposit account to the total value of all deposit accounts in the Savings Bank
at the time of liquidation.

After the Conversion, holders of withdrawable deposit(s) in the Savings
Bank, including certificates of deposit ("Savings Account(s)"), shall not be
entitled to share in any residual assets in the event of liquidation of the
Savings Bank. However, pursuant to OTS regulations, the Savings Bank shall, at
the time of the Conversion, establish a liquidation account in an amount equal
to its total equity as of the date of the latest statement of financial
condition contained herein.

The liquidation account shall be maintained by the Savings Bank subsequent
to the Conversion for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders who retain their Savings Accounts in the Savings Bank.
Each Eligible Account Holder and Supplemental Eligible Account Holder shall,
with respect to each Savings Account held, have a related inchoate interest in a
portion of the liquidation account balance ("subaccount").

<PAGE>
The initial subaccount balance for a Savings Account held by an Eligible
Account Holder or a Supplemental Eligible Account Holder shall be determined by
multiplying the opening balance in the liquidation account by a fraction of
which the numerator is the amount of such holder's "qualifying deposit" in the
Savings Account and the denominator is the total amount of the "qualifying
deposits" of all such holders. Such initial subaccount balance shall not be
increased, and it shall be subject to downward adjustment as provided below.

If the deposit balance in any Savings Account of an Eligible Account Holder
or Supplemental Eligible Account Holder at the close of business on any annual
closing day of the Savings Bank subsequent to September 30, 1994 is less than
the lesser of (i) the deposit balance in such Savings Account at the close of
business on any other annual closing date subsequent to September 30, 1994 or
March 31, 1996 or (ii) the amount of the "qualifying deposit" in such Savings
Account on September 30, 1994 or March 31, 1996, then the subaccount balance for
such Savings Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of
a downward adjustment, such subaccount balance shall not be subsequently
increased, notwithstanding any increase in the deposit balance of the related
Savings Account. If any such Savings Account is closed, the related subaccount
balance shall be reduced to zero.

In the event of a complete liquidation of the Savings Bank (and only in
such event) each Eligible Account Holder and Supplemental Eligible Account
Holder shall be entitled to receive a liquidation distribution from the
liquidation account in the amount of the then current adjusted subaccount
balance(s) for Savings Account(s) then held by such holder before any
liquidation distribution may be made to stockholders. No merger, consolidation,
bulk purchase of assets with assumptions of Savings Accounts and other
liabilities or similar transactions with another federally insured institution
in which the Savings Bank is not the surviving institution shall be considered
to be a complete liquidation. In any such transaction the liquidation account
shall be assumed by the surviving institution.

The Subscription, Direct Community and Syndicated Community Offerings

The Syndicated Community Offering is expected to expire at 9:00 a.m.,
Central Time, on the Expiration Date, unless extended or continued as described
on the cover page of this Prospectus.

Subscription Offering. In accordance with the Plan, nontransferable
Subscription Rights to purchase the Common Stock have been issued to all persons
and entities entitled to purchase the Common Stock in the Subscription Offering.
The amount of the Common Stock which these parties may purchase will be subject
to the availability of the Common Stock for purchase under the categories set
forth in the Plan. Subscription priorities have been established for the
allocation of stock to the extent that the Common Stock is available. These
priorities are as follows:

Category 1: Eligible Account Holders. Each depositor with $50.00 or
more on deposit at the Savings Bank as of September 30, 1994 will receive
nontransferable Subscription Rights to subscribe for up to the greater of
$150,000 of Common Stock, one-tenth of one percent of the total offering of
Common Stock or 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Common Stock to be issued
by a fraction of which the numerator is the amount of qualifying deposit of the
Eligible Account Holder and the denominator is the total amount of qualifying
deposits of all Eligible Account Holders. If the exercise of Subscription
Rights in this category results in an oversubscription, shares of Common Stock
will be allocated among subscribing Eligible Account Holders so as to permit
each Eligible Account Holder, to the extent possible, to purchase a number of
shares sufficient to make such person's total allocation equal 100 shares or the
number of shares actually subscribed for, whichever is less. Thereafter,
unallocated shares will be allocated among subscribing Eligible Account Holders
proportionately, based on the amount of their respective qualifying deposits as
compared to total qualifying deposits of all Eligible Account Holders.
Subscription Rights received by officers and directors in this category based on
their increased deposits in the Savings Bank in the one year period preceding
September 30, 1994 are subordinated to the Subscription Rights of other Eligible
Account Holders.

<PAGE>
Category 2: ESOP. The Plan of Conversion provides that the ESOP shall
receive nontransferable Subscription Rights to purchase up to 8% of the shares
of Common Stock issued in the Conversion. The ESOP intends to purchase 8% of
the shares of Common Stock issued in the Conversion. In the event the number of
shares offered in the Conversion is increased above the maximum of the Estimated
Valuation Range, the ESOP shall have a priority right to purchase any such
shares exceeding the maximum of the Estimated Valuation Range up to an aggregate
of 8% of the Common Stock.

Category 3: Supplemental Eligible Account Holders. Each depositor
with $50.00 or more on deposit as of March 31, 1996 will receive nontransferable
Subscription Rights to subscribe for up to the greater of $150,000 of Common
Stock, one-tenth of one percent of the total offering of Common Stock or 15
times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction of which the numerator is the amount of qualifying deposits of the
Supplemental Eligible Account Holder and the denominator is the total amount of
qualifying deposits of all Supplemental Eligible Account Holders. If the
exercise of Subscription Rights in this category results in an oversubscription,
shares of Common Stock will be allocated among subscribing Supplemental Eligible
Account Holders so as to permit each Supplemental Eligible Account Holder, to
the extent possible, to purchase a number of shares sufficient to make his total
allocation equal 100 shares or the number of shares actually subscribed for,
whichever is less. Thereafter, unallocated shares will be allocated among
subscribing Supplemental Eligible Account Holders proportionately, based on the
amount of their respective qualifying deposits as compared to total qualifying
deposits of all Supplemental Eligible Account Holders.

Category 4: Other Members. Each depositor of the Savings Bank as of
the Voting Record Date and each borrower with a loan outstanding on March 1,
1995 which continues to be outstanding as of the Voting Record Date will receive
nontransferable Subscription Rights to purchase up to $150,000 of Common Stock
in the Conversion to the extent shares are available following subscriptions by
Eligible Account Holders, the Savings Bank's ESOP and Supplemental Eligible
Account Holders. In the event of an oversubscription in this category, the
available shares will be allocated proportionately based on the amount of the
respective subscriptions.

Subscription Rights are nontransferable. Persons selling or otherwise
transferring their rights to subscribe for Common Stock in the Subscription
Offering or subscribing for Common Stock on behalf of another person will be
subject to forfeiture of such rights and possible further sanctions and
penalties imposed by the OTS or another agency of the U.S. Government. Each
person exercising Subscription Rights will be required to certify that he or she
is purchasing such shares solely for his or her own account and that he or she
has no agreement or understanding with any other person for the sale or transfer
of such shares. ONCE TENDERED, SUBSCRIPTION ORDERS CANNOT BE REVOKED WITHOUT
THE CONSENT OF THE SAVINGS BANK AND THE HOLDING COMPANY.

The Subscription Offering and all Subscription Rights under the Plan
will expire at 9:00 a.m., Central Time, on the Expiration Date, whether or not
the Savings Bank has been able to locate each person entitled to such
Subscription Rights. The Subscription Offering may be extended by the Holding
Company and the Savings Bank up to June 21, 1996 without the OTS's approval.
OTS regulations require that the Holding Company complete the sale of Common
Stock within 45 days after the close of the Subscription Offering. If the
Direct Community Offering and the Syndicated Community Offerings are not
completed by July 12, 1996 (or August 5, 1996, if the Subscription Offering is
fully extended), all funds received will be promptly returned with interest at
the Savings Bank's passbook rate and all withdrawal authorizations will be
canceled or, if regulatory approval of an extension of the time period has been
granted, all subscribers and purchasers will be given the right to increase,
decrease or rescind their orders. If an extension of time is obtained, all
subscribers will be notified of such extension and of the duration of any
extension that has been granted, and will be given the right to increase,
decrease or rescind their orders. If an affirmative response to any
resolicitation is not received by the Holding Company from a subscriber, the
subscriber's order will be rescinded and all funds received will be promptly
returned with interest (or withdrawal authorizations will be canceled). No
single extension can exceed 90 days.

<PAGE>
Direct Community Offering. Any shares of Common Stock which remain
unsubscribed for in the Subscription Offering will be offered by the Holding
Company to certain members of the general public in a Direct Community Offering,
with preference given to natural persons and trusts of natural persons residing
in the Local Community. Purchasers in the Direct Community Offering are
eligible to purchase up to $150,000 of Common Stock in the Conversion (or 15,000
shares based on the Purchase Price). In the event an insufficient number of
shares are available to fill orders in the Direct Community Offering, the
available shares will be allocated on a pro rata basis determined by the amount
of the respective orders. The Direct Community Offering, if held, is expected
to commence immediately subsequent to the Expiration Date, but may begin at
anytime during the Subscription Offering. The Direct Community Offering may
terminate on or at any time subsequent to the Expiration Date, but no later than
45 days after the close of the Subscription Offering, unless extended by the
Holding Company and the Savings Bank, with approval of the OTS. Any extensions
beyond 45 days after the close of the Subscription Offering would require a
resolicitation of orders, wherein subscribers would be given the opportunity to
continue their orders, in which case they will need to affirmatively reconfirm
their subscriptions prior to the expiration of the resolicitation offering or
their subscription funds will be promptly refunded with interest at the Savings
Bank's passbook rate, or be permitted to modify or cancel their orders. The
right of any person to purchase shares in the Direct Community Offering is
subject to the absolute right of the Holding Company and the Savings Bank to
accept or reject such purchases in whole or in part. If an order is rejected in
part, the purchaser does not have the right to cancel the remainder of the
order. The Holding Company presently intends to terminate the Direct Community
Offering as soon as it has received orders for all shares available for purchase
in the Conversion.

If all of the Common Stock offered in the Subscription Offering is
subscribed for, no Common Stock will be available for purchase in the Direct
Community Offering.

Syndicated Community Offering. The Plan provides that, if necessary,
all shares of Common Stock not purchased in the Subscription and Direct
Community Offering, if any, may be offered for sale to certain members of the
general public in a Syndicated Community Offering through a syndicate of
registered broker-dealers to be managed by Trident Securities acting as agent of
the Holding Company. The Holding Company and the Savings Bank have the right to
reject orders, in whole or part, in their sole discretion in the Syndicated
Community Offering. Neither Trident Securities nor any registered broker-dealer
shall have any obligation to take or purchase any shares of the Common Stock in
the Syndicated Community Offering; however, Trident Securities has agreed to use
its best efforts in the sale of shares in the Syndicated Community Offering.

Stock sold in the Syndicated Community Offering will be sold at the
$10.00 Purchase Price, the same price as all other shares in the Offering. See
"-- Stock Pricing and Number of Shares to be Issued." No person will be
permitted to subscribe in the Syndicated Community Offering for shares of Common
Stock with an aggregate purchase price of more than $150,000. See "-- Plan of
Distribution for the Subscription, Community and Syndicated Community Offerings"
for a description of the commission to be paid to the selected dealers and to
Trident Securities.

Trident Securities may enter into agreements with selected dealers to
assist in the sale of shares in the Syndicated Community Offering. During the
Syndicated Community Offering, selected dealers may only solicit indications of
interest from their customers to place orders with the Holding Company as of a
certain date ("Order Date") for the purchase of shares of Conversion Stock.
When and if Trident Securities and the Holding Company believe that enough
indications of interest and orders have been received in the Subscription
Offering, the Direct Community Offering and the Syndicated Community Offering to
consummate the Conversion, Trident Securities will request, as of the Order
Date, selected dealers to submit orders to purchase shares for which they have
received indications of interest from their customers. Selected dealers will
send confirmations to such customers on the next business day after the Order
Date. Selected dealers may debit the accounts of their customers on a date
which will be three business days from the Order Date ("Settlement Date").
Customers who authorize selected dealers to debit their brokerage accounts are
required to have the funds for payment in their account on but not before the
Settlement Date. On the Settlement Date, selected dealers will remit funds to
the account that the Holding Company established

<PAGE>
for each selected dealer. Each customer's funds so forwarded to the Holding
Company, along with all other accounts held in the same title, will be insured
by the FDIC up to the applicable $100,000 legal limit. After payment has been
received by the Holding Company from selected dealers, funds will earn interest
at the Savings Bank's passbook rate until the completion of the Offerings. At
the completion of the Conversion, the funds received in the Offerings will be
used to purchase the shares of Common Stock ordered. The shares issued in the
Conversion cannot and will not be insured by the FDIC or any other government
agency. In the event the Conversion is not consummated as described above,
funds with interest will be returned promptly to the selected dealers, who, in
turn, will promptly credit their customers' brokerage accounts.

The Syndicated Community Offering may terminate no more than 45 days
following the Expiration Date, unless extended by the Holding Company with the
approval of the OTS.

In the event the Savings Bank is unable to find purchasers from the
general public for all unsubscribed shares, other purchase arrangements will be
made by the Board of Directors of the Savings Bank, if feasible. Such other
arrangements will be subject to the approval of the OTS. The OTS may grant one
or more extensions of the offering period, provided that (i) no single extension
exceeds 90 days, (ii) subscribers are given the right to increase, decrease or
rescind their subscriptions during the extension period, and (iii) the
extensions do not go more than two years beyond the date on which the members
approved the Plan. If the Conversion is not completed within 45 days after the
close of the Subscription Offering, either all funds received will be returned
with interest (and withdrawal authorizations canceled) or, if the OTS has
granted an extension of time, all subscribers will be given the right to
increase, decrease or rescind their subscriptions at any time prior to 20 days
before the end of the extension period. If an extension of time is obtained,
all subscribers will be notified of such extension and of their rights to modify
their orders. If an affirmative response to any resolicitation is not received
by the Holding Company from a subscriber, the subscriber's order will be
rescinded and all funds received will be promptly returned with interest (or
withdrawal authorizations will be canceled).

Persons in Non-Qualified States. The Holding Company and the Savings
Bank will make reasonable efforts to comply with the securities laws of all
states in the United States in which persons entitled to subscribe for stock
pursuant to the Plan reside. However, the Holding Company and the Savings Bank
are not required to offer stock in the Subscription Offering to any person who
resides in a foreign country or resides in a state of the United States with
respect to which (i) a small number of persons otherwise eligible to subscribe
for shares of Common Stock reside in such state; or (ii) the Holding Company or
the Savings Bank determines that compliance with the securities laws of such
state would be impracticable for reasons of cost or otherwise, including but not
limited to a request that the Holding Company and the Savings Bank or their
officers, directors or trustees register as a broker, dealer, salesman or
selling agent, under the securities laws of such state, or a request to register
or otherwise qualify the Subscription Rights or Common Stock for sale or submit
any filing with respect thereto in such state. Where the number of persons
eligible to subscribe for shares in one state is small, the Holding Company and
the Savings Bank will base their decision as to whether or not to offer the
Common stock in such state on a number of factors, including the size of
accounts held by account holders in the state, the cost of registering or
qualifying the shares or the need to register the Holding Company, its officers,
directors or employees as brokers, dealers or salesmen.

Plan of Distribution for the Subscription, Direct Community and Syndicated
Community Offerings

The Savings Bank and the Holding Company have retained Trident
Securities to consult with and advise the Savings Bank and to assist the Savings
Bank and the Holding Company, on a best efforts basis, in the distribution of
shares in the Offerings. Trident Securities is a broker-dealer registered with
the SEC and a member of the NASD. Trident Securities will assist the Savings
Bank in the Conversion as follows: (i) it will act as marketing advisor with
respect to the Subscription Offering and will represent the Savings Bank as
placement agent on a best efforts basis in the sale of the Common Stock in the
Direct Community Offering if one is held; (ii) it will conduct training sessions
to ensure that directors, officers and employees of the Savings Bank are
knowledgeable regarding the Conversion process; and (iii) it will provide
assistance in the establishment and supervision of the Stock

<PAGE>
Information Center and will train the Savings Bank's staff to record properly
and tabulate orders for the purchase of Common Stock and to respond
appropriately to customer inquiries.

Based upon negotiations between Trident Securities on the one hand and
the Holding Company and the Savings Bank on the other hand concerning fee
structure, Trident Securities will receive a management fee in the amount of
$175,000. Trident and selected dealers participating in the Syndicated
Community Offering may receive a commission of up to 6% for shares sold by them
in the Syndicated Community Offering. Fees and commissions paid to Trident
Securities and to any selected dealers may be deemed to be underwriting fees,
and Trident Securities and such selected dealers may be deemed to be
underwriters. Trident Securities will also be reimbursed for its reasonable
out-of-pocket expenses, including legal fees, not to exceed $40,000 in the
aggregate. Trident Securities has received an advance of $10,000 towards its
reimbursable expenses. For additional information, see "-- Stock Pricing and
Number of Shares to be Issued" and "USE OF PROCEEDS."

The Holding Company and the Savings Bank have also agreed to indemnify
Trident Securities against liabilities and expenses (including legal fees)
incurred in connection with certain claims or litigation arising out of or based
upon untrue statements or omissions contained in the offering material for the
Common Stock or with regard to allocations of shares (in the event of
oversubscription) or determinations of eligibility to purchase shares.

Description of Sales Activities

The Common Stock will be offered in the Subscription and Direct
Community Offerings principally by the distribution of this Prospectus and
through activities conducted at the Savings Bank's Stock Information Center at
its main office facility. The Stock Information Center is expected to operate
during normal business hours throughout the Subscription and Direct Community
Offerings. It is expected that at any particular time, one or more Trident
Securities employees will be working at the Stock Information Center. Such
employees of Trident Securities will be responsible for mailing materials
relating to the Subscription and Direct Community Offerings, responding to
questions regarding the Conversion and the Subscription and Direct Community
Offerings and processing stock orders.

Sales of Common Stock will be made by registered representatives
affiliated with Trident Securities or by the selected dealers managed by Trident
Securities. The management and employees of the Savings Bank may participate in
the Offerings in clerical capacities, providing administrative support in
effecting sales transactions or, when permitted by state securities laws,
answering questions of a mechanical nature relating to the proper execution of
the Order Form. Management of the Savings Bank may answer questions regarding
the business of the Savings Bank when permitted by state securities laws. Other
questions of prospective purchasers, including questions as to the advisability
or nature of the investment, will be directed to registered representatives.
The management and employees of the Holding Company and the Savings Bank have
been instructed not to solicit offers to purchase Common Stock or provide advice
regarding the purchase of Common Stock.

No officer, director or employee of the Savings Bank or the Holding
Company will be compensated, directly or indirectly, for any activities in
connection with the offer or sale of securities issued in the Conversion.

None of the Savings Bank's personnel participating in the Subscription
and Direct Community Offering is registered or licensed as a broker or dealer or
an agent of a broker or dealer. The Savings Bank's personnel will assist in the
above-described sales activities pursuant to an exemption from registration as a
broker or dealer provided by Rule 3a4-1 ("Rule 3a4-1") promulgated under the
Exchange Act. Rule 3a4-1 generally provides that an "associated person of an
issuer" of securities shall not be deemed a broker solely by reason of
participation in the sale of securities of such issuer if the associated person
meets certain conditions. Such conditions include, but are not limited to, that
the associated person participating in the sale of an issuer's securities not be
compensated in connection therewith at the time of participation, that such
person not be associated with a broker or dealer and that such person observe
certain limitations on his participation in the sale of securities. For
purposes of this exemption,

<PAGE>
"associated person of an issuer" is defined to include any person who is a
director, officer or employee of the issuer or a company that controls, is
controlled by or is under common control with the issuer.

Procedure for Purchasing Shares in the Subscription and Direct Community
Offerings

To ensure that each purchaser receives a prospectus at least 48 hours
prior to the Expiration Date in accordance with Rule 15c2-8 under the Exchange
Act, no Prospectus will be mailed any later than five days prior to such date or
hand delivered any later than two days prior to such date. Execution of the
Order Form will confirm receipt or delivery in accordance with Rule 15c2-8.
Order Forms will only be distributed with a Prospectus. The Savings Bank will
accept for processing only orders submitted on Order Forms.

To purchase shares in the Subscription Offering, an executed Order
Form with the required full payment for each share subscribed for, or with
appropriate authorization for withdrawal of full payment from the subscriber's
deposit account with the Savings Bank (which may be given by completing the
appropriate blanks in the Order Form), must be received by the Savings Bank by
9:00 a.m., Central Time, on the Expiration Date. Order Forms which are not
received by such time or are executed defectively or are received without full
payment (or without appropriate withdrawal instructions) are not required to be
accepted. In addition, the Savings Bank is not obligated to accept orders
submitted on photocopied or telecopied Order Forms. The Holding Company and the
Savings Bank have the right to waive or permit the correction of incomplete or
improperly executed Order Forms, but do not represent that they will do so.
Pursuant to the Plan of Conversion, the interpretation by the Holding Company
and the Savings Bank of the terms and conditions of the Plan of Conversion and
of the Order Form will be final. In order to purchase shares in the Direct
Community Offering, the Stock Order Form, accompanied by the required payment
for each share subscribed for, must be received by the Savings Bank prior to the
time the Direct Community Offering terminates, which may be at any time
subsequent to the Expiration Date. Once received, an executed Order Form may
not be modified, amended or rescinded without the consent of the Savings Bank
unless the Conversion has not been completed within 45 days after the end of the
Subscription Offering, unless such period has been extended.

In order to ensure that Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are properly identified as to their
stock purchase priorities, depositors as of the Eligibility Record Date
(September 30, 1994) and/or the Supplemental Eligibility Record Date (March 31,
1996) and/or the Voting Record Date (April 24, 1996) must list all accounts on
the Order Form giving all names in each account, the account number and the
approximate account balance as of such date.

Full payment for subscriptions may be made (i) in cash if delivered in
person at the Savings Bank, (ii) by check, bank draft, or money order, or (iii)
by authorization of withdrawal from deposit accounts maintained with the Savings
Bank. Appropriate means by which such withdrawals may be authorized are
provided on the Order Form. No wire transfers will be accepted. Interest will
be paid on payments made by cash, check, bank draft or money order at the
Savings Bank's passbook rate from the date payment is received until the
completion or termination of the Conversion. If payment is made by
authorization of withdrawal from deposit accounts, the funds authorized to be
withdrawn from a deposit account will continue to accrue interest at the
contractual rates until completion or termination of the Conversion (unless the
certificate matures after the date of receipt of the Order Form but prior to
closing, in which case funds will earn interest at the passbook rate from the
date of maturity until consummation of the Conversion), but a hold will be
placed on such funds, thereby making them unavailable to the depositor until
completion or termination of the Conversion. At the completion of the
Conversion, the funds received in the Offerings will be used to purchase the
shares of Common Stock ordered. The shares issued in the Conversion cannot and
will not be insured by the FDIC or any other government agency. In the event
that the Conversion is not consummated for any reason, all funds submitted will
be promptly refunded with interest as described above.

If a subscriber authorizes the Savings Bank to withdraw the amount of
the aggregate Purchase Price from his deposit account, the Savings Bank will do
so as of the effective date of Conversion, though the account must contain the
full amount necessary for payment at the time the subscription order is
received. The Savings Bank will

<PAGE>
waive any applicable penalties for early withdrawal from certificate accounts.
If the remaining balance in a certificate account is reduced below the
applicable minimum balance requirement at the time that the funds actually are
transferred under the authorization the certificate will be canceled at the time
of the withdrawal, without penalty, and the remaining balance will earn interest
at the Savings Bank's passbook rate.

If the ESOP subscribes for shares during the Subscription Offering,
the ESOP will not be required to pay for the shares subscribed for at the time
it subscribes, but rather may pay for such shares of Common Stock subscribed for
at the Purchase Price upon consummation of the Conversion, provided that there
is in force from the time of its subscription until such time, a loan commitment
from an unrelated financial institution or the Holding Company to lend to the
ESOP, at such time, the aggregate Purchase Price of the shares for which it
subscribed.

Individual Retirement Accounts ("IRAs") maintained in the Savings Bank
do not permit investment in the Common Stock. A depositor interested in using
his IRA funds to purchase Common Stock must do so through a self-directed IRA.
Since the Savings Bank does not offer such accounts, it will allow such a
depositor to make a trustee-to-trustee transfer of the IRA funds to a trustee
offering a self-directed IRA program with the agreement that such funds will be
used to purchase the Holding Company's Common Stock in the Offerings. There
will be no early withdrawal or IRS interest penalties for such transfers. The
new trustee would hold the Common Stock in a self-directed account in the same
manner as the Savings Bank now holds the depositor's IRA funds. An annual
administrative fee may be payable to the new trustee. Depositors interested in
using funds in a Savings Bank IRA to purchase Common Stock should contact the
Stock Information Center at the Savings Bank so that the necessary forms may be
forwarded for execution and returned prior to the Expiration Date. In addition,
the provisions of ERISA and IRS regulations require that officers, directors and
10% shareholders who use self-directed IRA funds to purchase shares of Common
Stock in the Subscription Offering, make such purchases for the exclusive
benefit of IRAs.

Certificates representing shares of Common Stock purchased, and any
refund due, will be mailed to purchasers at such address as may be specified in
properly completed Order Forms or to the last address of such persons appearing
on the records of the Savings Bank as soon as practicable following consummation
of the sale of all shares of Common Stock. Any certificates returned as
undeliverable will be disposed of in accordance with applicable law. Until
certificates for the Common Stock are available and delivered to purchasers,
purchasers may not be able to sell the shares of Common Stock which they
purchased, even though trading of the Common Stock may have commenced.

Stock Pricing and Number of Shares to be Issued

Federal regulations require that the aggregate purchase price of the
securities sold in connection with the Conversion be based upon an estimated pro
forma value of the Holding Company and the Savings Bank as converted (i.e.,
----
taking into account the expected receipt of proceeds from the sale of securities
in the Conversion), as determined by an independent appraisal. The Savings Bank
and the Holding Company have retained RP Financial to prepare an appraisal of
the pro forma market value of the Holding Company and the Savings Bank as
converted, as well as a business plan. RP Financial will receive a fee expected
to total approximately $25,000 for its appraisal services and preparation of a
business plan, plus reasonable out-of-pocket expenses incurred in connection
with the appraisal. The Savings Bank has agreed to indemnify RP Financial under
certain circumstances against liabilities and expenses (including legal fees)
arising out of, related to, or based upon the Conversion.

RP Financial has prepared an appraisal of the estimated pro forma
market value of the Holding Company and the Savings Bank as converted taking
into account the formation of the Holding Company as the holding company for the
Savings Bank. For its analysis, RP Financial undertook substantial
investigations to learn about the Savings Bank's business and operations.
Management supplied financial information, including annual financial
statements, information on the composition of assets and liabilities, and other
financial schedules. In addition to this information, RP Financial reviewed the
Savings Bank's Form AC Application for Approval of Conversion and the Holding
Company's Form S-1 Registration Statement. Furthermore, RP Financial visited
the Savings Bank's

<PAGE>
facilities and had discussions with the Savings Bank's management and its
special conversion legal counsel, Breyer & Aguggia. No detailed individual
analysis of the separate components of the Holding Company's or the Savings
Bank's assets and liabilities was performed in connection with the evaluation.

In estimating the pro forma market value of the Holding Company and
the Savings Bank as converted, as required by applicable regulatory guidelines,
RP Financial's analysis utilized three selected valuation procedures, the
Price/Book ("P/B") method, the Price/Earnings ("P/E") method, and Price/Assets
("P/A") method, all of which are described in its report. RP Financial placed
the greatest emphasis on the P/E and P/B methods in estimating pro forma market
value. In applying these procedures, RP Financial reviewed, among other
factors, the economic make-up of the Savings Bank's primary market area, the
Savings Bank's financial performance and condition in relation to publicly-
traded institutions that RP Financial deemed comparable to the Savings Bank, the
specific terms of the offering of the Holding Company's Common Stock, the pro
forma impact of the additional capital raised in the Conversion, conditions of
securities markets in general, and the market for thrift institution common
stock in particular. RP Financial's analysis provides an approximation of the
pro forma market value of the Holding Company and the Savings Bank as converted
based on the valuation methods applied and the assumptions outlined in its
report. Included in its report were certain assumptions as to the pro forma
earnings of the Holding Company after the Conversion that were utilized in
determining the appraised value. These assumptions included expenses of
$551,000, an assumed after-tax rate of return on the net Conversion proceeds of
3.78%, purchases by the ESOP of 8% of the stock sold in the Conversion and
purchases in the open market by the MRP of a number of shares equal to 4% of the
stock sold in the Conversion at the Purchase Price. See "PRO FORMA DATA" for
additional information concerning these assumptions. The use of different
assumptions may yield somewhat different results.

On the basis of the foregoing, RP Financial has advised the Holding
Company and the Savings Bank that, in its opinion, as of February 23, 1996, the
aggregate estimated pro forma market value of the Holding Company and the
Savings Bank as converted and, therefore, the Common Stock was within the
valuation range of $10,625,000 to $14,375,000 with a midpoint of $12,500,000.
After reviewing the methodology and the assumptions used by RP Financial in the
preparation of the appraisal, the Board of Directors established the Estimated
Valuation Range which is equal to the valuation range of $10,625,000 to
$14,375,000 with a midpoint of $12,500,000. Assuming that the shares are sold
at $10.00 per share in the Conversion, the estimated number of shares would be
between 1,062,500 and 1,437,500 with a midpoint of 1,250,000. The Purchase
Price of $10.00 was determined by discussion among the Boards of Directors of
the Savings Bank and the Holding Company and Trident Securities, taking into
account, among other factors (i) the requirement under OTS regulations that the
Common Stock be offered in a manner that will achieve the widest distribution of
the stock and (ii) desired liquidity in the Common Stock subsequent to the
Conversion. Since the outcome of the Offerings relate in large measure to
market conditions at the time of sale, it is not possible to determine the exact
number of shares that will be issued by the Holding Company at this time. The
Estimated Valuation Range may be amended, with the approval of the OTS, if
necessitated by developments following the date of such appraisal in, among
other things, market conditions, the financial condition or operating results of
the Savings Bank, regulatory guidelines or national or local economic
conditions.

RP Financial's appraisal report is filed as an exhibit to the
Registration Statement. See "ADDITIONAL INFORMATION."

If, upon completion of the Subscription Offering, at least the minimum
number of shares are subscribed for, RP Financial, after taking into account
factors similar to those involved in its prior appraisal, will determine its
estimate of the pro forma market value of the Holding Company and the Savings
Bank as converted, as of the close of the Subscription Offering.

No sale of the shares will take place unless prior thereto RP
Financial confirms to the OTS that, to the best of RP Financial's knowledge and
judgment, nothing of a material nature has occurred that would cause it to
conclude that the actual total purchase price on an aggregate basis was
incompatible with its estimate of the total pro forma market value of the
Holding Company and the Savings Bank as converted at the time of the sale. If,
however, the facts do not justify such a statement, the Offerings or other sale
may be canceled, a new Estimated Valuation Range

<PAGE>
and price per share set and new Subscription, Direct Community and Syndicated
Community Offerings held. Under such circumstances, subscribers would have the
right to modify or rescind their subscriptions and to have their subscription
funds returned promptly with interest and holds on funds authorized for
withdrawal from deposit accounts would be released or reduced.

Depending upon market and financial conditions, the number of shares
issued may be more or less than the range in number of shares shown above. In
the event the total amount of shares issued is less than 1,062,500 or more than
1,653,125 (15% above the maximum of the Estimated Valuation Range), for
aggregate gross proceeds of less than $10,625,000 or more than $16,531,250,
subscription funds will be returned promptly with interest to each subscriber
unless he indicates otherwise. In the event a new valuation range is
established by RP Financial, such new range will be subject to approval by the
OTS.

If purchasers cannot be found for an insignificant residue of
unsubscribed shares from the general public, other purchase arrangements will be
made by the Boards of Directors of the Savings Bank and the Holding Company, if
possible. Such other purchase arrangements will be subject to the approval of
the OTS and may provide for purchases for investment purposes by directors,
officers, their associates and other persons in excess of the limitations
provided in the Plan of Conversion and in excess of the proposed director
purchases set forth herein, although no such purchases are currently intended.
If such other purchase arrangements cannot be made, the Plan will terminate.

In formulating its appraisal, RP Financial relied upon the
truthfulness, accuracy and completeness of all documents the Savings Bank
furnished it. RP Financial also considered financial and other information from
regulatory agencies, other financial institutions, and other public sources, as
appropriate. While RP Financial believes this information to be reliable, RP
Financial does not guarantee the accuracy or completeness of such information
and did not independently verify the financial statements and other data
provided by the Savings Bank and the Holding Company or independently value the
assets or liabilities of the Holding Company and the Savings Bank. The
appraisal by RP Financial is not intended to be, and must not be interpreted as,
a recommendation of any kind as to the advisability of voting to approve the
Conversion or of purchasing shares of Common Stock. Moreover, because the
appraisal is necessarily based on many factors which change from time to time,
there is no assurance that persons who purchase such shares in the Conversion
will later be able to sell shares thereafter at prices at or above the Purchase
Price.

Limitations on Purchases of Shares

The Plan of Conversion provides for certain limitations to be placed
upon the purchase of Common Stock by eligible subscribers and others in the
Conversion. Each subscriber must subscribe for a minimum of 25 shares. With
the exception of the ESOP, which is expected to subscribe for 8% of the shares
of Common Stock issued in the Conversion, no person or entity may purchase
shares with an aggregate purchase price of more than $150,000 (or 15,000 shares
based on the Purchase Price); and no person or entity, together with associates
of and persons acting in concert with such person or entity, may purchase in the
aggregate shares with an aggregate purchase price of more than $200,000 (or
20,000 shares based on the Purchase Price). Officers, directors and their
associates may not purchase, in the aggregate, more than 34% of the shares of
Common Stock offered in the Conversion. For purposes of the Plan, the directors
are not deemed to be acting in concert solely by reason of their Board
membership. Pro rata reductions within each Subscription Rights category will
be made in allocating shares to the extent that the maximum purchase limitations
are exceeded.

The Savings Bank's and the Holding Company's Boards of Directors may,
in their sole discretion, increase the maximum purchase limitation set forth
above up to 9.99% of the shares of Common Stock sold in the Conversion, provided
that orders for shares which exceed 5% of the shares of Common Stock sold in the
Conversion may not exceed, in the aggregate, 10% of the shares sold in the
Conversion. The Savings Bank and the Holding Company do not intend to increase
the maximum purchase limitation unless market conditions are such that an
increase in the maximum purchase limitation is necessary to sell a number of
shares in excess of the minimum of

<PAGE>
the Estimated Valuation Range. If the Boards of Directors decide to increase
the purchase limitation above 15,000 shares of Common Stock, all persons who
subscribed for the maximum number of shares will be given the opportunity to
increase their subscriptions accordingly, subject to the rights and preferences
of any person who has priority Subscription Rights.

The term "acting in concert" is defined in the Plan to mean (i)
knowing participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express agreement; or
(ii) a combination or pooling of voting or other interests in the securities of
an issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. In
general, a person who acts in concert with another other party shall also be
deemed to be acting in concert with any person who is also acting in concert
with that other party.

The term "associate" of a person is defined in the Plan to mean (i)
any corporation or organization (other than the Savings Bank or a majority-owned
subsidiary of the Savings Bank) of which such person is an officer or partner or
is, directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity (excluding tax-qualified employee plans); and
(iii) any relative or spouse of such person, or any relative of such spouse, who
either has the same home as such person or who is a director or officer of the
Savings Bank or any of its parents or subsidiaries. For example, a corporation
of which a person serves as an officer would be an associate of such person,
and, therefore, all shares purchased by such corporation would be included with
the number of shares which such person could purchase individually under the
above limitations.

The term "officer" is defined in the Plan to mean an executive officer
of the Savings Bank, including its Chairman of the Board, President, Executive
Vice Presidents, Senior Vice Presidents, Vice Presidents in charge of principal
business functions, Secretary and Treasurer.

Common Stock purchased pursuant to the Conversion will be freely
transferable, except for shares purchased by directors and officers of the
Savings Bank and the Holding Company and by NASD members. See "-- Restrictions
on Transferability by Directors and Officers and NASD Members."

Restrictions on Repurchase of Stock

Pursuant to OTS regulations, OTS-regulated savings associations (and
their holding companies) may not for a period of three years from the date of an
institution's mutual-to-stock conversion repurchase any of its common stock from
any person, except in the event of (i) an offer made to all of its stockholders
to repurchase the common stock on a pro rata basis, approved by the OTS; or (ii)
the repurchase of qualifying shares of a director; or (iii) a purchase in the
open market by a tax-qualified or non-tax-qualified employee stock benefit plan
in an amount reasonable and appropriate to fund the plan. Furthermore,
repurchases any of its common stock are prohibited if the effect thereof would
cause the association's regulatory capital to be reduced below (a) the amount
required for the liquidation account or (b) the regulatory capital requirements
imposed by the OTS. Repurchases are generally prohibited during the first year
following conversion. However, recent OTS policy has relaxed this restriction,
particularly during the second six months after conversion. While an applicant
needs to demonstrate the existence of "exceptional circumstances" during the
first six months after conversion, the OTS has indicated that it would analyze
repurchases during months six through 12 after conversion on a case-by-case
basis. Upon ten days' written notice to the OTS, and if the OTS does not
object, an institution may make open market repurchases of its outstanding
common stock during years two and three following the conversion, provided that
(x) no more than 5% of the outstanding common stock is to be purchased during
any 12-month period, (y) the repurchases do not cause the association to become
undercapitalized as defined under the OTS prompt corrective action regulations
and (z) the repurchase would not adversely affect the financial condition of the
association. No assurances, however, can be given that the OTS will approve a
repurchase program under current policy or that such policy will not change or
become more restrictive.

<PAGE>
Restrictions on Transferability by Directors and Officers and NASD Members

Shares of Common Stock purchased in the Offerings by directors and
officers of the Holding Company may not be sold for a period of one year
following consummation of the Conversion, except in the event of the death of
the stockholder or in any exchange of the Common Stock in connection with a
merger or acquisition of the Holding Company. Shares of Common Stock received
by directors or officers through the ESOP or the MRP or upon exercise of options
issued pursuant to the Stock Option Plan or purchased subsequent to the
Conversion are not subject to this restriction. Accordingly, shares of Common
Stock issued by the Holding Company to directors and officers shall bear a
legend giving appropriate notice of the restriction, and, in addition, the
Holding Company will give appropriate instructions to the transfer agent for the
Holding Company's Common Stock with respect to the restriction on transfers.
Any shares issued to directors and officers as a stock dividend, stock split or
otherwise with respect to restricted Common Stock shall be subject to the same
restrictions.

Purchases of outstanding shares of Common Stock of the Holding Company
by directors, executive officers (or any person who was an executive officer or
director of the Savings Bank after adoption of the Plan of Conversion) and their
associates during the three-year period following Conversion may be made only
through a broker or dealer registered with the SEC, except with the prior
written approval of the OTS. This restriction does not apply, however, to
negotiated transactions involving more than 1% of the Holding Company's
outstanding Common Stock or to the purchase of stock pursuant to the Stock
Option Plan.

The Holding Company has filed with the SEC a registration statement
under the Securities Act for the registration of the Common Stock to be issued
pursuant to the Conversion. The registration under the Securities Act of shares
of the Common Stock to be issued in the Conversion does not cover the resale of
such shares. Shares of Common Stock purchased by persons who are not affiliates
of the Holding Company may be resold without registration. Shares purchased by
an affiliate of the Holding Company will be subject to the resale restrictions
of Rule 144 under the Securities Act. If the Holding Company meets the current
public information requirements of Rule 144 under the Securities Act, each
affiliate of the Holding 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) would 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 Holding 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 Holding Company
to permit affiliates to have their shares registered for sale under the
Securities Act under certain circumstances.

In addition, under guidelines of the NASD, members of the NASD and
their associates are subject to certain restrictions on the transfer of
securities purchased in accordance with Subscription Rights and to certain
reporting requirements upon purchase of such securities.

RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY

The following discussion is a summary of certain provisions of federal
law and regulations and Delaware corporate law, as well as the Certificate of
Incorporation and Bylaws of the Holding Company, relating to stock ownership and
transfers, the Board of Directors and business combinations, all of which may be
deemed to have "anti-takeover" effects. The description of these provisions is
necessarily general and reference should be made to the actual law and
regulations and to the Certificate of Incorporation and Bylaws of the Holding
Company. See "ADDITIONAL INFORMATION" as to how to obtain a copy of these
documents.

<PAGE>
Conversion Regulations

OTS regulations prohibit any person from making an offer, announcing
an intent to make an offer or participating in any other arrangement to purchase
stock or acquiring stock or subscription rights in a converting institution (or
its holding company) from another person prior to completion of its conversion.
Further, without the prior written approval of the OTS, no person may make such
an offer or announcement of an offer to purchase shares or actually acquire
shares in the converting institution (or its holding company) for a period of
three years from the date of the completion of the conversion if, upon the
completion of such offer, announcement or acquisition, that person would become
the beneficial owner of more than 10% of the outstanding stock of the
institution (or its holding company). The OTS has defined "person" to include
any individual, group acting in concert, corporation, partnership, association,
joint stock company, trust, unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring, holding or
disposing of securities of an insured institution. However, offers made
exclusively to an association (or its holding company) or an underwriter or
member of a selling group acting on the converting institution's (or its holding
company's) behalf for resale to the general public are excepted. The regulation
also provides civil penalties for willful violation or assistance in any such
violation of the regulation by any person connected with the management of the
converting institution (or its holding company) or who controls more than 10% of
the outstanding shares or voting rights of a converting or converted institution
(or its holding company).

As permitted by OTS regulations, the Savings Bank's Federal Stock
Charter will contain a provision whereby the acquisition or offer to acquire
ownership of more than 10% of the issued and outstanding shares of any class of
equity securities of the Savings Bank by any person, either directly or through
an affiliate of such person, will be prohibited for a period of five years
following the date of consummation of the Conversion. Any stock in excess of
10% acquired in violation of the Federal Stock Charter provision will not be
counted as outstanding for voting purposes. Furthermore, for five years,
stockholders of the Savings Bank will not be permitted to call a special meeting
of stockholders relating to a change of control of the Savings Bank or a charter
amendment and will not be permitted to cumulate their votes in the election of
directors.

Change of Control Regulations

Under the Change in Bank Control Act, no person may acquire control of
an insured federal savings association or its parent holding company unless the
OTS has been given 60 days' prior written notice and has not issued a notice
disapproving the proposed acquisition. In addition, OTS regulations provide
that no company may acquire control of a savings association without the prior
approval of the OTS. Any company that acquires such control becomes a "savings
and loan holding company" subject to registration, examination and regulation by
the OTS.

Control, as defined under federal law, means ownership, control of
or holding irrevocable proxies representing more than 25% of any class of voting
stock, control in any manner of the election of a majority of the savings
association's directors, or a determination by the OTS that the acquiror has the
power to direct, or directly or indirectly to exercise a controlling influence
over, the management or policies of the institution. Acquisition of more than
10% of any class of a savings association's voting stock, if the acquiror also
is subject to any one of eight "control factors," constitutes a rebuttable
determination of control under the regulations. Such control factors include
the acquiror being one of the two largest stockholders. The determination of
control may be rebutted by submission to the OTS, prior to the acquisition of
stock or the occurrence of any other circumstances giving rise to such
determination, of a statement setting forth facts and circumstances which would
support a finding that no control relationship will exist and containing certain
undertakings. The regulations provide that persons or companies which acquire
beneficial ownership exceeding 10% or more of any class of a savings
association's stock must file with the OTS a certification form that the holder
is not in control of such institution, is not subject to a rebuttable
determination of control and will take no action which would result in a
determination or rebuttable determination of control without prior notice to or
approval of the OTS, as applicable. There are also rebuttable presumptions in

<PAGE>
the regulations concerning whether a group "acting in concert" exists, including
presumed action in concert among members of an "immediate family."

The OTS may prohibit an acquisition of control if it finds, among
other things, that (i) the acquisition would result in a monopoly or
substantially lessen competition, (ii) the financial condition of the acquiring
person might jeopardize the financial stability of the institution, or (iii) the
competence, experience or integrity of the acquiring person indicates that it
would not be in the interest of the depositors or the public to permit the
acquisition of control by such person.

Anti-takeover Provisions in the Holding Company's Certificate of Incorporation
and Bylaws and Delaware Law

A number of provisions of the Holding Company's Certificate of
Incorporation and Bylaws deal with matters of corporate governance and certain
rights of stockholders. The following discussion is a general summary of
certain provisions of the Holding Company's Certificate of Incorporation and
Bylaws and regulatory provisions relating to stock ownership and transfers, the
Board of Directors and business combinations, which might be deemed to have a
potential "anti-takeover" effect. These provisions may have the effect of
discouraging a future takeover attempt which is not approved by the Board of
Directors but which individual Holding Company stockholders may deem to be in
their best interests or in which stockholders may receive a substantial premium
for their shares over then current market prices. As a result, stockholders who
might desire to participate in such a transaction may not have an opportunity to
do so. Such provisions will also render the removal of the incumbent Board of
Directors or management of the Holding Company more difficult. The following
description of certain of the provisions of the Certificate of Incorporation and
Bylaws of the Holding Company is necessarily general and reference should be
made in each case to such Certificate of Incorporation and Bylaws, which are
incorporated herein by reference. See "ADDITIONAL INFORMATION" as to how to
obtain a copy of these documents.

Limitation on Voting Rights. The Certificate of Incorporation of the
Holding Company provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of common stock (the "Limit") be entitled or permitted to any vote in respect of
the shares held in excess of the Limit, unless permitted by a resolution adopted
by a majority of the board of directors. Beneficial ownership is determined
pursuant to Rule 13d-3 of the General Rules and Regulations of the Exchange Act
and includes shares beneficially owned by such person or any of his affiliates
(as defined in the Certificate of Incorporation), shares which such person or
his affiliates have the right to acquire upon the exercise of conversion rights
or options and shares as to which such person and his affiliates have or share
investment or voting power, but shall not include shares beneficially owned by
the ESOP or directors, officers and employees of the Savings Bank or Holding
Company or shares that are subject to a revocable proxy and that are not
otherwise beneficially, or deemed by the Holding Company to be beneficially,
owned by such person and his affiliates.

Board of Directors. The Board of Directors of the Holding Company is
divided into three classes, each of which shall contain approximately one-third
of the whole number of the members of the Board. The members of each class
shall be elected for a term of three years, with the terms of office of all
members of one class expiring each year so that approximately one-third of the
total number of directors are elected each year. The Holding Company's
Certificate of Incorporation provides that the size of the Board shall be as set
forth in the Bylaws. The Bylaws currently set the number of directors at seven.
The Certificate of Incorporation provides that any vacancy occurring in the
Board, including a vacancy created by an increase in the number of directors,
shall be filled by a vote of two-thirds of the directors then in office and any
director so chosen shall hold office for a term expiring at the annual meeting
of stockholders at which the term of the class to which the director has been
chosen expires. The classified Board is intended to provide for continuity of
the Board of Directors and to make it more difficult and time consuming for a
stockholder group to fully use its voting power to gain control of the Board of
Directors without the consent of the incumbent Board of Directors of the Holding
Company. The Certificate of Incorporation of the Holding Company provides that
a director may be removed from the Board of Directors prior to the expiration

<PAGE>
of his term only for cause and only upon the vote of 80% of the outstanding
shares of voting stock. In the absence of this provision, the vote of the
holders of a majority of the shares could remove the entire Board, but only with
cause, and replace it with persons of such holders' choice.

Cumulative Voting, Special Meetings and Action by Written Consent.
The Certificate of Incorporation does not provide for cumulative voting for any
purpose. Moreover, the Certificate of Incorporation provides that special
meetings of stockholders of the Holding Company may be called only by the Board
of Directors of the Holding Company and that stockholders may take action only
at a meeting and not by written consent.

Authorized Shares. The Certificate of Incorporation authorizes the
issuance of 6,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock. The shares of Common Stock and preferred stock were authorized in an
amount greater than that to be issued in the Conversion to provide the Holding
Company's Board of Directors with as much flexibility as possible to effect,
among other transactions, financings, acquisitions, stock dividends, stock
splits, restricted stock grants and the exercise of stock options. However,
these additional authorized shares may also be used by the Board of Directors,
consistent with fiduciary duties, to deter future attempts to gain control of
the Holding Company. The Board of Directors also has sole authority to
determine the terms of any one or more series of preferred stock, including
voting rights, conversion rates, and liquidation preferences. As a result of
the ability to fix voting rights for a series of preferred stock, the Board has
the power, to the extent consistent with its fiduciary duty, to issue a series
of preferred stock to persons friendly to management in order to attempt to
block a tender offer, merger or other transaction by which a third party seeks
control of the Holding Company, and thereby assist members of management to
retain their positions. The Holding Company's Board currently has no plans for
the issuance of additional shares, other than the issuance of shares of Common
Stock upon exercise of stock options and in connection with the MRP.

Stockholder Vote Required to Approve Business Combinations with
Principal Stockholders. The Certificate of Incorporation requires the approval
of the holders of at least 80% of the Holding Company's outstanding shares of
voting stock to approve certain "Business Combinations" (as defined therein)
involving a "Related Person" (as defined therein) except in cases where the
proposed transaction has been approved in advance by a majority of those members
of the Holding Company's Board of Directors who are unaffiliated with the
Related Person and were directors prior to the time when the Related Person
became a Related Person. The term "Related Person" is defined to include any
individual, corporation, partnership or other entity (other than the Holding
Company or its subsidiary) which owns beneficially or controls, directly or
indirectly, 10% or more of the outstanding shares of voting stock of the Holding
Company or an affiliate of such person or entity. This provision of the
Certificate of Incorporation applies to any "Business Combination," which is
defined to include: (i) any merger or consolidation of the Holding Company with
or into any Related Person; (ii) any sale, lease, exchange, mortgage, transfer,
or other disposition of 25% or more of the assets of the Holding Company or
combined assets of the Holding Company and its subsidiaries to a Related Person;
(iii) any merger or consolidation of a Related Person with or into the Holding
Company or a subsidiary of the Holding Company; (iv) any sale, lease, exchange,
transfer, or other disposition of 25% or more of the assets of a Related Person
to the Holding Company or a subsidiary of the Holding Company; (v) the issuance
of any securities of the Holding Company or a subsidiary of the Holding Company
to a Related Person; (vi) the acquisition by the Holding Company or a subsidiary
of the Holding Company of any securities of a Related Person; (vii) any
reclassification of common stock of the Holding Company or any recapitalization
involving the common stock of the Holding Company; or (viii) any agreement or
other arrangement providing for any of the foregoing.

Under Delaware law, absent this provision, business combinations,
including mergers, consolidations and sales of substantially all of the assets
of a corporation must, subject to certain exceptions, be approved by the vote of
the holders of a majority of the outstanding shares of common stock of the
Holding Company and any other affected class of stock. One exception under
Delaware law to the majority approval requirement applies to stockholders owning
15% or more of the common stock of a corporation for a period of less than three
years. Such 15% stockholder, in order to obtain approval of a business
combination, must obtain the approval of two-thirds of the outstanding stock,
excluding the stock owned by such 15% stockholder, or satisfy other requirements
under

<PAGE>
Delaware law relating to board of director approval of his or her acquisition of
the shares of the Holding Company. The increased stockholder vote required to
approve a business combination may have the effect of foreclosing mergers and
other business combinations which a majority of stockholders deem desirable and
place the power to prevent such a merger or combination in the hands of a
minority of stockholders.

Amendment of Certificate of Incorporation and Bylaws. Amendments to
the Holding Company's Certificate of Incorporation must be approved by a
majority vote of its Board of Directors and also by a majority of the
outstanding shares of its voting stock, provided, however, that an affirmative
vote of at least 80% of the outstanding voting stock entitled to vote (after
giving effect to the provision limiting voting rights) is required to amend or
repeal certain provisions of the Certificate of Incorporation, including the
provision limiting voting rights, the provisions relating to approval of certain
business combinations, calling special meetings, the number and classification
of directors, director and officer indemnification by the Holding Company and
amendment of the Holding Company's Bylaws and Certificate of Incorporation. The
Holding Company's Bylaws may be amended by its Board of Directors, or by a vote
of 80% of the total votes eligible to be voted at a duly constituted meeting of
stockholders.

Stockholder Nominations and Proposals. The Certificate of
Incorporation of the Holding Company requires a stockholder who intends to
nominate a candidate for election to the Board of Directors, or to raise new
business at a stockholder meeting to give not less than 30 nor more than 60
days' advance notice to the Secretary of the Holding Company. The notice
provision requires a stockholder who desires to raise new business to provide
certain information to the Holding Company concerning the nature of the new
business, the stockholder and the stockholder's interest in the business matter.
Similarly, a stockholder wishing to nominate any person for election as a
director must provide the Holding Company with certain information concerning
the nominee and the proposing stockholder.

Purpose and Takeover Defensive Effects of the Holding Company's
Certificate of Incorporation and Bylaws. The Board of Directors of the Savings
Bank believes that the provisions described above are prudent and will reduce
the Holding Company's vulnerability to takeover attempts and certain other
transactions that have not been negotiated with and approved by its Board of
Directors. These provisions will also assist the Savings Bank in the orderly
deployment of the Conversion proceeds into productive assets during the initial
period after the Conversion. The Board of Directors believes these provisions
are in the best interest of the Savings Bank and Holding Company and its
stockholders. In the judgment of the Board of Directors, the Holding Company's
Board will be in the best position to determine the true value of the Holding
Company and to negotiate more effectively for what may be in the best interests
of its stockholders. Accordingly, the Board of Directors believes that it is in
the best interest of the Holding Company and its stockholders to encourage
potential acquirors to negotiate directly with the Board of Directors of the
Holding Company and that these provisions will encourage such negotiations and
discourage hostile takeover attempts. It is also the view of the Board of
Directors that these provisions should not discourage persons from proposing a
merger or other transaction at a price reflective of the true value of the
Holding Company and that is in the best interest of all stockholders.

Attempts to acquire control of financial institutions and their
holding companies have recently become increasingly common. Takeover attempts
that have not been negotiated with and approved by the Board of Directors
present to stockholders the risk of a takeover on terms that may be less
favorable than might otherwise be available. A transaction that is negotiated
and approved by the Board of Directors, on the other hand, can be carefully
planned and undertaken at an opportune time in order to obtain maximum value of
the Holding Company for its stockholders, with due consideration given to
matters such as the management and business of the acquiring corporation and
maximum strategic development of the Holding Company's assets.

An unsolicited takeover proposal can seriously disrupt the business
and management of a corporation and cause it great expense. Although a tender
offer or other takeover attempt may be made at a price substantially above the
current market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, stockholders may be
presented with the alternative of partially liquidating their investment

<PAGE>
at a time that may be disadvantageous, or retaining their investment in an
enterprise that is under different management and whose objectives may not be
similar to those of the remaining stockholders. The concentration of control,
which could result from a tender offer or other takeover attempt, could also
deprive the Holding Company's remaining stockholders of benefits of certain
protective provisions of the Exchange Act, if the number of beneficial owners
became less than 300, thereby allowing for Exchange Act deregistration.

Despite the belief of the Savings Bank and the Holding Company as to
the benefits to stockholders of these provisions of the Holding Company's
Certificate of Incorporation and Bylaws, these provisions may also have the
effect of discouraging a future takeover attempt that would not be approved by
the Holding Company's Board, but pursuant to which stockholders may receive a
substantial premium for their shares over then current market prices. As a
result, stockholders who might desire to participate in such a transaction may
not have any opportunity to do so. Such provisions will also render the removal
of the Holding Company's Board of Directors and of management more difficult.
The Board of Directors of the Savings Bank and the Holding Company, however,
have concluded that the potential benefits outweigh the possible disadvantages.

Pursuant to applicable law, at any annual or special meeting of its
stockholders after the Conversion, the Holding Company may adopt additional
charter provisions regarding the acquisition of its equity securities that would
be permitted for a Delaware business corporation. The Holding Company and the
Savings Bank do not presently intend to propose the adoption of further
restrictions on the acquisition of the Holding Company's equity securities.

The cumulative effect of the restriction on acquisition of the Holding
Company contained in the Certificate of Incorporation and Bylaws of the Holding
Company and in Federal and Delaware law may be to discourage potential takeover
attempts and perpetuate incumbent management, even though certain stockholders
of the Holding Company may deem a potential acquisition to be in their best
interests, or deem existing management not to be acting in their best interests.

DESCRIPTION OF CAPITAL STOCK
OF THE HOLDING COMPANY

General

The Holding Company is authorized to issue 6,000,000 shares of Common
Stock having a par value of $.01 per share and 1,000,000 shares of preferred
stock having a par value of $.01 per share. The Holding Company currently
expects to issue up to 1,437,500 shares of Common Stock and no shares of
preferred stock in the Conversion. Each share of the Holding Company's Common
Stock will have the same relative rights as, and will be identical in all
respects with, each other share of Common Stock. Upon payment of the Purchase
Price for the Common Stock, in accordance with the Plan of Conversion, all such
stock will be duly authorized, fully paid and nonassessable.

The Common Stock of the Holding Company will represent nonwithdrawable
capital, will not be an account of any type, and will not be insured by the FDIC
or any other government agency.

Common Stock

Dividends. The Holding Company can pay dividends out of statutory
surplus or from certain net profits if, as and when declared by its Board of
Directors. The payment of dividends by the Holding Company is subject to
limitations which are imposed by law and applicable regulation. See "DIVIDEND
POLICY" and "REGULATION." The holders of Common Stock of the Holding Company
will be entitled to receive and share equally in such dividends as may be
declared by the Board of Directors of the Holding Company out of funds legally
available therefor. If the Holding Company issues preferred stock, the holders
thereof may have a priority over the holders of the Common Stock with respect to
dividends.

<PAGE>
Stock Repurchases. The Plan and OTS regulations place certain
limitations on the repurchase of the Holding Company's capital stock. See "THE
CONVERSION -- Restrictions on Repurchase of Stock" and "USE OF PROCEEDS."

Voting Rights. Upon Conversion, the holders of Common Stock of the
Holding Company will possess exclusive voting rights in the Holding Company.
They will elect the Holding Company's Board of Directors and act on such other
matters as are required to be presented to them under Delaware law or as are
otherwise presented to them by the Board of Directors. Except as discussed in
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY," each holder of Common
Stock will be entitled to one vote per share and will not have any right to
cumulate votes in the election of directors. If the Holding Company issues
preferred stock, holders of the Holding Company preferred stock may also possess
voting rights. Certain matters require a vote of 80% of the outstanding shares
entitled to vote thereon. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY."

As a federal mutual savings bank, corporate powers and control of the
Savings Bank are vested in its Board of Directors, who elect the officers of the
Savings Bank and who fill any vacancies on the Board of Directors as it exists
upon Conversion. Subsequent to Conversion, voting rights will be vested
exclusively in the owners of the shares of capital stock of the Savings Bank,
all of which will be owned by the Holding Company, and voted at the direction of
the Holding Company's Board of Directors. Consequently, the holders of the
Common Stock will not have direct control of the Savings Bank.

Liquidation. In the event of any liquidation, dissolution or winding
up of the Savings Bank, the Holding Company, as holder of the Savings Bank's
capital stock would be entitled to receive, after payment or provision for
payment of all debts and liabilities of the Savings Bank (including all deposit
accounts and accrued interest thereon) and after distribution of the balance in
the special liquidation account to Eligible Account Holders and Supplemental
Eligible Account Holders (see "THE CONVERSION"), all assets of the Savings Bank
available for distribution. In the event of liquidation, dissolution or winding
up of the Holding Company, the holders of its common stock would be entitled to
receive, after payment or provision for payment of all its debts and
liabilities, all of the assets of the Holding Company available for
distribution. If Holding Company preferred stock is issued, the holders thereof
may have a priority over the holders of the Common Stock in the event of
liquidation or dissolution.

Preemptive Rights. Holders of the Common Stock of the Holding Company
will not be entitled to preemptive rights with respect to any shares that may be
issued. The Common Stock is not subject to redemption.

Preferred Stock

None of the shares of the authorized Holding Company preferred stock
will be issued in the Conversion and there are no plans to issue the preferred
stock. Such stock may be issued with such designations, powers, preferences and
rights as the Board of Directors may from time to time determine. The Board of
Directors can, without stockholder approval, issue preferred stock with voting,
dividend, liquidation and conversion rights that could dilute the voting
strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control.

Restrictions on Acquisition

Acquisitions of the Holding Company are restricted by provisions in
its Certificate of Incorporation and Bylaws and by the rules and regulations of
various regulatory agencies. See "REGULATION" and "RESTRICTIONS ON ACQUISITION
OF THE HOLDING COMPANY."

<PAGE>
REGISTRATION REQUIREMENTS

The Holding Company will register the Common Stock with the SEC
pursuant to Section 12(g) of the Exchange Act upon the completion of the
Conversion and will not deregister its Common Stock for a period of at least
three years following the completion of the Conversion. Upon such registration,
the proxy and tender offer rules, insider trading reporting and restrictions,
annual and periodic reporting and other requirements of the Exchange Act will be
applicable.

LEGAL AND TAX OPINIONS

The legality of the Common Stock has been passed upon for the Holding
Company by Breyer & Aguggia, Washington, D.C. The federal tax consequences of
the Offerings have been opined upon by Breyer & Aguggia and the Missouri tax
consequences of the Offerings have been opined upon by Williams-Keepers, LLP,
Jefferson City, Missouri. Breyer & Aguggia and Williams-Keepers, LLP have
consented to the references herein to their opinions. Certain legal matters
will be passed upon for Trident Securities by Muldoon, Murphy & Faucette,
Washington, D.C.

EXPERTS

The consolidated financial statements of the Savings Bank as of
December 31, 1995 and 1994 and for each of the three years in the period ended
December 31, 1995 included in this Prospectus have been audited by Williams-
Keepers, LLP, independent auditors, as stated in its report appearing herein,
and have been so included in reliance upon the report of such firm given upon
its authority as experts in accounting and auditing.

RP Financial has consented to the publication herein of the summary of
its report to the Savings Bank setting forth its opinion as to the estimated pro
forma market value of the Holding Company and the Savings Bank as converted and
its letter with respect to subscription rights and to the use of its name and
statements with respect to it appearing herein.

ADDITIONAL INFORMATION

The Holding Company has filed with the SEC a Registration Statement on
Form S-1 (File No. 333-1880) under the Securities Act with respect to the Common
Stock offered in the Conversion. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the SEC. Such
information may be inspected at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at its
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies
may be obtained at prescribed rates from the Public Reference Section of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549.

The Savings Bank has filed with the OTS an Application for Approval of
Conversion, which includes proxy materials for the Savings Bank's Special
Meeting and certain other information. This Prospectus omits certain
information contained in such Application. The Application, including the proxy
materials, exhibits and certain other information that are a part thereof, may
be inspected, without charge, at the offices of the OTS, 1700 G Street, N.W.,
Washington, D.C. 20552 and at the office of the Regional Director of the OTS at
the Midwest Regional Office of the OTS, 122 W. John Carpenter Freeway, Suite
600, Irving, Texas 75039.

<PAGE>

Index To Consolidated Financial Statements
City National Savings Bank, FSB

Pages

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . F-1

Consolidated Statements of Financial Condition as of
December 31, 1994 and 1995 . . . . . . . . . . . . . . . . . . . F-2

Consolidated Statements of Income for the Years Ended
December 31, 1993, 1994 and 1995 . . . . . . . . . . . . . . . . 19

Consolidated Statements of Changes in Equity for the Years
Ended December 31, 1993, 1994 and 1995 . . . . . . . . . . . . . F-3

Consolidated Statements of Cash Flows for the Years
Ended December 31, 1993, 1994 and 1995 . . . . . . . . . . . . . F-4

Notes to Consolidated Financial Statements . . . . . . . . . . . . F-6

* * *

All schedules are omitted as the required information either is not
applicable or is included in the Consolidated Financial Statements or related
Notes.

Separate financial statements on the Holding Company have not been
included since it will not engage in material transactions, if any, until after
the Conversion. The Holding Company, which has been inactive to date, has no
significant assets, liabilities, revenues, expenses or contingent liabilities.

<PAGE>
[WILLIAMS KEEPERS LLP LETTERHEAD]

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
City National Savings Bank, FSB
and Subsidiary

We have audited the accompanying consolidated statements of financial condition
of City National Savings Bank, FSB (Bank) and subsidiary as of December 31, 1994
and 1995, and the related consolidated statements of income, changes in equity,
and cash flows for each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to in the first
paragraph present fairly, in all material respects, the consolidated financial
position of City National Savings Bank, FSB and subsidiary as of December 31,
1994 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.

As described in Note 1, the Bank changed its method of accounting for income
taxes in 1993, investments and mortgage-backed securities in 1994, and impaired
loans in 1995.

/S/ WILLIAMS - KEEPERS LLP

January 26, 1996

F-1

<PAGE>
<TABLE><CAPTION>
CITY NATIONAL SAVINGS BANK, FSB
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1994 and 1995

ASSETS 1994 1995
--------------- ---------------
<S> <C> <C>
Cash and due from depository institutions (including interest-bearing
accounts totaling $429,128 in 1994 and $2,796,790 in 1995) $ 1,296,596 $ 2,855,944
Securities available-for-sale (Note 2) 26,424,253 25,470,739
Securities held-to-maturity (fair value of $9,872,236 in 1994) (Note 2) 10,156,317 -
Stock in Federal Home Loan Bank (Note 2) 920,800 939,300
Loans held-for-sale, net (Note 3) 593,010 466,131
Loans receivable, net (Note 3) 44,852,542 52,611,378
Accrued interest receivable (Note 4) 501,560 486,060
Real estate owned, net (Note 5) 422,217 161,987
Premises and equipment, net (Note 6) 1,848,749 1,759,437
Income taxes receivable (Note 9) 852,791 486,472
Other assets 96,908 152,989
--------------- ---------------
Total assets $ 87,965,743 $ 85,390,437
=============== ===============

LIABILITIES AND EQUITY

Deposits (Note 7) $ 79,492,805 $ 75,930,917
Advances from borrowers for taxes and insurance 58,594 63,041
Accrued expenses and other liabilities 180,771 216,608
--------------- ---------------
Total liabilities 79,732,170 76,210,566
--------------- ---------------
Retained earnings, substantially restricted (Notes 13, 15) 9,506,821 9,697,118

Unrealized loss on securities available-for-sale, net of deferred taxes
(Note 2) (1,273,248) (517,247)
--------------- ---------------
Total equity 8,233,573 9,179,871
--------------- ---------------
Total liabilities and equity $ 87,965,743 $ 85,390,437
=============== ===============

The notes to consolidated financial statements are an integral part of these statements.
</TABLE>
F-2

<PAGE>
<TABLE><CAPTION>
CITY NATIONAL SAVINGS BANK, FSB
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended December 31, 1993, 1994, and 1995

Unrealized
Loss on
Securities
Retained Available-for-
Earnings Sale, net Total
--------------- --------------- -------------
<S> <C> <C> <C>
Balance, December 31, 1992 $ 8,329,040 $ - $ 8,329,040
Net income 749,786 - 749,786
--------------- --------------- -------------
Balance, December 31, 1993 9,078,826 - 9,078,826

Net income 427,995 - 427,995

Change in unrealized loss on securities
available-for-sale, net of deferred taxes - (1,273,248) (1,273,248)
--------------- --------------- -------------
Balance, December 31, 1994 9,506,821 (1,273,248) 8,233,573

Net income 190,297 - 190,297
Change in unrealized loss on securities
available-for-sale, net of deferred taxes - 756,001 756,001
--------------- --------------- -------------
Balance, December 31, 1995 $ 9,697,118 $ (517,247) $ 9,179,871
=============== =============== =============

The notes to consolidated financial statements are an integral part of these statements.
</TABLE>
F-3

<PAGE>
<TABLE><CAPTION>
CITY NATIONAL SAVINGS BANK, FSB
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1993, 1994, and 1995

CASH FLOWS FROM OPERATING ACTIVITIES 1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Net income $ 749,786 $ 427,995 $ 190,297
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Federal Home Loan Bank stock dividends (37,500) - (18,500)
Amortization of premiums and (discounts) on
mortgage-backed securities 106,699 65,085 44,004
Amortization of premiums and (discounts) on
investment securities 52,384 28,711 3,484
Proceeds from the sale of loans held-for-sale 14,757,688 3,185,571 1,679,504
Origination of loans held-for-sale (13,736,005) (2,553,982) (1,541,642)
Depreciation 169,596 154,028 147,541
Provision for losses on loans and real
estate owned 20,668 11,026 123,719
Loss on sale of mortgage-backed securities
(Note 17) - 16,708 113,845
Gain on sale of real estate owned (Note 5) (61,680) (97,763) (83,560)
Gain on sales of loans held-for-sale (Note 17) (81,363) (18,950) (10,983)
Adjustments for (increases) decreases in operating
assets and increases (decreases) in operating
liabilities:
Other assets 127,538 (30,577) (40,581)
Accrued expenses and other liabilities (1,477) 13,947 35,837
Income taxes receivable (57,664) (17,139) (5,987)
--------------- --------------- ---------------
Net cash provided by operating activities 2,008,670 1,184,660 636,978
--------------- --------------- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
Loan (origination) and principal payments
on loans, net 9,481,226 (785,045) (3,682,555)
Purchases of:
Loans receivable (2,200,000) (3,400,000) (4,200,000)
Securities available-for-sale - (8,000,000) -
Securities held-to-maturity - (2,747,984) (1,225,000)
Securities held for investment (13,484,916) - -
Proceeds from maturity of:
Securities available-for-sale - 3,783,007 1,664,513
Securities held-to-maturity - 3,800,000 7,375,000
Securities held for investment 10,179,827 - -
Proceeds from sales of securities available-for-sale - - 4,262,354
Proceeds from sales of real estate owned 284,717 359,731 318,121
Cash outflows for premises and equipment (11,152) (44,761) (32,622)
--------------- --------------- ---------------
Net cash provided by investing activities 4,249,702 (7,035,052) 4,479,811
--------------- --------------- ---------------

The notes to consolidated financial statements are an integral part of these statements.
</TABLE>
F-4

<PAGE>
<TABLE><CAPTION>
CITY NATIONAL SAVINGS BANK, FSB
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1993, 1994, and 1995

CASH FLOWS FROM FINANCING ACTIVITIES 1993 1994 1995
--------------- --------------- ---------------
<C> <C> <C>
Net (decrease) in deposits $ (4,677,411) $ (1,541,967) $ (3,561,888)
Net increase (decrease) in advance payments by
borrowers (35,813) 4,379 4,447
--------------- --------------- ---------------
Net cash (used by) financing activities (4,713,224) (1,537,588) (3,557,441)
--------------- --------------- ---------------
Increase (decrease) in cash and cash
equivalents 1,545,148 (7,387,980) 1,559,348
Cash and cash equivalents at beginning of year 7,139,428 8,684,576 1,296,596
--------------- --------------- ---------------
Cash and cash equivalents at end of year $ 8,684,576 $ 1,296,596 $ 2,855,944
=============== =============== ===============
Cash paid for:
Interest on deposits, advances and other borrowings $ 3,557,797 $ 3,006,766 $ 3,595,388
Income taxes $ 388,664 $ 229,856 $ 99,335
Non-cash transactions:
Transfers from loans receivable to real estate owned
held-for-sale $ 44,423 $ 116,566 $ -
Transfer from investment securities held-to-maturity
to investment securities available-for-sale $ - $ - $ 4,002,833

The notes to consolidated financial statements are an integral part of these statements.
</TABLE>
F-5

<PAGE>

CITY NATIONAL SAVINGS BANK, FSB
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations: City National Savings Bank, FSB (the Bank) provides a
variety of financial services to individuals and corporate customers through its
headquarters office in Jefferson City, Missouri, and its four branches in
Jefferson City, California, Tipton and Waynesville, Missouri. The Bank's primary
deposit products are interest-bearing checking and savings accounts and
certificates of deposit. Its primary lending products are one-to-four family
residential loans.

The Bank was formerly known as City National Savings and Loan Association prior
to its March 1, 1995 conversion from a state to a federal charter.

Principles of Consolidation: The accompanying consolidated financial statements
include the accounts of the Bank and its subsidiary, after elimination of all
significant intercompany accounts and transactions. The Bank's wholly-owned
subsidiary is Cinsal Service Corporation, along with its wholly-owned
subsidiary, Parity Insurance Agency, Inc. and its wholly-owned subsidiaries,
City National Real Estate, Inc. and Great Arrow Service Corporation. The
subsidiaries have been relatively inactive in recent years, but are authorized
to sell insurance products as well as develop and sell real estate.

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

Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans and the
valuation of real estate owned held-for-sale. In connection with the
determination of the allowances for losses on loans and real estate owned
held-for-sale, management obtains independent appraisals for significant
properties.

A majority of the Bank's loan portfolio consists of one-to-four family
residential loans in the Central Missouri area. The Central Missouri economy is
primarily dependent upon state government and, to a lesser extent, upon light
manufacturing and agriculture. Accordingly, the ultimate collectibility of a
substantial portion of the Bank's portfolio is susceptible to changes in local
market conditions.

While management uses available information to recognize losses on loans and
foreclosed real estate, future changes to the allowances may be necessary based
on changes in local economic conditions. In addition, regulatory agencies, as an
integral part of their examination process, periodically review the Bank's
allowances for losses on loans and foreclosed real estate. Such agencies may
require the Bank to make changes to the allowances based on their judgments
about information available to them at the time of their examination. Because of
these factors, the likelihood of a material change in the allowances for losses
on loans and real estate owned held-for-sale is more than remote.

Regulation: The Bank is subject to examination and regulation by the Office
of Thrift Supervision (OTS) and the Federal Deposit Insurance
Corporation (FDIC).

Cash and Cash Equivalents: Cash and cash equivalents are composed of cash,
Federal Home Loan Bank (FHLB) daily time deposits, certificates of deposit and
due from depository institutions. The Bank considers all highly liquid debt
instruments with original maturities when purchased of three months or less to
be cash equivalents.

F-6
<PAGE>

Investment Securities: On January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and classified all mortgage-backed
securities as securities available-for-sale. Such adoption resulted in a net
decrease to equity as of January 1, 1994 of approximately $58,000.
Investments in debt and equity securities at December 31, 1994 and 1995, are
classified as follows:

-Trading Securities. Government bonds held principally for resale in the
near term and mortgage-backed securities held-for-sale in the in the near
term in conjunction with the Bank's mortgage banking activities are
classified as trading securities and recorded at their fair values.
Unrealized gains and losses on trading securities are included in other
income. The Bank had no trading securities at December 31, 1994 or 1995.

-Securities to be held-to-maturity. Bonds, notes and debentures for which
the Bank has the positive intent and ability to hold to maturity are
reported at cost, adjusted for amortization of premiums and accretion of
discounts which are recognized in interest income using the interest method
over the period to maturity. The Bank had no held-to-maturity securities at
December 31, 1995.

-Securities available-for-sale. Securities available-for-sale consist of
mutual funds, bonds, notes, debentures, and mortgage-backed securities not
classified as trading securities or as securities to be held-to-maturity.
Unrealized gains and losses, net of tax, on securities available-for-sale
are reported as a net amount in a separate component of equity until
realized.

Any declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than temporary
result in write-downs of the individual securities to their fair value. The
related write-downs are included in earnings as realized losses. Gains and
losses on the sale of securities available-for-sale are determined using the
specific-identification method.

Prior to adoption of SFAS No. 115, the Bank's accounting policy regarding
investment securities was as follows:

-Securities held for investment are securities that management has the
intent, and the Bank has the ability, to hold until maturity. These
securities are carried at cost, adjusted for amortization of premium and
accretion of discounts on a level yield method. Equity securities that are
nonmarketable are carried at cost. Short-term mutual funds are carried at
the lower of cost or market value.

-Securities to be held for indefinite periods of time, but which may not
be held to maturity or on a long-term basis, including securities that
management intends to use as part of its asset/liability strategy, or that
may be sold in response to changes in interest rates, changes in prepayment
risk, liquidity needs, or other similar factors, are classified as held for
sale. These securities are recorded at the lower of cost or market value.
Gains and losses realized from the sale of securities and adjustments to
market value are included in noninterest income. Gain or loss on sale of
securities is based on specific identification method. All sales are made
without recourse.

Loans Held-for-Sale: Mortgage loans originated and intended for sale in the
secondary market are carried at the lower of cost or estimated market value in
the aggregate, in accordance with SFAS No. 65, Accounting for Certain
Mortgage Banking Activities. Gains and losses on the sales of these loans are
included as noninterest income.

Loans Receivable: Loans receivable that management has the intent and ability to
hold until maturity or pay-off are reported at their outstanding principal
balances adjusted for any charge-offs, the allowance for loan losses, any
deferred fees or costs on originated loans and unamortized premiums or discounts
on purchased loans.

Loan origination fees and certain direct origination costs are capitalized and
recognized as an adjustment of the yield of the related loan. Discounts and
premiums on purchased loans are amortized to income using the interest method
over the remaining period to contractual maturity, adjusted for anticipated
prepayments. Commitment

F-7

<PAGE>
fees and costs relating to commitments, the likelihood of exercise of which
is remote, are recognized over the commitment period on a straight-line basis.
If the commitment is subsequently exercised during the commitment period, the
remaining unamortized commitment fee at the time of exercise is recognized
over the life of the loan as an adjustment of yield.

Uncollectible interest on loans that are contractually past due is charged off,
or an allowance is established based on management's periodic evaluation. The
allowance is established by a charge to interest income equal to all interest
previously accrued and outstanding. Income is subsequently recognized only to
the extent that cash payments are received until, in management's judgment, 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.

The allowance for loan losses is increased by charges to income and decreased by
charge-offs (net of recoveries). Management utilizes a systematic, documented
approach in determining the appropriate level of the allowance for loan losses.
Management's approach, which provides for general and specific allowances, is
based, among other factors, on the Bank's past loan loss and collection
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions.

On January 1, 1995 the Bank adopted SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, and SFAS No. 118, Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures (an amendment of SFAS No. 114).
The adoption of these statements did not have a material effect on the Bank's
financial condition or operating results for 1995. These pronouncements consider
a loan to be impaired when it is probable a creditor will be unable to collect
all amounts due-both principal and interest-according to the contractual terms
of the loan agreement. Such pronouncements also require that impaired loans be
measured based on the present value of expected future cash flows or at the
loan's observable market price or the fair value of the collateral if the loan
is collateral dependent. If the value computed is less than the recorded value
of the loan, a valuation allowance is recorded for the difference. The entire
change in valuation allowance is reported as a component of the provision for
loan losses expense.

Management applies its normal loan review procedures in determining when a loan
is impaired. Management considers impaired loans to be all loans classified as
substandard, doubtful, or loss except for smaller balance homogeneous loans
(primarily consumer installment loans) which are collectively evaluated for
impairment. Impaired loans are charged off when deemed to be uncollectible by
management.

Management has elected to continue to use its existing nonaccrual methods for
recognizing interest income on impaired loans.

Real Estate Owned: Real estate properties acquired through, or in lieu of, loan
foreclosure and held-for-sale are carried at the lower of fair value minus
estimated costs to sell or cost. Such determination is made on an individual
asset basis. If the fair value of the asset minus the estimated costs to sell
the asset is less than the cost of the asset, the deficiency is recognized as a
valuation allowance. If the fair value of the asset minus estimated costs to
sell the asset subsequently increases to more than its carrying amount, the
valuation allowance is reduced, but not below zero. Increases or decreases in
the valuation allowance are charged or credited to income.

Foreclosed assets held for the production of income are carried at cost, less
accumulated depreciation computed principally by the straight-line method over
the estimated useful lives of the depreciable assets.

Real estate properties acquired for investment are carried at the lower of cost,
including cost of improvements and amenities incurred subsequent to acquisition,
or net realizable value. Costs relating to development and improvement of
property are capitalized, whereas costs relating to the holding of property are
expensed. The portion of interest costs relating to the development of real
estate is capitalized.

Valuations are periodically performed by management, and an allowance for losses
is established by a charge to operations if the carrying value of a property
exceeds its estimated net realizable value.

F-8

<PAGE>

Premises and Equipment: Land is carried at cost. Buildings and furniture,
fixtures, and equipment are carried at cost, less accumulated depreciation and
amortization computed principally by the straight-line method over the estimated
useful lives of the assets.

Income Taxes: Deferred tax assets and liabilities are reflected at currently
enacted income tax rates applicable to the period in which the deferred tax
assets or liabilities are expected to be realized and settled. As changes in tax
law or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.

Presentation of Financial Statements: Certain reclassifications have been made
to the 1993 and 1994 consolidated financial statements to conform with the 1995
presentation, including reclassifications resulting from the removal of mutual
funds from designation as cash equivalents.

2. INVESTMENT SECURITIES

The amortized cost and fair values of investment securities at December 31 are
as follows:

<TABLE><CAPTION>
1994 Gross Gross
Amortized Unrealized Unrealized Fair
Available-for-sale Cost Gains Losses Value
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Mutual funds, which invest in adjustable rate
mortgage-backed securities of U.S. government
agencies and short-term government debt $ 8,000,000 $ - $ 541,914 $ 7,458,086

Mortgage-backed securities of U.S. government
agencies 20,324,623 1,381 1,359,837 18,966,167
------------- ------------- ------------- -------------
$ 28,324,623 $ 1,381 $ 1,901,751 $ 26,424,253
============= ============= ============= =============

Held-to-Maturity

U.S. government and federal agency $ 10,156,317 $ - $ 284,081 $ 9,872,236
============= ============= ============= =============
<CAPTION>
1995 Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Available-for-Sale

Mutual funds, which invest in adjustable rate
mortgage-backed securities of U.S. government
agencies and short-term government debt $ 8,000,000 $ - $ 441,573 $ 7,558,427
securities

U.S. government and federal agency 4,002,833 11,020 27,741 3,986,112
Mortgage-backed securities of U.S. government
agencies 14,239,921 18,105 331,826 13,926,200
------------- ------------- ------------- -------------
$ 26,242,754 $ 29,125 $ 801,140 $ 25,470,739
============= ============= ============= =============
</TABLE>

On December 31, 1995, pursuant to a transfer grace period allowed by the
Financial Accounting Standards Board, the Bank transferred securities
held-to-maturity with a book value of $4,002,833 to the securities
available-for-sale classification. Such transfer resulted in an
increase of $16,721 in the unrealized loss on securities available-for-sale
reported as a separate component of equity.

F-9
<PAGE>

Gross realized gains and losses on sales of securities available-for-sale for
the year ended December 31 were as follows:

<TABLE><CAPTION>
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Gross realized gains $ $ $ 14,950
- -
Gross realized losses - (16,708) (128,795)
------------- ------------- -------------
Net loss on sale of securities (Note 17) $ - $ (16,708) $ (113,845)
============= ============= =============

Gross unrealized gains $ 1,381 $ 29,125
Gross unrealized losses (1,901,751) (801,140)
------------- -------------
Net unrealized losses (1,900,370) (772,015)
Deferred tax asset (Note 9) 627,122 254,768
------------- -------------
Unrealized loss on securities available-
for-sale, net of deferred taxes $ (1,273,248) $ (517,247)
============= =============
</TABLE>

The amortized cost and fair value of securities available-for-sale at
December 31, 1995, by contractual maturity are shown below. Expected
maturities will differ from contractual maturities as securities may have
the right to call or prepay with or without call or prepayment penalties.

<TABLE><CAPTION>
Amounts maturing in: Amortized Cost Fair Value
--------------- ---------------
<S> <C> <C>
One year or less $ 1,499,712 $ 1,499,545
After one through five years 2,503,121 2,486,567
--------------- ---------------
4,002,833 3,986,112
Mortgage-backed securities 14,239,921 13,926,200
Mutual funds 8,000,000 7,558,427
--------------- ---------------
$ 26,242,754 $ 25,470,739
=============== ===============
=============== ===============
</TABLE>

The investment in FHLB stock of $920,800 and $939,300 at December 31, 1994
and 1995, respectively, is recorded at cost and is considered a restricted
asset.

The Bank has pledged certain mortgage-backed securities to secure advances
from the FHLB. The Bank had no advances outstanding from the FHLB at both
December 31, 1994 and 1995. At December 31, 1994 and 1995, these pledged
assets had a carrying value of $2,395,192 and $2,255,188, respectively.

3. LOANS RECEIVABLE

Loans receivable at December 31 are summarized as follows:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Mortgage loans (principally conventional):
Secured by one-to-four-family residences $ 40,015,861 $ 43,609,052
Secured by other properties 4,659,863 7,365,320
Construction loans 650,000 1,719,336
Land 31,000 159,000
--------------- ---------------
45,356,724 52,852,708
F-10

<PAGE>

Less:
Undisbursed portion of mortgage loans 1,235,153 1,048,696
Net deferred loan-origination fees 5,165 1,356
--------------- ---------------
Net mortgage loans 44,116,406 51,802,656
--------------- ---------------

Consumer and other loans:
Automobile 29,076 59,863
Manufactured home 17,006 16,420
Share loans 499,933 570,760
Other 385,183 480,460
--------------- ---------------
931,198 1,127,503
--------------- ---------------
Net loans before allowance for loan losses 45,047,604 52,930,159

Less allowance for loan losses 195,062 318,781
--------------- ---------------
Loans receivable, net $ 44,852,542 $ 52,611,378
=============== ===============
</TABLE>

Loans held-for-sale of $593,010 and $466,131 at December 31, 1994 and 1995,
respectively, were net of a valuation allowance of $-0- for both years.

Activity in the allowance for loan losses is summarized as follows for the
years ended December 31:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Beginning balance $ 183,717 $ 207,629 $ 195,062
Provision charged to income 23,912 6,746 123,719
Charge-offs - (19,313) -
Recoveries - - -
--------------- --------------- ---------------
Ending balance $ 207,629 $ 195,062 $ 318,781
=============== =============== ===============
</TABLE>

Loans to directors and executive officers approximated $509,000 and $551,000
as of December 31, 1994 and 1995, respectively.

The following information relates to impaired loans as of and for the year
ended December 31, 1995:

<TABLE>
<S> <C>
Recorded investment in impaired loans for which a valuation allowance of
$10,000 is provided, based upon the measure of the loan's fair value of
underlying collateral $ 20,489

Recorded investment in impaired loans for which there is no need for a
valuation allowance, based upon the measure of the loan's fair value of
underlying collateral 201,169
---------------
Total recorded investment in impaired loans $ 221,658
===============
Average recorded investment in impaired loans during 1995 $ 226,691
===============
</TABLE>

Interest income recognized for cash payments received on impaired loans
during 1995 totaled $20,324.

Nonaccrual loans for which interest has not been recorded totaled approximately
$-0- and $88,280 at December 31, 1994 and 1995, respectively. For the years
ended December 31, 1994 and 1995, gross interest income which would have
been recorded had the nonaccruing loans been current in accordance with their
original terms amounted to $-0- and $3,497, respectively. The amounts that
were included in interest income on such loans were $-0- and $864 for 1994
and 1995, respectively.

F-11
<PAGE>

The Bank is not committed to lend additional funds to debtors whose loans have
been modified.

Mortgage loans serviced for the Federal Home Loan Mortgage Corporation (FHLMC)
are not included in the accompanying consolidated statements of financial
condition. The unpaid principal balances of these loans at December 31 are
summarized as follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage loan portfolio serviced for FHLMC $ 23,484,298 $ 22,991,322 $ 21,710,286
=============== =============== ===============
</TABLE>

Custodial escrow balances maintained in connection with the foregoing loan
servicing were $30,620 and $26,065 at December 31, 1994 and 1995, respectively.

4. ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at December 31 is summarized as follows:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Investment securities $ 168,083 $ 97,480
Mortgage-backed securities 116,848 102,318
Loans receivable and loans held-for-sale 216,629 286,262
--------------- ---------------
$ 501,560 $ 486,060
=============== ===============
</TABLE>

5. REAL ESTATE OWNED

Real estate owned consisted of the following at December 31:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Foreclosed real estate, including both held-for-sale and held for the
production of income $ 726,832 $ 379,101
Allowance for losses (53,322) (18,015)
Accumulated depreciation (251,293) (199,099)
--------------- ---------------
Foreclosed real estate, net $ 422,217 $ 161,987
=============== ===============

Real estate acquired for investment $ 1,250,000 $ 1,250,000
Allowance for losses (1,250,000) (1,250,000)
--------------- ---------------
Real estate acquired for investment, net $ - $ -
=============== ===============
</TABLE>

Income (loss) from real estate owned for the years ended December 31 is as
follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Income (loss) from real estate owned, net $ 36,830 $ 24,066 $ (11,753)
Benefit (provision) for losses 3,244 (4,280) -
Net gain on sale of real estate owned 61,680 97,763 83,560
--------------- --------------- ---------------
$ 101,754 $ 117,549 $ 71,807
=============== =============== ===============
</TABLE>
F-12

<PAGE>

Depreciation expense on foreclosed real estate held for the production of
income for the years ended December 31, 1993, 1994, and 1995 totaled
$49,923, $31,139, and $25,607, respectively.

Activity in the allowance for losses for real estate owned for the years ended
December 31 is as follows:
<TABLE><CAPTION>
Real Estate
Foreclosed Acquired for
Real Estate Investment Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1992 $ 155,770 $ 1,250,000 $ 1,405,770
Benefit included in income (3,244) - (3,244)
Elimination of allowance due to sale of real estate owned (74,399) - (74,399)
--------------- --------------- ---------------

Balance at December 31, 1993 78,127 1,250,000 1,328,127
Provision charged to expense 4,280 - 4,280
Elimination of allowance due to sale of real estate owned (29,085) - (29,085)
--------------- --------------- ---------------

Balance at December 31, 1994 53,322 1,250,000 1,303,322
Provision charged to expense - - -
Elimination of allowance due to sale of real estate owned (35,307) - (35,307)
--------------- --------------- ---------------
Balance at December 31, 1995 $ 18,015 $ 1,250,000 $ 1,268,015
=============== =============== ===============
</TABLE>

6. PREMISES AND EQUIPMENT

Premises and equipment at December 31 are summarized as follows:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Land $ 237,356 $ 237,356
Buildings 2,098,304 2,115,372
Furniture, fixtures and equipment 394,311 388,641
--------------- ---------------
2,729,971 2,741,369
Accumulated depreciation (881,222) (981,932)
--------------- ---------------
$ 1,848,749 $ 1,759,437
=============== ===============
</TABLE>

Depreciation expense for the years ended December 31, 1993, 1994, and 1995
totaled $119,673, $122,889, and $121,934, respectively.

F-13

<PAGE>

7. DEPOSITS

Deposits at December 31 are summarized as follows:
<TABLE><CAPTION>
Weighted
Average Rate at
December 31,
1995 1994 1995
--------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Demand 0.00% $ 522,558 0.7% $ 502,276 0.7%
NOW 2.75% 3,438,008 4.3% 3,784,118 5.0%
Money market 3.84% 6,281,396 7.9% 4,592,467 6.0%
Passbook savings 2.75% 7,040,447 8.9% 5,951,615 7.8%
Statement savings 3.00% 1,116,794 1.4% 1,601,667 2.1%
--------------- ------- --------------- ------
2.99% 18,399,203 23.2% 16,432,143 21.6%
--------------- ------- --------------- ------
Certificates of Deposit:
0.0% to 3.99% 14,968,873 18.8% 521,037 0.7%
4.0% to 4.99% 29,362,197 37.0% 8,165,585 10.8%
5.0% to 5.99% 15,120,127 19.0% 36,314,034 47.8%
6.0% to 6.99% 552,150 0.7% 14,415,247 19.0%
7.0% to 7.99% 1,058,846 1.3% 82,871 0.1%
8.0% and up 31,409 0.0% - 0.0%
--------------- ------- --------------- ------
5.59% 61,093,602 76.8% 59,498,774 78.4%
--------------- ------- --------------- ------
5.02% $ 79,492,805 100.0% $ 75,930,917 100.0%
--------------- ------- --------------- ------
</TABLE>

The aggregate amount of short-term certificates of deposit with a minimum
denomination of $100,000 was approximately $2,778,000 and $2,468,000 at
December 31, 1994 and 1995, respectively. Deposits which exceed $100,000 are
not federally insured.

At December 31, 1995, scheduled maturities of certificates of deposit are as
follows:
<TABLE><CAPTION>
Year Ending December 31,
------------------------------------------------------------------------------------
Interest Rates: 1996 1997 1998 1999 Total
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
0.0 to 3.99% $ 521,037 $ - $ - $ - $ 521,037
4.0 to 4.99% 3,731,737 3,845,640 588,208 - 8,165,585
5.0 to 5.99% 29,318,201 5,883,121 1,084,760 27,952 36,314,034
6.0 to 6.99% 4,749,214 4,543,977 2,215,738 2,906,318 14,415,247
7.0 to 7.99% 15,270 - - 67,601 82,871
8.0% and up - - - - -
--------------- --------------- --------------- --------------- ---------------
$ 38,335,459 $ 14,272,738 $ 3,888,706 $ 3,001,871 $ 59,498,774
=============== =============== =============== =============== ===============
</TABLE>
Interest expense on deposits for the years ended December 31 is summarized as
follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Money market $ 223,311 $ 225,432 $ 192,869
Passbook and statement savings 245,771 244,705 210,674
NOW 85,188 86,954 92,069
Certificates of deposit 2,856,431 2,466,062 3,121,265
--------------- --------------- ---------------
$ 3,410,701 $ 3,023,153 $ 3,616,877
=============== =============== ===============
</TABLE>
F-14
<PAGE>

8. BORROWED FUNDS

Borrowed funds at December 31 are summarized as follows:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Advances from FHLB $ - $ -
=============== ===============
</TABLE>

Information concerning advances from the FHLB is summarized as follows:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Average balance during the year $ 187,500 $ 1,369
Maximum month end balance during the year $ 750,000 $ -
=============== ===============
</TABLE>

Interest expense on borrowed funds for the years ended December 31 is
summarized as follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Advances from the FHLB $ - $ 8,460 $ 92
=============== =============== ===============
</TABLE>

The Bank has signed a blanket pledge agreement with the FHLB under which it
can draw advances of unspecified amounts from the FHLB. The Bank must hold
an unencumbered portfolio of eligible one-to-four family residential mortgages
with a book value of not less than 150% of the indebtedness.

9. INCOME TAXES

The Bank and its subsidiary file consolidated federal income tax and individual
state tax returns on a calendar year basis. If certain conditions are met in
determining taxable income, the Bank is allowed a special bad-debt deduction
based on a percentage of taxable income (presently 8 percent) or on specified
experience formulas. The Bank used the percentage method in 1993, 1994, and
1995.

Effective January 1, 1993, the Bank adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," (SFAS 109) which required,
among other things, a change from the deferred method to the asset and liability
method of accounting for deferred income taxes. The cumulative effect of this
change on years prior to January 1, 1993 was to increase net income for the year
ended December 31, 1993 by $62,464. The effect of this change on net income for
the year ended December 31, 1993, excluding the cumulative effect of adoption,
was to decrease net income for the year ended December 31, 1993, by $19,639.

Under the asset and liability method required by SFAS 109, deferred income taxes
are recognized, with certain exceptions, for temporary differences between the
financial reporting basis and income tax basis of assets and liabilities based
on enacted tax rates expected to be in effect when such amounts are realized or
settled. Deferred tax assets are recognized only to the extent that it is more
likely than not that such amounts will be realized based on consideration of
available evidence, including tax planning strategies and other factors.

SFAS 109 continues the exception for providing a deferred tax liability on bad
debt reserves for tax purposes of qualified thrift lenders such as the Bank that
arose in fiscal years beginning before December 31, 1987. Such bad debt reserve
for the Bank amounted to approximately $3,073,000 with an income tax effect of
$1,045,000 at December 31, 1995. This bad debt reserve would become taxable if
the Bank does not maintain certain qualified assets as defined, if the reserve
is charged for other than bad debt losses or if the Bank does not maintain its
thrift charter.

F-15

<PAGE>

Legislation was proposed in 1995 in the form of the "Thrift Charter Conversion
Tax Act of 1995" which provides that the Bank may be subject to tax on $140,000
of post - 1987 bad debt reserves. Such tax would be payable over a six year
period beginning in 1996. This legislation is still in proposed form.

The effects of changes in tax laws or rates on deferred tax assets and
liabilities are recognized in the period that includes the enactment date.

Income taxes receivable at December 31 are summarized as follows:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Current $ 47,376 $ 27,416
Deferred 805,415 459,056
--------------- ---------------
Income taxes receivable $ 852,791 $ 486,472
=============== ===============
</TABLE>

Provision (benefit) for income taxes for the years ended December 31 is
summarized as follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Federal:
Current $ 332,557 $ 180,717 $ 107,300
Deferred 2,600 11,000 (26,000)
--------------- --------------- ---------------
335,157 191,717 81,300
State:
Current - 21,000 12,000
--------------- --------------- ---------------
Provision for income taxes $ 335,157 $ 212,717 $ 93,300
=============== =============== ===============
</TABLE>

Provision for income taxes differed from the amounts computed by applying the
Federal income tax rate of 34 percent in 1993, 1994, and 1995 to income before
provision for income taxes as a result of the following:
<TABLE><CAPTION>
Percent Percent Percent
1993 Pre-tax 1994 Pre-tax 1995 Pre-tax
Income Income Income
--------------- --------- ------------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Expected income tax expense at
federal tax rate $ 347,643 34.0% $ 217,842 34.0% $ 96,423 34.0%
Effect of:
State income taxes, net
of federal tax benefits - - 14,000 2.2% 7,920 2.8%
Tax-exempt interest (8,924) (0.9)% (7,989) (1.2)% (7,295) (2.6)%
Other (3,562) 0.3% (11,136) (1.8)% (3,748) (1.3)%
--------------- --------- ------------- --------- ------------ ---------
Total income tax provision $ 335,157 33.4% $ 212,717 33.2% $ 93,300 32.9%
=============== ========= ============= ========= ============ =========
</TABLE>

Through 1986, the Bank had recognized income on the accrual method for
financial reporting purposes while recognizing income on the cash
basis for federal income tax purposes. Under the provisions of the Tax
Reform Act of 1986, the Bank has converted to the accrual basis for federal
income tax purposes, with the exception of certain transactions entered into
prior to September 25, 1985.

F-16

<PAGE>

The sources of temporary differences resulting in provision (benefit) for
deferred income taxes and the tax effect of each for the years ended
December 31, 1993, 1994, and 1995 are as follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash/accrual differences $ (16,110) $ (5,485) $ (930)
FHLB stock dividends 12,141 - 6,290
Allowance for loan losses 19,639 30,571 (21,104)
Deferred compensation (7,589) (8,722) (5,467)
Other (5,481) (5,364) (4,789)
--------------- --------------- ---------------
$ 2,600 $ 11,000 $ (26,000)
=============== =============== ===============
</TABLE>

The tax effects of temporary differences between the financial reporting basis
and income tax basis of assets and liabilities that are included in the net
deferred tax asset at December 31 relate to the following:
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Deferred tax assets:
Allowances for losses on loans $ 31,893 $ 52,992
Real estate investment 425,000 425,000
Deferred compensation 16,414 21,881
Unrealized loss on securities available-for-sale (Note 2) 627,122 254,768
--------------- ---------------
Total deferred tax assets 1,100,429 754,641
--------------- ---------------
Deferred tax liabilities:
Interest and fees on loans 1,756 461
FHLB stock dividends 105,381 111,671
Cash/accrual differences 18,295 16,070
Involuntary conversion 167,980 162,538
Other 1,602 4,845
--------------- ---------------
Total deferred tax liabilities 295,014 295,585
--------------- ---------------
Net deferred tax asset $ 805,415 $ 459,056
=============== ===============
</TABLE>

10. BENEFIT PLANS

Pension Plan: The Bank maintains a non-contributory defined benefit pension plan
for the benefit of eligible employees. This plan covers all employees who have
completed one year of service and have attained the age of 21 years and provides
for monthly retirement benefits determined on the basis of the employee's base
salary and years of service. The normal retirement age is 65 and the early
retirement age is before age 65, but generally after age 55. Benefits under the
plan are not subject to offset for social security benefits. Under the plan,
benefits vest at the rate of 20% per year beginning with a participant's third
year of service. The Bank's funding policy is to make, as a minimum
contribution, the equivalent of the minimum required by the Employee Retirement
Income Security Act of 1974.

F-17

<PAGE>

The following table sets forth the plan's funded status at the plan's year
end of November 30 (in thousands):
<TABLE><CAPTION>
1994 1995
--------------- ---------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $566
and $529 $ (572) $ (539)
=============== ===============
Projected benefit obligation for services rendered to date $ (715) $ (699)
Plan assets at fair value, primarily insurance contracts 508 438
Projected benefit obligation in excess of plan assets (207) (261)
Unrecognized net loss from past experience different from that
assumed 57 119
Unrecognized net obligation being recognized over 15 years 140 129
Adjustment required to recognize minimum liability (54) (87)
--------------- ---------------
Accrued pension cost $ (64) $ (100)
=============== ===============
</TABLE>

Net pension cost included the following components for the years ended
December 31 (in thousands):
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 29 $ 37 $ 40
Interest cost on projected benefit obligation 38 42 46
Actual return on plan assets (28) (33) (34)
Net amortization and deferral 11 11 11
--------------- --------------- ---------------
Net periodic cost $ 50 $ 57 $ 63
=============== =============== ===============
</TABLE>

The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected
benefit obligations were 7% and 3.5%, respectively. The expected long-term
rate of return on assets was 7%.

Deferred Compensation Plan: The Bank maintains a nonqualified deferred
compensation plan for a select group of management employees. Under the
plan, eligible employees may elect to defer up to 30% of annual compensation.
The Bank credits employee deferrals with interest based on the Bank's rate for
a certificate of deposit with a term of one year. Upon termination of
employment, the balance of the employee's deferred compensation account is
distributable in a lump sum or in installments over a number of years
specified by the employee. At December 31, 1994 and 1995, the Bank had an
accrued liability with respect to the plan of $48,276 and $75,856, respectively.

F-18

<PAGE>

11. OTHER NONINTEREST INCOME AND EXPENSES

Other noninterest income and expense amounts are summarized as follows for
the years ended December 31:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Other noninterest income:
Banking service charges and other fees $ 138,920 $ 61,036 $ 57,900
Loan late charges 20,011 16,039 14,482
Commission income 15,169 13,538 11,984
Other miscellaneous 8,711 2,790 3,904
--------------- --------------- ---------------
$ 182,811 $ 93,403 $ 88,270
=============== =============== ===============
<CAPTION>
1993 1994 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Other noninterest expense:
Stationery, printing and other supplies $ 32,865 $ 25,921 $ 27,440
Telephone and postage 35,237 32,269 36,037
Insurance and surety bond premiums 69,105 66,273 46,573
Professional fees 24,227 25,234 25,906
Supervisory examinations 44,539 37,972 23,868
Other operating expenses 57,461 58,024 64,562
Data processing 126,685 123,930 125,965
Advertising and promotions 104,972 116,067 111,282
--------------- --------------- ---------------
$ 495,091 $ 485,690 $ 461,633
=============== =============== ===============
</TABLE>

12. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS
OF CREDIT RISK

The Bank is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers and to
reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit. Those instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the Consolidated Statements of Financial Condition. The
contractual amounts of those instruments reflect the extent of involvement the
Bank has in particular classes of financial instruments.

The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The Bank uses the
same credit policies in making commitments as it does for on-balance-sheet
instruments.

Commitments to extend credit are agreements to lend funds to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates. The Bank evaluates each
customer's creditworthiness and related collateral on a case-by-case basis.

The Bank's exposure to market loss in the event of future changes in market
prices rendering these financial instruments less valuable is represented by the
contractual amount of the instruments.

The Bank's exposure to accounting loss on these financial instruments is a
combination of the credit and market risk described above.

At December 31, 1995, the Bank had approximate outstanding commitments to
originate loans of $1,948,000. Fixed rate loan commitments were $255,000 in
first mortgage loans committed at interest rates ranging from

F-19
<PAGE>

7.25% to 8.75%. Variable-rate loan commitments were $1,693,000 in first
mortgage loans with interest rates ranging from 7.625% to 8.75%.

The Bank also offers home equity lines of credit for its customers. At December
31, 1995, the outstanding lines of credit available totalled approximately
$150,000.

13. REGULATORY CAPITAL

At December 31, 1995 the Bank's total equity amounted to $9,179,871 or 10.8%
of total assets.

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

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Tangible, Core, and Risk-based capital (as defined in the regulations)
to total average assets (as defined). To be considered adequately capitalized
(as defined) under the regulatory framework, the Bank must maintain minimum
Tangible, Core, and Risk-based capital as set forth in the table. The Bank's
actual capital amounts and ratios are also presented in the table.

<TABLE><CAPTION>
Regulatory Capital
(dollars in thousands)
Tangible Core Risk-based
--------------- --------------- ---------------
<S> <C> <C> <C>
Total equity $ 9,180 $ 9,180 $ 9,180
Unrealized loss on securities available-for-sale
eligible for capital inclusion 517 517 517
Allowance for loan losses, as defined - - 313
--------------- --------------- ---------------
Regulatory capital 9,697 9,697 10,010
Less: Regulatory capital requirement 1,292 2,584 2,957
--------------- --------------- ---------------
Regulatory capital-excess $ 8,405 $ 7,113 $ 7,053
=============== =============== ===============

Regulatory capital ratio 11.26% 11.26% 27.08%
Less: Regulatory capital requirement 1.50% 3.00% 8.00%
--------------- --------------- ---------------
Regulatory capital ratio-excess 9.76% 8.26% 19.08%
=============== =============== ===============
</TABLE>

Management believes, as of December 31, 1995, the Bank meets all capital
requirements to which it is subject.

Section 38 of the Federal Deposit Insurance Act (FDIA), as amended by the
Federal Deposit Insurance Corporation Improvement Act (FDICIA) effective
December 19, 1991, requires that Federal banking agencies establish five
capital levels for insured depository institutions - "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized" - and requires or permits such agencies to
take certain supervisory actions as an insured institution's capital level
falls. Under regulations adopted by the Federal banking agencies to implement
these requirements, the Bank is classified as a "well capitalized institution"
for this purpose. A "well capitalized institution" significantly exceeds the
required minimum level for each relevant capital measure.

F-20

<PAGE>

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

On January 1, 1995, the Bank adopted SFAS No. 107, Disclosures about Fair Values
of Financial Instruments, which requires disclosure of fair value information
about financial instruments, whether or not recognized in the statement of
financial condition. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instruments. SFAS No. 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Bank.

The following methods and assumptions were used by the Bank in estimating fair
values of financial instruments as disclosed herein.

Cash and due from depository institutions: The carrying amounts of cash and due
from depository institutions approximate their fair value.

Mutual funds, investment securities, and mortgage-backed securities: Fair value
is determined by reference to quoted market prices.

Stock in FHLB: As discussed in footnote 2, this stock is a restricted asset and
its carrying value is a reasonable estimate of fair value.

Loans held-for-sale: The carrying value is a reasonable estimate of fair value.

Loans receivable: The fair value of first mortgage loans is estimated by using
discounted cash flow analyses, using interest rates currently offered by the
Bank for loans with similar terms to borrowers of similar credit quality. The
majority of real estate loans are residential. First mortgage loans are
segregated by fixed and adjustable interest terms. The fair value of consumer
loans is calculated by using the discounted cash flow based upon the current
market for like instruments. Fair values for impaired loans are estimated using
discounted cash flow analyses.

Accrued interest receivable: The carrying value approximates fair value.

Transaction deposits: Transaction deposits, payable on demand or with maturities
of 90 days or less, have a fair value equal to book value.

Certificates of Deposit: The fair value of fixed maturity certificates of
deposit is estimated by discounting the future cash flows using the rates
currently offered for deposits of similar maturities.

Advances from borrowers for taxes and insurance: The book value approximates
fair value.

All other liabilities: The book value approximates fair value.

Off-Balance Sheet Instruments: The fair value of a loan commitment and a letter
of credit is determined based on the fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreement and
the present creditworthiness of the counterparties. Neither the fees earned
during the year on these instruments nor their value at year-end are significant
to the Bank's consolidated financial position.

Limitations: Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument. The
valuation techniques employed above involve uncertainties and are affected by
assumptions used and judgements regarding prepayments, credit risk, discount
rates, cash flows and other factors. Changes in assumptions could significantly
affect the reported fair value.

F-21
<PAGE>

In addition, the fair value estimates are based on existing on and off-balance
sheet financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that are not
considered financial instruments. For example, the Bank has a mortgage servicing
portfolio that contributes net fee income annually. The mortgage servicing
portfolio is not considered a financial instrument and its value has not been
incorporated into the fair value estimates. Also, the fair value estimates do
not include the benefit that results from the low-cost funding provided by the
deposit liabilities compared to the cost of borrowing funds in the market.

<TABLE><CAPTION>
(Dollars in thousands)
1995
Carrying Fair
FINANCIAL ASSETS Amount Value
--------------- ---------------
<S> <C> <C>
Cash and due from depository institutions $ 2,856 $ 2,856
Mutual funds 7,558 7,558
Investment securities 3,986 3,986
Mortgage-backed securities 13,926 13,926
Stock in FHLB 939 939
Loans held-for-sale, net 466 466
Loans receivable, net 52,611 53,175
Accrued interest receivable 486 486

FINANCIAL LIABILITIES

Transaction accounts 16,432 16,432
Certificates of deposit 59,499 59,758
Advances from borrowers for taxes and insurance 63 63
All other liabilities 280 280

</TABLE>

15. PLAN OF REORGANIZATION AND STOCK ISSUANCE

On December 19, 1995, the Board of Directors of the Bank adopted a Plan of
Conversion (the Conversion) to convert from a federally chartered mutual savings
bank to a federally chartered stock savings bank and the concurrent formation of
a holding company (Holding Company).

The Conversion is expected to be accomplished by the sale of the Holding
Company's common stock in an amount equal to the consolidated pro forma market
value of the Holding Company and the Bank as converted. A subscription offering
of the shares of the Holding Company's common stock will be offered first to
eligible depositors, second to the employee stock benefit plans, third to
supplemental eligible depositors and fourth to other members of the Bank. Shares
of the Holding Company's common stock not subscribed for in the subscription
offering may be offered for sale to the general public.

At the time of the Conversion, the Bank will establish a liquidation account in
an amount equal to its total net worth as of the date of the latest statement of
financial condition appearing in the final prospectus. The liquidation account
will be maintained for the benefit of eligible account holders who continue to
maintain their accounts at the Bank after the Conversion. The liquidation
account will be reduced annually to the extent that eligible account holders
have reduced their qualifying deposits. Subsequent increases will not restore an
eligible account holder's interest in the liquidation account. In the event of a
complete liquidation, each eligible account holder will be entitled to receive a
distribution from the liquidation account in an amount proportionate to the
current adjusted qualifying balances for accounts then held before any
liquidation distribution may be made to stockholders.

F-22
<PAGE>

Subsequent to the Conversion, OTS regulations prohibit an institution from
declaring or paying any dividends or from repurchasing any of its stock if, as a
result, the regulatory capital of the Bank would be reduced below the amount
required to be maintained for the liquidation account established in connection
with its stock conversion.

Conversion costs will be deferred and deducted from the proceeds of the shares
sold in the Conversion. If the Conversion is not completed, all costs will be
charged to expense. Total costs related to the Conversion are expected to
approximate $600,000. Costs related to the conversion through December 31, 1995,
approximated $30,000 and are included in other assets in the consolidated
statement of financial condition as of December 31, 1995.

The Plan of Conversion is subject to the approval of the OTS and the Securities
and Exchange Commission and must be adopted by the affirmative vote of a
majority of the votes eligible to be cast by the members of the Bank. The
Holding Company plans to adopt a stock option and incentive plan, an employee
stock ownership plan and a recognition and retention plan. Pursuant to the stock
option and incentive plan and the recognition and retention plan, stock options
and restricted stock awards covering a number of shares equal to an aggregate of
14% of the shares of common stock issued in the Conversion may be granted. In
addition, the Employee Stock Ownership Plan is expected to purchase 8% of the
common stock issued in the Conversion.

16. RISK OF INCREASED INSURANCE ASSESSMENT RELATING TO THE
RECAPITALIZATION OF THE SAVINGS ASSOCIATION INSURANCE FUND (SAIF)

In November, 1995, Congress proposed a plan to recapitalize the SAIF which would
require savings institutions with SAIF insured deposits to pay a one time
special assessment. The proposed assessment would be based on 80 cents per $100
of deposits at March 31, 1995. (The final date and rate have not yet been
finalized pending passage of a successful budget bill.) This proposed assessment
would result in a charge of approximately $626,000 to noninterest expense.
Accordingly, this proposed assessment would significantly increase noninterest
expense and adversely affect the Bank's operations. No provision for this
proposed assessment has been made in the accompanying financial statements.
Conversely, at such time as the SAIF is adequately recapitalized, the Bank's
future deposit premiums could significantly decrease from the 23 cents per $100
of deposits currently paid.

17. NET GAIN (LOSS) ON SALE OF ASSETS

Net gain (loss) on sale of assets for each of the years ended December 31 is
summarized as follows:
<TABLE><CAPTION>
1993 1994 1995
--------------- --------------- --------------
<S> <C> <C> <C>
Net (loss) on sale of securities (Note 2) $ - $ (16,708) $ (113,845)
Net gain on sale of loans held-for-sale 81,363 18,950 10,983
Net gain on sale of other assets - - 49,230
--------------- --------------- --------------
$ 81,363 $ 2,242 $ (53,632)
=============== =============== ==============
</TABLE>

F-23

<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK)

<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK)

<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY CNS BANCORP, INC., OR CITY NATIONAL SAVINGS BANK, FSB. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF CNS BANCORP, INC. OR
CITY NATIONAL SAVINGS BANK, FSB SINCE ANY OF THE DATES
AS OF WHICH INFORMATION IS FURNISHED HEREIN OR SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
-------------------

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... (i)
Selected Consolidated Financial
Information........................... (vii)
Risk Factors.......................... 1
CNS Bancorp, Inc...................... 6
City National Savings Bank, FSB....... 7
Use of Proceeds....................... 7
Dividend Policy....................... 8
Market for Common Stock............... 9
Capitalization........................ 11
Historical and Pro Forma Capital
Compliance............................ 13
Pro Forma Data........................ 14
Shares to be Purchased by Management
Pursuant to Subscription Rights....... 18
City National Savings Bank, FSB and
Subsidiary Consolidated Statements of
Income................................ 19
Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................ 20
Recent Developments................... 32
Business of the Holding Company....... 35
Business of the Savings Bank.......... 36
Management of the Holding Company..... 58
Management of the Savings Bank........ 58
Regulation............................ 67
Taxation.............................. 74
The Conversion........................ 76
Restrictions on Acquisition of the
Holding
Company.............................. 90
Description of Capital Stock of the
Holding Company...................... 95
Registration Requirements............. 96
Legal and Tax Opinions................ 97
Experts............................... 97
Additional Information................ 97
Index to Consolidated Financial
Statements............................ 98
</TABLE>

UNTIL THE LATER OF JUNE 2, 1996, OR 25 DAYS AFTER COMMENCEMENT OF THE
SYNDICATED COMMUNITY OFFERING OF COMMON STOCK, IF ANY, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

[LOGO]
(PROPOSED HOLDING COMPANY FOR
CITY NATIONAL SAVINGS
BANK, FSB)
1,062,500 TO 1,437,500 SHARES
OF COMMON STOCK

---------------------
PROSPECTUS
---------------------

TRIDENT SECURITIES, INC.
MAY 8, 1996

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

<PAGE>
QUESTIONS AND ANSWERS
REGARDING
THE PLAN OF CONVERSION

On December 19, 1995, the Board of Directors of City National Savings Bank,
FSB ("City National" or the "Savings Bank") unanimously adopted the Plan of
Conversion, pursuant to which City National will convert from a
federally-chartered mutual savings bank to a federally-chartered stock savings
bank. In addition, all of City National's outstanding capital stock will be
issued to the holding company, CNS Bancorp, Inc. (the "Holding Company"), which
was organized by City National to own City National as a subsidiary.

This brochure is provided to answer general questions you might have about
the Conversion. Following the Conversion, City National will continue to provide
financial services to its depositors, borrowers and other customers as it has in
the past and will operate with its existing management and employees. The
Conversion will not affect the terms, balances, interest rates or existing
federal insurance coverage on City National's deposits or the terms or
conditions of any loans to existing borrowers under their individual contract
arrangements with City National.

For complete information regarding the conversion, see
the Prospectus and the Proxy Statement dated May 8, 1996. Copies of each of the
Prospectus and the Proxy Statement may be obtained by calling the Stock
Information Center at (573) 634-2465.

THIS INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY CNS BANCORP, INC. COMMON STOCK. OFFERS TO BUY OR TO SELL MAY BE
MADE ONLY BY THE PROSPECTUS. PLEASE READ THE PROSPECTUS PRIOR TO MAKING AN
INVESTMENT DECISION.

THE SHARES OF CNS BANCORP, INC. COMMON STOCK BEING OFFERED ARE NOT SAVINGS
OR DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE SAVINGS ASSOCIATION INSURANCE
FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
<PAGE>
CNS BANCORP, INC.
(THE PROPOSED HOLDING COMPANY FOR
CITY NATIONAL SAVINGS BANK, FSB)
Questions and Answers Regarding the
Subscription and Community Offerings
MUTUAL TO STOCK CONVERSION

1. Q. WHAT IS A "CONVERSION"?

A. Conversion is a change in the legal form of organization. City National
currently operates as a federally chartered mutual savings bank with no
stockholders. Through the Conversion, City National will become a
federally chartered stock savings bank, and the stock of its holding
company, CNS Bancorp, Inc., will be held primarily by stockholders who
purchase stock in the Subscription, Direct Community and Syndicated
Community Offerings or in the open market following the Offerings.

2. Q. WHY IS CITY NATIONAL CONVERTING?

A. City National, as a mutual savings bank, does not have stockholders and
has no authority to issue capital stock. By converting to the stock form
of organization, the Savings Bank will be structured in the form used by
commercial banks, most business entities and a growing number of savings
institutions. The Conversion will be important to the future growth and
performance of the Savings Bank by providing a larger capital base from
which the Savings Bank may operate, the ability to attract and retain
qualified management through stock-based employee benefit plans, enhanced
ability to diversify into other financial services related activities and
expanded ability to render services to the public.

The Board of Directors and management of City National believe that the stock
form of organization is preferable to the mutual form of organization for
a financial institution. The Board and management recognize the decline in
the number of mutual thrifts from over 12,500 mutual institutions in 1929
to under 800 mutual thrifts today.

City National believes that converting to the stock form of organization will
allow City National to more effectively compete with local community
banks, thrifts, and with statewide and regional banks, which are in stock
form. City National believes that by combining its existing quality
service and products with a local ownership base the Savings Bank's
customers and community members who become stockholders will be inclined
to do more business with City National.

Furthermore, because City National competes with local and regional banks not
only for customers, but also for employees, City National believes that
the stock form of organization will better afford City National the
opportunity to attract and retain employees, management and directors
through various stock benefit plans which are not available to mutual
savings institutions.

3. Q. IS CITY NATIONAL'S MUTUAL TO STOCK CONVERSION BENEFICIAL TO THE
COMMUNITIES THAT THE SAVINGS BANK SERVES?

A. Management believes that the structure of the Subscription, Community and
Syndicated Community Offerings is in the best interest of the various
communities that City National serves because following the Conversion it
is anticipated that a significant portion of the Common Stock will be
owned by local residents desiring to share in the ownership of a local
community financial institution. Management desires that a significant
<PAGE>
portion of the shares of common stock sold in the Offerings will be sold
to residents of the Savings Bank's "Local Community," which is comprised
of Cole, Moniteau and Pulaski counties of Missouri.

4. Q. WHAT EFFECT WILL THE CONVERSION HAVE ON DEPOSIT ACCOUNTS AND LOANS?

A. Terms and balances of accounts in City National and interest rates paid on
such accounts will not be affected by the Conversion. Insurable accounts
will continue to be insured by the Federal Deposit Insurance Corporation
("FDIC") up to the maximum amount permitted by law. The Conversion also
will not affect the terms or conditions of any loans to existing borrowers
or the rights and obligations of these borrowers under their individual
contractual arrangements with City National.

5. Q. WILL THE CONVERSION CAUSE ANY CHANGES IN CITY NATIONAL'S PERSONNEL?

A. No. Both before and after the Conversion, City National's business of
accepting deposits, making loans and providing financial services will
continue without interruption with the same board of directors, management
and staff.

6. Q. WHAT APPROVALS MUST BE RECEIVED BEFORE THE CONVERSION BECOMES EFFECTIVE?

A. First, the Board of Directors of City National must adopt the Plan of
Conversion, which occurred on December 19, 1995. Second, the Office of
Thrift Supervision must approve the applications required to effect the
Conversion. These approvals have been obtained. Third, the Plan of
Conversion must be approved by a majority of all votes eligible to be cast
by City National's voting members. A Special Meeting of voting members
will be held on June 4, 1996, to consider and vote upon the Plan of
Conversion.

THE HOLDING COMPANY

7. Q. WHAT IS A HOLDING COMPANY?

A. A holding company is a company that owns another entity. Concurrent with
the Conversion, City National will become a subsidiary of CNS Bancorp,
Inc., a company organized by City National to acquire all of the capital
stock of City National to be outstanding after the Conversion.

8. Q. IF I DECIDE TO BUY STOCK IN THIS OFFERING, WILL I OWN STOCK IN THE
HOLDING COMPANY OR CITY NATIONAL?

A. You will own stock in CNS Bancorp, Inc. However, CNS Bancorp, Inc., as a
holding company, will own all of the outstanding capital stock of City
National.

9. Q. WHY DID THE BOARD OF DIRECTORS FORM THE HOLDING COMPANY?

A. The Board of Directors believes that the Conversion of City National and
the formation of the Holding Company will result in a stronger financial
institution with the ability to provide additional flexibility to
diversify the Savings Bank's business activities through existing or
newly-formed subsidiaries, although there are no current arrangements or
understandings with respect to such diversification. The Holding Company
will also be able to use stock-based incentive programs to attract and
retain executive and other personnel for itself and its subsidiaries.
<PAGE>
ABOUT BECOMING A STOCKHOLDER

10.] Q. WHAT ARE THE SUBSCRIPTION, DIRECT COMMUNITY AND SYNDICATED COMMUNITY
OFFERINGS?

A. Under the Plan of Conversion adopted by City National, the Holding Company
is offering shares of stock in the Subscription Offering to certain
current and former customers of the Savings Bank and to the Savings Bank's
Employee Stock Ownership Plan ("ESOP"). Shares which are not subscribed
for in the Subscription Offering, if any, may be offered to the general
public in a Direct Community Offering with preference given to natural
persons who are residents of the Savings Bank's Local Community. These
Offerings are consistent with the Board's objective of CNS Bancorp, Inc.
being a locally owned company. The Subscription and Direct Community
Offerings are being managed by Trident Securities, Inc. It is anticipated
that any shares not subscribed for in the Subscription Offering may be
offered for sale in a Direct Community Offering or in a Syndicated
Community Offering, which is an offering on a best efforts basis by a
selling group of broker-dealers.

11. Q. MUST I PAY A COMMISSION TO BUY STOCK IN CONJUNCTION WITH THE
SUBSCRIPTION, DIRECT COMMUNITY AND SYNDICATED COMMUNITY OFFERINGS?

A. No. You will not pay a commission to buy the stock if the stock is
purchased in the Subscription, Direct Community or Syndicated Community
Offerings.

12. Q. HOW MANY SHARES OF CNS BANCORP, INC. STOCK WILL BE ISSUED IN THE
CONVERSION?

A. It is currently expected that between 1,062,500 shares and 1,437,500
shares of common stock will be sold at a price of $10.00 per share. Under
certain circumstances the number of shares may be increased to 1,653,125.

13. Q. HOW WAS THE PRICE DETERMINED?

A. The aggregate price of the common stock was determined by RP Financial,
L.C., an independent appraisal firm specializing in the thrift industry,
and was approved by the Office of Thrift Supervision. The price is based
on the pro forma market value of City National and the Holding Company as
determined by the independent evaluation.

14. Q. WHO IS ENTITLED TO BUY STOCK IN THE CONVERSION?

A. The shares of CNS Bancorp, Inc. to be issued in the Conversion are being
offered in the Subscription Offering in the following order of priority
to: (i) depositors with $50.00 or more on deposit at the Savings Bank as
of September 30, 1994 ("Eligible Account Holders"), (ii) the Savings
Bank's ESOP, (iii) depositors with $50.00 or more on deposit at the
Savings Bank as of March 31, 1996 ("Supplemental Eligible Account
Holders"), and (iv) depositors of the Savings Bank as of April 24, 1996
("Voting Record Date") and borrowers of the Savings Bank with loans
outstanding as of March 1, 1995 which continue to be outstanding as of the
Voting Record Date ("Other Members"), subject to the priorities and
purchase limitations set forth in the Plan of Conversion. Subject to the
prior rights of holders of subscription rights, Common Stock not
subscribed for in the Subscription Offering may be offered in the Direct
Community Offering to certain members of the general public, with
preference given to natural persons and trusts of natural persons residing
in the Local Community. Shares, if any, not subscribed for in the
Subscription or Direct Community Offerings may be offered to the general
public in the Syndicated Community Offering.
<PAGE>
15. Q. ARE THE SUBSCRIPTION RIGHTS TRANSFERABLE?

A. No. Subscription rights granted to City National's Eligible Account
Holders, Supplemental Eligible Account Holders and Other Members in the
Conversion are not transferable. Persons violating such prohibition,
directly or indirectly, may lose their right to purchase stock in the
Conversion and may be subject to other possible sanctions. IT IS THE
RESPONSIBILITY OF EACH SUBSCRIBER QUALIFYING AS AN ELIGIBLE ACCOUNT
HOLDER, SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER OR OTHER MEMBER TO LIST
COMPLETELY ALL ACCOUNT NUMBERS FOR QUALIFYING SAVINGS ACCOUNTS OR LOANS AS
OF THE QUALIFYING DATE ON THE STOCK ORDER FORM.

16. Q. WHAT ARE THE MINIMUM AND MAXIMUM NUMBERS OF SHARES THAT I CAN PURCHASE IN
THE CONVERSION?

A. The minimum number of shares is 25. The maximum number of shares that may
be purchased in the Conversion by any person currently is 15,000. The
maximum number of shares that may be purchased in the Conversion by any
person other than the ESOP, together with any associate or persons acting
in concert with such person, currently is 20,000 shares.

17. Q. ARE THE BOARD OF DIRECTORS AND MANAGEMENT OF CITY NATIONAL BUYING A
SIGNIFICANT AMOUNT OF THE STOCK OF THE HOLDING COMPANY?

A. Directors and executive officers of the Savings Bank are expected to
subscribe for 132,500 shares. The purchase price paid by directors and
executive officers will be the same $10.00 per share price as that paid by
all other persons who order stock in the Subscription, Direct Community
and Syndicated Community Offerings.

18. Q. HOW DO I SUBSCRIBE FOR SHARES OF STOCK?

A. To subscribe for shares of stock in the Subscription Offering, you should
send or deliver a stock order form together with full payment (or
appropriate instructions for withdrawal from permitted deposit accounts as
described below) to City National in the postage-paid envelope provided,
so that the stock order form and payment or withdrawal authorization
instructions are received prior to the close of the Subscription Offering,
which will terminate at 9:00 a.m., Central Time, on May 28, 1996, unless
extended. Payment for shares may be made in cash (if made in person) or by
check or money order. Subscribers who have deposit accounts with City
National may include instructions on the stock order form requesting
withdrawal from such deposit account(s) to purchase shares of CNS Bancorp,
Inc. Withdrawals from certificates of deposit may be made without
incurring an early withdrawal penalty. If shares remain available for sale
after the expiration of the Subscription Offering, they may be offered in
the Direct Community Offering, which will begin, if one is held, as soon
as practicable after the end of the Subscription Offering, but may begin
at any time during the Subscription Offering. Persons who wish to order
stock in the Direct Community Offering should return their stock order
form as soon as possible after the Direct Community Offering begins
because it may terminate at any time after it begins. Members of the
general public should contact the Stock Information Center at (573)
634-2465 for additional information.

19. Q. MAY I USE FUNDS IN A RETIREMENT ACCOUNT TO PURCHASE STOCK?

A. Yes. If you are interested in using funds held in your retirement account
at City National, the Stock Information Center can assist you in
transferring those funds to a self-directed IRA, if necessary, and
directing the trustee to purchase the stock. This process may be done
without an early withdrawal penalty and generally without a negative tax
consequence to your retirement account. Due to the additional paperwork
involved, IRA
<PAGE>
transfers must be completed by May 21, 1996. For additional information,
call the Stock Information Center at (573) 634-2465.

20. Q. WILL I RECEIVE INTEREST ON FUNDS I SUBMIT FOR A STOCK PURCHASE?

A. Yes. City National will pay interest at its passbook rate from the date
the funds are received until completion of the stock offering or
termination of the Conversion. All funds authorized for withdrawal from
deposit accounts with City National will continue to earn interest at the
contractual rate until the date of the completion of the Conversion.

21. Q. MAY I OBTAIN A LOAN FROM CITY NATIONAL TO PAY FOR SHARES PURCHASED IN THE
CONVERSION?

A. No. Federal regulations prohibit City National from making loans for this
purpose. However, federal regulations do not prohibit you from obtaining a
loan from another source for the purpose of purchasing stock in the
Conversion.

22. Q. IF I BUY STOCK IN THE CONVERSION, HOW WOULD I GO ABOUT BUYING ADDITIONAL
SHARES OR SELLING SHARES IN THE AFTERMARKET?

A. CNS Bancorp, Inc., as a newly organized company, has never issued capital
stock, and consequently there is no established market for its common
stock at this time. CNS Bancorp, Inc. has received approval to have the
Common Stock quoted on the Nasdaq SmallCap Market under the symbol "CNSB."

23. Q. WHAT IS THE HOLDING COMPANY'S DIVIDEND POLICY?

A. The Board of Directors of the Holding Company currently intends to
consider a policy of paying cash dividends. Dividends will be subject to
determination and declaration by the Board of Directors, which will take
into account a number of factors, including the operating results and
financial condition of the Holding Company, net worth and capital
requirements and regulatory restrictions on the payment of dividends by
the Savings Bank to the Holding Company upon which dividends paid by the
Holding Company eventually may be primarily dependent. There can be no
assurance that dividends will in fact be paid on the Common Stock or that,
if paid, such dividends will not be reduced or eliminated in future
periods.

24. Q. WILL THE FDIC INSURE THE SHARES OF THE HOLDING COMPANY?

A. No. The shares of CNS Bancorp, Inc. are not savings deposits or savings
accounts and are not insured by the FDIC or any other government agency.

25. Q. IF I SUBSCRIBE FOR SHARES AND LATER CHANGE MY MIND, WILL I BE ABLE TO GET
A REFUND?

A. No. Your order cannot be canceled or withdrawn once it has been received
by City National without the consent of City National.

ABOUT VOTING "FOR" THE PLAN OF CONVERSION

26. Q. AM I ELIGIBLE TO VOTE AT THE SPECIAL MEETING OF MEMBERS TO BE HELD TO
CONSIDER THE PLAN OF CONVERSION?

A. You are eligible to vote at the Special Meeting of Members to be held on
June 4, 1996 if you were a member of City National at the close of
business on the Voting Record Date for the Special Meeting (April 24,
1996) and continue as such until the Special Meeting. If you were a member
on the Voting Record Date, you should have received a proxy statement and
a proxy card with which to vote.

27. Q. HOW MANY VOTES DO I HAVE?

A. Each account holder is entitled to one vote for each $100, or fraction
thereof, on deposit in such account(s). Each borrower
<PAGE>
member is entitled to cast one vote in addition to the number of votes, if
any, he or she is entitled to cast as an account holder. No member may
cast more than 1,000 votes.

28. Q. IF I VOTE "AGAINST" THE PLAN OF CONVERSION AND IT IS APPROVED, WILL I BE
PROHIBITED FROM BUYING STOCK DURING THE SUBSCRIPTION OFFERING?

A. No. Voting against the Plan of Conversion in no way restricts you from
purchasing CNS Bancorp, Inc. stock in the Subscription Offering.

29. Q. DID THE BOARD OF DIRECTORS OF CITY NATIONAL UNANIMOUSLY ADOPT THE PLAN OF
CONVERSION?

A. Yes. City National's Board of Directors unanimously adopted the Plan of
Conversion and urges that all members vote "FOR" approval of such Plan.

30. Q. WHAT HAPPENS IF CITY NATIONAL DOES NOT GET ENOUGH VOTES TO APPROVE THE
PLAN OF CONVERSION?

A. The Conversion would not take place, and City National would remain a
mutual savings institution.

31. Q. AS A QUALIFYING DEPOSITOR OR BORROWER OF CITY NATIONAL, AM I REQUIRED TO
VOTE?

A. No. However, failure to return your proxy card or otherwise vote will have
the same effect as a vote AGAINST the Plan of Conversion.

32. Q. WHAT IS A PROXY CARD?

A. A proxy card gives you the ability to vote without attending the Special
Meeting in person. You may attend the meeting and vote, even if you have
returned your proxy card, if you choose to do so. However, if you are
unable to attend, you still are represented by proxy. Previously executed
proxies will not be used to vote for approval of the Plan of Conversion,
even if the respective members do not execute another proxy or attend the
Special Meeting and vote in person.

33. Q. HOW CAN I GET FURTHER INFORMATION CONCERNING THE STOCK OFFERING?

A. You may call the Stock Information Center at (573) 634-2465 for further
information or to request a copy of the Prospectus, a stock order form, a
proxy statement or a proxy card.

THIS INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY CNS BANCORP, INC. COMMON STOCK. SUCH OFFERS AND SOLICITATIONS
MAY BE MADE ONLY BY MEANS OF THE PROSPECTUS. COPIES OF THE PROSPECTUS MAY BE
OBTAINED BY CALLING THE STOCK INFORMATION CENTER AT (573) 634-2465.

May 8, 1996

Dear Valued Customer:

City National Savings Bank, FSB ("City National") is pleased to announce
that we have received regulatory approval to proceed with our plan to convert to
a federally-chartered stock savings bank, conditioned upon receipt of approval
by City National's members, among other things. This stock Conversion is the
most significant event in the history of City National in that it allows
customers, community members, directors and employees an opportunity to own
stock in CNS Bancorp, Inc., the proposed holding company for City National.

Since 1921, City National has successfully operated as a mutual company. We
want to assure you that the Conversion will not affect the terms, balances,
interest rates or existing FDIC insurance coverage on deposits at City National,
or the terms or conditions of any loans to existing borrowers under their
individual contract arrangements with City National. Let us also assure you that
the stock Conversion will not result in any changes in the management, personnel
or the Board of Directors of City National.

A special meeting of the members of City National will be held on June 4,
1996 at 3:00 p.m., Central Time at City National's main office at 427 Monroe
Street, Jefferson City, Missouri to consider and vote upon City National's Plan
of Conversion. Enclosed is a proxy card. Your Board of Directors solicits your
vote "FOR" City National's Plan of Conversion. A vote in favor of the Plan of
Conversion does not obligate you to purchase stock. If you do not plan to attend
the special meeting, please sign and return your proxy card promptly; your vote
is important to us.

As one of our valued members, you have the opportunity to invest in City
National's future by purchasing stock in CNS Bancorp, Inc. during the
Subscription Offering, without paying a sales commission.

If you decide to exercise your subscription rights to purchase shares, you
must return a properly completed stock order form together with full payment for
the subscribed shares so that it is received by City National not later than
9:00 a.m., Central Time on May 28, 1996.

We also have enclosed a Prospectus which fully describes City National, its
management, board and financial condition. Please review it carefully before you
vote or invest. For your convenience we have established a Stock Information
Center. If you have any questions, please call the Stock Information Center at
(573) 634-2465.

We look forward to continuing to provide quality financial services to you
in the future.

Sincerely,
Robert E. Chiles
President and Chief Executive Officer

Enclosures

THIS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER
TO BUY, SHARES OF CNS BANCORP, INC. COMMON STOCK OFFERED IN THE CONVERSION, NOR
DOES IT CONSTITUTE THE SOLICITATION OF A PROXY IN CONNECTION WITH THE
CONVERSION. SUCH OFFERS AND SOLICITATIONS OF PROXIES ARE MADE ONLY BY MEANS OF
THE PROSPECTUS AND PROXY STATEMENT. THERE SHALL BE NO SALE OF STOCK IN ANY STATE
IN WHICH ANY OFFER, SOLICITATION OF AN OFFER OR SALE OF STOCK WOULD BE UNLAWFUL.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.

DM
<PAGE>
(CITY NATIONAL LETTERHEAD)

DEAR INTERESTED INVESTOR:

Enclosed is a Prospectus which fully describes City National, its
management, board and financial condition. For your convenience we have
established a Stock Information Center. If you have any questions, please call
the Stock Information Center at (573) 634-2465.

Sincerely,
Robert E. Chiles
President and Chief Executive Officer

Enclosures

THIS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER
TO BUY, SHARES OF CNS BANCORP, INC. COMMON STOCK OFFERED IN THE CONVERSION. SUCH
OFFERS ARE MADE ONLY BY MEANS OF THE PROSPECTUS. THERE SHALL BE NO SALE OF STOCK
IN ANY STATE IN WHICH ANY OFFER, SOLICITATION OF AN OFFER OR SALE OF STOCK WOULD
BE UNLAWFUL.

THIS STOCK WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.

DI
<PAGE>
[PASTE-UP LETTERHEAD]

May 8, 1996

To Members and Friends of City National Savings Bank, FSB:

Trident Securities, Inc., a member of the National Association of Securities
Dealers ("NASD"), is assisting City National Savings Bank, FSB ("City National")
in its conversion from a federally chartered mutual savings bank to a federally
chartered stock savings bank and the concurrent offering of shares of common
stock by its holding company, CNS Bancorp, Inc. (the "Company").

At the request of the Company, we are enclosing materials explaining this
process and your alternatives, including an opportunity to invest in shares of
the Company's common stock being offered to customers through May 28, 1996.
Please read the enclosed offering materials carefully. The Company has asked us
to forward these documents to you in view of certain requirements of the
securities laws in your state.

We urge you to study these materials carefully, particularly the Prospectus
and Proxy Statement. If you choose to exercise your rights to subscribe for
shares of Common Stock of the Company you should follow the instructions
contained in the enclosed materials. Trident Securities, Inc. should not be
understood as recommending or soliciting in any way any action by you in regard
to the enclosed materials. If you have any questions, we have set up a Stock
Information Center at City National at City National's main office at 427 Monroe
Street, in Jefferson City, Missouri, or feel free to call the Stock Information
Center at (573) 634-2465.

Sincerely,
TRIDENT SECURITIES, INC.

THE SHARES OF COMMON STOCK OFFERED IN THE CONVERSION ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR
ANY OTHER GOVERNMENT AGENCY.

THIS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY STOCK. THE
OFFER WILL BE MADE ONLY BY MEANS OF THE PROSPECTUS.

TS
<PAGE>
(CITY NATIONAL LETTERHEAD)

May 8, 1996

Dear Friend:

City National Savings Bank, FSB ("City National") is pleased to announce
that we have received regulatory approval to proceed with our plan to convert to
a federally-charted stock savings bank, conditioned upon receipt of approval by
City National's members, among other things. This stock Conversion is the most
significant event in the history of City National in that it allows customers,
community members, directors and employees an opportunity to own stock in CNS
Bancorp, Inc., the proposed holding company for City National.

Our records indicate that you were a depositor of City National on September
30, 1994. Therefore, under applicable law, you are entitled to subscribe for
Common Stock in City National's Subscription Offering. Orders submitted by you
and others in the Subscription Offering are contingent upon the current members'
approval of the Plan of Conversion at a special meeting of members to be held on
June 4, 1996 and upon receipt of all required regulatory approvals.

IF YOU DECIDE TO EXERCISE YOUR SUBSCRIPTION RIGHTS TO PURCHASE SHARES, YOU
MUST RETURN A PROPERLY COMPLETED STOCK ORDER FORM TOGETHER WITH FULL PAYMENT FOR
THE SUBSCRIBED SHARES SO THAT IT IS RECEIVED AT CITY NATIONAL NOT LATER THAN
9:00 A.M., CENTRAL TIME ON MAY 28, 1996.

Enclosed is a Prospectus which fully describes City National, its
management, board and financial condition. Please review it carefully before you
invest. For your convenience, we have established a Stock Information Center. IF
YOU HAVE ANY QUESTIONS, PLEASE CALL THE STOCK INFORMATION CENTER AT (573)
634-2465.

We look forward to continuing to provide quality financial services to you
in the future.

Sincerely,
Robert E. Chiles
President and Chief Executive Officer

Enclosures

THIS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER
TO BUY, SHARES OF CNS BANCORP, INC. COMMON STOCK OFFERED IN THE CONVERSION, NOR
DOES IT CONSTITUTE THE SOLICITATION OF A PROXY IN CONNECTION WITH THE
CONVERSION. SUCH OFFERS AND SOLICITATIONS OF PROXIES ARE MADE ONLY BY MEANS OF
THE PROSPECTUS AND PROXY STATEMENT. THERE SHALL BE NO SALE OR STOCK IN ANY STATE
IN WHICH ANY OFFER, SOLICITATION OF AN OFFER OR SALE OF STOCK WOULD BE UNLAWFUL.

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.

DF
<PAGE>
(CITY NATIONAL LETTERHEAD)

May 8, 1996

Dear Member:

We are pleased to announce that City National Savings Bank, FSB ("City
National") is converting from a federally chartered mutual savings bank to a
federally chartered stock savings bank. In conjunction with this Conversion, CNS
Bancorp, Inc. ("Company"), the newly formed holding company for City National,
is offering shares of common stock in a Subscription Offering.

Enclosed you will find a Prospectus and Proxy Statement describing the
Conversion and proxy card(s). As a member of City National as of April 24, 1996,
we ask you to participate in the Conversion by reviewing the information
provided and voting on the Conversion by completing and mailing the enclosed
proxies in the enclosed postage-paid envelope as soon as possible. The Board of
Directors recommends that you vote FOR the Plan of Conversion.

Although we encourage you to vote on the Plan of Conversion, unfortunately
the Company is unable to either offer or sell its Common Stock to you because
the small number of eligible subscribers in your jurisdiction makes registration
or qualification of the Common Stock under the Securities laws of your
jurisdiction impractical, for reasons of cost or otherwise. Accordingly, this
letter and the materials enclosed herewith should be considered neither an offer
to sell nor a solicitation of an offer to buy the Common Stock of the Company.

IF YOU HAVE ANY QUESTIONS ABOUT YOUR VOTING RIGHTS OR THE CONVERSION IN
GENERAL, PLEASE CALL OUR STOCK INFORMATION CENTER AT (573) 634-2465.

Sincerely,
Robert E. Chiles
President and Chief Executive Officer

Enclosures

THE STOCK WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.