EQUALITY BANCORP INC, 424B3, 1997-10-31

EQUALITY BANCORP INC
424B3, 1997-10-31
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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<PAGE>

FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-38287

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 12, 1997)

LOGO
EQUALITY BANCORP, INC.

(Proposed Holding Company for Equality Savings and Loan
Association, F.A.)
UP TO 2,485,902 SHARES OF COMMON STOCK

Equality Bancorp, Inc. (the "Holding Company"), a Delaware corporation
formed at the direction of Equality Savings and Loan Association, F.A. (the
"Association"), is offering up to 2,485,902 shares of its common stock, par
value $0.01 per share (the "Common Stock"), in a resolicitation of subscribers
(the "Resolicitation Offering") by extending the period of time for completion
of the Offering (as such term is defined in the Prospectus) until November 19,
1997. The Resolicitation Offering is being conducted under the terms of the
Plan of Conversion and Reorganization adopted by the Boards of Directors of
the Association and First Missouri Financial, M.H.C. (the "Mutual Holding
Company"), a federally chartered mutual holding company that presently holds a
majority ownership interest in the Association.
This Prospectus Supplement supplements and amends the Prospectus of the
Holding Company, dated August 12, 1997 (the "Prospectus"), which is
incorporated herein by reference and should be read in conjunction herewith.
The information presented herein supersedes any information to the contrary
contained in the Prospectus. Unless otherwise specifically set forth herein,
the terms used in this Prospectus Supplement have the same meaning as they do
in the Prospectus.
(continued on following page)

FOR INFORMATION ON HOW TO CONFIRM, INCREASE, DECREASE OR RESCIND PRIOR
ORDERS FOR COMMON STOCK, CALL THE STOCK INFORMATION CENTER AT (314) 352-0567.

SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THE PROSPECTUS AND UPDATED RISK
FACTORS BEGINNING ON PAGE 3 OF THIS PROSPECTUS SUPPLEMENT FOR A DISCUSSION OF
CERTAIN RISKS TO BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"), THE OFFICE OF THRIFT SUPERVISION ("OTS"), OR
ANY OTHER FEDERAL AGENCY OR STATE SECURITIES COMMISSION, NOR HAS THE
SEC, THE OTS OR OTHER AGENCY OR COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
("FDIC") OR ANY OTHER GOVERNMENT AGENCY.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ESTIMATED UNDERWRITING ESTIMATED
SUBSCRIPTION COMMISSIONS AND NET PROCEEDS
PRICE OTHER EXPENSES (1) TO ISSUER (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................. $10.00 $0.45(3) $9.55
- --------------------------------------------------------------------------------
Minimum Total.............. $9,775,000(4) $515,000 $9,260,000
- --------------------------------------------------------------------------------
Midpoint Total............. $11,500,000(4) $515,000 $10,985,000
- --------------------------------------------------------------------------------
Maximum Total.............. $13,225,000(4) $515,000 $12,710,000
- --------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Consists of the estimated costs to be incurred in connection with the
Conversion and Reorganization, including $120,000 in fees for financial
advisory, consulting and marketing services and expense reimbursements
(including legal fees) to be paid to Trident Securities, Inc. ("Trident")
in connection with the Offering. See "The Conversion and Reorganization--
Marketing Arrangements" in the Prospectus. The actual fees and expenses
may vary from the estimates. Such fees paid to Trident may be deemed to be
underwriting fees.
(2) Actual net proceeds may vary substantially from estimated amounts
depending on the number of shares sold in the Resolicitation Offering. See
"Updated Pro Forma Data."
(3) Assumes the sale of the midpoint number of shares. If the minimum or
maximum number of shares are sold, estimated expenses per share would be
$0.53 or $0.39, respectively, resulting in estimated net proceeds per
share of $9.47 or $9.61, respectively.
(4) Based upon the minimum, midpoint and maximum of the Updated Offering Price
Range (as such term is defined herein), respectively. Such amount does not
include the offering of Exchange Shares (as such term is defined in the
Prospectus).

TRIDENT SECURITIES, INC.

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS OCTOBER 27, 1997
<PAGE>

(continued from previous page)

As a result of the Updated Appraisal and the Updated Offering Price Range
(as such terms are defined below), the Holding Company has increased the
number of shares of Conversion Stock being offered in the Offering from
920,000 shares to 1,322,500 shares. The offering price per share will remain
at $10.00. THE RESOLICITATION OFFERING IS BEING MADE ONLY TO THOSE PERSONS WHO
SUBMITTED ORDER FORMS IN THE INITIAL SUBSCRIPTION OFFERING. SUCH PERSONS WILL
BE GIVEN THE OPPORTUNITY TO CONFIRM, INCREASE, DECREASE OR RESCIND THEIR PRIOR
ORDERS FOR CONVERSION STOCK. Purchasers in the Resolicitation Offering are
subject to the same order of priority as was established for the initial
Subscription Offering. See "The Conversion and Reorganization--The Offering--
Subscription Offering" in the Prospectus. The Holding Company may offer shares
not subscribed for in the Resolicitation Offering in a Community Offering.

Each subscriber's resolicitation purchase order must be received by 12:00
Noon, Central time, on November 19, 1997 (the "Updated Expiration Date")
unless extended by the Holding Company with the approval of the OTS, if
necessary. A SUBSCRIBER WHO WISHES TO CONFIRM OR CHANGE HIS OR HER ORDER MUST
COMPLETE AND RETURN THE ENCLOSED SUPPLEMENTAL STOCK ORDER FORM SO THAT IT IS
RECEIVED AT ANY OFFICE OF THE ASSOCIATION PRIOR TO 12:00 NOON ON THE UPDATED
EXPIRATION DATE. ANY SUBSCRIBER WHO DOES NOT COMPLETE AND RETURN THE ENCLOSED
SUPPLEMENTAL STOCK ORDER FORM WILL HAVE HIS OR HER ORIGINAL SUBSCRIPTION ORDER
CANCELED AND ALL FUNDS PROMPTLY RETURNED WITH INTEREST. THE PERIOD FROM THE
DATE OF THIS PROSPECTUS SUPPLEMENT TO THE UPDATED EXPIRATION DATE IS REFERRED
TO AS THE "RESOLICITATION PERIOD."

Initially, the Holding Company and the Association were required to complete
the sale of the Conversion Stock by October 31, 1997. The Association and the
Holding Company have received an extension of time from the OTS to complete
the Resolicitation Offering and Community Offering, if any. In the event the
Association and the Holding Company are unable to complete the sale of the
Conversion Stock and consummate the Conversion and Reorganization, all
subscribers will receive a refund of their subscriptions unless the
Association and the Holding Company further extend the time to consummate the
Conversion and Reorganization with the approval of the OTS. If a further
extension is granted, the Holding Company will notify subscribers of their
right to confirm, increase or decrease their orders or cancel their orders and
have their funds promptly returned with interest.

As described in the Prospectus, each Association Share held by the Public
Stockholders will be converted into Exchange Shares pursuant to the Exchange
Ratio that will result in the Public Stockholders owning in the aggregate
approximately the same percentage of the Holding Company as they owned of the
Association, before giving effect to (i) the payment of cash in lieu of
fractional Exchange Shares, (ii) any shares of Common Stock purchased by such
stockholders in the Resolicitation Offering and Community Offering, if any, or
by the Association's ESOP thereafter or (iii) any exercise of dissenters'
rights. As discussed herein, the final Exchange Ratio will be determined based
on the Public Stockholders' ownership interest and not on the market value of
the Public Association Shares.

In accordance with the Plan and OTS regulations, RP Financial, LC. ("RP
Financial"), after September 16, 1997 (the initial expiration date of the
Subscription Offering), prepared an updated appraisal as of October 3, 1997
(the "Updated Appraisal") of the pro forma market value of the Conversion
Stock and Exchange Shares. The Updated Appraisal states that the estimated pro
forma market value of the Conversion Stock and Exchange Shares was $21,616,540
as of October 3, 1997. The Updated Appraisal was multiplied by the Mutual
Holding Company's percentage interest in the Association (i.e., 53.2%) to
determine a midpoint of the offering range ($11,500,000), and the minimum and
maximum range were set at 15% below and above the midpoint, respectively,
resulting in a range of $9,775,000 to $13,225,000 (the "Updated Offering Price
Range"). This offering range compares with the previous range of $6,800,000 to
$9,200,000.

This Prospectus Supplement contains more recent financial information about
the Association and the effects of the Updated Appraisal and the Updated
Offering Price Range, including updated pro forma data. THIS PROSPECTUS
SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS.

2
<PAGE>

UPDATED RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISK FACTORS PRESENTED
BELOW AND IN THE "RISK FACTORS" SECTION OF THE PROSPECTUS, IN ADDITION TO
OTHER CONSIDERATIONS DISCUSSED ELSEWHERE HEREIN AND IN THE PROSPECTUS.

MARKET CONSIDERATIONS

The Updated Appraisal of RP Financial is based upon current conditions in
the equity markets for thrift institution common stocks, among other factors.
The increase in the Offering Price Range of the Conversion Stock resulting
from the Updated Appraisal, and the corresponding increase in the number of
shares being offered in connection with the Conversion and Reorganization, may
weaken the price performance of the shares of Common Stock following the
Conversion and Reorganization, as compared to the price performance that might
have occurred if the previous Offering Price Range had not been increased. No
assurance can be given that such persons purchasing Common Stock will
thereafter be able to sell such shares of Common Stock at or above the
Purchase Price. See "Updated Stock Pricing, Exchange Ratio and Number of
Shares to be Issued."

DILUTIVE EFFECT OF UPDATED APPRAISAL

The Updated Offering Price Range results in an increase in the aggregate
range of Conversion Stock offered to a minimum of $9,775,000 and a maximum of
$13,225,000. The actual amount of Conversion Stock to be issued within the
Updated Offering Price Range will depend upon the number of subscribers that
confirm, increase, decrease or rescind their subscriptions during the
Resolicitation Period, market conditions at the time of consummation of the
Conversion and Reorganization and other factors. The increased number of
shares to be issued within the Updated Offering Price Range reduces the pro
forma book value and net income per share of the Common Stock, as compared to
the per share amounts if the previous Offering Price Range had not been
increased. See "Updated Pro Forma Data."

EFFECT OF VOTING CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS ON CORPORATE
GOVERNANCE

Directors and executive officers of the Holding Company expect to subscribe
for 51,000 shares of Conversion Stock issued in the Resolicitation Offering.
See "Proposed Subscriptions by Directors and Executive Officers." At the
maximum of the Updated Offering Price Range, directors, executive officers and
employees are also expected to eventually control the voting of 65,550 shares
of Conversion Stock issued in the Resolicitation Offering through the 1997
MRP. See "Benefits to Directors and Executive Officers--1997 Management
Recognition Plan." In addition, at the maximum of the Updated Offering Price
Range, 119,806 shares of Conversion Stock issued in the Resolicitation
Offering are expected to be acquired by the ESOP and the ESOP is expected to
receive 79,065 Exchange Shares. See "Benefits to Directors and Executive
Officers--Employee Stock Ownership Plan." Employees will vote the shares
allocated to them under the ESOP, and unallocated shares will be voted by the
ESOP trustee in the same proportion as the allocated shares. Accordingly,
directors and executive officers as a group, together with the ESOP and the
MRP, and taking into account the Exchange Shares to be beneficially owned by
such persons, may have effective control over as much as 19.7%, at the maximum
of the Updated Offering Price Range, of the Common Stock to be issued and
outstanding at the completion of the Conversion and Reorganization.

3
<PAGE>

shares of Common Stock, the shares held by directors and executive officers,
including the shares noted above, would give such persons effective control
over as much as 25.0%, at the maximum of the Updated Offering Price Range, of
the Common Stock issued and outstanding. Because the Holding Company's
Certificate of Incorporation will require the affirmative vote of 80% of the
outstanding shares entitled to vote in order to approve certain mergers,
consolidations or other business combinations without the prior approval of
two-thirds of the Holding Company's directors, the officers and directors and
their associates, as a group, could effectively block such transactions. See
"Comparison of Stockholders' Rights--Voting Restrictions on Certain Business
Combinations; Fair Price Provision" in the Prospectus.

POSSIBLE DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES

Various possible and planned issuances of Common Stock could dilute the
interests of prospective stockholders of the Holding Company following
consummation of the Conversion and Reorganization, as noted below.

If the 1997 MRP is approved by stockholders at an annual or special meeting
of the Holding Company's stockholders held at least six months following the
consummation of the Conversion and Reorganization, the 1997 MRP intends to
acquire an amount of Common Stock that, when combined with the Association
Shares purchased by the 1993 MRP following the Mutual Holding Company
Reorganization (as adjusted to give effect to the Exchange Ratio), would
aggregate 4% of the total shares of Common Stock to be outstanding upon
consummation of the Conversion and Reorganization (65,550 shares, based upon
the maximum of the Updated Offering Price Range). Such shares of Common Stock
may be acquired in the open market with funds provided by the Holding Company,
if permissible, or from authorized but unissued shares of Common Stock. In the
event that additional shares of Common Stock are issued to the 1997 MRP,
stockholders would experience dilution of their ownership interests (by 2.57%
at the maximum of the Updated Offering Price Range) and per share
stockholders' equity and per share net earnings would decrease as a result of
an increase in the number of outstanding shares of Common Stock. See "Updated
Pro Forma Data."

If the Holding Company's 1997 Stock Option Plan is approved by stockholders
at an annual or special meeting of stockholders held at least six months
following the consummation of the Conversion and Reorganization, the Holding
Company will reserve for future issuance pursuant to such plan a number of
authorized shares of Common Stock equal to an aggregate of 10% of the
Conversion Stock issued in the Resolicitation Offering (132,250 shares, based
on the maximum of the Updated Offering Price Range). See "Updated Pro Forma
Data."

The Association also has adopted and maintains the 1993 Stock Option and
Incentive Plan, which reserved for issuance 38,000 Association Shares. As of
March 31, 1997, no shares had been issued as a result of the exercise of
options granted under such option plan. Upon consummation of the Conversion
and Reorganization, the obligations and rights of this plan will be assumed by
the Holding Company, and Common Stock will be issued in lieu of Association
Shares pursuant to the terms of such plan. See "Management of the Holding
Company and Association--Employee Benefit Plans--1993 Stock Option and
Incentive Plan" in the Prospectus.

4
<PAGE>

RESULTS OF SPECIAL MEETINGS OF MEMBERS AND STOCKHOLDERS;
RESULTS OF SUBSCRIPTION OFFERING

The Plan, including the related Plans of Merger, were approved by more than
the required number of votes at the Members' Meeting and Stockholders'
Meeting, both held on September 19, 1997.

The expiration date for subscribers to submit orders in the Subscription
Offering was 12:00 Noon, Central Time, on September 16, 1997. At that time,
the Holding Company had received total valid orders for Conversion Stock of
approximately $31.1 million, excluding subscriptions by the ESOP.

UPDATED USE OF PROCEEDS

The net proceeds from the sale of the Conversion Stock are expected to range
from $9.3 million, at the minimum of the Updated Offering Price Range, to
$12.7 million, at the maximum of the Updated Offering Price Range. At the
midpoint of the Updated Offering Price Range, the estimated net proceeds from
the sale of the Conversion Stock would be $11.0 million.

The Holding Company plans to contribute to the Association $4.6 million,
$5.5 million and $10.7 million of the net proceeds from the sale of the
Conversion Stock at the minimum, midpoint and maximum of the Updated Offering
Price Range, respectively, and to retain the remainder of the net proceeds.
The Holding Company plans to contribute a greater portion of the net proceeds
to the Association at the maximum of the Updated Offering Price Range in order
to achieve a greater than 10% tangible capital ratio, which, in turn, will
permit the ESOP and the 1997 MRP to be funded with a greater amount of Common
Stock. See "Benefits to Directors and Executive Officers--Employee Stock
Ownership Plan;" "--1997 Management Recognition Plan." Assuming that the
Conversion and Reorganization is consummated at the maximum of the Updated
Offering Price Range, the Association will receive approximately $10.7 million
and the Holding Company will retain approximately $2.0 million, out of which
the Holding Company will make a loan to the Association's ESOP in the amount
of $1,334,000 and fund the 1997 MRP at a later date in the amount of $656,000,
provided the 1997 MRP is approved by the Holding Company's stockholders.

For additional information with respect to the use of the proceeds from the
Resolicitation Offering, see "Use of Proceeds" in the Prospectus.

UPDATED DIVIDEND POLICY

Upon consummation of the Conversion and Reorganization, the Board of
Directors of the Holding Company will have the authority to declare and pay
dividends on the Common Stock. The Board of Directors of the Holding Company
intends to pay cash dividends on the Common Stock at an initial quarterly rate
equal to $0.17 per share (the amount of the existing quarterly dividend on the
Association Shares) divided by the final Exchange Ratio, commencing with the
first full quarter following consummation of the Conversion and
Reorganization, which will have the effect of initially maintaining the
aggregate amount of quarterly cash dividends received by the Public
Stockholders. Based on the Updated Offering Price Range, the Exchange Ratio is
expected to be 2.1970, 2.5847 and 2.9724 at the minimum, midpoint and maximum
of the Updated Offering Price Range, respectively, resulting in an initial
quarterly dividend rate of $0.08, $0.07 and $0.06 per share, respectively.

For additional information with respect to the payment of dividends
following consummation of the Conversion and Reorganization, see "Dividend
Policy" in the Prospectus.

UPDATED MARKET FOR COMMON STOCK

The Holding Company has received approval to have the Common Stock listed on
the American Stock Exchange ("AMEX") under the symbol "EBI." There can be no
assurance, however, that the Common Stock will be listed on the AMEX or, if
listed, will continue to be eligible for such listing.

For additional information with respect to the market for the Common Stock,
see "Market for the Common Stock" in the Prospectus.

5
<PAGE>

UPDATED CAPITALIZATION

The following table presents the historical capitalization of the
Association at March 31, 1997, and the pro forma consolidated capitalization
of the Holding Company after giving effect to the assumptions set forth under
"Updated Pro Forma Data," based on the sale of the number of shares of
Conversion Stock at the minimum, midpoint and maximum of the Updated Offering
Price Range. A CHANGE IN THE NUMBER OF SHARES TO BE ISSUED IN THE CONVERSION
AND REORGANIZATION WOULD MATERIALLY AFFECT PRO FORMA CONSOLIDATED
CAPITALIZATION.

<TABLE>
<CAPTION>
HOLDING COMPANY PRO FORMA CONSOLIDATED
CAPITALIZATION AS OF MARCH 31, 1997
BASED UPON THE SALE FOR $10.00 PER
SHARE OF
--------------------------------------
ASSOCIATION 977,500 1,150,000 1,322,500
HISTORICAL SHARES SHARES SHARES
CAPITALIZATION AT (MINIMUM (MIDPOINT (MAXIMUM
MARCH 31, 1997 OF RANGE)(1) OF RANGE)(1) OF RANGE)(1)
----------------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deposits(2)............. $122,983 $122,983 $122,983 $122,983
FHLB advances and note
payable to bank........ 64,113 64,113 64,113 64,113
Debt in connection with
the acquisition of
Association Shares by
the ESOP............... 136 -- -- --
-------- -------- -------- --------
Total deposits and
borrowed funds......... $187,232 $187,096 $187,096 $187,096
======== ======== ======== ========
Stockholders' equity:
Preferred Stock(3).... -- -- -- --
Common Stock(3)....... 836 18 22 25
Additional paid-in
capital.............. 2,769 12,847 14,568 16,290
Retained earnings(4).. 9,675 9,725 9,725 9,725
Unrealized gain (loss)
on available for sale
securities........... (510) (510) (510) (510)
Less:
Association Shares
acquired by ESOP..... (136) -- -- --
Common Stock acquired
by ESOP(5)........... -- (820) (941) (1,334)
Common Stock to be
acquired by 1997
MRP(6)............... -- (293) (345) (656)
-------- -------- -------- --------
Total stockholders'
equity................. $ 12,634 $ 20,967 $ 22,519 $ 23,540
======== ======== ======== ========
</TABLE>
- --------
(1) Does not reflect the possible increase in the Updated Offering Price Range
to reflect material changes in the financial condition or results of
operations of the Association or changes in market conditions or general
financial, economic and regulatory conditions, or the issuance of
additional shares under the 1997 Stock Option Plan.
(2) Withdrawals from deposit accounts for the purchase of Conversion Stock are
not reflected. Such withdrawals will reduce pro forma deposits by the
amounts thereof.
(3) The Association's authorized capital will consist solely of 4,000,000
shares of common stock, par value $1.00 per share, 1,000 shares of which
will be issued to the Holding Company, and 1,000,000 shares of preferred
stock, par value $1.00 per share, none of which will be issued in
connection with the Conversion and Reorganization. At March 31, 1997, the
Association had 836,400 shares of common stock issued and outstanding. The
Holding Company's authorized capital will consist solely of 4,000,000
shares of common stock, par value $.01 per share, and 200,000 shares of
preferred stock, par value $.01 per share. The number of shares of common
stock of the Holding Company to be issued and outstanding in the
Conversion and Reorganization would be 1,837,406, 2,161,654 and 2,485,902,
at the minimum, midpoint and maximum of the Updated Offering Price Range,
respectively. No shares of preferred stock of the Holding Company will be
issued in the Conversion and Reorganization.

6
<PAGE>

(4) Retained earnings are substantially restricted by applicable regulatory
capital requirements. Additionally, the Association 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 Eligible Account Holders and Supplemental Eligible Account
Holders at the consummation of the Conversion and Reorganization and
adjusted downward thereafter as such account holders reduce their balances
or cease to be depositors. See "The Conversion and Reorganization--
Liquidation Rights" in the Prospectus. Historical retained earnings does
not include $50,000 of assets currently held at the Mutual Holding Company
level, and which will be consolidated with the Association's book value.
(5) Assumes that 68,425 shares, 80,500 shares and 119,806 shares of Conversion
Stock sold in the Resolicitation Offering at the minimum, midpoint and
maximum of the Updated Offering Price Range, respectively, will be
acquired by the ESOP with funds borrowed from the Holding Company. See
"Benefits to Directors and Executive Officers--Employee Stock Ownership
Plan." Under generally accepted accounting principles ("GAAP"), the amount
of Conversion 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. Because 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 "Benefits to Directors
and Executive Officers--Employee Stock Ownership Plan" and "Management of
the Holding Company and Association--Employee Benefit Plans--Employee
Stock Ownership Plan" in the Prospectus.
(6) Assumes the purchase in the open market at the Purchase Price, pursuant to
the proposed 1997 MRP, of 29,325 shares, 34,500 shares and 65,550 shares
of Conversion Stock issued in the Resolicitation Offering at the minimum,
midpoint and maximum of the Updated Offering Price Range, respectively.
See "Benefits to Directors and Executive Officers--1997 Management
Recognition Plan." The issuance of such additional Conversion Stock to the
MRP from authorized but unissued shares of Common Stock would dilute the
ownership interest of stockholders by 2.57% at the maximum of the Updated
Offering Price Range. The shares are reflected as a reduction of
stockholders' equity. See "Updated Risk Factors--Possible Dilutive Effect
of Issuance of Additional Shares," "Updated Pro Forma Data" and "Benefits
to Directors and Executive Officers--1997 Management Recognition Plan" and
"Management of the Holding Company and Association--Employee Benefit
Plans--1997 Management Recognition Plan" in the Prospectus. The 1997 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 and Reorganization.

7
<PAGE>

UPDATED REGULATORY CAPITAL
The following table presents the Association's historical and pro forma
capital position relative to its capital requirements at March 31, 1997. The
amount of capital infused into the Association for purposes of the following
table is $4.6 million, $5.5 million and $10.7 million of the net proceeds from
the sale of the Conversion Stock at the minimum, midpoint and maximum of the
Updated Offering Price Range, respectively. For purposes 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 1997 MRP are deducted from pro forma regulatory
capital. For a discussion of the assumptions underlying the pro forma capital
calculations presented below, see "Updated Use of Proceeds," "Updated
Capitalization" and "Updated Pro Forma Data." The definitions of the terms
used in the table are those provided in the OTS capital regulations as
discussed under "Regulation and Supervision--Federal Savings Association
Regulation--OTS Capital Requirements" in the Prospectus.
<TABLE>
<CAPTION>
PRO FORMA AT MARCH 31, 1997
----------------------------------------------------------------
ACTUAL REGULATORY
CAPITAL AT 977,500 SHARES 1,150,000 SHARES 1,322,500 SHARES
MARCH 31, 1997 (MINIMUM OF RANGE) (MIDPOINT OF RANGE) (MAXIMUM OF RANGE)
----------------- -------------------- ---------------------- --------------------
% OF % OF % OF % OF
AMOUNT ASSETS(1) AMOUNT ASSETS(1) AMOUNT ASSETS(1) AMOUNT ASSETS(1)
------- --------- --------- ---------- ---------- ----------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital(2)......... $12,634 6.29% $ 16,336 7.96% $ 17,026 8.27% $ 21,540 10.22%
======= ====== ========= ======== ========== ========= ========= ========
Tangible capital(2)..... $12,299 6.11% $ 16,001 7.78% $ 16,691 8.09% $ 21,205 10.04%
Tangible capital
requirement............ 3,017 1.50% 3,083 1.50% 3,095 1.50% 3,169 1.50%
------- ------ --------- -------- ---------- --------- --------- --------
Excess.................. $ 9,282 4.61% $ 12,918 6.28% $ 13,596 6.59% $ 18,036 8.54%
======= ====== ========= ======== ========== ========= ========= ========
Core capital(2)......... $12,299 6.11% $ 16,001 7.78% $ 16,691 8.09% $ 21,205 10.04%
Core capital
requirement(3)......... 6,035 3.00% 6,166 3.00% 6,191 3.00% 6,338 3.00%
------- ------ --------- -------- ---------- --------- --------- --------
Excess.................. $ 6,264 3.11% $ 9,835 4.78% $ 10,500 5.09% $ 14,867 7.04%
======= ====== ========= ======== ========== ========= ========= ========
Total capital(4)........ $12,582 17.86% $ 16,284 22.83% $ 16,974 23.75% $ 21,488 29.65%
Risk-based capital
requirement............ 5,635 8.00% 5,706 8.00% 5,719 8.00% 5,797 8.00%
------- ------ --------- -------- ---------- --------- --------- --------
Excess.................. $ 6,947 9.86% $ 10,578 14.83% $ 11,255 15.75% $ 15,691 21.65%
======= ====== ========= ======== ========== ========= ========= ========
</TABLE>
- --------
(1) Based upon total adjusted assets of $201.2 million at March 31, 1997 and
$205.5 million, $206.4 million and $211.3 million at the minimum, midpoint
and maximum of the Updated Offering Price Range, respectively, for
purposes of the tangible and core capital requirements, and upon risk-
weighted assets of $70.4 million at March 31, 1997 and $71.3 million,
$71.5 million and $72.5 million at the minimum, midpoint and maximum of
the Updated Offering Price Range, respectively, for purposes of the risk-
based capital requirement.
(2) An unrealized loss on securities available-for-sale, net of taxes of
$510,000, and an investment in non-includable subsidiaries of $845,000
account for the difference between GAAP capital and both tangible capital
and core capital.
(3) 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.
(4) 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.

8
<PAGE>

UPDATED PRO FORMA DATA

Under the Plan, the shares of Conversion Stock must be sold at a price equal
to the estimated pro forma market value of the Conversion Stock, based upon an
independent valuation. The Updated Offering Price Range as of October 3, 1997
is from a minimum of $9,775,000 to a maximum of $13,225,000 with a midpoint of
$11,500,000 or, at a price per share of $10.00, a minimum number of shares of
977,500, a maximum number of shares of 1,322,500 and a midpoint number of
shares of 1,150,000. The actual net proceeds from the sale of the Conversion
Stock cannot be determined until the Conversion and Reorganization is
completed. Net proceeds set forth on the following table are based upon the
assumption that Conversion and Reorganization expenses will total
approximately $515,000 at each of the minimum, midpoint and maximum of the
Updated Offering Price Range. Actual expenses may vary from this estimate.

The pro forma consolidated net income of the Association for the year ended
March 31, 1997 has been calculated as if the Conversion and Reorganization had
been consummated at the beginning of the period and the estimated net proceeds
received by the Holding Company and the Association had been invested at 5.81%
at the beginning of the period, which represents the arithmetic average of the
Association's yield on interest-earning assets and interest-bearing deposits
for the year ended March 31, 1997. As discussed under "Updated Use of
Proceeds," the Holding Company expects to contribute to the Association $4.6
million, $5.5 million and $10.7 million of the net proceeds from the sale of
the Conversion Stock at the minimum, midpoint and maximum of the Updated
Offering Price Range, respectively, and to retain the remainder of the net
proceeds from the sale of the Conversion Stock from which it will fund the
ESOP loan. A pro forma after-tax return of 3.63% is used for both the Holding
Company and the Association for the period, after giving effect to an
incremental combined federal and state income tax rate of 37.5% for the year
ended March 31, 1997. 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 March 31, 1997, 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 Association and the pro forma consolidated net income and
stockholders' equity of the Holding Company for the periods and at the date
indicated, based on the minimum, midpoint and maximum of the Updated Offering
Price Range. No effect has been given to: (i) the shares to be reserved for
issuance under the 1997 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 and Reorganization; (ii) withdrawals from
deposit accounts for the purpose of purchasing Conversion Stock in the
Resolicitation Offering; (iii) the issuance of shares from authorized but
unissued shares to the 1997 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 and Reorganization; (iv) the payment of cash in
satisfaction of dissenters' rights or (v) the establishment of a liquidation
account for the benefit of Eligible Account Holders and Supplemental Eligible
Account Holders. See "Benefits to Directors and Executive Officers--1997 Stock
Option Plan" and "Updated Stock Pricing, Exchange Ratio and Number of Shares
Issued." Shares of Conversion Stock may be purchased with funds on deposit at
the Association, 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 such purchases.

The following pro forma information may not be representative of the
financial effects of the Conversion and Reorganization at the date on which
the Conversion and Reorganization 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 according to 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.

9
<PAGE>

<TABLE>
<CAPTION>
HOLDING COMPANY PRO FORMA
AT OR FOR THE FISCAL YEAR ENDED
MARCH 31, 1997, BASED UPON THE
SALE FOR $10.00 PER SHARE OF
----------------------------------
977,500 1,150,000 1,322,500
SHARES SHARES SHARES
(MINIMUM (MIDPOINT (MAXIMUM
OF RANGE) OF RANGE) OF RANGE)
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Gross proceeds............................ $ 9,775 $ 11,500 $ 13,225
Less: estimated offering expenses......... (515) (515) (515)
---------- ---------- ----------
Estimated net proceeds.................. $ 9,260 $ 10,985 $ 12,710
Less: Common Stock acquired by ESOP....... (684) (805) (1,198)
Less: Common Stock to be acquired by 1997
MRP...................................... (293) (345) (656)
Add: Assets consolidated from the Mutual
Holding Company.......................... 50 50 50
---------- ---------- ----------
Estimated net proceeds, as adjusted..... $ 8,333 $ 9,885 $ 10,906
========== ========== ==========
Consolidated net income:
Historical.............................. $ 505 $ 505 $ 505
Pro forma income on net proceeds(1)..... 303 359 396
Pro forma ESOP adjustments(2)........... (43) (50) (75)
Pro forma 1997 MRP adjustments(3)....... (37) (43) (82)
---------- ---------- ----------
Pro forma net income.................... $ 728 $ 771 $ 744
========== ========== ==========
Per share net income (reflects SOP 93-
6)(4)(5):
Historical.............................. $ 0.28 $ 0.24 $ 0.21
Pro forma income on net proceeds........ 0.17 0.17 0.16
Pro forma ESOP adjustments(2)........... (0.02) (0.02) (0.03)
Pro forma 1997 MRP adjustments(3)....... (0.02) (0.02) (0.03)
---------- ---------- ----------
Pro forma net income per share.......... $ 0.41 $ 0.37 $ 0.31
========== ========== ==========
Offering price as a multiple of pro forma
net income per share..................... 24.39x 27.03x 32.26x
Number of shares used in income per share
calculations............................. 1,772,402 2,085,179 2,372,087
Stockholders' equity (book value):
Historical(9)........................... $ 12,684 $ 12,684 $ 12,684
Estimated net proceeds.................. 9,260 10,985 12,710
Less: Common Stock acquired by ESOP..... (684) (805) (1,198)
Less: Common Stock acquired by 1997
MRP(3)................................. (293) (345) (656)
---------- ---------- ----------
Pro forma stockholders' equity(6)....... $ 20,967 $ 22,519 $ 23,540
========== ========== ==========
Stockholders' equity per share (does not
reflect SOP 93-6)(5)(7):
Historical(5)(9)........................ $ 6.90 $ 5.87 $ 5.10
Estimated net proceeds.................. 5.04 5.08 5.11
Less: Common Stock acquired by ESOP..... (0.37) (0.37) (0.48)
Less: Common Stock acquired by 1997
MRP(3)................................. (0.16) (0.16) (0.26)
---------- ---------- ----------
Pro forma stockholders' equity per
share(8)............................... $ 11.41 $ 10.42 $ 9.47
========== ========== ==========
Pro forma tangible stockholders' equity
per share.............................. $ 11.41 $ 10.42 $ 9.47
========== ========== ==========
Offering price as a percentage of pro
forma stockholders' equity per share..... 87.64% 95.97% 105.60%
Offering price as a percent of pro forma
tangible equity.......................... 87.64% 95.97% 105.60%
Number of shares used in book value per
share calculations....................... 1,837,406 2,161,654 2,485,902
</TABLE>

10
<PAGE>

- --------
(1) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing shares of Conversion Stock. Because funds on
deposit at the Association may be withdrawn to purchase shares of
Conversion Stock (which will reduce deposits by the amount of such
purchases), the net amount of funds available to the Association for
investment following receipt of the net proceeds of the Resolicitation
Offering will be reduced by the amount of such withdrawals.

(2) It is assumed that 68,425 shares, 80,500 shares and 119,806 shares of
Conversion Stock issued in the Conversion and Reorganization will be
purchased by the ESOP at the minimum, midpoint and maximum of the Updated
Offering Price Range, respectively. See "Benefits to Directors and
Executive Officers--Employee Stock Ownership Plan." 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 and Reorganization, which rate is
currently 8.50%) from the net proceeds from the Resolicitation Offering
retained by the Holding Company. The amount of this borrowing has been
reflected as a reduction from gross proceeds to determine estimated net
investible proceeds. The Association intends to make contributions to the
ESOP at least equal to the principal and interest requirement of the
debt. As the debt is repaid, stockholders' equity will be increased. The
Association's payment of the ESOP debt is based upon equal installments
of principal over a 10-year period, assuming a combined federal and state
income tax rate of 37.5%. Interest income earned by the Holding Company
on the ESOP debt offsets the interest paid by the Association 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
Holding Company and Association--Employee Benefit Plans--Employee Stock
Ownership Plan" in the Prospectus and "Benefits to Directors and
Executive Officers--Employee Stock Ownership Plan" herein.

(3) In calculating the pro forma effect of the 1997 MRP, it is assumed that
the required stockholder approval has been received, that the shares were
acquired by the 1997 MRP at the beginning of the period presented in open
market purchases at the Purchase Price, that 20% of the amount
contributed was an amortized expense during such period, and that the
combined federal and state income tax rate is 37.5%. 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 1.57% at the minimum and midpoint of the Updated Offering
Price Range and 2.57% at the maximum, and pro forma net income per share
would be $0.41, $0.37 and $0.31 at the minimum, midpoint and maximum of
the Updated Offering Price Range for the year ended March 31, 1997,
respectively, and pro forma stockholders' equity per share would be
$11.39, $10.41 and $9.48 at the minimum, midpoint and maximum of the
Updated Offering Price Range at March 31, 1997, respectively. Shares
issued under the 1997 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 shares are awarded under the
1997 MRP, total 1997 MRP expense would increase. The total estimated 1997
MRP expense was multiplied by 20% (the total percent of shares for which
expense is recognized in the first year) resulting in pre-tax 1997 MRP
expense of $58,650, $69,000 and $131,100 at the minimum, midpoint and
maximum of the Updated Offering Price Range for the fiscal year ended
March 31, 1997, respectively. No effect has been given to the shares
reserved for issuance under the proposed 1997 Stock Option Plan. If
stockholders approve the 1997 Stock Option Plan following the Conversion
and Reorganization, the Holding Company will have reserved for issuance
under the 1997 Stock Option Plan authorized but unissued shares of Common
Stock representing an amount of shares equal to 10% of the shares of
Conversion Stock sold in the Offering. 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
5.05%. Assuming stockholder approval of the 1997 Stock Option Plan and
that all options were exercised at the end of the year ended March 31,
1997 at an exercise price of

11
<PAGE>

$10.00 per share, pro forma net earnings per share would be $0.39, $0.35
and $0.30, respectively, for the year ended March 31, 1997, and pro forma
stockholders' equity per share would be $11.34, $10.40 and $9.50,
respectively, for the year ended March 31, 1997 at the minimum, midpoint
and maximum of the Updated Offering Price Range. See "Benefits to
Directors and Executive Officers--1997 Stock Option Plan," "--1997
Management Recognition Plan" and "Updated Risk Factors--Possible Dilutive
Effect of Issuance of Additional Shares."
(4) Per share amounts are based upon shares outstanding of 1,772,402,
2,085,179 and 2,372,087 at the minimum, midpoint and maximum of the
Updated Offering Price Range for the fiscal year ended March 31, 1997,
respectively, which includes the shares of Conversion Stock sold in the
Resolicitation Offering, less the number of shares assumed to be held by
the ESOP not committed to be released within the first year following the
Conversion and Reorganization.
(5) Historical per share amounts have been computed as if the Conversion
Stock expected to be issued in the Conversion and Reorganization 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 and Reorganization, the additional ESOP
expense or the proposed 1997 MRP expense, as described above.
(6) "Book value" represents the difference between the stated amounts of the
Association'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 and Reorganization, or the federal income tax consequences of
the restoration to income of the Association's special bad debt reserves
for income tax purposes which would be required in the unlikely event of
liquidation. The amounts shown for book value do not represent fair
market values or amounts distributable to stockholders in the unlikely
event of liquidation.
(7) Per share amounts are based upon shares outstanding of 1,837,406,
2,161,654 and 2,485,902 at the minimum, midpoint and maximum of the
Updated Offering Price Range, respectively.
(8) Does not represent possible future price appreciation or depreciation of
the Common Stock.
(9) Historical book value includes $50,000 of assets currently held at the
Mutual Holding Company level, and which will be consolidated with the
Association's book value.

12
<PAGE>

PROPOSED SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, for each of the Holding Company's directors
and executive officers and for all of the directors and executive officers as
a group, (1) the number of Exchange Shares to be beneficially held upon
consummation of the Conversion and Reorganization, based upon their beneficial
ownership of Association Shares as of May 31, 1997 (see "Beneficial Ownership
of Capital Stock" in the Prospectus), (2) the proposed purchases of Conversion
Stock, assuming sufficient shares are available to satisfy their
subscriptions, and (3) the total amount of Common Stock to be held upon
consummation of the Conversion and Reorganization, in each case assuming that
1,322,500 shares of Conversion Stock are sold, which is the maximum of the
Updated Offering Price Range.

<TABLE>
<CAPTION>
PROPOSED PURCHASES TOTAL COMMON STOCK
OF CONVERSION TO BE BENEFICIALLY
STOCK HELD(2)
BENEFICIAL ------------------ ------------------
OWNERSHIP OF NUMBER
EXCHANGE NUMBER OF PERCENTAGE
NAME SHARES(1) AMOUNT OF SHARES SHARES OF TOTAL
- ---- ------------ -------- --------- ------- ----------
<S> <C> <C> <C> <C> <C>
LeRoy C. Crook.............. 148 $ 15,000 1,500 1,648 *
Kenneth J. Hrdlicka......... 5,831 $ 50,000 5,000 10,831 *
Michael J. Walsh............ 24,739 $ 35,000 3,500 28,239 1.14%
Richard C. Fellhauer........ 70,591 (3) (3) 70,591 2.84%
Daniel C. Aubuchon.......... 7,829 $ 50,000 5,000 12,829 *
Stacey W. Braswell.......... 9,166 $100,000 10,000 19,166 *
Berenice J. Mahacek......... 23,975 $100,000 10,000 33,975 1.37%
Charles J. Wolter........... 7,543 $ 25,000 2,500 10,043 *
Michael A. Deelo............ 45,242 $100,000 10,000 55,242 2.22%
Leonard O. Wolter........... 16,877 $ 35,000 3,500 20,377 *
All directors and executive
officers of the Holding
Company as a group (ten
persons)................... 211,941 $510,000 51,000 262,941 10.58%
</TABLE>
- --------
(1) Excludes shares which may be received upon the exercise of outstanding
stock options. Based upon the Exchange Ratio of 2.9724 Exchange Shares for
each Public Association Share at the maximum of the Updated Offering Price
Range.
(2) Excludes stock options and awards to be granted under the Company's 1997
Stock Option Plan and 1997 MRP if such plans are approved by stockholders
following the Conversion and Reorganization. See "Management of the
Company--Employee Benefit Plans."
(3) Because of the purchase limitations established by the Plan, if the
Conversion and Reorganization is consummated at the maximum of the Updated
Offering Price Range, Mr. Fellhauer will be prohibited from acquiring
shares of Conversion Stock in the Resolicitation Offering.
* Less than 1%.

13
<PAGE>

BENEFITS TO DIRECTORS AND EXECUTIVE OFFICERS

EMPLOYEE STOCK OWNERSHIP PLAN

The ESOP intends to purchase in the Resolicitation Offering up to an amount
of Conversion Stock that, when combined with the Exchange Shares to be
received by the ESOP, aggregates 8% of the total shares of Common Stock to be
outstanding upon consummation of the Conversion and Reorganization, which
amount is permitted by OTS regulations for converting savings associations.
If, upon consummation of the Conversion and Reorganization, the Association's
tangible capital ratio is 10% or less, the ESOP will only be permitted to
purchase 7% of the Conversion Stock. It is only as a result of the increased
proceeds of the Offering that may be realized under the Updated Appraisal that
will permit the ESOP to acquire the greater percentage of the Conversion
Stock.

For additional information with respect to the ESOP, see "Management of the
Holding Company and Association--Employee Benefit Plans--Employee Stock
Ownership Plan" in the Prospectus.

1997 STOCK OPTION PLAN

Notwithstanding when the 1997 Stock Option Plan is submitted to and approved
by stockholders, it is anticipated that the following awards of stock options
will be made pursuant to the 1997 Stock Option Plan to directors and officers
of the Holding Company and the Association as of the date of the approval of
the 1997 Stock Option Plan by the stockholders of the Holding Company
(assuming the sale of 1,322,500 shares of Conversion Stock in the
Resolicitation Offering at the maximum of the Updated Offering Price Range,
and the reservation of 132,250 shares of Common Stock for issuance under the
1997 Stock Option Plan):

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION TERM(1)
NUMBER OF % OF --------------------------------------
RECIPIENT OPTIONS GRANTED TOTAL OPTIONS 0% 5% 10%
- --------- --------------- ------------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
NONEMPLOYEE DIRECTORS:
Daniel C. Aubuchon...... 5,000 3.78% $ 0 $ 31,450 $ 79,700
Stacey W. Braswell...... 5,000 3.78% $ 0 $ 31,450 $ 79,700
LeRoy C. Crook.......... 5,000 3.78% $ 0 $ 31,450 $ 79,700
Kenneth J. Hrdlicka..... 5,000 3.78% $ 0 $ 31,450 $ 79,700
Berenice J. Mahacek..... 5,000 3.78% $ 0 $ 31,450 $ 79,700
Charles J. Wolter....... 5,000 3.78% $ 0 $ 31,450 $ 79,700
OFFICERS:
Richard C. Fellhauer.... 25,000 18.90% $ 0 $ 157,250 $ 398,500
Michael A. Deelo........ 17,500 13.23% $ 0 $ 110,075 $ 278,950
Leonard O. Wolter....... 5,000 3.78% $ 0 $ 31,450 $ 79,700
Michael J. Walsh........ 5,000 3.78% $ 0 $ 31,450 $ 79,700
Seymour Bailis.......... 5,000 3.78% $ 0 $ 31,450 $ 79,700
John L. Tacke........... 5,000 3.78% $ 0 $ 31,450 $ 79,700
All Directors and
Officers as a Group
(12 Persons)........... 92,500 69.93% $ 0 $ 581,825 $ 1,474,450
</TABLE>
- --------
(1) Assumes the options are granted at the Purchase Price ($10.00 per share),
the options have a 10-year term, the market price of the Common Stock
underlying the option appreciates annually in value from the date of grant
to the end of the option term at a compounded rate of either 5% or 10% as
indicated in the columns. There can be no assurance that the Common Stock
will appreciate annually at a compounded rate of 5% or

14
<PAGE>

10%. The Holding Company is unaware of any formula which provides an
accurate determination of the value of a stock option as of the date of
grant.

For additional information with respect to the 1997 Stock Option Plan, see
"Management of the Holding Company and Association--Employee Benefit Plans--
1997 Stock Option Plan" in the Prospectus.

1997 MANAGEMENT RECOGNITION PLAN

Notwithstanding when the 1997 MRP is submitted to and approved by the
stockholders, when the Holding Company receives stockholder approval to
establish the 1997 MRP, the Holding Company will contribute funds to the 1997
MRP to enable it to acquire shares of Common Stock up to an amount that, when
combined with the Association Shares purchased by the 1993 MRP following the
Mutual Holding Company Reorganization (as adjusted to give effect to the
Exchange Ratio), would aggregate 4% of the total shares of Common Stock to be
outstanding upon consummation of the Conversion and Reorganization, or up to
65,550 shares of Common Stock assuming the sale of 1,322,500 shares at $10.00
per share (the maximum of the Updated Offering Price Range), which amount is
permitted by OTS regulations for converting savings associations. If, upon
consummation of the Conversion and Reorganization, the Association's tangible
capital ratio is 10% or less, the 1997 MRP will only be permitted to purchase
an amount of Common Stock equal to 3% of the Conversion Stock sold in the
Resolicitation Offering. It is only as a result of the increased proceeds of
the Offering that may be realized under the Updated Appraisal that will permit
the 1997 MRP to acquire the greater percentage of the Common Stock.

Notwithstanding when the 1997 MRP is submitted to and approved by the
stockholders, it is anticipated that the following awards will be made
pursuant to the 1997 MRP to directors and executive officers of the
Association and the Holding Company as of the date of approval of the 1997 MRP
by the stockholders of the Holding Company (assuming the sale of 1,322,500
shares of Common Stock in the Resolicitation Offering, at the maximum of the
Updated Offering Price Range, and the purchase of 65,550 shares of Common
Stock by the 1997 MRP):

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
NUMBER % OF FOR TEN YEARS FROM GRANT DATE(1)
OF SHARES TOTAL MRP ----------------------------------
RECIPIENT AWARDED SHARES 0% 5% 10%
- --------- --------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
NONEMPLOYEE DIRECTORS:
Daniel C. Aubuchon...... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
Stacey W. Braswell...... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
LeRoy C. Crook.......... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
Kenneth J. Hrdlicka..... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
Berenice J. Mahacek..... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
Charles J. Wolter....... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
OFFICERS:
Richard C. Fellhauer.... 15,000 22.88% $ 150,000 $ 244,350 $ 389,100
Michael A. Deelo........ 10,500 16.02% $ 105,000 $ 171,045 $ 272,370
Leonard O. Wolter....... 4,000 6.10% $ 40,000 $ 65,160 $ 103,760
Michael J. Walsh........ 2,000 3.05% $ 20,000 $ 32,580 $ 51,880
Seymour Bailis.......... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
John L. Tacke........... 1,250 1.91% $ 12,500 $ 20,363 $ 32,425
James W. Caulfield...... 500 0.76% $ 5,000 $ 8,145 $ 12,970
All Directors and
Officers as a Group
(13 Persons)........... 42,000 64.09% $ 420,000 $ 684,184 $ 1,089,480
</TABLE>
- --------
(1) Assumes the 1997 MRP awards are granted at the Purchase Price ($10.00 per
share) and the market price of the Common Stock underlying the 1997 MRP
award appreciates annually in value from the date of grant until 10 years
thereafter at a compounded rate of either 5% or 10% as indicated in the
columns. MRP awards do not have a term like stock options; however, in
order to compare the value of the 1997 MRP awards to the value of the
stock options granted to these named individuals a comparable 10-year time
period has

15
<PAGE>

been used. There can be no assurance that the Common Stock will appreciate
annually at a compounded rate of either 5% or 10%.

For additional information with respect to the 1997 MRP, see "Management of
the Holding Company and Association--Employee Benefit Plans--1997 Management
Recognition Plan" in the Prospectus.

THE RESOLICITATION OFFERING

As a result of changes in the offering of the Conversion Stock necessitated
by the Updated Appraisal, the Association is resoliciting orders from all
persons who subscribed for shares of Conversion Stock, and whose orders were
valid and accepted by the Association, in the Subscription Offering. Thus, the
Holding Company is hereby offering to all subscribers with valid orders in the
Subscription Offering the opportunity to confirm their original orders, to
increase or decrease the number of shares subscribed for or to rescind their
original orders. Each subscriber, regardless of his or her original order, may
now choose to (1) confirm his or her order for the number of shares indicated
on his or her previously submitted Stock Order Form; (2) increase the number
of shares subscribed for, subject to the maximum purchase limitations; (3)
decrease the number of shares subscribed for, with any excess payment to be
refunded promptly or any excess authorization for withdrawal to be canceled
promptly; or (4) cancel his or her order in its entirety, with any payment to
be refunded with interest thereon and any authorization for withdrawal to be
canceled promptly.

A subscriber who wishes to confirm, increase, decrease or rescind his or her
original order as provided herein must return a duly completed Supplemental
Stock Order Form (with any additional payment or withdrawal authorization as
required due to an increase in the payment required for the number of shares
ordered over the amount previously paid) to any office of the Association by
12:00 Noon, Central Time, on November 19, 1997 (the Updated Expiration Date).
An executed Supplemental Stock Order Form once received may not be modified,
amended or rescinded without the consent of the Association.The Association
may extend the Resolicitation Period or the period in which it must complete
the sale of the Conversion Stock, if permitted by applicable regulatory
authorities, or it may waive or permit correction of any incomplete or
improperly executed Election Form. IF THE SUBSCRIBER DOES NOT RETURN A
COMPLETED SUPPLEMENTAL STOCK ORDER FORM OR IF IT IS RECEIVED BY THE
ASSOCIATION AFTER THE UPDATED EXPIRATION DATE, THE SUBSCRIBER'S ORIGINAL ORDER
WILL BE CANCELED AUTOMATICALLY AND HIS OR HER FUNDS WILL BE RETURNED PROMPTLY
WITH INTEREST.

Any necessary payment for additional subscribed shares may be made (1) in
cash if delivered in person at any office of the Association, (2) by check or
money order, or (3) by authorization of withdrawal from deposit accounts
maintained with the Association. Interest will continue to be paid on
subscriptions made by check, money order or in cash at the Association's
passbook rate of interest from the date the payment is received by the
Association until the completion or termination of the Conversion and
Reorganization. If payment is made by authorization of withdrawal from deposit
accounts, the funds authorized to be withdrawn will continue to accrue
interest at the contractual rates until completion or termination of the
Conversion and Reorganization but a hold will be placed on such funds, thereby
making them unavailable to the depositor, until completion or termination of
the Conversion and Reorganization. Appropriate means by which such withdrawals
may be authorized are contained in the Supplemental Stock Order Form.

With the exception of Employee Stock Benefit Plans (which would include the
ESOP), which may purchase up to an amount of Conversion Stock that, when
combined with the Exchange Shares to be received by the ESOP, aggregate 8% of
the total shares of Common Stock to be outstanding upon consummation of the
Conversion and Reorganization, no person or entity, together with associates
of, or persons acting in concert with, such person or entity, may purchase
shares of Conversion Stock in an amount that, when combined with Exchange
Shares received by such person, exceeds 62,500 shares of Common Stock. Each
person subscribing for Conversion Stock in the Offering must subscribe for at
least 25 shares. See "The Conversion and Reorganization--Limitations on
Conversion Stock Purchases" in the Prospectus for other purchase and sale
limitations. Because the purchase limitations contained in the Plan include
Exchange Shares to be issued to Public Stockholders for their Public
Association Shares, certain holders of Public Association Shares may be
limited in their ability to purchase Conversion Stock in the Resolicitation
Offering.

16
<PAGE>

EXTENSION OF TIME PERIOD TO COMPLETE THE OFFERING

The Association and the Holding Company have obtained from the OTS an
extension of such period to complete the Offering. As a result of such
extension and as a result of the increase in the Offering Price Range, all
subscribers have been given the right to confirm, increase, decrease or
rescind their subscriptions. If the Offering is not completed by November 19,
1997, either all funds received will be returned with interest and withdrawal
authorizations canceled or, if the Association requests, and the OTS has
granted, an extension of such period, all subscribers will again be given the
right to confirm, increase, decrease or cancel their subscriptions.

UPDATED STOCK PRICING, EXCHANGE RATIO AND NUMBER OF SHARES TO BE ISSUED

The increase in the valuation price range of the Common Stock from June 20,
1997 to October 3, 1997, as described in the appraisal report of RP Financial,
is due, among other factors, to increases during that period in the market
prices of publicly traded securities of financial institutions which RP
Financial believes to be comparable with the Holding Company and the
Association. Current market conditions influencing the increase in market
prices of these institutions include industry consolidation and fundamental
price-to-book and price-to-earnings comparisons which are believed to be
driving thrift stock prices. In particular, the appraisal report indicates
that acquisition activity in the thrift industry and investor speculation that
industry consolidation will continue has resulted in upward price movement in
the comparative group chosen by RP Financial. The increase in the offering
price range of the Common Stock was not based on any material change in the
earnings, assets or financial condition of the Association.

The Updated Appraisal has been prepared by RP Financial in reliance upon the
information contained in this Prospectus Supplement and in the Prospectus,
including the Consolidated Financial Statements of the Association. RP
Financial also considered the following factors, among others: the present and
projected operating results and financial condition of the Primary Parties and
the economic and demographic conditions in the Association's existing market
area; certain historical, financial and other information relating to the
Association; a comparative evaluation of the operating and financial
statistics of the Association with those of other similarly situated publicly-
traded companies located in Missouri and Illinois and other regions of the
United States; the aggregate size of the offering of the Conversion Stock; the
impact of the Conversion and Reorganization on the Association's net worth and
earnings potential; the proposed dividend policy of the Holding Company and
the Association; and the trading market for the Association Shares and
securities of comparable companies and general conditions in the market for
such securities.

On the basis of the foregoing, RP Financial has advised the Primary Parties
that, in its opinion, the estimated pro forma market value of the Conversion
Stock and Exchange Shares was $21,616,540 as of October 3, 1997. Because the
holders of the Public Association Shares will continue to hold the same
aggregate percentage

17
<PAGE>

ownership interest in the Holding Company as they currently hold in the
Association (before giving effect to the payment of cash in lieu of issuing
fractional Exchange Shares, any exercise of dissenters' rights and any shares
of Conversion Stock purchased by the Association's stockholders in the
Resolicitation Offering or by the ESOP thereafter), the Updated Appraisal was
multiplied by the Mutual Holding Company's percentage interest in the
Association (i.e., 53.2%) to determine the midpoint of the valuation
($11,500,000), and the minimum and maximum of the valuation were set at 15%
below and above the midpoint, respectively, resulting in a range of $9,775,000
to $13,225,000. The Boards of Directors of the Primary Parties determined that
the Conversion Stock would be sold at $10.00 per share, resulting in a range
of 977,500 to 1,322,500 shares of Conversion Stock being offered. Upon
consummation of the Conversion and Reorganization, the Conversion Stock and
the Exchange Shares will represent approximately 53.2% and 46.8%,
respectively, of the Holding Company's total outstanding shares. The Boards of
Directors of the Primary Parties reviewed RP Financial's updated appraisal
report, including the methodology and the assumptions used by RP Financial,
and determined that the Updated Offering Price Range was reasonable and
adequate. The Boards of Directors of the Primary Parties also established the
formula for determining the Exchange Ratio. Based upon such formula and the
Updated Offering Price Range, the Exchange Ratio ranged from a minimum of
2.1970 to a maximum of 2.9724 Exchange Shares for each Public Association
Share, with a midpoint of 2.5847. Based upon these Exchange Ratios, the
Holding Company expects to issue between 859,906 and 1,163,402 Exchange Shares
to the holders of Public Association Shares outstanding immediately prior to
the consummation of the Conversion and Reorganization. The Updated Offering
Price Range and the Exchange Ratio may be amended with the approval of the
OTS, if required, or if necessitated by subsequent developments in the
financial condition of any of the Primary Parties or market conditions
generally.

The following table sets forth, based upon the minimum, midpoint and maximum
of the Updated Offering Price Range, the following: (i) the total number of
shares of Conversion Stock and Exchange Shares to be issued in the Conversion
and Reorganization, (ii) the percentage of the total Common Stock represented
by the Conversion Stock and the Exchange Shares, (iii) the total shares of
Common Stock to be outstanding upon consummation of the Conversion and
Reorganization, and (iv) the Exchange Ratio. The table assumes that no holder
of Public Association Shares exercises dissenters' rights and that there is no
cash paid in lieu of issuing fractional Exchange Shares.

<TABLE>
<CAPTION>
CONVERSION STOCK EXCHANGE SHARES
TO BE ISSUED TO BE ISSUED TOTAL SHARES OF
----------------- ----------------- COMMON STOCK TO EXCHANGE
AMOUNT PERCENT AMOUNT PERCENT BE OUTSTANDING RATIO
--------- ------- --------- ------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Minimum........... 977,500 53.2% 859,906 46.8% 1,837,406 2.1970
Midpoint.......... 1,150,000 53.2% 1,011,654 46.8% 2,161,654 2.5847
Maximum........... 1,322,500 53.2% 1,163,402 46.8% 2,485,902 2.9724
</TABLE>

RP Financial's valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing such shares.
RP Financial did not independently verify the Consolidated Financial
Statements and other information provided by the Association and the Mutual
Holding Company, nor did RP Financial value independently the assets or
liabilities of the Association. The valuation considers the Association and
the Mutual Holding Company as going concerns and should not be considered as
an indication of the liquidation value of the Association and the Mutual
Holding Company. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons purchasing
Conversion Stock or receiving Exchange Shares in the Conversion and
Reorganization will thereafter be able to sell such shares at prices at or
above the Purchase Price or in the range of the foregoing valuation of the pro
forma market value thereof.

No sale of shares of Conversion Stock or issuance of Exchange Shares may be
consummated unless prior to such consummation RP Financial confirms that no
material event has occurred which, taking into account all relevant factors,
would cause it to conclude that the Purchase Price is materially incompatible
with the estimate of the pro forma market value of a share of Common Stock
upon consummation of the Conversion and Reorganization. If such is not the
case, a new offering price range may be set, a new exchange ratio may be
determined based upon the new offering price range, a new subscription
offering and community offering and/or syndicated community offering may be
held or such other action may be taken as the Primary Parties shall determine
and the OTS may permit or require.

18
<PAGE>

In the event market or financial conditions change so as to cause the
aggregate Purchase Price of the shares to be below the minimum of the Updated
Offering Price Range or more than the maximum of such range, purchasers may be
resolicited (i.e., permitted 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 Association's passbook rate of interest, or be
permitted to modify or rescind their subscriptions). Any increase or decrease
in the number of shares of Conversion Stock will result in a corresponding
change in the number of Exchange Shares, so that upon consummation of the
Conversion and Reorganization the Conversion Stock and the Exchange Shares
will represent approximately 53.2% and 46.8%, respectively, of the Holding
Company's total outstanding shares of Common Stock (exclusive of the effects
of the exercise of outstanding stock options).

The Updated Appraisal Report of RP Financial has been filed as an exhibit to
the Holding Company's Registration Statement on Form S-1 and Application for
Conversion, of which this Prospectus Supplement and the Prospectus are a part,
and is available for inspection in the manner set forth under "Additional
Information" in the Prospectus.

EXPERTS

RP Financial has consented to the inclusion herein of the summary of its
Updated Appraisal Report as to the estimated pro forma market value of the
Conversion Stock and Exchange Shares and to the use of its name and all
statements with respect to it appearing herein.

FINANCIAL RESULTS AND CAPITAL RATIOS

The following unaudited Consolidated Financial Statements reflect the
financial condition and results of operations of the Association at June 30,
1997 and for the three months ended June 30, 1997 and 1996. The interim
results reflect, in the opinion of management, all adjustments (consisting of
only normal recurring adjustments) which are necessary to present fairly the
results for such interim periods and are not necessarily indicative of the
results that may be expected for the fiscal year ending March 31, 1998.

The following table reflects the Association's regulatory capital ratios at
June 30, 1997.

<TABLE>
<CAPTION>
AT JUNE 30, 1997*
-----------------
<S> <C>
Tangible capital ratio.................................. 6.18%
Core capital ratio...................................... 6.18%
Risk-based capital ratio................................ 16.79%
</TABLE>
- --------
*The capital regulations of the OTS require institutions to have a tangible
capital ratio of at least 1.5% of total adjusted assets (as defined by
regulation), a core capital ratio of at least 3% of total adjusted assets
and a risk-based capital ratio of at least 8% of risk-weighted assets (as
defined by regulation).

From June 30, 1997 through September 30, 1997, there has been no material
change in the financial condition or the results of operations of the
Association, except for an increase in deposits resulting from the proceeds of
the Offering and interest expense thereon.

19
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 1997 AND MARCH 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
ASSETS 1997 1997
------ ------------ -----------
<S> <C> <C>
Cash, primarily interest-bearing demand accounts.... $ 25,866,773 1,037,199
Interest-bearing deposits........................... 2,662,374 3,819,744
Investment securities:
Available for sale, at market value............... 40,224,405 70,122,807
Held to maturity, at cost......................... 4,849,435 4,848,587
Mortgage-backed securities, available for sale, at
market value....................................... 11,028,018 14,954,025
Loans receivable, net............................... 93,793,652 91,530,369
Loans held for sale................................. 12,663,063 4,397,614
------------ -----------
Total loans receivable, net..................... 106,456,715 95,927,983
Investment in real estate........................... 864,926 869,898
Stock in Federal Home Loan Bank..................... 3,400,000 3,350,000
Mortgage servicing rights........................... 514,298 513,275
Office properties and equipment, net................ 3,633,317 2,933,591
Accrued interest receivable and other assets........ 2,330,660 2,386,533
------------ -----------
$201,830,921 200,763,642
============ ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Savings deposits.................................... $122,025,915 122,982,954
Accrued interest payable on savings deposits........ 133,459 134,599
Borrowed money...................................... 65,162,132 64,248,804
Advance payments by borrowers for taxes and
insurance.......................................... 131,391 86,776
Income tax payable.................................. 144,177 99,863
Deferred income taxes............................... 530,612 196,427
Accrued expenses and other liabilities.............. 397,713 379,958
------------ -----------
Total liabilities............................... 188,525,399 188,129,381
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value per share; 1,000,000
shares authorized; none issued................... -- --
Common stock, $1 par value per share; 4,000,000
shares authorized; 836,400 shares issued and
outstanding...................................... 836,400 836,400
Additional paid-in capital........................ 2,771,873 2,768,548
Retained earnings--substantially restricted ...... 9,798,633 9,674,676
Unrealized gain (loss) on investment and mortgage-
backed securities available for sale, net........ 13,176 (509,523)
Unearned ESOP shares.............................. (114,560) (135,840)
------------ -----------
Total stockholders' equity...................... 13,305,522 12,634,261
------------ -----------
$201,830,921 200,763,642
============ ===========
</TABLE>

See accompanying notes to consolidated financial statements.

20
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Interest income:
Loans receivable....................................... $1,954,874 1,836,577
Investment securities.................................. 1,120,431 782,502
Mortgage-backed securities............................. 217,469 429,481
Interest-bearing deposits.............................. 54,955 161,660
Other.................................................. 59,232 54,824
---------- ---------
Total interest income................................ 3,406,961 3,265,044
---------- ---------
Interest expense:
Savings deposits....................................... 1,401,552 1,435,167
Advances from Federal Home Loan Bank................... 891,241 782,909
Other borrowed money................................... 11,188 11,412
---------- ---------
Total interest expense............................... 2,303,981 2,229,488
---------- ---------
Net interest income.................................. 1,102,980 1,035,556
Provision for losses on loans............................ -- --
---------- ---------
Net interest income after provision for losses on
loans................................................. 1,102,980 1,035,556
---------- ---------
Noninterest income:
Gain on sale of mortgage loans......................... 190,830 210,464
Loan servicing fees and late charges................... 236,791 213,881
Gain on sale of investment and mortgage-backed
securities
available for sale, net............................... 47,517 29,660
Equity in earnings (loss) of joint venture............. (16,491) 2,906
Rental income.......................................... 6,264 56,630
Gain on sale of real estate............................ -- 105,875
Other.................................................. 90,071 104,226
---------- ---------
Total noninterest income............................. 554,982 723,642
---------- ---------
Noninterest expense:
Salaries and employee benefits......................... 786,457 747,409
Occupancy.............................................. 106,615 114,483
Data processing........................................ 53,776 45,584
Advertising............................................ 27,501 20,080
Federal insurance premiums............................. 19,692 71,658
Other.................................................. 355,531 326,586
---------- ---------
Total noninterest expense............................ 1,349,572 1,325,800
---------- ---------
Income before income tax expense....................... 308,390 433,398
Income tax expense....................................... 120,272 168,997
---------- ---------
Net income............................................. $ 188,118 264,401
========== =========
Earnings per share....................................... $ .23 .32
========== =========
</TABLE>

See accompanying notes to consolidated financial statements.

21
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

THREE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
UNREALIZED GAIN
(LOSS) ON
INVESTMENT AND
COMMON STOCK MORTGAGE-BACKED UNEARNED TOTAL
---------------- ADDITIONAL RETAINED SECURITIES AVAILABLE ESOP STOCKHOLDERS'
SHARES AMOUNT PAID-IN CAPITAL EARNINGS FOR SALE, NET SHARES EQUITY
------- -------- --------------- --------- -------------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31,
1997................... 836,400 $836,400 2,768,548 9,674,676 (509,523) (135,840) 12,634,261
Net income.............. -- -- -- 188,118 -- -- 188,118
Amortization of ESOP
awards................. -- -- 3,325 -- -- 21,280 24,605
Dividend declared on
nonmutual holding
company owned common
stock at $.17 per
share.................. -- -- -- (64,161) -- -- (64,161)
Change in unrealized
gain (loss) on
investment and
mortgage-backed
securities available
for sale, net.......... -- -- -- -- 522,699 -- 522,699
------- -------- --------- --------- -------- -------- ----------
Balance, June 30, 1997.. 836,400 $836,400 2,771,873 9,798,633 13,176 (114,560) 13,305,522
======= ======== ========= ========= ======== ======== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

22
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)

<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 188,118 264,401
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization:
Office properties and equipment................ 71,428 45,588
Real estate investments........................ 2,815 2,815
Premiums and discounts, net.................... 47,229 192,764
Mortgage servicing rights...................... 47,691 25,631
Increase (decrease) in accrued interest
receivable...................................... 71,687 (255,346)
Decrease in valuation reserve on loans held for
sale............................................ -- (50,967)
Gain on sale of office property and equipment.... -- (7,000)
Gain on sale of investment in real estate........ -- (105,875)
Gain on sale of investment and mortgage-backed
securities available for sale, net.............. (47,517) (29,660)
Increase (decrease) in accrued interest payable
on savings deposits............................. (1,140) 24,676
Change in income tax payable..................... 44,314 186,497
Equity in (earnings) loss of joint ventures...... 16,491 (2,906)
Other, net....................................... 26,545 407,881
Increase in loans held for sale.................... (8,265,449) ( 279,129)
------------ -----------
Net cash provided by (used in) operating
activities................................... (7,797,788) 419,370
------------ -----------
Cash flow from investing activities:
Net change in loans receivable..................... (2,320,333) (3,065,759)
Decrease in interest-bearing deposits.............. 1,157,370 1,446,982
Principal repayments on investment securities,
AFS............................................... 66,830 181,294
Principal repayments on mortgage-backed securities,
AFS............................................... 572,684 1,467,982
Proceeds from the sale of investment securities,
AFS............................................... 43,936,191 3,017,970
Proceeds from the maturity of investment
securities, AFS................................... 6,000,000 --
Proceeds from the sale of mortgage-backed
securities, AFS................................... 3,519,453 4,274,966
Purchase of investment securities, AFS............. (19,375,000) (12,205,000)
Purchase of mortgage-backed securities, AFS........ -- (6,236,596)
Proceeds from the sale of investment in real
estate............................................ -- 1,085,474
Decrease in joint venture borrowings............... 3,292 3,033
Purchase of stock in FHLB.......................... (50,000) --
Increase in cost of mortgage servicing rights...... (48,714) (135,950)
Purchase of office properties and equipment, net... (771,154) (13,497)
------------ -----------
Net cash provided by (used in) investing
activities................................... 32,690,619 (10,179,101)
Cash flows from financing activities:
Net increase (decrease) in savings deposits........ (957,039) 289,113
Proceeds from Federal Home Loan Bank advances...... 5,000,000 31,000,000
Repayment of Federal Home Loan Bank advances....... (5,000,000) (27,000,000)
Proceeds from other borrowed money................. 913,328 643,592
Cash dividends paid................................ (64,161) (56,274)
Increase in advance payments by borrowers for taxes
and insurance..................................... 44,615 39,097
------------ -----------
Net cash provided by (used in) financing
activities................................... (63,257) 4,915,528
------------ -----------
Net increase (decrease) in cash and cash
equivalents.................................. 24,829,574 ( 4,844,203)
Cash and cash equivalents, beginning of period...... 1,037,199 5,550,292
------------ -----------
Cash and cash equivalents, end of period............ $ 25,866,773 706,089
============ ===========
Supplemental disclosure of cash flow information:
Interest paid...................................... $ 2,305,122 2,169,077
Income taxes paid, net............................. 75,958 --
</TABLE>

See accompanying notes to consolidated financial statements.

23
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1997
(UNAUDITED)

(1) MUTUAL HOLDING COMPANY FORMATION

On October 22, 1993, Equality Savings and Loan Association, F.A. (Equality)
reorganized from a Missouri-chartered mutual savings and loan association into
a mutual holding company. The mutual holding company is a federal corporation,
chartered and regulated by the Office of Thrift Supervision (OTS), and is
named First Missouri Financial, M.H.C. (the MHC). As part of the
reorganization, Equality transferred substantially all of its assets and all
of its liabilities to a new Missouri-chartered savings and loan association
and retained its same name. The reorganization was accounted for as a change
in corporate form with the historic basis of Equality's assets, liabilities,
and retained earnings unchanged as a result.

Concurrent with the reorganization, Equality offered a minority interest in
its common stock to its depositors and to its Employee Stock Ownership Plan
(ESOP). A total of 380,000 shares of newly issued common stock was sold at
$10.00 per share. An additional 11,400 authorized shares of common stock were
sold to Equality's Management Recognition Plan (MRP) at $10.00 per share. The
cost of issuing the 391,400 shares totaled $333,000 and was deducted from the
sale proceeds.

Equality will be a majority-owned subsidiary of the MHC at all times as long
as the MHC remains in existence. The existing rights of Equality's depositors
upon liquidation were transferred to the MHC and records will be maintained to
ensure such rights receive statutory priority in the event of a future mutual-
to-stock conversion, or in the more unlikely event of the MHC's liquidation.

On May 16, 1997, First Missouri Financial, M.H.C. and Equality Savings and
Loan Association, F.A. adopted a Plan of Conversion and Reorganization
pursuant to which First Missouri Financial, M.H.C. will convert from the
mutual to stock form of organization. Shares of common stock of a new holding
company, Equality Bancorp, Inc., will be offered in a subscription offering in
descending order of priority to eligible account holders; employee stock
benefit plans; supplemental eligible account holders; other members;
directors, officers, and employees; and public stockholders. Any shares
remaining unsold in the subscription offering will be sold through a community
offering.

(2) BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions for Form 10-QSB and, therefore, do
not include information for footnotes necessary for a complete presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles. However, all adjustments (consisting
only of normal recurring accruals) which, in the opinion of management, are
necessary for a fair presentation of the consolidated financial statements
have been included in the results of operations for the three months ended
June 30, 1997 and 1996.

Operating results for the three months ended June 30, 1997 are not
necessarily indicative of the result that may be expected for the year ending
March 31, 1998.

(3) PRINCIPLES OF CONSOLIDATION

The accompanying unaudited consolidated financial statements include the
accounts of Equality Savings and Loan Association, F.A. and its wholly owned
subsidiaries, Equality Commodity Corporation (ECC) and Equality Mortgage
Corporation (EMC). All significant intercompany accounts and transactions have
been eliminated in consolidation.

24
<PAGE>

(4) EARNINGS PER SHARE

Earnings per share are based upon the weighted average number of common
shares and common stock equivalents outstanding during the period. The
weighted average number of common stock equivalents is calculated using the
treasury stock method.

Equality adopted the provisions of Statement of Position 93-6, Employers'
Accounting for Employee Stock Ownership Plans (SOP 93-6) on April 1, 1994.
Under the provisions of SOP 93-6, only ESOP shares that have been committed to
be released are considered outstanding shares. Accordingly, earnings per share
for 1997 have been computed based upon net income for the period from April
1st to June 30th, using 824,771 weighted average common shares outstanding
while 1996 earnings per share were computed using 820,156 weighted average
common shares outstanding.

25
<PAGE>

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPEC-
TUS SUPPLEMENT IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAV-
ING BEEN AUTHORIZED BY THE HOLDING COMPANY, THE MUTUAL HOLDING COMPANY, THE
ASSOCIATION OR TRIDENT SECURITIES, INC. THIS PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OF-
FER 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 UN-
LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT NOR ANY SALE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE ASSOCIATION 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>
Updated Risk Factors..................................................... 3
Results of Special Meetings of Members and Stockholders; Results of
Subscription Offering................................................... 5
Updated Use of Proceeds.................................................. 5
Updated Dividend Policy.................................................. 5
Updated Market for Common Stock.......................................... 5
Updated Capitalization................................................... 6
Updated Regulatory Capital............................................... 8
Updated Pro Forma Data................................................... 9
Proposed Subscriptions by Directors and Executive Officers............... 13
Benefits to Directors and Executive Officers............................. 14
The Resolicitation Offering.............................................. 16
Extension of Time Period to Complete the Offering........................ 17
Updated Stock Pricing, Exchange Ratio and Number of Shares to be Issued.. 17
Experts.................................................................. 19
Financial Results and Capital Ratios..................................... 19
Consolidated Financial Statements (unaudited)............................ 20
</TABLE>

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

2,485,902 SHARES

LOGO

EQUALITY BANCORP, INC.

(PROPOSED HOLDING COMPANY FOR
EQUALITY SAVINGS AND LOAN
ASSOCIATION, F.A.)

COMMON STOCK

---------------
PROSPECTUS SUPPLEMENT
---------------

TRIDENT SECURITIES, INC.

OCTOBER 27, 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUPPLEMENT TO PROSPECTUS

EQUALITY BANCORP, INC.

EQUALITY SAVINGS AND SECURITY PLAN

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

This Prospectus Supplement relates to the offer and sale to participants
(the "Participants") in the Equality Savings and Security Plan (the "Plan") of
participation interests in the Plan and up to 140,000 shares of Equality
Bancorp, Inc. (the "Holding Company") common stock, par value $.01 per share
(the "Holding Company Stock"), as set forth herein.

The Holding Company's principal executive offices are located at 9920 Watson
Road, St. Louis, Missouri 63126. Its telephone number is (314) 965-7090.

In connection with the proposed Conversion and Reorganization (as described
in the Prospectus dated August 12, 1997 (the "Prospectus")), Equality Savings
and Loan Association, F.A. (the "Association") will become a wholly-owned
subsidiary of the Holding Company and the shares of the Association common
stock, par value $1.00 per share (the "Association Shares") currently held
under the Plan will be exchanged for shares of Holding Company Stock. In
addition, the Plan has been amended to provide that each Participant in the
Plan may direct the trustee of the Plan (the "Trustee") to purchase Holding
Company Stock with certain amounts in the Plan attributable to such
Participant. This Prospectus Supplement relates to the election of a
Participant to direct the purchase of Holding Company Stock in the Conversion
and Reorganization.

The Prospectus attached to this Prospectus Supplement includes detailed
information with respect to the Conversion and Reorganization, the Holding
Company, the Association, the Holding Company Stock and the financial
condition, results of operations and business of the Holding Company and the
Association. This Prospectus Supplement, which provides detailed information
with respect to the Plan, should be read only in conjunction with the
Prospectus.

A Participant's eligibility to purchase Holding Company Stock in the
Conversion and Reorganization through the Plan is subject to the Participant's
general eligibility to purchase shares of Holding Company Stock in the
Conversion and Reorganization and the maximum and minimum purchase limitations
set forth in the Plan of Conversion and Reorganization. See "The Conversion
and Reorganization--Limitations on Conversion Stock Purchases" in the
Prospectus. For a discussion of certain factors that should be considered by
each Participant, see "Risk Factors" in the Prospectus.

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

THESE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), THE OFFICE OF THRIFT SUPERVISION
("OTS"), ANY STATE SECURITIES COMMISSION ("STATE COMMISSION") OR THE
FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), NOR HAS THE COMMISSION,
OTS, STATE COMMISSION OR FDIC PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 12, 1997.
<PAGE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PROSPECTUS OR THIS
PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
HOLDING COMPANY, THE ASSOCIATION OR THE PLAN. THIS PROSPECTUS SUPPLEMENT DOES
NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE HOLDING COMPANY, THE ASSOCIATION, OR THE PLAN SINCE THE
DATE HEREOF OR THAT THE INFORMATION HEREIN CONTAINED OR INCORPORATED BY
REFERENCE IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT SHOULD BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS
THAT IS ATTACHED HERETO AND SHOULD BE RETAINED FOR FUTURE REFERENCE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE OFFERING.............................................................. 3
Securities Offered...................................................... 3
Election to Purchase Holding Company Stock in the Conversion and
Reorganization......................................................... 3
Value of Participation Interests........................................ 3
Method of Election...................................................... 3
Time for Election....................................................... 3
Irrevocability of Election.............................................. 3
Direction to Purchase Holding Company Stock After the Conversion and
Reorganization......................................................... 3
Purchase Price of Holding Company Stock................................. 4
Nature of a Participant's Interest in the Holding Company Stock......... 4
Voting of Holding Company Stock......................................... 4
DESCRIPTION OF THE PLAN................................................... 4
Introduction............................................................ 4
Eligibility............................................................. 5
Contributions Under the Plan............................................ 5
Limitations on Contributions............................................ 6
Investment of Contributions............................................. 7
Benefits Under the Plan................................................. 9
Withdrawals and Distributions from the Plan............................. 9
Plan Loans.............................................................. 10
Administration of the Plan.............................................. 11
Reports to Plan Participants............................................ 11
Amendment and Termination............................................... 11
Merger, Consolidation or Transfer....................................... 11
Claims Procedures....................................................... 12
Federal Tax Aspects of the Plan......................................... 12
Restrictions on Resale of Holding Company Stock......................... 13
LEGAL OPINIONS............................................................ 14
</TABLE>

2
<PAGE>

THE OFFERING

SECURITIES OFFERED

The securities offered hereby are participation interests in the Plan and up
to 140,000 shares of Holding Company Stock which may be acquired by the Plan
for the Accounts of those employees participating in the Plan who elect to
have all or a portion of their Plan Account balances attributable to their own
contributions used to purchase Holding Company Stock. Shares sold pursuant to
the Plan will be included in the maximum individual purchase limitations set
forth in the Plan of Conversion and Reorganization. See "The Conversion and
Reorganization--Limitations on Conversion Stock Purchases." Accordingly, the
actual number of shares purchased by the Plan may be less than 140,000 shares
of Holding Company Stock. Information with regard to the Plan is contained in
this Prospectus Supplement and information with regard to the Conversion and
Reorganization and the financial condition, results of operations and business
of the Holding Company and the Association is contained in the attached
Prospectus.

ELECTION TO PURCHASE HOLDING COMPANY STOCK IN THE CONVERSION AND
REORGANIZATION

As part of the Conversion and Reorganization, each Participant has an
election to allocate up to 100% of the funds which represent his or her
beneficial interest in the assets of the Plan held in his or her Salary
Deferral Contributions Account, Voluntary Contributions Account and Rollover
Contributions Account to the purchase of Holding Company Stock. The Trustee of
the Plan will follow the Participants' directions and exercise subscription
rights to purchase Holding Company Stock in the Conversion and Reorganization.
Funds not allocated to the purchase of Holding Company Stock will be invested
in other Trust investments, including those authorized by Participants.

VALUE OF PARTICIPATION INTERESTS

The assets of the Plan are valued on an ongoing basis and each Participant
is informed by the Plan Administrator of the value of his or her beneficial
interest in the Plan on an annual basis. The value represents the market value
of contributions to the Plan by the Association and by the Participants and
earnings thereon, less distributions.

METHOD OF ELECTION

Enclosed with this Prospectus Supplement is an investment form (the
"Investment Form"). If a Participant wishes to allocate a part of his or her
beneficial interest in the assets of the Plan to the purchase of Holding
Company Stock in the Conversion and Reorganization, he or she should indicate
that decision on the Investment Form and return it to the Trustee. If a
Participant does not wish to make such an election, he or she does not need to
take any action.

TIME FOR ELECTION

The deadline for the election for purchase of Holding Company Stock in the
Conversion and Reorganization is September 16, 1997. The Election Form should
be returned to the Trustee by 12:00 noon, local time, on such date.

IRREVOCABILITY OF ELECTION

The election of a Participant to direct the Trustee to exercise subscription
rights in the Conversion and Reorganization becomes irrevocable at 12:00 noon,
local time, September 16, 1997. Prior to such time, a Participant may revoke
or amend any previously filed Investment Form by filing a new Investment Form
with the Association's personnel department.

DIRECTION TO PURCHASE HOLDING COMPANY STOCK AFTER THE CONVERSION AND
REORGANIZATION

After the Conversion and Reorganization, a Participant will be able to
direct that up to 100% of such Participant's interest in the Plan held in his
or her Salary Deferral Contributions Account, Voluntary

3
<PAGE>

Contributions Account and Rollover Contributions Account be transferred to the
Holding Company Stock fund and invested in Holding Company Stock.
Alternatively, a Participant may direct that a certain percentage of such
Participant's interest in the Holding Company Stock fund be transferred from
the Holding Company Stock fund to the other investment funds available under
the Plan. A Participant will be permitted to direct that future Salary
Deferral Contributions, Voluntary Contributions and Rollover Contributions
made to the Plan by or on such Participant's behalf be invested in Holding
Company Stock. Following the initial election, the allocation of a
Participant's interest in the Holding Company Stock fund may be changed by the
Participant. Special restrictions apply to transfers directed by those
Participants who are executive officers, directors and principal stockholders
of the Holding Company or the Association who are subject to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

PURCHASE PRICE OF HOLDING COMPANY STOCK

The funds allocated for the purchase of Holding Company Stock in the
Conversion and Reorganization will be used by the Trustee to purchase Holding
Company Stock. The price paid for such shares of Holding Company Stock will be
the same price as is paid by all other persons who purchase Holding Company
Stock in the Conversion and Reorganization. The price paid by the Trustee for
shares of Holding Company Stock will not exceed "adequate consideration" as
defined in Section 3(18) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and no fees or commissions will be paid by the
Plan with respect to the purchase of Holding Company Stock in the Conversion
and Reorganization. See "The Conversion and Reorganization--Stock Pricing,
Exchange Ratio and Number of Shares to be Issued" in the Prospectus for a
discussion of how the stock price will be determined in the Conversion and
Reorganization.

NATURE OF A PARTICIPANT'S INTEREST IN THE HOLDING COMPANY STOCK

The Holding Company Stock purchased for an Account of a Participant will be
held in the name of the Plan as a segregated, earmarked investment for the
Account. Any earnings, losses or expenses with respect to the Holding Company
Stock, including dividends and appreciation or depreciation in value, will be
credited or debited to the Account and will not be credited to or borne by any
other Accounts.

VOTING OF HOLDING COMPANY STOCK

Each Participant will have the opportunity to direct the Trustee as to the
manner in which the Holding Company Stock held in his or her Accounts will be
voted. In the event the Participant does not so direct the Trustee, the
Trustee will vote the Holding Company Stock held in the Participant's Accounts
proportionately in the same manner as it votes shares for which it has
received voting instructions.

DESCRIPTION OF THE PLAN

INTRODUCTION

The Plan, which currently is maintained by First Missouri Financial, M.H.C.
(the "Mutual Holding Company"), was originally adopted effective as of April
1, 1986 and subsequently has been amended and restated, effective January 1,
1990. In connection with the Conversion and Reorganization, the Plan will be
amended to designate the Holding Company as successor sponsor of the Plan. The
Plan is a profit sharing plan with a cash or deferred arrangement established
in accordance with the requirements of Sections 401(a) and 401(k) of the
Internal Revenue Code (the "Code"). The Plan has a calendar year fiscal year
(the "Plan Year").

The Plan has received from the Internal Revenue Service a determination that
the Plan, as amended, is qualified under Section 401(a) of the Code and
satisfies the requirements under Section 401(k) of the Code. It is intended
that the Plan will comply in operation with each of the requirements of the
Code which are applicable to a plan qualified under Section 401(a) of the Code
and the requirements which are applicable to a qualified cash or deferred
arrangement under Section 401(k) of the Code.

4
<PAGE>

The Plan is an "individual account plan" other than a "money purchase
pension plan" within the meaning of ERISA. As such, the Plan is subject to all
the reporting, disclosure, participation, vesting and fiduciary responsibility
provisions of Title I (Protection of Employee Benefit Rights) and Title II
(Amendments to the Internal Revenue Code Relating to Retirement Plans) of
ERISA, except the funding requirements contained in Part 3 of Title I of ERISA
which by their terms do not apply to an individual account plan (other than a
money purchase plan). The Plan is also subject to the provisions of Title III
regarding jurisdiction, administration and enforcement. The Plan is not
subject to Title IV (Plan Termination Insurance) of ERISA.

The following statements are summaries of certain provisions of the Plan.
They are not complete and are qualified in their entirety by the full text of
the Plan (and trust). Copies of the Plan (and trust) are available to all
employees upon request. Each employee is urged to read carefully the full text
of the Plan (and trust).

ELIGIBILITY

Each employee of the Association or its subsidiaries Equality Mortgage
Corporation and Equality Commodity Corporation is eligible to become a
Participant in the Plan as of the January 1st or July 1st (the "Entry Date")
following or coinciding with the date on which he or she completes one year of
service. (An employee earns a year of service if he or she completes 1,000 or
more hours of service during the twelve month period beginning with his or her
date of employment, or if later, the Plan Year or anniversary thereof that
begins during the first year of employment.) Notwithstanding the foregoing, an
employee is not eligible to participate in the Plan if he or she is covered by
a collective bargaining agreement under which retirement benefits were the
subject of good faith bargaining.

An employee who has met the eligibility requirements must complete and file
with the Plan administrator (the "Plan Administrator") a prescribed written
application form and contribute to the Plan.

As of June 1, 1997, there were 84 employees eligible to participate in the
Plan, and 71 employees had elected to participate in the Plan.

CONTRIBUTIONS UNDER THE PLAN

Salary Deferral Contributions. Each Participant in the Plan may elect to
reduce his or her Compensation (as defined below) from 1 to 15% on a before-
tax basis and have that amount contributed to the Plan on his or her behalf
("Salary Deferral Contributions"). For purposes of the Plan, "Compensation"
means the total compensation actually paid by the Association or a subsidiary
that is reported on Form W-2, including the amounts of Salary Deferral
Contributions and certain other pre-tax contributions made by the Participant.
The annual Compensation of each Participant taken into account under the Plan
is limited to Compensation earned while a Participant, to a maximum of
$160,000 in 1997 (this dollar limitation is adjusted periodically for
increases in the cost of living pursuant to the Code). A Participant may
change or terminate his or her Salary Deferral Contributions at any time,
provided that a change in the rate of contribution may be made once in any six
month period and no change or termination may be made within 60 days of the
end of the Plan Year. If a Participant terminates his or her Salary Deferral
Contributions, he or she may not recommence such Salary Deferral Contributions
until the following Plan Year. Salary Deferral Contributions are credited to
the Participant's Salary Deferral Contributions Account.

Voluntary Contributions. Each Participant in the Plan may also elect to
contribute to the Plan an additional amount of his or her Compensation
(minimum of 1%) on an after-tax basis ("Voluntary Contributions"). A
Participant may change or terminate his or her Voluntary Contributions at any
time, provided that a change in the rate of contribution may be made once in
any six month period and if a Participant terminates his or her Voluntary
Contributions, he or she may not recommence such Voluntary Contributions until
six months from the date of such termination.

5
<PAGE>

Rollover Amounts from Other Plans. A Participant may, subject to the
approval of the Plan Administrator and consistent with the requirements of
Section 402(c) or Section 408(d)(3) of the Code, transfer to the Plan
distributions received by the Participant from another qualified plan. Such
amounts are credited to the Participant's "Rollover Account."

Matching Contributions. The Mutual Holding Company will make a Matching
Contribution to the Plan for each Plan Year on behalf of each Participant who
is making Salary Deferral Contributions or Voluntary Contributions on the last
day of such Plan Year. The Matching Contribution will be an amount equal to
50% of the first 2% of the aggregate of the Participant's (i) Salary Deferral
Contributions made during the Plan Year; and (ii) Voluntary Contributions made
and not withdrawn during the Plan Year. Matching Contributions are credited to
each Participant's Matching Contributions Account.

Discretionary Contributions. The Mutual Holding Company may make
Discretionary Contributions to the Plan for each Plan Year. Each Participant
who is employed on the last day of the Plan Year is eligible to share in the
allocation of the Discretionary Contributions, if any, for the Plan Year.
Discretionary Contributions are allocated to each eligible Participant's
Account based on the ratio of each such Participant's number of units to the
aggregate number of units of all such Participants. A Participant will be
credited with one unit for each $500 of annual Compensation (with fractional
units rounded to one full unit) and four units for each full year of service.
A Participants earns a year of service for this purpose for each Plan Year in
which he or she is employed on the last day of such Plan Year. Discretionary
Contributions are credited to each Participant's Discretionary Contributions
Account.

LIMITATIONS ON CONTRIBUTIONS

Limitation on Annual Additions. Pursuant to the requirements of the Code,
the Plan provides that the annual additions to each Participant's Accounts
during any Plan Year may not exceed the lesser of 25% of the Participant's
taxable compensation for the Plan Year or $30,000 (adjusted for increases in
the cost of living as permitted by the Code).

Limitation on Salary Deferral Contributions. The total amount of Salary
Deferral Contributions of a Participant (when aggregated with any elective
deferrals of the Participant under another qualified cash or deferred
arrangement, a simplified employee pension plan, a salary reduction
arrangement, a deferred compensation plan under Code Section 457 or a Section
501(c)(8) trust) may not exceed $9,500 for the calendar year which began
January 1, 1997. This limitation is adjusted periodically for increases in the
cost of living pursuant to the Code. Salary Deferral Contributions in excess
of this limitation ("excess deferrals") will be included in the Participant's
gross income for federal income tax purposes in the year they are made. In
addition, any excess deferral will again be subject to federal income tax when
distributed by the Plan to the Participant, unless the excess deferral (and
any income allocable to the excess deferral) is distributed to the Participant
not later than the April 15 following the close of the calendar year in which
the excess deferral is made. Any income on the excess deferral that is
distributed not later than such April 15 will be treated, for federal income
tax purposes, as earned and received by the Participant in the taxable year in
which the excess deferral is made. A Participant must notify the Plan
Administrator in writing not later than April 1 of the following Plan Year
that he has excess elective deferrals for the previous Plan Year which must be
distributed.

Limitation on Contributions for Highly Compensated Employees. The Code
limits the amount of Salary Deferral Contributions, Voluntary Contributions
and Matching Contributions that may be made to the Plan in any Plan Year on
behalf of Highly Compensated Employees (defined below) in relation to the
amount of Salary Deferral Contributions, Voluntary Contributions and Matching
Contributions made by all other employees eligible to participate in the Plan.
In the case of Salary Deferral Contributions, the actual deferral percentage
(i.e., the average of the ratios, calculated separately for each eligible
employee in each group, of the amount of Salary Deferral Contributions of such
eligible employee to such eligible employee's compensation for the Plan Year)
of Highly Compensated Employees may not exceed either (i) 125% of the actual
deferral percentage of all

6
<PAGE>

other eligible employees, or (ii) 200% of the actual deferral percentage of
all other eligible employees and does not exceed the actual deferral
percentage of all other eligible employees by more than two percentage points.
In general, a Highly Compensated Employee includes any employee who (1) during
the Plan Year or the preceding Plan Year was at any time a 5% owner (i.e.,
owns directly or indirectly more than 5% of the stock of the Holding Company
or the Association, or stock possessing more than 5% of the total combined
voting power of all stock of the Holding Company or the Association) or (2)
during the preceding Plan Year received compensation from the Holding Company,
Association or a subsidiary in excess of $80,000 (as adjusted for cost-of-
living increases pursuant to the Code).

In order to avoid tax disqualification of the Plan, any Salary Deferral
Contributions of Highly Compensated Employees that exceed the foregoing
limitation in any Plan Year ("excess contributions"), together with any income
allocable thereto, must be distributed to such Highly Compensated Employees
before the close of the following Plan Year. Alternatively, the Mutual Holding
Company may in its sole discretion, elect to make additional contributions to
the Plan on behalf of Participants who are not Highly Compensated Employees in
order to satisfy the limitation on the actual deferral percentage.

Any Voluntary Contributions and Matching Contributions made under the Plan
are subject to similar limits, and if such limitations are exceeded for a Plan
Year the excess (including earnings allocable thereto) shall be returned to
Highly Compensated Employees or forfeited in accordance with procedures
described above in order to satisfy such limits.

Top-Heavy Plan Requirements. If for any Plan Year the Plan is a Top-Heavy
Plan (as defined below), then (i) the Mutual Holding Company may be required
to make certain minimum contributions to the Plan on behalf of non-Key
Employees (as defined below), and (ii) certain additional restrictions would
apply with respect to the combination of annual additions to the Plan and
projected annual benefits under any defined benefit plan maintained by the
Mutual Holding Company, Association, Holding Company or any subsidiary.

In general, the Plan will be a "Top-Heavy Plan" for any Plan Year if, as of
the last day of the preceding Plan Year, the aggregate balance of the Accounts
of Participants who are Key Employees exceeds 60% of the aggregate balance of
the Accounts of all Participants. Key Employees generally include any employee
who, at any time during the Plan Year or any of the four preceding Plan Years,
is (1) an officer of the Mutual Holding Company, Holding Company, Association
or any subsidiary having annual compensation in excess of $60,000 (as adjusted
for cost-of-living increases pursuant to the Code), (2) one of the ten
employees having annual compensation in excess of $30,000 (as adjusted for
cost-of-living increases pursuant to the Code) and owning, directly or
indirectly, the largest interests in the Holding Company or Association, (3) a
5% owner of the Holding Company or Association (i.e., owns directly or
indirectly more than 5% of the stock of the Holding Company or Association, or
stock possessing more than 5% of the total combined voting power of all stock
of the Holding Company or Association), or (4) a 1% owner of the Holding
Company or Association having annual compensation in excess of $150,000.

INVESTMENT OF CONTRIBUTIONS

All amounts credited to Participants' Accounts under the Plan are held in
the trust maintained under the Plan (the "Trust") which is administered by the
Trustee appointed by the Mutual Holding Company's Board of Directors.

A Participant may elect to direct the investment of all or any portion of
his or her Accounts under the Plan. Accordingly, a Participant, in his or her
sole and absolute discretion, may give directions to the Trustee in such form
as the Trustee may require concerning the investment of the Participant's
Accounts, which directions must generally be followed by the Trustee. A
Participant may direct the Trustee to invest his or her Accounts in specific
assets as permitted by the Plan Administrator, in multiples of 25%. The Plan
permits investments in Holding Company Stock.

7
<PAGE>

The net gain (or loss) of the Plan from investments, other than Holding
Company Stock, (including interest payments, realized and unrealized gains and
losses on securities, and expenses paid from the Plan) will be determined as
of each Valuation Date and will be allocated among the Accounts of
Participants according to the balance of each such Account, excluding the
amount of any Account invested in Holding Company Stock. For purposes of such
allocations, all assets of the Plan are valued at their fair market value.

Participants in the Plan may elect to have all or a portion of their Salary
Deferral Contributions Accounts, Voluntary Contributions Accounts and Rollover
Contributions Accounts invested in Holding Company Stock. Transfers to or out
of the Holding Company Stock fund may occur as of any January 1, April 1, July
1 or October 1 upon 20 days advance written notice to the Plan Administer. If
an Account is invested in Holding Company Stock, the shares will be held in
the Plan as a separate investment for the Account. Any earnings, losses or
expenses with respect to the Holding Company Stock held in the Account,
including without limitation dividends and appreciation or depreciation of the
value of the shares, will be credited or debited to the Account and will not
be credited to or borne by any other Account of any other Participant. Any
cash dividends and other cash distributions paid on any Holding Company Stock
will be reinvested by the Trustee as directed by each Participant under the
Plan. A Participant may direct the Trustee to sell all or any of the shares of
Holding Company Stock held in his or her Plan Accounts in accordance with Plan
procedures. Any sales of Holding Company Stock by the Trustee must be made in
compliance with all federal and state securities laws. Under current federal
securities laws, it may be necessary for any such sales to be made in
compliance with Rule 144 under the Securities Act of 1933, which places
certain conditions on any such sale, including a limit on how many shares may
be sold by the Trustee during any three month period. If Holding Company Stock
is sold, the proceeds will be credited to the Account from which the shares
were sold and thereafter invested by the Trustee as part of the remainder of
the general fund under the Plan. Accounts which are invested in Holding
Company Stock will continue to be invested in such shares until the
Participant directs the Trustee to sell the shares.

Investment Funds. The following table sets forth certain information about
the relative historical performance of each of the currently available
investment funds (other than the Holding Company Stock fund) in which amounts
credited to Participants' Accounts may be invested. Participants are advised
that past performance is not necessarily indicative of the future performance
of these funds.

TOTAL RETURN PERFORMANCE BASED ON NET ASSET VALUE
(NET OF ALL FEES AND EXPENSES) WITH ALL DISTRIBUTIONS

<TABLE>
<CAPTION>
NAME OF FUND 1996 1995 1994
------------ ------ ------ ------
<S> <C> <C> <C>
Guaranteed Interest Fund................................. 5.45% 7.90% 7.35%
Common Stock Index Fund.................................. 22.90% 36.86% 1.15%
Money Market Fund........................................ 5.51% 5.96% 4.21%
Publicly Traded Bond Fund................................ 2.92% 18.90% (4.13%)
Balanced Fund............................................ 15.79% 29.02% (3.85%)
Association Shares Fund.................................. 9.85% 6.00% 6.00%
</TABLE>

A Participant may upon request obtain additional information about each
investment fund (e.g., each fund's operating expenses, the prospectus and
financial statements of each fund and a list of assets comprising each fund)
by contacting: Linda L. Pipitone, 4131 South Grand Boulevard, St. Louis,
Missouri 63118-3436, telephone (314) 352-3333.

Equity securities in these investment funds, except for the Holding Company
Stock fund, will be voted by the Trustee. If a Participant has invested in the
Holding Company Stock fund, he is entitled to exercise any voting or tender
rights attributable to such participation. In this regard, prior to any
shareholders meeting at which the Holding Company Stock is entitled to be
voted, or if there is a tender offer made for the Holding Company Stock, each
Participant will receive information from the Trustee with instructions how to
exercise his or her voting or tender rights. If a Participant does not
exercise his or her voting rights, the Trustee will vote the shares

8
<PAGE>

representing his or her portion of this fund proportionately in the same
manner as it votes Holding Company Stock for which it has received voting
instructions. If a Participant does not exercise his or her tender rights, the
shares representing his or her portion of this Fund will not be tendered. If a
Participant exercises his or her tender rights, the funds obtained when the
shares of Holding Company Stock are sold will be invested in the investment
funds, other than the Holding Company Stock fund, in the same proportions as
are set forth in his or her election then in effect, or based on a new
investment election made by the Participant. All information relating to the
exercise of any voting or tender rights is confidential and shall not be
divulged or released to any officers or employees of the Mutual Holding
Company. The responsibility for monitoring compliance with the procedures for
ensuring such confidentiality has been delegated to: Linda L. Pipitone, 4131
South Grand Boulevard, St. Louis, Missouri 63118-3436, telephone (314) 352-
3333.

BENEFITS UNDER THE PLAN

Vesting. A Participant has at all times a fully vested, nonforfeitable
interest in his or her Salary Deferral Contributions Account, Voluntary
Contributions Account and Rollover Contributions Account. A Participant who
terminates employment on or after age 65, or due to death or disability, will
become fully vested in his or her Matching Contributions Account and
Discretionary Contributions Account. Any other Participant will become fully
vested and have a nonforfeitable interest in his or her Matching Contributions
Account and Discretionary Contributions Account according to the following
vesting schedule:

<TABLE>
<CAPTION>
YEARS OF SERVICE VESTED%
---------------- -------
<S> <C>
less than 3............................... 0%
3......................................... 20%
4......................................... 40%
5......................................... 60%
6......................................... 80%
7 or more................................. 100%
</TABLE>

(A Participant earns a Year of Service for each Plan Year in which he or she
is employed with the Holding Company, Association or a subsidiary on the last
day of the Plan Year, or in the event he or she is not so employed, for each
Plan Year in which he or she earns at least 1,000 hours of service.) Any
forfeitures resulting from a Participant's termination of employment prior to
full vesting in his or her Matching Contributions Account and Discretionary
Contributions Accounts will be reallocated among remaining Participants who
are employed on the last day of the Plan Year.

WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN

Hardship Withdrawals. A Participant may request a hardship withdrawal from
the vested portion of his or her Accounts (excluding amounts attributable to
any earnings accruing after December 31, 1988 on Salary Deferral
Contributions). A hardship withdrawal will be approved only if necessary to
pay for an immediate financial need, which may include payment of medical
expenses, the purchase of a principal residence, payment of certain fees and
expenses for post secondary education, or to prevent eviction from or
foreclosure on the Participant's principal residence. The Participant must
first obtain all other available amounts from other resources, including
liquidation of other assets, cessation of contributions under the Plan or
distributions or loans from other plans of the Mutual Holding Company, Holding
Company or the Association.

Withdrawal of Voluntary Contributions. A Participant may withdraw all or a
portion of his or her Voluntary Contributions Account upon 30 days advance
written notice to the Plan Administrator, with the consent of his or her
spouse, if any. If the withdrawal is not due to a financial hardship (as
described above), further withdrawals are not permitted for 12 months.

9
<PAGE>

Distribution To Participant Upon Termination of Employment. A Participant
who terminates employment for any reason will be paid the vested portion of
his or her Accounts in one or more of the following forms, as chosen by the
Participant:

1. a lump sum
2. a direct rollover to another qualified retirement plan or to an IRA
3. an annuity in one of the following forms:
. straight life
. 5, 10 or 15 years certain
. 100%, 66 2/3% or 50% joint and survivor annuity
. cash refund

If a married Participant elects an annuity, distribution will automatically
be in the form of a 50% joint and survivor annuity with the spouse as
beneficiary, unless the Participant waives such form and his or her spouse
consents. Such waiver and consent generally must be made within the 90 day
period prior to the date benefits commence.

If the vested portion of the Participant's Accounts exceeds $3,500, no
distribution generally will be made from the Plan to the Participant prior to
the Participant's attaining age 65 unless the Participant consents to an
earlier distribution. Notwithstanding the foregoing, if the vested portion of
the Participant's Accounts does not exceed $3,500, it will be distributed to
him or her in either an immediate lump sum payment or direct rollover, as
elected by the Participant.

Distribution To Beneficiary Upon Death. The Accounts of a Participant who
dies will be paid to the Participant's designated beneficiary. If the
Participant is married at his or her death, his or her surviving spouse will
be the beneficiary unless the spouse has consented to the designation of
another beneficiary. Distribution will be made in one of the forms as
described in the preceding paragraph, as elected by the Participant (or if not
elected by the Participant, then by the beneficiary). Notwithstanding the
foregoing, if the value of the Participant's Accounts does not exceed $3,500,
it will be distributed to his or her beneficiary in either an immediate lump
sum payment or direct rollover, as elected by the beneficiary.

Payment in Cash or Holding Company Stock. The amount which a Participant or
beneficiary is entitled to receive at any time from an Account which is
invested in Holding Company Stock will be paid by distributing cash, or if
elected by the Participant, shares of Holding Company Stock, to the
Participant or beneficiary. The amount payable to a Participant or beneficiary
which is not invested in Holding Company Stock will be paid in cash.

Nonalienation of Benefits. Except with respect to federal income tax
withholding and as provided with respect to a qualified domestic relations
order (as defined in the Code), benefits payable under the Plan are not
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any
rights to benefits payable under the Plan will be void.

PLAN LOANS

A Participant may obtain a loan from the vested portion of his Accounts in
accordance with procedures established by the Plan Administrator. The minimum
amount of such loan is $1,000 and the maximum of such loan is the lesser of
(i) $50,000, reduced by the amount of all loans made to the Participant during
the 12-month period before the loan is made, or (ii) 50% of the vested amount
of the Participant's Accounts. Only one loan may be outstanding at any time.
Repayment of the loan and interest will be made through irrevocable payroll
deductions according to an amortization schedule established by the Plan
Administrator. Repayments of loan principal and interest will be allocated to
the Participant's Accounts from which withdrawn and invested in

10
<PAGE>

accordance with his or her investment election then in effect. Should a
default and an acceleration of an unpaid balance and interest of the loan
occur, the Plan Administrator has the right to use any remedies available to
any creditor at law. If the Participant has a loan outstanding, and an event
occurs pursuant to which the Participant or his or her beneficiary will
receive a distribution from the Participant's Accounts, the amount needed to
liquidate the loan plus interest will be paid to the Trustee prior to any such
distribution.

ADMINISTRATION OF THE PLAN

The Plan Administrator. Richard C. Fellhauer is the Plan Administrator. The
business address of the Plan Administrator is 4131 South Grand Boulevard, St.
Louis, Missouri 63118-3436 (telephone (314) 352-3333). The Plan Administrator
is responsible for administration of the Plan. The Plan Administrator has
appointed individuals to assist in the administration of the Plan and in
carrying out his responsibilities for interpretation of the provisions of the
Plan, prescribing procedures for filing applications for benefits, preparation
and distribution of information explaining the Plan, furnishing the
Association with reports with respect to the administration of the Plan, and
receiving, reviewing and keeping on file reports of the financial condition of
the Trust. If so designated by the Mutual Holding Company, the Plan
Administrator shall also be responsible for maintenance of Plan records,
preparation and filing of all returns and reports relating to the Plan which
are required to be filed with the U.S. Department of Labor and the IRS, and
for all disclosures required to be made to Participants and beneficiaries
under Sections 104 and 105 of ERISA.

Trustee. The Trustee is appointed by the board of directors of the Mutual
Holding Company. The individuals currently serving as the Trustee of the Plan
are Michael A. Deelo, Berenice Mahacek and Richard C. Fellhauer. The business
address of the Trustee is 4131 South Grand Boulevard, St. Louis, Missouri
63118-3436 (telephone (314) 352-3333). The Trustee receives and holds the
contributions to the Plan in trust and distributes them to Participants and
beneficiaries in accordance with the provisions of the Plan and the directions
of the Plan Administrator. The Trustee is responsible for investment of the
assets of the Trust, other than assets invested as directed by the
Participants.

REPORTS TO PLAN PARTICIPANTS

Not less than once each year, each Participant will receive a statement
showing (i) balances in the Participant's Accounts as of the end of that
period, (ii) the amount of contributions allocated to his or her Accounts for
that period, and (iii) the adjustments to his or her Accounts to reflect his
or her share of Plan earnings, including any dividends on Holding Company
Stock held in his or her Accounts.

AMENDMENT AND TERMINATION

It is the intention of the Mutual Holding Company to continue the Plan
indefinitely. Nevertheless, the Mutual Holding Company may terminate the Plan
at any time. If the Plan is terminated in whole or in part, then, regardless
of other provisions in the Plan, each Participant affected by such termination
will have a fully vested interest in all of his or her Accounts, including his
or her Matching Contributions Account and Discretionary Contributions Account.
The Mutual Holding Company reserves the right to make from time to time any
amendment or amendments to the Plan which do not cause any part of the Trust
to be used for, or diverted to, any purpose other than the exclusive benefit
of Participants or their beneficiaries; provided, however, that the Mutual
Holding Company may make any amendment it determines necessary or desirable,
with or without retroactive effect, to comply with ERISA and/or the Code.

MERGER, CONSOLIDATION OR TRANSFER

In the event of the merger or consolidation of the Plan with another plan,
or the transfer of the Trust assets to another plan, the Plan requires that
each Participant would (if either the Plan or the other plan then terminated)
receive a benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).

11
<PAGE>

CLAIMS PROCEDURES

Claims for benefits under the Plan may be filed on forms provided by the
Plan Administrator. If a claim for benefits is wholly or partially denied, the
Participant will receive written notice explaining the reason for the denial
and the Plan provision on which it was based. The Participant will also be
notified of any additional material or information he or she could submit to
perfect the claim and the reasons such information is necessary. In order to
appeal a denial of a claim, the Participant or his or her representative may
request review of the claim by submitting written application not later than
60 days after receiving written notification of the claim denial. The
Participant or his or her representative may also review pertinent documents
and submit issues and comments in writing. These requests should be sent to
the Plan Administrator. They will be reviewed within 60 days after the Plan
Administrator's receipt of the Participant's request and a decision will be
communicated to Participant in writing not later than 120 days after receipt
of the Participant's request.

FEDERAL TAX ASPECTS OF THE PLAN

As noted above, the Plan has received from the IRS a determination that the
Plan is qualified under Section 401(a) of the Code. Assuming that the Plan is
administered in accordance with the requirements of the Code and that the Plan
remains qualified under Section 401(a) of the Code, participation in the Plan
should have the following implications under existing federal income tax laws:

(a) Amounts contributed to a Participant's Accounts (other than the
Participant's Voluntary Contributions Account), and the investment earnings
thereon, are not includable in the Participant's federal taxable income
until such contributions or earnings are actually distributed or withdrawn
from the Plan. (However, the amount of a Participant's Voluntary
Contributions will be included in his or her federal taxable income in the
year such amounts are earned by the Participant, and the amount of a
Participant's Salary Deferral Contributions will be included in his or her
income in the year such amounts are earned by the Participant for purposes
of Social Security taxes.)

(b) Income earned on assets of the Trust maintained under the Plan will
not be taxable to the Trust.

Distributions and Withdrawals. Distributions and withdrawals generally
become taxable in the year they are received by the Participant, except for
amounts attributable to after-tax contributions such as Voluntary
Contributions. A Participant may, however, elect to defer federal income
taxation of all or a portion of a distribution or withdrawal that qualifies as
an "eligible rollover distribution" by rolling over the distribution or
withdrawal to a qualified retirement plan of another employer or to an IRA. In
such event, the amount rolled over and earnings thereon are not subject to
federal income tax until subsequently distributed to the Participant or his or
her beneficiary. Any amount of an eligible rollover distribution that is not
rolled over will be subject to a mandatory 20% withholding requirement (see
"Income Tax Withholding" below).

Distribution in the Form of an Annuity. A distribution in the form of an
annuity from the Plan is taxed under the general annuity rules of Section 72
of the Code. These rules apply to all "amounts received as an annuity", and
specific rules apply to distributions from qualified plans. The Code provides
that amounts actually distributed to any Participant or beneficiary under the
Plan excluding any non-deductible after tax employee contributions and life
insurance benefits, are generally taxable in the year distributed. Generally,
the taxable portion of each payment is ordinary income.

Distribution of Holding Company Stock. If a lump sum distribution (i.e., a
payment within one year of the entire vested balance of all Accounts) includes
shares of Holding Company Stock, the excess, if any, of the fair market value
of such Holding Company Stock over the cost of the Holding Company Stock to
the Trustee is not subject to federal income tax at the time of distribution
but generally will be subject to federal income tax when such Holding Company
Stock is subsequently sold. To the extent provided by the Code, a Participant
may elect not to defer the tax on net unrealized appreciation in Holding
Company Stock until the year of disposition of such Holding Company Stock,
thus subjecting the entire distribution to federal income tax at the time of
distribution.

12
<PAGE>

Additional Tax on Early Distributions. An additional 10% excise tax will be
imposed on any taxable distribution or withdrawal received by a Participant
before he reaches age 59 1/2 unless such distribution or withdrawal is (i)
rolled over to another qualified plan or an IRA; (ii) made to a beneficiary
after the Participant's death; (iii) made on Account of the Participant's
retirement due to disability (as defined by the Plan Administrator); (iv) made
after the Participant's separation from service after attainment of age 55;
(v) made to the Participant for payment of medical expenses that could be
deducted on his or her tax return; (vi) made to an alternate payee pursuant to
a qualified domestic relations order; or (vii) paid to the Participant over
his or her life or life expectancy or the joint lives or life expectancies of
the Participant and his or her beneficiary.

15% Tax on Excess Distributions. The Code also imposes a 15% excise tax on
the portion of a lump sum distribution that exceeds a dollar limitation in a
calendar year. Distributions from all tax-qualified plans and IRAs received in
the same calendar year will be aggregated in calculating this tax. The 15%
excise tax applies irrespective of the Participant's age at the time of
distribution, but does not apply to an excess distribution that is (i) rolled
over into another qualified retirement plan or an IRA; (ii) made to an
alternate payee under a qualified domestic relations orders; or (iii) made on
Account of the Participant's death (although an additional estate tax
attributable to the excess distribution is due in the event of death).
Notwithstanding the above, the 15% excise tax has been suspended for
distributions made during 1997, 1998 and 1999.

Forward Averaging Rules. Amounts that are included in taxable income may
qualify for five-year forward averaging tax treatment if a Participant
receives the amount in a lump sum distribution after he or she reaches age 59
1/2 and if he or she actively participated in the Plan for at least five years
prior to the year in which the lump sum is distributed. Under a transitional
rule, if the Participant reached age 50 before January 1, 1986, he or she may
make one election, without regard to the age 59 1/2 requirement, to use either
five-year forward averaging (using current tax rates) or 10-year forward
averaging (using the 1986 tax rates) with respect to the lump sum
distribution, if otherwise eligible.

Income Tax Withholding. Most Plan distributions and withdrawals are subject
to mandatory federal income tax withholding. The Trustee is required to
withhold 20% of any "eligible rollover distribution", unless the Participant
elects to have the Trustee make a direct rollover of such distribution into
another employer's qualified retirement plan that accepts rollovers or to an
IRA. An "eligible rollover distribution" generally includes any distribution
and withdrawal other than (i) one paid over the Participant's life or life
expectancy, or the joint lives or life expectancies of the Participant and his
or her beneficiary (i.e., an annuity); or (ii) one paid over a specified
period of 10 years or more. In addition, a distribution is not an "eligible
rollover distribution", and thus may not be rolled over, if it is (i) a
distribution of after-tax contributions; (ii) a required distribution pursuant
to Code Section 401(a)(9); or (iii) a distribution made to a non-spousal
beneficiary. If a Participant requests a distribution or withdrawal of his or
her Holding Company Stock in the form of stock rather than cash, the Holding
Company Stock will not be liquidated to pay the withholding tax; however, the
applicable taxes will be withheld from any cash portion of the distribution or
withdrawal.

A distribution or withdrawal that is not an "eligible rollover distribution"
is subject to voluntary federal income tax withholding, which means that a
Participant can request that no withholding tax be deducted from his or her
distribution.

The foregoing is only a brief summary of certain federal income tax aspects
of the Plan which are of general application under the Code and is not
intended to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan.
Accordingly, each Participant may wish to consult a tax advisor concerning the
federal, state and local tax consequences of participating in and receiving
distributions from the Plan.

RESTRICTIONS ON RESALE OF HOLDING COMPANY STOCK

There are generally no restrictions on the resale of Holding Company Stock
purchased for or contributed to the Plan unless such shares have been
distributed to an employee who is deemed to be an "affiliate" of the

13
<PAGE>

Holding Company at the time such employee resells such shares. Any person
receiving shares of Holding Company Stock under the Plan who is an "affiliate"
of the Holding Company as the term "affiliate" is used in Rules 144 and 405
under the Securities Act of 1933 (e.g., directors, officers and substantial
shareholders of the Holding Company) may reoffer or resell such shares only
pursuant to a registration statement filed under the Securities Act of 1933
(the Holding Company having no obligation to file such a registration
statement) or, assuming the availability thereof, pursuant to Rule 144 or some
other exemption from the registration requirements of the Securities Act of
1933. Any person who may be an "affiliate" of the Holding Company may wish to
consult with counsel before transferring any Holding Company Stock owned by
him or her. In addition, Participants are advised to consult with counsel as
to the applicability of Section 16 of the Exchange Act which may restrict the
sale of Holding Company Stock where acquired under the Plan, or other sales of
Holding Company Stock.

LEGAL OPINIONS

The legality of the Holding Company Stock will be passed upon by Schiff
Hardin & Waite which firm acted as special counsel for the Holding Company in
connection with the Conversion and Reorganization.

14
<PAGE>

INVESTMENT FORM
(HOLDING COMPANY STOCK FUND)

EQUALITY SAVINGS AND SECURITY PLAN

Name of Participant: ___________________________________

Social Security Number: ________________________________

1. Instructions. In connection with the proposed Conversion and
Reorganization, the Plan has been amended to permit Participants to direct all
or a portion of their Salary Deferral Contributions Accounts, Voluntary
Contributions Accounts and Rollover Contributions Accounts under the Plan into
a Holding Company Stock Fund. Amounts transferred at the direction of
Participants into the Holding Company Stock Fund will be used to purchase
shares of common stock of Equality Bancorp, Inc. (the "Common Stock").

You may use this form to direct a transfer of up to 100% of the funds
credited to your Salary Deferral Contributions Account, Voluntary
Contributions Account and Rollover Contributions Account to the Holding
Company Stock Fund, to be used to purchase Common Stock in the Conversion and
Reorganization. To direct such a transfer to the Holding Company Stock Fund,
you should complete and file this form with the Personnel Department no later
than 12:00 noon, Central Daylight Time, on September 16, 1997.

2. Transfer Direction. Check only one of the following:

----- ALLOCATION CHANGE ONLY:
Please change the allocation percentages on file as follows:
(This change will affect all deposits made on or after September
16, 1997.)

----- ALLOCATION CHANGE AND FUNDS TRANSFER:
Please change the allocation percentages on file and transfer all
funds to equal the following:

Note: Allocations of an Account to a particular Investment Fund must be in 25%
increments. If neither alternative is checked, "Allocation change only"
will be effective. All prior allocation percentages are hereby canceled.
This designation shall remain in effect until changed in writing.

PERCENTAGE OF TOTAL ACCOUNT ASSETS

SALARY DEFERRAL CONTRIBUTIONS ACCOUNT
% Holding Company Stock Fund
% Guaranteed Interest Fund
% Common Stock Index Fund
% Money Market Fund
% Publicly Traded Bond Fund
% Balanced Fund

VOLUNTARY CONTRIBUTIONS ACCOUNT
% Holding Company Stock Fund
% Guaranteed Interest Fund
% Common Stock Index Fund
% Money Market Fund
% Publicly Traded Bond Fund
% Balanced Fund
<PAGE>

ROLLOVER CONTRIBUTIONS ACCOUNT
% Holding Company Stock Fund
% Guaranteed Interest Fund
% Common Stock Index Fund
% Money Market Fund
% Publicly Traded Bond Fund
% Balanced Fund

MATCHING CONTRIBUTIONS ACCOUNT
% Guaranteed Interest Fund
% Common Stock Index Fund
% Money Market Fund
% Publicly Traded Bond Fund
% Balanced Fund

DISCRETIONARY CONTRIBUTIONS ACCOUNT
% Guaranteed Interest Fund
% Common Stock Index Fund
% Money Market Fund
% Publicly Traded Bond Fund
% Balanced Fund

3. Effectiveness of Direction. I understand that this Investment Form shall
be subject to all of the terms and conditions of the Plan. I acknowledge that
I have received a copy of the Prospectus and the Prospectus Supplement.

- ------------------------------------- -------------------------
Signature of Participant Date

4. Acknowledgment of Receipt. This Investment Form was received by the Plan
Administrator and will become effective on the date noted below.

- ------------------------------------- -------------------------
Plan Administrator Date
<PAGE>

PROSPECTUS

[LOGO] EQUALITY BANCORP, INC.

(Proposed Holding Company for Equality Savings and Loan Association, F.A.)
UP TO 1,729,323 SHARES OF COMMON STOCK

FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK INFORMATION CENTER AT
(314) 352-3199.

SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN RISKS
TO BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION ("SEC"), THE OFFICE OF THRIFT SUPERVISION
("OTS"), OR ANY OTHER FEDERAL AGENCY OR STATE SECURITIES COMMISSION,
NOR HAS THE SEC, THE OTS OR OTHER AGENCY OR COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
("FDIC") OR ANY OTHER GOVERNMENT AGENCY.

================================================================================
<TABLE>
<CAPTION>
ESTIMATED UNDERWRITING ESTIMATED
SUBSCRIPTION COMMISSIONS AND NET PROCEEDS
PRICE OTHER EXPENSES (1) TO ISSUER (2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............. $10.00 $0.52(3) $9.48
- -------------------------------------------------------------------------------
Minimum Total.......... $6,800,000(4) $415,000 $6,385,000
- -------------------------------------------------------------------------------
Midpoint Total......... $8,000,000(4) $415,000 $7,585,000
- -------------------------------------------------------------------------------
Maximum Total.......... $9,200,000(4) $415,000 $8,785,000
- -------------------------------------------------------------------------------
Maximum Total, as ad-
justed................. $10,580,000(4)(5) $415,000 $10,165,000
</TABLE>
===============================================================================
(1) Consists of the estimated costs to be incurred in connection with the
Conversion and Reorganization, including $120,000 in fees for financial
advisory, consulting and marketing services and expense reimbursements
(including legal fees) to be paid to Trident Securities, Inc. ("Trident")
in connection with the Offering. See "The Conversion and Reorganization--
Marketing Arrangements." The actual fees and expenses may vary from the
estimates. Such fees paid to Trident may be deemed to be underwriting
fees.
(2) Actual net proceeds may vary substantially from estimated amounts
depending on the number of shares sold in the Offering. See "Pro Forma
Data."
(3) Assumes the sale of the midpoint number of shares. If the minimum, maximum
or 15% above the maximum number of shares are sold, estimated expenses per
share would be $0.61, $0.45 or $0.39, respectively, resulting in estimated
net proceeds per share of $9.39, $9.55 or $9.61, respectively.
(4) Based upon the minimum, midpoint, maximum and 15% above the maximum of the
Offering Price Range (as such term is defined herein), respectively. Such
amount does not include the offering of Exchange Shares (as such term is
defined herein).
(5) Reflects a 15% increase in the Offering Price Range, which may occur
without a resolicitation of subscribers or any right of cancellation, to
reflect changes in market and financial conditions prior to the completion
of the Conversion and Reorganization or to fill the order of the ESOP. See
"Management of the Holding Company and Association--Employee Benefit
Plans--Employee Stock Ownership Plan."

TRIDENT SECURITIES, INC.

THE DATE OF THIS PROSPECTUS IS AUGUST 12, 1997
<PAGE>

(continued from previous page)

presently holds a majority ownership interest in the Association. As more
fully described herein, pursuant to the Plan, the Association would become a
wholly-owned subsidiary of the Holding Company and existing stockholders of
the Association, other than the Mutual Holding Company (the "Public
Stockholders") and other than any Public Stockholders who exercise dissenters'
rights, would exchange the shares of Association common stock, par value $1.00
per share (the "Association Shares"), at the Exchange Ratio (as defined below)
for shares of Common Stock (the "Exchange"). In addition, pursuant to the
Plan, the Holding Company would offer additional shares of Common Stock in a
Subscription Offering (as such term is defined below) and a Community Offering
(as such term is defined below). The Subscription Offering and the Community
Offering (as well as any syndicated community offering that might be conducted
pursuant to the Plan) shall be hereinafter collectively referred to as the
"Offering." Upon consummation of the Plan, the Association would change its
name to "Equality Savings Bank." The Exchange and the Offering, collectively
with the other transactions described herein, shall be referred to hereinafter
as the "Conversion and Reorganization." References herein to the Association
shall mean the Association together with its subsidiaries unless specified
otherwise or unless the context indicates otherwise.

The Exchange. As a result of the Conversion and Reorganization and pursuant
to the Plan, the 445,000 Association Shares (53.2% of the total outstanding
Association Shares) held by the Mutual Holding Company will be canceled. Each
Association Share held by the Public Stockholders, in the aggregate 391,400
Association Shares or 46.8% of the total outstanding Association Shares (the
"Public Association Shares"), as of the date of this Prospectus, other than
Association Shares for which dissenters' rights are properly exercised, will
be converted into shares of Common Stock (the "Exchange Shares") pursuant to a
ratio (the "Exchange Ratio") that will result in the Public Stockholders
owning in the aggregate approximately the same percentage of the Holding
Company as they owned of the Association, before giving effect to (i) the
payment of cash in lieu of fractional Exchange Shares, (ii) any shares of
Common Stock purchased by such stockholders in the Offering described herein
or by the Association's Employee Stock Ownership Plan ("ESOP") thereafter or
(iii) any exercise of dissenters' rights. As discussed under "Independent
Valuation" below and herein, the final Exchange Ratio will be determined based
on the Public Stockholders' ownership interest and not on the market value of
the Public Association Shares.

The Offering. In addition to the Exchange, nontransferable subscription
rights to subscribe for up to 920,000 shares (which may be increased to
1,058,000 shares under certain circumstances described below) of Common Stock
(the "Conversion Stock") have been granted to (i) certain depositors of the
Association on March 31, 1996, (ii) employee stock benefit plans of the
Association or the Holding Company that meet the requirements to be
"qualified" under Section 401 of the Internal Revenue Code ("Code"), which
would include the ESOP ("Employee Stock Benefit Plans"), (iii) certain
depositors of the Association on June 30, 1997, (iv) certain other depositors
and borrowers of the Association on August 8, 1997, the voting record date,
(v) directors, officers and employees of the Association or any subsidiary
thereof, of the Mutual Holding Company or of the Holding Company, and (vi) the
Public Stockholders, subject to the limitations described herein (the
"Subscription Offering"). Commencing concurrently with, or after completion
of, the Subscription Offering, and subject to the prior rights of holders of
subscription rights, the right of the Holding Company, the Mutual Holding
Company and the Association (the "Primary Parties") to reject such orders in
whole or in part and the other limitations described herein, the Holding
Company is offering the shares of Conversion Stock not subscribed for in the
Subscription Offering, if any, for sale in a community offering (the
"Community Offering") to certain members of the general public to whom a copy
of this Prospectus is delivered by or on behalf of the Holding Company, with
preference given to natural persons residing in the Missouri counties of St.
Louis City, St. Louis, Jefferson, St. Charles and Franklin ("Local
Community").

The Plan also provides that shares of Conversion Stock may be made available
in the Community Offering through a direct community marketing program that
would provide for the utilization of a broker, dealer, consultant, or
investment banking firm experienced and expert in the sale of financial
institution securities. See "The Conversion and Reorganization--Syndicated
Community Offering."

ii
<PAGE>

The Primary Parties have engaged Trident to consult with and advise them in
the Conversion and Reorganization, and Trident has agreed to use its best
efforts to solicit subscriptions and purchase orders for shares of Conversion
Stock in the Offering. Trident is not obligated to take or purchase any shares
of Conversion Stock in the Offering. See "The Conversion and Reorganization--
Marketing Arrangements."

THE SUBSCRIPTION OFFERING WILL TERMINATE AT 12:00 NOON, CENTRAL TIME, ON
SEPTEMBER 16, 1997 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY THE HOLDING
COMPANY, WITH APPROVAL OF THE OTS, IF NECESSARY. THE COMMUNITY OFFERING IS
EXPECTED TO TERMINATE AT THE SAME TIME AS THE SUBSCRIPTION OFFERING, ASSUMING
THE PRIMARY PARTIES DO NOT ELECT TO COMMENCE THE COMMUNITY OFFERING AFTER
COMPLETION OF THE SUBSCRIPTION OFFERING. IN ANY EVENT, THE COMMUNITY OFFERING
MUST BE COMPLETED WITHIN 45 DAYS AFTER THE CLOSE OF THE SUBSCRIPTION OFFERING,
OR NOVEMBER 1, 1997, UNLESS EXTENDED BY THE HOLDING COMPANY WITH THE APPROVAL
OF THE OTS, IF NECESSARY. Orders submitted are irrevocable until the
completion of the Conversion and Reorganization; provided that, if the
Conversion and Reorganization is not completed within the 45-day period
referred to above, unless such period has been extended with the consent of
the OTS, if necessary, all subscribers will have their funds returned promptly
with interest, and all withdrawal authorizations will be canceled. See "The
Conversion and Reorganization--The Offering--Subscription Offering."

Subscription Rights may be exercised only by the person to whom they are
issued and only for his or her own account. Subscription Rights are
nontransferable; persons found to be transferring Subscription Rights may be
subject to forfeiture of such rights and possible further sanctions by the OTS
or other government agencies. Each person subscribing for shares of Conversion
Stock is required to represent that he or she is purchasing shares 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.

Independent Valuation. Pursuant to regulations of the OTS, the Offering is
required to be based on an independent valuation of the pro forma market value
of the Conversion Stock and Exchange Shares. RP Financial, LC. ("RP
Financial") has prepared an independent appraisal, which states that the
estimated pro forma market value of the Conversion Stock and Exchange Shares
was $15,037,594 as of June 20, 1997 (the "Appraisal"). The Appraisal was
multiplied by the Mutual Holding Company's percentage interest in the
Association (i.e., 53.2%) to determine a midpoint of the offering range
($8,000,000), and the minimum and maximum range were set at 15% below and
above the midpoint, respectively, resulting in a range of $6,800,000 to
$9,200,000 (the "Offering Price Range").

The Boards of Directors of the Primary Parties determined that the
Conversion Stock would be sold at $10.00 per share (the "Purchase Price"),
resulting in a range of 680,000 to 920,000 shares of Conversion Stock being
offered. Upon consummation of the Conversion and Reorganization, the
Conversion Stock and the Exchange Shares will represent approximately 53.2%
and 46.8%, respectively, of the Holding Company's total outstanding shares.
Based upon the Offering Price Range, the Exchange Ratio is expected to range
from 1.5283 to 2.0678, resulting in a range of 598,195 Exchange Shares to
809,323 Exchange Shares to be issued in the Conversion and Reorganization. The
1,729,323 shares of Common Stock offered hereby include up to 920,000 shares
of Conversion Stock (subject to adjustment up to 1,058,000 shares as described
herein) and up to 809,323 Exchange Shares (subject to adjustment up to 930,721
shares as described herein). The Offering Price Range may be increased or
decreased to reflect changes in market and economic conditions prior to
completion of the Conversion and Reorganization, and under certain
circumstances specified herein subscribers will be resolicited and given the
right to modify or cancel their orders. See "The Conversion and
Reorganization--Stock Pricing, Exchange Ratio and Number of Shares to be
Issued."

Required Approvals. Various approvals of the OTS are required in order to
consummate the Conversion and Reorganization. The OTS has approved the Plan,
subject to approval by the Mutual Holding Company's members and the
Association's stockholders. In addition, consummation of the Conversion and
Reorganization is subject to OTS approval of the Holding Company's application
to acquire all of the to-be-outstanding Association common stock and the
applications with respect to the merger of the Mutual Holding Company
(following its conversion to a federal interim stock savings association) into
the Association and the merger of

iii
<PAGE>

Interim II Savings and Loan Association, F.A. ("Interim") with and into the
Association, with the Association being the surviving entity in both mergers.
Applications for these approvals have been filed and are currently pending.
See "The Conversion and Reorganization--Required Approvals."

The consummation of the Conversion and Reorganization is also subject to the
approval of the members of the Mutual Holding Company and the stockholders of
the Association in the manner set forth herein.

The Holding Company has never issued capital stock and, consequently, there
is no market for the Common Stock. The National Association of Securities
Dealers, Inc. (the "NASD") has conditionally approved the Holding Company's
application to have the Common Stock listed on the Nasdaq National Market
System ("NMS") under the proposed symbol "ESBX," subject to the Holding
Company's continued compliance with all Nasdaq criteria for initial listing at
the time of listing of the Common Stock. If the Holding Company fails to
qualify the Common Stock for listing on the Nasdaq NMS, the Holding Company
intends to list the Common Stock on the Nasdaq SmallCap Market or the American
Stock Exchange under the same proposed symbol, subject to the applicable
listing criteria. Prior to the Conversion and Reorganization, there has not
been an active and liquid market for the Public Association Shares, and there
can be no assurance that an active and liquid trading market for the Common
Stock will develop. See "Risk Factors--Absence of Market for Common Stock" and
"Market for Common Stock." Trident intends to act as a market maker for the
Common Stock.

ADDITIONAL INFORMATION

The Association is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the OTS. Such reports, proxy statements and other information can be
inspected at the principal office of the OTS at 1700 G Street, N.W.,
Washington, D.C. 20552.

The Holding Company has filed with the SEC a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Conversion Stock and
Exchange Shares offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto.
For further information regarding the Holding Company and the Common Stock
offered hereby, reference is hereby made to such Registration Statement and
such exhibits, which can be inspected without charge at the office of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of which can be
obtained from the SEC at prescribed rates. Such materials may also be
available at the SEC's web site at "http://www.sec.gov."

The Mutual Holding Company has filed an Application for Conversion with the
OTS with respect to the Conversion and Reorganization. This Prospectus omits
certain information contained in that application. The application may be
examined at the principal office of the OTS, 1700 G Street, N.W., Washington,
D.C. 20552, and at the Midwest Regional Office of the OTS located at 122 West
John Carpenter Freeway, Suite 600, Irving, Texas 75039.

iv
<PAGE>

Equality Savings and Loan Association, F.A.
St. Louis, Missouri

[MAP]

The Conversion and Reorganization is contingent upon (i) the approval of the
Plan of Merger providing for the merger of the Mutual Holding Company with and
into the Association by the holders of at least two-thirds of the outstanding
Association Shares, (ii) the approval of the Plan of Merger providing for the
merger of Interim with and into the Association by the holders of at least
two-thirds of the outstanding Association Shares, (iii) the approval of the
Plan, including the Plans of Merger discussed above, by at least a majority of
the votes cast by the Public Stockholders at the Stockholders' Meeting (as
such term is defined herein), (iv) the approval of the Plan by at least a
majority of the total outstanding votes of the voting members of the Mutual
Holding Company at the Members' Meeting (as such term is defined herein), (v)
the sale of at least 680,000 shares of Conversion Stock in the Offering
pursuant to the Plan and (vi) receipt of all required regulatory approvals.

v
<PAGE>

SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial information appearing elsewhere in this
Prospectus.

EQUALITY BANCORP, INC.

The Holding Company was incorporated as a Delaware corporation on May 14,
1997 at the direction of the Board of Directors of the Association to hold all
of the capital stock of the Association and to facilitate the Conversion and
Reorganization. The Holding Company has not engaged in any business to date and
is not expected to engage in any business until the consummation of the
Conversion and Reorganization. The Holding Company's office is located at 9920
Watson Road, St. Louis, Missouri 63126, and its telephone number is (314) 965-
7090. See "Equality Bancorp, Inc."

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A.

The Association is a federally-chartered-stock-savings association regulated
by the OTS, and its deposits are insured by the FDIC through the SAIF. The
deposits of the Association will continue to be insured by the FDIC after the
Conversion and Reorganization. The Association was originally chartered in
1884. At March 31, 1997, the Association had total assets of $200.8 million,
deposit accounts of $123.0 million and total stockholders' equity of $12.6
million. The Association conducts its business through three full-service
branch offices and five limited-service loan production offices. The
Association's main office is located at 4131 South Grand Boulevard, St. Louis,
Missouri 63118-3464, and its telephone number is (314) 352-3333.

On October 22, 1993, Equality Savings and Loan Association (the predecessor
of the Association) (i) reorganized into a mutual holding company and changed
its name to "First Missouri Financial, M.H.C." and (ii) transferred
substantially all of its assets and all of its liabilities to the Association,
which sold a minority interest in its common stock to depositors of Equality
Savings and Loan Association and various stock compensation plans (the "Mutual
Holding Company Reorganization"). A total of 380,000 shares of newly issued
common stock were sold at $10.00 per share. An additional 11,400 authorized but
unissued shares were later sold to the Association's 1993 Management
Recognition Plan (the "1993 MRP") at $10.00 per share. The Association realized
net proceeds of approximately $3.2 million from the sale of its common stock.
On June 13, 1995, the Association converted from a Missouri-chartered-stock-
savings-and-loan association to a federally-chartered-stock-savings-and-loan
association.

The Association's business is similar in many respects to other savings
associations in that it gathers deposits from its local community and uses
these funds, along with FHLB advances, to invest primarily in residential one-
to four-family mortgage loans, U.S. government and agency securities and
mortgage-backed securities and, to a lesser extent, multifamily and commercial
real estate, consumer and commercial business loans. Notwithstanding these
traditional thrift attributes, the Association's operations are distinct in
that it conducts its residential mortgage lending business primarily through a
wholly-owned mortgage-banking subsidiary--Equality Mortgage Corporation
("EMC"). See "Equality Savings and Loan Association, F.A." and "Business of the
Association."

FIRST MISSOURI FINANCIAL, M.H.C.

1
<PAGE>

Reorganization). Prior to the Conversion and Reorganization, each depositor in
the Association has both a deposit account in the institution and a pro rata
ownership interest in the net worth of the Mutual Holding Company based upon
the value in his or her account, which interest may only be realized in the
event of a liquidation of the Mutual Holding Company. As part of the Conversion
and Reorganization, the Mutual Holding Company will convert from mutual form to
a federal interim stock savings association and simultaneously merge with and
into the Association, with the Association being the surviving entity. See
"First Missouri Financial, M.H.C."

THE CONVERSION AND REORGANIZATION

Purposes of the Conversion and Reorganization. The Boards of Directors of the
Mutual Holding Company and the Association believe that a conversion of the
Mutual Holding Company to stock form and the reorganization of the Association
pursuant to the Plan is in the best interests of the Mutual Holding Company and
the Association, as well as the best interests of the members of the Mutual
Holding Company and the Public Stockholders. The Conversion and Reorganization
will result in the Association being wholly owned by a stock holding company,
which is a more common structure and form of ownership than a mutual holding
company. In addition, the Conversion and Reorganization will result in the
raising of additional equity capital for the Association and the Holding
Company and is expected to result in a more active and liquid market for the
Common Stock than currently exists for the Association Shares, although there
can be no assurances that this will be the case.

If the Association had undertaken a standard conversion involving the
formation of a stock holding company in 1993, applicable OTS regulations would
have required a greater amount of Association Shares to be sold than resulted
in the amount of net proceeds raised in connection with the formation of the
Mutual Holding Company. In addition, if a standard conversion had been
conducted in 1993, management of the Association believed that it would have
been difficult to profitably invest the larger amount of capital that would
have been raised, when compared to the amount of net proceeds raised in
connection with the formation of the Mutual Holding Company. A standard
conversion in 1993 also would have immediately eliminated all aspects of the
mutual form of organization.

Subsequent to the formation of the Mutual Holding Company, there have been
certain changes in the regulations and policies of the OTS relating to mutual
holding companies. In recent years, the U.S. Congress has proposed major
overhauls to the structure of the thrift industry that include eliminating the
federal savings association charter, which is the charter under which the
Association currently operates. These proposals also have created uncertainty
concerning the future of the mutual form of ownership. In addition, since the
Mutual Holding Company Reorganization in 1993, the Boards of Directors of the
Mutual Holding Company and the Association have realized a need to create
additional liquidity for the Association Shares and believe the Holding Company
and the Association can effectively deploy the additional equity capital raised
in the Conversion and Reorganization. In light of the foregoing, the Boards of
Directors of the Mutual Holding Company and the Association believe that it is
in the best interests of such companies and their respective members and
stockholders to undertake the Conversion and Reorganization. See "The
Conversion and Reorganization--Purposes of the Conversion and Reorganization."

Description of the Conversion and Reorganization. On May 16, 1997, the Boards
of Directors of the Association and the Mutual Holding Company adopted the
Plan, which was amended on June 20, 1997 and on August 8, 1997. At the
direction of the Association, the Holding Company was incorporated under
Delaware law on May 14, 1997 and is currently a first-tier wholly owned
subsidiary of the Association. Pursuant to the Plan, (i) the Mutual Holding
Company will convert from mutual form to a federal interim stock savings
association and simultaneously merge with and into the Association, pursuant to
which the Mutual Holding Company will cease to exist and the Association Shares
held by the Mutual Holding Company will be canceled, and (ii) Interim will then
merge with and into the Association. As a result of the merger of Interim with
and into the Association, the Association will become a wholly-owned subsidiary
of the Holding Company and the Public

2
<PAGE>

Association Shares will be converted into the Exchange Shares pursuant to the
Exchange Ratio, which will result in the holders of such shares owning in the
aggregate approximately the same percentage of the Common Stock to be
outstanding upon the completion of the Conversion and Reorganization (i.e., the
Conversion Stock and the Exchange Shares) as the percentage of Association
Shares owned by them in the aggregate immediately prior to consummation of the
Conversion and Reorganization, before giving effect to (a) the payment of cash
in lieu of issuing fractional Exchange Shares, (b) any shares of Conversion
Stock purchased by the Public Stockholders in the Offering or the ESOP
thereafter, and (c) any exercise of dissenters' rights. Upon consummation of
the Conversion and Reorganization, the Association will change its name to
"Equality Savings Bank."

The Plan of Merger providing for the merger of the Mutual Holding Company
with and into the Association and the Plan of Merger providing for the merger
of Interim with and into the Association each must be approved by the holders
of at least two-thirds of the outstanding Association Shares at a special
meeting of the stockholders of the Association to be held for such purpose on
September 19, 1997 (the "Stockholders' Meeting"). The Plan of Merger between
Interim and the Association also must be approved by the Holding Company, as
the sole stockholder of Interim.

In addition, the Primary Parties have conditioned the consummation of the
Conversion and Reorganization upon the approval of the Plan, including the
Plans of Merger, by at least a majority of the votes cast, in person or by
proxy, by the Public Stockholders at the Stockholders' Meeting. The Plan is
subject to the approval of the OTS, and it also must be approved by at least a
majority of the total outstanding votes of the voting members of the Mutual
Holding Company at a special meeting of the members of the Mutual Holding
Company to be held for such purpose on September 19, 1997 (the "Members'
Meeting"), which votes may be cast in person or by proxy. See "The Conversion
and Reorganization--Description of the Conversion and Reorganization."

THE OFFERING

As part of the Conversion and Reorganization, the Holding Company is offering
up to 920,000 shares of Common Stock (i.e., Conversion Stock) at a Purchase
Price of $10.00 per share in the Subscription Offering. The Conversion and
Reorganization will not be consummated unless at least 680,000 shares of
Conversion Stock are sold in the Offering pursuant to the Plan. As described in
more detail below, nontransferable rights to subscribe for the Conversion Stock
in the Subscription Offering have been granted to certain persons according to
certain preference categories and, subject to the prior rights of holders of
Subscription Rights, the Holding Company is also offering shares of Conversion
Stock in the Community Offering to members of the general public (with
preference given to natural persons residing in the Local Community). In the
event of an oversubscription in the Subscription and Community Offering, up to
138,000 additional shares may be issued to reflect changes in market and
financial conditions and to cover additional subscriptions. The Primary Parties
may reject, in whole or in part, orders received in the Community Offering in
their sole discretion.

The Primary Parties have retained Trident as consultant and advisor in
connection with the Offering and to assist in soliciting subscriptions in the
Offering.

NONTRANSFERABILITY OF SUBSCRIPTION RIGHTS

3
<PAGE>

shares 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.

PROSPECTUS DELIVERY

To ensure that each subscriber receives a Prospectus at least 48 hours prior
to the Expiration Date in accordance with Rule 15c2-8 of the Exchange Act, no
Prospectus will be mailed any later than five days prior to the Expiration Date
or hand delivered any later than two days prior to such date. Execution of the
order form will confirm receipt or delivery of a Prospectus in accordance with
Rule 15c2-8. Order forms will only be distributed with a Prospectus.

PURCHASE LIMITATIONS

With the exception of Employee Stock Benefit Plans (which would include the
ESOP), which may purchase up to an aggregate of 7% of the number of shares of
Conversion Stock to be issued in the Offering, no person or entity, together
with associates of, or persons acting in concert with, such person or entity,
may purchase shares of Conversion Stock in an amount that, when combined with
Exchange Shares received by such person, exceeds 62,500 shares of Common Stock.
Each person subscribing for Conversion Stock in the Offering must subscribe for
at least 25 shares. See "The Conversion and Reorganization--Limitations on
Conversion Stock Purchases" for other purchase and sale limitations. Because
the purchase limitations contained in the Plan include Exchange Shares to be
issued to Public Stockholders for their Public Association Shares, certain
holders of Public Association Shares may be limited in their ability to
purchase Conversion Stock in the Offering.

STOCK PRICING, EXCHANGE RATIO AND NUMBER OF SHARES TO BE ISSUED IN THE
CONVERSION AND REORGANIZATION

The Plan requires that the purchase price of the Conversion Stock must be
based on the appraised pro forma market value of the Conversion Stock, as
determined on the basis of an independent valuation. The Primary Parties have
retained RP Financial to make such valuation. The Appraisal has been prepared
by RP Financial in reliance upon the information contained in this Prospectus,
including the Consolidated Financial Statements of the Association. RP
Financial also considered the following factors, among others: the present and
projected operating results and financial condition of the Primary Parties and
the economic and demographic conditions in the Association's existing market
area; certain historical, financial and other information relating to the
Association; a comparative evaluation of the operating and financial statistics
of the Association with those of other similarly situated publicly-traded
companies located in Missouri and Illinois and other regions of the United
States; the aggregate size of the offering of the Conversion Stock; the impact
of the Conversion and Reorganization on the Association's net worth and
earnings potential; the proposed dividend policy of the Holding Company and the
Association; and the trading market for the Association Shares and securities
of comparable companies and general conditions in the market for such
securities.

On the basis of the foregoing, RP Financial has advised the Primary Parties
in its opinion the estimated pro forma market value of the Conversion Stock and
the Exchange Shares was $15,037,594 as of June 20, 1997. Because the holders of
the Public Association Shares will continue to hold the same aggregate
percentage ownership interest in the Holding Company as they currently hold in
the Association (before giving effect to the payment of cash in lieu of issuing
fractional Exchange Shares, any exercise of dissenters' rights and any shares
of Conversion Stock purchased by the Association's stockholders in the Offering
or by the ESOP thereafter), the Appraisal was multiplied by the Mutual Holding
Company's percentage interest in the Association (i.e., 53.2%) to determine the
midpoint of the valuation ($8,000,000), and the minimum and maximum of the
valuation were set at 15% below and above the midpoint, respectively, resulting
in a range of $6,800,000 to $9,200,000. The Boards of Directors of the Primary
Parties determined that the Conversion Stock would be sold at $10.00 per share,
resulting in a range of 680,000 to 920,000 shares of Conversion Stock being
offered. Upon consummation of the Conversion and Reorganization, the Conversion
Stock and the Exchange Shares will represent

4
<PAGE>

approximately 53.2% and 46.8%, respectively, of the Holding Company's total
outstanding shares. The Boards of Directors of the Primary Parties reviewed RP
Financial's appraisal report, including the methodology and the assumptions
used by RP Financial, and determined that the Offering Price Range was
reasonable and adequate. The Boards of Directors of the Primary Parties also
established the formula for determining the Exchange Ratio. Based upon such
formula and the Offering Price Range, the Exchange Ratio ranged from a minimum
of 1.5283 to a maximum of 2.0678 Exchange Shares for each Public Association
Share, with a midpoint of 1.7981. Based upon these Exchange Ratios, the Holding
Company expects to issue between 598,195 and 809,323 Exchange Shares to the
holders of Public Association Shares outstanding immediately prior to the
consummation of the Conversion and Reorganization. See "The Conversion and
Reorganization--Stock Pricing, Exchange Ratio and Number of Shares to be
Issued."

MARKETING, APPRAISAL AND RELATED FEES

Based upon negotiations between the Primary Parties and Trident, Trident will
receive a fixed fee of $90,000 for its services in connection with the
Conversion and Reorganization. In the event that a selected dealers agreement
is entered into in connection with a syndicated community offering, the
Association will pay a fee to Trident and to selected broker-dealers for shares
sold by such NASD member firms pursuant to a selected dealers agreement in an
amount to be agreed upon jointly by Trident, the Holding Company and the
Association to reflect market requirements at the time of the syndicated
community offering. Fees paid to Trident and to any other broker-dealer may be
deemed to be underwriting fees, and Trident and such broker-dealers may be
deemed to be underwriters. Trident also will be reimbursed for its reasonable
out-of-pocket expenses (including legal fees and expenses) not to exceed
$30,000. The Primary Parties have agreed to indemnify Trident in connection
with certain claims or liabilities, including certain liabilities under the
Securities Act.

For its services in making its appraisal and any expenses incurred in
connection therewith, RP Financial will receive a maximum fee of $22,500 plus
out of pocket expenses, and a fee of no greater than $5,000 plus out of pocket
expenses for the preparation of a business plan and other services performed in
connection with the Holding Company's application to the OTS. The Primary
Parties have agreed to indemnify RP Financial and its employees and affiliates
against certain losses (including any losses in connection with claims under
the federal securities laws) arising out of its services as appraiser, except
where RP Financial's liability results from its negligence or bad faith.

DIFFERENCES IN STOCKHOLDER RIGHTS

The Holding Company is a Delaware corporation subject to the provisions of
the Delaware General Corporation Law (the "DGCL"), and the Association is a
federally chartered savings association subject to federal laws and
regulations. Upon consummation of the Conversion and Reorganization, the Public
Stockholders of the Association will become stockholders of the Holding Company
and their rights will be governed by the Holding Company's Certificate of
Incorporation and Bylaws and the DGCL. The rights of stockholders of the
Association are materially different in certain respects from the rights of
stockholders of the Holding Company. See "Comparison of Stockholders' Rights"
and "Description of Capital Stock."

BENEFITS OF THE CONVERSION AND REORGANIZATION TO MANAGEMENT AND RELATED PERSONS

General. The Board of Directors of the Holding Company has approved three
benefit plans pursuant to which officers, directors and employees of the
Holding Company and the Association may be entitled to receive, following the
Conversion and Reorganization, shares of Common Stock or options to acquire
shares of Common Stock. In addition, the Board of Directors of the Holding
Company has approved employment agreements for its executive officers. Those
benefit plans and employment agreements are summarized below and elsewhere
herein. See "Management of the Holding Company and Association--Employee
Benefit Plans"; "--Employment Agreements."

5
<PAGE>

Employee Stock Ownership Plan. In connection with the Mutual Holding Company
Reorganization, the Association adopted the ESOP for the exclusive benefit of
participating employees. Employees who have attained the age of 21 years and
have completed one year of service with the Association are eligible to
participate under the ESOP. The Association has received a Determination Letter
from the IRS confirming the tax-qualified status of the ESOP under Section
401(a) of the Code. The ESOP has been funded by contributions made by the
Association in cash and, upon consummation of the Conversion and
Reorganization, will continue to be funded by contributions made by the
Association solely in cash. The ESOP intends to purchase in the Offering,
utilizing funds borrowed from the Holding Company, up to an aggregate of 7% of
the number of shares of Conversion Stock to be issued in the Offering. The
Holding Company will make a loan to the ESOP, out of the net proceeds of the
Offering retained by it, in the amount of $696,000. See "Use of Proceeds."

1997 Stock Option Plan. The Board of Directors of the Holding Company intends
to adopt the 1997 Stock Option and Incentive Plan (the "1997 Stock Option
Plan") and to submit it to stockholders for approval following consummation of
the Conversion and Reorganization. The 1997 Stock Option Plan is intended to
promote stock ownership by directors and selected officers and employees of the
Holding Company and the Association to increase their proprietary interest in
the Holding Company and to encourage them to remain in the service of the
Holding Company or the Association.

6
<PAGE>

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION FOR
OPTION TERM(1)
NUMBER OF % OF -----------------------
RECIPIENT OPTIONS GRANTED TOTAL OPTIONS 0% 5% 10%
- --------- --------------- ------------- --- -------- ----------
<S> <C> <C> <C> <C> <C>
Nonemployee Directors:
Daniel C. Aubuchon...... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Stacey W. Braswell...... 4,600 5.0% $ 0 $ 29,000 $ 73,000
LeRoy C. Crook.......... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Kenneth J. Hrdlicka..... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Berenice J. Mahacek..... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Charles J. Wolter....... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Officers:
Richard C. Fellhauer.... 23,000 25.0% $ 0 $145,000 $ 367,000
Michael A. Deelo........ 16,100 17.5% $ 0 $101,000 $ 257,000
Leonard O. Wolter....... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Michael J. Walsh........ 4,600 5.0% $ 0 $ 29,000 $ 73,000
Seymour Bailis.......... 4,600 5.0% $ 0 $ 29,000 $ 73,000
John L. Tacke........... 4,600 5.0% $ 0 $ 29,000 $ 73,000
All Directors and
Officers as a Group (12
Persons)............... 85,100 92.5% $ 0 $536,000 $1,354,000
</TABLE>
- --------
(1) Assumes the options are granted at the Purchase Price ($10.00 per share),
the options have a 10-year term, the market price of the Common Stock
underlying the option appreciates annually in value from the date of grant
to the end of the option term at a compounded rate of either 5% or 10% as
indicated in the columns. There can be no assurance that the Common Stock
will appreciate annually at a compounded rate of 5% or 10%. The Holding
Company is unaware of any formula which provides an accurate determination
of the value of a stock option as of the date of grant.

1997 Management Recognition Plan. The Board of Directors of the Holding
Company intends to adopt the 1997 Management Development and Recognition Plan
(the "1997 MRP") and to submit it to stockholders for approval following
consummation of the Conversion and Reorganization. The 1997 MRP is intended as
a method of providing directors, officers and certain employees of the Holding
Company or the Association with a proprietary interest in the Holding Company
and to encourage such persons to remain with the Holding Company or the
Association.

7
<PAGE>

920,000 shares at $10.00 per share (the maximum of the Offering Price Range).
It is anticipated that the following awards will be made pursuant to the 1997
MRP to directors and executive officers of the Association and the Holding
Company as of the date of approval of the 1997 MRP by the stockholders of the
Holding Company (assuming the sale of 920,000 shares of Common Stock in the
Offering, at the maximum of the Offering Price Range, and the purchase of
27,600 shares of Common Stock by the 1997 MRP):

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR TEN YEARS FROM GRANT
NUMBER % OF DATE(1)
OF SHARES TOTAL MRP --------------------------
RECIPIENT AWARDED SHARES 0% 5% 10%
- --------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Nonemployee Directors:
Daniel C. Aubuchon............. 690 2.50% $ 6,900 $ 11,000 $ 18,000
Stacey W. Braswell............. 690 2.50% $ 6,900 $ 11,000 $ 18,000
LeRoy C. Crook................. 690 2.50% $ 6,900 $ 11,000 $ 18,000
Kenneth J. Hrdlicka............ 690 2.50% $ 6,900 $ 11,000 $ 18,000
Berenice J. Mahacek............ 690 2.50% $ 6,900 $ 11,000 $ 18,000
Charles J. Wolter.............. 690 2.50% $ 6,900 $ 11,000 $ 18,000
Officers:
Richard C. Fellhauer........... 6,900 25.00% $ 69,000 $112,000 $179,000
Michael A. Deelo............... 4,830 17.50% $ 48,300 $ 79,000 $125,000
Leonard O. Wolter.............. 2,070 7.50% $ 20,700 $ 34,000 $ 54,000
Michael J. Walsh............... 1,035 3.75% $ 10,350 $ 17,000 $ 27,000
Seymour Bailis................. 690 2.50% $ 6,900 $ 11,000 $ 18,000
John L. Tacke.................. 690 2.50% $ 6,900 $ 11,000 $ 18,000
James W. Caulfield............. 345 1.25% $ 3,450 $ 6,000 $ 9,000
All Directors and Officers as a
Group (13 Persons)............ 20,700 75.00% $207,000 $336,000 $538,000
</TABLE>
- --------
(1) Assumes the 1997 MRP awards are granted at the Purchase Price ($10.00 per
share) and the market price of the Common Stock underlying the 1997 MRP
award appreciates annually in value from the date of grant until 10 years
thereafter at a compounded rate of either 5% or 10% as indicated in the
columns. MRP awards do not have a term like stock options; however, in
order to compare the value of the 1997 MRP awards to the value of the stock
options granted to these named individuals a comparable 10-year time period
has been used. There can be no assurance that the Common Stock will
appreciate annually at a compounded rate of either 5% or 10%.

Employment Agreements. The Holding Company intends to enter into new
employment agreements with Richard C. Fellhauer, President and Chief Executive
Officer of the Holding Company and the Association, Michael A. Deelo, Executive
Vice President and Chief Financial Officer of the Association, and Leonard O.
Wolter, Vice President of the Association, each of which would be effective as
of the consummation of the Conversion and Reorganization. Each employment
agreement provides that the individual will be employed for a three-year term.
Such term may be extended for additional one-year periods by action of the
Board of Directors of the Holding Company taken on each successive anniversary
of the effective date of the employment agreement. Each of Messrs. Fellhauer,
Deelo and Wolter may terminate their employment agreements at any time upon 90
days' prior written notice to the Board of Directors of the Holding Company and
the Association.

8
<PAGE>

Deelo and Wolter, respectively. If the executive is terminated within one year
after a "change of control" of the Holding Company, other than for just cause
or if the executive terminates his employment for "good reason," then the
Holding Company will pay to the executive a lump sum equal to 2.99 times the
"Base Amount," as that term is defined in Section 280G(b)(3) of the Code, and
will continue to provide coverage for the executive and his dependents,
beneficiaries and estate under all executive benefit plans of the Holding
Company and the Association for the remainder of the term of the employment
agreement, which, at their present salaries, would amount to no more than
$396,175, $227,240 and $140,530 for each of Messrs. Fellhauer, Deelo and
Wolter, respectively.

USE OF PROCEEDS

The net proceeds from the sale of the Conversion Stock are expected to range
from $6.4 million, at the minimum of the Offering Price Range, to $8.8 million,
at the maximum of the Offering Price Range. At the midpoint of the Offering
Price Range, the estimated net proceeds from the sale of the Conversion Stock
would be $7.6 million. Pursuant to the business plan adopted by the Holding
Company and the Association on June 20, 1997 in contemplation of the Conversion
and Reorganization, the Holding Company plans to contribute to the Association
50% of the net proceeds from the sale of the Conversion Stock and retain the
remainder of the net proceeds. Assuming that the Conversion and Reorganization
is consummated at the midpoint of the Offering Price Range, the Association
will receive approximately $3.8 million and the Holding Company will retain
approximately $3.8 million, out of which the Holding Company will make a loan
to the Association's ESOP in the amount of $696,000 and fund the 1997 MRP at a
later date in the amount of $240,000, provided the 1997 MRP is approved by the
Holding Company's stockholders. The Holding Company intends to invest the net
proceeds of the Offering that it retains initially in short-term and
intermediate-term deposits and U.S. government and federal agency securities.
Thereafter, funds retained by the Holding Company will be deployed in
accordance with the Holding Company's and the Association's business plan as
determined by the Board of Directors of the Holding Company, as specific
business opportunities or requirements arise and for general corporate
purposes. The Association will invest the proceeds of the Offering that are
made available to it by the Holding Company initially in cash and short-term
investment securities (i.e., remaining maturities ranging up to 12 months)
pending their application pursuant to its business plan. The business plan of
the Holding Company and Association contemplates continuation of the
Association's current lending and investment strategies that emphasize one- to
four-family mortgage loans and U.S. government and agency securities and
mortgage-backed securities. See "Use of Proceeds."

DIVIDENDS

Upon consummation of the Conversion and Reorganization, the Board of
Directors of the Holding Company will have the authority to declare and pay
dividends on the Common Stock. The Board of Directors of the Holding Company
intends to pay cash dividends on the Common Stock at an initial quarterly rate
equal to $0.17 per share (the amount of the existing quarterly dividend on the
Association Shares) divided by the Exchange Ratio, commencing with the first
full quarter following consummation of the Conversion and Reorganization, which
will have the effect of initially maintaining the aggregate amount of quarterly
cash dividends received by the Public Stockholders. Based on the current
Offering Price Range, the Exchange Ratio is expected to be 1.5283, 1.7981,
2.0678 and 2.3779 at the minimum, midpoint, maximum and 15% above maximum of
the Offering Price Range, respectively, resulting in an initial quarterly
dividend rate of $0.11, $0.09, $0.08 and $0.07 per share, respectively.

9
<PAGE>

investment, or both, the Board of Directors may determine to pay special cash
dividends. The Holding Company will not, however, declare or pay a capital
distribution in the form of a "return of capital" to its stockholders or take
any steps in furtherance of any such capital distribution during the period
ending one year after the consummation of the Conversion and Reorganization.
Special cash dividends, if paid, may be paid in addition to, or in lieu of, any
regular cash dividends. No assurances can be given that any dividends, regular
or special, will be declared or, if declared, what the amount of dividends will
be or whether such dividends, once declared, will continue. Moreover, no
representation is being made regarding any "return of capital" following one
year after the consummation of the Conversion and Reorganization. See "Dividend
Policy."

DISSENTERS' RIGHTS OF APPRAISAL

Holders of Association Shares are entitled to appraisal rights under Section
552.14 of the OTS' regulations as a result of the merger of the Mutual Holding
Company (following its conversion to a federal interim stock savings
association) with and into the Association and the merger of Interim with and
into the Association. Any such stockholder who wishes to exercise such
appraisal rights should review carefully the discussion of such rights in the
Association's proxy statement, including Appendix D thereto, because failure to
timely and properly comply with the procedures specified will result in the
loss of appraisal rights under Section 552.14. Pursuant to the Plan,
consummation of the Conversion and Reorganization is conditioned upon holders
of less than 10% of the outstanding Association Shares exercising appraisal
rights. See "The Conversion and Reorganization--Dissenters' Rights of
Appraisal."

MARKET FOR COMMON STOCK

The Holding Company has never issued capital stock (other than 100 shares
issued to the Association, which will be canceled upon consummation of the
Conversion and Reorganization), and to date an active and liquid trading market
has not developed for the 391,400 Public Association Shares outstanding prior
to the Offering. Consequently, there is no established market for the Common
Stock to be issued in the Exchange and the Offering. The Holding Company has
received conditional approval to have the Common Stock listed on the Nasdaq NMS
under the symbol "ESBX." If the Holding Company should prove unable, for any
reason, to list the Common Stock on the Nasdaq NMS or to continue to be
eligible for such listing, then the Holding Company intends to list the Common
Stock on the Nasdaq SmallCap Market or the American Stock Exchange, under the
same symbol, subject to the applicable listing criteria for that market. See
"Risk Factors--Absence of Market for Common Stock" and "Market for Common
Stock."

RISK FACTORS

See "Risk Factors" for a discussion of certain risks related to the Exchange
and the Offering.

10
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE ASSOCIATION

The following table sets forth, on an historical basis, certain selected
consolidated financial data for the Association and its subsidiaries. This
summary has been derived from, and should be read in conjunction with, the
audited consolidated financial statements of the Association and the related
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AT AND FOR THE FISCAL YEAR ENDED MARCH 31,
---------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DATA:
Total assets............. $200,764 $195,768 $163,659 $147,143 $141,077
Cash, interest-bearing
deposits, and investment
securities(1)........... 79,828 59,864 56,106 59,304 56,519
Mortgage-backed
securities.............. 14,954 28,096 15,260 16,987 93
Loans receivable, net.... 95,928 96,998 83,235 61,683 75,643
Savings deposits......... 122,983 124,515 121,560 132,844 131,216
Borrowed money........... 64,249 57,305 29,256 1,105 --
Stockholders' equity..... 12,634 12,789 11,873 12,050 8,067
OPERATING DATA:
Total interest income.... $ 13,610 $ 12,275 $ 9,697 $ 9,420 $ 10,357
Total interest expense... 9,112 8,540 6,132 6,028 6,686
-------- -------- -------- -------- --------
Net interest income
before provision for
losses on loans......... 4,498 3,735 3,565 3,392 3,671
Provision for losses on
loans................... 50 31 9 12 14
-------- -------- -------- -------- --------
Net interest income after
provision for losses on
loans................... 4,448 3,704 3,556 3,380 3,657
Gain on sales of mortgage
loans................... 1,121 1,248 775 2,432 2,025
Other noninterest
income.................. 1,448 1,460 1,500 1,386 1,283
Total noninterest
expense................. 6,209 5,341 5,321 6,073 5,664
-------- -------- -------- -------- --------
Income before income tax
expense and cumulative
effect of change in
accounting principle.... 808 1,071 510 1,125 1,301
Income tax expense....... 303 418 188 400 453
-------- -------- -------- -------- --------
Income before cumulative
effect of change in
accounting principle.... 505 653 322 725 848
Cumulative effect of
change in accounting
principle............... -- -- -- 188 --
-------- -------- -------- -------- --------
Net income............... $ 505 $ 653 $ 322 $ 913 $ 848
======== ======== ======== ======== ========
Earnings per share....... $ 0.61 $ 0.80 $ 0.39 $ 0.22(3) N/A
======== ======== ======== ======== ========
PERFORMANCE RATIOS:
Return on average assets
(net income divided by
average assets)......... 0.25% 0.35% 0.20% 0.59%(2) 0.58%
Return on average equity
(net income divided by
average equity)......... 3.98% 5.18% 2.79% 8.92%(2) 10.92%
Dividend payout ratio
(dividends declared
divided by net income).. 46.16% 34.16% 68.33% 32.32%(3) N/A
Average equity to average
assets.................. 6.30% 6.68% 7.24% 6.62% 5.33%
Equity to assets (end of
year)................... 6.29% 6.53% 7.25% 8.19% 5.72%
Interest rate spread
(difference between
average yield on
interest-earning assets
and average cost of
interest-bearing
liabilities)............ 2.12% 1.90% 2.21% 2.23% 2.46%
Net interest margin (net
interest income as a
percentage of average
interest-earning
assets)................. 2.31% 2.09% 2.39% 2.38% 2.69%
Noninterest expense to
total assets............ 3.09% 2.73% 3.25% 4.13% 4.01%
Noninterest expense to
average assets.......... 3.08% 2.83% 3.34% 3.93% 3.89%
Average interest-earning
assets to average
interest-bearing
liabilities............. 104.19% 104.13% 104.37% 103.48% 104.73%
ASSET QUALITY RATIOS:
Allowance for loan losses
to total loans at end of
period.................. 0.29% 0.24% 0.26% 0.39% 0.30%
Net charge-offs to
average outstanding
loans during the
period.................. * 0.02% 0.04% * *
Nonperforming assets to
total assets............ 0.35% 0.39% 0.44% 0.29% 0.40%
OTHER DATA:
Number of real estate
loans outstanding....... 1,828 1,989 1,750 1,633 1,778
Number of deposit
accounts................ 14,944 15,442 15,647 16,256 16,634
Full service offices..... 3 3 3 3 3
Loan origination
offices................. 5 3 3 2 2
</TABLE>
- --------
(1) Includes interest-bearing deposits in other depository institutions.
(2) Includes cumulative effect of change in accounting principle totaling
$188,408, or .12% and 1.84% of average assets and average equity,
respectively.

(3) Included earnings per share data is only applicable to the period
subsequent to the initial public offering of common stock on October 22,
1993.
* Insignificant

11
<PAGE>

RECENT DEVELOPMENTS

The selected consolidated financial and other data of the Association set
forth below at and for the three months ended June 30, 1997 has been derived
from unaudited consolidated financial statements of the Association.

<TABLE>
<CAPTION>
AT AT
JUNE 30, 1997(1) MARCH 31, 1997
---------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
FINANCIAL CONDITION DATA:
Total assets.................................. $201,831 $200,764
Cash, interest-bearing deposits, and
investment securities(2)..................... 73,603 79,828
Mortgage-backed securities.................... 11,028 14,954
Loans receivable, net......................... 106,457 95,928
Savings deposits.............................. 122,026 122,983
Borrowed money................................ 65,162 64,249
Stockholders' equity.......................... 13,306 12,634
<CAPTION>
AT AND FOR THE THREE MONTHS
ENDED JUNE 30,
-------------------------------
1997(1) 1996(1)
---------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
OPERATING DATA:
Total interest income......................... $ 3,407 $ 3,265
Total interest expense........................ 2,304 2,229
-------- --------
Net interest income before provision for
losses on loans.............................. 1,103 1,036
Provision for losses on loans................. -- --
-------- --------
Net interest income after provision for losses
on loans..................................... 1,103 1,036
Gain on sales of mortgage loans............... 191 210
Other noninterest income...................... 364 513
Total noninterest expense..................... 1,350 1,326
-------- --------
Income before income tax expense.............. 308 433
Income tax expense............................ 120 169
-------- --------
Net income.................................... $ 188 $ 264
======== ========
Earnings per share............................ $ .23 $ .32
======== ========
PERFORMANCE RATIOS:
Return on average assets (net income divided
by average assets)........................... .37% .54%
Return on average equity (net income divided
by average equity)........................... 5.84% 8.29%
Dividend payout ratio (dividends declared
divided by net income)....................... 34.11% 21.28%
Average equity to average assets.............. 6.35% 6.47%
Equity to assets (end of year)................ 6.59% 6.24%
Interest rate spread (difference between
average yield on interest-earning assets and
average cost of interest-bearing
liabilities)................................. 2.06% 1.98%
Net interest margin (net interest income as a
percentage of average interest-earning
assets)...................................... 2.25% 2.18%
Noninterest expense to total assets........... 2.68% 2.65%
Noninterest expense to average assets......... 2.66% 2.69%
Average interest-earning assets to average
interest-bearing liabilities................. 104.03% 104.22%
ASSET QUALITY RATIOS:
Allowance for loan losses to total loans at
end of period................................ .27% .23%
Net charge-offs to average outstanding loans
during the period............................ * *
Nonperforming assets to total assets.......... .29% .31%
OTHER DATA:
Number of real estate loans outstanding....... 1,753 1,847
Number of deposit accounts.................... 15,038 15,298
Full service offices.......................... 3 3
Loan origination offices...................... 5 3
</TABLE>
- --------
(1) The data presented at and for the three months ended June 30, 1997 and 1996
were derived from unaudited consolidated financial statements and reflect,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to present fairly the results
for such interim periods. Interim results at and for the three months ended
June 30, 1997 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 1998.
(2) Includes interest-bearing deposits in other depository institutions.
* Insignificant.

12
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT DEVELOPMENTS

FINANCIAL CONDITION

The total assets of the Association increased approximately $1.0 million, or
0.5%, to $201.8 million at June 30, 1997 from $200.8 million at March 31,
1997. This increase in asset size primarily relates to the origination of
mortgage loans which were funded through cash reserves and the proceeds from
sales of investment securities and mortgage-backed securities.

Cash, primarily interest-bearing demand accounts, increased to $25.9 million
at June 30, 1997 from $1.0 million at March 31, 1997 and investment securities
available for sale decreased to $40.2 million at June 30, 1997 from $70.1
million at March 31, 1997 as a result of management's decision to move from
securities with longer term maturities into securities with shorter term
maturities in an effort to reduce the Association's exposure to interest rate
risk. While the proceeds from sales of investment securities have been
temporarily invested in interest-bearing deposits, management expects to
reinvest these balances during the next quarter.

Mortgage-backed securities available for sale decreased by approximately
$3.9 million, or 26.3%, to $11.0 million at June 30, 1997 from $15.0 million
at March 31, 1997. This decrease resulted from sales generated to fund
mortgage loan originations.

Loans held for investment totaled $93.8 million at June 30, 1997, an
increase of approximately $2.3 million, or 2.5%, from the March 31, 1997
balance of $91.5 million. This increase is primarily the result of continued
portfolio mortgage lending on one-to four-family residences offset by
principal repayments.

Loans held for sale increased by approximately $8.3 million, or 188.0%, to
$12.7 million at June 30, 1997 from $4.4 million at March 31, 1997. This
increase is the result of increased one-to four-family mortgage loan
originations due to improved residential lending interest rates.

Office properties and equipment increased $730,000, or 23.9%, to $3.6
million at June 30, 1997 from $2.9 million at March 31, 1997. The increase
resulted from the purchase of two properties designed to become branch
facilities, one to replace a currently leased, limited-use facility in the
fourth quarter of 1997 and the other to expand the Association's branch
network during the spring of 1998.

Savings deposits totaled $122.0 million at June 30, 1997, a decrease of
approximately $957,000 from the March 31, 1997 balance of $123.0 million.
Interest credited during the three months ended June 30, 1997 was
approximately $1.1 million.

FHLB advances remained constant at $63.0 million at June 30, 1997 as
compared to March 31, 1997. During the three months ended June 30, 1997, the
Association opened a $5.0 million line of credit which remained unused.

Other borrowed money increased by $913,000. These short-term borrowings
relate to EMC, the proceeds of which were invested solely in residential
mortgage loans.

RESULTS OF OPERATIONS

The operating results of the Association depend primarily on its net
interest income, which is the difference between interest income on interest-
earning assets, primarily loans, investment securities, and mortgage-backed
securities, and interest expense on interest-bearing liabilities, primarily
deposits and borrowed money. The Association's net income also is affected by
the establishment of provisions for losses on loans and the level of its other
income, loan servicing fees, deposit service charges, the results of real
estate activities, gain on sales of mortgage loans, as well as its other
expenses and income tax provisions.

13
<PAGE>

THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO JUNE 30, 1996

Net Income. Net income decreased $76,000, or 28.9%, from $264,000 for the
three months ended June 30, 1996 to $188,000 for the three months ended June
30, 1997. The decrease was primarily the result of the sale of the residential
investment property by Equality Commodity Corporation, a wholly-owned
subsidiary of the Association ("ECC"), in June, 1996 at a gain of $106,000
with no comparable item in 1997 in addition to reduced rental income in
investment property of $51,000 offset by a $67,000, or 6.5%, increase in net
interest income.

Interest Income. Interest income increased from $3.3 million for the three
months ended June 30, 1996 to $3.4 million for the three months ended June 30,
1997. The increase of $142,000, or 4.3%, resulted primarily from an increase
in the interest on loans receivable and interest on investment securities
offset by decreases in interest on interest bearing deposits and mortgage-
backed securities. Interest on loans receivable increased by $118,000, or
6.4%, to $2.0 million for the three months ended June 30, 1997 as compared to
$1.8 million for the three months ended June 30, 1996. This increase was
primarily due to an increase in the average balance of loans outstanding from
$98.1 million for the three months ended June 30, 1996 to $98.4 million for
the three months ended June 30, 1997 accompanied by an increase in the yield
on loans from 7.48% for the three months ended June 30, 1996 to 7.94% for the
three months ended June 30, 1997. The higher average balance of loans
outstanding for the three months ended June 30, 1997 reflects an increase in
residential mortgage loan and commercial loan portfolio lending. Interest on
investment securities increased $338,000, or 43.2%, from $783,000 for the
three months ended June 30, 1996 to $1.1 million for the three months ended
June 30, 1997 due to an increase in the average balance of investment
securities from $52.1 million for the three months ended June 30, 1996 to
$64.6 million for the three months ended June 30, 1997. During the same period
the yield on investment securities increased from 6.01% for the three months
ended June 30, 1996 to 6.94% for the three months ended June 30, 1997.
Interest income on mortgage-backed securities decreased $212,000, or 49.4%,
from $429,000 for the three months ended June 30, 1996 to $217,000 for the
three months ended June 30, 1997 due to a decrease in the average balances
from $27.5 million for the three months ended June 30, 1996 to $12.4 million
for the three months ended June 30, 1997, offset by an increase in the yield
on mortgage-backed securities from 6.25% for the three months ended June 30,
1996 to 7.03% for the three months ended June 30, 1997. Interest on interest
bearing deposits decreased $107,000, or 66.0%, from $162,000 for the three
months ended June 30, 1996 to $55,000 for the three months ended June 30,
1997. This decrease is the result of reduced average balances of interest-
bearing deposits from $8.6 million for the three months ended June 30, 1996 to
$3.2 million for the three months ended June 30, 1997.

Interest Expense. Interest expense increased from $2.2 million for the three
months ended June 30, 1996 to $2.3 million for the three months ended June 30,
1997. The increase of $74,000, or 3.3%, resulted primarily from increased
average FHLB advances offset by decreased average deposit balances and
decreased average cost of deposits. The weighted average cost of deposits
decreased 2 basis points from 4.62% for the three months ended June 30, 1996
to 4.60% for the three months ended June 30, 1997, due to the effects of
increased low cost checking account balances and reduced certificate balances.
Average deposit balances decreased $2.3 million, or 1.9%, from $124.2 million
at June 30, 1996 to $121.9 million at June 30, 1997.

Average FHLB advances increased $8.4 million, or 14.9%, to $64.7 million,
for the three months ended June 30, 1997 compared to $56.3 million for the
three months ended June 30, 1996. The weighted average cost of advances
decreased 5 basis points from 5.56% for the three months ended June 30, 1996
to 5.51% for the three months ended June 30, 1997.

Provision for Losses on Loans. There was no provision for losses on loans
for the three month periods ended June 30, 1997 or June 30, 1996. The
provision for losses on loans is based on management's evaluation of the
credit risk inherent in the loan portfolio and the amount required to be
maintained in the allowance for loan losses. The Association's allowance for
loan losses totaled $283,000 at June 30, 1997 and March 31, 1997,
respectively. Management believes the allowance for loan losses is adequate.

14
<PAGE>

Noninterest Income. Noninterest income decreased $169,000, or 23.3%, from
$724,000 for the three months ended June 30, 1996 to $555,000 for the three
months ended June 30, 1997. The decrease is due primarily to the results of
the sale of a 26 unit residential property by ECC during the three months
ended June 30, 1996 at a gain of $106,000. There was no comparable gain for
the three months ended June 30, 1997. Additionally, rental income decreased
from $57,000 for the three months ended June 30, 1996 to $6,000 for the three
months ended June 30, 1997 as a result of the disposition of this rental
property. Also contributing to the decrease in noninterest income was a
decrease in gain on sale of mortgage loans of $20,000, or 9.3%, from $210,000
for the three months ended June 30, 1996 to $191,000 for the three months
ended June 30, 1997 and increased loss in earnings of joint venture of $19,000
from earnings of $3,000 for the three months ended June 30, 1996 to losses of
$16,000 for the three months ended June 30, 1997 offset by increased loan
servicing fees and late charges of $23,000, or 10.7%, which improved from
$214,000 for the three months ended June 30, 1996 to $237,000 for the three
months ended June 30, 1997 due to an increase in the servicing portfolio of
EMC. For the three months ended June 30, 1996, the Association, through EMC,
sold $19.7 million of mortgage loans as compared to $11.5 million in the
comparable period in 1997. The decreased sales volume of $8.2 million resulted
in the decreased gain on sale of mortgage loans. Loans serviced by EMC
increased $16.8 million, or 5.5%, from $304.7 million at June 30, 1996 to
$321.5 million at June 30, 1997.

Noninterest Expense. Noninterest expense increased $24,000, or 1.8%, for the
three months ended June 30, 1997 compared to the three months ended June 30,
1996, due primarily to an increase of $39,000, or 5.2%, in salaries and
employee benefits from $747,000 for the three months ended June 30, 1996 to
$786,000 for the three months ended June 30, 1997, the result of general wage
increases, as well as general increases in data processing, advertising and
other general operating expenses offset by reduced federal deposit insurance
premiums of $52,000, or 72.5%, from $72,000 for the three months ended June
30, 1996 to $20,000 for the three months ended June 30, 1997, the result of
legislation passed by Congress to capitalize the Savings Association Insurance
Fund where following a one-time assessment in September, 1996 ongoing
insurance would be significantly reduced from approximately 23 basis points to
approximately 6 basis points.

Income Taxes. Income tax expense decreased from $169,000 for the three
months ended June 30, 1996 to $120,000 for the three months ended June 30,
1997. The decrease of $49,000, or 28.8%, was the result of a decrease in
income before income tax expense of $125,000. The effective tax rate was
approximately 39.0% for the three month periods ended June 30, 1997 and 1996.

15
<PAGE>

RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISK FACTORS PRESENTED
BELOW, IN ADDITION TO OTHER CONSIDERATIONS DISCUSSED ELSEWHERE IN THIS
PROSPECTUS.

EFFECT OF INTEREST RATES

The financial condition and results of operations of the Association, and of
savings institutions in general, are significantly influenced by general
economic conditions, by the related monetary and fiscal policies of the
federal government, and by the regulations of the OTS, the FDIC and the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board").
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 Association's profitability is substantially dependent 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 mismatch between
maturities and interest rate sensitivities of balance sheet items (i.e.
interest-earning assets and interest-bearing liabilities) results in interest
rate risk. The extent of interest rate risk to which the Association is
subject is monitored by management by modeling the change in its market value
of equity ("MVE") over a variety of interest rate scenarios. MVE 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 MVE
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. At March 31, 1997,
there would have been an estimated $3.4 million, or 21.8%, decrease in the
Association's MVE, assuming a 200 basis point increase in interest rates. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Asset and Liability Management" for a discussion of the MVE method
of analyzing interest rate risk.

At March 31, 1997, the Association had approximately $55.0 million of
adjustable rate mortgage loans ("ARMs") in its loan portfolio. The
Association's ARMs contain annual and lifetime interest rate adjustment limits
which, in a rising interest rate environment, may prevent such loans from
repricing to market interest rates. See "Business of the Association--Lending
and Mortgage-Banking Activities--Residential One- to Four- Family Loans."
While management anticipates that the Association's ARMs will better offset
the adverse effects of an increase in interest rates as compared to fixed-rate
mortgages, the increase in mortgage payments required of ARM borrowers in a
rising interest rate environment could potentially cause an increase in
delinquencies and defaults.

Changes in interest rates can affect the amount of loans originated by an
institution, as well as the value of its loans and other interest-earning
assets and the resultant ability to realize gains on the sale of such assets.
At March 31, 1997, the Association had net unrealized losses of $252,000 in
its mortgage-backed securities portfolio and net unrealized losses of $707,000
in its investment securities portfolio due primarily to changes in interest
rates since such securities were purchased by the Association.

Changes in interest rates also can result in the flow of funds away from
savings associations into investments in U.S. government and corporate
securities, and other investment vehicles which, because of the absence of
federal insurance premiums and reserve requirements among other reasons,
generally can pay higher rates of return than savings associations.

RELIANCE ON MORTGAGE-BANKING OPERATIONS

Mortgage-banking activities significantly influence the Association's
results of operations. The Association's mortgage-banking operations conducted
through EMC involve the origination, purchase and sale

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<PAGE>

of mortgage loans for the purpose of generating income from the sale of
mortgage loans and from servicing fees and late charges. The profitability of
EMC's mortgage-banking operations depends in a large part on managing the
volume of loan originations, purchases and sales and the expenses associated
with such activity so that gains on the sale of loans together with fee income
exceeds the costs of this activity. Changes in the level of interest rates and
the condition of the local and national economies affect the amount of loans
originated or purchased by EMC and demanded by investors to whom the loans are
sold. Generally, EMC's loan origination, purchase and sale activity and,
therefore, its results of operations, may be adversely affected by an
increasing interest rate environment to the extent such environment results in
decreased loan demand by borrowers and/or investors. Accordingly, the volume
of loan originations, purchases and sales and the profitability of this
activity can vary significantly from period to period, which can have
significant effects on the Association's results of operations from period to
period. In addition, EMC's (and therefore the Association's) results of
operations are affected by the amount of noninterest expenses associated with
mortgage-banking activities, such as compensation and benefits, occupancy and
equipment expenses and other operating costs. During periods of reduced loan
demand, EMC's (and therefore the Association's) results of operations may be
adversely affected to the extent that it is unable to reduce expenses
commensurate with the decline in loan originations.

As part of its mortgage-banking activities, EMC originates loans, and to a
lesser extent in recent years purchases loans, for subsequent sale into the
secondary market. Between the time that origination commitments are issued and
the time the loans are sold, EMC is exposed to movements in the price (due to
changes in interest rates) of such loans (or of securities into which such
loans are sometimes converted). EMC attempts to manage this risk by utilizing
the sale of forward commitments through which EMC agrees to sell loans at a
specified price on a future specified date. The amount of such forward
commitments and the date on which they settle is based upon management's
estimate as to estimated closing volumes and the length of the origination
commitment. Differences between the volume or timing of actual loan
originations and in management's estimates or in actual sales of the loans can
expose EMC to significant interest rate risk. This activity is managed on a
continuous basis. There can be no assurance that EMC will be successful in its
efforts to reduce the risk of interest rate fluctuation between the time of
origination of a mortgage loan and the time of the ultimate sale of the loan.
To the extent EMC does not adequately manage this interest rate risk, it may
incur significant mark-to-market losses or losses relating to the sale of such
loans, adversely affecting its and the Association's financial condition and
results of operations.

FEDERAL LEGISLATIVE PROPOSALS WOULD ELIMINATE THE FEDERAL SAVINGS ASSOCIATION
AND UNITARY SAVINGS AND LOAN HOLDING COMPANY CHARTERS

The U.S. Congress is considering legislative proposals, including a proposal
announced by the Clinton Administration on May 21, 1997, that would modernize
the financial services industry. Many of these proposals, including the
Administration's, would eliminate the federal savings association charter by
requiring that all federal thrifts convert to national banks or other banking
charters. Likewise, the unitary savings and loan holding company would be
eliminated and all thrift holding companies would become bank holding
companies regulated by the Federal Reserve Board. The Association is a federal
savings association and the Holding Company, upon completion of the Conversion
and Reorganization, will be a unitary savings and loan holding company. If
federal legislation is enacted that eliminates the federal savings association
and unitary savings and loan holding company charters, the Association and the
Holding Company would be required to change their charters. No assurance can
be given whether federal legislation will be enacted that affects the federal
savings association or unitary savings and loan holding company charters, or
if such legislation is enacted, what form this legislation might take.
Accordingly, management of the Association and the Holding Company cannot
predict what effect, if any, such legislation would have on the activities and
operations of the Association and the Holding Company. See "Reorganization and
Supervision--Recent Legislative and Regulatory Development--Modernization of
Financial Services Industry."

ADEQUACY OF THE ASSOCIATION'S ALLOWANCE FOR LOAN LOSSES

At March 31, 1997, the Association's ratio of its allowance for loan losses
to total loans outstanding was .29%, and the ratio of the allowance for loan
losses to total nonperforming loans was 44.0%; however, the majority of
nonperforming loans are FHA and VA loans which have guaranteed return of
principal. Excluding

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<PAGE>

these amounts, the Association's ratio of its allowance for loan losses to
total nonperforming loans was 393.1%. The Association determines the desired
level of allowance for loan losses based on an evaluation of the loan
portfolio including consideration of the collateral underlying problem loans,
prior loss experience, economic conditions, volume, growth and composition of
the loan portfolio, and other relevant factors. This evaluation is inherently
subjective as it requires material estimates including the amounts and timing
of future cash flows expected to be received on impaired loans that may be
susceptible to significant change. No assurance can be given that the
Association will not experience significant provisions for loan losses or
charges against its allowance for loan losses in the future related to a
deterioration in the quality of its loan portfolio. Furthermore, because
future events affecting borrowers and collateral cannot be predicted with any
certainty, there can be no assurance that existing reserves will be adequate
or that substantial increases will not be required should the quality of the
loans deteriorate. The allowance for loan losses at March 31, 1997 is
maintained at a level believed adequate by management to absorb losses in the
loan portfolio. Any material increase in loan provisions or material loss for
which adequate reserves have not been established may materially adversely
affect the Association's financial condition or results of operations,
including reducing or eliminating the Association's profitability.

ABSENCE OF MARKET FOR COMMON STOCK

The Holding Company has never issued capital stock (other than 100 shares
issued to the Association, which will be canceled upon consummation of the
Conversion and Reorganization), and to date an active and liquid trading
market has not developed for the 391,400 Public Association Shares outstanding
prior to the Offering. Consequently, there is no established market for the
Common Stock to be issued in the Exchange and the Offering. The Holding
Company has received conditional approval to have the Common Stock listed on
the Nasdaq NMS under the symbol "ESBX." In order for the Common Stock to be
listed on the Nasdaq NMS, however, there must be, among other things, two
market makers for the Common Stock. Trident intends to act as a market maker
for the Common Stock and will assist the Holding Company in retaining at least
one other market maker. The Holding Company will use its best efforts to
encourage and assist market making to establish and maintain a market for the
Common Stock. There can be no assurance, however, that any additional market
makers for the Common Stock will be obtained or that the Common Stock will be
listed on the Nasdaq NMS or, if listed, will continue to be eligible for such
listing. See "Market for Common Stock."

Making a market involves maintaining bid and asked 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. In addition, 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 Association or any market
maker. The smaller the number of holders of the stock, the less likely a
liquid market will develop. Accordingly, there can be no assurance that an
active and liquid trading market for the Common Stock will develop or, if
developed, be maintained, that resales of the Common Stock can be made at or
above the Purchase Price, or that quotations will be available on the Nasdaq
NMS as contemplated. In the absence of a liquid public market for the Common
Stock, 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.

COMPETITION

The Association faces intense and increasing competition both in making
loans and in attracting deposits. The Association's market area has a large
number of financial institutions, many of which have greater financial
resources, name recognition and market presence than the Association, and all
of which are competitors of the Association to varying degrees. Particularly
intense competition exists for deposits and the origination of all of the loan
products emphasized in the Association's business plan. The Association's
competition for loans comes principally from commercial banks, other savings
and loan associations, savings banks, mortgage-banking companies, finance
companies and credit unions. The Association's most direct competition for
deposits historically has come from other savings and loan associations,
savings banks, commercial banks and credit unions. In addition, the
Association faces increasing competition for deposits from non-bank
institutions such as

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<PAGE>

brokerage firms, insurance companies, money market mutual funds, other mutual
funds (such as corporate and government securities funds) and annuities.
Trends toward the consolidation of the banking industry and the lifting of
interstate banking and branching restrictions may make it more difficult for
smaller institutions, such as the Association, to compete effectively with
large national and regional banking institutions.

DEPENDENCE ON KEY PERSONNEL

The Association depends to a considerable degree on a limited number of key
management personnel, and the loss of such personnel could adversely affect
the Association. In order to minimize the likelihood of such an occurrence,
the Association and the Holding Company intend to enter into new employment
agreements with Richard C. Fellhauer, President and Chief Executive Officer of
the Holding Company and the Association, Michael A. Deelo, Executive Vice
President and Chief Financial Officer of the Association, and Leonard O.
Wolter, Vice President of the Association. The Association maintains "key man"
life insurance with respect to Messrs. Fellhauer, Deelo and Wolter. See
"Management of the Holding Company and Association--Employment Agreements."

EFFECT OF ANTI-TAKEOVER PROVISIONS IN DISCOURAGING TAKEOVER OFFERS AND CHANGES
IN MANAGEMENT

The Holding Company's certificate of incorporation and bylaws provide, among
other things, that (1) no person may acquire or hold the beneficial ownership
of more than 10% of the voting shares of the Holding Company, and if any
person acquires or holds the beneficial ownership of more than 10% of the
voting shares of the Holding Company, each share in excess of such 10% limit
shall have its voting power reduced to 1/100 of one vote; (2) the Holding
Company's Board of Directors will be divided into three classes with one class
to be elected each year; (3) special meetings of the Holding Company's
stockholders may be called only by the chairman of the Board of Directors, the
president or a majority of the Holding Company's Board of Directors; (4) the
Board of Directors may issue additional shares of authorized Common Stock and
fix the terms and designations of and issue shares of authorized preferred
stock without any further action by the stockholders; (5) certain Business
Transactions (as defined in the certificate of incorporation) must be approved
in advance by a majority of the Board of Directors, approved in advance by the
holders of 80% of the outstanding shares of voting stock other than shares
owned by persons who are Interested Parties (as defined in the certificate of
incorporation) with respect to the Business Transaction or approved after-the-
fact by two-thirds of directors who are not themselves Interested Directors
(as defined in the certificate of incorporation) with respect to the Business
Transaction; and (6) stockholders who propose to nominate a candidate for
election to the Board of Directors of the Holding Company or to present new
business at a stockholders' meeting must give advance notice of, and furnish
information relating to, the proposed nominee and business to the Holding
Company. The management of the Holding Company does not have the ability to
waive any of these provisions. A vote of 80% of the total votes eligible to be
cast, voting together as a single class, is required to amend, repeal or adopt
any provisions inconsistent with certain provisions of the certificate of
incorporation and the bylaws, including most of the provisions enumerated
above. See "Comparison of Stockholders' Rights" and "Restrictions on
Acquisition of the Holding Company--Restrictions in the Holding Company's
Certificate of Incorporation and Bylaws; Employment Agreements."

Such provisions are intended to encourage a potential acquiror of the
Holding Company to negotiate with the Board of Directors, which is in the best
position to act on behalf of all of the stockholders, before seeking to obtain
control of the Holding Company. Such provisions may, however, have the effect
of discouraging takeover offers that certain stockholders might deem to be in
their best interests, including takeover proposals in which stockholders might
receive a premium for their shares over the then-current market price. Such
provisions will also make it more difficult for individual stockholders or a
group of stockholders to replace existing management, whether or not such
stockholders believe that a change in management is in the best interests of
the Holding Company.

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<PAGE>

EFFECT OF VOTING CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS ON CORPORATE
GOVERNANCE

Directors and executive officers of the Holding Company expect to purchase
approximately 7.6% of the shares of Conversion Stock issued in the Offering
based upon the midpoint of the Offering Price Range. See "Proposed
Subscriptions by Directors and Executive Officers." Directors, executive
officers and employees are also expected to eventually control the voting of
3% of the shares of Conversion Stock issued in the Offering through the 1997
MRP. In addition, 7% of the shares of Conversion Stock issued in the Offering
are expected to be acquired by the ESOP. Employees will vote the shares
allocated to them under the ESOP, and unallocated shares will be voted by the
ESOP trustee in the same proportion as the allocated shares. Accordingly,
directors and executive officers as a group, together with the ESOP and the
MRP, and taking into account the Exchange Shares to be beneficially owned by
such persons, may have effective control over as much as 19.6%, at the
midpoint of the Offering Price Range, of the Common Stock to be issued and
outstanding at the completion of the Conversion and Reorganization.

In addition, following the Conversion and Reorganization, executive officers
and directors are expected to be granted options under the 1997 Stock Option
Plan to purchase an amount of Common Stock equal to 10% of the shares of
Conversion Stock issued in the Offering. If all of the options were issued to
directors and executive officers, exercised and satisfied with newly issued
shares, and if the Holding Company did not issue any other shares of Common
Stock, the shares held by directors and executive officers, including the
shares noted above, would give such persons effective control over as much as
22.0%, at the midpoint of the Offering Price Range, of the Common Stock issued
and outstanding. Because the Holding Company's Certificate of Incorporation
will require the affirmative vote of 80% of the outstanding shares entitled to
vote in order to approve certain mergers, consolidations or other business
combinations without the prior approval of two-thirds of the Holding Company's
directors, the officers and directors and their associates, as a group, could
effectively block such transactions. See "Comparison of Stockholders' Rights--
Voting Restrictions on Certain Business Combinations; Fair Price Provision."

POSSIBLE DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES

The number of shares to be sold in the Conversion and Reorganization may be
increased as a result of an increase in the Offering Price Range of up to 15%
to reflect changes in market and financial conditions following the
commencement of the Offering. In the event that the Offering Price Range is so
increased, it is expected that the Holding Company will issue up to 1,058,000
shares of Conversion Stock at the Purchase Price for an aggregate price of up
to $10,580,000. An increase in the number of shares will decrease net earnings
per share and stockholders' equity per share on a pro forma basis and will
increase the Holding Company's consolidated stockholders' equity and net
earnings. See "Capitalization" and "Pro Forma Data."

The ESOP intends to purchase an amount of the Conversion Stock that, when
combined with the Exchange Shares to be received by the ESOP, aggregates 7% of
the total shares of Common Stock to be outstanding upon consummation of the
Conversion and Reorganization. In the event that there are insufficient shares
available to fill the ESOP's order due to an oversubscription by Eligible
Account Holders and the total number of shares of Conversion Stock issued in
the Conversion and Reorganization is increased by up to 15%, the additional
shares will first be allocated to fill the ESOP's subscription and thereafter
in accordance with the terms of the Plan. See "Management of the Holding
Company and Association--Employee Benefit Plans--Employee Stock Ownership
Plan" and "The Conversion and Reorganization--The Offering--Subscription
Offering Category 2: Employee Stock Benefit Plans."

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<PAGE>

purchased by the 1993 MRP following the Mutual Holding Company Reorganization
(as adjusted to give effect to the Exchange Ratio), would aggregate 3% of the
total shares of Common Stock to be outstanding upon consummation of the
Conversion and Reorganization. Such shares of Common Stock may be acquired in
the open market with funds provided by the Holding Company, if permissible, or
from authorized but unissued shares of Common Stock. In the event that
additional shares of Common Stock are issued to the 1997 MRP, stockholders
would experience dilution of their ownership interests (by 1.57% at the
maximum of the Offering Price Range) and per share stockholders' equity and
per share net earnings would decrease as a result of an increase in the number
of outstanding shares of Common Stock. See "Pro Forma Data" and "Management of
the Holding Company and Association--Employee Benefit Plans--1997 Management
Recognition Plan."

If the Holding Company's 1997 Stock Option Plan is approved by stockholders
at an annual or special meeting of stockholders held at least six months
following the consummation of the Conversion and Reorganization, the Holding
Company will reserve for future issuance pursuant to such plan a number of
authorized shares of Common Stock equal to an aggregate of 10% of the
Conversion Stock issued in the Offering (92,000 shares, based on the maximum
of the Offering Price Range). See "Pro Forma Data" and "Management of the
Holding Company and Association--Employee Benefit Plans--1997 Stock Option
Plan."

INCREASE IN COMMERCIAL BUSINESS LENDING

During the fiscal year ended March 31, 1997, the Association began to
originate commercial business loans on a limited basis. Such loans generally
have shorter terms and higher interest rates than traditional mortgage loans.
Such lending, however, generally involves more credit risk than traditional
single-family residential lending because of the type and nature of the
collateral. As of March 31, 1997, commercial business loans amounted to
approximately $1.3 million, or 1.3% of the Association's loan portfolio. To
date, the Association has not experienced any significant credit problems with
respect to its commercial business loan portfolio and, as of March 31, 1997,
none of the Association's commercial business loans were nonperforming. See
"Business of the Association--Lending and Mortgage-Banking Activities--
Commercial Business Loans."

POSSIBLE ADVERSE INCOME TAX CONSEQUENCES

The Association has received an opinion of KPMG Peat Marwick LLP that states
that, for federal and state income tax purposes, consummation of the
Conversion and Reorganization will not be taxable to the Association, the
Holding Company or depositors of the Association. The opinion also states,
however, that if the Subscription Rights granted to Eligible Account Holders,
Supplemental Eligible Account Holders, Other Members, directors, officers and
employees and Public Stockholders are deemed to have an ascertainable fair
market value, income or gain may be recognized by the recipients of the
Subscription Rights (in certain cases, whether or not the rights are
exercised) in an amount equal to such value. Additionally, the Association
could recognize a gain for tax purposes on such distribution. This opinion is
not binding on the Internal Revenue Service ("IRS"). No assurance can be given
that the IRS will not take a contrary position. See "The Conversion and
Reorganization--Tax Aspects."

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<PAGE>

EQUALITY BANCORP, INC.

The Holding Company was incorporated as a Delaware corporation on May 14,
1997 at the direction of the Board of Directors of the Association to hold all
of the capital stock of the Association and to facilitate the Conversion and
Reorganization. The Holding Company has not engaged in any business to date
and is not expected to engage in any business until the consummation of the
Conversion and Reorganization. The Holding Company's offices are located at
9920 Watson Road, St. Louis, Missouri 63126, and its telephone number is (314)
965-7090.

The Holding Company will have no material assets or liabilities prior to the
consummation of the Conversion and Reorganization. Immediately following the
consummation of the Conversion and Reorganization, the Holding Company will
have, as its only material assets, the stock of the Association and that
portion of the net proceeds of the Offering that it retains. See "Use of
Proceeds" for a discussion of how the Holding Company intends to invest the
net proceeds of the Offering retained by it. Immediately following the
Conversion and Reorganization, the Holding Company will have no material
liabilities. Following the Conversion and Reorganization, the Holding Company
will be engaged in the business of managing its investments and directing,
planning and coordinating the business activities of the Association. In the
future, the Holding Company may acquire or organize other operating
subsidiaries, although there are no current plans or agreements to do so.

The Association expects the Holding Company's application to become a
savings and loan holding company under the Home Owners' Loan Act ("HOLA") and
to acquire the Association to be approved by the OTS prior to the Expiration
Date. Upon completion of the Conversion and Reorganization, the Holding
Company will be subject to regulation by OTS. See "Regulation and
Supervision--Holding Company Regulation."

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A.

The Association is a federally-chartered-stock-based-savings association
regulated by the OTS, and its deposits are insured by the FDIC through the
SAIF. The deposits of the Association will continue to be insured by the FDIC
after the Conversion and Reorganization. The Association was originally
chartered in 1884. At March 31, 1997, the Association had total assets of
$200.8 million, deposit accounts of $123.0 million and total stockholders'
equity of $12.6 million. The Association conducts its business through three
full-service branch offices and five limited-service-loan-production offices.
The Association's main office is located at 4131 South Grand Boulevard, St.
Louis, Missouri 63118-3464, and its telephone number is (314) 352-3333.

On October 22, 1993, Equality Savings and Loan Association (the predecessor
of the Association) (i) reorganized into a mutual holding company and changed
its name to "First Missouri Financial, M.H.C." and (ii) transferred
substantially all of its assets and all of its liabilities to the Association,
which sold a minority interest in its common stock to depositors of Equality
Savings and Loan Association and various stock compensation plans. A total of
380,000 shares of newly issued common stock were sold at $10.00 per share. An
additional 11,400 authorized but unissued shares were later sold to the 1993
MRP at $10.00 per share. The Association gained net proceeds of approximately
$3.2 million from the sale of its common stock. On June 13, 1995, the
Association converted from a Missouri-chartered-stock-savings-and-loan
association to a federally-chartered-stock-savings-and-loan association.

THE ASSOCIATION'S BUSINESS OPERATIONS

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<PAGE>

conducts its residential mortgage lending business primarily through a wholly-
owned mortgage-banking subsidiary--EMC.

. Mortgage-Banking Operations. EMC acts as a conduit for the origination,
purchase and sale of residential mortgage loans for the benefit of the
Association. It funds its mortgage-banking activities through lines of
credit from the Association and an unrelated commercial bank. EMC
provides several benefits to the Association, including, among other
things, originating a variety of mortgage loan products for the
Association's portfolio and generating noninterest income for the
Association through its activities in the secondary mortgage market. EMC
contributed approximately 17% to the Association's total interest income
and other income for the year ended March 31, 1997. For additional
information concerning the Association's mortgage-banking operations,
see "Business of The Association--Lending and Mortgage-Banking
Operations."

. Capital Position. At March 31, 1997, the Association's capital exceeded
the OTS's tangible, core and risk-based capital requirements of 1.5%,
3.0% and 8.0% of adjusted total assets, respectively. At this date, the
Association's tangible and core capital totaled $12.3 million, or 6.11%
of adjusted total assets, and its risk-based capital totaled $12.6
million, or 17.86% of risk-weighted assets. For additional information
concerning the Association's compliance with regulatory capital
requirements, see Note 2 to Notes to Consolidated Financial Statements.

. Asset Quality. At March 31, 1997, the Association's nonperforming assets
totaled $709,000 (representing .67% of gross loans and .35% of total
assets), the majority of which were FHA/VA loans secured by residential
one- to four-family dwellings and the related principal and interest of
which were either insured by the FHA or guaranteed by the VA. For
additional information concerning the Association's nonperforming
assets, see "Business of the Association--Lending and Mortgage-Banking
Activities--Nonperforming Assets and Their Classification."

. Loan Servicing Portfolio. At March 31, 1997, EMC serviced $323.0 million
in residential mortgage loans (of which $90.6 million was for the
Association). EMC earned $888,000 in servicing fee income for fiscal
year 1997. Loan servicing fees on loans serviced for institutions other
than the Association totaled $674,000, $603,000 and $622,000 for fiscal
years 1997, 1996 and 1995, respectively. Because EMC sells conventional
mortgage loans (non-FHA and VA) servicing retained, the Association's
loan servicing portfolio (and the associated earnings stream) continues
to grow.

. FHLB Borrowings. The amount of the Association's savings deposits has
declined by approximately $8 million since 1993, while its loan demand
through EMC has steadily increased. To fund this loan growth and to take
advantage of interest rate spreads, the Association began borrowing
funds from the FHLB of Des Moines in 1994. Since then, the Association's
FHLB borrowings have increased to $63 million at March 31, 1997.
Management of the Association attributes the decline in traditional
savings accounts to intense competition for investment funds by other
financial institutions in the Association's local market and other
financial service providers such as mutual funds and insurance
companies. For additional information concerning the Association's
borrowings and deposit activity, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Financial
Condition."

. Internal Expansion. In May 1997, the Association purchased a building in
Arnold, Missouri (which is in Jefferson County and adjacent to St. Louis
County) that the Association is remodeling as a full-service branch
office. The Association expects this office to be completed by the
summer of 1998. In addition, the Association is relocating a store-front
branch office several blocks and concurrently converting it into a
branch office with a drive-up facility; the relocation is expected to be
completed in September 1997. In early 1997, in connection with its
hiring of a new commercial lending officer, the Association began
originating a limited number of commercial business loans. Management
expects this type of lending to increase gradually over the next several
years. For additional information concerning the Association's
commercial business lending, see "Business of the Association--Lending
and Mortgage-Banking Activities--Commercial Business Loans."

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BUSINESS STRATEGIES

The Association's business strategy includes (i) maintaining a strong
capital level, (ii) maintaining a high level of asset quality, (iii) limiting
the Association's exposure to fluctuations in interest rates, (iv) emphasizing
local originations of one- to four-family fixed-rate mortgage loans and ARMs
and (v) continuing to emphasize high quality customer service with a
competitive service fee structure. Management of the Association believes that
the proceeds raised in the Conversion and Reorganization, and the additional
operating flexibility gained by converting to the full-stock-form-of-
ownership, will assist the Association in accomplishing this strategy, while
continuing to grow its business.

The capital raised in the Conversion and Reorganization will allow the
Association to continue its internal expansion through growth in core
operations. The Association intends to continue its community-oriented focus
by originating loans in the St. Louis metropolitan area. Management believes
there is an opportunity for the Association, as a independent-community-
oriented financial institution to compete for customers of national and super-
regional banking organizations that have offices in the Association's market.
Many of these larger banks recently have combined with other large financial
institutions, and management of the Association believes that customer
dissatisfaction with services provided by these combined organizations will
give the Association the opportunity to expand its depositor and borrower base
by offering superior personal service as an independent community banking
organization. To this end and in order to expand its market share, the
Association is in the process of relocating a store-front branch office and
concurrently converting it into a branch office with a drive-up facility and
also is constructing an additional full-service branch facility. The
additional capital raised in the Conversion and Reorganization will allow the
Association to continue to grow the operations of EMC, which focus on one- to
four-family lending, but also will make funds available, as needs arise, to
finance non-mortgage types of lending, which would be intended to improve the
yield and interest rate sensitivity of the Association's assets.

Prospects for external growth also will be enhanced by the capital raised in
the Conversion and Reorganization because the Association will have additional
capital available to support acquisitions of other financial institutions and
branch expansion. The Association, however, has no plans at this time for such
acquisitions or expansion, except as discussed in this Prospectus. For
additional information concerning how the Association intends to use the
proceeds raised in the Conversion and Reorganization, see "Use of Proceeds."

REGULATION

The OTS is charged with overseeing and regulating the Association's
activities and monitoring its financial condition. This regulatory framework
sets parameters for the Association's activities and operations and grants the
OTS extensive discretion with regard to its supervisory and enforcement powers
and examination policies. The Association files periodic reports with the OTS
concerning its activities and financial condition, must obtain OTS approval
prior to entering into certain transactions or initiating new activities, and
is subject to periodic examination by the OTS to evaluate the Association's
compliance with various regulatory requirements.

FIRST MISSOURI FINANCIAL, M.H.C.

The Mutual Holding Company is a federally chartered mutual holding company
that was chartered in 1993 in connection with the Mutual Holding Company
Reorganization. The Mutual Holding Company's primary asset is 445,000
Association Shares, which represents 53.2% of the total issued and outstanding
Association Shares. The Mutual Holding Company's only other assets consist of
a deposit account in the amount of $50,000 as of March 31, 1997 (which will
become an asset of the Association upon consummation of the Conversion and
Reorganization). Prior to the Conversion and Reorganization, each depositor in
the Association has both a deposit account in the institution and a pro rata
ownership interest in the net worth of the Mutual Holding Company based upon
the value in his or her account, which interest may only be realized in the
event of a liquidation of the Mutual Holding Company. As part of the
Conversion and Reorganization, the Mutual Holding Company will convert from
mutual form to a federal interim stock savings association and simultaneously
merge with and into the Association, with the Association being the surviving
entity.

24
<PAGE>

USE OF PROCEEDS

Pursuant to the business plan adopted by the Holding Company and the
Association on June 20, 1997 in contemplation of the Conversion and
Reorganization, the Holding Company plans to contribute to the Association 50%
of the net proceeds from the sale of the Conversion Stock and retain the
remainder of the net proceeds. Assuming that the Conversion and Reorganization
is consummated at the midpoint of the Offering Price Range, the Association
will receive approximately $3.8 million and the Holding Company will retain
approximately $3.8 million, out of which the Holding Company will make a loan
to the Association's ESOP in the amount of $696,000 and fund the 1997 MRP at a
later date in the amount of $240,000, provided the 1997 MRP is approved by the
Holding Company's stockholders. The ESOP will repay such loan from the Holding
Company with contributions made to the ESOP by the Association and any
dividends on the Common Stock held by the ESOP. The loan will require annual
interest and principal payments over a 10-year period and will bear interest
at a fixed rate established at the prime rate, as reported by The Wall Street
Journal, Midwest Edition, in effect at the time of completion of the
Conversion and Reorganization.

The Holding Company intends to invest the net proceeds of the Offering that
it retains initially in short-term and intermediate-term deposits and U.S.
government and federal agency securities. Thereafter, funds retained by the
Holding Company will be deployed in accordance with the Holding Company's and
the Association's business plan as determined by the Board of Directors of the
Holding Company, as specific business opportunities or requirements arise and
for general corporate purposes. The net proceeds retained by the Holding
Company may be used to support the future expansion of operations, such as the
establishment of new branch offices, the acquisition of branches from other
financial institutions or the acquisition of other financial institutions and
for other business or investment purposes, including the possible infusion of
additional equity into the Association, the possible payment of dividends and
the possible repurchase of shares of the Holding Company's Common Stock as
permitted by the OTS. See "Dividend Policy" and "The Conversion and
Reorganization--Certain Restrictions on Purchase or Transfer of Shares after
the Conversion and Reorganization." The Holding Company, upon consummation of
the Conversion, initially will be a unitary savings and loan holding company
which, under existing laws, would generally not be restricted as to
investments or as to the types of business activities in which it may engage,
provided that the Association continues to be a qualified thrift lender under
applicable OTS regulations.

It is expected that the Holding Company's return on equity will initially be
lower than historical levels as the Holding Company and the Association deploy
the proceeds from the Offering. While the Board of Directors and management
recognize this challenge will exist for the foreseeable future, the Holding
Company intends to manage capital through controlled growth, the payment of
regular cash dividends and possibly the payment of periodic special dividends.
In addition, the Holding Company may repurchase the Common Stock as market and
regulatory limits permit.

The Association will invest the proceeds of the Offering that are made
available to it by the Holding Company initially in cash and short-term
investment securities (i.e., remaining maturities ranging up to 12 months)
pending their application pursuant to its business plan. The business plan of
the Holding Company and Association contemplates continuation of the
Association's current lending and investment strategies that emphasize one- to
four-family mortgage loans and U.S. government and agency securities and
mortgage-backed securities. See "Business of the Association--Lending and
Mortgage-Banking Activities," and "--Investment Activities." The Association
may also use a portion of the net proceeds to pay dividends to the Holding
Company, subject to applicable legal requirements. See "Regulation and
Supervision--Federal Savings Association Regulation--Limitation on Capital
Distributions."

25
<PAGE>

The Holding Company and the Association also may use the net proceeds of the
Offering to expand their operations through acquisitions of other financial
institutions or other financial services companies or portions thereof,
subject to applicable regulatory restrictions. However, neither the
Association nor the Holding Company has any pending plans or agreements
regarding acquisitions of any specific financial institutions or other
financial services companies or portions thereof.

There can be no assurance that the Holding Company and the Association will
be able to effectively implement their business plan, as currently in effect,
and the business plan is subject to change.

DIVIDEND POLICY

Upon consummation of the Conversion and Reorganization, the Board of
Directors of the Holding Company will have the authority to declare and pay
dividends on the Common Stock. The Board of Directors of the Holding Company
intends to pay cash dividends on the Common Stock at an initial quarterly rate
equal to $0.17 per share (the amount of the existing quarterly dividend on the
Association Shares) divided by the Exchange Ratio, commencing with the first
full quarter following consummation of the Conversion and Reorganization,
which will have the effect of initially maintaining the aggregate amount of
quarterly cash dividends received by the Public Stockholders. Based on the
current Offering Price Range, the Exchange Ratio is expected to be 1.5283,
1.7981, 2.0678 and 2.3779 at the minimum, midpoint, maximum and 15% above
maximum of the Offering Price Range, respectively, resulting in an initial
quarterly dividend rate of $0.11, $0.09, $0.08 and $0.07 per share,
respectively.

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
Association'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 Offering and retained by the
Holding Company, dividends received from the Association or earnings on
Holding Company assets. In addition, from time to time in an effort to reduce
capital to a desirable level or further reward stockholders for their
investment, or both, the Board of Directors may determine to pay special cash
dividends. The Holding Company will not, however, declare or pay a capital
distribution in the form of a "return of capital" to its stockholders or take
any steps in furtherance of any such capital distribution during the period
ending one year after the consummation of the Conversion and Reorganization.
Special cash dividends, if paid, may be paid in addition to, or in lieu of,
any regular cash dividends. No assurances can be given that any dividends,
regular or special, will be declared or, if declared, what the amount of
dividends will be or whether such dividends, once declared, will continue.
Moreover, no representation is being made regarding any "return of capital"
following one year after the consummation of the Conversion and
Reorganization.

It is anticipated that a source of income to the Holding Company in the
future could consist of dividends on the Association's stock held by the
Holding Company. Consequently, future declarations of cash dividends by the
Holding Company could depend upon dividend payments by the Association to the
Holding Company or stock repurchases by the Association, which payments or
repurchases will be subject to various restrictions. The Association is
subject to federal regulatory restrictions on the declaration and payment of
dividends. For information concerning federal regulations that apply to the
Association regarding a savings institution's ability to make capital
distributions including payment of dividends to its holding company, see
"Regulation and Supervision--Federal Savings Association Regulation--
Limitation on Capital Distributions."

Unlike the Association, the Holding Company is not subject to federal
regulatory restrictions on the declaration or payment of dividends to its
stockholders, although the source of such dividends could depend upon dividend
payments from the Association in addition to that portion of the net proceeds
of the Offering retained by the Holding Company and earnings thereon. The
Holding Company is subject, however, to the requirements of Delaware law,
which generally limit dividends to an amount equal to the excess of its net
assets (the amount by which total assets exceed total liabilities) over its
stated capital or, if there is no such excess, to its net profits for the
current and/or immediately preceding fiscal year.

26
<PAGE>

Depositors of the Association who are also stockholders of the Holding
Company after consummation of the Conversion and Reorganization may elect to
have cash dividends deposited directly into an existing account with the
Association by completing section 10 of the order form for the Conversion
Stock. By entering an account number in section 10 of the order form,
stockholders will have all future dividends directly deposited into interest-
bearing insured accounts at the Association.

MARKET FOR COMMON STOCK

The Holding Company has received conditional approval to have the Common
Stock listed on the Nasdaq NMS under the symbol "ESBX." In order for the
Common Stock to be listed on the Nasdaq NMS, however, there must be, among
other things, two market makers for the Common Stock. Trident intends to act
as a market maker for the Common Stock and will assist the Holding Company in
retaining at least one other market maker. The Holding Company will use its
best efforts to encourage and assist market makers in establishing and
maintaining a market for the Common Stock. There can be no assurance, however,
that any additional market makers for the Common Stock will be obtained or
that the Common Stock will be listed on the Nasdaq NMS or, if listed, will
continue to be eligible for such listing. If the Holding Company should prove
unable, for any reason, to list the Common Stock on the Nasdaq NMS or to
continue to be eligible for such listing, then the Holding Company intends to
list the Common Stock on the Nasdaq SmallCap Market or the American Stock
Exchange, under the same symbol, subject to the applicable listing criteria
for that market.

At March 31, 1997, there were 836,400 Association Shares outstanding,
including 391,400 Public Association Shares, which were held by approximately
620 stockholders of record. There is no established market for the Association
Shares nor any uniformly quoted prices. The last sale price of the Association
Shares of which the Association is aware was $15.00 per share on April 7,
1997.

27
<PAGE>

CAPITALIZATION

The following table presents the historical capitalization of the
Association at March 31, 1997, 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 Conversion
Stock at the minimum, midpoint, maximum and maximum, as adjusted, of the
Offering Price Range. The shares that would be issued at the maximum, as
adjusted, of the Offering Price Range would be subject to receipt of OTS
approval of an updated appraisal confirming such valuation. A CHANGE IN THE
NUMBER OF SHARES TO BE ISSUED IN THE CONVERSION AND REORGANIZATION WOULD
MATERIALLY AFFECT PRO FORMA CONSOLIDATED CAPITALIZATION.

<TABLE>
<CAPTION>
HOLDING COMPANY PRO FORMA CONSOLIDATED CAPITALIZATION AS
OF MARCH 31, 1997 BASED UPON THE SALE FOR $10.00 PER
SHARE OF
---------------------------------------------------------------------
ASSOCIATION 680,000 800,000 920,000 1,058,000
HISTORICAL SHARES SHARES SHARES SHARES
CAPITALIZATION AT (MINIMUM (MIDPOINT (MAXIMUM (15% ABOVE
MARCH 31, 1997 OF RANGE)(1) OF RANGE)(1) OF RANGE)(1) MAXIMUM)(1)(2)
----------------- -------------- -------------- -------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deposits(3)............... $122,983 $ 122,983 $ 122,983 $ 122,983 $ 122,983
FHLB advances and note
payable to Association... 64,113 64,113 64,113 64,113 64,113
Debt in connection with
the acquisition of
Association Shares by the
ESOP..................... 136 -- -- -- --
-------- -------------- -------------- -------------- --------------
Total deposits and
borrowed funds........... $187,232 $ 187,096 $ 187,096 $ 187,096 $ 187,096
======== ============== ============== ============== ==============
Stockholders' equity:
Preferred Stock(4)...... -- -- -- -- --
Common Stock(4)......... 836 13 15 17 20
Additional paid-in
capital................ 2,769 9,977 11,175 12,373 13,750
Retained earnings(5).... 9,675 9,725 9,725 9,725 9,725
Unrealized gain (loss)
on available for sale
securities............. (510) (510) (510) (510) (510)
Less: existing stock plans
Association Shares
acquired by ESOP....... (136) -- -- -- --
Common Stock acquired by
ESOP(6)................ -- (612) (696) (780) (877)
Common Stock to be
acquired by 1997
MRP(7)................. -- (204) (240) (276) (317)
-------- -------------- -------------- -------------- --------------
Total stockholders'
equity................... $ 12,634 $ 18,389 $ 19,469 $ 20,549 $ 21,791
======== ============== ============== ============== ==============
</TABLE>
- --------
(1) Does not reflect the possible increase in the Offering Price Range to
reflect material changes in the financial condition or results of
operations of the Association or changes in market conditions or general
financial, economic and regulatory conditions, or the issuance of
additional shares under the 1997 Stock Option Plan.
(2) This column represents the pro forma capitalization of the Holding Company
if the aggregate number of shares of Conversion Stock issued in the
Offering is 15% above the maximum of the Offering Price Range. See "Pro
Forma Data" and Footnote 1 thereto.
(3) Withdrawals from deposit accounts for the purchase of Conversion Stock are
not reflected. Such withdrawals will reduce pro forma deposits by the
amounts thereof.
(4) The Association's authorized capital will consist solely of 4,000,000
shares of common stock, par value $1.00 per share, 1,000 shares of which
will be issued to the Holding Company, and 1,000,000 shares of preferred
stock, par value $1.00 per share, none of which will be issued in
connection with the Conversion and Reorganization. At March 31, 1997, the
Association had 836,400 shares of common stock issued and

28
<PAGE>

outstanding. The Holding Company's authorized capital will consist solely
of 4,000,000 shares of common stock, par value $.01 per share, and 200,000
shares of preferred stock, par value $.01 per share. The number of shares
of common stock of the Holding Company to be issued and outstanding in the
Conversion and Reorganization would be 1,278,195, 1,503,759, 1,729,323 and
1,988,721, at the minimum, midpoint, maximum and 15% above the maximum of
the Offering Price Range, respectively. No shares of preferred stock of the
Holding Company will be issued in the Conversion and Reorganization.
(5) Retained earnings are substantially restricted by applicable regulatory
capital requirements. Additionally, the Association 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 Eligible Account Holders and Supplemental Eligible Account
Holders at the consummation of the Conversion and Reorganization and
adjusted downward thereafter as such account holders reduce their balances
or cease to be depositors. See "The Conversion and Reorganization--
Liquidation Rights." Historical retained earnings does not include $50,000
of assets currently held at the Mutual Holding Company level, and which
will be consolidated with the Association's book value.
(6) Assumes that 7% of the shares of Conversion Stock sold in the Offering
will be acquired by the ESOP with funds borrowed from the Holding Company.
Under generally accepted accounting principles ("GAAP"), the amount of
Conversion 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
Holding Company and Association--Employee Benefit Plans--Employee Stock
Ownership Plan."
(7) Assumes the purchase in the open market at the Purchase Price, pursuant to
the proposed 1997 MRP, of a number of shares equal to 3% of the shares of
Conversion Stock issued in the Offering at the minimum, midpoint, maximum
and 15% above the maximum of the Offering Price Range. The issuance of
such additional Conversion Stock of the MRP from authorized but unissued
shares of Common Stock would dilute the ownership interest of stockholders
by 1.57%. The shares are reflected as a reduction of stockholders' equity.
See "Risk Factors--Possible Dilutive Effect of Issuance of Additional
Shares," "Pro Forma Data" and "Management of the Holding Company and
Association--Employee Benefit Plans--1997 Management Recognition Plan."
The 1997 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 and Reorganization.

29
<PAGE>

REGULATORY CAPITAL

The following table presents the Association's historical and pro forma
capital position relative to its capital requirements at March 31, 1997. The
amount of capital infused into the Association for purposes of the following
table is 50% of the net proceeds from the sale of the Conversion Stock. For
purposes 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 1997 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 OTS capital regulations
as discussed under "Regulation and Supervision--Federal Savings Association
Regulation--OTS Capital Requirements."

<TABLE>
<CAPTION>
PRO FORMA AT MARCH 31, 1997
----------------------------------------------------------------------------------
ACTUAL REGULATORY 1,058,000 SHARES
CAPITAL AT 680,000 SHARES 800,000 SHARES 920,000 SHARES (15% ABOVE
MARCH 31, 1997 (MINIMUM OF RANGE) (MIDPOINT OF RANGE) (MAXIMUM OF RANGE) MAXIMUM OF RANGE)
----------------- -------------------- ---------------------- -------------------- -----------------
% OF % OF % OF % OF % OF
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(2)........ $12,634 6.29% $ 15,197 7.46% $ 15,677 7.67% $ 16,357 7.80% $16,709 8.13%
Tangible capital(2).... $12,299 6.11% $ 14,862 7.28% $ 15,342 7.49% $ 15,822 7.71% $16,374 7.95%
Tangible capital
requirement............ 3,017 1.50% 3,063 1.50% 3,071 1.50% 3,080 1.50% 3,084 1.50%
------- ------ --------- -------- ---------- --------- --------- -------- ------- ------
Excess................. $ 9,282 4.61% $ 11,799 5.78% $ 12,271 5.99% $ 12,742 6.21% $13,290 6.45%
======= ====== ========= ======== ========== ========= ========= ======== ======= ======
Core capital(2)........ $12,299 6.11% $ 14,862 7.28% $ 15,342 7.49% $ 15,822 7.71% $16,374 7.95%
Core capital
requirement(3)......... 6,035 3.00% 6,126 3.00% 6,143 3.00% 6,160 3.00% 6,179 3.00%
------- ------ --------- -------- ---------- --------- --------- -------- ------- ------
Excess................. $ 6,264 3.11% $ 8,736 4.28% $ 9,199 4.49% $ 9,662 4.71% $10,195 4.95%
======= ====== ========= ======== ========== ========= ========= ======== ======= ======
Total capital(4)....... $12,582 17.86% $ 15,145 21.32% $ 15,625 21.96% $ 16,105 22.59% $16,657 23.33%
Risk-based capital
requirement............ 5,635 8.00% 5,684 8.00% 5,693 8.00% 5,702 8.00% 5,712 8.00%
------- ------ --------- -------- ---------- --------- --------- -------- ------- ------
Excess................. $ 6,947 9.86% $ 9,461 13.32% $ 9,932 13.96% $ 10,403 14.59% $10,945 15.33%
======= ====== ========= ======== ========== ========= ========= ======== ======= ======
</TABLE>
- ----
(1) Based upon total adjusted assets of $201.2 million at March 31, 1997 and
$204.2 million, $204.8 million, $205.3 million and $206.0 million at the
minimum, midpoint, maximum and maximum, as adjusted, of the Offering Price
Range, respectively, for purposes of the tangible and core capital
requirements, and upon risk-weighted assets of $70.4 million at March 31,
1997 and $71.1 million, $71.2 million, $71.3 million and $71.4 million at
the minimum, midpoint, maximum and maximum, as adjusted, of the Offering
Price Range, respectively, for purposes of the risk-based capital
requirement.
(2) An unrealized loss on securities available-for-sale, net of taxes of
$510,000 and an investment in non-includable subsidiaries of $845,000
account for the difference between GAAP capital and both tangible capital
and core capital.
(3) 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.
(4) 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.

30
<PAGE>

PRO FORMA DATA

Under the Plan, the shares of Conversion Stock must be sold at a price equal
to the estimated pro forma market value of the Conversion Stock, based upon an
independent valuation. The Offering Price Range as of June 20, 1997 is from a
minimum of $6,800,000 to a maximum of $9,200,000 with a midpoint of $8,000,000
or, at a price per share of $10.00, a minimum number of shares of 680,000, a
maximum number of shares of 920,000 and a midpoint number of shares of
800,000. The actual net proceeds from the sale of the Conversion Stock cannot
be determined until the Conversion and Reorganization is completed. Net
proceeds set forth on the following table are based upon the assumption that
Conversion and Reorganization expenses will total approximately $415,000 at
each of the minimum, midpoint, maximum and 15% above the maximum of the
Offering Price Range. Actual expenses may vary from this estimate.

The pro forma consolidated net income of the Association for the year ended
March 31, 1997 has been calculated as if the Conversion and Reorganization had
been consummated at the beginning of the period and the estimated net proceeds
received by the Holding Company and the Association had been invested at 5.81%
at the beginning of the period, which represents the arithmetic average of the
Association's yield on interest-earning assets and interest-bearing deposits
for the year ended March 31, 1997. As discussed under "Use of Proceeds," the
Holding Company expects to retain 50% of the net proceeds from the sale of the
Conversion Stock from which it will fund the ESOP loan. A pro forma after-tax
return of 3.63% is used for both the Holding Company and the Association for
the period, after giving effect to an incremental combined federal and state
income tax rate of 37.5% for the year ended March 31, 1997. 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 March 31,
1997, 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 Association and the pro forma consolidated net income and
stockholders' equity of the Holding Company for the periods and at the date
indicated, based on the minimum, midpoint and maximum of the Offering Price
Range and based on a 15% increase in the maximum of the Offering Price Range.
No effect has been given to: (i) the shares to be reserved for issuance under
the 1997 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 and Reorganization; (ii) withdrawals from deposit accounts for
the purpose of purchasing Conversion Stock in the Offering; (iii) the issuance
of shares from authorized but unissued shares to the 1997 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 and Reorganization;
(iv) the payment of cash in satisfaction of dissenters' rights or (v) the
establishment of a liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders. See "Management of the
Holding Company and Association--Employee Benefit Plans--1997 Stock Option
Plan" and "The Conversion and Reorganization--Stock Pricing, Exchange Ratio
and Number of Shares Issued." Shares of Conversion Stock may be purchased with
funds on deposit at the Association, 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
such purchases.

31
<PAGE>

<TABLE>
<CAPTION>
HOLDING COMPANY PRO FORMA
AT OR FOR THE FISCAL YEAR ENDED MARCH 31,
1997, BASED UPON THE SALE FOR $10.00 PER
SHARE OF
-----------------------------------------------
680,000 800,000 920,000 1,058,000
SHARES SHARES SHARES SHARES
(MINIMUM (MIDPOINT (MAXIMUM (15% ABOVE
OF RANGE) OF RANGE) OF RANGE) MAXIMUM)(1)
---------- ---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Gross proceeds................ $ 6,800 $ 8,000 $ 9,200 $ 10,580
Less: estimated offering
expenses..................... (415) (415) (415) (415)
---------- ---------- ---------- ----------
Estimated net proceeds...... $ 6,385 $ 7,585 $ 8,785 $ 10,165
Less: Common Stock acquired by
ESOP......................... (476) (560) (644) (741)
Less: Common Stock to be
acquired by 1997 MRP......... (204) (240) (276) (317)
Add: Assets consolidated from
the Mutual Holding Company... 50 50 50 50
---------- ---------- ---------- ----------
Estimated net proceeds, as
adjusted................... $ 5,755 $ 6,835 $ 7,915 $ 9,157
========== ========== ========== ==========
Consolidated net income:
Historical.................. $ 505 $ 505 $ 505 $ 505
Pro forma income on net
proceeds(2)................ 209 248 287 333
Pro forma ESOP
adjustments(3)............. (30) (35) (40) (46)
Pro forma 1997 MRP
adjustments(4)............. (26) (30) (35) (40)
---------- ---------- ---------- ----------
Pro forma net income........ $ 658 $ 688 $ 717 $ 752
========== ========== ========== ==========
Per share net income (reflects
SOP 93-6)(5)(6):
Historical.................. $ 0.41 $ 0.35 $ 0.30 $ 0.26
Pro forma income on net
proceeds................... 0.16 0.16 0.17 0.17
Pro forma ESOP
adjustments(3)............. (0.02) (0.02) (0.02) (0.02)
Pro forma 1997 MRP
adjustments(4)............. (0.02) (0.02) (0.02) (0.02)
---------- ---------- ---------- ----------
Pro forma net income per
share...................... $ 0.53 $ 0.47 $ 0.43 $ 0.39
========== ========== ========== ==========
Offering price as a multiple
of pro forma net earnings per
share........................ 18.87x 21.28x 23.26x 25.64x
Number of shares used in
earnings per share
calculations................. 1,237,497 1,455,879 1,674,261 1,925,400
Stockholders' equity (book
value):
Historical(10).............. $ 12,684 $ 12,684 $ 12,684 $ 12,684
Estimated net proceeds...... 6,385 7,585 8,785 10,165
Less: Common Stock acquired
by ESOP.................... (476) (560) (644) (741)
Less: Common Stock acquired
by 1997 MRP(4)............. (204) (240) (276) (317)
---------- ---------- ---------- ----------
Pro forma stockholders'
equity(7).................. $ 18,389 $ 19,469 $ 20,549 $ 21,791
========== ========== ========== ==========
Stockholders' equity per share
(does not reflect
SOP 93-6)(6)(8):
Historical(6)(10)........... $ 9.92 $ 8.43 $ 7.33 $ 6.38
Estimated net proceeds...... 5.00 5.05 5.08 5.11
Less: Common Stock acquired
by ESOP.................... (0.37) (0.37) (0.37) (0.37)
Less: Common Stock acquired
by 1997 MRP(4)............. (0.16) (0.16) (0.16) (0.16)
---------- ---------- ---------- ----------
Pro forma stockholders'
equity per share(9)........ $ 14.39 $ 12.95 $ 11.88 $ 10.96
========== ========== ========== ==========
Pro forma tangible
stockholders' equity per
share...................... $ 14.39 $ 12.95 $ 11.88 $ 10.96
========== ========== ========== ==========
Offering price as a percentage
of pro forma stockholders'
equity per share............. 69.49% 77.22% 84.18% 91.24%
Offering price as a percent of
pro forma tangible equity.... 69.49% 77.22% 84.18% 91.24%
Number of shares used in book
value per share
calculations................. 1,278,195 1,503,759 1,729,323 1,988,721
</TABLE>

32
<PAGE>

- --------
(1) Gives effect to the sale of an additional 138,000 shares of Conversion
Stock in the Conversion and Reorganization, which may be issued to cover
an increase in the pro forma market value of the Conversion Stock and
Exchange Shares without the resolicitation of subscribers or any right of
cancellation. The issuance of such additional shares will be conditioned
on a determination by RP Financial that such issuance is compatible with
its determination of the estimated pro forma market value of the
Conversion Stock and Exchange Shares. See "The Conversion and
Reorganization--Stock Pricing, Exchange Ratio and Number of Shares to be
Issued."
(2) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing shares of Conversion Stock. Since funds on deposit
at the Association may be withdrawn to purchase shares of Conversion
Stock (which will reduce deposits by the amount of such purchases), the
net amount of funds available to the Association for investment following
receipt of the net proceeds of the Offering will be reduced by the amount
of such withdrawals.
(3) It is assumed that 7% of the shares of Conversion Stock issued in the
Conversion and Reorganization 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 and Reorganization, which rate is
currently 8.5%) from the net proceeds from the Offering retained by the
Holding Company. The amount of this borrowing has been reflected as a
reduction from gross proceeds to determine estimated net investible
proceeds. The Association intends to make contributions to the ESOP at
least equal to the principal and interest requirement of the debt. As the
debt is repaid, stockholders' equity will be increased. The Association's
payment of the ESOP debt is based upon equal installments of principal
over a 10-year period, assuming a combined federal and state income tax
rate of 37.5%. Interest income earned by the Holding Company on the ESOP
debt offsets the interest paid by the Association 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 Holding
Company and Association--Employee Benefit Plans--Employee Stock Ownership
Plan."
(4) In calculating the pro forma effect of the 1997 MRP, it is assumed that
the required stockholder approval has been received, that the shares were
acquired by the 1997 MRP at the beginning of the period presented in open
market purchases at the Purchase Price, that 20% of the amount
contributed was an amortized expense during such period, and that the
combined federal and state income tax rate is 37.5%. 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 1.57% and pro forma net income per share would be $.52,
$.46, $.42 and $.38 at the minimum, midpoint, maximum and 15% above the
maximum of the Offering Price Range for the year ended March 31, 1997,
respectively, and pro forma stockholders' equity per share would be
$14.32, $12.90, $11.85 and $10.94 at the minimum, midpoint, maximum and
15% above the maximum of the Offering Price Range at March 31, 1997,
respectively. Shares issued under the 1997 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 shares are awarded
under the 1997 MRP, total 1997 MRP expense would increase. The total
estimated 1997 MRP expense was multiplied by 20% (the total percent of
shares for which expense is recognized in the first year) resulting in
pre-tax 1997 MRP expense of $40,800, $48,000, $55,200 and $63,480 at the
minimum, midpoint, maximum and 15% above the maximum of the Offering
Price Range for the fiscal year ended March 31, 1997, respectively. No
effect has been given to the shares reserved for issuance under the
proposed 1997 Stock Option Plan. If stockholders approve the 1997 Stock
Option Plan following the Conversion and Reorganization, the Holding
Company will have reserved for issuance under the 1997 Stock Option Plan
authorized but unissued shares of Common Stock representing an amount of
shares equal to 10% of the shares of Conversion Stock sold in the
Offering. 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

33
<PAGE>

approximately 5.05%. Assuming stockholder approval of the 1997 Stock
Option Plan and that all options were exercised at the end of the year
ended March 31, 1997 at an exercise price of $10.00 per share, pro forma
net earnings per share would be $.50, $.45, $.41 and $.37, respectively,
for the year ended March 31, 1997, and pro forma stockholders' equity per
share would be $14.17, $12.80, $11.79 and $10.91, respectively, for the
year ended March 31, 1997 at the minimum, midpoint, maximum and 15% above
the maximum of the Offering Price Range. See "Management of the Holding
Company and Association--Employee Benefit Plans--1997 Stock Option Plan"
and "--Employee Benefit Plans--1997 Management Recognition Plan" and "Risk
Factors--Possible Dilutive Effect of Issuance of Additional Shares."
(5) Per share amounts are based upon shares outstanding of 1,237,497,
1,455,879, 1,674,261 and 1,925,400 at the minimum, midpoint, maximum and
15% above the maximum of the Offering Price Range for the fiscal year
ended March 31, 1997, respectively, which includes the shares of
Conversion Stock sold in the Offering, less the number of shares assumed
to be held by the ESOP not committed to be released within the first year
following the Conversion and Reorganization.
(6) Historical per share amounts have been computed as if the Conversion
Stock expected to be issued in the Conversion and Reorganization 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 and Reorganization, the additional ESOP
expense or the proposed 1997 MRP expense, as described above.
(7) "Book value" represents the difference between the stated amounts of the
Association'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 and Reorganization, or the federal income tax consequences of
the restoration to income of the Association's special bad debt reserves
for income tax purposes which would be required in the unlikely event of
liquidation. 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 1,278,195,
1,503,759, 1,729,323, 1,988,721 at the minimum, midpoint, maximum and 15%
above the maximum of the Offering Price Range, respectively.
(9) Does not represent possible future price appreciation or depreciation of
the Common Stock.
(10) Historical book value includes $50,000 of assets currently held at the
Mutual Holding Company level, and which will be consolidated with the
Association's book value.

34
<PAGE>

PROPOSED SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, for each of the Holding Company's directors
and executive officers and for all of the directors and executive officers as
a group, (1) the number of Exchange Shares to be beneficially held upon
consummation of the Conversion and Reorganization, based upon their beneficial
ownership of Association Shares as of May 31, 1997 (see "Beneficial Ownership
of Capital Stock"), (2) the proposed purchases of Conversion Stock, assuming
sufficient shares are available to satisfy their subscriptions, and (3) the
total amount of Common Stock to be held upon consummation of the Conversion
and Reorganization, in each case assuming that 800,000 shares of Conversion
Stock are sold, which is the midpoint of the Offering Price Range.

<TABLE>
<CAPTION>
PROPOSED PURCHASES TOTAL COMMON STOCK
OF CONVERSION TO BE BENEFICIALLY
STOCK HELD(2)
BENEFICIAL ------------------ ------------------
OWNERSHIP OF NUMBER
EXCHANGE NUMBER OF PERCENTAGE
NAME SHARES(1) AMOUNT OF SHARES SHARES OF TOTAL
- ---- ------------ -------- --------- ------- ----------
<S> <C> <C> <C> <C> <C>
LeRoy C. Crook.............. 89 $ 15,000 1,500 1,589 *
Kenneth J. Hrdlicka......... 3,527 $ 50,000 5,000 8,527 *
Michael J. Walsh............ 14,965 $ 35,000 3,500 18,465 1.23%
Richard C. Fellhauer........ 42,703 $100,000 10,000 52,703 3.50%
Daniel C. Aubuchon.......... 4,736 $ 50,000 5,000 9,736 *
Stacey W. Braswell.......... 5,545 $100,000 10,000 15,545 1.03%
Berenice J. Mahacek......... 14,503 $100,000 10,000 24,503 1.63%
Charles J. Wolter........... 4,563 $ 25,000 2,500 7,063 *
Michael A. Deelo............ 27,368 $100,000 10,000 37,368 2.48%
Leonard O. Wolter........... 10,209 $ 35,000 3,500 13,709 *
All directors and executive
officers of the Holding
Company as a group (ten
persons)................... 128,208 $610,000 61,000 189,208 12.58%
</TABLE>
- --------
(1) Excludes shares which may be received upon the exercise of outstanding
stock options. Based upon the Exchange Ratio of 1.7981 Exchange Shares for
each Public Association Share at the midpoint of the Offering Price Range.
(2) Excludes stock options and awards to be granted under the Company's 1997
Stock Option Plan and 1997 MRP if such plans are approved by stockholders
following the Conversion and Reorganization. See "Management of the
Company--Employee Benefit Plans."
* Less than 1%.

35
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A.
CONSOLIDATED STATEMENTS OF INCOME

The Consolidated Statements of Income of the Association for each of the
three years ended March 31, 1997 have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon appears elsewhere in this
Prospectus. KPMG Peat Marwick LLP did not audit the financial statements of
Equality Mortgage Corporation (a consolidated subsidiary), which statements
reflect total assets constituting 3% and 7% in 1997 and 1996, respectively,
and total interest income and other income constituting 17%, 19%, and 17% in
1997, 1996, and 1995, respectively, of the related consolidated totals. Those
statements were audited by other auditors whose report has been furnished to
KPMG Peat Marwick LLP, and whose opinion, insofar as it relates to the amounts
included for Equality Mortgage Corporation, is based solely on the report of
the other auditors. The Consolidated Statements of Income should be read in
conjunction with the Association's Consolidated Financial Statements and
related Notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MARCH
31,
------------------------------------
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
Interest income:
Loans receivable....................... $ 7,448,854 $ 7,046,845 $5,868,970
Investment securities and interest-
bearing deposits...................... 4,399,442 3,723,795 2,950,035
Mortgage-backed securities............. 1,530,005 1,333,153 777,025
Other.................................. 231,968 171,569 101,041
----------- ----------- ----------
Total interest income.................... 13,610,269 12,275,362 9,697,071
Interest expense:
Savings deposits....................... 5,682,184 5,728,828 5,323,168
Advances from Federal Home Loan Bank... 3,377,929 2,742,672 740,721
Other borrowed money................... 51,976 69,226 67,951
----------- ----------- ----------
Total interest expense................... 9,112,089 8,540,726 6,131,840
Net interest income...................... 4,498,180 3,734,636 3,565,231
Provision for losses on loans............ 50,000 31,225 9,000
----------- ----------- ----------
Net interest income after provision for
losses on loans......................... 4,448,180 3,703,441 3,556,231
Noninterest income:
Gain on sales of mortgage loans........ 1,120,907 1,248,346 775,330
Loan servicing fees and late charges... 747,289 673,142 682,296
Gain (loss) on sale of investment and
mortgage-backed securities available
for sale, net......................... 7,284 (8,280) (34,202)
Equity in earnings (loss) of joint
ventures.............................. (2,433) (29,634) 188,022
Rental income.......................... 172,581 309,173 355,419
Other.................................. 523,451 516,356 307,734
----------- ----------- ----------
Total noninterest income................. 2,569,079 2,709,103 2,274,599
Noninterest expense:
Salaries and employee benefits......... 2,917,772 2,905,168 2,845,846
Occupancy.............................. 481,620 486,751 457,556
Data processing........................ 192,333 191,739 172,922
Advertising............................ 90,363 76,071 47,027
Federal insurance premiums............. 216,451 277,417 298,494
Savings Association Insurance Fund
special assessment.................... 788,770 -- --
Other.................................. 1,521,719 1,404,130 1,499,063
----------- ----------- ----------
Total noninterest expense................ 6,209,028 5,341,276 5,320,908
Income before income tax expense......... 808,231 1,071,238 509,922
Income tax expense....................... 303,459 417,782 188,247
----------- ----------- ----------
Net income............................... $ 504,772 $ 653,456 $ 321,675
=========== =========== ==========
Earnings per share....................... $ 0.61 $ 0.80 $ 0.39
=========== =========== ==========
</TABLE>

See Notes to Consolidated Financial Statements.

36
<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 Association's financial
condition, changes in financial condition and results of operations. The
information contained in this section should be read in conjunction with the
Consolidated Financial Statements, the accompanying Notes to Consolidated
Financial Statements and the other sections contained in this Prospectus.

The Association attracts deposits from the general public and uses these
deposits, together with other funding sources, to originate or invest in
residential and other mortgage loans and, to a lesser extent, nonmortgage
loans, investments, and other assets. Because the Association is primarily
dependent on net interest margin (interest income from loans and investments
minus interest expense on deposit accounts and borrowed money) for earnings,
the focus of the Association's planning has been to devise and employ
strategies that provide a stable, positive spread between the yield on
interest-earning assets and the cost of interest-bearing liabilities in order
to maximize the dollar amount of net interest income.

A substantial portion of the Association's operations and income is derived
from the operations of EMC. EMC acts as a conduit for the origination,
purchase and sale of residential mortgage loans for the benefit of the
Association. It funds its mortgage-banking activities through lines of credit
from the Association and an unrelated commercial bank. EMC provides several
benefits to the Association, including, among other things, originating a
variety of mortgage loan products for the Association's portfolio and
generating noninterest income for the Association through its activities in
the secondary mortgage market. EMC mortgage-banking activities produce
primarily two types of income-gain on sale of mortgage loans and loan
servicing fees and late charges. Gain on sale of mortgage loans and loan
servicing fees and late charges accounted for 47.1% and 40.8%, respectively of
EMC's total income for the year ended March 31, 1997. EMC contributed
approximately 17% to the Association's total interest and other income for the
year ended March 31, 1997.

The expenses of EMC increased $146,000, or 6.7%, from $2.2 million in 1996
to $2.3 million in 1997. The largest portion of EMC's operating expenses
relate to salaries and commission paid to employees. Salaries and commissions
increased $39,000, or 3.2%, from $1,223,000 in 1996 to $1,262,000 in 1997.
This increase resulted from normal salary increases to individuals involved in
the mortgage operations. Another component of EMC's expense is the
amortization of mortgage servicing rights, which increased from $50,000 in
1996 to $185,000 in 1997, as a result of the adoption of Statement of
Financial Accounting Standards No. 122, Accounting or Mortgage Servicing
Rights ("SFAS 122") on April 1, 1995. SFAS 122 provides for the capitalization
for originated mortgage servicing rights. Originated mortgage servicing rights
capitalized during 1996 and 1997 totaled $317,000 and $483,000, respectively.
The remaining portion of EMC's operating expenses relate to items necessary
for the day to day conduct of the mortgage loan production and sales. As a
result of the decrease in total income and increase in total expenses, the net
income of EMC decreased $149,000, or 84.2%, from $177,000 in 1996 to $28,000
in 1997.

37
<PAGE>

AVERAGE BALANCE SHEET

The following table sets forth, for the periods indicated, information
regarding average balances of interest-earning assets and interest-bearing
liabilities as well as the total dollar amounts of interest income from
average interest-earning assets and interest expense on average interest-
bearing liabilities, resultant yields, interest rate spread, net interest
margin, and ratio of average interest-earning assets to average interest-
bearing liabilities. Average balances for a period have been calculated using
the average of month-end balances during such period. Management of the
Association does not believe that the use of month-end balances results in
averages that are materially different from those calculated using daily
average balances.

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------
1997 1996 1995
---------------------------- ---------------------------- ----------------------------
INTEREST INTEREST INTEREST
AVERAGE AND YIELD/ AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE(1) DIVIDENDS COST BALANCE(1) DIVIDENDS COST BALANCE(1) DIVIDENDS COST
---------- --------- ------- ---------- --------- ------- ---------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans(2)(3).. $ 96,113 $ 7,265 7.56% $ 90,257 $ 6,879 7.62% $ 74,339 $5,724 7.70%
Consumer loans(2)..... 2,091 182 8.70% 1,926 168 8.72% 1,830 145 7.92%
Commercial loans(2)... 107 2 11.21% -- -- -- % -- -- -- %
-------- ------- -------- ------- -------- ------
Total loans receivable.. 98,311 7,449 7.58% 92,183 7,047 7.65% 76,169 5,869 7.71%
Investment
securities........... 63,710 3,931 6.17% 45,945 2,827 6.15% 38,187 2,064 5.41%
Interest-bearing
deposits............. 7,738 468 6.05% 13,290 897 6.75% 17,285 886 5.13%
Mortgage-backed
securities........... 21,778 1,530 7.03% 24,642 1,333 5.41% 16,105 777 4.83%
FHLB stock............ 3,300 232 7.03% 2,438 171 7.01% 1,256 101 8.04%
-------- ------- -------- ------- -------- ------
Total interest-earning
assets................. $194,837 $13,610 6.99% $178,498 $12,275 6.88% $149,002 $9,697 6.51%
------- ------- ------
Interest-bearing
liabilities:
Regular savings....... $ 21,846 $ 546 2.50% $ 22,398 $ 562 2.51% $ 25,851 $ 695 2.69%
NOW accounts.......... 11,325 169 1.49% 10,884 186 1.71% 10,835 200 1.85%
Money market
accounts............. 5,402 151 2.80% 6,298 176 2.80% 9,490 265 2.79%
Certificates of
deposit.............. 84,102 4,816 5.73% 83,463 4,805 5.76% 79,854 4,163 5.21%
-------- ------- -------- ------- -------- ------
Total savings deposits.. 122,675 5,682 4.63% 123,043 5,729 4.66% 126,030 5,323 4.22%
FHLB advances......... 61,917 3,378 5.46% 46,000 2,742 5.96% 14,417 741 5.14%
Other interest-bearing
liabilities.......... 2,409 52 2.16% 2,374 69 2.91% 2,320 68 2.93%
-------- ------- -------- ------- -------- ------
Total interest-bearing
liabilities............ $187,001 $ 9,112 4.87% $171,417 $ 8,540 4.98% $142,767 $6,132 4.30%
------- ------- ------
Net interest income..... $ 4,498 $ 3,735 $3,565
======= ======= ======
Interest rate spread.... 2.12% 1.90% 2.21%
Net interest margin(4).. 2.31% 2.09% 2.39%
Ratio of average
interest-earning assets
to average interest-
bearing liabilities.... 104.19% 104.13% 104.37%
</TABLE>
- -------
(1) Average balances are computed on a monthly basis (month-end balances).
(2) Does not include interest on loans 90 days or more past due.
(3) Includes loans held for sale.
(4) Net interest income divided by average interest-earning assets.

Note: At March 31, 1997, the weighted average yields on certain interest-
earning assets and the weighted average cost on certain interest-bearing
liabilities were as follows: loans receivable, 7.65%; mortgage-backed
securities, 6.95%; investment securities, 6.91%; total interest-earning
assets, 7.30%; savings deposits, 4.63%; borrowed money, 5.30%; total
interest-bearing liabilities, 4.86%; and interest rate spread, 2.44%.

38
<PAGE>

RATE/VOLUME ANALYSIS

The following table sets forth the effects of changing rates and volumes on
the Association's net interest income. Information is provided with respect to
(i) effects on interest income attributable to changes in rate (changes in
rate multiplied by prior volume); (ii) effects on interest income attributable
to changes in volume (changes in volume multiplied by prior rate); and (iii)
changes in rate/volume.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH FISCAL YEAR ENDED MARCH
FISCAL YEAR ENDED MARCH 31, 31,
31, 1996 COMPARED TO 1995 1995 COMPARED TO 1994
1997 COMPARED TO 1996 INCREASE (DECREASE) DUE INCREASE (DECREASE) DUE
INCREASE (DECREASE) DUE TO TO TO
---------------------------- ---------------------------- ----------------------------
RATE/ RATE/ RATE/
RATE VOLUME VOLUME NET RATE VOLUME VOLUME NET RATE VOLUME VOLUME NET
----- ------ ------ ------ ---- ------ ------ ------ ----- ------ ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans(1)...... $ (54) $ 446 $ (6) $ 386 $(59) $1,226 $ (12) $1,155 $(464) $ 757 $ (63) $ 230
Consumer loans(1)...... -- 14 -- 14 15 8 -- 23 (5) (3) -- (8)
Commercial loans(1).... -- -- 2 2 -- -- -- -- -- -- -- --
----- ------ ---- ------ ---- ------ ----- ------ ----- ----- ----- -----
Total loans receivable.. (54) 460 (4) 402 (44) 1,234 (12) 1,178 (469) 754 (63) 222
Investment securities.. 9 1,093 2 1,104 283 420 60 763 215 (58) (7) 150
Interest-bearing
deposits.............. (93) (375) 39 (429) 280 (205) (64) 11 74 (418) (25) (369)
Mortgage-backed
securities............ 399 (155) (47) 197 94 412 50 556 (74) 406 (59) 273
FHLB stock............. -- 60 1 61 (13) 95 (12) 70 -- 2 (1) 1
----- ------ ---- ------ ---- ------ ----- ------ ----- ----- ----- -----
Total net change in
income on interest-
earning assets......... 261 1,083 (9) 1,335 600 1,956 22 2,578 (254) 686 (155) 277
Interest-bearing
liabilities:
Regular savings........ (2) (14) -- (16) (47) (93) 7 (133) (63) (37) 3 (97)
NOW accounts........... (24) 8 (1) (17) (15) 1 -- (14) 12 (19) (1) (8)
Money market accounts.. -- (25) -- (25) 1 (89) (1) (89) (25) (71) 6 (90)
Certificates of
deposit............... (25) 37 (1) (11) 439 188 15 642 (195) (274) 13 (456)
----- ------ ---- ------ ---- ------ ----- ------ ----- ----- ----- -----
Total savings deposits.. (51) 6 (2) (47) 378 7 21 406 (271) (401) 21 (651)
FHLB advances.......... (230) 949 (83) 636 118 1,623 260 2,001 2 559 174 735
Other interest-bearing
liabilities........... (18) 1 -- (17) (1) 2 -- 1 8 10 2 20
----- ------ ---- ------ ---- ------ ----- ------ ----- ----- ----- -----
Total net change in
expense on interest-
bearing liabilities.... (299) 956 (85) 572 495 1,632 281 2,408 (261) 168 197 104
----- ------ ---- ------ ---- ------ ----- ------ ----- ----- ----- -----
Net change in interest
income................. $ 560 $ 127 $ 76 $ 763 $105 $ 324 $(259) $ 170 $ 7 $ 518 $(352) $ 173
===== ====== ==== ====== ==== ====== ===== ====== ===== ===== ===== =====
</TABLE>
- -------
(1) Does not include interest on loans 90 days or more past due.

39
<PAGE>

ASSET AND LIABILITY MANAGEMENT

The Association has employed various strategies intended to manage the
effect of interest rate risk on its future operations. Progress has been made
toward restructuring the composition of the loan portfolio, and liquidity has
been accumulated into investments in U.S. government and agency notes and
bonds.

Adjustable-rate mortgages, shorter-term consumer loans and commercial
business loans are among the tools currently utilized by the Association to
restructure the loan portfolio. The proper pricing of deposit accounts is also
significant. During periods of low or declining rates, the long-term deposits
extend attractive rates while in periods of high rates, the short-term deposit
accounts are competitively priced. This position allows the Association to
benefit from the ability to reprice as necessary based on market conditions.

Through EMC, the Association has focused on the origination of adjustable-
rate mortgages that reprice based on fluctuations in interest rates. Fixed-
rate mortgage loan originations are generally sold in the secondary market. In
addition, EMC's loan servicing operations have been a significant source of
noninterest income to the Association.

The principal objective of the Association's interest rate risk management
function is to evaluate the interest rate risk included in certain balance
sheet accounts, determine the level of risk appropriate given the
Association's business strategy, operating environment, capital and liquidity
requirements and performance objectives, and manage the risk consistent with
the Board of Directors' approved guidelines. Through such management, the
Association seeks to monitor the vulnerability of its operations to changes in
interest rates. The extent of the movement of interest rates is an uncertainty
that could have a negative effect on the earnings of the Association. See
"Risk Factors--Effect of Interest Rates."

The Association's interest rate sensitivity is monitored by management,
through the use of a model produced by the FHLB of Des Moines, on a quarterly
basis based upon custom data submitted by the Association and on the
Association's quarterly Thrift Financial Reports. The model generates
estimates of an immediate change in net interest income ("NII") and MVE that
would occur in the event of an immediate change in interest rates, without
giving effect to any steps that management of the Association might take to
counteract that change. MVE is the difference between incoming and outgoing
discounted cash flows from assets, liabilities and off-balance sheet
contracts. The MVE ratio, under any interest rate scenario, is defined as the
MVE in that scenario divided by the market value of assets in the same
scenario.

40
<PAGE>

The following table presents the Association's MVE at March 31, 1997, as
calculated by the FHLB of Des Moines based on information provided to the FHLB
of Des Moines by the Association. At March 31, 1997, the changes in MVE in the
various interest rate scenarios noted below were within the limits approved by
the Association's Board of Directors.

<TABLE>
<CAPTION>
AT MARCH 31, 1997
- ----------------------------------------------------------------------
MARKET VALUE OF EQUITY MVE AS % OF PV OF ASSETS
- ------------------------------------------ ---------------------------
CHANGE IN RATE $ AMOUNT $ CHANGE % CHANGE MVE RATIO BP CHANGE
- -------------- -------- -------- -------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
+ 400bp 8,956 (6,631) (42.5) 5.20 - 284
+ 300 10,444 (5,144) (33.0) 5.94 - 210
+ 200 12,182 (3,405) (21.8) 6.67 - 137
+ 100 13,967 (1,620) (10.4) 7.36 - 68
0 15,587 -- -- 8.04 --
- 100 16,931 1,344 8.6 8.39 + 35
- 200 17,864 2,277 14.6 8.73 + 69
- 300 18,791 3,203 20.6 8.93 + 89
- 400 19,717 4,130 26.5 9.13 + 109
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1997
-----------------
<S> <C>
RISK MEASURES: 200 BP RATE SHOCK:
Pre-Shock MVE Ratio: MVE as % of PV of Assets......... 8.04
Exposure Measure: Post-Shock MVE Ratio................ 6.67
Sensitivity Measure: Change in MVE Ratio.............. - 137bp
CALCULATION OF CAPITAL COMPONENT:
Change in MVE as % of PV of Assets.................... - 176bp
</TABLE>

An asset or liability is interest rate sensitive within a specific time
period if it will mature or reprice within that time period. If the
Association's assets mature or reprice more quickly than its liabilities, the
Association's MVE would increase during periods of rising interest rates but
decrease during periods of falling interest rates. If the Association's assets
mature or reprice more slowly than its liabilities, the Association's MVE
would decrease during periods of rising interest rates but increase during
periods of falling interest rates.

Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in MVE requires the making
of certain assumptions that may or may not reflect the manner in which actual
yields and costs respond to changes in market interest rates. In this regard,
the MVE model presented assumes that the composition of the Association's
interest sensitive assets and liabilities existing at the beginning of a
period remains constant over the period being measured and also assumes that a
particular change in interest rates is reflected uniformly across the yield
curve regardless of the duration to maturity or repricing of specific assets
and liabilities. Accordingly, although the MVE measurements provide an
indication of the Association's interest rate risk exposure at a particular
point in time, such measurements are not intended to and do not provide a
precise forecast of the effect of changes in market interest rates on the
Association's net interest income and will differ from actual results.

LIQUIDITY AND CAPITAL RESOURCES

The Association's primary sources of funds are deposits, borrowings,
amortization and prepayment of loan principal (including mortgage-backed
securities) and, to a lesser extent, maturities of investment securities,
short-term investments, and operations. While scheduled loan repayments and
maturing investments are relatively predictable, deposit flows and early loan
repayments are more influenced by interest rates, general economic conditions,
and competition. The Association attempts to price its deposits to meet its
asset/liability objectives discussed above, consistent with local market
conditions. Excess balances are temporarily invested in overnight funds. In
addition, the Association is eligible to borrow funds from the FHLB of Des
Moines.

41
<PAGE>

Under OTS regulations, a member thrift institution is required to maintain
an average daily balance of liquid assets (cash, certain time deposits and
savings accounts, bankers' acceptances, 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 of its net withdrawable
accounts plus short-term borrowings. This liquidity requirement, which is
currently 5.0%, may be changed from time to time by the OTS to any amount
within the range of 4.0% to 10.0%, depending upon economic conditions and the
savings flow of member associations. Existing OTS regulations also require
each member 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.
The short-term and total liquidity ratios of the Association at March 31, 1997
were 3.1% and 16.9%, respectively. For information regarding proposed changes
to the OTS liquidity requirements, see "Regulation and Supervision--Federal
Savings Association Regulation--Liquidity."

The primary investing activity of the Association is lending. During the
fiscal year ended March 31, 1997, the Association originated $73.3 million of
loans, of which $71.0 million were residential mortgage loans, purchased $5.9
million of loans, and sold $61.5 million of loans in the secondary market. In
addition, $16.4 million of loans were converted into mortgage-backed
securities and sold.

Liquidity management is both a short- and long-term responsibility of the
Association's management. The Association adjusts its investments in liquid
assets based upon management's assessment of (i) expected loan demand, (ii)
projected loan sales, (iii) expected deposit flows, (iv) yields available on
interest-bearing deposits, and (v) liquidity of its asset/liability management
program. Excess liquidity is invested generally in interest-bearing overnight
deposits and other short-term government and agency obligations. If the
Association requires funds beyond its ability to generate them internally, it
has additional borrowing capacity with the FHLB of Des Moines and collateral
eligible for repurchase agreements.

The Association anticipates that it will have sufficient funds available to
meet current loan commitments. At March 31, 1997, the Association had
outstanding commitments to originate loans of $953,000.

Certificates of deposit scheduled to mature in one year or less at March 31,
1997 totaled $36.3 million. Based upon management's experience and familiarity
with the customers involved and the Association's pricing policy relative to
that of its competitors, management believes the Association will retain a
significant portion of these deposits.

EFFECT OF INFLATION AND CHANGING PRICES

The Consolidated Financial Statements and Notes thereto included in this
Prospectus 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 changes in the relative purchasing power of
money over time due to inflation. The impact of inflation is reflected in the
increased cost of the Association's operations. Unlike industrial companies,
nearly all of the assets and liabilities of the Association are monetary in
nature. As a result, interest rates have a greater impact on the Association's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the
prices of goods and services.

FINANCIAL CONDITION

The total assets of the Association increased approximately $5.0 million, or
2.6%, to $200.8 million at March 31, 1997 from $195.8 million at March 31,
1996. This increase in asset size primarily relates to the purchase of
investment securities and the origination of mortgage loans, which were funded
through cash reserves, sales of mortgage-backed securities, and advances from
the FHLB of Des Moines.

Investment securities available for sale increased by approximately $31.2
million, or 80.3%, to $70.1 million at March 31, 1997 from $38.9 million at
March 31, 1996. This increase resulted from the application of proceeds

42
<PAGE>

generated by the sale of mortgage-backed securities, which were sold to fund
the investment in higher-yielding agency securities, and from advances from
the FHLB of Des Moines.

Loans held for investment totaled $91.9 million at March 31, 1997, an
increase of approximately $8.0 million, or 9.5%, from the March 31, 1996
balance of $83.9 million. This increase is primarily the result of continued
portfolio mortgage lending on one-to four-family residences, offset by
principal repayments. In addition, in early 1997, the Association began
originating a limited number of commercial business loans based on community
needs. At March 31, 1997 the Association had approximately $1.3 million of
such loans which are primarily secured by automobile floor planning
collateral.

Investment in real estate decreased $1.0 million, or 54.2%, from $1.9
million at March 31, 1996 to $870,000 at March 31, 1997 as a result of the
sale of a multifamily investment property by ECC at a $106,000 gain.

Savings deposits totaled $123.0 million at March 31, 1997, a decrease of
approximately $1.5 million, or 1.2%, from the March 31, 1996 balance of $124.5
million. Interest credited during March 31, 1997 was approximately $4.3
million.

FHLB advances increased $7.0 million, or 12.5%, to $63.0 million at March
31, 1997 from $56.0 million at March 31, 1996. Proceeds from these advances
were used to fund the increase in investment securities available for sale and
to fund mortgage loans.

Other borrowed money decreased by $57,000, or 4.3%, to $1.2 million at March
31, 1997 from $1.3 million at March 31, 1996. The note payable to bank relates
to EMC, the proceeds of which were invested solely in residential mortgage
loans. The ESOP debt is included on the balance sheet of the Association as
the debt is guaranteed by the Association.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED MARCH 31, 1997 COMPARED TO MARCH 31, 1996

Net Income. Net income decreased $148,000, or 22.8%, from $653,000 in 1996
to $505,000 in 1997. The decrease was primarily a result of legislation passed
by Congress to recapitalize the Savings Association Insurance Fund ("SAIF"),
in which the Association was assessed a one-time-deposit-insurance premium
(like all other SAIF-insured institutions) of $789,000 on November 27, 1996,
offset by an increase of $764,000, or 20.4%, in net interest income and a
reduction of $114,000, or 27.4%, in income tax expense. Without giving effect
to the special assessment, net income for the fiscal year ended March 31, 1997
would have been $986,000, an increase of $333,000, or 50.9%, when compared to
the fiscal year ended March 31, 1996.

Interest Income. Interest income increased $1.3 million, or 10.9%, from
$12.3 million in 1996 to $13.6 million in 1997. Interest on loans receivable
increased by $402,000, or 5.7%, to $7.4 million in 1997 as compared to $7.0
million in 1996. This increase was primarily due to an increase in the average
balance of loans outstanding from $92.2 million in 1996 to $98.3 million in
1997, offset by a decrease in the yield on loans from 7.65% in 1996 to 7.58%
in 1997. The higher average balance of loans outstanding in 1997 reflects an
increase in mortgage loan portfolio lending. Interest on investment securities
increased $1.1 million, or 38.9%, from $2.8 million in 1996 to $3.9 million in
1997 due to an increase in the average balance of investment securities from
$45.9 million in 1996 to $63.7 million in 1997. During the same period, the
yield on investment securities increased from 6.15% in 1996 to 6.17% in 1997.
Interest income on mortgage-backed securities increased $197,000, or 14.8%,
from $1.3 million in 1996 to $1.5 million in 1997 due to an increase in the
yield on

43
<PAGE>

mortgage-backed securities from 5.41% in 1996 to 7.03% in 1997, offset by a
decrease in the average balances from $24.6 million in 1996 to $21.8 million
in 1997.

Interest Expense. Interest expense increased from $8.5 million in 1996 to
$9.1 million in 1997. The increase of $572,000, or 6.7%, resulted primarily
from increased average FHLB advances. The weighted average cost of deposits
decreased from 4.66% in 1996 to 4.63% in 1997, while average deposit balances
decreased $368,000, or 0.3%, from $123.0 million in 1996 to $122.7 million in
1997. Average advances from the FHLB increased $15.9 million, or 34.6%, to
$61.9 million in 1997 compared to $46.0 million in 1996. The weighted average
cost of advances decreased 50 basis points from 5.96% in 1996 to 5.46% in 1997
due to effective borrowing programs offered by the FHLB.

Provision for Losses on Loans. Provision for losses on loans increased
$19,000, or 60.1%, from $31,000 in 1996 to $50,000 in 1997. The provision for
losses on loans is based on management's evaluation of the credit risk
inherent in the loan portfolio and the amount required to be maintained in the
allowance for loan losses. The provision in 1997 was made in response to the
Association's entry into the commercial business lending area. The
Association's allowance for loan losses totaled $283,000 at March 31, 1997 and
$233,000 at March 31, 1996. Management believes the allowance for loan losses
is adequate.

Noninterest Income. Noninterest income decreased $139,000, or 5.2%, from
$2.7 million in 1996 to $2.6 million in 1997. The decrease is due primarily to
gain on sales of mortgage loans that decreased from $1.2 million in 1996 to
$1.1 million in 1997, and a reduction in rental income of $137,000 due to the
sale of a 26 unit residential rental property in June 1996, offset by
increased loan servicing fees and late charges which increased $74,000, or
11.0%, from $673,000 in 1996 to $747,000 in 1997. The decrease of $127,000, or
10.2%, on gain on sales of mortgage loans was due to unfavorable market
conditions during the first and second quarters of 1996. The Association,
through EMC, sold $77.8 million of mortgage loans in 1997 as compared to $77.9
million in 1996. In addition to the minor decrease in sales volume of
$100,000, gain on sale of mortgage loans decreased compared to 1996 due to the
condition of the secondary mortgage market. Loan servicing fees and late
charges increased due primarily to an increase in the servicing portfolio of
EMC. Loans serviced by EMC increased $29.0 million, or 9.9%, from $294.0
million at March 31, 1996 to $323.0 million at March 31, 1997.

Noninterest Expense. Noninterest expense increased $868,000, or 16.3%, from
$5.3 million in 1996 to $6.2 million in 1997, due primarily to legislation
passed by Congress to recapitalize the SAIF in which the Association was
assessed a one-time insurance premium of $789,000, as well as an increase of
$136,000, or 283.3%, in amortization of originated mortgage servicing rights
("OMSR") from $50,000 in 1996 to $185,000 in 1997. As a result of the one-time
assessment, the Association's premium for insurance of accounts decreased from
23 basis points per $100 to approximately 6.5 basis points. The increase in
amortization of OMSR is the result of increased mortgage loan refinancing
activity and increased average balances subject to OMSR.

Income Taxes. Income tax expense decreased from $418,000 in 1996 to $303,000
in 1997. The decrease of $115,000, or 27.4%, was the result of the decrease in
income before income tax expense of $263,000. The effective tax rate was
approximately 37.5% and 39.0% in 1997 and 1996, respectively.

FISCAL YEAR ENDED MARCH 31, 1996 COMPARED TO MARCH 31, 1995

Net Income. The Association reported net income of $653,000 in 1996 as
compared to $322,000 in 1995. The increase in net income of $331,000, or
103.1%, is mainly attributed to increased gain on sales of mortgage loans of
$473,000 and increased net interest income of $170,000 offset by increased
income tax expense of $230,000. During the period, the Association experienced
improved loan demand and fluctuating market interest rates that resulted in
increased mortgage lending activity. For 1996, the Association sold $77.9
million of mortgage loans as compared to $26.7 million in 1995. The increased
volume of $51.2 million resulted in a higher level of gain on sales of
mortgage loans.

Interest Income. Interest income increased from $9.7 million in 1995 to
$12.3 million in 1996. The increase of $2.6 million, or 26.6%, resulted
primarily from an increase in the interest on loans receivable, an

44
<PAGE>

increase in interest on investment securities, and an increase in interest on
mortgage-backed securities. Interest on loans receivable increased by $1.2
million, or 20.1%, to $7.0 million in 1996. This increase resulted from an
increase in the average balance of loans outstanding from $76.2 million in
1995 to $92.2 million in 1996, offset by a decrease in the average yield on
loans from 7.71% in 1995 to 7.65% in 1996. The higher balance of loans
outstanding during 1996 reflects an increase in adjustable rate portfolio
mortgage lending. While the Association continued to originate a variety of
mortgage loans, fixed-rate originations were generally sold in the secondary
market and adjustable rate loans were retained for the Association's
portfolio. Interest on investment securities and interest-bearing deposits
increased $774,000, or 26.2%, to $3.7 million in 1996 from $3.0 million in
1995 as a result of the reinvestment of proceeds from sales and maturities
into higher yielding U.S. government and agency obligations. The increase is
mainly attributed to an increase in the average balance of investment
securities from $38.2 million in 1995 to $45.9 million in 1996 and an increase
in the average rate from 5.41% in 1995 to 6.15% in 1996. Interest on mortgage-
backed securities increased $556,000, or 71.6%, to $1.3 million in 1996 from
$777,000 in 1995. The increase is mainly attributed to an increase in the
average balance of mortgage-backed securities of $8.5 million from $16.1
million in 1995 to $24.6 million in 1996, and an increase in the average rate
from 4.83% for 1995 to 5.41% for 1996.

Interest Expense. Interest expense increased from $6.1 million in 1995 to
$8.5 million in 1996. The increase of $2.4 million, or 39.3%, resulted
primarily from the increased cost of savings deposits and FHLB advances and
increased FHLB advances partially offset by decreased average savings
deposits. The weighted average cost of deposits increased 44 basis points from
4.22% in 1995 to 4.66% in 1996, due to the effects of increased market
interest rates. Average deposit balances decreased $3.0 million, or 2.4%, from
$126.0 million at March 31, 1995 to $123.0 million at March 31, 1996.

FHLB advances average balances increased $31.6 million, or 219.1%, from
$14.4 million in 1995 to $46.0 million in 1996. FHLB advances were acquired to
fund increases in loans held for sale, investment securities and mortgage-
backed securities. In addition, the cost of FHLB advances increased 82 basis
points from 5.14% in 1995 to 5.96% in 1996 due to a general increase in
interest rates.

Provision for Losses on Loans. The Association has historically experienced
insignificant loan losses. The provision for losses on loans is determined by
management as the amount to be added to the allowance for loan losses, after
net credit losses and other adjustments have been deducted, to bring the
allowance to a level which is considered adequate to absorb losses inherent in
the loan portfolio. The provision for losses on loans increased $22,000, or
246.9%, from $9,000 in 1995 to $31,000 in 1996.

Noninterest Income. Gain on sales of mortgage loans increased from $775,000
in 1995 to $1.2 million in 1996. The increase of $473,000, or 61.0%, was due
primarily to increased loan demand and generally favorable interest rates. The
Association capitalized $297,000 of mortgage servicing rights as a result of
adopting Statement of Financial Accounting Standards No. 122. In 1996, the
Association sold $77.9 million of mortgage loans as compared to $26.7 million
in 1995. The increased sales volume of $51.2 million resulted in the increased
gain on sales of mortgage loans.

Equity in earnings (loss) of joint ventures decreased from income of
$188,000 in 1995 to a loss of $30,000 in 1996. The decrease of $218,000 was
primarily the result of the sale of Manchester 97 Joint Venture in June 1994
and the operations of WC Joint Venture. Prior to June 1994, the Association,
through ECC, owned a 50% interest in both Manchester 97 Joint Venture and WC
Joint Venture, which own and operate commercial property in St. Louis County.
During June 1994, ECC sold its ownership in Manchester 97 Joint Venture at a
profit of $215,000. Joint ventures are accounted for using the equity method.

Other noninterest income increased from $308,000 in 1995 to $516,000 in
1996. The increase of $208,000, or 67.8%, resulted primarily from increased
income associated with the operations of ECC and ECC's recognition of gain on
sale of residential investment property. During 1996, ECC's commissions on
insurance and specialty products increased $61,000 while ECC's net gain on
sale of the investment property before income taxes was $116,000. There was no
comparable item in 1995.

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<PAGE>

Noninterest Expense. Salaries and employee benefits expense increased from
$2.8 million in 1995 to $2.9 million in 1996. The increase of $59,000, or
2.1%, was primarily the result of increased loan commissions, and increased
bonus and profit sharing contributions, offset by a decrease in the number of
mortgage personnel. Commissioned loan officers are paid on the basis of loans
closed. The Association closed and sold $77.9 million of mortgage loans in
1996 as compared to $26.7 million in 1995. The increased volume of $51.2
million resulted in increased commission expense of $93,000, bonus and profit-
sharing expense was increased by $21,000 while compensation expenses and
related fringes decreased approximately $61,000.

Other noninterest expense decreased from $1.5 million in 1995 to $1.4
million in 1996. The decrease of $95,000, or 6.3%, resulted from decreased
expense related to the operations of the Association. During 1996, the
Association experienced reductions in legal expenses of $37,000, office
expenses of $39,000, and supervisory expenses of $17,000.

Income Taxes. The provision for federal income taxes increased from $188,000
in 1995 to $418,000 in 1996. The increase of $230,000, or 121.9% was the
result of increased pretax income of $561,000 for 1996 as compared to 1995.
The effective tax rate was 39.0% and 36.9% for 1996 and 1995, respectively.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

Accounting for Stock-Based Compensation. In October 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). SFAS
123 establishes financial accounting and reporting standards for stock-based
employee compensations plans and also applies to transactions in which an
entity issues its equity instruments to acquire goods or services from
nonemployees. SFAS 123 defines a fair value-based method of accounting for an
employee stock option or similar equity instruments and encourages all
entities to adopt that method of accounting. SFAS 123 also allows an entity to
continue to measure compensation cost for those plans using the intrinsic
value based method of accounting prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"). SFAS 123
was effective for transactions entered into in fiscal years beginning after
December 15, 1995. Pro forma disclosures required for entities that elect to
continue to measure compensation cost using APB 25 must include the effect of
all awards granted in fiscal years beginning after December 15, 1994. Equality
continues to measure compensation cost using APB 25. No stock options were
granted during the year ended March 31, 1997. SFAS 123 is not expected to have
a material impact on the Association's consolidated financial statements.

Earnings Per Share. In February 1997, the FASB issued Statement of Financial
Accounting Standards No. 128, Earnings per Share ("SFAS 128"). SFAS 128
establishes standards for computing and presenting earnings per share and
applies to entities with publicly held common stock or potential common stock.
SFAS 128 simplifies the current standards for computing earnings per share and
makes them comparable to international earnings per share standards. Under
SFAS 128 the presentation of primary earnings per share is replaced with a
presentation of basic earnings per share. SFAS 128 also requires dual
presentation of basic and diluted earnings per share on the face of the income
statement for all entities with complex capital structures and requires the
reconciliation of the numerator and denominator of the basic earnings per
share computation to the numerator and denominator of the diluted earnings per
share computation. SFAS 128 is effective for financial statements issued for
periods ending after December 31, 1997, including interim periods; early
application is not permitted. SFAS 128 will require the restatement of all
prior-period earnings per share data presented. The adoption of SFAS 128 is
not expected to have a material impact on the Association's consolidated
financial statements.

Disclosure of Information about Capital Structure. Also in February 1997,
the FASB issued Statement of Financial Accounting Standards No. 129,
Disclosure of Information about Capital Structure ("SFAS 129"). SFAS 129
applies to all entities and establishes standards for disclosing information
about an entity's capital structure. SFAS 129 is effective for financial
statements for periods ending after December 15, 1997. The adoption of SFAS
129 is not expected to have a material impact on the Association's
consolidated financial statements.

46
<PAGE>

Comprehensive Income. In June 1997, the FASB issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130").
SFAS 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial
statements. It does not, however, specify when to recognize or how to measure
items that make up comprehensive income. SFAS 130 was issued to address
concerns over the practice of reporting elements of comprehensive income
directly in equity.

SFAS 130 requires all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed in equal prominence with the other
financial statements. It does not require a specific format for that financial
statement but requires that an enterprise display an amount representing total
comprehensive income for the period in that financial statement. Enterprises
are required to classify items of "other comprehensive income" by their nature
in the financial statement and display the balance of other comprehensive
income separately in the equity section of a statement of financial position.
It does not require per share amounts of comprehensive income to be disclosed.

SFAS 130 is applicable to all entities that provide a full set of financial
statements consisting of a statement of financial position, results of
operations and cash flows.

SFAS 130 is effective for both interim and annual periods beginning after
December 15, 1997. Earlier application is permitted. Comparative financial
statements provided for earlier periods are required to be reclassified to
reflect the provisions of this statement. Publicly traded enterprises that
issue condensed financial statements for interim periods are required to
report a total for comprehensive income in those financial statements. The
adoption of SFAS 130 is not expected to have a material impact on the
Association's consolidated financial statements.

BUSINESS OF THE ASSOCIATION

GENERAL

Originally chartered in 1884, the Association serves the City of St. Louis
and St. Louis and St. Charles Counties through three full-service branch
offices and five limited-service-loan-production offices. The Association's
business is similar in many respects to other savings associations in that it
gathers deposits from its local community and uses these funds, along with
FHLB advances, to invest primarily in residential one- to four-family mortgage
loans, U.S. government and agency securities and mortgage-backed securities
and, to a lesser extent, multifamily and commercial real estate, consumer and
commercial business loans. Notwithstanding these traditional thrift
attributes, the Association's operations are distinct in that it conducts its
residential mortgage lending business primarily through a wholly-owned
mortgage-banking subsidiary--EMC.

Operating through the Association's eight full and limited service offices,
EMC acts as a conduit for the origination, purchase and sale of residential
mortgage loans for the benefit of the Association. It funds its mortgage-
banking activities through lines of credit from the Association and an
unrelated commercial bank. EMC provides several benefits to the Association,
including, among other things, originating a variety of mortgage loan products
for the Association's portfolio and generating noninterest income for the
Association through its activities in the secondary mortgage market. The
Association's President and Chief Executive Officer, Richard C. Fellhauer,
also is President of EMC. Leonard Wolter, Vice President of EMC, is EMC's
Chief Operating Officer. Mr. Wolter, in consultation with Mr. Fellhauer and
Michael A. Deelo, the Association's Chief Financial Officer, manages the day
to day operations of EMC. These individuals have 50 years combined experience
in the mortgage-banking business. The following description includes detailed
information regarding the business of the Association and EMC.

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<PAGE>

LENDING AND MORTGAGE-BANKING ACTIVITIES

The Association concentrates its business in residential mortgage finance,
which involves the origination, purchase and sale of residential real estate
loans secured by one- to four-family, owner-occupied residential properties.
In the past, and to a much lesser degree, the Association has originated
conventional loans secured by multifamily residential dwellings and commercial
real estate projects. The Association also originates short-term consumer
loans, primarily loans secured by savings deposits, home equity and second
mortgage loans, direct automobile loans and student loans, and, since early
1997, commercial business loans.

Loan Originations. During the first several years of its existence, EMC
originated primarily government mortgage loans (FHA and VA loans) on behalf of
the Association, while the Association originated conventional loans. But in
1989, the Association shifted its mortgage loan origination function to EMC;
however, the Association will still on occasion originate a mortgage loan
directly and it continues to originate a limited amount of consumer and other
non-mortgage loans.

Today, EMC, using its 40 employees (including 8 commissioned loan
originators), underwrites residential mortgage loans averaging in size between
$10,000 and $500,000, which are secured by properties located primarily in the
St. Louis metropolitan area. In addition, through the Association's Affordable
Housing Program, EMC provides mortgage financing to low- and moderate-income
families, which provides the Association with an effective way to attract
customers in its local market area. During 1997, EMC originated mortgage loans
totaling $66.2 million, all of which were one- to four-family loans.

Loan Sales. Central to EMC's loan origination activity is the sale of fixed-
rate mortgage loans to the secondary mortgage market. All loans originated by
EMC satisfy the guidelines of the Federal Housing Administration ("FHA"), the
Veterans Administration ("VA"), the Federal National Mortgage Association
("FNMA"), the Government National Mortgage Association ("GNMA"), the Federal
Home Loan Mortgage Corporation ("FHLMC") or various private investors so that
the loans can be sold in the secondary mortgage market. The Association has
been approved under the FHA Direct Endorsement Program and, consequently, the
Association's FHA approved direct endorsement underwriters are authorized to
approve or reject FHA insured loans up to maximum amounts established by the
FHA. The Association also has been approved as a VA "automatic approved
lender," which enables designated qualified Association personnel to approve
or reject loans on behalf of the Association.

In most cases, EMC sells in the secondary mortgage market fixed-rate loans
it originates, while its ARM originations are sold to the Association and
retained by the Association in its portfolio. The current strategy of selling
fixed-rate loans and retaining ARMs assists the Association in management of
the interest-rate sensitivity of its assets. Moreover, the loans retained by
the Association contribute to the Association's net interest rate margin.

EMC's loan-origination-and-sale activities create interest rate risk for the
Association in that if interest rates decline after the loan commitment date
below the interest rate on the loan, and the Association has not hedged its
interest rate risk using a forward commitment, the Association may incur a
loss when the loan is sold. The Association manages this risk by using a
computerized tracking system that allows EMC's management to closely monitor
the interest rates for all loans being processed by EMC, reviewing the future
prospects for movements in interest rates, and entering into forward
commitment contracts with FNMA, GNMA and FHLMC for the sale of fixed-rate
loans that limit the potential loss on loan sales, but which also limit the
potential gain. EMC's success in managing the interest-rate risk associated
with the origination-and-sale and purchase-and-resale of fixed-rate mortgage
loans depends primarily on the abilities of its managers. For a discussion of
the risks associated with the mortgage-banking business, see "Risk Factors--
Reliance on Mortgage-Banking Operations."

Loan Purchases and Resales. In addition to originating residential mortgage
loans for sale in the secondary market, EMC also purchases loans from other
financial institutions for packaging (or securitization) and resale in the
secondary mortgage market as either whole loans or as loan pools to FNMA,
GNMA, FHLMC

48
<PAGE>

or other investors. Other financial institutions may sell loans to EMC because
they lack the capability or expertise to package and sell their own loans in
the secondary market. EMC performs strict underwriting on each loan purchased
based on guidelines of the federal secondary mortgage market agencies and
private investors and standards otherwise applicable to loans originated by
the Association. Immediately following the purchase of a loan or loan package,
EMC simultaneously sells the mortgage or group of mortgages for future
delivery. Accordingly, the Association does not assume so-called pipeline risk
because the loans are not held in inventory. Pipeline risk is the hazard that
market interest rates will increase before the loan is sold, thereby reducing
the price at which the loan may be sold. During fiscal 1997, EMC purchased
mortgage loans totaling $5.9 million.

EMC's Contributions to the Business of the Association. EMC contributes
significantly to the Association's operations by providing an additional
income stream and by providing a conduit to offer lending services to the
local community. EMC's mortgage-banking activities produce primarily two types
of income--gain on sale of mortgage loans and loan servicing fees and late
charges. Each of these two types of income accounted for 47.1% and 40.8%,
respectively, of EMC's total income for the fiscal year ended March 31, 1997.
EMC contributed approximately 17% to the Association's total interest income
and other income for the year ended March 31, 1997.

Loan sales are intended to generate one-time gains, while loan originations
(whether the loans are sold or retained by the Association in portfolio)
produce loan origination fees that generally approximate 1% of the loan
amount. FHA and VA loans are generally sold with servicing released, for which
the Association generally receives an additional servicing fee of
approximately 1.5% of the aggregate loan amount, and, because EMC sells
conventional mortgage loans (non-FHA and VA) servicing retained, the
Association's loan servicing portfolio (and the associated earnings stream)
continues to grow.

At March 31, 1997, EMC serviced $323.0 million in residential mortgage loans
(of which $90.6 million was for the Association) and has the capacity to
expand its servicing portfolio significantly through additional loan
originations. EMC earned $888,000 in servicing fee income for fiscal year
1997. Loan servicing fees on loans serviced for institutions other than the
Association totaled $674,000, $603,000 and $622,000 for fiscal years 1997,
1996 and 1995, respectively. The proportionate contribution made by gains on
loan sales, loan origination fees and loan servicing fees to the Association's
net income varies each year depending on interest rates, which, in turn,
affects EMC's business focus from year to year.

EMC's residential mortgage loan origination volume has increased steadily
since 1994, and during this same period, ARMs have been in demand, which has
resulted in an increase in the Association's loan portfolio. As a result, EMC
has focused its efforts toward increasing its loan servicing portfolio and
increasing the associated income stream through increased servicing retention.
EMC's focus on servicing retention and fluctuating interest rates have
contributed to instability in recent years in EMC's gains on loan sales. For
information concerning the risks associated with a mortgage-banking operation,
see "Risk Factors--Reliance on Mortgage-Banking Operations." EMC has not, nor
does it anticipate, selling a bulk portion of its loan servicing portfolio to
augment earnings.

49
<PAGE>

Composition of the Loan Portfolio. The following table sets forth the
composition of the Association's loan portfolio by type of loan as of the
dates indicated:

<TABLE>
<CAPTION>
AT MARCH 31,
-------------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------- --------------- --------------- --------------- ---------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans secured by real
estate:
Residential:
One- to four-family:
Conventional(1) $69,810 72.5% $64,873 66.6% $61,455 73.5% $43,608 70.1% $47,470 62.4%
FHA/VA............. 14,233 14.8% 13,656 14.0% 13,616 16.3% 9,396 15.1% 9,367 12.3%
Loans held for
sale.............. 4,398 4.6% 13,507 13.9% 2,971 3.5% 5,109 8.2% 14,564 19.2%
Multifamily.......... 1,637 1.7% 783 .8% 828 1.0% 941 1.5% 1,437 1.9%
Commercial............. 2,662 2.8% 2,622 2.7% 2,975 3.5% 1,298 2.1% 1,309 1.7%
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total loans secured
by real estate...... 92,740 96.4% 95,441 98.0% 81,845 97.8% 60,352 97.0% 74,147 97.5%
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Consumer loans:
Loans secured by
savings deposits...... 366 .4% 453 .5% 448 .5% 603 1.0% 651 .8%
Property improvement... 1,596 1.7% 1,300 1.3% 1,053 1.3% 908 1.5% 972 1.3%
Automobiles............ 122 .1% 97 .1% 126 .2% 144 .2% 159 .2%
Other consumer loans... 162 .1% 96 .1% 175 .2% 181 .3% 133 .2%
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total consumer
loans............... 2,246 2.3% 1,946 2.0% 1,802 2.2% 1,836 3.0% 1,915 2.5%
Commercial business
loans.................. 1,280 1.3% -- -- % -- -- % -- -- % -- -- %
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total loans............. 96,266 100.0% 97,387 100.0% 83,647 100.0% 62,188 100.0% 76,062 100.0%
====== ====== ====== ====== ======
Less:
Deferred loan fees..... 46 59 71 98 148
Unearned discounts..... 4 12 24 15 41
Allowance for loan
losses................ 283 233 217 242 230
Valuation reserve on
loans held for sale... 5 85 100 150 --
------- ------- ------- ------- -------
Total loans receivable,
net.................... $95,928 $96,998 $83,235 $61,683 $75,643
======= ======= ======= ======= =======
</TABLE>
- --------
(1) Includes construction loans converted to permanent loans.

Residential One- to Four-Family Loans. The primary lending activity of the
Association has been the making of mortgage loans to enable borrowers to
purchase existing homes or to construct new single-family homes. The mortgage
loans are primarily originated by EMC and are sold to the Association at par.
Management believes that this policy of focusing on single-family residential
mortgage loans has been successful in contributing to interest income while
keeping delinquencies and losses to a minimum. At March 31, 1997,
approximately $88.4 million, or 91.9% of the total loan portfolio, consisted
of loans secured by one- to four-family residential real estate. In recent
years, the Association's one- to four-family mortgage lending has been
concentrated in St. Louis City and St. Louis County.

50
<PAGE>

EMC presently originates both fixed-rate mortgage loans and ARMs secured by
one- to four-family properties with loan terms of 10 to 30 years. The ARMs
have interest rates that adjust at regular intervals ranging between one- to
five-years generally based upon changes in the One-, Three- and Five-Year
Treasury Index. At March 31, 1997, the Association's ARM portfolio totaled
approximately $55.0 million. The majority of these loans provide that the
amount of any increase or decrease in the interest rate is limited to one or
two percentage points (upward or downward) per adjustment period and are
generally limited to an increase or decrease of five to eight percentage
points over the life of the loan. Borrower demand for ARMs versus fixed-rate
mortgage loans is a function of the level of interest rates, the expectation
of changes in the level of interest rates, and the difference between the
interest rates and loan fees offered for fixed-rate mortgage loans and the
first year "teaser rates" and loan fees for ARMs. The relative amount of
fixed-rate mortgage loans and ARMs that can be originated at any time is
largely determined by the demand for each in a competitive mortgage finance
environment. During 1997, total one- to four-family mortgage loan originations
were $70.0 million of which $21.6 million, or 30.9%, were subject to periodic
interest rate adjustments and $48.4 million, or 69.1%, were long-term, fixed-
rate mortgage loans.

ARMs generally involve credit risks different from those inherent in fixed-
rate mortgage loans, primarily because if interest rates rise, the underlying
payments of the borrower rise, thereby increasing the potential for default.
The Association underwrites ARMs based on the borrower's ability to repay the
loan assuming the fully indexed accrual rate on the ARM remains constant
during the loan term. As a result, the potential for a substantial increase in
delinquencies and defaults is lessened.

The retention of ARMs as opposed to fixed-rate mortgage loans in the
Association's loan portfolio helps reduce the Association's exposure to
interest rate risk. In an environment of rapidly increasing interest rates,
however, it is possible for the interest rate increase to exceed the maximum
aggregate adjustment on ARMs, which would negatively affect the spread between
the Association's interest income and its cost of funds. In addition, because
the interest earned on ARMs, which are refinanced on a one- to three-year
cycle, varies with prevailing interest rates, such loans do not offer the
Association as predictable a cash flow as do longer-term, fixed-rate loans.

EMC originates long-term, fixed-rate loans under guidelines established by
FNMA and FHLMC, which facilitates the sale of such loans to FNMA or FHLMC in
the secondary market. Long-term, fixed-rate mortgage loans are originated with
terms of between 10 and 30 years, amortized on a monthly basis with principal
and interest due each month. At March 31, 1997, the Association had
approximately $40.4 million of long-term, fixed-rate mortgage loans in its
portfolio. A determination is made at the time of origination whether the loan
is held for sale. Currently, EMC is originating fixed-rate loans primarily for
sale in the secondary market. At March 31, 1997, the Association had
approximately $4.4 million of loans held for sale of which $4.0 million were
fixed-rate loans.

The Association's lending policies generally limit the maximum loan-to-value
ratio on fixed-rate and adjustable-rate residential mortgage loans to 80% of
the lesser of the appraised value or purchase price of the underlying
residential property unless private mortgage insurance to cover the excess
over 80% is obtained, in which case the mortgage is limited to 95% of the
lesser of appraised value or purchase price. The loan-to-value ratio,
maturity, and other provisions of the loans made by the Association are
generally reflected in the policy of making less than the maximum loan
permissible under federal regulations, in accordance with established lending
practices, market conditions, and underwriting standards maintained by the
Association. The Association requires title, fire, and extended insurance
coverage on all mortgage loans originated. All of the Association's real
estate loans contain due-on-sale clauses, and the Association obtains
appraisals on all its real estate loans from outside appraisers.

The Association also originates construction loans on residential properties
against commitments for permanent financing at the completion of construction.
Construction loans are generally for a term of six to 11 months, and bear an
interest rate tied to the Association's cost of funds which varies on the term
and amount of the loan. At March 31, 1997, the Association had no construction
loans outstanding.

51
<PAGE>

Construction lending is generally considered to involve a higher degree of
credit risk than residential mortgage lending. The Association's risk of loss
on a construction loan is dependent largely upon the accuracy of the initial
estimate of the property's value at completion of construction and the
estimated cost (including interest) of construction. If the estimate of
construction cost proves to be inaccurate, the Association may be required to
advance funds beyond the amount originally committed to permit completion of
the dwelling. If the estimate of value proves to be inaccurate, the
Association may be confronted with, at or before the maturity of the loan,
loan security with a value which is insufficient to assure full repayment. In
addition, construction lending entails the risk that the project may not be
completed due to cost overruns or changes in market conditions.

Multifamily and Commercial Real Estate Loans. In addition to originating
one- to four-family residential real estate loans, the Association originates
loans secured by multifamily dwelling units (more than four units). At March
31, 1997, the Association had $1.6 million, or 1.7% of the total loan
portfolio, secured by multifamily dwelling units, located primarily in the
Association's primary market area. At March 31, 1997, the Association's
largest multifamily residential loan was a $941,000 loan secured by a 26-unit
apartment complex. Multifamily real estate loans are generally originated at
75% of the appraised value of the property or selling price, whichever is
less, and are generally originated for 10- to 30-year terms with the principal
amortized over 30 years. Loans secured by multifamily residential real estate
are generally larger and involve a greater degree of risk than one- to four-
family residential mortgage loans, similar to the risks associated with
commercial real estate lending. At March 31, 1997, the Association had no
multifamily loans accounted for on a nonaccrual basis.

The Association's permanent commercial real estate loans are secured by
improved properties such as office buildings, restaurants, and various retail
operations located in the Association's primary market area. At March 31,
1997, commercial real estate loans totaled approximately $2.7 million, or 2.8%
of the Association's total loan portfolio. The Association originates
permanent loans on commercial real estate at up to 80% of the appraised value.

Currently, it is the Association's policy to originate commercial real
estate loans only to selected borrowers known to the Association and on
properties in its primary market area. These loans generally have prepayment
schedules based upon a 10- to 25-year constant payment amortization, but may
have a 10-year final maturity (balloon payment) and are currently originated
with an interest rate that floats over the prime rate. At March 31, 1997, the
Association had no commercial real estate loans accounted for on a nonaccrual
basis.

The largest commercial real estate loan in the portfolio at March 31, 1997
totaled $1.5 million, which was secured by a real estate mortgage on a
shopping center located in the St. Louis metropolitan area. This loan is a
seasoned loan having been originated in 1994. The Association's legal lending
limit is approximately $1.9 million. Of primary concern in commercial real
estate lending is the borrower's creditworthiness, and the feasibility and
cash flow potential of the project. Loans secured by income properties are
generally larger and involve greater risks than residential mortgage loans
because payments on loans secured by income properties are often dependent on
the successful operation or management of the properties. As a result,
repayment of such loans may be subject to a greater extent than residential
real estate loans to adverse conditions in the real estate market or the
economy. Although many thrift institutions have had material adverse loss
experience in commercial real estate lending, the Association has sustained
few losses, and those losses were not significant relative to the size of the
entire commercial real estate loan portfolio or the mortgage loan portfolio at
the time. The Association does not presently intend to emphasize or expand
this type of lending in the future.

Consumer Loans. The Association originates a wide variety of consumer loans,
which are made primarily on a secured basis to existing customers. Such loans
include loans secured by savings deposits, home equity and second mortgage
loans, direct automobile loans, and student loans. These loans are made at
both fixed- and variable-rates of interest, which adjust annually, and vary in
terms depending on the type of loan. In addition,

52
<PAGE>

the Association offers unsecured consumer loans. Consumer loans totaled
approximately $2.2 million at March 31, 1997, or 2.3% of the Association's
total loan portfolio.

The Association applies strict underwriting standards for consumer loans.
These procedures include an assessment of the applicant's payment history on
other debts and ability to meet existing obligations and payments on the
proposed loans. Although the applicant's creditworthiness is a primary
consideration, the underwriting process also includes a comparison of the
value of the security, if any, to the proposed loan amount. The Association
underwrites and originates all of its consumer loans internally, which
management believes limits exposure to credit risks relating to loans
underwritten or purchased from brokers or other outside sources. The
Association views consumer lending as a component of its business operations
because consumer loans generally have shorter terms and higher yields, thus
reducing exposure to changes in interest rates. In addition, the Association
believes that offering consumer loans helps to expand and create stronger ties
to its customer base. The Association does not presently intend to emphasize
or expand this type of lending in the future.

The Association's consumer loan portfolio had no loans 90 days or more
delinquent at March 31, 1997. Consumer loans may entail greater risk than do
residential mortgage loans, particularly in the case of consumer loans which
are unsecured or secured by assets that depreciate rapidly, such as
automobiles. In the latter case, repossessed collateral for a defaulted
consumer loan may not provide an adequate source of repayment for the
outstanding loan and the remaining deficiency often does not warrant further
substantial collection efforts against the borrower. 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.
Such loans may also give rise to claims and defenses by the borrower against
the Association as the holder of the loan, and a borrower may be able to
assert claims and defenses that it has against the seller of the underlying
collateral.

Commercial Business Loans. In early 1997, in connection with its hiring of a
new commercial lending officer, the Association began originating a limited
number of commercial business loans based on community needs. Management of
the Association expects this type of lending to gradually increase over the
next several years. Such loans include, but are not limited to, automobile
dealer floor planning, commercial use vehicles and general working capital
loans. These loans are made at both fixed and variable rates of interest and
vary in terms depending on the type of loan and collateral.

At March 31, 1997, approximately $1.3 million, or 1.3% of the Association's
loan portfolio, consisted of commercial business loans, which are primarily
secured by automobile floor planning collateral. At March 31, 1997, the
largest commercial loan in the portfolio, which was secured by floor planned
vehicles, had a principal balance of approximately $256,000. Unlike
residential mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment based on the borrower's salary and other
income and which are secured by real property the value of which tends to be
more easily ascertainable, commercial business loans typically are made on the
basis of the borrower's ability to make repayment from the cash flow of the
borrower's business. As a result, the availability of funds for the repayment
of commercial business loans may be substantially dependent on the success of
the business itself (which, in turn, is likely to be dependent, in part, upon
the general economic environment). The Association's commercial business loans
are usually secured by business assets, which may depreciate over time, may be
difficult to appraise and may fluctuate in value based on the success of the
business.

The Association's underwriting standards for commercial business loans
include credit file documentation and analysis of the borrower's character,
capacity to repay the loan, the adequacy of the borrower's capital and
collateral as well as an evaluation of conditions affecting the borrower.
Analysis of the borrower's past, present and future cash flows is also an
important aspect of the Association's current credit analysis. Nonetheless,
such loans, are believed to carry higher credit risk than residential mortgage
loans. The Association generally requires personal guarantees from corporate
borrowers.

53
<PAGE>

Loan Maturity and Repricing. The following table sets forth certain
information at March 31, 1997 regarding the dollar amount of loans maturing in
the Association's portfolio based on their contractual terms to maturity, but
does not include scheduled payments or potential prepayments. Overdrafts are
reported as due in one year or less. Loan balances do not include undisbursed
loan proceeds, unearned discounts, unearned income, and allowance for loan
losses.

<TABLE>
<CAPTION>
DUE DURING THE YEAR DUE AFTER 3 DUE AFTER 5 DUE AFTER 10
ENDED THROUGH 5 THROUGH 10 THROUGH 15 DUE AFTER 15
MARCH 31, YEARS AFTER YEARS AFTER YEARS AFTER YEARS AFTER
-------------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1999 2000 1997 1997 1997 1997 TOTAL
------- ----------------------- ----------- ------------ ------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans secured by real
estate:
Residential(1)(2)...... $ 4,472 $ 158 $ 250 $1,368 $ 9,615 $10,525 $63,690 $90,078
Commercial............. 1 -- 160 73 2,088 287 53 2,662
Loans secured by savings
deposits............... 324 39 3 -- -- -- -- 366
Property improvement.... 8 67 133 636 539 213 -- 1,596
Automobiles............. 5 38 34 45 -- -- -- 122
Other consumer loans.... 98 64 -- -- -- -- -- 162
Commercial business
loans.................. 1,118 20 81 61 -- -- -- 1,280
------- ----- ----- ------ ------- ------- ------- -------
Total loans............ $ 6,026 $ 386 $ 661 $2,183 $12,242 $11,025 $63,743 $96,266
======= ===== ===== ====== ======= ======= ======= =======
</TABLE>
- --------
(1) Includes $4.4 million of loans held for sale, reported as due in one year
or less.
(2) Includes multifamily loans totaling $1.6 million.

The following table sets forth the dollar amount of all loans due after
March 31, 1998 which have fixed interest rates and adjustable interest rates.

<TABLE>
<CAPTION>
FIXED ADJUSTABLE
RATES RATES
----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Loans secured by real estate:
Residential...................................... $ 32,173 $ 53,433
Commercial....................................... 2,494 167
Loans secured by savings deposits.................. 42 --
Property improvement............................... 1,588 --
Automobiles........................................ 117 --
Other consumer loans............................... 64 --
Commercial business loans.......................... 162 --
----------- -----------
Total loans...................................... $ 36,640 $ 53,600
=========== ===========
</TABLE>

The following table sets forth total loans originated, purchased, sold, and
repaid during the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------
1997 1996 1995
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Total loans at beginning of period................. $97,387 $83,647 $62,188
Loans originated:
Residential one- to four-family.................. 70,019 75,779 56,606
Multifamily...................................... 950 -- --
Commercial business loans........................ 1,462 -- --
Consumer (property improvement and automobiles).. 774 666 475
Other loans...................................... 107 105 180
------- ------- -------
Total loans originated......................... 73,312 76,550 57,261
------- ------- -------
Loans purchased--residential one- to four-family... 5,892 17,396 934
Loans sold:
Whole loans:
Servicing retained............................. (45,669) (49,667) (12,266)
Servicing released............................. (15,617) (25,079) (13,302)
Participation loans (servicing retained)......... (185) -- --
------- ------- -------
Total loans sold............................... (61,471) (74,746) (25,568)
------- ------- -------
Loan principal repayments.......................... (2,486) (2,282) (10,067)
Loans converted to mortgage-backed securities and
sold.............................................. (16,368) (3,178) (1,101)
------- ------- -------
Total loans at end of period....................... $96,266 $97,387 $83,647
======= ======= =======
</TABLE>

54
<PAGE>

Loan Soliciting and Processing. Loan originations are derived primarily
through EMC loan officers' solicitation and personal visits to the local real
estate offices in the metropolitan St. Louis area as well as current and walk-
in customers. These loan officers have developed a clientele over the years
that send potential customers to EMC for loans. By use of the EMC loan
officers and client contacts, the Association has been able to cover a broad
market area and offer mortgage services to an extended number of potential
customers.

The Executive Loan Committee, composed of Messrs. Fellhauer, Wolter, Deelo,
and Fuchs, and one Association staff member are authorized to approve
residential mortgage loans up to $200,000. Residential mortgage loans in
excess of $200,000 require full Board of Directors approval. All residential
mortgage loans are subsequently approved by the full Board of Directors.

Loans-to-One Borrower Limitations. The Association's loans and extensions of
credit to a person outstanding at one time and not fully secured may not
exceed 15% of the unimpaired capital and surplus of the Association. This
limitation calls for a loan-to-one borrower limitation for the Association of
$1.9 million at March 31, 1997. Loans and extensions of credit fully secured
by readily marketable collateral may comprise an additional 10% of unimpaired
capital and surplus. At March 31, 1997, the largest aggregate amount of loans
by the Association to any borrower was approximately $1.5 million, which was
secured by a real estate mortgage on a shopping center located in the St.
Louis metropolitan area.

Loan Commitments. The Association issues commitments for fixed- and
adjustable-rate single-family residential mortgage 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 30 days from
approval, depending on the type of transaction. The Association had
outstanding loan commitments of approximately $953,000 at March 31, 1997.

Loan Origination and Other Fees. The Association, in most instances,
receives loan origination fees and discount "points." Loan fees and points are
a percentage of the principal amount of the mortgage loan that are charged to
the borrower for funding the loan. The Association usually charges origination
fees of 1% on all real estate loans. Current accounting standards require fees
received for originating loans to be deferred and amortized into interest
income over the contractual life of the loan. Deferred fees associated with
loans that are sold are included in the gain/loss computation at the time of
sale. The Association had approximately $46,000 of net deferred loan fees at
March 31, 1997.

The Association offsets all loan origination fees and certain related direct
loan origination costs against all fees and costs associated with loan
origination. The resulting net amount is deferred and amortized over the
contractual life of the related loans as an adjustment to the yield on such
loans, unless prepayments of a large group of similar loans are probable and
the timing and amount of prepayments can be reasonably estimated. The
Association offsets commitment fees against related direct costs and the
resulting net amount is recognized over the contractual life of the related
loans as an adjustment of yield if the commitment is exercised. If the
commitment expires unexercised, the fees collected are recognized as
noninterest income upon expiration of the commitment.

Delinquencies. The Association's collection procedures provide that when a
loan is 30 days overdue and again after an additional 15 days, the borrower
will be contacted by mail and payment requested. After a delinquency of 15
days, a late charge is assessed. If the delinquency continues, subsequent
efforts will be made to contact the delinquent borrower. In certain instances,
the Association may modify the loan or grant a limited moratorium on loan
payments to enable reorganization of the borrower's financial affairs. If the
loan continues in a delinquent status for 90 days or more, the Association
generally will initiate foreclosure proceedings.

55
<PAGE>

Nonperforming Assets and Their Classification. The following table sets
forth information with respect to the Association's nonperforming assets for
the periods indicated. During the periods shown, the Association had no
restructured loans within the meaning of Statement of Financial Accounting
Standards No. 15, Accounting by Debtors and Creditors for Troubled Debt
Restructurings:

<TABLE>
<CAPTION>
AT MARCH 31,
-------------------------
1997 1996 1995
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Loans accounted for on a nonaccrual basis(1):
Residential one- to four-family(2).............. $ 643 $ 669 $ 653
Consumer........................................ -- -- 9
------- ------- -------
Total......................................... 643 669 662
Real estate owned................................. 66 97 52
------- ------- -------
Total nonperforming assets...................... $ 709 $ 766 $ 714
======= ======= =======
Nonperforming loans to gross loans................ .67% .69% .79%
Total nonperforming assets to total assets........ .35% .39% .44%
</TABLE>
- --------
(1) All loans contractually past due 90 days or more are accounted for on a
nonaccrual basis by the Association.
(2) Includes $571,000, $326,000 and $528,000 of FHA/VA loans, the principal
and interest payments of which are either insured by the FHA or guaranteed
by the VA, at March 31, 1997, 1996 and 1995, respectively.

The Association had $643,000 in loans 90 days or more delinquent at March
31, 1997 which consisted of 25 one- to four-family residential mortgage loans,
each with an outstanding principal balance of less than $70,000.

For fiscal 1997 and 1996, gross interest income which would have been
recorded had the nonaccruing loans been current in accordance with their
original terms amounted to $55,000 and $57,000, respectively, of which $30,000
and $44,000, respectively, was included in interest income.

Asset Classification. The OTS asset classification system conforms with
commercial banking practices and puts the establishment of loan loss
allowances on a basis consistent with the requirements of GAAP. 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 must 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 "loss" is considered
uncollectible and of such little value that continuance as an asset of the
institution is not warranted. The regulations have also created a "special
mention" category, described as assets which do not currently expose an
insured institution to a sufficient degree of risk to warrant classification
but do possess credit deficiencies or potential weaknesses deserving
management's close attention. Assets classified as substandard or doubtful
require the institution to establish general allowances for loan losses. If an
asset or portion thereof is classified loss, the insured institution must
either establish specific allowances for loan losses in the amount of 100% of
the portion of the asset classified loss or charge-off such amount. A portion
of general 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.

56
<PAGE>

The Association's classified assets, general and specific loss allowances,
and charge-offs were as follows for the periods indicated:

<TABLE>
<CAPTION>
AT OR FOR THE YEAR
ENDED MARCH 31,
-----------------------
1997 1996 1995
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Substandard assets.................................. $ 138 $ 441 $ 714
General loss allowances............................. 283 233 217
Specific loss allowances............................ -- -- --
Charge-offs......................................... -- 15 34
</TABLE>

Real Estate Owned. Real estate acquired by the Association as a result of
foreclosure or by deed-in-lieu of foreclosure is classified as real estate
owned until sold. When property is acquired it is recorded at the lower of
cost (principal balance of the former mortgage loan plus the costs of
obtaining title and possession) or estimated fair value. The Association had
$66,000 in real estate owned at March 31, 1997, which consisted of three
single-family residences, all located in St. Louis, Missouri.

Allowance for Loan Losses. The Association's management evaluates the need
to establish reserves against losses on loans and other assets based on
estimated losses on specific loans and on any real estate held for investment
or acquired through foreclosure when it is determined that a decline in value
has occurred. Such evaluation includes a review of all loans for which full
collectibility may not be reasonably assured and considers, among other
matters, the estimated market value of the underlying collateral of problem
loans, prior loss experience, economic conditions, and overall portfolio
quality. These provisions for losses are charged against earnings in the year
they are established. The Association established provisions for losses on
loans for fiscal 1997, 1996, and 1995 of approximately $50,000, $31,000 and
$9,000, respectively. At March 31, 1997, the Association had an allowance for
loan losses of $283,000, which represented .29% of total loans. Based on past
experience and future expectations, management believes that loan loss
reserves are adequate.

The following table sets forth an analysis of the Association's allowance
for loan losses for the periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ----- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance at beginning of period........... $233 $217 $242 $ 230 $ 218
Provision for losses on loans.............. 50 31 9 12 14
Charge-offs--residential one- to four-
family.................................... -- (15) (34) -- (2)
---- ---- ---- ----- -----
Balance at end of period................... $283 $233 $217 $ 242 $ 230
==== ==== ==== ===== =====
Ratio of allowance to total loans
outstanding at the end of the period...... .29% .24% .26% .39% .30%
Ratio of net charge-offs to average loans
outstanding during the period............. * .02% .04% * *
Allowance for loan losses to total
nonperforming assets...................... 39.9% 30.4% 30.4% 56.02% 41.07%
Allowance for loan losses to total
nonperforming loans....................... 44.0% 34.8% 32.8% 68.36% 44.23%
</TABLE>
- --------
*Insignificant

57
<PAGE>

The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated.

<TABLE>
<CAPTION>
AT MARCH 31,
-------------------------------------------------------------------------------
1997 1996 1995
------------------------- ------------------------- -------------------------
AMOUNT OF LOAN AMOUNT OF LOAN AMOUNT OF LOAN
ALLOWANCE AMOUNTS % OF ALLOWANCE AMOUNTS % OF ALLOWANCE AMOUNTS % OF
FOR BY TOTAL FOR BY TOTAL FOR BY TOTAL
LOAN LOSS CATEGORY LOANS LOAN LOSS CATEGORY LOANS LOAN LOSS CATEGORY LOANS
--------- -------- ------ --------- -------- ------ --------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans secured by
real estate:
Residential one-
to four-
family(1)...... $174 $88,441 91.9% $174 $92,036 94.5% $202 $78,042 93.3%
Multifamily and
Commercial..... 49 4,299 4.5% 41 3,405 2.7% 11 3,803 3.5%
Property
improvement..... 20 1,596 1.7% 16 1,300 1.3% -- 1,053 1.3%
Automobiles...... 2 122 .1% 2 97 .1% 4 126 .2%
Other............ -- 528 .5% -- 549 1.4% -- 623 1.7%
Commercial
business loans.. 38 1,280 1.3% -- -- -- % -- -- -- %
---- ------- ------ ---- ------- ------ ---- ------- ------
Total............ $283 $96,266 100.0% $233 $97,387 100.0% $217 $83,647 100.0%
==== ======= ====== ==== ======= ====== ==== ======= ======
<CAPTION>
AT MARCH 31,
----------------------------------------------------
1994 1993
------------------------- -------------------------
AMOUNT OF LOAN AMOUNT OF LOAN
ALLOWANCE AMOUNTS % OF ALLOWANCE AMOUNTS % OF
FOR BY TOTAL FOR BY TOTAL
LOAN LOSS CATEGORY LOANS LOAN LOSS CATEGORY LOANS
--------- -------- ------ --------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Loans secured by
real estate:
Residential one-
to four-
family(1)...... $216 $58,113 93.4% $164 $71,401 93.9%
Multifamily and
Commercial..... 24 2,239 3.6% 52 2,746 3.6%
Property
improvement..... 1 908 1.5% 11 972 1.3%
Automobiles...... 1 144 .2% 3 159 .2%
Other............ -- 784 1.3% -- 784 1.0%
Commercial
business loans.. -- -- -- -- -- --
---- ------- ------ ---- ------- ------
Total............ $242 $62,188 100.0% $230 $76,062 100.0%
==== ======= ====== ==== ======= ======
</TABLE>
- --------
(1) Includes loans held for sale.

INVESTMENT ACTIVITIES

The Association classifies its investment securities and mortgage-backed
securities for financial accounting purposes into one of three categories:

Held to Maturity: includes investments in debt securities, which the
Association has the positive intent and ability to hold until maturity.

Trading: includes investments in debt and equity securities purchased and
held principally for the purpose of selling them in the near term.

Available for Sale: includes investments in debt and equity securities
not classified as held to maturity or trading (i.e., investments that the
Association has no present plans to sell in the near term but may be sold
in the future under different circumstances).

Investment and mortgage-backed securities classified as held to maturity are
measured at amortized cost, in which the amortization of premiums and
accretion of discounts, which are recognized as adjustments to interest
income, are recorded using methods approximating the interest method.
Unrealized holding gains and losses for trading securities (for which no
securities were so designated at March 31, 1997 or 1996) are included in

58
<PAGE>

earnings, while such gains and losses for available for sale securities are
excluded from earnings and reported as a net amount as a separate component of
stockholders' equity, net of income taxes, until realized. Unrealized holding
gains and losses for held to maturity securities are excluded from earnings
and stockholders' equity. Gains or losses for available for sale securities
are realized and included in other noninterest income upon sale, based on the
amortized cost of the individual security sold. All previous market value
adjustments included in the separate component of stockholders' equity are
reversed upon sale. Mortgage-backed securities represent a significant portion
of the debt security portfolio. Amortization of premiums and accretion of
discounts on mortgage-backed securities are analyzed in relation to the
corresponding prepayment rates, both historical and estimated, using a method
that approximates the interest method.

It has been the Association's practice to maintain assets in investment
securities at levels higher than required by federal regulations. The
Association's investment securities portfolio at March 31, 1997 consisted of
$4.8 million in U.S. government and agency obligations classified as held to
maturity, with an estimated market value of $4.7 million, and $70.1 million in
U.S. government and agency obligations classified as available for sale.

The overall objective of the Association's investment portfolio is to
provide a sufficient and consistent spread over the Association's marginal
cost of funds by investing funds that are not currently required for lending
purposes and to provide a liquidity reserve in excess of regulatory
requirements. The Association has traditionally maintained an investment
portfolio in the range of 15% to 20% of total assets. The Association's long-
term liquidity ratio at March 31, 1997 was 16.9%. The portfolio is also
intended to assist in managing the Association's asset and liability interest
rate sensitivity.

The Association's chief financial officer is responsible for daily
management of the Association's investment activities and is authorized to
perform any Board of Directors approved transaction necessary to achieve the
objectives established by the Board of Directors and that falls within
parameters established by the Board of Directors.

The following table sets forth the Association's investment securities at
the dates indicated:

<TABLE>
<CAPTION>
AT MARCH 31,
--------------------------------------------------------------------------------
1997 1996 1995
-------------------------- -------------------------- --------------------------
CARRYING % OF MARKET CARRYING % OF MARKET CARRYING % OF MARKET
VALUE PORTFOLIO VALUE VALUE PORTFOLIO VALUE VALUE PORTFOLIO VALUE
-------- --------- ------- -------- --------- ------- -------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government and
agency obligations:
Available for sale..... $70,123 93.5% $70,123 $38,898 86.9% $38,898 $31,953 77.9% $31,953
Held to maturity....... 4,849 6.5% 4,725 5,845 3.1% 5,589 9,047 22.1% 8,607
------- ------ ------- ------- ------ ------- ------- ------ -------
Total.................. $74,972 100.0% $74,848 $44,743 100.0% $44,487 $41,000 100.0% $40,560
======= ====== ======= ======= ====== ======= ======= ====== =======
</TABLE>

The following table sets forth the maturities and weighted average yields of
the Association's investment securities at March 31, 1997.

<TABLE>
<CAPTION>
AT MARCH 31, 1997
---------------------------------------------------------------------------------------------------------------
LESS THAN ONE YEAR ONE TO FIVE YEARS FIVE TO TEN YEARS OVER TEN YEARS TOTAL
-------------------- ----------------- ----------------- ----------------- -----------------------------------
AVERAGE
WEIGHTED WEIGHTED WEIGHTED WEIGHTED REMAINING WEIGHTED
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE YEARS TO CARRYING MARKET AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD MATURITY VALUE VALUE YIELD
--------- --------- -------- -------- -------- -------- -------- -------- --------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government
and agency
obligations:
Available for
sale........... $ 297 6.45% $13,804 6.98% $50,428 7.12% $5,594 7.53% 7.5 $70,123 $70,123 7.12%
Held to
maturity....... 2,249 4.49% 2,000 3.40% 600 3.50% -- -- % 1.6 4,849 4,725 3.91%
--------- -------- ------- ----- ------- ----- ------ ----- --- ------- ------- -----
Total........... $ 2,546 4.72% $15,804 6.53% $51,028 7.08% $5,594 7.53% 7.1 $74,972 $74,848 6.91%
========= ======== ======= ===== ======= ===== ====== ===== === ======= ======= =====
</TABLE>

MORTGAGE-BACKED SECURITIES

In order to supplement residential loan demand in its primary market area
and maintain geographic diversity in its loan portfolio, the Association has a
substantial portfolio of mortgage-backed securities that are classified as
available for sale and, accordingly, are carried at fair market value. All of
the Association's mortgage-backed securities are federal agency securities.

59
<PAGE>

Mortgage-backed securities represent a participation interest in a pool of
single-family or multi-family mortgages, the principal and interest payments
of which are passed from the mortgage originators through intermediaries that
pool and repackage the participation interest in the form of securities to
investors such as the Association. Such intermediaries may include quasi-
governmental agencies such as FHLMC, FNMA and GNMA that guarantee or insure
the payment of principal and interest to investors. Mortgage-backed securities
generally increase the quality of the Association's assets by virtue of the
guarantees that back them, are more liquid than individual mortgage loans and
may be used to collateralize borrowings or other obligations of the
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 are within an identified range and have similar
maturities. The underlying pool of mortgages can be composed of either fixed
rate mortgages, ARMs or balloon loans. Mortgage-backed securities generally
are referred to as mortgage participation certificates or pass-through
certificates. As a result, the interest rate risk characteristics of the
underlying pool of mortgages, i.e., fixed rate or adjustable rate, as well as
prepayment risk, are passed on to the certificate holder. The life of a
mortgage-backed pass-through security is equal to the life of the underlying
mortgages.

The actual maturity of a mortgage-backed security varies, depending on when
the mortgagors prepay or repay the underlying mortgages. Prepayments of the
underlying mortgages may shorten the life of the investment, thereby adversely
affecting its yield to maturity and the related market value of the mortgage-
backed security. The yield is based upon the interest income and the
amortization of the premium or accretion of the discount related to the
mortgage-backed security. Premiums and discounts on mortgage-backed securities
are amortized or accredited over the estimated term of the securities using a
level yield method. The prepayment assumptions used to determine the
amortization period for premiums and discounts can significantly affect the
yield of the mortgage-backed security and these assumptions are reviewed
periodically to reflect the actual prepayment. The actual prepayments of the
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 is an
important determinant in the rate of prepayments. If the coupon rate of the
underlying mortgages significantly exceeds the prevailing market interest
rates offered for mortgage loans, refinancing generally increases and
accelerates the prepayment of the underlying mortgages. Prepayment experience
is more difficult to estimate for adjustable rate mortgage-backed securities.

Certain of the Association's mortgage-backed securities yield above-market
rates of interest and are subject to substantial risk of prepayment. In a
declining interest rate environment, the Association may experience
significant prepayments of both fixed and adjustable rate mortgage-backed and
related securities. In such instances, the Association may be unable to
reinvest the cash flow from these securities into comparable yielding
investments, and would expect this reinvestment risk to continue so long as
interest rates remained relatively low.

The majority of the Association's mortgage-backed securities are fixed-rate
balloon securities due within 15 years. Depending on the Association's
asset/liability mix and future market conditions, however, the Association may
determine to purchase adjustable-rate mortgage-backed securities in the
future. The Association's holdings of mortgage-backed securities have
decreased in the past year as a result of an improved level of loan
origination in the Association's principal lending area. Because federal
agency mortgage-backed securities generally carry a yield of approximately 50
to 100 basis points below that of the corresponding type of residential loan
(due to the implied federal agency guarantee fee and the retention of a
servicing spread by the loan servicer) in the event that the proportion of the
Association's assets consisting of mortgage-backed securities increases, the
Association's asset yields could be somewhat adversely affected. Due to the
existence of the federal agency guarantee on the Association's mortgage-backed
securities and the availability of adjustable-rate mortgage-backed securities,
however, the Association's interest rate risk and credit risk would not
necessarily be increased by a future increase in mortgage-backed securities
volume. The Association will evaluate mortgage-backed securities purchases in
the future based on its asset/liability objectives, market conditions, and its
alternate investment opportunities.

60
<PAGE>

The following table sets forth certain information regarding carrying and
market values and percentage of total carrying values of the Association's
mortgage-backed securities portfolio.

<TABLE>
<CAPTION>
AT MARCH 31,
-----------------------------------------------------------------------
1997 1996 1995
----------------------- ----------------------- -----------------------
CARRYING % OF MARKET CARRYING % OF MARKET CARRYING % OF MARKET
VALUE TOTAL VALUE VALUE TOTAL VALUE VALUE TOTAL VALUE
-------- ------ ------- -------- ------ ------- -------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FNMA.................... $ 7,025 47.0% $ 7,025 $16,126 57.4% $16,126 $ 2,370 15.5% $ 2,299
FHLMC................... 4,555 30.5% 4,555 10,089 35.9% 10,089 12,890 84.5% 12,536
GNMA.................... 3,374 22.5% 3,374 1,881 6.7% 1,881 -- -- % --
------- ------ ------- ------- ------ ------- ------- ------ -------
Total mortgage-backed
securities............. $14,954 100.0% $14,954 $28,096 100.0% $28,096 $15,260 100.0% $14,835
======= ====== ======= ======= ====== ======= ======= ====== =======
</TABLE>
- -------
(1) In 1995, the Association's mortgage-backed securities were classified as
held to maturity and, accordingly, were carried at historical cost.

The following table sets forth the activity in the Association's mortgage-
backed securities during the periods indicated:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MARCH 31,
--------------------------------------
1997 1996 1995
------------ ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Mortgage-backed securities:
At beginning of period............... $ 28,096 $ 15,260 $ 16,987
Purchases.......................... 14,211 24,235 1,172
Sales.............................. (22,254) (6,898) --
Repayments......................... (4,585) (4,022) (2,651)
Premium/discount amortization,
net............................... (295) (446) (248)
SFAS 115 fair market value
adjustment........................ (219) (33) --
------------ ----------- -----------
End of period........................ $ 14,954 $ 28,096 $ 15,260
============ =========== ===========
</TABLE>

The composition and maturities of the Association's mortgage-backed
securities portfolio are indicated in the following table.

<TABLE>
<CAPTION>
AT MARCH 31, 1997
-----------------------------------------------------------------------------
LESS THAN 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS GREATER THAN 10 YEARS
----------------- ----------------- ----------------- -----------------------

WEIGHTED WEIGHTED WEIGHTED WEIGHTED
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD
-------- -------- -------- -------- -------- -------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FNMA............. $ 54 8.88% $2,723 6.64% $ -- -- % $ 4,248 6.75%
FHLMC............ 701 7.92% 1,133 7.69% 2,307 6.66% 414 7.25%
GNMA............. -- -- % 229 9.00% -- -- % 3,145 6.06%
---- ----- ------ ----- ------ ----- ----------- ----------
Total mortgage-
backed
securities..... $755 7.99% $4,085 7.07% $2,307 6.66% $ 7,807 6.50%
==== ===== ====== ===== ====== ===== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1997
-------------------------------------
TOTAL
-------------------------------------
AVERAGE
REMAINING ESTIMATED WEIGHTED
YEARS TO CARRYING MARKET AVERAGE
MATURITY VALUE VALUE YIELD
--------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
FNMA............. 11.4 $ 7,025 $ 7,025 6.72%
FHLMC............ 5.9 4,555 4,555 7.16%
GNMA............. 13.9 3,374 3,374 6.26%
---- ------- ------- -----
Total mortgage-
backed
securities..... 10.3 $14,954 $14,954 6.75%
==== ======= ======= =====
</TABLE>

At March 31, 1997, the Association did not hold any security of an issuer
(other than U. S. government and agency securities and mutual funds which
invest exclusively in such securities) which had an aggregate book value or
aggregate market value in excess of 10% of the Association's stockholders'
equity at the dates indicated.

61
<PAGE>

DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

General. Deposits are the primary source of the Association's funds for
lending and other investment purposes. In addition to deposits, the
Association derives funds from loan principal repayments. Loan repayments are
a relatively stable source of funds while deposit inflows and outflows may be
significantly influenced by the general level of interest rates and money
market conditions. The Association also has access to advances from the FHLB
of Des Moines. These advances can be used on a short-term basis to compensate
for reductions in the availability of funds from other sources or they may be
used on a longer term basis for general business purposes.

Deposit Accounts. Local deposits are and traditionally have been the primary
source of the Association's funds for use in lending and other general
business purposes. Deposits are attracted from within the Association's
primary market area (metropolitan St. Louis) through an offering of a variety
of financial accounts including savings, checking, money market, certificates
of deposit, retirement plan accounts, and commercial checking. The account
terms vary by type of account according to minimum balance requirements,
interest rate, and the length of time the account must remain open without
incurring a penalty for withdrawal of the funds as well as other factors. The
Association relies on the location of its offices, customer satisfaction, and
other references as its primary sources of deposit solicitation. To a lesser
degree, local media advertising is used in the seeking of deposit funds.

In determining the individual characteristics of its deposit accounts, the
Association considers the products and rates offered by the competition, the
attractiveness of the product to its customer base, the profitability of the
product to the Association, and the effect the account will have on the asset
liability mix of the institution. Attractive, convenient locations and quality
service are the Association's benchmark of success. The Association does not
use brokered deposits.

The following table sets forth information concerning the Association's
savings deposits at the dates indicated.

<TABLE>
<CAPTION>
AT MARCH 31,
--------------------------------------------------------------------------------
1997 1996 1995
-------------------------- -------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
PERCENT AVERAGE PERCENT AVERAGE PERCENT AVERAGE
OF TOTAL NOMINAL OF TOTAL NOMINAL OF TOTAL NOMINAL
BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE
-------- -------- -------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NOW accounts............ $ 7,170 5.83% 2.24% $ 6,990 5.61% 2.27% $ 7,522 6.19% 2.24%
Regular savings......... 21,577 17.55% 2.51% 21,831 17.54% 2.51% 23,878 19.64% 2.51%
Money market demand..... 6,135 4.99% 3.22% 6,552 5.26% 2.93% 7,778 6.40% 2.80%
Noninterest checking.... 4,993 4.06% 0.00% 3,824 3.07% 0.00% 2,637 2.18% 0.00%
Certificates of Deposit:
28-91 days--Fixed-term,
fixed rate............ 34 0.03% 2.88% 50 0.04% 2.81% 88 0.07% 2.89%
6 months--Fixed-term,
fixed rate............ 2,439 1.98% 4.01% 2,667 2.14% 4.00% 4,008 3.30% 4.01%
9 months--Fixed-term,
fixed rate............ 7,932 6.45% 5.27% 6,906 5.55% 5.43% 2,533 2.08% 5.27%
12 months--Fixed-term,
fixed rate............ 8,350 6.79% 5.06% 9,248 7.43% 5.32% 10,545 8.67% 5.06%
24 months--Fixed-term,
fixed rate............ 6,760 5.50% 5.55% 6,328 5.08% 5.49% 5,063 4.17% 5.55%
36 months--Fixed-term,
fixed rate............ 3,010 2.45% 5.35% 4,218 3.39% 4.71% 5,371 4.42% 5.35%
48 months--Fixed-term,
fixed rate............ 11,568 9.41% 6.39% 10,225 8.21% 6.44% 5,051 4.16% 6.39%
60 months--Fixed-term,
fixed rate............ 18,300 14.88% 5.67% 20,062 16.11% 5.80% 22,759 18.72% 5.67%
24 months--Fixed-term,
variable-rate......... 631 0.51% 5.50% 904 0.73% 5.50% 835 0.69% 5.50%
5-20 years--Fixed-term,
fixed rate (Guaranteed
Account).............. 115 0.09% 8.93% 107 0.09% 8.91% 101 0.08% 8.93%
1-60 months--Negotiated
rate.................. 2,718 2.21% 6.20% 3,428 2.75% 5.96% 2,935 2.41% 6.20%
Retirement Account
(IRAs):
12 months--Fixed-term,
fixed-rate............ 962 0.78% 5.00% 1,037 0.83% 5.00% 1,181 0.97% 5.00%
24 months--Fixed-term,
fixed-rate............ 942 0.77% 5.53% 809 0.65% 5.53% 734 0.60% 5.53%
36 months--Fixed-term,
fixed-rate............ 755 0.61% 5.44% 940 0.75% 4.89% 949 0.78% 5.44%
48 months--Fixed-term,
fixed-rate............ 10,260 8.34% 6.59% 8,563 6.88% 6.74% 4,677 3.85% 6.59%
60 months--Fixed-term,
fixed-rate............ 7,710 6.27% 5.87% 9,293 7.46% 6.08% 12,329 10.14% 5.87%
120 months--Fixed-term,
fixed-rate............ 370 0.30% 10.00% 346 0.28% 10.00% 326 0.27% 10.00%
24 months--Fixed-term,
variable-rate......... 252 0.20% 5.50% 187 0.15% 5.50% 260 0.21% 5.50%
-------- ------ -------- ------ -------- ------
$122,983 100.0% $124,515 100.0% $121,560 100.0%
======== ====== ======== ====== ======== ======
</TABLE>

62
<PAGE>

The following table indicates the amount of the Association's jumbo
certificates of deposit by time remaining until maturity as of March 31, 1997.
Jumbo certificates of deposit require minimum deposits of $100,000 and have
negotiable rates.

<TABLE>
<CAPTION>
MATURITY PERIOD CERTIFICATES OF DEPOSIT
--------------- -----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Three months or less.............................. $ 200
Three through six months.......................... 340
Six through twelve months......................... 1,313
Over twelve months................................ 865
------
Total........................................... $2,718
======
</TABLE>

DEPOSIT FLOW

The following table sets forth the balances of savings deposit in the
various types of savings accounts offered by the Association at the dates
indicated.

<TABLE>
<CAPTION>
AT MARCH 31,
--------------------------------------------------------------------------------------
1997 1996 1995
---------------------------- ---------------------------- ----------------------------
PERCENT INCREASE PERCENT INCREASE PERCENT INCREASE
AMOUNT OF TOTAL (DECREASE) AMOUNT OF TOTAL (DECREASE) AMOUNT OF TOTAL (DECREASE)
-------- -------- ---------- -------- -------- ---------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest-bearing
deposits............... $ 4,993 4.06% $ 1,170 $ 3,823 3.07% $1,186 $ 2,637 2.18% $ (605)
NOW checking............ 7,170 5.83% 180 6,990 5.61% (532) 7,522 6.19% (416)
Regular savings
accounts............... 21,577 17.55% (254) 21,831 17.54% (2,047) 23,878 19.64% (3,930)
Money market deposits... 6,135 4.99% (417) 6,552 5.26% (1,226) 7,778 6.40% (4,149)
Fixed-rate
certificates........... 82,225 66.86% (2,002) 84,227 67.64% 5,577 78,650 64.69% (2,494)
Variable-rate
certificates........... 883 .71% (209) 1,092 .88% (3) 1,095 .90% 310
-------- ------ ------- -------- ------- ------ -------- ------- --------
Total.................. $122,983 100.0% $(1,532) $124,515 100.00% $2,955 $121,560 100.00% $(11,284)
======== ====== ======= ======== ======= ====== ======== ======= ========
</TABLE>

CERTIFICATES OF DEPOSIT BY RATES

The following table sets forth the certificates of deposits classified by
rates as of the dates indicated.

<TABLE>
<CAPTION>
AT MARCH 31,
-----------------------
1997 1996 1995
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Less than 3.00%.............. $ 8 $ 19 $ 20
3.00% to 3.99%............... 251 1,344 7,550
4.00% to 4.99%............... 3,925 6,553 16,456
5.00% to 5.99%............... 49,200 43,120 23,705
6.00% to 6.99%............... 17,083 19,200 13,661
7.00% to 7.99%............... 12,155 14,630 14,947
8.00% and greater............ 486 453 3,406
------- ------- -------
Total...................... $83,108 $85,319 $79,745
======= ======= =======
</TABLE>

Certificate of deposit accounts at March 31, 1997, 1996 and 1995 are
scheduled to mature as indicated in the following table.

<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------ ------------------------
AMOUNT PERCENT OF TOTAL AMOUNT PERCENT OF TOTAL AMOUNT PERCENT OF TOTAL
------- ---------------- ------- ---------------- ------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Within one year......... $36,335 43.7% $32,402 38.0% $29,401 36.9%
Second year............. 22,832 27.5% 16,287 19.1% 12,015 15.1%
Third year.............. 16,693 20.1% 18,727 21.9% 12,472 15.6%
Fourth year............. 4,949 6.0% 15,464 18.1% 18,444 23.1%
Thereafter.............. 2,299 2.7% 2,439 2.9% 7,413 9.3%
------- ------ ------- ------ ------- ------
Total................. $83,108 100.0% $85,319 100.0% $79,745 100.0%
======= ====== ======= ====== ======= ======
</TABLE>

63
<PAGE>

The following table sets forth the savings activities of the Association for
the periods indicated.

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MARCH 31,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance................... $ 124,515 $ 121,560 $ 132,844
Net decrease before interest
credited........................... (5,811) (1,331) (15,209)
Interest credited................... 4,279 4,286 3,925
----------- ----------- -----------
Ending balance...................... $ 122,983 $ 124,515 $ 121,560
=========== =========== ===========
</TABLE>

BORROWINGS

While deposits are the primary source of funds for the Association, advances
from the FHLB of Des Moines are necessary periodically to supplement the funds
required for operations. At March 31, 1997, the Association had $63.0 million
in FHLB of Des Moines advances outstanding. During fiscal year 1997, the
Association utilized FHLB advances to offset deposit outflows to provide for
increased originations of portfolio loans and increased investment in
securities.

EMC maintains a custodial borrowing relationship at an unaffiliated bank
secured by investment securities with an amortized cost and a market value of
approximately $4.0 million at March 31, 1997. At March 31, 1997, there was
$1.1 million outstanding on this note payable.

Concurrent with the Mutual Holding Company Reorganization, the Association
established the ESOP. The ESOP initially borrowed $266,000 to finance the
acquisition of stock to be held in trust for future allocations to eligible
participants. At March 31, 1997, there was $136,000 outstanding on this note
payable. The debt of the ESOP is guaranteed by the Association and is
reflected as a liability in the consolidated balance sheet at March 31, 1997.

The following table sets forth certain information regarding borrowings by
the Association at the end of and during the periods indicated.

<TABLE>
<CAPTION>
AT
AND FOR THE YEAR ENDED MARCH 31,
--------------------------------
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Weighted average rate paid on:
FHLB of Des Moines borrowings.............. 5.34% 5.52% 6.28%
Note payable to bank....................... 2.25% 2.25% 2.25%
ESOP debt.................................. 9.50% 9.25% 10.00%
Maximum amount of borrowings outstanding at
any month-end:
FHLB of Des Moines borrowings.............. $67,000 $62,000 $28,000
Note payable to bank....................... 4,000 3,000 3,000
ESOP debt.................................. 158 193 220
Approximate average borrowings outstanding
with respect to:
FHLB of Des Moines borrowings.............. $61,917 $46,000 $14,417
Note payable to bank....................... 2,259 2,194 2,109
ESOP debt.................................. 150 180 211
Approximate weighted average rate paid on:
FHLB of Des Moines borrowings.............. 5.46% 5.96% 5.14%
Note payable to bank....................... 2.25% 2.25% 2.25%
ESOP debt.................................. 9.25% 9.73% 8.96%
</TABLE>

64
<PAGE>

COMPETITION

The Association has been, and intends to continue to be, a community-
oriented financial institution offering a wide variety of financial services
to meet the needs of the communities it serves. The Association is
headquartered in St. Louis, Missouri. It currently operates out of eight full
and limited service offices in the St. Louis area.

The Association faces intense competition both in making loans and in
attracting deposits. The St. Louis area has a large number of financial
institutions, many of which have greater financial resources, name recognition
and market presence than the Association, and all of which are competitors of
the Association to varying degrees. Particularly intense competition exists
for deposits and in all of the lending activities engaged in by the
Association.

The Association's competition for loans comes principally from national,
regional and local mortgage-banking companies, commercial banks, other savings
and loan associations, savings banks, insurance companies, finance companies
and credit unions. Thus, no assurances can be made that the Association will
be able to maintain its current level of such loans. The Association competes
for loans principally through EMC. Competition is based on a combination of
interest rates and loan fees charged in addition to the availability of
special issues such as the Affordable Housing Program. The efficiency and
quality of the service provided also plays a significant role in the
Association's competitive position.

The Association's most direct competition for deposits historically has come
from other savings and loan associations, commercial banks, savings banks and
credit unions. In addition, the Association faces increasing competition for
deposits from non-bank institutions such as brokerage firms and insurance
companies in such areas as money market funds, other mutual funds (such as
corporate and government securities funds) and annuities. The Association
competes for deposits by offering customers a variety of savings accounts,
checking accounts, certificates of deposit, and a responsive, customer-
oriented staff, as well as convenient access to the Association by 24-Hour
Teller Machines or personal appointment.

Trends toward the consolidation of the banking industry and the lifting of
interstate banking and branching restrictions may make it more difficult for
smaller institutions, such as the Association, to compete effectively with
large, national and regional banking institutions.

Smaller institutions such as the Association will be forced to either
compete with larger institutions on pricing of products and services, or to
identify and operate in a "niche" that will allow for operating margins to be
maintained at profitable levels. As a locally-based financial institution, the
Association's strategy has been to position itself as a community-oriented
financial institution that provides high quality products and services to meet
the retail banking needs of its local customer base. This strategy is designed
to identify a niche in the Association's market where it can effectively
compete against much larger institutions.

SUBSIDIARY ACTIVITIES AND JOINT VENTURES

The Association has two wholly owned subsidiaries, EMC and ECC. ECC operates
a full-service insurance agency under the name Equality Insurance Agency
("EIA") and owns several income-producing properties and participates in a
real estate joint venture. EIA provides a full array of insurance products,
including property and casualty, automobile, health and life insurance, and,
to a much lesser degree, commercial fire and casualty insurance. EIA also
offers annuities and operates Flood Information Specialists, which issues
flood plain certificates. These certificates are required by all mortgage loan
lenders and is a requirement for selling a loan in the secondary market.

In 1986, ECC purchased a 14-unit complex located in south St. Louis near
Hampton Village. The property produces a stable income stream. At March 31,
1997, the property had a net book value of $233,000.

65
<PAGE>

ECC has a 50% interest in a real estate joint venture, WC Joint Venture. WC
Joint Venture owns two properties in St. Louis County, Missouri. Tenants at
the properties include DDA, Suburban Journal, IBT, Inc. and Airport Bowl.

ECC owns 100% of the outstanding capital stock of Dutch Town Development
Co., a Missouri corporation ("Dutch Town"). Dutch Town has been inactive for
the past four years and holds no material assets.

The Association is required to deduct from capital a certain percentage of
its investment in ECC because ECC is considered a "nonincludable" subsidiary
as a result of its real estate investment activities. The Association intends
to continue to divest itself of various properties in an orderly and prudent
manner, taking advantage of more favorable economic conditions.

PROPERTIES

The Association conducts its business through three full-service offices.
The Association's main office is located at 4131 South Grand Boulevard, St.
Louis, Missouri. The Association owns its main office and South County Branch
in fee and they are unencumbered.

<TABLE>
<CAPTION>
OWNED NET LEASE
YEAR OR TOTAL BOOK EXPIRATION SQUARE
LOCATION OPENED LEASED INVESTMENT VALUE DATE FOOTAGE
-------- ------ ------ ---------- ------ ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MAIN OFFICE:
4131 South Grand Boulevard 1944 Owned $2,274 $1,269 -- 21,740
St. Louis, Missouri 63118
BRANCHES:
Yorkshire Branch 1957 Leased 60 -- 1997 2,928
1281 South Laclede Station
Road
Webster Groves, Missouri
63119
South County Branch 1987 Owned 1,528 1,264 -- 4,545
5400 South Lindbergh
Boulevard
St. Louis, Missouri 63123
LOAN OFFICES:
Florissant Loan Office 1992 Leased 20 10 1998 1,306
2620 North Lindbergh
Florissant, Missouri 63033
West County Loan Office 1993 Leased 3 2 1999 1,200
14334 South Outer Forty
Chesterfield, Missouri
63017
O'Fallon Loan Office 1994 Leased -- -- 1997 300
2017 Highway K
O'Fallon, Missouri 63366
Crestwood Loan Office 1996 Leased -- -- 1997 500
9920 Watson Road, Suite 207
Crestwood, Missouri 63126
Chesterfield Loan Office 1996 Leased -- -- 1997 500
361 Chesterfield Center
Chesterfield, Missouri
63017
</TABLE>

In May 1997, the Association purchased a building in Arnold, Missouri (which
is in Jefferson County and adjacent to St. Louis County) that the Association
is remodeling as a full-service branch office. The Association expects this
office to be completed by the summer of 1998. In addition, the Association is
relocating a store-front branch office several blocks and concurrently
converting it into a branch office with a drive-up facility; the

66
<PAGE>

relocation is expected to be completed in September 1997. With the exception
of the foregoing, the Association believes that its current facilities are
adequate to meet the present and foreseeable needs of the Association and the
Holding Company.

The net book value of the Association's investment in office properties and
equipment totaled $2.9 million at March 31, 1997.

The Association uses an outside data processing firm to process customer
records and monetary transactions, post deposit and general ledger entries,
and record activity in installment lending. EMC uses a second outside data
processing firm to process loan servicing and loan originations.

PERSONNEL

As of March 31, 1997, the Association, including subsidiaries, had 76 full-
time employees and 24 part-time employees. The employees are not represented
by a union or collective bargaining unit. The Association believes its
relationship with its employees are good.

LEGAL PROCEEDINGS

The Association is, from time to time, a party to legal proceedings arising
in the ordinary course of its business, including legal proceedings to enforce
its rights against borrowers. The Association is not currently a party to any
legal proceedings which could reasonably be expected to have a material
adverse effect on the financial condition or operations of the Association.

REGULATION AND SUPERVISION

GENERAL

The Association is chartered under federal law by the OTS. It is a member of
the FHLB System, and its deposit accounts are insured up to legal limits by
the FDIC under the SAIF. The OTS is charged with overseeing and regulating the
Association's activities and monitoring its financial condition. This
regulatory framework sets parameters for the Association's activities and
operations and grants the OTS extensive discretion with regard to its
supervisory and enforcement powers and examination policies. The Association
files periodic reports with the OTS concerning its activities and financial
condition, must obtain OTS approval prior to entering into certain
transactions or initiating new activities, and is subject to periodic
examination by the OTS to evaluate the Association's compliance with various
regulatory requirements.

The Holding Company will be a savings and loan holding company and, like the
Association, will be subject to regulation by the OTS. As part of this
regulation, the Holding Company will be required to file certain reports with,
and will be subject to periodic examination by, the OTS.

RECENT LEGISLATIVE AND REGULATORY DEVELOPMENTS

Since late in 1996, several new laws and regulations were adopted that
affect savings associations like the Association.

Deposit Insurance Reform Legislation. The SAIF and the Bank Insurance Fund
(the "BIF") were required by law to achieve and maintain a ratio of insurance
reserves to total insured deposits equal to 1.25%. The BIF reached this
required reserve ratio during 1995, while some predictions indicated the SAIF
would not reach this target until the year 2002. The SAIF had not grown as
quickly as the BIF for many reasons, but in large part because almost half of
SAIF premiums had to be used to retire bonds issued by the Financing
Corporation ("FICO Bonds") in the late 1980's to recapitalize the Federal
Savings and Loan Insurance Corporation.

67
<PAGE>

Until 1995, the SAIF and BIF deposit insurance premium rate schedules had
been identical. But in mid-1995, the FDIC issued final rules modifying its
assessment rate schedules for SAIF and BIF member institutions. Under the
revised schedule, SAIF members continued to pay assessments ranging from $0.23
to $0.31 per $100 of deposits, while BIF members paid assessments ranging from
zero to $0.27 per $100 of deposits. But the majority of BIF members paid only
the $2,000 minimum annual premium. Thrift industry representatives argued that
this significant premium differential caused savings associations to operate
at a competitive disadvantage to their BIF-insured bank counterparts.

On September 30, 1996, President Clinton signed the Deposit Insurance Funds
Act of 1996 ("DIFA") that was part of the omnibus spending bill enacted by
Congress at the end of its 1996 session. DIFA mandated that the FDIC impose a
special assessment on the SAIF-assessable deposits of each insured depository
institution at a rate applicable to all such institutions that the FDIC
determined would cause the SAIF to achieve its designated reserve ratio of
1.25% as of October 1, 1996. The assessment was based on the amount of SAIF-
insured deposits owned by each institution as of March 31, 1995, the record
date established in the original drafts of the legislation. DIFA allowed the
FDIC to exempt any insured institution that it determined to be weak from
paying the special assessment if the FDIC determined that the exemption would
reduce the risk to the SAIF.

DIFA provides that the FDIC may not set semiannual assessments with respect
to SAIF or BIF in excess of the amount needed to maintain the 1.25% designated
reserve ratio or, if the reserve ratio is less than the designated reserve
ratio, to increase the reserve ratio to the designated reserve ratio.

On October 10, 1996, the FDIC adopted a final rule governing the payment of
the SAIF special assessment. The FDIC imposed a special assessment in the
amount of 65.7 basis points, which is less than the 85-95 basis points
estimated during the early stages of the law's enactment in 1995. The SAIF
special assessment was due by November 27, 1996. The Association's portion of
this special assessment amounted to $789,000 on a pre-tax basis. The
Association accrued this amount during its fiscal second quarter ended
September 30, 1996. Payment was made in November 1996. DIFA also confirmed
that the special assessment is tax deductible.

In response to the recapitalization of the SAIF, the FDIC announced on
December 11, 1996 that deposit insurance rates for most savings associations
insured under the SAIF would be lowered to zero effective January 1, 1997.
BIF-insured institutions would also no longer have to pay the $2,000 minimum
for deposit insurance, thereby equalizing deposit premiums for savings
associations and banks.

Merger of SAIF and BIF. DIFA mandates the merger of the SAIF and BIF,
effective January 1, 1999, but only if no insured depository institution is a
savings association on that date. The combined deposit insurance fund will be
called the "Deposit Insurance Fund," or "DIF."

FICO Bond Payments. Before DIFA, federal regulators and thrift industry
trade groups were predicting that a default would occur on the FICO Bonds as
early as 1998, as SAIF-assessable deposits continued to decline. DIFA amends
The Federal Home Loan Bank Act to impose the FICO assessment against both SAIF
and BIF deposits beginning after December 31, 1996. But the assessment imposed
on insured depository institutions with respect to any BIF-assessable deposit
will be assessed at a rate equal to one-fifth of the rate (approximately 1.3
basis points) of the assessments imposed on insured depository institutions
with respect to any SAIF-assessable deposit (approximately 6.7 basis points).
The FICO assessment for 1996 was paid entirely by SAIF-insured institutions.
BIF-insured banks will pay the same FICO assessment as SAIF-insured
institutions beginning as of the earlier of December 31, 1999 or the date as
of which the last savings association ceases to exist.

Deposit Shifting. DIFA provides that until the earlier of December 31, 1999
or the date as of which the last savings association ceases to exist, the
Office of the Comptroller of the Currency (the "OCC"), the FDIC, the Federal
Reserve Board, and the OTS will take appropriate actions, including
enforcement actions and denial of applications, to prevent insured depository
institutions from facilitating or encouraging the shifting of deposits from
SAIF-assessable deposits to BIF-assessable deposits for the purpose of evading
the assessments imposed on insured depository institutions with respect to
SAIF-assessable deposits.

68
<PAGE>

Bad Debt Recapture. The Small Business Job Protection Act of 1996, signed by
President Clinton on August 20, 1996, removed a significant tax obstacle for
savings associations that desire to become commercial banks. It also
eliminated a potential impediment to business combinations between banks and
thrifts and the creation of a new depository institution charter.

Before this new law, savings associations that converted to commercial banks
had to change their method of accounting for bad debt reserves, which forced a
recapture of the savings association's untaxed bad debt reserves into taxable
income. Under prior law, savings associations were allowed to use the reserve
method for establishing bad debt reserves. This meant in recent years they
could deduct up to 8% of their taxable income each year as a charge for bad
debts, regardless of their actual loan loss experience. Since the 1950's, this
deduction has steadily declined from its initial rate of 100%. These annual
deductions resulted in significant tax savings for savings associations and an
accumulation by savings associations of untaxed income.

Under the new law, a savings association's base-year reserves established
before 1988 will not be taxed should it convert to a commercial bank. But
reserves created after 1987 would be recaptured into taxable income ratably
over six years (beginning with the first tax year after December 31, 1995)
whether or not a savings association converts to a commercial bank. Recapture
of post-1987 reserves may be deferred until after January 1, 1998 if the
savings association maintains a high level of residential loan originations.
In the future, all savings associations must account for bad debts under tax
rules applicable to commercial banks.

Relaxation of the Qualified Thrift Lender Test. In September 1996, the
Economic Growth and Regulatory Paperwork Reduction Act of 1996 became law (the
"Economic Growth Act of 1996"). In the past, savings associations were
required to satisfy a qualified thrift lender test ("QTL" test) by maintaining
65% of their portfolio assets (defined as all assets minus intangible assets,
property used by the association in conducting its business and liquid assets
equal to 20% of total assets) in certain "qualified thrift investments"
(primarily residential mortgages and related investments, including certain
mortgage- backed securities) on a monthly basis in nine out of every twelve
months.

The Economic Growth Act of 1996 liberalized the QTL test for savings
associations by permitting them to satisfy a similar-but-different 60% asset
test under the Internal Revenue Code. Alternatively, savings associations may
meet the QTL test by satisfying a more liberal 65% asset test that allows an
institution to include small business, credit card and education loans as
qualified investments for purposes of the test. Furthermore, consumer loans
now count as qualified thrift investments up to 20% of portfolio assets. On
April 3, 1997, OTS issued a final rule that implements provisions of the
Economic Growth Act of 1996, including the amended QTL test.

Increased Commercial and Consumer Lending Authority. Before the Economic
Growth Act of 1996, federal savings associations were able to lend up to 10%
of their assets in commercial business loans (i.e., secured or unsecured loans
for commercial, corporate, business, or agricultural purposes) and, subject to
OTS approval for a higher amount, up to 400% of their capital in commercial
real estate loans. In addition, federal savings associations were permitted to
make consumer loans (i.e., loans for personal, family or household purposes)
in an amount not to exceed 35% of their assets.

The Economic Growth Act of 1996 amended the commercial-lending-asset limit
by increasing the ceiling from 10% to 20%, but provides that amounts in excess
of 10% may be used only for small business loans. Moreover, the new law
exempts credit card and educational loans from any percentage of asset
limitations applicable to consumer loans. The final rule issued by the OTS
that became effective on April 3, 1997, defines a "small business loan" as one
which meets the Small Business Administration size eligibility standards or,
alternatively, a loan in the amount of $1 million or less. This definition
also applies for purposes of the new QTL test.

Effective October 30, 1996, the OTS (as part of its regulatory streamlining
project) amended its lending regulations for federal savings associations to
remove the requirement that commercial loans made at the service corporation
level be aggregated with the 10% of assets limit on commercial lending.

69
<PAGE>

Charter Overhaul. Proposals to eliminate the savings association charter
have been considered by the U.S. Congress several times in recent years. DIFA
mandates that the Secretary of the Treasury conduct a study of all issues
which the Secretary considers to be relevant with respect to the development
of a common charter for all insured depository institutions and the abolition
of separate and distinct charters between banks and savings associations.

The Secretary of the Treasury was required to submit a report to the
Congress on or before March 31, 1997, containing the findings and conclusions
of the Secretary in connection with this study. The report needed to include a
detailed analysis of each issue the Secretary considers relevant to the
subject of the study, recommendations of the Secretary with regard to the
establishment of a common charter for insured depository institutions and such
recommendations for legislative and administrative action as the Secretary
determines to be appropriate to implement the recommendations of the
Secretary. See "--Recent Legislative and Regulatory Developments--
Modernization of Financial Services Industry."

Regulatory Relief for Thrifts and Banks. The Economic Growth Act of 1996
included dozens of changes to financial institution laws granting regulatory
relief to financial institutions (including savings associations) and
simplifying and streamlining the regulatory application process with respect
to certain transactions. Many existing laws were affected by the new
legislation, including the Truth in Lending Act (the "TILA"), the Real Estate
Settlement Procedures Act, the Truth in Savings Act, the Fair Credit Reporting
Act, the Home Mortgage Disclosure Act and Fair Lending, among others. In
particular, the new law expands the definition of a small depository
institution that qualifies for an extended examination cycle (18 rather than
12 months) to include institutions with assets of $250 million (as opposed to
the former $175 million asset threshold).

Environmental Liability Reform. On September 30, 1996, President Clinton
signed into law amendments to the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA"). These amendments provide relief for
lenders in connection with their liability for environmental contamination in
making and administering loans.

Overhaul of Thrift Conflict of Interest, Corporate Opportunity and Corporate
Governance Rules. For several years the OTS has been engaged in an extensive
review of its regulations to identify regulations that are obsolete and areas
where regulatory streamlining is appropriate. This review has culminated in
several substantial revisions to OTS regulations. In 1996, the OTS issued
final regulations streamlining its regulations in the areas of lending and
investment authority, corporate governance, subsidiaries and equity
investments and conflicts of interest, among others. As a result of this
project, many OTS regulations have been removed to the OTS Thrift Activities
Handbook.

New Thrift Subsidiary and Equity Investment Rules. On December 18, 1996, the
OTS issued a final rule updating and streamlining its regulations governing
subsidiary and equity investments. The regulation recasts operating
subsidiaries and service corporations as "subordinate organizations," revises
the list of permissible activities for service corporations, confirms federal
preemption of state law regarding the activities of operating subsidiaries and
clarifies the application process for establishing subordinate organizations.
The new rule also codifies the authority of a federal savings association to
invest in certain pass-through investments, such as limited partnerships and
mutual funds.

Modernization of Financial Services Industry. On May 21, 1997, the Clinton
Administration announced a plan to modernize the financial services industry.
The proposal, among other things, addresses the ongoing debate concerning
mixing banking and commerce, elimination of the savings association charter
and the merger of the SAIF and BIF. Under the proposal, companies that own
banks (bank holding companies) and meet certain qualifications would--subject
to certain safeguards--be permitted to engage in any financial activity,
including the full range of securities activities, insurance activities,
investment advisory activities and mutual fund sponsorship and merchant
banking. Likewise, financial companies could own banks.

70
<PAGE>

Regarding financial activities of insured depository institutions and their
subsidiaries, the proposal provides that national banks (and state banks to
the extent permitted by state law) would be authorized, subject to certain
safeguards, to conduct any financial activity through subsidiaries (except
that national bank subsidiaries would not be authorized to engage in real
estate development). National banks would be permitted to engage in the full
scope of activities that have previously been permissible for national banks
or federally chartered savings associations (except engaging in the real
estate development). Moreover, national banks (and state banks to the extent
permitted by state law) would be permitted to act as general agents for the
sale of insurance, but would be prohibited from engaging directly in insurance
underwriting other than what is currently permissible (for instance, credit-
related insurance). Additionally, national banks (and state banks to the
extent permitted by state law) would be permitted to underwrite and deal in
municipal revenue bonds in addition to other securities activities currently
permissible in the bank.

The Clinton Administration's proposal also addressed affiliations between
banking organizations and non-financial companies. The proposal recommended
two alternative approaches--the "basket" approach and the "financial-only"
approach. Under the basket approach, bank holding companies that derive some
significant percentage (as specified by the U.S. Congress) of their gross
revenues in the U.S. from financial activities could derive the remainder of
their revenues from non-financial activities. In addition to the basket
limitation, the proposal suggested prohibiting any affiliation between a bank
holding company and a non-financial firm having assets in excess of a
specified amount (calculated to approximate the 1,000 largest non-financial
companies). Moreover, banks would be prohibited from extending any credit to,
or for the benefit of, any non-financial affiliate.

Under the basket approach, the federal savings association charter would be
eliminated after two years (thereby requiring all federal thrifts to convert
to bank charters), and existing unitary thrift holding companies (which
presently have no activity restrictions) would be given a grandfather
exemption from the "basket" test (terminable upon a change of control). All
remaining state-chartered thrifts would be treated as banks for federal bank
regulatory purposes. The OTS and the OCC would be merged at the end of the
two-year-conversion period and the SAIF and BIF would be merged. The Federal
Reserve Board, however, would continue to approve the formation of, and to
supervise and regulate all bank holding companies.

Under the financial-only approach, bank holding companies would not be
permitted to engage in any non-financial activities. But the existing federal
savings association charter would be preserved, and thrift holding companies
would retain their current authority to engage in any lawful activity.
Furthermore, the OTS and OCC would be kept in tact, but the SAIF and BIF would
be merged.

The Administration's proposal also sets forth capital protections and other
safeguards associated with the new activities contemplated for banks. In order
for a bank holding company or a subsidiary of a bank to engage as a principal
in activities not permissible for a national bank to engage in directly, the
bank would have to remain "well capitalized"--that is, to be in the highest
regulatory capital category, with regulatory capital exceeding normal
requirements--and it would have to deduct from its regulatory capital the
entire amount of its equity investment in a subsidiary engaged in such
activities. The bank also would have to be well-managed.

On June 20, 1997, the House Committee on Banking and Financial Services of
the U.S. House of Representatives passed H.R. 10 (the "Act"), the "Financial
Services Competition Act of 1997," by a vote of 28 to 26. Like the proposal
announced by the Clinton Administration on May 2, 1997, H.R. 10 is a sweeping
proposal for financial modernization of the banking system that would permit
affiliations between commercial banks, securities firms, insurance companies
and, subject to certain limitations, other commercial enterprises. The stated
purposes of the Act are to enhance consumer choice in the financial services
marketplace, level the playing field among providers of financial services,
and increase competition. The Act has been sent to the House Commerce
Committee, which has jurisdiction over insurance and securities and is
expected to vote on the bill in mid-September 1997. If approved, it would then
be sent to the full House for consideration. The Senate also would need to
approve the Act before it would be sent to the President for his signature.

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H.R. 10 removes the restrictions contained in the Glass-Steagall Act of 1933
and the Bank Holding Company Act of 1956, thereby allowing qualified financial
holding companies to control banks, securities firms, insurance companies, and
other financial firms. Conversely, securities firms, insurance companies and
financial firms would be allowed to own or affiliate with a commercial bank.
The Act also provides that subsidiaries of national banks may engage in
financial activities not allowed in the bank itself (except real estate
investment and development, merchant banking and insurance underwriting), but
only if the bank and all of its depository institutions are well capitalized
and well managed and have achieved a "satisfactory" rating under the Community
Reinvestment Act.

Under the new framework, the Federal Reserve would serve as an umbrella
regulator to oversee the new financial holding company structure. Securities
affiliates would be required to comply with all applicable federal securities
laws, including registration and other requirements applicable to broker-
dealers. The Act also would provide that insurance affiliates be subject to
applicable state insurance regulation and supervision.

With respect to the thrift industry, H.R. 10 would eliminate the federal
savings association charter by requiring all federal thrifts to convert to
national banks or state-chartered savings associations within two years after
the date of the Act's adoption. State-chartered savings associations would be
treated as commercial banks for purposes of federal banking law. After
conversion, the new institution would be permitted to retain its existing
investments, affiliations and branches. In addition, the Act would merge the
OTS with the OCC, and merge the SAIF and BIF. Unitary savings and loan holding
companies could maintain their affiliations with nonfinancial enterprises and
engage in all currently permissible activities. There can be no assurance that
legislation will be enacted that modernizes the financial services industry,
or if enacted, what form such legislation might take.

FEDERAL SAVINGS ASSOCIATION REGULATION

Business Activities. The activities of savings associations are governed by
the Home Owners' Loan Act, as amended (the "HOLA"), and, in certain respects,
the Federal Deposit Insurance Act (the "FDI Act"). The HOLA and the FDI Act
were amended by the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA") and the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). FIRREA was enacted for the purpose of
resolving problem savings associations, establishing a new thrift insurance
fund, reorganizing the regulatory structure applicable to savings
associations, and imposing bank-like standards on savings associations.
FDICIA, among other things, requires that federal banking regulators intervene
promptly when a depository institution experiences financial difficulties,
mandates the establishment of a risk-based deposit insurance assessment system
and requires imposition of numerous additional safety and soundness
operational standards and restrictions. FIRREA and FDICIA both contain
provisions affecting numerous aspects of the operations and regulations of
federally-insured savings associations and empowers the OTS and the FDIC,
among other agencies, to promulgate regulations implementing its provisions.

Branching. A federally-chartered savings association, like the Association,
can establish branches in any state or states in the United States and its
territories, subject to a few exceptions. The exercise by the OTS of its
authority to permit interstate branching by federal savings associations is
preemptive of any state law purporting to address the subject of branching by
a federal savings association.

Loans to One Borrower. Under HOLA, savings associations are generally
subject to the national bank limits regarding loans to one borrower.
Generally, savings associations may not make a loan or extend credit to a
single or related group of borrowers in excess of 15% of the association's
unimpaired capital and surplus, where the borrowing is not fully secured by
readily-marketable collateral. An additional amount may be lent, equal to 10%
of the association's unimpaired capital and surplus, if such additional
borrowing is secured by readily-marketable collateral at least equal to the
amount of such additional funds. At March 31, 1997, the Association had no
outstanding loans or commitments that exceeded the loans to one borrower limit
at the time made or committed.

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Brokered Deposits. Well-capitalized savings associations that are not
troubled are not subject to brokered deposit limitations. Adequately-
capitalized associations are able to accept, renew or roll over brokered
deposits but only (i) with a waiver from the FDIC and (ii) subject to the
limitation that they do not pay an effective yield on any such deposit that
exceeds by more than (a) 75 basis points the effective yield paid on deposits
of comparable size and maturity in such association's normal market area for
deposits accepted in its normal market area or (b) 120 basis points of the
current yield on similar maturity U.S. Treasury obligations or, in the case of
any deposit at least half of which is uninsured, 130% of such Treasury yield.
Undercapitalized associations are not permitted to accept brokered deposits
and may not solicit deposits by offering an effective yield that exceeds by
more than 75 basis points the prevailing effective yields on insured deposits
of comparable maturity in the association's normal market area or in the
market area in which such deposits are being solicited. The Association is not
presently soliciting brokered deposits.

Enforcement. Under the FDI Act, the OTS has primary enforcement
responsibility over savings associations and has the authority to bring
enforcement action against all "institution-related 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 association. Civil penalties cover a wide range of violations and
actions. Criminal penalties for most financial association crimes include
fines and imprisonment. In addition, regulators have substantial discretion to
impose enforcement action on an association that fails to comply with its
regulatory requirements, particularly with respect to amounts of capital.
Possible enforcement action ranges from requiring the preparation of a capital
plan or imposition of a capital directive to receivership, conservatorship or
the termination of deposit insurance. Under the FDI Act, the FDIC has the
authority to recommend to the Director of OTS enforcement action be taken with
respect to a particular savings association. If action is not taken by the
Director, the FDIC has authority to take enforcement action under certain
circumstances.

Assessments. Savings associations are required by OTS regulation to pay
assessments to the OTS to fund the operations of the OTS. The general
assessment paid on a semi-annual basis is computed based upon the savings
association's total assets, including consolidated subsidiaries, as reported
in the association's latest quarterly thrift financial report.

Federal Home Loan Bank System. The Association is a member of the FHLB
System, which consists of 12 regional FHLB's. The FHLB provides a central
credit facility primarily for member associations. The Association, as a
member of the FHLB-Des Moines, is required to acquire and hold shares of
capital stock in that FHLB in an amount at least equal to 1% of the aggregate
principal amount of its unpaid residential mortgage loans and similar
obligations at the beginning of each year, or 1/20 of its advances
(borrowings) from the FHLB-Des Moines, whichever is greater. The Association
is in compliance with this requirement, with an investment in FHLB-Des Moines
stock at March 31, 1997, of $3.4 million. FHLB advances must be secured by
specified types of collateral and may be obtained only for the purpose of
purchasing or funding new residential housing finance assets.

OTS Capital Requirements. The OTS capital regulations require savings
associations to meet three capital standards: a 1.5% tangible capital
standard, a 3% leverage ratio (or core capital ratio) and an 8% risk-based
capital standard.

Tangible capital is defined as common stockholders' equity (including
retained earnings), noncumulative perpetual preferred stock and related
earnings, certain nonwithdrawable accounts and pledged deposits of mutual
savings associations, and minority interests in equity accounts of fully
consolidated subsidiaries, less intangible assets (other than certain mortgage
servicing rights) and certain equity and debt investments in nonqualifying
subsidiaries (as hereinafter defined).

Core capital is defined as common stockholders' equity (including retained
earnings), certain noncumulative perpetual preferred stock and related
surplus, minority interests in equity accounts of consolidated subsidiaries,
certain nonwithdrawable accounts and pledged deposits of mutual savings
associations, certain amounts of goodwill resulting from prior regulatory
accounting practices, less intangible assets (other than certain mortgage
servicing rights) and certain equity and debt investments in nonincludable
subsidiaries.

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The OTS capital regulation requires that in meeting the leverage ratio,
tangible and risk-based capital standards, savings associations must deduct
investments in and loans to subsidiaries engaged in activities not permissible
for a national bank (a "nonincludable subsidiary"). At March 31, 1997, ECC was
considered a nonincludable subsidiary.

In April 1991, the OTS issued a proposal to amend its regulatory capital
regulation to establish a 3% leverage ratio (defined as the ratio of core
capital to adjusted total assets) for associations in the strongest financial
and managerial condition, with a 1 CAMEL Rating (the highest rating of the OTS
for savings associations). For all other associations, the minimum core
capital leverage ratio would be 3% plus at least an additional 100 to 200
basis points. In determining the amount of additional capital under the
proposal, the OTS would assess both the quality of risk management systems and
the level of overall risk in each individual association through the
supervisory process on a case-by-case basis. Associations that failed the new
leverage ratio would be required to file with the OTS a capital plan that
details the steps they would take to reach compliance. If enacted in final
form as proposed, management does not believe that the proposed regulation
would have a material effect on the Association. Since the date of this
proposal, the OTS has amended its regulations to refer to the Uniform
Financial Institutions Rating System ("UFIRS") established by the Federal
Financial Institutions Examination Council (the "FFIEC") in lieu of the
traditional CAMEL rating system. The UFIRS is a supervisory rating system used
by the OTS and other agencies represented on the FFIEC to evaluate the
soundness of depository institutions on a uniform basis. The agencies have
implemented UFIRS through CAMEL ratings, which are a series of five factors
for assessing a depository institution--capital adequacy, asset quality,
management, earnings and liquidity. Accordingly, where OTS regulations before
referred to "CAMEL" ratings, the regulations now refer to UFIRS as it may
exist from time to time, or a comparable rating system that the OTS may adopt
in lieu of UFIRS. References herein to UFIRS also refer to a comparable rating
system that the OTS may adopt in lieu of UFIRS.

Although the OTS has not adopted this regulation in final form, generally a
savings association that has a leverage capital ratio of less than 4% will be
deemed to be "undercapitalized" under the OTS prompt corrective action
regulations and consequently can be subject to various limitations on
activities.

The OTS' risk-based capital standard requires that savings associations
maintain a ratio of total capital (which is defined as core capital and
supplementary capital) to risk-weighted assets of 8%. In calculating total
capital, a savings association must deduct reciprocal holdings of depository
institution capital instruments, all equity investments and that portion of
land loans and nonresidential construction loans in excess of 80% loan-to-
value ratio and its interest rate risk component (as discussed below), in
addition to the assets that must be deducted in calculating core capital. In
determining the amount of risk-weighted assets, all assets, including certain
off-balance sheet assets, are multiplied by a risk-weight of 0% to 100%, as
assigned by the OTS capital regulation based on the risks OTS believes are
inherent in the type of asset.

The components of core capital are equivalent to those discussed above under
the 3% leverage standard. The components of supplementary capital include
cumulative preferred stock, long-term perpetual preferred stock, mutual
capital certificates, certain nonwithdrawable accounts and pledged deposits,
certain net worth certificates, income capital certificates, certain perpetual
subordinated debt, mandatory convertible subordinated debt, certain
intermediate-term preferred stock, certain mandatorily redeemable preferred
stock and allowance for loan and lease losses (up to 1.25% of risk-weighted
assets). Allowance for loan and lease losses includable in supplementary
capital is limited to a maximum of 1.25%. Overall, the amount of capital
counted toward supplementary capital cannot exceed 100% of core capital. At
March 31, 1997, the Association met each of its capital requirements.

FDICIA required that the OTS (and other federal banking agencies) revise
risk-based capital standards, with appropriate transition rules, to ensure
that they take account of interest rate risk, concentration of risk and the
risks of nontraditional activities.

The OTS' interest rate risk component became effective on January 1, 1994.
Under the rule, savings associations with "above normal" interest rate risk
exposure would be subject to a deduction from total capital

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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 (except when the three-month Treasury bond
equivalent yield falls below 4%, then the decrease would be equal to one-half
of that Treasury rate) 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 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 association'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. Savings associations with assets of less than $300
million and risk-based capital ratios in excess of 12% are not subject to the
interest rate risk component. The rule also provides that the Director of the
OTS may waive or defer an association's interest rate risk component. The OTS
has postponed the date that the risk component will first be deducted from an
institution's total capital to allow, among other things, the OTS to evaluate
the interest rate risk proposals issued by the other banking agencies.

Liquidity. The Association is required to maintain an average daily balance
of liquid assets (e.g., cash, accrued interest on liquid assets, certain time
deposits, savings accounts, bankers' acceptances, specified U.S. government,
state or federal agency obligations, shares of certain mutual funds and
certain corporate debt securities and commercial paper) equal to not less than
a specified percentage of the average daily balance of its net withdrawal
deposit accounts plus short-term borrowings. This liquidity requirement may be
changed from time to time by the OTS to any amount within the range of 4% to
10% depending upon economic conditions and the savings flows of member
associations; this requirement is currently 5%. OTS regulations also require
each member savings association to maintain an average daily balance of short-
term liquid assets at a specified percentage (currently 1%) of the average
daily balance of its net withdrawable deposit accounts and borrowings. The OTS
may initiate enforcement actions for failure to meet these liquidity
requirements. The Association has never been subject to monetary penalties for
failure to meet its liquidity requirements.

On May 14, 1997, the OTS issued a notice of proposed rulemaking to update,
simplify, and streamline its liquidity regulation. Under the proposal, the
burden of compliance with the liquidity regulation would be decreased by
reducing the liquidity base, streamlining the calculations used to measure
compliance with the liquidity requirement, reducing the liquidity requirement
from 5% of net withdrawable accounts and short-term borrowings to 4%, removing
the 1% percent short-term liquidity requirement and expanding the categories
of liquid assets that may count toward satisfying the savings association's
liquidity requirement. In addition, a general requirement that thrifts
maintain a safe and sound level of liquidity would be added to the regulation.

Insurance of Deposit Accounts. FDICIA required the FDIC to establish a risk-
based assessment system for insured depository associations that takes into
account the risks attributable to different categories and concentrations of
assets and liabilities. Under the rule, the FDIC assigns an association to one
of three capital categories consisting of (i) well capitalized, (ii)
adequately capitalized or (iii) undercapitalized, and one of three supervisory
subcategories. The supervisory subgroup to which an association is assigned is
based on a supervisory evaluation provided to the FDIC by the association's
primary federal regulator and information which the FDIC determines to be
relevant to the association's financial condition and the risk posed to the
deposit insurance funds (which may include, if applicable, information
provided by the association's state supervisor). An association's assessment
rate depends on the capital category and supervisory category to which it is
assigned. There are nine assessment risk classifications (i.e., combinations
of capital groups and supervisory subgroups) to which different assessment
rates are applied. Assessment rates range from zero basis points for an
association in the highest category (i.e., well-capitalized and healthy) to 27
basis points for an association in the lowest category (i.e., undercapitalized
and of substantial supervisory concern).

Limitation on Capital Distributions. The OTS regulations impose limitations
upon all capital distributions by savings associations, such as cash
dividends, payments to repurchase or otherwise acquire its shares, payments

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to shareholders of another association in a cash-out merger and other
distributions charged against capital. The regulations establish three tiers
of associations. An association that exceeds all fully phased-in capital
requirements before and after the proposed capital distribution ("Tier 1
Association") and has not been advised by the OTS that it is in need of more
than normal supervision, could, after prior notice but without the approval of
the OTS, make capital distributions during a calendar year up to the higher of
(a) 100% of its net income to date during the calendar year plus the amount
that would reduce by one-half its "surplus capital ratio" (the excess capital
over its fully phased-in capital requirements) at the beginning of the
calendar year or (b) 75% of its net reserve over the most recent four-quarter
period. Any additional capital distributions would require prior regulatory
approval. In computing the association's permissible percentage of capital
distributions, previous distributions made during the prior four quarter
period must be included. As of March 31, 1997, the Association met the
requirements of a Tier 1 Association. In the event the Association's capital
fell below its fully phased-in requirement or the OTS notified it that it was
in need of more than normal supervision, the Association's ability to make
capital distributions could be restricted. In addition, the OTS could prohibit
a proposed capital distribution by any association, which would otherwise be
permitted by regulation, if the OTS determines that such distribution would
constitute an unsafe or unsound practice. Moreover, under the OTS prompt
corrective action regulations, the Association would be prohibited from making
any capital distribution if, after the distribution, the Association would
have, (i) total risk-based capital ratio of less than 8%, (ii) Tier 1 risk-
based capital ratio of less than 4%, or (iii) a leverage ratio of less than 4%
or has a leverage ratio that is less than 3% if the association is rated
composite 1 under the UFIRS rating system in the most recent examination of
the association and is not experiencing or anticipating significant growth.

Community Reinvestment. The OTS, the FDIC, the Federal Reserve Board and the
OCC have jointly issued a final rule (the "Final Rule") under the Community
Reinvestment Act (the "CRA"). The Final Rule eliminates the existing CRA
regulation's 12 assessment factors and substitutes a performance based
evaluation system. The Final Rule will be phased in over a period of time and
become fully effective by July 1, 1997. Under the Final Rule, an institution's
performance in meeting the credit needs of its entire community, including
low- and moderate-income areas, as required by the CRA, will generally be
evaluated under three tests: the "lending test," the "investment test," and
the "service test."

The lending test analyzes lending performance using five criteria: (i) the
number and amount of loans in the institution's assessment area, (ii) the
geographic distribution of lending, including the proportion of lending in the
assessment area, the dispersion of lending in the assessment area, and the
number and amount of loans in low-, moderate-, middle-, and upper-income areas
in the assessment area, (iii) borrower characteristics, such as the income
level of individual borrowers and the size of businesses or farms, (iv) the
number and amount, as well as the complexity and innovativeness of an
institution's community development lending and (v) the use of innovative or
flexible lending practices in a safe and sound manner to address the credit
needs of low- or moderate-income individuals or areas. The investment test
analyzes investment performance using four criteria: (i) the dollar amount of
qualified investments, (ii) the innovativeness or complexity of qualified
investments, (iii) the responsiveness of qualified investments to credit and
community development needs, and (iv) the degree to which the qualified
investments made by the institution are not routinely provided by private
investors. The service test analyzes service performance using six criteria:
(i) the institution's branch distribution among low-, moderate-, middle-, and
upper-income areas, (ii) its record of opening and closing branches,
particularly in low- and moderate-income areas, (iii) the availability and
effectiveness of alternative systems for delivering retail banking services,
(iv) the range of services provided in low-, moderate-, middle- and upper-
income areas and extent to which those services are tailored to meet the needs
of those areas, (v) the extent to which the institution provides community
development services, and (vi) the innovativeness and responsiveness of
community development services provided.

An independent financial institution with assets of less than $250 million,
or a financial institution with assets of less than $250 million that is a
subsidiary of a holding company with assets of less than $1 billion, will be
evaluated under a streamlined assessment method based primarily on its lending
record. The streamlined test considers an institution's loan-to-deposit ratio
adjusted for seasonal variation and special lending activities, its percentage
of loans and other lending related activities in the assessment area, its
record of lending to borrowers

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of different income levels and businesses and farms of different sizes, the
geographic distribution of its loans, and its record of taking action, if
warranted, in response to written complaints. In lieu of being evaluated under
the three assessment tests or the streamlined test, a financial institution
can adopt a "strategic plan" and elect to be evaluated on the basis of
achieving the goals and benchmarks outlined in the strategic plan.

Transactions with Related Parties. The Association's authority to engage in
transactions with related parties or "affiliates," (i.e., any company that
controls or is under common control with an association) including the Holding
Company and its non-savings-association subsidiaries or to make loans to
certain insiders, is limited by Sections 23A and 23B of the Federal Reserve
Act ("FRA"). Subsidiaries of a savings association are generally exempted from
the definition of "affiliate." Section 23A limits the aggregate amount of
transactions with any individual affiliate to 10% of the capital and surplus
of the savings association and also limits the aggregate amount of
transactions with all affiliates to 20% of the savings association's capital
and surplus. Certain transactions with affiliates are required to be secured
by collateral in an amount and of a type described in the FRA and the purchase
of low quality assets from affiliates is generally prohibited. Section 23B
provides that certain transactions with affiliates, including loans and asset
purchases, must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the
association as those prevailing at the time for comparable transactions with
non-affiliated companies. In the absence of comparable transactions, such
transactions may only occur under terms and circumstances, including credit
standards, that in good faith would be offered to or would apply to non-
affiliated companies. Notwithstanding Sections 23A and 23B, FIRREA prohibits
any savings association from lending to any affiliate that is engaged in
activities that are not permissible for bank holding companies under Section
4(c) of the Bank Holding Company Act ("BHC Act"). Further, no savings
association may purchase the securities of any affiliate other than a
subsidiary.

The Association's authority to extend credit to executive officers,
directors and 10% shareholders, as well as such entities such persons control
are currently governed by Section 22(g) and 22(h) of the FRA and Regulation O
promulgated by the Federal Reserve Board. Among other things, these
regulations require such loans to be made on terms substantially similar to
those offered to unaffiliated individuals, place limits on the amount of loans
the Association may make to such persons based, in part, on the Association's
capital position, and require certain approval procedures to be followed. OTS
regulations, with the exception of minor variations, apply Regulation O to
savings associations.

Prompt Corrective Regulatory Action. FDICIA establishes a system of prompt
corrective action to resolve the problems of undercapitalized associations.
Under this system, the OTS is required to take certain supervisory actions
against undercapitalized associations, the severity of which depends upon the
association's degree of undercapitalization. Generally, subject to a narrow
exception, FDICIA requires the OTS to appoint a receiver or conservator for an
association that is critically undercapitalized. FDICIA authorizes the OTS to
specify the ratio of tangible equity to assets at which an association becomes
critically undercapitalized and requires that ratio be no less than 2% of
assets.

Under OTS regulations, a savings association is considered to be
undercapitalized if it has risk-based capital of less than 8% or has a Tier 1
risk-based capital ratio that is less than 4% or has a leverage ratio that is
less than 4% or has a leverage ratio less than 3% if the savings association
is rated composite 1 under the UFIRS rating system in the most recent
examination of the association. A savings association that has risk-based
capital less than 6% or a Tier 1 risk-based capital ratio that is less than 3%
or a leverage ratio that is less than 3% would be considered to be
"significantly undercapitalized." A savings association that has a tangible
equity to total assets ratio equal to or less than 2% would be deemed to be
"critically undercapitalized." Generally, a capital restoration plan must be
filed with the OTS within 45 days of the date an association receives notice
that it is undercapitalized, significantly undercapitalized or critically
undercapitalized. In addition, numerous mandatory supervisory actions become
immediately applicable to the association, including, but not limited to,
restrictions on growth, investment activities, capital distributions, and
affiliate transactions. In addition, the OTS could issue a capital directive
to the savings association that includes additional discretionary restrictions
on the savings association.

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Real Estate Lending Standards. The OTS and the other federal banking
agencies have uniform regulations prescribing real estate lending standards.
The OTS regulation requires each savings association to establish and maintain
written internal real estate lending standards consistent with safe and sound
banking practices and appropriate to the size of the institution and the
nature and scope of its real estate lending activities. The policy must also
be consistent with accompanying OTS guidelines, which include maximum loan-to-
value ratios for the following types of real estate loans: raw land (65%),
land development (75%), nonresidential construction (80%), improved property
(85%) and one- to four-family residential construction (85%). Owner-occupied
one- to four-family mortgage loans and home equity loans do not have maximum
loan-to-value ratio limits, but those with a loan-to-value ratio at
origination of 90% or greater are to be backed by private mortgage insurance
or readily marketable collateral. Institutions are also permitted to make a
limited amount of loans that do not conform to the proposed loan-to-value
limitations so long as such exceptions are appropriately reviewed and
justified. The guidelines also list a number of lending situations in which
exceptions to the loan-to-value standard are justified.

Standards for Safety and Soundness. As required by FDICIA and subsequently
amended by the Riegle Community Development and Regulatory Improvement Act of
1994, the federal banking regulators adopted interagency guidelines
establishing standards for safety and soundness for depository institutions on
matters such as internal controls, loan documentation, credit underwriting,
interest-rate risk exposure, asset growth, compensation and other benefits and
asset quality and earnings (the "Guidelines"). The agencies expect to request
a compliance plan from an institution whose failure to meet one or more of the
standards is of such severity that it could threaten the safe and sound
operation of the institution. FDIC regulations enacted under FDICIA also
require all depository institutions to be examined annually by the banking
regulators (but see, "Regulatory Relief for Thrifts and Banks") and depository
institutions having $500 million or more in total assets to have an annual
independent audit, an audit committee comprised solely of outside directors,
and to hire outside auditors to evaluate the institution's internal control
structure. The FDIC, in adopting the regulations, reiterated its belief that
every depository institution, regardless of size, should have an annual
independent audit and an independent audit committee.

Financial Management Requirements. FDICIA imposes new financial reporting
requirements on all depository institutions with assets of more than $500
million, their management, and their independent auditors. It also establishes
new rules for the composition, duties and authority of such institutions'
audit committees and boards of directors. Among other things, all such
depository institutions will be required to prepare and make available to the
public annual reports on their financial condition and management (including
statements of managements' responsibility for the financial statements,
internal controls and compliance with certain federal banking laws and
regulations relating to safety and soundness, and an assessment by management
of the effectiveness of the institution's internal controls and procedures and
the institution's compliance with such laws and regulations). Each such
institution is also required to have an audit committee composed of
independent directors.

FEDERAL RESERVE SYSTEM

The Federal Reserve Board regulations require savings institutions to
maintain noninterest-earning reserves against their transaction accounts
(primarily NOW and regular checking accounts), non-personal time deposits
(those which are transferable or held by a person other than a natural person)
with an original maturity of less than one and one-half years and certain
money market accounts. The Federal Reserve Board regulations generally require
that reserves of 3% must be maintained against aggregate transaction accounts
of $52 million or less (subject to adjustment by the Federal Reserve Board)
and an initial reserve of $1.6 million plus 10% (subject to adjustment by the
Federal Reserve Board between 8% and 14 %) against that portion of total
transaction accounts in excess of $52 million. The first $4.3 million of
otherwise reservable balances (subject to adjustments by the Federal Reserve
Board) are exempted from the reserve requirements. The Association is in
compliance with the foregoing requirements.

The balances maintained to meet the reserve requirements imposed by the
Federal Reserve Board may be used to satisfy liquidity requirements by the
OTS. Because required reserves must be maintained in the form of

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<PAGE>

either vault cash, a non-interest-bearing account at a Federal Reserve Bank or
a pass-through account as defined by the Federal Reserve Board, the effect of
this reserve requirement is to reduce the Association's interest-earning
assets.

FHLB System members are also authorized to borrow from the Federal Reserve
"discount window," but Federal Reserve Board regulations require institutions
to exhaust all FHLB sources before borrowing from a Federal Reserve Bank.

HOLDING COMPANY REGULATION

Upon consummation of the Conversion and Reorganization, the Holding Company
will be considered a non- diversified, savings and loan holding company within
the meaning of the HOLA, will be registered as a savings and loan holding
company with the OTS and will be subject to OTS regulations, examinations,
supervision and reporting requirements. In addition, the OTS will have
enforcement authority over the Holding Company and its non-savings association
subsidiaries. Among other things, this authority permits the OTS to restrict
or prohibit activities that are determined to be a serious risk to the
subsidiary savings association.

The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from (i) acquiring control
of, or acquiring by merger or purchase of assets, another savings association
or holding company thereof, without prior written approval of the OTS; (ii)
acquiring or retaining, with certain exceptions, more than 5% of a non-
subsidiary savings association, a non-subsidiary holding company, or a non-
subsidiary company engaged in activities other than those permitted by the
HOLA; or (iii) acquiring or retaining control of an institution that is not
federally insured. In evaluating applications by holding companies to acquire
savings associations, the OTS must consider the financial and managerial
resources and future prospects of the company and institution involved, the
effect of the acquisition on the risk to the insurance funds, the convenience
and needs of the community and competitive factors.

As a unitary savings and loan holding company, the Holding Company generally
will not be restricted under existing laws as to the types of business
activities in which it may engage, provided that its savings association
subsidiary continues to satisfy the QTL test. Upon any acquisition by the
Holding Company of another SAIF-insured institution (other than the Holding
Company), a federal savings association insured by the BIF, or a state-
chartered BIF-insured savings association meeting the QTL test that is deemed
to be a savings institution by OTS, except for a supervisory acquisition, the
Holding Company would become a multiple savings and loan holding company (if
the acquired institution is held as a separate subsidiary) and would be
subject to extensive limitations on the types of business activities in which
it could engage. The HOLA, as amended by the FIRREA, limits the activities of
a multiple savings and loan holding company and its non-insured institution
subsidiaries primarily to activities permissible for bank holding companies
under Section 4(c)(8) of the BHC Act, subject to the prior approval of the
OTS, and activities in which multiple savings and loan holding companies were
authorized by regulation to engage in on March 5, 1987. Such activities
include mortgage-banking, consumer finance, operation of a trust company, and
certain types of securities brokerage. The services and activities in which
multiple holding companies were authorized to engage in on March 5, 1987
generally correspond to the activities which are permitted for service
corporations of federally-chartered savings institutions.

FEDERAL AND STATE TAXATION

FEDERAL TAXATION

For federal income tax purposes, the Association files a federal income tax
return based upon a tax year ended March 31. The Mutual Holding Company does
not currently file a consolidated federal income tax return with the
Association since it owns less than 80% of the Association Shares. After the
Conversion and Reorganization, it is expected that the Holding Company and its
subsidiaries (including the Association) will file a consolidated federal tax
return on a tax year ended March 31. Consolidated returns have the effect of
eliminating intercompany distributions, including dividends, from the
computation of consolidated taxable income for the year in which the
distribution occurs.

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<PAGE>

Prior to 1997, if certain conditions were met, savings and loan associations
and savings banks were allowed special bad debt deductions in determining
taxable income based on either specified experience formulas or on a
percentage of taxable income before such deduction. Bad debt deductions in
excess of actual losses were tax-preference items, and were subject to a
minimum tax. The Association used the percentage of taxable income method for
1996 and 1995 in determining the bad debt deduction for tax purposes.

The special bad debt deduction accorded thrift institutions is covered under
Section 593 of the Code. The Small Business Job Protection Act of 1996
included the repeal of certain portions of Section 593 effective for tax years
beginning after December 31, 1995. As a result, the Association is no longer
allowed a percentage method bad debt deduction. The repeal of the thrift
reserve method generally requires thrift institutions to recapture into income
the portion of tax bad debt reserves accumulated since 1987 ("base year
reserve"). The recapture will generally be taken into income ratably over six
tax years. However, if the Association meets a residential loan requirement
for tax years beginning in 1997 and 1998, recapture of the reserve can be
deferred until the tax year beginning in 1999. At March 31, 1997, the
Association had bad debts deducted for tax purposes in excess of the base year
reserve of approximately $241,000. The Association has recognized a deferred
income tax liability for this amount.

Certain events covered by Code Section 593(e), which was not repealed, will
trigger a recapture of the base year reserve. The base year reserve of thrift
institutions would be recaptured if a thrift ceases to qualify as a "bank" for
federal income tax purposes. The base year reserves of thrift institutions
also remain subject to income tax penalty provisions which, in general,
require recapture upon certain stock redemptions of, and excess distributions
to, stockholders. At March 31, 1997, retained earnings included approximately
$2.9 million of base year reserves, for which no deferred federal income tax
liability has been recognized.

Deferred income taxes arise from the recognition of certain items of income
and expense for tax purposes in years different from those in which they are
recognized in the consolidated financial statements.

The Association is subject to the corporate alternative minimum tax which is
imposed to the extent it exceeds the Association's regular income tax for the
year. The alternative minimum tax will be imposed at the rate of 20% of a
specially computed tax base. Included in this base will be a number of
preference items, including the following: (i) 100% of the excess of a thrift
institution's bad debt deduction over the amount that would have been
allowable on the basis of actual experience; and (ii) for years beginning in
1988 and 1989 an amount equal to one-half of the amount by which an
institution's "book income" (as specially defined) exceeds its taxable income
with certain adjustments, including the addition of preference items (for
taxable years commencing after 1989 this adjustment item is replaced with a
new preference item relating to "adjusted current earnings" as specially
computed). In addition, for purposes of the new alternative minimum tax, the
amount of alternative minimum taxable income that may be offset by net
operating losses is limited to 90% of alternative minimum taxable income.

The Association has not been audited by the IRS within the last five years.
For additional information regarding taxation, see Note 13 of Notes to
Consolidated Financial Statements.

MISSOURI TAXATION

The Association is subject to a state financial institutions tax, computed
on the basis of its state taxable income, at a rate of 7%.

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MANAGEMENT OF THE HOLDING COMPANY AND ASSOCIATION

DIRECTORS OF THE HOLDING COMPANY

The Board of Directors of the Holding Company is currently the same as that
of the Association. The names and biographical information of the directors
are set forth below under "--Directors of the Association." The Board of
Directors is divided into three classes, each of which will serve a three-year
term (except with respect to two of the classes for the first two years after
the incorporation of the Holding Company). One class of directors, consisting
of LeRoy C. Crook, Kenneth J. Hrdlicka and Michael J. Walsh, has a term of
office expiring at the first annual meeting of the Holding Company following
the Conversion and Reorganization; a second class, consisting of Richard C.
Fellhauer, Daniel C. Aubuchon and Stacey W. Braswell, has a term of office
expiring at the annual meeting to be held one year thereafter, and a third
class, consisting of Berenice J. Mahacek, Charles J. Wolter and Michael A.
Deelo, has a term of office expiring at the annual meeting to be held two
years thereafter. Mr. Fellhauer is the president and chief executive officer
of the Holding Company.

None of the directors has received remuneration from the Holding Company to
date, and it is expected that no compensation will initially be paid to them
by the Holding Company after the Conversion and Reorganization. Information
concerning the principal occupations and employment of, and compensation
received from the Association by, the directors of the Holding Company is set
forth under "--Directors of the Association;" and "--Directors' Fees."

DIRECTORS OF THE ASSOCIATION

Upon completion of the Conversion and Reorganization, each director of the
Association immediately prior to the Conversion and Reorganization will
continue to serve as a director of the Association after the Conversion and
Reorganization. Each director serves for a term of three years. The terms are
staggered so that approximately one-third of the Board of Directors is elected
each year. Because the Holding Company will own all of the issued and
outstanding capital stock of the Association following the Conversion and
Reorganization, the Holding Company will elect the directors of the
Association following the Conversion and Reorganization.

The following table sets forth certain information with respect to the
persons who currently serve as members of the Board of Directors of the
Association.

<TABLE>
<CAPTION>
AGE AT POSITION HELD DIRECTOR TERM
NAME JUNE 30, 1997 WITH THE ASSOCIATION SINCE EXPIRES
---- ------------- -------------------- -------- -------
<S> <C> <C> <C> <C>
LeRoy C. Crook.......... 88 Director 1965 1998
Kenneth J. Hrdlicka..... 54 Director 1983 1998
Michael J. Walsh........ 53 Director 1986 1998
Richard C. Fellhauer.... 55 Director, Chairman of the Board, 1973 1999
President and Chief Executive Officer
Daniel C. Aubuchon...... 49 Director 1981 1999
Stacey W. Braswell...... 53 Director 1982 1999
Berenice J. Mahacek..... 63 Director 1982 2000
Charles J. Wolter....... 79 Director 1989 2000
Michael A. Deelo........ 41 Director, Executive Vice President 1994 2000
and Chief Financial Officer
</TABLE>

The business experience for the past five years of each of the current
directors is as follows:

LeRoy C. Crook, now retired, was a Vice President of Vess Bottling Company.

Kenneth J. Hrdlicka has been the Director of Business Development of
Anheuser Busch, Inc. for more than the past five years.

Michael J. Walsh has been a Vice President of ECC for more than the past
five years.

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<PAGE>

Richard C. Fellhauer has been affiliated with the Association since 1966 and
assumed the position of Chairman of the Board, President and Chief Executive
Officer in 1982.

Daniel C. Aubuchon has been a partner with the law firm of Aubuchon, Raniere
& Lally, P.C. for more than the past five years.

Stacey W. Braswell has been a principal stockholder and Vice President of
Blaine-Braswell and Associates, an insurance agency, for more than the past
five years.

Berenice J. Mahacek has been retired since 1996. Prior to that time she was
a Senior Vice President of the Association.

Charles J. Wolter has been the President of Realty Net--Wolter Real Estate
for more than the past five years. Charles J. Wolter is the father of Leonard
O. Wolter, an executive officer of the Holding Company.

Michael A. Deelo has been an Executive Vice President and Chief Financial
Officer of the Association since 1996. Prior to that time, he served as Vice
President and Chief Financial Officer of the Association.

ASSOCIATE DIRECTORS OF THE ASSOCIATION

The Association also has four non-voting Associate Directors who are
appointed each year by the Board of Directors. The current Associate Directors
are Seymour Bailis, James W. Caulfield, Leonard O. Wolter and John L. Tacke.
While the Associate Directors attend the Board of Directors meetings and
provide periodic advice to the Board, they do not vote on any matters
presented to the Board for a vote.

MEETINGS AND COMMITTEES OF THE BOARDS OF DIRECTORS

The Holding Company has established two standing committees: audit and
compensation. The Board of Directors intends for each committee to meet only a
few times each year.

Directors Aubuchon, Hrdlicka and Mahacek are members of the audit committee.
The audit committee is principally responsible for recommending which firm to
engage as the Holding Company's external auditor and for reviewing the Holding
Company's annual financial statements and matters relating thereto.

Directors Aubuchon, Braswell and Hrdlicka are members of the compensation
committee. The compensation committee is principally responsible for
administering the Holding Company's benefit plans and addressing other
compensation issues at the Holding Company level.

The full Board of Directors of the Holding Company will act on matters
relating to the nomination of directors.

The Board of Directors of the Association conducts its business through
meetings and committees of the Board. During the fiscal year ended March 31,
1997, the Board of Directors of the Association held 13 meetings. No director
of the Association attended fewer than 75% of the total meetings of the Board
and committee on which such Board member served during this period.

The Board of Directors of the Association has an audit committee and a
nominating committee. It does not have a compensation committee.

The audit committee of the Association selects the Association's independent
auditors and meets with them to discuss the results of the annual audit and
any related matters. The audit committee meets quarterly to review internal
accounting controls and to review all reports, findings and all other
information presented to them by senior management. The audit committee met
four times during the fiscal year ended March 31, 1997. The audit committee
currently consists of Directors Aubuchon, Braswell and Hrdlicka.

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The Association's bylaws provide that the Board of Directors of the
Association shall act as a nominating committee for selecting the management
nominees for election as directors. The nominating committee proposes and
considers candidates for election to the Board of Directors. The Board of
Directors of the Association met once in its capacity as the nominating
committee during the fiscal year ended March 31, 1997.

DIRECTORS' FEES

Members of the Board of Directors of the Association received a fee of $600
for each Board meeting attended. No fees are paid for attending committee
meetings of the Board. Associate directors of the Association received $500
for each Board meeting attended.

The Holding Company's Board of Directors intends to meet quarterly.
Directors of the Holding Company will not receive any fees in consideration of
their service.

EXECUTIVE OFFICERS

Upon consummation of the Conversion and Reorganization, the Holding Company
will have three executive officers. Mr. Fellhauer is the President and Chief
Executive Officer of the Holding Company. Mr. Deelo is the Treasurer and Chief
Financial Officer of the Holding Company. For information concerning Messrs.
Fellhauer's and Deelo's business experience, see "--Directors of the
Association." Leonard O. Wolter is Vice President of the Holding Company. Mr.
Wolter is also a Vice President of the Association and Vice President of EMC
and has held such positions for more than the past five years. Leonard O.
Wolter is the son of Charles J. Wolter, a director of the Holding Company.

EXECUTIVE COMPENSATION

The following tables summarize compensation information for the fiscal years
ended March 31, 1997, 1996 and 1995 with respect to the Association's
President and Chief Executive Officer. No other officers of the Association
received compensation in excess of $100,000 during the fiscal year ended March
31, 1997. The Holding Company does not plan to pay compensation to officers of
the Holding Company for their services as such.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------- -----------------------
SECURITIES
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) STOCK AWARDS OPTIONS COMPENSATION(2)
------------------ ---- -------- ------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Fellhauer.... 1997 $141,000 -- $6,700 -- -- $3,300
President & Chief 1996 $125,000 $10,000 $6,500 -- 5,000 $4,700
Executive Officer 1995 $121,000 $ 2,500 $6,000 -- -- $8,000
</TABLE>
- --------
(1) Consisting solely of directors' fees.
(2) Represents the dollar value of matching and discretionary profit sharing
contributions pursuant to the Association's tax-qualified thrift plan for
the fiscal year ended March 31, 1994 and ESOP contributions (based on the
value of the Common Stock on the date the Common Stock was allocated) made
by the Association for the fiscal years ended March 31, 1995, 1996 and
1997.

The following table sets forth information regarding the fiscal year-end
values of unexercised options under the 1993 Stock Option and Incentive Plan
held by the named executive officer.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
SHARES ACQUIRED VALUE -------------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- -------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Fellhauer.... -- -- 12,600 -- $48,000 --
President & Chief
Executive Officer
</TABLE>
- --------
(1) This amount represents the difference between the market value of one
share of the Association's Common Stock on March 31, 1997 ($15.00) and the
option exercise price times the total number of shares subject to
exercisable or unexercisable options.

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<PAGE>

EMPLOYEE BENEFIT PLANS

Insurance. Full-time employees of the Association and its subsidiaries are
provided group plan insurance that covers hospitalization, dental, dependent
coverage, long-term disability and life insurance. This insurance is available
generally and on the same basis to all full-time employees after completion of
90 days of service. The Association pays 100% of employee premiums, while
employees pay 100% of dependent coverage premiums.

Profit Sharing Plan. The Mutual Holding Company currently maintains a
defined contribution profit sharing plan (the "Profit Sharing Plan") for the
benefit of its eligible employees and the eligible employees of its
subsidiaries. The Profit Sharing Plan is a tax qualified retirement plan under
Sections 401(a) and 401(k) of the Code.

All employees who have completed one year of service with the Association
and its subsidiaries are eligible to participate in the Profit Sharing Plan. A
participant may elect to contribute from 1-15% of his or her compensation on a
pre-tax basis to his or her account under the Profit Sharing Plan. Any such
contribution defers the amount of compensation otherwise paid to the
participant and the participant is not taxed on that compensation, or earnings
thereon, until he or she withdraws such amount from the Profit Sharing Plan. A
participant may also elect to make after-tax contributions to his or her
account under the Profit Sharing Plan equal to a specified percentage of his
or her compensation. The earnings on such after-tax contributions are not
subject to tax until the participant withdraws such amount from the Profit
Sharing Plan.

The Mutual Holding Company will make a matching contribution for a plan year
on behalf of each participant who is making contributions to the Profit
Sharing Plan on the last day of the plan year (i.e., December 31) and will be
an amount equal to 50% of the first 2% of the participant's total pre-tax and
after-tax contributions made during the plan year. In addition, the Mutual
Holding Company may, in its sole discretion, make a discretionary employer
contribution. Such contribution will be allocated to the account of each
participant who is employed on the last day of the plan year, on the basis of
the participant's compensation and service.

A participant in the Profit Sharing Plan is 100% vested at all times in his
or her own pre-tax and after-tax contributions and the earnings thereon. A
participant will vest in the matching and employer contributions allocated to
his or her account at a rate equal to 20% after three years of service, and
20% for each additional year of service (up to 100%). A participant becomes
fully vested in all matching and employer contributions allocated to his or
her account, regardless of years of service, upon the participant's death,
disability or retirement on or after normal retirement age.

A participant is entitled to a distribution of the vested portion of his or
her benefits under the Profit Sharing Plan upon termination of employment.
Benefits will be paid in the form elected by the participant, in either a lump
sum, direct rollover or an annuity. If the participant elects an annuity and
he or she is married, the benefit will be paid in the form of a 50% joint and
survivor annuity with the spouse as beneficiary, unless the participant elects
a different form of payment and the spouse consents. If the participant dies
prior to the date his or her benefits are distributed, they will be paid to
his or her designated beneficiary.

A participant may also elect an in-service withdrawal of (i) his or her
after-tax contribution account; or (ii) his or her pre-tax contributions, if
necessary to meet a financial hardship. A participant may also obtain a loan
from the Profit Sharing Plan, which must be repaid by payroll deductions.

The administrator of the Profit Sharing Plan is Richard C. Fellhauer and the
trustees of the Profit Sharing Plan are Michael A. Deelo, Berenice Mahacek and
Richard C. Fellhauer.

1993 Stock Option and Incentive Plan. In connection with the Mutual Holding
Company Reorganization, the Association adopted and maintains the 1993 Stock
Option and Incentive Plan. Pursuant to the 1993 Stock Option and Incentive
Plan, 38,000 Association Shares were reserved for issuance upon the exercise
of stock options granted to full-time employees and non-employee directors of
the Association and its subsidiaries. Of the 38,000 Association Shares
reserved for issuance under the 1993 Stock Option and Incentive Plan, none
have

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<PAGE>

been issued upon the exercise of stock options as of March 31, 1997. Upon
consummation of the Conversion and Reorganization, the obligations and rights
of this plan will be assumed by the Holding Company, and Common Stock will be
issued in lieu of Association Shares pursuant to the terms of such plan.

1993 Management Recognition Plan. In connection with the Mutual Holding
Company Reorganization, the Association adopted the 1993 MRP. Under the 1993
MRP 11,400 Association Shares were available for award to certain officers of
the Association, all of which have been awarded and vested as of March 31,
1997.

The ESOP has been funded by contributions made by the Association in cash
and, upon consummation of the Conversion and Reorganization, will continue to
be funded by contributions made by the Association solely in cash. Following
consummation of the Conversion and Reorganization, benefits under the ESOP
will be paid either in shares of Common Stock or in cash. The ESOP borrowed
funds from an unrelated third party lender to purchase 26,600 Association
Shares in the Conversion and Reorganization. At March 31, 1997, 12,617 of such
Association Shares had been allocated to participant's accounts. At March 31,
1997, the unpaid principal amount of the ESOP debt was $136,000 (the "Existing
ESOP Debt"). Upon consummation of the Conversion and Reorganization, the
Association Shares held by the ESOP will convert into Common Stock based upon
the Exchange Ratio and the Existing ESOP Debt will be retired and replaced by
the New ESOP Debt (as defined below).

The ESOP anticipates borrowing funds from the Holding Company (the "New ESOP
Debt") to repay the Existing ESOP Debt and to acquire up to an aggregate of 7%
of the number of shares of Conversion Stock to be issued in the Offering. The
New ESOP Debt will be secured by the unallocated shares of Common Stock held
by the ESOP and will be repaid by the ESOP with funds from the Association's
contributions to the ESOP. Unallocated ESOP shares are held in a suspense
account for allocation among participants as the loan is repaid. The
Association expects to make contributions to the ESOP at such times and in an
amount that, at a minimum, will enable the ESOP to meet its debt service
obligations on the New ESOP Debt. Any contributions in excess of this amount
may be made at the Association's discretion. While the New ESOP Debt is
outstanding, any cash dividends received with respect to the shares held in
the ESOP will be applied to the principal and interest payments due on such
loan. The New ESOP Debt will require annual interest and principal payments
over a 10- year period and will bear interest at a fixed rate established at
the prime rate, as reported in The Wall Street Journal, Midwest Edition, in
effect at the time of completion of the Conversion and Reorganization.

The Association's contributions to the ESOP to retire the principal and
interest on the New ESOP Debt will be accounted for as compensation and
employee benefits expense. The contributions to repay principal and interest
on the New ESOP Debt are tax deductible to the Association. The ESOP, in turn,
will use the Association's contribution with respect to principal and interest
to repay the New ESOP Debt. Interest paid by the ESOP to the Holding Company
on the New ESOP Debt will be taxable income to the Holding Company; however,
such amount, when netted against the deduction to the Association for its
interest contribution to the ESOP, will negate any income or deduction to the
Holding Company on a consolidated tax basis with respect to the New ESOP Debt.
The Association intends to record compensation and employee benefits expense
related to the ESOP in accordance with SOP 93-6. As a result, to the extent
the value of the Common Stock appreciates over time, compensation and employee
benefits expense related to the ESOP will increase. For additional information
regarding SOP 93-6, see "Pro Forma Data."

As stated above, the ESOP intends to purchase in the Offering up to an
aggregate of 7% of the number of shares of Conversion Stock to be issued in
the Offering. If the final Conversion valuation exceeds $9.2 million (the
maximum of the Offering Price Range), an additional number of shares may be
issued in the Offering to the

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<PAGE>

ESOP to enable the ESOP to purchase up to an aggregate of 7% of the number of
shares of Conversion Stock to be issued in the Offering, subject to the
approval of OTS. If the final Conversion valuation does not exceed $9.2
million, the ESOP will be permitted to purchase Conversion Stock in the
Offering only if stock is available after satisfaction of orders by Eligible
Account Holders.

Contributions to the ESOP by the Association and shares released from the
suspense account are allocated among participants based on compensation.
Except for participants who retire, become disabled or die during the plan
year, all other participants are required to have completed at least 1,000
hours of service and be employed on the last day of the plan year in order to
receive an allocation. Participant benefits vary in accordance with the
following schedule: three years of service--20% vested, four years of
service--40% vested, five years of service--60% vested, six years of service--
80% vested, seven years of service or greater--100% vested. All years of
service are counted toward vesting. Vesting is accelerated upon retirement,
death, disability or termination of the ESOP. Forfeitures are reallocated to
other participants to reduce future funding costs. Benefits may be payable
upon retirement, death, disability or separation from service. Contributions
to the ESOP are not fixed, so benefits payable under the ESOP cannot be
estimated.

The Board of Directors has appointed a committee to administer the ESOP.
Messrs. Aubuchon, Braswell and Hrdlicka collectively act as the trustee ("ESOP
Trustee") under the ESOP. Under the ESOP, the ESOP Trustee is required to vote
all allocated shares held in the ESOP in accordance with the instructions of
the participating employees. Shares for which employees do not give
instructions and unallocated shares must be voted by the ESOP Trustee in the
same proportion as determined by the vote of participants with respect to
allocated shares.

The Board of Directors may amend the ESOP in any manner which it deems
desirable, except that the ESOP may not be amended in any way to deprive any
participant or beneficiary of any benefits to which be is entitled with
respect to contributions previously made.

The ESOP may purchase Common Stock in the open market at then prevailing
prices from time to time following the Conversion and Reorganization. The ESOP
is subject to requirements of ERISA and regulations of the IRS and the
Department of Labor promulgated thereunder.

1997 Stock Option Plan. The Board of Directors of the Holding Company
intends to adopt the 1997 Stock Option Plan and to submit it to stockholders
for approval following consummation of the Conversion and Reorganization. The
1997 Stock Option Plan is intended to promote stock ownership by directors and
selected officers and employees of the Holding Company and the Association to
increase their proprietary interest in the Holding Company and to encourage
them to remain in the service of the Holding Company or the Association.

OTS conversion regulations prohibit the Association from seeking
ratification of the 1997 Stock Option Plan by the Holding Company's
stockholders sooner than six months after completion of the Conversion and
Reorganization. Moreover, pursuant to OTS conversion regulations, if the 1997
Stock Option Plan is effective within one year after completion of the
Conversion and Reorganization, options awarded under the plan cannot vest at a
rate greater than 20% per year, vesting of awards cannot be accelerated in the
event of a change of control of the Holding Company and the number of options
that can be allocated to directors and officers is subject to certain limits
set by OTS. The Board of Directors of the Holding Company has not decided when
the 1997 Stock Option Plan will be submitted to stockholders for approval;
however, in no event will the 1997 Stock Option Plan be submitted for
stockholder approval sooner than six months after completion of the Conversion
and Reorganization. The Holding Company and Association intend to comply with
applicable law governing implementation and terms of the 1997 Stock Option
Plan (including OTS regulations and policies) in effect at the time the 1997
Stock Option Plan is submitted to the Holding Company's stockholders for
approval.

Depending upon when the Board of Directors decides it wishes to submit the
1997 Stock Option Plan to stockholders of the Holding Company for approval,
the plan could be submitted either at the Holding Company's first annual
meeting of stockholders (currently expected to be held in August 1998) (the
"First Annual

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<PAGE>

Meeting") or at a special meeting of stockholders which could be held earlier
than the First Annual Meeting (but not sooner than six months after completion
of the Conversion and Reorganization). The 1997 Stock Option Plan may not, and
will not, be established and become effective unless and until approved by the
Holding Company's stockholders.

The 1997 Stock Option Plan is to be administered by the Holding Company's
compensation committee (the "Committee"). None of the members of the Committee
may be an officer or employee of the Holding Company or the Association. The
Committee will have the authority, among other things, to select the employees
and directors to whom options may be granted, to determine the terms of each
option, to interpret the provisions of the 1997 Stock Option Plan and to make
all other determinations that it may deem necessary or advisable for the
administration of the 1997 Stock Option Plan. Each determination or other
action made or taken pursuant to the 1997 Stock Option Plan, including
interpretation of the 1997 Stock Option Plan and the specific terms and
conditions of the options granted thereunder, by the Committee will be final
and conclusive for all purposes and upon all persons.

The 1997 Stock Option Plan provides for the grant of "incentive stock
options" within the meaning of Section 422 of the Code and for options that do
not constitute incentive stock options (referred to herein as "nonstatutory
options"), as determined in each individual case by the Committee. Incentive
stock options granted under the 1997 Stock Option Plan have certain
advantageous tax attributes under federal and state income tax laws. No
taxable income is recognized by the option holder for federal income tax
purposes at the time of the grant or exercise of an incentive stock option,
and no federal income tax deduction is available to the Holding Company or the
Association as a result of such a grant or exercise. Any gain or loss
recognized by an option holder on the later disposition of shares acquired
pursuant to the exercise of an incentive stock option generally will be
treated as long-term capital gain or loss if such disposition does not occur
prior to one year after the date of exercise of the option or two years after
the date the option was granted.

As in the case of incentive stock options, the grant of a nonstatutory stock
option will not result in taxable income to the recipient of the option for
federal income tax purposes nor will the Holding Company or the Association be
entitled to an income tax deduction. Upon exercise of a nonstatutory stock
option, however, the option holder will generally recognize ordinary income
for federal income tax purposes equal to the difference between the exercise
price and the fair market value of the shares acquired on the date of
exercise, and the Holding Company, the Association or any other subsidiary of
the Holding Company which is the employer of the option holder will be
entitled to federal income tax deductions equal to the amount of ordinary
income recognized by the option holder. In general, any further gain or loss
realized by the option holder on the subsequent disposition of such shares
will be long-term or short-term capital gain or loss, depending on the length
of time the shares are held after the option is exercised.

The Committee will initially, and from time to time thereafter, select those
officers and other key employees of the Holding Company, the Association or
any of their subsidiaries to participate in the 1997 Stock Option Plan on the
basis of the special importance of their services in the management,
development and operations of the Holding Company, the Association or their
subsidiaries. Such officers and other key employees may receive either
incentive stock options or nonstatutory options under the 1997 Stock Option
Plan. Unless expressly provided otherwise at the time of the grant, however,
such officers and other key employees will receive incentive stock options.

The exercise price of options granted under the 1997 Stock Option Plan must
at least equal the fair market value of the Common Stock subject to the option
(determined as provided in the 1997 Stock Option Plan) on the date the option
is granted. Assuming the 1997 Stock Option Plan is submitted and the Holding
Company's stockholders approve it at the First Annual Meeting, the exercise
price of options granted at the time of such approval would equal the fair
market value of the Holding Company's stock on the date of the First Annual
Meeting.

87
<PAGE>

Options granted under the 1997 Stock Option Plan will vest and become
exercisable at a rate of 20% per year, commencing one year after the grant
date, and 20% on each anniversary date thereof for the following four years.
Notwithstanding such a five-year vesting schedule, all awards will be 100%
vested upon the death or disability of the recipient, in which case all of the
recipient's options will expire on the earlier of (i) the first anniversary of
the date of the recipient's death or disability or (ii) the date that any
option of the recipient expires in accordance with its terms. Subject to the
earlier termination of an employee's employment with the Holding Company, the
Association or any of their subsidiaries, each option granted under the 1997
Stock Option Plan will expire on the tenth anniversary of the date on which
such option was granted. If an employee's employment terminates with the
Holding Company, the Association or any of their subsidiaries for any reason
other than death or disability, all the employee's unvested options will be
forfeited; provided, however, that an employee who is also a director will not
forfeit any of his or her unvested options by reason of his or her retirement
as an employee of the Holding Company, the Association or any of their
subsidiaries if such director continues his or her service on the Board of
Directors after retirement as an employee, in which case that director's
options will continue to vest and will remain exercisable in the same manner
and to the same extent as before that director retired as an employee. If a
director's service on the Board of Directors terminates for any reason other
than death, disability or retirement, that director's unvested options will be
forfeited. In the event of a director's death or disability, all of that
director's awards will be 100% vested, in which case all of that director's
options will expire on the earlier of (i) the first anniversary of the date of
the director's death or disability or (ii) the date that any option held by
that director expires in accordance with its terms. In the event of a
director's retirement from the Board of Directors, that director's options
will continue to vest and will remain exercisable in the same manner and to
the same extent as before that director retired as a director. In general, any
shares of Common Stock subject to issuance upon exercise of options but which
are not issued because of a surrender, forfeiture, expiration, termination or
cancellation of any such option will once again be available for issuance
pursuant to subsequently granted options.

An incentive stock option granted under the 1997 Stock Option Plan to an
employee owning more than 10% of the total combined voting power of all
classes of stock of the Holding Company is subject to the further restrictions
that such option must have an exercise price of at least 110% of the fair
market value of the shares issuable on exercise of the option (determined as
of the date the option is granted) and will expire, and all rights to purchase
shares thereunder will cease, no later than the fifth anniversary of the date
on which the incentive stock option was granted. Incentive stock options are
subject to the further restriction that the aggregate fair market value
(determined as of the date of grant) of stock as to which any such incentive
stock option first becomes exercisable in any calendar year is limited to
$100,000. To the extent options covering more than $100,000 worth of stock
first become exercisable in any one calendar year, the excess will be
nonstatutory options.

The full exercise price for all shares purchased on exercise of options
granted under the 1997 Stock Option Plan may be purchased by paying cash, by
paying cash received from a broker-dealer to whom the optionee has submitted
an exercise notice consisting of a fully endorsed option, by delivering shares
of Common Stock having an aggregate fair market value on the date of exercise
equal to the exercise price, by directing the Holding Company to withhold such
number of shares of Common Stock otherwise issuable upon exercise of such
option having an aggregate fair market value on the date of exercise equal to
the exercise price, by using other medium of payment, in the case of an
officer or employee, as the Committee, in its discretion, shall authorize at
the time of grant or by using any combination of the above methods.

The Board of Directors or the Committee has the authority to terminate,
suspend or amend the 1997 Stock Option Plan, in whole or in part, from time to
time, without the approval of the stockholders of the Holding Company to the
extent allowed by law. The 1997 Stock Option Plan provides for appropriate
adjustment in the number and kind of shares subject to the 1997 Stock Option
Plan and in the number, kind and per share exercise price of shares subject to
unexercised options in the event of any change in the outstanding Common Stock
of the Holding Company by reason of a stock split, stock dividend, combination
or reclassification of shares, recapitalization, merger or similar event.

88
<PAGE>

Notwithstanding when the 1997 Stock Option Plan is submitted to and approved
by the stockholders, upon receipt of stockholder approval to establish the
1997 Stock Option Plan, the Board of Directors intends to reserve an amount of
stock equal to 10% of the Conversion Stock sold in the Offering for issuance
under the 1997 Stock Option Plan (or between 68,000 shares and 92,000 shares,
assuming the sale of between 680,000 shares and 920,000 shares of Conversion
Stock in the Offering). Each nonemployee director of the Holding Company, as
of the time the 1997 Stock Option Plan is approved by stockholders, will
receive (notwithstanding when the 1997 Stock Option Plan is submitted to
stockholders for their ratification), subject to the vesting rules above, a
nondiscretionary grant of a 10-year nonstatutory option to purchase 4,600
shares of Common Stock (based on 920,000 shares of Conversion Stock sold at
the maximum of the Offering Price Range and 92,000 shares of Common Stock
reserved under the 1997 Stock Option Plan). Non-employee directors will also
be eligible to receive discretionary grants of nonstatutory options as
determined by the Committee from time to time. The shares used to fund these
option awards will come from authorized but unissued shares, from treasury
shares or from shares held in a grantor trust. As a result, in the event that
all options under the 1997 Stock Option Plan are awarded and exercised, the
percentage interests of stockholders as of the date the Conversion and
Reorganization is consummated will be diluted by approximately 5.05%. If more
or less than 920,000 shares of Conversion Stock are sold in the Offering, the
number of options granted under the 1997 Stock Option Plan will be adjusted to
maintain the ratio of the awards intended to be made to the number of shares
sold at the maximum of the Offering Price Range.

The total number of shares of Common Stock that may be available for options
under the 1997 Stock Option Plan will be adjusted each January 1, through
January 1, 2007, so that the total number of shares of Common Stock that may
be issued and sold under the 1997 Stock Option Plan as of each January 1 will
be equal to 5.32% of the outstanding shares of Common Stock on such date;
provided, however, that no such adjustment may reduce the total number of
shares of Common Stock that may be issued and sold under the 1997 Stock Option
Plan below 10% of the shares originally reserved. The shares of Common Stock
issued and sold under the 1997 Stock Option Plan may be issued from shares
specifically reserved for such purpose by the Board of Directors, may be
issued from shares repurchased by the Holding Company ("Treasury Shares")
(whether or not such Treasury Shares were repurchased by the Holding Company
specifically for the purpose of being issued under the 1997 Stock Option Plan)
or may be issued from shares held in a grantor trust. In the event of a stock
split, reverse stock split or stock dividend, the number of shares of Common
Stock reserved under the 1997 Stock Option Plan and the number of options
granted pursuant thereto and exercise price of the options will be adjusted to
reflect such increase or decrease in the total number of shares of Common
Stock outstanding.

At any time following approval of the 1997 Stock Option Plan by the
stockholders of the Holding Company, the Association or the Holding Company
may contribute sufficient funds to a grantor trust to purchase, and such trust
may purchase in the open market, a number of shares of Common Stock equal to
10% of the Conversion Stock sold in the Offering. Such shares would be held by
the trust for issuance to stock option holders upon the exercise of stock
options. Whether such shares are purchased, and the timing of such purchases,
will depend on market and other conditions and the alternative uses of capital
available to the Holding Company.

89
<PAGE>

Notwithstanding when the 1997 Stock Option Plan is submitted to and approved
by stockholders, it is anticipated that the following awards of stock options
will be made pursuant to the 1997 Stock Option Plan to directors and officers
of the Holding Company and the Association as of the date of the approval of
the 1997 Stock Option Plan by the stockholders of the Holding Company
(assuming the sale of 920,000 shares of Conversion Stock in the Offering at
the maximum of the Offering Price Range, and the reservation of 92,000 shares
of Common Stock for issuance under the 1997 Stock Option Plan):

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION TERM(1)
NUMBER OF % OF --------------------------------------
RECIPIENT OPTIONS GRANTED TOTAL OPTIONS 0% 5% 10%
- --------- --------------- ------------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
NONEMPLOYEE DIRECTORS:
Daniel C. Aubuchon...... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Stacey W. Braswell...... 4,600 5.0% $ 0 $ 29,000 $ 73,000
LeRoy C. Crook.......... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Kenneth J. Hrdlicka..... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Berenice J. Mahacek..... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Charles J. Wolter....... 4,600 5.0% $ 0 $ 29,000 $ 73,000
OFFICERS:
Richard C. Fellhauer.... 23,000 25.0% $ 0 $ 145,000 $ 367,000
Michael A. Deelo........ 16,100 17.5% $ 0 $ 101,000 $ 257,000
Leonard O. Wolter....... 4,600 5.0% $ 0 $ 29,000 $ 73,000
Michael J. Walsh........ 4,600 5.0% $ 0 $ 29,000 $ 73,000
Seymour Bailis.......... 4,600 5.0% $ 0 $ 29,000 $ 73,000
John L. Tacke........... 4,600 5.0% $ 0 $ 29,000 $ 73,000
All Directors and
Officers as a Group
(12 Persons)........... 85,100 92.5% $ 0 $ 536,000 $ 1,354,000
</TABLE>
- --------
(1) Assumes the options are granted at the Purchase Price ($10.00 per share),
the options have a 10-year term, the market price of the Common Stock
underlying the option appreciates annually in value from the date of grant
to the end of the option term at a compounded rate of either 5% or 10% as
indicated in the columns. There can be no assurance that the Common Stock
will appreciate annually at a compounded rate of 5% or 10%. The Holding
Company is unaware of any formula which provides an accurate determination
of the value of a stock option as of the date of grant.

Under the Plan and presently effective regulations and policies of the OTS,
the shares of Common Stock for which options may be granted during the first
year following the Conversion and Reorganization may not exceed 10% of the
total number of shares of Conversion Stock sold in the Offering. Furthermore,
during that first year following the Conversion and Reorganization, no
individual may be granted options to purchase more than 25% of the total
shares covered by the 1997 Stock Option Plan, and nonemployee directors may
not be granted options to purchase more than 5% individually, or more than 30%
as a group, of the shares covered by the 1997 Stock Option Plan, unless the
OTS allows greater awards. The 1997 Stock Option Plan may not and will not be
established in the absence of stockholder approval.

1997 Management Recognition Plan. The Board of Directors of the Holding
Company intends to adopt the 1997 MRP and to submit it to stockholders for
approval following consummation of the Conversion and Reorganization. The 1997
MRP is intended as a method of providing directors, officers and certain
employees of the Holding Company or the Association with a proprietary
interest in the Holding Company and to encourage such persons to remain with
the Holding Company or the Association.

OTS conversion regulations prohibit the Association from seeking
ratification of the 1997 MRP by the Holding Company's stockholders sooner than
six months after completion of the Conversion and Reorganization. Moreover,
pursuant to OTS conversion regulations, if the 1997 MRP is effective within
one year after completion of the Conversion and Reorganization, awards under
the plan cannot vest at a rate greater than 20% per year, vesting of awards
cannot be accelerated in the event of a change of control of the Holding
Company and the

90
<PAGE>

number of MRP awards that can be allocated to directors and officers is
subject to certain limits set by OTS. The Board of Directors of the Holding
Company has not decided when the 1997 MRP will be submitted to stockholders
for approval; however, in no event will the 1997 MRP be submitted for
stockholder approval sooner than six months after the completion of the
Conversion and Reorganization. The Holding Company and the Association intend
to comply with applicable law governing implementation and terms of the 1997
MRP (including OTS regulations and policies) in effect at the time the 1997
MRP is submitted to the Holding Company's stockholders for approval.

Depending upon when the Board of Directors decides to submit the 1997 MRP to
stockholders of the Holding Company for approval, the plan could be submitted
either at the First Annual Meeting or at a special meeting of stockholders
which could be held earlier than the First Annual Meeting (but not sooner than
six months after completion of the Conversion and Reorganization). The 1997
MRP may not, and will not, be established and become effective unless and
until approved by the Holding Company's stockholders.

The 1997 MRP will be administered by the Holding Company's compensation
committee. Officers and employees of the Holding Company, the Association and
any of their subsidiaries as of the date the 1997 MRP is approved by the
stockholders of the Holding Company will be eligible for grants of shares of
Common Stock of the Holding Company held by the 1997 MRP. Nonemployee
directors, officers and employees will become vested in shares of Common Stock
awarded to them under the 1997 MRP at a rate of 20% per year, commencing one
year after the grant date, and 20% on each anniversary date thereof for the
following four years. Notwithstanding such a five-year vesting schedule, all
awards will be 100% vested upon the death or disability of the recipient. If
an employee's employment terminates (or a director's service as a director
terminates) with the Holding Company, the Association or any of their
subsidiaries for any reason other than death or disability, that employee's
(or director's) unvested awards will be forfeited.

MRP award recipients will recognize taxable ordinary income equal to the
aggregate fair market value of the shares of Common Stock awarded at the time
such shares become vested. Income recognized by MRP award recipients will be a
deductible expense to the Holding Company or the Association for tax purposes.
When cash dividends are paid with respect to plan shares allocated to a
recipient, such recipient will be entitled to receive an amount equal to such
cash dividend, but only after the related plan shares are earned by the
recipient. No recipient will have any voting or other rights of a stockholder
with respect to any plan shares awarded to such recipient prior to the time
such shares are actually distributed.

The Plan and applicable regulations and policies of the OTS prohibit the
1997 MRP from subscribing for shares of Conversion Stock in the Offering or
otherwise being funded with shares of stock purchased in the Offering.
Following completion of the Offering and approval of the 1997 MRP, the 1997
MRP may purchase either outstanding shares of Common Stock in the open-market
at the then market price of the Common Stock or authorized but previously
unissued shares of Common Stock from the Holding Company (which the Holding
Company intends to reserve for issuance) at the then market price of the
Common Stock. Whether such shares purchased will be purchased in the open
market or will be newly issued shares, and the timing of such purchase, will
depend on market and other conditions and the alternative uses of capital
available to the Holding Company.

Notwithstanding when the 1997 MRP is submitted to and approved by the
stockholders, when the Holding Company receives stockholder approval to
establish the 1997 MRP, the Holding Company will contribute funds to the 1997
MRP to enable it to acquire shares of Common Stock in an amount equal to 3% of
the number of shares of Conversion Stock sold in the Offering, or up to 27,600
shares of Common Stock assuming the sale of 920,000 shares at $10.00 per share
(the maximum of the Offering Price Range). No contributions by employees or
recipients will be permitted. Each nonemployee director as of the effective
date of the 1997 MRP will be granted 690 shares of Common Stock held by the
1997 MRP (based on 920,000 shares of Conversion Stock sold at the maximum of
the Offering Price Range and 27,600 shares of Common Stock purchased by the
1997 MRP in the open market). Assuming that the 1997 MRP is funded entirely
through purchases of authorized but previously unissued shares of stock from
the Holding Company, the percentage interest of stockholders as of the date of
such purchase will be diluted by approximately 1.57%. If more or less than
920,000 shares of Conversion Stock are sold in the Offering, the number of MRP
awards granted to directors, officers and other employees of

91
<PAGE>

the Holding Company and Association will be adjusted to maintain the ratio of
the awards intended to be made to the number of shares sold at the maximum of
the Offering Price Range.

Notwithstanding when the 1997 MRP is submitted to and approved by the
stockholders, it is anticipated that the following awards will be made
pursuant to the 1997 MRP to directors and executive officers of the
Association and the Holding Company as of the date of approval of the 1997 MRP
by the stockholders of the Holding Company (assuming the sale of 920,000
shares of Common Stock in the Offering, at the maximum of the Offering Price
Range, and the purchase of 27,600 shares of Common Stock by the 1997 MRP):

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
NUMBER % OF FOR TEN YEARS FROM GRANT DATE(1)
OF SHARES TOTAL MRP ---------------------------------
RECIPIENT AWARDED SHARES 0% 5% 10%
- --------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
NONEMPLOYEE DIRECTORS:
Daniel C. Aubuchon........ 690 2.50% $ 6,900 $ 11,000 $ 18,000
Stacey W. Braswell........ 690 2.50% $ 6,900 $ 11,000 $ 18,000
LeRoy C. Crook............ 690 2.50% $ 6,900 $ 11,000 $ 18,000
Kenneth J. Hrdlicka....... 690 2.50% $ 6,900 $ 11,000 $ 18,000
Berenice J. Mahacek....... 690 2.50% $ 6,900 $ 11,000 $ 18,000
Charles J. Wolter......... 690 2.50% $ 6,900 $ 11,000 $ 18,000
OFFICERS:
Richard C. Fellhauer...... 6,900 25.00% $ 69,000 $ 112,000 $ 179,000
Michael A. Deelo.......... 4,830 17.50% $ 48,300 $ 79,000 $ 125,000
Leonard O. Wolter......... 2,070 7.50% $ 20,700 $ 34,000 $ 54,000
Michael J. Walsh.......... 1,035 3.75% $ 10,350 $ 17,000 $ 27,000
Seymour Bailis............ 690 2.50% $ 6,900 $ 11,000 $ 18,000
John L. Tacke............. 690 2.50% $ 6,900 $ 11,000 $ 18,000
James W. Caulfield........ 345 1.25% $ 3,450 $ 6,000 $ 9,000
All Directors and Officers
as a Group
(13 Persons)............. 20,700 75.00% $ 207,000 $ 336,000 $ 538,000
</TABLE>
- --------
(1) Assumes the 1997 MRP awards are granted at the Purchase Price ($10.00 per
share) and the market price of the Common Stock underlying the 1997 MRP
award appreciates annually in value from the date of grant until 10 years
thereafter at a compounded rate of either 5% or 10% as indicated in the
columns. MRP awards do not have a term like stock options; however, in
order to compare the value of the 1997 MRP awards to the value of the
stock options granted to these named individuals a comparable 10-year time
period has been used. There can be no assurance that the Common Stock will
appreciate annually at a compounded rate of either 5% or 10%.

Under the Plan and presently effective regulations and policies of the OTS,
during that first year following the Conversion and Reorganization, no
individual may be awarded more than 25% of the total number of shares of
Common Stock held by the 1997 MRP, and nonemployee directors may not be
awarded more than 5% individually, or more than 30% as a group, of the number
of shares of Common Stock held by the 1997 MRP, unless the OTS allows greater
awards. The 1997 MRP may not and will not be established in the absence of
stockholder approval.

EMPLOYMENT AGREEMENTS

The Holding Company intends to enter into new employment agreements with
Richard C. Fellhauer, President and Chief Executive Officer of the Holding
Company and the Association, Michael A. Deelo, Executive Vice President and
Chief Financial Officer of the Association, and Leonard O. Wolter, Vice
President of the Association (each an "executive," or the "executives"), each
of which would be effective as of the consummation of the Conversion and
Reorganization. Each employment agreement provides that the individual will be
employed for a three-year term. Such term may be extended for additional one-
year periods by action of the Board of Directors of the Holding Company taken
on each successive anniversary of the effective date of the

92
<PAGE>

employment agreement. Each of Messrs. Fellhauer, Deelo and Wolter may
terminate their employment agreements at any time upon 90 days' prior written
notice to the Board of Directors of the Holding Company and the Association.

Under the employment agreements, the base annual salary for each executive
may be increased from time to time during the term of the employment agreement
in the sole discretion of the Board of Directors of the Holding Company, but
the executive's salary shall not be reduced below the level then in effect. In
addition, the executive will be entitled to participate in incentive
compensation plans or arrangements as may from time to time be established by
the Holding Company or the Association on a basis consistent with the
treatment of other executive officers of the Holding Company or the
Association, but recognizing differences in responsibilities among executive
officers. The executive also shall be entitled to receive any other bonus or
discretionary compensation payments as the Board of Directors of the Holding
Company may determine from time to time. Pursuant to the employment
agreements, each executive also will be provided such other benefits
(including but not limited to medical, health, life and other insurance
coverage) and will be entitled to participate in such retirement plans of the
Holding Company and the Association, as are generally made available to other
executive officers of the Holding Company or the Association. During his
employment, each executive also will be entitled to customary vacations in
accordance with vacation policies and practices of the Holding Company or the
Association prevailing from time to time, and to reimbursement for reasonable
expenses incurred on behalf of the Holding Company or the Association in
accordance with the then prevailing policies and practices of the Holding
Company.

Each employment agreement provides for continuing benefits in the event the
executive is terminated by the Holding Company, other than for "just cause,"
or in the event the executive voluntarily terminates the employment agreement
for "good reason." Under the employment agreement, "just cause" would include
personal dishonesty, incompetence, willful misconduct or breach of a fiduciary
duty involving personal profit in the performance of his duties under the
employment agreement, intentional and continued failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses), final cease-and-desist order or material
breach of any provision of the employment agreement. Under the employment
agreement, "good reason" would be deemed to exist if the executive terminated
his employment because, without his express written consent, the Holding
Company breached any of the terms of the employment agreement. In such
instances, the executive generally will continue to receive all benefits due
to him under the employment agreement through the remaining term of the
agreement, which, assuming each of the executives were terminated at the
beginning of the term of the agreement and at their present salaries, would
amount to no more than $371,640, $201,960 and $114,660 for each of Messrs.
Fellhauer, Deelo and Wolter, respectively. If the executive is terminated
within one year after a "change of control" of the Holding Company, other than
for just cause or if the executive terminates his employment for "good
reason", then the Holding Company will pay to the executive a lump sum equal
to 2.99 times the "Base Amount," as that term is defined in Section 280G(b)(3)
of the Code, and will continue to provide coverage for the executive and his
dependents, beneficiaries and estate under all executive benefit plans of the
Holding Company and the Association for the remainder of the term of the
employment agreement, which, at their present salaries, would amount to no
more than $396,175, $227,240 and $140,530 for each of Messrs. Fellhauer, Deelo
and Wolter, respectively. If payments and benefits under the employment
agreements would constitute an "Excess Parachute Payment" under Section 280G
of the Code, then such payments and benefits will be reduced to one dollar
less than the maximum amount that the Association may pay under Section 280G
of the Code without losing its ability to deduct such payments for tax
purposes. A "change of control" is defined in each employment agreement to
include, among other events, the acquisition of beneficial ownership of 25% or
more of the voting power of the Holding Company's capital stock.

TRANSACTIONS WITH MANAGEMENT

The Association has followed the policy of offering residential mortgage
loans for the financing of personal residences, share loans and consumer loans
to its officers, directors and employees. The loans are made in the ordinary
course of business and are also made on substantially the same terms and
conditions, including interest rate and collateral, as those of comparable
transactions prevailing at the time with other persons, and do not include
more than the normal risk of collectibility or present other unfavorable
features. As of March 31, 1997, approximately $1.2 million of loans were
outstanding from the Association to executive officers and directors of the
Association and their affiliates.

93
<PAGE>

BENEFICIAL OWNERSHIP OF CAPITAL STOCK

The following table sets forth, as of May 31, 1997, certain information as
to those persons known by the Association to be the beneficial owners of more
than 5% of the outstanding Association Shares.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) STOCK OUTSTANDING
------------------- ----------------------- -----------------
<S> <C> <C>
First Missouri Financial, M.H.C. .... 445,000 53.20%
4131 South Grand Boulevard
St. Louis, Missouri 63118-3464
</TABLE>
- --------
(1) Unless otherwise indicated, the nature of beneficial ownership for shares
shown in this column is sole voting and investment power.

The following table sets forth, as of May 31, 1997, the number of
Association Shares beneficially owned by each director, the executive officer
named in the Summary Compensation Table above (who is also a director), each
associate director and all directors and executive officers of the Association
as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) STOCK OUTSTANDING
- ------------------------ ----------------------- -----------------
<S> <C> <C>
Richard C. Fellhauer................. 36,349 4.28%(2)
Berenice J. Mahacek.................. 10,066 1.20%(2)
Daniel C. Aubuchon................... 3,014 *
Stacey W. Braswell................... 3,464 *
Charles J. Wolter.................... 2,918 *
LeRoy C. Crook....................... 430 *
Kenneth J. Hrdlicka.................. 2,342 *
Michael J. Walsh..................... 9,583 1.15%(2)
Michael A. Deelo..................... 22,021 2.61%(2)
Seymour Bailis....................... 10,250 1.22%(2)
James W. Caulfield................... 380 *
Leonard O. Wolter.................... 7,938 *
John L. Tacke........................ -- --
All directors and executive officers
as a group
(13 persons)........................ 108,755 12.57%(3)
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise indicated, the nature of beneficial ownership for shares
shown in this column is sole voting and investment power. The beneficially
owned shares set forth in this column include the following Association
Shares which the beneficial owner has the right to acquire within sixty
(60) days through the exercise of stock options: Fellhauer: 12,600;
Mahacek: 2,000; Aubuchon: 380; Braswell: 380; C. Wolter: 380; Crook: 380;
Hrdlicka: 380; Walsh: 1,260; Deelo: 6,800; Bailis: 950; Caulfield: 380; L.
Wolter: 2,260; J. Tacke: 0; and all directors and officers as a group:
28,150.
(2) Percentage is calculated on a partially diluted basis, assuming only the
exercise of stock options by such individual which are exercisable within
60 days.
(3) Percentage is calculated on a fully diluted basis, assuming the exercise
of all stock options which are exercisable within 60 days.

THE CONVERSION AND REORGANIZATION

THE BOARDS OF DIRECTORS OF THE MUTUAL HOLDING COMPANY, THE ASSOCIATION AND
THE HOLDING COMPANY HAVE APPROVED THE PLAN, AS HAS THE OTS, SUBJECT TO
APPROVAL BY THE MEMBERS OF THE MUTUAL HOLDING COMPANY AND THE STOCKHOLDERS OF
THE ASSOCIATION ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION OF CERTAIN
OTHER CONDITIONS. SUCH OTS APPROVAL, HOWEVER, DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY SUCH AGENCY.

94
<PAGE>

GENERAL

The Boards of Directors of the Mutual Holding Company and the Association
unanimously adopted the Plan as of May 16, 1997, which was amended on June 20,
1997 and on August 8, 1997. The Plan has been approved by the OTS, subject to,
among other things, approval of the Plan by the Members of the Mutual Holding
Company and the stockholders of the Association. The Members' Meeting and the
Stockholders' Meeting have been called for this purpose on September 19, 1997.

The following is a brief summary of pertinent aspects of the Plan and the
Conversion and Reorganization. The summary is qualified in its entirety by
reference to the Plan, which is available for inspection at each office of the
Association and at the offices of the OTS. The Plan also is filed as an
exhibit to the Registration Statement of which this Prospectus is a part,
copies of which may be obtained from the SEC. See "Available Information."

PURPOSES OF THE CONVERSION AND REORGANIZATION

The Boards of Directors of the Mutual Holding Company and the Association
believe that a conversion of the Mutual Holding Company to stock form and the
reorganization of the Association pursuant to the Plan is in the best
interests of the Mutual Holding Company and the Association, as well as the
best interests of the members of the Mutual Holding Company and the Public
Stockholders. The Conversion and Reorganization will result in the Association
being wholly owned by a stock holding company, which is a more common
structure and form of ownership than a mutual holding company. In addition,
the Conversion and Reorganization will result in the raising of additional
equity capital for the Association and the Holding Company and is expected to
result in a more active and liquid market for the Common Stock than currently
exists for the Association Shares, although there can be no assurances that
this will be the case. Finally, the Conversion and Reorganization has been
structured to reunite the accumulated earnings and profits tax attribute
retained by the Mutual Holding Company with the retained earnings of the
Association through a tax-free reorganization. This will increase the
Association's ability to pay dividends in the future.

Subsequent to the formation of the Mutual Holding Company, there have been
certain changes in the regulations and policies of the OTS relating to mutual
holding companies. In recent years, the U.S. Congress has proposed major
overhauls to the structure of the thrift industry that include eliminating the
federal savings association charter, which is the charter the Association
currently operates under. These proposals also have created uncertainty
concerning the future of the mutual form of ownership. In addition, since the
Mutual Holding Company Reorganization in 1993, the Boards of Directors of the
Mutual Holding Company and the Association have realized a need to create
additional liquidity for the Association Shares and believe the Holding
Company and the Association can effectively deploy the additional equity
capital raised in the Conversion and Reorganization. In light of the
foregoing, the Boards of Directors of the Mutual Holding Company and the
Association believe that it is in the best interests of such companies and
their respective members and stockholders to undertake the Conversion and
Reorganization.

DESCRIPTION OF THE CONVERSION AND REORGANIZATION

On May 16, 1997, the Boards of Directors of the Association and the Mutual
Holding Company adopted the Plan, which was amended on June 20, 1997 and on
August 8, 1997. At the direction of the Association, the Holding Company was
incorporated under Delaware law on May 14, 1997 and is currently a first-tier
wholly

95
<PAGE>

owned subsidiary of the Association. Pursuant to the Plan, (i) the Mutual
Holding Company will convert from mutual form to a federal interim stock
savings association and simultaneously merge with and into the Association,
pursuant to which the Mutual Holding Company will cease to exist and the
Association Shares held by the Mutual Holding Company will be canceled, and
(ii) Interim will then merge with and into the Association. As a result of the
merger of Interim with and into the Association, the Association will become a
wholly-owned subsidiary of the Holding Company and the Public Association
Shares will be converted into the Exchange Shares pursuant to the Exchange
Ratio, which will result in the holders of such shares owning in the aggregate
approximately the same percentage of the Common Stock to be outstanding upon
the completion of the Conversion and Reorganization (i.e., the Conversion
Stock and the Exchange Shares) as the percentage of Association Shares owned
by them in the aggregate immediately prior to consummation of the Conversion
and Reorganization, before giving effect to (a) the payment of cash in lieu of
issuing fractional Exchange Shares, (b) any shares of Conversion Stock
purchased by the Public Stockholders in the Offering or the ESOP thereafter,
and (c) any exercise of dissenters' rights. Upon consummation of the
Conversion and Reorganization, the Association will change its name to
"Equality Savings Bank."

96
<PAGE>

The following diagram summarizes the current organizational structure of the
parties' ownership interests.

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

Public Stockholders First Missouri Financial, M.H.C.

- --------------------------------- ---------------------------------
| |
| 46.8% | 53.2%
| |
| |
---------------------------------------------------
|
| 100%
|
|
--------------------------------------------

Equality Savings and Loan Association, F.A.

--------------------------------------------
|
|
|
|
---------------------------------------------------
| |
| 100% | 100%
| |
- --------------------------------- ---------------------------------

Equality Commodity Corporation Equality Mortgage Corporation

- --------------------------------- ---------------------------------
|
|
|
|
- ---------------------------------

Dutch Town Development Co.

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

<PAGE>

The following diagram reflects the Conversion and Reorganization including (i)
the merger of the Mutual Holding Company(following its conversion into an
interim federal stock savings association) with and into the Association, (ii)
the merger of Interim with and into the Association, pursuant to which the
Public Association Shares will be converted into Exchange Shares, and (iii) the
offering of Conversion Stock.
<TABLE>
<CAPTION>

<S> <C> <C> <C>
--------------- ----------------- -------------------

Existing First Missouri New
Public Financial, ---- Public
Stockholders M.H.C. | MHC converts to Stockholders
| Stock Interim Thrift
--------------- ----------------- | -------------------
| | | |
| 46.8% | 53.2% | |
| | | |
| | | |
------------------------ ----------------------- |
| |
| 100% Stock |
| ---- Interim |
| | Thrift |
------------------------ | |
| ----------------------- |
Equality Savings and | Stock Interim Thrift |
---- Loan Association, F.A | Merges into Equality: |
| | 53.2% ownership cancelled |
| ---- |
| ------------------------ |
| | |
| | |
| | 100% Equality forms |
| | Bancorp |
| ------------------------ |
| |
| Equality Bancorp. Inc. ------------------------------------------------------------
| Offering of
| conversion stock
| ------------------------
| | Bankcorp forms Stock
| | 100% Interim Thrift
| |
| |
| ------------------------
|
| Stock
---- Interim
Thrift
------------------------
</TABLE>
Stock Interim Thrift merges into Equality;
existing public stockholders exchange shares of
Equality for same proportional ownership of
Bancorp: shares of Stock Interim Thrift held
by Bancorp continue as shares of survivor in
the merger; shares of Bancorp held by Equality
cancelled.

98
<PAGE>

The following diagram summarizes the resulting organizational structure of the
parties' ownership interests.

-------------------------------------
Existing and New Public Stockholders
-------------------------------------
|
| 100%
|
|
-------------------------------------
Equality Bancorp, Inc.
-------------------------------------
|
| 100%
|
|
-------------------------------------------------------
Equality Savings Bank
(Formerly, Equality Savings and Loan Association, F.A.)
-------------------------------------------------------
|
|
|
---------------------------------------------------
| |
| 100% | 100%
| |
- --------------------------------- ---------------------------------

Equality Commodity Corporation Equality Mortgage Corporation

- --------------------------------- ---------------------------------
|
|100%
|
|
- ---------------------------------

Dutch Town Development Co.

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

99
<PAGE>

The Plan of Merger providing for the merger of the Mutual Holding Company
with and into the Association, which is attached to the Plan as Annex A, and
the Plan of Merger providing for the merger of Interim with and into the
Association, which is attached to the Plan as Annex B, each must be approved
by the holders of at least two-thirds of the outstanding Association Shares at
the Stockholders' Meeting. The Plan of Merger between Interim and the
Association also must be approved by the Holding Company, as the sole
stockholder of Interim.

In addition, the Primary Parties have conditioned the consummation of the
Conversion and Reorganization upon the approval of the Plan, including the
Plans of Merger, by at least a majority of the votes cast, in person or by
proxy, by the Public Stockholders at the Stockholders' Meeting. The Plan is
subject to the approval of the OTS, and it also must be approved by at least a
majority of the total outstanding votes of the voting members of the Mutual
Holding Company at the Members' Meeting, which votes may be cast in person or
by proxy.

EFFECTS OF THE CONVERSION AND REORGANIZATION

General. Prior to the Conversion and Reorganization, each depositor in the
Association has both a deposit account in the institution and a pro rata
ownership interest in the net worth of the Mutual Holding Company based upon
the balance in his account, which interest may only be realized in the event
of a liquidation of the Mutual Holding Company. This ownership interest,
however, is tied to the depositor's account and has no tangible market value
separate from such deposit account. A depositor who reduces or closes his or
her account receives a portion or all of the balance in the account but
nothing for his ownership interest in the net worth of the Mutual Holding
Company, which is lost to the extent that the balance in the account is
reduced.

Consequently, the depositors of the Association normally have no way to
realize the value of their ownership interest in the Mutual Holding Company,
which has realizable value only in the unlikely event that the Mutual Holding
Company is liquidated. In such event, the depositors of record at that time,
as owners, would share pro rata in any residual surplus and reserves of the
Mutual Holding Company after other claims are paid.

Upon consummation of the Conversion and Reorganization, permanent
nonwithdrawable capital stock will be created to represent the ownership of
the net worth of the Holding Company. The Common Stock of the Holding Company
is separate and apart from deposit accounts and cannot be and is not insured
by the FDIC or any other governmental agency. Certificates are issued to
evidence ownership of the permanent stock. The stock certificates are
transferable, and therefore the stock may be sold or traded if a purchaser is
available with no effect on any account the seller may hold in the
Association.

Continuity. While the Conversion and Reorganization is being accomplished,
the normal business of the Association of accepting deposits and making loans
will continue without interruption. The Association will continue to be
subject to regulation by the OTS and the FDIC. After the Conversion and
Reorganization, the Association will continue to provide services for
depositors and borrowers under current policies by its present management and
staff.

The directors and officers of the Association at the time of the Conversion
and Reorganization will continue to serve as directors and officers of the
Association after the Conversion and Reorganization. The directors and
officers of the Holding Company consist of individuals currently serving as
directors and officers of the Mutual Holding Company and the Association, and
they generally will retain their positions in the Holding Company after the
Conversion and Reorganization.

Effect on Public Association Shares. Under the Plan, upon consummation of
the Conversion and Reorganization, the Public Association Shares shall be
converted into Common Stock based upon the Exchange Ratio without any further
action on the part of the holder thereof. Upon surrender of the Public
Association Shares, Common Stock will be issued in exchange for such shares.
See "--Delivery and Exchange of Certificates."

100
<PAGE>

Upon consummation of the Conversion and Reorganization, the Public
Stockholders of the Association, a federally chartered savings association,
will become stockholders of the Holding Company, a Delaware corporation. For a
description of certain changes in the rights of stockholders as a result of
the Conversion and Reorganization, see "Comparison of Stockholders' Rights"
below.

Effect on Deposit Accounts. Under the Plan, each depositor in the
Association at the time of the Conversion and Reorganization will
automatically continue as a depositor after the Conversion and Reorganization,
and each such deposit account will remain the same with respect to deposit
balance, interest rate and other terms, except to the extent that funds in the
account are withdrawn to purchase Conversion Stock to be issued in the
Offering. Each such account will be insured by the FDIC to the same extent as
before the Conversion and Reorganization. Depositors will continue to hold
their existing certificates, passbooks and other evidences of their accounts.

Effect on Loans. No loan outstanding from the Association will be affected
by the Conversion and Reorganization, and the amount, interest rate, maturity
and security for each loan will remain as they were contractually fixed prior
to the Conversion and Reorganization.

Effect on Voting Rights of Members. At present, all depositors and certain
borrowers of the Association are members of, and have voting rights in, the
Mutual Holding Company as to all matters requiring membership action. Upon
completion of the Conversion and Reorganization, depositors and borrowers will
cease to be members and will no longer be entitled to vote at meetings of the
Mutual Holding Company (which will cease to exist). Upon completion of the
Conversion and Reorganization, all voting rights in the Association will be
vested in the Holding Company as the sole stockholder of the Association.
Exclusive voting rights with respect to the Holding Company will be vested in
the holders of Common Stock. Depositors of and borrowers from the Association
will not have voting rights in the Holding Company after the Conversion and
Reorganization, except to the extent that they become stockholders of the
Holding Company.

Tax Effects. Consummation of the Conversion and Reorganization is
conditioned on prior receipt by the Mutual Holding Company and the Association
of rulings or opinions with regard to federal and Missouri income taxation
indicating that the adoption and implementation of the Plan set forth herein
will not be a taxable event for federal or Missouri income tax purposes to the
Mutual Holding Company, the Association or the Association's Eligible Account
Holders, Supplemental Eligible Account Holders or Other Members, except as
discussed below. See "--Tax Aspects" below.

Effect on Liquidation Rights. If the Mutual Holding Company ever liquidated,
all claims of the Mutual Holding Company's creditors would be paid first.
Thereafter, if there were any assets remaining, members of the Mutual Holding
Company would receive such remaining assets, pro rata, based upon the deposit
balances in their deposit accounts at the Association immediately prior to
liquidation. In the unlikely event that the Association were to liquidate
after the Conversion and Reorganization, all claims of creditors (including
those of depositors, to the extent of their deposit balances) also would be
paid first, followed by distribution of the "liquidation account" to certain
depositors (see "--Liquidation Rights" below), with any assets remaining
thereafter distributed to the Holding Company as the holder of the
Association's capital stock. Pursuant to the rules and regulations of the OTS,
a merger, consolidation, sale of bulk assets or similar combination or
transaction with another insured institution would not be considered a
liquidation for this purpose and, in such a transaction, the liquidation
account would be required to be assumed by the surviving institution.

Effect on Existing Compensation Plans. Upon consummation of the Plan, the
rights and obligations of the Association under Association's 1993 Stock
Option and Incentive Plan will be assumed by the Holding Company, and shares
of Common Stock will be issued (or reserved for issuance) pursuant to such
plan in substitution for Association Shares. See "Management of the Holding
Company and Association--Employee Benefit Plans."

101
<PAGE>

THE OFFERING

As part of the Conversion and Reorganization, the Holding Company is
offering up to 920,000 shares of Common Stock (i.e., Conversion Stock) at a
Purchase Price of $10.00 per share in the Subscription Offering. As described
in more detail below, nontransferable rights to subscribe for the Conversion
Stock in the Subscription Offering have been granted to certain persons
according to certain preference categories and, subject to the prior rights of
holders of Subscription Rights, the Holding Company is also offering shares of
Conversion Stock in the Community Offering to members of the general public.
In the event of an oversubscription in the Subscription and Community
Offering, up to 138,000 additional shares may be issued to reflect changes in
market and financial conditions and to cover additional subscriptions. The
Primary Parties may reject, in whole or in part, orders received in the
Community Offering in their sole discretion.

The Subscription and Community Offering will expire on the Expiration Date,
as described on the cover page of the Prospectus.

Subscription Offering. In accordance with the OTS's regulations,
subscription rights have been granted pursuant to the Subscription Offering
under the Plan to the following persons (collectively, the "Eligible
Subscribers") in the following order of priority: (1) Eligible Account Holders
(depositors with aggregate account balances of $50 or more on deposit at the
Association on March 31, 1996); (2) Employee Stock Benefit Plans (which would
include the ESOP but not include the 1997 MRP); (3) Supplemental Eligible
Account Holders (depositors with aggregate account balances of $50 or more on
deposit at the Association, other than officers or directors of the Mutual
Holding Company or the Association or any of their associates, on June 30,
1997); (4) Other Members (depositors and certain borrowers on August 8, 1997,
the voting record date, who are not Eligible Account Holders or Supplemental
Eligible Holders); (5) directors, officers and employees of the Mutual Holding
Company and the Association; and (6) the Public Stockholders. Subscription
Rights are nontransferable and have been granted to Eligible Subscribers
without charge. No Eligible Subscriber is required to purchase any shares of
Conversion Stock in the Subscription Offering. All subscriptions received will
be subject to the availability of Conversion Stock after satisfaction of
subscriptions of all Eligible Subscribers having prior rights in the
Subscription Offering and to the maximum purchase limitations and other terms
and conditions set forth in the Plan and described below.

CATEGORY 1: ELIGIBLE ACCOUNT HOLDERS. Subject to the minimum purchase
limitation set forth in the Plan, each Eligible Account Holder will receive,
without payment, nontransferable subscription rights to purchase up to the
greater of (i) the number of shares of Conversion Stock that when combined
with Exchange Shares received aggregate 62,500 shares of Common Stock (or such
maximum purchase limitation as may be established for the Community Offering),
(ii) one-tenth of one percent of the total offering of shares of Conversion
Stock in the Subscription Offering or (iii) 15 times the product (rounded down
to the next whole number) obtained by multiplying the total number of shares
of Conversion Stock to be issued in the Subscription Offering by a fraction,
of which the numerator is the amount of the qualifying deposit of the Eligible
Account Holder and the denominator is the total amount of qualifying deposits
of all Eligible Account Holders.

Subscription rights received by officers and directors of the Mutual Holding
Company or the Association and their associates, as Eligible Account Holders,
based on their increased deposits in the Association in the one year period
preceding March 31, 1996 will be subordinated to all other subscriptions
involving the exercise of subscription rights pursuant to this category.

In the event of an oversubscription for shares of Conversion Stock by
Eligible Account Holders, available shares 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 his or her
total allocation equal to 100 shares or the total amount of his or her
subscription, whichever is less. Thereafter, any shares remaining will be
allocated among Eligible Account Holders in the proportion that the amount of
the qualifying deposit of each such Eligible Account Holder bears to the total
amount of the qualifying deposits of all such Eligible Account Holders. If the
amount of shares so allocated to one or more Eligible Account Holders exceeds
the

102
<PAGE>

amount subscribed for by such Eligible Account Holder(s), the excess will be
reallocated (one or more times, as necessary) among those Eligible Account
Holders whose subscriptions are still not fully satisfied on the same
principle until all available shares have been allocated or all subscriptions
satisfied. No fractional shares will be issued in connection with the
allocation of shares under this category.

CATEGORY 2: EMPLOYEE STOCK BENEFIT PLANS. Each Employee Stock Benefit Plan
(which would include the ESOP but not include the 1997 MRP) will receive,
without payment, subscription rights to purchase the number of shares of
Conversion Stock requested by such Employee Stock Benefit Plan, subject to (i)
the availability of sufficient shares of Conversion Stock after filling in
full all subscription orders of Eligible Account Holders and (ii) the maximum
purchase limitations described in "--Limitation on Conversion Stock Purchases"
below. The Employee Stock Benefit Plans will not be deemed to be associates of
any director, officer or employee of the Mutual Holding Company, the
Association or the Holding Company for purposes of the purchase limitations.
In the event that, after completion of the Subscription Offering, the number
of shares of Conversion Stock to be issued is increased to an amount greater
than the number of shares representing the maximum of the Offering Price Range
("Maximum Shares"), the Employee Stock Benefit Plans will have a priority
right to purchase any such shares exceeding the Maximum Shares up to the
purchase limitations described in "--Limitation on Conversion Stock Purchases"
below.

CATEGORY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. Subject to the minimum
purchase limitation set forth in the Plan, each Supplemental Eligible Account
Holder will receive, without payment, nontransferable subscription rights
entitling such Supplemental Eligible Account Holder to purchase up to the
greater of (i) number of shares of Conversion Stock that when combined with
Exchange Shares received aggregate 62,500 shares of Common Stock (or such
maximum purchase limitation as may be established for the Community Offering),
(ii) one-tenth of one percent of the total offering of shares of Conversion
Stock in the Subscription Offering or (iii) 15 times the product (rounded down
to the next whole number) obtained by multiplying the total number of shares
of Conversion Stock to be issued in the Subscription Offering by a fraction,
of which the numerator is the amount of the qualifying deposit of the
Supplemental Eligible Account Holder and the denominator is the total amount
of the qualifying deposits of all Supplemental Eligible Account Holders. Any
subscription rights to purchase shares of Conversion Stock received by an
Eligible Account Holder in accordance with Category 1 will reduce to the
extent thereof the subscription rights to be distributed pursuant to Category
3.

In the event of an oversubscription for shares of Conversion Stock by
Supplemental Eligible Account Holders, available shares 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 or her total allocation equal to 100
shares or the total amount of his or her subscription, whichever is less.
Thereafter, any shares remaining will be allocated among Supplemental Eligible
Account Holders in the proportion that the amount of the qualifying deposit of
each such Supplemental Eligible Account Holder bears to the total amount of
the qualifying deposits of all such Supplemental Eligible Account Holders. If
the amount of shares so allocated to one or more Supplemental Eligible Account
Holders exceeds the amount subscribed for by such Supplemental Eligible
Account Holder(s), the excess will be reallocated (one or more times, as
necessary) among those Supplemental Eligible Account Holders whose
subscriptions are still not fully satisfied on the same principle until all
available shares have been allocated or all subscriptions satisfied. No
fractional shares will be issued in connection with the allocation of shares
under this category.

CATEGORY 4: OTHER MEMBERS. Subject to the minimum purchase limitation set
forth in the Plan, each Other Member will receive, without payment,
nontransferable subscription rights entitling such Other Member to purchase up
to the greater of (i) the number of shares of Conversion Stock that when
combined with Exchange Shares received aggregate 62,500 shares of Common Stock
(or such maximum purchase limitation as may be established for the Community
Offering), and (ii) or one-tenth of one percent of the total offering of
Conversion Stock in the Subscription Offering.

In the event of an oversubscription for shares of Conversion Stock by Other
Members, the available shares of Conversion Stock will be allocated among the
subscribing Other Members pro rata (to the extent of their

103
<PAGE>

orders) in the same proportion as the amount of Conversion Stock subscribed
for by each Other Member bears to the amount of Conversion Stock subscribed
for by all Other Members.

CATEGORY 5: DIRECTORS, OFFICERS AND EMPLOYEES. To the extent that there are
sufficient shares remaining after satisfaction of all subscriptions by
Eligible Account Holders, Employee Stock Benefit Plans, Supplemental Eligible
Account Holders and Other Members, then directors, officers and employees of
the Mutual Holding Company, the Association and the Holding Company will
receive, without payment, nontransferable subscription rights to purchase up
to an aggregate of 21% of the shares of Conversion Stock offered in the
Subscription Offering. The ability of directors, officers and employees to
purchase Conversion Stock under this category is in addition to rights that
are otherwise available to them under the Plan, which generally allows such
persons to purchase in the aggregate up to 31% of the total number of shares
of Conversion Stock sold in the Offering. See "--Limitations on Conversion
Stock Purchases."

In the event of an oversubscription in this category, subscription rights
will be allocated among the individual directors, officers and employees on a
point system basis, whereby such individuals will receive subscription rights
in the proportion that the number of points assigned to each of them bears to
the total points assigned to all directors, officers and employees, provided
that no fractional shares shall be issued. One point will be assigned for each
year of service with the Mutual Holding Company and the Association, one point
for each salary increment of $5,000 per annum and five points for each office
presently held in the Mutual Holding Company and the Association, including
directorships. For information as to the number of shares of Conversion Stock
proposed to be purchased by certain of the directors and officers, see
"Beneficial Ownership of Capital Stock--Proposed Subscriptions by Directors
and Executive Officers."

CATEGORY 6: PUBLIC STOCKHOLDERS. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, Employee Stock Benefit Plans, Supplemental Eligible Account Holders,
Other Members and directors, officers and employees, each Public Stockholder
as of the voting record date for the Stockholders' Meeting will receive,
without payment, nontransferable subscription rights to purchase Conversion
Stock in the Subscription Offering up to the greater of (i) the number of
shares of Conversion Stock that when combined with Exchange Shares received
aggregate 62,500 shares of Common Stock (or such maximum purchase limitations
as may be established for the Community Offering) and (ii) one-tenth of one
percent of the total offering of shares of Conversion Stock in the
Subscription Offering.

In the event of an oversubscription in this category, available shares will
be allocated among subscribing Public Stockholders on a pro rata basis in the
same proportion as each Public Stockholder's subscription bears to the total
subscriptions of all subscribing Public Stockholders, provided that no
fractional shares will be issued.

Expiration Date for the Subscription Offering. The Subscription Offering
will expire at 12:00 Noon, Central Time, on September 16, 1997, unless
extended by the Holding Company with the approval of the OTS, if necessary.
Such extensions may not be extended beyond October 4, 1997. Subscription
rights which have not been exercised prior to the Expiration Date will become
void.

The Primary Parties will not execute orders until at least the minimum
number of shares of Conversion Stock (680,000 shares) have been subscribed for
or otherwise sold. If all shares have not been subscribed for or sold within
45 days after the Expiration Date, unless such period is extended with the
consent of the OTS, all funds delivered to the Holding Company pursuant to the
Subscription Offering will be returned promptly to the subscribers with
interest and all withdrawal authorizations will be canceled. If an extension
beyond the 45-day period following the Expiration Date is granted, the Holding
Company will notify subscribers of the extension of time and subscribers will
be resolicited and permitted to modify or cancel their subscriptions.

Community Offering. Subject to the minimum purchase limitation set forth in
the Plan and to the availability of shares of the Conversion Stock after
satisfaction of all subscriptions of Eligible Account Holders, Employee Stock
Benefit Plans, Supplemental Eligible Account Holders, Other Members,
directors, officers and

104
<PAGE>

employees and Public Stockholders, the remaining shares of the Conversion
Stock will be offered in the Community Offering to natural persons who reside
in Missouri and to whomever else the Prospectus is delivered ("Other
Purchasers"), giving preference to natural persons residing in the Missouri
counties of St. Louis City, St. Louis, Jefferson, St. Charles and Franklin
("Preferred Other Purchasers") in a manner designed to achieve the widest
possible distribution of Conversion Stock. The Community Offering may commence
concurrently with or as soon as practicable after completion of the
Subscription Offering and must be completed within 45 days after completion of
the Subscription Offering, unless extended with the approval of the OTS.

Other purchasers, together with associates of and persons acting in concert
with such persons, may purchase up to the number of shares of Conversion Stock
that when combined with Exchange Shares received aggregate 62,500 shares of
Common Stock. See "--Limitations on Conversion Stock Purchases." THE
OPPORTUNITY TO SUBSCRIBE FOR SHARES OF CONVERSION STOCK IN THE COMMUNITY
OFFERING CATEGORY IS SUBJECT TO THE RIGHT OF THE PRIMARY PARTIES, IN THEIR
SOLE DISCRETION, TO ACCEPT OR REJECT ANY SUCH ORDERS IN WHOLE OR IN PART
EITHER AT THE TIME OF RECEIPT OF AN ORDER OR AS SOON AS PRACTICABLE FOLLOWING
THE EXPIRATION DATE.

If orders are received in the Community Offering for shares in excess of the
available Conversion Stock, accepted subscriptions from Preferred Other
Purchasers will first be filled in full up to a maximum of 2% of the
Conversion Stock and thereafter remaining shares will be allocated on an equal
number of shares basis per order until all orders of Preferred Other
Purchasers have been filled, before any subscriptions in the Community
Offering are filled from subscribers who are not Preferred Other Purchasers.
If Preferred Other Purchasers order more shares of Conversion Stock than are
available for purchase in the Community Offering, available shares of
Conversion Stock will be allocated first to Preferred Other Purchasers pro
rata (to the extent of their orders) in the same proportion as the amount of
the Conversion Stock ordered by each bears to the total amount of the
Conversion Stock ordered by all Preferred Other Purchasers. The Primary
Parties may require a Person to provide evidence, satisfactory to the Primary
Parties, that such Person qualifies as a Preferred Other Purchaser.
Determinations as to whether a Person qualifies as a Preferred Other Purchaser
will be made by the Primary Parties in their sole discretion and will be final
and conclusive.

To the extent that there are shares of Conversion Stock available after
satisfaction of the subscriptions of Preferred Other Purchasers, accepted
subscriptions from subscribers in the Community Offering who are not Preferred
Other Purchasers will first be filled in full up to a maximum of 2% of the
Conversion Stock and thereafter remaining shares will be allocated on an equal
number of shares basis per order until all orders of subscribers who are not
Preferred Other Purchasers have been filled. If Subscribers who are not
Preferred Other Purchasers order more shares of Conversion Stock than are
available for purchase in the Community Offering, available shares of
Conversion Stock will be allocated first to such subscribers pro rata (to the
extent of their orders) in the same proportion as the amount of the Conversion
Stock ordered by each bears to the total amount of the Conversion Stock
ordered by all subscribers in the Community Offering who are not Preferred
Other Purchasers.

SYNDICATED COMMUNITY OFFERING

The Plan also provides that shares of Conversion Stock may be made available
in the Community Offering through a direct community marketing program that
may provide for the utilization of a broker, dealer, consultant, or investment
banking firm, experienced and expert in the sale of financial institution
securities. Should a syndicated community offering be utilized, Trident would,
acting as agent of the Holding Company, organize and form a syndicate of
registered-broker dealers as selected dealers to assist the Holding Company
and the Association in the sale of the Conversion Stock as part of the
Community Offering. Neither Trident nor any registered broker-dealer will have
any obligation to take or purchase shares of Conversion Stock in the
syndicated community offering; however, Trident 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 Purchase Price, and
hence will be sold at the same price as all other shares in the Offering.

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ALTERNATIVE OFFERINGS OF CONVERSION STOCK

If for any reason a Syndicated Community Offering of shares of Conversion
Stock not sold in the Subscription Offering or the Community Offering cannot
be effected, or in the event that an insignificant amount of Conversion Stock
is sold in the Subscription Offering or the Community Offering or in
syndicated community offering, other arrangements will be made for the
disposition of unsubscribed shares by the Holding Company, if possible. Such
other purchase arrangements would be subject to the approval of the OTS, and
with respect to federal securities matters, the SEC, and may provide for
purchases for investment purposes by directors, their associates and other
persons in excess of the limitations provided below and in excess of the
proposed director and officer purchases set forth above. If such other
purchase arrangements cannot be made, the Conversion and Reorganization will
terminate.

STOCK PRICING, EXCHANGE RATIO AND NUMBER OF SHARES TO BE ISSUED

The Appraisal has been prepared by RP Financial in reliance upon the
information contained in this Prospectus, including the Consolidated Financial
Statements of the Association. RP Financial also considered the following
factors, among others: the present and projected operating results and
financial condition of the Primary Parties and the economic and demographic
conditions in the Association's existing market area; certain historical,
financial and other information relating to the Association; a comparative
evaluation of the operating and financial statistics of the Association with
those of other similarly situated publicly-traded companies located in
Missouri and Illinois and other regions of the United States; the aggregate
size of the offering of the Conversion Stock; the impact of the Conversion and
Reorganization on the Association's net worth and earnings potential; the
proposed dividend policy of the Holding Company and the Association; and the
trading market for the Association Shares and securities of comparable
companies and general conditions in the market for such securities.

On the basis of the foregoing, RP Financial has advised the Primary Parties
in its opinion the estimated pro forma market value of the Conversion Stock
and Exchange Shares was $15,037,594 as of June 20, 1997. Because the holders
of the Public Association Shares will continue to hold the same aggregate
percentage ownership interest in the Holding Company as they currently hold in
the Association (before giving effect to the payment of cash in lieu of
issuing fractional Exchange Shares, any exercise of dissenters' rights and any
shares of Conversion Stock purchased by the Association's stockholders in the
Offering or by the ESOP thereafter), the Appraisal was multiplied by the
Mutual Holding Company's percentage interest in the Association (i.e., 53.2%)
to determine the midpoint of the valuation ($8,000,000), and the minimum and
maximum of the valuation were set at 15% below and above the midpoint,
respectively, resulting in a range of $6,800,000 to $9,200,000. The Boards of
Directors of the Primary Parties determined that the Conversion Stock would be
sold at $10.00 per share, resulting in a range of 680,000 to 920,000 shares of
Conversion Stock being offered. Upon consummation of the Conversion and
Reorganization, the Conversion Stock and the Exchange Shares will represent
approximately 53.2% and 46.8%, respectively, of the Holding Company's total
outstanding shares. The Boards of Directors of the Primary Parties reviewed RP
Financial's appraisal report, including the methodology and the assumptions
used by RP Financial, and determined that the Offering Price Range was
reasonable and adequate. The Boards of Directors of the Primary Parties also
established the formula for determining the Exchange Ratio.

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Based upon such formula and the Offering Price Range, the Exchange Ratio
ranged from a minimum of 1.5283 to a maximum of 2.0678 Exchange Shares for
each Public Association Share, with a midpoint of 1.7981. Based upon these
Exchange Ratios, the Holding Company expects to issue between 598,195 and
809,323 Exchange Shares to the holders of Public Association Shares
outstanding immediately prior to the consummation of the Conversion and
Reorganization. The Offering Price Range and the Exchange Ratio may be amended
with the approval of the OTS, if required, or if necessitated by subsequent
developments in the financial condition of any of the Primary Parties or
market conditions generally. In the event the Appraisal is updated to below
$12,781,955 or above $19,887,218, such updated Appraisal will be filed with
the SEC by post-effective amendment.

Based upon current market and financial conditions and recent practices and
policies of the OTS, in the event the Holding Company receives orders for
Conversion Stock in excess of $9,200,000 (the maximum of the Offering Price
Range) and up to $10,580,000 the maximum of the Offering Price Range, as
adjusted by 15%), the Holding Company may be required by the OTS to accept all
such orders. No assurances, however, can be made that the Holding Company will
receive orders for Conversion Stock in excess of the maximum of the Offering
Price Range or that, if such orders are received, that all such orders will be
accepted because the Holding Company's final valuation and number of shares to
be issued are subject to the receipt of an updated appraisal from RP Financial
which reflects such an increase in the valuation and the approval of such
increase by the OTS. There is no obligation or understanding on the part of
management to take and/or pay for any shares of Conversion Stock in order to
complete the Offering.

The following table sets forth, based upon the minimum, midpoint, maximum
and 15% above the maximum of the Offering Price Range, the following: (i) the
total number of shares of Conversion Stock and Exchange Shares to be issued in
the Conversion and Reorganization, (ii) the percentage of the total Common
Stock represented by the Conversion Stock and the Exchange Shares, (iii) the
total shares of Common Stock to be outstanding upon consummation of the
Conversion and Reorganization, and (iv) the Exchange Ratio. The table assumes
that no holder of Public Association Shares exercises dissenters' rights and
that there is no cash paid in lieu of issuing fractional Exchange Shares.

<TABLE>
<CAPTION>
CONVERSION STOCK EXCHANGE SHARES
TO BE ISSUED TO BE ISSUED TOTAL SHARES OF
----------------- --------------- COMMON STOCK TO EXCHANGE
AMOUNT PERCENT AMOUNT PERCENT BE OUTSTANDING RATIO
--------- ------- ------- ------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Minimum............. 680,000 53.2% 598,195 46.8% 1,278,195 1.5283
Midpoint............ 800,000 53.2% 703,759 46.8% 1,503,759 1.7981
Maximum............. 920,000 53.2% 809,323 46.8% 1,729,323 2.0678
15% above Maximum... 1,058,000 53.2% 930,721 46.8% 1,988,721 2.3779
</TABLE>

No sale of shares of Conversion Stock or issuance of Exchange Shares may be
consummated unless prior to such consummation RP Financial confirms that
nothing of a material nature has occurred which, taking into account all
relevant factors, would cause it to conclude that the Purchase Price is
materially incompatible with the estimate of the pro forma market value of a
share of Common Stock upon consummation of the Conversion and Reorganization.
If such is not the case, a new Offering Price Range may be set, a new Exchange
Ratio may

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be determined based upon the new Offering Price Range, a new Subscription
Offering and Community Offering and/or syndicated community offering may be
held or such other action may be taken as the Primary Parties shall determine
and the OTS may permit or require.

Depending upon market or financial conditions following the commencement of
the Subscription Offering, the total number of shares of Conversion Stock to
be issued in the Offering may be increased or decreased without a
resolicitation of subscribers, provided that the product of the total number
of shares times the Purchase Price is not below the minimum or more than 15%
above the maximum of the Offering Price Range (exclusive of the number of
shares of Conversion Stock which may be issued to the ESOP out of authorized
but unissued shares of Common Stock to the extent such shares are not
purchased in the Offering due to an oversubscription). In the event market or
financial conditions change so as to cause the aggregate Purchase Price of the
shares to be below the minimum of the Offering Price Range or more than 15%
above the maximum of such range (exclusive of additional shares that may be
issued to the ESOP), purchasers will be resolicited (i.e., permitted 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
Association's passbook rate of interest, or be permitted to modify or rescind
their subscriptions). Any increase or decrease in the number of shares of
Conversion Stock will result in a corresponding change in the number of
Exchange Shares, so that upon consummation of the Conversion and
Reorganization the Conversion Stock and the Exchange Shares will represent
approximately 53.2% and 46.8%, respectively, of the Holding Company's total
outstanding shares of Common Stock (exclusive of the effects of the exercise
of outstanding stock options).

An increase in the number of shares of Conversion Stock, either as a result
of an increase in the appraisal of the estimated pro forma market value or due
to the purchase by the ESOP of authorized but unissued shares (see "--The
Offering--Subscription Offering--Category 2: Employee Stock Benefit Plans"),
would decrease both a subscriber's ownership interest and the Holding
Company's pro forma net earnings and stockholders' equity on a per share basis
while increasing pro forma net earnings and stockholders' equity on an
aggregate basis. A decrease in the number of shares of Conversion Stock would
increase both a subscriber's ownership interest and the Holding Company's pro
forma net earnings and stockholders' equity on a per share basis while
decreasing pro forma net earnings and stockholders' equity on an aggregate
basis. See "Risk Factors--Possible Dilutive Effect of Issuance of Additional
Shares" and "Pro Forma Data."

The appraisal report of RP Financial has been flied as an exhibit to the
Registration Statement and Application for Conversion of which this Prospectus
is a part and is available for inspection in the manner set forth under
"Additional Information."

PERSONS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES

The Holding Company 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. The Holding Company,
however, is 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 all of the following apply: (a) the number of
persons otherwise eligible to subscribe for shares under the Plan who reside
in such jurisdiction is small; (b) the granting of subscription rights or the
offer or sale of shares of Conversion Stock to such persons would require any
of the Primary Parties or their officers or directors, under the laws of such
jurisdiction, to register as a broker, dealer, salesman or selling agent or to
register or otherwise qualify its securities for sale in such jurisdiction or
to qualify as a foreign corporation or file a consent to service of process in
such jurisdiction; and (c) such registration, qualification or filing in the
judgment of the Primary Parties would be impracticable or unduly burdensome
for reasons of costs or otherwise. Where the number of persons eligible to
subscribe for shares in one state is small, the Primary Parties would intend
to base their decision as to whether or not to offer the Conversion Stock in
such state on a number of factors, including but not limited to 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 or directors as brokers, dealers or salesmen.

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LIMITATIONS ON CONVERSION STOCK PURCHASES

The Plan includes the following limitations on the number of shares of
Conversion Stock that may be purchased:

(a) Purchases of Conversion Stock in the Subscription Offering, including
purchases in the Community Offering, by any person, and associates thereof,
or a group acting in concert (as such terms are defined in the Plan), shall
be limited to that number of shares of Conversion Stock that when combined
with Exchange Shares received aggregate 62,500 shares of Common Stock,
except that the Employee Stock Benefit Plans may purchase up to an
aggregate of 7% of the number of shares of Conversion Stock to be issued in
the Offering. Shares to be held by the Employee Stock Benefit Plans and
attributable to a person shall not be aggregated with other shares
purchased directly by or otherwise attributable to such person.

(b) Directors and officers of the Association and the Mutual Holding
Company and any associates thereof may not purchase in the aggregate more
than 31% of the shares of Conversion Stock.

(c) The Boards of Directors of the Primary Parties will not be deemed to
be associates or a group acting in concert with other directors or trustees
solely as a result of membership on the Board of Directors.

(d) To the extent that shares of Conversion Stock are available, no
subscriber will be allowed to purchase less than 25 shares of Conversion
Stock.

(e) The Boards of Directors of the Primary Parties, with the approval of
the OTS and without further approval of members of the Mutual Holding
Company or the Public Stockholders, may, as a result of market conditions
and other factors, increase or decrease the purchase limitation in
paragraph (a) above or the number of shares of Conversion Stock to be sold
in the Conversion and Reorganization; provided that in no event may such
purchase limitations be less than 1% or greater than 5% of the total number
of shares of Common Stock to be issued in the Conversion and
Reorganization, which purchase limit shall include Exchange Shares
received. If the Primary Parties increase the maximum purchase limitations
or the number of shares of Conversion Stock to be sold in the Conversion
and Reorganization, the Holding Company is only required to resolicit
persons who subscribed for the maximum purchase amount and may, in the sole
discretion of the Holding Company, resolicit certain other large
subscribers. If the Primary Parties decrease the maximum purchase
limitations or the number of shares of Conversion Stock to be sold in the
Conversion and Reorganization, the orders of any person who subscribed for
the maximum purchase amount shall be decreased by the minimum amount
necessary so that such person shall be in compliance with the then maximum
number of shares permitted to be subscribed for by such person.

(f) The purchase limitations in paragraphs (a) and (b) above may be
increased to exceed 5% of the shares of Common Stock, provided that orders
for Common Stock exceeding 5% shall not exceed in the aggregate 10% of the
shares of Common Stock sold in the Conversion and Reorganization, including
Exchange Shares, except that Employee Stock Benefit Plans may purchase up
to an aggregate of 7% of the number of shares of Conversion Stock to be
issued in the Offering.

(g) Each Person purchasing Conversion Stock in the Conversion and
Reorganization shall be deemed to confirm that such purchase does not
conflict with the purchase limitations under the Plan or otherwise imposed
by law, rule or regulation. If the number of shares of Conversion Stock
otherwise allocable pursuant to the Plan to any person or that person's
associates would be in excess of the maximum number of shares permitted as
set forth above, the number of shares of Conversion Stock allocated to each
such person shall be reduced to the lowest purchase limitation applicable
to that person, and then the number of shares allocated to each group
consisting of a person and that person's associates shall be reduced so
that the aggregate allocation to that person and his or her associates
complies with the above purchase limitations, and such maximum number of
shares shall be reallocated among that person and his or her associates as
they may agree, or in the absence of an agreement, in proportion to the
shares subscribed for by each (after first applying the purchase
limitations applicable to each person, separately).

(h) The Primary Parties shall have the right to take all such actions as
they may, in their sole discretion, deem necessary, appropriate or
advisable in order to monitor and enforce the terms, condition, limitations
and restrictions contained in the Plan and the terms, conditions and
representations contained in

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the order form for the Conversion Stock, including, but not limited to, the
absolute right (subject only to any necessary regulatory approvals or
concurrences) to reject, limit or revoke acceptance of any subscription or
order and to delay, terminate or refuse to consummate any sale of
Conversion Stock that they believe might violate, or is designed to, or is
any part of a plan to, evade or circumvent such terms, conditions,
limitations, restrictions and representations. Any such action shall be
final, conclusive and binding on all persons, and the Primary Parties and
their respective Boards shall be free from any liability to any person on
account of any such action.

(i) Notwithstanding anything to the contrary contained in the Plan
(except as otherwise may be required by the OTS), the Public Stockholders
will not have to sell any Association Shares or to be limited in receiving
Exchange Shares even if their ownership of Association Shares when
converted into Exchange Shares would exceed an applicable purchase
limitation.

For purposes of the purchase limitations set forth in the Plan of
Conversion, Exchange Shares will be valued at the same price that shares of
Conversion Stock are issued in the Offering.

In the event of an increase in the total number of shares of Conversion
Stock offered in the Conversion due to an increase in the Offering Price Range
of up to 15% (the "Adjusted Maximum"), the additional shares will be allocated
in the following order of priority in accordance with the Plan: (i) in the
event that there is an oversubscription by Eligible Account Holders, to fill
Employee Stock Benefit Plan subscriptions; (ii) in the event that there is an
oversubscription by Eligible Account Holders, to fill unfulfilled
subscriptions of Eligible Account Holders, inclusive of the Adjusted Maximum;
(iii) in the event that there is an oversubscription by Supplemental Eligible
Account Holders, to fill unfulfilled subscriptions of Supplemental Eligible
Account Holders, inclusive of the Adjusted Maximum; (iv) in the event that
there is an oversubscription by Other Members, to fill unfulfilled
subscriptions of Other Members, inclusive of the Adjusted Maximum; (v) in the
event there is an oversubscription by directors, officers and employees of the
Mutual Holding Company, the Association and the Holding Company, to fill
unfulfilled subscriptions of directors, officers and employees, inclusive of
the Adjusted Maximum; (vi) in the event that there is an oversubscription by
Public Stockholders, to fill unfulfilled subscriptions of Public Stockholders,
inclusive of the Adjusted Maximum; and (vii) to fill unfulfilled subscriptions
in the Community Offering to the extent possible, inclusive of the Adjusted
Maximum.

MARKETING ARRANGEMENTS

The Primary Parties have engaged Trident as a financial advisor and
marketing agent in connection with the offering of the Conversion Stock, and
Trident has agreed to use its best efforts to solicit subscriptions and
purchase orders for shares of Conversion Stock in the Offering. Trident is a
member of the NASD and a broker-dealer registered with the SEC. Trident will
provide various services including, but not limited to, (1) training and
educating the Association's employees who will be performing certain
ministerial functions in the Offering regarding the mechanics and regulatory
requirements of the stock sales process; (2) providing its employees to staff
the Stock Information Center to assist the Association's customers and
internal stock purchasers and to keep records of orders for shares of
Conversion Stock; (3) targeting the Holding Company's sales efforts, including
preparation of marketing materials; and (4) assisting in the solicitation of
proxies of members of the Mutual Holding Company and stockholders of the
Association for use at the Members' Meeting and the Stockholders' Meeting,
respectively. Based upon negotiations between the Primary Parties and Trident,
Trident will receive a fixed fee of $90,000. In the event that a selected
dealers agreement is entered into in connection with a syndicated community
offering, the Association will pay a fee to Trident and to selected broker-
dealers for shares sold by such NASD member firms pursuant to a selected
dealers agreement in an amount to be agreed upon jointly by Trident, the
Holding Company and the Association to reflect market requirements at the time
of the syndicated community offering. Fees paid to Trident and to any other
broker-dealer may be deemed to be underwriting fees, and Trident and such
broker-dealers may be deemed to be underwriters. Trident also will be
reimbursed for its reasonable out-of-pocket expenses (including legal fees and
expenses) not to exceed $30,000. The Primary Parties have agreed to indemnify
Trident in connection with certain claims or liabilities, including certain
liabilities under the Securities Act.

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<PAGE>

Directors and executive officers of the Primary Parties may participate in
the solicitation of offers to purchase Conversion Stock. Other employees of
the Association may participate in the Offering in ministerial capacities or
providing clerical work in effecting a sales transaction. Such other employees
have been instructed not to solicit offers to purchase Conversion Stock or
provide advice regarding the purchase of Conversion Stock. Questions of
prospective purchasers will be directed to executive officers or registered
representatives. The Holding Company will rely on Rule 3a4-1 under the
Exchange Act, and sales of Conversion Stock will be conducted within the
requirements of Rule 3a4-1, so as to permit officers, directors and employees
to participate in the sale of Conversion Stock. No officer, director or
employee of the Primary Parties will be compensated in connection with his
solicitations or other participation in the Offering or the Exchange by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in the Conversion Stock and Exchange Shares,
respectively.

PROCEDURE FOR PURCHASING SHARES IN THE OFFERING

To ensure that each subscriber receives a Prospectus at least 48 hours
before the Expiration Date in accordance with Rule 15c2-8 of 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 of the Prospectus in accordance
with Rule 15c2-8. Order forms will only be distributed with a Prospectus.

To purchase shares in the Offering, an executed order form with the required
payment for each share subscribed for, or with appropriate authorization for
withdrawal from a deposit account at the Association (which may be given by
completing the appropriate blanks in the order form), must be received by the
Association at any of its offices by 12:00 Noon, Central Time, on the
Expiration Date. In addition, the Primary Parties will require a prospective
purchaser to execute a certification in the form required by applicable OTS
regulations in connection with any sale of Conversion Stock. Order forms which
are not received by such time or are executed defectively or are received
without full payment (or appropriate withdrawal instructions) are not required
to be accepted. In addition, the Association will not accept orders submitted
on photocopied or facsimiled order forms nor order forms unaccompanied by an
executed certification form. The Primary Parties have the right to waive or
permit the correction of incomplete or improperly executed forms, but do not
represent that they will do so. Once received, an executed order form may not
be modified, amended or rescinded without the consent of the Primary Parties,
unless the Offering has not been completed within 45 days after the end of the
Subscription and Community 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 priority, depositors as of the close of business on the Eligibility
Record Date (March 31, 1996) or the Supplemental Eligibility Record Date (June
30, 1997) and depositors and certain borrowers as of the close of business on
the voting record date for the Members' Meeting (August 8, 1997) must list on
the order form all accounts in which they have an ownership interest, giving
all names in each account and the account numbers.

Payment for subscriptions may be made (i) in cash if delivered in person at
any office of the Association, (ii) by check or money order or (iii) by
authorization of withdrawal from deposit accounts maintained with the
Association. Interest will be paid on payments made by cash, check or money
order at the Association's passbook rate of interest from the date payment is
received until completion or termination of the Conversion and Reorganization.
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 and Reorganization, but a hold will be placed on such funds,
thereby making them unavailable to the depositor until completion or
termination of the Conversion and Reorganization.

If a subscriber authorizes the Association to withdraw the aggregate amount
of the purchase price from a deposit account, the Association will do so as of
the effective date of the Conversion and Reorganization. The Association will
waive any applicable penalties for early withdrawal from certificate accounts.
If the remaining

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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 passbook rate.

Employee Stock Benefit Plans will not be required to pay for the shares
subscribed for at the time it subscribes, but rather may pay for such shares
of Conversion Stock subscribed for by it at the Purchase Price upon
consummation of the Offering, 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 Employee Stock
Benefit Plan, at such time, the aggregate Purchase Price of the shares for
which it subscribed.

Owners of self-directed Individual Retirement Accounts ("IRAs") may use the
assets of such IRAs to purchase shares of Conversion Stock in the Offering,
provided that such IRAs are not maintained at the Association. Persons with
self-directed IRAs maintained at the Association must have their accounts
transferred to an unaffiliated institution or broker to purchase shares of
Conversion Stock in the Offering. In addition, ERISA provisions and IRS
regulations require that officers, directors and 10% stockholders who use
self-directed IRA funds to purchase shares of Conversion Stock in the Offering
make such purchases for the exclusive benefit of the IRAs. Any interested
parties wishing to use IRA funds for stock purchases are advised to contact
the Stock Information Center for additional information and allow sufficient
time for the account to be transferred as required.

RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES

Pursuant to the rules and regulations of the OTS, no person with
subscription rights may transfer or enter into any agreement or understanding
to transfer the legal or beneficial ownership of the subscription rights
issued under the Plan or the shares of Conversion Stock to be issued upon
their exercise. Such rights may be exercised only by the person to whom they
are granted and only for that person's account. Persons exercising such
subscription rights will be required to certify that they are purchasing
shares solely for their own account and that they have no agreement or
understanding regarding the sale or transfer of such shares. Federal
regulations also prohibit any person from offering or making an announcement
of an offer or intent to make an offer to purchase such subscription rights or
shares of Conversion Stock prior to the completion of the Conversion and
Reorganization.

THE PRIMARY PARTIES WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES IN
THE EVENT THEY BECOME AWARE OF THE TRANSFER OF SUBSCRIPTION RIGHTS AND WILL
NOT HONOR ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF SUCH RIGHTS.

LIQUIDATION RIGHTS

In the unlikely event of a complete liquidation of the Mutual Holding
Company in its present mutual form, each depositor of the Association would
receive his or her pro rata share of any assets of the Mutual Holding Company
remaining after payment of claims of all creditors. Each depositor's pro rata
share of such remaining assets would be in the same proportion as the value of
his or her deposit account was to the total value of all deposit accounts in
the Association at the time of liquidation. After the Conversion and
Reorganization, each depositor, in the event of a complete liquidation of the
Association, would have a claim as a creditor of the same general priority as
the claims of all other general creditors of the Association. However, except
as described below, his or her claim would be solely in the amount of the
balance in his or her deposit account plus accrued interest. He or she would
not have an interest in the value or assets of the Association or the Holding
Company above that amount.

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statement of financial condition contained in the final offering circular
utilized in the Mutual Holding Company Reorganization, or (2) 53.2% of the
Association's total stockholders' equity as reflected in its latest balance
sheet contained in the final Prospectus utilized in the Offering. As of the
date of this Prospectus, the initial balance of the liquidation account would
be approximately $8,877,000. Each Eligible Account Holder and Supplemental
Eligible Account Holder, if he were to continue to maintain his deposit
account at the Association, would be entitled, upon a complete liquidation of
the Association after the Conversion and Reorganization, to an interest in the
liquidation account prior to any payment to the Holding Company as the sole
stockholder of the Association. Each Eligible Account Holder and Supplemental
Eligible Account Holder would have an initial interest in such liquidation
account for each deposit account, including passbook accounts, transaction
accounts such as checking accounts, money market deposit accounts and
certificates of deposit, held in the Association at the close of business on
March 31, 1996 or June 30, 1997, as the case may be. Each Eligible Account
Holder and Supplemental Eligible Account Holder will have a pro rata interest
in the total liquidation account balance based on the proportion that the
balance of each such deposit account on the March 31, 1996 Eligibility Record
Date (or the June 30, 1997 Supplemental Eligibility Record Date, as the case
may be) bore to the balance of all deposit accounts in the Association on such
date.

If, however, on any March 31 annual closing date of the Association,
commencing March 31, 1998, the amount in any deposit account is less than the
amount in such deposit account on March 31, 1996 or June 30, 1997, as the case
may be, or any other annual closing date, then the interest in the liquidation
account relating to such deposit account would be reduced by the proportion of
any such reduction, and such interest will cease to exist if such deposit
account is closed. In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related deposit
account. Any assets remaining after the above liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders are satisfied would
be distributed to the Holding Company as the sole stockholder of the
Association.

TAX ASPECTS

Consummation of the Conversion and Reorganization is expressly conditioned
upon prior receipt of either a ruling or an opinion of counsel or of a
certified public accounting firm with respect to federal tax laws, and either
a ruling or an opinion with respect to Missouri income tax laws, to the effect
that consummation of the transactions contemplated hereby will not result in a
taxable reorganization under the provisions of the applicable codes or
otherwise result in any adverse tax consequences to the Mutual Holding
Company, the Association, the Holding Company or to account holders receiving
subscription rights, except to the extent, if any, that subscription rights
are deemed to have fair market value on the date such rights are issued. This
condition may not be waived by the Primary Parties.

KPMG Peat Marwick LLP has issued an opinion to the Holding Company, the
Association and the Mutual Holding Company to the effect that, for federal
income tax purposes: (1) the converted Mutual Holding Company's merger with
and into the Association, with the Association being the surviving
institution, will qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Code, (2) no gain or loss will be recognized by the
Association upon the receipt of the assets of the Mutual Holding Company in
such merger, (3) the merger of Interim with and into the Association, with the
Association being the surviving institution, will qualify as a reorganization
within the meaning of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the
Code, (4) no gain or loss will be recognized by Interim upon the transfer of
its assets to the Association, (5) no gain or loss will be recognized by the
Association upon the receipt of the assets of Interim, (6) no gain or loss
will be recognized by the Holding Company upon the receipt of Association
common stock solely in exchange for Common Stock, (7) no gain or loss will be
recognized by the Public Stockholders upon the receipt of Common Stock solely
in exchange for their Public Association Shares, (8) the basis of the Common
Stock to be received by the Public Stockholders will be the same as the basis
of the Public Association Shares surrendered in exchange therefor, before
giving effect to any payment of cash in lieu of fractional shares, (9) the
holding period of the Common Stock to be received by the Public Stockholders
will include the holding period of the Public Association Shares, provided
that the Public Association Shares were held as a capital asset on the date of
the exchange, and (10) no gain or loss will be recognized by Eligible Account
Holders and Supplemental Eligible

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Account Holders upon distribution to them of subscription rights to purchase
shares of Conversion Stock, provided that the amount paid for the Conversion
Stock is equal to the fair market value of the Conversion Stock.

KPMG Peat Marwick LLP has also issued an opinion to the Holding Company and
the Association to the effect that there are no material adverse Missouri
income tax consequences as a result of the Conversion and Reorganization.

Unlike private rulings, an opinion is not binding on the IRS and the IRS
could disagree with conclusions reached therein. In the event of such
disagreement, there can be no assurance that the IRS would not prevail in a
judicial or administrative proceeding.

DELIVERY AND EXCHANGE OF CERTIFICATES

Conversion Stock. Certificates representing Conversion Stock issued in
connection with the Offering will be mailed by the Holding Company's transfer
agent for the Common Stock to the persons entitled thereto at the addresses of
such persons appearing on the stock order form for Conversion Stock as soon as
practicable following consummation of the Conversion and Reorganization. Any
certificates returned as undeliverable will be held by the Holding Company
until claimed by persons legally entitled thereto or otherwise disposed of in
accordance with applicable law. Until certificates for Conversion Stock are
available and delivered to subscribers, subscribers may not be able to sell
such shares.

Exchange Shares. After consummation of the Conversion and Reorganization,
each holder of a certificate or certificates theretofore evidencing issued and
outstanding Association Shares (other than the Mutual Holding Company), upon
surrender of the same to an agent, duly appointed by the Holding Company,
which is anticipated to be the transfer agent for the Common Stock (the
"Exchange Agent"), shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of full shares of Common
Stock for which the Association Shares theretofore represented by the
certificate or certificates so surrendered shall have been converted based on
the Exchange Ratio. The Exchange Agent shall promptly mail to each such holder
of record of an outstanding certificate which immediately prior to the
consummation of the Conversion and Reorganization evidenced Association
Shares, and which is to be exchanged for Common Stock based on the Exchange
Ratio as provided in the Plan, a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to such
certificate shall pass, only upon delivery of such certificate to the Exchange
Agent) advising such holder of the terms of the exchange effected by the
Conversion and Reorganization and of the procedure for surrendering to the
Exchange Agent such certificate in exchange for a certificate or certificates
evidencing Common Stock. The Association's stockholders should not forward
Association Shares certificates to the Association or the Exchange Agent until
they have received the transmittal letter.

No holder of a certificate theretofore representing Association Shares shall
be entitled to receive any dividends in respect of the Common Stock into which
such shares shall have been converted by virtue of the Conversion and
Reorganization until the certificate representing such Association Shares is
surrendered in exchange for certificates representing shares of Common Stock.
In the event that dividends are declared and paid by the Holding Company in
respect of Common Stock after the consummation of the Conversion and
Reorganization but prior to surrender of certificates representing Association
Shares, dividends payable in respect of shares of Common Stock not then issued
shall accrue (without interest). Any such dividends shall be paid (without
interest) upon surrender of the certificates representing such Association
Shares. The Holding Company shall be entitled, after the consummation of the
Conversion and Reorganization, to treat certificates representing Association
Shares as evidencing ownership of the number of full shares of Common Stock
into which the Association Shares represented by such certificates shall have
been converted, notwithstanding the failure on the part of the holder thereof
to surrender such certificates.

The Holding Company shall not be obligated to deliver a certificate or
certificates representing shares of Common Stock to which a holder of
Association Shares would otherwise be entitled as a result of the Conversion

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and Reorganization until such holder surrenders the certificate or
certificates representing the Association Shares for exchange as provided
above, or, in default thereof, an appropriate affidavit of loss and indemnity
agreement and/or a bond as may be required in each case by the Holding
Company. If any certificate evidencing shares of Common Stock is to be issued
in a name other than that in which the certificate evidencing Association
Shares surrendered in exchange therefor is registered, it shall be a condition
of the issuance thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a certificate for shares of Common Stock
in any name other than that of the registered holder of the certificate
surrendered or otherwise establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.

REQUIRED APPROVALS

Various approvals of the OTS are required in order to consummate the
Conversion and Reorganization. The OTS has approved the Plan, subject to
approval by the Mutual Holding Company's members and the Association's
stockholders. In addition, consummation of the Conversion and Reorganization
is subject to OTS approval of the Holding Company's application to acquire all
of the to-be-outstanding Association common stock and the applications with
respect to the merger of the Mutual Holding Company (following its conversion
to a federal interim stock savings association) into the Association and the
merger of Interim into the Association, with the Association being the
surviving entity in both mergers. Applications for these approvals have been
filed and are currently pending. There can be no assurances that the requisite
OTS approvals will be received in a timely manner, in which event the
consummation of the Conversion and Reorganization may be delayed beyond the
expiration of the Offering.

In addition, the Primary Parties have conditioned the consummation of the
Conversion and Reorganization upon the approval of the Plan, including the
Plans of Merger, by at least a majority of the votes cast, in person or by
proxy, by the Public Stockholders at the Stockholders' Meeting. The Plan is
subject to the approval of the OTS, and it also must be approved by at least a
majority of the total outstanding votes of the voting members of the Mutual
Holding Company at the Members' Meeting, which votes may be cast in person or
by proxy.

DISSENTERS' RIGHTS OF APPRAISAL

Holders of Association Common Stock are entitled to appraisal rights under
Section 552.14 of the OTS regulations as a result of the merger of the Mutual
Holding Company (following its conversion to a federal interim stock savings
association) with and into the Association and the merger of Interim with and
into the Association. A holder of Association Shares wishing to exercise his
or her appraisal rights must deliver to the Secretary of the Association,
before the vote on the Plans of Merger at the Stockholders' Meeting, a writing
which identifies such stockholder and which states his or her intention to
demand appraisal of and payment for his or her Association Shares. Such demand
must be in addition to and separate from any proxy or vote against the Plans
of Merger. Any such stockholder who wishes to exercise such appraisal rights
should review carefully the discussion of such rights in the Association's
proxy statement, including Appendix D thereto, because failure to timely and
properly comply with the procedures specified will result in the loss of
appraisal rights under Section 552.14. All written demands for appraisal
should be sent or delivered to the attention of the Secretary of the
Association, Equality Savings and Loan Association, F.A., 4131 South Grand
Boulevard, St. Louis, Missouri 63118-3436 so as to be received prior to the
vote at the Stockholders' Meeting with respect to the Plans of Merger.
Pursuant to the Plan, consummation of the Conversion and Reorganization is
conditioned upon holders of less than 10% of the outstanding Association
Shares exercising appraisal rights.

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CERTAIN RESTRICTIONS ON PURCHASE OR TRANSFER OF SHARES AFTER THE CONVERSION
AND REORGANIZATION

All shares of Conversion Stock purchased in connection with the Conversion
and Reorganization by a director or an executive officer of the Primary
Parties will be subject to a restriction that the shares not be sold for a
period of one year following the Conversion and Reorganization, except in the
event of the death of such director or executive officer or pursuant to a
merger or similar transaction approved by the OTS. Each certificate for
restricted shares will bear a legend giving notice of this restriction on
transfer, and appropriate stop-transfer instructions will be issued to the
Holding Company's transfer agent. Any shares of Common Stock issued within
this one-year period as a stock dividend, stock split or otherwise with
respect to such restricted stock will be subject to the same restrictions. The
directors and executive officers of the Holding Company will also be subject
to the insider trading rules promulgated pursuant to the Exchange Act.

Purchases of Common Stock of the Holding Company by directors, executive
officers and their associates during the three-year period following
completion of the Conversion and Reorganization 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 1.0% of the Holding Company's outstanding
Common Stock or to the purchase of stock pursuant to any tax-qualified
employee stock benefit plan, such as the ESOP, or by any non-tax-qualified
employee stock benefit plan, such as the 1997 MRP.

Pursuant to OTS regulations, the Holding Company will generally be
prohibited from repurchasing any shares of Common Stock within one year
following consummation of the Conversion and Reorganization. During the second
and third years following consummation of the Conversion and Reorganization,
the Holding Company may not repurchase any shares of its Common Stock other
than pursuant to (i) an offer to all stockholders on a pro rata basis which is
approved by the OTS; (ii) the repurchase of qualifying shares of a director,
if any; (iii) purchases 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; or (iv) purchases that are part of an open-market program
not involving more than 5% of its outstanding capital stock during a 12-month
period, if the repurchases do not cause the Association to become
undercapitalized and the Association provides to the Regional Director of the
OTS no later than 10 days prior to the commencement of a repurchase program
written notice containing a full description of the program to be undertaken
and such program is not disapproved by the Regional Director. However, the
Regional Director has authority to permit repurchases during the first year
following consummation of the Conversion and Reorganization and to permit
repurchases in excess of 5% during the second and third years upon the
establishment of exceptional circumstances (i.e., where such repurchases would
be in the best interests of the institution and its stockholders).

COMPARISON OF STOCKHOLDERS' RIGHTS

GENERAL

As a result of the Conversion and Reorganization, stockholders of the
Association, a federally chartered savings association which is a majority
owned subsidiary of the Mutual Holding Company, will become stockholders of
the Holding Company, a Delaware corporation.

There are certain differences in the rights of stockholders as a result of
the differences between the Association's charter and bylaws and the Holding
Company's certificate of incorporation and bylaws and the differences between
laws with respect to federally chartered savings associations and the DGCL.

The following discussion is not intended to be a complete statement of the
differences affecting the rights of stockholders and is qualified in its
entirety by reference to the certificate of incorporation and bylaws of the
Holding Company and the DGCL.

AUTHORIZED CAPITAL STOCK

The Holding Company's authorized capital stock consists of 4,000,000 shares
of common stock, par value $0.01 per share, and 200,000 shares of preferred
stock, par value $0.01 per share, whereas the Association's authorized capital
stock consists of 4,000,000 shares of common stock, par value $1.00 per share
and 1,000,000

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shares of preferred stock, par value $1.00 per share. The Board of Directors
of the Holding Company has determined to issue no preferred stock and up to
1,729,323 shares of Common Stock in the Conversion and Reorganization.

The Holding Company's certificate of incorporation authorized the additional
shares of Common Stock to provide the Board of Directors with as much
flexibility as possible to effect, among other transactions, financings,
acquisitions, stock dividends, stock splits, shares under the Reinvestment
Plan and employee stock options. These additional authorized shares of Common
Stock, however, may also be used by the Board of Directors, to the extent
consistent with its fiduciary duties to the stockholders of the Holding
Company, to deter future attempts to gain control of the Holding Company. With
regard to the authorized but unissued preferred stock of the Holding Company,
the Board of Directors has sole authority to determine the terms of any one or
more series of such preferred stock, including voting rights, conversion
rates, and liquidation preferences. See "Description of Capital Stock--
Preferred Stock." As a result of the ability to fix voting rights for a series
of preferred stock, the Board of Directors of the Holding Company has the
power, to the extent consistent with its fiduciary duties to the stockholders
of the Holding Company, to issue a series of preferred stock to persons
friendly to management in order to attempt to block a post-tender offer merger
or other transaction by which a third party seeks control, and thereby to
assist management to retain its position. The Holding Company's Board of
Directors currently has no plans for the issuance of any preferred stock or of
any additional shares of Common Stock, other than the issuance of additional
shares of Common Stock pursuant to the terms of the employee benefit plans.

The Holding Company will be subject to an annual franchise tax in the State
of Delaware and in the State of Missouri. As a federally chartered
institution, the Association is not subject to franchise taxes, regardless of
the amount of its authorized capitalization.

ISSUANCE OF CAPITAL STOCK

Pursuant to applicable laws and regulations, the Mutual Holding Company is
required to own not less than a majority of the outstanding Association
Shares. There will be no such restriction applicable to the Holding Company
following consummation of the Conversion and Reorganization.

The certificate of incorporation of the Holding Company does not contain
restrictions on the issuance of shares of capital stock to directors, officers
or controlling persons of the Holding Company, whereas the charter of the
Association restricts such issuance to general public offerings, or if
qualifying shares, to directors, unless the share issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting.

Thus, stock-related compensation plans such as stock option plans could be
adopted by the Holding Company and the Association without stockholder
approval and shares of Holding Company capital stock and Association capital
stock could be issued directly to directors, officers or controlling persons
without stockholder approval. The bylaws of the NASD, however, generally
require corporations with securities which are quoted on the Nasdaq NMS to
obtain stockholder approval of most stock compensation plans for directors,
officers and key employees of the corporation. Moreover, although generally
not required, stockholder approval of stock-related compensation plans may be
sought in certain instances in order to qualify such plans for favorable
federal income tax treatment under current laws and regulations. The Holding
Company intends to seek stockholder approval of the 1997 Stock Option Plan and
1997 MRP. For additional information regarding these two stock award programs,
see "Management of the Holding Company and Association--Employment Benefit
Plans--1997 Stock Option Plan," and "--1997 Management Recognition Plan."

Neither the charter and bylaws of the Association nor the certificate of
incorporation and bylaws of the Holding Company provide for preemptive rights
to stockholders in connection with the issuance of capital stock.

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VOTING RIGHTS

The Association's charter and the certificate of incorporation and bylaws of
the Holding Company eliminate cumulative voting in elections of directors.
Elimination of cumulative voting will help to ensure continuity and stability
of the Holding Company's Board of Directors and the policies adopted by it by
making it more difficult for the holders of a relatively small amount of the
Common Stock to elect their nominees to the Board of Directors and possibly by
delaying, deterring or discouraging proxy contests.

The Association's charter permits the provision of separate class voting
rights for holders of a class of the Association preferred stock only under
specified circumstances, including (i) mergers, consolidations and sales,
leases or conveyances of property of the Association if the class of the
Association preferred stock is to be exchanged for securities of another
corporation, (ii) amendments of the charter that would adversely change the
specific terms of any class or series of the Association preferred stock and
(iii) the provision of class voting rights to holders of the Association
preferred stock permitting such holders to elect a specified number of
directors of the Board of Directors of the Association (which must be less
than a majority of directors) in the event of default in the payment of
dividends on the Association preferred stock. The certificate of incorporation
of the Holding Company does not contain any specification of or limitation on
the circumstances under which separate class voting rights may be provided to
a particular class or series of Holding Company preferred stock.

For additional information relating to voting rights, see "--Limitations on
Acquisitions of Voting Stock and Voting Rights" below.

PAYMENT OF DIVIDENDS

The ability of the Association to pay dividends on its capital stock is
restricted by OTS regulations. See "Regulation and Supervision--Federal
Savings Association Regulation--Limitation on Capital Distributions." Although
the Holding Company is not subject to these restrictions as a Delaware
corporation, such restrictions will indirectly affect the Holding Company
because dividends from the Association will be a primary source of funds of
the Holding Company for the payment of dividends to stockholders of the
Holding Company.

The DGCL generally provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus, as defined by Delaware law, or, if there is no surplus,
from its net profits for the fiscal year in which the dividend is declared and
the preceding fiscal year. However, if the corporation's capital has been
diminished to an amount less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, dividends may not be declared and
paid out of such net profits until the deficiency in such capital has been
repaired.

BOARD OF DIRECTORS

The Association's bylaws and the certificate of incorporation of the Holding
Company, respectively, require the Board of Directors of the Association and
the Holding Company to be divided into three classes as nearly equal in number
as possible and that the members of each class shall be elected for a term of
three years and until their successors are elected and qualified, with one
class being elected annually.

Under the Association's bylaws, any vacancies in the Board of Directors of
the Association may be filled by the affirmative vote of a majority of the
remaining directors although less than a quorum of the Board of Directors.
Persons elected by the directors of the Association to fill vacancies may only
serve until the next annual meeting of stockholders. Under the Holding
Company's certificate of incorporation, however, any vacancy occurring in the
Board of Directors of the Holding Company, including any vacancy created by
reason of an increase in the number of directors, may be filled by the
remaining directors, and any director so chosen shall hold office for the
remainder of the term to which the director has been elected and until his or
her successor is elected and qualified.

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Under the Association's bylaws, any director may be removed for cause by the
holders of a majority of the outstanding voting shares, provided that if less
than the entire board is to be removed, none of the directors may be removed
if the votes cast against the removal would be sufficient to elect a director
if then cumulatively voted at an election of the class of directors of which
such director is a member. The certificate of incorporation and the bylaws of
the Holding Company provide that directors may be removed from office only for
cause and only upon the vote of the holders of at least 80% of the outstanding
shares of all classes of capital stock of the Holding Company.

The classification of directors, the removal requirements and the absence of
cumulative voting in the Holding Company's certificate of incorporation and
bylaws have the effect of making it more difficult for stockholders to change
the composition of the Board of Directors in a relatively short period of
time.

LIMITATIONS ON LIABILITY

The Holding Company's certificate of incorporation currently provides that
directors of the Holding Company shall not be personally liable to the Holding
Company or its stockholders for monetary damages for breaches of fiduciary
duty, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) for the payment of certain unlawful dividends and the making of
certain stock purchases or redemptions, or (iv) for any transaction from which
the director derived an improper personal benefit. This provision would
absolve directors of personal liability for simple negligence in the
performance of their duties. It would not permit a director to be exculpated,
however, for liability for actions involving conflicts of interest or breaches
of the traditional "duty of loyalty" to the Holding Company and its
stockholders, and it would not affect the availability of injunctive or other
equitable relief as a remedy.

The provision in the Holding Company's certificate of incorporation that
limits the personal liability of directors is designed to ensure that the
ability of the Holding Company's directors to exercise their best business
judgment in managing the Holding Company's affairs is not unreasonably impeded
by exposure to the potentially high personal costs or other uncertainties of
litigation. The nature of the tasks and responsibilities undertaken by
directors of publicly-held corporations often require such persons to make
difficult judgments of great importance that can expose such persons to
personal liability, but from which they will acquire no personal benefit. In
recent years, litigation against publicly held corporations and their
directors challenging good faith business judgments and involving no
allegations of personal wrongdoing has become common. Such litigation
regularly involves damage claims in huge amounts that bear no relationship to
the amount of compensation received by the directors, particularly in the case
of directors who are not employees of the corporation. The expense of such
litigation, whether it is well-founded or not, can be enormous. The provision
of the certificate of incorporation relating to director liability is intended
to reduce, in appropriate cases, the risk incident to serving as a director
and to enable the Holding Company to elect and retain the persons most
qualified to serve as directors.

Currently, federal law does not permit federally chartered savings
associations such as the Association to limit the personal liability of
directors in the manner authorized by the DGCL and the laws of many other
states.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Association's charter and bylaws do not contain any provision relating
to indemnification of directors and officers of the Association. Under present
OTS regulations, however, the Association shall indemnify its directors,
officers and employees for any costs incurred in connection with any
litigation involving any such person's activities as a director, officer or
employee if such person obtains a final judgment on the merits in his or her
favor. In addition, indemnification is permitted in the case of a settlement,
a final judgment against such person or final judgment other than on the
merits, if a majority of disinterested directors determine that such person
was acting in good faith within the scope of his or her employment as he or
she could reasonably have perceived it under the circumstances and for a
purpose he or she could reasonably have believed under the circumstances was
in the best interest of the Association or its stockholders. The Association
also is permitted to

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pay ongoing expenses incurred by a director, officer or employee if a majority
of disinterested directors concludes that such person may ultimately be
entitled to indemnification. Before making any indemnification payment, the
Association is required to notify the OTS of its intention and such payment
cannot be made if the OTS objects to it.

The Holding Company's certificate of incorporation and bylaws provide that
the Holding Company shall indemnify and advance expenses to any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Holding Company, or is or was a director or
officer of the Holding Company and is or was serving at the request of the
Holding Company as a director or officer of another enterprise against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding to the fullest extent authorized by the DGCL.

SPECIAL MEETINGS OF STOCKHOLDERS

The Association's charter and bylaws provide that special meetings of the
stockholders of the Association may be called by the Chairman, President, a
majority of the Board of Directors or the holders of not less than one-tenth
of the outstanding capital stock of the Association entitled to vote at the
meeting; provided that special meetings of stockholders relating to changes in
control of the Association or amendments to its charter may be called only
upon direction of the Board of Directors of the Association.

The certificate of incorporation and bylaws of the Holding Company allow
only the chairman of the Board of Directors, the president or a majority of
the Board of Directors to call a special stockholders' meeting. Stockholders
do not have the right to call such a meeting. This provision may have the
effect of delaying consideration of a stockholder proposal until the next
annual meeting of stockholders.

STOCKHOLDER NOMINATIONS AND PROPOSALS

The Association's bylaws generally provide that stockholders may submit
nominations for election as director at an annual meeting of stockholders and
any new business to be taken up at such a meeting at least five days before
the date of any such meeting.

The Holding Company's certificate of incorporation requires advance
notification to the secretary of the Holding Company of nominations of persons
for election to the Board of Directors by a stockholder. The notice must be
received not later than the date corresponding to 40 days before the first
anniversary date of the immediately preceding annual meeting of stockholders.
The notice by a stockholder must comply with certain information requirements
specified in the certificate of incorporation. Advance written notification is
also required by the Holding Company's bylaws before a stockholder may bring
any item of business before the annual meeting of stockholders. The notice
must be received by the secretary of the Holding Company not later than the
date corresponding to 60 days before the first anniversary date of the
immediately preceding annual meeting of stockholders. The notice by a
stockholder must comply with certain information requirements specified in the
bylaws. The purpose of such advance notice requirements is to insure the
orderly conduct of business at annual meetings of stockholders and to afford
the board of directors a meaningful opportunity to consider the qualifications
of proposed nominees and to inform themselves, and where appropriate, to
inform the stockholders in advance of the meeting of any business proposed to
be conducted at the meeting. Such procedures may, however, have the effect of
precluding the nomination of a director, or a slate of directors, or the
consideration of business at a particular meeting if the proper procedures
have not been followed prior to the meeting.

STOCKHOLDER ACTION WITHOUT A MEETING

The bylaws of the Association provide that any action to be taken or which
may be taken at any annual or special meeting of stockholders may be taken if
a consent in writing, setting forth the actions so taken, is given by the
holders of all outstanding shares entitled to vote.

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The Holding Company's certificate of incorporation and bylaws prohibit
action that is required or permitted to be taken at any annual or special
meeting of stockholders of the Holding Company from being taken by the written
consent of the stockholders without a meeting. This provisions may have the
effect of delaying consideration of a stockholder proposal until the next
annual meeting of stockholders.

STOCKHOLDER'S RIGHT TO EXAMINE BOOKS AND RECORDS

A federal regulation that is applicable to the Association provides that
stockholders may inspect and copy specified books and records of a federally
chartered savings association after proper written notice for a proper
purpose.

The DGCL similarly provides that a stockholder may inspect books and records
upon written demand under oath stating the purpose of the inspection, if such
purpose is reasonably related to such person's interest as a stockholder.

LIMITATIONS ON ACQUISITIONS OF VOTING STOCK AND VOTING RIGHTS

The certificate of incorporation of the Holding Company provides that no
person shall directly or indirectly acquire or hold beneficial ownership of
more than 10% of the voting shares of the Holding Company. This limitation
does not apply to the purchase of shares by underwriters in connection with a
public offering, to any reclassification of securities, recapitalization or
any merger or consolidation that does not have the effect of changing the
beneficial ownership interests of the Holding Company's stockholders, or to
the purchase of shares by employee benefit plans of the Holding Company or any
subsidiary of the Holding Company. The certificate of incorporation further
provides that, where any person directly or indirectly acquires beneficial
ownership of more than 10% of the voting shares of the Holding Company, the
voting power of the securities beneficially owned in excess of 10% shall be
reduced to 1/100 of one vote for each share held in excess of such limit. The
certificates evidencing the shares of Common Stock sold in the Conversion and
Reorganization will bear a legend reflecting such restrictions.

The charter of the Association contains a provision that, for a period of
five years after completion of the MHC Reorganization (which was completed on
October 22, 1993), no person (other than the Mutual Holding Company) shall
directly or indirectly offer to acquire or acquire the beneficial ownership of
more than 10% of any class of an equity security of the Association, with some
exceptions. In the event shares are acquired in violation of this provision,
all shares beneficially owned by any person in excess of 10% shall be
considered "excess shares" and shall not be counted as shares entitled to vote
and shall not be voted by any person or counted as voting shares in connection
with any matters submitted to the stockholders for a vote. Upon consummation
of the Conversion and Reorganization the Association will amend its charter to
delete this provision because as a wholly-owned subsidiary of the Holding
Company this provision would have no practical effect in the Association's
charter.

VOTING RESTRICTIONS ON CERTAIN BUSINESS COMBINATIONS; FAIR PRICE PROVISION

Under the Holding Company's certificate of incorporation, the adoption or
approval of certain business transactions, including mergers, consolidations,
asset and securities sales, plans of liquidation or dissolution and certain
reclassifications involving any "Interested Party" (as defined below) and
certain affiliates of any such Interested Party, requires an affirmative vote
of the holders of at least that number of voting shares that equals the sum of
(i) the number of voting shares beneficially owned by all Interested Parties
with respect to the proposed business transaction plus (ii) 80% of the
remaining number of voting shares that are not beneficially owned by any such
Interested Party. An "Interested Party" is defined in the Holding Company
certificate of incorporation to mean generally the beneficial owner of 10% or
more of the voting stock of the Holding Company.

121
<PAGE>

The 80% affirmative voting requirement is not applicable to business
transactions (i) approved by a resolution adopted by a majority of the Board
of Directors holding office at the time such resolution is adopted, provided
that such resolution approving the business transaction is adopted prior to
the time all Interested Parties with respect to the business transaction
become Interested Parties, or (ii) approved by a resolution adopted by 66 2/3%
of the directors holding offices at the time such resolution is adopted who
are not themselves Interested Parties or affiliates of an Interested Party.

The 80% affirmative voting requirement also is not applicable to any
business transaction and such business transaction need only be approved by a
simple majority vote of the stockholders (if such a vote is required under
applicable Delaware law) if all of the following conditions have been met: (i)
the per share consideration to be received by holders of Common Stock in such
business transaction is not less than the greater of (A) the highest per share
price paid by the Interested Party in acquiring its holdings of Common Stock
during the immediately preceding five years, (B) the per share book value of
the Common Stock at the end of the fiscal quarter immediately preceding such
business transaction or (C) the highest market price per share of Common Stock
during the two-year period ending immediately prior to the first public
announcement of such business transaction; (ii) the consideration to be
received by holders of Common Stock is in cash or in the same form as the
consideration paid by the Interested Party to acquire the largest number of
shares of Common Stock acquired by the Interested Party from a non-Interested
Party; (iii) as of the record date for the determination of stockholders
entitled to vote on the proposed business transaction, there is at least one
director of the Holding Company who is not an Interested Party or an affiliate
of an Interested Party; and (iv) holders of voting shares as of the record
date for the determination of stockholders entitled to vote on the business
transaction shall have received a proxy or information statement complying
with the rules and regulations under the Exchange Act, which proxy or
information statement includes, among other things, an opinion of an
investment banking firm as to the fairness from a financial point of view of
the consideration to be received by the stockholders in the proposed business
transaction.

Neither the Association's charter and bylaws nor federal laws and
regulations contain a provision that restricts business combinations between
the Association and interested stockholders in the manner described above.

NON-STOCKHOLDER CONSTITUENCIES

The Holding Company's certificate of incorporation provides that in
evaluating certain transactions which could effect a change in control of the
Holding Company, it is proper for the Board of Directors to consider the
effects of such transactions on the employees, suppliers and customers of the
Holding Company and the communities in which the principal offices of the
Holding Company are located. Neither the Association's charter nor bylaws
provide for a similar provision.

AMENDMENT OF GOVERNING INSTRUMENTS

The process the Association must follow for amending its federal stock
charter depends on whether or not the proposed amendment is preapproved under
applicable OTS regulation. Any amendment to the Association's charter, whether
or not preapproved, must first be approved by the Board of Directors of the
Association. If the amendment qualifies as a preapproved charter amendment, it
must be filed with the OTS in the form of a notice 30 days prior to the date
it is submitted to stockholders for approval, which approval must be by the
holders of a majority of the total votes eligible to be cast at a legal
meeting. A preapproved charter amendment is automatically deemed approved by
the OTS 30 days from the date of its submission, provided the Association
follows the requirements of its charter in adopting the amendment and unless
the OTS notifies the Association that the amendment is rejected or does not
qualify for preapproved status. Conversely, an amendment not considered
preapproved, must be submitted to the OTS for approval before it is submitted
to stockholders for approval. Charter amendments that are not normally
considered preapproved include provisions that would render more difficult or
discourage a merger, tender offer, or proxy contest, the assumption of control
by a holder of a block of the Association's stock, the removal of incumbent
management, or involve significant issues of law or policy.

122
<PAGE>

No amendment of the Holding Company's certificate of incorporation may be
made unless it is first approved by the Board of Directors of the Holding
Company and thereafter is approved by the holders of a majority of the shares
of the Holding Company entitled to vote generally in an election of directors,
voting together as a single class, as well as such additional vote of the
preferred stock as may be required by the provisions of any series thereof;
provided, however, that the classified board, limitation of beneficial
ownership, fair price, special meeting, stockholder consent, advance notice,
bylaw amendment and non-stockholder constituency provisions of the certificate
of incorporation of the Holding Company may be altered, amended or repealed
only if the holders of at least 80% of the outstanding shares of voting stock
entitled to vote in the election of directors vote in favor of such action.

The bylaws of the Association may be amended by a majority vote of the full
Board of Directors of the Association or by a majority vote of the votes cast
by the stockholders of the Association at any legal meeting. Bylaw amendments
that are preapproved under applicable OTS regulations, such as those that
adopt the language of the OTS' model bylaws, and are adopted without change
and filed with the OTS 30 days prior to the date the bylaw amendment is
adopted by the Association, are effective 30 days after submission to the OTS,
provided the association follows the requirements of its charter and bylaws in
adopting the amendment and unless prior to the expiration of the 30 day period
the OTS notifies the Association that the amendment is rejected or that such
amendment does not qualify as preapproved. Conversely, bylaw amendments that
are inconsistent with the OTS' model bylaws or would render more difficult or
discourage a merger, tender offer or proxy contest, the assumption of control
by a holder of a large block of the Association's stock, or the removal of
incumbent management or involve a significant issue of law or policy
(including indemnification, conflicts of interest and limitations on director
and officer liability) must be submitted to the OTS by the Association for
approval before the amendment is adopted by the Association.

Amendments to the bylaws of the Holding Company may be made only upon (i)
the affirmative vote of a majority of the members of the Board of Directors,
or (ii) the affirmative vote of the holders of at least 80% of the outstanding
shares of voting stock entitled to vote in the election of directors.

RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY

RESTRICTIONS IN THE HOLDING COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS;
EMPLOYMENT AGREEMENTS

The Holding Company has implemented certain measures designed to enhance the
ability of the Board of Directors to protect stockholders against, among other
things, unsolicited attempts to acquire a significant interest in the Holding
Company or to influence the Holding Company's management (whether through open
market purchases, tender offers or otherwise) that do not offer an adequate
price to all stockholders or that the Board of Directors otherwise considers
not in the best interests of the Holding Company and its stockholders.

Certain provisions in the certificate of incorporation and bylaws of the
Holding Company may impact significantly the stockholders' ability to change
the composition of the incumbent Board of Directors or the ability of a
substantial holder of the Common Stock to acquire control of, or to remove,
the incumbent Board of Directors, and might discourage certain types of
transactions that involve an actual or threatened change of control of the
Holding Company.

The provisions of the certificate of incorporation and bylaws are intended
to encourage persons seeking to acquire control of the Holding Company to
initiate such an acquisition through arm's-length negotiations with the
Holding Company's management and Board of Directors. Management of the Holding
Company does not have the power to waive any of these provisions. These
provisions could have the effect of discouraging a third party from making a
tender offer to or otherwise attempting to obtain control of the Holding
Company, even though certain stockholders of the Holding Company might deem
such an attempt to be in the best interests of the Holding Company and its
stockholders or in which stockholders may receive a substantial premium for
their shares over then current market prices. At the same time, these
provisions ensure that the Board of Directors, if

123
<PAGE>

confronted by an unsolicited proposal from a third party who has recently
acquired a block of Common Stock, will have sufficient time to review the
proposal and alternatives to it and to seek better proposals or negotiate
better terms for the Holding Company's stockholders, employees, suppliers,
customers and others. 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 "Available Information" as to how to obtain a copy of these
documents.

These provisions, which are described under "Comparison of Stockholders'
Rights" above, provide, among other things, that: (1) no person may acquire or
hold the beneficial ownership of more than 10% of the voting shares of the
Holding Company, and if any person acquires or holds the beneficial ownership
of more than 10% of the voting shares of the Holding Company, each share in
excess of such 10% limit shall have its voting power reduced to 1/100 of one
vote; (2) the Holding Company's Board of Directors will be divided into three
classes with one class to be elected each year; (3) special meetings of the
Holding Company's stockholders may be called only by the chairman of the Board
of Directors, the president or a majority of the Holding Company's Board of
Directors; (4) the Board of Directors may issue additional shares of
authorized Common Stock and fix the terms and designations of and issue shares
of authorized preferred stock without any further action by the stockholders;
(5) certain Business Transactions (as defined in the certificate of
incorporation) must be approved in advance by a majority of the Board of
Directors, approved in advance by the holders of 80% of the outstanding shares
of voting stock other than shares owned by persons who are Interested Parties
(as defined in the certificate of incorporation) with respect to the Business
Transaction or approved after-the-fact by two-thirds of directors who are not
themselves Interested Directors (as defined in the certificate of
incorporation) with respect to the Business Transaction; and (6) stockholders
who propose to nominate a candidate for election to the Board of Directors of
the Holding Company or to present new business at a stockholders' meeting must
give advance notice of, and furnish information relating to, the proposed
nominee and business to the Holding Company. The management of the Holding
Company does not have the ability to waive any of these provisions. A vote of
80% of the total votes eligible to be cast, voting together as a single class,
is required to amend, repeal or adopt any provisions inconsistent with certain
provisions of the certificate of incorporation and the bylaws, including most
of the provisions enumerated above.

The provisions described above are intended to reduce the Holding Company's
vulnerability to takeover attempts and certain other transactions which have
not been negotiated with and approved by members of the Board of Directors.
The provisions of the proposed employment agreements with Messrs. Fellhauer,
Deelo and Wolter may also discourage takeover attempts by increasing the costs
to be incurred by the Association and the Holding Company in the event of a
takeover. See "Management of the Holding Company and Association."

The Holding Company's Board of Directors believes that the provisions of the
certificate of incorporation, the bylaws and the proposed employment
agreements are in the best interest of the Holding Company and its
stockholders. An unsolicited, non-negotiated proposal can seriously disrupt
the business and management of a corporation and cause it great expense.
Accordingly, the Board of Directors believes it is in the best interest of the
Holding Company and its stockholders to encourage potential acquirors to
negotiate directly with management and that these provisions will encourage
such negotiations and discourage non-negotiated takeover attempts. It is also
the Board of Directors' view that these provisions should not discourage
persons from proposing a merger or other transaction at a price that reflects
the true value of the Holding Company and that otherwise is in the best
interest of all stockholders.

REGULATORY RESTRICTIONS

The OTS regulations prohibit any person, prior to the completion of the
Conversion and Reorganization, from transferring, or from entering into any
agreement or understanding to transfer, to the account of another, legal or
beneficial ownership of the subscription rights issued under the Plan or of
the Conversion Stock to be issued upon the exercise of such rights. The OTS
regulations also prohibit any person, prior to the completion of the
Conversion and Reorganization, from offering, or making an announcement of an
offer or intent to make an offer, to purchase such subscription rights or
Conversion Stock.

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<PAGE>

For three years following the Conversion and Reorganization, OTS regulations
prohibit any person from acquiring or making an offer to acquire more than 10%
of the stock of the Holding Company without the prior written consent of the
OTS except for: (i) offers that, if consummated, would not result in the
acquisition by such person during the preceding twelve-month period of more
than 1% of such stock; (ii) offers for up to 25% of the stock in the aggregate
by the ESOP or other tax-qualified plans of the Association or the Holding
Company; or (iii) offers made exclusively to the Holding Company by
underwriters or members of a selling group acting on the Holding Company's
behalf for resale to the general public. Such acquisition may be disapproved
by the OTS if it is found, among other things, that the proposed acquisition:
(a) would frustrate the purposes of the provisions of the regulations
regarding conversions; (b) would be manipulative or deceptive; (c) would
subvert the fairness of the Conversion; (d) would be likely to result in
injury to the Association; (e) would not be consistent with economical home
financing; (f) would otherwise violate some law or regulation; or (g) would
not contribute to the prudent deployment of the Association's conversion
proceeds. In the event that any person, directly or indirectly, violates this
regulation, the securities beneficially owned by such person in excess of 10%
shall not be counted as shares entitled to vote and shall not be voted by any
person or counted as voting shares in connection with any matters submitted to
a vote of stockholders. The definition of beneficial ownership for these
regulations extends to persons holding revocable or irrevocable proxies for
the Holding Company's stock under circumstances that give rise to a conclusive
or rebuttable determination of control under the OTS regulations, as described
below.

In addition, federal laws and regulations contain a number of provisions
that affect the acquisition of insured institutions such as the Association,
and a savings institution holding company such as the Holding Company. The
Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more persons, may acquire
control of a savings association unless the OTS has been given 60 days' prior
written notice and the OTS does not issue a notice disapproving the proposed
acquisition. Moreover, certain provisions of the HOLA provide that no company
may acquire control of a savings and loan association without the prior
approval of the OTS. Any company that acquires such control becomes a "savings
institution holding company" subject to registration, examination and
regulation by the OTS. Such change in control restrictions on the acquisition
of Holding Company stock are not limited to three years after the Conversion,
but will apply as long as such regulations are in effect.

Pursuant to applicable regulations, control of a savings institution or its
holding company is conclusively deemed to have been acquired by, among other
things, the acquisition of more than 25% of any class of voting stock of a
savings association or the ability to control the election of a majority of
the directors of such an institution. Alternatively, control is presumed to
have been acquired, subject to rebuttal, upon the acquisition of more than 10%
of any class of voting stock, or more than 25% of any class of stock, of a
savings association, where one or more enumerated "control factors" are also
present in the acquisition. The OTS may prohibit an acquisition of control of
the Holding Company 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 Association 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.
The foregoing restrictions do not apply to the acquisition of the Holding
Company's capital stock by one or more tax-qualified employee stock benefit
plans, provided that the plan or plans do not have beneficial ownership in the
aggregate of more than 25% of any class of equity security.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Holding Company consists of 4,000,000
shares of Common Stock, par value $0.01 per share, and 200,000 shares of
Preferred Stock, par value $0.01 per share. The Holding Company currently
expects to issue 1,729,323 shares of Common Stock in the Offering at the
maximum of the Offering Price Range and no shares of Preferred Stock in the
Offering. 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, all such shares

125
<PAGE>

of Common Stock will be duly authorized, fully paid and nonassessable. Series
of Preferred Stock may be issued by the Board of Directors, from time to time,
on terms set by the board without further authorization from the stockholders.

THE COMMON STOCK OF THE HOLDING COMPANY WILL REPRESENT NONWITHDRAWABLE
CAPITAL, WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT BE INSURED
BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.

COMMON STOCK

General. The holders of shares of Common Stock are entitled to share pro
rata in distributions to stockholders upon liquidation, dissolution,
distribution of assets, or winding up of the Holding Company, subject to the
prior rights of any holders of Preferred Stock. No holders of shares of Common
Stock have any preemptive right to subscribe for or purchase any additional
issue of capital stock or securities convertible into capital stock of the
Holding Company.

Dividend Rights. Subject to the preferential dividend rights of any
outstanding Preferred Stock, the holders of Common Stock are entitled to such
dividends, ratably in proportion to the number of shares of Common Stock held
by them respectively, as the Board of Directors, in its discretion, may
declare out of funds legally available for the payment of such dividends.
Funds for the payment of dividends and expenses of the Holding Company will be
obtained primarily from dividends received from the Association.

Voting Rights. Except as may otherwise be required by law or the certificate
of incorporation of the Holding Company, each holder of Common Stock is
entitled to one vote for each share held with respect to all matters voted
upon by the stockholders.

Stock Repurchases. For information regarding restrictions on the Holding
Company's ability to repurchase its stock, see "The Conversion and
Reorganization--Certain Restrictions on Purchase or Transfer of Shares after
the Conversion and Reorganization."

PREFERRED STOCK

Under the Holding Company's certificate of incorporation, the Board of
Directors of the Holding Company may, from time to time, authorize the
issuance of up to 200,000 shares of Preferred Stock, in one or more series,
with such provisions as to voting rights, dividend rates and preferences,
redemption, sinking funds, and convertibility, and such preferences,
privileges and powers, and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of such series of
Preferred Stock, as shall be stated in the resolution of the Board of
Directors providing for the issuance of the Preferred Stock. No Preferred
Stock is currently outstanding nor will any be issued in the Conversion.

REGISTRATION REQUIREMENTS

The Holding Company will register the Common Stock with the SEC pursuant to
Section 12(g) of the Exchange Act prior to completion of the Conversion and
Reorganization and will not deregister its Common Stock for a period of at
least three years following the completion of the Conversion and
Reorganization. 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.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is the Illinois Stock
Transfer Company, Chicago, Illinois.

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<PAGE>

LEGAL OPINIONS

The legality of the Common Stock will be passed upon for the Holding Company
by Schiff Hardin & Waite, Chicago, Illinois. Breyer & Aguggia, Washington,
D.C., has acted as counsel to Trident.

EXPERTS

The Consolidated Financial Statements of the Association as of March 31,
1997 and 1996 and for each of the years in the three-year period ended March
31, 1997, have been included in this Prospectus and the Registration Statement
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing. KPMG Peat Marwick LLP did not
audit the financial statements of Equality Mortgage Corporation (a
consolidated subsidiary), which statements reflect total assets constituting
3% and 7% in 1997 and 1996, respectively, and total interest income and other
income constituting 17%, 19%, and 17% in 1997, 1996, and 1995, respectively,
of the related consolidated totals. Those statements were audited by other
auditors whose report has been furnished to KPMG Peat Marwick LLP, and whose
opinion, insofar as it relates to the amounts included for Equality Mortgage
Corporation, is based solely on the report of the other auditors.

RP Financial has consented to the inclusion herein of the summary of its
appraisal report as to the estimated pro forma market value of the Conversion
Stock and Exchange Shares and to the use of its name and all statements with
respect to it appearing herein.

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<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditors' Reports............................................. F-2
Consolidated Balance Sheets as of March 31, 1997 and 1996................. F-4
Consolidated Statements of Income for the years ended March 31, 1997, 1996
and 1995................................................................. 36
Consolidated Statements of Stockholders' Equity for the years ended March
31, 1997, 1996 and 1995.................................................. F-5
Consolidated Statements of Cash Flows for the years ended March 31, 1997,
1996 and 1995............................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

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

The Mutual Holding Company has limited assets other than its Association
Shares (which will be canceled in connection with the Conversion and
Reorganization), has no liabilities, and has engaged in only minimal
activities to date; accordingly, the financial statements of the Mutual
Holding Company have been omitted because of their immateriality.

The Holding Company was incorporated on May 14, 1997, has been initially
capitalized with $1,000 and has engaged in only minimal activities to date;
accordingly, the financial statements of the Holding Company have been omitted
because of their immateriality.

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Equality Savings and Loan Association, F.A.
St. Louis, Missouri:

We have audited the accompanying consolidated balance sheets of Equality
Savings and Loan Association, F.A. and subsidiaries (Equality) as of March 31,
1997 and 1996, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended March 31, 1997. These consolidated financial statements are the
responsibility of Equality's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We did
not audit the financial statements of Equality Mortgage Corporation (a
consolidated subsidiary), which statements reflect total assets constituting
3% and 7% in 1997 and 1996, respectively, and total interest income and other
income constituting 17%, 19%, and 17% in 1997, 1996, and 1995, respectively,
of the related consolidated totals. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Equality Mortgage Corporation, is based
solely on the report of the other auditors.

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, and the report of the
other auditors, provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Equality Savings and Loan
Association, F.A. and subsidiaries as of March 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended March 31, 1997, in conformity with generally accepted
accounting principles.

/s/ KPMG Peat Marwick LLP

St. Louis, Missouri
May 9, 1997

F-2
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
Equality Mortgage Corporation
St. Louis, Missouri

We have audited the balance sheet of Equality Mortgage Corporation as of
March 31, 1997 and 1996 and the related statements of income, retained
earnings and cash flows for the years ended March 31, 1997, 1996 and 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Equality Mortgage
Corporation as of March 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the years ended March 31, 1997, 1996 and 1995
in conformity with generally accepted accounting principles.

/s/ Rubin, Brown Gornstein & Co. LLP

St. Louis, Missouri
April 10, 1997

F-3
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
Cash, primarily interest-bearing demand accounts.... $ 1,037,199 5,550,292
Interest-bearing deposits........................... 3,819,744 9,570,490
Investment securities:
Available for sale, at market value............... 70,122,807 38,898,346
Held to maturity, at cost......................... 4,848,587 5,845,193
Mortgage-backed securities available for sale, at
market value....................................... 14,954,025 28,096,499
Loans receivable, net............................... 95,927,983 96,998,052
Investment in real estate........................... 869,898 1,898,427
Stock in Federal Home Loan Bank..................... 3,350,000 3,150,000
Mortgage servicing rights........................... 513,275 261,067
Office properties and equipment, net................ 2,933,591 3,134,839
Accrued interest receivable and other assets........ 2,386,533 2,364,485
------------ -----------
Total Assets.................................... $200,763,642 195,767,690
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Savings deposits.................................... $122,982,954 124,515,370
Accrued interest payable on savings deposits........ 134,599 102,142
Borrowed money...................................... 64,248,804 57,305,406
Advance payments by borrowers for taxes and insur-
ance............................................... 86,776 113,684
Income taxes payable................................ 99,863 --
Deferred income taxes............................... 196,427 400,346
Accrued expenses and other liabilities.............. 379,958 541,330
------------ -----------
Total liabilities............................... 188,129,381 182,978,278
------------ -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value per share; 1,000,000
shares authorized; none issued and outstanding... -- --
Common stock, $1 par value per share; 4,000,000
shares authorized; 836,400 shares issued and out-
standing......................................... 836,400 836,400
Additional paid-in capital........................ 2,768,548 2,759,797
Retained earnings--substantially restricted....... 9,674,676 9,402,887
Unrealized loss on investment and mortgage-backed
securities available for sale, net of tax........ (509,523) (47,232)
Unearned ESOP shares.............................. (135,840) (162,440)
------------ -----------
Total stockholders' equity...................... 12,634,261 12,789,412
------------ -----------
Total Liabilities and Stockholders' Equity...... $200,763,642 195,767,690
============ ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED MARCH 31, 1997, 1996, AND 1995

<TABLE>
<CAPTION>
UNREALIZED LOSS
ON INVESTMENT
RETAINED AND MORTGAGE-
COMMON STOCK ADDITIONAL EARNINGS-- BACKED SECURITIES UNEARNED TOTAL
---------------- PAID-IN SUBSTANTIALLY AVAILABLE UNAMORTIZED ESOP STOCKHOLDERS'
SHARES AMOUNT CAPITAL RESTRICTED FOR SALE, NET STOCK AWARDS SHARES EQUITY
------- -------- ---------- ------------- ----------------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31,
1994................... 836,400 $836,400 2,744,600 8,870,785 (105,366) (76,000) (220,000) 12,050,419
Net income.............. -- -- -- 321,675 -- -- -- 321,675
Additional stock
offering expenses...... -- -- (4,100) -- -- -- -- (4,100)
Amortization of stock
awards................. -- -- -- -- -- 47,500 -- 47,500
Amortization of ESOP
awards................. -- -- 8,977 -- -- -- 15,960 24,937
Dividend declared on
non-mutual holding
company owned common
stock at $.60 per
share.................. -- -- -- (219,809) -- -- -- (219,809)
Change in unrealized
loss on investment
securities available
for sale, net.......... -- -- -- -- (347,241) -- -- (347,241)
------- -------- --------- --------- -------- ------- -------- ----------
Balance, March 31,
1995................... 836,400 836,400 2,749,477 8,972,651 (452,607) (28,500) (204,040) 11,873,381
Net income.............. -- -- -- 653,456 -- -- -- 653,456
Amortization of stock
awards................. -- -- -- -- -- 28,500 -- 28,500
Amortization of ESOP
awards................. -- -- 10,320 -- -- -- 41,600 51,920
Dividend declared on
non-mutual holding
company owned common
stock at $.60 per
share.................. -- -- -- (223,220) -- -- -- (223,220)
Change in unrealized
loss on investment and
mortgage-backed
securities available
for sale, net.......... -- -- -- -- 405,375 -- -- 405,375
------- -------- --------- --------- -------- ------- -------- ----------
Balance, March 31,
1996................... 836,400 836,400 2,759,797 9,402,887 (47,232) -- (162,440) 12,789,412
Net income.............. -- -- -- 504,772 -- -- -- 504,772
Amortization of ESOP
awards................. -- -- 8,751 -- -- -- 26,600 35,351
Dividend declared on
non-mutual holding
company owned common
stock at $.62 per
share.................. -- -- -- (232,983) -- -- -- (232,983)
Change in unrealized
loss on investment and
mortgage-backed
securities available
for sale, net.......... -- -- -- -- (462,291) -- -- (462,291)
------- -------- --------- --------- -------- ------- -------- ----------
Balance, March 31,
1997................... 836,400 $836,400 2,768,548 9,674,676 (509,523) -- (135,840) 12,634,261
======= ======== ========= ========= ======== ======= ======== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED MARCH 31, 1997, 1996, AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $ 504,772 653,456 321,675
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization:
Office properties and equipment...... 280,383 313,436 338,482
Real estate investments.............. 17,140 48,163 87,820
Premiums and discounts, net.......... 216,824 329,123 281,475
Mortgage servicing rights............ 185,281 49,667 1,807
Stock awards......................... -- 28,500 47,500
Increase in accrued interest receiv-
able................................. (221,226) (153,915) (333,011)
Provision for losses on loans......... 50,000 31,225 9,000
Decrease in valuation reserve on loans
held for sale........................ (80,291) (14,906) (50,000)
Loss (gain) on the sale of real estate
acquired through foreclosure......... (7,696) 1,179 19,388
Gain on sale of investment in real es-
tate................................. (105,875) (116,482) --
Loss (gain) on the sale of investment
and mortgage-backed securities avail-
able for sale, net................... (7,284) (8,280) 34,202
Increase in accrued interest payable
on savings deposits.................. 32,457 48,334 1,739
Stock dividend from FHLB.............. -- (50,000) --
Change in income taxes payable........ 228,326 103,943 109,588
Equity in loss (earnings) of joint
ventures............................. 2,433 29,634 (188,022)
Other, net............................ 26,476 (288,948) (33,511)
Origination and purchases of loans
held for sale........................ (68,974,276) (77,563,150) (49,962,543)
Proceeds from sales of loans held for
sale................................. 78,083,656 67,027,634 52,146,852
----------- ------------ -----------
Net cash provided by (used in) operat-
ing activities........................ (7,987,660) (9,531,387) 2,832,441
----------- ------------ -----------
Cash flows from investing activities:
Net change in loans receivable........ 10,080,084 (3,308,774) (23,746,843)
Decrease in interest-bearing
deposits............................. 5,750,746 4,508,510 3,687,732
Principal repayments on investment
securities available for sale........ 476,709 112,466 --
Principal repayments on mortgage-
backed securities available for
sale................................. 4,584,586 4,021,889 2,650,584
Proceeds from maturities of investment
securities available for sale........ 11,935,000 14,600,000 5,000,000
Proceeds from the sale of investment
securities available for sale........ 28,377,443 31,147,503 16,349,851
Proceeds from the sale of mortgage-
backed securities available for
sale................................. 22,254,028 6,897,588 --
Proceeds from maturities of investment
securities held to maturity.......... 1,000,000 1,500,000 --
Purchase of investment securities
available for sale................... (72,469,418) (50,052,295) (20,661,218)
Purchase of mortgage-backed securities
available for sale................... (14,211,212) (24,234,815) (1,171,550)
Purchase of investment securities held
to maturity.......................... -- (244,062) (1,443,477)
Cash distribution from joint venture.. -- -- 214,786
Proceeds from the sale of real estate
acquired through foreclosure......... 178,249 18,427 57,745
Proceeds from the sale of investment
in real estate....................... 1,071,372 298,140 --
Decrease in joint venture borrowings.. 12,513 11,527 367,006
Purchase of stock in FHLB............. (200,000) (1,700,000) (158,500)
Increase in cost of mortgage servicing
rights............................... (437,489) (296,583) --
Purchase of office properties and
equipment, net....................... (79,135) (55,325) (225,558)
----------- ------------ -----------
Net cash used in investing activities.. (1,676,524) (16,775,804) (19,079,442)
----------- ------------ -----------
Cash flows from financing activities:
Net increase (decrease) in savings de-
posits............................... (1,532,416) 2,955,006 (11,283,618)
Proceeds from FHLB advances........... 101,000,000 143,000,000 104,000,000
Repayment of FHLB advances............ (94,000,000) (112,000,000) (79,000,000)
Net change in FHLB line of credit..... -- (3,000,000) 3,000,000
Proceeds from other borrowed money.... -- 91,316 166,245
Repayment of other borrowed money..... (56,602) (41,600) (15,960)
Cash dividends paid................... (232,983) (223,220) (219,809)
Increase (decrease) in advance pay-
ments by borrowers for taxes and in-
surance ............................. (26,908) 49,747 (20,995)
----------- ------------ -----------
Net cash provided by financing activi-
ties.................................. 5,151,091 30,831,249 16,625,863
----------- ------------ -----------
Net increase (decrease) in cash and
cash equivalents...................... (4,513,093) 4,524,058 378,862
Cash and cash equivalents, beginning of
year.................................. 5,550,292 1,026,234 647,372
----------- ------------ -----------
Cash and cash equivalents, end of
year.................................. $ 1,037,199 5,550,292 1,026,234
=========== ============ ===========
Supplemental disclosure of cash flow
information:
Interest paid......................... $ 9,079,632 8,492,392 6,130,101
Income taxes paid..................... 989 225,014 26,285
Noncash transfers of loans to real
estate acquired through foreclosure.. 253,689 72,516 52,382
Transfer of investment securities held
to maturity to investment securities
available for sale................... -- 1,966,984 --
Transfer of mortgage-backed securities
held to maturity to mortgage-backed
securities available for sale........ -- 14,265,565 --
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997 AND 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

On October 22, 1993, Equality Savings and Loan Association, F.A. and
Subsidiaries (Equality) reorganized from a Missouri-chartered mutual savings
and loan association into a mutual holding company. The mutual holding company
is a federal corporation, chartered and regulated by the Office of Thrift
Supervision (OTS), and is named First Missouri Financial, M.H.C. (the MHC). As
part of the reorganization, Equality transferred substantially all of its
assets and all of its liabilities to a new Missouri-chartered savings and loan
association and retained its same name. The reorganization was accounted for
as a change in corporate form with the historic basis of Equality's assets,
liabilities, and retained earnings unchanged as a result.

Business

Equality provides a full range of banking services to individual and
corporate customers from its home office and two branch locations in the St.
Louis area. In addition, Equality provides mortgage lending services from five
locations. Equality is subject to competition from other financial
institutions, is subject to the regulations of certain regulatory agencies,
and undergoes periodic examinations by those regulatory authorities.

Basis of Financial Statement Presentation

The consolidated financial statements of Equality have been prepared in
conformity with generally accepted accounting principles and conform to
predominant practices within the savings and loan industry. The preparation of
the consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions,
including the determination of the allowance for loan losses and the valuation
of real estate acquired through foreclosure or in satisfaction of loans, that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-7
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Principles of Consolidation

The consolidated financial statements include the accounts of Equality
Savings and Loan Association, F.A. and its wholly owned subsidiaries, Equality
Commodity Corporation (ECC) and Equality Mortgage Corporation (EMC). All
significant intercompany accounts and transactions have been eliminated in
consolidation.

Restricted Cash

Included in cash is $56,257 and $116,721 at March 31, 1997 and 1996,
respectively, which consists of assistance funds held by EMC on behalf of
mortgagors participating in a subsidy program. The subsidy is passed through
to the investors monthly.

Investment and Mortgage-Backed Securities

At the time of purchase, investment and mortgage-backed securities are
classified in one of two categories: available for sale or held to maturity.
Held to maturity securities are those securities which Equality has the
ability and intent to hold until maturity. All equity securities, and debt
securities not classified as held to maturity, are classified as available for
sale.

Available for sale securities are recorded at fair value. Held to maturity
securities are recorded at cost, adjusted for the amortization of premiums or
discounts. Unrealized gains and losses, net of the related tax effect, on
available for sale securities are excluded from earnings and reported as a
separate component of stockholders' equity until realized. Gains and losses on
the sale of available for sale securities are determined using the specific
identification method.

A decline in the market value of any available for sale or held to maturity
security below cost that is deemed to be other than temporary is charged to
earnings and results in the establishment of a new cost basis for the
security.

On November 15, 1996, the Financial Accounting Standards Board issued a
special report, A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities, Questions and Answers (the
Special Report). The Special Report allowed a one-time reassessment of the
classification of securities as of a single measurement date without tainting
the classification of the remaining held to maturity debt securities. Such
reassessment and transfers were to be completed no later than December 31,
1995. Effective December 31, 1995, as allowed under the Special Report,
Equality transferred investment and mortgage-backed securities classified as
held to maturity with an amortized cost of $1,966,984 and $14,265,565,
respectively, to available for sale. In conjunction with these transfers, the
market valuation account for available for sale securities was adjusted by
$26,897 to increase the recorded balance of such securities at December 31,
1995 to their market value, the deferred tax liability account was increased
by $10,490 to reflect the tax effect of the increase in the market valuation
account, and the net increase resulting from the market valuation adjustment
at December 31, 1995 of $16,407 was recorded to the unrealized loss on
investment and mortgage-backed securities available for sale component of
stockholders' equity.

Loans Receivable and Related Fees

Loans receivable, other than loans held for sale, are carried at cost
because Equality has both the intent and the ability to hold them for the
foreseeable future. Mortgage loans held for sale are valued at the lower of
cost or market, computed on an aggregate loan basis. Interest is credited to
income as earned; however, interest receivable is accrued only if deemed
collectible. Loans are placed on nonaccrual status when management believes
that the borrower's financial condition, after consideration of economic
conditions and collection efforts, is such that collection of interest is
doubtful. A loan remains on nonaccrual status until the loan is current as to
payment of both principal and interest and/or the borrower demonstrates the
ability to pay and remain current.

F-8
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

EMC derives income primarily from the origination and subsequent sale of
mortgage loans and from the servicing of mortgage loans. EMC recognizes the
origination fee charged on nonconventional mortgage loans as income when the
loan is recorded on its books. For conventional loans, management has elected
to recognize the origination fee as income when the loan is sold to investors.
The remaining income for both types of loans is recognized upon receipt of
proceeds from the sale of the mortgage from the investor. Mortgages are sold
at such times as management deems advisable. EMC's activities are performed
primarily in the St. Louis metropolitan area.

Beginning in 1996, in accordance with Statement of Financial Accounting
Standards No. 122, Accounting for Mortgage Servicing Rights, an amendment of
FASB Statement No. 65 (SFAS 122), EMC capitalized the cost of originated
mortgage servicing rights retained as assets. Previously, only the cost of
purchased mortgage servicing rights could be capitalized as assets. The cost
of the mortgage servicing rights is being amortized over periods ranging up to
eight years using the straight-line method. SFAS 122 provides for a valuation
allowance when the carrying value of the mortgage servicing rights exceeds the
fair value.

The allowance for loan losses is increased by provisions charged to expense
and is reduced by loan 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 valuation allowances, considers numerous factors including
general economic conditions, loan portfolio composition, prior loss
experience, independent appraisals, and such other factors which, in
management's judgment, deserve current recognition in estimating loan losses.

Management believes the allowance for loan losses is adequate to absorb
losses in the loan portfolio. While management uses available information to
recognize loan losses, future additions to the allowance may be necessary
based on changes in economic conditions. In addition, various regulatory
agencies, as an integral part of their examination process, periodically
review the allowance for loan losses. Such agencies may require Equality to
increase the allowance for loan losses based on their judgment about
information available to them at the time of their examination.

Premiums and Discounts

Premiums and discounts on investment securities, mortgage-backed securities,
and purchased loans and unearned discounts on property improvement loans are
amortized using the interest method over the period to maturity, adjusted for
anticipated prepayments.

Funds Held for Investors

EMC holds funds belonging to investors in separate bank accounts which are
offset by liabilities for escrow and other fiduciary funds. These funds and
the related liabilities are not included in the consolidated balance sheets.
These amounts totaled $2,604,137 and $2,253,139 at March 31, 1997 and 1996,
respectively.

At March 31, 1997 and 1996, escrow funds related to loans serviced by EMC
for Equality totaled $705,097 and $673,541, respectively, and are included in
savings deposits in the consolidated balance sheets.

Investment in Real Estate

Investment in real estate includes real estate held for investment,
investment in real estate joint ventures, and real estate acquired through
foreclosure.

Real estate held for investment is recorded at the lower of cost, net of
accumulated depreciation, or net realizable value. Depreciation is charged to
expense using the straight-line method over an estimated useful life of 30
years.

F-9
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Equality accounts for its investment in real estate joint ventures using the
equity method.

Real estate acquired through foreclosure is initially recorded at fair value
less cost to sell. If the fair value less cost to sell of the real estate
declines subsequent to foreclosure, the difference is recorded as a valuation
allowance through a charge to expense. Subsequent increases in fair value less
cost to sell are recorded through a reversal of the valuation allowance.
Expenses incurred in maintaining the properties are charged to expense.

Profit on sales of real estate is recognized when title has passed, minimum
down payment requirements have been met, the terms of any notes received by
Equality are such to satisfy initial and continuing payment requirements, and
Equality is relieved of any requirement for continued involvement in the real
estate.

Stock in Federal Home Loan Bank

Equality, as a member of the Federal Home Loan Bank System administered by
the Federal Housing Finance Board, is required to maintain an investment in
the capital stock of the Federal Home Loan Bank of Des Moines (FHLB) in an
amount equal to the greater of 1% of Equality's total mortgage-related assets
at the beginning of each year, 0.3% of Equality's total assets at the
beginning of each year, or 5% of advances from the FHLB to Equality. The stock
is recorded at cost which represents redemption value.

Office Properties and Equipment

Land is carried at cost. Office buildings and improvements, furniture and
equipment, and automobiles are carried at cost, less accumulated depreciation
and amortization. Depreciation and amortization are charged to expense using
the straight-line method over the estimated useful lives of the related
assets. Useful lives are 10 to 50 years for office buildings and improvements,
7 to 10 years for furniture and equipment, and 5 years for automobiles.

Income Taxes

Equality files a consolidated federal income tax return. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Reclassifications

Certain reclassifications of 1996 and 1995 information have been made to
conform with the 1997 presentation. Such reclassifications have no effect on
previously reported net income.

Earnings Per Share

Earnings per share are based upon the weighted average number of common
shares and common stock equivalents, if dilutive, outstanding during the
period. The weighted average number of common stock equivalents is calculated
using the treasury stock method. The average number of common shares and
common equivalent shares outstanding for 1997, 1996, and 1995 was 821,190,
817,383, and 815,167, respectively.

Equality only considers ESOP shares that have been committed to be released
outstanding for purposes of computing earnings per share. At March 31, 1997,
1996, and 1995, ESOP shares totaling 14,213, 10,356, and 6,196, respectively,
are considered outstanding for earnings per share calculations.

F-10
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(2) CAPITAL REQUIREMENTS

Equality 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
Equality's consolidated financial statements. Under capital adequacy
guidelines, Equality must meet specific capital guidelines that involve
quantitative measures of assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. Equality's capital
amounts and classifications are also subject to quantitative judgments by the
regulators about components, risk-weightings and other factors. At March 31,
1997, Equality meets all capital adequacy requirements.

Equality is also subject to the regulatory framework for prompt corrective
action. The most recent notification from the regulatory agencies categorized
Equality as well capitalized. To be categorized as well capitalized, Equality
must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the following table. There are no conditions or events
since the dates of the aforementioned notifications that management believes
have changed Equality's category.

Equality's actual and required capital amounts and ratios at March 31, 1997
are as follows:

<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
MINIMUM FOR FOR PROMPT
CAPITAL ADEQUACY CORRECTIVE ACTION
ACTUAL PURPOSES PROVISIONS
------------------- ----------------- ------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
----- ------------ ----- ---------- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity,
and ratio to total
assets................. 6.29% $ 12,634,261
Unrealized loss on
investment and
mortgage-backed
securities available
for sale............... 509,523
Investment in and
advances to
nonincludable
subsidiaries........... (845,000)
------------
Tangible capital, and
ratio to adjusted total
assets................. 6.11% $ 12,298,784 1.50% $3,017,402
===== ============ ==== ==========
Tier I (core) capital,
and ratio to adjusted
total assets........... 6.11% $ 12,298,784 3.00% $6,034,805 5.00% $10,058,008
===== ============ ==== ========== ===== ===========
Tier I capital, and
ratio to risk-weighted
assets................. 17.46% 12,298,784 6.00% $ 4,226,580
===== ===========
Allowance for loan
losses (general
valuation allowance)... 283,000
------------
Total risk-based
capital, and ratio to
risk-weighted assets... 17.86% $ 12,581,784 8.00% $5,635,440 10.00% $ 7,044,300
===== ============ ==== ========== ===== ===========
Total assets.......... $200,763,642
============
Adjusted total
assets............... $201,160,165
============
Risk-weighted assets.. $ 70,443,000
============
</TABLE>

(3) SUBSIDIARIES' OPERATIONS

ECC operates under the name of Equality Insurance Agency and Flood
Information Specialists and is a wholly owned subsidiary of Equality. ECC's
services and activities include sales of multiple lines of insurance to the
general public, the issuance of flood plain certificates, and investments in
real estate joint ventures.

F-11
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

EMC operates as a mortgage banker and is a wholly owned subsidiary of
Equality. At March 31, 1997, EMC serviced approximately $323.0 million in
loans of which $90.2 million are for Equality. In addition, EMC was carrying a
blanket bond in the amount of $4,560,000 and an errors and omissions policy in
the amount of $1,000,000.

(4) INVESTMENT SECURITIES

The amortized cost and market value of investment securities classified as
available for sale at March 31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and agency
obligations:
1997....................... $70,705,833 255,529 838,555 70,122,807
1996....................... $38,942,766 260,901 305,321 38,898,346
</TABLE>

The amortized cost and market value of investment securities classified as
available for sale at March 31, 1997, by contractual maturity, are as follows:

<TABLE>
<CAPTION>
AMORTIZED COST MARKET VALUE
-------------- ------------
<S> <C> <C>
Due in one year or less.......................... $ 294,978 297,094
Due after one year through five years............ 13,844,221 13,804,129
Due after five years through ten years........... 50,924,967 50,427,327
Due after ten years.............................. 5,641,667 5,594,257
----------- ----------
$70,705,833 70,122,807
=========== ==========
</TABLE>

Proceeds from sales of investment securities during 1997, 1996, and 1995
were approximately $28.4 million, $31.1 million, and $16.3 million,
respectively. During 1997, 1996, and 1995, gross gains of $77,173 $125,167,
and $23,594, respectively, and gross losses of $41,296, $66,252, and $57,796,
respectively, were recognized on these sales.

The amortized cost and estimated market value of investment securities
classified as held to maturity at March 31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. government and agency ob-
ligations:
1997......................... $4,848,587 476 124,063 4,725,000
1996......................... $5,845,193 120 256,313 5,589,000
</TABLE>

The amortized cost and estimated market value of investment securities
classified as held to maturity at March 31, 1997, by contractual maturity, are
as follows:

<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
COST VALUE
---------- ---------
<S> <C> <C>
Due in one year or less................................. $2,248,587 2,236,000
Due after one year through five years................... 2,000,000 1,936,250
Due after five years through ten years.................. 600,000 552,750
---------- ---------
$4,848,587 4,725,000
========== =========
</TABLE>

F-12
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(5) MORTGAGE-BACKED SECURITIES

The amortized cost and market value of mortgage-backed securities classified
as available for sale at March 31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1997
FNMA.......................... $ 7,193,758 17,364 186,609 7,024,513
FHLMC......................... 4,562,858 28,305 35,790 4,555,373
GNMA.......................... 3,449,668 19,702 95,231 3,374,139
----------- ------- ------- ----------
$15,206,284 65,371 317,630 14,954,025
=========== ======= ======= ==========
Weighted average interest rate
at March 31.................. 6.95%
====
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1996
FNMA.......................... $16,209,663 19,818 103,023 16,126,458
FHLMC......................... 10,043,002 77,896 31,483 10,089,415
GNMA.......................... 1,876,756 7,579 3,709 1,880,626
----------- ------- ------- ----------
$28,129,421 105,293 138,215 28,096,499
=========== ======= ======= ==========
Weighted average interest rate
at March 31.................. 6.96%
====
</TABLE>

The amortized cost and market value of mortgage-backed securities classified
as available for sale at March 31, 1997, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities due to
scheduled repayments and because borrowers have the right to prepay
obligations with or without prepayment penalties. The following table does not
take into consideration the effects of scheduled repayments or the effects of
possible prepayments.

<TABLE>
<CAPTION>
AMORTIZED MARKET
COST VALUE
----------- ----------
<S> <C> <C>
Due in one year or less............................... $ 747,622 755,068
Due after one year through five years................. 4,076,527 4,084,204
Due after five years through ten years................ 2,334,004 2,307,471
Due after ten years................................... 8,048,131 7,807,282
----------- ----------
$15,206,284 14,954,025
=========== ==========
</TABLE>

Proceeds from the sale of mortgage-backed securities during 1997 and 1996
were approximately $22.3 million and $6.9 million, respectively. During 1997
and 1996, gross gains of $97,917 and $3,186, respectively, and gross losses of
$126,510 and $70,381, respectively, were recognized on these sales. There were
no sales of mortgage-backed securities during 1995.

F-13
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(6) LOANS RECEIVABLE

Loans receivable are summarized as follows:

<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Loans secured by real estate:
Residential:
One- to four-family:
Conventional.................................. $69,810,802 64,873,244
FHA and VA.................................... 14,233,144 13,656,084
Multifamily..................................... 1,637,293 782,952
Commercial........................................ 2,661,620 2,621,296
Loans held for sale............................... 4,397,614 13,506,994
----------- ----------
Total loans secured by real estate.................. 92,740,473 95,440,570
----------- ----------
Commercial business................................. 1,279,641 --
Loans secured by savings deposits................... 366,082 452,764
Property improvement................................ 1,595,572 1,299,752
Automobiles......................................... 122,403 97,410
Other............................................... 162,297 96,350
----------- ----------
Total loans......................................... 96,266,468 97,386,846
Less:
Deferred loan fees, net........................... 46,159 58,691
Unearned discounts................................ 4,523 12,009
Allowance for loan losses......................... 283,000 233,000
Valuation reserve on loans held for sale.......... 4,803 85,094
----------- ----------
$95,927,983 96,998,052
=========== ==========
Weighted average interest rate at March 31........ 7.65% 7.63%
</TABLE>

Adjustable rate mortgages at March 31, 1997 and 1996 totaled approximately
$55,000,000 and $45,000,000, respectively.

At March 31, 1997 and 1996, loans secured by real estate contractually
delinquent 90 days or more totaled $642,856 and $669,395, respectively. Of
these amounts, $571,386 and $326,102, respectively, were insured by the
Federal Housing Administration or guaranteed by the Veterans Administration.
No loans were deemed by management to be impaired at March 31, 1997 or 1996.

EMC had commitments to sell loans of approximately $3,920,000 and $1,628,000
at March 31, 1997 and 1996, respectively.

Loans serviced by EMC at March 31, 1997, 1996, and 1995 are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
For Equality............................ $ 90,600,283 83,926,591 80,465,279
For others.............................. 232,430,243 210,037,963 195,745,355
------------ ----------- -----------
$323,030,526 293,964,554 276,210,634
============ =========== ===========
</TABLE>

F-14
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Activity in the allowance for loan losses is summarized as follows:

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Balance, beginning of year........................ $233,000 216,775 242,000
Provision charged to expense...................... 50,000 31,225 9,000
Charge-offs....................................... -- (15,000) (34,225)
-------- ------- -------
Balance, end of year.............................. $283,000 233,000 216,775
======== ======= =======
</TABLE>

Statement of Financial Accounting Standards No. 114, Accounting by Creditors
for Impairment of a Loan (SFAS 114), as amended by Statement of Financial
Accounting Standards No. 118, Accounting by Creditors for Impairment of a
Loan--Income Recognition and Disclosures (SFAS 118), require that impairment
of larger-balance, non-homogeneous loans be measured by comparing the net
carrying amount of the loan to the present value of the expected future cash
flows discounted at the loan's effective interest rate, the secondary market
value of the loan, or fair value of the collateral for collateral-dependent
loans. SFAS 118 amended SFAS 114 to allow a creditor to use existing methods
for recognizing interest income on an impaired loan.

As SFAS 114 does not apply to residential mortgage and consumer loans which
are collectively evaluated for impairment, the initial and continuing
application of SFAS 114 continues to have no impact on the level of overall
allowance for loan losses or on operating results of Equality. The discussed
provisions do apply, however, to multifamily, commercial, and commercial
business loans, as well as all restructured loans, including modified
residential mortgage loans not otherwise within the scope of SFAS 114.
Equality has no multifamily, commercial, commercial business loans or
restructured residential mortgage loans deemed to be impaired at March 31,
1997 or 1996.

Following is a summary of activity for 1997 of loans made by Equality to
executive officers and directors or to entities in which such individuals had
beneficial interest. Such loans were made in the normal course of business on
substantially the same terms, including interest and collateral requirements,
as those prevailing at the same time for comparable transactions with other
persons and did not involve more than the normal risk of collectibility or
present unfavorable features.

<TABLE>
<S> <C>
Balance at March 31, 1996........................................ $1,164,415
New loans........................................................ 50,000
Payments received................................................ (62,169)
----------
Balance at March 31, 1997........................................ $1,152,246
==========
</TABLE>

(7) INVESTMENT IN REAL ESTATE

Investment in real estate is summarized as follows:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Real estate held for investment........................ $ 291,045 1,273,682
Investment in real estate joint venture:
Equity in operations................................. (150,405) (147,972)
Loan to real estate joint venture.................... 662,912 675,425
Real estate acquired through foreclosure............... 66,346 97,292
--------- ---------
$ 869,898 1,898,427
========= =========
</TABLE>

The investment in real estate joint venture consists of the WC Joint
Venture, a 50%-owned venture formed in 1986 for the purpose of acquiring,
developing, and selling real estate.

F-15
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(8) MORTGAGE SERVICING RIGHTS

The cost of mortgage servicing rights capitalized and the resulting increase
in gain on sale of mortgage loans amounted to $483,093 in 1997 and $317,001 in
1996. Equality established an impairment reserve of $66,022 in 1997 and
$20,418 in 1996. The fair value of the capitalized mortgage servicing rights
was approximately $979,000 and $418,000 at March 31, 1997 and 1996,
respectively. The fair value was estimated based on quoted market prices for
mortgage servicing rights of a similar nature. Note rate and loan type are the
predominant characteristics used to evaluate the carrying and fair value of
the capitalized mortgage servicing rights.

(9) OFFICE PROPERTIES AND EQUIPMENT

Office properties and equipment are summarized as follows:

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Land.................................................... $1,146,688 1,146,688
Office buildings and improvements....................... 2,483,865 2,483,865
Furniture and equipment................................. 2,212,369 2,183,916
Automobiles............................................. 81,758 61,927
---------- ---------
5,924,680 5,876,396
Less accumulated depreciation and amortization.......... 2,991,089 2,741,557
---------- ---------
$2,933,591 3,134,839
========== =========
</TABLE>

Depreciation and amortization expense for 1997, 1996, and 1995 was $280,383,
$313,436 and, $338,482, respectively.

Equality is obligated under certain noncancellable leases on properties. The
future minimum lease payments under these leases total $68,676 during 1998.

(10) ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS

Accrued interest receivable and other assets are summarized as follows:

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Accrued interest:
Loans receivable...................................... $ 487,720 478,444
Interest-bearing deposits............................. 181,528 231,268
Investment securities................................. 989,575 630,469
Mortgage-backed securities............................ 89,961 187,377
---------- ---------
Total accrued interest.............................. 1,748,784 1,527,558
Accounts receivable..................................... 346,380 372,056
Prepaid expenses........................................ 255,005 256,892
Income tax receivable................................... -- 128,463
Other................................................... 36,364 79,516
---------- ---------
$2,386,533 2,364,485
========== =========
</TABLE>

F-16
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(11) SAVINGS DEPOSITS

Savings deposits are summarized as follows:

<TABLE>
<CAPTION>
1997 1996
------------------------------ -------------------------------
WEIGHTED WEIGHTED
AVERAGE PERCENT AVERAGE PERCENT
INTEREST OF TOTAL INTEREST OF TOTAL
AMOUNT RATE SAVINGS AMOUNT RATE SAVINGS
------------ -------- -------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits:
NOW................... $ 12,163,249 1.32% 9.9% $ 10,813,992 1.47% 8.7%
Passbook.............. 21,576,722 2.51 17.5 21,831,026 2.51 17.5
Money market.......... 6,135,128 3.22 5.0 6,551,797 2.93 5.3
------------ ---- ----- ------------- ---- -----
Total demand
deposits........... 39,875,099 2.25 32.4 39,196,815 2.28 31.5
------------ ---- ----- ------------- ---- -----
Certificates of deposit:
Negotiated rate
($100,000 or more)... 2,717,985 6.20 2.2 3,427,991 5.96 2.7
Other................. 80,389,870 5.75 65.4 81,890,564 5.78 65.8
------------ ---- ----- ------------- ---- -----
Total certificates
of deposit......... 83,107,855 5.76 67.6 85,318,555 5.79 68.5
------------ ---- ----- ------------- ---- -----
$122,982,954 4.63% 100.0% $ 124,515,370 4.69% 100.0%
============ ==== ===== ============= ==== =====
</TABLE>

Certificate of deposit accounts by interest rate ranges are as follows:

<TABLE>
<CAPTION>
1997 1996
------------------- -------------------
AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Less than 3.00%...................... $ 7,791 2.50% $ 19,075 2.50%
3.00% to 3.99%....................... 250,986 3.85 1,343,986 3.89
4.00% to 4.99%....................... 3,925,295 4.26 6,553,454 4.24
5.00% to 5.99%....................... 49,200,044 5.39 43,119,557 5.44
6.00% to 6.99%....................... 17,083,022 6.20 19,199,628 6.20
7.00% to 7.99%....................... 12,154,898 7.00 14,629,987 7.03
8.00% and greater.................... 485,819 9.75 452,868 9.76
----------- ---- ----------- ----
$83,107,855 5.76% $85,318,555 5.79%
=========== ==== =========== ====
</TABLE>

Certificate of deposit accounts at March 31, 1997 and 1996 are scheduled to
mature as follows:

<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
Within one year.................... $36,334,368 43.7% $32,401,947 38.0%
Second year........................ 22,832,417 27.5 16,286,882 19.1
Third year......................... 16,693,320 20.1 18,726,853 21.9
Fourth year........................ 4,948,760 5.9 15,463,905 18.1
Thereafter......................... 2,298,990 2.8 2,438,968 2.9
----------- ----- ----------- -----
$83,107,855 100.0% $85,318,555 100.0%
=========== ===== =========== =====
</TABLE>

F-17
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Interest expense on savings deposits by type is summarized as follows:

<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
NOW and money market demand................... $ 320,394 362,174 464,452
Passbook...................................... 545,808 562,264 695,313
Certificates of deposit....................... 4,815,982 4,804,390 4,163,403
---------- --------- ---------
$5,682,184 5,728,828 5,323,168
========== ========= =========
</TABLE>

(12) BORROWED MONEY

Borrowed money at March 31, 1997 and 1996 is summarized as follows:

<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
INTEREST INTEREST
AMOUNT RATE AMOUNT RATE
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
Note payable to bank............... $ 1,112,964 2.25% $ 1,142,966 2.25%
Advances from the FHLB:
Due in 1997...................... -- -- 46,000,000 5.47
Due in 1998...................... 7,000,000 5.69 10,000,000 5.76
Due in 2002...................... 56,000,000 5.30 -- --
ESOP debt.......................... 135,840 9.50 162,440 9.25
----------- ---- ----------- ----
$64,248,804 5.30% $57,305,406 5.47%
=========== ==== =========== ====
</TABLE>

The note payable to bank, which is tied to average collected funds of EMC on
deposit at such bank, is due April 28, 1997. Investment securities with an
amortized cost of $3,974,475 and a market value of $3,941,875 secure the note
payable to bank at March 31, 1997.

FHLB advances are secured under a blanket agreement which assigns all FHLB
stock, certain investment securities, and mortgage loans equal to 150% of the
outstanding advances balance. Investment securities with an amortized cost of
$17,645,473 and a market value of $17,432,201 are pledged to secure advances
from the FHLB at March 31, 1997.

The ESOP borrowed $266,000 to finance the acquisition of the stock to be
held in trust for future allocation to eligible participants. The debt of the
ESOP is guaranteed by Equality and is reflected as a liability in the
consolidated balance sheet. The loan is due on September 30, 2003. Principal
payments totaling $26,600, $41,600, and $15,960 and interest payments totaling
$13,553, $18,033, and $18,946 were made during 1997, 1996, and 1995,
respectively.

(13) INCOME TAXES

Prior to 1997, if certain conditions were met, savings and loan associations
and savings banks were allowed special bad debt deductions in determining
taxable income based on either specified experience formulas or on a
percentage of taxable income before such deduction. Bad debt deductions in
excess of actual losses were tax-preference items, and were subject to a
minimum tax. Equality used the percentage of taxable income method for 1996
and 1995 in determining the bad debt deduction for tax purposes.

The special bad debt deduction accorded thrift institutions is covered under
Section 593 of the Internal Revenue Code (IRC). On August 20, 1996, the Small
Business Job Protection Act of 1996 (the Act) was signed

F-18
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

into law. This Act included the repeal of certain portions of Section 593
effective for tax years beginning after December 31, 1995. As a result,
Equality is no longer allowed a percentage method bad debt deduction. The
repeal of the thrift reserve method generally requires thrift institutions to
recapture into income the portion of tax bad debt reserves accumulated since
1987 (base year reserve). The recapture will generally be taken into income
ratably over six tax years. However, if Equality meets a residential loan
requirement for tax years beginning in 1997 and 1998, recapture of the reserve
can be deferred until the tax year beginning in 1999. At March 31, 1997,
Equality had bad debts deducted for tax purposes in excess of the base year
reserve of approximately $241,000. Equality has recognized a deferred income
tax liability for this amount.

Certain events covered by IRC Section 593(e), which was not repealed, will
trigger a recapture of the base year reserve. The base year reserve of thrift
institutions would be recaptured if a thrift ceases to qualify as a "bank" for
federal income tax purposes. The base year reserves of thrift institutions
also remain subject to income tax penalty provisions which, in general,
require recapture upon certain stock redemptions of, and excess distributions
to, stockholders. At March 31, 1997, retained earnings included approximately
$2.9 million of base year reserves, for which no deferred federal income tax
liability has been recognized.

The composition of income tax expense for 1997, 1996, and 1995 is as
follows:

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Current:
Federal........................................... $187,974 273,713 171,945
State............................................. 23,752 19,111 10,526
-------- ------- -------
Total current................................... 211,726 292,824 182,471
Deferred............................................ 91,733 124,958 5,776
-------- ------- -------
Total income tax expense........................ $303,459 417,782 188,247
======== ======= =======
</TABLE>

Applicable income taxes for financial reporting purposes differ from the
amount computed by applying the statutory federal income tax rate of 34% for
the reasons noted in the table below:

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Tax at statutory federal income tax rate........ $274,799 364,221 173,373
State income tax, net of federal tax benefit.... 15,676 12,613 6,947
Other, net...................................... 12,984 40,948 7,927
-------- ------- -------
$303,459 417,782 188,247
======== ======= =======
Effective tax rate.............................. 37.54% 39.00% 36.92%
======== ======= =======
</TABLE>

F-19
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The components of deferred tax assets and deferred tax liabilities at March
31, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Deferred tax assets:
General loan loss allowance............................. $105,050 86,490
Deferred compensation................................... 9,409 20,656
Deferred loan fees...................................... 13,728 20,592
Excess servicing gains.................................. 20,026 25,440
Available for sale securities market valuation.......... 325,849 30,197
Other................................................... 9,117 44,855
-------- -------
Total deferred tax assets............................. $483,179 228,230
======== =======
Deferred tax liabilities:
Tax depreciation in excess of that recorded for book
purposes............................................... $246,172 281,255
FHLB stock dividends.................................... 154,162 154,162
Allowance for loan losses in excess of base-year
reserve................................................ 81,858 80,872
Mortgage servicing rights............................... 186,616 92,325
Other................................................... 10,798 19,962
-------- -------
Total deferred tax liabilities........................ 679,606 628,576
-------- -------
Net deferred tax liability................................ $196,427 400,346
======== =======
</TABLE>

The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods which the deferred tax assets are deductible, management believes it
is more likely than not that Equality will realize the benefits of these
temporary differences at March 31, 1997 and, therefore, has not established a
valuation reserve.

(14)EMPLOYEE STOCK OWNERSHIP PLAN, STOCK OPTION AND INCENTIVE PLAN, MANAGEMENT
RECOGNITION PLAN, AND 401(K) PLAN

In connection with the conversion to the stock form of ownership, Equality's
Board of Directors established an employee stock ownership plan for the
exclusive benefit of participating employees. Employees age 21 or older who
have completed one year of service are eligible to participate. The ESOP is to
be funded by contributions made in cash or common stock.

Upon the issuance of the common stock, the ESOP acquired 26,600 shares (3.2%
of total shares issued) of $1 par value common stock at the subscription price
of $10.00 per share. Equality makes quarterly contributions to the ESOP equal
to the ESOP's debt service less dividends received by the ESOP. All dividends
received by the ESOP are used to pay debt service. The ESOP shares initially
were pledged as collateral for its debt. As the debt is repaid, shares are
released from collateral and allocated to active employees, based upon the
proportion of debt service paid in the year. As shares are released from
collateral, Equality reports compensation expense equal to the current market
price of the shares, and the shares become outstanding for earnings per share
computations. Dividends on ESOP shares are used to pay principal and interest
on the debt. ESOP compensation expense was $28,544, $32,577, and $35,578 for
1997, 1996, and 1995, respectively. There were 14,213 and 10,356 allocated
ESOP shares and 12,387 and 16,244 unreleased ESOP shares at March 31, 1997 and
1996, respectively. The fair value of unreleased ESOP shares was $185,805 and
$219,294 at March 31, 1997 and 1996, respectively.

F-20
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Board of Directors adopted a stock option plan under which 38,000 shares
of common stock have been reserved for future issuance. Equality accounts for
stock-based compensation under the stock option plan in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and, accordingly, recognizes no compensation expense as the exercise
price of Equality's employee stock options equals the market price of the
underlying stock on the date of grant.

Information on Equality's stock options are summarized as follows:

<TABLE>
<CAPTION>
PER SHARE
AVERAGE PRICE OPTION
SHARES PER SHARE PRICE RANGE
------ ------------- ------------
<S> <C> <C> <C>
Outstanding and exercisable at March 31,
1994................................... 24,200 $10.00 $ 10.00
Granted................................. -- -- --
------ ------
Outstanding and exercisable at March 31,
1995................................... 24,200 10.00 10.00
Granted................................. 13,800 13.00 13.00
------ ------
Outstanding and exercisable at March 31,
1996................................... 38,000 11.09 10.00-13.00
Granted................................. -- -- --
------ ------
Outstanding and exercisable at March 31,
1997................................... 38,000 $11.09 $10.00-13.00
====== ======
</TABLE>

Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, and has been determined as if Equality had
accounted for its employee stock options under the fair value method. The fair
value of these options was estimated at the date of grant using the Black-
Scholes option pricing model with the following weighted-average assumptions
for 1996; risk-free interest rate of 8.15%, divided yield of 1.90%, volatility
factor of the expected market price of Equality's common stock of 15.00%, and
a weighted-average expected life of the options of 7.6 years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which are fully transferable. In addition,
option valuation modes require the input of highly subjective assumptions
including the expected stock price volatility. Because Equality's employee
stock options have characteristics significantly different from those traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable measure of the fair
value of its employee stock options.

The following represents pro forma disclosures:

<TABLE>
<S> <C>
Net income:
As reported....................................................... $653,456
Pro forma......................................................... 618,185
Net income per share:
As reported....................................................... 0.80
Pro forma......................................................... 0.76
</TABLE>

Also in conjunction with the conversion to a stock form of ownership,
Equality established a management recognition plan which acquired 11,400
shares (2.7% of total shares issued) of $1 par value stock at a subscription
price of $10.00 per share. The MRP provides that such common stock can be
issued to employees in key management positions to encourage such key
employees to remain with Equality. Interest in the MRP for

F-21
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

each participant vested in three equal installments beginning December 31,
1993. Accordingly, as of December 31, 1995, all stock had been released to the
appropriate participants. Compensation expense related to vesting in the MRP
totaled approximately $28,500 and $47,500 during 1996 and 1995, respectively.

Equality sponsors a defined contribution plan qualifying under Section
401(k) of the Internal Revenue Code. Participants may designate up to 15% of
their annual compensation as their contribution to the plan, which is
partially matched by Equality. Expense included in the consolidated statements
of income totaled approximately $21,585, $17,259, and $17,274 for 1997, 1996,
and 1995, respectively.

(15) DISCLOSURES ABOUT FINANCIAL INSTRUMENTS

Equality 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.
The commitment to extend credit may involve, to varying degrees, elements of
credit in excess of the amount recognized in the consolidated balance sheets.
The contractual amounts of these instruments reflect the extent of involvement
Equality has in this particular class of financial instruments.

Equality'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 these instruments. Equality uses the
same credit policies in making commitments and conditional obligations as they
do for financial instruments recorded in the consolidated balance sheets. At
March 31, 1997, Equality had outstanding commitments to originate fixed rate
mortgage loans of $644,000 (at interest rates ranging from 7.625% to 8.50%)
and variable rate mortgage loans of $309,000 (at an interest rate of 6.50%).
In addition, Equality had commitments to sell mortgage loans totaling $3.9
million at March 31, 1997.

A summary of the carrying amounts and fair values of Equality's financial
instruments at March 31, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>
1997 1996
------------------------ -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
ASSETS ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash, primarily interest-
bearing demand deposits.. $ 1,037,199 1,037,199 5,550,292 5,550,292
Interest-bearing
deposits................. 3,819,744 3,853,575 9,570,490 9,684,427
Investment securities..... 74,971,394 74,847,807 44,743,539 44,487,346
Mortgage-backed
securities............... 14,954,025 14,954,025 28,096,499 28,096,499
Loans receivable.......... 95,927,983 94,395,483 96,998,052 97,389,327
Stock in Federal Home Loan
Bank..................... 3,350,000 3,350,000 3,150,000 3,150,000
Accrued interest
receivable............... 1,748,784 1,748,784 1,527,558 1,527,558
------------ ----------- ----------- -----------
$195,809,129 194,186,873 189,636,430 189,885,449
------------ ----------- ----------- -----------
LIABILITIES
Savings deposits.......... 122,982,954 122,925,487 124,515,370 126,248,126
Accrued interest payable
on savings deposits...... 134,599 134,599 102,142 102,142
Borrowed money............ 64,248,804 63,984,429 57,305,406 57,203,352
Advance payments by
borrowers for taxes and
insurance................ 86,776 86,776 113,684 113,684
------------ ----------- ----------- -----------
$187,453,133 187,131,291 182,036,602 183,667,304
------------ ----------- ----------- -----------
</TABLE>

F-22
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
such value:

Cash, Primarily Interest-Bearing Demand Deposits

For cash, primarily interest-bearing demand deposits, the carrying amount is
a reasonable estimate of fair value, as such instruments reprice in a short
time period.

Interest-Bearing Deposits

The fair value of interest-bearing deposits is based on the discounted value
of contractual cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining maturity.

Investment and Mortgage-Backed Securities

Fair values are based on quoted market prices or dealer quotes.

Loans Receivable

Fair values are estimated for portfolios of loans receivable with similar
financial characteristics. Loans are segregated by type such as residential,
commercial, and consumer. Each loan receivable category is further segmented
into fixed and adjustable rate interest terms. The fair value of loans
receivable is calculated by discounting scheduled cash flows through the
estimated maturity using estimated market discount rates equal to rates at
which loans, similar in type, would be originated at March 31, 1997. Estimated
maturities are based upon the average remaining contractual lives for each
loan receivable classification.

Stock in Federal Home Loan Bank

Fair value is equal to cost, which represents redemption value.

Accrued Interest Receivable

For accrued interest receivable, the carrying amount is a reasonable
estimate of fair value because of the short maturity for this financial
instrument.

Savings Deposits

The fair value of savings deposits with no stated maturity is equal to the
amount payable on demand. The fair value of time deposits is based on the
discounted value of contractual cash flows. The discount rate is estimated
using the rates currently offered for savings deposits of similar remaining
maturities.

Accrued Interest Payable on Savings Deposits

For accrued interest payable, the carrying amount is a reasonable estimate
of fair value because of the short maturity for this financial instrument.

Borrowed Money

The fair value of borrowed money is based on the discounted value of
contractual cash flows. The discount rate is estimated using rates on borrowed
money with similar remaining maturities.

F-23
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Advance Payments by Borrowers for Taxes and Insurance

The carrying amount of advance payments by borrowers for taxes and insurance
approximates fair value because of the short maturity for this financial
instrument.

Commitments to Extend Credit and Standby Letters of Credit

The fair value of commitments to extend credit and standby letters of credit
are estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements, the
likelihood of the counterparties drawing on such financial instruments, and
the present creditworthiness of such counterparties. Equality believes such
commitments have been made on terms which are competitive in the markets in
which it operates.

The fair value estimates provided are made at a point in time based on
market information and information about the financial instruments. Because no
market exists for a portion of Equality's financial instruments, fair value
estimates are based on judgments regarding future expected loss experience,
current economic conditions, risk characteristics of various financial
instruments, and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision. Changes in assumptions could
significantly affect the fair value estimates.

(16) CONTINGENCIES

Equality is involved in various litigation arising in the ordinary course of
business. In the opinion of management, at the present time, disposition of
the suits and claims will not have a material effect on the financial position
of Equality.

(17) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly financial data for the year ended March 31, 1997 and 1996
is as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1996 1996 1996 1997
-------- ------------- ------------ ---------
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Total interest income....... $ 3,265 3,492 3,388 3,465
Total interest expense...... (2,229) (2,352) (2,304) (2,227)
------- ------ ------ ------
Net interest income......... 1,036 1,140 1,084 1,238
Provision for losses on
loans...................... -- -- -- (50)
Noninterest income.......... 723 529 752 565
Noninterest expense......... (1,326) (2,201) (1,344) (1,338)
------- ------ ------ ------
Income before income tax ex-
pense...................... 433 (532) 492 415
Income tax expense (bene-
fit)....................... 169 (207) 192 149
------- ------ ------ ------
Net income (loss)........... $ 264 (325) 300 266
======= ====== ====== ======
Earnings (loss) per share... $ .32 (.39) .37 .31
======= ====== ====== ======
</TABLE>

F-24
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1995 1995 1995 1996
-------- ------------- ------------ ---------
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Total interest income........ $2,818 3,037 3,103 3,317
Total interest expense....... (1,913) (2,190) (2,156) (2,281)
------ ------ ------ ------
Net interest income.......... 905 847 947 1,036
Provision for losses on
loans....................... (6) -- -- (25)
Noninterest income........... 730 731 621 626
Noninterest expense.......... (1,289) (1,350) (1,300) (1,402)
------ ------ ------ ------
Income before income tax ex-
pense....................... 340 228 268 235
Income tax expense........... 133 89 104 92
------ ------ ------ ------
Net income................... $ 207 139 164 143
====== ====== ====== ======
Earnings per share........... $ .25 .17 .20 .18
====== ====== ====== ======
</TABLE>

(18) EVENT SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT--ADOPTION OF
PLAN OF CONVERSION TO STOCK CHARTER (UNAUDITED)

DESCRIPTION OF THE CONVERSION AND REORGANIZATION

On May 16, 1997, as subsequently amended, First Missouri Financial, M.H.C.
(the MHC), which owns approximately 53% of Equality's common stock, and
Equality Savings and Loan Association, F.A., adopted a Plan of Conversion and
Reorganization (the Plan), pursuant to which the MHC will convert from the
mutual to stock form of organization. Shares of common stock of a new holding
company, Equality Bancorp, Inc., will be offered in a subscription offering in
descending order of priority to eligible account holders; employee stock
benefit plans; supplemental eligible account holders; other members;
directors, officers, and employees; and public stockholders. Any shares
remaining unsold in the subscription offering will be sold through a community
offering.

In general, the Plan provides for the conversion of the MHC (a federally
chartered mutual holding company) to stock form (whereby the MHC will be
extinguished) and the creation of Equality Bancorp, Inc. (the Holding
Company), a capital stock corporation organized under Delaware law (the
Conversion). The Holding Company, as a result of the Conversion, will acquire
100% of the outstanding shares of stock of Equality. The MHC currently owns a
majority of the common stock of Equality. The purpose of the Conversion is to
convert the MHC to the capital stock form of organization, which will provide
the Holding Company and Equality with greater flexibility and capital
resources to respond to changing regulatory and market conditions and to
effect corporate transactions, including mergers and acquisitions. The Holding
Company will offer common stock (the Conversion Stock) upon the terms and
conditions set forth in the Plan. Stockholders of Equality, other than the
MHC, will exchange their Equality shares for shares of the Holding Company.
The Conversion will result in the attributes of ownership of the MHC being
transferred from Equality's depositors (and certain borrowers) to persons who
purchase stock in the Conversion stock offering and persons who exchange
common stock of Equality for common stock of the Holding Company. The
Conversion will have no impact on depositors, borrowers, or customers of
Equality. Equality will continue to be a member of the Federal Home Loan Bank
System and all of its insured savings deposits will continue to be insured by
the Federal Deposit Insurance Corporation, through the Savings Association
Insurance Fund, to the extent provided by applicable law.

F-25
<PAGE>

EQUALITY SAVINGS AND LOAN ASSOCIATION, F.A. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

LIQUIDATION RIGHTS

In the unlikely event of a complete liquidation of the MHC in its present
mutual form, each depositor of Equality would receive his or her pro rata
share of any assets of the MHC remaining after payment of claims of all
creditors. Each depositor's pro rata share of such remaining assets would be
in the same proportion as the value of his or her deposit account was to the
total value of all deposit accounts in Equality at the time of liquidation.
After the Conversion and Reorganization, each depositor, in the event of a
complete liquidation of Equality, would have a claim as a creditor of the same
general priority as the claims of all other general creditors of Equality.
However, except as described below, his or her claim would be solely in the
amount of the balance in his or her deposit account plus accrued interest. He
or she would not have an interest in the value or assets of Equality or the
Holding Company above that amount.

The Plan provides for the establishment, upon the completion of the
Conversion and Reorganization, of a special "liquidation account" for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders
(as defined in the Plan) in an amount equal to the amount of any dividends
waived by the MHC plus the greater of (i) Equality's retained earnings of
$8,067,000 at March 31, 1993, the date of the latest statement of financial
condition contained in the final offering circular utilized in Equality's 1993
initial public offering, or (ii) 53.2% of Equality's total stockholders'
equity as reflected in its latest balance sheet contained in the final
Prospectus utilized in the Conversion and Reorganization. As of the date of
the Prospectus to be used in the Conversion and Reorganization, the initial
balance of the liquidation account would be approximately $8,877,000. Each
Eligible Account Holder and Supplemental Eligible Account Holder, if he were
to continue to maintain his deposit account at Equality, would be entitled,
upon a complete liquidation of Equality after the Conversion and
Reorganization, to an interest in the liquidation account prior to any payment
to the Holding Company as the sole stockholder of Equality. Each Eligible
Account Holder and Supplemental Eligible Account Holder would have an initial
interest in such liquidation account for each deposit account, including
passbook accounts, transaction accounts such as checking accounts, money
market deposit accounts and certificates of deposit, held in Equality at the
close of business on March 31, 1996 or June 30, 1997, as the case may be. Each
Eligible Account Holder and Supplemental Eligible Account Holder will have a
pro rata interest in the total liquidation account balance based on the
proportion that the balance of each such deposit account on the March 31, 1996
Eligibility Record Date (or the June 30, 1997 Supplemental Eligibility Record
Date, as the case may be) bore to the balance of all deposit accounts in
Equality on such date.

If, however, on any March 31 annual closing date of Equality, commencing
March 31, 1998, the amount in any deposit account is less than the amount in
such deposit account on March 31, 1996 or June 30, 1997, as the case may be,
or any other annual closing date, then the interest in the liquidation account
relating to such deposit account would be reduced by the proportion of any
such reduction, and such interest will cease to exist if such deposit account
is closed. In addition, no interest in the liquidation account would ever be
increased despite any subsequent increase in the related deposit account. Any
assets remaining after the above liquidation rights of eligible account
holders and supplemental eligible account holders are satisfied would be
distributed to the Holding Company as the sole stockholder of Equality.

PAYMENT OF DIVIDENDS

The ability of Equality to pay dividends on its capital stock is restricted
by OTS regulation.

GENERAL

Equality had no conversion costs at March 31, 1997. If the Conversion and
Reorganization is successful, the conversion costs will be offset against the
proceeds received from the sale of stock. If it is unsuccessful, they will be
expensed.

F-26
<PAGE>

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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPEC-
TUS 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 AU-
THORIZED BY THE HOLDING COMPANY, THE MUTUAL HOLDING COMPANY, THE ASSOCIATION
OR TRIDENT SECURITIES, INC. 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 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 THE ASSOCIATION SINCE ANY OF
THE DATES AS OF WHICH INFORMATION IS FURNISHED HEREIN OR SINCE THE DATE HERE-
OF.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................. 1
Recent Developments...................................................... 12
Management's Discussion and Analysis of Recent Developments.............. 13
Risk Factors............................................................. 16
Equality Bancorp, Inc.................................................... 22
Equality Savings and Loan Association, F.A............................... 22
First Missouri Financial, M.H.C.......................................... 24
Use of Proceeds.......................................................... 25
Dividend Policy.......................................................... 26
Market for Common Stock.................................................. 27
Capitalization........................................................... 28
Regulatory Capital....................................................... 30
Pro Forma Data........................................................... 31
Proposed Subscriptions by Directors and Executive Officers............... 35
Consolidated Statements of Income........................................ 36
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 37
Business of the Association.............................................. 47
Regulation and Supervision............................................... 67
Federal and State Taxation............................................... 79
Management of the Holding Company and Association........................ 81
Beneficial Ownership of Capital Stock.................................... 94
The Conversion and Reorganization........................................ 94
Comparison of Stockholders' Rights....................................... 116
Restrictions on Acquisition of the Holding Company....................... 123
Description of Capital Stock............................................. 125
Registration Requirements................................................ 126
Transfer Agent and Registrar............................................. 126
Legal Opinions........................................................... 127
Experts.................................................................. 127
Index to Consolidated Financial Statements............................... F-1
</TABLE>

UNTIL THE LATER OF NOVEMBER 10, 1997 OR 90 DAYS AFTER COMMENCEMENT OF THE OF-
FERING OF COMMON STOCK, 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 UN-
SOLD ALLOTMENTS OR SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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1,729,323 SHARES

LOGO

EQUALITY BANCORP, INC.

(PROPOSED HOLDING COMPANY FOR
EQUALITY SAVINGS AND LOAN
ASSOCIATION, F.A.)

COMMON STOCK

---------------
PROSPECTUS
---------------

TRIDENT SECURITIES, INC.

AUGUST 12, 1997

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