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x Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-22269

Louisiana	72-1341014
(State or Other Jurisdiction	(IRS Employer ID Number)
of Incorporation or Organization)

Registrant's Telephone Number: (504) 457-6220

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)

As of June 28, 2002, there were 1,611,386 shares of the Registrant’s common stock, par value $.01 per share, issued and outstanding. The aggregate market value of such stock, excluding the shares held by all directors, officers and affiliates of the Registrant, was $19.8 million at June 28, 2002 based on the per common share price at closing of $18.01 on that date.

DOCUMENTS INCORPORATED BY REFERENCE

Listed hereunder are the following documents which have been incorporated by reference and the Part of the Form 10-K into which the document is incorporated.

(1)	Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 2002 are incorporated into Part II, Items 5 through 9, and Part IV, Item 15.
(2)	Portions of the definitive proxy statement for the 2003 Annual Meeting of Shareholders to be filed within 120 days of the Registrant’s fiscal year end are incorporated into Part III, Items 10 through 13.

Item 1. BUSINESS

In addition to historical information, this Annual Report on Form 10-K includes certain "forward-looking statements," as defined in the Securities Act of 1933 and the Securities Exchange Act of 1934, based on current management expectations. The Company’s actual results could differ materially from those management expectations. Such forward-looking statements include statements regarding the Company’s intentions, beliefs or current expectations as well as the assumptions on which such statements are based. Stockholders and potential stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Company’s loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees. The Company undertakes no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

General

GS Financial Corp. (the "Company") was incorporated under Louisiana law on December 24, 1996 as a thrift holding company. The Company commenced operations on April 1, 1997 upon the completion of its initial public offering of common stock, which trades on the Nasdaq National Market under the symbol "GSLA." On that date the Company’s wholly owned subsidiary, Guaranty Savings and Homestead Association (the "Association") was converted from a Louisiana chartered mutual savings and loan association to a Louisiana chartered stock savings and loan association. This was accomplished through the offer and sale of common stock by the Company to certain depositors, employees, officers and directors of the Association as well as the GS Financial Employee Stock Ownership Plan (the "ESOP"). The Company simultaneously used a portion of the proceeds of its sale of common stock to acquire 100% of the stock of the Association.

The Company's principal business is conducted through the Association. Guaranty Savings and Homestead Association was founded in New Orleans, Louisiana in 1937 as a mutual savings and loan association. The Association’s unconsolidated assets at December 31, 2002 totaled $207.1 million and comprise 98.6% of the total consolidated assets of the Company. The Association provides financial services primarily to individuals, mainly through the origination of mortgage loans on 1-4 family residences. The Association accepts deposits in the form of passbook savings, certificates of deposit, demand deposit accounts and individual retirement accounts. The Association also invests in short and long term liquid investments such as US Treasury and Agency securities, mortgage backed securities, overnight Federal Funds, money market investments and qualified thrift grade mutual funds. The balance of the consolidated assets includes $2.1 million in similar short and long-term liquid investments, and $.8 million in fixed assets held exclusively at the Company level.

Regulation

The Company’s primary regulator is the Office of Thrift Supervision ("OTS"). The OTS regulates all thrifts and thrift holding companies whose deposits are insured by the Savings Association Insurance Fund ("SAIF") which is administered by the Federal Deposit Insurance Corporation ("FDIC"). The Company, by virtue of its state charter is also subject to the rules and regulations of the Louisiana Office of Financial Institutions ("OFI"). These two agencies currently examine the Company approximately every 18 months on an individual basis, relying on the examination report of the other agency on cycles, alternating when it is not their year to examine the Association. The nature of such examinations includes safety and soundness issues as well as compliance with applicable laws and regulations. The Association and Company were last examined by the OTS as of June 30, 2002.

As a public registrant the Company is subject to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Company also is subject to the rules of the NASDAQ Stock Market.

The Association has been a member of the Federal Home Loan Bank of Dallas ("FHLB") since 1937. The Federal Home Loan Bank System is comprised of 12 regional banks which serve thrifts and banks by offering investment opportunities and sources of funds.

Lending Activities

Loan Portfolio Composition. The following table sets forth the composition of the Company’s loan portfolio by type of loan at the dates indicated (in thousands):

				At December 31,
				2002		2001		2000		1999		1998
Real Estate Loans:
	One to Four
		Family Residential	$	57,502	$	69,843	$	71,092	$	67,424	$	61,562
	FHA and VA			1		9		52		140		237
	Construction			1,263		1,056		619		646		740
	Commercial Real Estate			8,672		3,431		1,006		1,377		1,157
	Other			9,451		6,750		1,453		446		201
				---------		---------		---------		---------		---------
		Total Real Estate Loans		76,889		81,089		74,222		70,033		63,897
Consumer Loans:
	Second Mortgage			7		11		52		84		119
	Loans on Deposits			396		254		237		367		337
				---------		---------		---------		---------		---------
		Total Consumer Loans		403		265		289		451		456
Commercial Loans				1,515		683		381		-		-
				---------		---------		---------		---------		---------
		Total Loans		78,807		82,037		74,892		70,484		64,353
Allowance for
	Loan Losses			(483)		(435)		(420)		(424)		(463)
Net Deferred Loan
	Origination Costs			10		9		8		6		5
				---------		---------		---------		---------		---------
Net Loans			$	78,334	$	81,611	$	74,480	$	70,066	$	63,895
				=====		=====		=====		=====		=====

Contractual Term to Final Maturities. The following table sets forth certain information as of December 31, 2002 regarding the dollar amount of loans maturing in the Company’s portfolio, based on the contractual date of the loan’s final maturity, before giving effect to net items. Demand loans and loans having no stated maturity are reported as due in one year or less. The amounts shown below do not reflect normal principal amortization; rather, the balance of each loan outstanding at December 31, 2002 is shown in the appropriate year of the loan’s final maturity. The actual maturity of loans varies primarily on prepayments which to a large extent depends on market interest rates. In general, if prevailing market rates fall below those of the portfolio, prepayments accelerate. Conversely, if market interest rates increase above portfolio rates early pay-offs tend to decrease.

Fixed rate loans receivable as of December 31, 2002 are scheduled to mature and adjustable rate loans are scheduled to re-price as follows (in thousands):

				Under One Year		One to Five Years		Over Five to Ten Years		Over 10 Years		Total
				------		------		------		------		------
Loans Secured by 1-4 Family
	Residential:
		Fixed Rate	$	71	$	1,184	$	6,698	$	49,549	$	57,502
Other Loans Secured by
	Real Estate:
		Fixed Rate		-		14,236		5,158		-		19,394
Commercial Fixed Rate				1,146		-		369		-		1,515
All Other Loans				396		-		-		-		396
				------		------		------		------		------
			$	1,613	$	15,420	$	12,225	$	49,549	$	78,807
				=====		=====		=====		=====		=====

Loan Origination Activity. The table below sets forth the Company’s total loan origination and reduction experience during the periods indicated. Historically, the Company has not purchased or sold any loans.

			For the Years ended December 31,
			2002		2001		2000		1999		1998
			-------		-------		-------		-------		-------
Loan Originations (in thousands):
	1-4 family residential	$	8,021	$	12,062	$	11,229	$	13,082	$	14,697
	Construction		2,143		1,670		1,514		1,004		1,610
	Commercial real estate		4,503		1,430		323		306		526
	Consumer		364		252		106		266		283
	Commercial		2,049		610		-		-		-
	Other Real Estate		4,336		6,030		568		263		732
			-------		-------		-------		-------		-------
Total Loan Originations			21,416		22,054		13,740		14,921		17,848
Loan principal
	Repayments		(24,557)		(14,521)		(9,218)		(8,790)		(7,490)
Increase (decrease)
	due to other items		(47)		(14)		6		72		(51)
			-------		-------		-------		-------		-------
Net increase(decrease) in
	Loan portfolio	$	(3,188)	$	7,519	$	4,528	$	6,203	$	10,307
			======		======		======		======		======

Real Estate Lending Standards and Underwriting Policies. The lending activities of the Company are subject to written underwriting standards and loan origination procedures established by the Company's Board of Directors (the "Board") and Management. These standards and procedures are incorporated into the Company's Underwriting Standards and Lending Policy which are reviewed as needed by the Board and Management. The underwriting standards dictate the manner in which loan applications are accepted and processed. Such standards are written to comply with all applicable laws and regulations including but not limited to Truth-In-Lending (Regulation Z) and the Real Estate Settlement and Procedures Act ("RESPA"). These standards pertain to such issues as appraisal guidelines, disclosure requirements, credit criteria, complete applications, and title requirements. The Company requires appraisals from Board-approved state licensed and certified appraisers who are on an approved appraiser list maintained by Management. The lending policy establishes the overall direction of the Company's lending activities within the community and forms the basis for setting underwriting standards which limit the Company's exposure to credit risk. Such factors include loan amount, debt to income ratios, collateral, and acceptable rates and terms.

Briefly stated, the loan process consists of applicants meeting with loan personnel and providing pertinent documentation, including but not limited to, requested loan amount, property description, security offered as collateral, intended down payments and an acceptable rate and term consistent with the Company's then current lending policy. Upon receipt of a favorable credit report, an appraisal is obtained with requisite documentation to support the property's stated market value. Upon completion the loan package is presented to the Loan Committee for consideration. All applicants receive written notification of the Committee’s decision to approve or deny the request. Approved loans are assigned to one of the Company's approved attorneys for closing. Actions of the Loan Committee are submitted to the Board of Directors for consideration and ratification on a monthly basis.

Loan applications are accepted at all four of the Company’s full service branches and the loan production office in Ponchatoula and forwarded to the Loan Committee which meets weekly. The Company usually requires a title insurance policy on loans prior to closing.

The Company’s conventional fixed rate mortgage loans on 1-4 family residential dwellings are offered with terms up to 30 years. Currently, the minimum cash down payment is 20% of the lesser of purchase price or appraised value. The Company originates and funds construction loans which subsequently convert to permanent, fixed rate mortgage loans. During the construction period, the company requires payment of interest only on the amount of principal drawn.

In 2000, the Company began shifting some of its lending activity towards the commercial market to diversify and enhance the products and services offered to its customers and add higher yielding loans to the overall portfolio than current market rates on residential mortgage loans. Commercial loans typically carry higher yields and associated risk than loans on 1-4 family dwellings. The Company offers mortgage loans on multifamily residential dwellings, commercial real estate and vacant ground. The Company also offers commercial asset based loans secured by non-real estate collateral such as inventory and accounts receivable. The Company has a special commercial loan committee to evaluate such applications.

During 2002 and 2001, the Company was able to originate approximately $8.7 and $8.0 million of non-residential loans, respectively. These loans are secured mainly by multifamily and commercial real estate. The Company applies similar underwriting standards to its commercial loans with particular attention paid to cash flow analysis of the underlying business entity and debt coverage ratios. Commercial loan documentation procedures differ from residential lending requirements on a case-by-case basis.

Loans are available to depositors of the Company secured by passbook savings or certificates of deposit at a rate of 2 percentage points above the savings rate up to 90% of the face amount of a certificate of deposit or 90% of the current available balance of a passbook. The minimum amount on such loans is $1,000 and these loans are payable on demand subject to 30 days notice.

Asset Quality

General. The Company has adopted an asset classification policy which is designed to draw attention to assets before collection becomes a problem, thus maintaining the quality of the Company’s investment as an interest-earning asset. The policy also insures the accurate reporting of the Company’s assets from a valuation standpoint.

All of the Company’s loans are reviewed on a quarterly basis. Payment histories as well as the value of the underlying collateral are reviewed and assessed in light of several risk factors. The state of the local economy factors into the evaluation process. A healthy economy is characterized by low unemployment which usually leads to strong real estate markets and the maintenance or appreciation of underlying collateral values. Current interest rates and expectations of the movement thereof is also a significant risk factor. Low or falling interest rates can act to stimulate local real estate markets while also increasing prepayment speeds on existing assets. Rising or high interest rates usually slows down payments. The level of credit concentration the customer has with the Company is also a risk factor. Other risk factors include environmental factors which could impair the value of the underlying collateral of an asset or changes in federal and state regulations which might reduce the ability of the Company to collect all of the principal and interest owed to the Company.

The Company maintains a "Watch List" of loans, which is part of management’s internal asset classification system. The watch list identifies assets classified as "substandard," "doubtful" or "loss," pursuant to OTS regulations. Assets displaying tendencies which might hinder full collection of principal are classified as substandard. Such tendencies include but are not limited to late payments on loans or deterioration of the underlying collateral. Those loans classified substandard, for which a specific potential for loss has been identified, are considered "special assets."

Loan collection efforts in the form of past due notices commence when loan payments are more than 15 days past due. Once a loan reaches 30 days past due status, the Company’s collection manager initiates personal contact with the borrower. When a loan becomes 90 days past due, the Company initiates foreclosure proceedings. At this point, loans are placed on non-accrual status. All interest and late charges due on such loans are reversed in the form of reserves for uncollectible interest and late charges.

Real estate acquired by the Company through foreclosure is classified as foreclosed real estate until such time as the property is sold. All such assets are booked at the lower of appraised value or cost which includes all principal, escrow overdrafts and attorney fees. All foreclosed real estate is considered substandard.

Delinquent Loans and Non-Performing Assets. The following tables set forth the Company’s delinquent loans and non-performing assets as of the dates indicated. Balances are indicative of the total principal balances of such loans rather than the actual principal past due based on the number of payments past due. The Company had no loans 90 plus days delinquent and still accruing in the table below. At December 31 of the five years presented, predominantly all of the Association’s delinquent loans and non performing assets were either repossessed 1-4 family residential dwellings or loans secured by 1-4 family residential dwellings.

		At December 31,
		2002		2001		2000		1999		1998
		-----		-----		-----		-----		-----
30-89 Days	$	2,931	$	3,542	$	2,231	$	2,673	$	2,171
90+ Days		651		249		434		100		266
		-----		-----		-----		-----		-----
Total Delinquent Loans	$	3,582	$	3,791	$	2,665	$	2,773	$	2,437
		====		====		====		====		====

			At December 31,
			2002		2001		2000		1999		1998
			-----		-----		-----		-----		-----
90+ Day Delinquent Loans		$	651	$	249	$	434	$	100	$	266
Foreclosed Real Estate			-		-		117		14		-
			-----		-----		-----		-----		-----
Total Non Performing Assets		$	651	$	249	$	551	$	114	$	266
			===		===		===		===		===
Non Performing Loans as
	a % of Total Loans		.83%		.30%		.58%		.14%		.42%
Non Performing Assets as
	a % of Total Assets		.31%		.13%		.28%		.06%		.17%

Classified Assets. At December 31, 2002, 2001 and 2000, the Company’s total classified assets amounted to $1.8 million. All such classified loans at each of these dates were secured by first liens on one-to-four family residential dwellings.

Allowance for Loan Loss. The allowance for loan loss ("ALL") is calculated by assessing the need for specific reserves on identified problem credits (see special assets in the previous paragraph) in addition to using historical and economic based percentages on certain classifications of homogeneous loans to arrive at an overall ALL. These categories are based on the type of underlying collateral such as commercial or residential real estate while still other categories are based on the nature of the loan such as construction verses permanent financing. At December 31, 2002, the ALL was allocated as follows:

GS Financial Corp.

Allocation of the Allowance for Loan Losses

	At December 31,
Allowance at End of Period Applicable to:	2002		2001		2000		1999		1998
	Amount	Percent of Total Loans	Amount	Percent of Total Loans	Amount	Percent of Total Loans	Amount	Percent of Total Loans	Amount	Percent of Total Loans
One to Four Family Residential	$ 217	73.0%	$ 337	85.1%	$ 390	94.9%	$ 340	95.7%	$ 377	95.7%
FHA and VA	-	0.0%	-	0.0%	-	.1%	-	.2%	-	.4%
Construction	5	1.6%	5	1.4%	-	.8%	-	.9%	-	1.1%
Commercial Real Estate	115	11.0%	57	4.2%	24	1.3%	39	2.0%	15	1.8%
Other Real Estate	126	12.0%	33	8.2%	-	1.9%	45	.6%	45	.3%
Second Mortgage	-	0.0%	-	0.0%	-	.1%	-	.1%	26	.2%
Loans on Deposits	-	.5%	-	.3%	-	.3%	-	.5%	-	.5%
Commercial Loans	20	1.9%	3	.8%	6	n/a	-	n/a	-	n/a
TOTAL	$ 483	100.0%	$ 435	100.0%	$ 420	100.0%	$ 424	100.0%	$ 463	100.0%
	====		====		====		====		====

During 2002, the ALL increased even though the loan portfolio decreased in size. The increase in ALL was not due to any deterioration of collateral, downturn in the economy or other negative factor. The change in the mix of the loan portfolio dictated the increase. At December 31, 2001, non-residential loans comprised approximately 13% of the entire portfolio, as compared to approximately 25% at December 31, 2002. These loans are primarily mortgage loans secured by multifamily residential dwellings or commercial real estate. Non-residential loans typically carry more risk than residential loans, and under the Company’s valuation calculation, are assessed higher valuation allowances than residential loans.

LOAN LOSS EXPERIENCE

Provisions for loan losses are charged to earnings to bring the total ALL to a level considered appropriate by management. Losses are incurred via foreclosure, deterioration of the underlying collateral, inability of the customer to repay the loan or other means. These losses are charged against the ALL. The ALL is evaluated throughout the year and provisions to increase or reductions to reduce the allowance to the appropriate level deemed by management are recorded when necessary. Charge-offs reduce the allowance while recoveries increase the allowance during the quarter. Management assesses the ALL accordingly and establishes additional provisions to bring the ALL to an appropriate level. The appropriate level of the ALL is determined by management’s estimation of the amount of loss associated with loans considered to be impaired in accordance with SFAS 114, "Accounting by Creditors for Impairment of a Loan," as well as management’s estimate of loss associated with the remaining portfolio. Historical analysis of factors such as number of foreclosures, level of delinquencies and amount of charge-offs as well as other factors such as local and national economic conditions help management set both the formula used to calculate the ALL for the remaining loan portfolio as well as an appropriate level for the ALL overall.

The following table sets forth the Company’s loan loss experience for the years presented. All of the charge-offs and provisions in the following table were on first mortgages of one-to-four family dwellings. An analysis of the allowance for loan loss is as follows (dollars in thousands):

			Years Ended December 31,
			2002		2001		2000		1999		1998
			-----		-----		-----		-----		-----
Balance, Beginning
	of Year	$	435	$	420	$	424	$	463	$	410
Provision for Losses			48		25		7		6		53
Loans Charged Off			-		(10)		(11)		(45)		-
Recoveries			-		-		-		-		-
			-----		-----		-----		-----		-----
Balance, End of Year		$	483	$	435	$	420	$	424	$	463
			====		====		====		====		====
Allowance for Loan
	Losses as a % of
	Total Loans Receivable	.62%		.53%		.56%		.60%		.72%
Allowance for Loan
	Losses as a % of
	Non Performing Loans	74.16%		174.80%		96.69%		422.97%		174.01%

Mortgage-Backed Securities

The Company has invested in a portfolio of fixed-rate, mortgage-backed securities that are issued or guaranteed by the Government National Mortgage Association ("GNMA.") GNMA securities represent direct obligations of the Federal government. Because of this, these securities are considered high quality investments with minimal credit risks. The guaranteed aspect of these investments results in yields slightly less than the actual yields on the underlying mortgage loans.

Mortgage-backed securities represent participating interests in pools of first mortgage loans originated and serviced by their prospective issuers. Principal and interest payments of the underlying mortgage loans are passed through intermediaries, including but not limited to the issuing agencies, on to investors such as GS Financial Corp.

The Company invests in mortgage-backed securities with terms varying from 5 to 30 years. These securities are subject to variations in cash flow and yield due to the prepayment rates of the underlying mortgage loans. All such mortgage-backed securities meet the requirements of qualified thrift investments as later defined.

All of the Company’s mortgage-backed securities are classified as available-for-sale pursuant to SFAS 115. During 2000 and 2001, the Company largely divested itself of mortgage-backed securities in order to provide liquidity for additional investment in CMOs which provide more attractive yields and terms to the Company.

The following table sets forth the composition of the Company’s mortgage-backed securities portfolio at each of the dates indicated (in thousands):

MORTGAGE-BACKED SECURITIES

At December 31, 2002:		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		----------			----------		----------		----------
Available for Sale:
GNMA	$	539		$	30	$	-	$	569
		-------			-------		-------		-------
	$	539		$	30	$	-	$	569
		=====			=====		=====		=====
At December 31, 2001:		Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		----------			----------		----------		----------
Available for Sale:
GNMA	$	857	$		28	$	-	$	885
		-------			-------		-------		-------
	$	857	$		28	$	-	$	885
		====			==		==		=====

The following table sets forth the contractual maturities of the mortgage-backed security portfolio as of December 31, 2002 (in thousands):

MORTGAGE-BACKED SECURITIES

	At December 31, 2002:		Amortized Cost		Fair Value	Weighted Average Rate
			---------		---------
Mortgage-Backed Securities Maturing:
	In One Year or Less	$	-	$	-	-
	After One Year Through Five Years		-		-	-
	After Five Years Through Ten Years		-		-	-
	After Ten Years		539		569	8.25%
			------		------
		$	539	$	569
			====		====

The following table sets forth the purchases, sales and principal repayments of the Company’s mortgage-backed securities during the periods indicated (in thousands):

MORTGAGE-BACKED SECURITIES

				2002		2001		2000
				-------		-------		-------
Mortgage-Backed Securities
	Balance at January 1,		$	857	$	4,118	$	16,743
	Purchases			-		-		-
	Repayments			(311)		(925)		(1,956)
	Sales (Net of Gains)			-		(2,321)		(10,650)
	Amortizations of Premiums
		/Discounts (Net)		(7)		(15)		(19)
				-------		-------		-------
	Balance at December 31,		$	539	$	857	$	4,118
				====		======		======
	Weighted Average Yield			7.09%		6.54%		6.68%

Investment Securities

The Company invests in United States Treasury issued investments, FHLMC common and preferred stock, and several mutual funds for which the underlying collateral is comprised of mortgage-based products, United States Treasury Obligations and various money-market investments. These mutual funds provide the Company with an investment with one-day availability which offer yields over and above traditional overnight investments. The investment policy of the Company strives to maintain a liquid, conservative portfolio of investments, keeping in mind the cash flow and investment needs of the Company. The Company’s investment portfolio is classified as available-for-sale in accordance with SFAS 115.

Interest rates dictate many of the investment decisions and policies of the Company. It is the policy of the Company not to engage in speculative purchasing, selling or trading of investments, however, certain profits may be taken from time to time on the sale of investments. When interest rate spreads reach acceptable levels the Company may utilize leveraged purchasing of investment securities. Also, when anticipated earnings permit, certain portfolio adjustments may be made to enhance the overall portfolio yield even though losses may be recognized in doing so.

INVESTMENT SECURITIES

Securities available-for-sale consist of the following (in thousands):

At December 31, 2002:			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			----------		----------		----------		----------
U. S. Government
	and Federal Agencies	$	801	$	116	$	-	$	917
Adjustable Rate
	Mortgage Mutual Fund		31,924		39		-		31,963
Intermediate
	Mortgage Mutual Fund		412		7		-		419
FHLMC Common Stock			16		929		-		945
FHLMC Preferred Stock			19,846		1,001		-		20,847
			-------		-------		-------		-------
		$	52,999	$	2,092	$	-	$	55,091
			======		=====		=====		=====
At December 31, 2001:			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			----------		----------		----------		----------
U. S. Government
	and Federal Agencies	$	801	$	85	$	-	$	886
Adjustable Rate
	Mortgage Mutual Fund		12,481		32		-		12,513
Ultra Short Term
Mutual Fund			4,255		-		4		4,251
Intermediate
	Mortgage Mutual Fund		394		3		-		397
FHLMC Common Stock			16		1,031		-		1,047
FHLMC Preferred Stock			16,224		326		-		16,550
Equity Investments – Other			173		3		-		176
			-------		-------		-------		-------
		$	34,344	$	1,480	$	4	$	35,820
			=====		=====		===		=====

The following table sets forth the amount of investment securities which mature during each of the periods indicated at December 31, 2002:

INVESTMENT SECURITIES

		Securities
		Available-for-Sale
At December 31, 2002:			Amortized Cost		Fair Value	Weighted Average Rate
			---------		---------
Amounts Maturing in:
	In One Year or Less	$	52,198	$	54,174	3.60%
	After One Year Through Five Years		801		917	7.19%
	After Five Years Through Ten Years		-		-	-
			------		------
		$	52,999	$	55,091
			=====		=====

COLLATERALIZED MORTGAGE OBLIGATIONS

Currently, the Company’s investment in Collateralized Mortgage Obligations (CMO’s) is limited to Real Estate Mortgage Investment Conduits (REMIC’s). A REMIC is a pass through investment created under the Tax Reform Act of 1986 to issue multiple class mortgage-backed securities. The Company’s investment in REMIC’s is limited to those issued by FNMA, FHLMC, GNMA and "AAA" rated non-governmental issuers. These are defined to be within the 20% risk-weighted category for thrift institutions. The contractual maturity of a REMIC is defined by the latest maturity date of the underlying group of mortgage loans. In terms of actual cash flow, the term or duration of the REMIC’s purchased by the Company varies from 1 to 7 years. The cash flow of these investments facilitates the operating needs of the Company.

The following table sets forth the composition of the Company’s portfolio of Collateralized Mortgage Obligations indicated (in thousands):

COLLATERALIZED MORTGAGE OBLIGATIONS

At December 31, 2002:		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		----------		----------		----------		----------
Available-for-Sale:
FNMA	$	7,534	$	8	$	18	$	7,524
FHLMC		19,404		81		2		19,483
GNMA		1,601		-		-		1,601
Other		23,564		898		4		24,458
		-------		-------		-------		-------
	$	52,103	$	987	$	24	$	53,066
		=====		=====		===		=====

At December 31, 2001:		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		----------		----------		----------		----------
Available-for-Sale:
FNMA	$	1,283	$	-	$	9	$	1,274
FHLMC		13,702		153		65		13,790
Other		35,810		1,213		-		37,023
		-------		-------		-------		-------
	$	50,795	$	1,366	$	74	$	52,087
		=====		=====		====		=====

Sources of Funds

General. The last two years the Company has experienced a significant increase in retail deposits, due largely to investors taking money out to the equity markets. The Company has also utilized wholesale sources such as the FHLB which allows member institutions such as the Company to borrow money at discounted costs.

Deposits. The Company’s deposits are attracted principally from within its market area. Many depositors are also loan customers. The Company offers passbook savings, demand deposit accounts, NOW accounts and certificates of deposit. Terms for certificates vary from 6 months to 5 years while rates tend to increase with term.

The following table shows the distribution of, and certain other information relating to the Company’s deposits. Deposit account balances at December 31, 2002, 2001, and 2000 are summarized as follows (in thousands):

		Years Ending December 31,
			2002			2001			2000
				Wtd.			Wtd.			Wtd.
				Avg.			Avg.			Avg.
			Balance	Rate		Balance	Rate		Balance	Rate
			---------	----------		---------	----------		---------	----------
Demand Deposit
	Accounts	$	7,143	1.83%	$	7,910	1.94%	$	3,185	4.64%
Passbook Savings
	Accounts		31,153	2.28%		20,042	2.75%		17,431	3.00%
Certificates of
	Deposit		68,213	3.44%		43,217	4.34%		38,263	5.85%
			--------			--------			--------
		$	106,509		$	71,169		$	58,879
			=====			=====			=====

The following table sets forth the deposit cash flow of the Company during the periods indicated (in thousands):

		Years Ended December 31,
			2002		2001		2000
			------		------		------
Increase (decrease) before
	Interest Credited	$	33,174	$	10,019	$	(2,396)
Interest Credited			2,167		2,271		2,059
			------		------		------
Net increase (decrease) in deposits		$	35,341	$	12,290	$	(337)

The Company attempts to price its deposit accounts to remain generally competitive with other financial institutions in its market area, while maintaining its traditional margins. Traditionally the Company has relied on its passbook savings accounts as a core deposit base. During 2001, the Company was able to establish a portfolio of demand deposit accounts of approximately $8.0 million. This was in line with the Company's goals to diversify and expand the products and services offered to its customers. The Company does not pay "jumbo" rates for deposits $100,000 and over.

The principal methods used by the Company to attract deposits include its emphasis on personal service, competitive interest rates and convenient office locations. The Company does not advertise for deposits outside of its primary market area. At December 31, 2002, the Company had no deposits that were obtained through deposit brokers.

The following table presents the amount of certificates of deposit at December 31, 2002 which mature during the periods indicated (in thousands).

			Amount	Percent
			-------	-------
Certificate Accounts Maturing
	Under 12 months	$	47,695	69.92%
	12 months to 24 months		8,981	13.17%
	24 months to 36 months		11,428	16.75%
	36 months to 48 months		35	0.05%
	48 months to 60 months		74	0.11%
			------	-----
Total Certificates		$	68,213	100.00%
			=====	======

The following table sets forth the maturities of the Company’s deposits of $100,000 or more at December 31, 2002 by time remaining to maturity (in thousands).

DEPOSITS $100,000 AND OVER

(in thousands)

Maturing in 3 months or less	$	8,918
Maturing in 3 to 6 months		3,282
Maturing in 6 months to 1 year		2,485
Maturing in 1 to 2 years		510
Maturing in 2 to 3 years		2,173
		------
Total Deposits $100,000 and over	$	17,368
		=====

Borrowings. During 2002 the Company obtained advances from the FHLB, as part of a leveraged investment program. The Company borrows the funds which are subsequently reinvested in mortgage-backed securities, collateralized mortgage obligations and other investments which earn interest at a rate greater than the rate charged on the advances. The advances consist of fully amortizing and balloon advances which mature between January, 2003 and June, 2008. A summary of the advances by maturity and interest rate are detailed as follows (in thousands):

			Weighted
Maturing in the Year			Average
Ending December 31,		Amount	Rate
-------------------		----------	----------
2003	$	27,453	5.51%
2004		6,226	5.56%
2005		9,537	5.97%
2006		6,131	5.55%
2007		5,514	5.63%
Thereafter		11,531	5.44%
		---------
	$	66,392

The maximum amount of advances outstanding at any month-end during 2002 was $79.3 million. The average balance outstanding during 2002 was $72.1 million.

Treasury Stock

Since 1998, the Company has been repurchasing shares of its common stock. The following table summarizes the repurchase of shares of its common stock by year:

GS Financial Corp.
Common Stock Repurchases
	Shares	Average Price
Year	Repurchased	Per Share
------	----------------	-----------------
1998	491,054	$ 16.95
1999	299,000	$ 12.22
2000	679,600	$ 12.64
2001	305,684	$ 15.09
2002	142,201	$ 17.69
	---------	----------
Total	1,917,539	$ 14.44
	=======	======

All purchases were open market transactions and most were at a discount to book value.

Subsidiaries

Guaranty Savings and Homestead Association is a wholly-owned subsidiary of the Company. The Company has no other subsidiaries.

Competition

Guaranty Savings and Homestead Association faces significant competition both in attracting deposits and in originating loans. Its most direct competition for loans and deposits has come from commercial banks, credit unions, other savings and loans and mortgage brokers located in the metropolitan New Orleans market. The Association also competes for investors’ funds with short-term money market mutual funds and issuers of corporate and government securities. Guaranty Savings and Homestead Association does not rely on any individual group or entity for a material portion of its deposits or loan portfolio. The Association’s primary factors in competing in the loan and deposit markets are its efficient personal service and attractive interest rates and terms.

Employees

The Association had 40 full-time employees at December 31, 2002. None of these employees are represented by a collective bargaining agreement. Guaranty Savings and Homestead Association believes that it enjoys excellent relations with its personnel.

Regulation

Set forth below is a brief description of certain laws and regulations which are applicable to the Company and Guaranty Savings and Homestead Association. The description of these laws and regulations, as well as descriptions of laws and regulations contained elsewhere herein, does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations.

The Company

General. The Company, as a savings and loan holding company within the meaning of the Home Owners’ Loan Act, as amended ("HOLA"), is registered with and subject to OTS regulations, examinations, supervision and reporting. As a subsidiary of a savings and loan holding company, Guaranty Savings and Homestead Association is subject to certain restrictions in its dealings with the Company and any affiliates thereof.

Activities Restrictions. There are generally no restrictions on the activities of a savings and loan holding company which holds only one subsidiary savings institution. However, if the Director of the OTS determines that there is reasonable cause to believe that the continuation by a savings and loan holding company of an activity constitutes a serious risk to the financial safety, soundness or stability of its subsidiary savings institution, the Director may impose such restrictions as deemed necessary to address such risk, including limiting (i) payment of dividends by the savings institution; (ii) transactions between the savings institution and its affiliates; and (iii) any activities of the savings institution that might create a serious risk that the liabilities of the holding company and its affiliates may be imposed on the savings institution. Notwithstanding the above rules as to permissible business activities of unitary savings and loan holding companies, if the savings institution subsidiary of such a holding company fails to meet the qualified thrift lender ("QTL") test, as discussed under "- The Association – Qualified Thrift Lender Test," then such unitary holding company also shall become subject to the activities restrictions applicable to multiple savings and loan holding companies and, unless the savings institution re-qualifies as a QTL within one year thereafter, shall register as, and become subject to the restrictions applicable to, a bank holding company. See "- The Association – Qualified Thrift Lender Test."

If the Company were to acquire control of another savings institution, other than through merger or other business combination with Guaranty Savings, the Company would thereupon become a multiple savings and loan holding company. Except where such acquisition is pursuant to the authority to approve emergency thrift acquisitions and where each subsidiary savings institution meets the QTL test, as set forth below, the activities of the Company and any of its subsidiaries (other than Guaranty Savings or other subsidiary savings institutions) would thereafter be subject to further restrictions. Among other things, no multiple savings and loan holding company or subsidiary thereof which is not a savings institution shall commence or continue for a limited period of time after becoming a multiple savings and loan holding company or subsidiary thereof any business activity, other than: (i) furnishing or performing management services for a subsidiary savings institution; (ii) conducting an insurance agency or escrow business; (iii) holding, managing, or liquidating assets owned by or acquired from a subsidiary savings institution; (iv) holding or managing properties used or occupied by a subsidiary savings institution; (v) acting as trustee under deeds of trust; (vi) those activities authorized by regulation as of March 5, 1987 to be engaged in by multiple savings and loan holding companies; or (vii) unless the Director of the OTS by regulation prohibits or limits such activities for savings and loan holding companies. Those activities described in clause (vii) above also must be approved by the Director of the OTS prior to being engaged in by a multiple savings and loan holding company.

Limitations on Transactions with Affiliates. Transactions between savings institutions and any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a savings institution is any company or entity which controls, is controlled by or is under common control with the savings institution. In a holding company context, the parent holding company of a savings institution (such as the Company) and any companies which are controlled by such parent holding company are affiliates of the savings institution. Generally, Sections 23A and 23B (i) limit the extent to which the savings institution or its subsidiaries may engage in "covered transactions" with any one affiliate to an amount equal to 10% of such institution’s capital stock and surplus, and contain an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus and (ii) require that all such transactions be on terms substantially the same, or at least as favorable, to the institution or subsidiary as those provided to a non-affiliate. The term "covered transaction" includes the making of loans, purchase of assets, issuance of guarantee and other similar transactions. In addition to the restrictions imposed by Sections 23A and 23B, no savings institution may (i) loan or otherwise extend credit to an affiliate, except for any affiliate which engages only in activities which are permissible for bank holding companies, or (ii) purchase or invest in any stocks, bonds, debentures, notes or similar obligations of any affiliate, except for affiliates which are subsidiaries of the savings institution.

In addition, Sections 22(h) and (g) of the Federal Reserve Act place restrictions on loans to executive officers, directors and principal stockholders. Under Section 22(h), secured loans to a director, an executive officer and to a greater than 10% stockholder of a savings institution, and certain affiliated interest of either, may not exceed, together with all other outstanding loans to such person and affiliated interests, the savings institution’s loans to one borrower limit (generally equal to 25% of the institution’s unimpaired capital and surplus). Section 22(h) also requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other persons unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees of the institution and (ii) does not give preference to any director, executive officer or principal stockholder, or certain affiliated interests of either, over other employees of the savings institution. Section 22(h) also requires prior Board approval for certain loans. In addition, the aggregate amount of extensions of credit by a savings institution to all insiders cannot exceed the institution’s unimpaired capital and surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers. At December 31, 2002 Guaranty Savings was in compliance with the above restrictions.

Restrictions on Acquisitions. Except under limited circumstances, savings and loan holding companies are prohibited from acquiring, without prior approval of the Director of the OTS, (i) control of any other savings institution or savings and loan holding company or substantially all the assets thereof or (ii) more than 5% of the voting shares of a savings institution or holding company thereof which is not a subsidiary. Except with the prior approval of the Director of the OTS, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such company’s stock, may acquire control of any savings institution, other than a subsidiary savings institution, or of any other savings and loan holding company.

The Director of the OTS may only approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings institutions in more than one state if (i) the multiple savings and loan holding company involved controls a savings institution which operated a home or branch office located in the state of the institution to be acquired as of March 5, 1987; (ii) the acquirer is authorized to acquire control of the savings institution pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act ("FDIA"); or (iii) the statutes of the state in which the institution to be acquired is located specifically permit institutions to be acquired by the state-chartered institutions or savings and loan holding companies located in the state where the acquiring entity is located (or by a holding company that controls such state-chartered savings institutions).

Under the Bank Holding Company Act of 1956, the Federal Reserve Bank ("FRB") is authorized to approve an application by a bank holding company to acquire control of a savings institution. In addition, a bank holding company that controls a savings institution may merge or consolidate the assets and liabilities of the savings institution with, or transfer assets and liabilities to, any subsidiary bank which is a member of the Bank Insurance fund with the approval of the appropriate federal banking agency and the FRB. As a result of these provisions, there have been a number of acquisitions of savings institutions by bank holding companies in recent years.

Federal Securities Laws. The Company’s common stock is registered with the SEC under the Securities and Exchange Act of 1934 ("Exchange Act"). The Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Exchange Act.

Sarbanes-Oxley Act of 2002 On July 30, 2002, the President signed into law the Sarbanes-Oxley Act of 2002 implementing legislative reforms intended to address corporate and accounting fraud. In addition to the establishment of a new accounting oversight board which will enforce auditing, quality control and independence standards and will be funded by fees from all publicly traded companies, the bill restricts provision of both auditing and consulting services by accounting firms. To ensure auditor independence, any non-audit services being provided to an audit client will require preapproval by the company's audit committee members. In addition, the audit partners must be rotated. The bill requires chief executive officers and chief financial officers, or their equivalent, to certify to the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they knowingly or willfully violate this certification requirement. In addition, under the Act, counsel will be required to report evidence of a material violation of the securities laws or a breach of fiduciary duty by a company to its chief executive officer or its chief legal officer, and, if such officer does not appropriately respond, to report such evidence to the audit committee or other similar committee of the board of directors or the board itself.

Longer prison terms will also be applied to corporate executives who violate federal securities laws, the period during which certain types of suits can be brought against a company or its officers has been extended, and bonuses issued to top executives prior to restatement of a company's financial statements are now subject to disgorgement if such restatement was due to corporate misconduct. Executives are also prohibited from insider trading during retirement plan "blackout" periods, and loans to company executives are restricted. In addition, a provision directs that civil penalties levied by the SEC as a result of any judicial or administrative action under the Act be deposited to a fund for the benefit of harmed investors. The Federal Accounts for Investor Restitution ("FAIR") provision also requires the SEC to develop methods of improving collection rates. The legislation accelerates the time frame for disclosures by public companies, as they must immediately disclose any material changes in their financial condition or operations. Directors and executive officers must also provide information for most changes in ownership in a company’s securities within two business days of the change.

The Act also increases the oversight of, and codifies certain requirements relating to audit committees of public companies and how they interact with the company's "registered public accounting firm" ("RPAF"). Audit Committee members must be independent and are barred from accepting consulting, advisory or other compensatory fees from the issuer. In addition, companies must disclose whether at least one member of the committee is a "financial expert" (as such term will be defined by the SEC) and if not, why not. Under the Act, a RPAF is prohibited from performing statutorily mandated audit services for a company if such company's chief executive officer, chief financial officer, comptroller, chief accounting officer or any person serving in equivalent positions has been employed by such firm and participated in the audit of such company during the one-year period preceding the audit initiation date. The Act also prohibits any officer or director of a company or any other person acting under their direction from taking any action to fraudulently influence, coerce, manipulate or mislead any independent public or certified accountant engaged in the audit of the company's financial statements for the purpose of rendering the financial statement's materially misleading. The Act also requires the SEC to prescribe rules requiring inclusion of an internal control report and assessment by management in the annual report to shareholders. The Act requires the RPAF that issues the audit report to attest to and report on management's assessment of the company’s internal controls. In addition, the Act requires that each financial report required to be prepared in accordance with (or reconciled to) generally accepted accounting principles and filed with the SEC reflect all material correcting adjustments that are identified by a RPAF in accordance with generally accepted accounting principles and the rules and regulations of the SEC.

The Association

General. As a Louisiana chartered stock savings and loan association, the OFI is the Association’s chartering authority, and the OTS serves as the Association’s primary regulator. As such, the OFI and the OTS have extensive authority over the operations of Louisiana-chartered savings institutions. The Association is subject to periodic examinations and is required to file monthly, quarterly and annual reports with either or both parties. The investment and lending authority of savings institutions are prohibited from engaging in any activities not permitted by such laws and regulations. Such regulation and supervision is primarily intended for the protection of depositors.

Insurance of Accounts. The deposits of Guaranty Savings and Homestead Association are insured to the maximum permitted by the SAIF, which is administered by the FDIC, and are backed by the full faith and credit of the U.S. Government. As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the FDIC. The FDIC also has the authority to initiate enforcement actions against savings institutions, after giving the OTS an opportunity to take such action.

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

Regulatory Capital Requirements. Federally insured savings institutions are required to maintain minimum levels of regulatory capital. Pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), the OTS has established capital standards applicable to all savings institutions. These standards generally must be as stringent as the comparable capital requirements imposed on national banks. The OTS also is authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.

Current OTS capital standards require savings institutions to satisfy three different capital requirements. Under these standards, savings institutions must maintain tangible capital (1.5%), core capital (3.0%), and risk based capital (8.0%). Core capital includes generally recognized capital such as common stockholders’ equity and retained earnings plus other items such as qualifying goodwill. Tangible capital is essentially the same but does not include qualifying supervisory goodwill. At December 31, 2002 the Association had no goodwill or other intangible assets which are deducted in computing its tangible capital.

In determining risk-based capital, a savings institution is allowed to include both core capital and supplementary capital. Assets are assigned to particular risk-weighted categories and subsequently multiplied by that particular percentage (cash and US Treasury and Agency securities equal 0%, 20% for high quality mortgage-backed securities including those issued by US Government Agencies and "AAA" rated private companies, state and local obligations, claims on FHLB’s and claims on domestic depository institutions, 50% for single family mortgage loans and 100% for all other loans and investments). The sum of these calculations becomes the total of risk-weighted assets which are then used to calculate the Association’s risk-based capital ratio.

At December 31, 2002, Guaranty Savings exceeded all of its regulatory capital requirements, with tangible, core and risk- based capital ratios of 13.79%, 13.79% and 25.05% respectively.

Liquidity Requirements. During 2001, the OTS adopted a final rule removing formal regulation requiring savings institutions to maintain an average daily balance of liquid assets equal to four percent of its average daily balance of net withdrawable deposit accounts and borrowings payable in one year or less commonly referred to as its liquidity base. The Association does maintain a formal policy of providing for sufficient liquidity to ensure its safe and sound operation. This includes being able to meet its daily financial obligations including but not limited to loan disbursements, savings withdrawals, payment of cash dividends and operating expenses of the Association. The cash position of the Association is managed through monitoring and maintaining certain levels of cash on hand, overnight Federal Funds Sold and other short-term liquid assets.

Capital Distributions. A savings institution that before and after the proposed distribution would at least be adequately capitalized may make capital distributions during any calendar year equal to net income for the applicable calendar year plus net income for the prior two years less any capital distribution in those prior periods. Failure to meet minimum capital requirements will result in further restriction on capital distributions, including possible prohibition without explicit OTS approval.

In order to make distributions under this safe harbor, institutions which are subsidiaries of savings and loan holding companies must submit 30 day written notice to the OTS prior to making the distribution. The OTS may object to the distribution during the 30-day period based on safety and soundness concerns.

Community Reinvestment. Under the Community Reinvestment Act of 1977, as amended ("CRA"), as implemented by OTS regulations, a savings institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the OTS, in connection with its examination of a savings institution, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution. The CRA requires public disclosure of an institution’s CRA rating and requires the OTS to provide a written evaluation of an institution’s CRA performance utilizing a rating system which identifies four levels of performance that may describe an institution’s record of meeting community needs: outstanding, satisfactory, needs to improve and substantial noncompliance. The CRA also requires all institutions to make public disclosure of their CRA ratings. The Association’s current CRA rating is satisfactory.

Qualified Thrift Lender Test. The Qualified Thrift Lender (QTL) Test measures the Association’s level of qualified thrift investments compared to its total portfolio assets (total assets less intangibles, property used by a savings association in its business and liquidity investments in an amount not to exceed 20% of assets). Generally, qualified thrift investments ("QTI’s") are residential housing related assets. The Internal Revenue Service (IRS) requires a savings institution to have at least 65% of its assets in QTI’s to qualify for tax treatment as a building and loan association. At December 31, 2002, 88.4% of the Association’s assets were invested in QTI’s which was in excess of the 65% required to qualify the Association under the QTL test.

Federal Home Loan Bank System. Guaranty Savings and Homestead Association is a member of the FHLB of Dallas. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of FHLB agency issued obligations. As a member, the Association is required to maintain stock in the FHLB of Dallas in an amount equal to at least 1% of its aggregate unpaid residential mortgage loans, home purchase contracts or similar obligations at the beginning of each year or 5% of its advances from the FHLB of Dallas, whichever is greater. At December 31, 2002, Guaranty Savings and Homestead Association had $5.5 million in FHLB stock, which was in compliance with this requirement.

Federal Taxation

General. The Company and the Association are subject to the generally applicable corporate tax provisions of the Internal Revenue Code (the "Code"), and the Association is subject to certain additional provisions of the Code which apply to thrifts and other types of financial institutions. The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters relevant to the taxation of the Company and the Association and is not a comprehensive discussion of the tax rules applicable to the Company and the Association.

Year. The Company files a consolidated federal tax return on the basis of a calendar year ending on December 31.

Bad Debt Reserves. A small financial institution (one with an adjusted basis of assets of less than $500 million), such as the Association, is required in tax years beginning after 1995 to determine additions to its bad debt reserves under the experience method. Under the experience method, the deductible annual addition to the institution’s bad debt reserves is the amount necessary to increase the balance of the reserve at the close of the taxable year to the greater of (a) the amount which bears the same ratio to loans outstanding at the close of the taxable year as the total net bad debts sustained during the current and five preceding taxable years bear to the sum of loans outstanding at the close of the same six years, or (b) the lower of (i) the balance of the reserve account at the close of the Association’s "base year," which was its tax year ended December 31, 1987, or (ii) if the amount of loans outstanding at close of the taxable year is less than the amount of loans outstanding at the close of the base year, the amount which bears the same ratio to loans outstanding at the close of the taxable year as the balance of the reserve at the close of the base year bears to the amount of loans outstanding at the close of the base year.

In 1996, the Association was required to change its method of computing its bad debt deduction from other methods previously allowable to the experience method. As a result of the change in law, the Association is required to include an amount into taxable income over a six-year period beginning in 1998. The amount required to be included in taxable income is the difference between its bad debt reserves at December 31, 1995, as determined under previously allowable bad debt methods, and the reserve allowable under the experience method at December 31, 1995. The amount to be included in the Association’s taxable income over the six-year period beginning with 1998 is $145,346, or $24,224 per year.

At December 31, 2002, the federal income tax reserves of the Association included $3.8 million for which no federal income tax has been provided. Because of these federal income tax reserves and the liquidation account to be established for the benefit of certain depositors of the Association in connection with the conversion of the Association to stock form, the retained earnings of the Association are substantially restricted.

Distributions. If the Association were to distribute cash or property to its sole stockholder, and the distribution was treated as being from its accumulated bad debt reserves, the distribution would cause the Association to have additional taxable income. A distribution is deemed to have been made from accumulated bad debt reserves to the extent that (a) the reserves exceed the amount that would have been accumulated on the basis of actual loss experience, and (b) the distribution is a "non-qualified distribution." A distribution with respect to stock is a non- qualified distribution to the extent that, for federal income tax purposes, (i) it is in redemption of shares, (ii) it is pursuant to a liquidation of the institution, or (iii) in the case of a current distribution, together will all other such distributions during the taxable year, it exceeds the institutions current and post-1951 accumulated earnings and profits. The amount of additional taxable income created by a non-qualified distribution is an amount that when reduced by the tax attributable to it is equal to the amount of the distribution.

Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on corporations with average annual gross receipts in excess of $7.5 million for the prior three tax years. Average annual gross receipts of the Company is in excess of $7.5 million and as a result, the Company is subject to the provisions of the alternative minimum tax provisions of the Code. The alternative minimum tax generally applies to a base of regular taxable income plus certain tax preferences ("alternative minimum taxable income" or "AMTI") and is payable to the extent such AMTI is in excess of an exemption amount. The Code provides items of tax preference including (a) tax exempt interest on newly issued (generally, issued after August 8, 1986) private activity bonds other than certain qualified bonds, (b) certain accelerated depreciation amounts and (c) 75% of the excess if any of (i) adjusted current earnings as defined in the Code, over (ii) AMTI (defined without regard to this preference and prior to reduction by net operating losses).

Net Operating Loss Carryovers. A financial institution may carry back net operating losses ("NOLs") to the preceding two taxable years and forward to the succeeding 20 taxable years. This provision applies to losses incurred in taxable years beginning after 1986. At December 31, 2002, the Association had no NOL carry-forwards for federal income tax purposes.

Capital Gains and Corporate Dividends-Received Deduction. Corporate net capital gains are taxed at a maximum rate of 35%. The corporate dividends-received deduction is 80% in the case of dividends received from 20% or more owned corporations with which a corporate recipient does not file a consolidated tax return. Corporations which own less than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received or accrued on their behalf. However, a corporation may deduct 100% of dividends from a member of the same affiliated group of corporations.

Other Matters. Federal legislation is introduced from time to time that would limit the ability of individuals to deduct interest paid on mortgage loans. Individuals are currently not permitted to deduct interest on consumer loans. Significant increases in tax rates or further restrictions on the deductibility of mortgage interest could adversely affect the Association. The Company’s federal income tax returns for the tax years ended December 31, 1999 forward are open under the statute of limitations and are subject to review by the IRS.

State Taxation

Any non-banking subsidiaries of the Association ( as well as the Company) are subject to the Louisiana Corporation Income Tax based on their Louisiana taxable income, as well as franchise taxes. The Corporation Income Tax applies at graduated rates from 4% upon the first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of $200,000. For these purposes, "Louisiana taxable income" means net income which is earned within or derived from sources within the State of Louisiana, after adjustments permitted under Louisiana law including a federal income tax deduction and an allowance for net operating losses, if any. As a stock thrift, the Association is subject to the Louisiana Shares Tax. The formula for deriving the assessed value is to; (a) calculate 15% of the sum of 20% of the company’s capitalized earnings, plus (b) 80% of the company’s taxable stockholders’ equity, and to subtract from that figure 50% of the company’s real and personal property assessment. Various items may also be subtracted in calculating a company’s capitalized earnings.

Franchise Tax

The Company is also subject to the Louisiana franchise tax, which is imposed upon equity and certain borrowings (the franchise base) at a rate of $3 for every $1,000 of franchise base. Financial institution holding companies are allowed to reduce the franchise base to the extent of investments in and advances to subsidiary financial institutions.

Item 2. PROPERTIES

The following table sets forth certain information relating to the Company’s offices at December 31, 2002. All properties are owned by the Company. All amounts are in thousands.

		Net
		Book		Total
Location		Value		Deposits
----------		------		-------
3798 Veterans Blvd., Metairie	$	1,735	$	69,942
1700 Veterans Blvd., Metairie		529	$	12,278
2111 N. Causeway Blvd., Mandeville		298		10,528
3915 Canal St., New Orleans		229		13,761
		-----		------
	$	2,791	$	106,509
		=====		======

Item 3. LEGAL PROCEEDINGS

The Company and the Association are not involved in any pending legal proceedings other than nonmaterial legal proceedings occurring in the ordinary course of business.

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

There were no matters submitted to security holders during the quarter ending December 31, 2002.

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required herein, to the extent applicable, is incorporated by reference from page 2 of the Registrant’s 2002 Annual Report to Stockholders ("Annual Report").

Item 6. SELECTED FINANCIAL DATA

The information required herein is incorporated by reference from pages 3 to 4 of the Registrant’s Annual Report.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required herein is incorporated by reference from pages 4 to 12 of the Registrant’s Annual Report.

Item 7a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

The information required herein is incorporated by reference from pages 12 to 17 of the Registrant’s Annual Report.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required herein is incorporated by reference from pages 18 to 56 of the Registrant’s Annual Report.

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

Not applicable

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required herein is incorporated by reference from pages 2-4 of the Registrant’s definitive proxy statement for the 2003 Annual Meeting of Stockholders ("Proxy Statement").

Item 11. EXECUTIVE COMPENSATION

The information required herein is incorporated by reference from pages 7-9 of the Registrant’s Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required herein by Item 403 of Regulation S-K is incorporated by reference from pages 5-6 of the Registrant’s Proxy Statement.

Equity Compensation Plan Information. The following table sets forth certain information for all equity compensation plans and individual compensation arrangements (whether with employees or non-employees, such as directors), in effect as of December 31, 2002.

Plan Category	Number of Shares to be issued upon the Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options	Number of Shares Remaining Available for Future Issuance (Excluding Shares Reflected in the First Column)
Equity Compensation Plans Approved by Security Holders	275,076	$17.18	68,774
Equity Compensation Plans Not Approved by Security Holders	--	--	--
Total	275,076	$17.18	68,774

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required herein is incorporated by reference from page 2 and page 9 of the Registrant’s Proxy Statement.

Part IV.

Item 14. CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company’s management, including its chief executive officer and chief financial officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures within 90 days of the filing date of this annual report, and based on their evaluation, the Company’s chief executive officer and chief financial officer have concluded that these controls and procedures are effective. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is accumulated and communicated to the Company’s management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON

FORM 8-K.

(a)	Documents filed as part of this Report.

(1)	The following financial statements are incorporated by
		reference from Item 8 hereof (see Exhibit 13):
			Report of Independent Auditors
			Consolidated Balance Sheets as of December 31, 2002 and 2001
			Consolidated Statements of Income for the Fiscal Periods
				Ended December 31, 2002, 2001 and 2000
			Consolidated Statements of Changes in Shareholders’ Equity for
				the Fiscal Periods Ended December 31, 2002, 2001 and 2000
			Consolidated Statements of Cash Flows for the Fiscal Periods
				Ended December 31, 2002, 2001 and 2000
			Notes to Consolidated Financial Statements

(2)	All schedules for which provision is made in the applicable
		accounting regulation of the SEC are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.

(3)	The following exhibits are filed as part of this form 10-K, and this
		list includes the Exhibit Index.

3.1*	Articles of Incorporation of GS Financial Corp.
3.2*	Bylaws of GS Financial Corp.
4.1*	Stock Certificate of GS Financial Corp.
10.1**	GS Financial Corp. Stock Option Plan
10.2**	GS Financial Corp. Recognition and Retention Plan and Trust
.		Agreement for Employees and Non-Employee Directors
10.3*	Employment Agreement among GS Financial Corp. Guaranty Savings and
		Homestead Association and Donald C. Scott Dated February 13, 1997
10.4*	Employment Agreement among GS Financial Corp. Guaranty Savings and
		Homestead Association and Bruce A. Scott Dated February 13, 1997
13.0	2002 Annual Report to Stockholders
21.0	Subsidiaries of the Registrant - Reference is made to
		Item 1 "Business-Subsidiaries" for the required information
23.0	Consent of LaPorte, Sehrt, Romig & Hand
99.1	Certification of Chief Executive Officer pursuant to Section 906 of the
	Sarbannes-Oxley Act of 2002
99.2	Certification of Chief Financial Officer pursuant to Section 906 of the
	Sarbannes-Oxley Act of 2002

* Incorporated herein by reference from the Registration Statement on Form SB-2 (Registration number 333-18841) filed by the Registrant with the SEC on December 26, 1996, as subsequently amended.

** Incorporated herein by reference from the definitive proxy statement, dated September 16, 1997, filed by the Registrant with the SEC (Commission File No. 000-22269)

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 25, 2003

By:

/s/ Donald C. Scott ------------------- Donald C. Scott Chairman of the Board, President And Chief Executive Officer

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

Name and Signature	Title	Date Signed
/s/ Donald C. Scott ------------------- Donald C. Scott	Chairman of the Board, President and Chief Executive Officer (principal executive officer)	March 25, 2003
/s/ Bruce A. Scott ------------------- Bruce A. Scott	Executive Vice President and Director	March 25, 2003
/s/ Glenn R. Bartels ------------------- Glenn R. Bartels	Controller (principal financial and accounting officer)	March 25, 2003
/s/ J. Scott Key ------------------- J. Scott Key	Director	March 25, 2003
/s/ M.D. Paine, Jr. ------------------- M.D. Paine, Jr.	Director	March 25, 2003
/s/ Bradford A. Glazer ------------------- Bradford A. Glazer	Director	March 25, 2003
/s/ Stephen L. Cory ------------------- Stephen L. Cory	Director	March 25, 2003
/s/ Albert J. Zahn, Jr. ------------------- Albert J. Zahn, Jr.	Director	March 25, 2003
/s/ Kenneth B. Caldcleugh ------------------- Kenneth B. Caldcleugh	Director	March 25, 2003

I, Donald C. Scott, Chairman of the Board and Chief Executive Officer of GS Financial Corp., certify that:

1. I have reviewed this annual report on Form 10-K of GS Financial Corp.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 25, 2003	/s/Donald C. Scott
	----------------------
	Donald C. Scott
	Chairman of the Board and
	Chief Executive Officer

I, Glenn R. Bartels, Chief Financial Officer of GS Financial Corp., certify that:

1. I have reviewed this annual report on Form 10-K of GS Financial Corp.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

Date: March 25, 2003	/s/Glenn R. Bartels
	----------------------
	Glenn R. Bartels
	Chief Financial Officer

Exhibit 23.0

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in the Registration Statement of GS Financial Corp. on Form S-8 (Registration No. 333-70905) of our report dated January 10, 2003, incorporated by reference in this Annual Report on Form 10-K of GS Financial Corp. for the year ended December 31, 2002.

/s/ Laporte, Sehrt, Romig & Hand

Laporte, Sehrt, Romig & Hand

Metairie, Louisiana
March 20, 2003

Exhibit 99.1

I, Donald C. Scott, Chairman of the Board and Chief Executive Officer of GS Financial Corp. (the "Company"), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Annual report on Form 10-K of the Company for the fiscal year ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

By: /s/ Donald C. Scott

Donald C. Scott

Chairman of the Board and

Chief Executive Officer

Date: March 25, 2003

Exhibit 99.2

I, Glenn R. Bartels, Chief Financial Officer of GS Financial Corp. (the "Company"), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Annual report on Form 10-K of the Company for the fiscal year ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

By: /s/ Glenn R. Bartels

Glenn R. Bartels

Chief Financial Officer

Date: March 25, 2003

Exhibit 13

February 1, 2003

TO OUR STOCKHOLDERS

It was a tumultuous year for financial markets. Aversion to risk based investments caused a tremendous amount of liquidity in the market. This in turn, brought about some of the lowest savings and mortgage rates in years.

Corporate governance became the new regulatory mantra. The reverberations have been felt in board rooms across the nation; causing boards of directors to re-examine rules for accounting, disclosure of financial information, and fiduciary responsibility to shareholders. Our focus has always been founded in doing what is in the best interest of our shareholders and will remain so.

Despite the limited long-term investment opportunities in 2002 at rates deemed acceptable over the long term, net interest income increased year over year. The increase in non-interest expense is largely attributable to our continued branch expansion and the addition of qualified personnel. Our commercial lending program continues to successfully enhance interest income, as well as broadening our lending and checking account opportunities.

We continue to review our business strategy for opportunities that will enhance shareholder value, including the share repurchase program as funds and market conditions warrant.

Our promise to you, the shareholder, has always been and will continue to be that we will endeavor to enhance the value of the Company, while doing our best to minimize risk.

Sincerely,

/s/ Donald C. Scott

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

Donald C. Scott

President and Chairman of the Board

The Company

GS Financial Corp. (the "Company") is a thrift holding company which was organized and incorporated under the laws of the State of Louisiana on December 24, 1996. The Company’s primary business is conducted through its wholly owned subsidiary, Guaranty Savings and Homestead Association (the "Association"), at its five locations in the metropolitan New Orleans area.

Market Information

GS Financial Corp.’s common stock trades on The NASDAQ Stock Market under the symbol GSLA. The Company’s stock traded in the range shown below. At December 31, 2002, the closing price was $18.15 per share and there were approximately 560 shareholders of record.

2002

QUARTER ENDING	HIGH	LOW	Cash Dividend
------------------	------	------	-------
March 31, 2002	$ 15.500	$ 14.700	$.09
June 30, 2002	18.200	14.950	$.09
September 30, 2002	18.400	17.650	$.09
December 31, 2002	18.600	18.050	$.09

2001

QUARTER ENDING	HIGH	LOW	Cash Dividend
------------------	------	------	-------
March 31, 2001	$ 15.000	$ 14.563	$.09
June 30, 2001	15.500	14.600	$.09
September 30, 2001	15.500	15.000	$.09
December 31, 2001	15.500	14.190	$.09

Notice of Annual Meeting

The Annual Meeting of Shareholders of GS Financial Corp. will be held at the offices of Guaranty Savings and Homestead Association, 3798 Veterans Blvd., Metairie, Louisiana on Tuesday, April 22, 2003 at 10:00 a.m. CST.

Shareholder Services

Shareholders desiring to change the name, address or ownership of stock, to report lost certificates, or to consolidate accounts should contact our transfer agent:

Registrar and Transfer Company

10 Commerce Drive

Cranford, NJ 07016

1-800-368-5948

Investor Relations

Shareholders and others seeking financial information or copies of the Company’s publicly available financial information should contact:

Amy Mashburn, Compliance Officer or, Glenn R. Bartels, Controller

GS Financial Corp.

3798 Veterans Blvd.

Metairie, LA 70002

(504) 457-6220

The following selected consolidated financial and other data of the Company does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed financial information, including the Consolidated Financial Statements of the Company and Notes thereto, contained elsewhere herein.

(Dollars in Thousands, except per share data)			At December 31,
			2002	2001	2000	1999	1998
Selected Financial Condition:
	Total Assets		$ 210,029	$ 188,494	$ 153,500	$ 157,982	$ 157,534
	Cash and Cash Equivalents		13,352	8,638	3,403	2,504	1,810
	Loans Receivable, Net		78,334	81,611	74,480	70,066	63,895
	Investment Securities		55,091	35,820	11,000	10,483	20,877
	Mortgage-Backed Securities		569	885	4,115	16,275	23,209
	Collateralized Mortgage Obligations		53,066	52,087	53,745	52,080	41,726
	Deposit Accounts		106,509	71,169	58,879	59,216	61,105
	Borrowings		66,392	79,265	54,191	53,988	45,381
	Stockholders’ Equity		34,384	35,408	37,795	43,548	48,509
Selected Operating Data:
	Interest Income		12,433	13,100	11,262	10,658	9,585
	Interest Expense		(6,804)	(7,825)	(5,875)	(5,221)	(4,087)
	Net Interest Income		5,629	5,275	5,387	5,437	5,498
	Provision for Loan Losses		(48)	(25)	(7)	(6)	(53)
	Net Interest Income After Provision
		for Loan Losses	5,581	5,250	5,380	5,431	5,445
	Non-Interest Income		102	634	(135)	(5)	233
	Non-Interest Expense		(4,188)	(3,678)	(3,384)	(3,301)	(3,453)
	Net Income Before Taxes		1,495	2,206	1,861	2,125	2,225
	Income Tax Expense		(318)	(589)	(666)	(750)	(870)
	Net Income		1,177	1,617	1,195	1,375	1,355
	Net Income per share – Basic		$0.86	$1.04	$0.60	$0.58	$0.49
	Net Income per share – Diluted		$0.86	$1.04	$0.60	$0.58	$0.49
	Dividends declared per share		$0.36	$0.36	$0.36	$0.34	$0.28

(Dollars in Thousands, except per share data)		At December 31,
		2002	2001	2000	1999	1998
Other Data:
Profitability
	Average Yield Interest-Earning Assets	6.50	7.12	7.42	7.09	7.16
	Average Rate on Interest-Bearing Liabilities	4.29	5.22	5.24	4.85	4.76
	Average Interest Rate Spread	2.21	1.90	2.18	2.24	2.40
	Net Interest Margin	2.94	2.87	3.55	3.62	4.11
	Interest-Earning Assets as a % of Interest-
	Bearing Liabilities	120.68	122.80	135.40	139.62	156.04
	Net Interest Income After Provision for Loan
	Loss as a % of Non-Interest Expense	133.27	142.72	159.00	164.51	157.68
	Non-Interest Expense as a % of
	Average Assets	2.13	1.97	2.21	2.12	2.47
	Return on Average Assets	0.60	0.86	0.78	0.88	0.97
	Return on Average Equity	3.35	4.43	2.97	3.16	2.62
Capital Ratio's:
	Average Equity as a % of Total Assets	17.87	19.49	26.18	27.92	37.03
	Tangible Capital Ratio (Association alone)	13.79	14.40	16.22	17.68	27.62
	Core Capital Ratio (Association alone)	13.79	14.40	16.22	17.68	27.62
	Risk-Based Capital Ratio (Association alone)	25.05	28.71	39.54	49.15	72.60
Asset Quality Ratios:
	Non Performing Loans as a % of Total Loans	0.83	0.30	0.58	0.14	0.42
	Non Performing Assets as a % of Total Assets	0.31	0.13	0.28	0.06	0.17
	Allowance for Loan Losses as a % of Total
	Loans Receivable	0.62	0.53	0.56	0.60	0.72
	Allowance for Loan Losses as a % of Non
	Performing Loans	74.16	174.80	96.69	422.97	174.01

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

The following discussion and analysis of the financial condition and results of operations of GS Financial Corp. and its subsidiary, for the years ended December 31, 2000 through 2002 is designed to assist readers in their understanding of the Company. This review should be read in conjunction with the audited consolidated financial statements, accompanying footnotes and supplemental financial data included herein.

FORWARD-LOOKING STATEMENTS

In addition to the historical information, this Annual Report includes certain "forward-looking statements" based on current management expectations. The Company’s actual results could differ materially, as defined in the Securities Act of 1933 and the Securities Exchange Act of 1934, from those management expectations. Such forward-looking statements include statements regarding our intentions, beliefs or current expectations as well as the assumptions on which such statements are based. Stockholders and potential stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Company’s loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive governmental and technological factors affecting the Company’s operations, markets, products, services and fees.

The Company undertakes no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

ASSETS

General – The Company's balance sheet was affected for the second consecutive year by low interest rates and continued uncertainty in the equity markets. With interest rates for mortgages and mortgage-backed securities at thirty-year lows, the Company’s portfolio of mortgage loans and collateralized mortgage obligations ("CMOs") were particularly affected by prepayments caused by the latest wave of home-owner re-financing, especially in the second half of 2002. The Company did benefit from an inflow of retail deposits. The end result was a significant increase in cash and short-term investments for the Company’s balance sheet in 2002.

In summary, total assets increased 11% or $21.5 million to $210.0 million at December 31, 2002, compared to $188.5 million at December 31, 2001. Investment securities increased $19.3 million to $55.1 million at December 31, 2002 an increase of 54% from December 31, 2001, when investment securities totaled $35.8 million. Retail deposits increased $ 35.3 million, or 50%, to $106.5 million at December 31, 2002, compared to $71.2 million at December 31, 2001.

Cash and Cash Equivalents – Cash and cash equivalents consist of cash on hand, deposits in interest and non-interest bearing transaction accounts and overnight Federal Funds Sold. At December 31, 2002, the Company’s balances in such accounts totaled $13.4 million. This represents an increase of 56% from December 31, 2001 when such balances totaled $8.6 million. Due to the decrease of interest rates, the Company’s average collected balance requirements were raised for its operating accounts, thus contributing to the increase in balance of cash and cash equivalents. Cash and cash equivalents represent balances sufficient for the Company to meet its daily operations whether it be loan disbursements, customer withdrawals, operating expenses or the payment of cash dividends.

Loans Receivable, Net – Loans receivable, net, decreased by $3.3 million, or 4%, from $81.6 million at December 31, 2001 compared to $78.3 million at December 31, 2002. The largest decrease in the loan portfolio came in loans secured by one-to-four family residential dwellings, which decreased $12.35 million from December 31, 2001 to December 31, 2002. Non-residential mortgages includes mortgage loans on multifamily dwellings and commercial real estate. Non-residential mortgage loans increased $7.9 million from $10.2 million at December 31, 2001, to $18.1 million at December 31, 2002. Commercial loans increased $.8 million from $.7 million at December 31, 2001, compared to $1.5 million at December 31, 2002. Over the last two years, the primary focus of the Company’s lending activity has been in non-residential loans. This is reflected in the Company’s loan portfolio mix where 13.2% of its loans were non-residential at December 31, 2001, compared to 24.9% non-residential at December 31, 2002.

Investment Securities – Investment securities increased from $35.8 million at December 31, 2001, to $55.1 million at December 31, 2002. This represents an increase of $19.3 million or 54%. As of December 31, 2002, investment securities were comprised of United States Treasury Notes, common and preferred stock issued by the Federal Home Loan Mortgage Corporation ("FHLMC"), an agency sponsored by the Federal government, and an investment in two mortgage-based mutual funds. During 2002, the Company increased its portfolio of FHLMC preferred stock by $3.6 million. The FHLMC preferred stock contains call options varying from two to six years and coupons ranging between 5% and 6%. The dividends from the FHLMC preferred and common stock are 70% tax exempt. The Company’s investment in mortgage-based mutual funds increased by $15.2 million during the year ended December 31, 2002. These funds carry one-day availability and carry higher yields than overnight funds. Most of the increase in investment securities was funded by repayments of the Company’s loan and CMO portfolio’s.

Mortgage-Backed Securities – Mortgage-backed securities decreased $316,000 from $885,000 at December 31, 2001, to $569,000 at December 31, 2002. The decrease was due to principal repayments of these instruments. At December 31, 2002 and 2001, all of the Company’s mortgage-backed securities were Government National Mortgage Association ("GNMA") issued instruments. GNMA securities represent direct obligations of the United States Government.

Collateralized Mortgage Obligations – The Company’s investment in CMOs consists of fixed-rate Real Estate Mortgage Investment Conduits ("REMICs"). REMICs are multiple class mortgage-backed securities whereby an underlying pool of mortgages held by the issuer serves as collateral for the debt. The Company has REMICs issued by the Federal National Mortgage Association ("FNMA"), FHLMC and "AAA" rated non-governmental issuers. The CMOs contain contractual maturities up to thirty years. The expected life of these investments varies from two to fifteen years. During 2002, declining mortgage rates triggered rapid refinancing of the underlying mortgage loans. During 2002, the Company received $73.0 million in such principal repayments. This was offset by $73.6 million in new purchases. Overall during 2002, CMOs increased $1 million from $52.1 million at December 31, 2001, compared to $53.1 million at December 31, 2002.

LIABILITIES AND STOCKHOLDERS’ EQUITY

General – The Company’s deposits, borrowings and stockholders’ equity represent sources of funds for its various investments and operating needs.

Deposits – The Company’s deposits increased $35.3 million, or 50%, from $71.2 million at December 31, 2001, to $106.5 million at December 31, 2002. Passbook savings and certificate of deposit accounts increased during 2002 while demand deposits decreased.

Passbook Savings - During 2002, passbook savings accounts increased $11.2 million to $31.2 million at December 31, 2002, compared to $20.0 million at December 31, 2001. Most of the increase occurred in the second half of 2002. This growth equated to a 56% increase. The Company believes that a significant reason for many of the Company’s new savings customers was due to individuals who have liquidated their positions and withdrawn from the equity markets.

Transaction Accounts - NOW accounts decreased $.8 million, or 11%, to $7.1 million at December 31, 2002, compared to $7.9 million at December 31, 2001. These accounts are comprised of interest-bearing NOW accounts as well as non-interest bearing deposit accounts. Some of the decrease was attributed to NOW account customers moving their funds to savings accounts which paid a higher rate of interest.

Certificates of Deposit - Certificates of deposit increased $25.0 million to $68.2 million at December 31, 2002. This represents an increase of 57% compared to $43.2 million at December 31, 2001. Again, many of the new customers represented investors transferring money from the equity markets. One year certificates increased $11.7 million while certificates varying in term from 2.5 to 5 years increased $10.3 million.

Borrowings – The Company’s borrowings consist of advances from the Federal Home Loan Bank of Dallas. These advances consist of fully amortizing loans, balloon loans and interest only loans. The Company’s borrowings decreased from $79.3 million at December 31, 2001 to $66.4 million at December 31, 2002. The $12.9 million change represented a decrease of 16% and was due to regularly scheduled principal payments.

Stockholders’ Equity – Stockholders’ equity decreased from $35.4 million at December 31, 2001 to $34.4 million at December 31, 2002. The decrease was due to the net effect of the following events:

Purchase of Treasury Stock	( $2.5 million)
2002 Net Income	1.2 million
Cash Dividends Paid	( .5 million)
Distribution of RRP Stock	.1 million
Distribution of ESOP Stock	.5 million
Increase in Other Comprehensive Income	.2 million
	-----------------
NET CHANGE	( $1.0 million)
	==========

Treasury Stock – During 2002, the Company repurchased 142,201 shares of its common stock for $2.5 million, or an average price of $17.68 per share. Since the inception of its stock buyback program in 1998, the Company has repurchased 1,917,539 shares of its common stock at an average price of $14.44 per common share, or a total of $27.7 million. At December 31, 2002, the book value was $22.60 per common share. This compares to a book value of $21.29 per common share at December 31, 2001.

COMPARISON OF RESULTS OF OPERATIONS

General – The Company reported net income of $1.2 million, $1.6 million and $1.2 million for the years ended December 31, 2002, 2001, and 2000, respectively. The results for 2002 reflected an increase in net interest income offset by a decrease in non-interest income and an increase in non-interest expense. The Company’s net interest margin increased in 2002 as a result of the Company’s liabilities re-pricing more rapidly than its assets in a falling rate environment. The results for 2001 were affected primarily by a falling interest rate environment while interest rates rose slightly in 2000. The results for 2001 included gains on the sale of investment securities of $607,000 while the results for 2002 included $20,000 of gains on sale of investment securities. During 2000, the Company experienced a net loss on the sale of investment securities totaling ($146,000). Earnings per share were $ .86 in 2002 compared to $1.04 in 2001 and $.60 in 2000.

Interest Income – Interest income decreased from $13.1 million for the twelve months ended December 31, 2001 to $12.4 million for the twelve months ended December 31, 2002, a decline of $.7 million, or 5%. This compares to $11.3 million in 2000. Average earning assets were $191.3 million in 2002 which yielded 6.5%. For the twelve months ended December 31, 2001, average earning assets were $184.0 million which yielded 7.1%. In 2000, the Company’s earning assets averaged $151.7 million and yielded 7.42%. Falling interest rates caused many consumers to refinance their home mortgage loans during 2002. The effect of this was to accelerate the repayment of many of the Company’s loans and CMOs. The cash received from these repayments was primarily invested in short-term investments with lower yields.

The yield on loans receivable was unchanged from 2001 to 2002 at 7.85%, compared to 7.96% in 2000. Despite declining mortgage loan rates in 2002, the Company’s ability to maintain the same yield in 2002 as in 2001 was due to the continued growth of its non-residential loan portfolio. At December 31, 2000, the Company held $3.1 million in non-residential loans or 4% of its entire portfolio. During 2001 the Company added $8 million in non-residential loans to bring the total to $11.1 million or 14% of its entire portfolio. At December 31, 2002, the Company’s total of non-residential loans totaled $20.0 million or 25% of its loan portfolio. These loans, consisting primarily of mortgage loans secured by multifamily and commercial real estate, typically carry higher yields than residential mortgage loans. Average loans receivable in 2002 were $81.5 million, compared to $76.3 million in 2001 and $72.7 million in 2000.

Interest income on securities increased $.4 million, or 28%, from $1.4 million for the twelve months ended December 31, 2001, compared to $1.8 million for the twelve months ended December 31, 2002. This compares to $.4 million for the twelve months ended December 31, 2000. The average balance of investment securities was $44.1 million with an average yield of 4.1% for the twelve months ended December 31, 2002. For the twelve months ended December 31, 2001, average investment securities were $25.0 million and yielded 5.4 %. In 2000, the average balance of investment securities was $7.4 million which yielded 5.71%. The underlying mix of the Company’s portfolio of investment securities changed as the amount invested in short term mortgage based mutual funds approximately doubled from 2001 to 2002. These investments typically re-price monthly, thus causing their yields to fall during 2002. As of December 31, 2002, the yield of these funds was approximately 2.5%.

AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID

The following table represents for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. The table does not reflect any effect of income taxes.

			For the Years Ended December 31,
			2002			2001			2000
(Dollars in Thousands)			Average		Yield/	Average		Yield/	Average		Yield/
			Balance	Interest	Rate	Balance	Interest	Rate	Balance	Interest	Rate
Interest Earning Assets
	Loans Receivable		81,463	6,397	7.85%	76,300	5,989	7.85%	72,744	5,788	7.96%
	Mortgage Backed Securities		677	48	7.09%	1,376	90	6.54%	11,985	800	6.68%
	Investment Securities		44,145	1,805	4.09%	24,988	1,350	5.40%	7,432	424	5.71%
	Collateralized Mortgage		53,817	3,931	7.30%	68,903	5,142	7.46%	53,136	3,799	7.15%
		Obligations
	Other Interest Earning Assets		11,244	252	2.24%	12,411	529	4.26%	6,421	451	7.02%
	Total Interest Earning Assets		191,346	12,433	6.50%	183,978	13,100	7.12%	151,718	11,262	7.42%
	Non Interest Earning Assets		5,370			3,225			1,752
	TOTAL ASSETS		196,716			187,203			153,470
Interest Bearing Liabilities
	Passbooks Deposits		26,819	677	2.52%	17,247	514	2.98%	17,964	523	2.91%
	Interest Bearing Checking		6,569	132	2.01%	5,797	207	3.57%	993	49	4.93%
	Certificates of Deposits		53,113	1,953	3.68%	39,930	2,122	5.31%	39,151	2,094	5.35%
	Borrowings		72,056	4,042	5.61%	86,840	4,982	5.74%	53,944	3,209	5.95%
	Total Interest Bearing Liabilities		158,557	6,804	4.29%	149,814	7,825	5.22%	112,052	5,875	5.24%
	Non Interest Bearing Liabilities		3,011			906			1,238
	TOTAL LIABILITIES		161,568			150,720			113,290
	Stockholders’ Equity		35,148			36,483			40,180
	TOTAL LIABILITIES AND
		STOCKHOLDERS’ EQUITY	196,716			187,203			153,470
Net Interest Earning Assets			32,789			34,164			39,666
Net Interest Income				5,629			5,275			5,387
Net Interest Spread					2.21%			1.90%			2.18%
Net Interest Margin					2.94%			2.87%			3.55%

Interest on mortgage-backed securities decreased $42,000 during the twelve months ended December 31, 2002 to $48,000, compared to $90,000 for the twelve months ended December 31, 2001. This compares to $800,000 for the twelve months ended December 31, 2000. The yield of the Company’s mortgage-backed securities increased in 2002 to 7.1% compared to 6.5% in 2001. The increase in the yield was due to a decrease in the prepayments of these instruments with a subsequent decrease in the amortization of premiums related to these instruments. During 2000, the Company’s mortgage-backed securities yielded 6.68%. The average balance of mortgage-backed securities was $.7 million, $1.4 million and $12.0 million in 2002, 2001 and 2000, respectively.

Interest income from CMOs decreased from $5.1 million for the twelve months ended December 31, 2001, to $3.9 million for the twelve months ended December 31, 2002. For the twelve months ended December 31, 2000, interest income from CMOs was $3.8 million. For the twelve months ended December 31, 2002, the average balance of CMOs was $53.8 which yielded 7.3%. For the twelve months ended December 31, 2001 the average balance of CMOs was $68.9 million which yielded 7.5%. The Company ‘s CMOs yielded 7.15% on an average balance of $53.1 million for the twelve months ended December 31, 2000.

Interest income from other interest-earning assets consist of dividends on Federal Home Loan Bank ("FHLB") stock and interest earned on Federal Funds Sold and interest-bearing deposits in other financial institutions. During the twelve months ended December 31, 2002, interest income from other interest earning assets decreased $277,000 to $252,000, compared to $529,000 for the twelve months ended December 31, 2001. The average balance of other interest-earning assets was $11.2 million which yielded 2.2% for the twelve months ended December 31, 2002. For the twelve months ended December 31, 2001, the average balance of other interest earning assets was $12.4 million which yielded 4.26%. The decrease in yield was a direct result of falling interest rates. For the twelve months ended December 31, 2000, the average balance of other interest-earning assets was $6.4 million which yielded 7.02%.

RATE/VOLUME ANALYSIS

The following table shows the extent to which changes in interest rates and changes in volume of interest-related assets and liabilities affected interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume multiplied by prior year rate and (ii) changes in rate multiplied by prior year volume. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.

			12/31/01 to 12/31/02			12/31/00 to 12/31/01
			Rate	Volume	Total	Rate	Volume	Total
Interest Income
		Loans Receivable	$ -	$ 408	$ 408	$ (80)	$ 281	$ 201
		Mortgage-backed Securities	8	(50)	(42)	(17)	(693)	(710)
		Investment Securities	(400)	855	455	(23)	949	926
		CMO's	(86)	(1,125)	(1,211)	165	1,178	1,343
		Other-Interest Earning Assets	(251)	(26)	(277)	(192)	270	78
Total			(729)	62	(667)	(147)	1,985	1,838
Interest Expense
		Passbook Savings	(79)	242	163	13	(22)	(9)
		Interest-Bearing Checking	(90)	15	(75)	(14)	172	158
		Certificates of Deposit	(651)	482	(169)	(16)	44	28
		Borrowings	(113)	(827)	(940)	(112)	1,885	1,773
Total			(933)	(88)	(1,021)	(129)	2,079	1,950
Increase/(Decrease) in
	Net Interest Income		$ 204	$ 150	$ 354	$ (18)	$ (94)	$ (112)
			===	===	===	===	====	====

Interest Expense – Interest expense decreased $1.0 million for the twelve months ended December 31, 2002 to $6.8 million compared to $7.8 million for the twelve months ended December 31, 2001. Average interest-bearing liabilities was $158.6 million which cost 4.3% for the twelve months ended December 31, 2002. For the twelve months ended December 31, 2001, average total interest bearing liabilities were $149.8 million which cost 5.2%. The decrease in the Company’s overall cost of funds from 2001 to 2002 was primarily due to a reduction in the average balance of FHLB advances, which typically cost more than retail deposits, and the downward re-pricing of the Company’s existing retail deposits. In 2000, average interest-bearing liabilities of $112.1 million cost the Company 5.24%.

Interest Expense on Deposits - Interest expense on deposits was $2.8 million for twelve months ended December 31, 2002 and 2001 and $2.7 million for the twelve months ended December 31, 2000. While the average balance increased, the overall cost decreased due to the continuing reduction of the average rates paid. The average balance of deposits for the twelve months ended December 31, 2002 was $86.5 million which cost 3.2%. The average balance of deposits for the twelve months ended December 31, 2001 was $63.0 million which cost 4.5%. The average balance of deposits for the twelve months ended December 31, 2000 was $58.1 million and cost 4.59%.

Interest Expense on Transaction Accounts - Expense on checking accounts (predominantly NOW accounts) was $132,000 for the twelve months ended December 31, 2002 compared to $207,000 for the twelve months ended December 31, 2001. The average balance of transaction accounts was $6.6 million in 2002 and cost 2.0 %. For 2001, such accounts carried an average balance of $5.8 million and cost 3.6%. The average balance of transaction accounts was $1.0 million for the twelve months ended December 31, 2000 and cost 4.93%.

Interest Expense on Certificates of Deposit - Expense on certificates of deposit decreased slightly in 2002 compared to 2001. This was because a large percentage of the Company’s portfolio of certificates of deposit carry maturities of one year or less, meaning many repriced in 2002 during a falling interest rate environment. The average balance of certificates of deposit was $53.1 million costing the Company $2.0 million, or 3.7%, for the twelve months ended December 31, 2002. For the twelve months ended December 31, 2001, the average balance of certificates of deposit was $39.9 million, costing 5.3%. For the twelve months ended December 31, 2000, the average balance of certificates of deposit was $39.2 million, costing 5.35%.

Interest Expense on Passbook Savings – For the twelve months ended December 31, 2002, the average balance of passbook savings was $26.8 million and cost 2.5%. For the twelve months ended December 31, 2001, the average balance of passbook savings was $17.2 million which cost 3.0 %. For the twelve months ended December 31, 2000, the average balance of passbook savings was $18.0 million which cost 2.91 %.

Interest Expense on Borrowings –Interest expense on borrowings decreased $1.0 million for the twelve months ended December 31, 2002 to $4.0 million, a decrease of 20%, compared to $5.0 million for the twelve months ended December 31, 2001. The average balance of borrowings was $72.1 million in 2002 which cost 5.6%. For the twelve months ended December 31, 2001, the average balance of borrowings was $86.8 million which cost 5.7%. In 2000, average borrowings were $53.9 million which cost 5.95%.

Provision for Loan Losses -The Allowance for Loan Loss ("ALL") is closely monitored by management and provisions to increase or reductions to the ALL to a level deemed appropriate by management are made accordingly. Additional provisions are necessary when either growth of the entire loan portfolio, changes in the loan mix, or charge-offs drop the ALL below that level deemed appropriate by management. Reductions occur due to a decline in the size of the loan portfolio or when previously reserved-for loans are paid down or collected in full.

The Company made provisions for loan losses of $48,000 in 2002 compared to $25,000 in 2001. The provision for loan loss in 2001 was mainly due to the continued growth of the loan portfolio. The $48,000 provision for loan loss was related to a change in the mix of the Company’s loan portfolio. While the overall balance of the loan portfolio was decreased from 2001 to 2002, the percentage of non-residential loans increased. The Company’s non-residential loans consist of commercial term loans and lines of credit, the mortgage loans secured by multifamily dwellings and commercial real estate. These loans typically carry more risk than loans secured by one-to-four family residences. Accordingly, non-residential loans are assigned a higher allowance than the Company’s residential loans in the overall calculation of the ALL. At December 31, 2002, approximately 25% of the Company’s loan portfolio was comprised of non-residential loans compared to 13% at December 31, 2001.

For the twelve months ended December 31, 2002, the Company had no loan charge-offs. During the twelve months ended December 31, 2001, the Company had $10,000 in loan charge-offs. The provision for loan losses reflects management’s evaluation of the underlying credit risk of the Company’s loan portfolio to adequately provide for probable loan losses inherent in the loan portfolio as of the balance sheet date. As of December 31, 2002, the ALL as a percent of the entire loan portfolio was .62% while the ratio in 2001 was .53%. The ALL as a percentage of non-performing loans was 74% at December 31, 2002, compared to 175% at December 31, 2001. Future additions to the ALL will be dependent on a number of factors including the performance of the Company’s loan portfolio, specifically in terms of delinquencies, foreclosures and charge-offs. Other factors considered in establishing the ALL include the local economy, inflation, and changes in interest rates and the effect of such changes on real estate values. Management believes that the ALL was adequate at December 31, 2002.

Non-Interest Income - Non-interest income for the twelve months ended December 31, 2002, was $102,000, compared to $634,000 for the twelve months ended December 31, 2001. Non-interest income is comprised of two components, gain or losses from the sale of investments, and service charges. In 2001, the Company realized net gains on the sale of investment securities of $607,000, primarily from the sale of FHLMC common stock, compared to $20,000 in gains from the sale of other equity investments in 2002. In 2000, the Company had net losses of ($146,000) primarily from the sale of $10 million of mortgage-backed securities. Fee income is made up primarily of service charges on transaction accounts as well as ATM fees. Fee income was $82,000, $27,000 and $11,000 in 2002, 2001 and 2000, respectively.

Non-Interest Expenses – Non-interest expenses increased from $3.7 million for the twelve months ended December 31, 2001, to $4.2 million for the twelve months ended December 31, 2002. This compares to $3.4 million for the twelve months ended December 31, 2000. The increase was attributable to compensation and benefits, occupancy expense and ad valorem taxes. During 2002, the Company opened another full service branch office. This increased expenses such as utilities, telephone and office supplies. Also during 2002, the Company increased its staff by four employees. The cost of the Company’s ESOP also increased from 2001 to 2002 due to the increase in market value of the Company’s stock. The Company’s increase in ad valorem taxes was attributable to the increase in Louisiana Bank Shares tax paid by the Association. There was a substantial increase in the tax rate in 2002 and an increase in the Company’s basis, which approximates the shareholders’ equity of the Association.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity measures the Company’s ability to meet its financial commitments and obligations on a timely basis. These commitments and obligations include loan disbursements, savings withdrawals by customers, the payment of cash dividends, check clearings and the daily operating expenses of the Company. Liquidity management involves the daily monitoring of cash on hand, non-interest bearing operating accounts, overnight Federal Funds Sold, short-term investments and the Company’s ability to convert these assets into cash without incurring a loss. Monthly paydowns on mortgage loans, mortgage-backed securities and CMOs are anticipated and channeled to either cash on hand, overnight Federal Funds Sold or short-term investments in order to meet the Company’s demands and maximize interest earned on these funds.

The Company’s primary sources of funds are interest and non-interest bearing customer deposits, advances from the Federal Home Loan Bank and maturities of its existing investments including mortgage loans, mortgage-backed securities, investment securities and CMOs. The Company offers competitive interest rates in an effort to maintain its core deposit base consisting of passbook savings, checking accounts and certificates of deposit. The Company does not utilize brokered deposits nor does it offer special rates for "jumbo" deposits of $100,000 or more.

Guaranty Savings and Homestead Association, the Company’s wholly-owned subsidiary, is required to maintain regulatory capital sufficient to meet all three of the regulatory capital requirements, those being tangible capital (1.5%), core capital (3.0%), and risk-based capital (8.0%). As of December 31, 2002, the Association’s tangible and core capital amounted to $28.1 million, or 13.8% of adjusted total assets, while the Association’s risk-based capital was $28.6 million, or 25.1% of total adjusted risk-weighted assets. The Company remains "well capitalized" under the standards of the Office of Thrift Supervision ("OTS").

MARKET RISK ANALYSIS – ASSET LIABILITY MANAGEMENT

Qualitative Risk Analysis. The ability to maximize net interest income is largely dependent upon the achievement of a positive interest rate spread that could be sustained during fluctuations in prevailing interest rates. Interest rate sensitivity is a measure of the difference between amounts of interest-earning assets and interest-bearing liabilities which either re-price or mature within a given period of time. The difference or the interest rate re-pricing "gap" provides an indication of the extent to which an institution’s interest rate spread will be affected by changes in interest rates. A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities, and is considered negative when the amount of interest-rate sensitive liabilities exceeds the amount of interest-rate sensitive assets. Generally, during a period of rising interest rates, a negative gap within shorter maturities would adversely affect net interest income, while a positive gap within shorter maturities would result in an increase in net interest income. During a period of falling interest rates, a negative gap within shorter maturities would result in an increase in net interest income while a positive gap within shorter maturities would have the opposite effect. As of December 31, 2002, the ratio of the Association’s cumulative one-year gap to total assets was 36.8% and its ratio of interest-earning assets to interest-bearing liabilities maturing or re-pricing within one year was 150.7%. This compares to December 31, 2001, when the Association’s cumulative one-year gap to total assets was 27.8% and its ratio of interest-earning assets to interest-bearing liabilities maturing or re-pricing within one year was 154.4%. The sensitivity analysis for 2002 and 2001 appears in the following tables on 13-16.

In order to minimize the potential for adverse effects of material and prolonged increases in interest rates on the Association’s results of operations, the Association has adopted asset and liability management policies including an interest rate risk policy to better enable management to match the re-pricing and maturities of its interest-earning assets and interest-bearing liabilities. Monthly, management reviews the re-pricing gap on an internal model specifically designed for the assets and liabilities currently being held by the Association. On a quarterly basis, the entire Board of Directors receives an interest rate risk report which analyzes changes to the net portfolio value ("NPV"). The NPV is the difference between the market value of the Association’s assets and the market value of the Association’s liabilities and off balance sheet commitments. The Board reviews the internal model and a standard thrift industry model prepared by the OTS from the Association’s quarterly Consolidated Maturity and Rate Report.

The nature of thrifts such as Guaranty Savings and Homestead Association lends itself to the creation of negative gaps over the short term since the Association is invested primarily in home mortgage loans varying in length usually from 15 to 25 years while its longest term interest-bearing liabilities are five-year certificates of deposit and several of its FHLB advances. Therefore it is vital that the Association utilize its other investments to offset in the short-term (12-month) horizon the substantial negative re-pricing gap which arises from one to five years while at the same time maximizing net interest income. This is why the Association places much of its ready cash in short-term investments such as mortgage-based mutual funds. These types of investments provide the benefit of overnight availability while producing yields approximately 150 basis points higher than overnight Federal Funds Sold. The Association also places a high emphasis on cash flows in its portfolio of CMOs. The duration of the Association’s CMOs varies from two to fifteen years. At present, due to the large influx of cash and subsequent reinvestment in short-term mutual funds during 2002, at December 31, 2002, the Association was in a very positively gapped position over the twelve-month horizon.

Quantitative Risk Analysis Presented below, as of December 31, 2002 is an analysis of Guaranty Savings & Homestead Association’s interest rate risk as measured by changes in NPV for instantaneous and sustained parallel shifts in the yield curve, in 100 basis point increments, up and down 300 basis points in accordance with OTS regulations. Currently, due to the low level of interest rates, the only downward shock capable of being applied is 100 basis points. As illustrated in the tables below, NPV is more sensitive to and may be more negatively impacted by falling rates than rising rates. This position is opposite the traditional position of the Association. Due to the high payoffs currently being experienced by the Association in its portfolio of loans and CMOs, and due to the significant balances in cash, cash equivalents, and short term investments, the Association would benefit most from a rising interest rate environment in terms of net interest income as well as NPV. This is due to the large amount of assets which would reprice sooner than the Associations liabilities.

Change (in Basis Points)	Net Portfolio Value at December 31, 2002 ------------------------
in Interest Rates	$ Amount	$ Change	% Change
	(Dollars in Thousands)
+300	36,092	2,075	+6%
+200	35,451	1,434	+4%
+100	34,765	748	+2%
0	34,017
-100	33,156	(861)	-3%

Change (in Basis Points)	Net Portfolio Value at December 31, 2001 ------------------------
in Interest Rates	$ Amount	$ Change	% Change
	(Dollars in Thousands)
+300	19,589	(10,889)	-36%
+200	23,459	(7,019)	-23%
+100	27,032	(3,446)	-11%
0	30,478
-100	34,175	3,697	12%
-200	37,682	7,204	24%
-300	41,090	10,612	35%

The assumptions used by management to evaluate the vulnerability of the Association’s operations to changes in interest rates in the tables above are based on assumptions utilized in the gap tables on pages 13 - 16. Although management finds these assumptions reasonable, the interest rate sensitivity of the Association’s assets and liabilities and the estimated effects of changes in interest rates on the Association’s net interest income and NPV indicated in the above table could vary substantially if different assumptions were used or actual experience differs from such assumptions.

SENSITIVITY ANALYSIS

The following table summarizes the anticipated maturities or re-pricing of the Association’s interest-earning assets and interest-bearing liabilities as of December 31, 2002, based on the information and assumptions set forth in the notes below.

(Dollars in Thousands)		Within Three Months		Three to Twelve Months		More Than One Year to Three Years		More Than Three Years to Five Years		Over Five Years		Total
Interest-Earning Assets:
	Cash and interest-earning deposits	$	11,500	$	-	$	-	$	-	$	-	$	11,500
	U.S. Government and Agency Securities (1)		-		-		300		501		-		801
	FHLMC and FHLB Stock		25,322		-		-		-		-		25,322
	Mortgage-based Mutual Funds		30,955		-		-		-		-		30,955
	Mortgage Loans (1)		10,848		32,545		33,502		-		-		76,896
	Commercial Loans (2)		-		1,145		-		-		370		1,515
	Collateralized Mortgage Obligations (1)		27,304		25,189		-		-		-		52,493
	Consumer Loans		396		-		-		-		-		396
TOTAL INTEREST-EARNING ASSETS			106,325		58,880		33,802		501		370		199,878
			======		=====		=====		=====		=====		======
Interest Bearing Liabilities:
	NOW Accounts		6,542		-		-		-		-		6,542
	Passbook Savings		31,117		-		-		-		-		31,117
	Certificates of Deposits (2)		10,824		36,872		20,408		109		-		68,213
	FHLB Advances (2)		9,977		14,287		18,951		11,645		11,532		66,392
TOTAL INTEREST-EARNING LIABILITIES		$	58,460	$	51,159	$	39,359	$	11,754	$	11,532	$	172,264
			=====		=====		=====		=====		=====		======
Excess/(Deficiency) of interest-earning
assets over interest-bearing liabilities			$47,865		$7,721		($5,557)		($11,253)		($11,162)		$27,614
Cumulative Excess/(Deficiency) of interest-
earning assets over interest bearing liabilities			$47,865		$55,586		$50,029		$38,776		$27,614
Cumulative Excess/(Deficiency) of interest-
earning assets over interest bearing liabilities
as a percent of total assets			23.11%		26.84%		24.16%		18.72%		13.33%
Ratio of interest-earning assets to interest-
bearing liabilities			181.88%		115.09%		85.88%		4.26%		3.21%
Ratio of cumulative interest-earning assets
to interest-bearing liabilities			181.88%		150.71%		133.58%		124.12%		116.03%
(1) Based on monthly payments received in the month ended December 31, 2002.
(2) Based on contractual maturities