<PAGE>

Mission Statement

The mission of ANB Corporation is to provide a broad range of financial
services to its market, to maximize a long-term return to stockholders
through capital appreciation and dividends, and to provide a challenging work
environment with appropriate compensation.

ANB Corporation will accomplish its mission through its affiliated companies
by taking an active financial and civic role in its local communities. The
organization shall deal fairly under all circumstances, and shall endeavor to
be the most professional and responsive financial institution in the market.

ANB Corporation will continue to grow profitably by attaining excellence in
the fulfillment of customer financial service needs. Growth may also be
accomplished via acquisition or merger when such actions are in the best
interests of all ANB Corporation stockholders.

<PAGE>

Shareholder Information

Founded in 1984, ANB Corporation is a multi-bank holding company engaged in
the business of commercial banking, trust and asset management. Headquartered
in Muncie, Indiana, the business of the company is conducted through its
three subsidiaries: American National Bank and Trust Company of Muncie,
American National Trust And Investment Management Company, and Peoples Loan &
Trust Bank.

American National Bank is a national banking association with its principal
office in Muncie, Delaware County, Indiana. American National Trust is a
nationally chartered trust bank headquartered in Muncie, with regional
offices in three other Indiana communities. Peoples is a state banking
association with its home office in Winchester, Randolph County, Indiana.

American National Bank has one wholly owned subsidiary: ANB Financial
Planning Services.

ANB Corporation provides commercial banking, trust and asset management
products and services through 23 affiliated offices in six Indiana counties.

ALLEN COUNTY
American National Trust And Investment Management Company

DELAWARE COUNTY
American National Bank and Trust Company of Muncie (10 offices)
American National Trust And Investment Management Company
ANB Financial Planning Services

JAY COUNTY
American National Bank and Trust Company of Muncie

MADISON COUNTY
American National Trust And Investment Management Company

RANDOLPH COUNTY
American National Trust And Investment Management Company
Peoples Loan & Trust Bank (5 Offices)

WAYNE COUNTY
Peoples Loan & Trust Bank (2 Offices)

<PAGE>

Annual Meeting                         Market Makers
Wednesday, April 16, 1997              NatCity Investments
Minnetrista Cultural Center            McDonald & Company Sec., Inc.
1200 North Minnetrista Parkway         Howe Barnes Investments, Inc.
Muncie, Indiana 47303                  Robert W. Baird & Co., Inc.

Corporate Address                      Stock Transfer Agent
ANB Corporation                        American National Trust And
110 East Main Street                   Investment Management Company
Muncie, Indiana 47305                  320 South High Street
                                       Muncie, Indiana 47305


ANNUAL REPORT (FORM 10-K)
Upon written request, the Company will provide without charge to each
shareholder, a copy of the annual report on Form 10-K as filed with the
Securities and Exchange Commission for the year ended December 31, 1996.
Address all requests to: L.E. Thomas, Chief Financial Officer and Treasurer,
at the corporate office address.

COMPANY STOCK PRICES AND DIVIDENDS
The Company's common stock trades on The NASDAQ Stock Market under the symbol
ANBC. At December 31, 1996, the Company had 4,490,556 shares of its common
stock outstanding, and there were 619 shareholders of record.

The following table sets forth the high and low prices of the Company's
common stock as reported by NatCity Investments in 1996 and 1995. The prices
do not include retail mark-ups, mark-downs or commissions and may not
represent actual transactions. The prices have been adjusted for stock
splits. The table also sets forth the cash dividends declared on Company
common stock since January 1, 1995. All dividends have been adjusted to give
effect to stock splits.

                 Stock Price                                  Dividends
                 High                Low                      Per Share
                 1996      1995      1996      1995           1996      1995
                ------    ------    ------    ------         ------    ------
First Quarter   $16.50    $12.25    $15.50    $11.88         $0.125    $0.105
Second Quarter   17.50     13.50     16.50     12.25          0.125     0.105
Third Quarter    18.00     14.00     17.50     13.50          0.150     0.125
Fourth Quarter   21.00     15.75     18.00     14.00          0.150     0.125

The primary source of funds for the payment of cash dividends by the Company
is dividends received from its subsidiaries. The subsidiaries have certain
dividend restrictions, which are common to the banking industry, that limit
the payment of dividends. The Company has no reason to believe these
restrictions will, in any way, impair the payment of future cash dividends.

The Company currently anticipates that it will continue to pay quarterly cash
dividends on its common stock. The payment of dividends in the future is at
the discretion of the Company's Board of Directors and will depend on the
Company's operating results and financial condition, the availability of
funds, regulatory limitations, tax considerations and other factors.

<PAGE>

FINANCIAL HIGHLIGHTS

ANB Corporation Selected Financial Data
(Dollars in Thousands Except for Per Share Amounts)
<TABLE>
<CAPTION>

                                         1996         1995         1994         1993        1992
<S>                                    <C>          <C>          <C>          <C>         <C>
FOR THE YEAR:
    Net interest income                $21,028      $19,824      $17,411      $14,424     $14,510
    Provision for loan losses            1,089        1,084          277          519       1,082
    Net interest income after
         provision for loan losses      19,939       18,740       17,134       13,905      13,428
    Income before cumulative effect
         of change in accounting
         method                          6,006        5,285        4,770        4,987       4,573
    Net income                           6,006        5,285        4,770        5,185       4,573
    Dividends                            2,472        2,090        1,866        1,676       1,446
    Average shares outstanding       4,501,155    4,551,822    4,549,010    4,529,060   4,517,680

PER SHARE:*
    Income before cumulative effect
         of change in accounting
         method                          $1.33        $1.16        $1.05        $1.10       $1.01
    Net income                            1.33         1.16         1.05         1.14        1.01
    Dividends                             0.55         0.46         0.41         0.37        0.32
    Stockholders' equity                 11.43        10.92         9.85         9.17        8.38
    Market stock price at year end       20.00        15.75        12.00        13.25       11.25

AT YEAR END:
    Total assets                      $493,847     $483,236     $441,586     $346,335    $353,445
    Loans, net                         372,681      346,016      326,105      237,908     251,520
    Deposits                           405,845      415,351      380,132      289,492     301,422
    Stockholders' equity                51,341       49,471       44,910       41,703      37,904
</TABLE>

*Per share amounts have been restated to give retroactive   effect to   the 1995
stock split.

<PAGE>

REPORT FROM MANAGEMENT

To our shareholders and friends:

Nineteen ninety-six was a record-setting year for ANB Corporation. All-time
highs were recorded in net income per share and net income, dividends per
share and total dividends, stockholders' equity, total assets and total
loans. Key asset and equity measurements improved, while for the second
consecutive year, the Company maintained a net interest margin in excess of
five percent.

The board of directors and management of your Company followed closely a
strategic initiatives plan - a "road map" document - designed to grow your
Company, expand earning opportunities and enhance the value of the shares you
hold. The Company grew through one acquisition and poised itself, through
reorganization, to take advantage of future growth possibilities. In
addition, communication with market makers, analysts and institutional
investors received increased emphasis during 1996, an activity that will be
heightened in the future.

In 1996, the associates of ANB Corporation and its affiliated companies
continued a unified pursuit of an important organizational core value -
lifelong learning. We worked to expand our sales and business development
abilities, our technological readiness, our leadership and our managerial
skills. Most importantly, we did not relent in our steadfast quest for
unparalleled customer service; a brand of service for which we have become
well known.

As a stakeholder in ANB Corporation, we invite you to read further as we
report the results of 1996 and share our expectations for continued success.

RECORD NET INCOME. ANB Corporation net income per share in 1996 was $1.33, an
increase of 14.7 percent over the $1.16 earned in 1995. Net income was $6.006
million, an increase of 13.6 percent over 1995 net income.

We are most gratified to report that the double-digit increases in net income
per share and net income were achieved in spite of having to pay a one-time
charge assessed by the Federal Deposit Insurance Corporation. The
non-recurring special assessment, which amounted to $589 thousand, resulted
from federal legislation enacted to recapitalize the Savings Association
Insurance Fund. The impact on net income for 1996 was 8 CENTS per share.

ANB CORPORATION STOCK, DIVIDEND AND EQUITY GROWTH. The market bid price of
ANB Corporation was $15.75 at the beginning of 1996. On December 31, 1996,
the market bid price was $20.00, an increase of 27.0 percent during the year.
Since the beginning of 1995, ANB Corporation has appreciated in value more
than 66.0 percent. An investment of $100 in ANB Corporation on January 1,
1992, would have grown to $293 by December 31, 1996, assuming the
reinvestment of all dividends. The average annual compound growth rate during
that span of five years was 24.0 percent.

Again in 1996, the dividend paid per share of ANB Corporation stock was
increased. Effective with the third quarter payment, the dividend increased
20.0 percent from 12.5 CENTS to 15 CENTS per share. It was the 17th consecutive
year during which the dividend per share was increased. Total dividends paid
per share during 1996 increased 19.6 percent over the prior year and have
risen in excess of 10.8 percent for 13 years in a row.

Total dividends paid to shareholders reached $2.472 million in 1996 with the
dividend payout ratio reaching 41.4 percent. Stockholders' equity in the
Company increased 3.8 percent during 1996, to an all-time high of $51.3
million. At the end of 1996, ANB Corporation maintained a leverage capital
ratio of 9.5 percent and a risk-adjusted total capital ratio of 14.4 percent.

<PAGE>

TOTAL ASSETS. Total assets of the Company increased 2.2 percent during the
year, from $483.2 million at year end 1995 to $493.8 million at year end
1996. Total loans grew 7.8 percent from $348.9 million to $376.1 million.
Credit quality at ANB Corporation remained positive during 1996 due to
continued sound credit administration policies and thorough internal loan
review. The minimization of loan losses is of central importance to long-term
profitability. A strong credit portfolio builds investor confidence and
strengthens customer faith in ANB Corporation and its affiliates.

STRATEGIC INITIATIVES. Enhancement of shareholder value receives top priority
and attention by the directors and management of your Company. Two years ago,
during a day-long corporate board retreat, a strategic initiatives document
was developed. The initiatives provide a road map to be followed, the result
of which will be growth, expanded earning opportunities and shareholder value
enhancement.

In 1996, ANB Corporation senior management accepted the challenge of
developing the concept of a statewide community bank network. The network
envisioned will consist of individually chartered, community financial
institutions supported by a single holding company.

A network such as this will provide community banks and thrifts an
alternative to "going it alone;" an alternative to selling to a regional bank
holding company where local control and decision-making authority are
removed. The network will preserve relationships with the local customer and
the community - the foundations upon which community banking is built. The
holding company will foster economies of size and scale by serving as a
resource for data processing, alternative delivery technologies, internal
audit, loan review, human resources, employee benefits, marketing, trust
services, access to capital markets and shareholder liquidity.

Within the framework of ANB Corporation's strategic initiatives, a
significant 1996 event involved our trust affiliate, American National Trust
And Investment Management Company. Late in the year, the ownership of
American National Trust was transferred from American National Bank and Trust
Company to ANB Corporation. This transfer was made in order to accommodate
plans for future growth and expansion of trust operations throughout Indiana.

In March 1996, American National Trust acquired Northern Indiana Trust
Company and merged the staff and assets of the trust department of another
Company affiliate, Peoples Loan & Trust Bank. These consolidations added
approximately $180 million to the assets of American National Trust and
positioned this important corporate affiliate to gain an even greater share
of the Indiana trust services market. American National Trust is currently
the fourth largest Indiana-based provider of trust and asset management
services.

Formal research conducted last year confirmed there are opportunities to gain
trust market share in communities where ownership of local trust providers
has shifted to institutions headquartered outside of Indiana. This same
research revealed a high level of satisfaction among the current clients of
American National Trust. Contributing elements to this satisfaction are the
rates of return achieved in 1996 by the Trust Company's investment
department. The American National Trust bond and income funds exceeded the
Lehman Brothers Intermediate Government/Corporate Index by 0.54 percent and
0.55 percent, respectively. The American National Trust equity and growth
funds exceeded the Standard and Poor's 500 Index by 2.17 percent and 3.20
percent, respectively.

EXPANSION OF BOARD AND MANAGEMENT. The number of ANB Corporation directors
increased by one in 1996 with the election of Madelyn K. Ferris. As senior
vice president of Paws Incorporated - the operating company for the
international cartoon character, Garfield the Cat - Mrs. Ferris brings a
wealth of national and international business experience. The Board is
delighted to welcome Mrs. Ferris as a member.

As a result of a management expansion plan, Jerome J. Gassen was added to the
executive management of American National Bank and Trust Company of Muncie in
early 1997. Mr. Gassen, formerly an executive with Firstar Corporation of
Iowa, will serve as president and chief operating officer of American
National,

<PAGE>

along with yours truly who will serve as vice chairman and chief executive
officer of the bank and continue to serve as president and chief executive
officer of ANB Corporation.

CAPITALIZING ON TECHNOLOGY. During 1996, an extensive study of core data
processing and alternative delivery applications concluded with the selection
and purchase of a new system. Following conversion in 1997, the corporate
in-house system will support existing Company affiliates and those that join
the ANB Corporation family under the statewide community bank network concept.

Harmonious with the statewide network concept, the new core data processing
solution will allow customers of affiliate companies to transact business on
their accounts at any affiliate bank. In addition, it will enable ANB
Corporation affiliates to implement or enhance comprehensive telephone and
personal computer banking systems. This state-of-the-art technology will make
it possible for increasing numbers of customers to electronically access
their accounts whenever and wherever they choose while ultimately decreasing
delivery costs.

POSITIONED FOR THE FUTURE. The associates of ANB Corporation and its
affiliates worked diligently in 1996 to ensure that the return on your
investment in the Company was enhanced. Although we look forward to continued
high performance results in 1997 and beyond, we will not be content to rest
on the record performance of 1996.

To remain profitable, to increase shareholder value, to meet the
ever-increasing expectations of an interactive marketplace, the directors and
management of your Company will continue to embrace the accelerated pace of
change in the financial services industry. Our objective is to employ change
and make it work to enhance shareholder value. New technologies will be an
integral part of our strategic directions for the future.

Innovation, flexibility, responsiveness and performance are some of the
attributes that characterize your Company. We will continue to build upon the
unique strengths and hard-earned successes of the past - the combination of
which will position ANB Corporation strategically for the future.


James R. Schrecongost
President and Chief Executive Officer


<PAGE>

Independent Auditor's Report


To the Stockholders and
Board of Directors
ANB Corporation
Muncie, Indiana


We have audited the consolidated balance sheet of ANB Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements described above present
fairly, in all material respects, the consolidated financial position of ANB
Corporation and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.

As discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for investments in securities in
1994.


Geo. S. Olive & Co. LLC


Indianapolis, Indiana
January 31, 1997

<PAGE>

                        ANB CORPORATION AND SUBSIDIARIES

                        Consolidated Financial Statements
                           December 31, 1996 and 1995

<PAGE>


                        ANB CORPORATION AND SUBSIDIARIES
                                 TABLE OF CONTENTS

                                                                     PAGE
-------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT                                            1

FINANCIAL STATEMENTS

   Consolidated balance sheet                                           2

   Consolidated statement of income                                     3

   Consolidated statement of changes in stockholders' equity            4

   Consolidated statement of cash flows                                 5

   Notes to consolidated financial statements                           6

<PAGE>

                        INDEPENDENT AUDITOR'S REPORT



To the Stockholders and
Board of Directors
ANB Corporation
Muncie, Indiana


We have audited the consolidated balance sheet of ANB Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996.  These consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements described above present
fairly, in all material respects, the consolidated financial position of ANB
Corporation and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.

As discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for investments in securities in
1994.


Geo. S. Olive & Co. LLC


Indianapolis, Indiana
January 31, 1997


<PAGE>


                        ANB CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

DECEMBER 31                                               1996        1995
_____________________________________________________________________________
                                                       (Dollars in Thousands)

ASSETS
 Cash and due from banks                                 $ 21,835  $ 23,488
 Federal funds sold                                         2,475    19,800
 Interest-bearing deposit accounts                             74       248
                                                         __________________
   Cash and cash equivalents                               24,384    43,536
 Investment securities available for sale                  73,944    70,514
 Mortgage loans held for sale                                 204       129
 Loans                                                    376,081   348,913
  Allowance for loan losses                                (3,400)   (2,897)
                                                         __________________
     Net loans                                            372,681   346,016
 Premises and equipment                                     9,345     9,577
 Federal Reserve and Federal Home Loan Bank stock           2,713     2,661
 Foreclosed real estate                                       516       341
 Interest receivable                                        4,159     4,081
 Core deposit intangibles and goodwill                      4,306     4,309
 Other assets                                               1,595     2,072
                                                         __________________
     Total assets                                        $493,847  $483,236
                                                         __________________
                                                         __________________

  Deposits
   Noninterest bearing                                   $ 50,256  $ 52,029
   Interest bearing                                       355,589   363,322
                                                         __________________
     Total deposits                                       405,845   415,351
  Short-term borrowings                                    17,676     7,749
  Federal Home Loan Bank advances                          14,000     2,395
  Interest payable                                          1,391     1,626
  Other liabilities                                         3,594     6,644
                                                         __________________
     Total liabilities                                    442,506   433,765
                                                         __________________
  Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
  Preferred stock, without par value
    Authorized and unissued--250,000 shares
  Common stock, $1 stated value
    Authorized--20,000,000 shares
    Issued and outstanding--4,490,556 and 4,530,335 shares  4,491     4,530
  Paid-in capital                                           6,930     6,274
  Paid-in capital--stock options                              397       466
  Prepaid compensation expense                                          (68)
  Retained earnings                                        38,325    36,358
  Net unrealized gain on securities available for sale      1,198     1,911
                                                         __________________
     Total stockholders' equity                            51,341    49,471
                                                         __________________
     Total liabilities and stockholders' equity          $493,847  $483,236
                                                         __________________
                                                         __________________
See notes to consolidated financial statements.


                                       (2)
<PAGE>

                           ANB CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31                              1996     1995     1994
______________________________________________________________________________
                                                     (Dollars in Thousands
                                                 Except for Per Share Amounts)

INTEREST INCOME
  Loans receivable
    Taxable                                         $32,310   $30,342   $24,502
    Tax exempt                                          107        80        66
  Investment securities
    Taxable                                           1,837     1,674     1,391
    Tax exempt                                        2,679     2,573     2,561
  Federal funds sold                                    271       591       368
  Other interest and dividend income                    220       211       208
                                                    ___________________________
     Total interest income                           37,424    35,471    29,096
                                                    ___________________________
INTEREST EXPENSE
  Deposits                                           15,484    15,051    11,326
  Short-term borrowings                                 481       479       322
  Federal Home Loan Bank advances                       431       117        37
                                                    ___________________________
     Total interest expense                          16,396    15,647    11,685
                                                    ___________________________

NET INTEREST INCOME                                  21,028    19,824    17,411
  Provision for loan losses                           1,089     1,084       277
                                                    ___________________________

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES  19,939    18,740    17,134
                                                    ___________________________

OTHER INCOME
  Fiduciary activities                                4,452     4,132     3,990
  Service charges on deposit accounts                 1,359     1,349     1,244
  Other customer fees                                   463       338       327
  Investment securities gains, net                                          305
  Net loans sold gains                                  159        97       129
  Other income                                          567       625       607
                                                    ___________________________
     Total other income                               7,000     6,541     6,602
                                                    ___________________________

OTHER EXPENSES
  Salaries and employee benefits                     10,017     9,827     9,206
  Premises and equipment expenses                     2,672     2,645     2,617
  Advertising                                           472       496       468
  Professional fees                                     268       336       394
  Deposit insurance expense                             867       558       817
  Printing and office supplies                          561       569       532
  Amortization of goodwill and core deposit intangibles 375       360       338
  Other expenses                                      2,907     2,683     2,563
                                                    ___________________________
     Total other expenses                            18,139    17,474    16,935
                                                    ___________________________

INCOME BEFORE INCOME TAX                              8,800     7,807     6,801
  Income tax expense                                  2,794     2,522     2,031
                                                    ___________________________
NET INCOME                                         $  6,006  $  5,285  $  4,770
                                                    ___________________________
                                                    ___________________________
NET INCOME PER SHARE                                  $1.33     $1.16     $1.05
WEIGHTED AVERAGE SHARES OUTSTANDING               4,501,155 4,551,822 4,549,010


See notes to consolidated financial statements.


                                     (3)
<PAGE>

                        ANB CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                           COMPENSATORY STOCK OPTIONS             NET
                                                                           --------------------------          UNREALIZED
                                                COMMON STOCK                                                    GAIN ON
                                          ---------------------                          PREPAID               SECURITIES
                                             SHARES                PAID-IN   PAID-IN  COMPENSATION  RETAINED   AVAILABLE
                                           OUTSTANDING   AMOUNT    CAPITAL   CAPITAL     EXPENSE    EARNINGS    FOR SALE    TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
                                                            (Dollars in Thousands except for Per Share Amounts)
<S>                                         <C>         <C>        <C>       <C>        <C>         <C>         <C>       <C>
BALANCES, JANUARY 1, 1994                   2,272,279   $  2,272   $ 7,960   $   519    $   (261)   $ 31,213              $ 41,703
  Net income for 1994                                                                                  4,770                 4,770
  Cash dividends ($.41 per share)                                                                     (1,866)               (1,866)
  Cumulative effect of change in method
    of accounting for securities                                                                                $    957       957
  Net change in unrealized gain on
    securities available for sale                                                                                   (936)     (936)
  Exercise of stock options                     3,362          3        53        (7)                                           49
  Stock tendered in exercise of stock
    options                                      (462)                  (2)                               (9)                  (11)
  Compensation expense for 1994
    related to options granted                                                               109                               109
  Tax benefit on stock options
    exercised                                                           11                                                      11
  Stock issued under dividend
    reinvestment and stock
    purchase plan                               5,086          5       119                                                     124
                                           ---------------------------------------------------------------------------------------

BALANCES, DECEMBER 31, 1994                 2,280,265      2,280     8,141       512        (152)     34,108          21    44,910
  Net income for 1995                                                                                  5,285                 5,285
  Cash dividends ($.46 per share)                                                                     (2,090)               (2,090)
  Net change in unrealized gain on
    securities available for sale                                                                                  1,890     1,890
  Two-for-one stock split                   2,261,963      2,262    (2,262)
  Exercise of stock options                    17,913         18       172       (46)                                          144
  Stock tendered in exercise of stock
    options                                    (6,195)        (6)      (14)                              (89)                 (109)
  Compensation expense for 1995
    related to options granted                                                                84                                84
  Tax benefit on stock options
    exercised                                                           66                                                      66
  Stock repurchases                           (34,651)       (35)     (126)                             (856)               (1,017)
  Stock issued under dividend
    reinvestment and stock
    purchase plan                              11,040         11       297                                                     308
                                           ---------------------------------------------------------------------------------------

BALANCES, DECEMBER 31, 1995                 4,530,335      4,530     6,274       466         (68)     36,358       1,911    49,471
  Net income for 1996                                                                                  6,006                 6,006
  Cash dividends ($.55 per share)                                                                     (2,472)               (2,472)
  Net change in unrealized gain on
    securities available for sale                                                                                   (713)     (713)
  Exercise of stock options                    39,950         40       287       (57)                                          270
  Stock tendered in exercise of stock
    options                                   (10,488)       (10)      (13)                             (157)                 (180)
  Compensation expense for 1996
    related to options granted                                                                56                                56
  Compensatory stock options
    cancelled                                                                    (12)         12
  Tax benefit on stock options
    exercised                                                          109                                                     109
  Stock repurchases                           (93,000)       (93)     (128)                           (1,410)               (1,631)
  Stock issued under dividend
    reinvestment and stock
    purchase plan                              23,759         24       401                                                     425
                                           ---------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1996                 4,490,556   $  4,491   $ 6,930   $   397    $      0    $ 38,325    $  1,198  $ 51,341
                                           ---------------------------------------------------------------------------------------
                                           ---------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.


                                                                             (4)
<PAGE>

                        ANB CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                                                 1996         1995       1994
-----------------------------------------------------------------------------------------------------------------------
                                                                                          (Dollars in Thousands)
<S>                                                                                  <C>         <C>         <C>
OPERATING ACTIVITIES
  Net income                                                                         $   6,006   $   5,285   $   4,770
  Adjustments to reconcile net income to net cash provided by operating activities

    Provision for loan losses                                                            1,089       1,084         277
    Depreciation and amortization                                                        1,109       1,172       1,263
    Amortization of goodwill and core intangibles                                          375         360         338
    Amortization of loan, deposit and other purchase accounting adjustments, net
                                                                                            33         (31)       (110)
    Deferred income tax                                                                   (381)       (274)        (73)
    Investment securities amortization (accretion), net                                    (63)       (132)        323
    Investment securities gains                                                                                   (305)
    Net change in
      Loans held for sale                                                                  (75)         35         111
      Accounts receivable for loans sold                                                   163        (163)        696
      Interest receivable                                                                  (78)       (566)       (196)
      Interest payable                                                                    (235)        376         361
    Other adjustments                                                                      151       1,509         879
                                                                                     ----------------------------------
      Net cash provided by operating activities                                          8,094       8,655       8,334
                                                                                     ----------------------------------

INVESTING ACTIVITIES
  Net change in marketable equity securities available for sale                            251        (274)      1,040
  Purchases of securities available for sale                                           (18,455)    (17,758)    (10,041)
  Proceeds from maturities of securities held to maturity                                            6,342       7,495
  Proceeds from maturities of securities available for sale                             11,408      15,025      22,200
  Proceeds from sales of securities available for sale                                     250                   6,957
  Purchases of securities held to maturity                                                          (3,493)     (1,386)
  Net change in loans                                                                  (28,203)    (21,094)    (34,018)
  Purchases of premises and equipment                                                     (878)       (572)       (895)
  Proceeds from sale of foreclosed real estate                                             253          20         400
  Purchase of Federal Home Loan Bank stock                                                 (52)        (13)       (361)
  Acquisitions, net of cash acquired                                                      (399)                 (7,330)
  Other investing activities                                                                24          42          71
                                                                                     ----------------------------------
    Net cash used by investing activities                                              (35,801)    (21,775)    (15,868)
                                                                                     ----------------------------------

FINANCING ACTIVITIES
  Net change in
    Noninterest-bearing, interest-bearing demand and savings deposits                   (5,737)        903       1,502
    Certificates of deposit                                                             (3,760)     34,409      10,772
    Short-term borrowings                                                                9,926      (4,908)        486
  Proceeds from Federal Home Loan Bank advances                                         15,000       4,850
  Repayment of Federal Home Loan Bank advances                                          (3,395)     (2,850)
  Repayment of long-term debt                                                                                     (996)
  Cash dividends                                                                        (2,472)     (2,090)     (1,866)
  Stock repurchases                                                                     (1,631)     (1,017)
  Stock sold
    Exercise of stock options                                                              199         101          49
    Dividend reinvestment and stock purchase plan                                          425         308         124
                                                                                     ----------------------------------
      Net cash provided by financing activities                                          8,555      29,706      10,071
                                                                                     ----------------------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                (19,152)     16,586       2,537

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                            43,536      26,950      24,413
                                                                                     ----------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                               $  24,384   $  43,536   $  26,950
                                                                                     ----------------------------------
                                                                                     ----------------------------------
ADDITIONAL CASH FLOWS INFORMATION
  Interest paid                                                                      $  16,631   $  15,271   $  11,321
  Income tax paid                                                                        3,095       2,530       1,888
</TABLE>

See notes to consolidated financial statements.


                                                                             (5)
<PAGE>

                       ANB CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (Table Dollar Amounts in Thousands)


- NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of ANB Corporation ("Company") and its
wholly owned subsidiaries, American National Bank and Trust Company of Muncie
("American National"), Peoples Loan & Trust Bank ("Peoples") and American
National Trust and Investment Management Company ("ANTIM"), and ANB Financial
Planning Services ("ANBFPS"), a subsidiary of American National, conform to
generally accepted accounting principles and general practices followed by
the banking industry.  The more significant of the policies are described
below.

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

The Company is a bank holding company whose principal activity is the
ownership and management of the banks and other subsidiaries.  The bank and
trust company subsidiaries operate under national and state bank charters and
provide full banking services.  Accordingly, these subsidiaries are subject
to regulation by the Office of the Comptroller of the Currency, Department of
Financial Institutions, State of Indiana, and the Federal Deposit Insurance
Corporation.

The banking subsidiaries generate commercial, mortgage and consumer loans and
receive deposits from customers located primarily in Delaware, Jay, Randolph
and Wayne Counties, Indiana and surrounding counties.  The loans are
generally secured by specific items of collateral including real property,
consumer assets and business assets.  American National also engages in loan
servicing for investors.  ANTIM provides trust and asset management services,
and ANBFPS is engaged in the selling of financial services.

CONSOLIDATION--The consolidated financial statements include the accounts of
the Company and subsidiaries after elimination of all material intercompany
transactions and accounts.

INVESTMENT SECURITIES--Debt securities are classified as held to maturity when
the Company has the positive intent and ability to hold the securities to
maturity.  Securities held to maturity are carried at amortized cost.

Debt securities not classified as held to maturity are classified as
available for sale.  Securities available for sale are carried at fair value
with unrealized gains and losses reported separately in stockholders' equity,
net of tax.

Amortization of premiums and accretion of discounts are recorded as interest
income from securities.  Realized gains and losses are recorded as net
security gains (losses).  Gains and losses on sales of securities are
determined on the specific-identification method.

At January 1, 1994, investment securities, securities held for sale and
marketable equity securities with an approximate carrying value of
$42,058,000 were reclassified as available for sale.  This reclassification
resulted in an increase in total stockholders' equity, net of taxes, of
$957,000.


                                     (6)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)


MORTGAGE SERVICING RIGHTS on originated loans are capitalized by allocating
the total cost of the mortgage loans between the mortgage servicing rights
and the loans based on their relative fair values.  Capitalized servicing
rights are amortized in proportion to and over the period of estimated
servicing revenues.

MORTGAGE LOANS HELD FOR SALE are carried at the lower of aggregate cost or
market.  Net unrealized losses are recognized through a valuation allowance
by charges to income.

LOANS are carried at the principal amount outstanding.  Interest income is
accrued on the principal balances of loans.  The accrual of interest on
impaired loans is discontinued when, in management's opinion, the borrower
may be unable to meet payments as they become due.  When interest accrual is
discontinued, all unpaid accrued interest is reversed.  Interest income is
subsequently recognized only to the extent cash payments are received.
Certain loan fees and direct costs are being deferred and amortized as an
adjustment of yield on the loans.

ALLOWANCE FOR LOAN LOSSES is maintained to absorb loan losses based on
management's continuing review and evaluation of the loan portfolio and its
judgment as to the impact of economic conditions on the portfolio.  The
evaluation by management includes consideration of past loss experience,
changes in the composition of the portfolio,  the current condition and
amount of loans outstanding, and the probability of collecting all amounts
due.  Impaired loans are measured by the present value of expected future
cash flows, or the fair value of the collateral of the loan, if collateral
dependent.

The determination of the adequacy of the allowance for loan losses is based
on estimates that are particularly susceptible to significant changes in the
economic environment and market conditions.  Management believes that as of
December 31, 1996 the allowance for loan losses is adequate based on
information currently available.  A worsening or protracted economic decline
in the areas within which the banking subsidiaries operate would increase the
likelihood of additional losses due to credit and market risks and could
create the need for additional loss reserves.

PREMISES AND EQUIPMENT are carried at cost net of accumulated depreciation.
Depreciation is computed using the straight-line and the declining balance
methods based principally on the estimated useful lives of the assets.
Maintenance and repairs are expensed as incurred while major additions and
improvements are capitalized.  Gains and losses on dispositions are included
in current operations.

FEDERAL RESERVE AND FEDERAL HOME LOAN BANK STOCK are required investments for
institutions that are members of the Federal Reserve and Federal Home Loan
Bank systems.  The required investment in the common stock is based on a
predetermined formula.

FORECLOSED REAL ESTATE is carried at the lower of cost or fair value less
estimated selling costs.   When foreclosed real estate is acquired, any
required adjustment is charged to the allowance for loan losses.  All
subsequent activity is included in current operations.

CORE DEPOSIT INTANGIBLES AND GOODWILL are being amortized on the
straight-line method over periods not exceeding 15 years.  Such assets are
periodically evaluated as to the recoverability of their carrying value.


                                     (7)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

INCOME TAX in the consolidated statement of income includes deferred income
tax provisions or benefits for all significant temporary differences in
recognizing income and expenses for financial reporting and income tax
purposes.  The Company files consolidated income tax returns with its
subsidiaries.

EARNINGS PER SHARE have been computed based upon the weighted average common
and common equivalent shares outstanding during each year after retroactive
adjustment for the stock split.  Common stock equivalents consisting of
shares issuable under stock option plans were not included since their effect
on dilution was insignificant.

- ACQUISITION

On January 21, 1994, the Company acquired 100% of the outstanding common
stock of Winchester Bancorporation ("Winchester") for approximately
$11,045,000 including acquisition costs of $119,000.  The transaction was
recorded using the purchase method and, accordingly, the net assets acquired
of $6,269,000 were recorded at their estimated fair values at date of
acquisition.  The excess of the purchase price over the estimated fair value
of underlying net assets of $4,776,000 was allocated to goodwill and is being
amortized over 15 years. Peoples was the wholly owned subsidiary of
Winchester at the date of acquisition.  Winchester, the parent company, was
dissolved.  The consolidated financial statements include the accounts of
Peoples from January 21, 1994.

Pro forma condensed results of operations for 1994 as though Winchester and
Peoples had been acquired as of January 1 of that year are as follows:

<TABLE>
<CAPTION>
                                                                1994
                                                        ---------------------
                                                         REPORTED  PRO FORMA
                                                        ---------------------
<S>                                                     <C>        <C>
Net interest income . . . . . . . . . . . . . . . . . .  $17,411    $17,578
Net income. . . . . . . . . . . . . . . . . . . . . . .    4,770      4,800
Net income per share. . . . . . . . . . . . . . . . . .     1.05       1.06

</TABLE>

- RESTRICTION ON CASH AND DUE FROM BANKS

The banking subsidiaries are required to maintain reserve funds in cash and/or
on deposit with the Federal Reserve Bank.  The reserve required at December 31,
1996, was $5,561,000.

- INVESTMENT SECURITIES

<TABLE>
<CAPTION>
                                                      1996
                                   ---------------------------------------------
                                                GROSS         GROSS
                                   AMORTIZED  UNREALIZED    UNREALIZED     FAIR
DECEMBER 31                          COST       GAINS         LOSSES       VALUE
--------------------------------------------------------------------------------
<S>                                <C>        <C>           <C>          <C>
Available for sale
  U.S. Treasury. . . . . . . . . .  $17,763    $  106          $ 31      $17,838
  Federal agencies . . . . . . . .    8,047         3            78        7,972
  State and municipal. . . . . . .   42,138     2,178           150       44,166
  Mortgage-backed securities . . .    3,123                      45        3,078
  Marketable equity securities . .      690                                  690
  Corporate obligations. . . . . .      200                                  200
                                   ---------------------------------------------
    Total investment securities. .  $71,961    $2,287          $304      $73,944
                                   ---------------------------------------------
                                   ---------------------------------------------
</TABLE>


                                     (8)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

<TABLE>
<CAPTION>
                                                      1995
                                   ---------------------------------------------
                                                GROSS         GROSS
                                   AMORTIZED  UNREALIZED    UNREALIZED     FAIR
DECEMBER 31                          COST       GAINS         LOSSES       VALUE
--------------------------------------------------------------------------------
<S>                                <C>        <C>           <C>          <C>
Available for sale
  U.S. Treasury . . . . . . . . .   $17,950     $  226         $  3      $18,173
  Federal agencies. . . . . . . .     4,148          8            3        4,153
  State and municipal . . . . . .    40,118      3,031           44       43,105
  Mortgage-backed securities. . .     3,744                      49        3,695
  Marketable equity securities. .       941                                  941
  Corporate obligations . . . . .       450                       3          447
                                   ---------------------------------------------
   Total investment securities. .   $67,351     $3,265         $102      $70,514
                                   ---------------------------------------------
                                   ---------------------------------------------
</TABLE>

Marketable equity securities consist of shares in a mutual fund which invests in
money market instruments including federal funds and repurchase agreements.

The amortized cost and fair value of securities available for sale at December
31, 1996, by contractual maturity, are shown below.  Expected maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>

                                              AMORTIZED            FAIR
                                                COST               VALUE
---------------------------------------------------------------------------
<S>                                           <C>                  <C>
Within one year. . . . . . . . . . . . . .     $ 8,892              $ 8,930
One to five years. . . . . . . . . . . . .      21,605               21,767
Five to ten years. . . . . . . . . . . . .      16,951               17,568
After ten years. . . . . . . . . . . . . .      20,700               21,911
                                              -----------------------------
                                                68,148               70,176
Mortgage-backed securities . . . . . . . .       3,123                3,078
Marketable equity securities . . . . . . .         690                  690
                                              -----------------------------
      Totals . . . . . . . . . . . . . . .     $71,961              $73,944
                                              -----------------------------
                                              -----------------------------
</TABLE>

Securities with a total carrying value of $41,063,000 and $29,037,000 were
pledged at December 31, 1996 and 1995 to secure certain deposits and for other
purposes as permitted or required by law.

Proceeds from sales of securities available for sale during 1996 and 1994 were
$250,000 and $6,957,000.  No gains or losses were realized on the 1996 sales.
Gross gains of $321,000 and gross losses of $16,000 were realized on the 1994
sales.

The tax expense for securities gains was $121,000 for 1994.

The Company had amounts due to brokers for purchases of investment securities of
$1,999,000 at December 31, 1995.

On December 31, 1995, the Company transferred certain securities from held to
maturity to available for sale in accordance with a transition reclassification
allowed by the Financial Accounting Standards Board.  Such securities had a
carrying value of $35,830,000 and a fair value of $37,984,000.


                                     (9)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)


- LOANS AND ALLOWANCE

<TABLE>
<CAPTION>

DECEMBER 31                                           1996           1995
-----------------------------------------------------------------------------
<S>                                                 <C>            <C>
Commercial and industrial loans. . . . . . . . . . . $ 81,142       $ 75,083
Term federal funds sold. . . . . . . . . . . . . . .    5,500          8,784
Real estate loans
  One-to-four family properties. . . . . . . . . . .  144,749        134,488
  Other. . . . . . . . . . . . . . . . . . . . . . .   98,366         91,581
Individuals' loans for household and other
  personal expenditures. . . . . . . . . . . . . . .   42,507         35,736
Tax-exempt loans . . . . . . . . . . . . . . . . . .    2,432          1,630
Other loans. . . . . . . . . . . . . . . . . . . . .    1,385          1,611
                                                    ------------------------
     Total loans . . . . . . . . . . . . . . . . . . $376,081       $348,913
                                                    ------------------------
                                                    ------------------------

DECEMBER 31                               1996         1995           1994
-----------------------------------------------------------------------------
Allowance for loan losses
  Balances, January 1. . . . . . . . . . $2,897        $2,698         $1,441
  Addition resulting from acquisition. .                               1,105
  Provision for losses . . . . . . . . .  1,089         1,084            277
  Recoveries on loans. . . . . . . . . .     66           187            302
  Loans charged off. . . . . . . . . . .   (652)       (1,072)          (427)
                                         -----------------------------------
  Balances, December 31. . . . . . . . . $3,400        $2,897         $2,698
                                         -----------------------------------
                                         -----------------------------------

Information on impaired loans is summarized below.

DECEMBER 31                                           1996           1995
----------------------------------------------------------------------------
<S>                                                  <C>            <C>
Impaired loans with an allowance . . . . . . . . . . $1,047         $  930
Impaired loans for which the discounted cash flows
  or collateral value exceeds the carrying value of
  the loan . . . . . . . . . . . . . . . . . . . . .    190            261
                                                     -----------------------
     Total impaired loans. . . . . . . . . . . . . . $1,237         $1,191
                                                     -----------------------
                                                     -----------------------
Allowance for impaired loans (included in the
  Company's allowance for loan losses) . . . . . . . $  459         $  202
                                                     -----------------------
                                                     -----------------------

YEAR ENDED DECEMBER 31                                1996           1995
----------------------------------------------------------------------------
Average balance of impaired loans. . . . . . . . . . $1,152         $1,370
Interest income recognized on impaired loans . . . .     56             16
Cash-basis interest included above . . . . . . . . .     56             16

</TABLE>


                                    (10)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)


The Company's banking subsidiaries have entered into transactions with certain
directors, executive officers, significant stockholders and their affiliates or
associates (related parties).  Such transactions were made in the ordinary
course of business on substantially the same terms and conditions, including
interest rates and collateral, as those prevailing at the same time for
comparable transactions with other customers, and did not, in the opinion of
management, involve more than normal credit risk or present other unfavorable
features.

The aggregate amount of loans, as defined, to such related parties were as
follows:


Balance, December 31, 1995                                       $13,248

Changes in composition of related parties                            155
New loans, including renewals                                      6,970
Payments, etc., including renewals                                (5,687)
                                                                 -------
Balance, December 31, 1996                                       $14,686
                                                                 -------
                                                                 -------

- PREMISES AND EQUIPMENT

DECEMBER 31                                              1996     1995
------------------------------------------------------------------------
Land                                                   $2,342    $2,275
Buildings                                               7,516     7,451
Leasehold improvements                                    246       254
Equipment                                               8,897     8,639
                                                       ----------------
     Total cost                                        19,001    18,619
Accumulated depreciation                               (9,656)   (9,042)
                                                       ----------------
     Net                                               $9,345    $9,577
                                                       ----------------
                                                       ----------------

- DEPOSITS

DECEMBER 31                                              1996     1995
------------------------------------------------------------------------
Demand deposits                                      $163,181  $167,018
Savings deposits                                       26,727    28,627
Certificates and other time deposits of $100,000
  or more                                              57,674    55,193
Other certificates and time deposits                  158,263   164,513
                                                     ------------------
     Total deposits                                  $405,845  $415,351
                                                     ------------------
                                                     ------------------


                                       (11)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)


Certificates and other time deposits maturing in years ending after December 31,
1996:

     1997                                               $171,677
     1998                                                 30,230
     1999                                                  8,089
     2000                                                  4,618
     2001                                                  1,218
     Thereafter                                              105
                                                        --------
                                                        $215,937
                                                        --------
                                                        --------

- SHORT-TERM BORROWINGS

DECEMBER 31                                          1996        1995
------------------------------------------------------------------------
Federal funds purchased                             $ 6,600
Securities sold under repurchase agreements           7,203     $4,594
U. S. Treasury demand notes                           3,873      3,155
                                                    ------------------
Total short-term borrowings                         $17,676     $7,749
                                                    ------------------
                                                    ------------------

Securities sold under agreements to repurchase consist of obligations of the
Company to other parties.  The obligations are secured by U. S. Treasury
securities and such collateral is held in safekeeping by financial institutions.
The maximum amount of outstanding agreements at any month-end during 1996 and
1995 totaled $7,203,000 and $8,502,000 and the monthly average of such
agreements totaled $4,761,000 and $5,611,000.  The agreements at December 31,
1996, mature within five months.


- FEDERAL HOME LOAN BANK ADVANCES

Federal Home Loan Bank advances were $14,000,000 and $2,395,000 at December 31,
1996 and 1995.  Maturities by year for advances at December 31, 1996 are
$12,000,000 in 1997; $1,000,000 in 1998; and $1,000,000 in 2000.  The weighted
average interest rate at December 31, 1996 and 1995 was 5.61% and 6.77%.

These advances are secured by first mortgage loans and investment securities
totaling $146,175,000 and $136,716,000 at December 31, 1996 and 1995.  Advances
are subject to restrictions or penalties in the event of prepayment.

- LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheet.  The unpaid principal balances of mortgage loans
serviced for others totaled $56,350,000 and $54,329,000 at December 31, 1996 and
1995.


                                       (12)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

In 1996, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS.  This Statement requires the
capitalization of retained mortgage servicing rights on originated or purchased
loans.  The amount of servicing rights capitalized in 1996 was not material.

- INCOME TAX

YEAR ENDED DECEMBER 31                             1996       1995      1994
-------------------------------------------------------------------------------
Income tax expense
  Currently payable
    Federal                                        $2,361    $2,071    $1,471
    State                                             814       725       633
  Deferred
    Federal                                          (317)     (259)      (61)
    State                                             (64)      (15)      (12)
                                                   --------------------------
        Total income tax expense                   $2,794    $2,522    $2,031
                                                   --------------------------
                                                   --------------------------
Reconciliation of federal statutory to actual
 tax expense
  Federal statutory income tax at 34%              $2,992    $2,654    $2,312
  Tax exempt interest                                (834)     (797)     (812)
  Effect of state income taxes                        495       468       410
  Nondeductible goodwill amortization                 121       122       115
  Other                                                20        75         6
                                                   --------------------------
        Actual tax expense                         $2,794    $2,522    $2,031
                                                   --------------------------
                                                   --------------------------

A cumulative net deferred tax liability is included in other liabilities.  The
components of the liability are as follows:


DECEMBER 31                                                   1996     1995
-----------------------------------------------------------------------------
Differences in depreciation methods                         $   543  $   569
Accretion of investment discounts                                33       25
Differences in accounting for loan fees                         (22)     (99)
Differences in accounting for loan losses                      (449)    (152)
State income tax                                                114       96
Differences in accounting for retirement plans and other
  employee benefits                                            (491)    (378)
Deferral of directors' fees                                    (218)    (220)
Differences in accounting for stock option compensation        (168)    (169)
Deferral of Federal Home Loan Bank dividends                    110      110
Differences in accounting for securities available for sale     785    1,252
Other                                                           (25)      27
                                                             ---------------
                                                               $212   $1,061
                                                             ---------------
                                                             ---------------
Liabilities                                                  $1,585   $2,079
Assets                                                       (1,373)  (1,018)
                                                             ---------------
                                                             $  212   $1,061
                                                             ---------------
                                                             ---------------

No valuation allowance was necessary at any time during 1996, 1995 or 1994.


                                      (13)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)


- COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business there are outstanding commitments and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements.  The
banking subsidiaries' exposure to credit loss in the event of nonperformance by
the other party to the financial instruments for commitments to extend credit
and standby letters of credit is represented by the contractual or notional
amount of those instruments.  The banking subsidiaries use the same credit
policies in making such commitments as they do for instruments that are included
in the consolidated balance sheet.

Financial instruments whose contract amount represents credit risk as of
December 31 were as follows:

                                                         1996      1995
---------------------------------------------------------------------------
Commitments to extend credit                            $57,944   $53,132
Standby letters of credit                                 1,032       387

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee.  Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.  The banking subsidiaries evaluate each
customer's credit worthiness on a case-by-case basis.  The amount of collateral
obtained, if deemed necessary by the banking subsidiaries upon extension of
credit, is based on management's credit evaluation.  Collateral held varies but
may include accounts receivable, inventory, property and equipment, and
income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the banking
subsidiaries to guarantee the performance of a customer to a third party.

The Company has entered into agreements with seven officers which provide for
salary continuation for a three-year period under certain circumstances
following a change of control of the Company, as defined.  Under the terms of
the agreements, these payments could occur if, during a two-year period
following a change of control, such officers are terminated other than for cause
or unreasonable changes are made in their employment relationships.

The Company and its subsidiaries are also subject to claims and lawsuits which
arise primarily in the ordinary course of business.  It is the opinion of
management that the disposition or ultimate resolution of such claims and
lawsuits will not have a material adverse effect on the consolidated financial
position of the Company.


                                      (14)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

- RESTRICTION ON BANK DIVIDENDS

Without prior approval of the Comptroller of the Currency, American National is
restricted by national banking laws as to the maximum amount of dividends it can
pay in any calendar year to its retained net profits (as defined) for that year
plus the two preceding years.  In addition, American National assumed the Muncie
Federal Savings Bank (merged into American National in 1993) liquidation account
for the benefit of eligible account holders established in connection with its
merger-conversion, which was $6,277,000 at October 1, 1990.  As a result of
these restrictions, net assets of American National not available for payment of
dividends to the Company were approximately $24,224,000 as of December 31, 1996.
Total net assets of American National at such date were $27,823,000.  American
National received approval for payment of dividends to the Company needed to
acquire Winchester in 1994.

Without prior approval, current regulations allow Peoples to pay dividends to
the Company not exceeding net profits (as defined) for the current year plus
those for the previous two years.  As a result of this restriction, net assets
of Peoples not available for payment of dividends to the Company were
approximately $14,625,000 as of December 31, 1996.  Total net assets of Peoples
at such date were $16,025,000.

As a practical matter, banking subsidiary dividends are restricted to a lesser
amount because of the need to maintain adequate capital structures.

- STOCK TRANSACTIONS

In April, 1995, the stockholders approved an increase in the number of
authorized shares of common stock from 5,000,000 to 20,000,000 shares.

In April, 1995, the Company adopted a resolution to repurchase up to 200,000
shares of Company common stock.  During 1996 and 1995, shares totaling 93,000
and 69,302 were repurchased under this program, which was terminated effective
in November, 1996.

In November, 1995, the Company declared a two-for-one common stock split,
distributed 2,261,963 shares ($1 stated value) to stockholders on December 29,
1995, and transferred $2,261,963 from paid-in-capital to common stock.
Accordingly, all references to stock option plans, dividend reinvestment plan,
and stock repurchase program data in the notes to consolidated financial
statements, weighted average shares outstanding and per share amounts have been
restated to give retroactive effect to the two-for-one split.


                                       (15)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

Pursuant to the stock option plans, the Company redeemed 10,488, 7,397 and 924
shares of its common stock and issued 39,950, 24,426 and 6,724 shares of common
stock in 1996, 1995 and 1994, respectively.  Tax benefits of $109,500, $66,100
and $10,700 related to the exercise of stock options were credited to paid-in
capital in 1996, 1995 and 1994.

The Company approved a Dividend Reinvestment and Stock Purchase Plan in 1994
enabling stockholders to elect to have their cash dividends on all shares held
automatically reinvested in additional shares of the Company's common stock.  In
addition, stockholders may elect to make optional cash payments up to an
aggregate of $5,000 per quarter for the purchase of additional shares of common
stock.  The stock is credited to participant accounts at fair market value.
Dividends are reinvested on a quarterly basis on the applicable dividend payment
date that began with the October, 1994 dividend payment.  The plan made 200,000
shares available for purchase.  At December 31, 1996, 143,987 shares of common
stock remained available for purchase under the plan.

- REGULATORY CAPITAL

The Company and banking subsidiaries are subject to various regulatory capital
requirements administered by the federal banking agencies.  Failure to meet
minimum capital requirements can initiate actions by the regulatory agencies
that, if undertaken, could have a material effect on the Company's financial
statements.  Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and banking subsidiaries must meet
specific capital guidelines that involve quantitative measures of the Company's
and banking subsidiaries' assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices.  The Company's and
banking subsidiaries' capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors.

At December 31, 1996, the management of the Company believes that it meets all
capital adequacy requirements to which it is subject.  The most recent
notification from the regulatory agency categorized the Company and banking
subsidiaries as well capitalized under the regulatory framework for prompt
corrective action.  To be categorized as well capitalized, the Company and
banking subsidiaries must maintain a minimum total risk-based capital, core
capital to adjusted tangible assets and core capital to adjusted total assets of
10.0%, 6.0% and 5.0%, respectively.  There have been no conditions or events
since that notification that management believes have changed this
categorization.


                                       (16)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

The actual and required capital amounts and ratios of the Company, American
National and Peoples are as follows:

                                                         1996
                                             ------------------------------
                                                             REQUIRED FOR
                                              ACTUAL   ADEQUATE CAPITAL 1
                                             ------------------------------
DECEMBER 31                                  AMOUNT   RATIO   AMOUNT  RATIO
---------------------------------------------------------------------------
Total capital 1 (to risk-weighted assets)
  Consolidated                               $49,237   14.4%  $27,418   8.0%
  American National                           28,926   12.5    18,544   8.0
  Peoples                                     13,275   12.4     8,598   8.0

Tier I capital 1 (to risk-weighted assets)
  Consolidated                                45,837   13.4    13,709   4.0
  American National                           26,742   11.5     9,272   4.0
  Peoples                                     12,059   11.2     4,299   4.0

Tier I capital 1 (to average assets)
Consolidated                                  45,837    9.5    19,245   4.0
American National                             26,742    8.1    13,233   4.0
Peoples                                       12,059    8.4     5,726   4.0

1 As defined by regulatory agencies


- EMPLOYEE BENEFIT PLANS

The Company's defined-benefit pension plan covers substantially all of its
employees.  The benefits are based primarily on years of service and employees'
pay near retirement.  Contributions are intended to provide not only for
benefits attributed to service to date, but also for those expected to be earned
in the future.  Pension expense was $231,000 for 1996, $161,000 for 1995 and
$170,000 for 1994.


                                       (17)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)



The following table sets forth the plan's funded status and amounts recognized
in the consolidated balance sheet:

<TABLE>
<CAPTION>

DECEMBER 31                                                                   1996           1995
---------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>
Actuarial present value of
  Accumulated benefit obligation including vested benefits
    of $5,715 and $6,079                                                   $  6,012       $  6,381
                                                                          -------------------------
  Projected benefit obligation for service rendered to date                $ (7,296)      $ (7,703)
Plan assets at fair value, primarily fixed income obligations, equity
  securities, and collective investment and mutual funds                      8,056          7,178
                                                                          -------------------------
Plan assets in excess of (less than) projected benefit obligation               760           (525)
Unrecognized net loss from experience different than that assumed               186          1,602
Unrecognized prior service cost being recognized over 16 years                 (441)          (475)
Unrecognized net asset at January 1, 1987 being recognized over 17 years       (499)          (569)
                                                                          -------------------------
Prepaid pension cost included in other assets                              $      6       $     33
                                                                          -------------------------
                                                                          -------------------------
Plan assets at fair value related to the Company
  Company common stock                                                     $    760       $    751
  Collective investment funds managed by ANTIM                                1,033          1,417


<CAPTION>

DECEMBER 31                                                    1996           1995           1994
---------------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>            <C>
Pension expense includes the following components
  Service cost--benefits earned during the year             $    454       $    346       $    369
  Interest cost on projected benefit obligation                  496            517            506
  Actual return on plan assets                                  (976)          (833)            77
  Net amortization and deferral                                  257            131           (782)
                                                           ----------------------------------------

                                                            $    231       $    161       $    170
                                                           ----------------------------------------
                                                           ----------------------------------------

Assumptions used in the accounting as of December 31 were
  Discount rate                                                 7.50%          7.00%          7.25%
  Rate of increase in compensation                              4.50%          4.50%          4.50%
  Expected long-term rate of return on assets                   9.00%          9.00%          9.00%

</TABLE>


                                     (18)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

The Company has a retirement savings 401(k) plan in which substantially all
employees may participate.  The Company matches employees' contributions at
the rate of 50 percent for the first 4 percent of base salary contributed by
participants.  The Company also has a stock investment plan under which
employees may, at their option, purchase stock of the Company.  The Company
contributes 20 percent of employees' contributions.  The expense for these
plans was $157,600 for 1996, $140,600 for 1995 and $129,000 for 1994.

The Company maintains a director retirement policy previously established by
Muncie Federal which provides for benefits subsequent to retirement date.
The amount of accrued benefits under the policy is included in other
liabilities.

-  STOCK OPTION PLANS

Under terms of the ANB Corporation Stock Option Plan ("1990 Plan") for key
employees, 300,000 shares of Company common stock shall be available for
grant, and the option price upon exercise shall not be less than 75% of fair
market value of such stock at date of grant.  Options granted shall be
exercisable in four annual installments, on a cumulative basis, beginning one
year after date of grant, or upon a change in control of the Company as
defined in the 1990 Plan, a purchase of Company stock pursuant to a tender
offer or exchange offer, or a merger or sale of assets in which the Company
does not survive as an independent entity.  The period for exercising options
shall not exceed ten years, and no options may be granted after December,
1999.  The 1990 Plan may be later amended or terminated with no options
granted thereafter pursuant to terms set forth in the 1990 Plan.  Any excess
of fair market value over the option price for the 1990 Plan options at date
of grant is recorded as prepaid compensation expense and is allocated to
paid-in capital.  The Company recorded amortization of prepaid compensation
expense of $56,000 for 1996, $84,000 for 1995, and $109,000 for 1994 as a
charge to income.  There were 8,050 shares available for grant under the 1990
Plan as of December 31, 1996.

The Nonqualified Stock Option Plan of ANB Corporation for Former Directors of
Muncie Federal Savings and Loan Association ("1991 Plan") made 28,000 shares
of Company common stock available for grant at an option price upon exercise
of $7.25 per share.  Options granted shall be exercisable within five years
from date of grant.  Notwithstanding the five-year period, exercise rights
terminate thirty days after status as a director terminates other than for
retirement after age 70, death or disability.

The Company also adopted the ANB Corporation 1995 Stock Option Plan ("1995
Plan") for key employees.  Under terms of the 1995 Plan, 300,000 shares of
Company common stock shall be available for granting both incentive ("ISO's")
and non-qualified stock options.  The option price to be paid upon exercise
shall be not less than fair market value at date of grant.  For an individual
who receives a grant and is also the owner of more than 10% of the total of
the Company's common stock (stockholder-employee), the option price shall be
not less than 110% of such value.  The period for exercising options shall
not exceed ten years from the date of grant.  The option period for any ISO
granted to a stockholder-employee may not exceed five years.  No option may
be granted after December 31, 2004.  The options shall be exercisable in four
annual installments, on a cumulative basis, beginning one year after date of
grant, after reaching age 65, upon circumstances or earlier times determined
by the Compensation Committee or upon a change in control as defined in the
1995 Plan. The 1995 Plan may be amended or terminated with no options granted
thereafter pursuant to its terms.  There were 212,000 shares available for
grant under the 1995 Plan as of December 31, 1996.


                                     (19)
<PAGE>


                                     (20)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

In April, 1996, the Company's stockholders approved the ANB Corporation 1996
Directors' Stock Option Plan ("Directors' Plan") for non-employee members of
the Board of Directors.  Under terms of the Directors' Plan, 96,000 shares of
the Company stock shall be available for granting non-qualified stock
options.  The option price to be paid upon exercise shall be not less than
fair market value at date of grant.  The period for exercising options shall
not exceed ten years from the date of grant.  Options granted shall be
exercisable in four annual installments, on a cumulative basis, beginning one
year after date of grant. Exercise rights terminate thirty days after status
as a director terminates other than for retirement after age 70, death or
disability.  The Directors' Plan may be amended or terminated with no options
granted thereafter pursuant to terms set forth in the Directors' Plan.  There
were 72,000 options available for grant under the Directors' Plan as of
December 31, 1996.

The following is a summary of the status of the Company's stock option plans
and changes in those plans as of and for the years ended December 31, 1996,
1995, and 1994.

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                          1996                    1995                    1994
-------------------------------------------------------------------------------------------------------------
                                                    WEIGHTED-               WEIGHTED-               WEIGHTED-
                                                     AVERAGE                 AVERAGE                 AVERAGE
                                                    EXERCISE                EXERCISE                EXERCISE
               OPTIONS                   SHARES       PRICE      SHARES       PRICE    SHARES         PRICE
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>         <C>         <C>         <C>         <C>
Outstanding at beginning of year         305,150    $   8.97     289,876    $   7.78     244,600    $   6.80
Granted                                   70,000       19.14      42,000       15.44      52,000       12.38
Exercised                                (39,950)       6.75     (24,426)       5.91      (6,724)       7.33
Cancelled                                 (5,750)      10.52      (2,300)      10.07
                                       ----------              ----------              ----------
Outstanding at end of year               329,450       11.37     305,150        8.97     289,876        7.78
                                       ----------              ----------              ----------
                                       ----------              ----------              ----------
Options exercisable at year end          189,700                 178,675                 146,576

Weighted-average fair value of options
  granted during the year                  $3.38                   $1.89

</TABLE>

As of December 31, 1996, other information in exercise price ranges for options
outstanding and exercisable is as follows:

<TABLE>
<CAPTION>

                                              OUTSTANDING                        EXERCISABLE
                               -------------------------------------------------------------------------
                                               WEIGHTED-        WEIGHTED-                     WEIGHTED-
                                                AVERAGE          AVERAGE                       AVERAGE
                                 NUMBER        REMAINING        EXERCISE         NUMBER       EXERCISE
   RANGE OF EXERCISE PRICES    OF SHARES    CONTRACTUAL LIFE      PRICE        OF SHARES        PRICE
--------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>                 <C>            <C>            <C>
$5.44 -  6.56                    117,450        4.3 Years        $  6.07         117,450        $  6.07
 8.80 - 12.38                    100,000        6.8                10.45          61,750          10.10
15.44 - 20.38                    112,000        9.5                17.75          10,500          15.44
                               ----------                                      ----------

       Total                     329,450        6.8                11.37         189,700        $  7.90
                               ----------                                      ----------
                               ----------                                      ----------

</TABLE>


                                     (21)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

Although the Company has elected to follow Accounting Principles Board
Opinion No. 25, SFAS No. 123 requires pro forma disclosures of net income and
earnings per share as if the Company had accounted for its employee stock
options under that Statement.  The fair value of each option grant was
estimated on the grant date using an option-pricing model with the following
assumptions:

                                                                1996       1995
                                                            --------------------
Risk-free interest rates                                    6.2% AND 6.5   5.4%
Dividend yields                                                  3.0       3.3
Expected volatility factors of market price of common stock     11.0       8.0
Weighted-average expected life of the options                 6 YEARS    6 years

Under SFAS No. 123, compensation cost is recognized in the amount of the
estimated fair value of the options and amortized to expense over the
options' vesting period.  The pro forma effect on net income and earnings per
share of this Statement are as follows:

                                                              1996      1995
                                                           ------------------
Net income                              As reported          $6,006    $5,285
                                        Pro forma             5,983     5,284
Earnings per share                      As reported            1.33      1.16
                                        Pro forma              1.33      1.16

During the initial phase-in period of SFAS No. 123, the effects of applying
this Statement are not likely to be representative of the effects on reported
net income for future years because options vest over several years and
additional awards generally are made each year.

-  FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:

CASH AND CASH EQUIVALENTS--The fair value of cash and cash equivalents
approximates carrying value.

INVESTMENT SECURITIES--Fair values are based on quoted market prices.

LOANS--For both short-term loans and variable-rate loans that reprice
frequently and with no significant change in credit risk, fair values are
based on carrying values.  The fair value for other loans are estimated using
discounted cash flow analyses and using interest rates currently being
offered for loans with similar terms to borrowers of similar credit quality.

INTEREST RECEIVABLE/PAYABLE--The fair values of accrued interest
receivable/payable approximate carrying values.


                                      (22)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

FRB AND FHLB STOCK--Fair value of FRB and FHLB stock is based on the price at
which it may be resold to the FRB and FHLB.

DEPOSITS--The fair values of noninterest-bearing, interest-bearing demand and
savings accounts are equal to the amount payable on demand at the balance
sheet date.  The carrying amounts for variable rate, fixed-term certificates
of deposit approximate their fair values at the balance sheet date.  Fair
values for fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently being
offered on certificates to a schedule of aggregated expected monthly
maturities on such time deposits.

FEDERAL HOME LOAN BANK ADVANCES--The fair value of these borrowings are
estimated using a discounted cash flow calculation, based on current Federal
Home Loan Bank advance rates for periods comparable to the remaining terms to
maturity of these advances.

SHORT-TERM BORROWINGS--The interest rates on short-term borrowings
approximate market rates, and thus the fair values approximate carrying
values.

DUE TO BROKER--Fair values approximate carrying values.

The estimated fair values of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>

                                                        1996               1995
                                                ---------------------------------------
                                                CARRYING     FAIR   Carrying     Fair
DECEMBER 31                                      AMOUNT     VALUE    Amount      Value
---------------------------------------------------------------------------------------
<S>                                               <C>       <C>       <C>       <C>
ASSETS
  Cash and cash equivalents                       $ 24,384  $ 24,384  $ 43,536  $ 43,536
  Investment securities available for sale          73,944    73,944    70,514    70,514
  Loans including loans held for sale, net         372,885   374,766   346,145   349,187
  Interest receivable                                4,159     4,159     4,081     4,081
  Stock in FRB and FHLB                              2,713     2,713     2,661     2,661
LIABILITIES
  Deposits                                         405,845   406,815   415,351   416,768
  Borrowings
  Short-term borrowings                             17,676    17,676    7,749     7,749
  FHLB advances                                     14,000    14,006    2,395     2,440
  Interest payable                                   1,391     1,391    1,626     1,626
  Due to broker                                                         1,999     1,999
</TABLE>


                                     (23)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)


-  CONDENSED FINANCIAL INFORMATION (Parent Company Only)

Presented below is condensed financial information as to financial position,
results of operations and cash flows of the Company:

                         CONDENSED BALANCE SHEET

DECEMBER 31                                       1996       1995
------------------------------------------------------------------
ASSETS
  Cash on deposit                               $   663   $   974
  Investment securities available for sale           14
  Investment in subsidiaries                     50,323    48,279
  Core deposit intangibles and goodwill             107       144
  Other assets                                      398       408
                                                -------   -------
    Total assets                                $51,505   $49,805
                                                -------   -------
                                                -------   -------
LIABILITIES                                     $   164   $   334
STOCKHOLDERS' EQUITY                             51,341    49,471
                                                -------   -------
    Total liabilities and stockholders' equity  $51,505   $49,805
                                                -------   -------
                                                -------   -------


                                     (24)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

<TABLE>
<CAPTION>

                                        CONDENSED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31                                            1996     1995       1994
--------------------------------------------------------------------------------------------
<S>                                                             <C>       <C>       <C>
INCOME
  Dividends from subsidiaries                                   $10,261   $3,697    $13,988
  Other income                                                      120      107        120
                                                                ----------------------------
    Total income                                                 10,381    3,804     14,108
                                                                ----------------------------
EXPENSES
  Amortization of core deposit intangibles, goodwill and
    fair value adjustments                                           43       48         52
  Salaries and employee benefits                                    626      693        581
  Compensation expense for stock options                             56       84        109
  Other expenses                                                    272      296        215
                                                                ----------------------------
      Total expenses                                                997    1,121        957
                                                                ----------------------------

Income before income tax and equity in undistributed
  income of subsidiaries                                          9,384    2,683     13,151
  Income tax benefit                                                292      378        313
                                                                ----------------------------

Income before equity in undistributed
  income of subsidiaries                                          9,676    3,061     13,464

Equity in undistributed (distribution in excess of) income
  of subsidiaries                                                (3,670)   2,224     (8,694)
                                                                ----------------------------
NET INCOME                                                      $ 6,006   $5,285    $ 4,770
                                                                ----------------------------
                                                                ----------------------------

</TABLE>


                                     (25)
<PAGE>

ANB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)

<TABLE>
<CAPTION>

                            CONDENSED STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31                                  1996       1995     1994
----------------------------------------------------------------------------------
<S>                                                    <C>       <C>       <C>
OPERATING ACTIVITIES
  Net income                                           $6,006    $ 5,285   $4,770
  Adjustments to reconcile net income to net cash
    provided by operating activities
  Equity in undistributed income of subsidiaries        3,670     (2,224)   8,694
  Noncash dividend                                     (6,426)
  Other adjustments                                       (68)       222      317
                                                      ----------------------------
    Net cash provided by operating activities           3,182      3,283   13,781
                                                      ----------------------------

INVESTING ACTIVITIES
  Acquisition of Winchester, net of cash acquired                         (11,041)
  Purchases of securities available for sale              (14)
                                                      --------           ---------
    Net cash used by investing activities                 (14)            (11,041)
                                                      --------           ---------

FINANCING ACTIVITIES
  Cash dividends                                       (2,472)    (2,090)  (1,866)
  Repayment of long-term debt                                                (996)
  Stock repurchases                                    (1,631)    (1,017)
  Stock sold
    Exercise of stock options                             199        101       38
    Dividend reinvestment and stock purchase plan         425        308      124
                                                      ----------------------------
      Net cash used by financing activities            (3,479)    (2,698)  (2,700)
                                                      ----------------------------
NET CHANGE IN CASH ON DEPOSIT                            (311)       585       40
CASH ON DEPOSIT AT BEGINNING OF YEAR                      974        389      349
                                                      ----------------------------
CASH ON DEPOSIT AT END OF YEAR                        $   663    $   974  $   389
                                                      ----------------------------
                                                      ----------------------------
</TABLE>


                                     (26)
<PAGE>

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

The following discussion and analysis is intended to cover the significant
factors affecting the Company's consolidated financial statements from
January 1, 1994, to December 31, 1996. It is designed to provide a more
comprehensive review of the operating results and financial position than
could be obtained from an analysis of the financial statements alone. It
should, however, be read in conjunction with the financial statements and
notes included elsewhere herein. The consolidated financial statements, and
the following discussion and analysis, include the results of operations of
Peoples Loan & Trust Bank ("Peoples") from its acquisition date of January
21, 1994.

ANALYSIS OF RESULTS OF OPERATIONS

NET INCOME. 1996 was the most profitable year in the history of the Company.
Net income for 1996 climbed to $6.006 million, an increase of $721 thousand,
or 13.6%, over the previous high of $5.285 million which was reported in
1995. Net income results for 1995 were higher by 10.8%, or $515 thousand,
when compared to the $4.770 million net income recorded in 1994.

Net income per common share for 1996, 1995 and 1994 was $1.33, $1.16 and
$1.05 respectively. Net income per common share increased 14.7% for 1996 over
1995, following an increase of 10.5% in 1995 when compared to 1994.

A significant contributor in 1996 to the Company's strong earnings trend was
the continued quality growth in the loan portfolio, and the resulting
increase in both net interest margin and net interest income. Also having a
positive impact on 1996 results was a 10% increase in fees generated by the
Company's fiduciary activities, and the continued improvement in the
operating efficiency ratio of the Company. Effective in December 1995, the
Company merged The Saratoga State Bank ("Saratoga") into the Peoples
operation, making Saratoga a branch of Peoples. As intended, the merger
improved operational efficiencies and, in addition, reduced operating
expenses.

For 1995, the substantial increase in net interest income was partially
offset by the Company's strengthening of the allowance for loan losses to
sustain potential consequences of a national, or local economic downturn.

The following table presents certain key performance ratios for the last
three years:

                                                1996         1995         1994

Return on average assets                         1.27%        1.17%        1.15%
Return on average equity                        12.29%       11.37%       11.01%
Efficiency ratio*                               58.96%       62.16%       66.40%
Average earning assets to average assets        93.26%       93.08%       92.23%
Net interest spread                              4.41%        4.39%        4.36%
Net interest margin (fully taxable equivalent)   5.07%        5.02%        4.87%

    *Excludes one-time special SAIF assessment of $589 thousand in 1996.


<PAGE>

Other factors impacting the net income of the Company are discussed below.

NET INTEREST INCOME. In an effort to promote sustainable economic growth, the
Federal Open Market Committee ("FOMC") of the Federal Reserve eased its
stance of policy, bringing down the federal funds rate a half percentage
point to 5.25%, with a 25 basis point reduction in December 1995 and another
in late January 1996. Interest rates were left alone by the FOMC for the
balance of 1996, as measurements of the state of the economy apparently
remained within ranges acceptable to the FOMC. The ensuing relatively stable
interest rate environment of 1996, coupled with steady economic growth,
provided new business opportunities that allowed the Company to grow the
balance sheet and generate net interest income that again eclipsed the total
of the prior year.

An increase or decrease in net interest income, the Company's primary source
of revenue, is the combined result of volume and rate changes for both
earning assets and interest-bearing liabilities. Loan volume was the key
factor in 1996 in producing another record net interest income total, as the
Company funded new loans with a combination of earnings, liquidity and
borrowings from the Federal Home Loan Bank. The Company experienced moderate
growth in net average earning assets (average earning assets net of average
interest-bearing liabilities) and an improved net interest spread (average
yield on earning assets net of average cost of interest-bearing liabilities)
compared to the prior year totals.

Net interest income on a tax-equivalent basis for 1996 of $22.347 million
exceeded the 1995 total of $21.069 million by $1.278 million, or 6.1%. The
1995 total represented a $2.398 million, or 12.8%, increase over 1994 net
interest income on a tax-equivalent basis of $18.671 million. The enhanced
results for both years were primarily a function of significant growth in net
average earning assets coupled with improvement in the net interest spread.

Total interest income on a tax-equivalent basis of $38.743 million for 1996
was $2.027 million, or 5.5%, higher than the $36.716 million earned in 1995.
The increase was due primarily to a $20.828 million, or 5.0%, growth in
average earning assets from $419.913 million to $440.741 million. The 1996
yield on average earning assets of 8.79% was four basis points higher than
the prior year. In 1995, total interest income on a tax-equivalent basis rose
21.0% to $36.716 million from the $30.356 million recorded in 1994. The
significant increase for 1995 was accomplished through a $35.980 million, or
9.4%, growth in average earning assets combined with an 84 basis points
improvement in yield to 8.75%.

Although total interest-bearing deposits at year end 1996 were down slightly
from the prior period end, average interest-bearing deposits for 1996 of
$357.861 million represented a $9.532 million, or 2.7%, increase over the
$348.329 million total for 1995. A heavier reliance on borrowings in 1996 to
fund loans resulted in the total of average borrowed money increasing by
$6.339 million, or 62.3%, to $16.510 million for 1996, compared to $10.171
million for 1995. Due primarily to these volume increases, interest expense
for 1996 of $16.396 million was $749 thousand, or 4.8%, above the 1995 total
of $15.647 million. Market conditions in 1996 allowed the Company to hold the
average cost of funds to 4.38%, a modest increase of two basis points over
the 1995 average cost of 4.36%.

In 1995, the Company experienced a $27.653 million, or 8.6%, gain over the
prior year in average interest-bearing deposits. This growth was principally
responsible for average total interest-bearing liabilities increasing $29.412
million, or 8.9%, to $358.500 million. A shift of balances to certificate of
deposit accounts and higher average rollover rates for existing certificates
of deposit were the key factors leading to an 81 basis points increase in the
average cost of total interest-bearing liabilities. The volume increase,
together with higher average rates, drove total interest expense up $3.962
million, or 33.9%, from $11.685 million.

Net average earning assets were increased to $66.370 million in 1996, from
$61.413 million in 1995 and $54.845 million in 1994, or annual increases of 8.1%
and 12.0% for 1996 and 1995, respectively. This solid growth in 1996 and 1995
was achieved primarily through the utilization of funds available from


<PAGE>

undistributed earnings and from an increase in average total balances in
noninterest-bearing demand deposits.

In 1996, the Company continued to improve net interest spread, achieving a
two basis point increase to 4.41% compared to 4.39% and 4.36% recorded for
1995 and 1994, respectively.

The following table presents net interest income components on a
tax-equivalent basis and reflects changes between periods attributable to
movement in either the average balance or average interest rate for both
earnings assets and interest-bearing liabilities. The volume differences were
computed as the difference in volume between the current and prior year
multiplied times the prior year's interest rate, while the interest rate
changes were computed as the difference in rate between the current and prior
year multiplied times the volume of the prior year. Volume/rate variances
have been allocated on the basis of the absolute relationship between volume
variances and rate variances.

ANALYSIS OF CHANGES IN NET INTEREST INCOME

<TABLE>
<CAPTION>

                                               1996 over 1995                  1995 over 1994
                                        --------------------------       ---------------------------
                                        Volume      Rate     Total       Volume      Rate      Total
                                        --------------------------       ---------------------------
                                              (In Thousands on Fully Taxable Equivalent Basis)
<S>                                      <C>       <C>       <C>         <C>        <C>        <C>
Interest income:
 Federal funds sold ................     ($279)    ($41)     ($320)        $16       $207       $223
 Interest-bearing deposits .........        (7)      (2)        (9)        (80)        24        (56)
 Investment securities .............       335       12        347         (94)       427        333
 Loans .............................     1,969       40      2,009       3,317      2,543      5,860
                                        ------------------------------------------------------------
  Totals ...........................     2,018        9      2,027       3,159      3,201      6,360
                                        ------------------------------------------------------------

Interst expense:
 NOW accounts ......................       105       42        147          28         22         50
 Money market investment accounts ..      (119)      30        (89)       (264)       132       (132)
 Savings deposits ..................       (28)     (16)       (44)        (62)        (7)       (69)
 Certificates of deposit ...........       556     (137)       419       1,858      2,018      3,876
 Short-term borrowings .............        41      (39)         2          21        136        157
 Federal Home Loan Bank advances ...       335      (21)       314          91        (11)        80
                                        ------------------------------------------------------------
  Totals ...........................       890     (141)       749       1,672      2,290      3,962
                                        ------------------------------------------------------------

Change in net interest income
 (fully taxable equivalent basis) ..    $1,128     $150      1,278      $1,487       $911      2,398
                                        ---------------                 -----------------
                                        ---------------                 -----------------
Tax equivalent adjustment ..........                           (74)                               15
                                                             -----                             -----
Change in net interest income ......                        $1,204                            $2,413
                                                             -----                             -----
                                                             -----                             -----
</TABLE>

PROVISION FOR LOAN LOSSES. During 1996, 1995 and 1994, the Company provided
$1.089 million, $1.084 million and $277 thousand, respectively, to replenish
the allowance for loan losses for charge-offs recorded, and to maintain an
adequate balance for potential losses that may exist in the portfolio, but
are not specifically known.

The allowance for loan losses at year end 1996, 1995 and 1994 was $3.400
million, $2.897 million and $2.698 million, respectively. Total loan balances
at the end of these periods were $376.081 million, $348.913 million and
$328.803 million, respectively, and the ratio of the allowance for loan
losses to total loan balances was 0.90%, 0.83% and 0.82%, respectively.

The allowance for loan losses included $459 thousand at December 31, 1996,
and $202 thousand at December 31, 1995, for loans considered by the Company
to be impaired. Impaired loans totaled $1.237 million and $1.191 million at
December 31, 1996 and 1995, respectively.

The Company's dollar amount of outstanding loans made to individuals to
purchase owner occupied residential property represented 38.5% of the total
loan portfolio at December 31, 1996. Historically, net charge-offs in this
category of the mortgage loan portfolio have been minimal.

Net charge-offs in 1996 were $586 thousand, compared to $885 thousand in 1995
and $125 thousand in 1994. The ratio of net charge-offs to average
outstanding loans for 1996, 1995 and 1994 was 0.16%, 0.26% and 0.04%,
respectively, which compares favorably to the Company's peer group.

Based on management's analysis of the composition of the loan portfolio and
current economic conditions, management considers the current allowance for
loan losses to be adequate.


<PAGE>

SUMMARY OF LOAN LOSS EXPERIENCE

The following table summarizes the loan loss experience for the years
indicated.

<TABLE>
<CAPTION>

                                         1996      1995      1994      1993      1992
                                         ----      ----      ----      ----      ----
                                             (In Thousands, Except for Ratios)
<S>                                    <C>       <C>       <C>       <C>       <C>
Allowance for loan losses:
 Balance at January 1 ............     $2,897    $2,698    $1,441    $2,136    $1,661
                                       ------    ------    ------    ------    ------
 Additions resulting from
 aquisitions .....................                          1,105
                                                           ------
 Chargeoffs:
  Commercial .....................        284       544       254     1,067       159
  Real estate mortgage ...........        177       261        69       140       438
  Loans to individuals ...........        191       267       104        87       108
                                       ------    ------    ------    ------    ------
   Total chargeoffs ..............        652     1,072       427     1,294       705
                                       ------    ------    ------    ------    ------
 Recoveries:
  Commercial .....................         14        32        31         4        39
  Real estate mortgage ...........         20        64       214        21        29
  Loans to individuals ...........         32        91        57        55        30
                                       ------    ------    ------    ------    ------
   Total recoveries ..............         66       187       302        80        98
                                       ------    ------    ------    ------    ------
 Net chargeoffs ..................        586       885       125     1,214       607
                                       ------    ------    ------    ------    ------
 Provision for loan losses .......      1,089     1,084       277       519     1,082
                                       ------    ------    ------    ------    ------
 Balance at December 31 ..........     $3,400    $2,897    $2,698    $1,441    $2,136
                                       ------    ------    ------    ------    ------
                                       ------    ------    ------    ------    ------

 Ratio of net charge-offs during
 the period to average loans
 outstanding during the period ...       0.16%     0.26%     0.04%     0.48%     0.23%

</TABLE>

OTHER INCOME. The following table shows the components of other income for
1996, 1995 and 1994.

                                                   1996      1995      1994
                                                 --------------------------
                                                       (In Thousands)
Fiduciary activities .......................     $4,452    $4,132    $3,990
Service charges on deposit accounts ........      1,359     1,349     1,244
Other customer fees ........................        463       338       327
Other income ...............................        567       625       607
                                                 --------------------------
  Subtotal .................................      6,841     6,444     6,168
Investment securities gains, net ...........                            305
Net loans sold gains .......................        159        97       129
                                                 --------------------------
  Total other income .......................     $7,000    $6,541    $6,602
                                                 --------------------------
                                                 --------------------------

Other income is comprised of income items not directly related to the
Company's interest-earning assets. Other income, excluding net securities
gains and net gains from loan sales, increased $397 thousand from 1995 to
1996, or 6.2%. From 1994 to 1995, other income, excluding net securities
gains and net gains from loan sales, increased $276 thousand, or 4.5%. The
1996 increase in other income, excluding net securities gains and net gains
from loan sales, was primarily a result of increased fiduciary and other
customer fees. Fiduciary fees increased $320 thousand from 1995 to 1996, or
7.7%. Other customer fees increased $125 thousand from 1995 to 1996. The
increase in other customer fee income was primarily attributable to increased
fee income generated by customer usage of check cards that were introduced by
American National and Peoples in 1995.

Other operating income decreased $58 thousand from 1995 to 1996. The change
in other operating income was primarily due to a refund in 1995 of $79
thousand for state bank tax paid in prior years.

In 1996, net gains from loan sales of $159 thousand increased significantly
from $97 thousand recorded in 1995 and $129 thousand recorded in 1994.
Effective January 1, 1996, SFAS No. 122, Accounting for Mortgage Servicing
Rights, was adopted by the Company. SFAS No. 122 requires the capitalization
of retained mortgage servicing rights on originated or purchased loans.

OTHER EXPENSES. The following table shows the components of other expenses
for 1996, 1995 and 1994.

<TABLE>
<CAPTION>
                                                                 1996          1995         1994
                                                              ----------------------------------
                                                                         (In Thousands)
<S>                                                           <C>            <C>          <C>
Salaries and employees benefits .........................     $10,017        $9,827       $9,206
Premises and equipment expenses .........................       2,672         2,645        2,617
Advertising .............................................         472           496          468
Professional fees .......................................         268           336          394
Deposit insurance expense ...............................         867           558          817
Printing and office supplies ............................         561           569          532
Amortization of goodwill and core deposit intangibles ...         375           360          338
Other operating expenses ................................       2,907         2,683        2,563
                                                              ----------------------------------
  Total other expenses ..................................     $18,139       $17,474      $16,935
                                                              ----------------------------------
                                                              ----------------------------------
</TABLE>

Other expenses are noninterest operating expenses of the Company. Total other
expenses increased $665 thousand, or 3.8%, from 1995 to 1996, and $539
thousand, or 3.2%, from 1994 to 1995.

Salaries and employee benefits increased 1.9%, or $190 thousand, from 1995 to
1996, and 6.7%, or $621 thousand, from 1994 to 1995. The increase from 1994
to 1995 was primarily due to general and merit pay increases and an increased
level of incentive bonus plan payments. During the period 1994 through 1996,
the Company reduced its full time equivalent employees. In 1994, there were
278 full time equivalent

<PAGE>

employees, and in 1996, the number of full time equivalent employees had been
reduced to 257, or a 7.6% reduction.

Professional fees declined $68 thousand in 1996 from the level reported in
1995. Fewer matters requiring outside legal and accounting expertise were
experienced during 1996. In 1995, professional fees decreased $58 thousand,
or 14.7%, from 1994. The decrease was primarily attributable to the inclusion
of fees related to the acquisition of Peoples in 1994.

In 1996, the Federal Deposit Insurance Corporation levied a special deposit
insurance assessment on Savings Association Insurance Fund ("SAIF") deposits.
SAIF insured deposits acquired in the 1991 acquisition of Muncie Federal
Savings Bank, a savings and loan association, were subject to the special
assessment. The special assessment resulted in a before tax charge of $589
thousand to deposit insurance expense. As a result of the special assessment,
the Federal Deposit Insurance Corporation adjusted the rate on SAIF
assessable deposits which will lower deposit insurance expense in future
periods. In 1995 and 1996, the Federal Deposit Insurance Corporation lowered
the rate assessed on deposits insured by the Bank Insurance Fund resulting in
a reduction in federal deposit insurance expense.

INCOME TAXES. Income tax expense for 1996, 1995 and 1994 was $2.794 million,
$2.522 million and $2.031 million, respectively. The Company invests in
tax-exempt municipal securities as its principal strategy to reduce federal
income taxes. The Company also receives a state tax credit for a portion of
interest earned on qualified loans made to urban enterprise zone businesses
and residents. The tax credit earned is then reinvested in the urban
enterprise zone which produced the credit.

The effective tax rates for 1996, 1995 and 1994 were 31.7%, 32.3% and 29.9%,
respectively. The increase in income tax expense is generally due to
increases in income upon which applicable federal and state income taxes are
calculated.


<PAGE>

BALANCE SHEET ANALYSIS

AVERAGE BALANCES AND INTEREST. The average balance sheet grew at a more
moderate rate in 1996 than in 1995. Average total assets of $472.589 million
represented a $21.437 million, or 4.8%, increase for the year, while a
significant growth in average deposit account balances in 1995 provided the
funds to raise average total assets to $451.152 million, a $34.872 million,
or 8.4%, gain over the 1994 total.

In both 1996 and 1995, the company's increase in average total assets was
concentrated almost exclusively in the loan portfolio. Average total loans of
$361.199 million for 1996 were $21.902 million, or 6.5%, greater than the
prior year. 1995 average total loans of $339.297 million exceeded the 1994
total by $38.435 million, or an increase of 12.8%.

The average size of the Company's portfolio of investment securities and
overnight investments has remained at a relatively consistent level in recent
years, with an average total portfolio balance for 1996 of $79.542 million,
compared to $80.616 million and $83.071 million for 1995 and 1994,
respectively. This multipurpose portfolio serves as a ready source of
liquidity, can be restructured to mitigate interest rate risk in other areas
of the balance sheet and provides further diversification of the Company's
total portfolio of earning assets.

Average earning assets for 1996 of $440.741 million, represented a strong
share of total average assets at 93.3%, and the continuing enhancement of a
key ratio for the Company. Average earnings assets were $419.913 million and
$383.933 million, and 93.1% and 92.2% of total average assets for 1995 and
1994, respectively.

A paradox developed in 1996 as total deposits declined, but average total
deposits of $400.677 million for the year exceeded the 1995 average of
$388.109 million by $12.568 million, or 3.2%. The deposit account growth in
1995 that fueled the loan portfolio expansion resulted in an increase in
average total deposits of $30.135 million, 8.4% greater than the 1994 total.

In 1996, through an increased use of the funding resources of the Federal
Home Loan Bank ("FHLB"), the Company was able to reach a two-fold objective
of further meeting the housing needs of the community, while expanding its
residential mortgage loan portfolio. As a result of this strategy, average
total borrowings for 1996 of $16.510 million were up $6.339 million over the
1995 total of $10.171 million, which was only $1.759 million higher than the
1994 total of $8.412 million.

The ongoing success the Company has achieved in growing its business and
increasing net earning assets, while maintaining a strong net interest
spread, has provided the required ingredients for consistent significant
annual growth in net interest income. In 1996, net interest income on a tax
equivalent basis rose to $22.347 million, compared to $21.069 million for
1995 and $18.671 million for 1994. The two latest plateaus represented gains
of $1.278 million, or 6.1%, and $2.398 million, or 12.8%, for 1996 and 1995,
respectively.

A summary of average earnings assets and interest-bearing liabilities is set
forth below, together with the interest earned (on a tax-equivalent basis)
and paid on each major type of earning asset and interest-bearing liability
account. The average yield on the earning assets and the average rate paid on
the interest-bearing liabilities is also summarized.

<TABLE>
<CAPTION>
TABLE "E"
                                                    1996                            1995                          1994
                                        ----------------------------    ---------------------------    ---------------------------
                                                  Interest                        Interest                       Interest
                                        Average   Income/   Average     Average   Income/  Average     Average   Income/   Average
                                        Balance   Expense   Rate(%)     Balance   Expense  Rate(%)     Balance   Expense   Rate(%)
                                        --------  --------  -------     --------  -------  -------     --------  --------  -------
<S>                                     <C>       <C>       <C>         <C>       <C>       <C>        <C>       <C>       <C>
Assets:
  Federal funds sold..................  $  4,992  $   271   5.43%       $ 10,084  $   591   5.86%      $  5,670  $   368   3.81%
  Interest-bearing deposits...........       163        8   4.91%            303       17   5.61%         1,919       73   3.80%
  Investment securities:
    Taxable...........................    32,606    2,048   6.28%         31,030    1,868   6.02%        32,894    1,526   4.64%
    Tax-exempt........................    41,781    3,947   9.45%         39,199    3,780   9.64%        38,588    3,789   9.82%
                                        --------  --------              --------  -------              --------  -------
      Total investment securities.....    74,387    5,995   8.06%         70,229    5,648   8.04%        71,482    5,315   7.44%

Loans:*
  Commercial..........................    86,217    8,429   9.78%         78,916    8,061  10.21%        68,354    5,875   8.59%
  Term federal funds..................     5,528      295   5.34%          7,142      424   5.94%         7,174      301   4.20%
  Real estate mortgage................   228,381   19,843   8.69%        215,442   18,472   8.57%       191,166   15,336   8.02%
  Loans to individuals................    39,123    3,743   9.57%         36,355    3,385   9.31%        33,146    2,990   9.02%
  Tax exempt..........................     1,950      159   8.15%          1,442      118   8.18%         1,022       98   9.59%
                                        --------  --------              --------  -------              --------  -------
      Total loans.....................   361,199   32,469   8.99%        339,297   30,460   8.98%       300,862   24,600   8.18%
                                        --------  --------              --------  -------              --------  -------
     *Total earning assets............    40,741   38,743   8.79%        419,913   36,716   8.75%       383,933   30,356   7.91%
                                                  --------                        -------                        -------
Allowance for loan losses.............    (2,882)                         (2,548)                        (2,548)
Cash and due from banks...............    14,900                          13,667                         13,771
Premises and equipment................     9,475                           9,934                         10,603
Other assets..........................    10,355                          10,186                         10,521
                                        --------                        --------                       --------
      Total assets....................  $472,589   38,743               $451,152   36,716              $416,280   30,356
                                        ========  -------               ========  -------              ========  -------
Liabilities:
  Interest-bearing deposits:
    NOW accounts......................  $ 71,954    1,802   2.50%       $ 67,742    1,655   2.44%      $ 66,576    1,605   2.41%
    Money market investment accounts..    40,383    1,253   3.10%         44,235    1,342   3.03%        53,210    1,474   2.77%
    Savings deposits..................    28,174      705   2.50%         29,277      749   2.56%        31,710      818   2.58%
    Certificates of deposit...........   217,350   11,724   5.39%        207,075   11,305   5.46%       169,180    7,429   4.39%
                                        --------  -------               --------  -------              --------  -------
      Total interest-bearing deposits.   357,861   15,484   4.33%        348,329   15,051   4.32%       320,676   11,326   3.53%
    Short-term borrowings.............     9,267      481   5.19%          8,516      479   5.62%         8,017      322   4.02%
    FHLB advances.....................     7,243      431   5.95%          1,655      117   7.07%           395       37   9.37%
                                        --------  -------               --------  -------              --------  -------
      Total interest-bearing
        liabilities...................   374,371   16,396   4.38%        358,500   15,647   4.36%       329,088   11,685   3.55%
Non-interest bearing demand deposits..    42,816                          39,780                         37,298
Other liabilities.....................     6,535                           6,400                          6,562
                                        --------                        --------                       --------
      Total liabilities...............  423,722                          404,680                        372,948

Stockholders' equity..................   48,867                           46,472                         43,332
                                        --------  -------               --------  -------              --------  -------
      Total liabilities
       and stockholder's equity.......  $472,589   16,396   3.72%**     $451,152   15,647   3.73%**    $416,280   11,685   3.04%
                                        ========  -------               ========  -------              ========  -------
   Net interest income................            $22,347   5.07%                 $21,069   5.02%                $18,671   4.87%
                                                  =======                         =======                        =======

Adjustment to convert tax-exempt
  investment securities and loans to
  fully taxable equivalent basis,
  using marginal rate of 34% after
  adjustment for effect of
  non-deductible interest expense
  attributed to such assets........... $   1,319                                  $ 1,245                        $ 1,260
                                       =========                                  =======                        =======
</TABLE>

*  Loans held for sale are included with loans. Nonaccruing loans have been
   included in the average balances.
** Total interest expense divided by total earning assets


<PAGE>

ASSETS. At year end 1996, total assets of $493.847 million represented
another record high, surpassing the December 31, 1995, total of $483.236
million by $10.611 million, or 2.2%.

In 1995, the Company had experienced greater balance sheet growth, driven
primarily by a substantial gain in deposits, with total assets increasing
$41.650 million, or 9.4%, over the December 31, 1994, total of $441.586
million.

The Company's investment in federal funds was reduced by $17.325 million
during the year to $2.475 million at December 31, 1996. Federal funds is a
financial instrument designed to serve as an immediate liquidity source for
banks, and funds were redeployed by the Company to take advantage of new
lending opportunities, and to temporarily cover net deposit outflows until
the benefits of new marketing strategies are realized.

Effective January 1, 1994, the Company adopted the Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards No. 115
(SFAS No. 115), Accounting for Certain Investments in Debt and Equity
Securities. In accordance with this statement, investment securities
classified as available-for-sale are reported at fair value, with unrealized
gains and losses excluded from earnings, but reported in a separate component
of stockholders' equity. As a result of a prior management decision to
maintain greater liquidity and flexibility within the portfolio, all
investment securities held at both year end 1996 and year end 1995 had been
classified as available for sale.

When taking into account the Company's asset growth rate for 1996 and 1995,
the size of the investment securities portfolio did not change materially,
with carrying values of $73.944 million, $70.514 million and $64.096 million,
at December 31, 1996, 1995 and 1994, respectively. The annual increases were
$3.430 million, or 4.9%, and $6.418 million, or 10.0%, for 1996 and 1995,
respectively. The product mix of the portfolio, which consists of relatively
conservative financial instruments, also remained fairly similar over the
past two periods.

It should be noted that the 1995 investment portfolio increase was impacted
substantially when the Company elected under FASB's temporary relaxing of
SFAS No. 115 requirements to classify all investment portfolio securities as
available-for-sale. This decision, together with a lower interest rate
environment compared to the prior year end, resulted in net unrealized gains
in the portfolio increasing to $3.163 million at December 31, 1995, from $61
thousand at December 31, 1994. A moderate net upswing in market yields for
1996 was the principal factor causing net unrealized gains in the portfolio
to decline to $1.983 million at December 31, 1996.

As market conditions result in the recording of adjustments to the carrying
value of investment securities classified as available-for-sale,
corresponding entries, reduced by related income taxes, are recorded in the
separate component of stockholders' equity. Securities with a carrying value
of $9.606 million, or 13.0% of the total investment portfolio at December 31,
1996, were scheduled to mature within one year. The following tables show the
mix of the investment securities portfolio for each of the last three years
at December 31, and the maturity distribution at year end 1996:

TABLE "F"

<TABLE>
<CAPTION>
                                              1996                     1995                     1994
                                       Amount     Percent       Amount     Percent       Amount     Percent
                                       -------    -------       -------    -------       -------    -------
<S>                                    <C>         <C>          <C>         <C>
U.S. Treasury......................    $17,838     24.1%        $18,173     25.8%        $18,415     28.7%
Federal agencies...................      7,972     10.8%          4,153      5.9%          2,685      4.2%
State and municipal................     44,166     59.7%         43,105     61.2%         37,574     58.6%
Morgage-backed.....................      3,078      4.2%          3,695      5.2%          4,347      6.8%
Corporates.........................        200      0.3%            447      0.6%            408      0.6%
Other..............................        690      0.9%            941      1.3%            667      1.1%
                                       -------    -------       -------    -------       -------    -------
                                       $73,944    100.0%        $70,514    100.0%        $64,096    100.0%
                                       =======    =======       =======    =======       =======    =======
</TABLE>


<TABLE>
<CAPTION>
                                       Within                                 Over
                                       1 Year    1-5 Years    5-10 Years    10 Years      Total
                                       ------    ---------    ----------    --------     -------
<S>                                    <C>       <C>            <C>          <C>         <C>
U.S. Treasury......................    $6,764    $11,074                                 $17,838
Federal agencies...................     1,500      6,131        $   341                    7,972
State and municipal................       566      4,462         17,227      $21,911      44,166
Morgage-backed.....................                                 431        2,647       3,078
Corporates.........................       100        100                                     200
Other..............................       676                                     14         690
                                       ------    ---------    ----------    --------     -------
                                       $9,606    $21,767        $17,999      $24,572     $73,944
                                       ======    =========    ==========    ========     =======


Distribution Percent                     13.0%      29.4%          24.3%        33.3%      100.0%
                                         ====       ====           ====         ====       =====
</TABLE>


<PAGE>

LOANS. During 1996, several positive factors, including moderate economic growth
in the communities served by the Company, created many attractive lending
opportunities for the Company to pursue, resulting in another year of
significant loan portfolio expansion.

The total loan portfolio of $376.081 million at December 31, 1996, represented a
gain of $27.168 million, or 7.8%, over the 1995 year end total of $348.913
million. The favorable climate in 1996 for business enterprises allowed the
Company to increase the total of commercial and industrial loans to $81.142
million, a $6.059 million, or 8.1%, net addition for the year.

Affordable interest rates generated substantial mortgage lending activity,
further growing the largest segment of the loan portfolio. The Company sold a
significant share of its new production in the secondary market, but also
originated a considerable amount of product for its portfolio, primarily
adjustable-rate loans and some shorter term fixed-rate loans. Real estate loans
on one-to-four family properties increased $10.261 million, or 7.6%. to $144.749
million, while mortgage loans on other properties grew $6.785 million, or 7.4%,
to $98.366 million at December 31, 1996.

More aggressive marketing efforts for consumer loans produced solid results,
with a $6.771 million, or 18.9%, increase to $42.507 million at year end 1996.

The total loan portfolio of $348.913 million at December 31, 1995, represented
an increase for the year of $20.110 million, or 6.1%. Commercial and industrial
loans increased $6.722 million in 1995, or 9.8%, to $75.083 million. Real estate
loans totaling $226.069 million were up $14.627 million, or 6.9%, for the year,
with the increase occurring totally in the category of loans on other than
one-to-four family properties.

With the reinvestment of available cash from overnight federal funds into higher
yielding loans, the loan portfolio became a larger portion of the company's
total assets in 1996. Total loans net of loss allowances at December 31, 1996,
in the amount of $372.681 million represented 75.5% of total assets, compared to
$346.016 million and 71.6% at December 31, 1995.

OTHER ASSETS. Normal depreciation recorded in 1996 exceeded the acquisition cost
of new items, causing the carrying value of premises and equipment to decrease
by $232 thousand to $9.345 million at December 31, 1996, compared to $9.577
million at the prior year end. Similar activity produced comparable results in
1995, as the carrying value declined $688 thousand from the December 31, 1994,
total of $10.265 million.

DEPOSITS. The dramatic climb of the stock market during 1996 and management
strategies designed to control interest costs were factors in the Company's
total deposits dropping $9.506 million, or 2.3%, from $415.351 million to
$405.845 million at December 31, 1996. It should be noted, though, that in many
cases the funds were moved to alternative investments available through the
Company's financial planning and trust subsidiaries, ANBFPS and ANTIM, resulting
in additional fee income for the Company and a continuing and expanded financial
services provider relationship with the customer.

The deposit mix remained relatively unchanged, with certificates and other time
deposits comprising $215.937 million, or 53.2% of total deposits at December 31,
1996, compared to $219.706 million and 52.9% of total deposits at December 31,
1995.

The Company's total deposits at December 31, 1995, represented a $35.219
million, or 9.3%, increase over the 1994 year end total of $380.132 million.
With many investors extending their investment maturities to obtain higher
yields, balances in certificate accounts grew by $34.316 million, or 18.5%, to
$219.706 million at year end 1995.


<PAGE>

BORROWED FUNDS. With borrowing rates in 1996 offering an attractive alternative
to management's estimate of the incremental cost of quickly raising new deposit
balances, it was decided to further utilize FHLB advances, as well as daily
purchases of federal funds as a temporary measure, to fund new lending
opportunities and net deposit outflows.

Total borrowed funds of $31.676 million at December 31, 1996, was considerably
higher than the totals of $10.144 million and $13.052 million for December 31,
1995 and 1994, respectively.

LIQUIDITY AND INTEREST RATE SENSITIVITY. The principal objective of liquidity
management is to insure the availability of sufficient funds to meet borrowers'
credit requirements and depositor withdrawal needs on a continual basis, while
maintaining a responsive program of investing excess funds until the need arises
for their use. Funds management committees are responsible for monitoring the
liquidity position on a monthly basis at each affiliate. Outside sources for
temporary primary liquidity, which include the federal funds market and Federal
Reserve discount window, are available should such a situation develop.

During 1996 and 1995, funds provided principally through net income, advances
from the FHLB, and a reduction in the Company's average daily federal funds sold
position were used by the Company to take advantage of strong loan demand.

In January 1994, short-term investments were liquidated to finance the
acquisition of Peoples.

Interest rate sensitive assets and liabilities are monitored monthly by the
Asset/Liability Management committees. A rate sensitive asset is any asset that
can be repriced upward or downward within a specific time frame, and likewise, a
rate sensitive liability is any liability that can be repriced upward or
downward within the identical time frame. Measuring interest rate sensitivity is
an important fundamental to develop so that proper management of interest
margins can be achieved, thereby avoiding wide variances in net interest income
and net income. A positive or negative gap results from the measurement of rate
sensitivity, and this gap can be expressed as a percentage of total assets. The
lower the negative or positive gap, the less likely a severe earnings swing will
occur during periods of rapidly changing interest rates.

On December 31, 1996, the Company had interest rate-sensitive assets and
liabilities which matured or could be repriced within one year, of $250.401
million and $345.506 million respectively. For this one year time frame, the
Company had a negative rate sensitivity gap. A negative rate sensitivity gap is
beneficial to the Company's net interest income during a period in which
interest rates are falling, and could adversely affect the Company's net
interest income during a period in which interest rates are rising. The
Company's current negative gap for the one year time frame expressed as a
percentage of total assets is 19.3%, which is within the guidelines established
by the funds management committee and approved by the board of Directors. The
policy of the Company requires management to keep interest rate sensitivity gaps
within certain pre-determined parameters.

The following table shows the gap position of the Company at December 31, 1996.

<TABLE>
<CAPTION>

                                      0-3        3-6       Total       6-12     Total 12    Over 12           Current
                                     Months     Months    6 Months    Months     Months      Months           Balance
                                     ------     ------    --------    ------    --------    -------          --------
<S>                                  <C>        <C>       <C>         <C>       <C>         <C>              <C>
Earning assets
     Federal funds sold............    $2,475               $2,475                $2,475                       $2,475
     Interest bearing deposits
      in banks....................         74                   74                    74                           74
     Securities available for sale:
      Taxable......................     4,880    $1,107      5,987     $3,057      9,044    23,447             32,491
      Tax-exempt...................     1,485                1,485        417      1,900    42,264             44,166
     Loans.........................   123,944    41,990    165,934     70,768    236,702   139,379            376,081
     Loans held for sale...........       204                  204                   204                          204
                                      -------    ------    -------     ------    -------   -------            -------

                TOTALS                123,062    43,097    176,159     74,242    250,401   205,090            455,491
                                      -------    ------    -------     ------    -------   -------            -------

Interest-bearing liabilities
   Deposits:
     NOW Accounts..................    75,174               75,174                75,174                       75,174
     Money market accounts.........    37,751               37,174                37,751                       37,751
     Regular savings...............    26,727               26,727                26,727                       26,727
     Certificates of deposit.......    84,319    20,679    104,998      71,180   176,178    39,759            215,937
     Short-term borrowings.........    17,409       267     17,676                17,676                       17,676
     Federal Home Loan Bank
       advances....................    12,000               12,000                12,000     2,000             14,000
                                      -------    -------   -------      -------  -------   --------           -------
               TOTALS                 253,380    20,946    274,326       71,180  345,506    41,759            387,265
                                      -------    -------   -------      -------  -------   --------           -------

Rate sensitivity gap
  positive (negative).............  ($120,318)  $22,151   ($98,167)     $3,062  ($95,105)
                                      -------    ------     ------       -----    ------
                                      -------    ------     ------       -----    ------

Rate sensitivity gap as a
  percent of total assets.........     -24.4%      4.5%    -19.9%         0.6%    -19.3%


Percent of earning assets to
  interest-bearing liabilities          52.5%               64.2%                  72.5%

</TABLE>

CAPITAL. A strong commitment to safety and soundness is the fundamental
philosophy that has served the Company well in the development of its strong
capital position. A high level of capital provides a solid foundation to support
future growth and to weather difficult economic periods and promotes depositor
and


<PAGE>

investor confidence. For many years, stockholders have been rewarded with
increasing cash dividends and with significant growth in the value of their
Company achieved through the retention of a share of net income.

For the three years ended December 31, 1996, the Company has recorded net income
totaling $16.061 million. Total stockholders' equity has grown from $41.703
million on January 1, 1994, to $51.341 at year end 1996, an increase of $9.638
million or 23.1% for the three year period. Stockholders have received a total
of $6.428 million in cash dividends, representing an average payout ratio of 40%
for the three year period. In August 1996, the Company's Board of Directors
approved raising the quarterly dividend from $.125 to $.15 a share effective
with the third quarter of 1996. This 20% increase in the quarterly dividend rate
marked the seventeenth consecutive year dividends have been increased. In each
of the last thirteen years, total annual dividends paid per share have grown at
a rate of 10.8% or more. Average annual increase in total dividends paid per
share during the last thirteen years has been 16.4%.

The $1.870 million increase in stockholders' equity in 1996 was the result of
net income of $6.006 million, a reduction of $713 thousand related to market
value accounting for investment securities classified as available for sale, a
net addition of $680 thousand from activity related to stock options and the
Company's dividend reinvestment and stock purchase plan, and reductions of
$2.472 million for cash dividends and $1.631 million for stock purchases.

The Federal Reserve Board has adopted "risk adjusted" capital ratios for bank
holding companies. The "risk based" guidelines require the assignment of risk
weightings to all assets and certain off-balance sheet items. Bank holding
companies are required to have a total risk-based capital ratio of 10% or
greater to be considered well-capitalized. The Company's total risk-based
capital ratio at December 31, 1996, was 14.4%, which is 4.4% above the level
considered "well capitalized" under the current regulatory guidelines. At
December 31, 1996, the Company's leverage capital ratio was 9.5%, which was 4.5%
greater than the requirement for well capitalized institutions.

The following table shows various capital and performance ratios for the last
three years:

<TABLE>
<CAPTION>

                                                          1996       1995      1994
                                                          ----       ----      ----
<S>                                                    <C>        <C>       <C>
Average stockholders' equity to:
   Average assets.....................................   10.34%     10.30%    10.41%
   Average deposits...................................   12.20%     11.97%    12.10%
Dividend payout ratio.................................   41.35%     39.66%    39.05%
Increases in annual dividends paid....................   19.57%     12.20%    10.81%
Total return to investors (*).........................   30.91%     35.66%    -6.42%
Market value as a % of book value.....................  174.98%    144.23%   121.83%


(*) Market value change with dividends reinvested

</TABLE>

INFLATION. Changing prices of goods, services and capital affect the financial
position of every business enterprise. The level of market interest rates and
the price of funds loaned or borrowed fluctuate due to changes in the rate of
inflation and various other factors, including government monetary policy.
Fluctuating interest rates affect the affiliated banks' net interest income and
loan volume. The Company and affiliated banks' other expenses, such as employee
salaries and benefits, reflect the effects of escalating prices as well as
increased levels of operation and other factors. As the inflation rate
increases, the purchasing power of the dollar decreases. Those holding
fixed-rate monetary assets incur a loss, while those holding fixed-rate monetary
liabilities enjoy a gain. The nature of a bank holding company's operations is
such that there will be an excess of monetary assets over monetary liabilities
and thus, a bank holding company will tend to suffer from an increase in the
rate of inflation and benefit from a decrease.


<PAGE>

CURRENT ACCOUNTING ISSUES

MORTGAGE SERVICING RIGHTS. During 1995, the FASB issued SFAS No. 122, Accounting
for Mortgage Servicing Rights. SFAS No. 122 pertains to mortgage banking
enterprises and financial institutions that conduct operations that are
substantially similar to the primary operations of mortgage banking enterprises.
SFAS No. 122 eliminates the accounting distinction between mortgage servicing
rights that are acquired through loan origination activities and those acquired
through purchase transactions. Under SFAS No. 122, if a mortgage banking
enterprise sells or securitizes loans and retains the mortgage servicing rights,
the enterprise must allocate the total cost of the mortgage loans to mortgage
servicing rights and the loans (without the rights) based on their relative fair
values if it is practicable to estimate those fair values. If it is not
practicable, the entire cost should be allocated to the mortgage loans and no
cost should be allocated to the mortgage service rights. An entity would measure
impairment of mortgage servicing rights and loans based on the excess of the
carrying amount of the mortgage servicing rights portfolio over the fair value
of that portfolio.

SFAS No. 122 is to be applied prospectively in fiscal years beginning after
December 15, 1995, to transactions in which an entity acquires mortgage
servicing rights and to impairment evaluations of all capitalized mortgage
servicing rights. The Company adopted SFAS No. 122 in 1996.

STOCK BASED COMPENSATION. The FASB has issued SFAS No. 123, Accounting for
Stock-based Compensation. SFAS No. 123 establishes a fair value based method of
accounting for stock-based compensation plans. The FASB encourages all entities
to adopt this method for accounting for all arrangements under which employees
receive shares of stock or other equity instruments of the employer, or the
employer incurs liabilities to employees in amounts based on the price of its
stock.

Due to the extremely controversial nature of this project, SFAS No. 123 permits
a company to continue the accounting for stock-based compensation prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. If a company elects that option, pro forma disclosures of net income
(and EPS, if presented) are required in the notes to the financial statements as
if the provision of SFAS No. 123 had been used to measure stock-based
compensation. The disclosure requirements of Opinion No. 25 have been superseded
by the disclosure requirements of this Statement. Once an entity adopts the fair
value based method for accounting for these transactions, that election cannot
be reversed.

Equity instruments granted or otherwise transferred directly to an employee by a
principal stockholder are stock-based employee compensation to be accounted for
in accordance with either Opinion No. 25 or SFAS No. 123 unless the transfer
clearly is for a purpose other than compensation. The accounting requirements of
SFAS No. 123 became effective for transactions entered into in fiscal years
beginning after December 15, 1995, and the disclosure requirements became
effective for financial statements for fiscal years beginning after December 15,
1995. Pro forma disclosures required for entities that elect to continue to
measure compensation cost using Opinion 25 must include the effects of all
awards granted in fiscal years beginning after December 15, 1994. During the
initial phase-in period, the effects of applying this Statement are not likely
to be representative of the effects on reported net income for future years
because options vest over several years and additional awards generally are made
each year.

The Company adopted SFAS No. 123 for 1996, and elected to report the pro forma
disclosures of net income and earnings per share in the notes to financial
statements.

TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES.
SFAS No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, breaks new ground in resolving long-standing
questions about whether transactions should be accounted for as secured
borrowings or as sales. The Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are considered secured borrowings.


<PAGE>

A transfer of financial assets in which the transferor surrenders control over
those assets is accounted for as a sale to the extent that consideration other
than beneficial interests in the transferred assets is received in exchange. The
transferor has surrendered control over transferred assets only if all of the
following conditions are met:

*  The transferred assets have been isolated from the transferor - put
presumptively beyond the reach of the transferor and its creditors, even in
bankruptcy or other receivership.

*  Each transferee obtains the right - free of conditions that constrain it from
taking advantage of that right - to pledge or exchange the transferred assets,
or the transferee is a qualifying special-purpose entity and the holders of
beneficial interest in that entity have the right - free of conditions that
constrain them from taking advantage of that right - to pledge or exchange those
interests.

*  The transferor does not maintain effective control over the transferred
assets through an agreement that both entitles and obligates the transferor to
repurchase or redeem them before their maturity, or an agreement that entitles
the transferor to repurchase or redeem transferred assets are not readily
obtainable.

The Statement provides detailed measurement standards for assets and liabilities
included in these transactions. It also includes implementation guidance for
assessing isolation of transferred assets and for accounting for transfers of
partial interest, servicing of financial assets, securitization, transfers or
sales type and direct financing lease receivables, securities lending
transactions, repurchase agreements, "wash sales," loan syndications and
participations, risk participation in banker's acceptances, factoring
arrangements, transfers of receivables with recourse and extinguishment of
liabilities.

The Statement supersedes SFAS Statements No. 76, Extinguishment of Debt, and No.
77, Reporting by Transferors of Transfers of Receivables with Recourse, and No.
122, Accounting for Mortgage Servicing Rights, and amends SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, in addition to
clarifying or amending a number of other statements and technical bulletins.

Except as amended by SFAS No. 127, this Statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
December 31, 1996 and is to be applied prospectively. Earlier or retroactive
application is not permitted.

The FASB was made aware that the volume of certain transactions and the related
changes to information systems and accounting processes that are necessary to
comply with the requirements of SFAS No. 125 would make it extremely difficult,
if not impossible, for some affected enterprises to apply the transfer and
collateral provision of SFAS No. 125 to those transactions as soon as January 1,
1997. As a result, SFAS No. 127 defers for one year the effective date (a) of
paragraph 15 of SFAS No. 125 and (b) for repurchase agreements, dollar-roll,
securities lending, and similar transactions, of paragraphs 9-12 and 237(b) of
SFAS No. 125.

SFAS No. 127 provides additional guidance on the types of transactions for which
the effective date of SFAS No. 125 has been deferred. It also requires that if
it is not possible to determine whether a transfer occurring during calendar
year 1997 is part of a repurchase agreement, dollar-roll, securities lending, or
similar transaction, then paragraphs 9-12 of SFAS No. 125 should be applied to
that transfer.

All provisions of SFAS No. 125 should continue to be applied prospectively, and
earlier or retroactive application is not permitted.


<PAGE>

ANB Corporation Directors and Officers

DIRECTORS

Ben E. Delk, President, Standt's Fine Jewelry

Madelyn K. Ferris, Senior Vice President, Paws Incorporated

R. David Hoover, Executive Vice President and Chief Financial Officer and
Director, Ball Corporation

William L. Peterson, Chairman of the Board, ANB Corporation; Chairman of the
Board, Alltrista Corporation

Donald A. Ross, President, A. L. Ross & Sons, Inc.

James R. Schrecongost, President and Chief Executive Officer, ANB Corporation;
Vice Chairman and Chief Executive Officer, American National Bank and Trust
Company

Kelly N. Stanley, Vice Chairman of the Board, ANB Corporation; President and
Chief Executive Officer, Ontario Corporation

Chris L. Talley, President and Chief Executive Officer, Peoples Loan & Trust
Bank

Leon V. Towne, Management Advisor and Consultant

HONORARY DIRECTOR

Edmund F. Ball

OFFICERS

William L. Peterson, Chairman of the Board

Kelly N. Stanley, Vice Chairman of the Board

James R. Schrecongost, President and Chief Executive Officer

Larry E. Thomas, Treasurer and Chief Financial Officer

Lloyd M. Townsend, Vice President

James W. Convy, Corporate Secretary

David W. Spade, Assistant Secretary

Jason A. Conley, Information Technology Officer

Suanne B. Collins, Director of Corporate Sales and Service Training

Ted R. Girton, Director of Corporate Loan Review

AUDIT DEPARTMENT

Douglas J. Schuba, CBA, Senior Auditor


<PAGE>

Debra A. Clayborn, Assistant Auditor

Jeffrey A. Davis, CTA, CBA, Assistant Auditor


American National Bank and Trust Company Directors and Officers

DIRECTORS

Ben E. Delk, President, Standt's Fine Jewelry

W H Fike, Managing Partner, Atlas Collections, Inc.

Charles N. Hetrick, President and Chief Operating Officer, Maxon Corporation

Robert L. Hoogenboom, Retired, American National Bank and Trust Company

Noel L. Pooler, President, Pooler Industries, Inc.

Donald A. Ross, Chairman of the Board, American National Bank and Trust Company;
President, A. L. Ross & Sons, Inc.

Charles E. Sanders, Jr., M.D., Medical Consultants, P.C.

James R. Schrecongost, President and Chief Executive Officer, ANB Corporation;
Vice Chairman and Chief Executive Officer, American National Bank and Trust
Company

W. Alan Simmons, Partner, Simmons, Carroll, Summers, Estep & Whisler, CPA

Norman L. Tirey, Retired Vice Chairman of the Board, ANB Corporation

HONORARY DIRECTORS

Edmund F. Ball

Wendell E. Covalt, M.D.

John L. Cullison, M.D.

J. Roberts Dailey

Margaret J. Edwards

John W. Fisher

John P. Isenbarger

William F. Radcliff

Charles W. Rothhaar

Martin D. Schwartz


<PAGE>

Edgar H. Seward

James O. Timbrook

OFFICERS

EXECUTIVE OFFICERS

Donald A. Ross, Chairman of the Board

James R. Schrecongost, Vice Chairman and Chief Executive Officer

Jerome J. Gassen, President and Chief Operating Officer

David W. Spade, Senior Vice President, Commercial Lending

Larry E. Thomas, Senior Vice President and Cashier

Lloyd M. Townsend, Senior Vice President for Administration, Banking Department

Banking Department

James W. Convy, Vice President, Human Resources and Branch Administrator

Joseph M. Davis, Vice President, Data Processing Manager

Richard A. Hancock, Vice President, Operations

John J. Letter, CPA, Vice President and Controller

Roger S. Miller, Vice President, Retail Banking and Alternative Delivery
Services

Bettie J. Hensley, Personnel Officer

David M. Ivey, Assistant Vice President and Assistant Data Processing Manager

Jill A. Jordan, Assistant Vice President, Deposit Services Manager

Betty M. Brown, Assistant Cashier

Sherry J. Hildreth, Assistant Deposit Services Manager

Thomas L. Kovach, Marketing Officer

Patricia A. Shoemaker, Assistant Cashier, Data Processing Supervisor

Cynthia L. Sollars, CPA, Assistant Cashier

Mary J. Wingate, Assistant Cashier, Money Desk Manager

Lending Department

Patricia A. Davis, Vice President and Senior Mortgage Loan Officer


<PAGE>

Thomas R. Miller, Vice President, Commercial Lending

Wade R. Phelps, Vice President, Commercial Lending

Terri E. Rickel, Vice President, Loan Administration

Serona S. Bartlett, Assistant Vice President, Mortgage Loan Officer

David George II, Assistant Vice President, Consumer Lending

Brian T. Jackson, Assistant Vice President, Mortgage Loan Officer

Judy A. Schuck, Mortgage Loan Operations Officer

Denise L. Williams, Consumer Loan Officer

Muncie Banking Centers

Tamra L. Brown, Manager, Hoyt Avenue

Carol S. Dobbs, Manager, Westminster Village

Jennifer S. Haisley, Manager, Morrison Road

Rebecca L. Harmon, Assistant Vice President and Manager, Jackson Street

Lillie M. King, Assistant Vice President and Manager, Main Street

Connie J. Lamb, Manager, Country Village

Jeffrey M. Lindley, Manager, East Memorial

Barbara I. Metcalf-Bell, Assistant Vice President and Manager, Broadway Avenue
and McGalliard Road

Portland Banking Center

Donald C. Gillespie, Assistant Vice President and Manager

Yorktown Banking Center

Stanton E. Schad, Assistant Vice President and Manager


American National Trust and Investment Management Company
Directors and Officers

DIRECTORS

William A. Barnes, Chairman of the Board

Frank E. Ball, President, Minnetrista Corporation

John W. Fisher, Retired Chairman, Ball Corporation


<PAGE>

Robert E. Kersey, President, American Lawn Mower Company

James R. Schrecongost, President and Chief Executive Officer, ANB Corporation;
Vice Chairman and Chief Executive Officer, American National Bank and Trust
Company

Paul L. Sehnert, Jr., President and Chief Executive Officer, American National
Trust And Investment Management Company

William L. Skinner, Senior Vice President, Alltrista Corporation

Edmund F. Ball, Honorary Director


Officers

William A. Barnes, Chairman

Paul L. Sehnert, Jr., President and Chief Executive Officer

David S. Gooden, Senior Vice President and Senior Investment Officer

Theodore H. Jarvis, Senior Vice President and Senior Portfolio Manager

Thomas R. Papp, Vice President and Senior Trust Officer and Corporate Secretary

Archie B. Spangler, Vice President and Senior Trust Officer and Corporate
Cashier

Gary D. Demaree, Vice President

Edward V. Huffman, Vice President and Trust Officer

Terri E. Matchett, Vice President and Trust Officer

Tracy O. Osborne, CPA, Vice President and Trust Officer

Nancy L. Reed, Vice President and Trust Officer

John C. Silletto, Vice President and Investment Officer

William A. Tucker, Jr., Vice President and Trust Officer

Carolyn S. Bowers, Assistant Vice President and Trust Officer

Judith A. Polson, Assistant Vice President and Trust Officer

James L. Griest, Business Development Officer

J. Thomas Hurley, Trust Officer

Melissa V. Jones, Trust Officer


<PAGE>

ANB Financial Planning Services
Directors and Officers

Directors and Officers

James R. Schrecongost, Chairman of the Board

Lloyd M. Townsend, President

Michael T. Downham, Executive Vice President

Larry E. Thomas, Treasurer

Cynthia L. Sollars, CPA, Secretary


Peoples Loan & Trust Bank
Directors and Officers

Directors

Richard G. Applegate, President, R. G. Applegate Steel Company, Inc.

Lowell W. Fields, Retired Manager, Campbell Soup Company

Richard L. Golliher, Retired, The Saratoga State Bank

John B. Goodrich, President, J&P Plating, Inc.

Grace E. Losh, Retired

James R. Schrecongost, President and Chief Executive Officer, ANB Corporation;
Vice Chairman and Chief Executive Officer, American National Bank and Trust
Company

Gerald Stephen, Chairman of the Board

Chris L. Talley, President and Chief Executive Officer, Peoples Loan & Trust
Bank

Carl A. Thompson, Retired Farmer

Honorary Director

John W. Thompson


Officers

Gerald Stephen, Chairman of the Board

Chris L. Talley, President and Chief Executive Officer

Dean E. Edwards, Executive Vice President, Loan Administration


<PAGE>

Kent L. Heckley, Executive Vice President, Randolph County Mortgage and Consumer
Lending

Philip R. Hirschfeld, Executive Vice President, Wayne County Commercial Lending

Janice A. Powers, Vice President/Cashier

E. Daniel Cox, Vice President, Wayne County Commercial and Ag Lending

Marc C. Edwards, Vice President and Branch Manager, Saratoga

Ernest R. Heighway, Vice President, Wayne County Mortgage Lending

Mary Jane Miller, Vice President, Wayne County Commercial Lending

Thomas L. Powers, Vice President and Branch Manager, Farmland

Gary A. Saxman, Vice President, Director of Data Processing

Stephen K. Welch, Vice President and Branch Manager, Lynn

David E. Bartram, Assistant Vice President and Branch Manager, Wayne County

Kathy E. Beumer, Assistant Cashier, Director of Marketing

Debra K. Butcher, Secretary to the Board of Directors

Linda E. Pugh, Controller