HARRODSBURG FIRST FINANCIAL BANCORP, INC.

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

Harrodsburg  First  Financial  Bancorp,   Inc.,  a  Delaware   corporation  (the
"Company"),  converted from a unitary savings and loan holding company to a bank
holding company  effective July 15, 2001, and on the same date acquired a 56.27%
interest in Citizens Financial Bank, Inc. (Citizens), which is a newly organized
de novo Kentucky  chartered  commercial bank located in Glasgow,  Kentucky.  The
Company serves as the bank holding  company for Citizens and for First Financial
Bank ("First Financial"),  a federally chartered savings bank of which it is the
sole shareholder.

First  Financial is subject to  regulation  by the Office of Thrift  Supervision
("OTS") and Citizens is subject to  examination  and  regulation  by the Federal
Deposit  Insurance   Corporation  and  the  Kentucky   Department  of  Financial
Institutions. The primary activity of the Company is its investment in the stock
of First Financial and Citizens and monitoring  their  operations.  Accordingly,
the information  set forth in this report,  including  financial  statements and
related  data,  relates  primarily  to the  operations  of First  Financial  and
Citizens.

First  Financial  was  formed  in 1961 as a  federal  mutual  savings  and  loan
association  and  obtained  insurance  of  accounts  and  became a member of the
Federal Home Loan Bank ("FHLB") of Cincinnati at that time.  Upon its conversion
to stock form in September 1995, the Bank adopted the name First Federal Savings
Bank of Harrodsburg.  Effective  January 1, 2000, the Bank's name was changed to
First Financial Bank.  First Financial  operates through one full service office
in Harrodsburg,  Kentucky,  and two full service branch offices in Lawrenceburg,
Kentucky.

The  executive  offices of the  Company and First  Financial  are located at 104
South Chiles Street,  Harrodsburg,  Kentucky 40330,  and its telephone number is
(859) 734-5452. The executive offices of Citizens are located at 113 West Public
Square, Glasgow, Kentucky, 42142 and its telephone number is (270) 651-9921.

                         MARKET AND DIVIDEND INFORMATION

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

Market for the Common Stock
Since  October 4, 1995,  the Common  Stock of the  Company  has been  listed for
trading  under the  symbol  "HFFB" on the  National  Association  of  Securities
Dealers,  Inc. Automated Quotation ("NASDAQ") National Market. As of December 6,
2002,  there were 1,334,016  shares of the Common Stock issued and  outstanding,
held by  approximately  500  stockholders  of record,  not including  beneficial
owners in nominee or street name.

Dividends

The Company  maintains a policy whereby it will pay a semi-annual  cash dividend
payable as of the 15th day of each April and October or the first  business  day
thereafter  if such day is not a business day, to  stockholders  of record as of
the last business day of the month following the end of such semi-annual period.
The regular  semi-annual  dividend of $0.30 per share was payable on October 15,
2002 to  stockholders of record on September 28, 2002. The Board of Directors of
the  Company  periodically  reviews  its  dividend  policy.  Any  change  in the
Company's dividend policy, as determined by the Board of Directors,  will depend
on the  Company's  debt  and  equity  structure,  earnings,  regulatory  capital
requirements,  and other  factors,  including  economic  conditions,  regulatory
restrictions,  and tax  considerations.  See  Note 9 of  Notes  to  Consolidated
Financial  Statements for  restrictions  on the payment of cash  dividends.  For
further  information  on stock  prices  and  dividends,  see  Stock  Prices  and
Dividends (page 3).


<PAGE>

                        SELECTED FINANCIAL AND OTHER DATA


Financial Condition Data

<TABLE>
<CAPTION>
                                                            At September 30,
                                         ----------------------------------------------------
                                            2002       2001       2000       1999       1998
                                         --------   --------   --------   --------   --------
                                                       (Dollars in Thousands)
                                         ----------------------------------------------------
<S>                                    <C>        <C>        <C>        <C>        <C>
Total Amount of:
    Assets ...........................   $153,052   $136,541   $117,393   $110,416   $109,919
    Loans receivable, net ............    113,352    105,081    100,881     89,062     85,272
    Investments (1) ..................     21,328     17,450     10,994     11,240     14,966
    Cash and interest-bearing deposits     12,448     10,896      3,031      8,350      8,074
    Deposits .........................    121,920    102,961     86,473     82,018     78,996
    FHLB advances ....................      5,000      7,000      3,500
    Minority interests ...............      1,662      1,849
    Stockholders' equity .............     22,066     22,305     25,241     26,220     28,982
---------------------------------------------------------------------------------------------
Number of:
    Real estate loans outstanding ....      1,446      1,559      1,587      1,532      1,601
    Deposit accounts .................     10,909     10,535     10,026      9,574      9,590
    Full service offices .............          4          4          3          2          2
</TABLE>


--------------------------
(1)  Includes FHLB stock, and term deposits with the FHLB.

Operating Data

<TABLE>
<CAPTION>
                                              For the year ended September 30,
                                   ---------------------------------------------------
                                     2002       2001       2000       1999       1998
                                   -------    -------    -------    -------    -------
                                                   (Dollars in Thousands)
                                   ---------------------------------------------------
<S>                              <C>        <C>        <C>        <C>        <C>
Interest income ................   $ 8,737    $ 8,744    $ 8,051    $ 7,745    $ 7,778
Interest expense ...............     4,741      5,187      4,150      3,813      3,897
                                   -------    -------    -------    -------    -------
    Net interest income ........     3,996      3,557      3,901      3,932      3,881
Provision for loan losses ......       241         39         15         35         96
                                   -------    -------    -------    -------    -------
    Net interest income after
     provision for loan losses .     3,755      3,517      3,886      3,897      3,785
Non-interest income ............       486        178        113        116        122
Non-interest expense ...........     3,306      2,679      2,261      1,728      1,679
                                   -------    -------    -------    -------    -------
Income before income tax expense
    and minority interests .....       935      1,016      1,738      2,285      2,228
Income tax expense .............      (494)      (394)      (591)      (777)      (799)
Minority interests .............       229         63
                                   -------    -------    -------    -------    -------
Net income .....................   $   670    $   685    $ 1,147    $ 1,508    $ 1,429
                                   =======    =======    =======    =======    =======

Basic earnings per share .......   $   .54    $   .52    $   .76    $   .94    $   .79
                                   =======    =======    =======    =======    =======

Diluted earnings per share .....   $   .54    $   .52    $   .76    $   .94    $   .79
                                   =======    =======    =======    =======    =======
</TABLE>

                                       2
<PAGE>

Key Operating Ratios

<TABLE>
<CAPTION>
                                                  At or for the year ended September 30,
                                            -------------------------------------------------
                                               2002      2001      2000      1999      1998
                                               ----      ----      ----      ----      ----
<S>                                         <C>       <C>      <C>       <C>       <C>
Performance Ratios:
Return on average assets (net income
  dividend by average total assets) ...         .46%      .56%     1.02%     1.36%     1.31%

Return on average equity (net income
  divided by average equity ...........        3.02      3.06      4.49      5.49      4.98

Average interest-earning assets to
  average interest-bearing liabilities       116.00    123.25    128.80    133.86    136.40

Net interest rate spread ..............        2.34      1.95      2.46      2.43      2.30

Net yield on average interest-earning
  assets ..............................        2.89      2.95      3.55      3.63      3.63

Dividend payout .......................      110.90    108.63    113.08     87.74    102.38

Capital Ratios:
Average equity to average assets
  (average equity divided by average
  total assets) .......................       15.32     18.16     22.64     24.80     26.31

Equity to assets at period end ........       14.42     16.34     21.50     23.75     26.37

Asset Quality Ratios:
Net interest income after provision for
  loan losses to total other expenses .      113.58    131.28    171.87    225.58    225.43

Non-performing loans to total loans ...         .33       .21       .51       .32       .57

Non-performing loans to total assets ..         .25       .16       .44       .25       .44
</TABLE>


Stock Prices and Dividends

The  following  table sets forth the range of high and low sales  prices for the
common  stock  as  reported  by the Wall  Street  Journal  as well as  dividends
declared  in each  quarter  for  2002 and  2001.  Such  over-the-counter  market
quotations reflect inter-dealer prices,  without retail mark-up,  mark-down,  or
commission and may not necessarily represent actual transactions.

Quarterly Stock Information

                         Fiscal 2002                            Fiscal 2001
             ----------------------------------   ------------------------------
              Stock Price Range                     Stock Price Range
             ----------------------               -----------------------
                                      Per Share                        Per Share
Quarter        Low         High        Dividend     Low       High     Dividend
--------------------------------------------------------------------------------
1st          $ 10.82     $ 12.11       $     -    $ 9.69   $ 12.88      $    -
2nd            11.00       12.03           .30     10.75     14.50         .30
3rd            11.00       13.52             -     11.00     13.00          --
4th            10.95       12.49           .30     10.00     13.00         .30
--------------------------------------------------------------------------------
                                       $   .60                          $  .60
                                       =======                          ======

                                       3
<PAGE>

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

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

The  Private  Securities  Litigation  Reform Act of 1995  contains  safe  harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes,"  "anticipates,"  "contemplates,"  "expects,"  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest  rates,  risks  associated with the ability to control costs
and expenses,  and general  economic  conditions.  Harrodsburg  First  Financial
Bancorp,  Inc.  undertakes no obligation to publicly  release the results of any
revisions  to those  forward  looking  statements,  which may be made to reflect
events or  circumstances  after the date hereof or to reflect the  occurrence of
unanticipated events.

Harrodsburg First Financial Bancorp,  Inc. ("Company") is a bank holding company
headquartered in Harrodsburg,  Kentucky, which provides a full range of deposits
and  traditional  mortgage  loan products  through its wholly owned  subsidiary,
First Financial Bank ("First  Financial"),  a federally  chartered savings bank,
and Citizens  Financial Bank, Inc.  ("Citizens"),  a state chartered  commercial
bank, in which the Company has a 55.8%  interest.  All references to the Company
generally  refer  to the  consolidated  entity  including  First  Financial  and
Citizens, unless the context indicates otherwise. "Banks" refers to the combined
operations  of First  Financial  and  Citizens,  unless  the  context  indicates
otherwise.

Overview

On July 15,  2001,  the Company  converted  from a unitary  savings bank holding
company  to a bank  holding  company,  and on the same  date  acquired  a 56.27%
interest  in  Citizens  Financial  Bank,  Inc.,  which is a  Kentucky  chartered
commercial bank. The Company paid a cash price of $2,816,300 for its controlling
interest in  Citizens.  The  acquisition  was  accounted  for under the purchase
method of  accounting.  As a result of the  transaction,  the  Company  recorded
goodwill  of  $356,064  for the excess  cost over the net assets  acquired.  The
Company has  determined  that goodwill is not impaired as of September 30, 2002.
The Company's  investment  in Citizens  decreased to 55.8% in fiscal 2002 due to
Citizens  issuance  of 2,100  shares  of stock  in lieu of cash  for  rental  of
Citizens banking office. Future rent is payable in cash.

For the fiscal year ended  September  30, 2002,  net income was $670,000 or $.54
cents per diluted share, as compared to $685,000 or $.52 cents per diluted share
for fiscal 2001. During the year assets increased $16.5 million to $153 million.
Net loans  outstanding  grew by 7.9% to $113.4 million and asset quality remains
strong. Net income decreased by 2.19% during the year or $15,000. Citizens, as a
startup  venture has not yet  achieved  profitability.  The  Company's  share of
Citizens loss was $(289,000)  compared to $(81,000) for the year ended September
30, 2001, an increased loss of  $(208,000).  First  Financial  Bank's net income
increased by $206,000 for the year, primarily due to increases in cash surrender
value of the Bank's investment in life insurance.

Asset/Liability Management

Market Risk Analysis.  The Banks,  like many other financial  institutions,  are
vulnerable  to  an  increase  in  rates  to  the  extent  that  interest-bearing
liabilities  generally  mature or reprice  more  rapidly  than  interest-earning
assets.  Historically,  the lending activities of savings institutions,  such as
First  Financial,  emphasized  the  origination  of long-term,  fixed rate loans
secured by single family  residences,  and the primary  source of funds has been
deposits with substantially  shorter maturities.  While having  interest-bearing
liabilities  that  reprice  more  frequently  than  interest-earning  assets  is
generally  beneficial  to net  interest  income  during  a period  of  declining
interest rates, such an asset/liability mismatch is generally detrimental during
periods of rising interest rates.

                                       4
<PAGE>

Historically,  the lending  activities  of commercial  banks,  such as Citizens,
emphasized the origination of short to intermediate variable rate loans, secured
by various  types of collateral  that are more closely  matched with the deposit
maturities  and repricing of  interest-earning  assets occurs closer to the same
general time period.

To reduce the effect of interest  rate changes on net interest  income the Banks
have adopted various  strategies to improve matching of  interest-earning  asset
maturities to interest-bearing  liability maturities.  The principal elements of
these strategies include:

o    Originate one to four family  residential  mortgage  loans with  adjustable
     rate features or fixed rate loans with short maturities;
o    Lengthen the maturities of our liabilities  when it would be cost effective
     through the pricing and  promotion of higher rate  certificates  of deposit
     and utilization of FHLB advances or other borrowings;
o    Attract low cost checking and transaction  accounts,  which tend to be less
     interest rate sensitive when interest rates rise;
o    Maintain  interest-bearing  deposits,  federal funds,  and U.S.  government
     securities with short to intermediate terms to maturities; and
o    Maintain an investment  portfolio that provides a stable cash flow, thereby
     providing investable funds in varying interest rate cycles.

The Banks also monitor  interest  rate  sensitivity  through the use of a model,
which  estimates  the change in net  portfolio  value  ("NPV") in the event of a
range of assumed  changes  in market  interest  rates.  Net  portfolio  value is
defined as the current market value of assets,  less the current market value of
liabilities,  plus or minus the current value of  off-balance  sheet items.  The
change in NPV measures the Banks'  vulnerability to changes in interest rates by
estimating  the  change  in  the  market  value  of  assets,  liabilities,   and
off-balance  sheet items as a result of an  instantaneous  change in the general
level of interest rates.

As  market  interest  rates  decrease,  the  average  maturities  of  loans  and
investment securities shorten due to quicker prepayments, causing an increase in
their  value.  Deposit  accounts  have  only  relatively  minor  movements  in a
declining  interest  rate  environment  since they are  primarily  short-term in
nature,  resulting  in the value of deposits  decreasing  more  quickly than the
value of assets increase.

The NPV models used by the OTS and the FDIC has certain  shortcomings.  Based on
the models,  certain  assumptions are made that may or may not actually  reflect
how actual yields,  and costs will react to market interest rates.  For example,
the NPV models  assume  that the makeup of the Banks'  interest  rate  sensitive
assets,  and  liabilities  will remain  constant over the period being measured.
Thus,  although  using such models can be instructive in providing an indication
of the Banks exposure to interest rate risk, the Banks cannot precisely forecast
the  effects of a change in market  interest  rates.  Additionally,  the results
indicated by the models are likely to differ from actual results.

First  Financial  measures its interest  rate risks,  using the Office of Thrift
Supervision NPV method. The OTS defines the sensitivity measure as the change in
the NPV ratio with a 200 basis point shock.  At September  30, 2002, if interest
rates increased by 200 basis points, First Financial's NPV ratio would be 14.62%
based on a 136 basis point decrease in its NPV. Additionally,  if interest rates
decline by 100 basis points,  First  Financial's NPV ratio would be 16.13% based
on a 16 basis point  increase in its NPV. Due to the  abnormally  low prevailing
rate environment, the OTS does not currently provide NPV estimates for 200 basis
point declines in interest rates.

The FDIC does not require a specific measurement tool for interest rate risk but
sets forth desirable interest rate risk management practices, including adequate
risk measurement systems. Citizens measures its exposure to rate movements using
a 200 up/down rate stock to  determine  12 month impact on net interest  margins
for assets and liabilities  repricing in one year. As of June 30, 2002, if rates
increased  200 basis points,  net interest  margins would decline .01%. If rates
decreased 200 basis points net interest margins would decline by .05%.

                                       5
<PAGE>

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2002 and 2001

The Company's  consolidated  assets  increased $16.5 million,  or 12.1%, to $153
million at September 30, 2002.  The increase in total assets is primarily due to
Citizens,  whose total assets  increased $15.9 million or 134.75%.  Consolidated
interest  bearing assets  increased  $13.8 million or 10.4%.  Loans  outstanding
increased $8.5 million.  Other  significant  changes to interest  bearing assets
include an increase in securities available-for-sale of $4.8 million and in time
deposits in other banks of $4.7  million.  These  increases in interest  bearing
assets were offset  primarily by a decrease in interest  bearing demand accounts
of $2.7 million,  securities  held-to-maturity of $1.0 million, and decreases in
federal funds sold of $.6 million. Non-interest bearing assets increased by $2.7
million due primarily to the increase in cash surrender  value of life insurance
of $2.6 million.

Securities  available-for-sale  increased  $4.8 million at September 30, 2002 to
$17.3  million  from $12.5  million at September  30, 2001.  The decline in U.S.
government   securities   of  $2.6   million  was  offset  by  the  purchase  of
mortgaged-backed   securities  of  $8.0  million.   Securities  held-to-maturity
decreased  by $1  million.  The  decrease  was  attributable  to  maturities  of
securities during the year.

Loans  receivable,  net increased  $8.3 million or 7.9% at September 30, 2002 to
$113.4  million  from $105.1  million at  September  30,  2001.  The increase in
interest bearing loans was due to Citizens increase of $17.8 million,  which was
offset by a decrease of $9.5 by First Financial. First Financial loans decreased
primarily due to decisions by management not to originate  long-term  fixed rate
loans at market rates below a certain yield.  Significant  changes in the mix of
loans includes an increase in commercial loans primarily  secured by real estate
of $5.4 million, an increase in loans secured by farmland of $3.4 million and an
increase in commercial  loans of $2.6 million.  These  increases  were offset by
declines in  residential  loans  secured by real estate of $4.2 million and real
estate construction and development loans of $1.9 million.

Total interest bearing liabilities increased $15.8 million or 14.4% at September
30, 2002 to $125.6  million  from $109.8  million at  September  30,  2001.  The
increase in total  interest  bearing  liabilities  was primarily due to Citizens
increase in  interest  bearing and other  deposits of $15.2  million  with First
Financial's interest bearing and other deposits also increasing by $2.6 million.
These  increases in interest  bearing  liabilities  were offset by a decrease in
Federal Home Loan Bank advances of $2.0 million.  Demand deposits increased $4.3
million to $22.4 million while  certificates of deposits increased $14.7 million
to $99.5 million.  These increases  reflect  management's  success in attracting
deposit customers.  Non-interest  bearing liabilities  increased by $1.1 million
primarily  due to Citizens  increase in  non-interest  bearing  deposits of $1.1
million.

Stockholders'  equity was $22.1  million at  September  30,  2002 and  decreased
approximately  $239,000  from the balance at September  30, 2001.  Net income of
$670,000 and an increase of $271,000 for ESOP shares released from collateral in
2002 were offset by the  declaration  of  dividends  of $742,000 and $390,000 of
unrealized losses on securities available-for-sale,  net of tax. During the year
ended September 30, 2002, the Company repurchased $52,000 in common stock.

Average Balances, Interest, and Average Yields

Net interest  income is affected by (i) the difference  ("interest rate spread")
between  rates of  interest  earned  on  interest-earning  assets  and  rates of
interest paid on  interest-bearing  liabilities and (ii) the relative amounts of
interest-earning assets and interest-bearing  liabilities. When interest-earning
assets approximate or exceed interest-bearing liabilities, any positive interest
rate spread will generate net interest  income.  Banks have  traditionally  used
interest  rate  spreads as a measure of net  interest  income.  Certificates  of
deposit  constitute  approximately  81.6% of the total deposits of the Banks and
generally  pay higher  rates of interest  than core  deposits.  Certificates  of
deposits  were 82.3% of total  deposits at September  30, 2001.  The emphasis on
certificates  of deposits may result in a higher  average cost of deposits which
may  adversely  affect  the  interest  rate  spread.  Another  indication  of an
institution's net interest income is its "net yield on interest-earning  assets"
which is net interest  income divided by average  interest-earning  assets.  The
following  table  sets  forth  certain  information   relating  to  the  average
interest-earning  assets  and  interest-bearing  liabilities  of the  Banks  and
reflects  the average  yield on assets and average cost of  liabilities  for the
periods  indicated.  Such  yields and costs are  derived by  dividing  income or
expense by the average monthly  balance of assets or liabilities,  respectively,
for the periods presented.  During the periods

                                       6
<PAGE>

indicated,  nonaccruing  loans are  included in the net loan  category.  Average
balances  are derived  from  month-end  average  balances.  Management  does not
believe  that the use of month-end  average  balances  instead of average  daily
balances has caused any material difference in the information presented.

<TABLE>
<CAPTION>
                                                                          Year Ended September 30,
                                          -----------------------------------------------------------------------------------------
                                                             2002                                          2001
                                          -------------------------------------------    ------------------------------------------
                                             Average                        Average          Average                       Average
                                             Balance       Interest        Yield/Cost        Balance     Interest        Yield/Cost
                                          -----------    -----------      ------------    ----------    ----------      ------------
<S>                                       <C>             <C>              <C>           <C>             <C>             <C>
Interest-earning assets:
 Loans receivable                           $109,011        $ 8,099            7.43%       $102,989        $8,068            7.83%
 Investment securities and other 1            29,215            638            2.18%         17,600           676            3.84%
                                          -----------    -----------                     -----------    ----------
     Total interest-earning assets           138,226          8,737            6.32%        120,589         8,744            7.25%
                                                         -----------                     -----------    ----------
Non-interest earning assets                    6,571                                          2,723
                                          -----------                                    -----------
     Total assets                           $144,797                                       $123,312
                                          ===========                                    ===========
Interest-bearing liabilities:
 Deposits                                   $115,540        $ 4,632            4.01%       $ 91,671         4,848            5.29%
 Borrowings                                    3,625            109            3.01%          6,167           339            5.50%
                                          -----------    -----------                     -----------    ----------
     Total interest-bearing
       liabilities                           119,165          4,741            3.98%         97,838         5,187            5.30%
                                                         -----------                                    ----------
Non-interest bearing liabilities               1,691                                          2,618
                                          -----------                                    -----------
     Total liabilities                       120,856                                        100,456
Minority interests                             1,755                                            464
Stockholders' equity                          22,186                                         22,392
                                          -----------                                    -----------
     Total liabilities and stock-
       holders' equity                      $144,797                                       $123,312
                                          ===========                                    ===========
Non-interest income                                         $ 3,996                                        $3,557
                                                         ===========                                    ==========
Interest rate spread 2                                                         2.34%                                         1.95%
                                                                        =============                                 =============
Net yield on interest-earnings
 assets 3                                                                      2.89%                                         2.95%
                                                                        =============                                 =============
Ratio of average interest-earnings
 assets to average interest-bearing
 liabilities                                                                 116.00%                                       123.25%
                                                                        =============                                 =============
</TABLE>

-------------------------------------
1    Includes interest-bearing overnight deposits with FHLB.
2    Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the  average   cost  of  interest   bearing
     liabilities
3    Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                       7
<PAGE>

Rate/Volume Analysis

The following table below sets forth certain  information  regarding  changes in
interest income and interest expense of the Banks for the periods indicated. For
each  category  of  interest-earning  assets and  interest-bearing  liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average  volume).  Average balances
are derived from month-end balances. Management does not believe that the use of
month-end  balances  instead of average  daily  balances has caused any material
difference in the information presented.

<TABLE>
<CAPTION>
                                              Year Ended September 30,
                                      --------------------------------------------
                                                    2002 vs. 2001
                                      --------------------------------------------
                                              Increase (Decrease) Due To
                                      --------------------------------------------
                                                                Rate/
                                          Volume      Rate      Volume       Net
                                         -------    -------    -------    -------
<S>                                    <C>        <C>        <C>        <C>

Interest income:
   Loans receivable .................... $   471    $  (416)   $   (24)   $    31
   Investment securities 1  and other...     447       (292)      (193)       (38)
                                         -------    -------    -------    -------
          Total ........................ $   918    $  (708)   $  (217)   $    (7)
                                         =======    =======    =======    =======

Interest expense:
   Deposits ............................ $ 1,263    $(1,173)   $  (306)   $  (216)
   Borrowings ..........................    (140)      (153)        63       (230)
                                         -------    -------    -------    -------
          Total ........................ $ 1,123    $(1,326)   $  (243)   $  (446)
                                         =======    =======    =======    =======

Net change in interest income .......... $  (205)   $   618    $    26    $   439
                                         =======    =======    =======    =======
</TABLE>

-----------------------------------
1    Includes interest-earning overnight deposits with FHLB of Cincinnati.

                                       8
<PAGE>

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE YEARS
ENDED SEPTEMBER 30, 2002 and 2001

Net Income.  Net income  decreased  by $15,000 or 2.2% to $670,000  for the year
ended  September  30, 2002 as compared to $685,000 for the year ended  September
30,  2001.  Net interest  income  increased  by  $439,000,  non-interest  income
increased  by  $309,000  and the  minority  ownerships  share of  Citizens  loss
increased  by  $166,000.  These  increases in income were offset by increases in
non-interest expenses of $627,000,  income tax expense of $99,000 and provisions
for loan losses of $202,000 primarily due to growth in Citizens' loan portfolio.

Net Interest  Income.  Net interest income for the year ended September 30, 2002
was $4.0 million. The increase in net interest income in fiscal 2002 compared to
2001 of $439,000 was due to a decrease in interest expense of $446,000 offset by
a  decrease  in  interest  income of  $7,000.  Interest  income in 2002 was $8.7
million with an average yield of 6.32%  compared to $8.7 million with an average
yield o 7.25% in 2001. The average  balance of interest  bearing assets for 2002
was $138.2 million  compared to $120.6 million for 2001. The average  balance of
interest bearing  liabilities in 2002 was $119.2 million with an average cost of
funds of 3.98% compared to average balances of interest  bearing  liabilities in
2001 of $97.8 million with an average cost of funds of 5.30%.

Interest  Income.  Interest  income  was  $8.7  million,  or  6.32%  of  average
interest-earning  assets, for the year ended September 30, 2002 compared to $8.7
million,  or 7.25% over  average  interest  earning  assets,  for the year ended
September  30,  2001.  Interest  income  decreased by $7,000 or .1% from 2001 to
2002. While average yields on  interest-earning  assets decreased .93% from 2001
to 2002, average interest-earning assets increased by $17.6 million from 2001 to
2002. These  offsetting  changes resulted in the net decrease in interest income
of $7,000.

Interest  Expense.  Interest  expense  was $4.7  million,  or  3.98% of  average
interest-bearing  liabilities, for the year ended September 30, 2002 as compared
to $5.2 million, or 5.30% of average  interest-bearing  liabilities,  for fiscal
2001. While average  interest-bearing  liabilities increased by $21.3 million to
$119.2 million in fiscal 2002, the average rate paid on deposits declined by 128
basis points in fiscal 2002 and the average rate paid on borrowings  declined by
249 basis  points in fiscal  2002.  The effect of the  declines in rates paid on
deposits and borrowings was partially offset by increases in average balances of
deposits and borrowings.  The changes resulted in a decrease in interest expense
in fiscal 2002 of $446,000 or 8.6% from fiscal 2001.

Provision  for  Losses on Loans.  The  provision  for loan  losses is charged to
operations  to bring  the  total  allowance  for  loan  losses  to a level  that
represents  management's  best estimate of the losses inherent in the portfolio,
based on:

o    historical experience;
o    volume;
o    type of lending conducted by the Banks;
o    industry standards;
o    the level and status of past due and non-performing loans;
o    the general economic conditions in the Banks' lending areas; and
o    other factors affecting the collectibility of the loans in the portfolio.

For the year ended  September 30, 2002, the provision for loan losses  increased
$201,900 to $241,400  compared to $39,500 for fiscal  2001.  The increase in the
provision  relates  to  Citizens  growth in its loan  portfolio.  Citizens  loan
portfolio  increased $18 million to $20.9 million in fiscal 2002.  This increase
was  primarily  comprised  of  increases  in  real  estate  secured  loans  with
commercial real estate loans increasing $10.4 million and 1-4 family residential
real estate loans  increasing  by $6.0 million.  While  Citizens does not have a
loss history, the Bank provides reserves for other factors discussed above.

The  allowance  for  loan  losses  is  maintained  at a  level  that  represents
management's best estimates of losses in the loan portfolio at the balance sheet
date.  However,  there can be no assurance that the allowance for losses will be
adequate  to  cover  losses,  which  may be  realized  in the  future  and  that
additional provisions for losses will not be required.

                                       9
<PAGE>

Non-Interest Income. Non-interest income was $487,000 and $178,000 for the years
ended  September  30, 2002 and 2001,  respectively.  Other  non-interest  income
increased by $179,000 to $223,000,  primarily  due to increases in the Company's
bank owned life  insurance cash  surrender  value of $147,000.  The remainder of
other  non-interest  income was due to Citizens growth and related  increases in
non-interest  income  of  $44,000.  Loan and other  service  fees  increased  by
$130,000 to $263,000.  Citizens loan  portfolio  growth and related fees thereon
accounted for $100,000 of this increase.

Non-Interest Expense.  Non-interest expense increased  approximately $627,000 or
23.4% to $3.3 million for the year ended  September  30, 2002.  The increase was
primarily  due to an  increase of $353,000 in  compensation  and  benefits,  and
increase  of  $78,000  in  occupancy  expense,  an  increase  of $54,000 in data
processing,  an  increase  of $100,000  in other  non-interest  expenses  and an
increase in state franchise taxes of $39,000.  These increases are primarily due
to the  acquisition  of Citizens  and its growth  during the year with  Citizens
total non-interest  expenses  increasing by $659,000 and First Financial's other
non-interest expenses decreasing by $26,000.

Income  Tax  Expense.   The  provision  for  income  tax  expense   amounted  to
approximately  $494,000 and $395,000 for the years ended  September 30, 2002 and
2001,  respectively.  The  provision  for income tax expense as a percentage  of
income before income tax expenses amounted to 52.8% for the year ended September
30, 2002 and 38.8% for the year ended  September  30, 2001.  The increase in the
effective rate is attributable  to a valuation  allowance  against  Citizens net
deferred tax assets in the amount of $174,000.

Liquidity

The liquidity of the Company  depends  primarily on the dividends  paid to it by
its bank  subsidiaries.  The  payment  of cash  dividends  by the Banks on their
common stock is limited by regulations  of the OTS and the FDIC,  which are tied
to their level of compliance with their regulatory capital requirements.

The Banks'  primary source of funds are deposits and proceeds from principal and
interest  payments of loans.  Additional  sources of liquidity are advances from
the FHLB of Cincinnati and other borrowings, such as Federal Funds purchased. At
September  30, 2002,  First  Financial  had $5.0 million in advances  from FHLB.
First  Financial  utilizes FHLB of  Cincinnati  borrowings  during  periods when
management  believes that such  borrowings  provide a source of funds at a lower
cost than  deposit  accounts,  and when they desire  liquidity  in order to help
expand the loan portfolio.

The Company's  operating  activities produced positive cash flows for the fiscal
years ended September 30, 2002 and 2001. Net cash from operating  activities for
2002 totaled $806,000, as compared to $679,000 million for 2001. The increase in
operating cash flows in year 2002 results primarily from increased non cash loan
loss provisions.

Net cash  used by  investing  activities  for 2002  totaled  $18.4  million,  as
compared to $10.3 million for 2001.

Net cash from financing activities for the year ended September 30, 2002 totaled
$16.3 million, as compared to $17.5 million for 2001.

The Banks'  most  liquid  assets are cash and  cash-equivalents,  which  include
investments in highly liquid, short-term investments.  At September 30, 2002 and
2001,  cash and  cash  equivalents  totaled  $9.6  million  and  $10.8  million,
respectively.

At September 30, 2002, the Banks had $78.9 million in  certificates  of deposits
due  within  one year  and  $17.7  million  due  between  one and  three  years.
Management believes,  based on past experience,  that the Banks will retain much
of the deposits or replace them with new  deposits or  borrowings.  At September
30, 2002,  the Banks had $1.6 million in  outstanding  commitments  to originate
mortgages.   The  Banks  intend  to  fund  these   commitments  with  short-term
investments and proceeds from loan repayments.

                                       10
<PAGE>

Impact of Inflation and Changing Prices

The consolidated  financial  statements and notes thereto  presented herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering  the change in the relative  purchasing
power of money  over  time and due to  inflation.  The  impact of  inflation  is
reflected  in the  increased  cost  of the  Company's  operations.  Unlike  most
industrial  companies,  nearly all the assets and liabilities of the Company are
monetary in nature.  As a result,  interest  rates have a greater  impact on the
Company's  performance  than do the  effects  of  general  levels of  inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the price of goods and services.

New Accounting Pronouncements

In June of 2001 the Financial Accounting Standards Board (FASB) issued Statement
No. 141,  "Business  Combinations"  and Statement  No. 142,  "Goodwill and Other
Intangible  Assets."  Statement  No.  141  pertains  to  business   combinations
initiated after June 30, 2001 and requires all business  combinations after this
date to be accounted for using the purchase method of accounting.  Statement No.
142 pertains to the accounting for goodwill and other  intangible  assets and is
effective  for the Company  beginning  July 1, 2001.  Under  Statement  No. 142,
goodwill recorded in Business  Combinations after July 1, 2001 must be evaluated
for  impairment  at least  on an  annual  basis.  If it is  determined  that the
goodwill has been impaired,  then the carrying value of goodwill must be reduced
for the  impairment.  The Company does not anticipate the effect of implementing
these  statements  to be  material  to its  financial  position  or  results  of
operations.

                                       11
<PAGE>

[LOGO]
EKW                                                    JEFFREY T. EBELHAR, CPA
& ASSOCIATES, llp                                      DOUGLASS E. KELLER, CPA
CERTIFIED PUBLIC ACCOUNTANTS &                         REBECCA R. WHITEHEAD, CPA
    BUSINESS CONSULTANTS                               MARTHA F. CLARK, CPA
                                                       CHRISTOPHER L. LOVE, CPA
                                                       THERESA P. ELLIOTT, CPA
                                                       GINA G. SLOAN, CPA
                                                       EVE B. HOLDER, CPA
                                                       JULIA H. WIMAN, CPA
                                                       ERIC C. HICKS, CPA
                                                       KRISTIN C. N. CALLIS, CPA
                                                       HEATHER R. ESTES, CPA
                                                       SARA E. PHILLIPS, CPA




                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Harrodsburg First Financial Bancorp, Inc.
Harrodsburg, Kentucky

We have audited the accompanying consolidated balance sheet of Harrodsburg First
Financial Bancorp, Inc. and Subsidiaries (the Company) as of September 30, 2002,
and the related  consolidated  statements  of income,  changes in  stockholders'
equity,  and cash flows for the year then ended.  These  consolidated  financial
statements  are  the  responsibility  of the  management  of  Harrodsburg  First
Financial  Bancorp,  Inc. Our  responsibility  is to express an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements  of the  Company as of  September  30,  2001,  were  audited by other
auditors whose report dated November 16, 2001,  expressed an unqualified opinion
on those statements.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Harrodsburg First
Financial  Bancorp,  Inc. and  Subsidiaries  as of September  30, 2002,  and the
results  of their  operations  and their  cash  flows for the year then ended in
conformity with U.S. generally accepted accounting principles.



/s/EKW & Associates, llp


Owensboro, Kentucky
October 24, 2002


                                       12

    100 West Third Street - P.O. Box 1824 - Owensboro, Kentucky - 42302-1824
             PH: 270-926-2922 - Fax: 270-684-0178 - www.ekwllp.com

<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           September 30, 2002 and 2001

<TABLE>
<CAPTION>
ASSETS                                                       2002             2001
                                                        -------------    -------------
<S>                                                   <C>              <C>
Cash and due from banks                                 $   1,337,830    $   1,180,469
Federal funds sold                                            418,000          964,000
Interest bearing deposits in banks                          7,799,846        8,651,379
                                                        -------------    -------------

                  Cash equivalents                          9,555,676       10,795,848

Interest bearing deposits in banks                          2,892,000          100,000
Securities available-for-sale at fair value                17,275,431       12,508,751
Securities held-to-maturity, fair value of
  $2,261,119 and $3,280,067 for 2002 and
  2001, respectively                                        2,221,053        3,235,300
Federal Home Loan Bank stock, at cost                       1,831,400        1,705,800
Loans receivable, net                                     113,351,935      105,081,309
Accrued interest receivable                                   667,290          730,500
Premises and equipment, net                                 1,838,733        1,896,931
Cash surrender value of life insurance                      2,646,941               --
Other assets                                                  771,579          486,922
                                                        -------------    -------------

                  Total assets                          $ 153,052,038    $ 136,541,361
                                                        =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                $ 121,920,471    $ 102,961,466
Advances from Federal Home Loan Bank                        5,000,000        7,000,000
Advance payments by borrowers for taxes
  and insurance                                                   364            1,215
Deferred federal income tax                                 1,537,650        1,904,364
Dividends payable                                             401,975          404,150
Other liabilities                                             463,668          115,969
                                                        -------------    -------------

                  Total liabilities                       129,324,128      112,387,164
                                                        -------------    -------------

Minority interests                                          1,661,699        1,848,807
                                                        -------------    -------------

Stockholders' equity:
  Common stock  $0.10 par value,5,000,000 shares
    authorized; 1,257,477 and 1,238,834 shares issued
    and outstanding at September 30, 2002 and 2001,
    respectively                                              218,213          218,213
  Additional paid-in capital                               21,283,692       21,237,991
  Retained earnings, substantially restricted              10,906,419       10,978,953
  Accumulated other comprehensive income                    2,867,743        3,257,257
  Treasury stock, 842,209 and 837,959 shares, at
    cost, for 2002 and 2001, respectively                 (12,385,241)     (12,333,701)
  Unallocated employee stock ownership plan
    (ESOP) shares                                            (824,615)      (1,053,323)
                                                        -------------    -------------

                  Total stockholders' equity               22,066,211       22,305,390
                                                        -------------    -------------

                  Total liabilities and stockholders'
                    equity                              $ 153,052,038    $ 136,541,361
                                                        =============    =============
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       13
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                 for the years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>

                                                            2002           2001
                                                        -----------    -----------
<S>                                                   <C>            <C>
Interest income:
  Interest on loans                                     $ 8,098,705    $ 8,067,540
  Interest and dividends on securities                      335,724        439,413
  Other interest income                                     302,325        237,171
                                                        -----------    -----------

                  Total interest income                   8,736,754      8,744,124
                                                        -----------    -----------

Interest expense:
  Interest on deposits                                    4,631,824      4,848,316
  Interest on other borrowings                              108,948        338,688
                                                        -----------    -----------

                  Total interest expense                  4,740,772      5,187,004
                                                        -----------    -----------

Net interest income                                       3,995,982      3,557,120
Provision for loan losses                                   241,400         39,500
                                                        -----------    -----------

                  Net interest income after provision
                    for loan losses                       3,754,582      3,517,620
                                                        -----------    -----------
Non-interest income:
  Loan and other service fees, net                          263,323        133,076
  Other                                                     223,358         44,638
                                                        -----------    -----------

                                                            486,681        177,714
                                                        -----------    -----------
Non-interest expense:
  Compensation and benefits                               1,832,063      1,478,947
  Occupancy expenses, net                                   327,856        249,891
  Federal and other insurance premiums                       26,072         19,306
  Data processing expenses                                  308,911        254,906
  State franchise tax                                       150,763        115,694
  Other operating expenses                                  660,634        560,707
                                                        -----------    -----------

                                                          3,306,299      2,679,451
                                                        -----------    -----------

Income before income tax expense and minority
  interests                                                 934,964      1,015,883
Income tax expense                                         (493,877)      (394,519)
Minority interests                                          228,780         63,176
                                                        -----------    -----------

                  Net income                            $   669,867    $   684,540
                                                        ===========    ===========

Basic earnings per common share                         $       .54    $       .52
                                                        ===========    ===========

Diluted earnings per common share                       $       .54    $       .52
                                                        ===========    ===========

Weighted average common shares outstanding
  during the year                                         1,242,836      1,307,002
                                                        ===========    ===========

Weighted average common shares after dilutive
  effect outstanding during the year                      1,242,836      1,307,002
                                                        ===========    ===========
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       14
<PAGE>

                      HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                           for the years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>

                                                                             ACCUMULATED
                                                  ADDITIONAL                    OTHER                                    TOTAL
                                        COMMON     PAID-IN      RETAINED    COMPREHENSIVE    TREASURY   UNALLOCATED   TOCKHOLDERS'
                                         STOCK     CAPITAL      EARNINGS       INCOME         STOCK     ESOP SHARES     EQUITY
                                      --------- --------------------------- ---------------------------------------   --------

<S>                                  <C>       <C>           <C>           <C>            <C>           <C>           <C>
Balance, September 30, 2000           $218,213  $ 21,215,999  $ 11,038,055  $  2,700,651   $ (8,771,467) (1,160,600)   25,240,851

Comprehensive income:
  Net income                                                       684,540                                                684,540
  Other comprehensive income,
    net of tax unrealized gains
    on securities                                                                556,606                                  556,606
                                                                                                                      -----------

     Total comprehensive income                                                                                         1,241,146

Dividend declared                                                 (743,642)                                              (743,642)

ESOP shares released in 2001                          21,992                                                107,277       129,269
Purchase of 269,909 shares of
  common stock                                                                               (3,562,234)               (3,562,234)
                                      --------  ------------  ------------  ------------   ------------   ----------  ------------

Balance, September 30, 2001            218,213    21,237,991    10,978,953     3,257,257    (12,333,701) (1,053,323)   22,305,390

Comprehensive income:
  Net income                                                       669,867                                                669,867
  Other comprehensive income,
    net of tax unrealized gains
    on securities                                                               (389,514)                                (389,514)
                                                                                                                      -----------

     Total comprehensive income                                                                                           280,353

Dividend declared                                                 (742,401)                                              (742,401)

ESOP shares released in 2002                          42,062                                                228,708       270,770
Purchase of 4,250 shares of
  common stock                                                                                  (51,540)                  (51,540)
Decrease in ownership of
  Subsidiary                                           3,639                                                                3,639
                                      --------  ------------  ------------  ------------   ------------   ----------  ------------

Balance, September 30, 2002           $218,213  $ 21,283,692  $ 10,906,419  $  2,867,743   $(12,385,241)  $ (824,615) $ 22,066,211
                                      ========  ============  ============  ============   ============   ==========  ============
</TABLE>

                             The accompanying notes are an integral part of the
                                       consolidated financial statements.

                                       15

<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 for the years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                           2002            2001
                                                      ------------    ------------
<S>                                                 <C>             <C>
Operating activities:
  Net income                                          $    669,867    $    684,540
  Adjustments to reconcile net income to net
          cash provided by operating activities:
    Provision for loan losses                              241,400          39,500
    Provision for depreciation                             152,950         126,675
    ESOP benefit expense                                   123,890         129,271
    Amortization of loan fees                             (137,661)        (99,355)
    Amortization of investment premium (discount)           22,478            (128)
    Loss on sale of fixed asset                              2,191             896
    FHLB stock dividend                                    (84,500)       (118,000)
    Minority interest                                     (228,780)        (63,176)
    Change in:
      Accrued interest receivable                           63,210         (74,443)
      Interest payable                                      (1,354)         33,919
      Accrued liabilities                                   (8,584)         45,380
      Prepaid expenses                                     (51,974)        (35,766)
      Cash surrender value of life insurance              (146,941)             --
      Income taxes payable                                 189,877           9,519
                                                      ------------    ------------

          Net cash provided by operating activities        806,069         678,832
                                                      ------------    ------------

Investing activities:
  Net increase in loans                                 (9,100,453)     (4,140,187)
  Purchase of securities, available-for-sale           (24,168,355)     (7,498,031)
  Purchase of securities, held-to-maturity              (2,508,125)     (3,500,000)
  Purchase of FHLB stock                                   (41,100)             --
  Calls of securities, available-for-sale               18,546,073              --
  Calls of securities, held-to-maturity                  3,500,000       5,500,000
  Principal repayments mortgage-backed securities          270,340           3,548
  Purchase of certificates of deposit                   (2,792,000)       (100,000)
  Purchase of goodwill                                          --        (356,065)
  Purchase of fixed assets                                 (96,943)       (289,340)
  Purchase of life insurance                            (2,500,000)             --
  Proceeds from sale of foreclosed assets                  534,431              --
  Additions to foreclosed assets                           (41,030)             --
                                                      ------------    ------------
          Net cash used by investing
            activities                                 (18,397,162)    (10,380,075)
                                                      ------------    ------------
Financing activities:
  Minority interests                                       186,707       1,911,983
  Net increase in demand deposits,
    NOW accounts and savings accounts                    4,254,192       8,040,121
  Net increase in certificates of deposit               14,704,813       8,448,214
  Net decrease in custodial accounts                          (850)        (86,764)
  Purchase of treasury stock                               (51,540)     (3,562,234)
  Proceeds from FHLB borrowings                         13,500,000      24,500,000
  Payments of FHLB borrowings                          (15,500,000)    (21,000,000)
  Payments of dividends                                   (742,401)       (785,396)
                                                      ------------    ------------
          Net cash provided by financing
            activities                                  16,350,921      17,465,924
                                                      ------------    ------------
</TABLE>
                                    Continued

                                       16
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

                 for the years ended September 30, 2002 and 2001

                                                       2002            2001
                                                  ------------    ------------

          Increase (decrease) in cash and
            cash equivalents                      $ (1,240,172)   $  7,764,681

Cash and cash equivalents, beginning of year        10,795,848       3,031,167
                                                  ------------    ------------

Cash and cash equivalents, end of year            $  9,555,676    $ 10,795,848
                                                  ============    ============

Supplemental Disclosures:

  Cash payments for:
    Interest                                      $  4,739,418    $  4,831,557
                                                  ============    ============

      Income taxes                                $    683,754    $    383,000
                                                  ============    ============

Noncash investing and financing transactions:

Loans transferred to other real estate owned      $    726,087    $         --
                                                  ============    ============

Loans to facilitate sale of real estate owned     $    263,366    $         --
                                                  ============    ============

Total increase (decrease) in unrealized gain on
  securities available-for-sale                   $   (590,173)   $    843,343
                                                  ============    ============


               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                       17
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies

     Nature of Operations.  Harrodsburg First Financial Bancorp,  Inc. (Company)
     is a  corporation  organized  under  the laws of  Delaware.  The  Company's
     Articles of Incorporation authorize the issuance of up to 500,000 shares of
     preferred  stock,  which may be issued with certain rights and preferences.
     As of September 30, 2002, no preferred stock has been issued.

     On July 15, 2001,  the Company  converted  from a unitary  savings and loan
     holding  company to a bank holding  company.  The activities of the Company
     are primarily  limited to holding stock in two banks,  First Financial Bank
     (First Financial), a wholly owned subsidiary,  and Citizens Financial Bank,
     Inc.  (Citizens),  in which the Company  acquired a 56.27% interest on July
     15,  2001.  At  September  30,  2002,  the  Company  owned  55.80%  of  the
     outstanding stock of Citizens.

     Citizens is a newly organized de novo Kentucky  chartered  commercial bank,
     located in Glasgow,  Kentucky, and is subject to examination and regulation
     by the Federal  Deposit  Insurance  Corporation  ("FDIC")and  the  Kentucky
     Department  of  Financial  Institutions.  First  Financial  is a  federally
     chartered  stock  savings  bank and a member of the Federal  Home Loan Bank
     System.

     The following is a summary of the Company's significant accounting policies
     which have been consistently applied in the preparation of the accompanying
     consolidated financial statements.

     Basis  of  Presentation  and  Consolidation.   The  consolidated  financial
     statements include the accounts of the Company, First Financial,  Citizens,
     and First Financial's wholly owned subsidiary,  Harrodsburg  Savings & Loan
     Service Corporation. All significant intercompany accounts and transactions
     have been eliminated in consolidation.

     Use  of  Estimates.  In  preparing  consolidated  financial  statements  in
     conformity with generally  accepted  accounting  principles,  management is
     required to make estimates and assumptions that affect the reported amounts
     of assets and  liabilities as of the date of the balance sheet and reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results  could differ from those  estimates.  Material  estimates  that are
     particularly  susceptible to significant  change in the near term relate to
     the  determination  of the  allowance  for loan losses and the valuation of
     deferred tax assets.

     Business.  First Financial and Citizens conduct general banking business in
     central  Kentucky  and  western  Kentucky,  respectively,  which  primarily
     consists of attracting  deposits from the general public and applying those
     funds  to  the   origination  of  loans  for   residential,   consumer  and
     nonresidential  purposes.  Primary  deposit  products  are savings and term
     certificate  accounts and primary lending products are residential consumer
     and commercial mortgage loans.

     Cash and Cash Equivalents.  For purposes of the consolidated  statements of
     cash flows,  cash and cash  equivalents  include cash and balances due from
     banks,  federal funds sold and interest  bearing  deposits in banks, all of
     which mature within ninety days.
                                    Continued

                                       18
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies, Continued

     Interest-bearing  Deposits  in Banks.  Interest-bearing  deposits  in banks
     which are not cash  equivalents  mature within one year  and are carried at
     cost.

     Securities.  Debt  securities  that  management has the positive intent and
     ability  to hold to  maturity  are  classified  as  "held-to-maturity"  and
     recorded at amortized cost.  Securities not classified as held-to-maturity,
     including  equity  securities with readily  determinable  fair values,  are
     classified  as  "available-for-sale"  and  recorded  at  fair  value,  with
     unrealized  gains and losses  excluded  from earnings and reported in other
     comprehensive income.

     Purchase premiums and discounts are recognized in interest income using the
     interest  method  over the terms of the  securities.  Declines  in the fair
     value of  held-to-maturity  and  available-for-sale  securities below their
     costs that are deemed to be other than  temporary are reflected in earnings
     as realized losses. Gains and losses on the sale of securities are recorded
     on the trade  date and are  determined  using the  specific  identification
     method.

     Loans. First Financial and Citizens grant mortgage, commercial and consumer
     loans  to  customers.  A  substantial  portion  of the  loan  portfolio  is
     represented by mortgage loans throughout central and western Kentucky.  The
     ability of debtors to honor  their  contracts  is  dependent  upon the real
     estate and general economic conditions in these areas.

     Loans  that  management  has  the  intent  and  ability  to  hold  for  the
     foreseeable  future or until maturity or pay-off  generally are reported at
     their outstanding unpaid principal  balances adjusted for charge-offs,  the
     allowance  for loan losses,  and any deferred  fees or costs on  originated
     loans.  Interest income is accrued on the unpaid  principal  balance.  Loan
     origination  fees, net of certain  interest direct  origination  costs, are
     deferred and  recognized  as an  adjustment of the related loan yield using
     the interest method.

     The accrual of interest on mortgage and commercial loans is discontinued at
     the time the loan is 90 days  delinquent  unless the credit is well-secured
     and in process of collection.  Other  personal loans are typically  charged
     off no later  than 180 days past due.  In all  cases,  loans are  placed on
     nonaccrual or  charged-off at an earlier date if collection of principal or
     interest is considered doubtful.

     All  interest  accrued  but no  collected  for  loans  that are  placed  on
     nonaccrual or charged off is reversed against interest income. The interest
     on these loans is accounted for on the cash-basis or cost-recovery  method,
     until  qualifying  for return to  accrual.  Loans are  returned  to accrual
     status when all the principal and interest  amounts  contractually  due are
     brought current and future payments are reasonably assured.

     Allowance for Loan Losses.  The allowance  for loan losses  is  established
     as losses are  estimated  to have  occurred  through a  provision  for loan
     losses charged to earnings. Loan losses are charged against the allowance

                                    Continued

                                       19
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies, Continued

     when  management  believes  the  uncollectibility  of  a  loan  balance  is
     confirmed. Subsequent recoveries, if any, are credited to the allowance.

     The allowance for loan losses is evaluated on a regular basis by management
     and is based upon management's periodic review of the collectibility of the
     loans in light of historical experience,  the nature and volume of the loan
     portfolio,  adverse  situations  that may affect the borrower's  ability to
     repay, estimated value of any underlying collateral and prevailing economic
     conditions.  This  evaluation  is  inherently  subjective  as  it  requires
     estimates that are susceptible to significant  revision as more information
     becomes available.

     A loan is  considered  impaired  when,  based on  current  information  and
     events,  it is  probable  that the  Company  will be unable to collect  the
     scheduled  payments of  principal  or interest  when due  according  to the
     contractual terms of the loan agreement.  Factors  considered by management
     in determining impairment include payment status, collateral value, and the
     probability of collecting  scheduled  principal and interest  payments when
     due.  Loans  that  experience  insignificant  payment  delays  and  payment
     shortfalls generally are not classified as impaired.  Management determines
     the significance of payment delays and payment shortfalls on a case-by-case
     basis,  taking into consideration all of the circumstances  surrounding the
     loan and the borrower,  including the length of the delay,  the reasons for
     the delay,  the  borrower's  prior  payment  record,  and the amount of the
     shortfall in relation to the  principal  and interest  owed.  Impairment is
     measured on a loan by loan basis for commercial and  construction  loans by
     either the present  value of expected  future cash flows  discounted at the
     loan's effective  interest rate, the loan's obtainable market price, or the
     fair value of the collateral if the loan is collateral dependent.

     Large  groups  of  smaller  balance   homogeneous  loans  are  collectively
     evaluated  for  impairment.  Accordingly,  the Company does not  separately
     identify   individual   consumer  and  residential   loans  for  impairment
     disclosures.

     Office Premises and Equipment.  Office premises and equipment are stated at
     cost less  accumulated  depreciation.  Depreciation  is computed  using the
     straight  line  method and the double  declining  balance  method  over the
     estimated useful lives of the related assets. The gain or loss on the sales
     of property and equipment is recorded in the year of disposition.

     Real Estate  Owned.  Real estate owned is  generally  comprised of property
     acquired  through  foreclosure or deed in lieu of  foreclosure.  Foreclosed
     real estate is initially  recorded at fair value, net of selling  expenses,
     establishing  a new cost  basis.  Expenses  relating  to holding  property,
     including interest expense, are not capitalized. These expenses are charged
     to operations as incurred.

     After foreclosure, valuations are periodically performed by management, and
     the real  estate is carried at the lower of  carrying  amount or fair value
     less estimated selling expenses.

                                    Continued

                                       20
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies, Continued

     Deposits. First Financial's deposits are insured by the Savings Association
     Insurance  Fund  ("SAIF"),  which is  administered  by the  FDIC.  Citizens
     deposits are insured by the FDIC.

     Income Taxes.  The Company files a  consolidated  federal income tax return
     with First Financial.  Citizens files a separate federal income tax return.
     The current income tax expense or benefit is allocated to each  Corporation
     included  in the  consolidated  tax  return  based on their tax  expense or
     benefit computed in a separate return basis.

     Income taxes are provided for the tax effects of the transactions  reported
     in the  financial  statements  and  consist  of  taxes  currently  due plus
     deferred  taxes  related  primarily  to  differences  between  the basis of
     available-for-sale  securities,  allowance  for  loan  losses,  accumulated
     depreciation,  and Federal  Home Loan Bank stock  dividends  received.  The
     deferred  tax  assets  and  liabilities  represent  the  future  tax return
     consequences  of  those  differences,  which  will  either  be  taxable  or
     deductible  when the assets  and  liabilities  are  recovered  or  settled.
     Deferred  tax  assets and  liabilities  are  reflected  at income tax rates
     applicable  to the period in which the deferred  tax assets or  liabilities
     are expected to be realized or settled. As changes in tax laws or rates are
     enacted,  deferred  tax assts and  liabilities  are  adjusted  through  the
     provision for income taxes.

     A valuation  allowance  is provided for net deferred tax assets of Citizens
     to the extent that the value of net deductible  temporary  differences  and
     carryforward  attributes exceeds management's estimates of taxes payable on
     future taxable income.

     Employee  Stock  Ownership  Plan.  Shares  of  common  stock  issued to the
     Company's  employee stock  ownership plan (ESOP) are initially  recorded as
     unearned ESOP shares in the  stockholders'  equity at the fair value of the
     shares at the date of the issuance of the plan.  As shares are committed to
     be released as compensation to employees,  the Company reduces the carrying
     value of the unearned shares and records  compensation expense equal to the
     current value of the shares.

     Earnings  Per Share.  Earnings  per common  share is  computed  by dividing
     income  available to common  shareholders by the weighted average number of
     common  shares  outstanding  during the period.  Earnings  per common share
     assuming  dilution  reflects  the  potential  dilution  that could occur if
     securities  or other  contract  to issue  common  stock were  exercised  or
     converted  into common stock or resulted in the  issuance of common  stock,
     that then shared in the earnings of the Company.

     Reclassifications.  Certain  presentations of accounts  previously reported
     have been reclassified in these  consolidated  financial  statements.  Such
     reclassifications  had no effect  on net  income or  retained  earnings  as
     previously reported.

                                    Continued

                                       21
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.   Business Acquisition

     On July 15,  2001,  the  Company  acquired  56.27% of the voting  shares of
     Citizens  Financial  Bank,  Inc. in Glasgow,  Kentucky  for a cash price of
     $2,816,300.  Citizens  is a newly  organized  de  novo  bank,  which  began
     operations on July 17, 2001. The acquisition of the controlling interest in
     Citizens was accounted  for under the purchase  method of  accounting.  The
     excess of the  purchase  price  over the fair value of the  underlying  net
     assets acquired of $356,604 was allocated to goodwill, which is expected to
     be deductible for tax purposes.  Goodwill results from pre-opening expenses
     and  the  Company's  purchase  decision  was  primarily  influenced  by the
     opportunity  to participate in this start-up bank and its evaluation of the
     west Kentucky market.

3.       Investment Securities

     The cost and estimated  fair value of  securities  held as of September 30,
     2002 and 2001 are summarized as follows:
<TABLE>
<CAPTION>
                                                                       2002
                                               -----------------------------------------------------
                                                                Gross        Gross
                                                 Amortized    Unrealized    Unrealized
                                                   Cost         Gains        Losses      Fair Value
                                               -----------   -----------   -----------   -----------
<S>                                          <C>           <C>           <C>           <C>
     Securities, available-for-sale:
      Debt securities:
       U.S. Government and federal agencies    $ 4,920,934   $    12,023   $       670   $ 4,932,287
       Mortgage-backed securities                7,928,933       104,992            --     8,033,925
                                               -----------   -----------   -----------   -----------

                                                12,849,687       117,015           670    12,966,212
      Equity securities:
       Federal Home Loan Mortgage Corpora-
      tion, capital stock, 77,088 shares            75,482     4,233,737            --     4,309,219
                                               -----------   -----------   -----------   -----------

                                               $12,925,349   $ 4,350,752   $       670   $17,275,431
                                               ===========   ===========   ===========   ===========
     Securities, held-to-maturity:
       Debt Securities:
        U.S. Government and Federal agencies   $ 2,007,209   $    27,181   $        --   $ 2,034,390
        Municipal bonds                            213,724        12,885            --       226,729
                                               -----------   -----------   -----------   -----------

                                               $ 2,221,053   $    40,066   $        --   $ 2,261,119
                                               ===========   ===========   ===========   ===========
</TABLE>
<TABLE>
<CAPTION>
                                                                       2001
                                               -----------------------------------------------------
                                                                Gross        Gross
                                                 Amortized    Unrealized    Unrealized
                                                   Cost         Gains        Losses      Fair Value
                                               -----------   -----------   -----------   -----------
<S>                                          <C>           <C>           <C>           <C>
Securities, available-for-sale:
      Debt securities:
       U.S. Government and Federal agencies    $ 7,498,031   $        --   $        --   $ 7,498,031

      Equity securities:
       Federal Home Loan Mortgage Corpora-
       tion, capital stock, 77,088 shares           75,482     4,935,238                   5,010,720
                                               -----------   -----------   -----------   -----------

                                               $ 7,573,513   $ 4,935,238   $        --   $12,508,751
                                               ===========   ===========   ===========   ===========
     Securities, held-to-maturity:
       Debt Securities:
        U.S. Government and Federal agencies   $ 3,000,000   $    37,065   $        --   $ 3,037,065
        Municipal bonds                            213,724         6,588            --       220,312
        Mortgage-backed securities                  21,576         1,114            --        22,690
                                               -----------   -----------   -----------   -----------

                                               $ 3,235,300   $    44,767   $        --   $ 3,280,067
                                               ===========   ===========   ===========   ===========
</TABLE>
                                    Continued

                                       22
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.       Investment Securities, Continued

     The amortized cost and estimated fair value of debt securities at September
     30, 2002, by contractual maturity, are as follows:

                                                          Available-for-Sale
                                                      --------------------------
                                                                       Estimated
                                                        Amortized        Fair
                                                          Cost           Value
                                                      -----------    -----------

         Due in one year or less                      $ 3,699,832    $ 3,699,162
         Due after one year through five years          1,018,318      1,030,312
         Due after five through ten years                 202,784        202,813
                                                      -----------    -----------

                                                        4,920,934      4,932,287
         Mortgage-backed securities                     7,928,933      8,033,925
                                                      -----------    -----------

                                                      $12,849,867    $12,966,212
                                                      ===========    ===========

                                                           Held-to-Maturity
                                                      --------------------------
                                                                    Estimated
                                                        Amortized     Fair
                                                          Cost        Value
                                                      -----------   ------------

         Due in one year or less                      $    39,991    $    40,523
         Due after one year through five years          1,064,959      1,069,314
         Due after five through ten years               1,007,205      1,032,589
         Due after ten years                              108,898        118,693
                                                      -----------    -----------

                                                      $ 2,221,053    $ 2,261,119
                                                      ===========    ===========

     For the year ended  September  30, 2002,  $3,500,000  was received from the
     call of 7 debt securities backed by U.S.  Government  Agencies,  which were
     classified  as  held-to-maturity.  For the year ended  September  30, 2001,
     $5,500,000 was received from the call of eleven debt  securities  backed by
     U.S. Government Agencies, which were classified as held-to-maturity.  There
     were no sales or transfers of investments classified as held-to-maturity.

4.       Loans Receivable

     Loans  receivable,  net at  September  30,  2002 and 2001,  consists of the
following:

<TABLE>
<CAPTION>
                                                                       2002             2001
                                                                  ------------     ------------
<S>                                                             <C>              <C>
         Loans secured by first lien mortgages on real estate:
             One-to-four residential property                     $ 75,990,363     $ 80,152,688
             Multi-family residential property                       2,418,612        2,540,563
             Commercial properties                                  14,216,970        8,783,410
             Construction                                            5,433,353        7,286,230
             Agricultural                                            7,283,115        3,864,562

</TABLE>
                                    Continued

                                       23
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.       Loans Receivable, Continued

                                                    2002             2001
                                                ------------     ------------
         Consumer loans:
             Home equity                        $  2,665,705     $  1,879,047
             Home improvement and personal         2,177,443        1,760,723
             Auto loans                              770,570          155,445
             Commercial                            4,278,982        1,696,775
             Loans secured by savings deposits       741,407          497,591
                                                ------------      ------------

                                                 115,976,520      108,617,034
         Loans in process                         (1,553,616)      (2,686,523)
         Provisions for loan losses                 (632,024)        (411,000)
         Deferred loan origination fees             (438,945)        (438,202)
                                                ------------     ------------
                  Loans receivable, net         $113,351,935     $105,081,309
                                                ============     ============

     First Financial and Citizens provide an allowance to the extent  considered
     necessary  to provide  for losses that may be  incurred  upon the  ultimate
     realization  of loans.  The  changes in the  allowance  for loan  losses is
     analyzed as follows:

                                                     Year Ended September 30,
                                                  -----------------------------
                                                      2002             2001
                                                  ------------     ------------

         Balance at beginning of period           $    411,000     $    371,500
         Additions charged to operations               241,400           39,500
         Charge-offs                                   (20,476)              --
         Recoveries                                        100               --
                                                  ------------     ------------
              Balance at end of period            $    632,024     $    411,000
                                                  ============     ============

     The  following  is a summary  of  non-performing  loans (in  thousands)  at
     September 30, 2002 and 2001, respectively:

                                                          September 30,
                                                  ------------------------------
                                                     2002             2001
                                                  ------------     -------------

         Non-accrual loans                        $         41     $       -
         Accruing loans past 90 days or more               334              222
                                                  ------------     ------------
              Total non-performing loan balances  $        375      $        222
                                                  ============      ============

     At September 30, 2002 and 2001 the Company had identified no impaired loans
     as defined by SFAS No. 114.

     Loans to executive  officers and directors,  including  loans to affiliated
     companies of which executive  officers and directors are principal  owners,
     and loans to members of the  immediate  family of such persons at September
     30, 2002 and 2001 are summarized as follows:

                                                          September 30,
                                                  ------------------------------
                                                      2002             2001
                                                  ------------     -------------

         Balance at beginning of period           $    321,059     $    462,040
           Additions during the year                   758,719           34,301
           Repayments                                 (156,766)        (175,282)
                                                  ------------     ------------
         Balance at end of period                 $    923,012     $    321,059
                                                  ============     ============

                                    Continued

                                       24
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.   Premises and Equipment

     Premises and equipment cost and accumulated depreciation are as follows:

<TABLE>
<CAPTION>
                                                              2002             2001
                                                          ------------     ------------

<S>                                                     <C>              <C>
     Land, buildings and improvements                     $  1,640,033     $  1,607,527
     Furniture, fixtures and equipment                       1,293,223        1,266,228
                                                          ------------     ------------

                                                             2,933,256        2,873,755
         Less accumulated depreciation                      (1,094,523)        (976,824)
                                                          ------------     ------------

                                                          $  1,838,733     $  1,896,931
                                                          ============     ============
</TABLE>

     Depreciation  expense for the years ended  September  30, 2002 and 2001 was
     $152,951 and $126,675, respectively.

6.   Deposits

     Deposit account balances are summarized as follows:

<TABLE>
<CAPTION>
                                                                September 30,
                                                        -----------------------------
                                                           2002             2001
                                                        ------------     ------------

<S>                                                   <C>              <C>
     Demand deposit accounts, non-interest bearing      $  3,844,411     $  3,276,514
     Passbook accounts with a weighted average rate
       of 2.01% and 2.79% at September 30, 2002 and
       2001, respectively                                  7,193,462        6,776,358
     NOW and MMDA deposits with a weighted average
       rate of 1.41% and 2.52% at September 30, 2002
       and 2001, respectively                             11,408,583        8,139,392
                                                        ------------     ------------

                                                          22,446,456       18,192,264
     Certificate of deposits with a weighted average
       interest rate of 3.98% and 5.61% at
       September 30, 2002 and 2001, respectively          99,474,015       84,769,202
                                                        ------------     ------------

              Total deposits                            $121,920,471     $102,961,466
                                                        ============     ============
     Jumbo certificates of deposit (minimum
       denomination of $100,000)                        $ 23,488,331     $ 16,549,734
                                                        ============     ============
</TABLE>

     Certificates  of deposit by maturity at September  30, 2002 and 2001 are as
     follows:

<TABLE>
<CAPTION>
                                                                September 30,
                                                         -----------------------------
                                                             2002             2001
                                                         ------------     ------------
<S>                                                    <C>              <C>
     Within one year                                     $ 78,955,000     $ 59,623,000
     Over 1 to 3 years                                     17,729,000       21,078,000
     Maturing in years thereafter                           2,790,000        4,068,000
                                                         ------------     ------------

                                                         $ 99,474,000     $ 84,769,000
                                                         ============     ============
</TABLE>
                                   Continued

                                       25
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.   Deposits, Continued

     Certificates of deposit by maturity and interest rate category at September
30, 2002 (in thousands) are as follows:

<TABLE>
<CAPTION>
                                                           Amount Due
                                 -------------------------------------------------------------
                                 Less Than                                 After
                                 One Year      1-2 Years    2-3 Years      Years       Total
                                 ---------     ---------    ---------    ---------   ---------
<S>                            <C>           <C>          <C>          <C>         <C>

              2.00% or less      $     100     $      --    $      --    $      --   $     100
              2.01%--4.00%          59,158         4,965        1,666    $     299      66,088
              4.01%--6.00%          13,091         6,717        1,434        1,914      23,156
              6.01%--8.00%           6,606           964        1,983          577      10,130
                                 ---------     ---------    ---------    ---------   ---------

                                 $  78,955     $  12,646    $   5,083    $   2,790   $  99,474
                                 =========     =========    =========    =========   =========
</TABLE>


     Interest  expense on deposits for the periods  indicated is  summarized  as
follows:

                                               Years ended September 30,
                                             -----------------------------
                                                 2002             2001
                                             ------------     ------------

         Money market and Now accounts       $    215,380     $    247,728
         Savings accounts                         140,466          181,584
         Certificates                           4,275,978        4,419,004
                                             ------------     ------------

                                             $  4,631,824     $  4,848,316
                                             ============     ============

     First Financial  maintains  arrangements for clearing NOW and MMDA accounts
     with  Federal  Home Loan Bank of  Cincinnati  (FHLB),  and is  required  to
     maintain  adequate  collected  funds in its Demand Account to cover average
     daily clearings. First Financial was in compliance with this requirement at
     September  30, 2002 and 2001.  In addition,  at September  30, 2002,  First
     Financial had pledged $2,325,000 of its overnight deposits held by the FHLB
     of  Cincinnati  to secure  public  deposits.  The Company held deposits for
     related parties of approximately $3,326,000.

7.   Advances from Federal Home Loan Bank

     The advances from the Federal Home Loan Bank consist of the following:

              Maturity            Interest         September 30,
               Date                Rate                2002
              --------            --------         -------------

              12/24/02             2.15%           $  2,000,000
              12/27/02             2.15%              2,000,000
              03/07/11             5.20%              1,000,000
                                                   ------------
                                                   $  5,000,000
                                                   ============

                                    Continued

                                       26
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7.   Advances from Federal Home Loan Bank, Continued

     A schedule of the  principle  payments due over the  remaining  term of the
notes as of September 30, 2002 follows:

                                         Year                  Amount
                                         ----                  ------

                                  2003                      $  4,000,000
                                  Due after five years         1,000,000
                                                            ------------
                                                            $  5,000,000
                                                            ============

     These  borrowings  are   collateralized  by  qualified  real  estate  first
     mortgages and Federal Home Loan Bank stock held by First  Financial,  which
     had a book value of $15,540,300 at September 30, 2002.

8.   Income Taxes

     The  provision  for income taxes for the periods  indicated  consist of the
following:
                                                       Years ended September 30,
                                                       -------------------------
                                                           2002         2001
                                                       ----------    ---------
         Federal income tax expense:
           Current expense                             $ 467,936     $ 265,699
           Deferred expense (benefit)                     25,941       128,820
                                                       ---------     ---------
                                                       $ 493,877     $ 394,519
                                                       =========     =========

     Deferred income taxes result from temporary  differences in the recognition
     of income and expenses for tax and financial statement purposes. The source
     of these temporary differences and the tax effect of each are as follows:

                                                       Years ended September 30,
                                                       -------------------------
                                                           2002        2001
                                                        ---------   ---------

         Section 481 adjustment for bad debt recapture  $ (32,411)  $  97,233
         Deferred loan fee income                            (139)     (9,194)
         Depreciation                                      17,830      21,247
         FHLB stock                                        28,730      40,120
         Allowance for loan losses                         10,755     (10,363)
         Other, net (ESOP loan)                             1,176     (10,223)
                                                        ---------   ---------
         Deferred expense (benefit)                     $  25,941   $ 128,820
                                                        =========   =========

     For the  periods  indicated,  total  income tax expense  differed  from the
     amounts  computed by applying  the U.S.  federal  income tax rate of 34% to
     income before income taxes as follows:

<TABLE>
<CAPTION>
                                                          Years ended September 30,
                                                              2002          2001
                                                           ---------     ---------
<S>                                                      <C>           <C>
         Expected income tax expense at federal tax rate   $ 317,888     $ 366,880
         Valuation allowance                                 174,362        27,639
         Other, net                                            1,627            --
                                                           ---------     ---------
              Total income tax expense                     $ 493,877     $ 394,519
                                                           =========     =========

         Effective income tax rate                              52.8%         38.8%
                                                           =========     =========
</TABLE>
                                    Continued

                                       27
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.   Income Taxes, Continued

     Deferred  tax assets and  liabilities  as of  September  30,  2002 and 2001
consisted of the following:

                                                          2002       2001
                                                       --------   --------
         Deferred tax assets:
           Net operating loss carryover for Citizens
             Financial Bank                            $215,995   $ 27,639
           Charitable contribution carryover for
             Citizens Financial Bank                        765         --
           Deferred loan fee income                     149,127    148,989
           ESOP contributions                            80,677     81,853
           Allowance for loan losses                    196,807    131,207
           Start-up costs                               133,510         --
           Organizational costs                           4,964         --
                                                       --------   --------

                  Total deferred tax assets             781,845    389,688
                                                       --------   --------

         Deferred tax liabilities:
           Section 481 adjustment for bad debt
             recapture                                   64,823     97,233
           FHLB stock                                   412,250    383,520
           Fixed asset basis over tax basis             145,260    107,679
                                                       --------   --------

                  Total deferred tax liabilities        622,333    588,432
                                                       --------   --------

             Valuation allowance of Citizens
               Financial Bank                           411,837     27,639
                                                       --------   --------

                  Net deferred tax liability           $252,325   $226,383
                                                       ========   ========


     In addition to the net  deferred tax  liability  at  September  30, 2002 of
     $252,325 outlined in the preceding table, the financial  statements include
     a deferred  tax  liability  of  $1,475,168  that was  charged  against  the
     unrealized  gain on securities  available-for-sale  of $4,338,730.  The net
     unrealized gain totals  $2,863,562 and is recorded as a separate  component
     of stockholders' equity.  Citizens Financial Bank's net operating loss will
     expire in the fiscal year ended 2021.

     Included  in  retained   earnings  at  September   30,  3002  and  2001  is
     approximately $2,134,000 in bad debt reserves for which no deferred federal
     income tax liability has been recorded.  This amount represents allocations
     of income to bad debt deductions for tax purposes only.  Reduction of these
     reserves for purposes other than for bad debt losses or adjustments arising
     from carryback of net operating losses would create income for tax purposes
     which be  subject  to the  then-current  corporate  income  tax  rate.  The
     unrecorded   deferred   liability  to  these   amounts  was   approximately
     $1,408,500.

                                    Continued

                                       28
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



9.   Stockholders' Equity and Regulatory Capital

     Regulatory  Capital.  First  Financial's  actual  capital and its statutory
     required  capital  levels at September 30, 2002 and 2001 are as follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                                                  To be Well
                                                                                                  Capitalized
                                                                                                 Under Prompt
                                                                        For Capital               Corrective
                                                                         Adequacy                   Action
                                                                         Purposes                 Provisions
                                                Actual                   Required                  Required
                                          ----------------------    --------------------      ----------------------
                                          Amount           %         Amount         %          Amount           %
                                         --------      ---------    --------     -------      --------       -------
<S>                                     <C>            <C>        <C>           <C>         <C>             <C>
    September 30, 2002

    Tier 1 risk based capital             $14,102         20.55%     $2,745        4.0%        $4,118          6.0%
    Tangible capital                      $14,102         11.67%     $1,813        1.5%           N/A          N/A
    Total risk based capital              $14,485         21.11%     $5,491        8.0%        $6,863         10.0%
    Leverage capital                      $14,102         11.67%        N/A        N/A         $6,043          5.0%

    September 30, 2001

    Tier 1 risk based capital             $12,905         18.76%     $2,752         4.0%       $4,128          6.0%
    Tangible capital                      $12,905         10.80%     $1,792         1.5%          N/A          N/A
    Total risk based capital              $13,312         19.35%     $5,504         8.0%       $6,881         10.0%
    Leverage capital                      $12,905         10.80%        N/A         N/A        $5,975          5.0%

</TABLE>


     The  Federal  Deposit  Insurance   Corporation   Improvement  Act  of  1991
     ("FDICIA")  required  each  federal  banking  agency  to  implement  prompt
     corrective actions for institutions that it regulates.  In response to this
     requirement,  OTS  adopted  final rules based upon  FDICIA's  five  capital
     tiers.  The rules provide that a savings bank is "well  capitalized" if its
     total  risk-based  capital  ratio is 10% or greater,  its Tier 1 risk-based
     capital  ratio is 6% or  greater,  its  leverage  is 5% or greater  and the
     institution is not subject to a capital  directive.  Under this regulation,
     First  Financial  was deemed to be "well  capitalized"  as of September 30,
     2002 and 2001 based upon the most recent notifications from its regulators.
     There are no conditions or events since those notifications that management
     believed would change its classifications.

     Citizens'  actual and  required  capital  amounts and ratios are as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                                              To be Well
                                                                                              Capitalized
                                                                                             Under Prompt
                                                                         For Capital          Corrective
                                                                          Adequacy              Action
                                                                          Purposes            Provisions
                                                                      ------------------   ------------------
                                                  Actual                   Required             Required
                                          ------------------------    ------------------   ------------------
                                           Amount         %            Amount     %         Amount      %
                                          ------------ -----------    -------- --------    --------  -------
<S>                                     <C>          <C>            <C>       <C>        <C>        <C>
    September 30, 2002

    Total risk-based capital
     (to risk-weighted
     assets)                              $ 3,994      19.68%         $1,623    8.0%       $2,030     10.0%
    Tier I capital (to risk-
     weighted assets)                     $ 3,752      18.49%         $  812    4.0%       $1,218      6.0%
    Tier I capital (to
     adjusted total assets)               $ 3,752      19.68%         $1,038    4.0%       $1,297      5.0%
</TABLE>

                                    Continued

                                       29
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   Stockholders' Equity and Regulatory Capital, Continued

<TABLE>
<CAPTION>
                                                                                              To be Well
                                                                                              Capitalized
                                                                                             Under Prompt
                                                                         For Capital          Corrective
                                                                          Adequacy              Action
                                                                          Purposes            Provisions
                                                                      ------------------   ------------------
                                                  Actual                   Required             Required
                                          ------------------------    ------------------   ------------------
                                           Amount          %            Amount     %         Amount      %
                                          ------------ -----------    -------- --------    --------  -------
<S>                                     <C>          <C>            <C>
    September 30, 2001

    Total risk-based capital
     (to risk-weighted
     assets)                              $ 4,233         94.34%         $  359    8.0%     $  449     10.0%
    Tier I capital (to risk-
     weighted assets)                     $ 4,228         94.23%         $  179    4.0%     $  269      6.0%
    Tier I capital (to
     adjusted total assets)               $ 4,228         48.99%         $  345    4.0%     $  432      5.0%
</TABLE>

     Citizens is subject to various regulatory capital requirements administered
     by its primary  federal  regulator,  the FDIC.  Failure to meet the minimum
     regulatory  capital  requirements  can  initiate  certain  mandatory,   and
     possible   additional   discretionary   actions  by  regulators,   that  if
     undertaken,  could  have a  direct  material  affect  on  Citizens  and the
     consolidated  financial  statements.  Under the regulatory capital adequacy
     guidelines  and the  regulatory  framework  for prompt  corrective  action,
     Citizens  must meet  specific  capital  guidelines  involving  quantitative
     measures of Citizens' assets,  liabilities,  and certain  off-balance sheet
     items  as  calculated  under  regulatory  accounting  practices.  Citizens'
     capital  amounts  and  classification  under the prompt  corrective  action
     guidelines  are also subject to  qualitative  judgments  by the  regulators
     about components, risk weightings, and other factors.

     Quantitative  measures established by regulation to ensure capital adequacy
     require Citizens to maintain minimum amounts and ratios of total risk-based
     capital  and Tier I capital  to  risk-weighted  assets  (as  defined in the
     regulations),  and Tier I capital to adjusted  total  assets (as  defined).
     Management believes,  as of September 30, 2002, that Citizens meets all the
     capital adequacy requirements to which it is subject.

     As of September  30, 2002,  the most recent  notification  from the Federal
     Deposit  Insurance  Corporation  categorized  Citizens as well  capitalized
     under  the  regulatory  framework  for  prompt  corrective  action.  To  be
     categorized as well capitalized, an institution must maintain minimum total
     risk-based,  Tier 1  risk-based  and Tier 1  leverage  ratios  as set forth
     above.  There are no  conditions  or events  since  the  notification  that
     management believes have changed the Bank's category.

     Retained  Earnings  Restriction.  Retained  earnings at September  30, 2002
     include tax bad debt reserves of approximately $2,134,000 accumulated prior
     to September 30, 1988,  for which no federal  income tax has been provided.
     These tax bad debt reserves are only taxable in certain circumstances, such
     as if First Financial converted to an institution that did not qualify as a
     bank for tax purposes.


                                    Continued

                                       30
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   Stockholders' Equity and Regulatory Capital, Continued

     Liquidation  Account.  Upon  conversion  to a capital  stock  savings bank,
     eligible  account holders who continued to maintain their deposit  accounts
     were  granted  priority  in the event of the  future  liquidation  of First
     Financial through the establishment of a special  "Liquidation  Account" in
     an amount equal to the  consolidated  net worth of First Financial at March
     31, 1995. The liquidation  account was $10,236,488 at March 31, 1995 and is
     reduced in  proportion  to  reductions  in the balance of eligible  account
     holders as determined on each subsequent  fiscal year end. The existence of
     the  liquidation  account will not restrict the use or  application  of net
     worth except with respect to the cash  payment of  dividends.  The Bank may
     not declare or pay a cash dividend on or repurchase any of its common stock
     if the effect  thereof  would  cause its  regulatory  capital to be reduced
     below the amount required for the liquidation account.

     Dividend Restrictions. The payment of cash dividends by First Financial and
     Citizens on their  common  stock is limited by  regulations  of the OTS and
     FDIC.  Interest  on  savings  accounts  will be paid prior to  payments  of
     dividends on common stock.  Additional  limitation on dividends declared or
     paid,  or  repurchases  of their  stock  are tied to both  the  Bank's  and
     Citizens' level of compliance with its regulatory capital requirements.

     Required Stock Investment. As members of the Federal Home Loan Bank System,
     First  Financial  and Citizens are  required to maintain an  investment  in
     capital  stock of the FHLB in an amount equal to at least the greater of 1%
     (0.15% after  December 30, 2002) of outstanding  loans and  mortgage-backed
     securities,  or  5% of  outstanding  FHLB  advances.  First  Financial  and
     Citizens met this requirement at September 30, 2002 and 2001.

10.  Retirement Benefits

     Retirements Benefits.  First Financial maintains a dormant  noncontributory
     defined benefit pension plan (Pension Trust).  The  multi-employer  pension
     plan  covers all  full-time  employees  with one year of  service  who have
     attained  the age of 21.  There was no pension  expense for the years ended
     September 30, 2002 and 2001.

     Effective April 1, 1993, the Board of Directors of First Financial  adopted
     an  employee  pension  benefit  plan  (referred  to as a  "401K  Plan")  as
     described  under the  Employees'  Retirement  Income  Security Act of 1974.
     Under  the Plan,  First  Financial  is  required  to match 25% of  employee
     contributions  up to a maximum of 1.5% of eligible  compensation.  The Plan
     covers all full-time  employees.  First Financial  contributed  $13,980 and
     $12,950  to the Plan for the  years  ended  September  30,  2002 and  2001,
     respectively.

     Effective  September  28, 2001,  Citizens  established a Simple 401(k) plan
     under  Section  408(P) of the Internal  Revenue  Code.  All  employees  are
     eligible to participate.  Citizens will contribute a matching  contribution
     equal to the employees salary  reduction  contributions up to a limit of 3%
     of the employee's compensation for the calendar year. During the year ended
     September 30, 2002, Citizens contributed approximately $10,000 to the Plan.

                                    Continued

                                       31
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.  Retirement Benefits

     Employee  Stock  Ownership  Plan. In connection  with the stock  conversion
     September 30, 1995, the Company  established  an internally  leveraged ESOP
     which covers substantially all full time employees of First Financial.  The
     ESOP borrowed  $1,745,700 from the Company and purchased  174,570 shares of
     common  stock of the Company at the date of  conversion.  The loan is to be
     repaid in annual installments over a 15 year period with interest, which is
     based on the published prime rate per the Wall Street Journal as determined
     annually on September 30 of each year.

     First Financial makes annual  contributions  to the ESOP Trust equal to the
     ESOP's debt service  requirement  less dividends,  if any,  received by the
     ESOP  which are used for debt  service.  The ESOP  shares  are  pledged  as
     collateral  on the debt.  As the debt is repaid,  shares are released  from
     collateral  and  allocated  to  active  participants  based  on  a  formula
     specified in the ESOP agreement.

     ESOP  compensation  was $123,890 for the year ended September 30, 2002. For
     fiscal year 2002,  10,915 shares were released from  collateral  and 11,955
     shares were released for prepayments on the loan by ESOP  participants.  At
     September 30, 2002, there were 82,461 unallocated ESOP shares having a fair
     value of  $915,317.  ESOP  compensation  was  $129,271  for the year  ended
     September 30, 2001. For 2001,  10,728 shares were released from collateral.
     At September 30, 2001, there were 105,332  unallocated ESOP shares having a
     fair value of $1,253,450.

     Option Plan. On January 21, 1997, the  stockholders of the Company approved
     the  establishment of the Harrodsburg  First Financial  Bancorp,  Inc. 1996
     Stock  Option  Plan.  Under the Option  Plan,  the Company may grant either
     incentive or non-qualified stock options to Directors and key employees for
     an aggregate  of 200,000  shares of the  Company's  common  stock,  with an
     exercise  price equal to the fair market  value of the stock at the date of
     the award. Upon exercise of the options, the Company may issue stock out of
     authorized  shares or purchase the stock in the open market.  The option to
     purchase  shares  expires ten years after the date of the grant.  Effective
     with the approval of the Option Plan, options to purchase 190,000 shares of
     common stock were awarded to key employees  and directors  with an exercise
     price  of  $16.50  per  share.   The  options  vest,   and  thereby  become
     exercisable, at the rate of 20% on the date of grant, January 21, 1997, and
     20% annually thereafter.  The Options become vested immediately in the case
     of death or disability, or upon a change in the control of the Company.

     A summary of option transactions for the years indicated are as follows:

<TABLE>
<CAPTION>
                                                            Year ended September 30,
                                                  --------------------------------------------
                                                        2002                     2001
                                                  ------------------        ------------------
                                                  Option     Number         Option     Number
                                                  Price     of Units        Price     of Units
                                                  -----     --------        -----     --------

<S>                                            <C>         <C>            <C>       <C>
    Balance outstanding at beginning of year     $13.00-     185,000        $13.00    195,000
                                                 $16.50
    Granted                                                     -            16.50     10,000
    Released                                                    -                     (20,000)
                                                            --------                  -------

    Balance outstanding at end of year           $13.50-     185,000                  185,000
                                                            ========                  =======
                                                 $16.50
</TABLE>

                                    Continued

                                       32
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.  Retirement Benefits, Continued

                                             Year ended September 30,
                                       -----------------------------------------
                                              2002                 2001
                                       ------------------    -------------------
                                       Option     Number     Option     Number
                                       Price     of Unit     Price     of Units
                                       -----     -------     -----     --------

    Shares exercisable                            184,000             184,000
                                                 ========             =======

    Shares available for grant                     15,000              15,000
                                                 ========             =======

     In October 1995, the Financial  Accounting  Standards Board issued SFAS No.
     123, " Accounting for  Stock-based  Compensation,"  which was effective for
     fiscal years beginning after December 15, 1995. The new standard  defines a
     fair value  method of  accounting  for stock  options  and  similar  equity
     instruments.  Under the fair value method, compensation cost is measured at
     the grant date, based on the fair value of the award and is recognized over
     the service period, which is usually the vesting period.

     Companies are not required to adopt the fair value method of accounting for
     employee  stock-based  transactions,  and may  continue to account for such
     transactions  under  Accounting  Principles  Based  (APB)  Opinion  No.  25
     "Accounting  for  Stock  Issued  to  Employees."   Under  this  method  the
     compensation  cost is measured by the difference  between the fair value of
     the Company's stock at the date of the award,  and the exercise price to be
     paid  by  the  employee.  If  a  company  chooses  to  report  stock  based
     compensation  under APB 25, they must disclose the pro forma net income and
     earnings  per  share  as if the  Company  had  applied  the new  method  of
     accounting. Accordingly, the following table shows the Company's net income
     and  earnings per share on a pro forma basis as if the  compensation  costs
     for the stock options  awarded were  accounted for in accordance  with SFAS
     No. 123 for the year ended September 30, 2002 and 2001, respectively.

                                Reported Per Consolidated
                                   Financial Statements       Pro Forma Amount
                                   ---------------------   ---------------------
                                      2002        2001        2002       2001
                                   ---------   ---------   ---------   ---------

    Net income                     $ 669,867   $ 684,580   $ 663,212   $ 560,565
                                   =========   =========   =========   =========

    Earnings per common share      $     .54   $     .52   $     .53   $     .43
                                   =========   =========   =========   =========

    Earning per common share
     assuming dilution             $     .54   $     .52   $     .53   $     .43
                                   =========   =========   =========   =========

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes option pricing model with the following  weighted-average
     assumptions:

                                             2002               2001
                                          ------------       ------------

           Dividend yield                      2.4%               2.4%
           Expected volatility                 .03%               .03%
           Expected life                        10                 10
           Free interest rate                  5.3%               5.3%


                                    Continued

                                       33
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.  Retirement Benefits, Continued

     Employee  Recognition  Plan. On January 21, 1997, the  stockholders  of the
     Company  approved the  establishment  of the First Federal  Savings Bank of
     Harrodsburg  Restricted  Stock Plan (RSP).  The  objective of the RSP is to
     enable the First  Financial to attract and retain  personnel of  experience
     and ability in key positions of  responsibility.  Those eligible to receive
     benefits  under the RSP will be such  employees as selected by members of a
     committee  appointed  by the  Company's  Board of  Directors.  The RSP is a
     non-qualified  plan  that  is  managed  through  a  separate  trust.  First
     Financial can contribute sufficient funds to the RSP Trust for the purchase
     of up to 85,000 shares of common stock.

     Awards  made to  employees  will vest 20% on each  anniversary  date of the
     award.  Shares will be held by the trustee and are voted by the RSP trustee
     as directed by the  participant for those shares earned or by the Committee
     for those shares held,  but unearned or unawarded.  Any assets of the trust
     are subject to the general  creditors  of the Company.  All shares  awarded
     vest immediately in the case of a participant's death, disability,  or upon
     a change in control of the  Company.  The  Company  intends to expense  RSP
     awards over the years  during  which the shares are  payable,  based on the
     fair  market  value of the  common  stock  at the date of the  grant to the
     employee. As of September 30, 2002, no awards had been made under the RSP.

11.  Financial  Instruments  with Off-Balance  Sheet Risk and Significant  Group
     Concentrations of Credit Risk

     First  Financial  and Citizens are parties to  financial  instruments  with
     off-balance  sheet  risk in the  normal  course  of  business  to meet  the
     financing  needs of its  customers.  These  financial  instruments  include
     mortgage commitments outstanding which amounted to approximately $3,161,000
     plus unused lines of credit  granted to customers  totaling  $4,556,000  at
     September 30, 2002. Of the mortgage loan commitments at September 30, 2002,
     approximately  $222,599  were for fixed rate loans.  At September 30, 2001,
     mortgage commitments  outstanding amounted to approximately  $715,450,  and
     unused lines of credit amounted to $5,313,000.

     The  exposure  to credit loss in the event of  nonperformance  by the other
     party to the financial  instrument for loan  commitments and consumer lines
     of credit are represented by the contractual  amount of those  instruments.
     First  Financial  and  Citizens  use the same  credit  policies  in  making
     commitments  and  conditional  obligations as they do for on-balance  sheet
     instruments.  Since many of the loan  commitments  may expire without being
     drawn upon,  the total  commitment  amount does not  necessarily  represent
     future  requirements.  They evaluate each customer's credit worthiness on a
     case-by-case  basis.  The amount of collateral  obtained upon  extension of
     credit is based on  management's  credit  evaluation of the counter  party.
     Collateral held varies, but primarily includes residential real estate.

     At  September  30,  2002,  the  Bank  held  deposits  in  other   financial
     institutions  of  approximately  $4,321,000 in excess of federally  insured
     amounts.


                                    Continued

                                       34
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


12.  Disclosures about Fair Value of Financial Instruments

     SFAS No.  107,  "Disclosures  About  Fair Value of  Financial  Instruments"
     extends the existing fair value  disclosure  practices for some instruments
     by  requiring  all  entities  to  disclose  the  fair  value  of  financial
     instruments (as defined),  both assets and  liabilities  recognized and not
     recognized  in the  statements  of  financial  condition,  for  which it is
     practicable to estimate fair value.

     There are inherent limitations in determining fair value estimates, as they
     relate only to specific data based on relevant information at that time. As
     a significant percentage of the Bank's financial instruments do not have an
     active trading market, fair value estimates are necessarily based on future
     expected  cash  flows,  credit  losses,  and other  related  factors.  Such
     estimates are  accordingly,  subjective in nature,  judgmental  and involve
     imprecision.  Future events will occur at levels different from that in the
     assumptions, and such differences may significantly affect the estimates.

     The statement  excludes certain financial  instruments and all nonfinancial
     instruments from its disclosure  requirements.  Accordingly,  the aggregate
     fair value amounts  presented do not represent the underlying  value of the
     Company. Additionally, the tax impact of the unrealized gains or losses has
     not been presented or included in the estimates of fair value.

     The  following  methods  and  assumptions  were  used  by  the  Company  in
     estimating its fair value disclosures for financial instruments.

     Cash and Cash  Equivalents.  The carrying amounts reported in the statement
     of financial  condition  for cash and  short-term  instruments  approximate
     those assets' fair values.

     Investment  Securities.  Fair values for investment securities are based on
     quoted  market  prices,  where  available.  If quoted market prices are not
     available,  fair  values are based on quoted  market  prices of  comparable
     instruments. No active market exists for the Federal Home Loan Bank capital
     stock.  The  carrying  value is  estimated  to be fair value since if First
     Financial  withdraws  membership  in the Federal Home Loan Bank,  the stock
     must be redeemed for face value.

     Loans Receivable.  The fair value of loans was estimated by discounting the
     future cash flows using the current  rates at which  similar loans would be
     made to borrowers  with similar  credit  ratings and for the same remaining
     maturities.

     Deposits.  The fair value of savings  deposits  and  certain  money  market
     deposits is the amount  payable on demand at the reporting  date.  The fair
     value of  fixed-maturity  certificates  of deposit is  estimated  using the
     rates currently offered for deposits of similar remaining maturities.

     Loan Commitments and Unused Home Equity Lines of Credit.  The fair value of
     loan  commitments  and unused  lines of credit is  estimated by taking into
     account   the   remaining   terms  of  the   agreements   and  the  present
     credit-worthiness of the counter parties.

                                    Continued

                                       35
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


12.  Disclosures about Fair Value of Financial Instruments, Continued

     The  estimated  fair  value  of  the  Company's  financial  instruments  at
September 30, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                          September 30, 2002                September 30, 2001
                                    ------------------------------    -----------------------------
                                         Carrying        Fair             Carrying         Fair
                                          Amount         Value             Amount          Value
                                    ---------------  -------------    --------------  -------------
<S>                                 <C>            <C>             <C>            <C>
  Assets
   Cash and cash equivalents          $  8,347,676   $  8,347,676      $ 10,795,848   $ 10,795,848
   Securities available-for-sale        17,275,431     17,275,431        12,508,751     12,508,751
   Securities held-to-maturity           4,052,453      4,092,519         4,941,100      4,985,867
   Loans receivable, net               113,351,935    108,471,622       105,081,309    102,016,039

  Liabilities
   Deposits                            121,920,471    122,752,276       102,961,466    103,912,471
   FHLB advances                         5,000,000      5,000,000         7,000,000      7,000,000

  Unrecognized Financial
     Instruments
   Loan commitments                                   $ 1,608,229                        $ 715,450
   Unused lines of credit                               3,235,593                        5,313,000
</TABLE>

13.  Stock Purchase

     In fiscal  years 2002 and 2001,  the  Company  repurchased  4,250 of common
     stock at a cost of $51,540 and 269,909  shares of common stock at a cost of
     $3,652,233, respectively.

14.  Subsequent Event

     On October 15,  2002,  the Company  entered  into an  agreement to purchase
     200,000 shares of unissued but authorized shares of Independence Bancorp at
     $10 a share.  The Company  anticipates  that the  closing  will occur on or
     about December 31, 2002. The transaction is subject to regulatory approval,
     which is pending,  and the closing of the transaction prior to December 31,
     2002.

     The Company has  $4,000,000 of time deposits at  Independence  at September
     30, 2002.


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