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 the Bank 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,
2001,  there were 1,343,416  shares of the Common Stock issued and  outstanding,
held by  approximately  457  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,
2001 to  stockholders of record on September 28, 2001. 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>
<TABLE>
<CAPTION>
                        SELECTED FINANCIAL AND OTHER DATA
---------------------------------------------------------------------------------------------

Financial Condition Data
                                                             At September 30,
                                         ----------------------------------------------------
                                           2001       2000       1999       1998       1997
                                         --------   --------   --------   --------   --------
                                                          (Dollars in Thousands)
<S>                                    <C>        <C>        <C>        <C>        <C>
Total Amount of:
    Assets ...........................   $136,541   $117,393   $110,416   $109,919   $109,638
    Loans receivable, net ............    105,081    100,881     89,062     85,272     81,261
    Investments (1) ..................     17,450     10,994     11,240     14,966     14,382
    Cash and interest-bearing deposits     10,896      3,031      8,350      8,074     12,621
    Deposits .........................    102,961     86,473     82,018     78,996     78,629
    FHLB advances ....................      7,000      3,500
    Minority interests ...............      1,849
    Stockholders' equity .............     22,305     25,241     26,220     28,982     29,773
---------------------------------------------------------------------------------------------
Number of:
  Real estate loans outstanding ......      1,559      1,587      1,532      1,601      1,668
  Deposit accounts ...................     10,535     10,026      9,574      9,590      9,594
  Full service offices ...............          4          3          2          2          2

</TABLE>

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

Operating Data
<TABLE>
<CAPTION>
                                             For the year ended September 30,
                                   ---------------------------------------------------
                                     2001       2000       1999     1998      1997
                                   -------    -------    -------    -------    -------
                                                  (Dollars in Thousands)
<S>                               <C>        <C>        <C>        <C>        <C>
Interest income ................   $ 8,744    $ 8,051    $ 7,745    $ 7,778    $ 7,699
Interest expense ...............     5,187      4,150      3,813      3,897      3,835
                                   -------    -------    -------    -------    -------
    Net interest income ........     3,557      3,901      3,932      3,881      3,864
Provision for loan losses ......        39         15         35         96         11
                                   -------    -------    -------    -------    -------
    Net interest income after
     provision for loan losses .     3,517      3,886      3,897      3,785      3,853
Non-interest income ............       178        113        116        122         95
Non-interest expense ...........     2,679      2,261      1,728      1,679      1,701
                                   -------    -------    -------    -------    -------
Income before income tax expense
    and minority interests .....     1,016      1,738      2,285      2,228      2,247
Income tax expense .............      (394)      (591)      (777)      (799)      (771)
Minority interests .............        63
                                   -------    -------    -------    -------    -------

Net income .....................   $   685    $ 1,147    $ 1,508    $ 1,429    $ 1,476
                                   =======    =======    =======    =======    =======

Basic earnings per share .......   $   .52    $   .76    $   .94    $   .79    $   .78
                                   =======    =======    =======    =======    =======

Diluted earnings per share .....   $   .52    $   .76    $   .94    $   .79    $   .78
                                   =======    =======    =======    =======    =======
</TABLE>

                                       2
<PAGE>

Key Operating Ratios
<TABLE>
<CAPTION>
                                                    At or for the year ended September 30,
                                             --------------------------------------------------
                                                 2001      2000      1999      1998      1997
                                                 ----      ----      ----      ----      ----
<S>                                          <C>      <C>       <C>       <C>       <C>
Performance Ratios:
Return on average assets (net income
    divided by average total assets) ...          .56%     1.02%     1.36%     1.31%     1.36%

Return on average equity (net income
    divided by average equity) .........         3.06      4.49      5.49      4.98      5.12

Average interest-earning assets to
    average interest-bearing liabilities       123.25    128.80    133.86    136.40    136.34

Net interest rate spread ...............         1.95      2.46      2.43      2.30      2.32

Net yield on average interest-
    earning assets .....................         2.95      3.55      3.63      3.63      3.64

Dividend payout ........................       108.63    113.08     87.74    102.38     45.26

Capital Ratios:
Average equity to average assets
    (average equity divided by
    average total assets) ..............        18.16     22.64     24.80     26.31     26.64

Equity to assets at period end .........        16.34     21.50     23.75     26.37     27.14

Asset Quality Ratios:
Net interest income after provision for
    loan losses to total other expenses        131.28    171.87    225.58    225.43    226.51
Non-performing loans to total loans ....          .21       .51       .32       .57       .64
Non-performing loans to total assets ...          .16       .44       .25       .44       .47
</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  2001 and  2000.  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 2001                     Fiscal 2000
             ----------------------------   -----------------------------
             Stock Price Range              Stock Price Range
             -----------------  Per Share   -----------------   Per Share
Quarter        Low      High    Dividend       Low     High     Dividend
-------------------------------------------------------------------------
1st          $ 9.69    $12.88   $            $11.38   $14.00     $    .25
2nd           10.75     14.50        .30      10.50    13.38          .30
3rd           11.00     13.00                  9.69    13.00           --
4th           10.00     13.00        .30       9.50    12.38          .30
-------------------------------------------------------------------------
Total                           $    .60                         $    .85
                                ========                         ========

                                       3
<PAGE>

                           MANAGEMENTS 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 56.27% 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.

In fiscal  2001,  due to an increase in the average  rates paid on deposits  and
borrowed funds, a slight decline in the yield on interest  earning  assets,  and
the operations of Citizens as a new  subsidiary,  plus  increased  costs from an
additional  branch office that opened in February of 2000, net income for fiscal
2001 decreased by approximately  40% from fiscal 2000. For the fiscal year ended
September  30, 2001,  net income was  $685,000,  or $.52 per diluted  share,  as
compared to $1.1 million,  or $.76 per diluted share,  for the fiscal year ended
September 30, 2000.  However,  assets  increased $19.1 million to $136.5 million
over last year. Net loans  outstanding grew by 4.2%, and asset quality continues
to remain excellent.

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.

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.

                                       4
<PAGE>

To reduce the effect of interest  rate changes on net interest  income the Banks
have  adopted   various   strategies  to  enable  it  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 its interest rate sensitivity through the use of a model,
which  estimates the change in its 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 its  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 and Citizens measure their interest rate risks, using the Office
of Thrift Supervision and Federal Deposit Insurance ("FDIC"),  respectively, NPV
method. The OTS and FDIC define the sensitivity measure as the change in the NPV
ratio with a 200 basis point shock.  At September  30, 2001,  if interest  rates
increased by 200 basis points, First Financial's NPV ratio would be 13.67% based
on a 143 basis  point  decrease  in its NPV.  Additionally,  if  interest  rates
decline by 200 basis points,  First  Financial's NPV ratio would be 15.48% based
on a 74 basis point increase in its NPV.

Citizens  began  operations  on July 17, 2001,  and the FDIC estimate of the net
portfolio  value  using the NPV method is not  available.  The  interest-earning
assets and  interest-bearing  liabilities  of  Citizens  at  September  30, 2001
amounted to $11.5 million and $7.4 million, respectively. Management's principal
strategy in managing the interest  rate risk is to match  maturities of interest
sensitive  assets and  liabilities,  which is  accomplished  by  maintaining  an
investment and loan portfolio with short to  intermediate-term  maturities,  and
using a tiered pricing program for its certificates of deposits.  Citizens' loan
portfolio at September  30, 2001 did not have any loan  maturities  greater than
five years.

                                       5
<PAGE>

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2001 and 2000

The Company's  consolidated  assets increased $19.1 million, or 16.3%, to $136.5
million at September 30, 2001 compared to $117.4  million at September 30, 2000.
The increase in assets is primarily due to Citizens.  At September 30, 2001, the
assets of Citizens  totaled $11.9  million,  which  consisted of $7.5 million in
securities   available-for-sale   and   loans   receivable   of  $2.9   million.
Additionally,  cash and cash  equivalents  (which consisted of cash and due from
banks, federal funds sold, and interest-bearing deposits) increased $7.9 million
from  September  30,  2000.  Such an increase in cash and cash  equivalents  was
primarily  the result of the lack of loan demand and the  decline in  investment
yields.

Securities  available-for-sale  increased  $8.3 million due to the purchase of a
short-term U.S. Government Treasury Bill totaling $7.5 million, plus an increase
in  the  fair   value  of  such   securities   totaling   $800,000.   Securities
held-to-maturity  decreased  $1.9  million  due to the  call of debt  securities
backed  by U.S.  Government  Agencies  offset  in part by the  purchase  of debt
securities backed by U.S. Government Agencies.

Loans  receivable  increased $4.2 million or 4.2% to $105.1 million at September
30, 2001 from  $100.9  million at  September  30,  2000.  The growth in the loan
portfolio  was  primarily  due to the increase in loans of $2.9 million from the
growth of Citizens' loan portfolio.  The increase in loans includes $1.6 million
in loans  secured  by  commercial  properties  and a $1.3  million  increase  in
consumer commercial loans.

Liabilities of the Company increased $20.2 million,  or 22.0%, to $112.4 million
at  September  30, 2001  compared to $92.2  million at September  30, 2000.  The
increase in  liabilities  was primarily due to the increase in deposits of $16.5
million,  reflecting management's success in attracting depositors.  The deposit
growth includes $7.5 million related to the Citizens' acquisition. Additionally,
FHLB  advances  increased  $3.5 million to $7 million at September 30, 2001 from
$3.5 million at September 30, 2000.

Stockholder's  equity was $22.3  million at  September  30,  2001 and  decreased
approximately  $2.9 million from the balance at September 30, 2000. The decrease
was due primarily to the  repurchase of common stock  totaling $3.6 million plus
the declaration of dividends totaling $743,000 offset by net income of $685,000,
an increase  of $557,000 in  accumulated  other  comprehensive  income,  plus an
increase of $129,000 due to ESOP shares released from collateral in 2001.


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  82.3% of the total deposits of the Banks and
generally  pay higher  rates of interest  than core  deposits.  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 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.

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                      Year Ended September 30,
                                                -------------------------------------------------------------------
                                                            2001                                 2000
                                                -------------------------------     -------------------------------
                                                Average                Average      Average                Average
                                                Balance   Interest   Yield/Cost     Balance    Interest  Yield/Cost
                                                -------   --------   ----------     -------    --------  ----------
                                                                       (Dollars in Thousands)
<S>                                          <C>          <C>       <C>          <C>           <C>       <C>
Interest-earning assets:
    Loans receivable                           $102,989     $8,068      7.83%      $ 95,726      $7,340     7.67%
    Investment securities (1)                    17,600        676      3.84         14,253         711     5.00
                                               --------     ------                 --------      ------
      Total interest-earning assets             120,589      8,744      7.25        109,979       8,051     7.32
                                                            ------                               ------
Non-interest earning assets                       2,723                               2,973
                                               --------                            --------
    Total assets                               $123,312                            $112,952
                                               ========                            ========

Interest-bearing liabilities:
    Deposits                                     91,671      4,848      5.29         84,345       4,111     4.87
    Borrowings                                    6,167        339      5.50          1,042          39     3.74
                                               --------     ------                 --------      ------
    Total interest-bearing liabilities           97,838      5,187      5.30         85,387       4,150     4.86
                                                            ------                               ------
Non-interest bearing liabilities:                 2,618                               1,997
                                               --------                            --------
    Total liabilities                           100,456
                                                                                     87,384
Minority interests                                  464
Stockholders' equity                             22,392                              25,568
                                               --------                            --------
    Total liabilities & stockholders' equity   $123,312                            $112,952
                                               ========                            ========
Net interest income                                         $3,557                               $3,901
                                                            ======                               ======
Interest rate spread (2)                                                1.95%                               2.46%
                                                                      ======                              ======
Net yield on interest-earning assets (3)                                2.95%                               3.55%
                                                                      ======                              ======
Ratio of average interest-earning assets
    to average interest-bearing liabilities                           123.25%                             128.80%
                                                                      ======                              ======
</TABLE>
----------------
(1)  Includes interest-bearing overnight deposits and term deposits with FHLB.
(2)  Interest-rate  spread represents the differnce between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(3)  Net yield on  interest-bearing  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.

                                        Year Ended September 30,
                                             2001 vs 2000
                                 -------------------------------------
                                           Increase (Decrease)
                                                Due to
                                 -------------------------------------
                                                      Rate/
                                 Volume      Rate     Volume       Net
                                 ------      ----     ------       ---
                                            (In Thousands)
Interest-earning assets:
   Loans receivable             $   557   $   154    $    17    $   728
   Investment securities(1)         167      (164)       (38)       (35)
                                -------   -------    -------    -------
     Total                      $   724   $   (10)   $   (21)   $   693
                                =======   =======    =======    =======

Interest expense:
   Deposits                     $   356   $   351    $    30    $   737
   Borrowings                       192        18         90        300
                                -------   -------    -------    -------
     Total                      $   548   $   369    $   120    $ 1,037
                                =======   =======    =======    =======
Net change in interest income   $   176   $  (379)   $  (141)   $  (344)
                                =======   =======    =======    =======

-------------
(1)  Includes interest-earning overnight deposits and term deposits with FHLB of
     Cincinnati.

                                       8
<PAGE>

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE YEARS
ENDED SEPTEMBER 30, 2001 and 2000

Net Income. Net income decreased by $462,000,  or 40.3% to $685,000 for the year
ended  September  30,  2001 as  compared  to $1.1  million  for the  year  ended
September  30,  2000.  The net  decrease  was due to a decrease in net  interest
income of $344,000, an increase in the provision for loan losses of $24,000, and
an  increase  of  $418,000  in  non-interest  expense,  offset by an increase in
non-interest  income of $65,000,  a decrease in income tax expense of  $196,000,
and an  allocation of $63,000 of the net  operating  loss of Citizens  Financial
Bank, Inc. to the minority interest.

Net Interest  Income.  Net interest income for the year ended September 30, 2001
was $3.5 million. The decrease in net interest income in fiscal 2001 compared to
2000 of $344,000  was due to an increase  in  interest  expense of $1.0  million
offset by an increase in interest  income of $693,000.  Interest  income in 2001
was $8.7 million with an average yield of 7.25% compared to $8.0 million with an
average yield of 7.32% in 2000. The average balance of  interest-earning  assets
for 2001 was $120.6  million  compared  to $110.0  million in 2000.  The average
balance  of  interest  bearing  liabilities  in 2001 was $97.8  million  with an
average cost of funds of 5.30% compared to average  balances of interest bearing
liabilities in 2000 of $85.4 million with an average cost of funds of 4.86%.

Interest  Income.  Interest  income  was  $8.7  million,  or  7.25%  of  average
interest-earning  assets,  for the year ended  September 30, 2001 as compared to
$8.0 million,  or 7.32% of average  interest-earning  assets, for the year ended
September  30, 2000.  Interest  income  increased  $693,000 or 8.6% from 2001 to
2000.  The  increase was due  primarily  to an increase of $10.6  million in the
average balance of interest earning assets in year 2001 compared to 2000.

Interest  Expense.  Interest  expense  was $5.2  million,  or  5.30% of  average
interest-bearing  liabilities, for the year ended September 30, 2001 as compared
to $4.1  million,  or 4.86% of  average  interest-bearing  liabilities,  for the
corresponding  period in 2000. The increase in interest  expense of $1.0 million
was the result of a 44 basis  point  increase  in the  average  rate paid on the
deposits,  primarily  certificates  of deposits,  in addition to, an increase of
$12.4 million in the average balance of interest  bearing  deposits for the year
ended September 30, 2001 compared to the same period in 2000.

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 estimates 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, 2001, the provision for loan losses  increased
$24,500 to $39,500  compared  to $15,000 for the  comparable  2000  period.  The
increase in the  provision  for loan losses was  precipitated  by a $1.6 million
increase in loans secured by commercial  properties and a $1.3 million  increase
in consumer commercial loans.

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 amounted to $178,000 and $113,000 for
the years ended September 30, 2001 and 2000,  respectively.  The largest item in
non-interest income is service fees on loan and deposit accounts, which amounted
to $136,000 and $93,000 for 2001 and 2000, respectively.

Non-Interest Expense.  Non-interest expense increased approximately $418,000, or
18.5%,  to $2.7 million for the year ended  September 30, 2001.  The increase of
$418,000  was  primarily  due to an increase of  $268,000  in  compensation  and
benefits,  an increase of $47,000 in occupancy expenses,  an increase of $78,000
in data processing expenses,  an increase of $46,000 in other operating expenses
offset by a decrease of $6,000 in federal and other  insurance  premiums,  and a
decrease  of $15,000 in state  franchise  taxes.  The  increase  of  $268,000 in
compensation  and benefits is due to the additional  expense from the operations
of Citizens  of  $86,000,  four  additional  employees  hired for the new branch
office in  Lawrenceburg,  Kentucky,  which opened for  operations in February of
2000, and normal salary  increases.  The increases in occupancy  expenses,  data
processing expense,  and in other operating expenses are primarily  attributable
to the  increase in operating  expense  related to the  acquisition  of Citizens
amounting to approximately  $90,000 for these categories and additional expenses
in 2001 due to the opening of a new branch office effective February 14, 2000.

Income  Tax  Expense.   The  provision  for  income  tax  expense   amounted  to
approximately  $395,000 and $591,000 for the years ended  September 30, 2001 and
2000,  respectively.  The  provision  for income tax expense as a percentage  of
income before income tax expenses amounted to 38.8% for the year ended September
30, 2001 and 34% for the year ended September 30, 2000.

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, 2001,  First  Financial  had $7.0 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, 2001 and 2000. Net cash from operating  activities for
2001  totaled  $679,000,  as compared to $1.1  million for 2000.  The decline in
operating  cash flows in year 2001 results from the 40.2%  decline in net income
during this period.

Net cash  used by  investing  activities  for 2001  totaled  $10.3  million,  as
compared to $12.0 million for 2000.

Net cash from financing activities for the year ended September 30, 2001 totaled
$17.5  million,  as compared to $5.6  million  for 2000.  The  increase of $11.9
million  in cash  from  financing  activities  for 2001 was a result  of a $12.0
million increase in deposits, and additional borrowings of $3.5 million,  offset
by stock repurchases of $3.6 million.

The Banks'  most  liquid  assets are cash and  cash-equivalents,  which  include
investments in highly liquid, short-term investments.  At September 30, 2001 and
2000,  cash  and cash  equivalents  totaled  $10.8  million  and  $3.0  million,
respectively.

                                       10
<PAGE>

At September 30, 2001, the Banks had $59.6 million in  certificates  of deposits
due  within  one year  and  $21.1  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, 2001, the Banks had $715,000 million in outstanding commitments to originate
mortgages.   The  Banks  intend  to  fund  these   commitments  with  short-term
investments and proceeds from loan repayments.


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>

                     MILLER, MAYER, SULLIVAN & STEVENS LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                    "INNOVATORS OF SOLUTION TECHNOLOGY"(sm)


                          INDEPENDENT AUDITORS' REPORT

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


We have audited the  accompanying  consolidated  balance  sheets of  Harrodsburg
First Financial Bancorp, Inc. and Subsidiaries as of September 30, 2001 and 2000
and the related  consolidated  statements of income,  stockholders'  equity, and
cash flows for the years then ended. These consolidated financial statements are
the  responsibility  of the management of Harrodsburg  First Financial  Bancorp,
Inc.   (Company).   Our  responsibility  is  to  express  an  opinion  on  these
consolidated financial statements based on our audits.

We conducted  our audits in accordance  with U.S.  generally  accepted  auditing
standards.  Those standards require 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  statement  presentation.   We  believe  that  our  audits  provide  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, 2001 and 2000, and
the results of their operations and their cash flows for the years then ended in
conformity with U.S. generally accepted accounting principles.


/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
November 16, 2001



                                                                  (859) 223-3095
2365 HARRODSBURG ROAD      LEXINGTON, KENTUCKY 40504-3399    FAX: (859) 223-2143

                                       12
<PAGE>
           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           September 30, 2001 and 2000

                        --------------------------------
<TABLE>
<CAPTION>
ASSETS                                                                            2001             2000
                                                                            -------------    -------------

<S>                                                                       <C>              <C>
Cash and due from banks                                                     $   1,180,469    $     564,340
Federal funds sold                                                                964,000
Interest bearing deposits                                                       8,751,379        2,466,827
Securities available-for-sale at fair value                                    12,508,751        4,167,377
Securities held-to-maturity, fair value of $4,985,867 and
  $6,731,799 for 2001 and 2000, respectively                                    4,941,100        6,826,520
Loans receivable, net                                                         105,081,309      100,881,267
Accrued interest receivable                                                       730,500          656,057
Premises and equipment, net                                                     1,896,931        1,735,162
Other assets                                                                      486,922           95,092
                                                                            -------------    -------------
         Total assets                                                       $ 136,541,361    $ 117,392,642
                                                                            =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                    $ 102,961,466    $  86,473,131
Advances from Federal Home Loan Bank                                            7,000,000        3,500,000
Advance payments by borrowers for taxes and insurance                               1,215           87,979
Deferred Federal income tax                                                     1,904,364        1,488,806
Dividends payable                                                                 404,150          445,902
Other liabilities                                                                 115,969          155,973
                                                                            -------------    -------------
         Total liabilities                                                    112,387,164       92,151,791
                                                                            -------------    -------------

Minority interests                                                              1,848,807
                                                                            -------------    -------------

Stockholders' equity
  Common stock, $0.10 par value, 5,000,000 shares authorized;
     1,238,834 and 1,498,015 shares issued and outstanding at
     September 30, 2001 and 2000, respectively.                                   218,213          218,213
  Additional paid-in capital                                                   21,237,991       21,215,999
  Retained earnings, substantially restricted                                  10,978,953       11,038,055
  Accumulated other comprehensive income                                        3,257,257        2,700,651
  Treasury stock, 837,959 and 568,050 shares, at cost, for 2001               (12,333,701)      (8,771,467)
     and 2000, respectively
  Unallocated employee stock ownership plan (ESOP) shares                      (1,053,323)      (1,160,600)
                                                                            -------------    -------------
  Total stockholders' equity                                                   22,305,390       25,240,851
                                                                            -------------    -------------
  Total liabilities and stockholders' equity                                $ 136,541,361    $ 117,392,642
                                                                            =============    =============
</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, 2001 and 2000

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

<TABLE>
<CAPTION>
                                                                 2001           2000
                                                             -----------    -----------
<S>                                                        <C>            <C>
Interest income:
  Interest on loans                                          $ 8,067,540    $ 7,339,869
  Interest and dividends on securities                           439,413        499,807
  Other interest income                                          237,171        211,530
                                                             -----------    -----------
       Total interest income                                   8,744,124      8,051,206
                                                             -----------    -----------
Interest expense:
  Interest on deposits                                         4,848,316      4,111,095
  Interest on other borrowings                                   338,688         38,613
                                                             -----------    -----------
       Total interest expense                                  5,187,004      4,149,708
                                                             -----------    -----------

Net interest income                                            3,557,120      3,901,498
Provision for loan losses                                         39,500         15,000
                                                             -----------    -----------
Net interest income after provision for loan losses            3,517,620      3,886,498
                                                             -----------    -----------
Non-interest income:
  Loan and other service fees, net                               133,076         93,373
  Other                                                           44,638         19,518
                                                             -----------    -----------
                                                                 177,714        112,891
                                                             -----------    -----------
Non-interest expense:
  Compensation and benefits                                    1,478,947      1,210,783
  Occupancy expenses, net                                        249,891        202,531
  Federal and other insurance premiums                            19,306         25,731
  Data processing expenses                                       254,906        177,088
  State franchise tax                                            115,694        130,920
  Other operating expenses                                       560,707        514,145
                                                             -----------    -----------
                                                               2,679,451      2,261,198
                                                             -----------    -----------
Income before income tax expense and minority interests        1,015,883      1,738,191
Income tax expense                                              (394,519)      (590,951)
Minority interests                                                63,176
                                                             -----------    -----------
Net income                                                   $   684,540    $ 1,147,240
                                                             ===========    ===========
Basic earnings per common share                              $       .52    $       .76
                                                             ===========    ===========
Diluted earnings per common share                            $       .52    $       .76
                                                             ===========    ===========
Weighted average common shares outstanding during the year     1,307,002      1,512,921
                                                             ===========    ===========
Weighted average common shares after dilutive
  effect outstanding during the year                           1,307,002      1,512,921
                                                             ===========    ===========
</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 STOCKHOLDERS' EQUITY
                           For the Years Ended September 30, 2001 and 2000

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

<TABLE>
<CAPTION>
                                                                        Accumulated
                                       Additional                          Other                       Unallocated      Total
                             Common     Paid-In         Retained       Comprehensive      Treasury       ESOP        Stockholders'
                             Stock      Capital         Earnings           Income          Stock        Shares          Equity
                           --------- -------------- --------------------------------- -------------- -----------------------------
<S>                      <C>         <C>            <C>                 <C>          <C>            <C>             <C>
Balance,
  September 30, 1999       $218,213    $21,194,168    $11,187,966         $2,595,842   $(7,698,625)   $(1,277,330)    $26,220,234
                                                                                                                      ------------
Comprehensive income:                                   1,147,240                                                       1,147,240
Net income
Other comprehensive
  income, net of tax
  unrealized gains
  on securities                                                              104,809                                      104,809
                                                                                                                      ------------
Total comprehensive
  income                                                                                                                1,252,049
Dividend declared                                      (1,297,151)                                                     (1,297,151)
ESOP shares earned
  in 2000                                   21,831                                                        116,730         138,561
Purchase of 86,800
  shares of common
  stock                                                                                 (1,072,842)                    (1,072,842)
                           --------    -----------    -----------         ----------  ------------    -----------     -----------
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:                                     684,540                                                         684,540
Net income
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 earned
  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
                           ========    ===========    ===========         ==========  ============    ===========     ===========
</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, 2001 and 2000

                        --------------------------------
<TABLE>
<CAPTION>
                                                                 2001            2000
                                                            ------------    ------------
<S>                                                       <C>             <C>
Operating activities

Net income                                                $    684,540    $  1,147,240
Adjustments to reconcile net income to net cash
provided by operating activities:
  Provision for loan losses                                     39,500          15,000
  Provision for depreciation                                   126,675         101,988
  ESOP benefit expense                                         129,271         138,561
  Amortization of loan fees                                    (99,355)        (74,267)
  Amortization of investment premium (discount)                   (128)           (128)
  Loss on sale of fixed asset                                      896
  FHLB stock dividend                                         (118,000)       (109,400)
  Minority interest                                            (63,176)
  Change in:
    Interest receivable                                        (74,443)        (37,204)
    Interest payable                                            33,919           2,952
    Accrued liabilities                                         45,380         (94,171)
    Prepaid expense                                            (35,766)         (5,253)
    Income taxes payable                                         9,519          53,992
                                                          ------------    ------------

       Net cash provided by operating activities               678,832       1,139,310
                                                          ------------    ------------

Investing activities

Net increase in loans                                       (4,140,187)    (11,760,389)
Purchase of securities, available-for-sale                  (7,498,031)
Purchase of securities held-to-maturity                     (3,500,000)     (1,000,000)
Calls of securities held-to-maturity                         5,500,000       1,500,000
Principle repayments - mortgage back securities                  3,548          14,753
Purchase of CD                                                (100,000)
Purchase of goodwill                                          (356,065)
Purchase of fixed assets                                      (289,340)       (781,955)
                                                          ------------    ------------

       Net cash provided (used) by investing activities    (10,380,075)    (12,027,591)
                                                          ------------    ------------

</TABLE>
                                   (Continued)

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

                                       16
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                 For the Years Ended September 30, 2001 and 2000

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

<TABLE>
<CAPTION>
                                                                 2001            2000
                                                            ------------    ------------
<S>                                                       <C>             <C>
Financing activities

Minority interests                                             1,911,983
Net increase (decrease) in demand deposits,
  NOW accounts and savings accounts                            8,040,121      (1,355,666)
Net increase in certificates of deposit                        8,448,214       5,810,478
Net increase (decrease) in custodial accounts                    (86,764)          7,114
Purchase of treasury stock                                    (3,562,234)     (1,072,842)
Proceeds from FHLB borrowings                                 24,500,000       3,500,000
Payments of FHLB borrowings                                  (21,000,000)
Payments of dividends                                           (785,396)     (1,319,949)
                                                            ------------    ------------
         Net cash provided (used) by financing activities     17,465,924       5,569,135
                                                            ------------    ------------
         Increase (decrease) in cash and cash equivalents      7,764,681      (5,319,146)
Cash and cash equivalents, beginning of year                   3,031,167       8,350,313
                                                            ------------    ------------
Cash and cash equivalents, end of year                      $ 10,795,848    $  3,031,167
                                                            ============    ============
Supplemental Disclosures
Cash payments for:
Interest on deposits                                        $  4,831,557    $  4,146,756
Income taxes                                                $    383,000    $    630,000

</TABLE>
               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

         Harrodsburg First Financial  Bancorp,  Inc. 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  stocks,
         which  may  be  issued  with  certain  rights  and  preferences.  As of
         September 30, 2001, 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.

         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  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.  As a member of this  system,  First  Financial  is
         required to maintain an investment in capital stock of the Federal Home
         Loan  Bank of  Cincinnati  (FHLB)  in an  amount  equal to at least the
         greater of 1% of its outstanding loans and mortgage-backed  securities,
         or  5%  of  outstanding   FHLB  advances.   First  Financial  met  this
         requirement at September 30, 2001 and 2000.

         First  Financial  and Citizens  conduct a 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.  The Banks'  profitability  is  significantly
         dependent  on net  interest  income,  which is the  difference  between
         interest income generated from interest-earning  assets (i.e. loans and
         investments)  and  the  interest   expense  paid  on   interest-bearing
         liabilities (i.e.  customer deposits and borrowed funds).  Net interest
         income is affected by the relative  amount of  interest-earning  assets
         and  interest-bearing  liabilities and the interest received or paid on
         these  balances.  The level of  interest  rates paid or received by the
         Banks can be  significantly  influenced  by a number  of  environmental
         factors,  such as  governmental  monetary  policy,  that are outside of
         management's control.

         The  consolidated  financial  information  presented  herein  has  been
         prepared in accordance with generally  accepted  accounting  principles
         (GAAP) and general  accounting  practices within the financial services
         industry. In preparing  consolidated financial statements in accordance
         with GAAP,  management is required to make  estimates  and  assumptions
         that  affect the  reported  amounts of assets and  liabilities  and the
         disclosure  of  contingent  assets and  liabilities  at the date of the
         financial  statements  and revenues and expenses  during the  reporting
         period. Actual results could differ from such estimates.

                                       18
<PAGE>
           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

         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.

         Principles of  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.

         Loan  Origination  Fees.  Loan  origination  fees are  accounted for in
         accordance  with SFAS No. 91  "Accounting  for  Nonrefundable  Fees and
         Costs Associated with Originating or Acquiring Loans and Initial Direct
         Cost of Leases." Pursuant to the provisions of SFAS No. 91, origination
         fees received from loans, net of direct origination costs, are deferred
         and amortized to interest income using the level-yield  method,  giving
         effect to actual loan prepayments.  Additionally, SFAS No. 91 generally
         limits the  definition  of loan  origination  costs to the direct costs
         attributable to originating a loan, i.e.,  principally actual personnel
         costs. Fees received for loan commitments that are expected to be drawn
         upon,  based on the  experience of the Banks with similar  commitments,
         are  deferred  and  amortized  over  the  life of the  loan  using  the
         level-yield  method.  Fees for other loan  commitments are deferred and
         amortized over the loan commitment period on a straight-line basis.

         Investment  Securities.  Investment  securities that management has the
         intent   and   ability  to  hold  to   maturity   are   classified   as
         held-to-maturity,  and carried at cost,  adjusted for  amortization  of
         premium or accretion of discount over the term of the  security,  using
         the level yield method. Included in this category of investments is the
         FHLB stock  which is a  restricted  stock  carried at cost.  Securities
         available-for-sale  are  carried  at  market  value.  Adjustments  from
         amortized cost to market value are recorded in stockholders' equity net
         of deferred income tax until realized.  The identified  security method
         is used to determine gains or losses on sales of securities.

         Federal Home Loan Mortgage  Corporation Stock. On December 6, 1984, the
         Federal  Home  Loan  Mortgage   Corporation  created  a  new  class  of
         participating  preferred  stock. The preferred stock was distributed to
         the twelve  district  banks of the Federal Home Loan Banking System for
         subsequent  distribution to their member institutions.  First Financial
         received 1,606 shares of the stock and recorded it at its fair value of
         $40 per share as of  December  31,  1984.  The fair  value of the stock
         recognized  as of  December  1984  became its cost.  The stock has been
         subsequently  classified  as  available-for-sale  and  carried  at fair
         value.

         Office  Properties and Equipment.  Office  properties 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.

                                   (Continued)
                                       19
<PAGE>
           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

         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.

         Loans  Receivable.  Loans receivable are stated at the principal amount
         outstanding  less the  allowance  for loan losses and net deferred loan
         fees. First Financial and Citizens have adequate liquidity and capital,
         and it is  generally  management's  intention  to hold  such  assets to
         maturity.

         The  allowance  for loan losses is  increased  by charges to income and
         decreased by charge-offs  (net of  recoveries).  Management's  periodic
         evaluation  of the adequacy of the  allowance is based on the past loan
         loss  experience  of  the  Banks,  known  and  inherent  risks  in  the
         portfolio, adverse situations that may affect the borrower's ability to
         pay, estimated value of any underlying collateral, and current economic
         conditions.  While  management  uses  the best  information  available,
         future adjustments may be necessary if conditions differ  substantially
         from assumptions used in management's evaluation. In addition,  various
         regulatory agencies,  as an integral part of their examination process,
         periodically  review the  allowance  for loan  losses  and may  require
         additions to the allowances  based on their judgment about  information
         available to them at the time of their examination.

         Interest  earned on loans  receivable is recorded in the period earned.
         Uncollectible  interest  on loans  that are  contractually  past due is
         charged  off or an  allowance  is  established  based  on  management's
         periodic  evaluation.  The  allowance  is  established  by a charge  to
         interest income equal to all interest previously accrued, and income is
         subsequently  recognized  only to the extent cash payments are received
         until,  in  management's  judgment,  the  borrower's  ability  to  make
         periodic  interest and principal  payments is back to normal,  in which
         case the loan is returned to accrual status.

         Impairment of loans are accounted for in accordance  with SFAS No. 114,
         Accounting  by Creditors  for  Impairment of a Loan, as amended by SFAS
         No. 118 as to certain income  recognition  and  disclosure  provisions.
         These  accounting  standards  require that  impaired  loans be measured
         based upon the present value of expected  future cash flows  discounted
         at the loan's  effective  interest rate, or as an  alternative,  at the
         loan's observable market price or fair value of the collateral.  A loan
         is  defined  under  SFAS No.  114 as  impaired  when,  based on current
         information  and events,  it is probable that a creditor will be unable
         to collect all amounts due  according to the  contractual  terms of the
         loan agreement.  In applying the provisions of SFAS No. 114, investment
         in one-to-four family residential loans and consumer  installment loans
         are  considered to be homogenous  and therefore  excluded from separate
         identification for evaluation of impairment. With respect to investment
         in  impaired  multi-family  and  nonresidential  loans,  such loans are
         collateral  dependent,  and as a result,  are  carried  as a  practical
         expedient  at the  lower of cost or fair  value.  Collateral  dependent
         loans when put in non-accrual  status are considered to constitute more
         than a minimum  delay in repayment  and are  evaluated  for  impairment
         under SFAS No. 114 at that time.

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

         Income  Taxes.  The  Company  accounts  for  federal  income  taxes  in
         accordance with the provisions of SFAS No. 109,  "Accounting for Income
         Taxes." SFAS No. 109  established  financial  accounting

                                  (Continued)
                                       20
<PAGE>
           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

          and  reporting  standards  for the effects of income taxes that result
          from the Company's  activities  within the current and previous years.
          Pursuant to the  provisions  of SFAS No. 109, a deferred tax liability
          or deferred  tax asset is computed by applying  the current  statutory
          tax rates to net  taxable or  deductible  differences  between the tax
          basis  of an  asset  or  liability  and  its  reported  amount  in the
          financial statements that will result in taxable or deductible amounts
          in future periods. Deferred tax assets are recorded only to the extent
          that  the  amount  of  net   deductible   temporary   differences   or
          carryforward   attributes  may  be  utilized  against  current  period
          earnings,  carried back against prior years  earnings,  offset against
          taxable temporary differences reversing in future periods, or utilized
          to the extent of  management's  estimate of future taxable  income.  A
          valuation  allowance is provided for deferred tax assets 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.  Deferred  tax  liabilities  are
          provided on the total amount of net temporary  differences  taxable in
          the future.

          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 on a separate return basis.

          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.

          Cash and Cash Equivalents. For purposes of reporting consolidated cash
          flows, the Company  considers cash,  balances with banks, and interest
          bearing  deposits  in  other  financial   institutions  with  original
          maturities of three months or less to be cash equivalents.

          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  contracts  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.

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

3.       Investment Securities

         The cost and estimated  fair value of  securities  held as of September
         30, 2001 and 2000 are summarized as follows:

<TABLE>
<CAPTION>
                                                                            2001
                                                   --------------------------------------------------------
                                                                      Gross        Gross
                                                      Amortized     Unrealized    Unrealized
                                                        Cost          Gains        Losses      Fair Value
                                                      ----------    ----------  -----------     ----------
<S>                                                 <C>           <C>        <C>          <C>
Securities, available-for-sale:
  Federal Home Loan Mortgage, capital                 $   75,482    $4,935,238  $              $ 5,010,720
    stock, 77,088 shares
  U.S. Government and Federal Agencies                 7,498,031                                 7,498,031
                                                      ----------    ----------  -----------     ----------
                                                      $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
                                                      ----------    ----------  -----------     ----------
                                                       3,213,724        43,653                   3,257,377
                                                      ----------    ----------  -----------     ----------
  Mortgage-backed Securities                              21,576         1,114                      22,690
                                                      ----------    ----------  -----------     ----------
  Federal Home Loan
    Bank of Cincinnati,
      capital stock - 17,058 shares                    1,705,800                                 1,705,800
                                                      ----------    ----------  -----------     ----------
                                                      $4,941,100    $   44,767  $               $4,985,867
                                                      ==========    ==========  ===========     ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                            2000
                                                   --------------------------------------------------------
                                                                      Gross        Gross
                                                      Amortized     Unrealized    Unrealized
                                                        Cost          Gains        Losses      Fair Value
                                                      ----------    ----------  --------------------------
<S>                                                 <C>           <C>        <C>          <C>
Securities, available-for-sale:
  Federal Home Loan Mortgage, capital
    stock, 77,088 shares                              $   75,482    $4,091,895  $               $4,167,377
                                                      ==========    ==========  ===========     ==========
Securities, held-to-maturity:
  Debt Securities:
    U.S. Government and Federal Agencies              $5,000,000    $           $    90,240     $4,909,760
    Municipal bonds                                      213,595                      4,899        208,696
                                                      ----------    ----------  -----------     ----------
                                                       5,213,595                     95,139      5,118,456
                                                      ----------    ----------  -----------     ----------
  Mortgage-backed Securities                              25,125           418                      25,543
                                                      ----------    ----------  -----------     ----------
  Federal Home Loan
    Bank of Cincinnati,
      capital stock - 15,878 shares                    1,587,800                                 1,587,800
                                                      ----------    ----------  -----------     ----------
                                                      $6,826,520    $      418  $    95,139     $6,731,799
                                                      ==========    ==========  ===========     ==========
</TABLE>

                                  (Continued)
                                       22
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

         The  amortized  cost and  estimated  fair value of debt  securities  at
         September 30, 2001, by contractual maturity, are as follows:

                                                                 Estimated
                                            Amortized              Fair
                                              Cost                Value
                                            ----------          -----------
Due after one year through five years       $1,104,909          $1,120,845
Due after five through ten years             2,108,815           2,136,332
                                            ----------          -----------
                                            $3,213,724          $3,257,377
                                            ==========          ==========

         In accordance  with the  requirements  of SFAS No. 115  "Accounting for
         Certain Investments in Debt and Equity Securities," the unrealized gain
         on securities  available-for-sale  of $4,935,238 net of deferred income
         taxes of  $1,677,981  has been  recorded  as a  separate  component  of
         stockholders' equity as of September 30, 2001.

         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. For the year ended September
         30,  2000,  $1,500,000  was  received  from the  maturity of three debt
         securities backed by a U.S. Government Agency, which were classified as
         held-to-maturity.

         Accrued  interest on  investment  securities  at September 30, 2001 and
         2000 totaled $38,341 and $70,115, respectively.


                                  (Continued)
                                       23
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4.       Loans Receivable

         Loans  receivable,  net at September  30, 2001 and 2000 consists of the
following:

<TABLE>
<CAPTION>

                                                              2001             2000
                                                        -------------    -------------
<S>                                                   <C>              <C>
Loans secured by first lien mortgages on real estate:
  One-to-four residential property                      $  80,152,688    $  79,826,008
  Multi-family residential property                         2,540,563        2,941,035
  Commercial properties                                     8,783,410        7,296,226
  Construction                                              7,286,230        6,318,800
  Agricultural                                              3,864,562        4,244,881
Consumer loans:
  Home equity                                               1,879,047        1,775,453
  Home improvement and personal                             1,760,723        1,220,487
  Auto loans                                                  155,445          100,107
  Commercial                                                1,696,775          337,215
  Loans secured by savings deposits                           497,591          550,870
                                                        -------------    -------------
                                                          108,617,034      104,611,082
Loans in process                                           (2,686,523)      (2,947,154)
Provisions for loan losses                                   (411,000)        (371,500)
Deferred loan origination fees                               (438,202)        (411,161)
                                                        -------------    -------------
       Loans receivable, net                            $ 105,081,309    $ 100,881,267
                                                        =============    =============
</TABLE>

       First Financial has  concentrated  its lending  activity within a 45 mile
       radius of Harrodsburg,  Kentucky. Therefore, a substantial portion of its
       debtors'  ability to honor their contracts is dependent on the economy of
       this area.

       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,
                                         -----------------------------
                                            2001                2000
                                         ---------           ---------
Balance at beginning or period           $ 371,500           $ 370,000
Additions charged to operations             39,500              15,000
Charge-offs                                                    (13,500)
Recoveries
                                         ---------           ---------
Balance at end of period                 $ 411,000           $ 371,500
                                         =========           =========

                                  (Continued)
                                       24
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


         The following is a summary of  non-performing  loans (in  thousands) at
September 30, 2001 and 2000, respectively:

                                                   September 30,
                                              ----------------------
                                               2001             2000
                                               ----             ----
Non-accrual loans                              $                $
Loans past due 90 days or more                  222              517
                                               ----             ----
Total non-performing loan balances             $222             $517
                                               ====             ====

      At September  30, 2001 and 2000,  the Company had  identified  no impaired
      loans as  defined  by SFAS No.  114.  There  were no loans in  non-accrual
      status,  and as such,  all  interest  income  earned  for the years  ended
      September 30, 2001 and 2000 on the loans  outstanding has been included in
      income.

      Accrued  interest on loans at September 30, 2001 and 2000 totaled $692,159
and $585,942, respectively.

      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, 2001 and 2000 are summarized as follows:
                                                 September 30,
                                         ------------------------------
                                            2001                 2000
                                         ---------            ---------
Balance at beginning of period           $ 462,040            $ 166,707
  Additions during year                     34,301              333,116
  Repayments                              (175,282)             (37,783)
                                         ---------            ---------
Balance at end of period                 $ 321,059            $ 462,040
                                         =========            =========

5.    Premises and Equipment

      Office premises and equipment included the following:

                        Description       Useful Life     2001       2000
---------------------------------------  --------------  ----------- -----------
Land, buildings and improvements          30-45 years    $1,607,527  $1,602,754
Furniture, fixtures and equipment          5-10 years     1,266,228   1,021,929
                                                         ----------- -----------
                                                          2,873,755   2,624,683
         Less accumulated depreciation                     (976,824)   (889,521)
                                                         ----------  ----------
                                                         $1,896,931  $1,735,162
                                                         ==========  ==========

      Depreciation  expense  for the years  ended  September  30,  2001 and 2000
      amounted to $126,675 and $101,988, respectively.


                                  (Continued)
                                       25
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


6.    Deposits

     Deposit  account  balances  as of the dates  indicated  are  summarized  as
     follows:

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                                            ---------------------------
                                                                                2001           2000
                                                                            ------------   ------------
<S>                                                                       <C>            <C>
Demand deposit accounts, non-interest bearing                               $  3,276,514   $    490,399
Passbook accounts with a weighted average rate of 2.79% and 2.79% at           6,776,358      6,753,354
September 30, 2001 and 2000, respectively
NOW and MMDA deposits with a weighted average rate of 2.52%  and 2.63% at
September 30, 2001 and 2000, respectively                                      8,139,392      8,885,193
                                                                            ------------   ------------
                                                                              18,192,264     16,128,946
Certificate of deposits with a weighted average interest rate of 5.61%
and 5.92% at September 30, 2001 and 2000, respectively                        84,769,202     70,344,185
                                                                            ------------   ------------
Total Deposits                                                              $102,961,466   $ 86,473,131
                                                                            ============   ============
Jumbo certificates of deposit (minimum denomination of $100,000)            $ 16,549,734   $  9,796,720
                                                                            ============   ============
</TABLE>

Certificates  of  deposit  by  maturity  at  September  30,  2001  and  2000 (in
thousands) are as follows:

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                                          --------------------------------
                                                                             2001               2000
                                                                          --------------   ---------------
<S>                                                                     <C>              <C>
Within one year                                                           $      $59,623   $        47,487
Over 1 to 3 years                                                                 21,078            19,441
Maturing in years thereafter                                                       4,068             3,416
                                                                          --------------   ---------------
                                                                          $       84,769   $        70,344
                                                                          ==============   ===============
</TABLE>

      Certificates  of  deposit  by  maturity  and  interest  rate  category  at
      September 30, 2001 (in thousands) are as follows:

                                           Amount Due
                  --------------------------------------------------------------
                  Less Than
                  One Year     1-2 Years    2-3 Years    After 3 Years   Total
                  ----------   ----------  -----------  --------------  --------

     2.01--4.00%  $   4,921    $      72   $            $               $  4,993
     4.01--6.00%     33,759       11,493        1,217           1,514     47,983
     6.01--8.00%     20,943        6,747        1,549           2,554     31,793
                  ----------   ----------  -----------  --------------  --------
                  $  59,623    $  18,312       $2,766   $      $4,068   $ 84,769
                  ==========   ==========  ===========  ==============  ========

                                  (Continued)
                                       26
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

      Interest  expense on deposits for the periods  indicated is  summarized as
follows:
                                                     Years Ended September 30,
                                                    ----------------------------
                                                        2001              2000
                                                    ----------        ----------
Money market and NOW account                        $  247,728        $  246,525
Savings Accounts                                       181,584           198,158
Certificates                                         4,419,004         3,666,412
                                                    ----------        ----------
                                                    $4,848,316        $4,111,095
                                                    ==========        ==========

      First Financial maintains  arrangements for clearing NOW and MMDA accounts
      with the Federal Home Loan Bank of Cincinnati, 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, 2001 and 2000. In addition,  at September  30, 2001,  First
      Financial had pledged  $1,975,000  of its  overnight  deposits held by the
      FHLB of Cincinnati to secure certain customer deposit balances.

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               2001
    ---------------   -----------------    -------------
       10/9/01              3.52%            $1,000,000
       10/24/01             3.52%             1,500,000
       11/6/01              3.52%             1,000,000
       11/13/01             3.52%             1,500,000
       11/15/01             3.52%             1,000,000
        3/7/11              5.20%             1,000,000
                                             ----------
                                             $7,000,000
                                             ==========


      A schedule of the principle  payments due over the  remaining  term of the
notes as of September 30, 2001 follows:

                     Year                      Amount
           ----------------------------   -------------
           2002                           $   6,000,000
           Due after five years               1,000,000
                                          -------------
                                          $   7,000,000
                                          =============

      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 $10,455,800 at September 30, 2001.

                                  (Continued)
                                       27
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


8.    Income Taxes

      The provision  for income taxes for the periods  indicated  consist of the
      following:

                                                       Years ended September 30,
                                                       -------------------------
                                                         2001             2000
                                                       --------         --------
Federal income tax expense:
  Current expense                                      $265,699         $545,863
  Deferred expense (benefit)                            128,820           45,088
                                                       --------         --------
                                                       $394,519         $590,951
                                                       ========         ========

      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,
                                                       -------------------------
                                                          2001           2000
                                                       ---------      ---------

Section 481 adjustment for bad debt recapture          $  97,233      $
Deferred loan fee income                                  (9,194)          (368)
Depreciation                                              21,247         18,823
FHLB stock                                                40,120         37,196
Allowance for loan losses                                (10,363)          (510)
Other, net (ESOP loan)                                   (10,223)       (10,053)
                                                       ---------      ---------
Net deferred tax expense (benefit)                     $ 128,820      $  45,088
                                                       =========      =========

      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:

                                                       Years ended September 30,
                                                       -------------------------
                                                          2001           2000
                                                       ---------      ---------

Expected income tax expense at federal tax rate        $ 366,880      $ 590,985
Valuation allowance                                       27,639
Other, net                                                                  (34)
                                                       ---------      ---------
         Total income tax expense                      $ 394,519      $ 590,951
                                                       =========      =========
Effective income tax rate                                   38.8%          34.0%
                                                       =========      =========


                                  (Continued)
                                       28
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

      Deferred  tax assets and  liabilities  as of  September  30, 2001 and 2000
consisted of the following:

<TABLE>
<CAPTION>

                                                                    2001       2000
                                                                  --------   --------
<S>                                                             <C>        <C>
Deferred tax assets:
  Net operating loss carry over for Citizens Financial Bank       $ 27,639   $
  Deferred loan fee income                                         148,989    139,795
  ESOP loan                                                         81,853     71,631
  Allowance for loan losses                                        131,207    120,845
                                                                  --------   --------
        Total deferred tax assets                                  389,688    332,271
                                                                  --------   --------
Deferred tax liabilities:
  Section 481 adjustment for bad debt recapture                     97,233
  FHLB stock                                                       383,520    343,400
  Fixed asset basis over tax basis                                 107,679     86,433
                                                                  --------   --------
        Total deferred tax liabilities                             588,432    429,833
                                                                  --------   --------
Valuation allowance on net operating loss of Citizens
        Financial Bank                                              27,639        -0-
                                                                  --------   --------
Net deferred tax liability                                        $226,383   $ 97,562
                                                                  ========   ========
</TABLE>

      In addition to the net  deferred tax  liability  at September  30, 2001 of
      $226,383 outlined in the preceding table, the financial statements include
      a deferred  tax  liability  of  $1,677,981  that was  charged  against the
      unrealized gain on securities  available-for-sale  of $4,935,238.  The net
      unrealized gain totals $3,257,257 and is recorded as a separate  component
      of stockholders' equity.

      Effective  for tax years ending  December  31, 1996 or after,  fiscal year
      September 30, 1997 for First Financial,  all thrift institutions are taxed
      as other banking  institutions.  Institutions under $500 million in assets
      are  allowed  to use the  reserve  method  of  determining  their bad debt
      deduction  based on their actual  experience,  while  larger  institutions
      (over $500 million) must use the specific charge off method in determining
      their  deduction.  Tax bad debt reserves  accumulated  since September 30,
      1988 must be included in taxable income of First Financial prorated over a
      six year period,  beginning in the tax year  effected by the change.  This
      change did not have a  material  impact as a deferred  tax  liability  was
      provided for these  accumulated  reserves.  The  accumulated  tax bad debt
      reserves  as  of  September  30,  1988,  which  amounts  to  approximately
      $2,134,000  is only  subject to being taxed at a later date under  certain
      circumstances,  such as  converting to a type of  institution  that is not
      considered a bank for tax  purposes.  These  financial  statements  do not
      include any deferred tax liability related to the accumulated tax bad debt
      reserves as of September 30, 1988.


                                  (Continued)
                                       29
<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, 2001 and 2000 are as follows (in
      thousands):

<TABLE>
<CAPTION>

                                                            September 30, 2001
                               --------------------------------------------------------------------------------
                                                                                             To be Well
                                                                                         Capitalized Under
                                                                 For Capital             Prompt Corrective
                                                              Adequacy Purposes          Action Provisions
                               ------------------------    ------------------------   -------------------------
                                       Actual                     Required                    Required
                               ------------------------    ------------------------   -------------------------
                                    Amount     %                Amount     %               Amount          %
                               ------------------------    ------------------------   -------------------------
<S>                              <C>       <C>                <C>       <C>              <C>            <C>
Core capital                       $12,905   10.80%             $4,780    4.0%             $7,170         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                           $12,905   10.80%                N/A     N/A             $5,975         5.0%
</TABLE>

<TABLE>
<CAPTION>
                                                             September 30, 2000
                               --------------------------------------------------------------------------------
                                                                                             To be Well
                                                                                         Capitalized Under
                                                                 For Capital             Prompt Corrective
                                                              Adequacy Purposes          Action Provisions
                               ------------------------    ------------------------   -------------------------
                                       Actual                     Required                    Required
                               ------------------------    ------------------------   -------------------------
                                    Amount      %               Amount     %               Amount          %
                               ------------------------    ------------------------   -------------------------
<S>                              <C>        <C>               <C>       <C>              <C>            <C>
Core capital                       $19,824    17.5%             $4,532    4.0%             $6,798         6.0%
Tangible capital                   $19,824    17.5%             $1,700    1.5%                N/A          N/A
Total Risk based capital           $20,196    19.0%             $8,528    8.0%            $10,659        10.0%
Leverage                           $19,824    17.5%                N/A     N/A             $5,665         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,
      2001  and  2000  based  upon  the  most  recent   notifications  from  its
      regulators.  There are no conditions  or events since those  notifications
      that management believes would change its classifications.


                                  (Continued)
                                       30
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

<TABLE>
<CAPTION>
                                                             September 30, 2001
                               --------------------------------------------------------------------------------
                                                                                             To be Well
                                                                                         Capitalized Under
                                                                 For Capital             Prompt Corrective
                                                              Adequacy Purposes          Action Provisions
                               ------------------------    ------------------------  --------------------------
                                       Actual                     Required                   Required
                               ------------------------    ------------------------  --------------------------
                                 Amount       Ratio          Amount       Ratio         Amount       Ratio
                               ------------------------    ------------------------  --------------------------
<S>                               <C>      <C>                  <C>     <C>                <C>         <C>
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 Federal Deposit Insurance Corporation
     (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  judgements 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, 2001, that Citizens meets all the
     capital adequacy requirements to which it is subject.

     Retained  Earnings  Restriction.  Retained  earnings at September  30, 2001
     includes  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 (see Note 8).

     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


                                  (Continued)
                                       31
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     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.

10.  Retirement Benefits

     Retirement  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, 2001 and 2000.

     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  $12,950 and
     $9,792  to the  Plan for the  years  ended  September  30,  2001 and  2000,
     respectively.

     Employee  Stock  Ownership  Plan. In connection  with the stock  conversion
     September  30,  1995,  the  Company  established  an  internally  leveraged
     Employee Stock Ownership Plan (the "ESOP") which covers  substantially  all
     full time  employees.  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 $129,271 for the year ended September 30, 2001. For
     fiscal year 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. ESOP compensation was $138,561 for the year ended September 30,
     2000. For 2000,  11,673 shares were released from collateral.  At September
     30, 2000, there were 116,060 unallocated ESOP shares having a fair value of
     $1,399,683.


                                  (Continued)
                                       32
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     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,
                                                        ------------------------------------------------------
                                                                    2001                    2000
                                                        ------------------------      ------------------------
                                                            Option       Number          Option       Number
                                                            Price       of Units         Price        of Units
                                                        -------------   --------      -------------   --------

<S>                                                   <C>              <C>             <C>           <C>
        Balance outstanding at beginning of year        $13.00-$16.50    195,000         $16.50        190,000
        Granted                                                           10,000          13.00          5,000
        Released                                                         (20,000)
        --------                                                         -------                       -------

        Balance outstanding at end of year              $13.00-$16.50    185,000      $13.00-$16.50    195,000
                                                                         =======                       =======

        Shares exercisable                                               184,000                       157,000
                                                                         =======                       =======

        Shares available for grant                                        15,000                         5,000
                                                                         =======                       =======
</TABLE>

        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

                                  (Continued)
                                       33
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  the
        compensation  cost for the stock options  awarded were  accounted for in
        accordance  with SFAS No. 123 for the year ended  September 30, 2001 and
        2000, respectively.

<TABLE>
<CAPTION>
                                           Reported Per Consolidated
                                            Financial Statements           Pro Forma Amount
                                             2001         2000            2001         2000
                                           --------    ----------        --------   -----------

<S>                                      <C>         <C>               <C>        <C>
        Net income                         $684,580    $1,147,240        $560,565   $ 1,023,225
                                           ========    ==========        ========   ===========
        Earnings per common share          $    .52    $      .76        $    .43   $       .68
                                           ========    ==========        ========   ===========
        Earnings per common share
          assuming dilution                $    .52    $      .76        $    .43   $       .68
                                           ========    ==========        ========   ===========
</TABLE>

        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:

                                                               2001       2000
                                                               ----       ----

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

        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 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, 2001, no awards had
        been made under the RSP.

11.     Financial  Instruments  with Off-Balance Sheet Risk and Concentration 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
        $715,450  plus  unused  lines of credit  granted to  customers  totaling
        $5,313,000 at September 30, 2001.  Of the mortgage loan  commitments  at
        September 30, 2001 approximately  $223,200 were for fixed rate loans. At
        September

                                  (Continued)
                                       34
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

        30, 2000 mortgage commitments   outstanding  amounted  to  approximately
        $1,051,450, and unused lines of credit amounted to $2,703,027.

        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.

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.

                                  (Continued)
                                       35
<PAGE>

           HARRODSBURG FIRST FINANCIAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


        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.

        The estimated fair value  of  the  Company's  financial  instruments  at
        September 30, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                              September 30, 2001             September 30, 2000
                                          ----------------------------   ----------------------------
                                            Carrying          Fair          Carrying         Fair
                                             Amount           Value          Amount         Value
                                           ------------     -----------   ------------     -----------
<S>                                      <C>             <C>             <C>            <C>
Assets
  Cash and cash equivalents                 $10,795,848     $10,795,848     $3,031,167     $3,031,167
  Securities available-for-sale              12,508,751      12,508,751      4,167,377      4,167,377
  Securities held-to-maturity                 4,941,100       4,985,867      6,826,520      6,731,799
  Loans receivable, net                     105,081,309     102,016,039    100,881,267     98,918,071
Liabilities
  Deposits                                  102,961,466     103,912,471     86,473,131     85,976,241
  FHLB advances                               7,000,000       7,000,000      3,500,000      3,500,000
Unrecognized Financial Instruments
  Loan commitments                                              715,450                     1,051,450
  Unused lines of credit                                      5,313,000                     2,703,027
</TABLE>

13.    Stock Purchase

       In fiscal years 2001 and 2000, the Company  repurchased 269,909 shares of
       common stock at a cost of $3,652,233 and 86,800 shares of common stock at
       a cost of $1,072,842, respectively.


                                       36