EXHIBIT 13



Killbuck Bancshares, Inc.



Corporate Profile



Killbuck Bancshares, Inc. (the Company) was incorporated under the laws of the State of Ohio on November 29, 1991 at the direction of management of the Bank,
for the purpose of becoming a bank holding company by acquiring all of the outstanding shares of The Killbuck Savings Bank Company. In November 1992, the Company became the sole shareholder of the Bank. The Bank carries on business under the name
The Killbuck Savings Bank Company. The principal office of the Company is located at 165 N. Main Street, Killbuck, Ohio.



The Killbuck Savings Bank Company was established under the banking laws of the State of Ohio in September of 1900. The Bank is headquartered in Killbuck, Ohio, which is
located in the northeast portion of Ohio, in Holmes County. The Bank is insured by the Federal Deposit Insurance Corporation, and is regulated by the Ohio Division of Financial Institutions and the Board of Governors of the Federal Reserve System.



The Bank provides customary retail and commercial banking services to its
customers, including checking and savings accounts, time deposits, interest-bearing accounts, internet banking, bill payment, safe deposit facilities, real estate mortgage loans and consumer loans. The Bank also makes secured and unsecured
commercial loans.



Stock Market Information



There is no established public trading market for our common stock and our shares are not
listed on any exchange. Sale price information is based on information reported to us by individual buyers and sellers of our stock. The following table summarizes the high and low prices and dividend information for 2004 and 2003. Cash dividends
are paid on a semi-annual basis.



|              |  |              |  |     |       |                   |   |       |  |   |     
|------------- |  | ------------ |  | --- | ----- | ----------------- | - | ----- |  | - | ----
|Quarter Ended |  | High         |  | Low |       | CashDividendsPaid
|2004          |  | March 31     |  | $   | 95.00 |                   | $ | 95.00 |  |   | N/A 
|              |  | June 30      |  |     | 95.00 |                   |   | 95.00 |  | $ | .95 
|              |  | September 30 |  |     | 96.69 |                   |   | 95.00 |  |   | N/A 
|              |  | December 31  |  |     | 97.38 |                   |   | 96.38 |  | $ | 1.00
|              |  |              |  |    
|2003          |  | March 31     |  | $   | 95.00 |                   | $ | 93.00 |  |   | N/A 
|              |  | June 30      |  |     | 95.00 |                   |   | 95.00 |  | $ | .90 
|              |  | September 30 |  |     | 95.00 |                   |   | 95.00 |  |   | N/A 
|              |  | December 31  |  |     | 95.00 |                   |   | 91.25 |  | $ | .95 



At December 31, 2004 the Company had
approximately 1,026 shareholders of record.







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Selected Financial Data



The following table sets forth general information and ratios of the Company at the dates indicated (in thousands except per share data and
shares).



|                                                    |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                    |  | Year Ended December 31, |        
|                                                    |  | 2004                    |         |   | 2003 |   |         | 2002 |  |   | 2001    |   |  | 2000 |        
|For The Year:                                       |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total interest income                               |  | $                       | 14,033  |   |      | $ | 14,283  |      |  | $ | 16,057  |   |  | $    | 19,025  |   |  | $ | 19,265  |  
|Total interest expense                              |  |                         | 3,264   |   |      |   | 4,017   |      |  |   | 5,926   |   |  |      | 9,237   |   |  |   | 9,367   |  
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                 |  |                         | 10,769  |   |      |   | 10,266  |      |  |   | 10,131  |   |  |      | 9,788   |   |  |   | 9,898   |  
|Provision for loan losses                           |  |                         | 225     |   |      |   | 390     |      |  |   | 210     |   |  |      | 263     |   |  |   | 540     |  
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses |  |                         | 10,544  |   |      |   | 9,876   |      |  |   | 9,921   |   |  |      | 9,525   |   |  |   | 9,358   |  
|Total other income                                  |  |                         | 1,015   |   |      |   | 1,120   |      |  |   | 873     |   |  |      | 730     |   |  |   | 724     |  
|Total other expense                                 |  |                         | 7,158   |   |      |   | 7,045   |      |  |   | 6,642   |   |  |      | 6,407   |   |  |   | 5,720   |  
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                          |  |                         | 4,401   |   |      |   | 3,951   |      |  |   | 4,152   |   |  |      | 3,848   |   |  |   | 4,362   |  
|Income tax expense                                  |  |                         | 982     |   |      |   | 742     |      |  |   | 934     |   |  |      | 903     |   |  |   | 1,079   |  
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                          |  | $                       | 3,419   |   |      | $ | 3,209   |      |  | $ | 3,218   |   |  | $    | 2,945   |   |  | $ | 3,283   |  
|                                                    |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Per share data                                      |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net earnings                                        |  | $                       | 5.16    |   |      | $ | 4.75    |      |  | $ | 4.68    |   |  | $    | 4.23    |   |  | $ | 4.66    |  
|Dividends                                           |  | $                       | 1.95    |   |      | $ | 1.85    |      |  | $ | 1.75    |   |  | $    | 1.60    |   |  | $ | 1.45    |  
|Book value (at period end)                          |  | $                       | 53.78   |   |      | $ | 51.24   |      |  | $ | 50.03   |   |  | $    | 47.65   |   |  | $ | 45.18   |  
|                                                    |  |                         |         |   |     
|Average no. of shares outstanding                   |  |                         | 662,130 |   |      |   | 676,133 |      |  |   | 686,739 |   |  |      | 696,017 |   |  |   | 703,784 |  
|                                                    |  |                         |         |   |     
|Year-end balances:                                  |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total loans                                         |  | $                       | 217,173 |   |      | $ | 201,697 |      |  | $ | 175,157 |   |  | $    | 152,158 |   |  | $ | 151,800 |  
|Securities                                          |  |                         | 45,769  |   |      |   | 58,211  |      |  |   | 80,626  |   |  |      | 91,223  |   |  |   | 82,287  |  
|Total assets                                        |  |                         | 293,867 |   |      |   | 284,139 |      |  |   | 283,174 |   |  |      | 281,258 |   |  |   | 262,000 |  
|Deposits                                            |  |                         | 247,349 |   |      |   | 241,724 |      |  |   | 239,039 |   |  |      | 237,971 |   |  |   | 219,168 |  
|Borrowings                                          |  |                         | 10,575  |   |      |   | 7,810   |      |  |   | 9,198   |   |  |      | 9,522   |   |  |   | 10,514  |  
|Shareholders equity                                |  |                         | 35,359  |   |      |   | 34,062  |      |  |   | 34,204  |   |  |      | 33,037  |   |  |   | 31,741  |  
|                                                    |  |                         |         |   |     
|Significant ratios:                                 |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Return on average assets                            |  |                         | 1.18    | % |      |   | 1.13    | %    |  |   | 1.15    | % |  |      | 1.10    | % |  |   | 1.31    | %
|Return on average equity                            |  |                         | 10.26   |   |      |   | 9.77    |      |  |   | 10.10   |   |  |      | 9.34    |   |  |   | 10.98   |  
|Dividends per share to net income per share         |  |                         | 37.72   |   |      |   | 38.95   |      |  |   | 37.31   |   |  |      | 37.83   |   |  |   | 31.12   |  
|Average equity to average assets                    |  |                         | 11.55   |   |      |   | 11.53   |      |  |   | 11.36   |   |  |      | 11.75   |   |  |   | 11.93   |  
|Loans to deposits                                   |  |                         | 87.80   |   |      |   | 83.44   |      |  |   | 73.28   |   |  |      | 63.94   |   |  |   | 69.26   |  
|Allowance for loan loss to total loans              |  |                         | 1.22    |   |      |   | 1.34    |      |  |   | 1.33    |   |  |      | 1.49    |   |  |   | 1.55    |  







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



Killbuck Bancshares, Inc. (Killbuck or the Company) is the parent
holding company for the Killbuck Savings Bank Company (the Bank). The following discussion and analysis is intended to provide information about the financial condition and results of operation of the Company and should be read in
conjunction with the audited Consolidated Financial Statements, footnotes and other discussions appearing elsewhere in this annual report and the Companys Form 10-K.



Certain information presented in this discussion and analysis and other statements concerning future performance, developments or events,
and expectations for growth and market forecasts constitute forward-looking statements which are subject to a number of risks and uncertainties, including interest rate fluctuations, changes in local or national economic conditions, and government
and regulatory actions which might cause actual results to differ materially from stated expectations or estimates.



Critical Accounting Policies



The Companys accounting policies are integral to understanding the results reported. The accounting policies are described in detail in Note 1 of the consolidated
financial statements. Our most complex accounting policies require managements judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. We have established detailed policies and control procedures that are
intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The
following is a brief description of our current accounting policies involving significant management valuation judgments.



Allowance for Loan Losses



Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. The Companys allowance for loan losses provides for probable
losses based upon evaluations of known and inherent risks in the loan portfolio.



Management uses historical information to assess the adequacy of the allowance for loan losses as well as the prevailing business environment as it is affected by changing economic conditions and various external factors, which may impact
the portfolio in ways currently unforeseen. The allowance is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. For a full discussion of the Companys methodology of
assessing the adequacy of the reserve for loan losses, refer to Note 1 of Notes to Consolidated Financial Statements.



Goodwill and Other Intangible Assets



As discussed in Note 7 of the consolidated financial statements, the Company must assess goodwill and other intangible assets each year for impairment. This assessment
involves estimating cash flows for future periods. If the future cash flows were less than the recorded goodwill and other intangible assets balances, we would be required to take a charge against earnings to write down the assets to the lower
value.



Deferred Tax Assets



We use an estimate of future earnings to support our position that the benefit of our
deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and our net income will be reduced.
Our deferred tax assets are described further in Note 14 of the consolidated financial statements.



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Overview



The reported results of the Company are dependent on a variety of factors, including the general interest rate environment, competitive conditions in the industry,
governmental policies and regulations and conditions in the markets for financial assets. We are not aware of any market or institutional trends, events or uncertainties that are expected to have a material effect on liquidity, capital resources or
operations. Net interest income is the largest component of net income, and consists of the difference between income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is
primarily affected by the volume, interest rates and composition of interest-earning assets and interest-bearing liabilities.



The branch facility in Sugarcreek, Ohio opened for business in February 2000. In July 2001, a branch facility in Howard, Ohio (Apple Valley Area) opened for business.
These locations have given us a presence in the Sugarcreek and Apple Valley areas and allowed us to develop new business and deposit relationships in these areas. A loan production facility was opened in Millersburg, Ohio in July 2003. This facility
has allowed us to concentrate our Millersburg lenders into one location to provide better service, more office space, and new business opportunities with a commercial calling officer. In April of 2004, a branch facility was opened in the German
Village grocery store complex in Berlin, Ohio. It provides a greater level of convenience to the Berlin community.



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RESULTS OF OPERATIONS



Summary



For 2004, we recorded net income of $3.4 million compared to $3.2 million for 2003 and $3.2 million for 2002.



Other operating income was $1.0 million for 2004 compared to $1.1 million for 2003 and $873,000 for 2002.



Total other operating expenses were $7.2 million in 2004 compared to $7.0 million in 2003 and $6.6 million in 2002.



Earnings per share for 2004 were $5.16 compared to $4.75 for 2003 and $4.68 for 2002.



NET INTEREST INCOME



Our net interest income increased by $503,000 in 2004 from 2003 and increased by $135,000 in
2003 from 2002.



Total interest income decreased by $250,000 or 1.8% for 2004
from 2003. The decrease of $250,000 for 2004 resulted primarily from a decrease of $875,000 in interest income on investment securities. The decrease in investment security interest income resulted primarily from decreases in the average volume in
the investment portfolio which led to a decrease of 1 basis point to 4.26%. The increases in loan interest income resulted primarily from increases in the average volume of the loan portfolio. The average loan portfolio increased $25.9 million or
13.8% for 2004. The current yield on the average loan portfolios decreased 42 basis points to 5.46%. The decrease in the current yield was a result of the economic environment, historically low interest rates.



Total interest income decreased by $1,774,000 or 11.04% for 2003 from 2002. The decrease of
$1,774,000 for 2003 resulted primarily from a decrease of $475,000 in interest income on loans and $1,148,000 in interest income on investment securities. The decreases in loan interest income resulted primarily from decreases in the current yield
on the loan portfolios which decreased 120 basis points to 5.88%. The decrease in investment security interest income resulted primarily from decreases in volume in the investment portfolio which led to a decrease of 59 basis points to 4.28%. The
decrease in the current yield was a result of the economic environment, more specifically, falling interest rates.



The yield on earning assets was 5.13%, 5.28%, and 6.03% for 2004, 2003, and 2002 respectively. The decrease in the yield on earning assets is attributable to the general
decline in interest rates.



Interest expense for 2004 decreased by $753,000 or
18.74% from 2003 and decreased by $1,909,000 for 2003 from 2002. The decrease was due to a decrease in the cost on interest bearing liabilities, which declined 35 basis points from 1.89% in 2003 to 1.54% in 2004 and declined 89 basis points from
2.78% in 2002 to 1.89% in 2003.



The average volume of time deposits decreased
$5.8 million and interest-bearing demand deposits, money market deposits, and savings deposits increased $.7 million, $39,000, and $1.6 million respectively in 2004. The volume decrease in time deposits and increases in other deposit categories are
primarily due to the low interest rate environment and the uncertainty of interest rate levels. The funds are continuing to shift into liquid deposits. The average volume of time deposits decreased $6.5 million while interest bearing demand
deposits, money market deposits, and savings deposits increased $1.2 million, $1.6 million, and $4.1 million respectively for 2003.



---

The cost on average interest-bearing liabilities was 1.54% for 2004 and 1.89% for 2003, and 2.78% for 2002. The decrease
for 2004 and 2003 is due mainly to a decrease in the cost of time deposits of 37 and 101 basis points.



Due mainly to an increase in the average volume of loans, the net yield on earning assets has increased this year reversing the decreases of prior years. The net yield on average interest-earning assets is 3.94%,
3.80% and 3.80% for 2004, 2003 and 2002 respectively.



The following table sets
forth, for the periods indicated, information regarding the total dollar amounts of interest income from average interest-earning assets and the resulting yields, the total dollar amount of interest expense on average interest-bearing liabilities
and the resulting rate paid, net interest income, interest rate spread and the net yield on interest-earning assets (dollars in thousands):



---

Average Balance Sheet and Net Interest Analysis



|                                     |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|------------------------------------ |  | ------------------------------ | ------- | - | -------- | - | ---------- | ---- | ---- | -------------- |  | - | -------- | - | ---------- | - | ------ | -------------- | ---- | - | -------- | - | ---------- | - |  | - | ------ |  | ---- | -
|                                     |  | For the Year Ended December 31 |        
|                                     |  | 2004                           |         |   | 2003     |   |            | 2002 |     
|                                     |  | AverageBalance                 |         |   | Interest |   | Yield/Rate |      |      | AverageBalance |  |   | Interest |   | Yield/Rate |   |        | AverageBalance |      |   | Interest |   | Yield/Rate |  
|Assets                               |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Interest earning assets:             |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Loans (1)(2)(3)                      |  | $                              | 213,463 |   |          | $ | 11,657     |      | 5.46 | %              |  | $ | 187,554  |   |            | $ | 11,029 |                | 5.88 | % |          | $ | 162,413    |   |  | $ | 11,504 |  | 7.08 | %
|Securities - taxable (4)             |  |                                | 13,308  |   |          |   | 517        |      | 3.88 | %              |  |   | 30,874   |   |            |   | 1,263  |                | 4.09 | % |          |   | 46,440     |   |  |   | 2,393  |  | 5.15 | %
|Securities  nontaxable              |  |                                | 38,685  |   |          |   | 1,700      |      | 4.39 | %              |  |   | 41,504   |   |            |   | 1,827  |                | 4.40 | % |          |   | 40,599     |   |  |   | 1,845  |  | 4.54 | %
|Securities  Equity (4)(5)           |  |                                | 1,515   |   |          |   | 67         |      | 4.45 | %              |  |   | 1,470    |   |            |   | 69     |                | 4.69 | % |          |   | 1,423      |   |  |   | 69     |  | 4.85 | %
|Federal funds sold                   |  |                                | 6,404   |   |          |   | 92         |      | 1.44 | %              |  |   | 8,860    |   |            |   | 95     |                | 1.07 | % |          |   | 15,370     |   |  |   | 246    |  | 1.60 | %
|                                     |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Total interest - earnings assets     |  |                                | 273,375 |   |          |   | 14,033     |      | 5.13 | %              |  |   | 270,262  |   |            |   | 14,283 |                | 5.28 | % |          |   | 266,245    |   |  |   | 16,057 |  | 6.03 | %
|                                     |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Noninterest-earning assets           |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Cash and due from other Institutions |  |                                | 9,627   |   |          |   |            |      |      |                |  |   | 8,508    |   |            |   |        |                |      |   |          |   | 8,743      |   |  |   |        |  |      |  
|Premises and equipment, net          |  |                                | 5,013   |   |          |   |            |      |      |                |  |   | 5,088    |   |            |   |        |                |      |   |          |   | 5,209      |   |  |   |        |  |      |  
|Accrued interest                     |  |                                | 781     |   |          |   |            |      |      |                |  |   | 978      |   |            |   |        |                |      |   |          |   | 1,306      |   |  |   |        |  |      |  
|Other assets                         |  |                                | 2,542   |   |          |   |            |      |      |                |  |   | 2,401    |   |            |   |        |                |      |   |          |   | 1,386      |   |  |   |        |  |      |  
|Less allowance for loan losses       |  |                                | (2,764  | ) |          |   |            |      |      |                |  |   | (2,512   | ) |            |   |        |                |      |   |          |   | (2,291     | ) |  |   |        |  |      |  
|                                     |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Total                                |  | $                              | 288,574 |   |          |   |            |      |      |                |  | $ | 284,725  |   |            |   |        |                |      |   |          | $ | 280,598    |   |  |   |        |  |      |  
|                                     |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Liabilities and Shareholders Equity  |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Interest bearing liabilities:        |  |                                |         |   |          |   |            |      |      |                |  |   |          |   |            |   |        |                |      |   |          |   |            |   |  |   |        |  |      |  
|Interest bearing demand              |  | $                              | 33,610  |   |          | $ | 123        |      | 0.37 | %              |  | $ | 32,944   |   |            | $ | 161    |                | .49  | % |          | $ | 31,768     |   |  | $ | 321    |  | 1.01 | %
|Money market accounts                |  |                                | 19,316  |   |          |   | 171        |      | 0.89 | %              |  |   | 19,277   |   |            |   | 198    |                | 1.03 | % |          |   | 17,636     |   |  |   | 330    |  | 1.87 | %
|Savings deposits                     |  |                                | 42,198  |   |          |   | 267        |      | 0.63 | %              |  |   | 40,582   |   |            |   | 415    |                | 1.02 | % |          |   | 36,438     |   |  |   | 602    |  | 1.65 | %
|Time deposits                        |  |                                | 106,629 |   |          |   | 2,427      |      | 2.28 | %              |  |   | 112,388  |   |            |   | 2,980  |                | 2.65 | % |          |   | 118,851    |   |  |   | 4,346  |  | 3.66 | %
|Short term borrowings                |  |                                | 3,871   |   |          |   | 8          |      | 0.21 | %              |  |   | 3,913    |   |            |   | 5      |                | .13  | % |          |   | 3,831      |   |  |   | 5      |  | .13  | %



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Average Balance Sheet and Net Interest Analysis (Continued)



|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|---------------------------------------- |  | ------------------------------ | ------- | -------- | ---- | ---------- |  | ---- | -------------- |  | -------- | ------- | ---------- | - | ------ | -------------- | ---- | -------- |  | ---------- | ------- |  | - | ------ |  | ---- | -
|                                         |  | For the Year Ended December 31 |        
|                                         |  | 2004                           |         |          | 2003 |            |  | 2002 |               
|                                         |  | AverageBalance                 |         | Interest |      | Yield/Rate |  |      | AverageBalance |  | Interest |         | Yield/Rate |   |        | AverageBalance |      | Interest |  | Yield/Rate |        
|Federal Home Loan Bank Advances          |  |                                | 6,003   |          |      | 268        |  | 4.46 | %              |  |          | 3,838   |            |   | 258    |                | 6.72 | %        |  |            | 4,751   |  |   | 322    |  | 6.78 | %
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Total interest bearing liabilities       |  |                                | 211,627 |          |      | 3,264      |  | 1.54 | %              |  |          | 212,942 |            |   | 4,017  |                | 1.89 | %        |  |            | 213,275 |  |   | 5,926  |  | 2.78 | %
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Noninterest bearing liabilities:         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Demand deposits                          |  |                                | 41,220  |          |      |            |  |      |                |  |          | 36,327  |            |   |        |                |      |          |  |            | 33,524  |  |   |        |  |      |  
|Accrued expenses and other liabilities   |  |                                | 2,394   |          |      |            |  |      |                |  |          | 2,618   |            |   |        |                |      |          |  |            | 1,931   |  |   |        |  |      |  
|                                         |  |                                |         |          |      |            |  |      |               
|Shareholders equity                     |  |                                | 33,333  |          |      |            |  |      |                |  |          | 32,838  |            |   |        |                |      |          |  |            | 31,868  |  |   |        |  |      |  
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Total                                    |  | $                              | 288,574 |          |      |            |  |      |                |  | $        | 284,725 |            |   |        |                |      |          |  | $          | 280,598 |  |   |        |  |      |  
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Net interest income                      |  |                                |         |          | $    | 10,769     |  |      |                |  |          |         |            | $ | 10,266 |                |      |          |  |            |         |  | $ | 10,131 |  |      |  
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Interest rate spread (6)                 |  |                                |         |          |      |            |  | 3.59 | %              |  |          |         |            |   |        |                | 3.39 | %        |  |            |         |  |   |        |  | 3.25 | %
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  
|Net yield on interest earning assets (7) |  |                                |         |          |      |            |  | 3.94 | %              |  |          |         |            |   |        |                | 3.80 | %        |  |            |         |  |   |        |  | 3.80 | %
|                                         |  |                                |         |          |      |            |  |      |                |  |          |         |            |   |        |                |      |          |  |            |         |  |   |        |  |      |  

---

|(1) | For purposes of these computations, the daily average loan amounts outstanding are net of deferred loan fees.
|--- | -------------------------------------------------------------------------------------------------------------

|(2) | Included in loan interest income are loan related fees of $299,952, $406,089, and $414,438 in 2004, 2003, and 2002, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------

|(3) | Nonaccrual loans are included in loan totals and do not have a material impact on the information presented.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Average balance is computed using the carrying value of securities. The average yield has been computed using the historical amortized cost average balance for available for sale
securities.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Equity securities are comprised of common stock of the Federal Home Loan Bank, Federal Reserve Bank, and Great Lakes Bankers Bank.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(6) | Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Net yield on interest earning assets represents net interest income as a percentage of average interest earning assets.
|--- | -----------------------------------------------------------------------------------------------------------------------



---

Rate/Volume Analysis



The table below sets forth certain information regarding changes in interest income and interest expense of the Company 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) and (ii) changes in rates (changes in rate multiplied by old
average volume). Changes which are not solely attributable to rate or volume are allocated to changes in rate due to rate sensitivity of interest-earning assets and interest-bearing liabilities (dollars in thousands).



|                                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|---------------------------------- |  | -------------------------- | ----- | - | -------------------------- | - | ---- | --- |  | - | ------ | - |  | ---- | ----- | - | --- | - | ------ | - |  | - | ------ | -
|                                   |  | 2004 Compared to 2003      |       |   | 2003 Compared to 2002      |  
|                                   |  | Increase (Decrease) Due To |       |   | Increase (Decrease) Due To |  
|                                   |  | Volume                     |       |   | Rate                       |   |      | Net |  |   | Volume |   |  | Rate |       |   | Net |  
|Interest income                    |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Loans                              |  | $                          | 1,524 |   |                            | $ | (896 | )   |  | $ | 628    |   |  | $    | 1,781 |   |     | $ | (2,256 | ) |  | $ | (475   | )
|Securities-taxable                 |  |                            | (719  | ) |                            |   | (27  | )   |  |   | (746   | ) |  |      | (802  | ) |     |   | (328   | ) |  |   | (1,130 | )
|Securities-nontaxable              |  |                            | (124  | ) |                            |   | (3   | )   |  |   | (127   | ) |  |      | 41    |   |     |   | (59    | ) |  |   | (18    | )
|Securities-equities                |  |                            | 2     |   |                            |   | (4   | )   |  |   | (2     | ) |  |      | 2     |   |     |   | (2     | ) |  |   |       |  
|Federal funds sold                 |  |                            | (26   | ) |                            |   | 23   |     |  |   | (3     | ) |  |      | (104  | ) |     |   | (47    | ) |  |   | (151   | )
|                                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Total interest earning Assets      |  |                            | 657   |   |                            |   | (907 | )   |  |   | (250   | ) |  |      | 918   |   |     |   | (2,692 | ) |  |   | (1,774 | )
|                                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Interest expense                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Interest bearing demand            |  |                            | 3     |   |                            |   | (41  | )   |  |   | (38    | ) |  |      | 12    |   |     |   | (172   | ) |  |   | (160   | )
|Money market accounts              |  |                            |      |   |                            |   | (27  | )   |  |   | (27    | ) |  |      | 31    |   |     |   | (163   | ) |  |   | (132   | )
|Savings deposits                   |  |                            | 17    |   |                            |   | (165 | )   |  |   | (148   | ) |  |      | 68    |   |     |   | (255   | ) |  |   | (187   | )
|Time deposits                      |  |                            | (153  | ) |                            |   | (400 | )   |  |   | (553   | ) |  |      | (236  | ) |     |   | (1,130 | ) |  |   | (1,366 | )
|Short-term borrowing               |  |                            |      |   |                            |   | 3    |     |  |   | 3      |   |  |      |      |   |     |   |       |   |  |   |       |  
|Federal Home Loan Bank Advances    |  |                            | 146   |   |                            |   | (136 | )   |  |   | 10     |   |  |      | (62   | ) |     |   | (2     | ) |  |   | (64    | )
|                                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Total interest bearing Liabilities |  |                            | 13    |   |                            |   | (766 | )   |  |   | (753   | ) |  |      | (187  | ) |     |   | (1,722 | ) |  |   | (1,909 | )
|                                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  
|Net change in interest income      |  | $                          | 644   |   |                            | $ | (141 | )   |  | $ | 503    |   |  | $    | 1,105 |   |     | $ | (970   | ) |  | $ | 135    |  
|                                   |  |                            |       |   |                            |   |      |     |  |   |        |   |  |      |       |   |     |   |        |   |  |   |        |  



Provision for Loan Losses



The provision for loan losses was $225,000 for 2004, $390,000 for 2003,
and $210,000 for 2002. We make periodic provisions to the allowance for loan losses to maintain the allowance at an acceptable level commensurate with the credit risks inherent in the loan portfolio. There can be no assurances, however, that
additional provisions will not be required in future periods. The allowance for loan losses as a percent of total loans was 1.22%, 1.34% and 1.33% for 2004, 2003 and 2002 respectively.



The allowance for loan losses is Managements estimate of the amount of probable credit losses in the portfolio. The Company determines
the allowance for loan losses based upon an ongoing evaluation. This evaluation is inherently subjective, as it requires material estimates, including the amounts and timing of cash flows expected to be received on impaired loans that may be
susceptible to significant change. Increases to the allowance for loan losses are made by charges to the provision for loan losses. Loans deemed uncollectible are charged against the allowance for loan losses. Recoveries of previously charged-off
amounts are credited to the allowance for loan losses.



The Companys
allowance for loan losses is the accumulation of various components calculated based upon independent methodologies. All components of the allowance for loan losses represent an estimation performed according to either Financial Accounting Standards
No. 5 or No. 114. Managements estimate of each allowance component is based on certain observable data that Management believes is the most reflective of the underlying loan losses being estimated. Changes in the amount of each component of
the allowance for loan losses are directionally consistent with changes in the observable data and corresponding analyses. Some of the components that Management factors in are current economic conditions, loan growth assumptions, and levels of
nonperforming loans.



---

A key element of the methodology for determining the allowance for loan losses is the Companys
credit-risk-evaluation process, which includes credit-risk grading of individual commercial loans. Loans are assigned credit-risk grades based on an internal assessment of conditions that affect a borrowers ability to meet its contractual
obligation under the loan agreement. The assessment process includes reviewing a borrowers current financial information, historical payment experience, credit documentation, public information, and other information specific to each
individual borrower. Certain commercial loans are reviewed on an annual or rotational basis or as Management becomes aware of information affecting a borrowers ability to fulfill its obligation.



Noninterest Income



Other income, which is comprised principally of fees and charges on customers deposit accounts, decreased $104,000 or 9.3% to
$1,015,000 in 2004 from $1,119,000 in 2003, and increased $246,000 or 28.2% in 2003 from 2002. Service charges on customer accounts increased $67,000 or 9.1% in 2004 due in part to an increase in ATM usage by non-customers and an increase in Non
Sufficient Funds occurrences, $22,000 and $38,000, respectively. The Bank sells fixed rate loans in the secondary market. Due to market conditions, the Bank originated and sold $10.5 million less of these loans in 2004 compared to 2003. Gains for
these sales were $63,000 in 2004, $241,000 in 2003 and $129,000 in 2002. Income from the alternative investment service was $25,000 for 2004 and $15,000 for 2003 and $13,000 for 2002.



Noninterest Expense



Other expense increased $113,000 or 1.6% to $7.2 million in 2004 as compared to $7.0 million in 2003 and increased $403,000 or 6.1% for 2003 from $6.6 million in 2002.



Salary and employee benefits for 2004 totaled $4.0 million, an increase of
$268,000 or 7.2% from $3.7 million in 2003 and increased $318,000 for 2003 or 9.4% from $3.4 million in 2002. These increases are due to: 1) Normal recurring employee cost increases for annual salary raises and employee benefits, 2) Additional
business development staff hired in March 2003 for Knox County, and 3) Due to the retirement of the branch manager, the bank hired new management personnel in June 2004 for the Tuscarawas County Office. Salary for the retiree was expensed through
February 2005 for earned but non-accrued benefits. The increase for 2003 was attributable to staff additions and normal recurring employee cost increases for salary and employee benefits.



Occupancy and equipment expense decreased $72,000 in 2004 and increased $88,000 in 2003. In October of 2000, a new computer network was
installed. In 2003, the majority of this equipment was fully depreciated, hence the decrease in expense during 2004. For 2003, the increases were attributable to normal and recurring items and the opening of the Loan Annex in Millersburg, Ohio in
July 2003.



Other operating expenses for 2004 totaled $2.20 million, an $81,000
or 3.6% decrease from the $2.28 million reported in 2003 and a $4,000 or .18 % decrease for 2003 from the 2002 total of $2.28 million. The credit card processing expenses decreased by $115,000 or 53.5% from $215,000 in 2003 to $100,000 in 2004 due
to the sale of the merchant program. The postage, express and freight expenses increased by $9,000 or 6.1% from $147,000 in 2003 to $156,000 in 2004 due to increased branch usage and the German Village Branch, Berlin, Ohio opening in April 2004. The
telephone expense increased $24,000 or 18.3% from $131,000 in 2003 to $155,000 in 2004 due to increased bandwidth on the frame relay and the increased taxes and government surcharges and additional usage at the Loan Annex and German Village
locations. The data processing expense for 2004 totaled $168,000, an $8,000 or a 5.0% increase from the $160,000 reported 2003 and a $48,000 or 42.9% increase from the 2002 total of $112,000. In 2004, the Check Imaging System was upgraded from a DOS
based system to a Windows environment. This format change required a different Hot Site for disaster recovery planning and testing and the transfer of archived information into the new format, $3,200 and 4,500, respectively. In 2003, $35,000 of this
increase was due to Security Monitoring and Testing of the computer network which are provisions of the Gramm-Leach-Bliley Act. The initial testing was conducted in 2003 but not completed until 2004. The monitoring is conducted 24 hours a day 7 days
a week 365 days a year.



The decrease in other expense in 2002 was due to
several factors including the elimination of the amortization expense for goodwill of $ 111,000, with the adoption of FAS No. 142. For further discussion of the goodwill expense, see Note 7 of the consolidated financial statements.



---

Income Tax Expense



Income tax expense increased by $239,000 for 2004 to $981,000 from $742,000 in 2003 and decreased $193,000 in 2003 from $935,000 in 2002. The effective rate on taxes for
2004, 2003 and 2002 was 22.2%, 18.8% and 22.5% respectively. The effective tax rate is affected by the amount of tax-exempt income earned by the Company each year.



Comparison of Financial Condition at December 31, 2004 and 2003



Total assets at December 31, 2004 amounted to $294 million, an increase of $10 million compared to $284 million at December 31, 2003.



Cash and cash equivalents increased $4.1 million or 23.3% from December 31,
2003 to December 31, 2004, with liquid funds held in the form of federal funds sold increasing $1.7 million. The increase in federal funds sold at December 31, 2004 is the excess of funds from the net increase in deposits that was not used in
investing activities, financing activities, or operating activities.



Total
investment securities decreased $12.4 million or 21.4% from December 31, 2003 to December 31, 2004. The decrease in investments was due to maturities and calls and was used to help fund loan growth. Information detailing the book value of the
investment portfolio by security type and classification is present in Note 3 to the consolidated financial statements.



Total loans were $217.2 million at December 31, 2004 an increase of $15.5 million or 7.7% from $201.7 million at December 31, 2003. The loan increases were due in part to
an effective marketing of our loan products including but not limited to a business development calling officer program. Also the general economic well-being of the communities we serve contributed to our loan growth. Of this $15.5 million increase
approximately $9.2 million was in the residential real estate loan portfolio, approximately $11,000 was an increase in the agriculture real estate loan portfolio, approximately $5.1 million was an increase in the commercial real estate loan
portfolio, approximately $22,000 was an increase in the construction real estate loan portfolio, approximately $2.5 million was an increase in the commercial and other loan portfolio, and approximately $1.3 million was a decrease in the consumer and
credit loan portfolio. Approximately $13.3 million of the $9.2 million increase in real estate loans was in residential 1 to 4 family adjustable rate mortgages while approximately $4.1 million in residential 1 to 4 family fixed rate mortgages
decreased. Late in 1997 we began to offer residential mortgage customers a new fixed rate product. This program enables us to offer competitive long-term fixed rates. These loans are made with the intent to sell in the secondary loan market. We
originated and sold $11.6 million and $22.1 million of loans in 2004 and 2003. Profit on the sale of these loans was $63,000 and $241,000 for 2004 and 2003. Information detailing the composition of the loan portfolio is presented in Note 4 to the
consolidated financial statements.



Total deposits increased $5.6 million or
2.3% from December 31, 2003 to December 31, 2004. All deposit accounts increased except interest bearing demand deposits and time deposits. The interest bearing demand deposits decreased $176,000 and time deposits decreased $3.1 million. The
increases are attributable to new deposit account growth and internal growth for existing accounts. See also, Average Balance Sheet and Net Interest Analysis for information related to the average amount and average interest paid on deposit accounts
during 2004 and 2003. Information related to the maturity of time deposits of $100,000 and over at December 31, 2004 is presented in Note 8 of the accompanying consolidated financial statements.



Advances were $6.8 million and $3.4 million at December 31, 2004 and 2003 respectively. There
was $6.0 million in new advances in 2004. These advances are six months to two years in term and were used for general liquidity purposes. There were no new advances in 2003. The prior advances were used to fund fixed rate residential real estate
loans with similar maturities. Additional information on the Federal Home Loan Bank Advances is presented in Note 10 of the accompanying consolidated financial statements.



Shareholders equity increased $1.3 million during 2004 to $35.4 million at December 31, 2004 from $34.1 million at December 31, 2003.
This increase was the result of an increase of $3.4 million in net earnings during the year, a net unrealized loss on securities available for sale of $.1 million, and Cash Dividends paid totaling $1.3 million. The Company also purchased treasury
stock for $.7 million. Treasury stock purchases are monitored against the Companys Strategic Plan and the goals set forth in the plan. The Treasury stock purchases have been within the Strategic Plans guidelines for 2004.



---

Market Risk and Asset/Liability Management



Our primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. Because of the nature of our operations, we
are not subject to currency exchange or commodity price risk and, since we have no trading portfolio, it is not subject to trading risk. Currently, we have equity securities that represent only 3.2% of its investment portfolio and, therefore, equity
price risk is not significant.



We actively manage interest rate sensitivity
and asset/liability products through an asset/liability management committee. The principle objectives of asset-liability management are to maximize current net interest income while minimizing the risk to future earnings of negative fluctuations in
net interest margin and to insure adequate liquidity exists to meet operational needs.



In an effort to reduce interest rate risk and protect itself from the negative effects or rapid or prolonged changes in interest rates, we have instituted certain asset and liability management measures, including underwriting long-term
fixed rate loans that are saleable in the secondary market, offering longer term deposit products and diversifying the loan portfolio into shorter term consumer and commercial business loans. In addition, since the mid-1980s, we have
originated adjustable-rate loans and as of December 31, 2004, they comprised approximately 85.4% of the total loan portfolio.



Liquidity



Liquidity represents our ability to meet normal cash flow requirements of our customers for the funding of loans and repayment of deposits. Both short term and long term liquidity needs are generally derived from the
repayments and maturities of loans and investment securities, and the receipt of deposits. Management monitors liquidity daily, and on a monthly basis incorporates liquidity management into its asset/liability program. The assets defined as liquid
are: cash and cash equivalents and the available for sale security portfolio. The liquidity ratio as of December 31, 2004 and 2003 are 11% and 12%, respectively.



Operating activities, as presented in the statement of cash flows in the accompanying consolidated financial statements, provided $1.5 and
$4.0 million in cash during 2004 and 2003 respectively, generated principally from net income.



Investing activities consist primarily of loan originations and repayments, investment purchases and maturities, and investment in technology. These activities used $3.8 million in funds during 2004, principally for
the net funding of loans, and the net purchase of technology and fixed assets totaling $15.7 million, and $.3 million respectively; and provided the net proceeds of investments of $12.2 million. For 2003, investing activities used $5.0 million,
principally for the net funding of loans, and the net purchase of technology and fixed assets totaling $26.5 million, and $.3 million respectively; and provided the net proceeds of investments of $21.8 million.



Financing activities consisted of the solicitation and repayment of customer deposits,
borrowings and repayments, and the payment of dividends. For 2004, financing activities provided $6.4 million, comprised mainly of net deposit increases of $5.6 million, proceeds from Federal Home Loan Bank advances of $6 million, repayment of
Federal Home Loan Bank advances of $2.6 million, net decrease in short-term borrowings of $.6 million, purchase of treasury stock of $.7 million and payment of dividends of $1.3 million. For 2003 financing activities used $1.6 million, comprised
mainly of net deposit increases of $2.6 million, Federal Home Loan Bank advance repayments of $.8 million, net decrease in short-term borrowings of $.5 million, purchase of treasury stock of $1.7 million and payment of dividends of $1.2 million.



In addition to using the loan, investment and deposit portfolios as sources of
liquidity, we have access to funds from the Federal Home Loan Bank of Cincinnati. We also have a ready source of funds through the available-for-sale component of the investment securities portfolio.



---

Capital Resources



Capital adequacy is our ability to support growth while protecting the interests of shareholders and depositors. Bank regulatory agencies have developed certain capital
ratio requirements, which are used to assist them in monitoring the safety and soundness of financial institutions. We continually monitor these capital requirements and believe the Company to be in compliance with these regulations at December 31,
2004.



Our regulatory capital position at December 31, 2004, as compared to the
minimum regulatory capital requirements imposed on us by banking regulators at that date is presented in Note 17 of the accompanying consolidated financial statements. We are not aware of any actions contemplated by banking regulators, which would
result in us being in non-compliance with capital requirements.



Impact of
Inflation Changing Prices



The consolidated financial statements and the
accompanying notes presented elsewhere in this document, have been prepared in accordance with accounting principles generally accepted in the United States of America, 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. Unlike most industrial companies, virtually all of the assets and liabilities are monetary in nature. The impact of
inflation is reflected in the increased cost of operations. As a result, interest rates have a greater impact on performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the
same extent as the prices of goods and services.



---

Killbuck Bancshares, Inc.



Killbuck, Ohio



Audit Report



December 31, 2004



---

Killbuck Bancshares, Inc.

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004



|                                                          |  |           
|--------------------------------------------------------- |  | ----------
|                                                          |  | PageNumber
|Report of Independent Registered Public Accounting Firm   |  | 2         
|                                                          | 
|Financial Statements                                      |  |           
|                                                          | 
|Consolidated Balance Sheet                                |  | 3         
|                                                          | 
|Consolidated Statement of Income                          |  | 4         
|                                                          | 
|Consolidated Statement of Changes in Shareholders Equity |  | 5         
|                                                          | 
|Consolidated Statement of Cash Flows                      |  | 6         
|                                                          | 
|Notes to Consolidated Financial Statements                |  | 7-25      



---

Report of Independent Registered Public Accounting Firm



The Board of Directors and Shareholders

Killbuck Bancshares, Inc.



We have audited the accompanying consolidated balance sheet of Killbuck Bancshares, Inc. and
subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders equity, and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are
the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Killbuck Bancshares, Inc. and subsidiary as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2004 in conformity with U.S. generally accepted accounting principles.



/s/ S.R. SNODGRASS, A.C.



Steubenville, Ohio

February 9, 2005



S.R. Snodgrass, A.C.

626 North Fourth Street

Steubenville, Ohio 43952-1982

Phone: 740-282-2771

Facsimile: 740-282-1606



-2-



---

Killbuck Bancshares, Inc.

CONSOLIDATED BALANCE SHEET



|                                                                         |  |              |             |   |      |   |             |  
|------------------------------------------------------------------------ |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                                         |  | December 31, |            
|                                                                         |  | 2004         |             |   | 2003 |  
|ASSETS                                                                   |  |              |             |   |      |   |             |  
|Cash and cash equivalents:                                               |  |              |             |   |      |   |             |  
|Cash and amounts due from depository institutions                        |  | $            | 12,163,199  |   |      | $ | 9,755,218   |  
|Federal funds sold                                                       |  |              | 9,500,000   |   |      |   | 7,800,000   |  
|                                                                         |  |              |             |   |      |   |             |  
|Total cash and cash equivalents                                          |  |              | 21,663,199  |   |      |   | 17,555,218  |  
|                                                                         |  |              |             |   |      |   |             |  
|Investment securities:                                                   |  |              |             |   |      |   |             |  
|Securities available for sale                                            |  |              | 9,754,110   |   |      |   | 17,582,096  |  
|Securities held to maturity (fair value of $37,947,368 and $42,952,009)  |  |              | 36,015,317  |   |      |   | 40,628,977  |  
|                                                                         |  |              |             |   |      |   |             |  
|Total investment securities                                              |  |              | 45,769,427  |   |      |   | 58,211,073  |  
|                                                                         |  |              |             |   |      |   |             |  
|Loans (net of allowance for loan losses of $2,645,981 and $2,701,943)    |  |              | 214,161,315 |   |      |   | 198,628,138 |  
|Loans held for sale                                                      |  |              | 167,500     |   |      |   | 521,450     |  
|Premises and equipment, net                                              |  |              | 4,949,795   |   |      |   | 5,020,577   |  
|Accrued interest receivable                                              |  |              | 927,860     |   |      |   | 924,193     |  
|Goodwill, net                                                            |  |              | 1,329,249   |   |      |   | 1,329,249   |  
|Other assets                                                             |  |              | 4,898,694   |   |      |   | 1,949,477   |  
|                                                                         |  |              |             |   |      |   |             |  
|Total assets                                                             |  | $            | 293,867,039 |   |      | $ | 284,139,375 |  
|                                                                         |  |              |             |   |      |   |             |  
|LIABILITIES                                                              |  |              |             |   |      |   |             |  
|Deposits:                                                                |  |              |             |   |      |   |             |  
|Noninterest bearing demand                                               |  | $            | 47,185,066  |   |      | $ | 40,136,527  |  
|Interest bearing demand                                                  |  |              | 34,569,644  |   |      |   | 34,745,944  |  
|Money market                                                             |  |              | 17,504,480  |   |      |   | 17,398,777  |  
|Savings                                                                  |  |              | 43,282,000  |   |      |   | 41,579,239  |  
|Time                                                                     |  |              | 104,807,571 |   |      |   | 107,863,327 |  
|                                                                         |  |              |             |   |      |   |             |  
|Total deposits                                                           |  |              | 247,348,761 |   |      |   | 241,723,814 |  
|Federal Home Loan Bank advances                                          |  |              | 6,845,342   |   |      |   | 3,444,805   |  
|Short-term borrowings                                                    |  |              | 3,730,000   |   |      |   | 4,365,000   |  
|Accrued interest and other liabilities                                   |  |              | 584,002     |   |      |   | 544,202     |  
|                                                                         |  |              |             |   |      |   |             |  
|Total liabilities                                                        |  |              | 258,508,105 |   |      |   | 250,077,821 |  
|                                                                         |  |              |             |   |      |   |             |  
|SHAREHOLDERS EQUITY                                                     |  |              |             |   |      |   |             |  
|Common stock  No par value: 1,000,000 shares authorized, 718,431 issued |  |              | 8,846,670   |   |      |   | 8,846,670   |  
|Retained earnings                                                        |  |              | 31,558,974  |   |      |   | 29,430,710  |  
|Accumulated other comprehensive income                                   |  |              | 35,201      |   |      |   | 166,471     |  
|Treasury stock, at cost (60,945 and 53,643 shares)                       |  |              | (5,081,911  | ) |      |   | (4,382,297  | )
|                                                                         |  |              |             |   |      |   |             |  
|Total shareholders equity                                               |  |              | 35,358,934  |   |      |   | 34,061,554  |  
|                                                                         |  |              |             |   |      |   |             |  
|Total liabilities and shareholders equity                               |  | $            | 293,867,039 |   |      | $ | 284,139,375 |  
|                                                                         |  |              |             |   |      |   |             |  



See accompanying notes to the
consolidated financial statements.



-3-



---

Killbuck Bancshares, Inc.

CONSOLIDATED STATEMENT OF INCOME



|                                                    |  |                         |            |      |   |            |  |   |           
|--------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- |  | - | ----------
|                                                    |  | Year Ended December 31,
|                                                    |  | 2004                    |            | 2003 |   | 2002      
|INTEREST INCOME                                     |  |                         |            |      |   |            |  |   |           
|Interest and fees on loans                          |  | $                       | 11,656,645 |      | $ | 11,029,106 |  | $ | 11,504,240
|Federal funds sold                                  |  |                         | 92,160     |      |   | 95,625     |  |   | 245,539   
|Investment securities:                              |  |                         |            |      |   |            |  |   |           
|Taxable                                             |  |                         | 583,917    |      |   | 1,331,800  |  |   | 2,462,536 
|Exempt from federal income tax                      |  |                         | 1,700,170  |      |   | 1,826,764  |  |   | 1,845,087 
|                                                    |  |                         |            |      |   |            |  |   |           
|Total interest income                               |  |                         | 14,032,892 |      |   | 14,283,295 |  |   | 16,057,402
|                                                    |  |                         |            |      |   |            |  |   |           
|INTEREST EXPENSE                                    |  |                         |            |      |   |            |  |   |           
|Deposits                                            |  |                         | 2,988,827  |      |   | 3,754,438  |  |   | 5,599,201 
|Federal Home Loan Bank advances                     |  |                         | 267,509    |      |   | 257,525    |  |   | 321,749   
|Short term borrowings                               |  |                         | 7,844      |      |   | 5,081      |  |   | 4,952     
|                                                    |  |                         |            |      |   |            |  |   |           
|Total interest expense                              |  |                         | 3,264,180  |      |   | 4,017,044  |  |   | 5,925,902 
|                                                    |  |                         |            |      |   |            |  |   |           
|NET INTEREST INCOME                                 |  |                         | 10,768,712 |      |   | 10,266,251 |  |   | 10,131,500
|                                                    |  |                         |           
|Provision for loan losses                           |  |                         | 225,000    |      |   | 390,000    |  |   | 210,000   
|                                                    |  |                         |            |      |   |            |  |   |           
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                         | 10,543,712 |      |   | 9,876,251  |  |   | 9,921,500 
|                                                    |  |                         |            |      |   |            |  |   |           
|NONINTEREST INCOME                                  |  |                         |            |      |   |            |  |   |           
|Service charges on deposit accounts                 |  |                         | 803,823    |      |   | 736,763    |  |   | 624,197   
|Gain on sale of loans, net                          |  |                         | 62,777     |      |   | 240,885    |  |   | 128,645   
|Other income                                        |  |                         | 148,615    |      |   | 141,787    |  |   | 119,938   
|                                                    |  |                         |            |      |   |            |  |   |           
|Total other income                                  |  |                         | 1,015,215  |      |   | 1,119,435  |  |   | 872,780   
|                                                    |  |                         |            |      |   |            |  |   |           
|NONINTEREST EXPENSE                                 |  |                         |            |      |   |            |  |   |           
|Salaries and employee benefits                      |  |                         | 3,987,149  |      |   | 3,719,307  |  |   | 3,401,327 
|Occupancy and equipment                             |  |                         | 974,517    |      |   | 1,047,156  |  |   | 958,750   
|Other expense                                       |  |                         | 2,196,676  |      |   | 2,278,040  |  |   | 2,281,801 
|                                                    |  |                         |            |      |   |            |  |   |           
|Total other expense                                 |  |                         | 7,158,342  |      |   | 7,044,503  |  |   | 6,641,878 
|                                                    |  |                         |            |      |   |            |  |   |           
|INCOME BEFORE INCOME TAXES                          |  |                         | 4,400,585  |      |   | 3,951,183  |  |   | 4,152,402 
|Income taxes                                        |  |                         | 981,177    |      |   | 742,363    |  |   | 934,858   
|                                                    |  |                         |            |      |   |            |  |   |           
|NET INCOME                                          |  | $                       | 3,419,408  |      | $ | 3,208,820  |  | $ | 3,217,544 
|                                                    |  |                         |            |      |   |            |  |   |           
|EARNINGS PER SHARE                                  |  | $                       | 5.16       |      | $ | 4.75       |  | $ | 4.68      
|                                                    |  |                         |            |      |   |            |  |   |           
|WEIGHTED AVERAGE SHARES OUTSTANDING                 |  |                         | 662,415    |      |   | 676,380    |  |   | 687,216   
|                                                    |  |                         |            |      |   |            |  |   |           



See accompanying notes to the
consolidated financial statements.



-4-



---

Killbuck Bancshares, Inc.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY



|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|-------------------------------------------------------------------------------- |  | ------------ | --------- | ----------------- | - | ---------- | --------------------------------------------- |  | - | -------------- | - |  | -------------------------- | ---------- | - | -------------------- | - | ---------- | - |  | - | --------- | -
|                                                                                 |  | Common Stock |           | Retained Earnings |   |            | Accumulated Other Comprehensive Income (Loss) |  |   | Treasury Stock |   |  | Total Shareholders Equity |            |   | Comprehensive Income |  
|BALANCE, DECEMBER 31, 2001                                                       |  | $            | 8,846,670 |                   | $ | 25,445,528 |                                               |  | $ | 493,654        |   |  | $                          | (1,748,400 | ) |                      | $ | 33,037,452 |   |  |   |           |  
|                                                                                 |  |              |           |                   |   |           
|Net income                                                                       |  |              |           |                   |   | 3,217,544  |                                               |  |   |                |   |  |                            |            |   |                      |   | 3,217,544  |   |  | $ | 3,217,544 |  
|Other comprehensive income:                                                      |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Unrealized gain on available for sale securities, net of tax of $21,295          |  |              |           |                   |   |            |                                               |  |   | 41,336         |   |  |                            |            |   |                      |   | 41,336     |   |  |   | 41,336    |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Comprehensive income                                                             |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  | $ | 3,258,880 |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Cash dividends paid ($1.75 per share)                                            |  |              |           |                   |   | (1,200,310 | )                                             |  |   |                |   |  |                            |            |   |                      |   | (1,200,310 | ) |  |   |           |  
|Purchase of Treasury Stock, at cost (9,627 shares)                               |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            | (892,363   | ) |                      |   | (892,363   | ) |  |   |           |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|BALANCE, DECEMBER 31, 2002                                                       |  |              | 8,846,670 |                   |   | 27,462,762 |                                               |  |   | 534,990        |   |  |                            | (2,640,763 | ) |                      |   | 34,203,659 |   |  |   |           |  
|                                                                                 |  |              |           |                   |   |           
|Net income                                                                       |  |              |           |                   |   | 3,208,820  |                                               |  |   |                |   |  |                            |            |   |                      |   | 3,208,820  |   |  | $ | 3,208,820 |  
|Other comprehensive income:                                                      |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Unrealized loss on available for sale securities, net of tax benefit of $189,843 |  |              |           |                   |   |            |                                               |  |   | (368,519       | ) |  |                            |            |   |                      |   | (368,519   | ) |  |   | (368,519  | )
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Comprehensive income                                                             |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  | $ | 2,840,301 |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Cash dividends paid ($1.85 per share)                                            |  |              |           |                   |   | (1,240,872 | )                                             |  |   |                |   |  |                            |            |   |                      |   | (1,240,872 | ) |  |   |           |  
|Purchase of Treasury Stock, at cost (18,872 shares)                              |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            | (1,741,534 | ) |                      |   | (1,741,534 | ) |  |   |           |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|BALANCE, DECEMBER 31, 2003                                                       |  |              | 8,846,670 |                   |   | 29,430,710 |                                               |  |   | 166,471        |   |  |                            | (4,382,297 | ) |                      |   | 34,061,554 |   |  |   |           |  
|                                                                                 |  |              |           |                   |   |           
|Net income                                                                       |  |              |           |                   |   | 3,419,408  |                                               |  |   |                |   |  |                            |            |   |                      |   | 3,419,408  |   |  | $ | 3,419,408 |  
|Other comprehensive income:                                                      |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Unrealized loss on available for sale securities, net of tax benefit of $67,624  |  |              |           |                   |   |            |                                               |  |   | (131,270       | ) |  |                            |            |   |                      |   | (131,270   | ) |  |   | (131,270  | )
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Comprehensive income                                                             |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  | $ | 3,288,138 |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|Cash dividends paid ($1.95 per share)                                            |  |              |           |                   |   | (1,291,144 | )                                             |  |   |                |   |  |                            |            |   |                      |   | (1,291,144 | ) |  |   |           |  
|Purchase of Treasury Stock, at cost (7,302 shares)                               |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            | (699,614   | ) |                      |   | (699,614   | ) |  |   |           |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  
|BALANCE, DECEMBER 31, 2004                                                       |  | $            | 8,846,670 |                   | $ | 31,558,974 |                                               |  | $ | 35,201         |   |  | $                          | (5,081,911 | ) |                      | $ | 35,358,934 |   |  |   |           |  
|                                                                                 |  |              |           |                   |   |            |                                               |  |   |                |   |  |                            |            |   |                      |   |            |   |  |   |           |  



See accompanying notes to the
consolidated financial statements.



-5-



---

Killbuck Bancshares, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS



|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                  |  | Year Ended December 31, |            
|                                                                                  |  | 2004                    |             |   | 2003 |   |             | 2002 | 
|OPERATING ACTIVITIES                                                              |  |                         |             |   |      |   |             |      |  |   |             |  
|Net income                                                                        |  | $                       | 3,419,408   |   |      | $ | 3,208,820   |      |  | $ | 3,217,544   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |             |   |      |   |             |      |  |   |             |  
|Provision for loan losses                                                         |  |                         | 225,000     |   |      |   | 390,000     |      |  |   | 210,000     |  
|Depreciation, amortization and accretion, net                                     |  |                         | 395,031     |   |      |   | 541,810     |      |  |   | 509,805     |  
|Gain on sale of loans, net                                                        |  |                         | (62,777     | ) |      |   | (240,885    | )    |  |   | (128,645    | )
|Origination of loans held for sale                                                |  |                         | (11,567,660 | ) |      |   | (22,109,417 | )    |  |   | (17,408,920 | )
|Proceeds from the sale of loans                                                   |  |                         | 11,984,386  |   |      |   | 22,248,602  |      |  |   | 17,711,015  |  
|Federal Home Loan Bank stock dividend                                             |  |                         | (46,500     | ) |      |   | (45,300     | )    |  |   | (51,200     | )
|Net changes in:                                                                   |  |                         |             |   |      |   |             |      |  |   |             |  
|Accrued interest and other assets                                                 |  |                         | (2,838,759  | ) |      |   | 166,875     |      |  |   | 369,283     |  
|Accrued interest and other liabilities                                            |  |                         | 39,800      |   |      |   | (190,244    | )    |  |   | 6,545       |  
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|Net cash provided by operating activities                                         |  |                         | 1,547,929   |   |      |   | 3,970,261   |      |  |   | 4,435,427   |  
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|INVESTING ACTIVITIES                                                              |  |                         |             |   |      |   |             |      |  |   |             |  
|Investment securities available for sale:                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Proceeds from maturities and repayments                                           |  |                         | 8,202,151   |   |      |   | 32,954,112  |      |  |   | 37,186,127  |  
|Purchases                                                                         |  |                         | (563,104    | ) |      |   | (12,031,475 | )    |  |   | (24,738,527 | )
|Investment securities held to maturity:                                           |  |                         |             |   |      |   |             |      |  |   |             |  
|Proceeds from maturities and repayments                                           |  |                         | 4,843,728   |   |      |   | 5,571,974   |      |  |   | 4,475,491   |  
|Purchases                                                                         |  |                         | (235,000    | ) |      |   | (4,681,460  | )    |  |   | (6,276,462  | )
|Net increase in loans                                                             |  |                         | (15,758,177 | ) |      |   | (26,535,632 | )    |  |   | (23,131,545 | )
|Purchase of premises and equipment                                                |  |                         | (329,272    | ) |      |   | (314,933    | )    |  |   | (561,915    | )
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|Net cash used in investing activities                                             |  |                         | (3,839,674  | ) |      |   | (5,037,414  | )    |  |   | (13,046,831 | )
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|FINANCING ACTIVITIES                                                              |  |                         |             |   |      |   |             |      |  |   |             |  
|Net increase in deposits                                                          |  |                         | 5,624,947   |   |      |   | 2,685,183   |      |  |   | 1,067,528   |  
|Proceeds from Federal Home Loan Bank advances                                     |  |                         | 6,035,000   |   |      |   |            |      |  |   |            |  
|Repayment of Federal Home Loan Bank advances                                      |  |                         | (2,634,463  | ) |      |   | (822,861    | )    |  |   | (959,066    | )
|Net (decrease) increase in short-term borrowings                                  |  |                         | (635,000    | ) |      |   | (564,993    | )    |  |   | 634,993     |  
|Purchase of treasury shares                                                       |  |                         | (699,614    | ) |      |   | (1,741,534  | )    |  |   | (892,363    | )
|Cash dividends paid                                                               |  |                         | (1,291,144  | ) |      |   | (1,240,872  | )    |  |   | (1,200,310  | )
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|Net cash provided by (used in) financing activities                               |  |                         | 6,399,726   |   |      |   | (1,685,077  | )    |  |   | (1,349,218  | )
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|Increase (decrease) in cash and cash equivalents                                  |  |                         | 4,107,981   |   |      |   | (2,752,230  | )    |  |   | (9,960,622  | )
|                                                                                  |  |                         |            
|Cash and cash equivalents at beginning of year                                    |  |                         | 17,555,218  |   |      |   | 20,307,448  |      |  |   | 30,268,070  |  
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  
|Cash and cash equivalents at end of year                                          |  | $                       | 21,663,199  |   |      | $ | 17,555,218  |      |  | $ | 20,307,448  |  
|                                                                                  |  |                         |             |   |      |   |             |      |  |   |             |  



See accompanying notes to the
consolidated financial statements.



-6-



---

Killbuck Bancshares, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



A summary of the significant accounting and reporting policies applied in the presentation of the consolidated financial statements follows:



Nature of Operations and Basis of Presentation



Killbuck Bancshares, Inc. (the Company) is an Ohio corporation organized as the
holding company of The Killbuck Savings Bank Company (the Bank). The Bank is a state-chartered bank located in Ohio. The Company and its subsidiary operate in the single industry of commercial banking and derive substantially all their
income from banking and bank-related services which include interest earnings on residential real estate, commercial mortgage, commercial and consumer loan financing as well as interest earnings on investment securities and charges for deposit
services to its customers through nine full service branches and one loan production office. The Board of Governors of the Federal Reserve System supervises the Company and Bank, while the Bank is also subject to regulation and supervision by the
Ohio Division of Financial Institutions.



The consolidated financial statements
of the Company include its wholly owned subsidiary, the Bank. All intercompany transactions have been eliminated in consolidation. The investment in subsidiary on the parent company financial statements is carried at the parent companys equity
in the underlying net assets.



The accounting principles followed by the
Company and the methods of applying these principles conform with U.S. generally accepted accounting principles and with general practice within the banking industry. In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of the consolidated balance sheet date and related revenues and expenses for the period. Actual results may differ significantly from those estimates.



Investment Securities



Investment securities are classified, at the time of purchase, based upon managements
intention and ability, as securities held to maturity or securities available for sale. Debt securities acquired with the intent and ability to hold to maturity are stated at cost adjusted for amortization of premium and accretion of discount which
are computed using the level yield method. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses on available for sale securities are
reported as a separate component of shareholders equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as
income when earned.



Common stock of the Federal Home Loan Bank, Federal
Reserve Bank and Great Lakes Bankers Bank represent ownership in institutions, which are wholly-owned by other financial institutions. These securities are accounted for at cost and are classified with other assets.



Bank-Owned Life Insurance (BOLI)



The Company purchased life insurance policies on certain key employees. BOLI is recorded at
its cash surrender value or the amount that can be realized.



-7-



---

Loans



Loans are stated at their outstanding principal, less the allowance for loan losses and any net deferred loan fees. Interest income on loans is recognized on the accrual
method. Accrual of interest on loans is generally discontinued when it is determined that a reasonable doubt exists as to the collectibility of principal, interest, or both. Loans are returned to accrual status when past due interest is collected,
and the collection of principal is probable.



Loan origination and commitment
fees, as well as certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method. Amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual
status.



Mortgage loans originated and held for sale in the secondary market
are carried at the lower of cost or market value determined on an aggregate basis. Net unrealized losses are recognized in a valuation allowance through charges to income. Gains and losses on the sale of loans held for sale are determined using the
specific identification method. All loans are sold to Freddie Mac.



Allowance for Loan Losses



The allowance for loan
losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance,
and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses which is charged to operations. The provision is based upon managements periodic evaluation of individual loans, the
overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses
including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant change in the near term.



Impaired loans are commercial and commercial real estate loans for which it is probable that the Company will not be able to collect all amounts due according to the
contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of impaired loans is not the same as the definition of
nonaccrual loans, although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility, while not classifying the loan as impaired, provided the loan is
not a commercial or commercial real estate classification. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference
between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the
collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.



Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller balance homogeneous loans and are measured for impairment
collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis, taking into
consideration all of the circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.



Premises and Equipment



Premises and equipment are stated at cost, less accumulated depreciation. Depreciation is
principally computed on the straight-line method over the estimated useful lives of the related assets, which range from three to ten years for furniture, fixtures and equipment and 25 to 50 years for building premises. Leasehold improvements are
amortized over the shorter of their estimated useful lives or their respective lease terms, which range from seven to fifteen years. Expenditures for maintenance and repairs are charged against income as incurred. Costs of major additions and
improvements are capitalized.



-8-



---

Real Estate Owned



Real estate acquired in settlement of loans is stated at the lower of the recorded investment in the property or its fair value minus estimated costs of sale. Prior to
foreclosure the value of the underlying collateral is written down by a charge to the allowance for loan losses if necessary. Any subsequent write-downs are charged against operating expenses. Operating expenses of such properties, net of related
income and losses on their disposition, are included in other expenses.



Intangible Assets and Liabilities



Goodwill represents
the amount by which the market value of the stock issued in the merger of Commercial Saving Bank Co. (Commercial) of Danville, Ohio with and into The Killbuck Savings Bank Company exceeded the market value of the assets, liabilities and capital of
Commercial on the date of the merger. As of December 31, 2004 and 2003 respectively, net goodwill was $1,329,249 and $1,329,249. The Company adopted Statement of Financial Accounting Standards (FAS) No. 142, Goodwill and Other
Intangible Assets, which changed the accounting for goodwill from an amortization method to an impairment-only approach. This statement eliminates the regularly scheduled amortization of goodwill and replaces this method with a two-step process
for testing the impairment of goodwill on at least an annual basis. This approach could cause more volatility in the Companys reported net income because impairment losses, if any, could occur irregularly and in varying amounts.



Mortgage Servicing Rights (MSRs)



The Company has agreements for the express purpose of selling loans in the secondary market.
The Company maintains all servicing rights for these loans. Originated MSRs are recorded by allocating total costs incurred between the loan and servicing rights based on their relative fair values. MSRs are amortized in proportion to the estimated
servicing income over the estimated life of the servicing portfolio. Impairment is evaluated based on the fair value of the right, based on portfolio interest rates and prepayment characteristics. MSRs are a component of other assets on the
Consolidated Balance Sheet.



Recent Accounting Pronouncements



In December 2004, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (FAS) No. 123 (Revised 2004), Share-Based Payment. The Statement requires that compensation cost relating to share-based payment transactions be recognized
in financial statements and that this cost be measured based on the fair value of the equity or liability instruments issued. FAS No. 123 (Revised 2004) covers a wide range of share-based compensation arrangements including share options, restricted
share plans, performance-based awards, share appreciation rights, and employee share purchase plans. The Company will adopt FAS No. 123 (Revised 2004) during 2005 and management is currently evaluating the impact the adoption of the standard will
have on the Companys results of operations.



In October 2003, the
American Institute of Certified Public Accountants issued SOP 03-3, Accounting for Loans or Certain Debt Securities Acquired in a Transfer. SOP 03-3 applies to a loan that is acquired where it is probable, at acquisition, that a
transferee will be unable to collect all contractually required payments receivable. SOP 03-3 requires the recognition, as accretable yield, the excess of all cash flows expected at acquisition over the investors initial investment in the loan
as interest income on a level-yield basis over the life of the loan. The amount by which the loans contractually required payments exceed the amount of its expected cash flows at acquisition may not be recognized as an adjustment to yield, a
loss accrual or a valuation allowance for credit risk. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 31, 2004. Early adoption is permitted. The adoption of SOP 03-3 is not expected to have a material impact on the
consolidated financial statements.



Employee Benefits Plans



The Bank maintains an integrated money purchase pension plan and a 401(K)
plan covering eligible employees. The Banks contributions are based upon the plans contribution formula.



-9-



---

Income Taxes



The Company and its subsidiary file a consolidated federal income tax return. Income tax expense is allocated among the parent company and the subsidiary as if each had
filed a separate return. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws
or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period.



Earnings Per Share



The Company currently maintains a simple capital structure; therefore, there are no dilutive
effects on earnings per share. As such, earnings per share are calculated using the weighted average number of share outstanding for the period.



Comprehensive Income



The Company is required to present comprehensive income in a full set of general purpose financial statements for all periods presented. Other comprehensive income is
comprised exclusively of unrealized holding gains and losses on the available for sale securities portfolio. The Company has elected to report the effects of other comprehensive income as part of the Consolidated Statement of Changes in
Shareholders Equity.



Cash Flow Information



For purposes of reporting cash flows, cash and cash equivalents include cash and amounts due
from financial institutions and federal funds sold. Cash payments for interest in 2004, 2003 and 2002 were $3,275,495, $4,082,922, and $6,043,639, respectively. Cash payments for income taxes for 2004, 2003, and 2002 were $883,858, $940,517, and
$895,358 respectively.



Reclassification of Comparative Amounts



Certain amounts in the prior year consolidated financial statements have
been reclassified to conform to the current year presentation. These reclassifications had no effect on shareholders equity or net income.



|2. | FEDERAL FUNDS SOLD
|-- | ------------------



Federal funds sold at December 31 consists of the following:



|                         |  |          |  |         |           |          |         |         |   |          
|------------------------ |  | -------- |  | ------- | --------- | -------- | ------- | ------- | - | ---------
|                         |  | 2004     |  | 2003   
|Institution              |  | Maturity |  | Balance |           | Maturity |         | Balance
|National City Bank       |  | 1-02-05  |  | $       | 7,100,000 |          | 1-02-04 |         | $ | 7,400,000
|Great Lakes Bankers Bank |  | 1-02-05  |  |         | 2,400,000 |          | 1-02-04 |         |   | 400,000  
|                         |  |          |  |         |           |          |         |         |   |          
|                         |  |          |  | $       | 9,500,000 |          |         |         | $ | 7,800,000
|                         |  |          |  |         |           |          |         |         |   |          



-10-



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|3. | INVESTMENT SECURITIES
|-- | ---------------------



The amortized cost of securities and their estimated market values are as follows:



Securities available for sale



|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|------------------------------------------------ |  | ------------- | ---------- | -------------------- | - | --------------------- |  | ---------- | ------ |  | - | ----------
|                                                 |  | 2004         
|                                                 |  | AmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|Obligations of U.S. Government                   |  |               |            |                      |   |                       |  |            |        |  |   |           
|Agencies and Corporations                        |  | $             | 9,700,775  |                      | $ | 93,480                |  | $          | 40,145 |  | $ | 9,754,110 
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|Total                                            |  | $             | 9,700,775  |                      | $ | 93,480                |  | $          | 40,145 |  | $ | 9,754,110 
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|                                                 | 
|                                                 |  | 2003         
|                                                 |  | AmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|Obligations of U.S. Government                   |  |               |            |                      |   |                       |  |            |        |  |   |           
|Agencies and Corporations                        |  | $             | 17,329,867 |                      | $ | 283,001               |  | $          | 30,772 |  | $ | 17,582,096
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|Total                                            |  | $             | 17,329,867 |                      | $ | 283,001               |  | $          | 30,772 |  | $ | 17,582,096
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|Securities held to maturity                      |  |               |            |                      |   |                       |  |            |        |  |   |           
|                                                 | 
|                                                 |  | 2004         
|                                                 |  | AmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|Obligations of States and Political Subdivisions |  | $             | 35,564,141 |                      | $ | 1,955,536             |  | $          | 29,684 |  | $ | 37,489,993
|Corporate Securities                             |  |               | 451,176    |                      |   | 6,199                 |  |            |       |  |   | 457,375   
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|Total                                            |  | $             | 36,015,317 |                      | $ | 1,961,735             |  | $          | 29,684 |  | $ | 37,947,368
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|                                                 | 
|                                                 |  | 2003         
|                                                 |  | AmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Fair Value
|Obligations of States and Political Subdivisions |  | $             | 39,900,030 |                      | $ | 2,342,520             |  | $          | 51,102 |  | $ | 42,191,448
|Corporate Securities                             |  |               | 728,947    |                      |   | 31,614                |  |            |       |  |   | 760,561   
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           
|Total                                            |  | $             | 40,628,977 |                      | $ | 2,374,134             |  | $          | 51,102 |  | $ | 42,952,009
|                                                 |  |               |            |                      |   |                       |  |            |        |  |   |           



-11-



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|3. | INVESTMENT SECURITIES (CONTINUED)
|-- | ---------------------------------



The amortized cost and fair market values of debt securities at December 31, 2004, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.



|                                      |  |                    |           |                  |   |               |  |            |            |  |   |           
|------------------------------------- |  | ------------------ | --------- | ---------------- | - | ------------- |  | ---------- | ---------- |  | - | ----------
|                                      |  | Available For Sale |           | Held to Maturity
|                                      |  | AmortizedCost      |           | Fair Value       |   | AmortizedCost |  | Fair Value
|Due in one year or less               |  | $                  | 3,499,109 |                  | $ | 3,507,032     |  | $          | 4,113,642  |  | $ | 4,182,133 
|Due after one year through five years |  |                    | 3,604,136 |                  |   | 3,632,500     |  |            | 15,474,752 |  |   | 16,282,537
|Due after five through ten years      |  |                    | 2,155,445 |                  |   | 2,178,318     |  |            | 16,219,561 |  |   | 17,268,911
|Due after ten years                   |  |                    | 442,085   |                  |   | 436,260       |  |            | 207,362    |  |   | 213,787   
|                                      |  |                    |           |                  |   |               |  |            |            |  |   |           
|                                      |  | $                  | 9,700,775 |                  | $ | 9,754,110     |  | $          | 36,015,317 |  | $ | 37,947,368
|                                      |  |                    |           |                  |   |               |  |            |            |  |   |           



Investment securities
with an approximate carrying value of $38,141,000 and $46,630,000 at December 31, 2004 and 2003, respectively were pledged to secure public deposits, securities sold under agreement to repurchase and for other purposes as required or permitted by
law.



The following table shows the Companys gross
unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at December 31, 2004.



|                                                 |  |                         |           |                          |   |            |  |                       |           |            |   |                       |  |   |           |  |   |       
|------------------------------------------------ |  | ----------------------- | --------- | ------------------------ | - | ---------- |  | --------------------- | --------- | ---------- | - | --------------------- |  | - | --------- |  | - | ------
|                                                 |  | 2004                   
|                                                 |  | Less Than Twelve Months |           | Twelve Months or Greater |   | Total     
|                                                 |  | Fair Value              |           | GrossUnrealizedLosses    |   | Fair Value |  | GrossUnrealizedLosses |           | Fair Value |   | GrossUnrealizedLosses
|U.S. Government agencies and corporations        |  | $                       | 1,420,010 |                          | $ | 22,075     |  | $                     | 1,214,914 |            | $ | 18,070                |  | $ | 2,634,924 |  | $ | 40,145
|Obligations of states and Political subdivisions |  |                         | 2,005,933 |                          |   | 16,117     |  |                       | 457,993   |            |   | 13,567                |  |   | 2,463,926 |  |   | 29,684
|                                                 |  |                         |           |                          |   |            |  |                       |           |            |   |                       |  |   |           |  |   |       
|Total debt securities                            |  | $                       | 3,425,943 |                          | $ | 38,192     |  | $                     | 1,672,907 |            | $ | 31,637                |  | $ | 5,098,850 |  | $ | 69,829
|                                                 |  |                         |           |                          |   |            |  |                       |           |            |   |                       |  |   |           |  |   |       



The Companys
investment securities portfolio contains unrealized losses of direct obligations of the U.S. Government securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government, and debt
obligations of a U.S. state or political subdivision.



On a
monthly basis, the Company evaluates, the severity and duration of impairment for its investment securities portfolio. Unless the Company has the ability to hold the security to maturity without incurring a loss, impairment is considered other than
temporary when an investment security has sustained a decline of ten percent or more for six months.



The Company has concluded that any impairment of its investment securities portfolio is not other than temporary, but is the result of interest rate
changes that are not expected to result in the noncollection of principal and interest, during the period.



-12-



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|4. | LOANS
|-- | -----



Major classification of loans are summarized as follows:



|                               |  |      |             |   |      |   |             |  
|------------------------------ |  | ---- | ----------- | - | ---- | - | ----------- | -
|                               |  | 2004 |             |   | 2003 |  
|Real estate  residential      |  | $    | 97,811,648  |   |      | $ | 88,648,922  |  
|Real estate  farm             |  |      | 12,308,653  |   |      |   | 12,298,008  |  
|Real estate  commercial       |  |      | 47,226,324  |   |      |   | 42,089,608  |  
|Real estate  construction     |  |      | 10,999,833  |   |      |   | 10,978,554  |  
|Commercial and other loans     |  |      | 40,751,867  |   |      |   | 38,269,095  |  
|Consumer and credit loans      |  |      | 8,074,908   |   |      |   | 9,413,249   |  
|                               |  |      |             |   |      |   |             |  
|                               |  |      | 217,173,233 |   |      |   | 201,697,436 |  
|Less allowance for loan losses |  |      | (2,645,981  | ) |      |   | (2,701,943  | )
|Less net deferred loan fees    |  |      | (365,937    | ) |      |   | (367,355    | )
|                               |  |      |             |   |      |   |             |  
|Loans, net                     |  | $    | 214,161,315 |   |      | $ | 198,628,138 |  
|                               |  |      |             |   |      |   |             |  



Loans held for sale
at December 31, 2004 and 2003 were $167,500 and $521,450 respectively. Real estate loans serviced for Freddie Mac, which are not included in the consolidated balance sheet, totaled $44,545,402 and $39,803,210 at December 31, 2004 and 2003,
respectively. The Bank is currently collecting a fee of .25% for servicing these loans.



Total nonaccrual loans and the related interest for the years ended December 31 are as follows. In managements opinion, these loans did not meet the definition of impaired loans.



|                           |  |      |           |      |   |         |  |   |        
|-------------------------- |  | ---- | --------- | ---- | - | ------- |  | - | -------
|                           |  | 2004 |           | 2003 |   | 2002   
|Principal outstanding      |  | $    | 1,094,922 |      | $ | 220,098 |  | $ | 148,928
|Contractual interest due   |  | $    | 38,263    |      | $ | 6,560   |  | $ | 12,583 
|Interest income recognized |  | $    |          |      | $ |        |  | $ |       



The Companys
primary business activity is with customers located within its local trade area. Residential, commercial, personal, and agricultural loans are granted. The Company also selectively funds loans originated outside of its trade area provided such loans
meet its credit policy guidelines. Although the Company has a diversified loan portfolio at December 31, 2004 and 2003, loans outstanding to individuals and businesses are dependent upon the local economic conditions in its immediate trade area.



The Bank entered into transactions with certain directors,
executive officers, significant stockholders, and their affiliates. A summary of loan activity for those directors, executive officers, and their associates with loan balances in excess of $60,000 for the year ended December 31, 2004 is as follows:



|                          |  |           |           |                  |   |                          |  |   |          
|------------------------- |  | --------- | --------- | ---------------- | - | ------------------------ |  | - | ---------
|Balance December 31, 2003 |  | Additions |           | AmountsCollected |   | BalanceDecember 31, 2004
|$4,297,829                |  | $         | 2,697,767 |                  | $ | 2,967,016                |  | $ | 4,028,580



-13-



---

|5. | ALLOWANCE FOR LOAN LOSSES
|-- | -------------------------



An analysis of the change in the allowance for loan losses follows:



|                                |  |      |           |   |      |   |           |      |  |   |           |  
|------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                |  | 2004 |           |   | 2003 |   |           | 2002 | 
|Balance, January 1              |  | $    | 2,701,943 |   |      | $ | 2,325,560 |      |  | $ | 2,260,555 |  
|Add:                            |  |      |           |   |      |   |           |      |  |   |           |  
|Provision charged to operations |  |      | 225,000   |   |      |   | 390,000   |      |  |   | 210,000   |  
|Loan recoveries                 |  |      | 74,942    |   |      |   | 106,885   |      |  |   | 177,543   |  
|Less: Loans charged off         |  |      | (355,904  | ) |      |   | (120,502  | )    |  |   | (322,538  | )
|                                |  |      |           |   |      |   |           |      |  |   |           |  
|Balance, December 31            |  | $    | 2,645,981 |   |      | $ | 2,701,943 |      |  | $ | 2,325,560 |  
|                                |  |      |           |   |      |   |           |      |  |   |           |  



|6. | PREMISES AND EQUIPMENT
|-- | ----------------------



Premises and equipment are summarized as follows:



|                                  |  |      |            |      |   |          
|--------------------------------- |  | ---- | ---------- | ---- | - | ---------
|                                  |  | 2004 |            | 2003
|Land                              |  | $    | 1,415,541  |      | $ | 1,415,541
|Building and improvements         |  |      | 4,115,367  |      |   | 4,143,706
|Leasehold improvements            |  |      | 75,619     |      |   |         
|Furniture, fixtures and equipment |  |      | 4,469,710  |      |   | 4,193,772
|                                  |  |      |            |      |   |          
|                                  |  |      | 10,076,237 |      |   | 9,753,019
|Less accumulated depreciation     |  |      | 5,126,442  |      |   | 4,732,442
|                                  |  |      |            |      |   |          
|Total                             |  | $    | 4,949,795  |      | $ | 5,020,577
|                                  |  |      |            |      |   |          



Depreciation expense
charged to operations was $408,422 for 2004, $492,257 for 2003, and $496,743 for 2002.



|7. | GOODWILL
|-- | --------



As of December 31, 2004 and 2003, goodwill had a gross carrying amount of $1,661,561 and an accumulated amortization amount of $332,312 resulting in a net
carrying amount of $1,329,249.



The gross carrying amount of
goodwill was tested for impairment in the second quarter. Due to an increase in overall earning asset growth, operating profits and cash flows were greater than expected for the reporting units. Based on fair value of the reporting unit, estimated
using the expected present value of future cash flows, no goodwill impairment loss was recognized in the current year.



The following tables set forth a comparison of net income and basic and diluted earnings per share adjusted for the adoption of FAS No. 142, Goodwill and
Other Intangible Assets:



|                                            |  |      |           |      |   |           |  |   |          
|------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                            |  | 2004 |           | 2003 |   | 2002     
|Goodwill amortization                       |  | $    |          |      | $ |          |  | $ |         
|Net income                                  |  |      | 3,419,408 |      |   | 3,208,820 |  |   | 3,217,544
|Addback: Goodwill amortization (net of tax) |  |      |          |      |   |          |  |   |         
|                                            |  |      |           |      |   |           |  |   |          
|Adjusted net income                         |  | $    | 3,419,408 |      | $ | 3,208,820 |  | $ | 3,217,544
|                                            |  |      |           |      |   |           |  |   |          
|Basic earnings per share:                   |  |      |           |      |   |           |  |   |          
|Net income                                  |  | $    | 5.16      |      | $ | 4.75      |  | $ | 4.68     
|Goodwill amortization                       |  |      |          |      |   |          |  |   |         
|                                            |  |      |           |      |   |           |  |   |          
|Adjusted basic earnings per share           |  | $    | 5.16      |      | $ | 4.75      |  | $ | 4.68     
|                                            |  |      |           |      |   |           |  |   |          



-14-



---

|8. | DEPOSITS
|-- | --------



Time deposits include certificates of deposit in denominations of $100,000 or more. Such deposits aggregated $34,479,668 and $34,498,178 at December 31,
2004 and 2003, respectively.



Interest expense on certificates
of deposit $100,000 and over amounted to $661,560 in 2004, $855,558 in 2003, and $1,281,223 in 2002.



The following table sets forth the remaining maturity of time certificates of deposits of $100,000 or more at December 31, 2004.



|                         |  |   |           
|------------------------ |  | - | ----------
|3 months or less         |  | $ | 8,648,327 
|Over 3 through 6 months  |  |   | 7,181,129 
|Over 6 through 12 months |  |   | 6,277,799 
|Over 12 months           |  |   | 12,372,413
|                         |  |   |           
|Total                    |  | $ | 34,479,668
|                         |  |   |           



The following table
sets forth the remaining maturity of all time deposits at December 31, 2004.



|                            |  |   |            
|--------------------------- |  | - | -----------
|12 month or less            |  | $ | 62,602,661 
|12 months through 24 months |  |   | 14,401,466 
|24 months through 36 months |  |   | 9,891,019  
|36 months through 48 months |  |   | 8,845,737  
|48 months through 60 months |  |   | 9,044,228  
|Over 60 months              |  |   | 22,460     
|                            |  |   |            
|                            |  | $ | 104,807,571
|                            |  |   |            



|9. | SHORT-TERM BORROWINGS
|-- | ---------------------



Short-term borrowings consist of securities sold under agreements to repurchase. These retail repurchase agreements are with customers in their respective
loan market areas. These borrowings are collateralized with securities owned by the Company and held in their safekeeping account at an independent correspondent bank. The outstanding balances and related information for short-term borrowings are
summarized as follows:



|                                          |  |      |           |   |      |   |           |  
|----------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                          |  | 2004 |           |   | 2003 |  
|Short-term borrowings:                    |  |      |           |   |      |   |           |  
|Ending balance                            |  | $    | 3,730,000 |   |      | $ | 4,365,000 |  
|Maximum month-end balance during the year |  |      | 4,480,000 |   |      |   | 4,720,000 |  
|Average month-end balance during the year |  |      | 3,624,583 |   |      |   | 3,859,167 |  
|Weighted average at year end              |  |      | .13       | % |      |   | .13       | %
|Weighted average rate during the year     |  |      | .13       | % |      |   | .13       | %



The Company has
pledged investment securities with carrying values of $5,005,625 and $5,094,576 as of December 31, 2004 and 2003, respectively, as collateral for the repurchase agreements.



-15-



---

|10. | FEDERAL HOME LOAN BANK ADVANCES
|--- | -------------------------------



The Federal Home Loan Bank advances have monthly principal and interest payments due with maturity dates from 2005 through 2017. Interest rates range from
2.60% to 8.90% on the advances. The scheduled aggregate minimum future principal payments on the advances outstanding as of December 31, 2004 are as follows:



|                         |  |        |          
|------------------------ |  | ------ | ---------
|Year Ending December 31, |  | Amount
|2005                     |  | $      | 2,456,533
|2006                     |  |        | 2,410,833
|2007                     |  |        | 370,164  
|2008                     |  |        | 333,973  
|2009                     |  |        | 300,235  
|2010 and thereafter      |  |        | 973,604  
|                         |  |        |          
|Total                    |  | $      | 6,845,342
|                         |  |        |          



The Bank maintains a
credit arrangement with Federal Home Loan Bank of Cincinnati, Ohio (FHLB). The FHLB borrowings, when used, are collateralized by the Banks investment in Federal Home Loan Bank stock and a blanket collateral pledge agreement with
FHLB under which the Bank has pledged certain qualifying assets equal to 150 percent of the unpaid amount of the outstanding balances. At December 31, 2004 the Bank had a borrowing capacity of approximately $38.2 million with the FHLB. At December
31, 2004 and 2003 there was $6,845,342 and $3,444,805, respectively borrowed against this credit arrangement.



|11. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------



The Bank maintains an integrated money purchase pension plan and a 401(k) plan.



Under the integrated money purchase pension plan contribution formula, the Bank, for each plan year, will contribute an
amount equal to 8% of an employees compensation for the plan year and 5.7% of the amount of an employees excess compensation for the plan year. Excess compensation is a participants compensation in excess of the designated
integration level. This designated integration level is 100% of the taxable wage base in effect at the beginning of the plan year. The federal government annually adjusts the taxable wage base. This plan does not permit nor require employees to make
contributions to the plan.



The 401(k) plan allows employees
to make salary reduction contributions to the plan up to 20% of a participants compensation. For each plan year, the Bank may contribute to the plan an amount of matching contributions for a particular plan year. The Bank may choose not to
make matching contributions for a particular plan year. For 2004 and 2003 the Bank matched 25% of the employees voluntary contributions up to 1% of the employees compensation.



Both plans cover substantially all employees with one year of service and
attained age 21. For 2004, the annual contribution to a participants retirement account may not exceed $41,000.



The pension costs charged to operating expense for the years 2004, 2003 and 2002 amounted to $253,812, $237,540 and $207,608, respectively.



-16-



---

|12. | OTHER OPERATING EXPENSE
|--- | -----------------------



Other operating expense included the following:



|                                  |  |      |           |      |   |           |  |   |          
|--------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                  |  | 2004 |           | 2003 |   | 2002     
|Professional fees                 |  | $    | 190,389   |      | $ | 231,217   |  | $ | 259,355  
|Franchise tax                     |  |      | 433,920   |      |   | 398,931   |  |   | 397,238  
|Telephone                         |  |      | 154,739   |      |   | 131,249   |  |   | 128,373  
|Stationery, supplies and printing |  |      | 165,140   |      |   | 166,304   |  |   | 167,055  
|Postage, express and freight      |  |      | 156,279   |      |   | 146,537   |  |   | 162,264  
|Data processing                   |  |      | 167,532   |      |   | 160,268   |  |   | 112,440  
|Other                             |  |      | 928,677   |      |   | 1,043,534 |  |   | 1,055,076
|                                  |  |      |           |      |   |           |  |   |          
|Total                             |  | $    | 2,196,676 |      | $ | 2,278,040 |  | $ | 2,281,801
|                                  |  |      |           |      |   |           |  |   |          



|13. | OPERATING LEASES
|--- | ----------------



The bank leases the space housing the German Village branch located in Berlin, Ohio. The lease expires in nine years, with an option to automatically
renew for an additional ten year period. Minimum future rental payments are as follows:



|                     |  |   |        
|-------------------- |  | - | -------
|Less than 1 year     |  | $ | 18,900 
|1 to 3 years         |  |   | 37,800 
|3 to 5 years         |  |   | 37,800 
|Greater than 5 years |  |   | 307,946
|                     |  |   |        
|                     |  | $ | 402,446
|                     |  |   |        



|14. | INCOME TAXES
|--- | ------------



The provision for federal income taxes for the years ended December 31 consist of:



|                |  |      |         |      |   |         |      |  |   |        
|--------------- |  | ---- | ------- | ---- | - | ------- | ---- |  | - | -------
|                |  | 2004 |         | 2003 |   |         | 2002
|Current payable |  | $    | 884,920 |      | $ | 806,521 |      |  | $ | 918,823
|Deferred        |  |      | 96,257  |      |   | (64,158 | )    |  |   | 16,035 
|                |  |      |         |      |   |         |      |  |   |        
|Total provision |  | $    | 981,177 |      | $ | 742,363 |      |  | $ | 934,858
|                |  |      |         |      |   |         |      |  |   |        



The following is a
reconcilement between the actual provision for federal income taxes and the amount of income taxes, which would have been provided at statutory rates for the year ended December 31:



|                                |  |        |           |   |                   |       |   |        |   |           |                   |  |       |        |  |   |                   |   |  |       |  
|------------------------------- |  | ------ | --------- | - | ----------------- | ----- | - | ------ | - | --------- | ----------------- |  | ----- | ------ |  | - | ----------------- | - |  | ----- | -
|                                |  | 2004   |           |   | 2003              |       |   | 2002   |  
|                                |  | Amount |           |   | % ofPre-TaxIncome |       |   | Amount |   |           | % ofPre-TaxIncome |  |       | Amount |  |   | % ofPre-TaxIncome |  
|Provision at statutory rate     |  | $      | 1,496,199 |   |                   | 34.0  | % |        | $ | 1,343,402 |                   |  | 34.0  | %      |  | $ | 1,411,817         |   |  | 34.0  | %
|Tax exempt income               |  |        | (579,220  | ) |                   | (13.2 | ) |        |   | (622,791  | )                 |  | (15.7 | )      |  |   | (627,878          | ) |  | (15.1 | )
|Non-deductible interest Expense |  |        | 30,3767   |   |                   | .7    |   |        |   | 40,364    |                   |  | 1.00  |        |  |   | 59,082            |   |  | 1.4   |  
|Other, net                      |  |        | 33,822    |   |                   | .7    |   |        |   | (18,612   | )                 |  | (.5   | )      |  |   | 91,837            |   |  | 2.2   |  
|                                |  |        |           |   |                   |       |   |        |   |           |                   |  |       |        |  |   |                   |   |  |       |  
|Tax expense and effective rate  |  | $      | 981,177   |   |                   | 22.2  | % |        | $ | 742,363   |                   |  | 18.8  | %      |  | $ | 934,858           |   |  | 22.5  | %
|                                |  |        |           |   |                   |       |   |        |   |           |                   |  |       |        |  |   |                   |   |  |       |  



-17-



---

|14. | INCOME TAXES (CONTINUED)
|--- | ------------------------



The tax effects of deductible and taxable temporary differences that gave rise to significant portions of the net deferred tax assets and liabilities at
December 31 are as follows:



|                                  |  |      |         |      |   |        
|--------------------------------- |  | ---- | ------- | ---- | - | -------
|                                  |  | 2004 |         | 2003
|Deferred Tax Assets:              |  |      |         |      |   |        
|Allowance for loan losses         |  | $    | 705,680 |      | $ | 725,022
|Deferred loan fees                |  |      | 7,115   |      |   | 9,155  
|                                  |  |      |         |      |   |        
|Deferred tax asset                |  |      | 712,795 |      |   | 734,177
|                                  |  |      |         |      |   |        
|Deferred Tax Liabilities:         |  |      |         |      |   |        
|Premise and equipment             |  |      | 298,375 |      |   | 251,336
|Stock dividends                   |  |      | 175,576 |      |   | 159,766
|Net unrealized gain on securities |  |      | 18,136  |      |   | 85,757 
|Other, net                        |  |      | 86,081  |      |   | 74,055 
|                                  |  |      |         |      |   |        
|Deferred tax liabilities          |  |      | 578,168 |      |   | 570,914
|                                  |  |      |         |      |   |        
|Net deferred tax assets           |  | $    | 134,627 |      | $ | 163,263
|                                  |  |      |         |      |   |        



No valuation allowance
was established at December 31, 2004 and 2003 in view of certain tax strategies coupled with the anticipated future taxable income as evidenced by the companys earnings potential.



|15. | COMMITMENTS AND CONTINGENT LIABILITIES
|--- | --------------------------------------



Commitments



In the normal course of business, the Company has outstanding commitments and contingent liabilities, such as commitments to extend credit and standby
letters of credit, which are not included in the accompanying consolidated financial statements. The Companys exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend
credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the consolidated
balance sheet.



These commitments were comprised of the
following at December 31:



|                             |  |      |            |      |   |           
|---------------------------- |  | ---- | ---------- | ---- | - | ----------
|                             |  | 2004 |            | 2003
|Commitments to extend credit |  | $    | 31,332,000 |      | $ | 31,263,000
|Standby letters of credit    |  |      | 529,000    |      |   | 356,000   
|                             |  |      |            |      |   |           
|Total                        |  | $    | 31,861,000 |      | $ | 31,619,000
|                             |  |      |            |      |   |           



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



-18-



---

|15. | COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
|--- | --------------------------------------------------



Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters
of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The fees earned from issuance of letters are recognized at the origination of the coverage period. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan facilities to customers. The Companys policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making
commitments to extend credit.



The Company has not been
required to perform any financial guarantees during the past two years. The Company has not incurred any losses on its commitments in either 2004 or 2003.



Contingent Liabilities



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



|16. | REGULATORY MATTERS
|--- | ------------------



The approval of regulatory authorities is required if the total of all dividends declared by the Bank in any calendar year exceeds net profits as defined
for that year combined with its retained net profits for the two preceding calendar years less any required transfers to surplus. Under this formula, the amount available for payment of dividends by the Bank to the Company in 2005, without the
approval of the regulatory authorities, is approximately $1,693,294 plus 2005 profits retained up to the date of the dividend declaration.



Included in cash and due from banks are required federal reserves of $3,866,000 and $3,512,000 at December 31, 2004 and 2003, respectively, for
facilitating the implementation of monetary policy by the Federal Reserve System. The required reserves are computed by applying prescribed ratios to the classes of average deposit balances. These are held in the form of cash on hand and/or balances
maintained directly with the Federal Reserve Bank.



Federal
law prevents the Company from borrowing from the Bank unless the loans are secured by specific obligations. Further, such secured loans are limited in amount to ten percent of the Banks capital. The Company had no such borrowings at December
31, 2004 and 2003.



|17. | REGULATORY CAPITAL REQUIREMENTS
|--- | -------------------------------



Federal regulations require the Company and the Bank to maintain minimum amounts of capital. Specifically, each is required to maintain certain minimum
dollar amounts and ratios of Total and Tier I capital to risk-weighted assets and of Tier I capital to average total assets.



In addition to the capital requirements, the Federal Deposit Insurance Corporation Improvement Act (FDICIA) established five capital
categories ranging from well capitalized to critically undercapitalized. Should any institution fail to meet the requirements to be considered adequately capitalized, it would become subject to a series of
increasingly restrictive regulatory actions.



As of December
31, 2004 and 2003, the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be classified as a well capitalized financial institution, Total risk-based, Tier I risk-based, and Tier I Leverage
capital ratios must be at least ten percent, six percent, and five percent, respectively. There have been no conditions or events since notification that management believes have changed this category.



-19-



---

|17. | REGULATORY CAPITAL REQUIREMENTS (CONTINUED)
|--- | -------------------------------------------



The Companys actual capital ratios are presented in the following table, which shows the Company met all regulatory capital requirements. The
capital position of the Bank does not differ significantly from the Companys.



|                                                   |  |        |        |       |       |   |        |   |        |  |       |  
|-------------------------------------------------- |  | ------ | ------ | ----- | ----- | - | ------ | - | ------ |  | ----- | -
|                                                   |  | 2004   |        |       | 2003  |  
|                                                   |  | Amount |        | Ratio |       |   | Amount |   | Ratio  | 
|Total Risk Based Capital (to Risk Weighted Assets) |  |        |        |       |       |   |        |   |        |  |       |  
|                                                   |  |        |        |      
|Actual                                             |  | $      | 36,595 |       | 17.31 | % |        | $ | 35,022 |  | 17.58 | %
|For Capital Adequacy Purposes                      |  |        | 16,913 |       | 8.00  |   |        |   | 15,938 |  | 8.00  |  
|To be well capitalized                             |  |        | 21,142 |       | 10.00 |   |        |   | 19,922 |  | 10.00 |  
|                                                   |  |        |        |      
|Tier 1 Capital (to Risk Weighted Assets)           |  |        |        |       |       |   |        |   |        |  |       |  
|                                                   |  |        |        |      
|Actual                                             |  | $      | 33,994 |       | 16.08 | % |        | $ | 32,566 |  | 16.35 | %
|For Capital Adequacy Purposes                      |  |        | 8,457  |       | 4.00  |   |        |   | 7,969  |  | 4.00  |  
|To be well capitalized                             |  |        | 12,685 |       | 6.00  |   |        |   | 11,953 |  | 6.00  |  
|                                                   |  |        |        |      
|Tier 1 Capital (to Average Assets)                 |  |        |        |       |       |   |        |   |        |  |       |  
|                                                   |  |        |        |      
|Actual                                             |  | $      | 33,994 |       | 11.54 | % |        | $ | 32,566 |  | 11.44 | %
|For Capital Adequacy Purposes                      |  |        | 11,785 |       | 4.00  |   |        |   | 11,388 |  | 4.00  |  
|To be well capitalized                             |  |        | 14,732 |       | 5.00  |   |        |   | 14,235 |  | 5.00  |  



|18. | FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
|--- | ----------------------------------------------



The carrying amounts and estimated fair values at December 31 are as follows:



|                                |  |                |             |            |   |                |  |            |             |  |   |            
|------------------------------- |  | -------------- | ----------- | ---------- | - | -------------- |  | ---------- | ----------- |  | - | -----------
|                                |  | 2004           |             | 2003      
|                                |  | CarryingAmount |             | Fair Value |   | CarryingAmount |  | Fair Value
|Financial assets:               |  |                |             |            |   |                |  |            |             |  |   |            
|Cash and due from banks         |  | $              | 12,163,199  |            | $ | 12,163,199     |  | $          | 9,755,218   |  | $ | 9,755,218  
|Federal funds sold              |  |                | 9,500,000   |            |   | 9,500,000      |  |            | 7,800,000   |  |   | 7,800,000  
|Securities available for sale   |  |                | 9,754,110   |            |   | 9,754,110      |  |            | 17,582,096  |  |   | 17,582,096 
|Securities held to maturity     |  |                | 36,015,317  |            |   | 37,947,368     |  |            | 40,628,977  |  |   | 42,952,009 
|Net loans                       |  |                | 214,161,315 |            |   | 217,168,148    |  |            | 198,628,138 |  |   | 203,388,811
|Loans held for sale             |  |                | 167,500     |            |   | 169,852        |  |            | 521,450     |  |   | 530,189    
|Accrued interest receivable     |  |                | 927,860     |            |   | 927,860        |  |            | 924,193     |  |   | 924,193    
|Regulatory Stock                |  |                | 1,533,810   |            |   | 1,533,810      |  |            | 1,487,310   |  |   | 1,487,310  
|BOLI                            |  |                | 3,000,000   |            |   | 3,000,000      |  |            |            |  |   |           
|                                |  |                |             |           
|Financial liabilities:          |  |                |             |            |   |                |  |            |             |  |   |            
|Deposits                        |  | $              | 247,348,761 |            | $ | 246,138,000    |  | $          | 241,723,814 |  | $ | 244,156,000
|Federal Home Loan Bank advances |  |                | 6,845,342   |            |   | 6,906,000      |  |            | 3,444,805   |  |   | 3,828,000  
|Short term borrowings           |  |                | 3,730,000   |            |   | 3,730,000      |  |            | 4,365,000   |  |   | 4,365,000  
|Accrued interest payable        |  |                | 151,357     |            |   | 151,357        |  |            | 162,672     |  |   | 162,672    



Financial instruments
are defined as cash, evidence of ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.



-20-



---

|18. | FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS (CONTINUED)
|--- | ----------------------------------------------------------



Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a
forced or liquidation sale. If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.



If no readily available market exists, the fair value estimates for
financial instruments should be based upon managements judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or
simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a
particular financial instrument. In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting estimated fair values.



As certain assets and liabilities such as deferred tax assets and liabilities, premises and equipment and many other
operational elements of the Company, are not considered financial instruments, but have value, this estimated fair value of financial instruments would not represent the full market value of the Company.



The Company employed simulation modeling in determining the estimated fair
value of financial instruments for which quoted market prices were not available based upon the following assumptions:



Cash and Due from Banks, Federal Funds Sold, Accrued Interest Receivable, Regulatory Stock, BOLI, Short-Term Borrowings, and Accrued Interest
Payable



The fair value approximates the current
carrying value.



Investment Securities and Loans Held for
Sale



The fair value of investment securities and
loans held for sale are equal to the available quoted market price. If no quoted market price is available, fair value is estimated using the quoted market price for similar securities.



Loans, Deposits, and Federal Home Loan Bank Advances



The fair value of loans is estimated by discounting the future cash flows
using a simulation model which estimates future cash flows and constructs discount rates that consider reinvestment opportunities, operating expenses, non-interest income, credit quality, and prepayment risk. Demand, savings, and money market
deposit accounts are valued at the amount payable on demand as of year end. Fair values for time deposits and Federal Home Loan Bank advances are estimated using a discounted cash flow calculation that applies contractual costs currently being
offered in the existing portfolio to current market rates being offered for deposits and borrowings of similar remaining maturities.



Commitments to Extend Credit and Standby Letters of Credit



These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The
carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently
charged to enter into similar agreements with similar credit risk, are not considered material for disclosure. The contractual amounts of unfunded commitments and letters of credit are presented previously in the commitments and contingent
liabilities note.



-21-



---

|19. | PARENT COMPANY
|--- | --------------



The following are parent only condensed financial statements:



CONDENSED BALANCE SHEET



|                                           |  |              |            |      |   |           
|------------------------------------------ |  | ------------ | ---------- | ---- | - | ----------
|                                           |  | December 31,
|                                           |  | 2004         |            | 2003
|ASSETS                                     |  |              |            |      |   |           
|Cash                                       |  | $            | 104,802    |      | $ | 270,610   
|Investment in bank subsidiary              |  |              | 35,254,115 |      |   | 33,790,944
|Federal income tax receivable              |  |              | 17         |      |   |          
|                                           |  |              |            |      |   |           
|Total assets                               |  | $            | 35,358,934 |      | $ | 34,061,554
|                                           |  |              |            |      |   |           
|LIABILITIES AND SHAREHOLDERS EQUITY       |  |              |            |      |   |           
|Shareholders equity                       |  | $            | 35,358,934 |      | $ | 34,061,554
|                                           |  |              |            |      |   |           
|Total liabilities and shareholders equity |  | $            | 35,358,934 |      | $ | 34,061,554
|                                           |  |              |            |      |   |           



CONDENSED
STATEMENT OF INCOME



|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|-------------------------------------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                               |  | Year Ended December 31, |          
|                                                               |  | 2004                    |           |   | 2003 |   |           | 2002 | 
|INCOME                                                         |  |                         |           |   |      |   |           |      |  |   |           |  
|Dividends from bank subsidiary                                 |  | $                       | 1,825,000 |   |      | $ | 3,110,000 |      |  | $ | 1,775,000 |  
|Operating expenses                                             |  |                         | 50        |   |      |   | 50        |      |  |   | 50        |  
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|Income before income taxes                                     |  |                         | 1,824,950 |   |      |   | 3,109,950 |      |  |   | 1,774,950 |  
|Income tax benefit                                             |  |                         | (17       | ) |      |   | (17       | )    |  |   | (17       | )
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|Income before equity in undistributed net income of subsidiary |  |                         | 1,824,967 |   |      |   | 3,109,967 |      |  |   | 1,774,967 |  
|Equity in undistributed net income of subsidiary               |  |                         | 1,594,441 |   |      |   | 98,853    |      |  |   | 1,442,577 |  
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|NET INCOME                                                     |  | $                       | 3,419,408 |   |      | $ | 3,208,820 |      |  | $ | 3,217,544 |  
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  



-22-



---

|19. | PARENT COMPANY (CONTINUED)
|--- | --------------------------



CONDENSED STATEMENT OF CASH FLOWS



|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | Year Ended December 31, |           
|                                                                                  |  | 2004                    |            |   | 2003 |   |            | 2002 | 
|OPERATING ACTIVITIES                                                              |  |                         |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $                       | 3,419,408  |   |      | $ | 3,208,820  |      |  | $ | 3,217,544  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |            |   |      |   |            |      |  |   |            |  
|Equity in undistributed net income of subsidiary                                  |  |                         | (1,594,441 | ) |      |   | (98,853    | )    |  |   | (1,442,577 | )
|(Increase) decrease in other assets                                               |  |                         | (17        | ) |      |   |           |      |  |   |           |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |                         | 1,824,950  |   |      |   | 3,109,967  |      |  |   | 1,774,967  |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|FINANCING ACTIVITIES                                                              |  |                         |            |   |      |   |            |      |  |   |            |  
|Purchase of treasury shares                                                       |  |                         | (699,614   | ) |      |   | (1,741,534 | )    |  |   | (892,363   | )
|Dividends paid                                                                    |  |                         | (1,291,144 | ) |      |   | (1,240,872 | )    |  |   | (1,200,310 | )
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                             |  |                         | (1,990,758 | ) |      |   | (2,982,406 | )    |  |   | (2,092,673 | )
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|INCREASE (DECREASE) IN CASH                                                       |  |                         | (165,808   | ) |      |   | 127,561    |      |  |   | (317,706   | )
|                                                                                  |  |                         |           
|CASH AT BEGINNING OF YEAR                                                         |  |                         | 270,610    |   |      |   | 143,049    |      |  |   | 460,755    |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|CASH AT END OF YEAR                                                               |  | $                       | 104,802    |   |      | $ | 270,610    |      |  | $ | 143,049    |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  



-23-



---

|20. | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|--- | ---------------------------------------------

(IN THOUSANDS EXCEPT PER SHARE DATA)



|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|---------------------------------------------------- |  | ------------------ | ------- | --------- | - | ------------- |  | ------------ | ------- |  | - | -------
|                                                     |  | Three Months Ended
|                                                     |  | March2004          |         | June 2004 |   | September2004 |  | December2004
|Total interest income                                |  | $                  | 3,386   |           | $ | 3,435         |  | $            | 3,522   |  | $ | 3,690  
|Total interest expense                               |  |                    | 812     |           |   | 779           |  |              | 817     |  |   | 856    
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Net interest income                                  |  |                    | 2,574   |           |   | 2,656         |  |              | 2,705   |  |   | 2,834  
|Provision for loan losses                            |  |                    | 90      |           |   | 30            |  |              | 30      |  |   | 75     
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Net interest income after provision for loans losses |  |                    | 2,484   |           |   | 2,626         |  |              | 2,675   |  |   | 2,759  
|                                                     |  |                    |         |          
|Total other income                                   |  |                    | 245     |           |   | 250           |  |              | 262     |  |   | 258    
|Total other expense                                  |  |                    | 1,746   |           |   | 1,883         |  |              | 1,708   |  |   | 1,821  
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Income before income taxes                           |  |                    | 983     |           |   | 993           |  |              | 1,229   |  |   | 1,196  
|Income taxes                                         |  |                    | 210     |           |   | 211           |  |              | 282     |  |   | 279    
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Net income                                           |  | $                  | 773     |           | $ | 782           |  | $            | 947     |  | $ | 917    
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Per share data:                                      |  |                    |         |           |   |               |  |              |         |  |   |        
|Net earnings                                         |  | $                  | 1.16    |           | $ | 1.18          |  | $            | 1.43    |  | $ | 1.39   
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Weighted average shares outstanding                  |  |                    | 664,369 |           |   | 662,919       |  |              | 661,644 |  |   | 660,727
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        



-24-



---

|20. | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)(CONTINUED)
|--- | --------------------------------------------------------

(IN THOUSANDS EXCEPT PER SHARE DATA)



|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|---------------------------------------------------- |  | ------------------ | ------- | --------- | - | ------------- |  | ------------ | ------- |  | - | -------
|                                                     |  | Three Months Ended
|                                                     |  | March2003          |         | June 2003 |   | September2003 |  | December2003
|Total interest income                                |  | $                  | 3,653   |           | $ | 3,605         |  | $            | 3,518   |  | $ | 3,508  
|Total interest expense                               |  |                    | 1,124   |           |   | 1,046         |  |              | 959     |  |   | 888    
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Net interest income                                  |  |                    | 2,529   |           |   | 2,559         |  |              | 2,559   |  |   | 2,620  
|Provision for loan losses                            |  |                    | 105     |           |   | 105           |  |              | 90      |  |   | 90     
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Net interest income after provision for loans losses |  |                    | 2,424   |           |   | 2,454         |  |              | 2,469   |  |   | 2,530  
|                                                     |  |                    |         |          
|Total other income                                   |  |                    | 245     |           |   | 329           |  |              | 301     |  |   | 245    
|Total other expense                                  |  |                    | 1,721   |           |   | 1,806         |  |              | 1,697   |  |   | 1,822  
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Income before income taxes                           |  |                    | 948     |           |   | 977           |  |              | 1,073   |  |   | 953    
|Income taxes                                         |  |                    | 196     |           |   | 207           |  |              | 234     |  |   | 105    
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Net income                                           |  | $                  | 752     |           | $ | 770           |  | $            | 839     |  | $ | 848    
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Per share data:                                      |  |                    |         |           |   |               |  |              |         |  |   |        
|Net earnings                                         |  | $                  | 1.10    |           | $ | 1.14          |  | $            | 1.24    |  | $ | 1.27   
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        
|Weighted average shares outstanding                  |  |                    | 682,158 |           |   | 677,089       |  |              | 676,788 |  |   | 669,484
|                                                     |  |                    |         |           |   |               |  |              |         |  |   |        



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