<PAGE>   1
                                                                      Exhibit 13

                  1999 FFD FINANCIAL CORPORATION ANNUAL REPORT

                 "SERVING TUSCARAWAS COUNTY FOR OVER 100 YEARS"

<PAGE>   2


                            FFD FINANCIAL CORPORATION
             321 North Wooster Avenue P.O. BOX 38 DOVER, OHIO 44622


      Dear Shareholders:

      It is with a great deal of pleasure that we present to you FFD Financial
      Corporation's Annual Report to Shareholders for the fiscal year ended June
      30, 1999.

      FFD Financial Corporation reported consolidated net earnings of $717,000
      or $.53 per share, for the fiscal year ended June 30, 1999. Our earnings
      for 1999 were driven by a strong increase of $801,000, or 16.8%, in
      interest income on loans. This strategic improvement was attained by
      increasing the average loan portfolio balance outstanding by $16.2
      million, or 25.6%. Securities gains were used to offset some of the
      increased costs associated with adding staff to develop new consumer
      products, business banking loan products, our branch office servicing
      center in New Philadelphia and the decrease in interest income which
      resulted from our $6.5 million tax-free return of capital special dividend
      in June of 1998.

      Asset growth is an essential part of your Corporation's strategic plan for
      the future. To achieve this goal, our unprecedented loan orginations of
      $40.9 million during fiscal 1999 exceeded the prior fiscal years
      originations of $29.2 million by 40.0%. This increase in loan originations
      added $16.4 million, or 23.1%, over the June 30, 1998 loan portfolio. Loan
      growth was funded partially by increasing deposits by $10.1 million, or
      16.3%. Our New Philadelphia office provided $5.9 million of the deposit
      increase and ended June 30, 1999 with a deposit base of over $9.6 million.

      Our operating success has provided our charter shareholders with a
      cumulative return of approximately 280% on their original investment since
      the conversion to stock form was completed in April 1996.

      First Federal Savings Bank of Dover expects its computer systems and other
      technology to operate successfully on January 1, 2000 and beyond. We have
      addressed our potential mission critical problems associated with Y2K and
      have performed year 2000 proxy transactions successfully. We have also
      developed contingency plans to comply with regulatory requirements.

      Your directors, managers, and staff are confident that our current
      strategic direction has positioned FFD and First Federal Savings Bank of
      Dover to meet the challenges confronting us as we enter our 102nd year. We
      remain committed to maintaining friendly, personalized financial services
      in our markets, while continuing the local decision making and focus our
      customers have grown to expect.

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      As always, we wish to take this opportunity to thank all our customers and
      shareholders for your past and continuing support that has made it
      possible for us to prosper.


      Sincerely,


      Robert R. Gerber
      President

                                       3

<PAGE>   4


                      BUSINESS OF FFD FINANCIAL CORPORATION

================================================================================

FFD Financial Corporation ("FFD" or the "Corporation"), a unitary savings and
loan holding company incorporated under the laws of the State of Ohio, owns all
of the issued and outstanding common stock of First Federal Savings Bank of
Dover ("First Federal" or the "Savings Bank"), a savings bank chartered under
the laws of the United States. In April 1996, FFD acquired all of the common
stock issued by First Federal upon its conversion from a mutual savings
association to a stock savings association (the "Conversion"). Since its
formation, FFD's activities have been limited primarily to holding the common
shares of First Federal.

First Federal is a stock savings bank principally engaged in the business of
making fixed-rate and adjustable-rate first mortgage loans, to be held in
portfolio or sold in the secondary mortgage market, secured by one- to
four-family residential real estate located in First Federal's primary lending
area. First Federal also originates loans for the construction of residential
real estate, loans secured by multifamily real estate (over four units), loans
for commercial business purposes and nonresidential real estate loans. The
origination of consumer loans, including unsecured loans, passbook loans, loans
secured by motor vehicles and home improvement loans, constitutes a small
portion of First Federal's lending activities. In addition to originating loans,
First Federal invests in U.S. Government and agency obligations,
interest-bearing deposits in other financial institutions and mortgage-backed
securities. Funds for lending and investing activities are obtained primarily
from deposits, which are insured up to applicable limits by the Federal Deposit
Insurance Corporation ("FDIC"), from Federal Home Loan Bank ("FHLB") advances,
and from loan and mortgage-backed securities repayments. First Federal conducts
business from two locations, one in Dover, Ohio, and one in New Philadelphia,
Ohio. The primary market area for First Federal is Tuscarawas County.

As a savings and loan holding company, FFD is subject to regulation, supervision
and examination by the Office of Thrift Supervision of the United States
Department of the Treasury (the "OTS"). As a savings bank chartered under the
laws of the United States, First Federal is subject to regulation, supervision
and examination by the OTS and the FDIC. First Federal is also a member of the
FHLB of Cincinnati.


                              MARKET PRICE OF FFD'S
                  COMMON SHARES AND RELATED SHAREHOLDER MATTERS
================================================================================

There were 1,453,416 common shares of FFD outstanding on September 7, 1999, held
of record by approximately 691 shareholders. Price information with respect to
FFD's common shares is quoted on the Nasdaq SmallCap Market ("Nasdaq") under the
symbol "FFDF."

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<PAGE>   5

The following table sets forth the high and low trading prices for the common
shares of FFD, as quoted by Nasdaq, together with the respective dividends
declared per share, for each quarter of fiscal 1999 and 1998.

<TABLE>
<CAPTION>
                                                     High Trade       Low Trade      Cash Dividends Declared
                                                     ----------       ---------      -----------------------
<S>                                                    <C>             <C>                      <C>
FISCAL 1998
   Quarter Ended:
     September 30, 1997                                $16.500         $14.125                  $ .075
     December 31, 1997                                  19.500          16.250                    .075
     March 31, 1998                                     22.750          17.750                    .075
     June 30, 1998                                      24.125          19.125                   4.575

FISCAL 1999
   Quarter Ended:
     September 30, 1998                                $19.625         $15.500                   $.075
     December 31, 1998                                  16.000          13.500                    .075
     March 31, 1999                                     14.750          13.000                    .075
     June 30, 1999                                      18.000          13.375                    .075
</TABLE>

The income of FFD consists primarily of dividends which may periodically be
declared and paid by the Board of Directors of First Federal on the common
shares of First Federal held by FFD.

In addition to certain federal income tax considerations, OTS regulations impose
limitations on the payment of dividends and other capital distributions by
savings associations. Under OTS regulations applicable to converted savings
associations, First Federal is not permitted to pay a cash dividend on its
common shares if the regulatory capital of First Federal would, as a result of
the payment of such dividend, be reduced below the amount required for the
liquidation account established in connection with the Conversion or applicable
regulatory capital requirements prescribed by the OTS.

OTS regulations applicable to all savings associations provide that a savings
association that immediately prior to, and on a pro forma basis after giving
effect to, a proposed capital distribution (including a dividend) has total
capital (as defined by OTS regulations) that is equal to or greater than the
amount of its capital requirements is generally permitted without OTS approval
(but subsequent to 30 days' prior notice to the OTS) to make capital
distributions, including dividends, during a calendar year in an amount not to
exceed the greater of (1) 100% of its net earnings to date during the calendar
year, plus an amount equal to one-half the amount by which its capital to assets
ratio exceeded its required capital to assets ratio at the beginning of the
calendar year, or (2) 75% of its net earnings for the most recent four-quarter
period. Savings associations with total capital in excess of the capital
requirements that have been notified by the OTS that they are in need of more
than normal supervision will be subject to restrictions on dividends. A savings
association that fails to meet current minimum capital requirements is
prohibited from making any capital distributions without the prior approval of
the OTS. First Federal currently meets all of its regulatory capital
requirements and, unless the OTS determines that First Federal is an institution
requiring more than normal supervision, First Federal may pay dividends in
accordance with the foregoing provisions of the OTS regulations.

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<PAGE>   6


                              SELECTED CONSOLIDATED
                      FINANCIAL INFORMATION AND OTHER DATA

================================================================================

The following table sets forth certain information concerning the consolidated
financial condition, earnings and other data regarding FFD at the dates and for
the periods indicated.

<TABLE>
<CAPTION>
  SELECTED CONSOLIDATED FINANCIAL                                        At June 30,
                                             --------------------------------------------------------------------
                                               1999             1998          1997           1996          1995
     CONDITION:                              --------         ---------     ----------     ---------     --------
                                                                       (In thousands)
<S>                                           <C>              <C>           <C>            <C>          <C>
  Total amount of:
    Assets                                    $112,293         $90,966       $88,000        $79,458      $58,955
    Interest-bearing
       deposits (1)                              2,167             607         3,547          1,793        3,659
    Investment securities available for
       sale - at market                          2,924           2,655         9,924          9,256          903
    Investment securities held to
       maturity - at cost                            -             977         1,469          2,460        3,353
    Mortgage-backed securities available
       for sale - at market                     10,978           5,935         7,944          9,007            -
    Mortgage-backed securities held to
       maturity- at cost                         4,779           5,960         7,165          5,932        8,153
    Loans receivable - net (2)                  87,382          70,990        55,504         48,539       41,494
    Deposits                                    72,025          61,956        57,090         52,208       50,601
    Advances from the FHLB                      23,616          12,519          8,382         5,184           26
    Shareholders' equity, restricted (3)
    (4)                                         16,204          15,825        21,480         21,411        7,787
</TABLE>
<TABLE>
<CAPTION>
  SUMMARY OF EARNINGS:                                             For the year ended June 30,
                                            ----------------------------------------------------------------------
                                                1999            1998           1997          1996          1995
                                            -----------      ----------     ----------     ---------     ---------
                                                                         (In thousands)

<S>                                             <C>            <C>             <C>           <C>           <C>
  Interest income                               $6,915         $6,460          $5,880        $4,555        $3,718
  Interest expense                               3,941          3,454           3,101         2,471         1,951
                                                 -----          -----           -----         -----         -----
  Net interest income                            2,974          3,006           2,779         2,084         1,767
  Provision for losses on loans                      -              -             125            50             -
                                                ------         ------           -----         -----         -----
  Net interest income after provision
     for losses on loans                         2,974          3,006           2,654         2,034         1,767
  Other income                                     428            525           1,337            88            37
  General, administrative and other
     expense                                     2,317          2,044           1,859         1,163         1,077
                                                 -----          -----           -----         -----         -----
  Earnings before income taxes                   1,085          1,487           2,132           959           727
  Federal income taxes                             368            505             705           327           248
                                                ------         ------          ------        ------        ------
  Net earnings                                 $   717         $  982          $1,427       $   632       $   479
                                                ======          =====           =====        ======        ======
  Earnings per share
    Basic                                        $.53           $.73           $1.07            N/A           N/A
                                                  ===            ===            ====
    Diluted                                      $.51           $.71           $1.06            N/A           N/A
                                                  ===            ===            ====
-----------------------------------
</TABLE>

(1) Includes short-term interest-bearing deposits in other banks.

(2) Includes loans held for sale.

(3) Consists solely of retained earnings at June 30, 1995.

(4) At June 30, 1999, includes $216,000 of net unrealized losses and at June 30,
    1998, 1997 and 1996, includes $140,000, $20,000 and $586,000, respectively,
    of net unrealized gains on investment and mortgage-backed securities
    designated as available for sale, net of

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    related tax effects, pursuant to Statement of Financial Accounting Standards
    ("SFAS") No. 115.

                                       7
<PAGE>   8


<TABLE>
<CAPTION>
SELECTED FINANCIAL RATIOS                                    At or for the year ended June 30,
   AND OTHER DATA:                         ---------------------------------------------------------------------
                                              1999           1998           1997           1996           1995
                                           --------        --------      ---------      ---------       --------

<S>                                       <C>               <C>            <C>           <C>               <C>
Return on average assets                      0.69%           1.06%          1.65%         0.99%            0.86%
Return on average equity                      5.11            4.65           6.65          5.72             6.86
Interest rate spread                          2.37            2.22           2.15          2.41             2.77
Net interest margin                           2.92            3.29           3.30          3.28             3.24
General, administrative and other
   expense to average assets                  2.25            2.20           2.15          1.82             1.93
Average equity to average
   assets                                    13.59           22.75          24.83         17.29            12.49
Nonperforming assets to
   total assets                               0.01            0.09           0.07          0.15             0.22
Nonperforming loans to total loans
                                              0.02            0.11           0.11          0.24             0.31
Total delinquent loans to total loans
   (1)                                        0.39            0.51           0.69          0.51             1.06
Allowance for loan losses to
   total loans                                0.30            0.37           0.47          0.29             0.23
Allowance for loan losses to
   nonperforming loans                    1,793.33          329.27         421.88        124.79            73.28
Net charge-offs to average
   loans (2)                                      -               -              -             -            0.01
Average interest-earning
   assets to average interest-bearing
   liabilities                              114.24          128.34         131.46        122.47           113.11
Number of full service offices                2               2              1             1                1
Dividend payout ratio (3)                    56.60           41.10          21.03            N/A             N/A

----------------------------
</TABLE>

(1)   Delinquent loans are loans as to which a scheduled payment has not been
      made within 30 days after the due date.

(2)   For the years ended June 30, 1999, 1998, 1997 and 1996, First Federal did
      not have any charge-offs.

(3)   Dividend payout ratio for the year ended June 30, 1998, is presented
      exclusive of the $4.50 per share special distribution.

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<PAGE>   9


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

================================================================================

                                     GENERAL

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

FFD was incorporated for the purpose of owning all of First Federal's
outstanding stock. As a result, the discussion that follows focuses on First
Federal's financial condition and results of operations. The following
discussion and analysis of the financial condition and results of operations of
FFD and First Federal should be read in conjunction with and with reference to
the consolidated financial statements, and the notes thereto, included in this
Annual Report.


       CHANGES IN FINANCIAL CONDITION FROM JUNE 30, 1998 TO JUNE 30, 1999

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

The Corporation's total assets at June 30, 1999, amounted to $112.3 million, a
$21.3 million, or 23.4%, increase over the total at June 30, 1998. This increase
was funded primarily through an increase in advances from the FHLB of $11.1
million and growth in deposits of $9.5 million.

Investment securities totaled $2.9 million at June 30, 1999, a decrease of
$708,000, or 19.5%, from the total at June 30, 1998, as maturities and sales
totaling $3.7 million during the period were partially offset by purchases of
securities totaling $3.0 million.

Mortgage-backed securities totaled $15.8 million at June 30, 1999, a $3.9
million, or 32.5%, increase over the total at June 30, 1998. This increase
resulted primarily from purchases of $9.6 million, which were partially offset
by principal repayments totaling $5.4 million. Purchases of mortgage-backed
securities during the period were comprised of long-term, variable-rate
certificates yielding approximately 6.05%, which were funded by FHLB advances
with a weighted-average cost of approximately 4.83%.

Loans receivable totaled $87.4 million at June 30, 1999, an increase of $16.4
million, or 23.1%, over the June 30, 1998 total. Loan disbursements during the
period totaled $40.9 million, which were partially offset by principal
repayments of $17.2 million and loans sold in the secondary market totaling $7.4
million. Loan disbursements during the year ended June 30, 1999, increased by
$11.7 million, or 40.0%, compared to the origination volume during the same
period in 1998. The growth in loans consisted primarily of loans secured by
nonresidential real estate, which totaled $18.7 million at June 30, 1999,
compared to $6.7 million at June 30, 1998.

The allowance for loan losses totaled $269,000 and $270,000 at June 30, 1999 and
1998, respectively, which represented .30% and .37% of total loans and 1,793.3%
and 329.3% of nonperforming loans at those respective dates. Nonperforming loans
amounted to $15,000 and $82,000 at June 30, 1999, and 1998, respectively.
Although management believes that its allowance for loan losses at June 30,
1999, is adequate based upon the available facts and

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<PAGE>   10

circumstances, there can be no assurance that additions to such allowance will
not be necessary in future periods, which could adversely affect the
Corporation's results of operations.

Deposits totaled $72.0 million at June 30, 1999, a $10.1 million, or 16.3%,
increase over total deposits at June 30, 1998. This increase resulted primarily
from growth in deposits totaling approximately $5.9 million at the branch office
located in New Philadelphia, Ohio, coupled with management's efforts to generate
growth through advertising and pricing strategies. Proceeds from deposit growth
were used primarily to fund new loan originations during the period.

FHLB advances totaled $23.6 million at June 30, 1999, an $11.1 million, or
88.6%, increase over June 30, 1998. Proceeds from the increase in borrowings
were primarily used to fund purchases of mortgage-backed securities and new loan
originations.

Shareholders' equity totaled $16.2 million at June 30, 1999, an increase of
$379,000, or 2.4%, over June 30, 1998 levels as net earnings of $717,000 were
partially offset by dividends declared totaling $403,000.


                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

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

The earnings of FFD depend primarily on its level of net interest income, which
is the difference between interest earned on FFD's interest-earning assets and
the interest paid on interest-bearing liabilities. Net interest income is
substantially affected by FFD's interest rate spread, which is the difference
between the average yield earned on interest-earning assets and the average rate
paid on interest-bearing liabilities, as well as by the average balance of
interest-earning assets compared to interest-bearing liabilities.

GENERAL. FFD's net earnings totaled $717,000 for the fiscal year ended June 30,
1999, a decrease of $265,000, or 27.0%, from the net earnings of $982,000
recorded in fiscal 1998. The decrease in net earnings resulted primarily from a
$32,000 decrease in net interest income, a $97,000 decrease in other income and
a $273,000 increase in general, administrative and other expense, which were
partially offset by a $137,000 decrease in the provision for federal income
taxes.

NET INTEREST INCOME. Total interest income increased by $455,000, or 7.0%, to a
total of $6.9 million for the year ended June 30, 1999, compared to $6.5 million
for the year ended June 30, 1998. Interest income on loans increased by
$801,000, or 16.8%, due primarily to a $16.2 million, or 25.6%, increase in the
average loan portfolio balance outstanding, which was partially offset by a 53
basis point decrease in the average yield, to 7.00% in fiscal 1999. Interest
income on mortgage-backed securities increased by $41,000, or 4.4%, due
primarily to a $1.1 million, or 7.8%, increase in the average balance
outstanding, partially offset by a 21 basis point decrease in the yield earned
on such securities to 6.32% in fiscal 1999. Interest income on investment
securities and interest-bearing deposits decreased by $387,000, or 50.5%, due
primarily to an approximate $7.0 million, or 50.5%, decrease in the related
average investment balance.

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<PAGE>   11

Interest expense on deposits increased by $187,000, or 6.7%, for the year ended
June 30, 1999, compared to fiscal 1998, due primarily to a $9.8 million, or
16.5%, increase in the average deposit portfolio balance outstanding, which was
partially offset by a 40 basis point decrease in the cost of such funds, to
4.30% in fiscal 1999.

Interest expense on borrowings increased by $300,000, or 45.7%, due primarily to
an $8.0 million, or 68.1%, increase in the average balance of advances
outstanding, which was partially offset by a 75 basis point decline in the
average cost of such borrowings, to 4.87% in fiscal 1999.

As a result of the foregoing changes in interest income and interest expense,
net interest income decreased by $32,000, or 1.1%, for the fiscal year ended
June 30, 1999, compared to fiscal 1998. The interest rate spread amounted to
approximately 2.37% for the fiscal year ended June 30, 1999, compared to 2.22%
for the comparable 1998 period, while the net interest margin amounted to 2.92%
in 1999, compared to 3.29% in 1998.

PROVISION FOR LOSSES ON LOANS. A provision for losses on loans is charged to
earnings to bring the total allowance for loan losses to a level considered
appropriate by management based on historical loss experience, the volume and
type of lending conducted by First Federal, the status of past due principal and
interest payments, general economic conditions, particularly as such conditions
relate to First Federal's market area, and other factors related to the
collectibility of First Federal's loan portfolio. As a result of such analysis,
management concluded that the allowance for loan losses was adequate and,
therefore, did not record a provision for losses on loans during the fiscal
years ended June 30, 1999 and 1998. There can be no assurance that the loan loss
allowance of First Federal will be adequate to cover losses on nonperforming
assets in the future.

OTHER INCOME. Other income totaled $428,000 for the year ended June 30, 1999, a
decrease of $97,000, or 18.5%, from the 1998 total. The decrease resulted
primarily from a $231,000, or 52.4%, decrease in gain on sales of securities,
which was partially offset by a $108,000 gain on sale of loans in fiscal 1999
and a $26,000, or 31.0%, increase in other operating income. Other operating
income consists primarily of fees generated from ATM transactions, late charges
on loans, safety deposit box rentals and negotiable order of withdrawal ("NOW")
account fees.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and other
expense totaled $2.3 million for the year ended June 30, 1999, an increase of
$273,000, or 13.4%, compared to the same period in 1998. The increase resulted
primarily from an $83,000, or 8.0%, increase in employee compensation and
benefits, a $44,000, or 22.8%, increase in occupancy and equipment expense, a
$53,000, or 24.9%, increase in franchise taxes, a $73,000, or 70.0%, increase in
data processing and a $16,000, or 3.5%, increase in other operating expenses.

The increase in employee compensation and benefits was due primarily to the
addition of a secondary marketing officer and support staff during fiscal 1998,
coupled with an increase in expense associated with stock benefit plans, normal
merit increases and increased staffing levels related to the opening of the New
Philadelphia office location in November 1997. The increase in occupancy and
equipment and other operating expense resulted primarily from costs associated
with office remodeling and the implementation of new business products and
services,

                                       11
<PAGE>   12

as well as, the start-up of the New Philadelphia office. The increase in
franchise taxes was due to the increase in shareholders' equity year to year.
The increase in data processing costs was due primarily to the increased number
of deposit and loan accounts associated with the Savings Bank's growth.

FEDERAL INCOME TAXES. FFD recorded a provision for federal income taxes totaling
$368,000 for the year ended June 30, 1999, a decrease of $137,000, or 27.1%,
from fiscal 1998. The decrease resulted primarily from a $402,000, or 27.0%,
decrease in earnings before taxes. The effective tax rates were 33.9% and 34.0%
for the years ended June 30, 1999 and 1998, respectively.


                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 1998 AND 1997

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

GENERAL. FFD's net earnings totaled $982,000 for the fiscal year ended June 30,
1998, a decrease of $445,000, or 31.2%, from the net earnings of $1.4 million
recorded in fiscal 1997. The decrease in net earnings resulted primarily from an
$812,000 decrease in other income and a $185,000 increase in general,
administrative and other expense, which were partially offset by a $227,000
increase in net interest income coupled with a $200,000 decrease in the
provision for federal income taxes.

NET INTEREST INCOME. Total interest income increased by $580,000, or 9.9%, to a
total of $6.5 million for the year ended June 30, 1998, compared to $5.9 million
for the year ended June 30, 1997. Interest income on loans increased by
$959,000, or 25.2%, due primarily to an $11.0 million, or 21.1%, increase in the
average loan portfolio balance outstanding, coupled with a 25 basis point
increase in the average yield, to 7.53% in fiscal 1998. Interest income on
mortgage-backed securities decreased by $248,000, or 21.1%, due primarily to a
$3.0 million, or 17.6%, decrease in the average balance outstanding, coupled
with a decrease in the yield earned on such securities. Interest income on
investment securities and interest-bearing deposits decreased by $131,000, or
14.6%, due primarily to an approximate $729,000, or 5.0%, decrease in the
related average investment balance and a decrease in the yield earned on such
investments.

Interest expense on deposits increased by $199,000, or 7.7%, for the year ended
June 30, 1998, compared to fiscal 1997, due primarily to a $4.4 million, or
8.0%, increase in the average deposit portfolio balance outstanding.

Interest expense on borrowings increased by $154,000, or 30.6%, due primarily to
a $2.8 million, or 31.9%, increase in the average balance of advances
outstanding.

As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $227,000, or 8.2%, for the fiscal year ended
June 30, 1998, compared to fiscal 1997. The interest rate spread amounted to
approximately 2.22% for the fiscal year ended June 30, 1998, compared to 2.15%
for the comparable 1997 period, while the net interest margin amounted to 3.29%
in 1998, compared to 3.30% in 1997.

                                       12
<PAGE>   13

PROVISION FOR LOSSES ON LOANS. As a result of an analysis of historical loss
experience, the volume and type of lending conducted by First Federal, the
status of past due principal and interest payments, general economic conditions,
particularly as such conditions relate to First Federal's market area, and other
factors related to the collectibility of First Federal's loan portfolio,
management concluded that the allowance for loan losses was adequate and,
therefore, did not record a provision for losses on loans during the fiscal year
ended June 30, 1998, as compared to the $125,000 provision recorded in fiscal
1997.

OTHER INCOME. Other income totaled $525,000 for the year ended June 30, 1998, a
decrease of $812,000 from the 1997 total. The decrease resulted primarily from
an $843,000, or 65.7%, decrease in gain on sales of securities. Other operating
income consists primarily of fees generated from ATM transactions, late charges
on loans, safety deposit box rentals and NOW account fees.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and other
expense totaled $2.0 million for the year ended June 30, 1998, an increase of
$185,000, or 10.0%, compared to the same period in 1997. The increase resulted
primarily from a $257,000, or 33.1%, increase in employee compensation and
benefits, a $75,000, or 63.6%, increase in occupancy and equipment expense, a
$69,000, or 47.9%, increase in franchise taxes and a $110,000, or 31.3%,
increase in other operating expenses, which were partially offset by a $360,000,
or 91.4%, decrease in federal deposit insurance premiums, due to the $332,000
one-time pre-tax charge to recapitalize the SAIF which was recorded in the
fiscal 1997 period.

The increase in employee compensation and benefits was due primarily to
increased staffing levels related to the opening of the New Philadelphia office
location in November 1997, and the addition of a commercial lending officer
during fiscal 1997, coupled with an increase in expense associated with stock
benefit plans and normal merit increases. The increase in occupancy and
equipment and other operating expense resulted primarily from costs associated
with the start-up of the New Philadelphia office. The increase in franchise
taxes was due to the increase in shareholders' equity year to year.

FEDERAL INCOME TAXES. FFD recorded a provision for federal income taxes totaling
$505,000 for the year ended June 30, 1998, a decrease of $200,000, or 28.4%,
from fiscal 1997. The decrease resulted primarily from a $645,000, or 30.3%,
decrease in earnings before taxes. The effective tax rates were 34.0% and 33.1%
for the years ended June 30, 1998 and 1997, respectively.

                                       13

<PAGE>   14


                  AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA

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

The following table sets forth certain information relating to FFD's average
balance sheet and reflects the average yield on interest-earning assets and the
average cost of interest-bearing liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense by the average
monthly balance of interest-earning assets or interest-bearing liabilities,
respectively, for the periods presented. Average balances are derived from
month-end balances, which include nonaccruing loans in the loan portfolio, net
of the allowance for loan losses.

<TABLE>
<CAPTION>
                                                                  Year ended June 30,
                                  ------------------------------------------------------------------------------------------
                                                1999                          1998                        1997
                                  ----------------------------  ---------------------------  -------------------------------
                                    Average   Interest            Average   Interest           Average  Interest
                                  outstanding  earned/  Yield/ outstanding  earned/   Yield/ outstanding earned/    Yield/
                                    balance     paid     rate    balance     paid      rate    balance    paid       rate
                                   ---------   ------    ----   ---------   -------    ----   ---------  -------     ----
                                                                  (Dollars in thousands)
<S>                                <C>         <C>        <C>     <C>       <C>         <C>     <C>       <C>         <C>
Interest-earning assets:
  Loans receivable                 $  79,497   $5,567     7.00%   $63,315   $4,766      7.53%   $52,295   $3,807      7.28%
  Mortgage-backed securities          15,305      968     6.32     14,202      927      6.53     17,228    1,175      6.82
  Investment securities                2,902      177     6.10      5,097      319      6.26     12,198      782      6.41
  Interest-bearing deposits
    and other                          3,978      203     5.10      8,816      448      5.08      2,444      116      4.75
                                   ---------   ------     ----   --------  -------      ----  ---------  -------      ----
  Total interest-earning assets      101,682    6,915     6.80     91,430    6,460      7.07     84,165    5,880      6.99

  Non-interest-earning assets          1,517                        1,417                         2,254
                                   ---------                     --------                      --------

    Total assets                    $103,199                      $92,847                       $86,419
                                     =======                       ======                        ======

  Interest-bearing liabilities:
  Deposits                         $  69,374    2,984     4.30    $59,554    2,797      4.70    $55,166    2,598      4.71
  Advances from the FHLB              19,637      957     4.87     11,685      657      5.62      8,857      503      5.68
                                    --------   ------     ----   --------  -------      ----   --------  -------      ----
    Total interest-bearing
      liabilities                     89,011    3,941     4.43     71,239    3,454      4.85     64,023    3,101      4.84
                                                -----     ----              ------      ----             -------      ----

Non-interest-bearing liabilities         166                          487                           937
                                  ----------                    ---------                      --------

  Total liabilities                   89,177                       71,726                        64,960

Shareholders' equity                  14,022                       21,121                        21,459
                                    --------                       ------                        ------

    Total liabilities and
      shareholders' equity          $103,199                      $92,847                       $86,419
                                     =======                       ======                        ======

Net interest income
                                               $2,974                       $3,006                        $2,779
                                                =====                        =====                         =====

Interest rate spread                                      2.37%                         2.22%                         2.15%
                                                          ====                          ====                          ====

Net interest margin (net interest
  income as a percent of average
  interest-earning assets)                                2.92%                         3.29%                         3.30%
                                                          ====                          ====                          ====

Average interest-earning assets to
  average interest-bearing liabilities                  114.24%                       128.34%                       131.46%
                                                        ======                        ======                        ======
</TABLE>

The table on the following page describes the extent to which changes in
interest rates and changes in volume of interest-earning assets and
interest-bearing liabilities have affected FFD's interest income and expense
during the years 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 volume multiplied by prior year rate), (ii)
changes in rate (changes in rate multiplied by prior year volume) and (iii)
total changes in rate and volume. The combined effects of changes in both volume
and rate, which cannot be separately identified, have been allocated
proportionately to the change due to volume and the change due to rate.

                                       14
<PAGE>   15

<TABLE>
<CAPTION>
                                                                     Year ended June 30,
                                             -------------------------------------------------------------------
                                                       1999 vs. 1998                        1998 vs. 1997
                                             ------------------------------      -------------------------------
                                                  Increase                           Increase
                                                 (decrease)                         (decrease)
                                                   due to                             due to
                                             -------------------                 ----------------
                                             Volume        Rate       Total      Volume      Rate        Total
                                             ------        ----       -----      ------      ----        -----
                                                                       (In thousands)
<S>                                          <C>           <C>         <C>         <C>        <C>         <C>
Interest income attributable to:
   Loans receivable                          $1,133        $(332)      $801        $824       $135        $959
   Mortgage-backed securities                    70          (29)        41        (200)       (48)       (248)
   Investment securities                       (134)          (8)      (142)       (445)       (18)       (463)
   Interest-bearing deposits and other         (247)           2       (245)        323          9         332
                                             ------         ----        ---         ---      -----         ---
Total interest income                           822         (367)       455         502         78         580
                                             ------         ----        ---         ---       ----         ---

Interest expense attributable to:
   Deposits                                     422         (235)       187         193          6         199
   FHLB advances                                388          (88)       300         149          5         154
                                             ------        -----        ---         ---      -----         ---

Total interest expense                          810         (323)       487         342         11         353
                                             ------         ----        ---         ---       ----         ---

Increase (decrease) in net interest income $     12       $  (44)     $ (32)       $160      $  67        $227
                                            =======        =====       ====         ===       ====         ===
</TABLE>


                         ASSET AND LIABILITY MANAGEMENT

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

First Federal, like other financial institutions, is subject to interest rate
risk to the extent that its interest-earning assets reprice differently than its
interest-bearing liabilities. As part of its effort to monitor and manage
interest rate risk, First Federal uses the "net portfolio value" ("NPV")
methodology adopted by the OTS as part of its capital regulations. Although
First Federal is not currently subject to the NPV regulation because such
regulation does not apply to institutions with less than $300 million in assets
and risk-based capital in excess of 12%, the application of the NPV methodology
illustrates certain aspects of First Federal's interest rate risk.

Generally, NPV is the discounted present value of the difference between
incoming cash flows on interest-earning and other assets and outgoing cash flows
on interest-bearing and other liabilities. The application of the methodology
attempts to quantify interest rate risk as the change in the NPV which would
result from a theoretical 200 basis point (1 basis point equals .01%) change in
market interest rates. Both a 200 basis point increase in market interest rates
and a 200 basis point decrease in market interest rates are considered. If the
NPV would decrease more than 2% of the present value of the institution's assets
with either an increase or a decrease in market rates, the institution must
deduct 50% of the amount of the decrease in excess of such 2% in the calculation
of the institution's risk-based capital. See "Liquidity and Capital Resources."

                                       15
<PAGE>   16

At June 30, 1999, 2% of the present value of First Federal's assets was
approximately $2.2 million, and the interest rate risk of a 200 basis point
decrease in market interest rates (which was greater than the interest rate risk
of a 200 basis point increase) was $1.7 million.

Presented below, as of June 30, 1999 and 1998, is an analysis of First Federal's
interest rate risk as measured by changes in NPV for instantaneous and sustained
parallel shifts of 200 basis points in market interest rates. The table also
contains the policy limits set by the Board of Directors of First Federal as the
maximum change in NPV that the Board of Directors deems advisable in the event
of various changes in interest rates. Such limits have been established with
consideration of the dollar impact of various rate changes and First Federal's
strong capital position.


<TABLE>
<CAPTION>
                                                                                       June 30, 1999
                                                                           ----------------------------------
         Change in interest rate                Board limit                $ change               % change
                (basis points)                   % change                     in NPV                 in NPV
         -----------------------                -----------                ---------              -----------
                                                                                (Dollars in thousands)
<S>                                             <C>                       <C>                     <C>
                  +400                             +40.0%                  $   321                      2.46%
                  +200                             +20.0                       602                      4.63
                    -                                  -                         -                       -
                  -200                             -20.0                    (1,721)                   (13.22)
                  -400                             -40.0                    (3,333)                   (25.60)
</TABLE>
<TABLE>
<CAPTION>
                                                                                       June 30, 1998
                                                                           ----------------------------------
         Change in interest rate                Board limit                $ change               % change
             (basis points)                      % change                    in NPV                 in NPV
         -----------------------                -----------                ---------              -----------
                                                                                (Dollars in thousands)
<S>                                             <C>                       <C>                     <C>
                  +400                             +40.0%                    $(678)                    (4.47)%
                  +200                             +20.0                       100                       .66
                    -                                  -                         -                       -
                  -200                             -20.0                    (1,231)                    (8.12)
                  -400                             -40.0                    (1,574)                   (10.38)
</TABLE>

As with any method of measuring interest rate risk, certain shortcomings are
inherent in the NPV approach. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Also, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Further, in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed securities and
early withdrawal levels from certificates of deposit would likely deviate
significantly from those assumed in making the risk calculations.

                                       16
<PAGE>   17


                         LIQUIDITY AND CAPITAL RESOURCES

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

First Federal's principal sources of funds are deposits, loan and
mortgage-backed securities repayments, maturities of securities and other funds
provided by operations. First Federal also has the ability to borrow from the
FHLB of Cincinnati. While scheduled loan repayments and maturing investments are
relatively predictable, deposit flows and loan and mortgage-backed securities
prepayments are more influenced by interest rates, general economic conditions
and competition. First Federal maintains investments in liquid assets based upon
management's assessment of (i) the need for funds, (ii) expected deposit flows,
(iii) the yields available on short-term liquid assets and (iv) the objectives
of the asset/liability management program.

OTS regulations presently require First Federal to maintain an average daily
balance of investments in United States Treasury securities, federal agency
obligations and certain other investments having maturities of five years or
less in an amount equal to 4% of the sum of First Federal's average daily
balance of net withdrawable deposit accounts and borrowings payable in one year
or less. The liquidity requirement, which may be changed from time to time by
the OTS to reflect changing economic conditions, is intended to provide a source
of relatively liquid funds upon which First Federal may rely, if necessary, to
fund deposit withdrawals or other short-term funding needs. At June 30, 1999,
First Federal's regulatory liquidity ratio was 37.4%. At such date, First
Federal had commitments to originate loans, including unused lines of credit,
totaling $6.0 million and no commitments to purchase or sell loans.

First Federal's liquidity, primarily represented by cash and cash equivalents,
is a result of the funds used in or provided by First Federal's operating,
investing and financing activities. These activities are summarized below for
the years ended June 30, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                         Year ended June 30,
                                                        -----------------------------------------------------
                                                             1999                 1998                 1997
                                                             ----                 ----                 ----
                                                                             (In thousands)

<S>                                                     <C>                      <C>                  <C>
Net earnings                                            $     717                $  982               $1,427
Adjustments to reconcile net earnings to
   net cash from operating activities                        (965)                 (675)                (490)
                                                          -------                ------               ------
Net cash from operating activities                           (248)                  307                  937
Net cash used in investing activities                     (19,213)               (4,706)              (6,814)
Net cash from financing activities                         20,839                 1,952                7,259
                                                          -------                ------               ------
Net change in cash and cash equivalents                     1,378                (2,447)               1,382
Cash and cash equivalents at
   beginning of year                                        1,633                 4,080                2,698
                                                          -------                ------               ------
Cash and cash equivalents at
   end of year                                          $   3,011                $1,633               $4,080
                                                          =======                ======               ======
</TABLE>

First Federal is required by applicable law and regulation to meet certain
minimum capital standards. Such capital standards include a tangible capital
requirement, a core capital requirement, or leverage ratio, and a risk-based
capital requirement.

                                       17
<PAGE>   18

The tangible capital requirement requires savings associations to maintain
"tangible capital" of not less than 1.5% of the association's adjusted total
assets. Tangible capital is defined in OTS regulations as core capital minus any
intangible assets.

"Core capital" is comprised of common shareholders' equity (including retained
earnings), noncumulative preferred stock and related surplus, minority interests
in consolidated subsidiaries, certain nonwithdrawable accounts and pledged
deposits of mutual associations. OTS regulations require savings associations to
maintain core capital of at least 3% of the association's total assets. The OTS
has proposed to increase such requirement to 4% or 5%, except for those
associations with the highest examination rating and acceptable levels of risk.

OTS regulations require that savings associations maintain "risk-based capital"
in an amount not less than 8% of risk-weighted assets. Risk-based capital is
defined as core capital plus certain additional items of capital, which in the
case of First Federal includes a general loan loss allowance of $269,000 at June
30, 1999.

First Federal exceeded all of its capital requirements at June 30, 1999. The
following table summarizes First Federal's regulatory capital requirements and
regulatory capital at June 30, 1999:

<TABLE>
<CAPTION>
                                                                               Excess of regulatory
                                                                               capital over current
                            Regulatory capital        Current requirement          requirement
                            ------------------        -------------------          -----------
                            Amount      Percent       Amount      Percent       Amount     Percent
                            ------      -------       ------      -------       ------     -------
                                                     (Dollars in thousands)

<S>                         <C>         <C>            <C>        <C>           <C>          <C>
Tangible capital            $14,274      12.8%         $1,671      1.5%         $12,603        11.3%
Core capital                 14,274      12.8           3,343      3.0           10,931         9.8
Risk-based capital           14,543      21.5           5,404      8.0            9,139        13.5
</TABLE>

                   EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

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

In June 1997, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." SFAS No. 130 established standards
for reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. It does not require a specific format for that
financial statement but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement.

SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive

                                       18
<PAGE>   19

income separately from retained earnings and additional paid-in capital. SFAS
No. 130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. Management adopted SFAS No. 130 effective July
1, 1998, as required, without material impact on FFD's financial statements.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 significantly changes the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about reportable segments in interim financial reports issued to
shareholders. It also established standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 uses a
"management approach" to disclose financial and descriptive information about
the way that management organizes the segments within the enterprise for making
operating decisions and assessing performance. For many enterprises, the
management approach will likely result in more segments being reported. In
addition, SFAS No. 131 requires significantly more information to be disclosed
for each reportable segment than is presently being reported in annual financial
statements and also requires that selected information be reported in interim
financial statements. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. Management adopted SFAS No. 131 effective July 1, 1998, as
required, without material impact on FFD's financial statements.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires entities to recognize all
derivatives in their financial statements as either assets or liabilities
measured at fair value. SFAS No. 133 also specifies new methods of accounting
for hedging transactions, prescribes the items and transactions that may be
hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.

The definition of a derivative financial instrument is complex, but in general,
it is an instrument with one or more underlyings, such as an interest rate or
foreign exchange rate, that is applied to a notional amount, such as an amount
of currency, to determine the settlement amount(s). It generally requires no
significant initial investment and can be settled net or by delivery of an asset
that is readily convertible to cash. SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.

SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to transfer
held-to-maturity debt securities to the available-for-sale or trading category
without calling into question their intent to hold other debt securities to
maturity in the future. SFAS No. 133 is not expected to have a material impact
on FFD's financial statements.

                                       19

<PAGE>   20


                          YEAR 2000 COMPLIANCE MATTERS

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

As with all providers of financial services, First Federal's operations are
heavily dependent on information technology systems. First Federal has addressed
the potential problems associated with the possibility that the computers that
control or operate the Savings Bank's information technology system and
infrastructure may not be programmed to read four-digit date codes and, upon
arrival of the year 2000, may recognize the two-digit code "00" as the year
1900, causing systems to fail to function or to generate erroneous data.

As part of the awareness and assessment phases of its action plan related to the
Year 2000 problem, management identified its on-line core account processing
system performed by a third party service provider, Intrieve, Inc. ("Intrieve")
as "mission critical." Intrieve has converted its hardware to a new Year 2000
compliant system and First Federal's conversion to this new system was completed
during the fourth calendar quarter of 1998. Intrieve successfully performed Year
2000 proxy testing with several of its larger users during early October 1998
and First Federal performed final testing of its specific equipment
configuration and communications link to Intrieve during November 1998.

First Federal has developed a contingency plan in case any Intrieve systems
actually fail at Year 2000 critical dates. First Federal deems the likelihood of
failure of Intrieve's efforts to renovate Year 2000 changes to the on-line core
account processing system to be remote. The plan, therefore, primarily addresses
action to deal with the possibility that Intrieve's system would be down for
several days or weeks upon arrival of Year 2000. First Federal has the ability
to process transactions manually, if necessary, and through off-line computer
transactions.

First Federal has expended less than $10,000 through June 30, 1999, in
connection with its year 2000 compliance program, and management does not
anticipate additional significant expenditures.

In addition to possible expense related to its own systems, First Federal could
incur losses if loan payments are delayed due to Year 2000 problems affecting
any major borrowers in First Federal's primary market area. Because First
Federal's loan portfolio is highly diversified with regard to individual
borrowers and types of businesses and First Federal's primary market area is not
significantly dependent upon one employer or industry, First Federal does not
expect any significant or prolonged difficulties that will affect net earnings
or cash flow.

                                       20

<PAGE>   21


                         REPORT OF INDEPENDENT CERTIFIED
                             PUBLIC ACCOUNTANTS AND
                        CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

                                    CONTENTS

                                                                PAGE

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS               18


FINANCIAL STATEMENTS

         CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION          19

         CONSOLIDATED STATEMENTS OF EARNINGS                     20

         CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME         21

         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY         22

         CONSOLIDATED STATEMENTS OF CASH FLOWS                   23

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              25

                                       21

<PAGE>   22


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

================================================================================


Board of Directors
FFD Financial Corporation

We have audited the accompanying consolidated statements of financial condition
of FFD Financial Corporation as of June 30, 1999 and 1998, and the related
consolidated statements of earnings, comprehensive income, shareholders' equity
and cash flows for each of the years ended June 30, 1999, 1998 and 1997. These
consolidated financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of FFD Financial
Corporation as of June 30, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the years ended June 30, 1999, 1998
and 1997, in conformity with generally accepted accounting principles.



Cincinnati, Ohio
August 6, 1999

                                       22
<PAGE>   23


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                    June 30,
                        (In thousands, except share data)

<TABLE>
<CAPTION>
         ASSETS                                                                      1999          1998

<S>                                                                            <C>           <C>
Cash and due from banks                                                        $      844    $    1,026
Interest-bearing deposits in other financial institutions                           2,167           607
                                                                               ----------    ----------
         Cash and cash equivalents                                                  3,011         1,633

Investment securities designated as available for sale - at market                  2,924         2,655
Investment securities held to maturity - at cost, approximate market
  value of $993 as of June 30, 1998                                                  --             977
Mortgage-backed securities designated as available for sale - at market            10,978         5,935
Mortgage-backed securities held to maturity - at amortized cost, approximate
  market value of $4,907 and $6,073 as of June 30,
  1999 and 1998                                                                     4,779         5,960
Loans receivable - net                                                             86,417        70,990
Loans held for sale - at lower of cost or market                                      965          --
Office premises and equipment - at depreciated cost                                 1,364         1,383
Stock in Federal Home Loan Bank - at cost                                           1,201           933
Accrued interest receivable                                                           329           279
Prepaid expenses and other assets                                                     209           221
Prepaid federal income taxes                                                          116          --
                                                                               ----------    ----------

         Total assets                                                          $  112,293    $   90,966
                                                                               ==========    ==========

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                       $   72,025    $   61,956
Advances from the Federal Home Loan Bank                                           23,616        12,519
Accrued interest payable                                                              146            94
Other liabilities                                                                     250           258
Accrued federal income taxes                                                         --             197
Deferred federal income taxes                                                          52           117
                                                                               ----------    ----------
         Total liabilities                                                         96,089        75,141

Commitments                                                                          --            --

Shareholders' equity
  Preferred stock - authorized 1,000,000 shares without par
    value; no shares issued                                                          --            --
  Common stock - authorized 5,000,000 shares without par or
    stated value; 1,454,750 shares issued                                            --            --
  Additional paid-in capital                                                        7,798         7,705
  Retained earnings - substantially restricted                                      9,850         9,536
  Unrealized gains (losses) on securities designated as available
    for sale, net of related tax effects                                             (216)          140
  Shares acquired by stock benefit plans                                           (1,207)       (1,411)
  Less 1,334 and 9,400 treasury shares at June 30, 1999 and 1998 - at cost            (21)         (145)
                                                                               ----------    ----------
         Total shareholders' equity                                                16,204        15,825
                                                                               ----------    ----------

         Total liabilities and shareholders' equity                            $  112,293    $   90,966
                                                                               ==========    ==========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       23
<PAGE>   24


                            FFD FINANCIAL CORPORATION

                       CONSOLIDATED STATEMENTS OF EARNINGS

                               Year ended June 30,
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                       1999       1998       1997
<S>                                                                <C>        <C>        <C>
Interest income
  Loans                                                            $  5,567   $  4,766   $  3,807
  Mortgage-backed securities                                            968        927      1,175
  Investment securities                                                 177        319        782
  Interest-bearing deposits and other                                   203        448        116
                                                                   --------   --------   --------
         Total interest income                                        6,915      6,460      5,880

Interest expense
  Deposits                                                            2,984      2,797      2,598
  Borrowings                                                            957        657        503
                                                                   --------   --------   --------
         Total interest expense                                       3,941      3,454      3,101
                                                                   --------   --------   --------

         Net interest income                                          2,974      3,006      2,779

Provision for losses on loans                                          --         --          125
                                                                   --------   --------   --------

         Net interest income after provision for losses on loans      2,974      3,006      2,654

Other income
  Gain on sale of loans                                                 108       --         --
  Gain on sale of investment securities designated
    as available for sale                                               210        441      1,284
  Gain on sale of real estate acquired through foreclosure             --         --            2
  Other operating                                                       110         84         51
                                                                   --------   --------   --------
         Total other income                                             428        525      1,337

General, administrative and other expense
  Employee compensation and benefits                                  1,117      1,034        777
  Occupancy and equipment                                               237        193        118
  Franchise taxes                                                       266        213        144
  Federal deposit insurance premiums                                     38         34        394
  Data processing                                                       182        109         75
  Other operating                                                       477        461        351
                                                                   --------   --------   --------
         Total general, administrative and other expense              2,317      2,044      1,859
                                                                   --------   --------   --------

         Earnings before income taxes                                 1,085      1,487      2,132

Federal income taxes
  Current                                                               249        311        769
  Deferred                                                              119        194        (64)
                                                                   --------   --------   --------
         Total federal income taxes                                     368        505        705
                                                                   --------   --------   --------

         NET EARNINGS                                              $    717   $    982   $  1,427
                                                                   ========   ========   ========

         EARNINGS PER SHARE
           Basic                                                   $    .53   $    .73   $   1.07
                                                                   ========   ========   ========

           Diluted                                                 $    .51   $    .71   $   1.06
                                                                   ========   ========   ========
</TABLE>


The accompanying notes are an integral part of these statements.

                                       24
<PAGE>   25


                            FFD FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                          For the years ended June 30,
                                 (In thousands)


<TABLE>
<CAPTION>
                                                        1999        1998        1997

<S>                                                 <C>         <C>         <C>
Net earnings                                        $    717    $    982    $  1,427

Other comprehensive income, net of tax:
  Unrealized holding gains (losses) on securities
    during the period, net of tax                       (217)        411         281

Reclassification adjustment for realized gains
  included in earnings, net of tax of $71, $150
  and $437 in 1999, 1998 and 1997, respectively         (139)       (291)       (847)
                                                    --------    --------    --------

Comprehensive income                                $    361    $  1,102    $    861
                                                    ========    ========    ========

Accumulated comprehensive income (loss)             $   (216)   $    140    $     20
                                                    ========    ========    ========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       25
<PAGE>   26


                            FFD FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                For the years ended June 30, 1999, 1998 and 1997
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                     UNREALIZED
                                                                              SHARES             GAINS (LOSSES)
                                                                         ACQUIRED BY              ON SECURITIES
                                                               ADDITIONAL      STOCK    TREASURY     DESIGNATED
                                                      COMMON      PAID-IN    BENEFIT     SHARES-   AS AVAILABLE  RETAINED
                                                       STOCK      CAPITAL      PLANS     AT COST       FOR SALE  EARNINGS     TOTAL

<S>                                                  <C>        <C>         <C>         <C>         <C>         <C>        <C>
Balance at July 1, 1996                              $   --     $ 14,132    $ (1,164)   $   --      $    586    $  7,857   $ 21,411

Net earnings for the year ended June 30, 1997            --         --          --          --          --         1,427      1,427
Purchase of shares for stock benefit plan                --         --          (494)       --          --          --         (494)
Amortization of stock benefit plan expense               --            5          24        --          --          --           29
Realized gain on securities designated as available
  for sale, net of related tax effects                   --         --          --          --          (566)       --         (566)
Dividends of $.225 per share                             --         --          --          --          --          (327)      (327)
                                                     --------   --------    --------    --------    --------    --------   --------

Balance at June 30, 1997                                 --       14,137      (1,634)       --            20       8,957     21,480

Net earnings for the year ended June 30, 1998            --         --          --          --          --           982        982
Purchase of treasury shares                              --         --          --          (154)       --          --         (154)
Amortization of stock benefit plan expense               --           71         223        --          --          --          294
Unrealized gain on securities designated as available
  for sale, net of related tax effects                   --         --          --          --           120        --          120
Exercise of stock options                                --            1        --             9        --          --           10
Capital distribution of $4.50 per share                  --       (6,504)       --          --          --          --       (6,504)
Dividends of $.30 per share                              --         --          --          --          --          (403)      (403)
                                                     --------   --------    --------    --------    --------    --------   --------

Balance at June 30, 1998                                 --        7,705      (1,411)       (145)        140       9,536     15,825

Net earnings for the year ended June 30, 1999            --         --          --          --          --           717        717
Amortization of stock benefit plan expense               --          141         204        --          --          --          345
Unrealized loss on securities designated as available
  for sale, net of related tax effects                   --         --          --          --          (356)       --         (356)
Exercise of stock options                                --          (48)       --           124        --          --           76
Dividends of $.30 per share                              --         --          --          --          --          (403)      (403)
                                                     --------   --------    --------    --------    --------    --------   --------

Balance at June 30, 1999                             $   --     $  7,798    $ (1,207)   $    (21)   $   (216)   $  9,850   $ 16,204
                                                     ========   ========    ========    ========    ========    ========   ========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       26
<PAGE>   27


                            FFD FINANCIAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                               Year ended June 30,
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                       1999        1998        1997
<S>                                                                <C>         <C>         <C>
Cash flows from operating activities:
  Net earnings for the year                                        $    717    $    982    $  1,427
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Amortization of premiums and discounts
      on investments and mortgage-backed securities - net                53          33         (13)
    Amortization of deferred loan origination fees                      (57)        (73)        (66)
    Gain on sale of loans                                               (46)       --          --
    Loans originated for sale in the secondary market                (8,398)       --          --
    Proceeds from sale of mortgage loans in the secondary market      7,479        --          --
    Depreciation and amortization                                       131         109          61
    Gain on sale of investment and mortgage-backed
      securities designated as available for sale                      (210)       (441)     (1,284)
    Provision for losses on loans                                      --          --           125
    Amortization of stock benefit plan expense                          345         294          29
    Federal Home Loan Bank stock dividends                              (74)        (55)        (44)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                       (50)        (12)         16
      Prepaid expenses and other assets                                  12         (81)       --
      Other liabilities                                                  (8)        (82)        136
      Accrued interest payable                                           52          12          45
      Federal income taxes
        Current                                                        (313)       (573)        569
        Deferred                                                        119         194         (64)
                                                                   --------    --------    --------
         Net cash provided by (used in) operating activities           (248)        307         937

Cash flows provided by (used in) investing activities:
  Purchase of investment securities designated as available
    for sale                                                         (3,000)     (6,947)    (15,391)
  Purchase of investment securities designated as
    held to maturity                                                   --        (1,244)       --
  Proceeds from maturity of investment securities                     3,477      10,157      13,648
  Proceeds from sale of investment securities designated
    as available for sale                                               212       6,430       2,372
  Purchase of mortgage-backed securities designated
    as held to maturity                                                --          --        (2,528)
  Purchase of mortgage-backed securities designated
    as available for sale                                            (9,633)       --        (4,737)
  Principal repayments on mortgage-backed securities                  5,407       3,174       3,257
  Proceeds from sale of mortgage-backed securities
    designated as available for sale                                   --          --         3,970
  Purchase of Federal Home Loan Bank stock                             (194)       (236)       --
  Loan principal repayments                                          17,172      13,826      10,049
  Loan disbursements                                                (32,542)    (29,239)    (17,073)
  Purchase of office premises and equipment                            (115)       (627)       (381)
  Proceeds from sale of office premises and equipment                     3        --          --
                                                                   --------    --------    --------
         Net cash used in investing activities                      (19,213)     (4,706)     (6,814)
                                                                   --------    --------    --------

         Net cash used in operating and investing
           activities (subtotal carried forward)                    (19,461)     (4,399)     (5,877)
                                                                   --------    --------    --------
</TABLE>

                                       27
<PAGE>   28


                            FFD FINANCIAL CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                               Year ended June 30,
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       1999        1998        1997

<S>                                                                                <C>         <C>         <C>
         Net cash used in operating and investing
           activities (subtotal brought forward)                                   $(19,461)   $ (4,399)   $ (5,877)

Cash flows provided by (used in) financing activities:
  Net increase in deposit accounts                                                   10,069       4,866       4,882
  Proceeds from Federal Home Loan Bank advances                                      11,133      11,950       8,900
  Repayments of Federal Home Loan Bank advances                                         (36)     (7,813)     (5,702)
  Proceeds from exercise of stock options                                                76          10        --
  Purchase of shares for stock benefit plans                                           --          --          (494)
  Purchase of treasury shares                                                          --          (154)       --
  Cash distributions paid on common stock                                              (403)     (6,907)       (327)
                                                                                   --------    --------    --------
         Net cash provided by financing activities                                   20,839       1,952       7,259
                                                                                   --------    --------    --------

Net increase (decrease) in cash and cash equivalents                                  1,378      (2,447)      1,382

Cash and cash equivalents at beginning of year                                        1,633       4,080       2,698
                                                                                   --------    --------    --------

Cash and cash equivalents at end of year                                           $  3,011    $  1,633    $  4,080
                                                                                   ========    ========    ========


Supplemental disclosure of cash flow information: Cash paid during the year for:
    Federal income taxes                                                           $    182    $    819    $    116
                                                                                   ========    ========    ========

    Interest on deposits and borrowings                                            $  3,889    $  3,442    $  3,056
                                                                                   ========    ========    ========


Supplemental disclosure of noncash investing activities:
  Unrealized gains (losses) on securities designated as
    available for sale, net of applicable tax effects                              $   (356)   $    120    $   (566)
                                                                                   ========    ========    ========

  Recognition of mortgage servicing rights in accordance
    with SFAS No. 125                                                              $     62    $   --      $   --
                                                                                   ========    ========    ========
</TABLE>


The accompanying notes are an integral part of these statements.

                                       28

<PAGE>   29


                            FFD FINANCIAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    FFD Financial Corporation (the "Corporation") is a savings and loan holding
    company whose activities are primarily limited to holding the stock of First
    Federal Savings Bank of Dover (the "Savings Bank"). The Savings Bank
    conducts a general banking business in north central Ohio which consists of
    attracting deposits from the general public and applying those funds to the
    origination of loans for residential, consumer and nonresidential purposes.
    The Savings Bank's profitability is significantly dependent on net interest
    income, which is the difference between interest income generated from
    interest-earning assets (i.e. loans and investments) and the interest
    expense paid on interest-bearing liabilities (i.e. customer deposits and
    borrowed funds). Net interest income is affected by the relative amount of
    interest-earning assets and interest-bearing liabilities and the interest
    received or paid on these balances. The level of interest rates paid or
    received by the Savings Bank can be significantly influenced by a number of
    environmental factors, such as governmental monetary policy, that are
    outside of management's control.

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

    A summary of significant accounting policies which have been consistently
    applied in the preparation of the accompanying consolidated financial
    statements follows:

    1.  Principles of Consolidation
        ---------------------------

    The accompanying consolidated financial statements include the accounts of
    the Corporation, the Savings Bank, and its wholly-owned subsidiary, Dover
    Service Corporation ("Dover"). At June 30, 1999 and 1998, Dover's principal
    assets consisted of an investment in the stock of the Savings Bank's data
    processor and a deposit account in the Savings Bank. All intercompany
    balances and transactions have been eliminated in the accompanying
    consolidated financial statements.

    2.  Investment Securities and Mortgage-backed Securities
        ----------------------------------------------------

    The Corporation accounts for investment and mortgage-backed securities in
    accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
    "Accounting for Certain Investments in Debt and Equity Securities". SFAS No.
    115 requires that investments be categorized as held-to-maturity, trading,
    or available for sale. Securities classified as held-to-maturity are carried
    at cost only if the Corporation has the positive intent and ability to hold
    these securities to maturity. Trading securities and securities designated
    as available for sale are carried at fair value with resulting unrealized
    gains or losses recorded to operations or shareholders' equity,
    respectively. At June 30, 1999, the Corporation's shareholders' equity
    reflected a net unrealized loss on securities designated as available for
    sale totaling $216,000, while at June 30, 1998, the Corporation's
    shareholders' equity reflected a net unrealized gain of $140,000.

                                       29
<PAGE>   30


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.  Investment Securities and Mortgage-backed Securities (continued)
        ----------------------------------------------------

    Realized gains and losses on sales of securities are recognized using the
    specific identification method.

    3.  Loans Receivable
        ----------------

    Loans are stated at the principal balance outstanding, reduced by deferred
    loan origination fees and the allowance for loan losses. Interest is accrued
    as earned unless the collectibility of the loan is in doubt. Interest on
    loans that are contractually past due is charged off, or an allowance is
    established based on management's periodic evaluation. The allowance is
    established by a charge to interest income equal to all interest previously
    accrued, and income is subsequently recognized only to the extent that cash
    payments are received until, in management's judgment, the borrower's
    ability to make periodic interest and principal payments has returned to
    normal, in which case the loan is returned to accrual status. If the
    ultimate collectibility of the loan is in doubt, in whole or in part, all
    payments received on nonaccrual loans are applied to reduce principal until
    such doubt is eliminated.

    Loans held for sale are carried at the lower of cost or market, determined
    in the aggregate. In computing cost, deferred loan origination fees are
    deducted from the principal balances of the related loan. At June 30, 1999,
    loans held for sale were carried at cost.

    The Savings Bank retains the servicing on loans sold and agrees to remit to
    the investor loan principal and interest at agreed-upon rates. The Savings
    Bank recognizes rights to service mortgage loans for others pursuant to SFAS
    No. 125, "Accounting for Transfers and Servicing of Financial Assets and
    Extinguishments of Liabilities." In accordance with SFAS No. 125, an
    institution that acquires mortgage servicing rights through either the
    purchase or origination of mortgage loans and sells those loans with
    servicing rights retained would allocate some of the cost of the loans to
    the mortgage servicing rights.

    SFAS No. 125 requires that capitalized mortgage servicing rights and
    capitalized excess servicing receivables be assessed for impairment.
    Impairment is measured based on fair value.

    The Savings Bank recognized $62,000 of pre-tax gains on sales of loans
    related to capitalized mortgage servicing rights during the fiscal year
    ended June 30, 1999.

                                       30


<PAGE>   31


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    3.  Loans Receivable (continued)
        ----------------

    The mortgage servicing rights recorded by the Savings Bank, calculated in
    accordance with the provisions of SFAS No. 125, were segregated into pools
    for valuation purposes, using as pooling criteria the loan term and coupon
    rate. Once pooled, each grouping of loans was evaluated on a discounted
    earnings basis to determine the present value of future earnings that a
    purchaser could expect to realize from each portfolio. Earnings were
    projected from a variety of sources including loan servicing fees, interest
    earned on float, net interest earned on escrows, miscellaneous income, and
    costs to service the loans. The present value of future earnings is the
    "economic" value for the pool, i.e., the net realizable present value to an
    acquirer of the acquired servicing.

    The Savings Bank recorded amortization related to mortgage servicing rights
    totaling approximately $5,000 for the year ended June 30, 1999.

    4.  Loan Origination Fees
        ---------------------

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

    5.  Allowance for Loan Losses
        -------------------------

    It is the Savings Bank's policy to provide valuation allowances for
    estimated losses on loans based on past loan loss experience, changes in the
    composition of the loan portfolio, trends in the level of delinquent and
    problem loans, adverse situations that may affect the borrower's ability to
    repay, the estimated value of any underlying collateral and current and
    anticipated economic conditions in the primary lending area. When the
    collection of a loan becomes doubtful, or otherwise troubled, the Savings
    Bank records a charge-off equal to the difference between the fair value of
    the property securing the loan and the loan's carrying value. Major loans
    and major lending areas are reviewed periodically to determine potential
    problems at an early date. The allowance for loan losses is increased by
    charges to earnings and decreased by charge-offs (net of recoveries).

                                       31

<PAGE>   32


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    5.  Allowance for Loan Losses (continued)
        -------------------------

    The Savings Bank accounts for impaired loans in accordance with SFAS No.
    114, "Accounting by Creditors for Impairment of a Loan," which requires that
    impaired loans be measured based upon the present value of expected future
    cash flows discounted at the loan's effective interest rate or, as an
    alternative, at the loan's observable market price or fair value of the
    collateral if the loan is collateral dependent.

    A loan is defined under SFAS No. 114 as impaired when, based on current
    information and events, it is probable that a creditor will be unable to
    collect all amounts due according to the contractual terms of the loan
    agreement. In applying the provisions of SFAS No. 114, the Savings Bank
    considers its investment in one- to four-family residential loans and
    consumer installment loans to be homogeneous and therefore excluded from
    separate identification for evaluation of impairment. With respect to the
    Savings Bank's investment in impaired nonresidential, commercial and
    multi-family residential real estate loans, such loans are generally
    collateral dependent and, as a result, are carried as a practical expedient
    at the lower of cost or fair value.

    Collateral dependent loans which are more than ninety days delinquent are
    considered to constitute more than a minimum delay in repayment and are
    evaluated for impairment under SFAS No. 114 at that time.

    At June 30, 1999 and 1998, the Savings Bank had no loans that would be
    defined as impaired under SFAS No. 114.

    6.  Real Estate Acquired through Foreclosure
        ----------------------------------------

    Real estate acquired through foreclosure is carried at the lower of the
    loan's unpaid principal balance (cost) or fair value less estimated selling
    expenses at the date of acquisition. Real estate loss provisions are
    recorded if the properties' fair value subsequently declines below the value
    determined at the recording date. In determining the lower of cost or fair
    value at acquisition, costs relating to development and improvement of
    property are capitalized. Costs relating to holding real estate acquired
    through foreclosure, net of rental income, are charged against earnings as
    incurred.

    7.  Office Premises and Equipment
        -----------------------------

    Office premises and equipment are carried at cost and include expenditures
    which extend the useful lives of existing assets. Maintenance, repairs and
    minor renewals are expensed as incurred. For financial reporting,
    depreciation and amortization are provided on the straight-line method over
    the useful lives of the assets, estimated to be between twenty and thirty
    years for the building, ten to thirty years for building improvements and
    five to ten years for furniture and equipment. An accelerated method is used
    for tax reporting purposes.

                                       32
<PAGE>   33


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    8.  Federal Income Taxes
        --------------------

    The Corporation accounts for federal income taxes pursuant to SFAS No. 109,
    "Accounting for Income Taxes". In accordance with SFAS No. 109, a deferred
    tax liability or deferred tax asset is computed by applying the current
    statutory tax rates to net taxable or deductible temporary differences
    between the tax basis of an asset or liability and its reported amount in
    the consolidated financial statements that will result in net taxable or
    deductible amounts in future periods. Deferred tax assets are recorded only
    to the extent that the amount of net deductible temporary differences or
    carryforward attributes may be utilized against current period earnings,
    carried back against prior years' earnings, offset against taxable temporary
    differences reversing in future periods, or utilized to the extent of
    management's estimate of future taxable income. A valuation allowance is
    provided for deferred tax assets to the extent that the value of net
    deductible temporary differences and carryforward attributes exceeds
    management's estimates of taxes payable on future taxable income. Deferred
    tax liabilities are provided on the total amount of net temporary
    differences taxable in the future.

    The Corporation's principal temporary differences between pretax financial
    income and taxable income result primarily from the different methods of
    accounting for deferred loan origination fees, Federal Home Loan Bank stock
    dividends, general loan loss allowances, percentage of earnings bad debt
    deductions and certain components of retirement expense. A temporary
    difference is also recognized for depreciation expense computed using
    accelerated methods for federal income tax purposes.

    In fiscal 1996, the Savings Bank filed a deconsolidation request with the
    Internal Revenue Service ("IRS") pursuant to an available Revenue Procedure.
    In August 1998, management was authorized to enter into a closing agreement
    with the IRS regarding such deconsolidation request. As a result, the
    Corporation, the Savings Bank and Dover will file separate federal tax
    returns and will be individually responsible for their separate corporate
    tax liabilities.

    9.  Benefit Plans
        -------------

    The Corporation has an Employee Stock Ownership Plan ("ESOP"), which
    provides retirement benefits for substantially all employees who have
    completed one year of service and have attained the age of 21. The
    Corporation accounts for the ESOP in accordance with Statement of Position
    ("SOP") 93-6, "Employers' Accounting for Employee Stock Ownership Plans".
    SOP 93-6 requires the measure of compensation expense recorded by employers
    to equal the fair value of ESOP shares allocated to participants during a
    fiscal year. Expense recognized related to the ESOP totaled approximately
    $261,000, $228,000 and $120,000 for the fiscal years ended June 30, 1999,
    1998 and 1997, respectively.

                                       33
<PAGE>   34


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    9.  Benefit Plans (continued)
        -------------

    Additionally, during fiscal 1997, the Corporation adopted the First Federal
    Savings Bank of Dover Recognition and Retention Plan ("RRP"). The Savings
    Bank funded the RRP through the purchase of 40,600 shares of the
    Corporation's common stock in the open market. The Corporation has awarded
    29,300 shares under the RRP which vest over a five year period. A provision
    of $110,000, $109,000 and $61,000 related to the RRP was charged to expense
    for the fiscal years ended June 30, 1999, 1998 and 1997, respectively.

    10.  Earnings Per Share and Cash Distributions Per Share
         ---------------------------------------------------

    Basic earnings per share is computed based upon weighted-average common
    shares outstanding less shares in the ESOP which are unallocated and not
    committed to be released. Weighted-average shares outstanding, which gives
    effect to a reduction for 92,356, 106,515 and 114,044 unallocated shares
    held by the ESOP, totaled 1,355,501, 1,340,049 and 1,340,706 for the fiscal
    years ended June 30, 1999, 1998 and 1997, respectively.

    Diluted earnings per share is computed taking into consideration common
    shares outstanding and dilutive potential common shares to be issued under
    the Corporation's stock option plan. Weighted-average common shares deemed
    outstanding for purposes of computing diluted earnings per share totaled
    1,397,814, 1,376,664 and 1,345,995 for the fiscal years ended June 30, 1999,
    1998 and 1997, respectively. Incremental shares related to the assumed
    exercise of stock options included in the computation of diluted earnings
    per share totaled 42,313, 36,615 and 5,289 for the fiscal years ended June
    30, 1999, 1998 and 1997, respectively.

    During fiscal 1998, the Corporation paid cash distributions of $4.80 per
    share. Of these distributions, management deemed $4.50 per share as a return
    of capital, charging such amount to additional paid-in capital in the 1998
    consolidated financial statements. The remaining $.30 of the fiscal 1998
    distribution was accounted for as a normal quarterly cash dividend.

    11.  Cash and Cash Equivalents
         -------------------------

    For purposes of reporting cash flows, cash and cash equivalents include cash
    and due from banks and interest-bearing deposits in other financial
    institutions with original terms to maturity of less than ninety days.

                                       34
<PAGE>   35


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    12.  Fair Value of Financial Instruments
         -----------------------------------

    SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
    requires disclosure of fair value of financial instruments, both assets and
    liabilities, whether or not recognized in the consolidated statement of
    financial condition, for which it is practicable to estimate that value. For
    financial instruments where quoted market prices are not available, fair
    values are based on estimates using present value and other valuation
    methods.

    The methods used are greatly affected by the assumptions applied, including
    the discount rate and estimates of future cash flows. Therefore, the fair
    values presented may not represent amounts that could be realized in an
    exchange for certain financial instruments.

    The following methods and assumptions were used by the Corporation in
    estimating its fair value disclosures for financial instruments at June 30,
    1999 and 1998:

                  CASH AND CASH EQUIVALENTS: The carrying amounts presented in
                  the consolidated statements of financial condition for cash
                  and cash equivalents are deemed to approximate fair value.

                  INVESTMENT AND MORTGAGE-BACKED SECURITIES: For investment and
                  mortgage-backed securities, fair value is deemed to equal the
                  quoted market price.

                  LOANS RECEIVABLE: The loan portfolio has been segregated into
                  categories with similar characteristics, such as one- to
                  four-family residential, multi-family residential and
                  nonresidential real estate. These loan categories were further
                  delineated into fixed-rate and adjustable-rate loans. The fair
                  values for the resultant loan categories were computed via
                  discounted cash flow analysis, using current interest rates
                  offered for loans with similar terms to borrowers of similar
                  credit quality. For loans on deposit accounts and consumer and
                  other loans, fair values were deemed to equal the historic
                  carrying values. The historical carrying amount of accrued
                  interest on loans is deemed to approximate fair value.

                  FEDERAL HOME LOAN BANK STOCK: The carrying amount presented in
                  the consolidated statements of financial condition is deemed
                  to approximate fair value.

                  DEPOSITS: The fair value of NOW accounts, passbook and club
                  accounts, and money market deposits is deemed to approximate
                  the amount payable on demand. Fair values for fixed-rate
                  certificates of deposit have been estimated using a discounted
                  cash flow calculation using the interest rates currently
                  offered for deposits of similar remaining maturities.

                                       35

<PAGE>   36


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    12.  Fair Value of Financial Instruments (continued)
         -----------------------------------

                  ADVANCES FROM THE FEDERAL HOME LOAN BANK: The fair value of
                  these advances is estimated using the rates currently offered
                  for similar advances of similar remaining maturities or, when
                  available, quoted market prices.

                  COMMITMENTS TO EXTEND CREDIT: For fixed-rate and
                  adjustable-rate loan commitments, the fair value estimate
                  considers the difference between current levels of interest
                  rates and committed rates. The difference between the fair
                  value and notional amount of outstanding loan commitments at
                  June 30, 1999 and 1998 were not material.

    Based on the foregoing methods and assumptions, the carrying value and fair
    value of the Corporation's financial instruments at June 30 are as follows:

<TABLE>
<CAPTION>
                                                                         1999                               1998
                                                               CARRYING         FAIR              CARRYING         FAIR
                                                                  VALUE        VALUE                 VALUE        VALUE
                                                                                    (In thousands)
<S>                                                          <C>          <C>                     <C>          <C>
    Financial assets
      Cash and cash equivalents                              $    3,011   $    3,011              $  1,633     $  1,633
      Investment securities                                       2,924        2,924                 3,632        3,648
      Mortgage-backed securities                                 15,757       15,885                11,895       12,008
      Loans receivable                                           87,382       87,537                70,990       71,595
      Federal Home Loan Bank stock                                1,201        1,201                   933          933
                                                               --------     --------               -------       ------

                                                              $ 110,275    $ 110,558              $ 89,083     $ 89,817
                                                               ========     ========                ======       ======

    Financial liabilities
      Deposits                                                $  72,025    $  72,519              $ 61,956     $ 63,017
      Advances from the Federal Home Loan Bank                   23,616       23,598                12,519       12,519
                                                               --------     --------                ------       ------

                                                              $  95,641    $  96,117              $ 74,475     $ 75,536
                                                               ========     ========                ======       ======
</TABLE>

    13.  Comprehensive Income
         --------------------

    The Corporation adopted SFAS No. 130, "Reporting Comprehensive Income," as
    of July 1, 1998. The Statement established standards for reporting and
    presentation of comprehensive income and its components in a full set of
    general-purpose financial statements. It requires that all items that are
    required to be recognized under accounting standards as components of
    comprehensive income be reported in a financial statement that is presented
    with the same prominence as other financial statements. SFAS No. 130
    requires that companies (i) classify items of other comprehensive income by
    their nature in a financial statement and (ii) display the accumulated
    balance of other comprehensive income separately from retained earnings and
    additional paid-in capital. Financial statements for earlier periods have
    been restated for comparative purposes. Accumulated comprehensive income
    consists solely of the change in unrealized gains/losses on securities
    designated as available for sale in accordance with SFAS No. 115.

                                       36
<PAGE>   37


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    14.  Reclassifications
         -----------------

    Certain prior year amounts have been reclassified to conform to the 1999
    consolidated financial statement presentation.


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES

    The amortized cost, gross unrealized gains, gross unrealized losses, and
    estimated fair values of investment securities at June 30, 1999 and 1998,
    are as follows:

<TABLE>
<CAPTION>
                                                                                     JUNE 30, 1999
                                                                               GROSS               GROSS      ESTIMATED
                                                            AMORTIZED     UNREALIZED          UNREALIZED           FAIR
                                                                 COST          GAINS              LOSSES          VALUE
                                                                                     (In thousands)
<S>                                                            <C>              <C>                <C>           <C>
    AVAILABLE FOR SALE:
      U.S. Government agency obligations                       $3,000           $ -                $  76         $2,924
                                                                =====            ===                ====          =====
</TABLE>
<TABLE>
<CAPTION>
                                                                                     JUNE 30, 1998
                                                                               GROSS               GROSS      ESTIMATED
                                                            AMORTIZED     UNREALIZED          UNREALIZED           FAIR
                                                                 COST          GAINS              LOSSES          VALUE
                                                                                     (In thousands)
<S>                                                           <C>              <C>                   <C>        <C>
    HELD TO MATURITY:
      U.S. Government agency obligations                       $  977          $  16                 $-          $  993

    AVAILABLE FOR SALE:
      U.S. Government and agency
        obligations                                             2,496              2                  -           2,498
      Federal Home Loan Mortgage
        Corporation stock                                           3            154                  -             157
                                                                -----            ---                  --         ------
         Total available for sale                               2,499            156                  -           2,655
                                                                -----            ---                  --          -----

         Total investment securities                           $3,476           $172                 $-          $3,648
                                                                =====            ===                  ==          =====
</TABLE>

    The amortized cost and estimated fair value of U. S. Government agency
    obligations designated as available for sale, at June 30, 1999, by term to
    maturity are shown below.

<TABLE>
<CAPTION>
                                                                                                              ESTIMATED
                                                                                            AMORTIZED              FAIR
                                                                                                 COST             VALUE
                                                                                                      (In thousands)

<S>                                                                                            <C>               <C>
    Due after one year through five years                                                      $2,000            $1,957
    Due after ten years through twenty years                                                    1,000               967
                                                                                                -----            ------

                                                                                               $3,000            $2,924
                                                                                                =====             =====
</TABLE>

                                       37

<PAGE>   38


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

    The amortized cost, gross unrealized gains, gross unrealized losses and
    estimated fair value of mortgage-backed securities at June 30, 1999 and
    1998, are shown below:

<TABLE>
<CAPTION>
                                                                                          1999
                                                                                 GROSS             GROSS      ESTIMATED
                                                            AMORTIZED       UNREALIZED        UNREALIZED           FAIR
                                                                 COST            GAINS            LOSSES          VALUE
                                                                                      (In thousands)
<S>                                                          <C>                  <C>            <C>            <C>
    HELD TO MATURITY:
      Federal Home Loan Mortgage
        Corporation participation certificates               $  4,300             $102           $    (1)       $ 4,401
      Government National Mortgage
        Association participation certificates                    479               27                -             506
                                                               ------             ----                --         ------
         Total mortgage-backed securities
           held to maturity                                     4,779              129                (1)         4,907

    AVAILABLE FOR SALE:
      Federal National Mortgage
        Association participation certificates                  8,256               -               (246)         8,010
      Federal Home Loan Mortgage
        Corporation participation certificates                    265               -                 (1)           264
      Government National Mortgage
        Association participation certificates                  2,709               -                 (5)         2,704
                                                               ------               --              ----         ------
         Total mortgage-backed securities
           available for sale                                  11,230               -               (252)        10,978
                                                               ------               --              ----         ------

         Total mortgage-backed securities                     $16,009             $129             $(253)       $15,885
                                                               ======              ===              ====         ======
</TABLE>
<TABLE>
<CAPTION>
                                                                                          1998
                                                                                 GROSS             GROSS      ESTIMATED
                                                            AMORTIZED       UNREALIZED        UNREALIZED           FAIR
                                                                 COST            GAINS            LOSSES          VALUE
                                                                                      (In thousands)
<S>                                                          <C>                 <C>              <C>           <C>
    HELD TO MATURITY:
      Federal Home Loan Mortgage
        Corporation participation certificates               $  5,367            $  98            $   (2)       $ 5,463
      Government National Mortgage
        Association participation certificates                    593               17                -             610
                                                               ------              ---                --         ------
         Total mortgage-backed securities
           held to maturity                                     5,960              115                (2)         6,073

    AVAILABLE FOR SALE:
      Federal National Mortgage
        Association participation certificates                  5,348               45                -           5,393
      Federal Home Loan Mortgage
        Corporation participation certificates                    531               11                -             542
                                                               ------              ---                --         ------
         Total mortgage-backed securities
           available for sale                                   5,879               56                -           5,935
                                                               ------              ---                --         ------

         Total mortgage-backed securities                     $11,839             $171            $   (2)       $12,008
                                                               ======              ===             =====         ======
</TABLE>

                                       38

<PAGE>   39


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

    The amortized cost of mortgage-backed securities, including those designated
    as available for sale at June 30, 1999, by contractual term to maturity are
    shown below. Expected maturities will differ from contractual maturities
    because borrowers may generally prepay obligations without prepayment
    penalties.

<TABLE>
<CAPTION>
                                                                                                     AMORTIZED
                                                                                                          COST
                                                                                                (In thousands)

<S>                                                                                                   <C>
    Due within ten years                                                                              $  3,469
    Due after ten years                                                                                 12,540
                                                                                                        ------

                                                                                                       $16,009
                                                                                                        ======
</TABLE>

NOTE C - LOANS RECEIVABLE

    The composition of the loan portfolio at June 30 is as follows:
<TABLE>
<CAPTION>
                                                                                           1999           1998
                                                                                              (In thousands)
<S>                                                                                     <C>            <C>
    Residential real estate
      One- to four-family                                                               $65,103        $63,582
      Multi-family                                                                          721          1,058
    Nonresidential real estate and land                                                  18,652          6,722
    Consumer and other loans                                                              3,912          1,263
                                                                                         ------         ------
                                                                                         88,388         72,625
    Less:
      Undisbursed portion of loans in process                                             1,560          1,079
      Deferred loan origination fees                                                        142            286
      Allowance for losses on loans                                                         269            270
                                                                                         ------         ------

                                                                                        $86,417        $70,990
                                                                                         ======         ======
</TABLE>

    The Savings Bank's lending efforts have historically focused on one- to
    four-family and multi-family residential real estate loans, which comprise
    approximately $64.3 million, or 74%, of the total loan portfolio at June 30,
    1999, and approximately $63.6 million, or 90%, of the total loan portfolio
    at June 30, 1998. Generally, such loans have been underwritten on the basis
    of no more than an 80% loan-to-value ratio, which has historically provided
    the Savings Bank with adequate collateral coverage in the event of default.
    Nevertheless, the Savings Bank, as with any lending institution, is subject
    to the risk that real estate values could deteriorate in its primary lending
    area of north central Ohio, thereby impairing collateral values. However,
    management is of the belief that real estate values in the Savings Bank's
    primary lending area are presently stable.

    In the ordinary course of business, the Savings Bank has made loans to some
    of its directors and officers and their related business interests. In the
    opinion of management, such loans are consistent with sound lending
    practices and are within applicable regulatory lending limitations. The
    balance of such loans totaled approximately $444,000 and $423,000 at June
    30, 1999 and 1998, respectively.

                                       39
<PAGE>   40


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE D - ALLOWANCE FOR LOAN LOSSES

    The activity in the allowance for loan losses is summarized as follows for
    the years ended June 30:

<TABLE>
<CAPTION>
                                                                            1999           1998           1997
                                                                                      (In thousands)

<S>                                                                         <C>            <C>            <C>
    Beginning balance                                                       $270           $270           $146
    Provision for losses on loans                                             -              -             125
    Loan charge-offs                                                          (1)            -              (1)
                                                                             ---            ---            ---

    Ending balance                                                          $269           $270           $270
                                                                             ===            ===            ===
</TABLE>

    As of June 30, 1999, the Savings Bank's allowance for loan losses was
    comprised solely of a general loan loss allowance, which is includible as a
    component of regulatory risk-based capital.

    Nonperforming and nonaccrual loans at June 30, 1999, 1998 and 1997, totaled
    $15,000, $82,000 and $64,000, respectively. Interest income that would have
    been recognized had nonaccrual loans performed pursuant to contractual terms
    totaled approximately $1,000, $2,000 and $2,000 for the years ended June 30,
    1999, 1998 and 1997, respectively.


NOTE E - OFFICE PREMISES AND EQUIPMENT

    Office premises and equipment at June 30 is comprised of the following:

<TABLE>
<CAPTION>
                                                                                           1999           1998
                                                                                              (In thousands)

<S>                                                                                      <C>            <C>
    Land                                                                                 $  323         $  323
    Buildings and improvements                                                              836            833
    Furniture and equipment                                                                 579            483
                                                                                          -----          -----
                                                                                          1,738          1,639
      Less accumulated depreciation and
        amortization                                                                        374            256
                                                                                          -----          -----

                                                                                         $1,364         $1,383
                                                                                          =====          =====
</TABLE>

                                       40
<PAGE>   41


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE F - DEPOSITS

    Deposits consist of the following major classifications at June 30:

<TABLE>
<CAPTION>
    DEPOSIT TYPE AND WEIGHTED-
    AVERAGE INTEREST RATE                                                1999                           1998
                                                               AMOUNT          %                  AMOUNT         %
                                                                              (Dollars in thousands)
<S>                                                      <C>               <C>                 <C>          <C>
    NOW accounts
      1999 - 0.90%                                           $  8,290        11.5%
      1998 - 1.62%                                                                              $  5,954          9.6%
    Passbook
      1999 - 3.54%                                             22,557        31.3
      1998 - 3.86%                                                                                18,955         30.6
                                                             --------       -----                 ------       ------
    Total demand, transaction and
      passbook deposits                                        30,847        42.8                 24,909         40.2

    Certificates of deposit
      Original maturities of:
        One year or less
          1999 - 4.66%                                          8,511        11.8
          1998 - 5.08%                                                                             8,687         14.0
        12 months to 36 months
          1999 - 5.60%                                         28,040        39.0
          1998 - 5.83%                                                                            22,375         36.1
      Individual retirement accounts
        1999 - 5.35%                                            4,627         6.4
        1998 - 5.59%                                                                               5,985          9.7
                                                             --------       -----                -------       ------

    Total certificates of deposit                              41,178        57.2                 37,047         59.8
                                                             --------       -----                 ------        -----

    Total deposit accounts                                   $ 72,025       100.0%               $61,956        100.0%
                                                               ======       =====                 ======        =====
</TABLE>

    The Savings Bank had certificate of deposit accounts with balances in excess
    of $100,000 totaling $7.3 million and $1.3 million at June 30, 1999 and
    1998, respectively.

    Interest expense on deposits at June 30 is summarized as follows:

<TABLE>
<CAPTION>
                                                                                    1999            1998           1997
                                                                                              (In thousands)

<S>                                                                               <C>             <C>            <C>
    Passbook                                                                      $  737          $  702         $  613
    NOW accounts                                                                      81              98             85
    Certificates of deposit                                                        2,166           1,997          1,900
                                                                                   -----           -----          -----

                                                                                  $2,984          $2,797         $2,598
                                                                                   =====           =====          =====
</TABLE>

                                       41


<PAGE>   42


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE F - DEPOSITS (continued)

    Maturities of outstanding certificates of deposit at June 30 are summarized
    as follows:

<TABLE>
<CAPTION>
                                                                                      1999                1998
                                                                                           (In thousands)

<S>                                                                                <C>                 <C>
    Less than one year                                                             $28,262             $22,833
    One year to two years                                                           11,025              11,442
    Two years to three years                                                         1,891               2,772
                                                                                    ------              ------

                                                                                   $41,178             $37,047
                                                                                    ======              ======
</TABLE>

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

    Advances from the Federal Home Loan Bank, collateralized at June 30, 1999 by
    a pledge of certain residential mortgage loans totaling $35.4 million and
    the Savings Bank's investment in Federal Home Loan Bank stock, are
    summarized as follows:

<TABLE>
<CAPTION>
    INTEREST                 MATURING IN YEAR
    RATE                     ENDING JUNE 30,                                          1999                1998
                                                                                            (In thousands)

<S>                          <C>                                                  <C>                 <C>
    5.58% - 5.62%                    2004                                         $  2,500            $  2,500
    8.15%                            2005                                               17                  19
    4.96% - 5.10%                    2008                                           10,000              10,000
    4.50% - 6.10%                    After 2008                                     11,099                  -
                                                                                    ------              ------

                                                                                  $ 23,616            $ 12,519
                                                                                    ======              ======

    Weighted-average interest rate                                                    5.05%               5.11%
                                                                                      ====                ====
</TABLE>

NOTE H - FEDERAL INCOME TAXES

    Federal income taxes differ from the amounts computed at the statutory
    corporate tax rate for the years ended June 30 as follows:

<TABLE>
<CAPTION>
                                                                            1999           1998           1997
                                                                                  (Dollars in thousands)

<S>                                                                         <C>            <C>            <C>
    Federal income taxes at statutory rate                                  $369           $506           $725
    Decrease in taxes resulting from:
      Other (primarily nontaxable interest income in 1997)                    (1)            (1)           (20)
                                                                            ----           ----           ----
    Federal income taxes per consolidated
      financial statements                                                  $368           $505           $705
                                                                            ====           ====           ====

    Effective tax rate                                                      33.9%          33.9%          33.1%
                                                                            ====           ====           ====
</TABLE>

                                       42
<PAGE>   43


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE H - FEDERAL INCOME TAXES (continued)

    The composition of the Corporation's net deferred tax liability at June 30
    is as follows:

<TABLE>
<CAPTION>
    Taxes (payable) refundable on temporary                                                  1999         1998
    differences at statutory rate:                                                            (In thousands)

<S>                                                                                         <C>          <C>
    Deferred tax assets:
      Deferred loan origination fees                                                        $  48        $   8
      Retirement expense                                                                       52          106
      General loan loss allowance                                                              91           92
      Unrealized losses on securities designated as
        available for sale                                                                    112           -
      Other                                                                                     1            1
                                                                                             ----         ----
         Deferred tax assets                                                                  304          207

    Deferred tax liabilities:
      Financed loan origination fees                                                         (105)         (16)
      Federal Home Loan Bank stock dividends                                                 (143)        (118)
      Difference between book and tax depreciation                                            (17)         (31)
      Percentage of earnings bad debt deduction                                               (72)         (87)
      Mortgage servicing rights                                                               (19)          -
      Unrealized gains on securities designated
        as available for sale                                                                  -           (72)
                                                                                             ----         ----
         Deferred tax liabilities                                                            (356)        (324)
                                                                                             ----         ----

         Net deferred tax liability                                                         $ (52)       $(117)
                                                                                             ====         ====
</TABLE>

    The Savings Bank was allowed a special bad debt deduction generally limited
    to 8% of otherwise taxable income and subject to certain limitations based
    on aggregate loans and deposit account balances at the end of the year. If
    the amounts that qualify as deductions for federal income taxes are later
    used for purposes other than bad debt losses, including distributions in
    liquidation, such distributions will be subject to federal income taxes at
    the then current corporate income tax rate. Retained earnings at June 30,
    1999, include approximately $1.8 million for which federal income taxes have
    not been provided. The approximate amount of unrecognized deferred tax
    liability relating to the cumulative bad debt deduction was approximately
    $550,000 at June 30, 1999. See Note K for additional information regarding
    the Savings Bank's future percentage of earnings bad debt deductions.

                                       43
<PAGE>   44


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE I - LOAN COMMITMENTS

    The Savings Bank is a party to financial instruments with off-balance-sheet
    risk in the normal course of business to meet the financing needs of its
    customers including commitments to extend credit. Such commitments involve,
    to varying degrees, elements of credit and interest-rate risk in excess of
    the amount recognized in the consolidated statement of financial condition.
    The contract or notional amounts of the commitments reflect the extent of
    the Savings Bank's involvement in such financial instruments.

    The Savings Bank's exposure to credit loss in the event of nonperformance by
    the other party to the financial instrument for commitments to extend credit
    is represented by the contractual notional amount of those instruments. The
    Savings Bank uses the same credit policies in making commitments and
    conditional obligations as those utilized for on-balance-sheet instruments.

    At June 30, 1999, the Savings Bank had outstanding commitments of
    approximately $531,000 to originate loans. Additionally, the Savings Bank
    was obligated under unused lines of credit totaling $5.5 million. In the
    opinion of management, all loan commitments equaled or exceeded prevalent
    market interest rates as of June 30, 1999, and will be funded from normal
    cash flow from operations.


NOTE J - REGULATORY CAPITAL

    The Savings Bank is subject to minimum regulatory capital standards
    promulgated by the Office of Thrift Supervision (the "OTS"). Failure to meet
    minimum capital requirements can initiate certain mandatory -- and possibly
    additional discretionary -- actions by regulators that, if undertaken, could
    have a direct material effect on the consolidated financial statements.
    Under capital adequacy guidelines and the regulatory framework for prompt
    corrective action, the Savings Bank must meet specific capital guidelines
    that involve quantitative measures of the Savings Bank's assets,
    liabilities, and certain off-balance-sheet items as calculated under
    regulatory accounting practices. The Savings Bank's capital amounts and
    classification are also subject to qualitative judgments by the regulators
    about components, risk weightings, and other factors.

    The minimum capital standards of the OTS generally require the maintenance
    of regulatory capital sufficient to meet each of three tests, hereinafter
    described as the tangible capital requirement, the core capital requirement
    and the risk-based capital requirement. The tangible capital requirement
    provides for minimum tangible capital (defined as shareholders' equity less
    all intangible assets) equal to 1.5% of adjusted total assets. The core
    capital requirement provides for minimum core capital (tangible capital plus
    certain forms of supervisory goodwill and other qualifying intangible
    assets) equal to 3.0% of adjusted total assets. An OTS proposal, if adopted
    in present form, would increase the core capital requirement to a range of
    4.0% - 5.0% of adjusted total assets for substantially all savings
    associations. Management anticipates no material change to the Savings
    Bank's excess regulatory capital position as a result of this proposed
    change in the regulatory capital requirement. The risk-based capital
    requirement currently provides for the maintenance of core capital plus
    general loss

                                       44
<PAGE>   45


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE J - REGULATORY CAPITAL (continued)

    allowances equal to 8.0% of risk-weighted assets. In computing risk-weighted
    assets, the Savings Bank multiplies the value of each asset on its statement
    of financial condition by a defined risk-weighting factor, e.g., one- to
    four-family residential loans carry a risk-weighted factor of 50%.

    As of June 30, 1999 and 1998, management believes that the Savings Bank met
    all capital adequacy requirements to which it was subject.


<TABLE>
<CAPTION>
                                     AS OF JUNE 30, 1999


                                                                   FOR CAPITAL
                               ACTUAL                           ADEQUACY PURPOSES
                        ---------------- -------------------------------------------------------------
                         AMOUNT    RATIO             AMOUNT                          RATIO
                                                            (Dollars in thousands)

<S>                     <C>        <C>    <C>                              <C>
    Tangible capital    $14,274    12.8%  greater than or equal to $1,671  greater than or equal to 1.5%

    Core capital        $14,274    12.8%  greater than or equal to $3,343  greater than or equal to 3.0%

    Risk-based capital  $14,543    21.5%  greater than or equal to $5,404  greater than or equal to 8.0%
</TABLE>
<TABLE>
<CAPTION>
                                                AS OF JUNE 30, 1999
                                                    TO BE "WELL-
                                                CAPITALIZED" UNDER
                                                PROMPT CORRECTIVE
                                                ACTION PROVISIONS
                        ------------------------------------------------------------------
                                      AMOUNT                           RATIO


<S>                     <C>                                 <C>
    Tangible capital    greater than or equal to $5,572     greater than or equal to  5.0%

    Core capital        greater than or equal to $6,686     greater than or equal to  6.0%

    Risk-based capital  greater than or equal to $6,755     greater than or equal to 10.0%
</TABLE>

<TABLE>
<CAPTION>
                                     AS OF JUNE 30, 1999


                                                                   FOR CAPITAL
                               ACTUAL                           ADEQUACY PURPOSES
                        ---------------   -------------------------------------------------------------
                        AMOUNT    RATIO              AMOUNT                          RATIO
                                                             (Dollars in thousands)

<S>                     <C>        <C>    <C>                              <C>
    Tangible capital    $14,502    16.0%  greater than or equal to $1,361  greater than or equal to 1.5%

    Core capital        $14,502    16.0%  greater than or equal to $2,721  greater than or equal to 3.0%

    Risk-based capital  $14,772    29.7%  greater than or equal to $3,981  greater than or equal to 8.0%
</TABLE>
<TABLE>
<CAPTION>
                                                                  AS OF JUNE 30, 1999
                                                                      TO BE "WELL-
                                                                   CAPITALIZED" UNDER
                                                                   PROMPT CORRECTIVE
                             ACTUAL                                ACTION PROVISIONS
                        ---------------   ------------------------------------------------------------------
                        AMOUNT    RATIO                  AMOUNT                           RATIO


<S>                     <C>        <C>    <C>                                 <C>
    Tangible capital    $14,502    16.0%  greater than or equal to $4,535     greater than or equal to  5.0%

    Core capital        $14,502    16.0%  greater than or equal to $5,442     greater than or equal to  6.0%

    Risk-based capital  $14,772    29.7%  greater than or equal to $4,976     greater than or equal to 10.0%
</TABLE>

    The Savings Bank's management believes that, under the current regulatory
    capital regulations, the Savings Bank will continue to meet its minimum
    capital requirements in the foreseeable future. However, events beyond the
    control of the Savings Bank, such as increased interest rates or a downturn
    in the economy in the Savings Bank's market area, could adversely affect
    future earnings and, consequently, the ability to meet future minimum
    regulatory capital requirements.

                                       45


<PAGE>   46


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE K - LEGISLATIVE MATTERS

    The deposit accounts of the Savings Bank and of other savings associations
    are insured by the Federal Deposit Insurance Corporation ("FDIC") through
    the Savings Association Insurance Fund ("SAIF"). The reserves of the SAIF
    were below the level required by law, because a significant portion of the
    assessments paid into the fund were used to pay the cost of prior thrift
    failures. The deposit accounts of commercial banks are insured by the FDIC
    through the Bank Insurance Fund ("BIF"), except to the extent such banks
    have acquired SAIF deposits. The reserves of the BIF met the level required
    by law in May 1995. As a result of the respective reserve levels of the
    funds, deposit insurance assessments paid by healthy savings associations
    exceeded those paid by healthy commercial banks by approximately $.19 per
    $100 in deposits in 1995.

    Legislation was enacted to recapitalize the SAIF that provided for a special
    assessment totaling $.657 per $100 of SAIF deposits held at March 31, 1995,
    in order to increase SAIF reserves to the level required by law. The Savings
    Bank held $49.2 million in deposits at March 31, 1995, resulting in an
    assessment of approximately $332,000, or $219,000 after-tax, which was
    charged to operations in fiscal 1997.

    Under separate legislation related to the recapitalization plan, the Savings
    Bank is required to recapture as taxable income approximately $281,000 of
    its tax bad debt reserve, which represents the post-1987 additions to the
    reserve, and will be unable to utilize the percentage of earnings method to
    compute its bad debt deduction in the future. The Savings Bank has provided
    deferred taxes for this amount and will amortize the recapture of the bad
    debt reserve into taxable income over a six year period, which commenced in
    fiscal 1998.

                                       46
<PAGE>   47


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE L- CONDENSED FINANCIAL STATEMENTS OF FFD FINANCIAL CORPORATION

    The following condensed financial statements summarize the financial
    position of FFD Financial Corporation as of June 30, 1999 and 1998, and the
    results of its operations and its cash flows for the years ended June 30,
    1999, 1998 and 1997.

                            FFD FINANCIAL CORPORATION
                        STATEMENTS OF FINANCIAL CONDITION
                                    June 30,
                                 (In thousands)

<TABLE>
<CAPTION>
     ASSETS                                                             1999        1998

<S>                                                                 <C>         <C>
Cash and due from banks                                             $  1,106    $    103
Loan receivable from ESOP                                                931       1,047
Investment in First Federal Savings Bank of Dover                     14,064      14,642
Accrued interest receivable                                               14          19
Prepaid federal income tax                                                72        --
Prepaid expenses and other assets                                         17          18
                                                                    --------    --------

     Total assets                                                   $ 16,204    $ 15,829
                                                                    ========    ========

     LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued federal income taxes                                        $   --      $      4

Shareholders' equity
  Common stock                                                          --          --
  Additional paid-in capital                                           7,798       7,705
  Retained earnings                                                    9,850       9,536
  Unrealized gains (losses) on securities designated as available
    for sale, net of related tax effects                                (216)        140
  Shares acquired by stock benefit plans                              (1,207)     (1,411)
  Treasury shares - at cost                                              (21)       (145)
                                                                    --------    --------
     Total shareholders' equity                                       16,204      15,825
                                                                    --------    --------

     Total liabilities and shareholders' equity                     $ 16,204    $ 15,829
                                                                    ========    ========
</TABLE>

                                       47
<PAGE>   48


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997

NOTE L- CONDENSED FINANCIAL STATEMENTS OF FFD FINANCIAL CORPORATION (continued)
                            FFD FINANCIAL CORPORATION
                             STATEMENTS OF EARNINGS
                               Year ended June 30,
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                    1999        1998       1997
<S>                                                             <C>         <C>         <C>
Revenue
  Interest income                                               $     54    $    377   $    476
  Equity in earnings of subsidiary                                   833         888      1,243
                                                                --------    --------   --------
     Total revenue                                                   887       1,265      1,719

General and administrative expenses                                  229         235        219
                                                                --------    --------   --------

     Earnings before income taxes (credits)                          658       1,030      1,500

Federal income taxes (credits)                                       (59)         48         73
                                                                --------    --------   --------

     NET EARNINGS                                               $    717    $    982   $  1,427
                                                                ========    ========   ========
</TABLE>

                            FFD FINANCIAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                               Year ended June 30,
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                    1999        1998        1997
<S>                                                             <C>         <C>         <C>
Cash provided by (used in) operating activities:
  Net earnings for the year                                     $    717    $    982    $  1,427
  Adjustments to reconcile net earnings to net
  cash provided by (used in) operating activities:
    Excess distributions from consolidated subsidiary                567        --          --
    Undistributed earnings of consolidated subsidiary               --          (888)     (1,243)
    Loss on sale of mortgage-backed and investment securities       --          --            12
    Increase (decrease) in cash due to changes in:
      Prepaid expenses and other assets                                6         121          10
      Other liabilities                                               (4)       --            (3)
      Accrued federal income tax                                     (72)        (43)       --
                                                                --------    --------    --------
      Net cash provided by operating activities                    1,214         172         203

Cash flows provided by (used in) investing activities:
  Proceeds from repayment of loan to ESOP                            116          84          33
  Proceeds from maturities of investment securities                 --        11,389       9,948
  Purchase of investment securities                                 --        (4,951)    (15,391)
  Proceeds from sale of investment securities                       --          --           994
  Principal repayment on mortgage-backed securities                 --          --           444
  Proceeds from sale of mortgage-backed securities                  --          --         3,935
                                                                --------    --------    --------
      Net cash provided by (used in) investing activities            116       6,522         (37)

Cash flows provided by (used in) financing activities:
  Proceeds from exercise of stock options                             76          10        --
  Purchase of treasury shares                                       --          (154)       --
  Cash distributions on common stock                                (403)     (6,907)       (327)
                                                                --------    --------    --------
      Net cash used in financing activities                         (327)     (7,051)       (327)
                                                                --------    --------    --------

Net increase (decrease) in cash and cash equivalents               1,003        (357)       (161)

Cash and cash equivalents at beginning of year                       103         460         621
                                                                --------    --------    --------

Cash and cash equivalents at end of year                        $  1,106    $    103    $    460
                                                                ========    ========    ========
</TABLE>

                                       48
<PAGE>   49


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


NOTE L- CONDENSED FINANCIAL STATEMENTS OF FFD FINANCIAL CORPORATION (continued)

    As a condition to regulatory approval of the stock conversion and
    reorganization to the holding company form of ownership, the Savings Bank
    agreed to limit the amount of dividends payable to the Corporation.
    Regulations of the Office of Thrift Supervision (OTS) impose limitations on
    the payment of dividends and other capital distributions by savings
    associations. Under such regulations, a savings association that,
    immediately prior to, and on a pro forma basis after giving effect to, a
    proposed capital distribution, has total capital (as defined by OTS
    regulation) that is equal to or greater than the amount of its fully
    phased-in capital requirement is generally permitted without OTS approval
    (but subsequent to 30 days prior notice to the OTS of the planned dividend)
    to make capital distributions during a calendar year in the amount of up to
    the greater of (i) 100% of its net earnings to date during the year plus an
    amount equal to one-half of the amount by which its total capital-to-assets
    ratio exceeded its fully phased-in capital-to-assets ratio at the beginning
    of the year or (ii) 75% of its net earnings for the most recent four
    quarters. Pursuant to such OTS dividend regulations, the Savings Bank had
    the ability to pay dividends of approximately $4.6 million to the
    Corporation at June 30, 1999.


    NOTE M- STOCK OPTION PLAN

    The Corporation initiated the FFD Financial Corporation 1996 Stock Option
    and Incentive Plan (the "Plan") in October 1996 upon shareholder approval of
    the Plan. The Plan provides for the issuance of 145,475 shares of
    authorized, but unissued shares of common stock. The Board of Directors
    granted stock options to purchase 123,563 shares of the Corporation's common
    stock to officers and directors at a weighted-average exercise price of
    $9.36 per share.

    The Corporation accounts for the Plan in accordance with SFAS No. 123,
    "Accounting for Stock-Based Compensation," which contains a fair value-based
    method for valuing stock-based compensation that entities may use, which
    measures compensation cost at the grant date based on the fair value of the
    award. Compensation is then recognized over the service period, which is
    usually the vesting period. Alternatively, SFAS No. 123 permits entities to
    continue to account for stock options and similar equity instruments under
    Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
    Issued to Employees." Entities that continue to account for stock options
    using APB Opinion No. 25 are required to make pro forma disclosures of net
    earnings and earnings per share, as if the fair value-based method of
    accounting defined in SFAS No. 123 had been applied.

    The Corporation applies APB Opinion No. 25 and related Interpretations in
    accounting for its stock option plan. Accordingly, no compensation cost has
    been recognized with respect to the Plan. Had compensation cost for the
    Corporation's stock option plan been determined based on the fair value at
    the grant date in a manner consistent with the accounting method utilized in
    SFAS No. 123, then the Corporation's consolidated net earnings and earnings
    per share for the fiscal years ended June 30, 1999, 1998 and 1997, would
    have been reduced to the pro forma amounts indicated below:

                                       49
<PAGE>   50


                            FFD FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 1999, 1998 and 1997


    NOTE M- STOCK OPTION PLAN (continued)

<TABLE>
<CAPTION>
                                                                                         1999         1998         1997
                                                                                              (Earnings in thousands)

<S>                                              <C>                                     <C>           <C>        <C>
    Net earnings                                 As reported                             $717          $981       $1,427
                                                                                          ===           ===        =====

                                                   Pro-forma                             $717          $963       $1,407
                                                                                          ===           ===        =====

    Earnings per share
      Basic                                      As reported                            $0.53         $0.73        $1.07
                                                                                         ====          ====         ====

                                                   Pro-forma                            $0.53         $0.73        $1.05
                                                                                         ====          ====         ====

      Diluted                                    As reported                            $0.51         $0.71        $1.06
                                                                                         ====          ====         ====

                                                   Pro-forma                            $0.51         $0.71        $1.05
                                                                                         ====          ====         ====
</TABLE>

    The fair value of each option grant is estimated on the date of grant using
    the modified Black-Scholes options-pricing model with the following
    weighted-average assumptions used for grants in fiscal 1999, 1998 and 1997:
    dividend yield of 6.55%, expected volatility of 20.0%, a risk-free interest
    rate of 6.0% and an expected life of ten years.

    A summary of the status of the Corporation's stock option plan as of June
    30, 1999, 1998 and 1997, and changes during the years then ended are
    presented below:

<TABLE>
<CAPTION>
                                                    1999                      1998                     1997
                                                       WEIGHTED-                WEIGHTED-                   WEIGHTED-
                                                         AVERAGE                  AVERAGE                     AVERAGE
                                                        EXERCISE                 EXERCISE                    EXERCISE
                                             SHARES        PRICE       SHARES       PRICE         SHARES        PRICE

<S>                                         <C>           <C>        <C>            <C>          <C>          <C>
    Outstanding at beginning of year        130,329       $ 10.15     118,432       $  9.40           -       $  -
    Granted                                   3,000         14.63      12,635         17.19      122,890        9.39
    Exercised                                (8,066)         9.38        (738)        11.17           -           -
    Forfeited                               (10,055)        10.56          -             -        (4,458)      9.14
                                            -------        ------   ---------        ------      -------       ----

    Outstanding at end of year              115,208       $ 10.28     130,329       $ 10.15      118,432      $9.40
                                            =======        ======     =======        ======      =======       ====

    Options exercisable at year-end          41,096       $  9.86      22,948       $  9.35           -       $  -
                                            =======        ======    ========        ======      =======       ===
    Weighted-average fair value of
      options granted during the year                     $  1.71                   $  2.01                   $1.10
                                                           ======                    ======                    ====
</TABLE>

    The following information applies to options outstanding at June 30, 1999:

<TABLE>
<S>                                                                                                   <C>
    Number outstanding                                                                                          115,208
    Range of exercise prices                                                                             $9.14 - $18.14
    Weighted-average exercise price                                                                              $10.28
    Weighted-average remaining contractual life in years                                                      7.2 years
</TABLE>

                                       50
<PAGE>   51


                            FFD FINANCIAL CORPORATION
                                       AND
                       FIRST FEDERAL SAVINGS BANK OF DOVER
                        DIRECTORS AND EXECUTIVE OFFICERS

================================================================================



                              BOARD OF DIRECTORS OF
                          FFD FINANCIAL CORPORATION AND
                       FIRST FEDERAL SAVINGS BANK OF DOVER

                               Stephen G. Clinton
                                 Vice President
                           Tucker Anthony Cleary Gull

                                Robert R. Gerber
                                    President
                     First Federal Savings Bank of Dover and
                            FFD Financial Corporation

                                 J. Richard Gray
                                    Chairman
                              Hanhart Agency, Inc.

                                Richard J. Herzig
                               Chairman - Retired
                        Toland-Herzig Funeral Homes, Inc.

                                 Enos L. Loader
                              Financial Consultant
                           Retired Senior Bank Officer

                              Roy O. Mitchell, Jr.
                           Managing Officer - Retired
                       First Federal Savings Bank of Dover

                                Robert D. Sensel
                      President and Chief Executive Officer
                             Dover Hydraulics, Inc.




                              EXECUTIVE OFFICERS OF
                            FFD FINANCIAL CORPORATION

                                Robert R. Gerber
                                    President

                               Shirley A. Wallick
                             Secretary and Treasurer

                             Larry D. Browning, Jr.
                             Chief Financial Officer

                              EXECUTIVE OFFICERS OF
                       FIRST FEDERAL SAVINGS BANK OF DOVER

                                Robert R. Gerber
                                    President

                               Shirley A. Wallick
                             Secretary and Treasurer

                             Larry D. Browning, Jr.
                             Chief Financial Officer


                                       51

<PAGE>   52





                              SHAREHOLDER SERVICES

================================================================================

Registrar and Transfer Company serves as transfer agent and dividend
distributing agent for FFD's shares. Communications regarding change of address,
transfer of shares, lost certificates and dividends should be sent to:

                         Registrar and Transfer Company
                                10 Commerce Drive
                         Cranford, New Jersey 07016-3572
                                 (800) 368-5948


                                 ANNUAL MEETING

================================================================================

The Annual Meeting of Shareholders of FFD Financial Corporation will be held on
October 19, 1999, at 1:00 p.m., Eastern Time, at the McDonald/Marlite Conference
Center, 143 McDonald Drive SW, New Philadelphia, Ohio 44663. Shareholders are
cordially invited to attend.


                          ANNUAL REPORT ON FORM 10-KSB

================================================================================

A copy of FFD's Annual Report on Form 10-KSB, as filed with the Securities and
Exchange Commission, will be available at no charge to shareholders upon request
to:

                            FFD Financial Corporation
                            321 North Wooster Avenue
                                Dover, Ohio 44622
                              Attention: Secretary

                                       52