<PAGE>   1


                                   FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

    For the fiscal Year Ended June 30, 1999

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the transition period from ________________ to ________________

                         Commission File Number: 0-27916

                            FFD FINANCIAL CORPORATION
            ---------------------------------------------------------
                 (Name of small business issuer in its charter)

                 Ohio                                     34-1921148
    --------------------------------             -----------------------------
     (State or other jurisdiction                      (I.R.S. Employer
          of incorporation or                       Identification Number)
             organization)

                   321 North Wooster Avenue, Dover, Ohio 44622
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                           Issuer's telephone number:
                                 (330) 364-7777
                           --------------------------

         Securities registered under Section 12(b) of the Exchange Act:
                                      None
         --------------------------------------------------------------

         Securities registered under Section 12(g) of the Exchange Act:
                        Common Shares, without par value
         --------------------------------------------------------------
                                (Title of class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X  No
                                                                      ---   ---

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The issuer's revenues for the fiscal year ended June 30, 1999, were
$7.3 million.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant, computed by reference to the average of the bid and asked
prices quoted by the Nasdaq SmallCap Market, was $3.6 million on September 24,
1999.

         1,453,416 of the registrant's common shares were issued and outstanding
on September 24, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE

 Part II of Form 10-KSB - Portions of the Annual Report to Shareholders for the
     fiscal year ended June 30, 1999. Part III of Form 10-KSB - Portions of
          the Proxy Statement for 1999 Annual Meeting of Shareholders.


<PAGE>   2


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

         FFD Financial Corporation ("FFD") is a unitary savings and loan holding
company organized under Ohio law in November 1995 which owns all of the issued
and outstanding common shares of First Federal Savings Bank of Dover ("First
Federal"), a federal savings bank chartered under the laws of the United States.
On April 2, 1996, FFD acquired all of the common shares issued by First Federal
upon its conversion from a mutual savings bank to a stock savings bank (the
"Conversion").

         First Federal has conducted business in Tuscarawas County since it was
incorporated in 1898 as an Ohio savings and loan association under the name
"Dover Building & Loan Company." First Federal obtained a federal savings and
loan charter in 1937 under the name "First Federal Savings & Loan Association."
In 1983, First Federal changed its charter to a federal savings bank charter, at
which time the present name was adopted.

         As a savings and loan holding company, FFD is subject to regulation and
examination by the Office of Thrift Supervision (the "OTS"). As a federal
savings bank, First Federal is subject to supervision and regulation by the OTS
and the Federal Deposit Insurance Corporation (the "FDIC") and is a member of
the Federal Home Loan Bank (the "FHLB") of Cincinnati. The deposits of First
Federal are insured up to applicable limits by the Savings Association Insurance
Fund (the "SAIF") administered by the FDIC.

         First Federal is principally engaged in the business of making
permanent first mortgage loans secured by one- to four-family residential real
estate located in Tuscarawas County, Ohio. First Federal also originates
construction loans, commercial loans and loans secured by multifamily real
estate (over four units), nonresidential real estate and land. The origination
of consumer loans constitutes a small part of the lending activity of First
Federal. Loan funds are obtained primarily from savings deposits and loan
repayments. In addition, advances from the Federal Home Loan Bank (the "FHLB")
of Cincinnati are utilized from time to time when other sources of funds are
inadequate to fund loan demand. First Federal also invests in U.S. Government
agency obligations, interest-bearing deposits in other financial institutions,
mortgage-backed securities and other investments permitted by applicable law.

         Interest on loans, mortgage-backed securities and investments is First
Federal's primary source of income. First Federal's principal expense is
interest paid on deposit accounts. Operating results are dependent to a
significant degree on the net interest income of First Federal, which is the
difference between interest earned on loans, mortgage-backed securities and
other investments and interest paid on deposits and borrowings. Like most thrift
institutions, First Federal's interest income and interest expense are
significantly affected by general economic conditions and by the policies of
various regulatory authorities.

LENDING ACTIVITIES

         GENERAL. First Federal's principal lending activity is the origination
of conventional real estate loans, including construction loans, secured by one-
to four-family homes located in First Federal's primary market area. Loans
secured by multifamily properties containing five units or more and
nonresidential properties are also offered by First Federal. First Federal also
originates commercial loans for businesses located in its primary market area
and issues letters of credit for commercial, business or agricultural purposes,
other than loans secured by real estate.

                                      -2-
<PAGE>   3

         LOAN PORTFOLIO COMPOSITION. The following table presents certain
information with respect to the composition of First Federal's loan portfolio at
the dates indicated:

<TABLE>
<CAPTION>

                                                               At June 30,
                                    -------------------------------------------------------
                                                1999              1998              1997
                                    ------------------------ ---------------- -------------
                                             Percent            Percent           Percent
                                             of total           of total          of total
                                    Amount    loans     Amount   loans    Amount   loans
                                    -------   -----    -------   -----    -------  -----
                                                   (Dollars in thousands)
<S>                               <C>        <C>     <C>        <C>     <C>       <C>
  One- to four-family               $63,182    71.5%   $62,010    85.4%   $52,842   92.3%
  Multifamily                           721     0.8      1,058     1.4      1,158    2.0
  Construction                        1,921     2.2      1,572     2.2      1,474    2.6
  Nonresidential, commercial and
    land                             18,652    21.1      6,722     9.3      1,192    2.1
  Consumer                            3,912     4.4      1,263     1.7        583    1.0
                                    -------   -----    -------   -----    -------  -----

     Total loans                     88,388   100.0%    72,625   100.0%    57,249  100.0%
                                              =====              =====             =====

  Less:
  Undisbursed portion of loans in
    process                           1,560              1,079              1,185
  Deferred loan origination fees        142                286                290
  Allowance for losses on loans         269                270                270
                                    -------           --------          ---------

     Loans receivable, net          $86,417           $ 70,990          $  55,504
                                    =======           ========          =========
</TABLE>


         LOAN MATURITY SCHEDULE. The following table sets forth certain
information as of June 30, 1999, regarding the dollar amount of loans maturing
in First Federal's portfolio based on their contractual terms to maturity.
Demand loans and loans having no stated schedule of repayments and no stated
maturity are reported as due in one year or less.

<TABLE>
<CAPTION>


                              Due during the year ending       Due 4-5   Due 6-10  Due 11-15   Due 15 or
                                        June 30,                years      years     years    more years
                              ---------------------------       after      after     after      after
                               2000       2001       2002      6/30/99    6/30/99   6/30/99    6/30/99     Total
                               ----       ----       ----      -------    -------   -------    -------     -----
                                                                      (In thousands)

<S>                          <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Residential real estate(1)   $  1,393   $     12   $     91   $    586   $  4,542   $ 17,799   $ 41,401   $ 65,824
Nonresidential and land         1,229      1,166        380      1,613      3,434      5,892      4,938     18,652
Consumer loans                    244        111        329      1,869        863        496         --      3,912
                             --------   --------   --------   --------   --------   --------   --------   --------
   Total loans               $  2,866   $  1,289   $    800   $  4,068   $  8,839   $ 24,187   $ 46,339   $ 88,388
                             ========   ========   ========   ========   ========   ========   ========   ========
</TABLE>

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

(1) Includes one- to four-family, multifamily and construction loans.


         The following table sets forth the dollar amount of all loans due after
one year from June 30, 1999, which have predetermined interest rates and which
have floating or adjustable interest rates:

                                                  Due more than one year after
                                                         June 30, 1999
                                                  ----------------------------
                                                         (In thousands)

                  Fixed rate of interest                     $22,892
                  Adjustable rate of interest                 62,630
                                                             -------
                                                             $85,522
                                                             =======

                                      -3-
<PAGE>   4

         ONE- TO FOUR-FAMILY RESIDENTIAL REAL ESTATE LOANS. The primary lending
activity of First Federal has been the origination of permanent conventional
loans secured by first mortgages on existing one- to four-family residences,
primarily single-family residences, located in Tuscarawas County. First Federal
also originates a limited amount of home equity loans secured by second
mortgages on one- to four-family residential real estate. Each of such loans is
secured by a mortgage on the underlying real estate and improvements thereon, if
any. The aggregate amount of First Federal's one- to four-family residential
real estate loans equaled approximately $63.2 million at June 30, 1999, and
represented 71.5% of total loans at such date.

         Between 1982 and 1994, First Federal originated only adjustable-rate
mortgage loans ("ARMs"). ARMs are offered by First Federal for terms up to 30
years. The interest rate adjustment periods on the ARMs are one year, three
years or five years, although most of the ARMs originated by First Federal are
one-year ARMs. The rates on ARMs are tied to the average monthly mortgage
contract rate for previously occupied homes published by the Federal Housing
Finance Board. The maximum allowable adjustment at each adjustment date is 2%.
Some of First Federal's ARMs have a maximum adjustment of 6% over the term of
the loan.

         Adjustable-rate loans decrease First Federal's interest rate risk but
involve other risks, primarily credit risk, because as interest rates rise the
payment by the borrower rises to the extent permitted by the terms of the loan,
thereby increasing the potential for default. At the same time, the
marketability of the underlying property may be adversely affected by higher
interest rates. First Federal believes that these risks have not had a material
adverse effect on First Federal to date.

         In September 1994 First Federal resumed originating fixed-rate loans
with terms of up to 15 years. The majority of First Federal's fixed-rate loan
portfolio has been sold in the secondary market.

         OTS regulations limit the amount that First Federal may lend in
relationship to the appraised value of the real estate and improvements (the
"Loan-to-Value Ratio" or "LTV") at the time of loan origination. Most of First
Federal's one- to four-family loans have a LTV of 80% or less, although First
Federal will make first mortgage loans on one- to four-family residences up to
89% of the value of the real estate and improvements. First Federal has an
affordable housing loan program under which it originates a small number of
variable-rate loans with LTVs of up to 95%.

         Included in one- to four-family loans are lines of credit secured by
the equity in the borrower's principal residence. First Federal makes home
equity lines of credit in an amount which, when added to any prior indebtedness
secured by the real estate, does not exceed 89% of the estimated value of the
real estate. Home equity loans are secured by a second mortgage on the real
estate. First Federal's home equity loans have a term of 15 years. The interest
rates charged by First Federal on home equity loans adjust monthly and are tied
to the base rate on corporate loans, posted by at least 75% of the nation's 30
largest banks, as reported in THE WALL STREET JOURNAL. At June 30, 1999, First
Federal had $2.9 million in home equity loans.

         MULTIFAMILY RESIDENTIAL REAL ESTATE LOANS. In addition to loans on one-
to four-family properties, First Federal makes loans secured by multifamily
properties containing over four units. The majority of such loans are made with
adjustable interest rates and a maximum LTV of 80% for terms of up to 30 years.

         Multifamily lending is generally considered to involve a higher degree
of risk because the loan amounts are larger and the borrower typically depends
upon income generated by the project to cover operating expenses and debt
service. The profitability of a project can be affected by economic conditions,
government policies and other factors beyond the control of the borrower. First
Federal attempts to reduce the risk associated with multifamily lending by
evaluating the credit-worthiness of the borrower and the projected income from
the project and by obtaining personal guarantees on loans made to corporations
and partnerships.

         At June 30, 1999, loans secured by multifamily properties totaled
approximately $721,000, or 0.8% of total loans.

         CONSTRUCTION LOANS. First Federal makes loans for the construction of
residential real estate. Such loans are structured as permanent loans with fixed
or adjustable rates of interest and for terms of up to 30 years. Construction
loans originated by First Federal are primarily made to owner-occupants for the
construction of single-family homes by a general contractor, although First
Federal also makes construction loans to developers for the construction of
single-family homes.

                                      -4-
<PAGE>   5

         Construction loans generally involve greater underwriting and default
risks than do loans secured by mortgages on existing properties due to the
concentration of principal in a limited number of loans and borrowers and the
effects of general economic conditions on real estate developments, developers,
managers and builders. In addition, such loans are more difficult to evaluate
and monitor. Loan funds are advanced upon the security of the project under
construction, which is more difficult to value before the completion of
construction. Moreover, because of the uncertainties inherent in estimating
construction costs, it is relatively difficult to evaluate accurately the LTVs
and the total loan funds required to complete a project. In the event a default
on a construction loan occurs and foreclosure follows, First Federal must take
control of the project and attempt either to arrange for completion of
construction or dispose of the unfinished project.

         At June 30, 1999, a total of $1.9 million, or approximately 2.2%, of
First Federal's total loans, consisted of construction loans.

         NONRESIDENTIAL REAL ESTATE, COMMERCIAL AND LAND LOANS. First Federal
makes loans secured by nonresidential real estate consisting of retail stores,
office buildings and other commercial properties. Such loans are originated with
terms of up to 30 years and a maximum LTV of 80%. First Federal also makes loans
secured by improved and unimproved lots for the construction of single-family
residences. Unimproved lot loans have terms of up to five years and a maximum
LTV of 65%. Improved lot loans have terms of up to five years and a maximum LTV
of 89%. First Federal has also originated a limited number of commercial loans
which are secured by a security interest in inventory, accounts receivable,
machinery or other assets of the borrower. As a result of the addition of an
experienced loan officer and the implementation of enhanced underwriting
procedures, First Federal anticipates an increase in its commercial loan volume
in the future.

         Nonresidential real estate lending is generally considered to involve a
higher degree of risk than residential lending due to the relatively larger loan
amounts and the effects of general economic conditions on the successful
operation of income-producing properties. If the cash flow on the property is
reduced, for example, as leases are not obtained or renewed, the borrower's
ability to repay may be impaired. First Federal has endeavored to reduce such
risk by evaluating the credit history and past performance of the borrower, the
location of the real estate, the quality of the management constructing and
operating the property, the debt service ratio, the quality and characteristics
of the income stream generated by the property and appraisals supporting the
property's valuation. None of First Federal's nonresidential real estate loans
was nonperforming at June 30, 1999, 1998 or 1997.

         Commercial loans are generally deemed to entail significantly greater
risk than real estate lending. The repayment of commercial loans is typically
dependent on the income stream and successful operation of a business, which can
be affected by economic conditions. The collateral for commercial loans, if any,
often consists of rapidly depreciating assets.

         At June 30, 1999, First Federal had a total of $18.7 million invested
in nonresidential real estate, commercial and land loans, including the
participation interests. Such loans comprised approximately 21.1% of First
Federal's total loans at such date.

         Federal regulations limit the amount of nonresidential mortgage and
land loans which an association may make to 400% of its capital. At June 30,
1999, First Federal's nonresidential mortgage loans totaled 115.1% of First
Federal's capital.

         CONSUMER LOANS. First Federal makes various types of consumer loans,
including unsecured loans and loans secured by savings accounts and motor
vehicles. Such loans are made at fixed or adjustable rates of interest. Consumer
loans may entail greater credit risk than do residential mortgage loans. The
risk of default on consumer loans increases during periods of recession, high
unemployment and other adverse economic conditions. Although First Federal has
not had significant delinquencies on consumer loans, no assurance can be
provided that delinquencies will not increase. Unsecured loans are made with
terms of up to two years. Motor vehicle loans are made with terms of up to five
and a half years.

         At June 30, 1999, First Federal had approximately $3.9 million, or 4.4%
of its total loans, invested in consumer loans.

         LOAN SOLICITATION AND PROCESSING. Loan originations are developed from
a number of sources, including continuing business with depositors, borrowers
and real estate developers, periodic newspaper, television, and radio
advertisements, solicitations by First Federal's lending staff and walk-in
customers.

         Loan applications for permanent real estate loans are taken by loan
personnel. First Federal typically obtains a credit report, verification of
income and other documentation concerning the creditworthiness of the borrower.
An appraisal

                                      -5-
<PAGE>   6

or evaluation of the fair market value of the real estate which will be given as
security for the loan is prepared by a staff appraiser or a fee appraiser
approved by the Board of Directors. Upon the completion of the appraisal or
evaluation and the receipt of information on the credit history of the borrower,
the application for a loan is submitted for review in accordance with First
Federal's underwriting guidelines. All loans are ratified by the full Board of
Directors.

         Under First Federal's current loan guidelines, if a real estate loan
application is approved, title insurance is usually obtained on the real estate
which will secure the mortgage loan. In the past, First Federal used an
attorney's opinion for single-family loans, whereas title insurance was
typically used for nonresidential real estate loans. Borrowers are required to
carry satisfactory fire and casualty insurance and flood insurance, if
applicable, and to name First Federal as an insured mortgagee.

         The procedure for approval of construction loans is the same as for
permanent real estate loans, except that an appraiser evaluates the building
plans, construction specifications and estimates of construction costs. First
Federal also evaluates the feasibility of the proposed construction project and
the experience and record of the builder.

         Consumer loans are underwritten on the basis of the borrower's credit
history and an analysis of the borrower's income and expenses, ability to repay
the loan and the value of the collateral, if any.

         LOAN ORIGINATIONS, PURCHASES AND SALES. Currently, First Federal is
originating both fixed-rate and ARM loans for its portfolio. During the fiscal
year, First Federal was approved, and began, to sell fixed-rate loans to the
Federal Home Loan Mortgage Corporation ("FHLMC"). When a mortgage loan is sold,
First Federal services the loan by collecting monthly payments of principal and
interest and forwarding such payments to the FHLMC, net of a servicing fee.
During the year ended June 30, 1999, First Federal sold approximately $7.4
million in loans to the FHLMC.

         In prior years First Federal did not sell fixed-rate loans in the
secondary market. Because First Federal did not require property surveys and
certain other documentation that does not relate to the creditworthiness of the
borrower, the loans in First Federal's portfolio did not conform to the
secondary market standards of the FHLMC or the Federal National Mortgage
Association (the "FNMA"). By originating non-conforming loans, however, First
Federal was able to process and close loans with lower out-of-pocket expenses
and in a shorter time than some of its competitors. As reflected by the
relatively low levels of First Federal's delinquent loans and nonperforming
assets in recent years, management believes that the origination of
non-conforming loans had not adversely affected First Federal's overall asset
quality.

         The following table presents the activity in First Federal's loan
portfolio, including loans held for sale, for the periods indicated. First
Federal occasionally purchases participation interests in loans originated by
other financial institutions. No loans were purchased during the periods
presented, although First Federal's loan portfolio at June 30, 1999, includes
two participations purchased in the 1992 fiscal year. See "Nonresidential Real
Estate and Land Loans."


<TABLE>
<CAPTION>
                                                    Year ended June 30,
                                              ------------------------------
                                                1999      1998        1997
                                                ----      ----        ----
                                                      (In thousands)
<S>                                          <C>        <C>        <C>
Loans originated:
   One- to four-family                        $ 21,534   $ 19,424   $ 13,899
   Construction                                  2,880      2,391      2,710
   Nonresidential and land                      15,056      6,818        162
   Consumer                                      1,470        606        302
                                              --------   --------   --------
     Total loans originated                     40,940     29,239     17,073

Principal loan repayments                       17,172     13,826     10,049
Principal sold                                   7,433         --         --
Increase (decrease) in other items, net (1)         57         73        (59)
                                              --------   --------   --------
Net increase in loans receivable              $ 16,392   $ 15,486   $  6,965
                                              ========   ========   ========

</TABLE>

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

(1)      Other items consist of amortization of deferred loan origination fees,
         the provision for losses on loans and the recognition and amortization
         of mortgage servicing rights.

                                      -6-
<PAGE>   7

         OTS regulations impose a lending limit on the aggregate amount that a
savings association may lend to any one borrower to an amount equal to 15% of
the association's total capital for risk-based capital purposes plus any loan
reserves not already included in total capital (the "Lending Limit Capital"). A
savings association may loan to one borrower an additional amount not to exceed
10% of the association's Lending Limit Capital if the additional amount is fully
secured by certain forms of "readily marketable collateral." Real estate is not
considered "readily marketable collateral." In applying this limit, the
regulations require that loans to certain related or affiliated borrowers be
aggregated. An exception to this limit permits loans to one borrower of up to
$500,000. In addition, the OTS, under certain circumstances, may permit
exceptions to the lending limit on a case-by-case basis.

         Based on the 15% limit, First Federal was able to lend approximately
$2.2 million to one borrower at June 30, 1999. The largest amount First Federal
had outstanding to one borrower at June 30, 1999, was $1.8 million. Such loan
was secured by a hotel located in New Philadelphia, Ohio.

         LOAN ORIGINATION AND OTHER FEES. First Federal realizes loan
origination fees and other fee income from its lending activities. In addition,
First Federal realizes income from late payment charges, application fees and
fees for other miscellaneous services.

         Loan origination fees and other fees are a volatile source of income,
varying with the volume of lending, loan repayments and general economic
conditions. All nonrefundable loan origination fees and certain direct loan
origination costs are deferred and recognized as an adjustment to yield over the
life of the related loan.

         DELINQUENT LOANS, NONPERFORMING ASSETS AND CLASSIFIED ASSETS. First
Federal endeavors to maintain a high level of asset quality through sound
underwriting practices and efficient collection practices.

         To discourage late payments, First Federal charges a late fee of 5% of
the payment amount after 15 days for fixed-rate loans and 30 days for ARMs. When
a loan is 30 days or more delinquent, the borrower is sent a delinquency notice.
When a loan is 60 days delinquent, First Federal may contact the borrower by
telephone. When a loan becomes 90 days delinquent, it is generally referred to
an attorney for foreclosure, unless the Board of Directors authorizes
appropriate alternative payment arrangements to eliminate the arrearage. A
decision as to whether and when to initiate foreclosure proceedings is based on
such factors as the amount of the outstanding loan in relation to the original
indebtedness, the extent of the delinquency and the borrower's ability and
willingness to cooperate in curing delinquencies.

         If a foreclosure occurs, the real estate is sold at public sale and may
be purchased by First Federal. Real estate acquired by First Federal as a result
of foreclosure proceedings is classified as real estate owned ("REO") until it
is sold. When property is so acquired it is initially recorded by First Federal
at the lower of cost or fair value of the real estate, less estimated costs to
sell. Real estate loss provisions are recorded if the properties' fair value
substantially 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 are capitalized. Costs relating to holding real
estate acquired through foreclosure, net of rental income, are charged against
earnings as incurred. First Federal had no REO at June 30, 1999.

         The following table reflects the amount of loans in a delinquent status
as of the dates indicated:

<TABLE>
<CAPTION>

                               June 30, 1999               June 30, 1998              June 30, 1997
                        ---------------------------- -------------------------   ----------------------
                                            Percent                    Percent                  Percent
                                            of total                  of total                 of total
                        Number    Amount     loans   Number    Amount   loans    Number  Amount  loans
                        ------    ------     -----   ------    ------   -----    ------  ------  -----
                                                       (Dollars in thousands)
<S>                    <C>      <C>        <C>       <C>      <C>      <C>       <C>    <C>    <C>
Loans delinquent for:
   30 - 59 days             6      $248       .28%        2     $ 75     .10%       --   $ --     --%
   60 - 89 days            13       178       .20         7      193     .27         7    333    .58
   90 days and over         4        15       .02         5       82     .11         2     64    .11
                         ----      ----       ---      ----     ----     ---      ----   ----    ---
Total delinquent loans     23      $441       .50%       14     $350     .48%        9   $397    .69%
                         ====      ====       ===      ====     ====     ===      ====   ====    ===

</TABLE>

         Nonperforming assets include nonaccruing loans, real estate acquired by
foreclosure or by deed-in-lieu, and repossessed assets. First Federal ceases to
accrue interest on real estate loans that are delinquent 90 days or more. The

                                      -7-


<PAGE>   8


accrual of interest may stop before a loan is 90 days delinquent if the
collateral value is not adequate, in the opinion of management, to cover the
outstanding principal and interest. First Federal places a loan on nonaccrual
status when, in the judgment of management, the collection of interest on loans
contractually past due is unlikely.

         The following table sets forth information with respect to First
Federal's nonaccruing loans at the dates indicated. First Federal had no other
nonperforming assets at any of the dates presented.


<TABLE>
<CAPTION>
                                                                  At June 30,
                                                 --------------------------------------------
                                                  1999                1998             1997
                                                 --------            -------          -------

                                                            (Dollars in thousands)
<S>                                             <C>                 <C>              <C>
Total nonaccrual loans                           $      -            $    82          $    64
                                                 ========            =======          =======

Total nonperforming loans                        $     15            $    82          $    64
                                                 ========            =======          =======

Allowance for losses on loans                    $    269            $   270          $   270
                                                 ========            =======          =======

Loans delinquent 90 days or more and still
   accruing                                      $     15            $    -           $    -

Nonperforming loans as a percent of total
   loans                                              .02%              .13%             .11%

Allowance for losses on loans as a percent of
   nonperforming loans                           1,793.33%           329.27%          421.88%


</TABLE>

         For the year ended June 30, 1999, $1,000 would have been recorded on
nonaccruing loans had such loans been accruing pursuant to contractual terms.
During such period, no interest income was recorded on such loans.

         OTS regulations require that each thrift institution classify its own
assets on a regular basis. Problem assets are classified as "substandard,"
"doubtful" or "loss." "Substandard" assets have one or more defined weaknesses
and are characterized by the distinct possibility that the insured institution
will sustain some loss if the deficiencies are not corrected. "Doubtful" assets
have the same weaknesses as "substandard" assets, with the additional
characteristics that (i) the weaknesses make collection or liquidation in full
on the basis of currently existing facts, conditions and values questionable and
(ii) there is a high possibility of loss. An asset classified "loss" is
considered uncollectible and of such little value that its continuance as an
asset of the institution is not warranted. The regulations also contain a
"special mention" category, consisting of assets which do not currently expose
an institution to a sufficient degree of risk to warrant classification but
which possess credit deficiencies or potential weaknesses deserving management's
close attention.

         The aggregate amounts of First Federal's classified assets at the dates
indicated were as follows:

                                            At June 30,
                                 ------------------------------
                                  1999         1998       1997
                                          (In thousands)
Classified assets:
  Substandard                    $   --         $93        $64
  Doubtful                           --          --         --
                                 ------         ---        ---
     Total classified assets     $   --         $93        $64
                                 ======         ===        ===



         Federal examiners are authorized to classify an association's assets.
If an association does not agree with an examiner's classification of an asset,
it may appeal the determination to the Regional Director of the OTS. First
Federal had no disagreements with the examiners regarding the classification of
assets at the time of its last examination.

                                      -8-
<PAGE>   9

         OTS regulations require that First Federal establish prudent general
allowances for loan losses for any loan classified as substandard or doubtful.
If an asset, or portion thereof, is classified as loss, the association must
either establish specific allowances for losses in the amount of 100% of the
portion of the asset classified loss, or charge off such amount.

         ALLOWANCE FOR LOSSES ON LOANS. First Federal maintains an allowance for
losses on loans based upon a number of relevant factors, including, but not
limited to, growth and changes in the composition of the loan portfolio, trends
in the level of delinquent and problem loans, current and anticipated economic
conditions in the primary lending area, past loss experience and possible losses
arising from specific problem assets.

         The single largest component of First Federal's loan portfolio consists
of one- to four-family residential real estate loans. Substantially all of these
loans are secured by property in First Federal's lending area of Tuscarawas
County, which has a fairly stable economy. First Federal's practice of making
loans primarily in its local market area has contributed to a low historical
charge-off rate. In addition to one- to four-family residential real estate
loans, First Federal makes home equity, multifamily residential real estate,
nonresidential real estate and construction loans. These real estate loans are
also secured by property in First Federal's lending area. First Federal has not
experienced any significant charge-offs from these other real estate loan
categories in recent years.

         A small portion of First Federal's total loans consists of consumer
loans. Some of these loans are unsecured and others are secured by collateral
that declines in value. Such loans therefore carry a higher degree of risk than
the real estate loans.

         Large loans are reviewed periodically to determine potential problems
at an early date. While the Board of Directors believes that it uses the best
information available to determine the allowance for loan losses, unforeseen
market conditions could result in material adjustments, and net earnings could
be significantly adversely affected, if circumstances differ substantially from
the assumptions used in making the final determination.

         The following table sets forth an analysis of First Federal's allowance
for losses on loans for the periods indicated:

                                               Year ended June 30,
                                            ------------------------
                                            1999      1998      1997
                                            ----      ----      ----
                                             (Dollars in thousands)

Balance at beginning of period              $ 270     $ 270    $ 146
Charge-offs                                    (1)       --       (1)
Recoveries                                     --        --       --
                                            -----     -----    -----
Net charge-offs                                (1)       --       (1)
Provision for losses on loans                  --        --      125
                                            -----     -----    -----
Balance at end of period                    $ 269     $ 270    $ 270
                                            =====     =====    =====
Ratio of net charge-offs to average loans
   outstanding during the period               --        --       --

Ratio of allowance for loan losses to
   total loans                               0.30%     0.37%    0.47%

                                      -9-

<PAGE>   10

         The following table sets forth the allocation of First Federal's
allowance for loan losses by type of loan at the dates indicated:

<TABLE>
<CAPTION>


                                                        At June 30,
                           --------------------------------------------------------------------
                                    1999                    1998                   1997
                           ---------------------   ---------------------  ---------------------
                                    Percent of              Percent of             Percent of
                                   loans in each           loans in each          loans in each
                                    category to             category to            category to
                           Amount   total loans    Amount   total loans   Amount   total loans
                           ------   -----------    ------   -----------   ------   -----------
                                                   (Dollars in thousands)
<S>                       <C>       <C>           <C>        <C>         <C>       <C>
Balance at year end
 applicable to:
   Real estate loans        $142       95.6%        $142       98.3%       $ 77        99.0%
   Consumer loans              3        4.4            4        1.7           2         1.0
   Unallocated               124         --          124         --         191          --
                            ----      -----         ----      -----        ----       -----
     Total                  $269      100.0%        $270      100.0%       $270       100.0%
                            ====      =====         ====      =====        ====       =====

</TABLE>

         Because the loan loss allowance is based on estimates, it is monitored
monthly and adjusted as necessary to provide an adequate allowance.

INVESTMENT ACTIVITIES

         OTS regulations require that First Federal maintain a minimum amount of
liquid assets, which may be invested in U. S. Treasury obligations, securities
of various federal agencies, certificates of deposit at insured banks, bankers'
acceptances and federal funds. First Federal is also permitted to make
investments in certain commercial paper, corporate debt securities rated in one
of the four highest rating categories by one or more nationally recognized
statistical rating organizations, and mutual funds, as well as other investments
permitted by federal regulations.

         First Federal maintains a significant portfolio of mortgage-backed
securities in the form of FHLMC, Government National Mortgage Association
("GNMA") and Federal National Mortgage Association ("FNMA") participation
certificates. Mortgage-backed securities generally entitle First Federal to
receive a portion of the cash flows from an identified pool of mortgages. FHLMC,
GNMA and FNMA securities are guaranteed by the issuing agency as to principal
and interest. Although mortgage-backed securities generally yield less than
individual loans originated by First Federal, management believes they are a
prudent investment alternative during periods of decreased loan demand.


                                      -10-

<PAGE>   11


         The following table sets forth the composition of First Federal's
investment securities portfolio, including those designated as available for
sale, and mortgage-backed securities at the dates indicated:

<TABLE>
<CAPTION>

                                                                                      At June 30,
                                     --------------------------------------------------------------------------
                                                     1999                                 1998
                                     -----------------------------------  ------------------------------------
                                     Amortized  % of      Market   % of   Amortized   % of     Market    % of
                                        cost    total     value    total     cost     total    value     total
                                        ----    -----     -----    -----     ----     -----    -----     -----
Investment securities designated as                                           (Dollars in thousands)
<S>                                   <C>      <C>     <C>        <C>     <C>      <C>      <C>       <C>
   held to maturity:
   U.S. Government agency
     obligations                      $    --       -%   $    --       -%  $   977     6.4%   $   993     6.3%
Investment securities designated as
   available for sale:
   U.S. Government and agency
     obligations                        3,000    15.8      2,924    15.5     2,496    16.3      2,498    16.0
   FHLMC stock                             --      --         --      --         3      --        157     1.0
                                      -------   -----    -------   -----   -------   -----    -------   -----
Total investment securities
   designated as available for sale     3,000    15.8      2,924    15.5     2,499    16.3      2,655    17.0
                                      -------   -----    -------   -----   -------   -----    -------   -----
Total investment securities             3,000    15.8      2,924    15.5     3,476    22.7      3,648    23.3

Mortgage-backed securities
   designated as held to maturity       4,779    25.1      4,907    26.1     5,960    38.9      6,073    38.8
Mortgage-backed securities
   designated as available for sale    11,230    59.1     10,978    58.4     5,879    38.4      5,935    37.9
                                      -------   -----    -------   -----   -------   -----    -------   -----
Total mortgage-backed securities       16,009    84.2     15,885    84.5    11,839    77.3     12,008    76.7
                                      -------   -----    -------   -----   -------   -----    -------   -----
Total investment and mortgage-
   backed securities                  $19,009   100.0%   $18,809   100.0%  $15,315   100.0%   $15,656   100.0%
                                      =======   =====    =======   =====   =======   =====    =======   =====
</TABLE>

<TABLE>
<CAPTION>


                                     -------------------------------------
                                                      1997
                                      ------------------------------------
                                      Amortized   % of     Market    % of
                                        cost      total    value     total
                                        ----      -----    -----     -----
Investment securities designated as
<S>                                  <C>        <C>     <C>       <C>
   held to maturity:
   U.S. Government agency
     obligations                       $ 1,469     5.5%   $ 1,459     5.5%
Investment securities designated as
   available for sale:
   U.S. Government and agency
     obligations                         9,931    37.5      9,924    37.3
   FHLMC stock                              --      --         --      --
                                       -------   -----    -------   -----
Total investment securities
   designated as available for sale      9,931    37.5      9,924    37.3
                                       -------   -----    -------   -----
Total investment securities             11,400    43.0     11,383    42.8

Mortgage-backed securities
   designated as held to maturity        7,165    27.1      7,304    27.4
Mortgage-backed securities
   designated as available for sale      7,906    29.9      7,944    29.8
                                       -------   -----    -------   -----
Total mortgage-backed securities        15,071    57.0     15,248    57.2
                                       -------   -----    -------   -----
Total investment and mortgage-
   backed securities                   $26,471   100.0%   $26,631   100.0%
                                       =======   =====    =======   =====
</TABLE>


The maturities of First Federal's U. S. Government and agency obligations and
mortgage-backed securities at June 30, 1999, are indicated in the following
table:


<TABLE>
<CAPTION>

                         After one through          After five             After ten
                             five years         through ten years             years                        Total
                       ---------------------   --------------------  ----------------------   -----------------------------------
                       Amortized     Average   Amortized    Average  Amortized      Average   Amortized   Market      Weighted
                         cost         yield      cost        yield      cost         yield      cost      value     average yield
                         ----         -----      ----        -----      ----         -----      ----      -----     -------------

<S>                   <C>           <C>      <C>         <C>         <C>            <C>         <C>       <C>            <C>
U.S. Government and
  agency obligations    $2,000         6.0%     $    -          -%     $ 1,000        6.4%     $ 3,000    $ 2,924         6.1%
Mortgage-backed
  securities               297         6.2       3,172        6.3       12,540        6.7       16,009     15,885         6.6
                        ------         ---       -----        ---      -------        ---      -------    -------         ---
                        $2,297         6.0%     $3,172        6.3%      13,540        6.7%     $19,009    $18,809         6.6%
                        ======         ===      ======        ===      =======        ===      =======    =======         ===

</TABLE>
                                      -11-

<PAGE>   12


DEPOSITS AND BORROWINGS

         GENERAL. Deposits have traditionally been the primary source of First
Federal's funds for use in lending and other investment activities. In addition
to deposits, First Federal derives funds from interest payments and principal
repayments on loans and mortgage-backed securities, income on interest-earning
assets and service charges. Loan payments are a relatively stable source of
funds, while deposit inflows and outflows fluctuate more in response to changes
in general interest rates and money market conditions.

         DEPOSITS. Deposits are attracted principally from within First
Federal's primary market area through the offering of a broad selection of
deposit instruments, including NOW accounts, passbook savings accounts,
individual retirement accounts ("IRAs") and term certificate accounts. Interest
rates paid, maturity terms, service fees and withdrawal penalties for the
various types of accounts are established periodically by the management of
First Federal based on First Federal's liquidity requirements, growth goals and
interest rates paid by competitors. First Federal does not use brokers to
attract deposits.

         At June 30, 1999, First Federal's certificates of deposit totaled $41.2
million, or 57.2% of total deposits. Of such amount, approximately $28.3 million
in certificates of deposit mature within one year. Based on past experience and
First Federal's prevailing pricing strategies, management believes that a
substantial percentage of such certificates will renew with First Federal at
maturity. If there is a significant deviation from historical experience, First
Federal can utilize borrowings from the FHLB as an alternative to this source of
funds.

         The following table sets forth the dollar amount of deposits in the
various types of accounts offered by First Federal at the dates indicated:

<TABLE>
<CAPTION>

                                                                At June 30,
                                         -------------------------------------------------------
                                                1999               1998               1997
                                         ------------------ ------------------- ----------------
                                                   Percent           Percent            Percent
                                                  of total          of total            of total
                                         Amount   deposits  Amount  deposits   Amount   deposits
                                         ------   --------  ------  --------   ------   --------
                                                          (Dollars in thousands)

<S>                                     <C>      <C>      <C>        <C>     <C>       <C>
Transaction accounts:
  NOW and money market accounts (1)      $ 8,290    11.5%   $ 5,954     9.6%   $ 5,219     9.1%
  Passbook savings accounts (2)           22,557    31.3     18,955    30.6     17,568    30.8
                                         -------   -----    -------   -----    -------   -----

  Total transaction accounts              30,847    42.8     24,909    40.2     22,787    39.9

Certificates of deposit:
   2.01 - 4.00%                                                  --      --         --      --
   4.01 - 6.00%                           38,513    53.5     34,419    55.6     24,420    42.8
   6.01 - 8.00%                            2,665     3.7      2,628     4.2      9,883    17.3
                                         -------   -----    -------   -----    -------   -----
     Total certificates of deposit (3)    41,178    57.2     37,047    59.8     34,303    60.1
                                         -------   -----    -------   -----    -------   -----

     Total deposits                      $72,025   100.0%   $61,956   100.0%   $57,090   100.0%
                                         =======   =====    =======   =====    =======   =====

</TABLE>

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

(1)  The weighted average interest rates on NOW and money market accounts were
     0.9% at June 30, 1999, 1.62% at June 30, 1998, and 1.66% at June 30, 1997.

(2)  The weighted average interest rate on passbook accounts were 3.54% at June
     30, 1999, 3.86% at June 30, 1998, and 3.95% at June 30, 1997.

(3)  The weighted average rate on all certificates of deposit was 5.25%, 5.62%
     and 5.67%, at June 30, 1999, 1998 and 1997, respectively.

                                      -12-
<PAGE>   13

         The following table shows rate and maturity information for First
Federal's certificates of deposit at June 30, 1999:

                                                   Amount Due
                                                 Over       Over
                                      Up to   1 year to  2 years to
                   Rate             one year   2 years    3 years     Total
                   ----             --------   -------    -------     -----
                                                  (In thousands)

                4.01 - 6.00%        $25,880    $10,742     $1,891    $38,513
                6.01 - 8.00%          2,382        283          -      2,665
                                    -------    -------     ------    -------

                  Total             $28,262    $11,025     $1,891    $41,178
                                    =======    =======     ======    =======


         The following table presents the amount of First Federal's certificates
of deposit of $100,000 or more by the time remaining until maturity at June 30,
1999:

                      Maturity                                     Amount
                      --------                                     ------
                                                               (In thousands)

                      Three months or less                       $   536
                      Over 3 months to 6 months                      653
                      Over 6 months to 12 months                   1,234
                      Over 12 months                               1,142
                                                                 -------

                         Total                                    $3,565


         The following table sets forth First Federal's deposit account balance
activity for the periods indicated:


                                        Year ended June 30,
                               -------------------------------------
                                  1999         1998          1997
                               ----------  ------------  -----------
                                      (Dollars in thousands)

Beginning balance              $  61,956     $  57,090     $  52,208

Deposits                         356,315       113,942        96,413
Withdrawals                     (347,893)     (110,996)      (93,434)
                               ---------     ---------     ---------
Net increase in deposits
   before interest credited        8,422         2,946         2,979

Interest credited                  1,647         1,920         1,903
                               ---------     ---------     ---------
Ending balance                 $  72,025     $  61,956     $  57,090
                               =========     =========     =========

Net increase                   $  10,069     $   4,866     $   4,882
                               =========     =========     =========

Percent increase                    16.3%          8.5%          9.4%
                               =========     =========     =========


         BORROWINGS. First Federal's other sources of funds include advances
from the FHLB. As a member of the FHLB, First Federal is required to own capital
stock in the FHLB and is authorized to apply for advances from the FHLB. Each
FHLB credit program has its own interest rate, which may be fixed or variable,
and range of maturities. The FHLB may prescribe the acceptable uses for these
advances, as well as limitations on the size of the advances and repayment
provisions.


                                      -13-
<PAGE>   14

         The following table sets forth certain information as to First
Federal's FHLB advances at the dates indicated:

<TABLE>
<CAPTION>

                                                           At June 30,
                                           --------------------------------------------
                                             1999              1998               1997
                                           -------           --------           -------
                                                       (Dollars in thousands)

<S>                                      <C>                <C>                <C>
FHLB advances                              $23,616            $12,519            $8,382
Weighted average interest rate of
   FHLB advances                              5.05%              5.11%             5.76%

</TABLE>

         The following table sets forth the maximum balance, the average balance
and the weighted average interest rate of First Federal's FHLB advances during
the periods indicated:

<TABLE>
<CAPTION>

                                                  Year ended June 30,
                                     ---------------------------------------------
                                      1999                  1998             1997
                                      ----                  ----             ----
                                                 (Dollars in thousands)

<S>                                 <C>                  <C>              <C>
Maximum balance                      $23,616              $18,031          $10,782
Average balance                       19,637               11,685            8,857
Weighted average interest rate         4.87%                5.62%            5.68%

</TABLE>

         First Federal had no other borrowings during the last three fiscal
years.

COMPETITION

         First Federal competes for deposits with other savings associations,
commercial banks and credit unions and with the issuers of commercial paper and
other securities, such as shares in money market mutual funds. The primary
factors in competing for deposits are interest rates and convenience of office
location. In making loans, First Federal competes with other savings
associations, commercial banks, consumer finance companies, credit unions,
leasing companies, mortgage companies and other lenders. First Federal competes
for loan originations primarily through the interest rates and loan fees offered
and through the efficiency and quality of services provided. Competition is
affected by, among other things, the general availability of lendable funds,
general and local economic conditions, current interest rate levels and other
factors which are not readily predictable.

SUBSIDIARIES

         First Federal owns all of the outstanding shares of Dover Service
Corporation ("DSC"). The principal assets of DSC consist of an investment in a
data processing service center for financial institutions and a savings account
in First Federal. The net book value of First Federal's investment in DSC at
June 30, 1999, was approximately $17,000.

PERSONNEL

         At June 30, 1999, First Federal had 28 full-time employees and 6
part-time employees. First Federal believes that relations with its employees
are good. First Federal offers health, disability and life insurance benefits.
None of the employees of First Federal are represented by a collective
bargaining unit.

YEAR 2000

         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.

                                      -14-
<PAGE>   15
         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.


                                   REGULATION

         GENERAL. FFD, as the holding company of First Federal, is subject to
regulation, examination and oversight by the OTS and is required to submit
periodic reports to the OTS. As a savings association organized under the laws
of the United States, First Federal is also subject to regulatory oversight by
the OTS, and, because First Federal's deposits are insured by the FDIC, First
Federal is also subject to examination and regulation by the FDIC. First Federal
must file periodic reports with the OTS concerning its activities and financial
condition. Examinations are conducted periodically by the OTS and the FDIC to
determine whether First Federal is in compliance with various regulatory
requirements and is operating in a safe and sound manner. First Federal is a
member of the FHLB of Cincinnati.

        Congress is considering legislation to eliminate the federal savings and
loan charter and the separate federal regulation of savings and loan
associations. Pursuant to such legislation, Congress may eliminate the OTS and
First Federal may be regulated under federal law as a bank or may be required to
change its charter. Such change in regulation or charter would likely change the
range of activities in which First Federal may engage and would probably subject
First Federal to more regulation by the FDIC. In addition, FFD might become
subject to a different form of holding company regulation which may limit the
activities in which FFD may engage and subject FFD to additional regulatory
requirements, including separate capital requirements. FFD cannot predict when
or whether Congress may actually pass legislation regarding the Company's and
First Federal's regulatory requirements or charter. Although such legislation
may change the activities in which FFD and First Federal may engage, it is not
anticipated that the current activities of either FFD or First Federal will be
materially affected by those activity limits.

         OFFICE OF THRIFT SUPERVISION. The OTS is an office in the Department of
the Treasury and is responsible for the regulation and supervision of all
federally chartered savings associations and all other savings associations, the
deposits of which are insured by the FDIC in the SAIF. The OTS issues
regulations governing the operation of savings associations, regularly examines
such associations and imposes assessments on savings associations based on their
asset size to cover the costs of general supervision and examination. It also
promulgates regulations that prescribe the permissible investments and
activities of federally chartered savings associations, including the type of
lending that such associations may engage in and the investments in real estate,
subsidiaries and securities they may make. The OTS also may initiate enforcement
actions against savings associations and certain persons affiliated with them
for violations of laws or regulations or for engaging in unsafe or unsound
practices. If the grounds provided by law exist, the OTS may appoint a
conservator or receiver for a savings association.

         Federally chartered savings associations are subject to regulatory
oversight under various consumer protection and fair lending laws. These laws
govern, among other things, truth-in-lending disclosure, equal credit
opportunity, fair credit


                                      -15-
<PAGE>   16


reporting and community reinvestment. Failure to abide by federal laws and
regulations governing community reinvestment could limit the ability of an
association to open a new branch or engage in a merger transaction. Community
reinvestment regulations evaluate how well and to what extent an institution
lends and invests in its designated service area, with particular emphasis on
low-to-moderate income communities and borrowers in such areas. First Federal
has received a satisfactory examination rating under those regulations.

         OTS REGULATORY CAPITAL REQUIREMENTS. First Federal is required by OTS
regulations to meet certain minimum capital requirements. The following table
sets forth the amount and percentage level of regulatory capital of First
Federal at June 30, 1999, and the amount by which it exceeds the minimum capital
requirements. Tangible and core capital are reflected as a percentage of
adjusted total assets. Total (or risk-based) capital, which consists of core and
supplementary capital, is reflected as a percentage of risk-weighted assets.
Assets are weighted at percentage levels ranging from 0% to 100% depending on
their relative risk.

                                                   At June 30, 1999
                                               ------------------------
                                               Amount           Percent
                                               ------           -------
                                                     (In thousands)

               Tangible capital                $14,274          12.80%
               Requirement                       1,671           1.50
                                               -------          -----
               Excess                          $12,603          11.30%
                                               =======          =====

               Core capital                    $14,274          12.80%
               Requirement                       3,343           3.00
                                               -------          -----
               Excess                          $10,931           9.80%
                                               =======          =====

               Total capital                   $14,543          21.50%
               Risk-based requirement            5,404           8.00
                                               -------          -----
               Excess                          $ 9,139          13.50%
                                               =======          =====


         Current capital requirements call for tangible capital (which for First
Federal is equity capital under generally accepted accounting principles less
the unrealized gain on available-for-sale securities less the applicable
percentage of mortgage servicing rights) of 1.5% of adjusted total assets, core
capital (which for First Federal consists of tangible capital) of 3.0% of
adjusted total assets and risk-based capital (which for First Federal consists
of core capital plus general valuation reserves of $269,000) of 8.0% of
risk-weighted assets. The OTS has proposed to amend the core capital requirement
so that those associations that do not have the highest examination rating and
exceed an acceptable level of risk will be required to maintain core capital of
from 4% to 5%, depending on the association's examination rating and overall
risk. First Federal does not anticipate that it will be adversely affected if
the core capital requirement regulation is amended as proposed. First Federal's
current core capital level is 12.80% of adjusted total assets.

         The OTS has adopted an interest rate risk component to the risk-based
capital requirement, though the implementation of that component has been
delayed. Pursuant to that requirement, a savings association would have to
measure the effect of an immediate 200 basis point change in interest rates on
the value of its portfolio, as determined under the methodology established by
the OTS. If the measured interest rate risk is above the level deemed normal
under the regulation, the association will be required to deduct one-half of
that excess exposure from its total capital when determining its level of
risk-based capital. In general, an association with less than $300 million in
assets and a risk-based capital ratio of greater than 12% will not be subject to
the interest rate risk component. First Federal currently qualifies for such
exemption. Pending implementation of the interest rate risk component, the OTS
has the authority to impose a higher individualized capital requirement on any
savings association it deems to have excess interest rate risk. The OTS also may
adjust the risk-based capital requirement on an individual basis for any
association to take into account risks due to concentrations of credit and
non-traditional activities.

         The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings
associations. At each successively lower defined capital category, an
association is subject to more restrictive and numerous mandatory or
discretionary regulatory actions or limits, and the OTS has less flexibility in
determining how to resolve the problems of the institution. The OTS has defined
these capital levels as follows: (1) well-capitalized associations must have
total risk-based capital of at least 10%, core risk-based capital (consisting
only of items


                                      -16-
<PAGE>   17


that qualify for inclusion in core capital) of at least 6% and
core capital of at least 5%; (2) adequately capitalized associations are those
that meet the regulatory minimum of total risk-based capital of at least 8%,
core risk-based capital (consisting only of items that qualify for inclusion in
core capital) of at least 4% and core capital of at least 4% (except for
associations receiving the highest examination rating and with an acceptable
level of risk, in which case the level is at least 3%); (3) undercapitalized
associations are those that do not meet regulatory limits, but that are not
significantly undercapitalized; (4) significantly undercapitalized associations
have total risk-based capital of less than 6%, core risk-based capital
(consisting only of items that qualify for inclusion in core capital) of less
than 3% or core capital of less than 3%; and (5) critically undercapitalized
associations are those with tangible equity of less than 2% of total assets. In
addition, the OTS generally can downgrade an association's capital category,
notwithstanding its capital level, if, after notice and opportunity for hearing,
the association is deemed to be engaging in an unsafe or unsound practice
because it has not corrected deficiencies that resulted in it receiving a less
than satisfactory examination rating on matters other than capital or it is
deemed to be in an unsafe or unsound condition. An undercapitalized association
must submit a capital restoration plan to the OTS within 45 days after it
becomes undercapitalized. Such an association will be subject to increased
monitoring and asset growth restrictions and will be required to obtain prior
approval for acquisitions, branching and engaging in new lines of business.
Furthermore, critically undercapitalized institutions must be placed in
conservatorship or receivership within 90 days of reaching that capitalization
level, except under limited circumstances. First Federal's capital at June 30,
1999, meets the standards for a well-capitalized institution.

         Federal law prohibits an insured institution from making a capital
distribution to anyone or paying management fees to any person having control of
the association if, after such distribution or payment, the association would be
undercapitalized. In addition, each company controlling an undercapitalized
association must guarantee that the association will comply with its capital
plan until the association has been adequately capitalized on an average during
each of four preceding calendar quarters and must provide adequate assurances of
performance. The aggregate liability pursuant to such guarantee is limited to
the lesser of (a) an amount equal to 5% of the association's total assets at the
time the institution became undercapitalized or (b) the amount that is necessary
to bring the association into compliance with all capital standards applicable
to such association at the time the association fails to comply with its capital
restoration plan.

         LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various
restrictions or requirements on the ability of associations to make capital
distributions, including dividend payments. An association which has converted
to stock form is prohibited from declaring or paying any dividends or from
repurchasing any of its stock if, as a result, the net worth of the association
would be reduced below the amount required to be maintained for the liquidation
account established in connection with its mutual to stock conversion. OTS
regulations also establish a three-tier system limiting capital distributions
according to ratings of associations based on their capital level and
supervisory condition.

         Tier 1 consists of associations that, before and after the proposed
distribution, meet their fully phased-in capital requirements. Associations in
this category may make capital distributions during any calendar year equal to
the greater of 100% of net income, current year-to-date, plus 50% of the amount
by which the lesser of the association's tangible, core or risk-based capital
exceeds its capital requirement for such capital component, as measured at the
beginning of the calendar year, or the amount authorized for a Tier 2
association. A Tier 1 association deemed to be in need of more than normal
supervision by the OTS may be downgraded to a Tier 2 or Tier 3 association. Tier
2 consists of associations that before and after the proposed distribution meet
their current minimum, but not fully phased-in, capital requirements.
Associations in this category may make capital distributions of up to 75% of net
income over the four most recent quarters. Tier 3 associations do not meet
current minimum capital requirements and must obtain OTS approval of any capital
distribution.

         First Federal meets the requirements for a Tier 1 association and has
not been notified of any need for more than normal supervision. As a subsidiary
of FFD, First Federal is required to give the OTS 30 days notice prior to
declaring any dividend on its common shares. The OTS may object to the dividend
during that 30-day period based on safety and soundness concerns. Moreover, the
OTS may prohibit any capital distribution otherwise permitted by regulation if
the OTS determines that such distribution would constitute an unsafe or unsound
practice.

         In January 1998, the OTS issued a proposal to amend the capital
distribution limits. Under that proposal, an association owned by a holding
company would still be required to provide either a notice or an application to
the OTS, although under certain circumstances a savings association without a
holding company having an examination rating of 1 or 2 could make a capital
distribution without notice to the OTS, if it would remain adequately
capitalized after the distribution is made.


                                      -17-
<PAGE>   18

         LIQUIDITY. OTS regulations require that each savings association
maintain an average daily balance of liquid assets (cash, certain time deposits,
bankers' acceptances and specified United States government, state or federal
agency obligations) in each calendar quarter equal to not less than 4% of (1)
its net withdrawable savings deposits plus borrowings payable in one year or
less at the end of the preceding quarter or (2) the average daily balance of its
net withdrawable savings deposits plus borrowings payable in one year or less
during the preceding quarter. Monetary penalties may be imposed upon
associations failing to meet liquidity requirements. The eligible liquidity of
First Federal, as computed under current regulations, at June 30, 1999, was
$22.4 million, or 37.4% and exceeded the 4.0% liquidity requirement by
approximately $20.0 million.

         QUALIFIED THRIFT LENDER TEST. Savings associations are required to meet
the Qualified Thrift Lender ("QTL") Test. Prior to September 30, 1996, the QTL
Test required savings associations to maintain a specified level of investments
in assets that are designated as qualifying thrift investments ("QTI"), which
are generally related to domestic residential real estate and manufactured
housing and include stock issued by any FHLB, the FHLMC or the FNMA. Under this
test 65% of an institution's "portfolio assets" (total assets less goodwill and
other intangibles, property used to conduct business and 20% of liquid assets)
must consist of QTI on a monthly average basis in 9 out of every 12 months.
Congress created a second QTL Test, effective September 30, 1996, pursuant to
which a savings association may also qualify as a QTL thrift if at least 60% of
the institution's assets (on a tax basis) consist of specified assets (generally
loans secured by residential real estate or deposits, educational loans, cash
and certain governmental obligations). The OTS may grant exceptions to the QTL
Test under certain circumstances. If a savings association fails to meet the QTL
Test, the association and its holding company become subject to certain
operating and regulatory restrictions. A savings association that fails to meet
the QTL Test will not be eligible for new FHLB advances. At June 30, 1999, First
Federal met the QTL Test.

         LENDING LIMIT. OTS regulations generally limit the aggregate amount
that a savings association may lend to one borrower (the "Lending Limit") to an
amount equal to 15% of the savings association's total capital under the
regulatory capital requirements plus any additional loan reserve not included in
total capital (the "Lending Limit Capital"). A savings association may loan to
one borrower an additional amount not to exceed 10% of total capital plus
additional reserves if the additional loan amount is fully secured by certain
forms of "readily marketable collateral." Real estate is not considered "readily
marketable collateral." Certain types of loans are not subject to these limits.
In applying these limits, loans to certain borrowers may be aggregated.
Notwithstanding the specified limits, an association may lend to one borrower up
to $500,000 "for any purpose." At June 30, 1999, First Federal was in compliance
with this lending limit.

         TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
directors and principal shareholders and their related interests must conform to
the Lending Limit, and the total of such loans cannot exceed the association's
Lending Limit Capital. Most loans to directors, executive officers and principal
shareholders must be approved in advance by a majority of the "disinterested"
members of board of directors of the association with any "interested" director
not participating. All loans to directors, executive officers and principal
shareholders must be made on terms substantially the same as offered in
comparable transactions with the general public or as offered to all employees
in a company-wide benefit program. Loans to executive officers are subject to
additional restrictions. First Federal was in compliance with such restrictions
at June 30, 1999.

         All transactions between savings associations and their affiliates must
comport with Sections 23A and 23B of the Federal Reserve Act ("FRA"). An
affiliate of a savings association is any company or entity that controls, is
controlled by or is under common control with the savings association. FFD is an
affiliate of First Federal. Generally, Sections 23A and 23B of the FRA (i) limit
the extent to which a savings association or its subsidiaries may engage in
"covered transactions" with any one affiliate to an amount equal to 10% of such
institution's capital stock and surplus, (ii) limit the aggregate of all such
transactions with all affiliates to an amount equal to 20% of such capital stock
and surplus, and (iii) require that all such transactions be on terms
substantially the same, or at least as favorable to the association, as those
provided in transactions with a non-affiliate. The term "covered transaction"
includes the making of loans, purchase of assets, issuance of a guarantee and
other similar types of transactions. In addition to the limits in Sections 23A
and 23B, a savings association may not make any loan or other extension of
credit to an affiliate unless the affiliate is engaged only in activities
permissible for a bank holding company and may not purchase or invest in
securities of any affiliate except shares of a subsidiary. First Federal was in
compliance with these requirements and restrictions at June 30, 1999.

        FEDERAL DEPOSIT INSURANCE CORPORATION REGULATIONS. The FDIC is an
independent federal agency that insures the deposits of federally insured banks
and thrifts, up to prescribed statutory limits, and safeguards the safety and
soundness of the banking and thrift industries. The FDIC administers two
separate insurance funds, the Bank Insurance Fund ("BIF") for commercial banks
and state savings banks and the SAIF for savings associations. First Federal is
a member of the SAIF and


                                      -18-
<PAGE>   19


its deposit accounts are insured by the FDIC, up to the prescribed limits. The
FDIC has examination authority over all insured depository institutions,
including First Federal, and has authority to initiate enforcement actions
against federally insured savings associations, if the FDIC does not believe the
OTS has taken appropriate action to safeguard safety and soundness and the
deposit insurance fund.

         The FDIC is required to maintain designated levels of reserves in each
fund. The FDIC may increase assessment rates for either fund if necessary to
restore the fund's ratio of reserves to insured deposits to its target level
within a reasonable time and may decrease such rates if such target level has
been met. The FDIC has established a risk-based assessment system for both SAIF
and BIF members. Under this system, assessments vary based on the risk the
institution poses to its deposit insurance fund. The risk level is determined
based on the institution's capital level and the FDIC's level of supervisory
concern about the institution.

        Because of the differing reserve levels of the funds, deposit insurance
assessments paid by healthy banks were reduced significantly below the level
paid by healthy savings associations effective in mid-1995. Federal legislation,
which was effective September 30, 1996, provided for the recapitalization of the
SAIF by means of a special assessment of $.657 per $100 of SAIF deposits held at
March 31, 1995, in order to increase SAIF reserves to the level required by law.
First Federal had $49.2 million in deposits at March 31, 1995, and paid a
special assessment of $332,000, which was accounted for and recorded as of
September 30, 1996. BIF assessments for healthy banks in 1997 and the first half
of 1998 were $.013 per $100 in deposits and SAIF assessments for healthy
institutions in 1997 and the first half of 1998 were $.064 per $100 in deposits.

         FRB RESERVE REQUIREMENTS. FRB regulations currently require that
reserves of 3% of net transaction accounts (primarily NOW accounts) up to $47.8
million (subject to an exemption of up to $4.7 million), and of 10% of net
transaction accounts in excess of $47.8 million. At June 30, 1999, First Federal
was in compliance with its reserve requirements.

         FEDERAL HOME LOAN BANKS. The FHLBs provide credit to their members in
the form of advances. First Federal is a member of the FHLB of Cincinnati and
must maintain an investment in the capital stock of that FHLB in an amount equal
to the greater of 1.0% of the aggregate outstanding principal amount of First
Federal's residential mortgage loans, home purchase contracts and similar
obligations at the beginning of each year, or 5% of its advances from the FHLB.
First Federal is in compliance with this requirement with an investment in stock
of the FHLB of Cincinnati of $1.2 million at June 30, 1999.

         Upon the origination or renewal of a loan or advance, the FHLB of
Cincinnati is required by law to obtain and maintain a security interest in
collateral in one or more of the following categories: fully disbursed, whole
first mortgage loans on improved residential property or securities representing
a whole interest in such loans; securities issued, insured or guaranteed by the
United States government or an agency thereof; deposits in any FHLB; or other
real estate related collateral (up to 30% of the member association's capital)
acceptable to the applicable FHLB, if such collateral has a readily
ascertainable value and the FHLB can perfect its security interest in the
collateral.

         Each FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances from the FHLBs. The standards take into account a member's performance
under the Community Reinvestment Act and its record of lending to first-time
home buyers. All long-term advances by each FHLB must be made only to provide
funds for residential housing finance.

         HOLDING COMPANY REGULATION. FFD is a unitary savings and loan holding
company within the meaning of the Home Owners' Loan Act (the "HOLA"). As such,
FFD is registered with the OTS and is subject to OTS regulations, examination,
supervision and reporting requirements.

         There are generally no restrictions on the activities of unitary
savings and loan holding companies and such companies are the only financial
institution holding companies that may engage in commercial, securities and
insurance activities without limitation. The broad latitude to engage in
activities under current law can be restricted if the OTS determines that there
is reasonable cause to believe that the continuation of an activity by a savings
and loan holding company constitutes a serious risk to the financial safety,
soundness or stability of its subsidiary savings association. The OTS may impose
such restrictions as deemed necessary to address such risk, including limiting
(i) payment of dividends by the savings association, (ii) transactions between
the savings association and its affiliates, and (iii) any activities of the
savings association that might create a serious risk that the liabilities of the
holding company and its affiliates may be imposed on the savings association.
Notwithstanding the foregoing rules as to permissible business activities of a
unitary


                                      -19-
<PAGE>   20


savings and loan holding company, if the savings association subsidiary of a
holding company fails to meet the QTL Test, then such unitary holding company
would become subject to the activities restrictions applicable to multiple
holding companies. At June 30, 1999, First Federal met the QTL Test.

         The HOLA generally prohibits a savings and loan holding company from
controlling any other savings association or savings and loan holding company,
without prior approval of the OTS, or from acquiring or retaining more than 5%
of the voting shares of a savings association or holding company thereof, which
is not a subsidiary. Under certain circumstances, a savings and loan holding
company is permitted to acquire, with the approval of the OTS, up to 15% of the
previously unissued voting shares of an undercapitalized savings association for
cash without such savings association being deemed to be controlled by the
holding company. Except with the prior approval of the OTS, no director or
officer of a savings and loan holding company or person owning or controlling by
proxy or otherwise more than 25% of such company's stock may also acquire
control of any savings institution, other than a subsidiary institution, or any
other savings and loan holding company.

         If FFD were to acquire control of another savings institution, other
than through a merger or other business combination with First Federal, FFD
would become a multiple savings and loan holding company. Unless the acquisition
is an emergency thrift acquisition and each subsidiary savings association meets
the QTL Test, the activities of FFD and any of its subsidiaries (other than
First Federal or other subsidiary savings associations) would thereafter be
subject to activity restrictions. The HOLA provides that, among other things, no
multiple savings and loan holding company or subsidiary thereof that is not a
savings institution shall commence or continue for a limited period of time
after becoming a multiple savings and loan holding company or subsidiary
thereof, any business activity other than (i) furnishing or performing
management services for a subsidiary savings institution, (ii) conducting an
insurance agency or escrow business, (iii) holding, managing or liquidating
assets owned by or acquired from a subsidiary savings institution, (iv) holding
or managing properties used or occupied by a subsidiary savings institution, (v)
acting as trustee under deeds of trust, (vi) those activities previously
directly authorized by federal regulation as of March 5, 1987, to be engaged in
by multiple holding companies, or (vii) those activities authorized by the FRB
as permissible for bank holding companies, unless the OTS by regulation
prohibits or limits such activities for savings and loan holding companies.
Those activities described in (vii) above must also be approved by the OTS prior
to being engaged in by a multiple holding company.

         The OTS may approve acquisitions resulting in the formation of a
multiple savings and loan holding company that controls savings associations in
more than one state only if the multiple savings and loan holding company
involved controls a savings association that operated a home or branch office in
the state of the association to be acquired as of March 5, 1987, or if the laws
of the state in which the institution to be acquired is located specifically
permit institutions to be acquired by state-chartered institutions or savings
and loan holding companies located in the state where the acquiring entity is
located (or by a holding company that controls such state-chartered savings
institutions). The OTS may approve an acquisition resulting in a multiple
savings and loan holding company controlling savings associations in more than
one state in the case of certain emergency thrift acquisitions.

         MERGER MORATORIUM STATUTE. Chapter 1704 of the Ohio Revised Code
regulates certain takeover bids affecting certain public corporations with
significant ties to Ohio. The statute prohibits, with some exceptions, any
merger, combination or consolidation and any of certain other sales, leases,
distributions, dividends, exchanges, mortgages or transfers between such an Ohio
corporation and any person who has the right to exercise, alone or with others,
10% or more of the voting power of such corporation (an "Interested
Shareholder"), for three years following the date on which such person first
becomes an Interested Shareholder. Such a business combination is permitted only
if, prior to the time such person first becomes an Interested Shareholder, the
Board of Directors of the issuing corporation has approved the purchase of
shares that resulted in such person first becoming an Interested Shareholder.

         After the initial three-year moratorium, such a business combination
may not occur unless (1) an exception specifically enumerated in the statute is
applicable to the combination, (2) the combination is approved, at a meeting
held for such purpose, by the affirmative vote of the holders of the issuing
public corporation entitling them to exercise at least two-thirds of the voting
power of the issuing public corporation in the election of directors or of such
different proportion as the articles may provide, provided the combination is
also approved by the affirmative vote of the holders of at least a majority of
the disinterested shares, or (3) the business combination meets certain
statutory criteria designed to ensure that the issuing public corporation's
remaining shareholders receive fair consideration for their shares.

         An Ohio corporation may, under certain circumstances, "opt out" of the
statute by specifically providing in its articles of incorporation that the
statute does not apply to any business combination of such corporation. However,
the


                                      -20-
<PAGE>   21


statute still prohibits for twelve months any business combination that would
have been prohibited but for the adoption of such an opt-out amendment. The
statute also provides that it will continue to apply to any business combination
between a person who became an Interested Shareholder prior to the adoption of
such an amendment as if the amendment had not been adopted. The Articles of
Incorporation of FFD do not opt out of the protection afforded by Chapter 1704.

         CONTROL SHARE ACQUISITION. Section 1701.831 of the Ohio Revised Code
(the "Control Share Acquisition Statute") requires that, with certain
exceptions, acquisitions of voting securities which would result in the
acquiring shareholder owning 20%, 33 1/3%, or 50% of the outstanding voting
securities of an Ohio corporation (a "Control Share Acquisition") must be
approved in advance by (a) the holders of at least a majority of the outstanding
voting shares of such corporation represented at a meeting at which a quorum is
present, and (b) a majority of the portion of the outstanding voting shares
represented at such a meeting excluding the voting shares owned by the acquiring
shareholder, by certain other persons who acquire or transfer voting shares
after public announcement of the acquisition or by certain officers of the
corporation or directors of the corporation who are employees of the
corporation. The Control Share Acquisition Statute was intended, in part, to
protect shareholders of Ohio corporations from coercive tender offers.

         TAKEOVER BID STATUTE. Ohio law provides that an offeror may not make a
tender offer or request or invitation for tenders that would result in the
offeror beneficially owning more than ten percent of any class of the target
company's equity securities unless such offeror files certain information with
the Ohio Division of Securities (the "Securities Division") and provides such
information to the target company and the offerees within Ohio. The Securities
Division may suspend the continuation of the control bid if the Securities
Division determines that the offeror's filed information does not provide full
disclosure to the offerees of all material information concerning the control
bid. The statute also provides that an offeror may not acquire any equity
security of a target company within two years of the offeror's previous
acquisition of any equity security of the same target company pursuant to a
control bid unless the Ohio offerees may sell such security to the offeror on
substantially the same terms as provided by the previous control bid. The
statute does not apply to a transaction if either the offeror or the target
company is a savings and loan holding company and the proposed transaction
requires federal regulatory approval.

FEDERAL TAXATION

         FFD and First Federal are each subject to the federal tax laws and
regulations which apply to corporations generally. In addition to the regular
income tax, FFD and First Federal may be subject to the alternative minimum tax
which is imposed at a minimum tax rate of 20% on "alternative minimum taxable
income" (which is the sum of a corporation's regular taxable income, with
certain adjustments, and tax preference items), less any available exemption.
Such tax preference items include interest on certain tax-exempt bonds issued
after August 7, 1986. In addition, 75% of the amount by which a corporation's
"adjusted current earnings" exceeds its alternative minimum taxable income
computed without regard to this preference item and prior to reduction by net
operating losses, is included in alternative minimum taxable income. Net
operating losses can offset no more than 90% of alternative minimum taxable
income. The alternative minimum tax is imposed to the extent it exceeds the
corporation's regular income tax. Payments of alternative minimum tax may be
used as credits against regular tax liabilities in future years. However, the
Taxpayer Relief Act of 1997 repealed the alternative minimum tax for certain
"small corporations" for tax years beginning after December 31, 1997. A
corporation initially qualifies as a small corporation if it had average gross
receipts of $5,000,000 or less for the three tax years ending with its first tax
year beginning after December 31, 1996. Once a corporation is recognized as a
small corporation, it will continue to be exempt from the alternative minimum
tax for as long as its average gross receipts for the prior three-year period
does not exceed $7,500,000. In determining if a corporation meets this
requirement, the first year that it achieved small corporation status is not
taken into consideration.

         First Federal's average gross receipts for the three tax years ending
on December 31, 1998, is approximately $7.1 million and as a result, First
Federal does qualify as a small corporation exempt from the alternative minimum
tax.

         Prior to the enactment of the Small Business Jobs Protection Act (the
"Act"), which was signed into law on August 21, 1996, certain thrift
institutions, such as First Federal , were allowed deductions for bad debts
under methods more favorable than those granted to other taxpayers. Qualified
thrift institutions could compute deductions for bad debts using either the
specific charge-off method of Section 166 of the Code or one of two reserve
methods of Section 593 of the Code. The reserve methods under Section 593 of the
Code permitted a thrift institution annually to elect to deduct bad debts under
either (i) the "percentage of taxable income" method applicable only to thrift
institutions, or (ii) the "experience" method that also was available to small
banks. Under the "percentage of taxable income" method, a thrift institution
generally was allowed a deduction for an addition to its bad debt reserve equal
to 8% of its taxable income (determined without regard to


                                      -21-
<PAGE>   22

this deduction and with additional adjustments). Under the "experience" method,
a thrift institution was generally allowed a deduction for an addition to its
bad debt reserve equal to the greater of (i) an amount based on its actual
average experience for losses in the current and five preceding taxable years,
or (ii) an amount necessary to restore the reserve to its balance as of the
close of the base year. A thrift institution could elect annually to compute its
allowable addition to bad debt reserves for qualifying loans either under the
experience method or the percentage of taxable income method. For tax years
1995, 1994, and 1993, First Federal used the percentage of taxable income
method.

         The Act eliminated the percentage of taxable income method of
accounting for bad debts by thrift institutions, effective for taxable years
beginning after 1995. Thrift institutions that are treated as small banks are
allowed to utilize the experience method applicable to such institutions, while
thrift institutions that are treated as large banks are required to use only the
specific charge off method.

         A thrift institution required to change its method of computing
reserves for bad debt will treat such change as a change in the method of
accounting, initiated by the taxpayer and having been made with the consent of
the Secretary of the Treasury. Section 481(a) of the Code requires certain
amounts to be recaptured with respect to such change. Generally, the amounts to
be recaptured will be determined solely with respect to the "applicable excess
reserves" of the taxpayer. The amount of the applicable excess reserves will be
taken into account ratably over a six-taxable year period, beginning with the
first taxable year beginning after 1995, subject to the residential loan
requirement described below. In the case of a thrift institution that is treated
as a large bank, the amount of the institution's applicable excess reserves
generally is the excess of (i) the balances of its reserve for losses on
qualifying real property loans (generally loans secured by improved real estate)
and its reserve for losses on nonqualifying loans (all other types of loans) as
of the close of its last taxable year beginning before January 1, 1996, over
(ii) the balances of such reserves as of the close of its last taxable year
beginning before January 1, 1988 (i.e., the "pre-1988 reserves"). In the case of
a thrift institution that is treated as a small bank, like First Federal , the
amount of the institution's applicable excess reserves generally is the excess
of (i) the balances of its reserve for losses on qualifying real property loans
and its reserve for losses on nonqualifying loans as of the close of its last
taxable year beginning before January 1, 1996, over (ii) the greater of the
balance of (a) its pre-1988 reserves or (b) what the thrift's reserves would
have been at the close of its last year beginning before January 1, 1996, had
the thrift always used the experience method.

         For taxable years that begin after December 31, 1995, and before
January 1, 1998, if a thrift meets the residential loan requirement for a tax
year, the recapture of the applicable excess reserves otherwise required to be
taken into account as a Code Section 481(a) adjustment for the year will be
suspended. A thrift meets the residential loan requirement if, for the tax year,
the principal amount of residential loans made by the thrift during the year is
not less than its base amount. The "base amount" generally is the average of the
principal amounts of the residential loans made by the thrift during the six
most recent tax years beginning before January 1, 1996. A residential loan is a
loan as described in Section 7701(a)(19)(C)(v) (generally a loan secured by
residential or church property and certain mobile homes), but only to the extent
that the loan is made to the owner of the property.

         The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e), as modified by the Act, which require recapture in the case of
certain excessive distributions to shareholders. The pre-1988 reserves may not
be utilized for payment of cash dividends or other distributions to a
shareholder (including distributions in dissolution or liquidation) or for any
other purpose (except to absorb bad debt losses). Distribution of a cash
dividend by a thrift institution to a shareholder is treated as made: first, out
of the institution's post-1951 accumulated earnings and profits; second, out of
the pre-1988 reserves; and third, out of such other accounts as may be proper.
To the extent a distribution by First Federal to FFD is deemed paid out of its
pre-1988 reserves under these rules, the pre-1988 reserves would be reduced and
the gross income of First Federal for tax purposes would be increased by the
amount which, when reduced by the income tax, if any, attributable to the
inclusion of such amount in its gross income, equals the amount deemed paid out
of the pre-1988 reserves. As of June 30, 1999, the pre-1988 reserves of First
Federal for tax purposes totaled approximately $1.6 million. First Federal
believes it had approximately $7.7 million of accumulated earnings and profits
for tax purposes as of June 30, 1999, which would be available for dividend
distributions, provided regulatory restrictions applicable to the payment of
dividends are met. See Notes A and L to the financial statements. No
representation can be made as to whether First Federal will have current or
accumulated earnings and profits in subsequent years.

         The tax returns of First Federal have been audited or closed without
audit through fiscal year 1995. In the opinion of management, any examination of
open returns would not result in a deficiency which could have a material
adverse effect on the financial condition of First Federal.


                                      -22-
<PAGE>   23

OHIO TAXATION

         FFD is subject to the Ohio corporation franchise tax, which, as applied
to FFD, is a tax measured by both net earnings and net worth. The rate of tax is
the greater of (i) 5.1% on the first $50,000 of computed Ohio taxable income and
8.9% of computed Ohio taxable income in excess of $50,000 or (ii) 0.582% times
taxable net worth. For tax years beginning after December 31, 1998, the rate of
tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio taxable
income and 8.5% of computed Ohio taxable income in excess of $50,000 or (ii)
 .400% times taxable net worth.

         In computing its tax under the net worth method, FFD may exclude 100%
of its investment in the capital stock of First Federal , as reflected on the
balance sheet of FFD in computing its taxable net worth as long as it owns at
least 25% of the issued and outstanding capital stock of First Federal . The
calculation of the exclusion from net worth is based on the ratio of the
excludable investment (net of any appreciation or goodwill included in such
investment) to total assets multiplied by the net value of the stock. As a
holding company, FFD may be entitled to various other deductions in computing
taxable net worth that are not generally available to operating companies.

         A special litter tax is also applicable to all corporations, including
FFD, subject to the Ohio corporation franchise tax other than "financial
institutions." If the franchise tax is paid on the net income basis, the litter
tax is equal to .11% of the first $50,000 of computed Ohio taxable income and
 .22% of computed Ohio taxable income in excess of $50,000. If the franchise tax
is paid on the net worth basis, the litter tax is equal to .014% times taxable
net worth.

         First Federal is a "financial institution" for State of Ohio tax
purposes. As such, it is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.4% of the
book net worth of First Federal determined in accordance with generally accepted
accounting principles. For tax year 2000 and years thereafter, however, the
franchise tax on financial institutions will be 1.3% of the book net worth. As a
"financial institution," First Federal is not subject to any tax based upon net
income or net profits imposed by the State of Ohio.


                                      -23-
<PAGE>   24


ITEM 2.       DESCRIPTION OF PROPERTY

              The following table sets forth certain information at June 30,
1999, regarding the properties on which the main office of First Federal and a
branch office are located:

                                   Owned        Date            Net
Location                         or leased    acquired     book value(1)
--------                         ---------    --------     -------------

321 North Wooster Avenue
Dover, Ohio 44622                  Owned        1/96         $565,000

224 West High Avenue
New Philadelphia, OH 44663         Owned       11/97         $404,000
-----------------------------

(1)      At June 30, 1999, First Federal's office premises and equipment had a
         total net book value of approximately $1.4 million. For additional
         information regarding First Federal's office premises and equipment,
         see Notes A-7 and E of Notes to Consolidated Financial Statements.


ITEM 3.       LEGAL PROCEEDINGS

              Neither FFD nor First Federal is presently involved in any legal
proceedings of a material nature. From time to time, First Federal is a party to
legal proceedings incidental to its business to enforce its security interest in
collateral pledged to secure loans made by First Federal.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

              Not applicable.

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

              The information contained in the FFD Financial Corporation Annual
Report to Shareholders for the fiscal year ended June 30, 1999 (the "Annual
Report"), under the caption "Market Price of FFD Common Shares and Related
Shareholder Matters" is incorporated herein by reference.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

              The information contained in the Annual Report under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is incorporated herein by reference.

ITEM 7.       FINANCIAL STATEMENTS

              The Consolidated Financial Statements appearing in the Annual
Report and the report of Grant Thornton LLP dated August 6, 1999, are
incorporated herein by reference.

ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

              Not applicable.


                                      -24-
<PAGE>   25


                                    PART III

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

              The information contained in the definitive Proxy Statement for
the 1999 Annual Meeting of Shareholders of FFD (the "Proxy Statement"), under
the caption "Board of Directors" is incorporated herein by reference.

ITEM 10.      EXECUTIVE COMPENSATION

              The information contained in the Proxy Statement under the caption
"Compensation of Executive Officers and Directors" is incorporated herein by
reference.

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              The information contained in the Proxy Statement under the caption
"Voting Securities and Ownership of Certain Beneficial Owners and Management" is
incorporated herein by reference.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

              Not Applicable.

ITEM 13.      EXHIBITS AND REPORTS ON FROM 8-K

(A)      EXHIBITS

         3           Articles of Incorporation and Code of Regulations

         10.1        FFD Financial Corporation 1996 Stock Option and Incentive
                     Plan

         10.2        First Federal Savings Bank of Dover Recognition and
                     Retention Plan and Trust Agreement

         13          Annual Report to Shareholders (the following parts of
                     which are incorporated herein by reference; "Market Price
                     of FFD's Common Shares and Related Shareholders' Matters,"
                     "Management's Discussion and Analysis of Financial
                     Condition and Results of Operations" and Consolidated
                     Financial Statements).

         20          Proxy Statement for 1999 Annual Meeting of Shareholders

         21          Subsidiaries of FFD Financial Corporation

         27          Financial Data Schedule

(B)      REPORTS ON FORM 8-K

         No reports on Form 8-K have been filed by FFD during the quarter ended
June 30, 1999.


                                      -25-
<PAGE>   26


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                  FFD FINANCIAL CORPORATION


                                  By:/s/ Robert R. Gerber
                                     -----------------------------
                                     Robert R. Gerber, President
                                     (Principal Executive Officer)

                                  Date: September 24, 1999

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.


/s/ Robert R. Gerber                           /s/ Roy O. Mitchell, Jr.
----------------------------                   ---------------------------------
Robert R. Gerber, ,                            Roy O. Mitchell, Jr.
President and Director                         Director


Date: September 24, 1999                       Date: September 24, 1999



/s/ Stephen G. Clinton                         /s/ Robert D. Sensel
----------------------------                   ---------------------------------
Stephen G. Clinton                             Robert D. Sensel
Director                                       Director


Date: September 24, 1999                       Date: September 24, 1999



/s/ J. Richard Gray                            /s/ Enos L. Loader
----------------------------                   ---------------------------------
J. Richard Gray                                Enos L. Loader
Director                                       Director


Date: September 24, 1999                       Date:  September 24, 1999



/s/ Richard J. Herzig
----------------------------
Richard J. Herzig
Director


Date: September 24, 1999


                                      -26-
<PAGE>   27

<TABLE>
<CAPTION>

                                INDEX TO EXHIBITS

EXHIBIT
 NUMBER        DESCRIPTION                                  PAGE NUMBER
 ------        -----------                                  -----------
<S>            <C>                                          <C>
  3.1          Articles of Incorporation of FFD Financial   Incorporated by reference to the Registration Statement on
               Corporation                                  Form S-1 filed by FFD on December 15, 1995 (the "S-1") with
                                                            the Securities and Exchange Commission (the "SEC"), Exhibit
                                                            3.1.

  3.2          Certificate of Amendment to Articles of      Incorporated by reference to Pre-Effective Amendment No. 1 to
               Incorporation of FFD Financial Corporation   the S-1 filed with the SEC on February 1, 1996
                                                            ("Pre-Effective Amendment No. 1"), Exhibit 3.2.

  3.3          Certificate of Amendment to Articles of      Incorporated by reference to Pre-Effective Amendment No. 1,
               Incorporation of FFD Financial Corporation   Exhibit 3.3.

  3.4          Code of Regulations of FFD Financial         Incorporated by reference to the S-1, Exhibit 3.3.
               Corporation

  10.1         FFD Financial Corporation 1996 Stock         Incorporated by reference to the Form 10-KSB for the year ended
               Option and Incentive Plan                    June 30, 1998, as filed with the SEC on September 28, 1998
                                                            (the "1998 10-KSB"), Exhibit 10.1.

  10.2         First Federal Savings Bank of Dover          Incorporated by reference to the 1998 Form 10-KSB, Exhibit 10.2.
               Recognition and Retention Plan and Trust
               Agreement

  13           FFD Financial Corporation 1999 Annual
               Report to Shareholders

  20           Proxy Statement for 1999 Annual Meeting of
               Shareholders

  21           Subsidiaries of FFD Financial Corporation    Incorporated by reference to the Annual Report on Form 10-KSB
                                                            for the fiscal year ended June 30, 1996, filed with the SEC
                                                            on September 30, 1996, Exhibit 21.

  27           Financial Data Schedule
</TABLE>

                                      -27-