<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-KSB

  X     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
-----   SECURITIES EXCHANGE ACT OF 1934


           For the fiscal year ended: September 30, 1997

                                  OR

-----  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE 
       ECURITIES EXCHANGE ACT OF 1934

                       Commission File No.: 0-28020

                  FIRST FEDERAL FINANCIAL BANCORP, INC.
-----------------------------------------------------------------------------
              (Name of Small Business Issuer in its charter)

           DELAWARE                                       31-1456058
------------------------------               --------------------------------
(State or other jurisdiction                         (I.R.S. Employer
of incorporation or organization)                 Identification Number)


     415 Center Street                                      45638 
      Ironton, Ohio 
------------------------------               --------------------------------
   (Address of Principal                                  (Zip Code)
    Executive Offices)

    Issuer's telephone number, including area code: (614) 532-6845

    Securities registered under Section 12(b) of the Exchange Act:

                            Not Applicable

    Securities registered under Section 12(g) of the Exchange Act:
              Common Stock (par value $0.01 per share) 
-----------------------------------------------------------------------------
                           (Title of Class)

Check whether the issuer (1) has 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 disclosure of delinquent filers in response to Item 405 of 
Regulation S-B is not 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
                                             -------
Issuer's revenues for its most recent fiscal year: $4.1 million

As of December 16, 1997, the aggregate value of the 530,999 shares of Common 
Stock of the Registrant issued and outstanding on such date, which excludes 
115,384 shares held by all directors and executive officers of the Registrant 
as a group, was approximately $8.7 million. This figure is based on the last 
known trade price of $16.44 per share of the Registrant's Common Stock on 
December 16, 1997.

Number of shares of Common Stock outstanding as of December 22, 1997:
646,383 Transitional Small Business Disclosure Format: Yes        No   X
                                                           -----     -----
                     DOCUMENTS INCORPORATED BY REFERENCE

    List hereunder the following documents incorporated by reference and the
Part of the Form 10-KSB into which the document is incorporated: 

(1) Portions of the Annual Report to Stockholders for the fiscal year ended 
September 30, 1997 are incorporated into Parts II and IV. 

(2) Portions of the definitive proxy statement for the Annual Meeting of 
Stockholders are incorporated into Part III.

<PAGE>

                                    PART I.

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

    First Federal Financial Bancorp, Inc. (the "Company") is a Delaware 
corporation and sole stockholder of First Federal Savings Bank of Ironton 
(the "Savings Bank") which converted from a federally-chartered mutual 
savings and loan association to a federally-chartered stock savings bank in 
June 1996. The only significant assets of the Company are the capital stock 
of the Savings Bank, the Company's loan to its employee stock ownership plan, 
and the balance of the net conversion proceeds retained by the Company. The 
business of the Company initially consists of the business of the Savings 
Bank. At September 30, 1997, the Company had $59.2 million in total 
consolidated assets, $48.7 million in total consolidated liabilities and 
$10.5 million in total consolidated stockholders' equity.

    The Company's principal executive office is located in Ironton, Ohio. The 
Savings Bank conducts business from its main office in Ironton, Ohio and one 
branch office located in Proctorville, Ohio. The Savings Bank began 
conducting business in 1935. The Savings Bank's deposits are insured by the 
Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance 
Corporation ("FDIC") to the maximum extent permitted by law.

    The Savings Bank is a community oriented savings bank which has 
traditionally offered a variety of savings products to its retail customers. 
The Company has concentrated its lending activities on originating real 
estate loans secured by single-family residential properties in the local 
markets it serves. See "-Competition." At September 30, 1997, the total gross 
loan portfolio amounted to $40.3 million, or 68.1%, of total consolidated 
assets, of which $36.0 million, or 89.2%, were single-family residential 
mortgage loans, $.7 million, or 1.7%, were multi-family residential loans, 
$1.9 million, or 4.8%, were commercial real estate loans and $1.7 million, or 
4.3%, were comprised of other loans, including home improvement loans, 
automobile loans and loans secured by savings accounts.

    The Company also invests its funds in U.S. Government and agency 
securities, as well as mortgage-backed and related securities (hereinafter 
"mortgage-backed securities"), municipal and corporate debt securities and 
other short-term investments. At September 30, 1997, investment securities 
(both "held to maturity" as well as "available for sale") were $9.0 million, 
or 15.2% of total consolidated assets, and mortgage-backed securities (both 
"held to maturity" as well as "available for sale") were $7.8 million, or 
13.2% of total consolidated assets. The Company derives its income 
principally from interest earned on loans, securities and its other 
investments and, to a lesser extent, from fees received in connection with 
the origination of loans and for other services. The Company's primary 
expenses are interest expense on deposits and noninterest expenses. Funds are 
provided primarily by deposits, amortization and prepayments of outstanding 
loans and mortgage-backed securities and other sources.

<PAGE>

    Operating characteristics of the Company and the Savings Bank in recent 
years include the following:

    - PROFITABILITY. For the year ended September 30, 1997, the Company had 
      net income of $287,000 as compared to $217,000 for the year ended 
      September 30, 1996, and as compared to the Savings Bank's net income of 
      $353,000 for the year ended September 30, 1995. The Company's net 
      income in fiscal 1996 was negatively impacted by a one-time assessment 
      of $177,780, net of related tax benefits, to recapitalize the SAIF, as 
      described under "--Regulation--Insurance of Accounts." Without such 
      special assessment net income would have been $394,000. The Company's 
      net income is primarily dependent on its net interest income, the 
      difference between interest income on interest-earning assets and 
      interest expense on interest-bearing liabilities. Net interest income 
      amounted to $1.7 million, $1.5 million and $1.4 million for the years 
      ended September 30, 1997, 1996 and 1995, respectively. The interest 
      rate spreads were 2.12%, 2.36% and 2.62% for the years ended September 
      30, 1997, 1996 and 1995, respectively. Return on average assets was 
      .49%, .41% (.75% without the SAIF assessment) and 0.73% for the years 
      ended September 30, 1997, 1996 and 1995, respectively.
 
    - NONINTEREST EXPENSE. The Company's profitability has been enhanced by 
      management's emphasis on operating efficiency. The Company's ratio of 
      noninterest expense to average total consolidated assets amounted to 
      2.24% for the year ended September 30, 1997 and averaged 2.22% for the 
      three years ended September 30, 1997. Non-interest income historically 
      has not been a source of profitability.

    - ASSET QUALITY. Management of the Company believes that good asset 
      quality is the key to long-term financial strength and, as a result, 
      the Company's investments are intended to maintain asset quality and 
      control credit risk. In accordance with this approach, the Company has 
      predominantly emphasized single-family residential real estate loans, 
      which comprised 89.2% of total loans receivable at September 30, 1997. 
      As of such date, total non-performing assets constituted $134,000, or 
      .22% of total consolidated assets.

    - STRONG CAPITAL POSITION. At September 30, 1997, the Company had total 
      stockholders' equity of $10.5 million. The Savings Bank exceeded all of 
      its regulatory capital requirements, with tangible, core and risk-based 
      capital ratios of 15.0%, 15.0% and 33.7%, respectively, as compared to 
      the minimum requirements of 1.5%, 3.0% and 8.0%, respectively.

    The Company, as a registered savings and loan holding company, is subject 
to examination and regulation by the Office of Thrift Supervision ("OTS") and 
is subject to various reporting and other requirements of the Securities and 
Exchange Commission ("SEC"). The Savings Bank is subject to examination and 
comprehensive regulation by the 

                                  2

<PAGE>

OTS, which is the Savings Bank's chartering authority and primary regulator. 
The Savings Bank is also regulated by the FDIC, the administrator of the 
SAIF. The Savings Bank is also subject to certain reserve requirements 
established by the Board of Governors of the Federal Reserve System and is a 
member of the Federal Home Loan Bank ("FHLB") of Cincinnati, which is one of 
the 12 regional banks comprising the FHLB System.

LENDING ACTIVITIES

    GENERAL. The Company's primary lending emphasis has been, and continues 
to be, the origination of conventional loans secured by first liens on 
single-family residences located primarily in Lawrence County, Ohio. 
Conventional residential real estate loans are loans which are neither 
insured by the Federal Housing Administration ("FHA") nor partially 
guaranteed by the Veterans Administration ("VA"). The Company does not 
originate either FHA-insured or VA-guaranteed real estate loans. The 
Company's single-family residential loans constituted 89.2% of the total loan 
portfolio at September 30, 1997. To a significantly lesser extent, the 
Company's loan portfolio also includes loans secured by multi-family 
residential properties and commercial real estate, loans secured by savings 
deposits, automobile loans, home improvement loans and miscellaneous other 
loans.

    LOAN PORTFOLIO COMPOSITION.  The following table sets forth the 
composition of the Company's loan portfolio by type of loan at the dates 
indicated.

<TABLE>
<CAPTION>
                                                                                         SEPTEMBER 30,
                                                                ----------------------------------------------------------------
                                                                        1997                  1996                  1995
                                                                --------------------  --------------------  --------------------
                                                                  AMOUNT        %       AMOUNT        %       AMOUNT        %
                                                                ---------  ---------  ---------  ---------  ---------  ---------
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                             <C>        <C>        <C>        <C>        <C>        <C>
Real estate loans:
  Single-family residential...................................  $  35,984       89.2% $  32,673       90.0% $  30,536       89.7%
  Multi-family residential....................................        685        1.7        230         .6        251         .7
  Commercial real estate......................................      1,961        4.8      1,734        4.9      1,748        5.2
                                                                ---------  ---------  ---------  ---------  ---------  ---------
    Total real estate loans...................................     38,630       95.7     34,637       95.5     32,535       95.6
                                                                ---------  ---------  ---------  ---------  ---------  ---------
Non-real estate loans:
  Loans secured by savings accounts...........................        556        1.4        703        1.9        567        1.7
  Home improvement............................................         86         .2         86         .2         74         .2
  Automobile..................................................        508        1.3        463        1.3        387        1.1
  Other(1)....................................................        566        1.4        397        1.1        486        1.4
                                                                ---------  ---------  ---------  ---------  ---------  ---------
    Total other loans.........................................      1,716        4.3      1,649        4.5      1,514        4.4
                                                                ---------  ---------  ---------  ---------  ---------  ---------
    Total loans...............................................     40,346      100.0%    36,286      100.0%    34,049      100.0%
                                                                ---------  ---------  ---------  ---------  ---------  ---------
                                                                ---------  ---------  ---------  ---------  ---------  ---------
Less:
  Unearned interest...........................................       (140)                 (118)                 (117)
  Loans in process............................................       (880)                 (909)               (1,016)
  Deferred loan fees..........................................        (13)                  (21)                  (29)
  Allowance for loan losses...................................       (287)                 (283)                 (278)
                                                                ---------             ---------              ---------
    Net loans.................................................  $  39,026             $  34,955              $  32,609
                                                                ---------             ---------              ---------
                                                                ---------             ---------              ---------
</TABLE>

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

(1) Comprised primarily of unsecured consumer loans.

                                    3

<PAGE>

    CONTRACTUAL PRINCIPAL REPAYMENTS AND INTEREST RATES.  The following table 
sets forth certain information at September 30, 1997 regarding the dollar 
amount of loans maturing in the Company's total loan portfolio, based on the 
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 1-3 YEARS  DUE 3-5 YEARS  DUE 5-10 YEARS   DUE 10-15 YEARS   DUE 15 YEARS
                        DUE 1 YEAR       AFTER          AFTER           AFTER            AFTER       AND MORE AFTER
                          OR LESS       9/30/97        9/30/97         9/30/97          9/30/97         9/30/97        TOTAL
                        -----------  -------------  -------------  ---------------  ---------------  --------------  ---------
<S>                     <C>          <C>            <C>            <C>              <C>              <C>             <C>
                                                                    (IN THOUSANDS)
Single-family
  residential.........   $   1,243     $   2,606      $   2,795       $   7,390       $    10,506      $   11,444    $  35,984
Multi-family
  residential.........          20            46             55              61                65             438          685
Commercial real
  estate..............          93           202            205             525               432             504        1,961
Non-real estate.......         776           687            206              47           --               --            1,716
                         ---------     ---------      ---------       ---------       -----------      ----------    ---------
    Total.............   $   2,132     $   3,541      $   3,261       $   8,023       $    11,003      $   12,386    $  40,346
                         ---------     ---------      ---------       ---------       -----------      ----------    ---------
                         ---------     ---------      ---------       ---------       -----------      ----------    ---------
</TABLE>

                                       4

<PAGE>

    The following shows for the total loans due after one year from September 
30, 1997 the type and amount which have fixed interest rates and those which 
have adjustable interest rates.

<TABLE>
<CAPTION>
                                                                                FIXED      FLOATING OR
                                                                                RATES    ADJUSTABLE-RATES   TOTAL
                                                                              ---------  ---------------  ---------
<S>                                                                           <C>        <C>              <C>
                                                                                         (IN THOUSANDS)
Real estate loans:
  Single-family residential.................................................  $   5,806     $  28,935     $  34,741
  Multi-family residential..................................................     --               665           665
  Commercial real estate....................................................         49         1,819         1,868
                                                                              ---------       -------     ---------
    Total real estate loans.................................................      5,855        31,419        37,274
                                                                              ---------       -------     ---------
Non-real estate loans:
  Loan secured by savings accounts..........................................     --            --            --
  Home improvement..........................................................         58        --                58
  Automobile................................................................        342        --               342
  Other(1)..................................................................        540        --               540
                                                                              ---------       -------     ---------
    Total other loans.......................................................        940        --               940
                                                                              ---------       -------     ---------
      Total loans...........................................................  $   6,795     $  31,419     $  38,214
                                                                              ---------       -------     ---------
                                                                              ---------       -------     ---------
</TABLE>

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

(1) Comprised primarily of unsecured consumer loans.

    Scheduled contractual amortization of loans does not reflect the expected 
term of the Company's loan portfolio. The average life of loans is 
substantially less than their contractual terms because of prepayments. The 
Company also has the right under its mortgage loan documentation to declare a 
conventional loan immediately due and payable in the event, among other 
things, that the borrower sells the real property subject to the mortgage and 
the loan is not repaid. However, depending on whether it is profitable for 
the Company to do so, the Company will also permit loan assumptions subject 
to the acceptability of the assignee from a full credit underwriting 
standpoint. The average life of mortgage loans tends to increase when current 
mortgage loan rates are higher than rates on existing mortgage loans and, 
conversely, decrease when rates on existing mortgage loans are lower than 
current mortgage loan rates (due to refinancings of adjustable-rate and 
fixed-rate loans at lower rates). Under the latter circumstances, the 
weighted average yield on loans decreases as higher-yielding loans are repaid 
or refinanced at lower rates.

                                    5

<PAGE>

    LOAN ACTIVITY.  The following table shows total loans originated and 
repaid during the periods indicated. There were no loans purchased or sold 
during the periods.

<TABLE>
<CAPTION>
                                                                                          YEAR ENDED SEPTEMBER 30,
                                                                                       -------------------------------
                                                                                         1997       1996       1995
                                                                                       ---------  ---------  ---------

<CAPTION>
                                                                                               (IN THOUSANDS)
<S>                                                                                    <C>        <C>        <C>
Loan originations:
  Single-family residential..........................................................  $   8,509  $   8,481  $   9,802
  Multi-family residential...........................................................        458         70     --
  Commercial real estate.............................................................        536        324        165
  Non-real estate....................................................................      1,112        991        979
                                                                                       ---------  ---------  ---------
    Total loans originated...........................................................     10,615      9,866     10,946
  Loan principal reductions..........................................................     (6,495)    (6,257)    (5,677)
                                                                                       ---------  ---------  ---------
    Net increase (decrease) before other items.......................................      4,120      3,609      5,269
Decrease due to other items, net.....................................................        (49)    (1,263)    (1,407)
                                                                                       ---------  ---------  ---------
Net increase in loan portfolio.......................................................  $   4,071  $   2,346  $   3,862
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
</TABLE>

    The lending activities of the Company are subject to underwriting 
standards and loan origination procedures established by the Company's Board 
of Directors. After a loan application is taken, the Company begins the 
process of obtaining credit reports, appraisals (with respect to a mortgage 
loan) and other documentation involved with the loan. With respect to loans 
on property, the Company generally requires that a property appraisal be 
obtained in connection with all new mortgage loans, which are performed by 
independent appraisers designated by the Board of Directors. The Company also 
requires that hazard insurance be maintained on all security properties and 
that flood insurance be maintained if the property is within a designated 
flood plain. The Company receives a title opinion from an attorney in 
connection with closing a mortgage loan.

    Residential mortgage loan applications are primarily developed from 
referrals, existing customers and walk-in customers and advertising. 
Commercial real estate loan applications are primarily attributable to 
walk-in customers and referrals. Consumer loan applications are primarily 
obtained through existing and walk-in customers and advertising.

    Applications for residential mortgage loans are required to be approved 
by either the Loan Committee of the Board of Directors, which is comprised of 
at least three directors (for loans of $50,000 or less) or a majority of the 
Board of Directors (for loans with greater principal balances). The Company's 
President has authority to approve consumer loans in amounts of up to $25,000 
(on a secured basis) and $10,000 (on an unsecured basis) provided that the 
Company's underwriting requirements are otherwise satisfied.

    Most of the Company's single-family residential mortgage loans are 
originated for up to 80% of the lesser of the purchase price or appraised 
value (although the Company will originate such loans for up to a lesser of 
95% of the appraised value of the property 

                                   6

<PAGE>

securing a single-family residential loan or the purchase price of the 
property) for terms of up to 20 years and 30 years for fixed-rate and 
adjustable-rate loans, respectively. The Company will originate multi-family 
residential loans up to 70% of the value of the security property for terms 
of up to 15 years and commercial real estate loans for up to 60% of the 
appraised value for terms of up to 15 years. Share loans are originated in an 
amount up to 95% of the savings account balance at 2% over the rate paid on 
the account. Automobile loans are for up to five years for new cars and 
shorter terms for loans on used cars.

    Under applicable federal regulations, the permissible amount of loans to 
one borrower may not exceed 15% of unimpaired capital and surplus. Loans in 
an amount equal to an additional 10% of unimpaired capital and surplus also 
may be made to a borrower if the loans are fully secured by readily 
marketable securities. At September 30, 1997, the Company's five largest 
loans or groups of loans to one borrower, including related entities, ranged 
from an aggregate of $264,000 to $534,000 and the Company's 
loans-to-one-borrower limit was $1.3 million at such date. All of such loans 
were performing as of September 30, 1997.

    SINGLE-FAMILY RESIDENTIAL LOANS. The Company's single-family residential 
mortgage loans consist almost exclusively of conventional loans. The Company 
originates solely for portfolio retention and has never sold any loans 
originated. The single-family residential mortgage loans offered by the 
Company currently consist of fixed-rate and adjustable-rate loans. Fixed-rate 
loans have maturities of up to 20 years and are fully amortizing with monthly 
loan payments sufficient to repay the total amount of the loan with interest 
by the end of the loan term. At September 30, 1997, $6.3 million, or 17.5%, 
of the Company's single-family residential mortgage loans were fixed-rate 
loans.

    The adjustable-rate loans currently offered by the Company have 
maturities which range up to 30 years, with interest rates which adjust every 
year in accordance with a Federal Home Loan Bank index of national contract 
averages of single-family loans closed in the prior month, plus a margin. The 
margin established by the Company may be more or less than the Federal 
Housing Finance Board index rate. The Company's adjustable-rate residential 
loans generally have a cap of 1% on any increase or decrease in the interest 
rate at any adjustment date and 5% over the life of the loan. The Company's 
adjustable-rate loans require that any payment adjustment resulting from a 
change in the interest rate be fully amortized by the end of the loan term 
and, thus, do not permit so-called negative amortization. With the decline in 
market rates of interest over the past few years, the Company's customers 
have shown a preference for adjustable-rate loans. Originations of 
adjustable-rate residential loans constituted 84.7%, 85.3% and 90.1% of total 
origination of single-family residential loans during the years ended 
September 30, 1997, 1996 and 1995, respectively. At September 30, 1997, $29.7 
million or 82.5% of the Company's single-family residential mortgage loans 
were adjustable-rate loans.

    Adjustable-rate loans decrease the risks to the Company of holding 
long-term mortgages, but involve other risks. In a rising interest rate 
environment, as interest rates 

                                   7

<PAGE>

increase, the loan payment by the borrower increases to the extent permitted 
by the terms of the loan, thereby increasing the potential for default. 
Moreover, as interest rates increase, the marketability of the underlying 
collateral property may be adversely affected by higher interest rates. The 
Company believes that these risks, which have not had a material adverse 
effect on the Company to date because of the generally declining interest 
rate environment in recent years, generally are less than the risks 
associated with holding fixed-rate loans in an increasing interest rate 
environment.

    The Company currently will lend up to the lesser of 95% of the appraised 
value of the property securing a single-family residential loan or the 
purchase price of the property. Most loans are made for up to 80% of the 
lesser of the purchase price or appraised value. Beginning in May 1994, 
however, the Company initiated a "First Time Homebuyer's Program," which has 
been popular with customers, pursuant to which it will lend up to the lesser 
of 90% of the purchase price or the appraised value of the property and offer 
an interest rate which is .25% below its quoted rate. A prospective borrower 
must otherwise meet the Company's underwriting standards. The Company 
requires either private mortgage insurance or sufficient funds on deposit in 
a savings account with the Company on any loans which are originated with a 
loan-to-value ratio of greater than 80%. The Company's "First Time 
Homebuyer's Program" contributed 22.8%, 22.0% and 23.1% of total residential 
originations during fiscal 1995, 1996 and 1997.

    The Company began offering home equity loans secured by the underlying 
equity in the borrower's home to those borrowers with whom it has a first 
mortgage loan in April 1996. Such home equity loans are amortizing loans with 
a maximum term of 20 years. The Company's home equity loans require combined 
loan-to-value ratios of 95% or less, depending on the borrowers debt to 
income ratio.

    MULTI-FAMILY RESIDENTIAL AND COMMERCIAL REAL ESTATE LENDING. At September 
30, 1997, the Company's multi-family residential loan portfolio was comprised 
of four apartment buildings which contain between 6 and 20 units. The Company 
will originate loans up to 70% of the value of the security property for 
terms of up to 15 years. At September 30, 1997, the Company had $.7 million, 
or 1.7% of the total loan portfolio, invested in multi-family residential 
loans.

    At September 30, 1997, the Company's commercial real estate portfolio was 
comprised of 32 properties, with principal balances of up to $182,600. The 
properties which secure such loans are local facilities and include a 
warehouse, churches, a multi-purpose building, and various other small 
commercial facilities. The Company will originate loans for up to 60% of the 
appraised value for terms of up to 15 years. At September 30, 1997, the 
Company's commercial real estate loan portfolio amounted to $1.9 million or 
4.8% of the total loan portfolio.

    The Company evaluates various aspects of commercial and multi-family 
residential real estate loan transactions in an effort to mitigate risk to 
the extent possible. In 

                                  8

<PAGE>

underwriting these loans, consideration is given to the stability of the 
property's cash flow history, future operating projections, current and 
projected occupancy, position in the market, location and physical condition. 
The underwriting analysis also includes credit checks and a review of the 
financial condition of the borrower and guarantor, if applicable. An 
appraisal report is prepared by an independent appraiser to substantiate 
property values for every commercial real estate and multi-family loan 
transaction.

    Multi-family and commercial real estate lending entails different and 
significant risks when compared to single-family residential lending because 
such loans typically involve large loan balances to single borrowers and 
because the payment experience on such loans is typically dependent on the 
successful operation of the project or the borrower's business. These risks 
can also be significantly affected by supply and demand conditions in the 
local market for apartments, offices, or other commercial space. The Company 
attempts to minimize its risk exposure by limiting such lending to proven 
owners, only considering properties with existing operating performance which 
can be analyzed, requiring conservative debt coverage ratios, and 
periodically monitoring the operation and physical condition of the 
collateral.

    NON-REAL ESTATE LOANS. At September 30, 1997, the Company had $556,000, 
or 1.4% of the total loan portfolio, invested in loans secured by savings 
accounts. The Company will originate such loans in an amount up to 95% of the 
account balance at 2% over the rate paid on the account. In addition, as of 
such date, the Company had $508,000, or 1.3% of the total loan portfolio, 
invested in new and used automobile loans, which are fixed-rate loans with 
terms ranging up to five years in the case of loans on new cars and shorter 
terms for loans on used cars; $86,000, or .2% of the total loan portfolio, 
invested in home improvement loans and $566,000, or 1.4% of the total loan 
portfolio, invested in other miscellaneous loans, primarily small, short-term 
unsecured loans to customers.

ASSET QUALITY

    GENERAL.  When a borrower fails to make a required payment on a loan, the 
Company attempts to cure the deficiency by contacting the borrower and 
seeking payment. A notice is sent 15 days after a payment is due and, if 
payment has not been received within approximately 10 days, the borrower is 
contacted by phone. In most cases, deficiencies are cured promptly. If a 
delinquency continues, additional efforts are made to collect the loan. While 
the Company generally prefers to work with borrowers to resolve such 
problems, when a real estate loan becomes 90 days delinquent, the Company 
institutes foreclosure proceedings or takes such other action as may be 
necessary to minimize any potential loss. The Company believes that the 
attention paid by its collection department to late payments is a major 
reason for the low level of non-performing assets over the last several years.

    Real estate loans are placed on non-accrual status when, in the judgment 
of management, the probability of collection of interest is deemed to be 
insufficient to warrant further accrual. When a real estate loan is placed on 
non-accrual status, previously accrued 

                                   9

<PAGE>

but unpaid interest is deducted from interest income. As a matter of policy, 
the Company does not accrue interest on real estate loans past due 90 days or 
more.

    The Company generally follows the same rigorous collection procedure 
described above for its consumer loans. The Company charges off all consumer 
loans after the fifth payment due is missed.

    Real estate acquired as a result of foreclosure or by deed-in-lieu of 
foreclosure are classified as real estate owned until sold. Pursuant to a 
statement of position (SOP 92-3) issued by the AICPA in April 1992, which 
provides guidance on determining the balance sheet treatment of foreclosed 
assets in annual financial statements for periods ending on or after December 
15, 1992, there is a rebuttable presumption that foreclosed assets are held 
for sale and such assets are recommended to be carried at the lower of fair 
value minus estimated costs to sell the property, or cost (generally the 
balance of the loan on the property at the date of acquisition). After the 
date of acquisition, all costs incurred in maintaining the property are 
expenses and costs incurred for the improvement or development of such 
property are capitalized up to the extent of their net realizable value.

    NON-PERFORMING ASSETS. The following table sets forth the amounts and 
categories of the Company's non-performing assets at the dates indicated. The 
Company had no troubled debt restructurings during the periods presented.

<TABLE>
<CAPTION>
                                                                                                       SEPTEMBER 30,
                                                                                              -------------------------------
                                                                                                1997       1996       1995
                                                                                              ---------  ---------  ---------
                                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                                                           <C>        <C>        <C>
Non-accruing loans:
  Single-family residential.................................................................  $      84  $     109  $      46
                                                                                              ---------        ---        ---
    Total non-accruing loans................................................................         84        109         46
                                                                                              ---------        ---        ---
Accruing loans greater than 90 days delinquent..............................................     --         --         --
                                                                                              ---------        ---        ---
    Total non-performing loans(1)...........................................................         84        109         46
                                                                                              ---------        ---        ---
Real estate owned(1)........................................................................         50         33     --
                                                                                              ---------        ---        ---
    Total non-performing assets.............................................................  $     134  $     142  $      46
                                                                                              ---------        ---        ---
                                                                                              ---------        ---        ---
    Total non-performing loans as a percentage of total loans...............................        .21%      0.31%      0.14%
                                                                                              ---------        ---        ---
                                                                                              ---------        ---        ---
    Total non-performing assets as a percentage of total assets.............................        .22%      0.25%      0.09%
                                                                                              ---------        ---        ---
                                                                                              ---------        ---        ---
</TABLE>

                                                 (Footnotes on following page)

                                   10

<PAGE>

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

(1) The decrease in total non-performing loans is attributable to three loans 
    on non-accrual status at September 30, 1997 (the largest of which was 
    $35,000) as compared to five loans at September 30, 1996, net of the 
    transfer of one single-family residential loan to real estate owned 
    during the 1997 fiscal year. Management does not expect any material 
    losses to be sustained as a result of these non-accrual loans.

    For the years ended September 30, 1997 and 1996, gross interest income 
which would have been recorded had the loans accounted for on a non-accrual 
basis been current in accordance with their original terms amounted to $3,447 
and $3,584, respectively. For the years ended September 30, 1997 and 1996, 
$3,213 and $3,895 were included in interest income for these same loans prior 
to the time they were placed on non-accrual status.

    ALLOWANCE FOR LOAN LOSSES.  The Company's policy is to establish reserves 
for estimated losses on loans when it determines that a significant and 
probable decline in value occurs. The allowance for losses on loans is 
maintained at a level believed adequate by management to absorb estimated 
losses in the portfolio. Management's determination of the adequacy of the 
allowance is based on an evaluation of the portfolio, past loss experience, 
current economic conditions, volume, growth and composition of the portfolio, 
and other relevant factors. The allowance is increased by provisions for loan 
losses which are charged against income. The Company's allowance for loan 
losses has historically been predicated on its low loss experience.

                                       11

<PAGE>

    The following table sets forth an analysis of the Company's allowance for 
loan losses during the periods indicated.

<TABLE>
<CAPTION>
                                                                                                        YEAR ENDED
                                                                                                       SEPTEMBER 30,
                                                                                              -------------------------------
                                                                                                1997       1996       1995
                                                                                              ---------  ---------  ---------

                                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                                                           <C>        <C>        <C>
Balance at beginning of period..............................................................  $     283  $     278  $     265
                                                                                                    ---        ---        ---
Charge-offs:
  Single-family residential.................................................................         (2)        (2)        --
  Consumer and other........................................................................         --         (8)        (1)
Recoveries:
  Single-family residential.................................................................          1         --         --
  Consumer and other........................................................................          2          1          1
                                                                                                    ---        ---        ---
  Net (charge-offs) recoveries..............................................................          1         (9)        --
                                                                                                    ---        ---        ---
  Provision for loan losses...................................................................          3         14         13
                                                                                                    ---        ---        ---
Balance at end of period....................................................................  $     287  $     283  $     278
                                                                                                    ---        ---        ---
                                                                                                    ---        ---        ---
Allowance for loan losses as a percent of total loans outstanding...........................       0.73%      0.81%      0.85%
                                                                                                    ---        ---        ---
                                                                                                    ---        ---        ---
Ratio of net charge-offs to average loans outstanding.......................................         --%      0.03%      0.00%
                                                                                                    ---        ---        ---
                                                                                                    ---        ---        ---
</TABLE>

    The following table sets forth information concerning the allocation of 
the Company's allowance for loan losses by loan category at the dates 
indicated.

<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30,
                                        --------------------------------------------------------------------------------
                                                   1997                        1996                        1995
                                        --------------------------  --------------------------  ------------------------
                                                     PERCENT OF                    PERCENT OF                 PERCENT OF
                                                      LOANS TO                      LOANS TO                   LOANS TO
                                        AMOUNT       TOTAL LOANS      AMOUNT      TOTAL LOANS     AMOUNT      TOTAL LOANS
                                        -----------  -------------  -----------  -------------  -----------   -----------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                     <C>          <C>            <C>          <C>            <C>           <C>
Single-family residential..............  $     255          88.9%    $     235       90.4%      $   225          87.4%
Multi-family residential...............          5           1.7             7         .6             8           3.0
Commercial real estate.................         14           4.9            14        4.8            13           5.2
Other loans............................         13           4.5            27        4.2            32           4.4
                                              -----        -----          -----     -----         -----         -----
    Total..............................  $     287         100.0%    $     283      100.0%      $   278         100.0%
                                              -----        -----          -----     -----         -----         -----
                                              -----        -----          -----     -----         -----         -----

</TABLE>

                                   12

<PAGE>
 
MORTGAGE-BACKED SECURITIES AND INVESTMENT SECURITIES
 
    GENERAL. Federally-chartered savings institutions have authority to 
invest in various types of liquid assets, including United States Treasury 
obligations, securities of various federal agencies and of state and 
municipal governments, certificates of deposit at federally-insured banks and 
savings and loan associations, certain bankers' acceptances and Federal 
funds. Subject to various restrictions, federally-chartered savings 
institutions may also invest a portion of their assets in commercial paper, 
corporate debt securities and mutual funds, the assets of which conform to 
the investments that federally-chartered savings institutions are otherwise 
authorized to make directly.
 
    The Company's President has authority to implement the Company's
Board-approved investment policy. The President may make investments of up to
$500,000 without prior approval of the Board; however, the President generally
seeks Board approval on all investments over $250,000. All of such investments
are required to be reported to the Board for ratification at the next scheduled
meeting. Pursuant to the Company's investment policy, all securities are to be
purchased with the primary objective of safety of principal and liquidity and,
secondarily, with consideration given to the yield to be earned. The Company is
authorized to invest in U.S. Government and agency issues, mortgage-backed
securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal National Mortgage Association ("FNMA") and Government National Mortgage
Association ("GNMA"), municipal bonds issued by state or local authorities
(which generally must be rated in one of the top categories by one of the
nationally recognized rating services) and certificates of deposit in insured
institutions up to a maximum of $99,000 per institution.
 
    MORTGAGE-BACKED SECURITIES. The Company maintains a significant portfolio of
mortgage-backed securities as a means of investing in housing-related mortgage
instruments without the costs associated with originating mortgage loans for
portfolio retention and with limited credit risk of default which arises in
holding a portfolio of loans to maturity. Mortgage-backed securities (which also
are known as mortgage participation certificates or pass-through certificates)
represent a participation interest in a pool of single-family mortgages. The
principal and interest payments on mortgage-backed securities are passed from
the mortgage originators, as servicer, through intermediaries (generally U.S.
Government agencies and government-sponsored enterprises) that pool and
repackage the participation interests in the form of securities, to investors
such as the Company. Such U.S. Government agencies and government sponsored
enterprises, which guarantee the payment of principal and interest to investors,
primarily include the FHLMC, the FNMA and the GNMA.
 
    The FHLMC is a public corporation chartered by the U.S. Government and 
owned by the 12 Federal Home Loan Banks and federally-insured savings 
institutions. The FHLMC issues participation certificates backed principally 
by conventional mortgage loans. The FHLMC guarantees the timely payment of 
interest and the ultimate return of principal on participation certificates. 
The FNMA is a private corporation chartered by the U.S. 

                                              13
<PAGE>

Congress with a mandate to establish a secondary market for mortgage loans. 
The FNMA guarantees the timely payment of principal and interest on FNMA 
securities. FHLMC and FNMA securities are not backed by the full faith and 
credit of the United States, but because the FHLMC and the FNMA are U.S. 
Government-sponsored enterprises, these securities are considered to be among 
the highest quality investments with minimal credit risks. The GNMA is a 
government agency within the Department of Housing and Urban Development 
which is intended to help finance government-assisted housing programs. GNMA 
securities are backed by FHA-insured and VA-guaranteed loans, and the timely 
payment of principal and interest on GNMA securities are guaranteed by the 
GNMA and backed by the full faith and credit of the U.S. Government. Because 
the FHLMC, the FNMA and the GNMA were established to provide support for low- 
and middle-income housing, there are limits to the maximum size of loans that 
qualify for these programs. At September 30, 1997, the Company had an 
aggregate of $6.6 million, or 84.6% of total mortgage-backed securities (held 
to maturity and available for sale), invested in GNMA, FNMA and FHLMC 
certificates and, as of such date, the Company had $1.2 million, or 15.4% of 
total mortgage-backed securities, invested in four collateralized mortgage 
obligations ("CMOs").
 
    In contrast to pass-through mortgage-backed securities, in which cash 
flow is received pro rata by all security holders, the cash flow from the 
mortgages underlying a CMO is segmented and paid in accordance with a 
predetermined priority to investors holding various CMO classes. By 
allocating the principal and interest cash flows from the underlying 
collateral among the separate CMO classes, different classes of bonds are 
created, each with its own stated maturity, estimated average life, coupon 
rate and prepayment characteristics. The Company's CMO's were issued by the 
GNMA and FNMA and are performing in accordance with their terms. As of 
September 30, 1997, the Company did not own any mortgage-related securities 
designated as "high-risk mortgage securities" under OTS pronouncements.
 
    Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed-rate or
adjustable-rate loans. As a result, the risk characteristics of the underlying
pool of mortgages, (i.e., fixed-rate or adjustable-rate) as well as prepayment
risk, are passed on to the certificate holder. The life of a mortgage-backed
pass-through security thus approximates the life of the underlying mortgages.
 
    Mortgage-backed securities generally yield less than the loans which 
underlie such securities because of their payment guarantees or credit 
enhancements which offer nominal credit risk. In addition, mortgage-backed 
securities are more liquid than individual mortgage loans and may be used to 
collateralize certain obligations. At September 30, 1997, none of the 
Company's mortgage-backed securities were pledged as security for an 
obligation. Mortgage-backed securities issued or guaranteed by the FNMA or 
the FHLMC (except interest-only securities or the residual interests in CMOs) 
are weighted at no more 

                                              14
<PAGE>

than 20.0% for risk-based capital purposes, compared to a weight of 50.0% to 
100.0% for residential loans. See "--Regulation--The Savings Bank--Capital 
Requirements."
 
    The Company's mortgage-backed securities are classified as either held to
maturity or available for sale based upon the Company's intent and ability to
hold such securities to maturity at the time of purchase, in accordance with
GAAP. The mortgage-backed securities of the Company which are held to maturity
are carried at cost, adjusted for the amortization of premiums and the accretion
of discounts using a method which approximates a level yield, while
mortgage-backed securities available for sale are carried at the lower of cost
or current market value. See Notes 1, 5 and 6 of the Notes to Consolidated
Financial Statements.
 
    The following table sets forth the composition of the Company's
mortgage-backed securities held to maturity at the dates indicated.

<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                       -------------------------------
                                                                                         1997       1996       1995
                                                                                       ---------  ---------  ---------
                                                                                           (DOLLARS IN THOUSANDS)
<S>                                                                                    <C>        <C>        <C>
GNMA certificates....................................................................  $      40  $      43  $     656
FNMA certificates....................................................................      1,591      1,762      3,185
FHLMC certificates...................................................................      2,600      3,142      4,401
Collateralized mortgage obligations..................................................        356        124        163
                                                                                       ---------  ---------  ---------
  Total mortgage-backed securities held to maturity..................................      4,587      5,071      8,405
Unamortized premiums.................................................................        123        137        194
Unearned discounts...................................................................        (14)       (18)       (31)
                                                                                       ---------  ---------  ---------
  Net mortgage-backed securities held to maturity....................................  $   4,696  $   5,190  $   8,568
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
Weighted average interest rate.......................................................       6.01%      6.47%      6.52%
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
</TABLE>
 
                                       15
<PAGE>

    The following table sets forth the composition of the Company's
mortgage-backed securities available for sale at the dates indicated.

<TABLE>
<CAPTION>
                                                                                                  SEPTEMBER 30,
                                                                                         -------------------------------
                                                                                           1997       1996       1995
                                                                                         ---------  ---------  ---------
                                                                                             (DOLLARS IN THOUSANDS)
<S>                                                                                      <C>        <C>        <C>
GNMA certificates......................................................................  $     831  $     955      $ 465
FNMA certificates......................................................................        854        945        397
FHLMC certificates.....................................................................        575        657        131
Collateralized mortgage obligations....................................................        848         --         --
                                                                                         ---------  ---------      -----
  Total mortgage-backed securities available for sale..................................      3,108      2,557        993
Unamortized premiums...................................................................         27         31         15
Unearned discounts.....................................................................        (36)        (8)        (4)
Unrealized holding gain (loss) on mortgage-backed securities available for sale........         31         (4)       (14)
                                                                                         ---------  ---------      -----
  Net mortgage-backed securities available for sale....................................  $   3,130  $   2,576      $ 990
                                                                                         ---------  ---------      -----
                                                                                         ---------  ---------      -----
Weighted average interest rate.........................................................       6.67%      6.60%      6.09%
                                                                                         ---------  ---------      -----
                                                                                         ---------  ---------      -----
</TABLE>
 
    The following table sets forth the activity in the Company's aggregate
mortgage-backed securities portfolio (held to maturity and available for sale)
during the periods indicated.

<TABLE>
<CAPTION>
                                                                                         AT OR FOR THE YEAR ENDED
                                                                                               SEPTEMBER 30,
                                                                                      -------------------------------
                                                                                        1997       1996       1995
                                                                                      ---------  ---------  ---------
                                                                                              (IN THOUSANDS)
<S>                                                                                   <C>        <C>        <C>
Mortgage-backed securities at beginning of period...................................  $   7,766  $   9,558  $  10,712
Purchases...........................................................................      1,124         --         --
Repayments..........................................................................     (1,081)    (1,769)    (1,133)
Sales...............................................................................         --         --         --
Accretion and amortization, net.....................................................        (18)       (33)       (38)
Net change in unrealized holding gain on available for sale securities..............         35         10         17
                                                                                      ---------  ---------  ---------
Mortgage-backed securities at end of period.........................................  $   7,826  $   7,766  $   9,558
                                                                                      ---------  ---------  ---------
                                                                                      ---------  ---------  ---------
</TABLE>

                                                 16
<PAGE>
 
    At September 30, 1997, the weighted average contractual maturity of the 
Company's aggregate mortgage-backed securities (held to maturity and 
available for sale) was approximately 23 years. The actual maturity of a 
mortgage-backed security is less than its stated maturity due to prepayments 
of the underlying mortgages. Prepayments that are faster than anticipated may 
shorten the life of the security and adversely affect its yield to maturity. 
The yield is based upon the interest income and the amortization of any 
premium or discount related to the mortgage-backed security. In accordance 
with GAAP, premiums and discounts are amortized over the estimated lives of 
the securities, which decrease and increase interest income, respectively. 
The prepayment assumptions used to determine the amortization period for 
premiums and discounts can significantly affect the yield of the 
mortgage-backed security, and these assumptions are reviewed periodically to 
reflect actual prepayments. Although prepayments of underlying mortgages 
depend on many factors, the difference between the interest rates on the 
underlying mortgages and the prevailing mortgage interest rates generally is 
the most significant determinant of the rate of prepayments. During periods 
of falling mortgage interest rates, if the coupon rate of the underlying 
mortgages exceeds the prevailing market interest rates offered for mortgage 
loans, refinancing generally increases and accelerates the prepayment of the 
underlying mortgages and the related security. Under such circumstances, the 
Company may be subject to reinvestment risk because to the extent that the 
Company's mortgage-related securities amortize or prepay faster than 
anticipated, the Company may not be able to reinvest the proceeds of such 
repayments and prepayments at a comparable rate.
 
    INVESTMENT SECURITIES.  The following table sets forth certain information
relating to the Company's investment securities held to maturity at the dates
indicated.

<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                       -------------------------------
                                                                                         1997       1996       1995
                                                                                       ---------  ---------  ---------
                                                                                               (IN THOUSANDS)
<S>                                                                                    <C>        <C>        <C>
U.S. Treasury securities.............................................................  $      --  $     250  $     250
U.S. Government agency securities....................................................      4,380      5,078      1,843
Municipal bonds......................................................................      1,628      1,447      1,008
Certificates of deposit..............................................................        779      1,771      1,780
FHLB stock...........................................................................        470        438        409
                                                                                       ---------  ---------  ---------
  Total..............................................................................  $   7,257  $   8,984  $   5,290
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
</TABLE>

                                         17
<PAGE>
 
    The following table sets forth certain information relating to the Company's
investment securities available for sale at the dates indicated.

<TABLE>
<CAPTION>
                                                                                                    SEPTEMBER 30,
                                                                                          ---------------------------------
                                                                                            1997       1996        1995
                                                                                          ---------  ---------     -----
                                                                                                   (IN THOUSANDS)
<S>                                                                                       <C>        <C>           <C>
U.S. Government agency securities.......................................................  $   1,549  $   2,391   $  --
Obligations of states and political subdivisions........................................        140        140      --
                                                                                          ---------  ---------   -----
  Total investment securities available for sale........................................      1,689      2,531      --
Unrealized holding gain on investment securities available for sale.....................          5          1      --
                                                                                          ---------  ---------   -----
Net investment securities available for sale............................................  $   1,694  $   2,532   $  --
                                                                                          ---------  ---------   -----
                                                                                          ---------  ---------   -----
</TABLE>
 
    The following table sets forth certain information regarding the maturities
of the Company's investment securities at September 30, 1997.


<TABLE>
<CAPTION>
                                                                     CONTRACTUALLY MATURING
                                     --------------------------------------------------------------------------------------
                                               WEIGHTED               WEIGHTED                WEIGHTED             WEIGHTED
                                     UNDER 1   AVERAGE                AVERAGE                 AVERAGE    OVER 10   AVERAGE
                                      YEAR      YIELD     1-5 YEARS    YIELD     6-10 YEARS    YIELD      YEARS     YIELD
                                     -------   --------   ---------   --------   ----------   --------   -------   --------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                  <C>       <C>        <C>         <C>        <C>          <C>        <C>       <C>
U.S. Government agency
  securities.......................   $ --         --%     $4,083       6.21%      $1,492       6.97%    $  500      7.00%
Municipal bonds....................    150       4.65         484       5.90          898       5.25         95      4.95
Certificates of deposit............    297       5.55         482       6.16           --         --         --        --
FHLB stock.........................     --         --          --         --           --         --        470      7.09
                                     -------     ----     ---------     ----     ----------     ----     -------     ----
Total..............................   $447       5.24%     $5,049       6.18%      $2,390       5.87%    $1,065      6.85%
                                     -------     ----     ---------     ----     ----------     ----     -------     ----
                                     -------     ----     ---------     ----     ----------     ----     -------     ----
</TABLE>

    The Company's investment securities are classified as either held to
maturity or available for sale at the time of purchase, in accordance with
Generally Accepted Accounting Principles.
 
SOURCES OF FUNDS
 
    GENERAL.
 
    The Company's principal source of funds for use in lending and for other 
general business purposes has traditionally come from deposits obtained 
through its main and branch offices. The Company also derives funds from 
amortization and prepayments of outstanding loans and mortgage-backed 
securities, from maturing investment securities and, occasionally, from 
advances from the FHLB of Cincinnati. Loan repayments are a relatively stable 
source of funds, while deposit inflows and outflows are significantly 
influenced by general interest rates 

                                       18
<PAGE>

and money market conditions. The Company may use borrowings to 
supplement its deposits as a source of funds.
 
    DEPOSITS.  The Company's current deposit products primarily include passbook
accounts and certificates of deposit ranging in terms from six months to 37
months, and to a lesser extent, demand accounts. The Company's deposit products
also include Individual Retirement Account ("IRA") certificates.
 
    The Company's deposits are obtained from residents in its primary market
area. The Company attracts local deposit accounts by offering competitive
interest rates. The Company utilizes traditional marketing methods to attract
new customers and savings deposits, including print media and radio advertising.
 
    The following table sets forth the dollar amount and average interest rates
of deposits in the various types of deposit programs offered by the Company at
the dates indicated.

<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30,
                                                       ----------------------------------------------------------------------
                                                                1997                    1996                    1995
                                                       ----------------------  ----------------------  ----------------------
                                                        AMOUNT    PERCENTAGE    AMOUNT    PERCENTAGE    AMOUNT    PERCENTAGE
                                                       ---------  -----------  ---------  -----------  ---------  -----------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                    <C>        <C>          <C>        <C>          <C>        <C>
Certificate accounts:
  2.00--4.00%.....................................     $   1,006         2.2%  $   1,662         3.7%  $   2,452         5.3%
  4.01--6.00%.....................................        13,142        29.2      21,321        47.6       8,698        18.8
  6.01--8.00%.....................................        20,630        45.9      10,965        24.5      22,945        49.7
                                                       ---------       ------  ---------       -----   ---------       -----
Total certificate accounts........................        34,778        77.3      33,948        75.8      34,095        73.8
                                                       ---------       ------  ---------       -----   ---------       -----
Transaction accounts:
  Passbook accounts...............................         9,054        20.1       9,863        22.0      11,191        24.2
  Christmas Club..................................            91          .2          96          .2          94         0.2
  Demand accounts.................................         1,070         2.4         902         2.0         818         1.8
                                                       ---------       ------  ---------       -----   ---------       -----
Total transaction accounts........................        10,215        22.7      10,861        24.2      12,103        26.2
                                                       ---------       ------  ---------       -----   ---------       -----
Total deposits....................................     $  44,993       100.0%  $  44,809       100.0%  $  46,198       100.0%
                                                       ---------       ------  ---------       -----   ---------       -----
                                                       ---------       ------  ---------       -----   ---------       -----
</TABLE>

                                                       19
<PAGE>
 
    The following table sets forth the savings activities of the Company during
the periods indicated.

<TABLE>
<CAPTION>
                                                                                             YEAR ENDED
                                                                                            SEPTEMBER 30,
                                                                                   -------------------------------
                                                                                     1997       1996       1995
                                                                                   ---------  ---------  ---------
                                                                                           (IN THOUSANDS)
<S>                                                                                <C>        <C>        <C>
Deposits.........................................................................  $  35,414  $  39,002  $  35,225
Withdrawals......................................................................    (37,046)    42,057     32,457
                                                                                   ---------  ---------  ---------
  Net increase (decrease) before interest credited...............................     (1,632)    (3,055)     2,768
Interest credited................................................................      1,816      1,666      1,468
                                                                                   ---------  ---------  ---------
  Net increase (decrease) in deposits............................................  $     184  $  (1,389) $   4,236
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
</TABLE>
 
    The following table shows the contractual interest rate and maturity
information for the Company's certificates of deposit at September 30, 1997.

<TABLE>
<CAPTION>
                                        MATURITY DATE
                 -----------------------------------------------------------
                 ONE YEAR      OVER         OVER         OVER
                  OR LESS    1-2 YEARS    2-3 YEARS     3 YEARS      TOTAL
                 ---------  -----------  -----------  -----------  ---------
                                       (IN THOUSANDS)
<S>              <C>        <C>          <C>          <C>          <C>
  2.00--4.00%    $   2,980   $      26    $      --    $      --   $   3,006
  4.01--6.00%       21,079       3,163          786           16      25,044
  6.01--8.00%        3,309       1,292        1,794          333       6,728
                 ---------   ---------    ---------    ---------   ---------
     Total       $  27,368   $   4,481    $   2,580    $     349   $  34,778
                 ---------   ---------    ---------    ---------   ---------
                 ---------   ---------    ---------    ---------   ---------
</TABLE>
 
    The following table sets forth the maturities of the Company's certificates
of deposit having principal amounts of $100,000 or more at September 30, 1997.
The Company does not use brokered deposits and the substantial majority of all
funds are from within the local market area.
 
<TABLE>
<CAPTION>
                                 CERTIFICATES OF DEPOSIT MATURING
                                        IN QUARTER ENDING:                                          (IN THOUSANDS)
--------------------------------------------------------------------------------------------------  ---------------
<S>                                                                                                 <C>
December 31, 1997.................................................................................     $     532
March 31, 1998....................................................................................           437
June 30, 1998.....................................................................................           442
September 30, 1998................................................................................           877
After September 30, 1998..........................................................................         1,380
                                                                                                          ------
Total certificates of deposit with balances of $100,000 or more...................................     $   3,668
                                                                                                          ------
                                                                                                          ------
</TABLE>

                                                       20
<PAGE>
 
    BORROWINGS.  The Company may obtain advances from the FHLB of Cincinnati
upon the security of the common stock it owns in that bank and certain of its
residential mortgage loans and securities held to maturity, provided certain
standards related to creditworthiness have been met. Such advances are made
pursuant to several credit programs, each of which has its own interest rate and
range of maturities. At September 30, 1997, the Company had $3.3 million in
outstanding advances from the FHLB of Cincinnati.
 
    The following table sets forth the maximum month-end balance and average
balance of the Company's FHLB advances during the periods indicated.
<TABLE>
<CAPTION>
                                                                                                   YEAR ENDED
                                                                                                  SEPTEMBER 30,
                                                                                         -------------------------------
                                                                                           1997       1996       1995
                                                                                         ---------  ---------  ---------
                                                                                             (DOLLARS IN THOUSANDS)
<S>                                                                                      <C>        <C>        <C>
Maximum balance........................................................................  $   3,300  $     500  $   5,600
Average balance........................................................................      1,318         27      1,105
Year end balance.......................................................................      3,300        500         --
Weighted average interest rate:
  At end of year.......................................................................       6.25%      5.45%        --%
  During the year......................................................................       5.61       5.45       6.15
</TABLE>
 
SUBSIDIARIES
 
    The Savings Bank is permitted to invest up to 2% of its assets in the
capital stock of, or secured or unsecured loans to, subsidiary corporations,
with an additional investment of 1% of assets when such additional investment is
utilized primarily for community development purposes. The Savings Bank has no
subsidiaries.
 
COMPETITION
 
    The Company faces strong competition both in attracting deposits and making
real estate loans. Its most direct competition for deposits has historically
come from other savings associations, credit unions and commercial banks located
within 15 miles of Ironton, which covers Lawrence County, Ohio, Boyd and Greenup
Counties, Kentucky and Cabell County, West Virginia, including many large
financial institutions which have greater financial and marketing resources
available to them.
 
    The Company's primary market area is Lawrence County, Ohio. Lawrence County
has three banks with nine offices and four thrift institutions with eight
offices which all compete for deposits and loans. Lawrence County has a very
competitive financial institution market dominated in total deposits by banks.
The Company is much smaller in size than many of its competitors in terms of
assets and is less diversified.

                                            21
<PAGE>
 
    In addition, during times of high interest rates, the Company has faced
additional significant competition for investors' funds from short-term money
market securities, mutual funds and other corporate and government securities.
The ability of the Company to attract and retain savings deposits depends on its
ability to generally provide a rate of return, liquidity and risk comparable to
that offered by competing investment opportunities.
 
    The Company experiences strong competition for real estate loans 
principally from other savings associations, commercial banks and mortgage 
banking companies. The Company competes for loans principally through 
interest rates, by minimizing loan fees, and the efficiency and quality of 
services it provides borrowers. Competition may increase as a result of the 
continuing reduction of restrictions on the interstate operations of 
financial institutions.
 
REGULATION
 
    SET FORTH BELOW IS A BRIEF DESCRIPTION OF THOSE LAWS AND REGULATIONS WHICH,
TOGETHER WITH THE DESCRIPTIONS OF LAWS AND REGULATIONS CONTAINED ELSEWHERE
HEREIN, ARE DEEMED MATERIAL TO AN INVESTOR'S UNDERSTANDING OF THE EXTENT TO
WHICH THE COMPANY AND THE SAVINGS BANK ARE REGULATED. THE DESCRIPTION OF THE
LAWS AND REGULATIONS HEREUNDER, AS WELL AS DESCRIPTIONS OF LAWS AND REGULATIONS
CONTAINED ELSEWHERE HEREIN, DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO APPLICABLE LAWS AND REGULATIONS.
 
    THE COMPANY.  The Company, as a savings and loan holding company within the
meaning of the Home Owners Loan Act ("HOLA"), has registered with the OTS and is
subject to OTS regulations, examinations, supervision and reporting
requirements. As a subsidiary of a savings and loan holding company, the Savings
Bank is subject to certain restrictions in its dealings with the Company and
affiliates thereof.
 
    ACTIVITIES RESTRICTIONS.  There are generally no restrictions on the 
activities of a savings and loan holding company which holds only one 
subsidiary savings institution. However, if the Director of the OTS 
determines that there is reasonable cause to believe that the continuation by 
a savings and loan holding company of an activity constitutes a serious risk 
to the financial safety, soundness or stability of its subsidiary savings 
institution, the Director may impose such restrictions as deemed necessary to 
address such risk, including limiting (i) payment of dividends by the savings 
institution; (ii) transactions between the savings institution and its 
affiliates; and (iii) any activities of the savings institution that might 
create a serious risk that the liabilities of the holding company and its 
affiliates may be imposed on the savings institution. Notwithstanding the 
above rules as to permissible business activities of unitary savings and loan 
holding companies, if the savings institution subsidiary of such a holding 
company fails to meet the QTL test, as discussed under "--The Savings 
Bank--Qualified Thrift Lender Test," then such unitary holding company also 
shall become subject to the activities restrictions applicable to multiple 
savings and loan holding companies and, unless the savings institution 
requalifies as a QTL within one year thereafter, shall register as, and 
become subject to the restrictions applicable to, a bank holding company. See 
"--The Savings Bank--Qualified Thrift Lender Test."

                                            22
<PAGE>
 
    If the Company were to acquire control of another savings institution, other
than through merger or other business combination with the Savings Bank, the
Company would thereupon become a multiple savings and loan holding company.
Except where such acquisition is pursuant to the authority to approve emergency
thrift acquisitions and where each subsidiary savings institution meets the QTL
test, as set forth below, the activities of the Company and any of its
subsidiaries (other than the Savings Bank or other subsidiary savings
institutions) would thereafter be subject to further restrictions. Among other
things, no multiple savings and loan holding company or subsidiary thereof which
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, upon prior notice to, and no objection by the
OTS, 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 authorized by regulation as of March 5,
1987 to be engaged in by multiple savings and loan holding companies; or (vii)
unless the Director of the OTS by regulation prohibits or limits such activities
for savings and loan holding companies, those activities authorized by the
Federal Reserve Board ("FRB") as permissible for bank holding companies. Those
activities described in (vii) above also must be approved by the Director of the
OTS prior to being engaged in by a multiple savings and loan holding company.
 
    LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.  Transactions between savings
institutions and any affiliate are governed by Sections 23A and 23B of the
Federal Reserve Act. An affiliate of a savings institution is any company or
entity which controls, is controlled by or is under common control with the
savings institution. In a holding company context, the parent holding company of
a savings institution (such as the Company) and any companies which are
controlled by such parent holding company are affiliates of the savings
institution. Generally, Sections 23A and 23B (i) limit the extent to which the
savings institution 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, and contain an aggregate limit on all such transactions with
all affiliates to an amount equal to 20% of such capital stock and surplus and
(ii) require that all such transactions be on terms substantially the same, or
at least as favorable, to the institution or subsidiary as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and other similar transactions. In
addition to the restrictions imposed by Sections 23A and 23B, no savings
institution may (i) loan or otherwise extend credit to an affiliate, except for
any affiliate which engages only in activities which are permissible for bank
holding companies, or (ii) purchase or invest in any stocks, bonds, debentures,
notes or similar obligations of any affiliate, except for affiliates which are
subsidiaries of the savings institution.

                                            23
<PAGE>
 
    In addition, Sections 22(h) and (g) of the Federal Reserve Act places 
restrictions on loans to executive officers, directors and principal 
stockholders. Under Section 22(h), loans to a director, an executive officer 
and to a greater than 10% stockholder of a savings institution, and certain 
affiliated interests of either, may not exceed, together with all other 
outstanding loans to such person and affiliated interests, the savings 
institution's loans to one borrower limit (generally equal to 15% of the 
institution's unimpaired capital and surplus). Section 22(h) also requires 
that loans to directors, executive officers and principal stockholders be 
made on terms substantially the same as offered in comparable transactions to 
other persons unless the loans are made pursuant to a benefit or compensation 
program that (i) is widely available to employees of the institution and (ii) 
does not give preference to any director, executive officer or principal 
stockholder, or certain affiliated interests of either, over other employees 
of the savings institution. Section 22(h) also requires prior board approval 
for certain loans. In addition, the aggregate amount of extensions of credit 
by a savings institution to all insiders cannot exceed the institution's 
unimpaired capital and surplus. Furthermore, Section 22(g) places additional 
restrictions on loans to executive officers. At September 30, 1997, the 
Savings Bank was in compliance with the above restrictions.
 
    RESTRICTIONS ON ACQUISITIONS.  Except under limited circumstances, savings
and loan holding companies are prohibited from acquiring, without prior approval
of the Director of the OTS, (i) control of any other savings institution or
savings and loan holding company or substantially all the assets thereof or (ii)
more than 5% of the voting shares of a savings institution or holding company
thereof which is not a subsidiary. Except with the prior approval of the
Director 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 acquire control of any savings institution, other than
a subsidiary savings institution, or of any other savings and loan holding
company.
 
    The Director of the OTS may only approve acquisitions resulting in the
formation of a multiple savings and loan holding company which controls savings
institutions in more than one state if (i) the multiple savings and loan holding
company involved controls a savings institution which operated a home or branch
office located in the state of the institution to be acquired as of March 5,
1987; (ii) the acquiror is authorized to acquire control of the savings
institution pursuant to the emergency acquisition provisions of the Federal
Deposit Insurance Act ("FDIA"); or (iii) the statutes of the state in which the
institution to be acquired is located specifically permit institutions to be
acquired by the 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).
 
    Under the Bank Holding Company Act of 1956, the FRB is authorized to approve
an application by a bank holding company to acquire control of a savings
institution. In addition, a bank holding company that controls a savings
institution may merge or consolidate the assets and liabilities of the savings
institution with, or transfer assets and


                                     24

<PAGE>

liabilities to, any subsidiary bank which is a member of the BIF with the 
approval of the appropriate federal banking agency and the FRB. As a result 
of these provisions, there have been a number of acquisitions of savings 
institutions by bank holding companies in recent years.
 
    THE SAVINGS BANK.  The OTS has extensive authority over the operations of
federally chartered savings institutions. As part of this authority, savings
institutions are required to file periodic reports with the OTS and are subject
to periodic examinations by the OTS and the FDIC. The last regulatory
examination of the Savings Bank by the OTS was as of September 30, 1997. The
investment and lending authority of savings institutions are prescribed by
federal laws and regulations, and such institutions are prohibited from engaging
in any activities not permitted by such laws and regulations. Those laws and
regulations generally are applicable to all federally chartered savings
institutions and may also apply to state-chartered savings institutions. Such
regulation and supervision is primarily intended for the protection of
depositors.
 
    The OTS' enforcement authority over all savings institutions and their
holding companies includes, among other things, the ability to assess civil
money penalties, to issue cease and desist or removal orders and to initiate
injunctive actions. In general, these enforcement actions may be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with the OTS.
 
    INSURANCE OF ACCOUNTS.  The deposits of the Savings Bank are currently 
insured by the SAIF of the FDIC. Both the SAIF and the Bank Insurance Fund 
("BIF"), the federal deposit insurance fund that covers commercial bank 
deposits, are required by law to attain and thereafter maintain a reserve 
ratio of 1.25% of insured deposits.
 
    The BIF fund met its target reserve level in September 1995, but the SAIF 
was not expected to meet its target reserve level until at least 2002. 
Consequently, in late 1995, the FDIC approved a final rule regarding deposit 
insurance premiums which, effective with respect to the semiannual premium 
assessment beginning January 1, 1996, reduced deposit insurance premiums for 
BIF member institutions to zero basis points (subject to an annual minimum of 
$2,000) for institutions in the lowest risk category. Deposit insurance 
premiums for SAIF members were maintained at their existing levels (23 basis 
points for institutions in the lowest risk category).
 
    On September 30, 1996, President Clinton signed into law legislation which
eliminated the premium differential between SAIF-insured institutions and
BIF-insured institutions by recapitalizing the SAIF's reserves to the required
ratio. The legislation provided that all SAIF member institutions pay a one-time
special assessment to recapitalize the SAIF, which in the aggregate was
sufficient to bring the reserve ratio of the SAIF to 1.25% of insured deposits.
The legislation also provided for the merger of the BIF and the SAIF, with such
merger being conditioned upon the prior elimination of the thrift charter.



                                     25

<PAGE>
 
    Effective October 8, 1996, FDIC regulations imposed a one-time special
assessment of 65.7 basis points on SAIF-assessable deposits as of March 31,
1995, which was collected on November 27, 1996. The Savings Bank's one-time
special assessment amounted to $269,363 ($177,780 net of related tax benefits).
The payment of such special assessment had the effect of immediately reducing
the Savings Bank's capital by such an amount. Nevertheless, management does not
believe that this one-time special assessment will have a material adverse
effect on the Company's consolidated financial condition or cause non-compliance
with the Savings Bank's regulatory capital requirements.
 
    In the fourth quarter of 1996, the FDIC lowered the assessment rates for
SAIF members to reduce the disparity in the assessment rates paid by BIF and
SAIF members. Beginning October 1, 1996, effective SAIF rates generally ranged
from zero basis points to 27 basis points, except that during the fourth quarter
of 1996, the rates for SAIF members ranged from 18 basis points to 27 basis
points in order to include assessments paid to the Financing Corporation
("FICO"). From 1997 trough 1999, SAIF members will pay 6.4 basis points to fund
the FICO, while BIF member institutions will pay about 1.3 basis points. The
Savings Bank's insurance premiums, which have amounted to 23 basis points have
been reduced to 6.4 basis points, effective January 1, 1997.
 
    The FDIC may terminate the deposit insurance of any insured depository
institution, including the Savings Bank, if it determines after a hearing that
the institution has engaged or is engaging in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Savings Bank's deposit insurance.
 
    REGULATORY CAPITAL REQUIREMENTS.  Federally insured savings institutions are
required to maintain minimum levels of regulatory capital. The OTS has
established capital standards applicable to all savings institutions. These
standards generally must be as stringent as the comparable capital requirements
imposed on national banks. The OTS also is authorized to impose capital
requirements in excess of these standards on individual institutions on a
case-by-case basis.
 
    Current OTS capital standards require savings institutions to satisfy three
different capital requirements. Under these standards, savings institutions must
maintain "tangible" capital equal to at least 1.5% of adjusted total assets,
"core" capital equal to at least 3.0% of adjusted total assets and "total"
capital (a combination of core and "supplementary" capital) equal to at least
8.0% of "risk-weighted" assets. For purposes of the regulation, core capital
generally consists of common stockholders' equity (including retained earnings),


                                    26

<PAGE>

noncumulative perpetual preferred stock and related surplus, minority 
interests in the equity accounts of fully consolidated subsidiaries, certain 
nonwithdrawable accounts and pledged deposits and "qualifying supervisory 
goodwill." Tangible capital is given the same definition as core capital but 
does not include qualifying supervisory goodwill and is reduced by the amount 
of all the savings institution's intangible assets, with only a limited 
exception for purchased mortgage servicing rights. The Savings Bank had no 
goodwill or other intangible assets at September 30, 1997. Both core and 
tangible capital are further reduced by an amount equal to a savings 
institution's debt and equity investments in subsidiaries engaged in 
activities not permissible to national banks (other than subsidiaries engaged 
in activities undertaken as agent for customers or in mortgage banking 
activities and subsidiary depository institutions or their holding 
companies). These adjustments do not materially affect the Savings Bank's 
regulatory capital.
 
    In determining compliance with the risk-based capital requirement, a 
savings institution is allowed to include both core capital and supplementary 
capital in its total capital, provided that the amount of supplementary 
capital included does not exceed the savings institution's core capital. 
Supplementary capital generally consists of hybrid capital instruments; 
perpetual preferred stock which is not eligible to be included as core 
capital; subordinated debt and intermediate-term preferred stock; and general 
allowances for loan losses up to a maximum of 1.25% of risk-weighted assets. 
In determining the required amount of risk-based capital, total assets, 
including certain off-balance sheet items, are multiplied by a risk weight 
based on the risks inherent in the type of assets. The risk weights assigned 
by the OTS for principal categories of assets are (i) 0% for cash and 
securities issued by the U.S. Government or unconditionally backed by the 
full faith and credit of the U.S. Government; (ii) 20% for securities (other 
than equity securities) issued by U.S. Government-sponsored agencies and 
mortgage-backed securities issued by, or fully guaranteed as to principal and 
interest by, the FNMA or the FHLMC, except for those classes with residual 
characteristics or stripped mortgage-related securities; (iii) 50% for 
prudently underwritten permanent one- to four-family first lien mortgage 
loans not more than 90 days delinquent and having a loan-to-value ratio of 
not more than 80% at origination unless insured to such ratio by an insurer 
approved by the FNMA or the FHLMC, qualifying residential bridge loans made 
directly for the construction of one- to four-family residences and 
qualifying multi-family residential loans; and (iv) 100% for all other loans 
and investments, including consumer loans, commercial loans, and one- to 
four-family residential real estate loans more than 90 days delinquent, and 
for repossessed assets.
 
    In August 1995, the OTS and other federal banking agencies published a final
rule modifying their existing risk-based capital standards to provide for
consideration of interest rate risk when assessing capital adequacy of a bank.
Under the final rule, the OTS must explicitly include a bank's exposure to
declines in the economic value of its capital due to changes in interest rates
as a factor in evaluating a bank's capital adequacy. In addition, in August
1995, the OTS and the other federal banking agencies published a joint policy
statement for public comment that describes the process the banking agencies


                                       27

<PAGE>

will use to measure and assess the exposure of a bank's net economic value to
changes in interest rates. Under the policy statement, the OTS will consider
results of supervisory and internal interest rate risk models as one factor in
evaluating capital adequacy. The OTS intends, at a future date, to incorporate
explicit minimum requirements for interest rate risk in its risk-based capital
standards through the use of a model developed from the policy statement, a
future proposed rule and the public comments received therefrom.
 
    Any savings institution that fails any of the capital requirements is
subject to possible enforcement actions by the OTS or the FDIC. Such actions
could include a capital directive, a cease and desist order, civil money
penalties, the establishment of restrictions on the institution's operations,
termination of federal deposit insurance and the appointment of a conservator or
receiver. The OTS' capital regulation provides that such actions, through
enforcement proceedings or otherwise, could require one or more of a variety of
corrective actions.
 
    LIQUIDITY REQUIREMENTS.  All savings institutions are required to maintain
an average daily balance of liquid assets equal to a certain percentage of the
sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings institutions. At the present time, the required minimum
liquid asset ratio is 4%. At September 30, 1997, the Savings Bank's liquidity
ratio was 13.0%.

    CAPITAL DISTRIBUTIONS. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt and
other transactions charged to the capital account of a savings institution to
make capital distributions. Generally, the regulation creates a safe harbor for
specified levels of capital distributions from institutions meeting at least
their minimum capital requirements, so long as such institutions notify the OTS
and receive no objection to the distribution from the OTS. Savings institutions
and distributions that do not qualify for the safe harbor are required to obtain
prior OTS approval before making any capital distributions.
 
    Generally, a savings institution that before and after the proposed
distribution meets or exceeds its fully phased-in capital requirements (Tier 1
institutions) may make capital distributions during any calendar year equal to
the higher of (i) 100% of net income for the calendar year-to-date plus 50% of
its "surplus capital ratio" at the beginning of the calendar year or (ii) 75% of
net income over the most recent four-quarter period. The "surplus capital ratio"
is defined to mean the percentage by which the institution's ratio of total
capital to assets exceeds the ratio of its fully phased-in capital requirement
to assets. "Fully phased-in capital requirement" is defined to mean an
institution's capital requirement under the statutory and regulatory standards
applicable on December 31, 1994, as modified to reflect any applicable
individual minimum capital requirement imposed upon the institution. Failure to
meet fully phased-in or minimum capital requirements will result in further


                                   28

<PAGE>

restrictions on capital distributions, including possible prohibition without
explicit OTS approval.
 
    In order to make distributions under these safe harbors, Tier 1 and Tier 2
institutions must submit 30 days written notice to the OTS prior to making the
distribution. The OTS may object to the distribution during that 30-day period
based on safety and soundness concerns. At September 30, 1997, the Savings Bank
was a Tier 1 institution for purposes of this regulation.
 
    In December 1994, the OTS published a notice of proposed rulemaking to amend
its capital distribution regulation. Under the proposal, institutions would be
permitted to only make capital distributions that would not result in their
capital being reduced below the level required to remain "adequately
capitalized." Because the Savings Bank is a subsidiary of a holding company, the
proposal would require the Savings Bank to provide notice to the OTS of its
intent to make a capital distribution. The Savings Bank does not believe that
the proposal will adversely affect its ability to make capital distributions if
it is adopted substantially as proposed.
 
    LOANS TO ONE BORROWER.  The permissible amount of loans-to-one borrower now
generally follows the national bank standard for all loans made by savings
institutions, as compared to the pre-FIRREA rule that applied that standard only
to commercial loans made by federally chartered savings institutions. The
national bank standard generally does not permit loans-to-one borrower to exceed
the greater of $500,000 or 15% of unimpaired capital and surplus. Loans in an
amount equal to an additional 10% of unimpaired capital and surplus also may be
made to a borrower if the loans are fully secured by readily marketable
securities. For information about the largest borrowers from the Savings Bank,
see "--Lending Activities--Loan Activity."
 
    COMMUNITY REINVESTMENT.  Under the Community Reinvestment Act of 1977, as 
amended ("CRA"), as implemented by OTS regulations, a savings institution has 
a continuing and affirmative obligation consistent with its safe and sound 
operation to help meet the credit needs of its entire community, including 
low and moderate income neighborhoods. The CRA does not establish specific 
lending requirements or programs for financial institutions nor does it limit 
an institution's discretion to develop the types of products and services 
that it believes are best suited to its particular community, consistent with 
the CRA. The CRA requires the OTS, in connection with its examination of a 
savings institution, to assess the institution's record of meeting the credit 
needs of its community and to take such record into account in its evaluation 
of certain applications by such institution. FIRREA amended the CRA to 
require public disclosure of an institution's CRA rating and require the OTS 
to provide a written evaluation of an institution's CRA performance utilizing 
a rating system which identifies four levels of performance that may describe 
an institution's record of meeting community needs: outstanding, 
satisfactory, needs to improve and substantial noncompliance. The CRA also 
requires all institutions to make public disclosure of their CRA ratings. The 
Savings Bank received a "satisfactory" rating as a result of its most recent 
evaluation.


                                         29

<PAGE>

    NATIONWIDE BANKING.  The Savings Bank may face additional competition from
commercial banks headquartered outside of the State of Ohio as a result of the
enactment of the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, which became fully effective on June 1, 1997, and which will allow banks
and bank holding companies headquartered outside of Ohio to enter the Savings
Bank's market through acquisition, merger or de novo branching. For further
information about the Savings Bank's competition, see "--Competition."
 
    BRANCHING BY FEDERAL SAVINGS INSTITUTIONS. OTS policy permits interstate
branching to the full extent permitted by statute (which is essentially
unlimited). Generally, federal law prohibits federal savings institutions from
establishing, retaining or operating a branch outside the state in which the
federal institution has its home office unless the institution meets the IRS'
domestic building and loan test (generally, 60% of a thrift's assets must be
housing-related) ("IRS Test"). The IRS Test requirement does not apply if, among
other things, the law of the state where the branch would be located would
permit the branch to be established if the federal savings institution were
chartered by the state in which its home office is located. Furthermore, the OTS
will evaluate a branching applicant's record of compliance with the Community
Reinvestment Act of 1977 ("CRA"). An unsatisfactory CRA record may be the basis
for denial of a branching application.
 
    QUALIFIED THRIFT LENDER TEST.  Under Section 2303 of the Economic Growth and
Regulatory Paperwork Reduction Act of 1996, a savings association can comply
with the QTL test by either meeting the QTL test set forth in the HOLA and
implementing regulations or qualifying as a domestic building and loan
association as defined in Section 7701(a)(19) of the Internal Revenue Code of
1986, as amended ("Code").
 
    The QTL Test set forth in the HOLA requires that Qualified Thrift
Investments ("QTIs") represent 65% of portfolio assets. Portfolio assets are
defined as total assets less intangibles, property used by a savings association
in its business and liquidity investments in an amount not exceeding 20% of
assets. Generally, QTIs are residential housing related assets. At September 30,
1997, approximately 77.8% of the Savings Bank's assets were invested in QTIs,
which was in excess of the percentage required to qualify the Savings Bank under
the QTI Test in effect at that time.
 
    A savings association that does not comply with the QTL Test must either
convert to a bank charter or comply with the following restrictions on its
operations: (i) the association may not engage in any new activity or make any
new investment, directly or indirectly, unless such activity or investment is
permissible for a national bank; (ii) the branching powers of the association
shall be restricted to those of a national bank; (iii) the association shall not
be eligible to obtain any advances from its FHLB; and (iv) payment of dividends
by the association shall be subject to the rules regarding payment of dividends
by a national bank. Upon the expiration of three years from the date the
association ceases to be a QTL, it must cease any activity and not retain any
investment not permissible for a national bank and immediately repay any
outstanding FHLB advances (subject to safety and soundness considerations).


                                      30

<PAGE>
 
    ACCOUNTING REQUIREMENTS.  Applicable OTS accounting regulations and 
reporting requirements apply the following standards: (i) regulatory reports 
will incorporate GAAP when GAAP is used by federal banking agencies; (ii) 
savings institution transactions, financial condition and regulatory capital 
must be reported and disclosed in accordance with OTS regulatory reporting 
requirements that will be at least as stringent as for national banks; and 
(iii) the Director of the OTS may prescribe regulatory reporting requirements 
more stringent than GAAP whenever the Director determines that such 
requirements are necessary to ensure the safe and sound reporting and 
operation of savings institutions.
 
    The accounting principles for depository institutions are currently
undergoing review to determine whether the historical cost model or market-based
measure of valuation is the appropriate measure for reporting the assets of such
institutions in their financial statements. Such proposal is controversial
because any change in applicable accounting principles which requires depository
institutions to carry mortgage-backed securities and mortgage loans at fair
market value could result in substantial losses to such institutions and
increased volatility in their liquidity and operations. Currently, it cannot be
predicted whether there may be any changes in the accounting principles for
depository institutions in this regard beyond those imposed by SFAS No. 115 or
when any such changes might become effective.
 
    FEDERAL HOME LOAN BANK SYSTEM.  The Savings Bank is a member of the FHLB of
Cincinnati, which is one of 12 regional FHLBs that administers the home
financing credit function of savings institutions. Each FHLB serves as a reserve
or central bank for its members within its assigned region. It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB System. It makes loans to members (i.e., advances) in accordance with
policies and procedures established by the Board of Directors of the FHLB. At
September 30, 1997, the Savings Bank had $3.3 million in FHLB advances.
 
    As a member, the Savings Bank is required to purchase and maintain stock in
the FHLB of Cincinnati in an amount equal to at least 1% of its aggregate unpaid
residential mortgage loans, home purchase contracts or similar obligations at
the beginning of each year or 5% of its advances from the FHLB of Cincinnati,
whichever is greater. At September 30, 1997, the Savings Bank had $470,100 in
FHLB stock, which was in compliance with this requirement.
 
    The FHLBs are required to provide funds for the resolution of troubled
savings institutions and to contribute to affordable housing programs through
direct loans or interest subsidies on advances targeted for community investment
and low- and moderate-income housing projects. These contributions have
adversely affected the level of FHLB dividends paid in the past and could
continue to do so in the future. These contributions also could have an adverse
effect on the value of FHLB stock in the future.
 
    FEDERAL RESERVE SYSTEM.  The FRB requires all depository institutions to
maintain reserves against their transaction accounts (primarily NOW and Super


                                     31

<PAGE>

NOW checking accounts) and non-personal time deposits. As of September 30, 1997,
the Savings Bank was in compliance with applicable requirements. However,
because required reserves must be maintained in the form of vault cash or a
noninterest-bearing account at a Federal Reserve Bank, the effect of this
reserve requirement is to reduce an institution's earning assets.
 
FEDERAL TAXATION
 
    GENERAL.
 
    The Company and Savings Bank are subject to the generally applicable
corporate tax provisions of the Code, and Savings Bank is subject to certain
additional provisions of the Code which apply to thrift and other types of
financial institutions. The following discussion of federal taxation is intended
only to summarize certain pertinent federal income tax matters material to the
taxation of the Company and the Savings Bank and is not a comprehensive
discussion of the tax rules applicable to the Company and Savings Bank.
 
    BAD DEBT RESERVES.  Prior to the enactment, on August 20, 1996, of the 
Small Business Job Protection Act of 1996 (the "Small Business Act"), for 
federal income tax purposes, thrift institutions such as the Savings Bank, 
which met certain definitional tests primarily relating to their assets and 
the nature of their business, were permitted to establish tax reserves for 
bad debts and to make annual additions thereto, which additions could, within 
specified limitations, be deducted in arriving at their taxable income. The 
Savings Bank's deduction with respect to "qualifying loans," which are 
generally loans secured by certain interests in real property, could be 
computed using an amount based on a six-year moving average of the Savings 
Bank's actual loss experience (the "Experience Method"), or a percentage 
equal to 8.0% of the Savings Bank's taxable income (the "PTI Method"), 
computed without regard to this deduction and with additional modifications 
and reduced by the amount of any permitted addition to the non-qualifying 
reserve.
 
    Under the Small Business Act, the PTI Method was repealed and the Savings
Bank is required to use the Experience Method of computing additions to its
bad debt reserve for taxable years beginning with the Savings Bank's taxable
year beginning January 1, 1996. In addition, the Small Business Act required
banks to recapture (i.e., take into taxable income) over a six-year period,
beginning with the taxable year beginning January 1, 1996, the excess of the
balance of bad debt reserves (other than the supplemental reserve) as of
December 31, 1995 over (a) the greater of the balance of such reserves as of
December 31, 1987 or (b) an amount that would have been the balance of such
reserves as of December 31, 1995 had the bank always computed the additions to
its reserves using the Experience Method. However, under the Small Business Act
such recapture requirements will be suspended for each of the two successive
taxable years beginning January 1, 1996 in which the bank originates a minimum
amount of certain residential loans during such years that is not less than the
average of the principal amounts of such loans made by the bank during its six
taxable years preceding January 1, 1996. The Savings Bank was not subject to any
recapture under these provisions, as it had no excess reserves as defined above.



                                  32

<PAGE>

    At December 31, 1996, the federal income tax reserves of the Savings Bank
included $1.3 million for which no federal income tax has been provided. All of
this amount is attributable to pre-1987 bad debt reserves.
 
    DISTRIBUTIONS.  If the Savings Bank were to distribute cash or property to
its sole stockholder, and the distribution was treated as being from its
pre-1987 bad debt reserves, the distribution would cause the Savings Bank to
have additional taxable income. A distribution is deemed to have been made from
pre-1987 bad debt reserves to the extent that (a) the reserves exceed the amount
that would have been accumulated on the basis of actual loss experience, and (b)
the distribution is a "non-qualified distribution." A distribution with respect
to stock is a non-qualified distribution to the extent that, for federal income
tax purposes, (i) it is in redemption of shares, (ii) it is pursuant to a
liquidation of the institution, or (iii) in the case of a current distribution,
together with all other such distributions during the taxable year, it exceeds
the institution's current and post-1951 accumulated earnings and profits. The
amount of additional taxable income created by a non-qualified distribution is
an amount that when reduced by the tax attributable to it is equal to the amount
of the distribution.
 
    MINIMUM TAX.  The Code imposes an alternative minimum tax at a rate of 20%.
The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent such AMTI is in excess of an exemption
amount. The Code provides that an item of tax preference is the excess of the
bad debt deduction allowable for a taxable year pursuant to the percentage of
taxable income method over the amount allowable under the experience method.
Other items of tax preference that constitute AMTI include (a) tax-exempt
interest on newly issued (generally, issued on or after August 8, 1986) private
activity bonds other than certain qualified bonds and (b) 75% of the excess (if
any) of (i) adjusted current earnings as defined in the Code, over (ii) AMTI
(determined without regard to this preference and prior to reduction by net
operating losses).
 
    NET OPERATING LOSS CARRYOVERS. A financial institution may carry back net
operating losses ("NOLs") to the preceding three taxable years and forward to
the succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At September 30, 1997, the Savings Bank had
no NOL carryforwards for federal income tax purposes.

    CAPITAL GAINS AND CORPORATE DIVIDENDS-RECEIVED DEDUCTION. Corporate net
capital gains are taxed at a maximum rate of 35%. The corporate
dividends-received deduction is 80% in the case of dividends received from
corporations with which a corporate recipient does not file a consolidated tax
return, and corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received or accrued on
their behalf. However, a corporation may deduct 100% of dividends from a member
of the same affiliated group of corporations.
 

                                 33

<PAGE>

    OTHER MATTERS.  Federal legislation is introduced from time to time that
would limit the ability of individuals to deduct interest paid on mortgage
loans. Individuals are currently not permitted to deduct interest on consumer
loans. Significant increases in tax rates or further restrictions on the
deductibility of mortgage interest could adversely affect the Savings Bank.
 
    The Savings Bank's federal income tax returns for the tax years ended
December 31, 1994 forward are open under the statute of limitations and are
subject to review by the IRS.
 
STATE TAXATION
 
    The Company is subject to a Delaware franchise tax based on the Company's
authorized capital stock or on its assumed par and no-par capital, whichever
yields a lower result. Under the authorized capital method, each share is taxed
at a graduated rate based on the number of authorized shares with a maximum
aggregate tax of $150,000 per year. Under the assumed par-value capital method,
Delaware taxes each $1,000,000 of assumed par-capital at the rate of $200.
 
    The Company will be subject to an Ohio franchise tax only to the extent it
is determined to be doing business in Ohio. The Company, a Delaware corporation,
does not expect to transact business in Ohio. To the extent that the Ohio
franchise tax is determined to apply to the Company, the tax is computed based
on the greater of a Company's tax liability as determined under separate net
worth and net income computations. The Company would exclude its investment in
the Savings Bank in determining its tax liability under the net worth
computation. The tax liability under the net worth computation will be computed
at 0.596% of the Company's net taxable value. The tax liability under the net
income method would be computed at a graduated rate not exceeding 9.12% of the
Company's Ohio taxable income.
 
    The Savings Bank is subject to an Ohio franchise tax based on its net worth
plus certain reserve amounts. Total net worth for this purpose is reduced by
certain exempted assets. The resultant net worth is taxed at a rate of 1.5% for
the 1997 return, which is based on net worth as of December 31, 1997.
 
    The Savings Bank's state franchise tax returns for the tax years ended
December 31, 1994 forward are open under the statute of limitations and are
subject to review by state taxing authorities.
 

                                        34

<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY.
 
    The Company's principal executive office is located at 415 Center Street,
Ironton, Ohio 45638. The following table sets forth certain information with
respect to the offices and other properties of the Savings Bank at September 30,
1997.

                                            NET BOOK VALUE
DESCRIPTION/ADDRESS          LEASED/OWNED     OF PROPERTY    DEPOSITS
---------------------------  -------------  ---------------  ---------
                                                  (IN THOUSANDS)
Main Office(1) 
415 Center Street 
Ironton, Ohio 45638........      Owned         $   1,125     $  33,509

Branch Office(2): 
201 State Street 
Proctorville, Ohio 45669...      Owned               821        11,484

------------------------
 
(1) Drive-through facility expansion completed in October 1997. Located at the
    corner of 5th and Railroad Streets.

(2) This branch office opened on August 4, 1997. Former Chesapeake, Ohio branch
    was relocated to the new Proctorville location. The Company intends to sell
    the Chesapeake facility, which had a net book value of $107,000 at September
    30, 1997.
 
ITEM 3. LEGAL PROCEEDINGS.
 
    There are no material legal proceedings to which the Company is a party or
to which any of their property is subject.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
    Not applicable.
 
PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
    The information required herein is incorporated by reference from pages 39
and 40 of the Company's 1997 Annual Report to Stockholders ("Annual Report").



                                     35

<PAGE>
 
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS.
 
    The information required herein is incorporated by reference from pages
three to 13 of the Company's 1997 Annual Report.
 
ITEM 7. FINANCIAL STATEMENTS.
 
    The information required herein is incorporated by reference from pages 2,
and 14 to 37 of the Company's 1997 Annual Report.
 
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE.
 
    Not applicable.
 
                                    PART III
 
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
 
    The information required herein is incorporated by reference from pages two
to six, and nine of the Company's Proxy Statement dated December 19, 1997
("Proxy Statement").
 
ITEM 10. EXECUTIVE COMPENSATION.
 
    The information required herein is incorporated by reference from pages ten
to 16 of the Company's Proxy Statement.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
    The information required herein is incorporated by reference from pages
seven to nine of the Company's Proxy Statement.
 
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
    The information required herein is incorporated by reference from page 16 of
the Company's Proxy Statement.
 
PART IV
 
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
 
    (a) Document filed as part of this Report. 



                                     36

<PAGE>

     (1) The following documents are filed as part of this report and 
are incorporated herein by reference from the Registrant's 1997 Annual Report.
 
    Independent Auditor's Report.
 
    Consolidated Balance Sheets as of September 30, 1997 and 1996.
 
    Consolidated Statements of Income for the Years Ended September 30, 1997,
1996 and 1995.
 
    Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended September 30, 1997, 1996 and 1995.
 
    Consolidated Statements of Cash Flows for the Years Ended September 30,
1997, 1996 and 1995.
 
    Notes to Consolidated Financial Statements. 

     (2) All schedules for which provision is made in the applicable 
accounting regulation of the Securities and Exchange Commission are omitted 
because they are not applicable or the required information is included in 
the Consolidated Financial Statements or notes thereto. 

     (3)(a) The following exhibits are filed as part of this Form 10-KSB, and 
this list includes the Exhibit Index.
 
NO.                      DESCRIPTION
--------- -------------------------------------------------------------------

3.1   Certificate of Incorporation of First Federal Financial Bancorp, Inc.(1)
 
3.2   Bylaws of First Federal Financial Bancorp, Inc.(1)
 
4     Stock Certificate of First Federal Financial Bancorp, Inc.(1)
 
10.1  Employment Agreement among First Federal Financial Bancorp, Inc., First 
      Federal Savings Bank of Ironton and I. Vincent Rice (representative of a
      similar agreement entered into with Jeffery W. Clark)*(2)
 
10.2  Stock Option Plan*(2)
 
10.3  Recognition and Retention Plan and Trust*(2)
 
13    1997 Annual Report to Stockholders specified portion (p. two to 37, and
      40) of the Registrant's Annual Report to Stockholders for the year ended
      September 30, 1997.
 
21    Subsidiaries of the Registrant--Reference is made to Item 1.Business 
      for the Required information
 
27    Financial Data Schedule

                                                (Footnotes on following page)

                                       37

<PAGE>

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

 
(1) Incorporated by reference from the Registration Statement on Form S-1
    (Registration No. 333-1672) filed by the Registrant with the Securities and
    Exchange Commission ("SEC") on February 26, 1996, as amended.
 
(2) Incorporated by reference from the Form 10-KSB for the fiscal year ended
    September 30, 1996 filed by the Registrant with the SEC on December 26,
    1996.
 
*   Management contract or compensatory plan or arrangement.
 
          (3) (b) Reports filed on Form 8-K.

    None.
 








                                      38

<PAGE>
                                   SIGNATURES
 
    In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
                                FIRST FEDERAL FINANCIAL BANCORP, INC.
 
                                BY:  /s/ I. Vincent Rice
                                     -----------------------------------------
                                         I. Vincent Rice
                                            PRESIDENT
 
    In accordance with the Exchange Act, 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/ I. VINCENT RICE           
------------------------------------------                  December 15, 1997
I. Vincent Rice
President (Principal Executive Officer)

/s/ JEFFERY W. CLARK              
------------------------------------------                  December 15, 1997
Jeffery W. Clark                  
 Comptroller (Principal
 Financial and Accounting Officer)

/s/ THOMAS D. PHILLIPS
------------------------------------------                  December 15, 1997
Thomas D. Phillips
Chairman

/s/ JAMES E. WALDO       
------------------------------------------                  December 15, 1997
James E. Waldo
 Vice Chairman


<PAGE>
 
/s/ EDITH M. DANIELS            
------------------------------------------                  December 15, 1997
Edith M. Daniels
Corporate Secretary and Director

 
/s/ EDWARD R. RAMBACHER
------------------------------------------                  December 15, 1997
Edward R. Rambacher
Director


/s/ STEVEN C. MILLESON 
------------------------------------------                  December 15, 1997
Steven C. Milleson
Director
 
/s/ WILLIAM P. PAYNE       
------------------------------------------                  December 15, 1997
William P. Payne
Director