**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549








**FORM
      10-Q**


QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF


THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      Quarter Ended March 31, 2007








Commission
      File Number: 0-26876








**OAK
      HILL FINANCIAL, INC.**


(Exact
      name of Registrant as specified in its charter)








**Ohio**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **31-1010517**
              (I.R.S.
                Employer
              Identification
                Number)**14621
                S. R. 93**
              **Jackson,
                Ohio**
              (Address
                of principal executive office)
            **45640**
              (Zip
                Code)








Registrant’s
      telephone number, including area code: (740) 286-3283








Indicate
      by check mark whether the
      issuer (1) has filed all reports required to be filed by Section 13 or 15(d)
      of
      the Securities Exchange Act of 1934 during the preceding 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
ü                                No








Indicate
      by check mark whether the
      registrant is large accelerated filer, an accelerated filer, or a
      non-accelerated filer. See definition of  “accelerated filer and large
      accelerated filer” in Rule 12b-2 of the Exchange Act.





Large
      accelerated
      filer           Accelerated
      filer  ü         Non-accelerated
      filer








Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).





Yes                                   
      No  ü








As
      of May 9, 2007, the latest
      practicable date, 5,338,896 shares of the Registrant’s common stock, $.50 stated
      value, were outstanding.














**Oak
      Hill Financial, Inc.**





**TABLE
      OF CONTENTS**








Page**PART
                I – FINANCIAL INFORMATION**Item
                1:
            Financial
                StatementsConsolidated
                Statements of Financial
                Condition
            3Consolidated
                Statements of Earnings
            4Consolidated
                Statements of Comprehensive
                Income
            5Consolidated
                Statements of Cash Flows
            6Notes
                to Consolidated Financial Statements
            8Item
                2:
            Management’s
                Discussion and Analysis of Financial
                ConditionAnd
                Results of Operations
            15Item
                3:
            Quantitative
                and Qualitative Disclosures About Market
                Risk
            18Item
                4:
            Controls
                and Procedures
            18**PART
                II – OTHER INFORMATION**Item
                1:
            Legal
                Proceedings
            19Item
                1A:
            Risk
                Factors
            19Item
                2:
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            19Item
                3:
            Defaults
                Upon Senior Securities
            19Item
                4:
            Submission
                of Matters to a Vote of Security
                Holders
            19Item
                5:
            Other
                Information
            19Item
                6:
            Exhibits
            19Signatures
            
            20Certifications
            
            22














-
          2
          -
 *Table
          of Contents*


**PART
      I – FINANCIAL INFORMATION**


Item
      1: Financial Statements





**Oak
      HillFinancial, Inc.**


**CONSOLIDATED
      STATEMENTS OF FINANCIAL CONDITION**


March
                31,
            
            
            December
                31,*(In
                thousands, except share data)*
            
            2007
            
            
            2006(Unaudited)**ASSETS**Cash
                and cash equivalentsCash
                and due from banks
            
            $
            21,089
            
            
            $
            20,955Federal
                funds sold
            
            
            16,264
            
            
            
            818Interest-bearing
                deposits in other banks
            
            
            1,605
            
            
            
            1,474Total
                cash and cash equivalents
            
            
            38,958
            
            
            
            23,247Investment
                securities designated as available for sale – at market
            
            
            147,428
            
            
            
            153,010Investment
                securities designated as held to maturity – at cost (approximate
                marketvalue
                of $1,698 and $2,712 at March 31, 2007 and December 31, 2006,
                respectively)
            
            
            1,519
            
            
            
            2,559Loans
                receivable – net
            
            
            1,026,818
            
            
            
            1,017,983Loans
                held for sale – at lower of cost or market
            
            
            68
            
            
            
            90Mortgage
                servicing assets – at cost (approximate fair value of $3,740 and $3,719
                atMarch
                31, 2007 and December 31, 2006, respectively)
            
            
            3,294
            
            
            
            3,288Office
                premises and equipment – net
            
            
            28,432
            
            
            
            27,765Federal
                Home Loan Bank stock – at cost
            
            
            8,078
            
            
            
            8,078Real
                estate acquired through foreclosure
            
            
            2,699
            
            
            
            5,258Accrued
                interest receivable on loans
            
            
            4,777
            
            
            
            4,765Accrued
                interest receivable on investment securities
            
            
            1,298
            
            
            
            1,023Goodwill
            
            
            7,935
            
            
            
            7,935Core
                deposit intangible – net
            
            
            2,895
            
            
            
            3,111Bank
                owned life insurance
            
            
            13,571
            
            
            
            13,454Prepaid
                expenses and other assets
            
            
            2,723
            
            
            
            1,938Prepaid
                federal income taxes
            
            
            502
            
            
            
            1,086Deferred
                federal income taxes
            
            
            1,108
            
            
            
            1,045TOTAL
                ASSETS
            
            **$**
            **1,292,103**
            
            
            **$**
            **1,275,635****LIABILITIES
                AND STOCKHOLDERS’ EQUITY**DepositsDemand
            
            $
            98,534
            
            
            $
            94,256Savings
                and time deposits
            
            
            863,253
            
            
            
            848,704Total
                deposits
            
            
            961,787
            
            
            
            942,960Securities
                sold under agreements to repurchase
            
            
            56,091
            
            
            
            56,341Advances
                from the Federal Home Loan Bank
            
            
            153,597
            
            
            
            157,584Subordinated
                debentures
            
            
            23,000
            
            
            
            23,000Accrued
                interest payable and other liabilities
            
            
            4,712
            
            
            
            4,993Total
                liabilities
            
            
            1,199,187
            
            
            
            1,184,878Stockholders’
                equityCommon
                stock – $.50 stated value; authorized 15,000,000 shares,5,874,634
                shares issued at March 31, 2007 and December 31, 2006
            
            
            2,937
            
            
            
            2,937Additional
                paid-in capital
            
            
            13,324
            
            
            
            13,611Retained
                earnings
            
            
            92,369
            
            
            
            90,877Treasury
                stock (535,841 and 565,659 shares at March 31, 2007 andDecember
                31, 2006, respectively – at cost)
            
            
            (15,500
            )
            
            
            (16,368
            )Accumulated
                comprehensive loss:Unrealized
                loss on securities designated as available for sale, netof
                related tax benefits
            
            
            (214
            )
            
            
            (300
            )Total
                stockholders’ equity
            
            
            92,916
            
            
            
            90,757TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            **$**
            **1,292,103**
            
            
            **$**
            **1,275,635**





*See
      accompanying notes to consolidated financial statements.*


-
          3
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 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**CONSOLIDATED
      STATEMENTS OF EARNINGS**


For
                the Three Months EndedMarch
                31,*(In
                thousands, except per share data)*
            
            2007
            
            
            2006(Unaudited)**INTEREST
                INCOME**Loans
            
            $
            18,989
            
            
            $
            17,369Investment
                securities
            
            
            1,746
            
            
            
            1,465Interest-bearing
                deposits and other
            
            
            178
            
            
            
            137Total
                interest income
            
            
            20,913
            
            
            
            18,971**INTEREST
                EXPENSE**Deposits
            
            
            8,638
            
            
            
            7,242Borrowings
            
            
            3,007
            
            
            
            2,038Total
                interest expense
            
            
            11,645
            
            
            
            9,280Net
                interest income
            
            
            9,268
            
            
            
            9,691Provision
                for losses on loans
            
            
            543
            
            
            
            200Net
                interest income after provision for losses on loans
            
            
            8,725
            
            
            
            9,491**OTHER
                INCOME**Service
                fees, charges and other operating
            
            
            1,946
            
            
            
            1,991Commission
                income
            
            
            816
            
            
            
            820Bank
                owned life insurance
            
            
            117
            
            
            
            150Gain
                on sale of loans
            
            
            147
            
            
            
            209Gain
                on sale of securities
            
            
            87
            
            
            
            139Loss
                on sale of other real estate owned
            
            
            (369
            )
            
            
            (22
            )Total
                other income
            
            
            2,744
            
            
            
            3,287**GENERAL,
                ADMINISTRATIVE AND OTHER EXPENSE**Employee
                compensation and benefits
            
            
            4,446
            
            
            
            4,300Occupancy
                and equipment
            
            
            1,164
            
            
            
            993Federal
                deposit insurance premiums
            
            
            30
            
            
            
            32Franchise
                taxes
            
            
            292
            
            
            
            316Other
                operating
            
            
            2,089
            
            
            
            2,324Amortization
                of core deposit intangible
            
            
            216
            
            
            
            284Total
                general, administrative and other expense
            
            
            8,237
            
            
            
            8,249Earnings
                before federal income taxes
            
            
            3,232
            
            
            
            4,529**FEDERAL
                INCOME TAXES**Current
            
            
            728
            
            
            
            710Deferred
            
            
            (109
            )
            
            
            325Total
                federal income taxes
            
            
            619
            
            
            
            1,035**NET
                EARNINGS**
            
            **$**
            **2,613**
            
            
            **$**
            **3,494****EARNINGS
                PER SHARE**Basic
            
            **$**
            **.49**
            
            
            **$**
            **.63**Diluted
            
            **$**
            **.48**
            
            
            **$**
            **.62****DIVIDENDS
                PER SHARE**
            
            **$**
            **.21**
            
            
            **$**
            **.19**





*See
      accompanying notes to consolidated financial statements.*





-
          4
          -
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          of Contents*


**Oak
      Hill Financial, Inc.**


**CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE INCOME**


For
                the Three Months EndedMarch
                31,*(In
                thousands)*
            
            2007
            
            
            2006(Unaudited)Net
                earnings
            
            $
            2,613
            
            
            $
            3,494Other
                comprehensive income, net of tax:Unrealized
                gains (losses) on securities designated as available for
                sale,net
                of taxes (benefits) of $77 and $(63), respectively
            
            
            143
            
            
            
            (117
            )Reclassification
                adjustment for realized gains included in net earnings,net
                of taxes of $31 and $49, respectively
            
            
            (57
            )
            
            
            (90
            )Comprehensive
                income
            
            **$**
            **2,699**
            
            
            **$**
            **3,287**Accumulated
                comprehensive loss
            
            **$**
            **(214**
            **)**
            
            **$**
            **(548**
            **)**


*See
      accompanying notes to consolidated financial statements.*








-
          5
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 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**




For
                the Three Months EndedMarch
                31,*(In
                thousands)*
            
            2007
            
            
            2006(Unaudited**CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                earnings for the period
            
            $
            2,613
            
            
            $
            3,494Adjustments
                to reconcile net earnings to net cash provided byoperating
                activities:Depreciation
                and amortization
            
            
            423
            
            
            
            358Amortization
                of core deposit intangible
            
            
            216
            
            
            
            284Gain
                on sale of securities
            
            
            (87
            )
            
            
            (139
            )Amortization
                of premiums, discounts and mortgage servicing assets – net
            
            
            187
            
            
            
            116Proceeds
                from sale of loans in secondary market
            
            
            4,181
            
            
            
            11,058Loans
                disbursed for sale in secondary market
            
            
            (4,084
            )
            
            
            (10,621
            )Gain
                on sale of loans
            
            
            (75
            )
            
            
            (127
            )Amortization
                (accretion) of deferred loan origination (fees) costs
            
            
            100
            
            
            
            (75
            )Loss
                on sale of other real estate owned
            
            
            369
            
            
            
            22Purchase
                of loans
            
            
            —
            
            
            
            (450
            )Federal
                Home Loan Bank stock dividends
            
            
            —
            
            
            
            (108
            )Provision
                for losses on loans
            
            
            543
            
            
            
            200Compensation
                expense related to stock incentive plan
            
            
            12
            
            
            
            12Bank
                owned life insurance income
            
            
            (117
            )
            
            
            (150
            )Increase
                (decrease) in cash due to changes in:Prepaid
                expenses and other assets
            
            
            (785
            )
            
            
            (950
            )Accrued
                interest receivable
            
            
            (287
            )
            
            
            (129
            )Accrued
                interest payable and other liabilities
            
            
            (281
            )
            
            
            (27
            )Federal
                income taxesCurrent
            
            
            584
            
            
            
            660Deferred
            
            
            (109
            )
            
            
            325Net
                cash provided by operating activities
            
            
            3,403
            
            
            
            3,753**CASH
                FLOWS USED IN INVESTING ACTIVITIES:**Loan
                disbursements
            
            
            (60,138
            )
            
            
            (78,454
            )Principal
                repayments on loans
            
            
            50,153
            
            
            
            75,932Principal
                repayments on mortgage-backed securities designatedas
                available for sale
            
            
            7,643
            
            
            
            3,378Proceeds
                from sale of investment securities designatedas
                available for sale
            
            
            8,592
            
            
            
            9,611Proceeds
                from maturity of investment securities
            
            
            6,580
            
            
            
            38Proceeds
                from disposition of assets
            
            
            58
            
            
            
            —Proceeds
                from sale of other real estate owned
            
            
            2,631
            
            
            
            36Purchase
                of investment securities designatedas
                available for sale
            
            
            (16,102
            )
            
            
            (14,640
            )Purchase
                of office premises and equipment
            
            
            (1,148
            )
            
            
            (2,227
            )Net
                cash used in investing activities
            
            
            (1,731
            )
            
            
            (6,326
            )Net
                cash provided by (used in) operating and investing
                activities(balance
                carried forward)
            
            
            1,672
            
            
            
            (2,573
            )





*See
      accompanying notes to consolidated financial statements.*





-
          6
          -
 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**CONSOLIDATED
      STATEMENTS OF CASH
      FLOWS***(continued)*


For
                the Three Months EndedMarch
                31,*(In
                thousands)*
            
            2007
            
            
            2006(Unaudited)Net
                cash provided by (used in) operating and investing
                activities(balance
                brought forward)
            
            $
            1,672
            
            
            $
            (2,573
            )**CASH
                FLOWS PROVIDED BY FINANCING ACTIVITIES:**Net
                proceeds (repayments) from (of) securities sold under agreement to
                repurchase
            
            
            (250
            )
            
            
            12,207Net
                increase in deposit accounts
            
            
            18,828
            
            
            
            2,336Proceeds
                from Federal Home Loan Bank advances
            
            
            23,000
            
            
            
            23,000Repayments
                of Federal Home Loan Bank advances
            
            
            (26,987
            )
            
            
            (32,420
            )Dividends
                on common shares
            
            
            (1,121
            )
            
            
            (1,054
            )Purchase
                of treasury shares
            
            
            —
            
            
            
            (2,384
            )Proceeds
                from issuance of shares under stock option plan
            
            
            425
            
            
            
            211Tax
                benefit of stock options exercised
            
            
            144
            
            
            
            81Net
                cash provided by financing activities
            
            
            14,039
            
            
            
            1,977Net
                increase (decrease) in cash and cash equivalents
            
            
            15,711
            
            
            
            (596
            )Cash
                and cash equivalents at beginning of period
            
            
            23,247
            
            
            
            26,400Cash
                and cash equivalents at end of period
            
            **$**
            **38,958**
            
            
            **$**
            **25,804****SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                paid during the period for:Federal
                income taxes
            
            **$**
            **144**
            
            
            **$**
            —Interest
                on deposits and borrowings
            
            **$**
            **11,824**
            
            
            **$**
            **9,394****SUPPLEMENTAL
                DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:**Unrealized
                gains (losses) on securities designated as available for
                sale,net
                of related tax effects
            
            **$**
            **86**
            
            
            **$**
            **(207**
            **)**Recognition
                of mortgage servicing assets in accordance with SFAS No. 140 and
                156
            
            **$**
            **72**
            
            
            **$**
            **82**Transfer
                from loans to real estate acquired through foreclosure
            
            **$**
            **441**
            
            
            **$**
            **97****SUPPLEMENTAL
                DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:**Issuance
                of treasury stock in exchange for exercise of stock
                options
            
            **$**
            **252**
            
            
            **$**
            —


*See
      accompanying notes to consolidated financial
      statements.*





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          7
          -
 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


For
      the
      three month periods ended March 31, 2007 and 2006





1.
      *Basis of Presentation*





Oak
      Hill
      Financial, Inc. (the “Company”) is a financial holding company the principal
      assets of which have been its ownership of Oak Hill Banks (“Oak Hill”) and Oak
      Hill Financial Insurance (“OHFI”). The Company also owns forty-nine percent of
      Oak Hill Title Agency, LLC (“Oak Hill Title”) which provides title services for
      commercial and residential real estate transactions.  Accordingly, the
      Company’s results of operations are primarily dependent upon the results of
      operations of its subsidiaries.





Oak
      Hill
      conducts a general commercial banking business in southern and central Ohio
      which consists of attracting deposits from the general public and applying
      those
      funds to the origination of loans for commercial, consumer and residential
      purposes. OHFI is an insurance agency specializing in group health insurance
      and
      other employee benefits.





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





The
      accompanying unaudited consolidated
      financial statements were prepared in accordance with instructions for Form
      10-Q
      and, therefore, do not include information or footnotes necessary for a complete
      presentation of financial position, results of operations and cash flows in
      conformity with accounting principles generally accepted in the United States
      of
      America. Accordingly, these financial statements should be read in conjunction
      with the consolidated financial statements and notes thereto of the Company
      included in the Annual Report on Form 10-K for the year ended December 31,
      2006.
      However, all adjustments (consisting of normal recurring accruals), which,
      in
      the opinion of management, are necessary for a fair presentation of the
      consolidated financial statements, have been included. The results of operations
      for the three months ended March 31, 2007 are not necessarily indicative of
      the
      results that may be expected for the entire year.





2.
      *Principles of Consolidation*





The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries, Oak Hill and OHFI. Oak Hill Title is included in
      the
      financial statements of the Company with the 51% outside ownership being
      accounted for as minority interest. All intercompany balances and transactions
      have been eliminated.




3.
        *Liquidity and Capital Resources*





Like
      other financial institutions, the Company must ensure that sufficient funds
      are
      available to meet deposit withdrawals, loan commitments, and expenses. Control
      of the Company’s cash flow requires the anticipation of deposit flows and loan
      payments. The Company’s primary sources of funds are deposits, borrowings and
      principal and interest payments on loans. The Company uses funds from deposit
      inflows, proceeds from borrowings and principal and interest payments on loans
      primarily to originate loans, and to purchase short-term investment securities
      and interest-bearing deposits.





At
      March
      31, 2007, the Company had $331.9 million of certificates of deposit maturing
      within one year. It has been the Company’s historic experience that such
      certificates of deposit will be renewed with Oak Hill at market rates of
      interest. It is management’s belief that maturing certificates of deposit over
      the next year will similarly be renewed with Oak Hill at market rates of
      interest.





In
      the
      event that certificates of deposit cannot be renewed at prevalent market rates,
      the Company can obtain up to $238.2 million in advances from the Federal Home
      Loan Bank of Cincinnati (“FHLB”). Also, as an operational philosophy, the
      Company seeks to obtain advances to help with asset/liability management and
      liquidity. At March 31, 2007, the Company had $153.6 million of outstanding
      FHLB
      advances and $12.4 million of letters of credit pledged for public
      deposits.





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 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


For
      the
      three month periods ended March 31, 2007 and 2006





3.
      *Liquidity and Capital Resources*


The
      Company engages in off-balance sheet credit-related activities that could
      require the Company to make cash payments in the event that specified future
      events occur. The contractual amounts of these activities represent the maximum
      exposure to the Company. However, certain off-balance sheet commitments are
      expected to expire or be only partially used; therefore, the total amount of
      commitments does not necessarily represent future cash requirements. These
      off-balance sheet activities are necessary to meet the financing needs of the
      Company’s customers. At March 31, 2007, the Company had total off-balance sheet
      contractual commitments consisting of $16.9 million to originate loans, $132.8
      million in unused lines of credit and letters of credit totaling $11.7 million.
      Funding for these amounts is expected to be provided by the sources described
      above. Management believes the Company has adequate resources to meet its normal
      funding requirements. The lending commitments are generally backed by varying
      forms of collateral such as inventory, accounts receivable, equipment and other
      real estate.





The
      table below details the amount of
      loan commitments, unused lines of credit and letters of credit outstanding
      at
      March 31, 2007 by expiration period:





One
                year
            
            
            One
                to
            
            
            After*(In
                thousands)*
            
            or
                less
            
            
            three
                years
            
            
            three
                years
            
            
            TotalLoan
                commitments
            
            $
            16,943
            
            
            $
            —
            
            
            $
            —
            
            
            $
            16,943Unused
                lines of credit
            
            
            45,253
            
            
            
            35,602
            
            
            
            51,913
            
            
            
            132,768Letters
                of credit
            
            
            1,466
            
            
            
            10,277
            
            
            
            
            
            
            
            11,743$
            63,662
            
            
            $
            45,879
            
            
            $
            51,913
            
            
            $
            161,454





The
      table
      below details the amount of contractual obligations outstanding at March 31,
      2007, by expiration date:





One
                year
            
            
            One
                to
            
            
            After*(In
                thousands)*
            
            or
                less
            
            
            three
                years
            
            
            three
                years
            
            
            TotalAdvances
                and letters of credit from the Federal Home Loan Bank
            
            $
            58,901
            
            
            $
            41,722
            
            
            $
            65,374
            
            
            $
            165,997Securities
                sold under agreement to repurchase
            
            
            14,091
            
            
            
            
            
            
            
            42,000
            
            
            
            56,091Subordinated
                debentures
            
            
            
            
            
            
            
            
            
            
            23,000
            
            
            
            23,000Lease
                obligations
            
            
            584
            
            
            
            389
            
            
            
            956
            
            
            
            1,929$
            73,576
            
            
            $
            21,424
            
            
            $
            152,017
            
            
            $
            247,017




4.
        *Mortgage Servicing Assets*


A
      summary
      of the Company’s mortgage servicing assets at March 31, 2007 and December 31,
      2006 is as follows:





*(In
                thousands)*
            
            March
                31, 2007
            
            
            December
                31, 2006Beginning
                balance
            
            $
            3,440
            
            
            $
            3,458Recognition
                of mortgage servicing rights on sale of loans
            
            
            72
            
            
            
            367Amortization
            
            
            (87
            )
            
            
            (385
            )Ending
                balance
            
            
            3,425
            
            
            
            3,440Beginning
                valuation allowance
            
            
            (152
            )
            
            
            (130
            )Valuation
                allowance recorded
            
            
            (9
            )
            
            
            (22
            )Valuation
                allowance recaptured
            
            
            30
            
            
            
            —Ending
                valuation allowance
            
            
            (131
            )
            
            
            (152
            )Net
                carrying value
            
            $
            3,294
            
            
            $
            3,288





-
          9
          -
 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


For
      the
      three month periods ended March 31, 2007 and 2006




5.
        *Earnings Per Share*


Basic
      earnings per common share is computed based upon the weighted-average number
      of
      common shares outstanding during the period. Diluted earnings per common share
      is computed including the dilutive effect of additional potential common shares
      issuable under stock options.  The computations were as follows for
      the three-month periods ended March 31:





For
                theThree
                Months EndedMarch
                31,2007
            
            
            2006Weighted-average
                common shares outstanding (basic)
            
            
            5,324,538
            
            
            
            5,567,489Dilutive
                effect of assumed exercise of stock options
            
            
            69,304
            
            
            
            99,884Weighted-average
                common shares outstanding (diluted)
            
            
            5,393,842
            
            
            
            5,667,373





Options
      to purchase 162,800 and 119,750 shares of common stock with a weighted-average
      exercise price of $34.89 and $37.12 were outstanding at March 31, 2007 and
      2006,
      respectively, but were excluded from the computation of common share equivalents
      for the three month periods ended March 31, 2007 and 2006 because the exercise
      prices were greater than the average market price of the common
      shares.





6.
      *Income Taxes*





The
      Company adopted the provisions of Financial Accounting Standards Board (“FASB”)
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”)
      on January 1, 2007. Previously, the Company had accounted for tax contingencies
      in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5,
“Accounting for Contingencies.” As required by FIN 48, which clarifies SFAS No.
      109 “Accounting for Income Taxes,” the Company recognizes the financial
      statement benefit of a tax position only after determining that the relevant
      tax
      authority would more likely than not sustain the position following an audit.
      For tax positions meeting the more-likely-than-not threshold, the amount
      recognized in the financial statements is the largest benefit that has a greater
      than 50 percent likelihood of being realized upon ultimate settlement with
      the
      relevant tax authority. At the adoption date, the Company applied FIN 48 to
      all
      tax positions for which the statute of limitations remained open. As a result
      of
      the implementation of FIN 48, the Company was not required to record any
      liability for unrecognized tax benefits as of January 1, 2007. There have been
      no material changes in unrecognized tax benefits since January 1,
      2007.





The
      Company is subject to income taxes in the U.S. federal jurisdiction, as well
      as,
      various state jurisdictions. Tax regulations within each jurisdiction are
      subject to the interpretation of the related tax laws and regulations and
      require significant judgment to apply. With few exceptions, the Company is
      no
      longer subject to U.S. federal, state and local, or non-U.S. income tax
      examinations by tax authorities for the years before 2003.





The
      Company is currently under examination by the Internal Revenue Service for
      the
      year ended December 31, 2004. The Company expects this examination to be
      concluded and settled in the next 12 months without material adverse effect
      to
      the consolidated financial statements.





The
      Company will recognize, if applicable, interest accrued related to unrecognized
      tax benefits in interest expense and penalties in operating
      expenses.





7.  *Critical
      Accounting Policies*





The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to use judgments in making estimates and assumptions that affect
      the
      reported amounts of assets, liabilities, revenues and expenses.  The
      following critical accounting policies are based upon judgments and assumptions
      by management that include inherent risks and uncertainties.





-
          10
          -
 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


For
      the
      three month periods ended March 31, 2007 and 2006





7.*Critical
      Accounting Policies**(continued)*





*Allowance
      for Losses on Loans:*The balance in the allowance is an
      accounting estimate of probable but unconfirmed and unrecorded asset impairment
      that has occurred in the Company’s loan portfolio as of the date of the
      consolidated financial statements. It is the Company’s policy to provide
      valuation allowances for estimated losses on loans based upon past loss
      experience, adjusted for changes in trends and conditions of the certain items,
      including:





·
            Local
                market areas and national economic
                developments;





·
            Levels
                of and trends in delinquencies and impaired
                loans;





·
            Levels
                of and trends in recoveries of prior
                charge-offs;





·
            Adverse
                situations that may affect specific borrowers’ ability to
                repay;





·
            Effects
                of any changes in lending policies and
                procedures;





·
            Credit
                concentrations;





·
            Experience,
                ability, and depth of lending management and credit administration
                staff;





·
            Volume
                and terms of loans; and





·
            Current
                collateral values, where
                appropriate.





When
      the
      collection of a loan becomes doubtful, or otherwise troubled, the Company
      records a loan loss provision equal to the difference between the fair value
      of
      the property securing the loan and the loan’s carrying
      value.  Unsecured credits are charged- off upon becoming contractually
      delinquent for greater than 90 days.  Major loans and major lending
      areas are reviewed periodically to determine potential problems at an early
      date. The allowance for loan losses is increased by charges to earnings and
      decreased by charge-offs (net of recoveries).





The
      Company accounts for its allowance for losses on loans in accordance with SFAS
      No. 5, “Accounting for Contingencies,” and SFAS No. 114, “Accounting by
      Creditors for Impairment of a Loan.” Both Statements require the Company to
      evaluate the collectibility of both contractual interest and principal loan
      payments.  SFAS No. 5 requires the accrual of a loss when it is
      probable that a loan has been impaired and the amount of the loss can be
      reasonably estimated. SFAS No. 114 requires that impaired loans be measured
      based upon the present value of expected future cash flows discounted at the
      loan’s effective interest rate or, as an alternative, at the loans’ observable
      market price or fair value of the collateral if the loan is collateral
      dependent.





A
      loan is
      defined under SFAS No. 114 as impaired when, based on current information and
      events, it is probable that a creditor will be unable to collect all amounts
      due
      according to the contractual terms of the loan agreement. In applying the
      provisions of SFAS No. 114, the Company considers its investment in one-to-four
      family residential loans, consumer installment loans and credit card loans
      to be
      homogeneous and therefore excluded from separate identification for evaluation
      of impairment. These homogeneous loan groups are evaluated for impairment in
      accordance with SFAS No. 5.  With respect to the Company’s investment
      in commercial and other loans, and its evaluation of impairment thereof,
      management believes such loans are adequately collateralized and as a result
      impaired loans are carried as a practical expedient at the lower of cost or
      fair
      value.





It
      is the
      Company’s policy to charge off unsecured credits that are more than ninety days
      delinquent. Similarly, collateral- dependent loans which become more than ninety
      days delinquent are considered to constitute more than a minimum delay in
      repayment and are evaluated for impairment under SFAS No. 114 at that
      time.





*Goodwill
      and Other Intangible Assets.*The Company has recorded goodwill and core
      deposit intangibles as a result of merger and acquisition activity.





-
          11
          -
 *Table
          of Contents*




Oak
        Hill Financial, Inc.
 NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS


For
      the
      three month periods ended March 31, 2007 and 2006





7.*Critical
      Accounting Policies**(continued)*





Goodwill
      represents the excess purchase price paid over the net book value of the assets
      acquired in a merger or acquisition. Pursuant to SFAS No. 142, “Goodwill and
      Intangible Assets,” goodwill is not amortized, but is tested for impairment at
      the reporting unit annually and whenever an impairment indicator arises. The
      evaluation involves assigning assets and liabilities to


reporting
      units and comparing the fair value of each reporting unit to its carrying value
      including goodwill. If the fair value of a reporting unit exceeds its carrying
      amount, goodwill is not considered impaired. However, if the carrying amount
      of
      the reporting unit exceeds the fair value, goodwill is considered impaired.
      The
      impairment loss equals the excess of carrying value over fair
      value.





Core
      deposit intangibles represent the value of long-term deposit relationships
      and
      are amortized over their estimated useful lives. The Company annually evaluates
      these estimated useful lives. If the Company determines that events or
      circumstances warrant a change in these estimated useful lives, the Company
      will
      adjust the amortization of the core deposit intangibles, which could affect
      future amortization expense.





8*.* *Share-based
      Compensation*





In
      December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
      revises SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes
      Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued
      to Employees.” SFAS No. 123(R) requires that cost related to the fair value of
      all equity-based awards to employees, including grants of employee stock
      options, be recognized in the financial statements.





The
      Company adopted the provisions of SFAS No. 123(R) effective January 1, 2006,
      using the modified prospective transition method, as permitted, and therefore
      have not restated its financial statements for prior periods. Under this method,
      the Company has applied the provisions of SFAS No. 123(R) to new equity-based
      awards and to equity-based awards modified, repurchased, or cancelled after
      January 1, 2006. In addition, the Company has recognized compensation cost
      for
      the portion of equity-based awards for which the requisite service period has
      not been rendered (“unvested equity-based awards”) that are outstanding as of
      January 1, 2006. The compensation cost recorded for unvested equity-based awards
      will be based on their grant-date fair value. For each of the three month
      periods ended March 31, 2007 and March 31, 2006, the Company recorded $12,000
      in
      compensation cost for equity-based awards that vested during the respective
      three month periods ($8,000 after-tax). The Company has $48,000 of total
      unrecognized compensation cost related to non-vested equity-based awards granted
      under its stock incentive plan as of March 31, 2007, which is expected to be
      recognized over a weighted-average period of one year.





SFAS
      No.
      123(R) requires that cash flows from the exercise of stock options resulting
      from tax benefits in excess of recognized cumulative compensation cost (“excess
      tax benefits”) be classified as financing cash flows. The Company had $144,000
      and $81,000 of tax benefits classified as financing cash flows for the three
      months ended March 31, 2007 and March 31, 2006, respectively. At March 31,
      2007,
      the intrinsic value of outstanding options totaled $2.0 million.





There
      were no options granted during the three months ended March 31, 2007 and March
      31, 2006.





The
      Company has a stock incentive plan that provides for grants of options of up
      to
      1,200,000 authorized, but unissued shares of its common stock, restricted stock,
      stock appreciation rights, and other equity-based compensation. The following
      is
      a summary of the changes in outstanding options for the three months ended
      March
      31, 2007 and the year ended December 31, 2006:





Three
                Months Ended March 31, 2007
            
            
            Year
                Ended December 31, 2006Weighted-
            
            
            
            
            
            Weighted-Average
            
            
            
            
            
            AverageExercise
            
            
            
            
            
            ExerciseShares
            
            
            Price
            
            
            Shares
            
            
            PriceOutstanding
                at beginning of period
            
            
            434,383
            
            
            $
            23.27
            
            
            
            484,233
            
            
            $
            23.14Granted
            
            
            –
            
            
            
            –
            
            
            
            –
            
            
            
            –Exercised
            
            
            (37,150
            )
            
            
            17.09
            
            
            
            (33,300
            )
            
            
            15.89Forfeited
            
            
            (6,300
            )
            
            
            34.37
            
            
            
            (16,550
            )
            
            
            34.14Outstanding
                at end of period
            
            
            390,933
            
            
            $
            23.68
            
            
            
            434,383
            
            
            $
            23.27Exercisable
                at end of period
            
            
            386,933
            
            
            $
            23.60
            
            
            
            429,383
            
            
            $
            23.16Weighted-average
                remaining contractual term
            
            
            
            
            
            6.2
                years
            
            
            
            
            
            
            6.3
                years





-
          12
          -
 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


For
      the
      three month periods ended March 31, 2007 and 2006





8*.**Share-based
      Compensation**(continued)*





The
      following is a summary of the
      changes in restricted stock for the three months ended March 31, 2007 and the
      year ended December 31, 2006:





Three
                Months Ended March 31, 2007
            
            
            Year
                Ended December 31, 2006Fair
                Value
            
            
            
            
            
            Fair
                ValueShares
            
            
            at
                Grant
            
            
            Shares
            
            
            at
                GrantOutstanding
                at beginning of period
            
            
            1,234
            
            
            $
            30.30
            
            
            
            3,594
            
            
            $
            31.72Granted
            
            
            1,000
            
            
            
            27.98
            
            
            
            —
            
            
            
            —Vested
            
            
            —
            
            
            
            —
            
            
            
            (1,893
            )
            
            
            31.29Cancelled
            
            
            —
            
            
            
            —
            
            
            
            (467
            )
            
            
            37.21Outstanding
                at end of period
            
            
            2,234
            
            
            $
            29.26
            
            
            
            1,234
            
            
            $
            30.30





9.
      *Effects of Recent Accounting Pronouncements*





In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Instruments – an amendment of FASB Statements No. 133 and 140,” to simplify and
      make more consistent the accounting for certain financial instruments.
      Specifically, SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities,” to permit fair value remeasurement for any
      hybrid financial instrument with an embedded derivative that otherwise would
      require bifurcation, provided that the whole instrument is accounted for on
      a
      fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for Transfers
      and Servicing of Financial Assets and Extinguishment of Liabilities,” to allow a
      qualifying special purpose entity to hold a derivative instrument that pertains
      to a beneficial interest other than another derivative financial
      instrument.





SFAS
      No.
      155 is effective for all financial instruments acquired or issued after the
      beginning of an entity’s first fiscal year that begins after September 15, 2006,
      or January 1, 2007 as to the Company, with earlier application allowed. The
      Company adopted SFAS No. 155 on January 1, 2007, as required, without material
      effect on the Company’s financial position or results of
      operations.





In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Assets – an amendment of SFAS No. 140,” to simplify the accounting for
      separately recognized servicing assets and servicing liabilities. Specifically,
      SFAS No. 156 amends SFAS No. 140 to require an entity to take the following
      steps:





·
            Separately
                recognize financial assets as servicing assets or servicing entities,
                each
                time it undertakes an obligation to service a financial asset by
                entering
                into certain kinds of servicing
                contracts;


·
            Initially
                measure all separately recognized servicing assets and liabilities
                at fair
                value, if practicable, and;


·
            Separately
                present servicing assets and liabilities subsequently measured at
                fair
                value in the statement of financial position and additional disclosures
                for all separately recognized servicing assets and servicing
                liabilities.





Additionally,
      SFAS No. 156 permits, but does not require, an entity to choose either the
      amortization method or the fair value measurement method for measuring each
      class of separately recognized servicing assets and servicing liabilities.
      SFAS
      No. 156 also permits a servicer that uses derivative financial instruments
      to
      offset risks on servicing to use fair value measurement when reporting both
      the
      derivative financial instrument and related servicing asset or
      liability.





SFAS
      No. 156 applies to all
      separately recognized servicing assets and liabilities acquired or issued after
      the beginning of an entity’s fiscal year that begins after September 15, 2006,
      or January 1, 2007 as to the Company, with earlier application permitted. The
      Company adopted SFAS No. 156 on January 1, 2007, utilizing the amortization
      method without effect on the Company’s financial position or results of
      operations.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”
This Statement defines fair value, establishes a framework for measuring fair
      value and expands disclosures about fair value measurements. This Statement
      emphasizes that fair value is a market-based measurement and should be
      determined based on assumptions that a market participant would use
      when





-
          13
          -
 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


For
      the
      three month periods ended March 31, 2007 and 2006








9*.**Effects
      of Recent Accounting
      Pronouncements**(continued)*





pricing
      an asset or liability. This Statement clarifies that market participant
      assumptions should include assumptions about risk as well as the effect of
      a
      restriction on the sale or use of an asset. Additionally, this Statement
      establishes a fair value hierarchy that provides the highest priority to quoted
      prices in active markets and the lowest priority to unobservable data. This
      Statement is effective for fiscal years beginning after November 15, 2007,
      or January 1, 2008 as to the Company, and interim periods within that fiscal
      year. The adoption of this Statement is not expected to have a material adverse
      effect on the Company’s financial position or results of
      operations.





In
      July
      2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for
      Uncertainty in Income Taxes.” The interpretation clarifies the accounting for
      uncertainty in income taxes recognized in a company’s financial statements in
      accordance with SFAS No. 109, “Accounting for Income Taxes.” Specifically, FIN
      48 prescribes a recognition threshold and a measurement attribute for the
      financial statement recognition and measurement of a tax provision taken or
      expected to be taken on a tax return. FIN 48 also provides guidance on the
      related derecognition, classification, interest and penalties, accounting for
      interim periods, disclosure, and transition of uncertain tax positions. FIN
      48
      is effective for fiscal years beginning after December 15, 2006, or January
      1,
      2007 as to the Company. As previously stated, the Company adopted FIN 48 on
      January 1, 2007, as required, without material adverse effect on the Company’s
      financial position or results of operations.




In
      September 2006, the FASB ratified the Emerging Issues Task Force’s (EITF) Issue
      06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects
      of Endorsement Split-Dollar Life Insurance Arrangements,” which requires
      companies to recognize a liability and related compensation costs for
      endorsement split-dollar life insurance policies that provide a benefit to
      an
      employee extending to postretirement periods.  The liability should be
      recognized based on the substantive agreement with the employee.  This
      Issue is effective beginning January 1, 2008. The Issue can be adopted as
      either a change in accounting principle through a cumulative-effect adjustment
      to retained earnings as of the beginning of the year of adoption, or a change
      in
      accounting principle through retrospective application to all periods. The
      Company is in the process of evaluating the impact the adoption of Issue 06-4
      will have on the financial statements, but currently does not believe the Issue
      will have a material adverse effect on financial condition or results of
      operations.




In
      September 2006, the FASB ratified
      a consensus opinion reached by the EITF on EITF Issue 06-5, “Accounting for
      Purchases of Life Insurance – Determining the Amount that Could be Realized in
      Accordance with FASB Technical Bulletin No. 85-4.” The guidance in Issue 06-5
      requires policy holders to consider other amounts included in the contractual
      terms of an insurance policy, in addition to cash surrender value, for purposes
      of determining the amount that could be realized under the terms of the
      insurance contract. If it is probable that contractual terms would limit the
      amount that could be realized under the insurance contract, those contractual
      limitations should be considered when determining the realizable amounts. The
      amount that could be realized under the insurance contract should be determined
      on an individual policy (or certificate) level and should include any amount
      realized on the assumed surrender of the last individual policy or certificate
      in a group policy.





The
      Company holds a number of life
      insurance policies, however, the policies do not contain any provisions that
      would restrict or reduce the cash surrender value of the policies. The consensus
      in EITF Issue 06-5 is effective for fiscal years beginning after December 15,
      2006. The Company applied the guidance in EITF Issue 06-5 effective January
      1,
      2007 without material adverse effect on the Company’s financial position or
      results of operations.





In
      February 2007, the FASB issued
      SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
      Liabilities—Including an Amendment of FASB Statement No. 115”. This
      Statement allows companies the choice to measure many financial instruments
      and
      certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. This Statement
      is
      expected to expand the use of fair value measurement, which is consistent with
      the Board's long-term measurement objectives for accounting for financial
      instruments. This Statement is effective as of the beginning of an entity's
      first fiscal year that begins after November 15, 2007, or January 1, 2008 as
      to
      the Company, and interim periods within that fiscal year. Early adoption is
      permitted as of the beginning of a fiscal year that begins on or before November
      15, 2007, provided the entity also elects to apply the provisions of SFAS No.
      157, “Fair Value Measurements.” The Company is currently evaluating the impact
      the adoption of SFAS No. 159 will have on the financial statements.





-
          14
          -
 *Table
          of Contents*


**Forward-Looking
      Statements**





This
      report, including Management’s Discussion and Analysis of Financial Condition
      and Results of Operations, contains forward-looking statements about the
      Company. These forward-looking statements include statements regarding financial
      condition, results of operations, plans, objectives, and the future performance
      and business of the Company, including management’s establishment of an
      allowance for loan losses, its statements regarding the adequacy of such
      allowance for loan losses, and management’s belief that the allowance for loan
      losses is adequate. Forward-looking statements can be identified by the fact
      that they do not relate strictly to historical or current facts.





By
      their
      nature, forward-looking statements are subject to numerous assumptions, risks,
      and uncertainties. A number of factors could cause actual conditions, events,
      or
      results to differ significantly and materially from those described in the
      forward-looking statements.  These factors include, but are not
      limited to, those set forth below and under the heading “Business Risks”
included in Item 1 of the Company’s Annual Report on Form 10-K for the year
      ended December 31, 2006 (“2006 Form 10-K”), and other factors described in the
      2006 Form 10-K, and from time-to-time in other filings with the Securities
      and
      Exchange Commission.





Forward-looking
      statements speak only as of the date they are made. The Company assumes no
      obligation to update forward-looking statements to reflect circumstances or
      events that occur after the date the forward-looking statements were made or
      to
      reflect the occurrence of unanticipated events.





**Risk
      Factors**




Oak
      Hill
      Financial, like other financial companies, is subject to a number of risks,
      many
      of which are outside of management’s control.  Management strives to
      mitigate those risks while optimizing returns. Among the risks assumed are:
      (1)
**credit risk**, which is the risk that loan customers or other
      counterparties will be unable to perform their contractual obligations, (2)
      **market risk**, which is the risk that changes in market rates and
      prices will adversely affect the Company’s financial condition or results of
      operations, (3) **liquidity risk**, which is the risk that the
      Company will have insufficient cash or access to cash to meet operating needs,
      (4) **operational risk**, which is the risk of loss resulting from
      inadequate or failed internal processes, people, systems, or external events,
      and (5) **legal risk**, which is the risk of legal proceedings
      against the Company as well as regulatory and governmental reviews or
      investigations that arise in the course of the Company’s business. The
      description of the Company’s business contained in Item 1 of its 2006 Form 10-K,
      while not all inclusive, discusses a number of business risks that, in addition
      to the other information in this report, readers should carefully
      consider.





Item
      2: Management’s Discussion and Analysis of Financial Condition
      and Results of Operations





**Oak
      Hill Financial, Inc.**


**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF**


**FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS**


For
      the
      three month periods ended March 31, 2007 and 2006








*Discussion
      of Financial Condition Changes from December 31, 2006 to March 31,
      2007*





The
      Company’s total assets amounted to $1.3 billion at March 31, 2007, an increase
      of $16.5 million, or 1.3%, over the total at December 31, 2006. The increase
      in
      assets was funded primarily through an increase of $18.8 million, or 2.0% in
      deposits, which was partially offset by a decrease in FHLB advances of $4.0
      million, or 2.5% and a $250,000 decrease in repurchase agreements.





Cash
      and due from banks, federal funds
      sold, and investment securities, including mortgage-backed securities, increased
      by $9.1 million, or 5.1%, to a total of $187.9 million at March 31, 2007,
      compared to December 31, 2006. Investment securities decreased by $6.6 million,
      as maturities and repayments of $14.2 million and sales of $8.6 million exceeded
      purchases of $16.1 million.  Federal funds sold increased by $15.4
      million during the three-month period ended March 31, 2007.





Loans
      receivable, including loans held
      for sale, totaled $1.0 billion at March 31, 2007, an increase of $8.8 million,
      or 0.9%, over the comparable totals at December 31, 2006. Loan disbursements
      totaled $64.2 million during the three-month period ended March 31, 2007, which
      were partially offset by loan sales of $4.1 million and principal repayments
      of
      $50.2 million. Loan disbursements decreased by $24.9 million when compared
      to
      the same period in 2006. Sales volume decreased by $6.8 million as compared
      to
      the same period in 2006. Loan originations declined primarily in the residential
      real estate and consumer loan areas as competition in our market areas
      intensified. Growth in the loan portfolio during the three months ended March
      31, 2007 was comprised of a $9.9 million, or 1.4%, increase in commercial and
      residential real estate loans, a $4.9 million, or 9.1% increase in construction
      and land development loans and a $1.2 million, or 0.8%, increase in commercial
      loans, which were partially offset by a $6.9 million, or 6.4%, decrease in
      installment loans and a $156,000, or 6.6%, decrease in credit card loans. The
      allowance for loan losses totaled $13.1 million at March 31, 2007, an increase
      of $139,000, or 1.1%, over the total at December 31, 2006. The allowance for
      loan losses represented 1.25% of the total loan portfolio at March 31, 2007
      and
      December 31, 2006, respectively.





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          of Contents*


**Oak
      Hill Financial, Inc.**


**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF**


**FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS**


For
      the
      three month periods ended March 31, 2007 and 2006








Net
      charge-offs totaled approximately $405,000 and $146,000 for the three months
      ended March 31, 2007 and 2006, respectively. The Company’s allowance represented
      92.1% and 95.2% of the $14.2 million and $13.6 million of nonperforming loans
      at
      March 31, 2007 and December 31, 2006, respectively. At March 31, 2007,
      nonperforming loans were comprised of, $9.8 million of loans secured primarily
      by commercial real estate, $2.8 million of loans secured by one-to-four family
      residential real estate, $1.0 million of commercial and other loans and $546,000
      in installment and credit card loans. The Company continues to diligently
      explore several avenues to improve the status of such loans in a timely manner.
      In management’s opinion, based upon its ongoing review, knowledge, and current
      information, the carrying value of commercial and non-residential credits are
      appropriate and****all nonperforming loans were adequately
      collateralized or reserved for at March 31, 2007.





Deposits
      totaled $961.8 million at
      March 31, 2007, an increase of $18.8 million, or 2.0%, over the total at
      December 31, 2006. Total savings and time deposits increased by $14.5 million,
      or 1.7% during the period with a weighted-average cost of 3.67%. Total demand
      deposits increased by $4.3 million, or 4.5% during the period. Brokered deposits
      totaled $42.5 million, or 4.2% of total deposits, with a weighted-average cost
      of 4.41% at March 31, 2007, as compared to the $39.5 million, or 4.2% of total
      deposits, with a 3.87% weighted-average cost at December 31,
      2006.  Proceeds from deposit growth were used primarily to fund loan
      originations.





Advances
      from the Federal Home Loan
      Bank totaled $153.6 million at March 31, 2007, a decrease of $4.0 million,
      or
      2.5%, from the total at December 31, 2006. Securities sold under agreements
      to
      repurchase totaled $56.1 million at March 31, 2007, a decrease of $250,000,
      from
      the total at December 31, 2006.





The
      Company’s stockholders’ equity amounted to $92.9 million at March 31, 2007, an
      increase of $2.2 million, or 2.4%, over the total at December 31, 2006. The
      increase resulted primarily from net earnings of $2.6 million and proceeds
      from
      stock options exercised of $425,000, which were partially offset by $1.1 million
      in dividends paid to shareholders.








*Comparison
      of Results of Operations for the Three-Month Periods Ended March 31, 2007 and
      2006*





*General*





Net
      earnings for the three months ended March 31, 2007 totaled $2.6 million, an
      $881,000, or 25.2%, decrease from net earnings reported in the comparable 2006
      period. The decrease in earnings resulted primarily from a $423,000 decrease
      in
      net interest income, a $543,000 decrease in other income and a $343,000 increase
      in the provision for losses on loans, which were partially offset by a $416,000
      decrease in the provision for federal income taxes and a $12,000 decrease in
      general, administrative and other expenses..





*Net
      Interest Income*





Total
      interest income for the three months ended March 31, 2007, amounted to $20.9
      million, an increase of $1.9 million, or 10.2%, over the comparable 2006 period.
      Interest income on loans totaled $19.0 million, an increase of $1.6 million,
      or
      9.3%, over the 2006 period. This increase resulted primarily from an $8.5
      million, or 0.8% increase in the average portfolio balance, to a total of $1.0
      billion for the three months ended March 31, 2007, coupled with a 57 basis
      point
      increase in the average fully-taxable equivalent yield, to 7.44% for the three
      month period ended March 31, 2007. Interest income on investment securities
      and
      other interest-earning assets increased by $322,000, or 20.1%. This increase
      resulted primarily from a $20.3 million, or 13.9%, increase in the average
      portfolio balance, to a total of $165.7 million for the three months ended
      March
      31, 2007, coupled with an 8 basis point increase in the average fully-taxable
      equivalent yield, to 5.43% for the three months ended March 31,
      2007.





Total
      interest expense amounted to $11.6 million for the three months ended March
      31,
      2007, an increase of $2.4 million, or 25.5%, over the comparable 2006 period.
      Interest expense on deposits increased by $1.4 million, or 19.3%, to a total
      of
      $8.6 million for the three months ended March 31, 2007. The increase resulted
      primarily from a 78 basis point increase in the average cost of deposits, to
      4.11%, which was partially offset by a $30.2 million, or 3.4%, decrease in
      the
      average portfolio balance, to a total of $853.0 million for the three months
      ended March 31, 2007. Interest expense on borrowings increased by $969,000,
      or
      47.5%, for the three months ended March 31, 2007. The increase was due to a
      $70.8 million, or 42.9%, increase in the average borrowings outstanding for the
      three months ended March 31, 2007, coupled with a 16 basis point increase in
      the
      average cost of borrowings, to 5.17% for the three months ended March 31,
      2007.








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          of Contents*


**Oak
      Hill Financial, Inc.**


**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF**


**FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS**


For
      the
      three month periods ended March 31, 2007 and 2006





As
      a result of the foregoing changes in
      interest income and interest expense, net interest income decreased by $423,000,
      or 4.4%, for the three months ended March 31, 2007, as compared to the same
      period in 2006. The interest rate spread decreased 26 basis points, to 2.83%
      for
      the three months ended March 31, 2007, compared to 3.09% for the three months
      ended March 31, 2006. The fully-taxable equivalent net interest margin decreased
      24 basis points, from 3.48% to 3.24% for the three months ended March 31, 2006
      and 2007, respectively.





*Provision
      for Losses on Loans*





A
      provision for losses on loans is charged to earnings to bring the total
      allowance for loan losses to a level considered appropriate by management based
      on historical experience, the volume and type of lending conducted by the
      Company, the status of past due principal and interest payments, general
      economic conditions, particularly as such conditions relate to the Company’s
      market area, and other factors related to the collectibility of the Company’s
      loan portfolio.  As a result of such analysis, management recorded a
      $543,000 provision for losses on loans for the three months ended March 31,
      2007, an increase of $343,000, compared to the same period in 2006. The
      provision for losses on loans for the three months ended March 31, 2007 was
      predicated upon an increase of $600,000 in nonperforming loans, from $13.6
      million at December 31, 2006 to $14.2 million at March 31, 2007, the $8.8
      million of growth in the loan portfolio, as well as net charge-offs of $405,000
      during the quarter.





*Other
      Income*





Other
      income totaled $2.7 million for the three months ended March 31, 2007, a
      decrease of $543,000, or 16.5%, from the amount reported in the comparable
      2006
      period. This decrease resulted primarily from a $45,000, or 2.3%, decrease
      in
      service fees, charges and other income, a $33,000, or 22.0%, decrease in the
      incremental cash surrender value of bank owned life insurance, a $62,000, or
      29.7%, decrease in the gain on sale of loans, a $347,000 increase in loss on
      sale of other real estate owned, a $52,000, or 37.4%, decrease in the gain
      on
      the sale of investment securities, and a $4,000, or 0.5%, decrease in commission
      income. The decrease in service fees, charges and other income was due primarily
      to the effects of  mortgage servicing rights amortization, impairment
      and impairment recovery income totaling $129,000 and a $19,000 decrease in
      real
      estate loan servicing fees, which were partially offset by an increase in ATM
      fees totaling $51,000, an increase in service charges on deposits totaling
      $23,000, and an increase in other miscellaneous non-interest income totaling
      $29,000 in the 2007 quarter. The $62,000 decline in gain on sale of loans is
      attributable to a decrease in the sales volume of Small Business Administration
      and residential real estate loans with contributing effects of $19,000 and
      $43,000, respectively. The increase in the loss on sale of other real estate
      owned is attributable to the sale during the quarter of a REO property with
      a
      carrying value totaling $3.0 million.





*General,
      Administrative and Other Expense*





General,
      administrative and other expense totaled $8.2 million for the three months
      ended
      March 31, 2007, a decrease of $12,000, or 0.1%, from the amount reported in
      the
      2006 period. The decrease resulted primarily from a $235,000, or 10.1%, decrease
      in other operating expenses, a $68,000, or 23.9%, decrease in amortization
      of
      core deposit intangible, and a $24,000, or 7.6%, decrease in franchise taxes
      in
      2007, which were partially offset by a $146,000, or 3.4%, increase in employee
      compensation and benefits and a $171,000, or 17.2%, increase in occupancy and
      equipment.





The
      increase in occupancy and equipment expense was due primarily to a $100,000,
      or
      35.5%, increase in maintenance contracts, and a $50,000, or 13.2%, increase
      in
      depreciation expense associated with the Company’s expansion in 2006.
      Additionally, the Company experienced a $32,000, or 66.1%, decrease in rental
      income, and a $20,000, or 9.9%, increase in utilities, property taxes and
      insurance, which were partially offset by a $34,000, or 19.9%, decrease in
      rent
      expense.  The increase in compensation and benefits resulted primarily
      from a $248,000, or 42.6%, decrease in net loan costs associated with SFAS
      No.
      91, a $2,000, or 2.7%, increase in retirement plan expense, and a $6,000, or
      1.6% increase in payroll tax expense, which were partially offset by a $102,000,
      or 2.5% decrease in salaries and wages and a $9,000 decrease on other employee
      benefits.****The decrease in other expenses resulted
      primarily from a $150,000 decrease in dealer participation expense, a $98,000
      decrease in costs associated with improvements to the Company’s core processing
      system, a $40,000, or 23.2% decrease in marketing expense and a $40,000, or
      22.2% decrease in telephone expense, which were partially offset by a $50,000,
      or 31.4%, increase in ATM expense, an $18,000, or 7.5%, increase in credit
      and
      collection expenses, a $37,000, or 13.1% increase in professional fees, and
      a
      $31,000 increase in losses associated with bad checks and overdrafts in
      2007.





*Federal
      Income Taxes*





The
      provision for federal income taxes amounted to $619,000 for the three months
      ended March 31, 2007, a decrease of $416,000, or 40.2%, from the amount recorded
      in the comparable 2006 period. The decrease resulted primarily from a $1.3
      million, or 28.6%, decrease in earnings before taxes, coupled with a $25,000
      increase in New Markets Tax Credits pursuant to the Bank’s qualified investment
      in Oak Hill Banks Community Development Corp. The effective tax rates were
      19.2%
      and 22.9% for the three months ended March 31, 2007 and 2006,
      respectively.


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 *Table
          of Contents*


**Oak
      Hill Financial, Inc.**


**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF**


**FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS**


For
      the
      three month periods ended March 31, 2007 and 2006








*Subsequent
      Event*





On
      April 19, 2007, the Company
      announced the purchase of Meeker & Meeker, Inc., a property and casualty
      insurance agency. The acquisition is not material to the Company’s
      operations.








Item
                3:
            *Quantitative
                and Qualitative Disclosure About Market
                Risk*





There
      has
      been no significant change from disclosures included in the Company’s Annual
      Report on Form 10-K for the year ended December 31, 2006.





Item4:
            *Controls
                and Procedures*





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed by the Company in the reports
      that it files or submits under the Securities Act of 1934, as amended (the
      “Exchange Act”) is recorded, processed, summarized and reported, within the time
      periods specified in the SEC’s rules and forms. Disclosure controls and
      procedures include, without limitation, controls and procedures designed
      to ensure
      that information required to be disclosed by the Company in the reports that
      it
      files or submits under the Exchange Act is accumulated and communicated to
      the
      Company’s management as appropriate to allow timely decisions regarding required
      disclosure.





At
      the
      end of the period covered by this report, the Company’s management, with the
      participation of its chief executive officer and chief financial officer,
      carried out an evaluation of the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 promulgated under the Exchange Act. Based
      upon this evaluation, the Company’s chief executive officer and chief financial
      officer concluded that the Company’s disclosure controls and procedures were
      effective at March 31, 2007.


The
      Company’s management also conducted an evaluation of internal control over
      financial reporting to determine whether any changes occurred during the quarter
      ended March 31, 2007. Based on this evaluation, there were no changes in the
      Company’s internal control over financial reporting made during the quarter
      ended March 31, 2007, that have materiallyaffected, or are
      reasonably
      likely to materially affect, the Company’s internal control over financial
      reporting.










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          of Contents*




**Oak
        Hill Financial, Inc.**
 **PARTII– OTHER INFORMATION**





Item
                1:
            *Legal
                Proceedings*





Not
      applicable.





Item1A:
            *Risk
                Factors*





There
      have been no material changes from risk factors disclosed in the Company’s
      Annual Report on Form 10-K for the year ended December 31, 2006.





Item2:
            *Unregistered
                Sales of Equity Securities and Use of
                Proceeds*





Not
      applicable.





Item
                3:
            *Defaults
                Upon Senior Securities*





Not
      applicable.





Item
                4:
            *Submission
                of Matters to a Vote of Security
                Holders*





Not
      applicable.





Item
                5:
            *Other
                Information*





Not
      applicable.





Item
                6:
            *Exhibits*





Exhibits:





*ExhibitNumber*
            *Description*





31(a)
            Certification
                of Chief Executive Officer, R. E. Coffman, Jr., dated May 9, 2007,
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                (“SOX”).





31(b)
            Certification
                of Interim Chief Financial Officer, Dale B. Shafer, dated May 9,
                2007,
                pursuant to Section 302 of SOX.





32(a)
            Certification
                of Chief Executive Officer, R. E. Coffman, Jr., dated May 9, 2007,
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                SOX.





32(b)
            Certification
                of Interim Chief Financial Officer, Dale B. Shafer, dated May 9,
                2007,
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                SOX.

















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          of Contents*


**SIGNATURES**








Pursuant
      to the requirements of the
      Securities and Exchange Act of 1934, the Registrant has duly caused this report
      to be signed on its behalf by the undersigned thereunto duly
      authorized.








**Oak
                Hill Financial, Inc.**Date:
                May 9, 2007
            By:
            */s/
                R. E. Coffman, Jr.*R.
                E. Coffman, Jr.President
                & Chief Executive OfficerDate:
                May 9, 2007
            By:
            */s/
                Dale B. Shafer*Dale
                B. ShaferInterim
                Chief Financial Officer





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