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

                                  FORM 10-K

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

      For the fiscal year ended December 31, 1999

                                     OR

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

      For the transition period from ______________ to ___________________

                      Commission File Number: 0-026248

                          INDUSTRIAL BANCORP, INC.
           ------------------------------------------------------
           (Exact name of registrant as specified in its charter)

         Ohio                                          34-1800830
-------------------------------                  ----------------------
(State or other jurisdiction of                     I.R.S. Employer
 incorporation or organization)                  Identification Number)

211 North Sandusky Street, Bellevue, Ohio                 44811
-----------------------------------------              ----------
(Address of principal executive offices)               (Zip Code)

                Registrant's telephone number: (419) 483-3375
                                               --------------

         Securities registered pursuant to Section 12(b) of the Act:

      None                                      None
----------------            -------------------------------------------
(Title of Class)            (Name of each exchange on which registered)

         Securities registered pursuant to Section 12(g) of the Act:

                    Common shares, no par value per share
                    -------------------------------------
                              (Title of Class)

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

      Indicate by check mark if there is no disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K contained in this form, and no
disclosure will be contained, to the best of issuer's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]

      The aggregate market value of the voting stock held by non-affiliates
of the registrant, computed by reference to the average of the bid and asked
prices of such stock on The Nasdaq National Market as of March 21, 2000, was
$51,312,238. (The exclusion from such amount of the market value of the
shares owned by any person shall not be deemed an admission by the
registrant that such person is an affiliate of the registrant.)

      As of March 21, 2000, there were 4,343,883 of the Registrant's Common
Shares issued and outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE

    Part II of Form 10-K - Portions of 1999 Annual Report to Shareholders
         Part III of Form 10-K - Portions of Proxy Statement for the
                     2000 Annual Meeting of Shareholders


                                   PART I

Item 1.  Description of Business

General

      Industrial Bancorp, Inc. (the "Holding Company" or the "Corporation")
was incorporated in the State of Ohio in February 1995 for the purpose of
owning all of the outstanding capital stock of The Industrial Savings and
Loan Association ("Industrial" or the "Association") issued upon the
conversion of the Association from a mutual savings association to a
permanent capital stock savings association (the "Conversion"). On August 1,
1995, the effective date of the Conversion, the Holding Company acquired all
100 shares of the capital stock of the Association.

      The Association was organized as a mutual savings association under
Ohio law in 1890. As an Ohio savings association, the Association is subject
to supervision and regulation by the Office of Thrift Supervision (the
"OTS"), the Ohio Department of Commerce, Division of Financial Institutions
(the "Division") and the Federal Deposit Insurance Corporation (the "FDIC").
The Association is a member of the Federal Home Loan Bank (the "FHLB") of
Cincinnati and the deposits of the Association are insured up to applicable
limits by the FDIC in the Savings Association Insurance Fund (the "SAIF").

      The Association conducts business from its main office at 211 N.
Sandusky Street in Bellevue, Ohio, its eleven branch offices and its one
loan production office in the northern Ohio communities of Ashland,
Bellevue, Clyde, Findlay, Fremont, Lexington, Mansfield, Norwalk, Sandusky,
Tiffin and Willard. The Association is principally engaged in the business
of originating construction and permanent mortgage loans secured by first
mortgages on one- to four-family residential real estate located in the
Association's primary market area, which consists of the seven Ohio counties
in which its offices are located: Ashland, Erie, Hancock, Huron, Richland,
Sandusky and Seneca. The Association also originates construction and
permanent mortgage loans secured by multifamily real estate (over four
units) and nonresidential real estate in its primary market area. In
addition to real estate loans, the Association originates a limited number
of commercial loans and secured and unsecured consumer loans. For liquidity
and interest rate risk management purposes, the Association invests in
interest-bearing deposits in other financial institutions, U.S. Government
and agency obligations, mortgage-backed securities and other investments
permitted by applicable law. Funds for lending and other investment
activities are obtained primarily from savings deposits and loan principal
repayments. Advances from the FHLB of Cincinnati are also utilized as an
additional source of funds.

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

Market Area

      The Association conducts business from its main office in Bellevue,
Ohio, and its eleven branch offices in the northern Ohio cities of Ashland,
Clyde, Findlay, Fremont, Lexington, Norwalk, Sandusky, Tiffin and Willard.
The Association's primary market area for deposit and lending activity
consists of the seven counties in which the Association has its branch
offices.

      The economy of the Association's primary market area is stable.
Population growth and household growth have occurred at rates comparable to
that in the State of Ohio as a whole. The principal segments of the local
economy are manufacturing, wholesale/retail trade, tourism and other service
industries. Erie and Sandusky Counties include popular tourist attractions
along Lake Erie, such as Cedar Point, which provide a significant number of
jobs during the summer season and draw large numbers of visitors to the
area. Other major employers in the Association's primary market area include
Whirlpool Corporation, Cooper Tire & Rubber Company, Consolidated Biscuit
Co., General Motors, Ford Motor Company, Marathon Oil, Sprint, Therm-O-Disc
and R.R. Donnelly Co. There are also several colleges and universities in
the Association's primary market area.

Lending Activities

      General. The Association's principal lending activity is the
origination of conventional real estate loans, including construction loans,
secured by one- to four-family homes located in the Association's primary
market area. The Association also offers loans secured by multifamily
properties containing more than four units and nonresidential properties,
including construction loans. The Association does not originate first
mortgage loans insured by the Federal Housing Authority or guaranteed by the
Veterans Administration. In addition to real estate lending, the Association
originates a limited number of commercial loans and consumer loans,
including education loans, loans secured by deposit accounts, automobile
loans and a limited number of unsecured loans. As an approved Federal Home
Loan Mortgage Corporation seller/servicer, the Association sells certain
residential real estate mortgage loans in the secondary market.

      Loan Portfolio Composition. The following table presents certain
information regarding the composition of the Association's loan portfolio at
the dates indicated:

<TABLE>
<CAPTION>

                                                                       At December 31,
                           ------------------------------------------------------------------------------------------------------
                                  1999                 1998                 1997                 1996                 1995
                           -------------------  -------------------  -------------------  -------------------  -------------------
                                      Percent              Percent              Percent              Percent              Percent
                                      of total             of total             of total             of total             of total
                           Amount      loans    Amount      loans    Amount      loans    Amount      loans    Amount      loans
                           -------------------------------------------------------------------------------------------------------
                                                                    (Dollars in thousands)

<S>                        <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Real estate loans:
  One- to four-family      $288,905    83.07%   $279,237    83.87%   $278,438    85.00%   $248,694    85.35%   $226,868    85.90%
  Home equity                18,721     5.38      16,624     4.99      15,407     4.70      11,651     4.00       8,546     3.24
  Multifamily                10,873     3.13       9,165     2.75       8,170     2.49       9,028     3.10       8,213     3.11
  Nonresidential             11,956     3.44      10,979     3.31      10,521     3.21       8,842     3.03       9,100     3.45
  Construction (1)            9,479     2.73      11,607     3.49      10,341     3.16       8,765     3.01       6,746     2.55
                           ------------------------------------------------------------------------------------------------------

      Total real estate
       loans                339,934    97.74     327,612    98.41     322,877    98.56     286,980    98.49     259,473    98.25

Commercial loans              1,265     0.36         451     0.14         297     0.09         398     0.14         585     0.22

Consumer loans:
  Education loans               927     0.27       1,073     0.32       1,155     0.35       1,268     0.44       1,456     0.55
  Loans on deposits           1,084     0.31       1,307     0.39       1,258     0.39       1,087     0.37         987     0.38
  Automobile loans            1,901     0.55       1,545     0.46       1,189     0.36         773     0.27         826     0.31
  Other consumer loans        2,682     0.77         934     0.28         806     0.25         831     0.29         771     0.29
                           ------------------------------------------------------------------------------------------------------

      Total consumer
       loans                  6,594     1.90       4,859     1.45       4,408     1.35       3,959     1.37       4,040     1.53
                           ------------------------------------------------------------------------------------------------------

Total loans                 347,793   100.00%    332,922   100.00%    327,582   100.00%    291,337   100.00%    264,098   100.00%
                                      ======               ======               ======               ======               ======
  Less:
    Deferred loan
     origination fees        (3,500)              (4,020)              (4,171)              (3,977)              (3,598)
    Allowance for
     loan losses             (2,017)              (1,930)              (1,742)              (1,557)              (1,376)
                           --------             --------             --------             --------             --------

      Net loans            $342,276             $326,972             $321,669             $285,803             $259,124
                           ========             ========             ========             ========             ========

--------------------
<F1>  Net of the undisbursed portion of construction loans.

</TABLE>

      Loan Maturity. The following table sets forth certain information as
of December 31, 1999, regarding the dollar amount of loans maturing in the
Association's portfolio based on their contractual terms to maturity. Demand
loans, home equity loans and other loans having no stated schedule of
repayments or no stated maturity are reported as due in one year or less.

<TABLE>
<CAPTION>

                                                                       Due in years
                                    -------------------------------------------------------------------------------------
                                                                     2003       2005       2008       2020
                                                                     and       through    through      and
                                     2000       2001      2002       2004       2007       2019       After       Total
                                    -------------------------------------------------------------------------------------
                                                                       (In thousands)

<S>                                 <C>        <C>       <C>        <C>        <C>        <C>        <C>         <C>
Real estate loans:
  One- to four-family               $ 1,095    $  298    $ 1,399    $ 7,754    $25,995    $69,627    $182,737    $288,905
  Home equity                        18,721         -          -          -          -          -           -      18,721
  Multifamily and nonresidential        704       631        416      7,544      3,871      7,707       1,956      22,829
  Construction                        1,320        60          9         92         99      1,052       6,847       9,479
  Commercial loans                    1,265         -          -          -          -          -           -       1,265
  Consumer loans                      3,155       453        857      1,265        681        175           8       6,594
                                    -------------------------------------------------------------------------------------
      Total                         $26,260    $1,442     $2,681    $16,655    $30,646    $78,561    $191,548    $347,793
                                    =====================================================================================

</TABLE>

      The following table sets forth the dollar amount of all loans which
will become due after December 31, 2000, and which have fixed interest rates
or adjustable interest rates:

<TABLE>
<CAPTION>

                                 Due after
                             December 31, 2000
                             -----------------
                               (In thousands)

<S>                               <C>
Fixed interest rates                     6
Adjustable interest rates           68,487
                                  --------
                                  $321,533
                                  ========

</TABLE>

      Loans Secured by One- to Four-Family Real Estate. The principal
lending activity of the Association is the origination of permanent
conventional loans secured by one- to four-family residences, primarily
single-family residences, located within the Association's primary market
area. Each of such loans is secured by a first mortgage on the underlying
real estate and improvements thereon, if any. At December 31, 1999, the
Association's one- to four-family residential real estate loan portfolio was
$288.9 million, or 83% of total loans.

      OTS regulations and Ohio law limit the amount that the Association may
lend in relationship to the appraised value of the real estate and
improvements at the time of loan origination. In accordance with such
regulations and laws, the Association typically makes loans on one- to four-
family residences for up to 80% of the value of the real estate and
improvements (the "LTV") and occasionally makes loans with up to a 95% LTV.
The principal amount of any loan which exceeds an 80% LTV at the time of
origination is usually covered by private mortgage insurance at the expense
of the borrower.

      Fixed-rate one- to four-family loans are offered by the Association,
currently for terms of up to 30 years. Adjustable-rate one- to four-family
real estate loans ("ARMs") are also offered by the Association for terms of
up to 30 years. The interest rate adjustment periods on such ARMs are one
year and the rates are tied to the one-year U.S. Treasury bill rate. The new
interest rate at each change date is determined by adding a specified
margin, typically between 2.75% and 3.75%, to the prevailing index. The
maximum allowable adjustment at each adjustment date is 1% or 2% with a
maximum adjustment of 6% over the term of the loan. The initial rate on an
ARM with a 1% cap is typically higher than the initial rate on an ARM with a
2% cap to compensate for the reduced interest rate sensitivity. The initial
rate on ARMs originated by the Association is sometimes less than the sum of
the index at the time of origination plus the specified margin. Such loans
may be subject to greater risk of default as the interest rate adjusts to
the fully-indexed level. The Association attempts to reduce the risks by
underwriting such loans on the basis of the payment amount the borrower will
be required to pay during the second year of the loan, assuming the maximum
possible rate increase.

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

      Home Equity Loans. In recent years, lines of credit secured by the
equity in a borrower's principal residence have become increasingly popular.
The Association offers home equity lines of credit in an amount which, when
added to any prior indebtedness secured by the real estate, does not exceed
95% of the appraised value of the real estate. The Association's home equity
loans have terms of up to 30 years. The borrower can draw on the line of
credit during the first 15 years and must repay the loan during the second
15 years. Home equity loans are typically secured by a second mortgage on
the real estate. The Association frequently holds the first mortgage,
although the Association will make home equity loans in cases where another
lender holds the first mortgage. The interest rates charged by the
Association on home equity loans adjust quarterly and are tied to the
composite prime rate of 75% of the thirty largest U.S. banks, as published
in The Wall Street Journal.

      At December 31, 1999, the Association had $18.7 million, or 5% of
total loans, in home equity loans.

      Loans Secured by Multifamily Real Estate. In addition to loans on one-
to four-family properties, the Association originates loans secured by
multifamily properties containing over four units. Multifamily loans are
offered with adjustable rates for terms of up to 30 years and have a maximum
LTV of 80%.

      Multifamily lending is generally considered to involve a higher degree
of risk than one- to four-family residential lending because the borrower
typically depends upon income generated by the project to cover operating
expenses and debt service. The profitability of a project can be affected by
economic conditions, government policies and other factors beyond the
control of the borrower. The Association attempts to reduce the risk
associated with multifamily lending by evaluating the creditworthiness of
the borrower and the projected income from the project and by obtaining
personal guarantees on loans made to corporations and partnerships. The
Association requests that borrowers submit rent rolls and financial
statements annually to enable the Association to monitor such loans.

      At December 31, 1999, loans secured by multifamily properties totaled
$10.9 million, or 3% of total loans.

      Loans Secured by Nonresidential Real Estate. At December 31, 1999,
$12.0 million, or 3%, of the Association's total loans were secured by
permanent mortgages on nonresidential real estate. Such loans have
adjustable rates, terms of up to 25 years and LTVs of up to 75%. Among the
properties securing nonresidential real estate loans are office buildings
and motel and retail properties located in the Association's primary market
area.

      Although the loans secured by nonresidential real estate typically
have higher interest rates than one- to four-family residential real estate
loans, nonresidential real estate lending is generally considered to involve
a higher degree of risk than residential lending due to the relatively
larger loan amounts and the effects of general economic conditions on the
successful operation of income-producing properties. The Association has
endeavored to reduce such risk by evaluating the credit history and past
performance of the borrower, the location of the real estate, the financial
condition of the borrower, the quality and characteristics of the income
stream generated by the property and appraisals supporting the property's
valuation. The Association also makes loans for the construction of
nonresidential real estate.

      Construction Loans. The Association makes loans for the construction
of single-family houses, multifamily properties and nonresidential real
estate projects. At December 31, 1999, the Association's loan portfolio
included $9.5 million in construction loans, net of undisbursed proceeds, or
3% of total loans.

      The Association's construction loan portfolio at December 31, 1999,
consisted primarily of loans to individuals and builders for the
construction and permanent financing of single-family residences. Such loans
are offered with fixed or adjustable rates for terms of up to 30 years.
During the first year, while the residence is being constructed, the
borrower is required to pay interest only. At December 31, 1999, loans for
the construction of nonresidential real estate totaled $372,000.

      Construction loans, particularly loans involving nonresidential real
estate, generally involve greater underwriting and default risks than do
loans secured by mortgages on existing properties. Loan funds are advanced
upon the security of the project under construction, which is more difficult
to value before the completion of construction. Moreover, because of the
uncertainties inherent in estimating construction costs, it is relatively
difficult to evaluate accurately the LTV and the total loan funds required
to complete a project. In the event default on a construction loan occurs
and foreclosure follows, the Association would have to take control of the
project and attempt either to arrange for completion of construction or
dispose of the unfinished project. All of the Association's construction
loans are secured by property in the Association's primary market area.

      Commercial Loans. The Association occasionally makes commercial loans
to businesses in its primary market area. Such loans are typically secured
by a security interest in inventory, accounts receivable or other assets of
the borrower. At December 31, 1999, the Association's commercial loan
portfolio was $1.3 million, or less than 1% of total loans.

      Consumer Loans. The Association makes various types of consumer loans,
including education loans, loans made to depositors on the security of their
deposit accounts, automobile loans and other secured loans and unsecured
personal loans. Consumer loans are made at fixed rates of interest and for
varying terms based on the type of loan. At December 31, 1999, the
Association had $6.6 million, or 2% of total loans, invested in consumer
loans.

      Consumer loans, particularly consumer loans that are unsecured or are
secured by rapidly depreciating assets such as automobiles, may entail
greater risk than do residential real estate loans. Repossessed collateral
for a defaulted consumer loan may not provide an adequate source of
repayment of the outstanding loan balance. The risk of default on consumer
loans increases during periods of recession, high unemployment and other
adverse economic conditions.

      Loan Solicitation and Processing. Loan originations are developed from
a number of sources, including continuing business with depositors, other
borrowers and residential housing builders, solicitations by the
Association's lending staff and, to a limited extent, through the use of
local independent mortgage brokers, and walk-in customers.

      Loan applications for permanent real estate loans are taken by loan
personnel in the office where the loan is originated. The Association
typically obtains a credit report, verification of employment and other
documentation concerning the creditworthiness of the borrower. An appraisal
of the fair market value of the real estate, which will be given as security
for the loan, is prepared by a staff appraiser or a fee appraiser approved
by the Board of Directors. Upon the completion of the appraisal and the
receipt of information on the credit history of the borrower, the
application for a loan is submitted for review in accordance with the
Association's underwriting guidelines to the Association's Executive
Committee or Underwriting Committee. All loans are ratified by the full
Board of Directors.

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

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

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

      Loan Originations, Purchases and Sales. The Association originates
both fixed-rate and ARM loans for its portfolio. A majority of the loans in
the Association's portfolio conform to the secondary market standards of the
Federal Home Loan Mortgage Corporation (the "FHLMC") or the Federal National
Mortgage Association (the "FNMA"). In an effort to reduce interest rate risk
and due to the favorable market conditions to do so, the Association
initiated a program in 1998 to sell a portion of the Association's fixed-
rate loan originations in the secondary market. The Association intends to
continue to charge a higher interest rate on loans that do not conform to
FHLMC or FNMA standards to mitigate the increased interest rate risk
associated with loans that cannot be readily sold. At December 31, 1999, the
Association had $27.3 million of loans serviced for others.

      The following table presents the Association's loan origination,
purchase and sale activity for the periods indicated:

<TABLE>
<CAPTION>

                                                               Year ended December 31,
                                               ------------------------------------------------------
                                                 1999        1998        1997       1996       1995
                                               ------------------------------------------------------
                                                                   (In thousands)

<S>                                            <C>         <C>         <C>         <C>        <C>
Loans originated:
  One- to four-family residential              $ 74,598    $ 88,834    $ 74,289    $58,626    $46,007
  Multifamily residential                         4,979         844         211        702        375
  Nonresidential                                  1,707       2,335         817        957        848
  Construction                                   20,213      21,298      22,911     18,751     17,478
  Commercial                                      5,213       2,175       1,674        624        601
  Consumer                                        5,806       3,327       2,891      2,572      2,568
                                               ------------------------------------------------------
    Total loans originated                      112,516     118,813     102,793     82,232     67,877

Loan participations purchased                         -       2,175       1,025          -          -

Reductions:
  Principal repayments                           86,664     101,360      64,950     54,521     40,609
  Loans sold                                      8,450      17,663           -          -      1,250
  Transfers from loans to real estate owned          89          46          71          -         33
                                               ------------------------------------------------------
    Total reductions                             95,203     119,069      65,021     54,521     41,892

Increase (decrease) in other items, net (1)       2,009      (3,384)      2,931      1,032      2,398
                                               ------------------------------------------------------
Net increase                                   $ 15,304    $  5,303    $ 35,866    $26,679    $23,587
                                               ======================================================

--------------------
<F1>  Other items consist of the undisbursed portion of construction loans,
      net loan origination fees, unearned interest and the allowance for
      loan losses.

</TABLE>

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

      Based on such limits, the Association was able to lend approximately
$5.7 million to one borrower at December 31, 1999. The largest amount the
Association had outstanding to one borrower and related persons or entities
at December 31, 1999, was $3.5 million, consisting of a number of
residential rental and condominium development projects in the Association's
primary market area.

      Loan Origination and Other Fees. The Association realizes loan
origination fee and other fee income from its lending activities and also
realizes income from late payment charges, application fees and fees for
other miscellaneous services.

      Loan origination fees and other fees are a volatile source of income,
varying with the volume of lending, loan repayments and general economic
conditions. All nonrefundable loan origination fees and certain direct loan
origination costs are deferred and recognized in accordance with Statement
of Financial Accounting Standards No. 91 as an adjustment to yield over the
life of the related loan.

      Delinquent Loans, Nonperforming Assets and Classified Assets.
Delinquent loans are loans for which payment has not been received within 30
days of the payment due date. Loan payments are due on the first day of the
month with the interest portion of the payment applicable to interest
accrued during the prior month. When loan payments have not been made by the
thirtieth of the month, late notices are sent to the borrower. If payment is
not received by the sixtieth day, second notices are sent and telephone
calls are made. Each loan bears a late payment penalty which is assessed as
soon as such loan is more than 15 days delinquent. The late penalty is 5% of
the payment due.

      When a loan secured by real estate becomes delinquent more than 90
days, the Board of Directors reviews the loan and foreclosure proceedings
are instituted if the Board determines that the delinquency is not likely to
be resolved in a reasonable period of time. An appraisal of the security is
performed when foreclosure proceedings are initiated. If the appraisal
indicates that the value of the collateral is less than the book value of
the loan, a valuation allowance is established for such loan.

      When a consumer loan becomes more than 120 days past due, the loan is
classified loss and a specific reserve is established for the book balance
of the loan.

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

<TABLE>
<CAPTION>

                                                                At December 31,
                          --------------------------------------------------------------------------------------------
                                      1999                            1998                            1997
                          ----------------------------    ----------------------------    ----------------------------
                                               Percent                         Percent                        Percent
                                              of total                        of total                        of total
                          Number    Amount     loans      Number    Amount     loans      Number    Amount     loans
                          --------------------------------------------------------------------------------------------
                                                             (Dollars in thousands)

<S>                        <C>      <C>        <C>         <C>      <C>        <C>         <C>      <C>        <C>
Loans delinquent for:
  30 - 59 days              65      $1,818     0.52%       114      $2,336     0.70%        75      $2,019     0.62%
  60 - 89 days              40         622     0.18         35       1,266     0.38         49       1,327     0.40
  90 days and over          56       1,489     0.43         71       1,285     0.39         38         763     0.23
                           ----------------------------------------------------------------------------------------
Total delinquent loans     161      $3,929     1.13%       220      $4,887     1.47%       162      $4,109     1.25%
                           ========================================================================================

<CAPTION>


                                                    At December 31,
                           -----------------------------------------------------------
                                      1996                            1995
                           ---------------------------    ----------------------------
                                               Percent                         Percent
                                              of total                        of total
                          Number    Amount     loans      Number    Amount     loans
                          ------------------------------------------------------------
                                             (Dollars in thousands)

<S>                        <C>      <C>        <C>         <C>      <C>        <C>
Loans delinquent for:
  30 - 59 days              65      $1,267     0.43%        70      $1,238     0.47%
  60 - 89 days              34         575     0.20         47         749     0.28
  90 days and over          75         999     0.34         73       1,502     0.57
                           --------------------------------------------------------
Total delinquent loans     174      $2,841     0.97%       190      $3,489     1.32%
                           ========================================================

</TABLE>

      Nonperforming assets include nonaccruing loans, accruing loans that
are delinquent 90 days or more, real estate acquired by foreclosure or by
deed-in-lieu thereof, and repossessed assets. The Association ceases to
accrue interest on real estate loans if the collateral value is not
adequate, in the opinion of management, to cover the outstanding principal
and interest.

      The following table sets forth information with respect to the accrual
and nonaccrual status of the Association's loans and other nonperforming
assets at the dates indicated:

<TABLE>
<CAPTION>

                                                               At December 31,
                                              --------------------------------------------------
                                               1999       1998       1997       1996       1995
                                              --------------------------------------------------
                                                            (Dollars in thousands)

<S>                                           <C>        <C>        <C>        <C>        <C>
Accruing loans delinquent 90 days or more     $  629     $  512     $  294     $  721     $  939
Loans accounted for on a nonaccrual basis:
  Real estate:
    One- to four-family                          914        963        710        504        621
    Multifamily                                    -          -          -          -          -
    Nonresidential                                 -          -         10          -          7
  Consumer                                        14         13         18         13          5
                                              --------------------------------------------------
      Total nonaccrual loans                     928        976        738        517        633
                                              --------------------------------------------------
      Total nonperforming loans                1,557      1,488      1,032      1,238      1,572

Real estate owned                                 84          5         76          5          5
                                              --------------------------------------------------

      Total nonperforming assets              $1,641     $1,493     $1,108     $1,243     $1,577
                                              ==================================================

Allowance for loan losses                     $2,017     $1,930     $1,742     $1,557     $1,376
                                              ==================================================

Nonperforming assets as a
 percent of total assets                        0.42%      0.38%      0.31%      0.38%      0.49%
Nonperforming loans as a
 percent of total loans                         0.45%      0.45%      0.32%      0.42%      0.60%
Allowance for loan losses as a
 percent of nonperforming loans               129.55%    129.72%    168.76%    125.77%     87.53%

</TABLE>

      For the year ended December 31, 1999, gross interest income which
would have been recorded had nonaccruing loans been current in accordance
with their original terms was $30,000. Interest collected on such loans and
included in net income was $12,000.

      Real estate acquired by the Association as a result of foreclosure
proceedings is classified as real estate owned ("REO") until it is sold. REO
is recorded by the Association at the estimated fair value of the real
estate at the date of acquisition, less estimated selling expenses, and any
write-down resulting therefrom is charged to the allowance for loan losses.
Interest accrual, if any, ceases no later than the date of acquisition of
the real estate, and all costs incurred from such date in maintaining the
property are expensed. Costs relating to the development and improvement of
the property are capitalized to the extent of fair value.

      The Association classifies its own assets on a monthly basis in
accordance with federal regulations. Problem assets are classified as
"substandard," "doubtful" or "loss." "Substandard" assets have one or more
defined weaknesses and are characterized by the distinct possibility that
the Association will sustain some loss if the deficiencies are not
corrected. "Doubtful" assets have the same weaknesses as "substandard"
assets, with the additional characteristics that (i) the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable and (ii) there is a high possibility of
loss. An asset classified "loss" is considered uncollectible and of such
little value that its continuance as an asset of the Association is not
warranted.

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

<TABLE>
<CAPTION>

                                             At December 31,
                               ------------------------------------------
                                1999      1998     1997    1996     1995
                               ------------------------------------------
                                             (In thousands)

<S>                            <C>       <C>       <C>     <C>     <C>
Substandard                    $1,623    $1,482    $786    $874    $1,408
Doubtful                            -         -       -       -         -
Loss                               55        23      45      54        46
    Total classified assets    $1,678    $1,505    $831    $928    $1,454

</TABLE>

      The Association establishes general allowances for loan losses for any
loan classified as substandard or doubtful. If an asset, or portion thereof,
is classified as loss, the Association establishes specific allowances for
losses in the amount of 100% of the portion of the asset classified loss.
Generally, the Association charges off the portion of any real estate loan
deemed to be uncollectible.

      The Association analyzes each classified asset on a monthly basis to
determine whether a change in its classification is appropriate under the
circumstances. Such analysis focuses on a variety of factors, including the
amount of any delinquency and the reasons for the delinquency, if any, the
use of the real estate securing the loan, the status of the borrower and the
appraised value of the real estate. As such factors change, the
classification of the asset will change accordingly.

      Allowance for Loan Losses. Senior management, with oversight by the
Board, reviews on a monthly basis the allowance for loan losses as it
relates to a number of relevant factors, including but not limited to,
trends in the level of delinquent and nonperforming assets and classified
loans, current economic conditions in the primary lending area, past loss
experience and probable losses arising from specific problem assets. To a
lesser extent, management also considers loan concentrations to single
borrowers and changes in the composition of the loan portfolio. While
management believes that it uses the best information available to determine
the allowance for loan losses, unforeseen market conditions could result in
adjustments, and net income could be significantly affected if circumstances
differ substantially from the assumptions used in making the final
determination.

      The foregoing statement regarding the adequacy of the allowance for
loan losses is a "forward-looking" statement within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Factors that could affect the
adequacy of the loan loss allowance include, but are not limited to, the
following: (1) changes in the national and local economy which may
negatively impact the ability of borrowers to repay their loans and which
may cause the value of real estate and other properties that secure
outstanding loans to decline; (2) unforeseen adverse changes in
circumstances with respect to certain large loans; (3) decreases in the
value of collateral securing consumer loans to amounts less than the
outstanding balances of the consumer loans; and (4) determinations by
various regulatory agencies that the Association must recognize additions to
its loan loss allowance based on such regulators' judgment of information
available to them at the time of their examinations.

      The following table sets forth an analysis of the Association's
allowance for loan losses for the periods indicated:

<TABLE>
<CAPTION>

                                               Year ended December 31,
                                   ----------------------------------------------
                                   1999      1998     1997      1996     1995
                                   ----------------------------------------------
                                               (Dollars in thousands)

<S>                                <C>       <C>       <C>       <C>       <C>
Balance at beginning of period     $1,930    $1,742    $1,557    $1,376    $1,209

Charge-offs                           (19)      (14)       (2)        -       (17)
Recoveries                              3         2         1         1         4
                                   ----------------------------------------------
Net (charge-offs) recoveries          (16)      (12)       (1)        1       (13)
Provision for loan losses             103       200       186       180       180
                                   ----------------------------------------------
Balance at end of year             $2,017    $1,930    $1,742    $1,557    $1,376
                                   ==============================================
Net (charge-offs) recoveries to
 average loans                       0.00%     0.00%     0.00%     0.00%    (0.01)%
Allowance for loan losses to
 total loans                         0.58%     0.59%     0.54%     0.53%     0.52%

</TABLE>

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

<TABLE>
<CAPTION>

                               1999                     1998                     1997
                       ---------------------    ---------------------    ---------------------
                                 Percent of               Percent of               Percent of
                                    loans                    loans                    loans
                                   in each                  in each                  in each
                                 category to              category to              category to
                       Amount    total loans    Amount    total loans    Amount    total loans
                       -----------------------------------------------------------------------
                                                (Dollars in thousands)

<S>                    <C>          <C>         <C>          <C>         <C>          <C>
Balance at year end
 applicable to:
  Real estate loans    $1,507        98%        $1,442       98%         $1,303        99%
  Commercial loans         40         -             38        -              34         -
  Consumer loans          173         2            164        2             151         1
  Unallocated             297         -            286        -             254         -
                       ------------------------------------------------------------------
      Total            $2,017       100%        $1,930      100%         $1,742       100%
                       ==================================================================

<CAPTION>


                               1996                     1995
                       ---------------------    ---------------------
                                 Percent of               Percent of
                                    loans                    loans
                                   in each                  in each
                                 category to              category to
                       Amount    total loans    Amount    total loans
                       ----------------------------------------------
                                    (Dollars in thousands)

<S>                    <C>          <C>         <C>          <C>
Balance at year end
 applicable to:
  Real estate loans    $1,166        99%        $1,036        98%
Commercial loans           30         -             27         -
Consumer loans            134         1            112         2
Unallocated               227         -            201         -
                       -----------------------------------------
Total                  $1,557       100%        $1,376       100%
                       =========================================

</TABLE>

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

Investment Activities

      Federal regulation and Ohio law permit the Association to invest in
various types of investments, including interest- bearing deposits in other
financial institutions, U.S. Treasury and agency obligations, mortgage-
backed securities and certain other specified investments. The Board of
Directors of the Association has adopted an investment policy which
authorizes management to make investments in U.S. Government and agency
securities, deposits in the FHLB, certificates of deposit in federally-
insured financial institutions, banker's acceptances issued by major U.S.
banks, corporate debt securities rated at least "AA," or equivalent, by a
major statistical rating firm and municipal or other tax free obligations.
The Association's investment policy is designed primarily to provide and
maintain liquidity within regulatory guidelines, to maintain a balance of
high quality investments to minimize risk and to maximize return without
sacrificing liquidity and safety.

      The following table sets forth the composition of the Association's
interest-bearing deposits, investment securities and mortgage-backed
securities at the dates indicated:

<TABLE>
<CAPTION>

                                                                             At December 31,
                                         -----------------------------------------------------------------------------------
                                                           1999                                        1998
                                         ---------------------------------------     ---------------------------------------
                                         Carrying    % of       Fair       % of      Carrying    % of       Fair       % of
                                           value     total      value      total       value     total      value      total
                                         -----------------------------------------------------------------------------------
                                                                         (Dollars in thousands)

<S>                                      <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest-bearing deposits(1):
  Demand deposits                        $ 3,253     10.14%    $ 3,253     10.13%    $ 5,469     11.16%    $ 5,469     11.16%
  Overnight deposits                       4,000     12.46       4,000     12.46      22,000     44.91      22,000     44.89
  Time deposits                           10,500     32.71      10,500     32.70           -         -           -         -
                                         -----------------------------------------------------------------------------------

      Total interest-bearing deposits     17,753     55.31      17,753     55.29      27,469     56.07      27,469     56.05

Investment securities:
  U.S. Treasury securities:
    Available for sale                    6,993      21.79       6,993     21.78      12,156     24.81      12,156     24.81
  U.S. agency securities:
    Available for sale                    4,953      15.43       4,953     15.43       6,042     12.33       6,042     12.33
  Equity securities (2)                   2,195       6.84       2,195      6.84       3,037      6.20       3,037      6.20
                                        ------------------------------------------------------------------------------------
      Total investment securities        14,141      44.06      14,141     44.05      21,235     43.34      21,235     43.34
                                        ------------------------------------------------------------------------------------
  Mortgage-backed securities                202       0.63         212      0.66         283      0.59         302      0.61
                                        ------------------------------------------------------------------------------------
Total investments                       $32,096     100.00%    $32,106    100.00%    $48,987    100.00%    $49,006    100.00%
                                        ====================================================================================

<CAPTION>

                                                     At December 31,
                                         ---------------------------------------
                                                           1997
                                         ---------------------------------------
                                         Carrying    % of       Fair       % of
                                           value     total      value      total
                                         ---------------------------------------
                                                 (Dollars in thousands)

<S>                                      <C>        <C>        <C>        <C>
Interest-bearing deposits(1):
  Demand deposits                        $ 3,499     11.30%    $ 3,499     11.29%
  Overnight deposits                       6,000     19.38       6,000     19.35
  Time deposits                                -         -           -         -
                                         ---------------------------------------

      Total interest-bearing deposits      9,499     30.68       9,499     30.64

Investment securities:
  U.S. Treasury securities:
    Available for sale                    16,048     51.82      16,048     51.76
  U.S. agency securities:
    Available for sale                     3,011      9.72       3,011      9.71
  Equity securities (2)                    1,971      6.37       1,971      6.36
                                         ---------------------------------------
      Total investment securities         21,030     67.91      21,030     67.83
                                         ---------------------------------------
  Mortgage-backed securities                 437      1.41         474      1.53
                                         ---------------------------------------
Total investments                        $30,966    100.00%    $31,003    100.00%
                                         =======================================

--------------------
<F1>  Total interest-bearing deposits held at the FHLB of Cincinnati totaled
      $17,753 at December 31, 1999.
<F2>  Comprised of Federal Home Loan Mortgage Corporation preferred stock.

</TABLE>

      The maturities of the Association's interest-bearing deposits,
investment securities and mortgage-backed securities at December 31, 1999,
are as follows:

<TABLE>
<CAPTION>

                                                                At December 31, 1999
                              ---------------------------------------------------------------------------------------
                                                      After one through          After five             After ten
                                One year or less          five years         through ten years            years
                              -------------------    -------------------    -------------------    ------------------
                              Carrying    Average    Carrying    Average    Carrying    Average    Carrying    Average
                                value      yield      value       yield       value      yield       value      yield
                              ----------------------------------------------------------------------------------------
                                                               (Dollars in thousands)

<S>                           <C>          <C>        <C>         <C>         <C>        <C>         <C>        <C>
Interest-bearing deposits     $17,753      4.47%      $    -         -%       $  -          -%       $  -           -%
U.S. Treasury securities        6,993      6.08            -         -           -          -           -           -
U.S. agency securities          3,970      5.59          983      5.00           -          -           -           -
Mortgage-backed securities          -         -           25      9.70           8       8.50         169       10.62
                              ---------------------------------------------------------------------------------------
      Total                   $28,716      5.02%      $1,008      5.11%       $  8       8.50%       $169       10.62%
                              =======================================================================================

<CAPTION>

                                      At December 31, 1999
                              -----------------------------------

                                             Total
                              ------------------------------------
                              Carrying    Market        Weighted
                                value     value      average yield
                              ------------------------------------
                                     (Dollars in thousands)

<S>                           <C>         <C>           <C>
Interest-bearing deposits     $17,753     $17,753        4.47%
U.S. Treasury securities        6,993       6,993        6.08
U.S. agency securities          4,953       4,953        5.47
Mortgage-backed securities        202         212       10.42
                              -------------------------------
      Total                   $29,901     $29,911        5.05%
                              ===============================

</TABLE>

Not included in the preceding table is $2.2 million of Federal Home Loan
Mortgage Corporation preferred stock which has no stated maturity.

Deposits and Borrowings

      General. Deposits have traditionally been the primary source of the
Association's funds for use in lending and other investment activities. In
addition to deposits, the Association derives funds from interest payments
and principal repayments on loans and income on interest-earning assets.
Loan payments are a relatively stable source of funds, while deposit inflows
and outflows fluctuate more in response to general interest rates and money
market conditions. The Association also utilizes FHLB advances as an
alternative source of funds.

      Deposits. Deposits are attracted principally from within the
Association's primary market area through the offering of a broad selection
of deposit instruments, including NOW accounts, demand deposit accounts,
money market accounts, regular passbook savings accounts, term certificate
accounts, IRAs and Keogh accounts. Interest rates paid, maturity terms,
service fees and withdrawal penalties for the various types of accounts are
established periodically by management based on the Association's liquidity
requirements, growth goals and interest rates paid by competitors. The
Association does not use brokers to attract deposits. The amount of deposits
from outside the Association's primary market area is not significant.

      At December 31, 1999, the Association's certificates of deposit
totaled $203.3 million, or 69% of total deposits. Of such amount,
approximately $128.7 million in certificates of deposit mature within one
year. Based on past experience and the Association's prevailing pricing
strategies, management believes that a substantial percentage of such
certificates will be renewed with the Association at maturity. If deviation
from historical experience occurs, the Association can utilize borrowings
from the FHLB of Cincinnati as an alternative source of funds, up to the
Association's limit on such borrowings, which was $69.8 million at December
31, 1999.

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

<TABLE>
<CAPTION>

                                                                                 December 31,
                              -------------------------------------------------------------------------------------------------
                                  Weighted               1999                        1998                        1997
                              average rate at  ------------------------    ------------------------    ------------------------
                                December 31,              Percent of                  Percent of                  Percent of
                                   1999        Amount    total deposits    Amount    total deposits    Amount    total deposits
                              -------------------------------------------------------------------------------------------------
                                                                            (Dollars in thousands)

<S>                                <C>         <C>          <C>            <C>          <C>           <C>          <C>
Transaction accounts:
  Noninterest-bearing demand
   deposits                           -%       $  4,928       1.68%        $  4,009       1.39%       $  3,287       1.21%
  Passbook savings accounts        3.10          57,861      19.66           54,258      18.80          52,622      19.43
  NOW accounts                     2.90          23,767       8.08           17,750       6.15          15,277       5.64
  Money market accounts            3.00           4,364       1.48            4,713       1.63           4,049       1.49
                                               --------------------------------------------------------------------------
    Total transaction accounts                   90,920      30.90           80,730      27.97          75,235      27.77

Certificates of deposit:
  4.01%  - 6.00%                   5.25         153,450      52.15          149,696      51.87         120,113      44.33
  6.01% -  8.00%                   6.21          23,585       8.01           33,578      11.64          51,020      18.83
  Adjustable-rate (1)              5.27          26,295       8.94           24,580       8.52          24,589       9.07
                                               --------------------------------------------------------------------------
      Total certificates
       of deposit                  5.37         203,330      69.10          207,854      72.03         195,722      72.23
                                               --------------------------------------------------------------------------
      Total deposits               4.60%       $294,250     100.0%         $288,584     100.0%        $270,957     100.0%
                                               =========================================================================

--------------------
<F1>  Consists of IRA and Keogh accounts, the rates on which adjust monthly
      at the discretion of the Association.

</TABLE>

      The Association bids on deposits of public funds from entities in its
primary market area. The amount of such deposits was approximately $21.3
million at December 31, 1999.

      The following table shows rate and maturity information for the
Association's certificates of deposit at December 31, 1999:

<TABLE>
<CAPTION>

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

<S>                                  <C>          <C>          <C>          <C>        <C>
4.01% to 6.00%                       $ 97,458     $41,108      $10,544      $4,340     $153,450
6.01% to 8.00%                         13,437       5,847        3,608         693       23,585
Adjustable rate                        17,813       8,482            -           -       26,295
                                     ----------------------------------------------------------
    Total certificates of deposit    $128,708     $55,437      $14,152      $5,033     $203,330
                                     ==========================================================

</TABLE>

      The following table presents the amount of the Association's
certificates of deposit of $100,000 or more, by the time remaining until
maturity, at December 31, 1999:

<TABLE>
<CAPTION>

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

<S>                               <C>
Three months or less              $12,719
Over 3 months to 6 months          14,101
Over 6 months to 12 months         12,703
Over 12 months                      9,509
                                  -------
    Total                         $49,032
                                  =======

</TABLE>

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

<TABLE>
<CAPTION>

                                             Year ended December 31,
                                         -------------------------------
                                           1999        1998        1997
                                         --------------------------------
                                              (Dollars in thousands)

<S>                                      <C>         <C>         <C>
Beginning balance                        $288,584    $270,957    $259,074
  Deposits                                529,012     445,214     166,892
  Withdrawals                            (534,293)   (438,622)   (165,456)
                                         --------------------------------
Net deposits before interest credited     283,303     277,549     260,510
  Interest credited                        10,947      11,035      10,447
                                         --------------------------------
Ending balance                           $294,250    $288,584    $270,957
                                         ================================

  Net increase                           $  5,666    $ 17,627    $ 11,883
  Percent increase                            2.0%        6.5%        4.6%

</TABLE>

      Borrowings. The FHLB system functions as a central reserve bank,
providing credit for its member institutions and certain other financial
institutions. As a member in good standing of the FHLB of Cincinnati, the
Association is authorized to apply for advances from the FHLB of Cincinnati,
provided certain standards of creditworthiness have been met. Under current
regulations, an association must meet certain qualifications to be eligible
for FHLB advances. The extent to which an association is eligible for such
advances will depend upon whether it meets the Qualified Thrift Lender Test
(the "QTL test"). If an association meets the QTL test, it will be eligible
for 100% of the advances it would otherwise be eligible to receive. If an
association does not meet the QTL test, it will be eligible for such
advances only to the extent it holds specified QTL test assets. At December
31, 1999, the Association was in compliance with the QTL test.

      The following table sets forth the maximum month-end balance and
average balance of the Association's FHLB advances during the periods
indicated:

<TABLE>
<CAPTION>

                                 Year ended December 31,
                              -----------------------------
                                1999       1998       1997
                              -----------------------------
                                  (Dollars in thousands)

<S>                           <C>        <C>        <C>
Maximum balance               $37,000    $37,000    $29,000
Average balance                30,846     35,692     16,615
Average interest rate paid       5.91%      6.15%      6.38%

</TABLE>

      At December 31, 1999, the Association had outstanding FHLB advances
totaling $37.0 million, with a weighted average interest rate of 5.88%.

Competition

      The Association competes for deposits with other savings associations,
savings banks, commercial banks and credit unions and with the issuers of
commercial paper and other securities, such as shares in money market mutual
funds. The primary factors in competing for deposits are interest rates and
convenience of office location. In making loans, the Association competes
with other savings banks, savings associations, commercial banks, mortgage
brokers, consumer finance companies, credit unions, leasing companies and
other lenders. The Association competes for loan originations primarily
through the interest rates and loan fees it charges and through the
efficiency and quality of services it provides to borrowers. Competition is
intense and is affected by, among other things, the general availability of
lendable funds, general and local economic conditions, current interest rate
levels and other factors that are not readily predictable. The Association
does not offer all of the products and services offered by some of its
competitors, particularly commercial banks. The Association monitors the
product offerings of its competitors and adds new products when it can do so
competitively and cost effectively.

      The size of financial institutions competing with the Association is
likely to increase as a result of changes in statutes and regulations
eliminating various restrictions on interstate and inter-industry branching
and acquisitions. Such increased competition may have an adverse effect upon
the Association.

Employees

      As of December 31, 1999, the Association had 86 full-time employees
and 13 part-time employees. The Association believes that relations with its
employees are excellent. The Association offers health and disability
benefits, life insurance and an employee stock ownership plan. None of the
employees of the Association are represented by a collective bargaining
unit.

                                 REGULATION

General

      As a savings and loan association incorporated under the laws of Ohio,
Industrial is subject to regulation, examination and oversight by the OTS
and the Superintendent of the Division of Financial Institutions of the
Department of Commerce of the State of Ohio (the "Ohio Superintendent").
Because Industrial's deposits are insured by the FDIC, Industrial also is
subject to general oversight by the FDIC. Industrial must file periodic
reports with the OTS, the Ohio Superintendent and the FDIC concerning its
activities and financial condition. Examinations are conducted periodically
by federal and state regulators to determine whether Industrial is in
compliance with various regulatory requirements and is operating in a safe
and sound manner. Industrial is a member of the FHLB of Cincinnati.

      The Holding Company is a savings and loan holding company within the
meaning of the Home Owners Loan Act, as amended (the "HOLA") and is,
therefore, subject to regulation, examination, and oversight by the OTS and
is required to submit periodic reports to the OTS. Because the Holding
Company and Industrial are corporations organized under Ohio law, they are
also subject to the provisions of the Ohio Revised Code applicable to
corporations generally.

      On November 12, 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was
enacted into law. The GLB Act repealed prior laws which had generally
prevented banks from affiliating with securities and insurance firms and
made other significant changes in the financial services in which various
types of financial institutions may engage.

      Prior to the GLB Act, unitary savings and loan holding companies which
met certain requirements were the only financial institution holding
companies that were permitted to engage in any type of business activity,
whether or not the activity was a financial service. The GLB Act continues
those broad powers for unitary thrift holding companies in existence on May
4, 1999, including the Company. Any thrift holding company formed after May
4, 1999, however, will be subject to the same restrictions as multiple
thrift holding companies, which generally are limited to activities that are
considered incidental to banking.

      The GLB authorizes a new "financial holding company," which can own
banks and thrifts and which are also permitted to engage in a variety of
financial activities, including insurance and securities underwriting and
agency activities, as long as the depository institutions it owns are well
capitalized, well managed and meet certain other tests.

      The GLB Act is not expected to have a material effect on the
activities in which the Holding Company and Industrial currently engage,
except to the extent that competition from other types of financial
institutions may increase as they engage in activities not permitted prior
to enactment of the GLB Act.

Ohio Savings and Loan Law

      The Ohio Superintendent is responsible for the regulation and
supervision of Ohio savings and loan associations in accordance with the
laws of the State of Ohio. Ohio law prescribes the permissible investments
and activities of Ohio savings and loan associations, including the types of
lending that such associations may engage in and the investments in real
estate, subsidiaries, and corporate or government securities that such
associations may make. The ability of Ohio associations to engage in these
state-authorized investments and activities is subject to oversight and
approval by the FDIC, if such investments or activities are not permissible
for a federally-chartered savings and loan association.

      The Ohio Superintendent also has approval authority over any mergers
involving, or acquisitions of control of, Ohio savings and loan
associations. The Ohio Superintendent may initiate certain supervisory
measures or formal enforcement actions against Ohio associations.
Ultimately, if the grounds provided by law exist, the Ohio Superintendent
may place an Ohio association in conservatorship or receivership.

      The Ohio Superintendent conducts regular examinations of Industrial
approximately once every eighteen months. Such examinations are usually
conducted jointly with one or both federal regulators. The Ohio
Superintendent imposes assessments on Ohio associations based on their asset
size to cover the cost of supervision and examination.

Office of Thrift Supervision

      General. The OTS is an office in the Department of the Treasury and is
responsible for the regulation and supervision of all federally-chartered
savings and loan associations and all other savings and loan associations,
the deposits of which are insured by the FDIC. The OTS issues regulations
governing the operation of savings and loan associations, regularly examines
such associations and imposes assessments on savings associations based on
their asset size to cover the costs of this supervision and examination. The
OTS also may initiate enforcement actions against savings and loan
associations and certain persons affiliated with them for violations of laws
or regulations or for engaging in unsafe or unsound practices. If the
grounds provided by law exist, the OTS may appoint a conservator or receiver
for a savings and loan association.

      Savings associations are subject to regulatory oversight under various
consumer protection and fair lending laws. These laws govern, among other
things, truth-in-lending disclosures, equal credit opportunity, fair credit
reporting and community reinvestment. Failure to abide by federal laws and
regulations governing community reinvestment could limit the ability of an
association to open a new branch or engage in a merger. Community
reinvestment regulations evaluate how well and to what extent an institution
lends and invests in its designated service area, with particular emphasis
on low- to moderate-income communities and borrowers in that area.
Industrial has received a "satisfactory" examination rating under those
regulations.

      Regulatory Capital Requirements. Industrial is required by OTS
regulations to meet certain minimum capital requirements. Current capital
requirements call for tangible capital of 1.5% of adjusted total assets,
core capital (which for Industrial consists solely of tangible capital) of
4.0% of adjusted total assets, except for institutions with the highest
examination rating and acceptable levels of risk, and risk-based capital
(which for Industrial consists of core capital and general valuation
allowances) of 8.0% of risk-weighted assets (assets, including certain off-
balance sheet items, are weighted at percentage levels ranging from 0% to
100% depending on the relative risk).

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

      The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings and
loan associations. At each successively lower defined capital category, an
association is subject to more restrictive and numerous mandatory or
discretionary regulatory actions or limits, and the OTS has less flexibility
in determining how to resolve the problems of the institution. In addition,
the OTS generally can downgrade an association's capital category,
notwithstanding its capital level, if, after notice and opportunity for
hearing, the association is deemed to be engaging in an unsafe or unsound
practice because it has not corrected deficiencies that resulted in it
receiving a less than satisfactory examination rating on matters other than
capital or it is deemed to be in an unsafe or unsound condition. An
undercapitalized association must submit a capital restoration plan to the
OTS within 45 days after it becomes undercapitalized. Undercapitalized
associations will be subject to increased monitoring and asset growth
restrictions and will be required to obtain prior approval for acquisitions,
branching and engaging in new lines of business. Critically undercapitalized
institutions must be placed in conservatorship or receivership within 90
days of reaching that capitalization level, except under limited
circumstances. Industrial's capital at December 31, 1999, met the standards
for a well-capitalized institution.

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

      Liquidity. OTS regulations require that savings associations maintain
an average daily balance of liquid assets (cash, certain time deposits,
association's acceptances, and specified United States Government, state or
federal agency obligations) equal to a monthly average of not less than 4%
of its net withdrawable savings deposits plus borrowings payable in one year
or less. Monetary penalties may be imposed upon member institutions failing
to meet liquidity requirements. The eligible liquidity of Industrial at
December 31, 1999, was approximately $18.3 million, or 5.68%, which exceeded
the 4% liquidity requirement by approximately $6.1 million.

      Qualified Thrift Lender Test. Savings associations must meet one of
two possible tests in order to be a qualified thrift lender ("QTL"). The
first test requires a savings association to maintain a specified level of
investments in assets that are designated as qualifying thrift investments
("QTIs"), which are generally related to domestic residential real estate
and manufactured housing and include credit card, student and small business
loans and stock issued by any FHLB, the FHLMC or the FNMA. Under this test,
65% of an institution's "portfolio assets" (total assets less goodwill and
other intangibles, property used to conduct business and 20% of liquid
assets) must consist of QTI on a monthly average basis in nine out of every
12 months. The second test permits a savings association to qualify as a QTL
by meeting the definition of "domestic building and loan association" under
the Internal Revenue Code of 1986, as amended (the "Code"). In order for an
institution to meet the definition of a "domestic building and loan
association" under the Code, at least 60% of such institution's assets must
consist of specified types of property, including cash loans secured by
residential real estate or deposits, educational loans and certain
governmental obligations. The OTS may grant exceptions to the QTL tests
under certain circumstances. If a savings association fails to meet one of
the QTL tests, the association and its holding company become subject to
certain operating and regulatory restrictions. A savings association that
fails to meet one of the QTL tests will not be eligible for new FHLB
advances. At December 31, 1999, Industrial qualified as a QTL.

      Lending Limit. OTS regulations generally limit the aggregate amount
that a savings association can lend to one borrower or group of related
borrowers to an amount equal to 15% of the association's Lending Limit
Capital. A savings association may lend to one borrower an additional amount
not to exceed 10% of the association's Lending Limit Capital, if the
additional amount is fully secured by certain forms of "readily marketable
collateral." Real estate is not considered "readily marketable collateral."
Certain types of loans are not subject to this limit. In applying this
limit, the regulations require that loans to certain related borrowers be
aggregated. An exception to this limit permits loans of any type to one
borrower up to $500,000.

      Based on such limits, Industrial was able to lend approximately $5.7
million to one borrower at December 31, 1999. The largest amount Industrial
had outstanding to any group of affiliated borrowers at December 31, 1999,
was $3.5 million, which consisted of seven loans, secured by a number of
residential rental and condominium development projects. At December 31,
1999, such loans were performing in accordance with their terms.

      Transactions with Insiders and Affiliates. Loans to executive
officers, directors, and principal shareholders and their related interests
must conform to the lending limit on loans to one borrower, and the total of
such loans to executive officers, directors, principal shareholders, and
their related interests cannot exceed Industrial's Lending Limit Capital (or
200% of Lending Limit Capital for qualifying institutions with less than
$100 million in deposits). Most loans to directors, executive officers, and
principal shareholders must be approved in advance by a majority of the
"disinterested" members of the board of directors of Industrial with any
"interested" director not participating. All loans to directors, executive
officers, and principal shareholders must be made on terms substantially the
same as offered in comparable transactions with the general public or as
offered to all employees in a company-wide benefit program, and loans to
executive officers are subject to additional limitations. Industrial was in
compliance with such restrictions at December 31, 1999.

      All transactions between a savings association and its affiliates must
comply with Sections 23A and 23B of the Federal Reserve Act (the "FRA"). An
affiliate of a savings association is any company or entity that controls,
is controlled by or is under common control with, the savings association.
The Holding Company is an affiliate of Industrial. Generally, Sections 23A
and 23B of the FRA (i) limit the extent to which a savings association or
its subsidiaries may engage in "covered transactions" with any one affiliate
to an amount equal to 10% of such institution's capital stock and surplus,
(ii) limit the aggregate of all such transactions with all affiliates to an
amount equal to 20% of such capital stock and surplus, and (iii) require
that all such transactions be on terms substantially the same, or at least
as favorable to the association, as those provided in transactions with a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee, and other similar types of
transactions. In addition to the limits in Sections 23A and 23B, a savings
association may not make any loan or other extension of credit to an
affiliate unless the affiliate is engaged only in activities permissible for
a bank holding company and may not purchase or invest in securities of any
affiliate except shares of a subsidiary. Industrial was in compliance with
these requirements and restrictions at December 31, 1999.

      Limitations on Capital Distributions. The OTS imposes various
restrictions or requirements on the ability of associations to make capital
distributions. Capital distributions include, without limitation, payments
of cash dividends, repurchases and certain other acquisitions by an
association of its shares and payments to stockholders of another
association in an acquisition of such other association.

      An application must be submitted and approval from the OTS must be
obtained by a subsidiary of a savings and loan holding company (i) if the
proposed distribution would cause total distributions for the calendar year
to exceed net income for that year to date plus the savings association's
retained net income for that year to date plus the retained net income for
the preceding two years; (ii) if the savings association will not be at
least adequately capitalized following the capital distribution; (iii) if
the proposed distribution would violate a prohibition contained in any
applicable statute, regulation or agreement between the savings association
and the OTS (or the FDIC), or violate a condition imposed on the savings
association in an OTS-approved application or notice. If a savings
association subsidiary of a holding company is not required to file an
application, it must file a notice of the proposed capital distribution with
the OTS.

      Industrial is also prohibited from declaring or paying any dividends
or from repurchasing any of its stock if, as a result, the net worth of
Industrial would be reduced below the amount required to be maintained for
the liquidation account established in connection with the Conversion. In
addition, as a subsidiary of the Holding Company, Industrial is also
required to give the OTS 30 days' notice prior to declaring any dividend on
its stock. The OTS may object to the dividend during that 30-day period
based on safety and soundness concerns.  Moreover, the OTS may prohibit any
capital distribution otherwise permitted by regulation if the OTS determines
that such distribution would constitute an unsafe or unsound practice.

      Holding Company Regulation.  The Holding Company is a savings and loan
holding company within the meaning of the HOLA. As such, the Holding Company
has registered with the OTS and is subject to OTS regulations, examination,
supervision, and reporting requirements.

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

      The Holding Company is a unitary savings and loan holding company.
Under current law, there are generally no restrictions on the activities of
unitary savings and loan holding companies in existence on May 4, 1999 and
such companies are the only financial institution holding companies which
may engage in commercial, securities, and insurance activities without
limitation. The broad latitude under current law can be restricted if the
OTS determines that there is reasonable cause to believe that the
continuation by a savings and loan holding company of an activity
constitutes a serious risk to the financial safety, soundness, or stability
of its subsidiary savings and loan association. The OTS may impose such
restrictions as deemed necessary to address such risk, including limiting
(i) payment of dividends by the savings and loan association; (ii)
transactions between the savings and loan association and its affiliates;
and (iii) any activities of the savings and loan association that might
create a serious risk that the liabilities of the holding company and its
affiliates may be imposed on the savings and loan association.
Notwithstanding the foregoing rules as to permissible business activities of
a unitary savings and loan holding company, if the savings and loan
association subsidiary of a holding company fails to meet the QTL, then such
unitary holding company would become subject to the activities restrictions
applicable to multiple holding companies. At December 31, 1999, Industrial
met the QTL.

      If the Holding Company were to acquire control of another savings
institution, other than through a merger or other business combination with
Industrial, the Holding Company would become a multiple savings and loan
holding company. Unless the acquisition is an emergency thrift acquisition
and each subsidiary savings and loan association meets the QTL, the
activities of the Holding Company and any of its subsidiaries (other than
Industrial or other subsidiary savings and loan associations) would
thereafter be subject to activity restrictions.

      The OTS may approve an acquisition resulting in the formation of a
multiple savings and loan holding company that controls savings and loan
associations in more than one state only if the multiple savings and loan
holding company involved controls a savings and loan association that
operated a home or branch office in the state of Industrial to be acquired
as of March 5, 1987, or if the laws of the state in which the institution to
be acquired is located specifically permit institutions to be acquired by
state-chartered institutions or savings and loan holding companies located
in the state where the acquiring entity is located (or by a holding company
that controls such state-chartered savings institutions). As under prior
law, the OTS may approve an acquisition resulting in a multiple savings and
loan holding company controlling savings and loan associations in more than
one state in the case of certain emergency thrift acquisitions. Bank holding
companies have had more expansive authority to make interstate acquisitions
than savings and loan holding companies since August 1995.

FDIC Regulations

      Deposit Insurance. The FDIC is an independent federal agency that
insures the deposits, up to prescribed statutory limits, of federally-
insured banks and thrifts and safeguards the safety and soundness of the
banking and thrift industries. The FDIC administers two separate insurance
funds, Bank Insurance Fund (the "BIF") for commercial banks and state
savings banks and the SAIF for savings associations. The FDIC is required to
maintain designated levels of reserves in each fund. Industrial's deposit
accounts are insured by the FDIC in the SAIF up to the prescribed limits.
The FDIC has examination authority over all insured depository institutions,
including Industrial, and has authority to initiate enforcement actions
against federally-insured savings associations if the FDIC does not believe
the OTS has taken appropriate action to safeguard safety and soundness and
the deposit insurance fund.

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

FRB Regulations

      FRB regulations currently require savings associations to maintain
reserves of 3% of net transaction accounts (primarily NOW accounts) up to
$44.3 million (subject to an exemption of up to $5.0 million), and of 10% of
net transaction accounts over $44.3 million. At December 31, 1999,
Industrial was in compliance with this reserve requirement.

Federal Home Loan Banks

      The FHLBs provide credit to their members in the form of advances.
Industrial is a member of the FHLB of Cincinnati and must maintain an
investment in the capital stock of the FHLB of Cincinnati in an amount equal
to the greater of 1% of the aggregate outstanding principal amount of
Industrial's residential mortgage loans, home purchase contracts, and
similar obligations at the beginning of each year, and 5% of its advances
from the FHLB. Industrial was in compliance with this requirement with an
investment in stock of the FHLB of Cincinnati of $3.5 million at December
31, 1999.

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

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

                                  TAXATION

Federal Taxation

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

      Based on Industrial's average gross receipts of $30.0 million for the
three tax years ending on December 31, 1999, Industrial would not qualify as
a small corporation exempt from the alternative minimum tax.

      Prior to the enactment of the Small Business Jobs Protection Act (the
"Small Business Act"), which was signed into law on August 21, 1996, certain
thrift institutions, were allowed deductions for bad debts under methods
more favorable than those granted to other taxpayers. Qualified thrift
institutions could compute deductions for bad debts using either the
specific charge off method of Section 166 of the Code, or one of the two
reserve methods of Section 593 of the Code. The reserve methods under
Section 593 of the Code permitted a thrift institution annually to elect to
deduct bad debts under either (i) the "percentage of taxable income" method
applicable only to thrift institutions, or (ii) the "experience" method that
also was available to small banks. Under the "percentage of taxable income"
method, a thrift institution generally was allowed a deduction for an
addition to its bad debt reserve equal to 8% of its taxable income
(determined without regard to this deduction and with additional
adjustments). Under the experience method, a thrift institution was
generally allowed a deduction for an addition to its bad debt reserve equal
to the greater of (i) an amount based on its actual average experience for
losses in the current and five preceding taxable years, or (ii) an amount
necessary to restore the reserve to its balance as of the close of the base
year. A thrift institution could elect annually to compute its allowable
addition to bad debt reserves for qualifying loans either under the
experience method or the percentage of taxable income method.

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

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

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

      The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e) as modified by the Small Business Act which require recapture
in the case of certain excessive distributions to shareholders. The pre-1988
reserves may not be utilized for payment of cash dividends or other
distributions to a shareholder (including distributions in dissolution or
liquidation) or for any other purpose (except to absorb bad debt losses).
Distribution of a cash dividend by a thrift institution to a shareholder is
treated as made: first, out of the institution's post-1951 accumulated
earnings and profits; second, out of the pre-1988 reserves; and third, out
of such other accounts as may be proper. To the extent a distribution by
Industrial to the Holding Company is deemed paid out of its pre-1988
reserves under these rules, the pre-1988 reserves would be reduced and
Industrial's gross income for tax purposes would be increased by the amount
which, when reduced by the income tax, if any, attributable to the inclusion
of such amount in its gross income, equals the amount deemed paid out of the
pre-1988 reserves. As of December 31, 1999, Industrial's pre-1988 reserves
for tax purposes totaled approximately $4.2 million. Industrial believes it
had approximately $1.0 million of accumulated earnings and profits for tax
purposes as of December 31, 1999, which would be available for dividend
distributions, provided regulatory restrictions applicable to the payment of
dividends are met. No representation can be made as to whether Industrial
will have current or accumulated earnings and profits in subsequent years.

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

Ohio Taxation

      The Holding Company is subject to the Ohio corporation franchise tax,
which, as applied to the Holding Company, is a tax measured by both net
earnings and net worth. The rate of tax is the greater of (i) 5.1% on the
first $50,000 of computed Ohio taxable income and 8.5% of computed Ohio
taxable income in excess of $50,000 or (ii) 0.400% times taxable net worth.
Under these alternative measures of computing tax liability, the states to
which a taxpayer's adjusted total net income and adjusted total net worth
are apportioned or allocated are determined by complex formulas. The minimum
tax is $50 per year.

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

      Industrial is a "financial institution" for State of Ohio tax
purposes. As such, it is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.4% of
Industrial's apportioned book net worth, determined in accordance with GAAP,
less any statutory deduction. This rate of tax will be 1.3% for tax year
2000 and years thereafter. As a "financial institution," Industrial is not
subject to any tax based upon net income or net profits imposed by the State
of Ohio.

Item 2.  Description of Property

      The following table sets forth certain information at December 31,
1999, regarding the office facilities of the Association:

<TABLE>
<CAPTION>

                                 Owned or      Date                  Net book
          Location                leased     acquired    Deposits     value
          -------------------------------------------------------------------
                                             (In thousands)

<S>                              <C>         <C>         <C>         <C>
30 East Main Street              Owned       11/04/94    $29,317     $1,103
Ashland, Ohio 44805

203 North Sandusky Street (1)    Owned       02/25/93          -         61
Bellevue, Ohio 44811

211 North Sandusky Street        Owned       05/06/72     64,354        350
Bellevue, Ohio 44811

225 North Main Street            Owned       06/05/75     13,297         98
Clyde, Ohio 43410

1500 Bright Road                 Owned       01/29/93     18,441        990
Findlay, Ohio 45840

321 West State Street            Owned       06/30/87     16,071        196
Fremont, Ohio 43420

40 E. Main Street                Owned       02/13/99        845        373
Lexington, Ohio 44904

2080 Ferguson Road (2)           Leased             -          -          -
Mansfield, Ohio 44906

50 West Main Street              Owned       08/06/76     45,380        252
Norwalk, Ohio 44857

51 West Main Street (3)          Owned       09/11/92          -        194
Norwalk, Ohio 44587

4112 Milan Road                  Owned       02/29/88     13,770        413
Sandusky, Ohio 44870

48 East Market Street (4)        Owned       06/15/83     56,995        325
Tiffin, Ohio 44883

796 West Market Street (4)       Owned       12/18/90          -        211
Tiffin, Ohio 44883

301 Myrtle Avenue (5)            Owned       05/07/77     35,780        147
Willard, Ohio 44890

121 Blossom Centre (5)           Leased             -          -         94
Willard, Ohio 44890

--------------------
<F1>  Office facility for the Association's appraisal staff.
<F2>  Loan production office.
<F3>  Drive-up facility only.
<F4>  Deposit totals are combined for the two Tiffin offices.
<F5>  Deposit totals are combined for the two Willard offices.

</TABLE>

Item 3.  Legal Proceedings

      The Association is not presently involved in any material legal
proceedings. From time to time, the Association is a party to legal
proceedings incidental to its business to enforce its security interest in
collateral pledged to secure loans made by the Association.

Item 4.  Submission of Matters to a Vote of Security Holders

      Not applicable.


                                   PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder
         Matters

      The information contained in the 1999 Annual Report to Shareholders of
the Corporation (the "Annual Report"), a copy of which is attached hereto as
Exhibit 13, under the caption "Common Stock Information," is incorporated
herein by reference.

Item 6.  Selected Financial Data

      The information contained in the Annual Report under the caption
"Selected Consolidated Financial Data" is incorporated herein by reference.
The dividend pay-out ratio (dividends declared per share as a percentage of
basic earnings per share) of the Company was 53.7% for 1999, 48.4% for 1998,
and 46.2% for 1997.

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      The information contained in the Annual Report under the caption
"Asset and Liability Management" is incorporated herein by reference.


Item 8.  Financial Statements and Supplemental Data

      The Consolidated Financial Statements appearing in the Annual Report
and the report of Crowe, Chizek and Company LLP dated January 15, 2000, are
incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

      Not applicable.


                                  PART III

Item 10. Directors and Executive Officers of the Registrant

      The information contained in the Proxy Statement for the 2000 Annual
Meeting of Shareholders of the Company (the "Proxy Statement"), filed with
the Securities and Exchange Commission (the "Commission") on March 21, 2000,
under the captions "Election of Directors" and "Executive Officers," is
incorporated herein by reference.

Item 11. Executive Compensation

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

Item 12. Security Ownership of Certain Beneficial Owners and Management

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

Item 13. Certain Relationships and Related Transactions

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

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)   Exhibits

      3(a)    Articles of Incorporation

      3(b)    Certificate of Amendment to Articles of Incorporation

      3(c)    Code of Regulations

      11      Statement Regarding Computation of Per Share Earnings

      13      Annual Report to Shareholders

      21      Subsidiaries of Registrant

      27      Financial Data Schedule

      99      Proxy Statement for 2000 Annual Meeting of Shareholders

(b)   Financial Statement Schedules. All schedules are omitted because they
are not applicable or the required information is shown in the financial
statements or notes thereto.

(c)   Reports on Form 8-K. There were no reports on Form 8-K filed during
1999.


                                 SIGNATURES

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

                                       INDUSTRIAL BANCORP, INC.

                                       By:  /s/ David M. Windau
                                            --------------------------------
                                            David M. Windau, Chief Executive
                                            Officer (Duly Authorized
                                            Representative)

      Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons in the capacities
and on the dates indicated.

/s/ David M. Windau                    /s/ Lawrence R. Rhoades
-----------------------------          -------------------------------------
David M. Windau, President,            Lawrence R. Rhoades, Chairman of the
Chief Executive Officer and Director   Board Chief Financial Officer and
                                       Director

Date: March 29, 2000                   Date: March 29, 2000


/s/ Graydon H. Hayward                 /s/ Leon W. Maginnis
-----------------------------          -------------------------------------
Graydon H. Hayward, Director           Leon W. Maginnis, Director

Date: March 29, 2000                   Date: March 29, 2000


/s/ Bob Moore                          /s/ Fredric C. Spurck
-----------------------------          -------------------------------------
Bob Moore, Director                    Fredric C. Spurck, Director

Date: March 29, 2000                   Date: March 29, 2000


/s/ Roger O. Wilkinson
-----------------------------
Roger O. Wilkinson, Director

Date: March 29, 2000

                              INDEX TO EXHIBITS

Exhibit Number

    3(a)         Articles of Incorporation
                 Incorporated by reference to the Registration Statement on
                 Form S-1 filed by the Holding Company on March 23, 1995
                 (the "S-1") with the Securities and Exchange Commission,
                 Exhibit 3.1

    3(b)         Certificate of Amendment to Articles of Incorporation

    3(c)         Code of Regulations
                 Incorporated by reference to the S-1, Exhibit 3.2
                 Incorporated by reference to the S-1, Exhibit 3.3

   11            Statement Regarding Computation of Per Share Earnings
                 Incorporated by reference to Note 1 to the Financial
                 Statements included in the Annual Report

   13            Annual Report to Shareholders

   21            Subsidiaries of the Registrant

   27            Financial Data Schedule

   99            Proxy Statement for 2000 Annual Meeting of Shareholders
                 Incorporated by reference to the Proxy Statement, filed
                 with the Securities and Exchange Commission on March 21,
                 2000