<PAGE>   1
                                   FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[ X ]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [Fee Required]

For the Fiscal Year Ended June 30, 1999
                          -------------

                                       OR

[   ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from ______________ to ________________

                         Commission File Number: 0-25906

                               ASB FINANCIAL CORP.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

             Ohio                                          31-1429488
------------------------------                        ----------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                        Identification Number)

<TABLE>
<S>                                                    <C>
  503 Chillicothe Street, Portsmouth, Ohio 45662       Issuer's telephone number: (740) 354-3177
(Address of principal executive offices) (Zip Code)
</TABLE>

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      None
      --------------------------------------------------------------------
      Securities registered pursuant to Section 12(g) of the Exchange Act:
                        Common Shares, without par value
      --------------------------------------------------------------------
                                (Title of Class)

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

                  Check if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B 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-KSB or any
amendment to this Form 10-KSB. [X]

                  The issuer's revenues for the fiscal year ended June 30, 1999
were $8.9 million.

                  Based upon the average of the bid and asked prices quoted by
the Nasdaq National Market, the aggregate market value of the voting stock held
by non-affiliates of the issuer on September 22, 1999, was approximately $3.4
million.

                  1,660,858 of the issuer's common shares were issued and
outstanding on September 27, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE

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

   Part III of Form 10-KSB - Portions of the Proxy Statement for 1999 Annual
                            Meeting of Shareholders.


<PAGE>   2



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

         ASB Financial Corp. ("ASB"), an Ohio corporation, is a unitary savings
and loan holding company which owns all of the issued and outstanding common
shares of American Savings Bank, fsb ("American"), a federal savings bank
chartered under the laws of the United States. On May 10, 1995, ASB acquired all
of the common shares issued by American upon its conversion from a mutual
savings association to a stock savings association (the "Conversion").

GENERAL

         American is principally engaged in the business of originating real
estate loans secured by first mortgages on one- to four-family residential real
estate located in American's primary market area, which consists of the City of
Portsmouth and contiguous areas of Scioto County, Ohio. American also makes
loans secured by multifamily real estate (over four units) and nonresidential
real estate and secured and unsecured consumer loans. In addition, American
purchases interests in multifamily real estate and nonresidential real estate
loans originated and serviced by other lenders. American also invests in
mortgage-backed securities, U.S. Government agency obligations, obligations of
state and political subdivisions, and other investments permitted by applicable
law. Funds for lending and other investment activities are obtained primarily
from savings deposits, which are insured up to applicable limits by the Federal
Deposit Insurance Corporation (the "FDIC"), and loan principal and
mortgage-backed security repayments.

         American conducts business from its office in Portsmouth, Ohio.
American's primary market area for lending consists of Scioto County, Ohio, and
for deposits consists of Scioto County and adjacent communities in the North
Central Kentucky area.

         As a savings and loan holding company, ASB is subject to regulation,
supervision and examination by the Office of Thrift Supervision of the United
States Department of the Treasury (the "OTS"). As a federal savings bank,
American is subject to regulation, supervision and examination by the OTS and
the FDIC.

         ASB's activities have been limited primarily to holding the common
stock of American since acquiring such common stock in connection with the
Conversion. Consequently, the following discussion focuses primarily on the
business of American.

LENDING ACTIVITIES

         GENERAL. American's principal lending activity is the origination of
conventional real estate loans, including construction loans, secured by one- to
four-family residential real estate located in American's primary market area.
Loans secured by multifamily properties containing five units or more and
nonresidential properties, including construction loans, are also offered by
American. American also purchases interests in multifamily real estate loans and
nonresidential real estate loans originated and serviced by other financial
institutions. American does not originate first mortgage loans insured by the
Federal Housing Authority or guaranteed by the Veterans Administration. In
addition to real estate lending, American originates consumer loans, including
automobile loans, loans secured by deposit accounts, home improvement loans and
a limited number of unsecured loans.


                                      -2-
<PAGE>   3


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

<TABLE>
<CAPTION>

                                                                             At June 30,
                                              -------------------------------------------------------------------------
                                                    1999                      1998                        1997
                                              -------------------      --------------------      ---------------------
                                                         Percent                    Percent                     Percent
                                                         of total                  of total                    of total
                                              Amount       loans       Amount        loans         Amount       loans
                                              -------      -----       -------       -----        -------       ------
                                                                        (Dollars in thousands)
<S>                                           <C>           <C>        <C>            <C>         <C>             <C>
Real estate loans:
    One- to four-family residential           $60,810       70.4%      $55,707        70.6%       $50,481         66.3%
    Multifamily                                 3,404        3.9         5,184         6.6          7,721         10.1
    Nonresidential and land                     8,504        9.9         5,712         7.2          5,520          7.3
    Construction                                2,162        2.5         1,425         1.8            926          1.2
    Home equity                                 4,971        5.8         4,485         5.7          3,464          4.6
    Commercial                                  2,485        2.9         1,929         2.4          2,824          3.7
                                              -------      -----       -------       -----        -------       ------
      Total real estate loans                  82,336       95.4        74,442        94.3         70,936         93.2
Consumer and other loans:
    Passbook                                      615         .7           744          .9            556           .7
    Home improvement                            1,103        1.3         1,286         1.6          1,462          1.9
    Automobile                                  1,689        1.9         1,772         2.3          2,087          2.8
    Other                                         586         .7           707          .9          1,091          1.4
                                              -------      -----       -------       -----       --------      -------
      Total consumer and other loans            3,993        4.6         4,509         5.7          5,196          6.8
                                               ------       ----        ------        ----       --------      -------
Total loans                                    86,329      100.0%       78,951       100.0%        76,132        100.0%
                                                           =====                     =====                       =====
Less:
    Loans in process                            2,966                    1,452                        978
    Net deferred loan origination fees and
      unearned discounts                          200                      190                        198
    Allowance for loan losses                     733                      759                        820
                                              --------                 --------                   -------
Total loans net                               $82,430                  $76,550                    $74,136
                                              ========                 =======                    =======
</TABLE>


         LOAN MATURITY. The following table sets forth the contractual maturity
of American's total loans at June 30, 1999, before consideration of net items:
<TABLE>
<CAPTION>

Due during the fiscal          One- to                                                 Consumer
year ending June 30,       four-family (1)  Multifamily (1) Nonresidential (1) (2)  and other (3)        Total
--------------------       ---------------  --------------- ----------------------  -------------        -----
                                                               (In thousands)
<S>                          <C>                 <C>                <C>                <C>              <C>
2000                         $  2,177            $  330             $  770             $ 1,384          $ 4,661
2001                            2,249               340                794               1,428            4,811
2002                            2,297               353                815               1,458            4,923
2003-2004                       4,695               711              1,660               2,976           10,042
2005-2009                      11,963             1,844              4,325               4,203           22,335
2010-2014                      12,083               188                140                   -           12,411
2015 and thereafter            27,146                 -                  -                   -           27,146
                              -------            ------             ------             -------          -------
     Total                    $62,610            $3,766             $8,504             $11,449          $86,329
                              =======            ======             ======             =======          =======
</TABLE>

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

(1) Includes construction loans.

(2) Includes land development loans.

(3) Includes commercial and home equity loans.


                                      -3-
<PAGE>   4

         LOANS SECURED BY ONE- TO FOUR-FAMILY REAL ESTATE. The principal lending
activity of American is the origination of permanent conventional loans secured
by one- to four-family residences, primarily single-family homes, located within
American'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 June
30, 1999, American's one- to four-family residential real estate loan portfolio,
including certain construction loans secured by one- to four-family residences,
was approximately $62.6 million, or 72.5% of total loans.

         OTS regulations limit the amount which American may lend in
relationship to the appraised value of the real estate and improvements (the
"Loan-to-Value Ratio" or "LTV") at the time of loan origination. In accordance
with such regulations, American makes loans on one- to four-family residences
with LTVs of up to 95%. The principal amount of any loan which exceeds an 85%
LTV at the time of origination is usually covered by private mortgage insurance
at the expense of the borrower.

         Fixed-rate loans are offered by American, currently for terms of up to
30 years, however, most of the fixed-rate loans in American's portfolio have
terms of 15 years or less.

         Adjustable-rate residential real estate loans ("ARMs") are offered by
American for terms of up to 30 years. The interest rate adjustment periods on
the ARMs are either one year or three years. The interest rate adjustments on
one-year and three-year ARMs presently originated by American are tied to the
one-year and three-year U.S. Treasury securities rates or the Previously
Occupied Homes index published by the Federal Home Loan Bank (the "FHLB"). The
maximum allowable adjustment at each adjustment date is 2% with a maximum
adjustment of 6% over the term of the loan. The initial rate on a three-year ARM
is typically higher than the initial rate on a one-year ARM to compensate for
the reduced interest rate sensitivity.

         Adjustable-rate loans decrease American's interest rate risk but
involve other risks, primarily credit risk. 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.

         American also offers home equity loans for current mortgage customers
on one- to four-family residences with LTV's of up to 100%. At June 30, 1999,
American's home equity loans totaled $5.0 million, or 5.8% of total loans.

         LOANS SECURED BY MULTIFAMILY REAL ESTATE. In addition to loans on one-
to four-family properties, American originates and purchases interests in loans
secured by multifamily properties containing over four units. Multifamily loans
originated by American have terms of up to 15 years and a maximum LTV of 75%.
Approximately 70% of the multifamily real estate loans held by American are
participation interests in loans originated and serviced by other financial
institutions and secured by real estate located in Ohio, Kentucky, Florida and
North Carolina. See "Loan Originations, Purchases and Sales."

         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. American 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. American requires that borrowers submit rent
rolls and that all borrowers submit financial statements annually to enable
American to monitor the loan.

         At June 30, 1999, loans secured by multifamily properties totaled
approximately $3.4 million, or 3.9% of total loans.

         LOANS SECURED BY NONRESIDENTIAL REAL ESTATE AND LAND. At June 30, 1999,
approximately $8.5 million, or 9.9% of American's total loans, were secured by
nonresidential real estate and land. The majority of such loans have adjustable
rates and terms of up to 15 years. Among the properties securing nonresidential
real estate loans are office buildings, retail properties, warehouses, and a
hotel located in American's primary market area. Also included in American's
nonresidential


                                      -4-
<PAGE>   5

real estate loan portfolio are $5.6 in participation interests which have been
purchased in loans originated by other financial institutions.

         American has one land loan with a principal balance of $410,000 secured
by developed land which has been subdivided for single-family home construction
in Scioto County. Loans for the construction of nonresidential real estate are
occasionally made by American. At June 30, 1999, American had outstanding
nonresidential real estate construction loans with an aggregate balance of
$804,000.

         Although the loans secured by nonresidential real estate typically have
higher interest rates and shorter terms to maturity 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. American
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.

         CONSTRUCTION LOANS. Loans for the construction of single-family houses
are made to individuals for the construction and permanent financing of their
primary residences. Such loans are offered with adjustable and fixed 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.

         Construction loans 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 a default on a construction loan occurs and
foreclosure follows, American would have to take control of the project and
attempt either to arrange for completion of construction or dispose of the
unfinished project. At June 30, 1999, construction loans, in the aggregate,
totaled $2.2 million, or 2.5% of American's total loans. Approximately 90% of
American's construction loans are secured by property in Scioto County.

         COMMERCIAL REAL ESTATE LOANS. At June 30, 1999, approximately $2.5
million, or 2.9% of American's total loans were secured by commercial real
estate. American originates commercial loans for a maximum term of 15 years and
which are secured by real estate with a LTV of up to 75%. These extensions of
credit are typically secured by office buildings, retail stores and other
commercial properties.

         CONSUMER AND OTHER LOANS. American makes various types of consumer
loans, including loans made to depositors on the security of their deposit
accounts, automobile loans, home improvement loans and other secured loans,
including a loan to an automobile dealer leasing group, and unsecured personal
loans. Consumer loans, other than loans on deposits, are made at fixed rates of
interest only and for varying terms based on the type of loan. At June 30, 1999,
American had approximately $4.0 million, or 4.6% of total loans, invested in
consumer and other loans.

         Home improvement loans include loans insured by the Federal Housing
Administration. Home improvement loans typically have a five-year term and fixed
rates of interest.

         Consumer loans, particularly consumer loans which 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 real estate developers, solicitations by American's lending staff
and walk-in customers.

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

                                      -5-
<PAGE>   6

fair market value of the real estate which will be given as security for the
loan is prepared by 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 American's underwriting guidelines to American's Executive
Committee, the members of which are Directors Smith, Jenkins, Burke and
Schoettle. Any loan for more than $150,000 must be reviewed and approved by the
full Board of Directors.

         If a real estate loan application is approved, either an attorney's
opinion or title insurance is obtained on the real estate which will secure the
mortgage loan. Most of the loans in American's portfolio have an attorney's
opinion. Borrowers are required to carry satisfactory fire and casualty
insurance and flood insurance, if applicable, and to name American 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. American
also evaluates the feasibility of the proposed construction project and the
experience and record of the builder.

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

         LOAN ORIGINATIONS, PURCHASES AND SALES. Currently, American is
originating both fixed-rate and ARM loans for its portfolio and not with the
intention of selling such loans in the secondary market. The documentation for
most of the loans in American's portfolio does not conform to the secondary
market standards of the Federal Home Loan Mortgage Corporation ("FHLMC") or the
Federal National Mortgage Association ("FNMA").

         To supplement loan demand in its primary market area, American
purchases participation interests in multifamily and nonresidential real estate
loans originated and serviced by other financial institutions. See "Loans
Secured by Multifamily Real Estate" and "Loans Secured by Nonresidential Real
Estate and Land." American does not purchase participation interests through
brokers. Recent loan participations have been purchased primarily from a savings
bank and a mortgage banking affiliate of a commercial bank headquartered in
Ohio. Whole loans or participation interests purchased by American conform to
American's underwriting criteria for loans originated by American. American
intends to continue to purchase loans as suitable investment opportunities
become available.



                                      -6-
<PAGE>   7

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

<TABLE>
<CAPTION>

                                               Year ended June 30,
                                           ---------------------------
                                            1999      1998      1997
                                           -------   -------   -------
                                                 (In thousands)
<S>                                        <C>       <C>       <C>
Loans originated:
  Adjustable-rate:
   One- to four-family real estate         $ 3,104   $ 1,499   $ 1,385
   Multifamily real estate                     750        55       352
   Nonresidential real estate                3,512       528     2,298
   Commercial                                2,381      --        --
                                           -------   -------   -------
    Total adjustable-rate                    9,747     2,082     4,035

  Fixed-rate:
   One- to four-family real estate          17,517    15,022     9,886
   Nonresidential real estate                1,644       446      --
   Consumer                                  4,296     7,563     8,582
                                           -------   -------   -------
    Total fixed-rate                        23,457    23,031    18,468

Loans purchased                                778     2,183       773
                                           -------   -------   -------
    Total loans originated and purchased    33,982    27,296    23,276

Reductions:
   Principal repayments                     28,170    24,815    17,697
   Transfers from loans to real estate
    owned and repossessed assets              --         157      --
                                           -------   -------   -------
     Total reductions                       28,170    24,972    17,697
Increase in other items, net (1)                68        90       102
                                           -------   -------   -------
Net increase                               $ 5,880   $ 2,414   $ 5,681
                                           =======   =======   =======
</TABLE>

-------

(1)      Consists of loans in process, unearned discounts and deferred loan
         origination fees and allowance for loan losses.


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

         Based on the 15% limit, American was able to lend approximately $2.0
million to one borrower at June 30, 1999. The largest loan American had
outstanding to one borrower at June 30, 1999, was $944,000. Such loan was
secured by automobile titles, assignments of leases and a guarantee of the
leasing company and was current at June 30, 1999.

         LOAN ORIGINATION AND OTHER FEES. American realizes loan origination
fees 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 ("SFAS") No. 91 as an adjustment to yield over
the life of the related loan.


                                      -7-
<PAGE>   8

         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 portion of the payment applicable to interest to accrue during
the current month. When loan payments have not been made by the thirtieth of the
month, late notices are sent. If payment is not received by the sixtieth day,
second notices are sent and telephone calls are made to the borrower. Each loan
bears a late payment penalty which is assessed as soon as such loan is more than
30 days delinquent. The late penalty for real estate loans is 3% and for
consumer loans 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
normally instituted and an appraisal of the collateral is performed. 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 90 days past due, a specific allowance for loss is
established for the amount of the loan.



                                      -8-
<PAGE>   9

         The following table reflects the amount of loans in a delinquent status
at the dates indicated:
<TABLE>
<CAPTION>
                                                                   At June 30, 1999
                      -------------------------------------------------------------------------------------------------------------
                      Residential real estate  Nonresidential real estate             Consumer                        Total
                      ------------------------ --------------------------     ---------------------        ------------------------
                        Number   Amount   %(1)    Number Amount %(1)          Number   Amount   %(1)       Number   Amount     %(1)
                        ------   ------   ----     ---    ---   ---           ------   ------   ----       ------   ------     ---
                                                                  (Dollars in thousands)

<S>                     <C>  <C>       <C>        <C>    <C>    <C>         <C>       <C>      <C>         <C>     <C>        <C>
Loans delinquent for:
  30-59 days                28   $1,282    1.5%    --     $--    --%              13   $  259     .3%          41   $1,541     1.8%
  60-89 days                 8      247     .3     --      --    --                9       85     .1           17      332      .4
  90 days and over          10      287     .3     --      --    --               10       92     .1           20      379      .4
                        ------   ------   ----     ---    ---   ---           ------   ------   ----       ------   ------     ---
  Total delinquent
  loans                     46   $1,816    2.1%    --     $--    --%              32   $  436     .5%          78   $2,252     2.6%
                        ======   ======   ====     ===    ===   ===           ======   ======   ====       ======   ======     ===

</TABLE>
<TABLE>
<CAPTION>
                                                                   At June 30, 1998
                      -------------------------------------------------------------------------------------------------------------
                      Residential real estate  Nonresidential real estate             Consumer                        Total
                      ------------------------ --------------------------     ---------------------        ------------------------
                        Number   Amount   %(1)    Number Amount %(1)          Number   Amount   %(1)       Number   Amount     %(1)
                        ------   ------   ----     ---    ---   ---           ------   ------   ----       ------   ------     ---
                                                                  (Dollars in thousands)

<S>                     <C>    <C>      <C>     <C>    <C>    <C>            <C>      <C>     <C>         <C>      <C>       <C>
Loans delinquent for:

  30-59 days                40   $1,117    1.4%    --    $ --    --%              13     $  60    .1%          53   $1,177     1.5%
  60-89 days                 7      276     .4     --      --    --                4        24    --           11               .4
  90 days and over           8      168     .2     --      --    --               12        72    .1           20      240      .3
                        ------   ------   ----     ---    ---   ---           ------   ------   ----       ------   ------     ---
  Total delinquent
  loans                     55   $1,561    2.0%    --    $ --    --%              29      $156    .2%          84   $1,717     2.2%
                        ======   ======   ====     ===    ===   ===           ======   =======  ====       ======   ======     ===
</TABLE>

<TABLE>
<CAPTION>
                                                                   At June 30, 1997
                      -------------------------------------------------------------------------------------------------------------
                      Residential real estate  Nonresidential real estate             Consumer                        Total
                      ------------------------ --------------------------     ---------------------        ------------------------
                        Number   Amount   %(1)    Number Amount %(1)          Number   Amount   %(1)       Number   Amount     %(1)
                        ------   ------   ----     ---    ---   ---           ------   ------   ----       ------   ------     ---
                                                                  (Dollars in thousands)

<S>                     <C>    <C>      <C>     <C>    <C>    <C>            <C>      <C>     <C>         <C>      <C>       <C>

Loans delinquent for:

  30-59 days                39   $1,199    1.6%    --     $--    --%              10     $  41    .1%          49   $1,240     1.7%
  60-89 days                17      830    1.1     --      --    --                8        32    --           25      862     1.1
  90 days and over           6    1,052    1.4     --      --    --               10        93    .1           16    1,145     1.5
                        ------   ------   ----     ---    ---   ---           ------   -------  ----       ------   ------     ---
  Total delinquent
  loans                     62   $3,081    4.1%    --     $--    --%              28     $ 166    .2%          90   $3,247     4.3%
                        ======   ======   ====     ===    ===   ===           ======   =======  ====       ======   ======     ===
</TABLE>

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

(1)      Percentages correlate to total loans before net items.



                                      -9-
<PAGE>   10

         Nonperforming assets include non-accrual loans, accruing loans which
are delinquent 90 days or more, restructured loans, real estate acquired by
foreclosure or by deed-in-lieu thereof and repossessed assets. Loans are placed
on non-accrual status when, in the judgment of management, the probability of
collection of interest is deemed insufficient to warrant further accrual.

         The following table sets forth information with respect to the accrual
and nonaccrual status of American's loans and other nonperforming assets at the
dates indicated:
<TABLE>
<CAPTION>
                                                       At June 30,
                                              --------------------------
                                               1999      1998      1997
                                              ------    ------    ------
<S>                                         <C>       <C>       <C>
Non-accrual loans:
  One- to four-family                         $  261    $  168    $   87
  Multifamily                                   --        --         862
  Consumer                                      --        --          42
                                              ------    ------    ------
   Total                                         261       168       991

Accruing loans delinquent
  90 days or more:                               118        72       154
                                              ------    ------    ------
   Total nonperforming loans                     379       240     1,145

Real estate acquired through foreclosure:
  One- to four-family                           --         157      --
                                              ------    ------    ------
  Total nonperforming assets                  $  379    $  397    $1,145
                                              ======    ======    ======
  Allowance for loan losses                   $  733    $  759    $  820
                                              ======    ======    ======
  Nonperforming assets as a percent
    of  total assets (1)                         .31%      .34%     1.02%

  Allowance for loan losses as a percent of
    nonperforming loans                       193.40%   316.25%    71.62%

  Allowance for loan losses as a percent of
    nonperforming assets                      193.40%   191.18%    71.62%
</TABLE>

------

(1)      The applicable asset totals are $123.2 million, $116.4 million and
         $112.5 million for the fiscal years ended June 30, 1999, 1998 and 1997,
         respectively.


         For the year ended June 30, 1999, gross interest income which would
have been recorded had non-accrual loans been current in accordance with their
original terms was $5,000 and no interest was recorded on such loans during such
period.

         Real estate acquired by American as a result of foreclosure proceedings
is classified as real estate owned ("REO") until it is sold. When property is so
acquired it is recorded by American at the estimated fair value of the real
estate, less estimated selling expenses, at the date of acquisition, 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.


                                      -10-
<PAGE>   11

         American classifies its own assets on a regular 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 American 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 American is not
warranted.

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

<TABLE>
<CAPTION>

                                     At June 30,
                             ------------------------
                              1999     1998     1997
                             ------   ------   ------
<S>                          <C>      <C>      <C>
Classified assets
  Substandard                $  321   $  993   $  949
  Doubtful                     --       --       --
  Loss                         --          8       42
                             ------   ------   ------
   Total classified assets   $  321   $1,001   $  991
                             ======   ======   ======
</TABLE>


         American establishes general allowances for loan losses for loans
classified as substandard or doubtful. Generally, American charges off the
portion of any real estate loan deemed to be uncollectible, whereas a loss
classification and corresponding reserve is used for consumer loans.

         American analyzes each classified asset on a monthly basis to determine
whether changes in the classifications are 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 of Directors, 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 and anticipated economic conditions in American's primary lending area,
such as unemployment data and the consumer price index, past loss experience and
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 earnings could be
adversely affected if circumstances differ substantially from the assumptions
used in making the final determination.



                                      -11-
<PAGE>   12


         The following table sets forth an analysis of American's allowance for
loan losses for the periods indicated:
<TABLE>
<CAPTION>
                                                For the year ended June 30,
                                                ---------------------------
                                                 1999      1998      1997
                                                -----     -----     -----
                                                  (Dollars in thousands)
<S>                                             <C>       <C>       <C>
Balance at beginning of period                  $ 759     $ 820     $ 884
Charge-offs:
  Residential real estate loans (1)               (14)      (47)      (22)
  Nonresidential real estate loans               --        --         (64)
  Consumer loans                                  (11)       (9)       (6)
                                                -----     -----     -----
  Total charge-offs                               (25)      (56)      (92)
Recoveries                                       --        --        --
                                                -----     -----     -----
Net charge-offs                                   (25)      (56)      (92)
                                                -----     -----     -----
Provision for (recoveries of) losses on loans      (1)       (5)       28
                                                -----     -----     -----
  Balance at end of period                      $ 733     $ 759     $ 820
                                                =====     =====     =====
  Ratio of net charge-offs to average loans
     outstanding during the period                .03%      .07%      .13%


</TABLE>
-----

(1)      Includes multifamily loans.

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

<TABLE>
<CAPTION>


                                                                          At June 30,
                                         ------------------------------------------------------------------------------------
                                                1999                           1998                           1997
                                         -----------------------     -------------------------      -------------------------
                                                    Percent of                     Percent of                    Percent of
                                                   loans in each                 loans in each                  loans in each
                                                    category to                   category to                    category to
                                         Amount     total loans      Amount       total loans       Amount       total loans
                                         ------    --------------    ------      -------------      ------       ------------
                                                                       (Dollars in thousands)
<S>                                    <C>            <C>           <C>             <C>           <C>             <C>
Balance at year end applicable to:
   Real estate loans                      $  13          95.4%         $47             94.3%         $216            93.2%
   Consumer loans                             3           4.6           11              5.7            42             6.8
   Unallocated                              717             -          701                -           562              -
                                           ----         -----         ----            -----          ----           -----
   Total                                   $733         100.0%        $759            100.0%         $820           100.0%
                                           ====         =====         ====            =====          ====           =====
</TABLE>


INVESTMENT ACTIVITIES

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



                                      -12-
<PAGE>   13

         The following table sets forth the composition of American's
investments, other than mortgage-backed securities, at the dates indicated:
<TABLE>
<CAPTION>
                                                                        At June 30,
                                           -----------------------------------------------------------------------
                                                    1999                     1998                      1997
                                           ---------------------     ---------------------    --------------------
                                            Carrying      Percent     Carrying     Percent     Carrying     Percent
                                              Value      of total       Value      of total      Value      of total
                                             -------       -----       -------     --------    ---------    --------
                                                                     (Dollars in thousands)
<S>                                      <C>             <C>        <C>            <C>      <C>            <C>
Investments designated as held to maturity:
    Interest-bearing deposits in other
      financial institutions (1)            $  3,781        16.3%      $15,399        56.5%    $  7,732       29.3%
Investments designated as available for sale:
    U.S. Government agency obligations        18,133        78.3        10,766        39.5       17,960       68.0
    Corporate equity securities                  137          .6           128          .5            -        -
    FHLMC stock                                1,102         4.8           941         3.5          700        2.7
                                             -------       -----       -------       -----      -------      -----
    Total investments designated
      as available for sale                   19,372        83.7        11,835        43.5       18,660       70.7
                                             -------       -----       -------       -----      -------      -----
Total investments                            $23,153       100.0%      $27,234       100.0%     $26,392      100.0%
                                             =======       =====       =======       =====      =======      =====
</TABLE>

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

(1)      Includes interest-bearing deposits and certificates of deposit.

(2)      At June 30, 1999, 1998 and 1997, the market value of American's
         investment securities, held to maturity, totaled $3.8 million, $15.4
         million and $7.7 million, respectively.

         The following table sets forth information regarding the maturities,
book value and weighted average yields of American's investment securities,
other than mortgage-backed securities, at June 30, 1999:

<TABLE>
<CAPTION>
                            Less than 1 Year     1-5 Years            5-10 Years         10-20 Years             Total
                           ------------------ ------------------  ------------------- -------------------  ------------------
                                     Weighted           Weighted             Weighted            Weighted
                           Amortized  average Amortized  average  Amortized  average  Amortized  average   Amortized   Market
                             cost      yield    cost     yield      cost      yield    cost      yield        cost     value
                           ---------  ------- ---------  -------  ---------  -------  ---------  -------   ---------   ------
                                                                  (Dollars in thousands)
<S>                         <C>          <C>  <C>         <C>    <C>          <C>     <C>          <C>       <C>       <C>
Investments designated as
 held to maturity:
  Certificates of deposit
    in other financial
    institutions              $198      7.0%  $   95      6.7%   $    --        -%    $   --         -%      $    293  $   293
Investments designated as                --
  available for sale:
  U.S. Government
    agency obligations          --       --    1,000      6.0     13,283      6.4      4,481       6.9         18,764   18,133
  Corporate equity
    securities                  --       --       --       --         --       --         --        --            169      137
  FHLMC stock                   --       --       --       --         --       --         --        --             19    1,102
                            ------       ---  ------      ---    -------      ---     ------       ---       --------  -------
       Total                $  198       7.0% $1,095      6.1%   $13,283      6.4%    $4,481       6.9%      $ 19,245  $19,665
                            ======       ===  ======      ===    =======      ===     ======       ===       ========  =======

</TABLE>

         In addition to the foregoing investment securities, American has been
an active purchaser of mortgage-backed securities. At June 30, 1999,
mortgage-backed securities totaled $10.2 million, or 8.3 % of total assets. All
of the mortgage-backed securities in American's portfolio are
government-guaranteed securities, primarily participations or pass-through
securities, issued by the Government National Mortgage Association ("GNMA"), the
FHLMC or the FNMA. In addition, American does invest in collateralized mortgage
obligations ("CMOs").



                                      -13-
<PAGE>   14


         American generally purchases mortgage-backed securities at or near par
in order to avoid prepayment risk. The following table sets forth details of
American's investment in mortgage-backed securities, of which all are designated
as available for sale, at the dates indicated.

<TABLE>
<CAPTION>

                                               At June 30, 1999                                     At June 30, 1998
                                -------------------------------------------------   ----------------------------------------------
                                               Gross        Gross                                  Gross       Gross
                                Amortized   unrealized    unrealized   Estimated    Amortized    unrealized unrealized  Estimated
                                 cost          gains        losses     fair           cost         gains      losses    fair value
                                ---------   ----------    ----------   ---------    ---------    ---------- ----------  ---------
                                                                                                   (In thousands)
<S>                            <C>              <C>          <C>       <C>          <C>            <C>         <C>        <C>
Available for sale:
  FHLMC participation
     certificates              $ 1,266          $18          $12        $1,272      $2,007        $  41        $  4       $2,044
  FNMA participation
     certificates                1,035            8           35         1,008         850           26           9          867
  GNMA participation
     certificates                3,301           35           43         3,293       4,919           86           3        5,002
  Collateralized mortgage
     obligations                 4,649           13            3         4,659       1,014            4           7        1,011
                             ---------         ----         ----      --------      ------       ------       -----       ------
    Total mortgage-backed
    securities                 $10,251          $74          $93       $10,232      $8,790         $157        $ 23       $8,924
                               =======          ===          ===       =======      ======         ====        ====       ======


                                             At June 30, 1997
                               -------------------------------------------
                                             Gross      Gross
                               Amortized  unrealized  unrealized Estimated
                                 cost        gains      losses   fair value
                               ---------  ----------  ---------- ---------

<S>                              <C>           <C>         <C>     <C>
Available for sale:
  FHLMC participation
     certificates                $3,067         $34        $34     $3,067
  FNMA participation
     certificates                 1,637          23         21      1,639
  GNMA participation
     certificates                 3,817          61         24      3,854
  Collateralized mortgage
     obligations                      -           -          -          -
                              ---------    --------     ------  ---------
    Total mortgage-backed
    securities                   $8,521        $118        $79     $8,560
                                 ======        ====        ===     ======
</TABLE>












                                      -14-
<PAGE>   15







DEPOSITS AND BORROWINGS

         GENERAL. Deposits are the primary source of American's funds for use in
lending and other investment activities. In addition to deposits, American
derives funds from interest payments and principal repayments on loans and
mortgage-backed securities 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 changes in general interest rates and money market
conditions.

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

         The following table sets forth the dollar amount of deposits in the
various types of accounts offered by American at the dates indicated:
<TABLE>
<CAPTION>
                                         1999                       1998                       1997
                                 ---------------------        ------------------      ---------------------
                                              Percent                    Percent                   Percent
                                              of total                  of total                   of total
                                  Amount      deposits        Amount    deposits        Amount     deposits
                                 ---------     ------         -------      ----        --------      -----
                                                              (Dollars in thousands)
<S>                            <C>           <C>          <C>          <C>           <C>            <C>
  Transaction accounts:
    Passbook accounts            $   7,862        7.8%         $7,440       8.0%        $ 7,379        8.2%
    Demand, NOW and Super NOW
     accounts                        6,680        6.6           5,867       6.3           4,435        4.9
    Money market deposit
     accounts                       11,785       11.7           7,999       8.5           7,785        8.7
                                 ---------     ------         -------      ----        --------      -----
      Total transaction             26,327       26.1          21,306      22.8          19,599       21.8
        accounts
  Certificates of deposit:
     3.00 - 3.99%                      278         .3              -          -               -          -
     4.00 - 4.99%                    5,146        5.8             421        .5             402         .4
     5.00 - 5.99%                   57,094       67.8          45,033      48.2          52,404       58.4
     6.00 - 6.99%                   12,018          -          26,630      28.5          17,265       19.2
     7.00 - 7.99%                       31          -              31         -              30         .1
     8.00 - 8.99%                       60          -              56         -              52         .1
                                  --------      -----         -------     -----         -------      -----
      Total certificates of
       deposit                      74,627       73.9          72,171      77.2          70,153       78.2
                                  --------      -----         -------     -----         -------      -----
    Total deposits                $100,954      100.0%        $93,477     100.0%        $89,752      100.0%
                                  ========      =====         =======     =====         =======      =====
</TABLE>


                                      -15-
<PAGE>   16


         The following table sets forth the remaining maturities of American's
certificates of deposit at the dates indicated:
<TABLE>
<CAPTION>
                                                                          June 30,
                                                 ----------------------------------------------------------
                                                  1999                     1998                       1997
                                                 -------                  -------                   -------
                                                                      (In thousands)
<S>                                              <C>                      <C>                       <C>
  Less than one year                             $46,943                  $51,581                   $42,468
  One to two years                                23,448                   18,247                    22,606
  Two to three years                               3,870                    1,928                     4,095
  Over three years                                   366                      415                       984
                                                 -------                  -------                   -------
                                                 $74,627                  $72,171                   $70,153
                                                 =======                  =======                   =======
</TABLE>

         The following table presents the amount of American's certificates of
deposit of $100,000 or more by the time remaining until maturity at June 30,
1999:
<TABLE>
<CAPTION>

                                                                                   At June 30, 1999
                                                                                   ----------------
  Certificates of deposit with balances of $100,000                                   (In thousands)
   or more maturing in quarter ending (1):
<S>                                                                                  <C>
      September 30, 1999                                                                 $ 4,526
      December 31, 1999                                                                    3,175
      March 31, 2000                                                                       1,495
      June 30, 2000                                                                        1,440
      After  June 30, 2000                                                                 5,056
                                                                                         -------
       Total certificates of deposit with balances of $100,000 or more                   $15,692
                                                                                         =======
</TABLE>

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

(1)      Account balances over $100,000 are not insured by the FDIC.


         The following table sets forth American's deposit account balance
activity for the periods indicated:
<TABLE>
<CAPTION>

                                 Year ended June 30,
                         -------------------------------------
                            1999          1998          1997
                         ---------     ---------     ---------
                                  (Dollars in thousands)
<S>                      <C>           <C>           <C>
  Beginning balance      $  93,477     $  89,752     $  83,395
  Deposits                 197,010       120,166       118,033
  Withdrawals             (193,307)     (119,802)     (114,836)
  Interest credited          3,774         3,361         3,160
                         ---------     ---------     ---------
  Ending balance         $ 100,954     $  93,477     $  89,752
                         =========     =========     =========

  Net increase           $   7,477     $   3,725     $   6,357
                         =========     =========     =========
  Percent increase            8.00%         4.15%         7.62%
                         =========     =========     =========
</TABLE>

         BORROWINGS. American's other sources of funds include advances from the
FHLB. As a member of the FHLB, American is required to own capital stock in the
FHLB and is authorized to apply for advances from the FHLB. Each FHLB credit
program has its own interest rate, which may be fixed or variable, and range of
maturities. The FHLB may prescribe the acceptable uses for these advances, as
well as limitations on the size of the advances and repayment provisions. In
addition to American's advances from the FHLB, ASB has borrowed money at June
30, 1998 and 1997, totaling $2.5 million and $500,000 at respective interest
rates of 8.50% and 8.88%, which matured in 1999.


                                      -16-
<PAGE>   17

         The following table sets forth certain information as to American's
FHLB advances and ASB's other borrowings at the dates indicated:

<TABLE>
<CAPTION>
                                                       At June 30,
                                            ----------------------------------
                                               1999        1998         1997
                                            ---------   ---------    ---------
                                                  (Dollars in thousands)
<S>                                         <C>         <C>          <C>
FHLB advances                               $   5,823   $   4,354    $   2,884
Weighted  average  interest  rate of FHLB
   advances                                      5.06%       5.16%        5.65%

Other borrowed money                        $    --     $   2,500    $     500
Weighted  average  interest rate of other
   borrowed money                                --%         8.50%        8.88%
</TABLE>



         The following table sets forth the maximum balance and average balance
of FHLB advances and other borrowings during the periods indicated:
<TABLE>
<CAPTION>
                                        Year ended June 30,
                                    --------------------------
                                     1999      1998      1997
                                    ------    ------    ------
                                      (Dollars in thousands)
<S>                                 <C>       <C>       <C>
FHLB advances:
   Maximum balance                  $5,841    $4,354    $2,889
   Average balance                   5,454     3,130     2,489
   Weighted average interest rate     5.10%     5.90%     5.65%

Other borrowed money:
   Maximum balance                  $2,500    $2,500    $  500
   Average balance                     438       378       333
   Weighted average interest rate     8.44%     8.84%     8.88%
</TABLE>


COMPETITION

         American competes for deposits with other savings banks, savings
associations, commercial banks and credit unions and with the issuers of
commercial paper and other securities, such as shares in money market mutual
funds. The primary factors in competing for deposits are interest rates and
convenience of office location. In making loans, American competes with other
savings banks, savings associations, commercial banks, consumer finance
companies, credit unions, leasing companies and other lenders. American 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 which are not readily
predictable.

SUBSIDIARY ACTIVITIES

         American has one wholly-owned subsidiary, A.S.L. Services, Inc.
("ASL"), which owns stock in American's data processing service provider. At
June 30, 1999, the stock held by the service corporation had a book value of
$15,000. Additionally, ASL maintains an $18,000 investment in the Money Concepts
Financial Planning Center, bringing the total assets of ASL to approximately
$33,000 at June 30, 1999.

PERSONNEL

         As of June 30, 1999, American had 21 full-time employees and 5
part-time employees. American believes that relations with its employees are
excellent. American offers health, disability and life benefits and has
established the ASB


                                      -17-
<PAGE>   18

Financial Corp. Employee Stock Ownership Plan. None of the employees of American
are represented by a collective bargaining unit.

YEAR 2000

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

         American's primary data processing applications, which are handled by
a third-party service bureau, Intrieve, Inc., have been identified as mission
critical. Intrieve has implemented a fully Year 2000 compliant processing
system that has been fully tested as of January 1, 1999. Additionally,
American's systems were tested in November 1998 with satisfactory results.
Management has also reviewed American's ancillary  equipment and implemented
the appropriate remedial measures without material cost.

         American has developed a contingency plan in case Intrieve actually
fails at Year 2000 critical dates. American deems the likelihood of failure of
the service provider's efforts to renovate Year 2000 changes to the on-line
core account processing system to be remote. The contingency plan, therefore,
primarily addresses action to deal with the possibility that the service
provider's system would be down for several days or weeks upon arrival of year
2000. American can conduct and record transactions manually until the service
provider is operational.

         American estimates its expenses related to the Year 2000 to be less
than $10,000.

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

                                   REGULATION

                                   REGULATION

GENERAL

         ASB is a savings and loan holding company within the meaning of the
Home Owners Loan Act, as amended (the "HOLA"). Consequently, ASB is subject to
regulation, examination and oversight by the OTS and must submit periodic
reports to the OTS concerning its activities and financial condition. In
addition, as a corporation organized under Ohio law, ASB is subject to
provisions of the Ohio Revised Code applicable to corporations generally.

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

         Congress is considering legislation to eliminate the federal savings
and loan charter and the separate federal regulation of savings and loan
associations. Pursuant to such legislation, Congress may eliminate the OTS and
American may be regulated under federal law as a bank or be required to change
its charter. Such change in regulation or charter would likely change the range
of activities in which American may engage and would probably subject American
to more


                                      -18-
<PAGE>   19

regulation by the FDIC. In addition, ASB might become subject to a different set
of holding company regulations limiting the activities in which ASB may engage
and subjecting ASB to additional regulatory requirements, including separate
capital requirements. At this time, ASB cannot predict when or whether Congress
may actually pass legislation regarding ASB's and American's regulatory
requirements or charter. Although such legislation, if enacted, may change the
activities in which ASB or American are authorized to engage, it is not
anticipated that the current activities of either ASB or American will be
materially affected by those activity limits.

OHIO CORPORATION LAW

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

         After the initial three-year moratorium, such a business combination
may not occur unless (1) one of the specified exceptions applies, (2) the
holders of at least two-thirds of the voting shares, and of at least a majority
of the voting shares not beneficially owned by the Interested Shareholder,
approve the business combination at a meeting called for such purpose, or (3)
the business combination meets certain statutory criteria designed to ensure
that the issuing public corporation's remaining shareholders receive fair
consideration for their shares.

         An Ohio corporation may, under certain circumstances, "opt out" of the
statute by specifically providing in its articles of incorporation that the
statute does not apply to any business combination of such corporation. However,
the statute still prohibits for twelve months any business combination that
would have been prohibited but for the adoption of such an opt-out amendment.
The statute also provides that it will continue to apply to any business
combination between a person who became an Interested Shareholder prior to the
adoption of such an amendment as if the amendment had not been adopted. ASB has
not opted out of the protection afforded by Chapter 1704.

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

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


                                      -19-
<PAGE>   20

OFFICE OF THRIFT SUPERVISION

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

         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.

         REGULATORY CAPITAL REQUIREMENTS. American is required by OTS
regulations to meet certain minimum capital requirements. The tangible capital
requirement requires savings associations to maintain "tangible capital" of not
less than 1.5% of their adjusted total assets. Tangible capital is defined in
OTS regulations as core capital minus any intangible assets.

         "Core capital" is comprised of common stockholders' equity (including
retained earnings), noncumulative preferred stock and related surplus, minority
interests in consolidated subsidiaries, certain nonwithdrawable accounts and
pledged deposits of mutual associations. Effective April 1, 1999, OTS
regulations require savings associations with the highest examination rating to
maintain core capital of at least 3% of their total assets. Those associations
that do not have the highest examination rating and exceed an acceptable level
of risk will be required to maintain core capital of at least 4%. Depending on
the association's examination rating and overall risk, OTS may require a higher
core capital ratio.

         OTS regulations require that savings associations maintain "risk-based
capital" in an amount not less than 8% of their risk-weighted assets. Risk-based
capital is defined as core capital plus certain additional items of capital,
which in the case of American includes a general loan loss allowance of $733,000
at June 30, 1999.

         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 the interest rate risk component, a savings association
will 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, the association 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
associations. At each successively lower defined capital category, an
association is subject to more restrictive and more 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. All undercapitalized associations must submit a
capital restoration plan to the OTS within 45 days after becoming
undercapitalized. Such 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. Furthermore,
critically undercapitalized institutions must be placed in conservatorship or
receivership within 90 days of reaching that capitalization


                                      -20-
<PAGE>   21

level, except under limited circumstances. American's capital at June 30, 1999,
met the standards for the highest category, a "well-capitalized" institution.

         Federal law prohibits a savings 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 (a) an amount equal to 5% of the association's total assets at the
time the institution became undercapitalized and (b) the amount that is
necessary to bring the association into compliance with all capital standards
applicable to such association at the time the association fails to comply with
its capital restoration plan.

         LIQUIDITY. OTS regulations require that a savings association maintain
a minimum daily balance of liquid assets (cash, certain time deposits, bankers'
acceptances and specified United States government, state or federal agency
obligations). During fiscal 1999, certain maturity requirements were removed,
which, in American's case, resulted in a greater eligible liquidity amount and
percentage at June 30, 1999, than at prior year ends. At December 31, 1998, such
minimum requirement was an amount 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 associations failing to meet the
liquidity requirement. The eligible liquidity of American at June 30, 1999, was
approximately $23.2 million, or 21.4% and exceeded the 4.0% percentage liquidity
requirement by approximately $18.9 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 June 30,
1999, American qualified as a QTL.

         LENDING LIMIT. OTS regulations generally limit the aggregate amount
that a savings association can lend to one borrower 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 the lending
limit. A general exception to the 15% limit provides that an association may
lend to one borrower up to $500,000, for any purpose. In applying the limit on
loans to one borrower, the regulations require that loans to certain related
borrowers be aggregated. At June 30, 1999, American was in compliance with this
lending limit.

         TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
directors and principal shareholders and their related interests must conform to
the lending limit on loans to one borrower, and the total of such loans to
executive officers, directors, principal shareholders and their related
interests cannot exceed the association'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 the association, with any "interested"
director not participating. All loans to directors, executive officers and
principal shareholders must be made on terms substantially the same as offered
in comparable transactions with the general public or as offered to all
employees in a company-wide benefit program, and loans to executive officers are
subject to additional limitations. American was in compliance with such
restrictions at June 30, 1999.


                                      -21-
<PAGE>   22

         All transactions between savings associations and their 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. ASB is an
affiliate of American. 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, purchasing 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. American was in
compliance with these requirements and restrictions at June 30, 1999.

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

         Tier 1 consists of associations that, before and after the proposed
distribution, meet their fully phased-in capital requirements. Associations in
this category may make capital distributions during any calendar year up to the
greater of (i) 100% of net income, current year-to-date, plus 50% of the amount
by which the lesser of the association's tangible, core or risk-based capital
exceeds its fully phased-in capital requirement for such capital component, as
measured at the beginning of the calendar year, and (ii) the amount authorized
for a Tier 2 association. A Tier 1 association deemed to be in need of more than
normal supervision by the OTS may be downgraded to a Tier 2 or Tier 3
association. American meets the requirements for a Tier 1 association and has
not been notified of any need for more than normal supervision.

         Tier 2 consists of associations that, before and after the proposed
distribution, meet their current minimum, but not fully phased-in, capital
requirements. Associations in this category may make capital distributions of up
to 75% of net income over the most recent four quarters. Tier 3 associations do
not meet current minimum capital requirements and must obtain OTS approval of
any capital distribution. Tier 2 associations that propose to make a capital
distribution in excess of the noted safe harbor level must also obtain OTS
approval. Tier 2 associations proposing to make a capital distribution within
the safe harbor provisions and Tier 1 associations proposing to make any capital
distribution need only submit written notice to the OTS 30 days prior to such
distribution.

         As a subsidiary of ASB, American is required to give the OTS 30 days'
notice prior to declaring any dividend on its stock. The OTS may object to the
distribution during such 30-day period based on safety and soundness concerns.
American paid dividends to ASB totaling $3.5 million during fiscal 1999.

         HOLDING COMPANY REGULATION. ASB is a savings and loan holding company
within the meaning of the HOLA. As such, ASB 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 association or savings and loan holding company,
without prior approval of the OTS, or from acquiring or retaining more than 5%
of the voting shares of a savings association or holding company thereof, which
is not a subsidiary. Under certain circumstances, a savings and loan holding
company is permitted to acquire, with the approval of the OTS, up to 15% of the
previously unissued voting shares of an undercapitalized savings association for
cash without such savings association being deemed to be controlled by ASB.
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 holding company's stock may also acquire control of any
savings institution, other than a subsidiary institution, or any other savings
and loan holding company.

         As a unitary savings and loan holding company, ASB generally has no
restrictions on its activities. Such companies are the only financial
institution holding companies which may engage in any commercial, securities and
insurance activities without restriction. Congress is considering legislation
which may limit ASB's ability to engage in these activities. It cannot


                                      -22-
<PAGE>   23

be predicted whether and in what form these proposals might become law. However,
such limits would not impact ASB's current activities, which consist solely of
holding stock of American. The broad latitude to engage in activities under
current law can be restricted. If the OTS determines that there is reasonable
cause to believe that the continuation 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 association, the OTS may impose such
restrictions as deemed necessary to address such risk, including limiting (i)
payment of dividends by the savings association, (ii) transactions between the
savings association and its affiliates, and (iii) any activities of the savings
association that might create a serious risk that the liabilities of ASB and its
affiliates may be imposed on the savings association. Notwithstanding the
foregoing rules as to permissible business activities of a unitary savings and
loan holding company, if the savings association subsidiary of a holding company
fails to meet the QTL test, then such unitary holding company would become
subject to the activities restrictions applicable to multiple holding companies.
At June 30, 1999, American met both those tests.

         If ASB acquired control of another savings institution, other than
through a merger or other business combination with American, ASB would become a
multiple savings and loan holding company. Unless the acquisition was an
emergency thrift acquisition and each subsidiary savings association met the QTL
test, the activities of ASB and any of its subsidiaries (other than American or
other subsidiary savings associations) would thereafter be subject to activity
restrictions.

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

         FEDERAL REGULATION OF ACQUISITIONS OF CONTROL OF ASB AND AMERICAN. In
addition to the Ohio law limitations on the merger with, and acquisition of,
ASB, federal limitations generally require regulatory approval of acquisitions
at specified levels. Under pertinent federal law and regulations, no person,
directly or indirectly, or acting in concert with others, may acquire control of
American or ASB without 60 days' prior notice to the OTS. "Control" is generally
defined as having more than 25% ownership or voting power; however, ownership or
voting power of more than 10% may be deemed "control" if certain factors are in
place. If the acquisition of control is by a company, the acquiror must obtain
approval, rather than give notice, of the acquisition as a savings and loan
holding company.

         In addition, any merger of American must be approved by the OTS as well
as the Superintendent. Further, any merger of ASB in which ASB is not the
resulting company must also be approved by both the OTS and the Superintendent.

FEDERAL DEPOSIT INSURANCE CORPORATION

         DEPOSIT INSURANCE AND ASSESSMENTS. The FDIC is an independent federal
agency that insures the deposits, up to prescribed statutory limits, of
federally insured banks and savings and loan associations and safeguards the
safety and soundness of the banking and savings and loan industries. The FDIC
administers two separate insurance funds, the Bank Insurance Fund ("BIF") for
commercial banks and state savings banks and the SAIF for savings associations.
American is a member of the SAIF and its deposit accounts are insured by the
FDIC up to the prescribed limits. The FDIC has examination authority over all
insured depository institutions, including American, 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 the
SAIF and in the BIF. 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.


                                      -23-
<PAGE>   24

         Prior to September 1996, the SAIF's ratio of reserves to insured
deposits was significantly below the level required by law, while the BIF's
ratio was above the required level. As a result, institutions with SAIF-insured
deposits were paying higher deposit insurance assessments than institutions with
BIF-insured deposits. Federal legislation providing for the recapitalization of
the SAIF became effective in September 1996 and included a special assessment of
$.657 per $100 of SAIF-insured deposits held at March 31, 1995. American had
approximately $83.8 million in deposits at March 31, 1995, and paid a special
assessment of $551,000.

FEDERAL RESERVE REQUIREMENTS

         FRB regulations require savings associations to maintain reserves of 3%
of net transaction accounts (primarily NOW accounts) up to $46.5 million
(subject to an exemption of up to $4.9 million), and of 10% of net transaction
accounts in excess of $46.5 million. At June 30, 1999, American was in
compliance with the reserve requirements.

FEDERAL HOME LOAN BANKS

         The Federal Home Loan Banks provide credit to their members in the form
of advances. American 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 1.0% of the aggregate outstanding principal amount of American's
residential mortgage loans, home purchase contracts and similar obligations at
the beginning of each year, or 5% of its advances from the FHLB of Cincinnati.
American was in compliance with this requirement with an investment in stock of
the FHLB of Cincinnati of $778,000 at June 30, 1999.

         FHLB advances to member institutions who meet the QTL Test are
generally limited to the lower of (i) 25% of the member's assets or (ii) 20
times the member's investment in FHLB stock. At June 30, 1999, American's
maximum limit on advances was approximately 30.6 million. The granting of
advances is also subject to the FHLB's collateral and credit underwriting
guidelines.

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

         The FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances. 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 the FHLB must be made only to provide funds for
residential housing finance.

                                    TAXATION

FEDERAL TAXATION

         ASB and American are each subject to the federal tax laws and
regulations which apply to corporations generally. In addition to the regular
income tax, ASB and American 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. However, the
Taxpayer Relief Act of 1997 repealed the alternative minimum tax for certain
"small corporations" for tax years beginning after December 31, 1997. A
corporation initially qualifies as a small corporation if it had average gross
receipts of $5,000,000 or less for the three tax years ending


                                      -24-
<PAGE>   25

with its first tax year beginning after December 31, 1996. Once a corporation is
recognized as a small corporation, it will continue to be exempt from the
alternative minimum tax for as long as its average gross receipts for the prior
three-year period does not exceed $7,500,000. In determining if a corporation
meets this requirement, the first year that it achieved small corporation status
is not taken into consideration. American's average gross receipts for the three
tax years ending on June 30, 1999, is $8.8 million, and, as a result, American
does not qualify as a small corporation exempt from the alternative minimum tax.

         Prior to the enactment of the Small Business Jobs Protection Act (the
"Act"), which was signed into law on August 21, 1996, certain thrift
institutions, such as American, were allowed deductions for bad debts under
methods more favorable than those granted to other taxpayers. Qualified thrift
institutions could compute deductions for bad debts using either the specific
charge-off method of Section 166 of the Code or one of two reserve methods of
Section 593 of the Code. The reserve methods under Section 593 of the Code
permitted a thrift institution annually to elect to deduct bad debts under
either (i) the "percentage of taxable income" method applicable only to thrift
institutions, or (ii) the "experience" method that also was available to small
banks. Under the "percentage of taxable income" method, a thrift institution
generally was allowed a deduction for an addition to its bad debt reserve equal
to 8% of its taxable income (determined without regard to this deduction and
with additional adjustments). Under the "experience" method, a thrift
institution was generally allowed a deduction for an addition to its bad debt
reserve equal to the greater of (i) an amount based on its actual average
experience for losses in the current and five preceding taxable years, or (ii)
an amount necessary to restore the reserve to its balance as of the close of the
base year. A thrift institution could elect annually to compute its allowable
addition to bad debt reserves for qualifying loans either under the experience
method or the percentage of taxable income method. For tax years 1995, 1994, and
1993, American used the percentage of taxable income method.

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

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

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

         The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e), as modified by the Act, which require recapture in the case of
certain excessive distributions to shareholders. The pre-1988 reserves may not
be utilized for payment of cash dividends or other distributions to a
shareholder (including distributions in dissolution or liquidation) or for

                                      -25-
<PAGE>   26

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 American to ASB is deemed paid out of its
pre-1988 reserves under these rules, the pre-1988 reserves would be reduced and
the gross income of American for tax purposes would be increased by the amount
which, when reduced by the income tax, if any, attributable to the inclusion of
such amount in its gross income, equals the amount deemed paid out of the
pre-1988 reserves. As of June 30, 1999, the pre-1988 reserves of American for
tax purposes totaled approximately $1.9 million. American believes it had
approximately $2.7 million of accumulated earnings and profits for tax purposes
as of June 30, 1999, which would be available for dividend distributions,
provided regulatory restrictions applicable to the payment of dividends are met.
No representation can be made as to whether American will have current or
accumulated earnings and profits in subsequent years.

         The tax returns of American 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 American.

OHIO TAXATION

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

         A special litter tax is also applicable to all corporations, including
ASB, 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.

         American 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 1.5% of the taxable book
net worth of American determined in accordance with generally accepted
accounting principles. For tax year 1999, however, the franchise tax on
financial institutions will be 1.4% of the taxable book net worth and for tax
year 2000 and years thereafter the tax will be 1.3% of the taxable book net
worth. As a "financial institution," American is not subject to any tax based
upon net income or net profits imposed by the State of Ohio.

ITEM 2.           DESCRIPTION OF PROPERTY

                  American owns the property at 503 Chillicothe Street,
Portsmouth, Ohio, on which its main office is located. At June 30, 1999, the net
book value of the main office property was $540,000, and American's office
premises and equipment had a total net book value of $1.0 million. For
additional information regarding American's office premises and equipment, see
Notes A and E of Notes to Consolidated Financial Statements.

                  American also owns two parcels of real estate in downtown
Portsmouth, Ohio, with a book value of approximately $300,000. The properties
were purchased in November 1994 and April 1997. American is currently
constructing a drive-through and ATM facility on the properties.

ITEM 3.           LEGAL PROCEEDINGS

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




                                      -26-
<PAGE>   27


                                     PART II

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

                  Not applicable

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

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

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

ITEM 7.           CONSOLIDATED FINANCIAL STATEMENTS

                  The Consolidated Financial Statements contained in the Annual
Report and the opinion of Grant Thornton LLP, dated July 21, 1999, are
incorporated herein by reference.

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

                  Not applicable.

                                    PART III

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

                  The information contained in the definitive Proxy Statement
for the 1999 Annual Meeting of Shareholders of ASB Financial Corp. (the "Proxy
Statement") under the captions "Board of Directors," "Executive Officers" and
"Voting Securities and Ownership of Certain Beneficial Owners and Management" is
incorporated herein by reference.

ITEM 10.          EXECUTIVE COMPENSATION

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

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  Not applicable.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits

                           3.1      Articles of Incorporation (incorporated by
                                    reference)

                           3.2      Code of Regulations (incorporated by
                                    reference)



                                      -27-
<PAGE>   28

                           10.1     ASB Financial Corp. 1995 Stock Option and
                                    Incentive Plan (incorporated by reference)

                           10.2     American Savings Bank, fsb Management
                                    Recognition and Retention Plan and Trust
                                    Agreement (incorporated by reference)

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

                           20       Proxy Statement

                           21       Subsidiaries of ASB Financial Corp.
                                    (incorporated by reference)

                           27       Financial Data Schedule

                  (b) No reports on Form 8-K have been filed during the last
quarter of the fiscal year covered by this Report.



                                      -28-
<PAGE>   29



                                  SIGNATURES

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

                                         ASB FINANCIAL CORP.

                                         By /s/ Robert M. Smith
                                           -----------------------------------
                                            Robert M. Smith
                                            President and Director
                                            (Principal Executive Officer
                                            and Principal Financial Officer)
                                            Date: September 24, 1999

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

By /s/ Gerald R. Jenkins                 By  /s/ Lee O. Fitch
  -------------------------------------    -----------------------------------
    Gerald R. Jenkins                        Lee O. Fitch
    Director and Chairman of the Board       Director

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

By  /s/ William J. Burke                 By /s/ Louis M. Schoettle
  -------------------------------------    -----------------------------------
    William J. Burke                         Louis M. Schoettle
    Director                                 Director

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



                                      -29-
<PAGE>   30





                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

  EXHIBIT
  NUMBER         DESCRIPTION
  ------         -----------
<S>            <C>                                                             <C>
       3.1       Articles of Incorporation of ASB Financial Corp.              Incorporated by reference to the Form
                                                                               10-KSB for fiscal year ended June 30,
                                                                               1995 filed by ASB on September 28, 1995
                                                                               (the "1995 Form 10-KSB") with the
                                                                               Securities and Exchange Commission (the
                                                                               "SEC"), Exhibit 3.3

       3.4       Code of Regulations of ASB Financial Corp.                    Incorporated by reference to the Form
                                                                               10-KSB, Exhibit 3.5

       10.1      ASB Financial Corp. 1995 Stock Option and Incentive Plan      Incorporated by reference to the Form
                                                                               10-KSB for the fiscal year ended June 30,
                                                                               1996 filed with the SEC on September 30,
                                                                               1996, (the "1996 Form 10-KSB") Exhibit
                                                                               10.1

       10.2      American Savings Bank, fsb Recognition and Retention Plan     Incorporated by reference to the 1996
                 and Trust Agreement                                           Form 10-KSB, Exhibit 10.2

       13        1999 Annual Report to Shareholders

       20        Proxy Statement for 1999 Annual Meeting

       21        Subsidiaries of ASB Financial Corp.                           Incorporated by reference to the 1995
                                                                               Form 10-KSB, Exhibit 21

       27        Financial Data Schedule
</TABLE>


                                      -30-