ASB
                                    FINANCIAL
                                      CORP.




                                      2002
                                     ANNUAL
                                     REPORT
                                       TO
                                  SHAREHOLDERS



<PAGE>


Dear Fellow Shareholder:

It is with a great deal of pleasure that we present our Annual Report to
Shareholders covering the fiscal year ended June 30, 2002.

We were very pleased with another year of solid operating results in fiscal
2002. Net earnings for the fiscal year ended June 30, 2002, totaled $1.5
million, or $.97 per diluted share, which represents an increase of $379,000, or
33.4%, compared to the $1.1 million of net earnings reported for fiscal 2001.
Fiscal 2002 net earnings were enhanced by a $229,000, or $.15 per diluted share,
extraordinary income item resulting from our acquisition of the Waverly Building
and Loan Company. Before consideration of the effects of this non-recurring
income, fiscal 2002 net earnings increased over fiscal 2001 by $150,000, or
13.2%. At June 30, 2002, total assets amounted to a record $148.3 million, an
increase of $7.3 million, or 5.2% over June 30, 2001. The loan portfolio grew by
$5.7 million, or 5.5%, during fiscal 2002, ending the year with a record total
of $109.0 million. Similarly, deposits increased by $6.1 million, or 5.1%,
during the fiscal year, totaling an unprecedented level of $126.9 million at
June 30, 2002.

Your Corporation's focus for fiscal 2003 and beyond is an unwavering commitment
to growth. The continued expansion of our business will be accomplished through
the tireless efforts of our employees who provide the excellent customer service
that has become synonymous with our name.

It is the Board's intention to have shareholders directly participate in the
success of the Company. Therefore, the Board increased the quarterly dividend
for the third consecutive year, announcing an 8.3% increase from $.12 to $.13
per share effective July 31, 2002. In addition, the Company was able to increase
each investor's percentage of ownership by repurchasing 1.7% of its common
shares during the past year. Since our conversion to stock form in 1995, the
Company has repurchased 13.6% of its common stock and returned over 80% of the
offering proceeds to our shareholders in the form of special dividends and
returns of capital. We shall continue to utilize these effective capital
management strategies so as to maintain our overall capital ratio at optimal
levels.

The purchase of assets and assumption of liabilities of the Waverly Building and
Loan Company in Pike County gives us access to a larger market area. The Waverly
purchase is a natural medium for expansion of American Savings Bank. While
Waverly and Portsmouth are similar markets, the move into another county has
given our Bank a new opportunity to offer our products and services to the Pike
County communities.

In the future, we shall continue to be a community-oriented,
relationship-focused financial institution, which we feel is the right strategy
for growth and success. The Board of Directors and management team remain
committed to the communities we serve and to achieving growth and increasing
returns to our shareholders in the years ahead.

Thank you for your continued confidence.

Very truly yours,

ASB FINANCIAL CORP.


/s/Robert M. Smith

Robert M. Smith
President


<PAGE>


                         BUSINESS OF ASB FINANCIAL CORP.

==============================================================================

ASB Financial Corp. ("ASB" or the "Corporation"), a unitary savings and loan
holding company incorporated under the laws of the State of Ohio, owns all of
the issued and outstanding common shares of American Savings Bank, fsb
("American" or the "Savings Bank"), a savings bank chartered under the laws of
the United States. ASB was formed in 1995 in connection with the conversion of
American from a mutual savings association to a stock savings association (the
"Conversion") which was completed in May 1995. Other than investing excess funds
from the Conversion in investment securities, ASB's activities have been limited
primarily to holding the common shares of American.

Serving the Portsmouth, Ohio, area since 1892, American conducts business from
its main office at 503 Chillicothe Street in Portsmouth, Ohio and a branch
office at 118 North Market Street, Waverly, Ohio. The principal business of
American is the origination of loans secured by one- to four-family residential
real estate located in American's primary market area, which consists of the
City of Portsmouth and the City of Waverly and contiguous areas of Scioto County
and Pike County, Ohio. American also originates loans secured by multifamily
residences (over four units) and nonresidential real estate and purchases
interests in loans originated by other lenders secured by multifamily real
estate and nonresidential real estate located outside of American's primary
market area. In addition to real estate lending, American invests in
mortgage-backed securities, U.S. Government and agency obligations 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
from borrowings from the Federal Home Loan Bank (the "FHLB") of Cincinnati.

ASB is subject to regulation, supervision and examination by the Office of
Thrift Supervision of the United States Department of the Treasury (the "OTS").
American is subject to regulation, supervision and examination by the OTS and
the FDIC. American is also a member of the FHLB of Cincinnati.

ASB's office is located at 503 Chillicothe Street, Portsmouth, Ohio 45662. The
telephone number is (740) 354-3177.






























                                       2
<PAGE>


                              MARKET PRICE OF ASB'S
                  COMMON SHARES AND RELATED SHAREHOLDER MATTERS
==============================================================================

There were 1,512,305 common shares of ASB outstanding on September 1, 2002, held
of record by approximately 800 shareholders. Price information for ASB's common
shares is quoted on the Nasdaq National Market ("Nasdaq") under the symbol
"ASBP."

The table below sets forth the high and low closing prices for the common shares
of ASB, as quoted by Nasdaq, together with dividends declared per share, for
each quarter of fiscal 2002 and 2001.

                                                                Cash dividends
Quarter ended                 High close       Low close             declared

Fiscal 2002
   September 30, 2001          $10.98            $10.00               $.12
   December 31, 2001           $10.96           $  9.51               $.12
   March 31, 2002              $10.85            $10.02               $.12
   June 30, 2002               $11.61            $10.25               $.13

Fiscal 2001
   September 30, 2000          $10.75             $8.75               $.11
   December 31, 2000          $  9.94             $8.63               $.11
   March 31, 2001             $  9.38             $8.63               $.11
   June 30, 2001               $10.00             $8.63               $.12

The income of ASB consists of interest and dividends on investment and
mortgage-backed and related securities and dividends which may periodically be
paid on the common shares of American held by ASB. In addition to certain
federal income tax considerations, OTS regulations impose limitations on the
payment of dividends and other capital distributions by savings associations.
Under OTS regulations applicable to converted savings associations, American is
not permitted to pay a cash dividend on its common shares if American's
regulatory capital would, as a result of the payment of such dividend, be
reduced below the amount required for the liquidation account established in
connection with the Conversion or applicable regulatory capital requirements
prescribed by the OTS.

Under OTS regulations applicable to all savings associations, a savings
association that, immediately prior to, and on a pro-forma basis after giving
effect to, a proposed capital distribution has total capital (as defined by OTS
regulations) that is equal to or greater than the amount of its
"well-capitalized" capital requirement, is generally permitted, without OTS
approval (but subsequent to 30 days' prior notice of the planned dividend to the
OTS) to make capital distributions during a calendar year in an amount not to
exceed its net earnings for that year to date plus its retained net earnings for
the preceding two years. Savings associations which have total capital in excess
of the "well-capitalized" capital requirement and which have been notified by
the OTS that they are in need of more than normal supervision can be subject to
greater restrictions on dividends. In addition, a savings association that fails
to meet current minimum capital requirements is prohibited from making any
capital distributions without the prior approval of the OTS. American currently
meets the definition of a "well-capitalized" institution and, unless the OTS
determines that American is an institution requiring more than normal
supervision, may pay dividends in accordance with the foregoing provisions of
the OTS regulations.













                                       3
<PAGE>



                              SELECTED CONSOLIDATED
                      FINANCIAL INFORMATION AND OTHER DATA

==============================================================================

The following tables set forth certain information concerning the consolidated
financial condition, earnings and other data regarding ASB at the dates and for
the periods indicated.

<TABLE>
<CAPTION>
Selected consolidated financial                                                  At June 30,
condition data:                                            2002        2001         2000        1999       1998
                                                                             (In thousands)
<S>                                                         <C>          <C>         <C>         <C>        <C>
Total amount of:
  Assets                                                 $148,272    $140,987     $131,898    $123,248    $116,437
  Cash and cash equivalents (1)                             7,704       4,649        5,069       7,566      13,890
  Certificates of deposit in other financial                  100           -            -         293       2,004
    institutions
  Investment securities available for sale - at market     20,866      20,772       19,127      19,387      11,850
  Mortgage-backed securities available for sale - at        7,091       8,716        8,616      10,232       8,924
    market
  Loans receivable - net                                  109,015     103,308       94,744      82,430      76,550
  Deposits                                                126,872     120,725      110,007     100,954      93,477
  Advances from the FHLB                                    4,223       4,257        7,790       5,823       4,354
  Shareholders' equity, restricted (2)                     15,454      14,503       12,581      15,040      14,490
</TABLE>

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

(1)  Consists of cash and due from banks and interest-bearing  deposits in other
     financial institutions.

(2)  At June 30, 2002, 2001, 2000, 1999 and 1998,  includes $850,000,  $779,000,
     $(592,000),  $265,000  and  $714,000,  respectively,  of  unrealized  gains
     (losses) on securities designated as available for sale, net of related tax
     effects,  pursuant to Statement of Financial  Accounting Standards ("SFAS")
     No. 115.

<TABLE>
<CAPTION>
Selected consolidated operating                                        Year ended June 30,
data:                                                 2002         2001        2000         1999        1998
                                                              (In thousands, except per share data)
<S>                                                    <C>         <C>          <C>          <C>          <C>
Interest income                                      $9,543      $10,262      $9,257       $8,580       $8,541
Interest expense                                      5,050        6,379       5,427        5,112        4,961
                                                      -----       ------       -----        -----        -----
Net interest income                                   4,493        3,883       3,830        3,468        3,580
Provision for (recoveries of) losses on loans            70            1           1           (1)          (5)
                                                      -----       ------       -----        -----        -----
Net interest income after provision for
   (recoveries of) losses on loans                    4,423        3,882       3,829        3,469        3,585
Other income                                            486          495         354          330          281
General, administrative and other expense             3,077        2,783       2,673        2,286        2,345
                                                      -----       ------       -----        -----        -----
Earnings before income taxes                          1,832        1,594       1,510        1,513        1,521
Federal income taxes                                    548          460         426          433          445
                                                      -----       ------       -----        -----        -----
Earnings before extraordinary item                    1,284        1,134       1,084        1,080        1,076
Extraordinary item - negative goodwill arising
   from Waverly acquisition - net of tax                229             -          -            -            -
                                                      -----       -------      -----        -----        -----
Net earnings                                         $1,513      $  1,134     $1,084       $1,080       $1,076
                                                      =====       =======      =====        =====        =====

Earnings per share
  Basic                                               $1.00          $.75       $.70         $.68         $.68
                                                       ====           ===        ===          ===          ===
  Diluted                                              $.97          $.73       $.70         $.67         $.67
                                                        ===           ===        ===          ===          ===
</TABLE>


                                       4
<PAGE>





<TABLE>
<CAPTION>
                                                                        Year ended June 30,
Selected financial ratios:                              2002         2001        2000         1999        1998
<S>                                                      <C>          <C>         <C>          <C>         <C>
Return on average assets                                1.06%         .83%        .86%         .90%        .95%
Average interest rate spread during period              2.84         2.46        2.74         2.54        2.46
Net interest margin                                     3.23         2.94        3.15         3.04        3.25
Return on average equity                               11.48         8.22        8.21         7.22        6.38
Equity to total assets at end of period                10.42        10.29        9.54        12.20       12.44
Average interest-earning assets to average
 interest-bearing liabilities                         110.90       109.93      109.25       111.02      117.41
Net interest income to general, administrative
 and other expense                                    146.02       139.53      143.28       151.71      152.67
General, administrative and other expense to
 average total assets                                   2.16         2.05        2.13         1.91        2.08
Nonperforming assets to total assets                     .78          .44         .21          .31         .34
Loan loss allowance to nonperforming loans             74.22       115.37      257.30       193.40      316.25
Dividend payout ratio                                  49.00        60.00      201.43        58.82      352.94
</TABLE>












































                                       5
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

==============================================================================

                                     GENERAL

ASB was incorporated for the purpose of owning the outstanding common shares of
American. As a result, the discussion and analysis that follows focuses
primarily on the financial condition and results of operations of American. The
following discussion and analysis of the consolidated financial condition and
results of operations of ASB and American should be read in conjunction with and
with reference to the consolidated financial statements, and the notes thereto,
presented in this Annual Report.

On June 28, 2002, American acquired substantially all of the assets and
liabilities of the Waverly Building and Loan Company ("Waverly"). The
acquisition was accounted for in a manner similar to the purchase method of
accounting.

Forward-Looking Statements are Subject to Change

Certain statements are made in this document as to what management expects may
happen in the future. These statements usually contain the words "believe,"
"estimate," "project," "expect," "anticipate," "intend" or similar expressions.
Because these statements look to the future, they are based on management's
current expectations and beliefs. Actual results or events may differ materially
from those reflected in the forward-looking statements. Management's current
expectations and beliefs as to future events are subject to change at any time,
and no assurances can be provided that the future events will actually occur.


                         CHANGES IN FINANCIAL CONDITION
                       FROM JUNE 30, 2001 TO JUNE 30, 2002

ASB's total assets amounted to $148.3 million at June 30, 2002, an increase of
$7.3 million, or 5.2%, over 2001 levels. The increase in total assets resulted
primarily from the acquisition of Waverly, which increased total assets by $5.6
million and total deposits by $4.7 million. The increase in assets was funded by
growth in deposits of $1.4 million and an increase in shareholders' equity of
$951,000.

Cash and interest-bearing deposits totaled $7.7 million at June 30, 2002, an
increase of $3.1 million, or 65.7%, over 2001 levels. The Waverly acquisition
contributed $1.8 million to total cash and interest-bearing deposits. Investment
securities totaled $20.9 million at June 30, 2002, an increase of $94,000, or
..5%, over the balance at June 30, 2001. Mortgage-backed securities totaled $7.1
million at June 30, 2002, a decrease of $1.6 million, or 18.6%, year to year.
During fiscal 2002, purchases of investment and mortgage-backed securities
totaling $26.9 million were offset by maturities, sales and principal repayments
totaling $28.6 million.

Loans receivable increased by $5.7 million, or 5.5%, to a total of $109.0
million at June 30, 2002, compared to $103.3 million at June 30, 2001. The
increase resulted primarily from $4.5 million in loans acquired in the Waverly
transaction. Loan disbursements of $34.5 million and purchases of $2.0 million
exceeded principal repayments of $34.6 million during fiscal 2002. Growth in
loans secured by residential real estate totaled $2.4 million, or 3.2%, and the
consumer loan portfolio increased by $1.9 million, or 10.9%, year to year.

At June 30, 2002, American's allowance for loan losses was $855,000,
representing .77% of total loans and 74.2% of nonperforming loans. The
acquisition of Waverly contributed $160,000 to the allowance during fiscal 2002.
At June 30, 2001, American's allowance for loan losses was $713,000,
representing .67% of total loans and 115.4% of nonperforming loans.
Nonperforming loans totaled $1.2 million and $618,000 at June 30, 2002 and 2001,



                                       6
<PAGE>

respectively. At June 30, 2002, nonperforming loans were comprised of $606,000
of loans secured by one- to four-family residential real estate, $465,000 of
loans secured by nonresidential real estate and $81,000 of consumer and other
loans. Management believes that American's nonperforming loans are adequately
collateralized and no loss is anticipated on such loans. Although management
believes that its allowance for loan losses at June 30, 2002, was adequate based
on the available facts and circumstances, there can be no assurances that
additions to such allowance will not be necessary in future periods, which could
adversely affect ASB's results of operations.

Deposits increased by $6.1 million, or 5.1%, during fiscal 2002 to a total of
$126.9 million at June 30, 2002. The increase resulted primarily from $4.7
million in deposits acquired in the Waverly transaction. The additional $1.4
million growth in deposits was generally used to fund new loan originations.

Shareholders' equity totaled $15.5 million at June 30, 2002, an increase of
$951,000, or 6.6%, over June 30, 2001 levels. The increase resulted primarily
from net earnings of $1.5 million, a $71,000 increase in unrealized gains on
available for sale securities and the effects of $276,000 of amortization
related to stock benefit plans, which were partially offset by dividends paid of
$754,000 and treasury stock purchases of $260,000 during the year.


                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 2002 AND 2001

General. Net earnings amounted to $1.5 million for the fiscal year ended June
30, 2002, an increase of $379,000, or 33.4%, over fiscal 2001. The increase in
earnings resulted primarily from the recognition of after-tax negative goodwill
totaling $229,000 in connection with the Waverly acquisition and a $610,000
increase in net interest income, which were partially offset by a $294,000
increase in general, administrative and other expense and an $88,000 increase in
the provision for federal income taxes.

Net Interest Income. Total interest income amounted to $9.5 million for the
fiscal year ended June 30, 2002, a decrease of $719,000, or 7.0%, from fiscal
2001. Interest income on loans totaled $7.9 million in fiscal 2002, a decrease
of $268,000, or 3.3%. This decrease was due primarily to an 83 basis point
decrease in the average yield year to year, which was partially offset by a $7.3
million, or 7.4%, increase in the weighted-average balance of loans outstanding.
Interest income on mortgage-backed securities decreased by $143,000, or 25.7%,
as a result of a $1.4 million, or 16.7%, decrease in the weighted-average
balance outstanding, and a 72 basis point decrease in yield year to year.
Interest income on investment securities and interest-bearing deposits decreased
by $308,000, or 20.0%, due primarily to a 135 basis point decrease in the
average yield, which was partially offset by a $686,000, or 2.7%, increase in
the weighted-average balance outstanding year to year.

Interest expense totaled $5.1 million for the fiscal year ended June 30, 2002, a
decrease of $1.3 million, or 20.8%, from the $6.4 million total recorded in
fiscal 2001. Interest expense on deposits decreased by $1.1 million, or 18.3%,
due primarily to a 114 basis point decrease in the weighted-average cost of
deposits, which was partially offset by a $5.1 million, or 4.4%, increase in the
weighted-average balance outstanding year to year. Interest expense on
borrowings decreased by $227,000, or 65.6%, due primarily to a 427 basis point
decrease in the average cost of borrowings, to 2.36% in fiscal 2002. Decreases
in the average yields on interest-earning assets and the average costs of
interest-bearing liabilities were due primarily to the overall reductions in
interest rates in the economy during 2001. This low interest rate environment
continued through the first six months of 2002.

As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $610,000, or 15.7%, to a total of $4.5 million
for the fiscal year ended June 30, 2002, compared to $3.9 million in fiscal
2001. The interest rate spread increased by 38 basis points to 2.84% in fiscal


                                       7
<PAGE>

2002 from 2.46% in fiscal 2001, and the net interest margin increased by 29
basis points to 3.23% in fiscal 2002 from 2.94% in fiscal 2001.

Provision for Losses on Loans. American charges a provision for losses on loans
to earnings to bring the total allowance for loan losses to a level considered
appropriate by management based on historical experience, the volume and type of
lending conducted by American, the status of past due principal and interest
payments, general economic conditions, particularly as such conditions relate to
American's market area, and other factors related to the collectibility of
American's loan portfolio. As a result of such analysis, management elected to
record a $70,000 provision for losses on loans during the fiscal year ended June
30, 2002. The fiscal 2002 provision was predicated primarily upon the increase
in nonperforming loans and the level of loan charge-offs during the period.
There can be no assurance that the loan loss allowance will be adequate to
absorb losses on known nonperforming assets or that the allowance will be
adequate to cover losses on nonperforming assets in the future.

Other Income. Other income totaled $486,000 for the fiscal year ended June 30,
2002, a decrease of $9,000, or 1.8%, from the $495,000 recorded in fiscal 2001.
The decrease resulted from an $86,000 decrease in gain on sale of investment
securities year to year, which was substantially offset by an increase of
$77,000, or 20.4%, in other operating income. The increase in other operating
income was comprised of increases in fees on loans and deposits transactions.

General, Administrative and Other Expense. General, administrative and other
expense totaled $3.1 million for the fiscal year ended June 30, 2002, an
increase of $294,000, or 10.6%, over the total recorded in fiscal 2001. The
increase resulted primarily from increases of $68,000, or 4.5%, in employee
compensation and benefits, $47,000, or 13.5%, in data processing costs and
$225,000, or 40.3%, in other operating expense, which were partially offset by a
decrease of $55,000, or 33.1%, in franchise taxes. The increase in employee
compensation and benefits was due primarily to normal merit increases, partially
offset by a decline in expense related to stock benefit plans year to year. The
increase in data processing was due primarily to costs related to enhanced
computer programs for item-processing and advanced system upgrades, as well as
increased costs related to American's overall growth year to year. The increase
in other operating expense was due primarily to expense related to the Savings
Bank's investment in a low income housing project, as well as increased expense
associated with the debit card program, increased professional fees associated
with the acquisition of Waverly and pro-rata increases in operating costs due to
the Corporation's overall growth year to year. The decrease in franchise taxes
was due primarily to refund claims on prior year tax filings.

Federal Income Taxes. The provision for federal income taxes totaled $548,000
for the fiscal year ended June 30, 2002, an increase of $88,000, or 19.1%, over
the $460,000 recorded in fiscal 2001. The increase was due primarily to the
effects of a $238,000, or 14.9%, increase in pre-tax earnings. ASB's effective
tax rates were 29.9% and 28.9% for the fiscal years ended June 30, 2002 and
2001, respectively.


                         COMPARISON OF OPERATING RESULTS
                   FOR THE YEARS ENDED JUNE 30, 2001 AND 2000

General. Net earnings amounted to $1.1 million for the fiscal year ended June
30, 2001, an increase of $50,000, or 4.6%, over fiscal 2000. The increase in
earnings resulted from a $53,000 increase in net interest income and a $141,000
increase in other income, which were partially offset by a $110,000 increase in
general, administrative and other expense and a $34,000 increase in the
provision for federal income taxes.

Net Interest Income. Total interest income amounted to $10.3 million for the
fiscal year ended June 30, 2001, an increase of $1.0 million, or 10.9%, over
fiscal 2000. Interest income on loans totaled $8.2 million in fiscal 2001, an
increase of $1.0 million, or 14.2%. This increase was due primarily to an $11.4
million, or 13.0%, increase in the weighted-average balance of loans


                                       8
<PAGE>

outstanding, and a 9 basis point increase in the average yield year to year.
Interest income on mortgage-backed securities decreased by $45,000, or 7.5%, as
a result of a $1.4 million, or 14.7%, decrease in the weighted-average balance
outstanding, which was partially offset by a 52 basis point increase in yield
year to year. Interest income on investment securities and interest-bearing
deposits increased by $34,000, or 2.3%, due primarily to an $893,000, or 3.7%,
increase in the weighted-average balance outstanding, which was partially offset
by an 8 basis point decrease in the average yield year to year.

Interest expense totaled $6.4 million for the fiscal year ended June 30, 2001,
an increase of $952,000, or 17.5%, over the $5.4 million total recorded in
fiscal 2000. Interest expense on deposits increased by $1.0 million, or 19.9%,
due primarily to a $10.8 million, or 10.4%, increase in the weighted-average
balance outstanding and a 42 basis point increase in the weighted-average cost
of deposits year to year. Interest expense on borrowings decreased by $48,000,
or 12.2%, due primarily to a $1.7 million, or 24.2%, decrease in the
weighted-average balance outstanding, which was partially offset by a 91 basis
point increase in the average cost of borrowings, to 6.63% in fiscal 2001.

As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $53,000, or 1.4%, to a total of $3.9 million
for the fiscal year ended June 30, 2001, compared to $3.8 million in fiscal
2000. The interest rate spread decreased by 28 basis points to 2.46% in fiscal
2001 from 2.74% in fiscal 2000, and the net interest margin decreased by 21
basis points to 2.94% in 2001 from 3.15% in 2000.

Provision for Losses on Loans. American charges a provision for losses on loans
to earnings to bring the total allowance for loan losses to a level considered
appropriate by management based on historical experience, the volume and type of
lending conducted by American, the status of past due principal and interest
payments, general economic conditions, particularly as such conditions relate to
American's market area, and other factors related to the collectibility of
American's loan portfolio. As a result of such analysis, management determined
that the allowance for loan losses was adequate and elected to record a minimal
provision for losses on loans during the fiscal years ended June 30, 2001 and
2000.

Other Income. Other income totaled $495,000 for the fiscal year ended June 30,
2001, an increase of $141,000, or 39.8%, over the $354,000 recorded in fiscal
2000. The increase resulted from a $108,000 increase in the gain on sale of
investment securities year to year and an increase of $33,000, or 9.6%, in other
operating income. The increase in other operating income was comprised of an
increase in fees on loans and deposits transactions.

General, Administrative and Other Expense. General, administrative and other
expense totaled $2.8 million for the fiscal year ended June 30, 2001, an
increase of $110,000, or 4.1%, over the total recorded in fiscal 2000. The
increase resulted primarily from increases of $36,000, or 25.4%, in occupancy
and equipment expense, $49,000, or 16.4%, in data processing costs and $78,000,
or 16.3%, in other operating expense, which were partially offset by a decrease
of $24,000, or 12.6%, in franchise taxes and a $15,000, or 37.5%, decrease in
federal deposit insurance premiums. The increase in occupancy and equipment
expense resulted primarily from an increase in depreciation expense on capital
additions in fiscal 2001 and 2000 for renovations to the main office and the
completion of a new drive-through location. The increase in data processing was
due primarily to American's overall growth year to year and costs related to
enhanced computer programs for loan underwriting, item-processing and advanced
system upgrades. The increase in other operating expense was due primarily to
expense related to the Savings Bank's investment in a low income housing
project, as well as increased advertising and supplies expense and pro-rata
increases in operating costs connected with the Corporation's overall growth
year to year.

Federal Income Taxes. The provision for federal income taxes totaled $460,000
for the fiscal year ended June 30, 2001, an increase of $34,000, or 8.0%, over
the $426,000 recorded in fiscal 2000. The increase was due primarily to the
effects of an $84,000, or 5.6%, increase in pre-tax earnings. ASB's effective
tax rates were 28.9% and 28.2% for the fiscal years ended June 30, 2001 and
2000, respectively.




                                       9
<PAGE>

                  AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA

The following table sets forth certain information relating to ASB's average
balance sheet and reflects the average yield on interest-earning assets and the
average cost of interest-bearing liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense by the average
monthly balance of interest-earning assets or interest-bearing liabilities,
respectively, for the periods presented. Average balances are derived from
average monthly balances, which include nonaccruing loans in the loan portfolio,
net of the allowance for loan losses.

<TABLE>
<CAPTION>
                                                                     Year ended June 30,
                                             2002                            2001                          2000
                                 Average   Interest              Average   Interest             Average   Interest
                               outstanding  earned/   Yield/   outstanding  earned/   Yield/  outstanding  earned/  Yield/
                                 balance     paid      rate      balance     paid      rate     balance     paid     rate
                                                                    (Dollars in thousands)
<S>                                 <C>       <C>       <C>        <C>        <C>       <C>        <C>       <C>       <C>
Interest-earning assets:
  Loans receivable              $106,024    $7,901      7.45%   $ 98,713   $ 8,169      8.28%   $ 87,363    $7,153     8.19%
  Mortgage-backed
    securities                     6,947       413      5.95       8,338       556      6.67       9,779       601     6.15
  Investment securities and
    other interest-earning
    assets                        25,930     1,229      4.74      25,244     1,537      6.09      24,351     1,503     6.17
                                 -------     -----               -------    ------      ----     -------     -----     ----

   Total interest-earning
     assets                      138,901     9,543      6.87     132,295    10,262      7.76     121,493     9,257     7.62

Non-interest-earning assets        3,728                           3,780                           3,951
                                 -------                         -------                         -------

Total assets                    $142,629                        $136,075                        $125,444
                                 =======                         =======                         =======

Interest-bearing liabilities:
  Deposits                      $120,212     4,931      4.10    $115,126     6,033      5.24    $104,324     5,033     4.82
  Borrowings                       5,039       119      2.36       5,217       346      6.63       6,884       394     5.72
                                 -------     -----      ----     -------    ------      ----     -------     -----     ----

   Total interest-bearing
     liabilities                 125,251     5,050      4.03     120,343     6,379      5.30     111,208     5,427     4.88
                                 -------     -----               -------    ------               -------     -----     ----

Non-interest-bearing
  liabilities                      4,199                           1,933                           1,032
                                 -------                         -------                         -------

   Total liabilities             129,450                         122,276                         112,240

Shareholders' equity              13,179                          13,799                          13,204
                                 -------                         -------                         -------

   Total liabilities and
     shareholders' equity       $142,629                        $136,075                        $125,444
                                 =======                         =======                         =======

Net interest income                         $4,493                         $ 3,883                          $3,830
                                             =====                          ======                           =====

Interest rate spread                                    2.84%                           2.46%                          2.74%
                                                        ====                            ====                           ====

Net interest margin (net
  interest income as a
  percent of average
  interest-earning assets)                              3.23%                           2.94%                          3.15%
                                                        ====                            ====                           ====

Average interest-earning
  assets to average interest-
  bearing liabilities                                 110.90%                         109.93%                        109.25%
                                                      ======                          ======                         ======
</TABLE>





                                       10
<PAGE>


The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected ASB's interest income and expense during the years indicated. For
each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (change
in volume multiplied by prior year rate), (ii) changes in rate (change in rate
multiplied by prior year volume) and (iii) total changes in rate and volume. The
combined effects of changes in both volume and rate, which cannot be separately
identified, have been allocated proportionately to the change due to volume and
the change due to rate.

<TABLE>
<CAPTION>
                                                                Year ended June30,
                                                   2002 vs. 2001                 2001 vs. 2000
                                                 Increase                     Increase
                                                (decrease)                   (decrease)
                                                 due to                        due to
                                            Volume     Rate      Total      Volume     Rate     Total
                                                                 (In thousands)
<S>                                           <C>        <C>       <C>        <C>     <C>        <C>
Interest-earning assets:
   Loans receivable                           $582    $ (850)     $ (268)    $938    $  78     $1,016
   Mortgage-backed securities                  (87)      (56)       (143)    (106)      61        (45)
   Investment securities and interest -
     bearing assets                             40      (348)       (308)      53      (19)        34
                                               ---     -----       -----      ---     ----      -----

       Total interest-earning assets           535    (1,254)       (719)     885      120      1,005
                                               ---     -----       -----      ---     ----      -----

Interest-bearing liabilities:
   Deposits                                    257    (1,359)     (1,102)     544      456      1,000
   Borrowings                                  (11)     (216)       (227)    (140)      92        (48)
                                               ---     -----       -----      ---     ----      -----

       Total interest-bearing liabilities      246    (1,575)     (1,329)     404      548        952
                                               ---     -----       -----      ---     ----      -----

        Increase (decrease) in net
          interest   income                   $289    $   321     $  610     $481    $(428)    $   53
                                               ===     ======      =====      ===     ====      =====
</TABLE>


                         ASSET AND LIABILITY MANAGEMENT

American, like other financial institutions, is subject to interest rate risk to
the extent that its interest-earning assets reprice differently than its
interest-bearing liabilities. As a part of its effort to monitor its interest
rate risk, American reviews the reports of the OTS which set forth the
application of the "net portfolio value" ("NPV") methodology used by the OTS.

Generally, NPV is the discounted present value of the difference between
incoming cash flows on interest-earning and other assets and outgoing cash flows
on interest-bearing liabilities. The methodology attempts to quantify interest
rate risk as the change in the NPV which would result from theoretical changes
in market interest rates.

The following table presents, at June 30, 2002 and 2001, an analysis of the
interest rate risk of American, as measured by changes in NPV for instantaneous
and sustained parallel shifts of 100 basis point movements in market interest
rates.









                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                   At June 30, 2002                     At June 30, 2001
                                            NPV as a % of                      NPV as a % of
 Changes in interest rate   Board limit      PV of Assets        Change         PV of Assets          Change
       (basis points)        % changes          Ratio            in NPV             Ratio             in NPV

<S>                            <C>                <C>               <C>               <C>               <C>
          +300                 (6)%              8.61%            (377)bp             6.96%           (457)bp
          +200                 (6)              10.01             (237)               8.68            (285)
          +100                 (6)              11.35             (103)              10.42            (111)
             -                  -               12.38                -               11.53               -
          -100                  6               12.55               17               12.14              61
          -200                  6                -                   -               12.18              65
          -300                  6                -                   -               12.21              68
</TABLE>


The model reflects that American's NPV is more sensitive to an increase in
interest rates than a decrease in interest rates. This occurs principally
because, as rates rise, the market values of the Savings Bank's investments,
adjustable-rate mortgage loans, fixed-rate loans and mortgage-backed securities
decline due to the rate increases. The values of the Savings Bank's deposits and
borrowings change in approximately the same proportion in rising or falling rate
scenarios.

If interest rates rise from current levels, American's net interest income could
be expected to be negatively affected. Moreover, rising interest rates could
negatively affect American's earnings due to diminished loan demand.

As with any method of measuring interest rate risk, certain shortcomings are
inherent in the method of analysis presented in the foregoing table. For
example, although certain assets and liabilities may have similar maturities or
periods of repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as adjustable-rate loans, have features that
restrict changes in interest rates on a short-term basis and over the life of
the assets. Further, in the event of a change in interest rates, expected rates
of prepayment on loans and early withdrawal from certificates could likely
deviate significantly from those assumed in calculating the table.






















                                       12
<PAGE>


                         LIQUIDITY AND CAPITAL RESOURCES

Liquidity refers to the ability of an institution to generate sufficient cash to
fund current loan demand, meet deposit withdrawals and pay operating expenses.
Liquidity is influenced by financial market conditions, fluctuations in interest
rates, general economic conditions and regulatory requirements. ASB's liquidity,
primarily represented by cash and cash equivalents and investment securities
available for sale, is a result of the operating, investing and financing
activities of American. These activities are summarized below on a consolidated
basis for the years ended June 30, 2002, 2001, and 2000:

<TABLE>
<CAPTION>
                                                                               Year ended June30,
                                                                   2002                2001               2000
                                                                                 (In thousands)
<S>                                                                 <C>                <C>               <C>
Net cash from operating activities                                $1,932              $1,536           $ 1,554
Net cash from investing activities                                   647              (8,250)          (12,065)
Net cash from financing activities                                   476               6,294             8,014
                                                                   -----               -----            ------
Net change in cash and cash equivalents                            3,055                (420)           (2,497)
Cash and cash equivalents at the beginning of the year             4,649               5,069             7,566
                                                                   -----               -----            ------
Cash and cash equivalents at the end of the year                  $7,704              $4,649           $ 5,069
                                                                   =====               =====            ======
</TABLE>

At June 30, 2002, American had outstanding commitments of approximately $499,000
to originate loans. Additionally, American was obligated under unused lines and
letters of credit totaling $11.7 million. In the opinion of management, all loan
commitments had interest rates which equaled or exceeded market interest rates
as of June 30, 2002, and will be funded from existing excess liquidity and
normal cash flow from operations.

American is required by OTS regulations to maintain specified minimum amounts of
capital. At June 30, 2002, American exceeded all applicable minimum capital
requirements. The following table sets forth the amount and percentage level of
American's regulatory capital at June 30, 2002, and the minimum requirement
amounts. Tangible and core capital are reflected as a percentage of adjusted
total assets. Risk-based (or total) capital, which consists of core and
supplementary capital, is reflected as a percentage of risk-weighted assets.
American meets the definition of a "well capitalized" institution.

<TABLE>
<CAPTION>
                                                 June 30, 2002
                                                                                   Excess of
                                                                             regulatory capital
                                Regulatory                Current                over current
                                 capital                requirement               requirement
                              Amount   Percent        Amount   Percent        Amount   Percent
                                                 (Dollars in thousands)
<S>                             <C>       <C>           <C>      <C>           <C>       <C>
Tangible capital             $13,461      9.1%        $2,214    1.5%         $11,247    7.6%

Core capital                 $13,461      9.1%        $5,903    4.0%          $7,558    5.1%

Risk-based capital           $14,316     16.5%        $6,930    8.0%          $7,386    8.5%
</TABLE>








                                       13
<PAGE>



                   EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 "Business
Combinations," which requires that all business combinations initiated after
June 30, 2001 be accounted for using the purchase method. The
pooling-of-interests method of accounting is prohibited except for combinations
initiated before June 30, 2001. The remaining provisions of SFAS No. 141
relating to business combinations accounted for by the purchase method,
including identification of intangible assets, accounting for negative goodwill,
financial statement presentation and disclosure, are effective for combinations
completed after June 30, 2001. Management adopted SFAS No. 141 effective July 1,
2001, as required, without material effect on the Corporation's financial
position or results of operations.

In June 2001, the FASB issued SFAS No. 142 "Goodwill and Intangible Assets,"
which prescribes accounting for all purchased goodwill and intangible assets.
Pursuant to SFAS No. 142, acquired goodwill is not amortized, but is tested for
impairment at the reporting unit level annually and whenever an impairment
indicator arises.

SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.
Management adopted SFAS No. 142 effective July 1, 2002, as required, without
material effect on the Corporation's financial position or results of
operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 carries over the recognition and
measurement provisions in SFAS No. 121. Accordingly, an entity must recognize an
impairment loss if the carrying value of a long-lived asset or asset group (a)
is not recoverable and (b) exceeds its fair value. Similar to SFAS No. 121, SFAS
No. 144 requires an entity to test an asset or asset group for impairment
whenever events or changes in circumstances indicate that its carrying amount
may not be recoverable. SFAS No. 144 differs from SFAS No. 121 in that it
provides guidance on estimating future cash flows to test recoverability. An
entity may use either a probability-weighted approach or best-estimate approach
in developing estimates of cash flows to test recoverability. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. Management
adopted SFAS No. 144 effective July 1, 2002, as required, without material
effect on the Corporation's financial condition or results of operations.
































                                       14
<PAGE>


                         REPORT OF INDEPENDENT CERTIFIED
                             PUBLIC ACCOUNTANTS AND
                        CONSOLIDATED FINANCIAL STATEMENTS

=============================================================================


                                                                     Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                     16


FINANCIAL STATEMENTS

  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                       17

  CONSOLIDATED STATEMENTS OF EARNINGS                                  18

  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                      19

  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                      20

  CONSOLIDATED STATEMENTS OF CASH FLOWS                                21

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                           23



























                                       15
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
ASB Financial Corp.

We have audited the accompanying consolidated statements of financial condition
of ASB Financial Corp. as of June 30, 2002 and 2001, and the related
consolidated statements of earnings, comprehensive income, shareholders' equity
and cash flows for each of the three years in the period ended June 30, 2002.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ASB Financial Corp.
as of June 30, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years in the period ended June 30, 2002, in
conformity with accounting principles generally accepted in the United States of
America.





/s/GRANT THORNTON LLP

Cincinnati, Ohio
August 7, 2002











                                       16
<PAGE>
                               ASB FINANCIAL CORP.

<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                             June 30, 2002 and 2001
                        (In thousands, except share data)

         ASSETS                                                                          2002               2001
<S>                                                                                     <C>                <C>
Cash and due from banks                                                              $  1,428           $    640
Interest-bearing deposits in other financial institutions                               6,276              4,009
                                                                                      -------            -------
         Cash and cash equivalents                                                      7,704              4,649

Certificates of deposit in other financial institutions                                   100                 -
Investment securities available for sale - at market                                   20,866             20,772
Mortgage-backed securities available for sale - at market                               7,091              8,716
Loans receivable - net                                                                109,015            103,308
Office premises and equipment - at depreciated cost                                     1,277              1,394
Federal Home Loan Bank stock - at cost                                                  1,017                788
Accrued interest receivable on loans                                                      216                188
Accrued interest receivable on mortgage-backed securities                                  41                 50
Accrued interest receivable on investments and
  interest-bearing deposits                                                               293                295
Prepaid expenses and other assets                                                         646                788
Prepaid federal income taxes                                                               -                  39
Deferred federal income taxes                                                               6                 -
                                                                                      -------            -------

         Total assets                                                                $148,272           $140,987
                                                                                      =======            =======

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                             $126,872           $120,725
Advances from the Federal Home Loan Bank                                                4,223              4,257
Advances by borrowers for taxes and insurance                                             162                171
Accrued interest payable                                                                   85                129
Other liabilities                                                                       1,307              1,201
Accrued federal income taxes                                                              169                 -
Deferred federal income taxes                                                              -                   1
                                                                                      -------            -------
         Total liabilities                                                            132,818            126,484

Commitments                                                                                -                  -

Shareholders' equity
  Preferred stock, 1,000,000 shares authorized, no par value;
    no shares issued                                                                       -                  -
  Common stock, 4,000,000 shares authorized, no par value; 1,760,681 and
    1,746,924 shares issued at June 30, 2002 and 2001, respectively                        -                  -
  Additional paid-in capital                                                            8,619              8,482
  Retained earnings, restricted                                                         9,152              8,393
  Shares acquired by stock benefit plans                                                 (537)              (781)
  Accumulated comprehensive income, unrealized gains on securities
    designated as available for sale, net of related tax effects                          850                779
  Less 232,819 and 208,145 shares of treasury stock - at cost, at
    June 30, 2002 and 2001, respectively                                               (2,630)            (2,370)
                                                                                      -------            -------
         Total shareholders' equity                                                    15,454             14,503
                                                                                      -------            -------

         Total liabilities and shareholders' equity                                  $148,272           $140,987
                                                                                      =======            =======
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       17

<PAGE>


                               ASB FINANCIAL CORP.

<TABLE>
<CAPTION>
                       CONSOLIDATED STATEMENTS OF EARNINGS

                 For the year ended June 30, 2002, 2001 and 2000
                      (In thousands, except per share data)


                                                                         2002              2001             2000
<S>                                                                      <C>               <C>               <C>
Interest income
  Loans                                                                $7,901           $ 8,169           $7,153
  Mortgage-backed securities                                              413               556              601
  Investment securities                                                 1,221             1,533            1,491
  Interest-bearing deposits and other                                       8                 4               12
                                                                        -----            ------            -----
         Total interest income                                          9,543            10,262            9,257

Interest expense
  Deposits                                                              4,931             6,033            5,033
  Borrowings                                                              119               346              394
                                                                        -----            ------            -----
         Total interest expense                                         5,050             6,379            5,427
                                                                        -----            ------            -----

         Net interest income                                            4,493             3,883            3,830

Provision for losses on loans                                              70                 1                1
                                                                        -----            ------            -----

         Net interest income after provision
           for losses on loans                                          4,423             3,882            3,829

Other income
  Gain on sale of investment securities                                    31               117                9
  Other operating                                                         455               378              345
                                                                        -----            ------            -----
         Total other income                                               486               495              354

General, administrative and other expense
  Employee compensation and benefits                                    1,576             1,508            1,522
  Occupancy and equipment                                                 190               178              142
  Federal deposit insurance premiums                                       22                25               40
  Franchise taxes                                                         111               166              190
  Data processing                                                         395               348              299
  Other operating                                                         783               558              480
                                                                        -----            ------            -----
         Total general, administrative and other expense                3,077             2,783            2,673
                                                                        -----            ------            -----

         Earnings before income taxes and extraordinary item            1,832             1,594            1,510

Federal income taxes
  Current                                                                 595               494              474
  Deferred                                                                (47)              (34)             (48)
                                                                        -----            ------            -----
         Total federal income taxes                                       548               460              426
                                                                        -----            ------            -----

         Earnings before extraordinary item                             1,284             1,134            1,084

Extraordinary item - negative goodwill arising from Waverly
  acquisition - net of tax effects of $118                                229                -                -
                                                                        -----            ------            -----

         NET EARNINGS                                                  $1,513           $ 1,134           $1,084
                                                                        =====            ======            =====

         EARNINGS PER SHARE
           Basic                                                        $1.00              $.75             $.70
                                                                         ====               ===              ===

           Diluted                                                       $.97              $.73             $.70
                                                                          ===               ===              ===
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       18

<PAGE>


                               ASB FINANCIAL CORP.

<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                 For the year ended June 30, 2002, 2001 and 2000
                                 (In thousands)


                                                                              2002           2001           2000
<S>                                                                            <C>           <C>             <C>
Net earnings                                                                $1,513         $1,134         $1,084

Other comprehensive income (loss), net of tax:
  Unrealized holding gains (losses) on securities during the
    period, net of taxes (benefits) of $47, $746 and $(437)
    in 2002, 2001 and 2000, respectively                                        91          1,448           (851)

Reclassification adjustment for realized gains
  included in earnings, net of tax of $11, $40 and $3
  in 2002, 2001 and 2000, respectively                                         (20)           (77)            (6)
                                                                             -----          -----          -----

Comprehensive income                                                        $1,584         $2,505         $  227
                                                                             =====          =====          =====

Accumulated comprehensive income (loss)                                     $  850         $  779         $ (592)
                                                                             =====          =====          =====
</TABLE>




































        The accompanying notes are an integral part of these statements.

                                       19
<PAGE>


                               ASB FINANCIAL CORP.

<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                For the years ended June 30, 2002, 2001 and 2000
                        (In thousands, except share data)


                                                                                    Unrealized gains
                                                                     Shares            (losses) on
                                            Additional              acquired           securities
                                    Common    paid-in  Retained     by stock          designated as      Treasury
                                     stock    capital  earnings   benefit plans    available for sale      stock        Total
<S>                                    <C>      <C>      <C>          <C>                  <C>              <C>         <C>
Balance at July 1, 1999               $ -     $8,306    $8,909      $(1,297)             $  265          $(1,143)      $15,040

Amortization of expense related
  to stock benefit plans                -         87        -           238                  -                -            325
Net earnings for the year ended
  June 30, 2000                         -         -      1,084           -                   -                -          1,084
Cash dividends of $1.41 per share       -         -     (2,123)          -                   -                -         (2,123)
Purchase of treasury shares -
  at cost                               -         -         -            -                   -              (949)         (949)
Issuance of shares under stock
  option plan                           -         61        -            -                   -                -             61
Unrealized losses on securities
  designated as available for sale,
  net of related tax effects            -         -         -            -                 (857)              -           (857)
                                       ---     -----     -----       ------               -----           ------        ------

Balance at June 30, 2000                -      8,454     7,870       (1,059)               (592)          (2,092)       12,581

Amortization of expense related
  to stock benefit plans                -         28        -           278                  -                -            306
Net earnings for the year ended
  June 30, 2001                         -         -      1,134           -                   -                -          1,134
Cash dividends of $.45 per share        -         -       (611)          -                   -                -           (611)
Purchase of treasury shares -
  at cost                               -         -         -            -                   -              (278)         (278)
Unrealized gains on securities
  designated as available for sale,
  net of related tax effects            -         -         -            -                1,371               -          1,371
                                       ---     -----     -----       ------               -----           ------        ------

Balance at June 30, 2001                -      8,482     8,393         (781)                779           (2,370)       14,503

Amortization of expense related
  to stock benefit plans                -         32        -           244                  -                -            276
Net earnings for the year ended
  June 30, 2002                         -         -      1,513           -                   -                -          1,513
Cash dividends of $.49 per share        -         -       (754)          -                   -                -           (754)
Purchase of treasury shares -
  at cost                               -         -         -            -                   -              (260)         (260)
Issuance of shares under stock
  option plan                           -        105        -            -                   -                -            105
Unrealized gains on securities
  designated as available for sale,
  net of related tax effects            -         -         -            -                   71               -             71
                                       ---     -----     -----       ------               -----           ------        ------

Balance at June 30, 2002              $ -     $8,619    $9,152      $  (537)             $  850          $(2,630)      $15,454
                                       ===     =====     =====       ======               =====           ======        ======
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      20
<PAGE>
                              ASB FINANCIAL CORP.

<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 For the year ended June 30, 2002, 2001 and 2000
                                 (In thousands)


                                                                              2002           2001           2000
<S>                                                                           <C>             <C>            <C>
Cash flows from operating activities:
  Net earnings for the year                                                $ 1,513        $ 1,134        $ 1,084
  Adjustments to reconcile net earnings to net cash
  from operating activities:
    Amortization of discounts and premiums on loans,
      investments and mortgage-backed securities - net                          13             35             32
    Amortization of deferred loan origination fees                             (62)           (51)           (47)
    Amortization of expense related to stock benefit plans                     276            306            325
    Depreciation and amortization                                              128            122             86
    Provision for losses on loans                                               70              1              1
    Gain on sale of investment securities                                      (31)          (117)            (9)
    Federal Home Loan Bank stock dividends                                     (44)           (55)           (55)
    Increase (decrease) in cash, net of acquisition of Waverly
    Building and Loan Company, due to changes in:
      Accrued interest receivable on loans                                     (35)          (125)            15
      Accrued interest receivable on mortgage-backed securities                  9              9              7
      Accrued interest receivable on investments and
        interest-bearing deposits                                                6             60            (65)
      Prepaid expenses and other assets                                        142            (20)           172
      Accrued interest payable                                                 (44)           139             (4)
      Other liabilities                                                        (52)           (57)            88
      Federal income taxes
        Current                                                                 90            189            (28)
        Deferred                                                               (47)           (34)           (48)
                                                                            ------         ------         ------
         Net cash provided by operating activities                           1,932          1,536          1,554

Cash flows from investing activities:
  Proceeds from maturity of investment securities                           23,885          7,986            350
  Proceeds from sale of investment securities                                   31            119          1,011
  Purchase of investment securities                                        (23,914)        (7,911)        (2,116)
  Purchase of mortgage-backed securities                                    (3,011)        (1,260)            -
  Principal repayments on mortgage-backed securities                         4,706          1,480          1,310
  Purchase of loans                                                         (2,000)        (2,872)        (1,875)
  Loan principal repayments                                                 34,588         23,005         19,232
  Loan disbursements                                                       (34,533)       (28,647)       (29,965)
  Purchase of office premises and equipment                                    (11)          (150)          (405)
  Redemption of Federal Home Loan Bank stock                                    -              -             100
  Decrease in certificates of deposit in other financial
    institutions - net                                                          -              -             293
  Net cash received through acquisition of Waverly Building
    and Loan Company                                                           906             -              -
                                                                            ------         ------         ------
         Net cash provided by (used in) investing activities                   647         (8,250)       (12,065)
                                                                            ------         ------         ------

         Net cash provided by (used in) operating and investing activities
           (subtotal carried forward)                                        2,579         (6,714)       (10,511)
                                                                            ------         ------         ------
</TABLE>







                                       21
<PAGE>

                               ASB FINANCIAL CORP.

<TABLE>
<CAPTION>
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                 For the year ended June 30, 2002, 2001 and 2000
                                 (In thousands)


                                                                              2002           2001           2000
<S>                                                                           <C>             <C>            <C>

         Net cash provided by (used in) operating and investing activities
           (subtotal brought forward)                                       $2,579        $(6,714)      $(10,511)

Cash flows from financing activities:
  Net increase in deposit accounts                                           1,428         10,718          9,053
  Proceeds from Federal Home Loan Bank advances                              8,300          3,000          9,500
  Repayment of Federal Home Loan Bank advances                              (8,334)        (6,533)        (7,533)
  Advances by borrowers for taxes and insurance                                 (9)            (2)             5
  Proceeds from issuance of shares under stock option plan                     105             -              61
  Purchase of treasury stock                                                  (260)          (278)          (949)
  Dividends paid on common stock                                              (754)          (611)        (2,123)
                                                                             -----         ------        -------
         Net cash provided by financing activities                             476          6,294          8,014
                                                                             -----         ------        -------

Net increase (decrease) in cash and cash equivalents                         3,055           (420)        (2,497)

Cash and cash equivalents at beginning of year                               4,649          5,069          7,566
                                                                             -----         ------        -------

Cash and cash equivalents at end of year                                    $7,704        $ 4,649       $  5,069
                                                                             =====         ======        =======


Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Federal income taxes                                                    $  390        $   435       $    547
                                                                             =====         ======        =======

    Interest on deposits and borrowings                                     $5,094        $ 6,339       $  5,431
                                                                             =====         ======        =======

Supplemental disclosure of noncash investing activities:
  Unrealized gains (losses) on securities designated as available
    for sale, net of related tax effects                                    $   71        $ 1,371       $   (857)
                                                                             =====         ======        =======

  Fair value of assets received in acquisition of the Waverly
    Building and Loan Company                                               $5,646        $    -        $     -
                                                                             =====         ======        =======
</TABLE>












The accompanying notes are an integral part of these statements.

                                       22

<PAGE>
                               ASB FINANCIAL CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          June 30, 2002, 2001 and 2000



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    ASB Financial Corp. (the "Corporation") is a savings and loan holding
    company whose primary activity is holding the stock of its wholly-owned
    subsidiary, American Savings Bank, fsb (the "Savings Bank"). The Savings
    Bank conducts a general banking business in southeastern Ohio which consists
    of attracting deposits from the general public and primarily applying those
    funds to the origination of loans for residential, consumer and
    nonresidential purposes. The Savings Bank's profitability is significantly
    dependent on net interest income, which is the difference between interest
    income generated from interest-earning assets (i.e. loans and investments)
    and the interest expense paid on interest-bearing liabilities (i.e. customer
    deposits and borrowed funds). Net interest income is affected by the
    relative amounts of interest-earning assets and interest-bearing liabilities
    and the interest received or paid on these balances. The level of interest
    rates paid or received by the Savings Bank can be significantly influenced
    by a number of factors, such as governmental monetary policy, that are
    outside of management's control.

    In June 2002, the Savings Bank acquired substantially all of the assets and
    liabilities of The Waverly Building and Loan Company ("Waverly"). The
    acquisition was accounted for using the purchase method of accounting. The
    business combination with Waverly added approximately $5.6 million in assets
    and $4.6 million in liabilities to the Corporation at June 30, 2002.
    Consistent with the purchase method of accounting, Waverly's revenue and
    expense accounts for fiscal 2002 were not included in the Corporation's
    operating results for the fiscal year ended June 30, 2002. Financial and
    pro-forma disclosures pursuant to SFAS No. 141 have not been presented as
    the acquisition was not material to the Corporation.

    The consolidated financial information presented herein has been prepared in
    accordance with accounting principles generally accepted in the United
    States of America ("U. S. GAAP") and general accounting practices within the
    financial services industry. In preparing consolidated financial statements
    in accordance with U. S. GAAP, management is required to make estimates and
    assumptions that affect the reported amounts of assets and liabilities and
    the disclosure of contingent assets and liabilities at the date of the
    financial statements and revenues and expenses during the reporting period.
    Actual results could differ from such estimates.

    The following is a summary of the Corporation's significant accounting
    policies which have been consistently applied in the preparation of the
    accompanying consolidated financial statements.

       Principles of Consolidation

       The consolidated financial statements include the accounts of the
       Corporation, the Savings Bank and A.S.L. Services, Inc., the Savings
       Bank's subsidiary.  All significant intercompany balances and
       transactions have been eliminated.









                                       23
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

       Investment Securities and Mortgage-Backed Securities

       The Corporation accounts for investment and mortgage-backed securities in
       accordance with Statement of Financial Accounting Standards ("SFAS") No.
       115 "Accounting for Certain Investments in Debt and Equity Securities."
       SFAS No. 115 requires that investments in debt and equity securities be
       categorized as held-to-maturity, trading, or available for sale.
       Securities classified as held-to-maturity are carried at cost only if the
       Corporation has the positive intent and ability to hold these securities
       to maturity. Trading securities and securities designated as available
       for sale are carried at fair value with resulting unrealized gains or
       losses recorded to operations or shareholders' equity, respectively.

       At June 30, 2002 and 2001, the Corporation had designated all investment
       and mortgage-backed securities as available for sale.

       Realized gains and losses on sales of securities are recognized using the
       specific identification method.

       Loans Receivable

       Loans receivable are stated at the principal amount outstanding, adjusted
       for deferred loan origination fees and the allowance for loan losses.
       Interest is accrued as earned unless the collectibility of the loan is in
       doubt. Interest on loans that are contractually past due is charged off,
       or an allowance is established based on management's periodic evaluation.
       The allowance is established by a charge to interest income equal to all
       interest previously accrued, and income is subsequently recognized only
       to the extent that cash payments are received until, in management's
       judgment, the borrower's ability to make periodic interest and principal
       payments has returned to normal, in which case the loan is returned to
       accrual status. If the ultimate collectibility of the loan is in doubt,
       in whole or in part, all payments received on nonaccrual loans are
       applied to reduce principal until such doubt is eliminated.

       Loan Origination Fees

       The Savings Bank accounts for loan origination fees in accordance with
       SFAS No. 91 "Accounting for Nonrefundable Fees and Costs Associated with
       Originating or Acquiring Loans and Initial Direct Cost of Leases."
       Pursuant to the provisions of SFAS No. 91, origination fees received from
       loans, net of direct origination costs, are deferred and amortized to
       interest income using the level-yield method, giving effect to actual
       loan prepayments. Additionally, SFAS No. 91 generally limits the
       definition of loan origination costs to the direct costs of originating a
       loan, i.e., principally actual personnel costs. Fees received for loan
       commitments that are expected to be drawn upon, based on the Savings
       Bank's experience with similar commitments, are deferred and amortized
       over the life of the loan using the level-yield method. Fees for other
       loan commitments are deferred and amortized over the loan commitment
       period on a straight-line basis.






                                       24
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

       Allowance for Loan Losses

       It is the Savings Bank's policy to provide valuation allowances for
       estimated losses on loans based on past loss experience, trends in the
       level of delinquent and problem loans, adverse situations that may affect
       the borrower's ability to repay, the estimated value of any underlying
       collateral and current and anticipated economic conditions in the Savings
       Bank's primary lending area. When the collection of a loan becomes
       doubtful or otherwise troubled, the Savings Bank records a loan
       charge-off equal to the difference between the fair value of the property
       securing the loan and the loan's carrying value. Major loans (including
       development projects) and major lending areas are reviewed periodically
       to determine potential problems at an early date. The allowance for loan
       losses is increased by charges to earnings and decreased by charge-offs
       (net of recoveries).

       The Savings Bank accounts for impaired loans in accordance with SFAS No.
       114, "Accounting by Creditors for Impairment of a Loan," which requires
       that impaired loans be measured based upon the present value of expected
       future cash flows discounted at the loan's effective interest rate or, as
       an alternative, at the loan's observable market price or fair value of
       the collateral. The Savings Bank's current procedures for evaluating
       impaired loans result in carrying such loans at the lower of cost or fair
       value.

       A loan is defined under SFAS No. 114 as impaired when, based on current
       information and events, it is probable that a creditor will be unable to
       collect all amounts due according to the contractual terms of the loan
       agreement. In applying the provisions of SFAS No. 114, the Savings Bank
       considers its investment in one- to four-family residential loans and
       consumer installment loans to be homogeneous and therefore excluded from
       separate identification for evaluation of impairment. With respect to the
       Savings Bank's investment in multi-family and nonresidential loans and
       its evaluation of impairment thereof, such loans are collateral dependent
       and, as a result, are carried as a practical expedient at the lower of
       cost or fair value.

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

       The Savings Bank's total impaired loans were as follows at June 30:

                                                            2002         2001
                                                              (In thousands)

       Impaired loans with related allowance                $396         $403
       Impaired loans with no related allowance               -            -
                                                             ---          ---

              Total impaired loans                          $396         $403
                                                             ===          ===





                                       25
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

       Allowance for Loan Losses (continued)

<TABLE>
<CAPTION>
                                                                           2002         2001         2000
                                                                                 (In thousands)
<S>                                                                       <C>            <C>          <C>
       Allowance on impaired loans
         Beginning balance                                                 $ 46         $ 46         $ 46
         Provision                                                           -            -            -
                                                                            ---          ---          ---
         Ending balance                                                    $ 46         $ 46         $ 46
                                                                            ===          ===          ===

       Average balance of impaired loans                                   $446         $452         $461
       Interest income recognized on impaired loans                        $ 30         $ 36         $ 34
</TABLE>

       The allowance for impaired loans is not included in the Savings Bank's
       overall allowance for credit losses.

       Office Premises and Equipment

       Office premises and equipment are carried at cost and include
       expenditures which extend the useful lives of existing assets.
       Maintenance, repairs and minor renewals are expensed as incurred. For
       financial reporting, depreciation and amortization are provided on the
       straight-line and accelerated methods over the useful lives of the
       assets, estimated to be forty years for buildings, ten to forty years for
       building improvements, and five to ten years for furniture and equipment.
       An accelerated method is used for tax reporting purposes.

       Real Estate Acquired Through Foreclosure

       Real estate acquired through foreclosure is carried at the lower of the
       loan's unpaid principal balance (cost) or fair value, less estimated
       selling expenses at the date of acquisition. A real estate loss provision
       is recorded if the property's fair value subsequently declines below the
       amount determined at the recording date. In determining the lower of cost
       or fair value at acquisition, costs relating to development and
       improvement of property are capitalized. Costs relating to holding real
       estate acquired through foreclosure, net of rental income, are charged
       against earnings as incurred.

       Federal Income Taxes

       The Corporation accounts for federal income taxes in accordance with the
       provisions of SFAS No. 109, "Accounting for Income Taxes." Pursuant to
       the provisions of SFAS No. 109, a deferred tax liability or deferred tax
       asset is computed by applying the current statutory tax rates to net
       taxable or deductible differences between the tax basis of an asset or
       liability and its reported amount in the consolidated financial
       statements that will result in taxable or deductible amounts in future
       periods. Deferred tax assets are recorded only to the extent that the
       amount of net deductible temporary differences or carryforward attributes
       may be utilized against current period earnings, carried back against
       prior years earnings, offset against taxable temporary differences
       reversing in future periods, or utilized to the extent of management's








                                       26
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

       Federal Income Taxes (continued)
       --------------------

       estimate of future taxable income. A valuation allowance is provided for
       deferred tax assets to the extent that the value of net deductible
       temporary differences and carryforward attributes exceeds management's
       estimates of taxes payable on future taxable income. Deferred tax
       liabilities are provided on the total amount of net temporary differences
       taxable in the future.

       The Corporation's principal temporary differences between pretax
       financial income and taxable income result from different methods of
       accounting for deferred loan origination fees and costs, Federal Home
       Loan Bank stock dividends, the general loan loss allowance, deferred
       compensation, and percentage of earnings bad debt deductions. Additional
       temporary differences result from depreciation computed using accelerated
       methods for tax purposes.

       Salary Continuation Agreement

       The Savings Bank has entered into salary continuation agreements with
       certain current and former key members of management. These agreements
       provide for payments of up to fifteen years of compensation under certain
       circumstances. Recognition of compensation expense related to these
       salary continuation agreements totaled $24,000, $24,000 and $26,000 for
       the fiscal years ended June 30, 2002, 2001 and 2000, respectively.

       Benefit Plans

       The Corporation has an Employee Stock Ownership Plan ("ESOP") which
       provides retirement benefits for substantially all employees who have
       completed one year of service and have attained the age of 21. The
       Corporation accounts for the ESOP in accordance with Statement of
       Position ("SOP") 93-6, "Employers' Accounting for Employee Stock
       Ownership Plans." SOP 93-6 requires that compensation expense recorded by
       employers equal the fair value of ESOP shares allocated to participants
       during a given fiscal year. Expense related to the ESOP totaled
       approximately $190,000, $162,000 and $270,000 for the fiscal years ended
       June 30, 2002, 2001 and 2000, respectively.

       The Corporation also has a Management Recognition Plan ("MRP") which
       provides for awards of up to 68,558 shares to members of the board of
       directors and management. During fiscal 1996, the MRP purchased 68,558
       shares of the Corporation's common stock in the open market. Common
       shares awarded under the MRP vest ratably over a five year period,
       commencing with the date of the award. Expense recognized under the MRP
       totaled approximately $100,000, $93,000 and $132,000 for the fiscal years
       ended June 30, 2002, 2001 and 2000, respectively. As of June 30, 2002,
       all shares under the Corporation's MRP have been awarded. Expense related
       to this plan is expected to be approximately $75,000 for each of the next
       four fiscal years.










                                       27
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

       Earnings Per Share

       Basic earnings per share for the fiscal years ended June 30, 2002, 2001
       and 2000 is based upon the weighted-average shares outstanding during the
       year, less 21,979, 34,918 and 49,633 unallocated ESOP shares,
       respectively. Diluted earnings per share is computed taking into
       consideration common shares outstanding and dilutive potential common
       shares to be issued under the Corporation's stock option plan. The
       computations were as follows:

<TABLE>
<CAPTION>
                                                                     2002             2001              2000
<S>                                                                  <C>               <C>              <C>
       Weighted-average common shares
         outstanding (basic)                                      1,512,553         1,515,886        1,548,144
       Dilutive effect of  assumed exercise
         of stock options                                            53,177            41,191               -
                                                                  ---------         ---------        ---------
       Weighted-average common shares
         outstanding (diluted)                                    1,565,730         1,557,077        1,548,144
                                                                  =========         =========        =========
</TABLE>

       Options to purchase 164,557 shares of common stock with a
       weighted-average exercise price of $10.08 were outstanding at June 30,
       2000, but were excluded from the computation of common stock equivalents
       because their exercise price was higher than the average market price of
       the common stock.

       Fair Value of Financial Instruments

       SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
       requires disclosure of the fair value of financial instruments, both
       assets and liabilities, whether or not recognized in the consolidated
       statement of financial condition, for which it is practicable to estimate
       that value. For financial instruments where quoted market prices are not
       available, fair values are based on estimates using present value and
       other valuation methods.

       The methods used are greatly affected by the assumptions applied,
       including the discount rate and estimates of future cash flows.
       Therefore, the fair values presented may not represent amounts that could
       be realized in an exchange for certain financial instruments.

       The following methods and assumptions were used by the Corporation in
       estimating its fair value disclosures for financial instruments at June
       30, 2002 and 2001:

                  Cash and cash equivalents: The financial statement carrying
                  amounts for cash and cash equivalents are deemed to
                  approximate fair value.

                  Certificates of deposit in other financial institutions: The
                  financial statement carrying amounts for certificates of
                  deposit in other financial institutions are deemed to
                  approximate fair value.

                  Investment and mortgage-backed securities: For investment and
                  mortgage-backed securities, fair value is deemed to equal the
                  quoted market price.





                                       28
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    Fair Value of Financial Instruments (continued)

                  Loans receivable: The loan portfolio has been segregated into
                  categories with similar characteristics, such as one- to
                  four-family residential, multi-family residential and
                  nonresidential real estate. These loan categories were further
                  delineated into fixed-rate and adjustable-rate loans. The fair
                  values for the resultant loan categories were computed via
                  discounted cash flow analysis, using current interest rates
                  offered for loans with similar terms to borrowers of similar
                  credit quality. For loans on deposit accounts and consumer and
                  other loans, fair values were deemed to equal the historic
                  carrying values. The historical carrying amount of accrued
                  interest on loans is deemed to approximate fair value.

                  Federal Home Loan Bank stock: The carrying amount presented in
                  the consolidated statements of financial condition is deemed
                  to approximate fair value.

                  Deposits: The fair values of NOW accounts, passbook accounts,
                  money market demand accounts and advances by borrowers are
                  deemed to approximate the amount payable on demand. Fair
                  values for fixed-rate certificates of deposit have been
                  estimated using a discounted cash flow calculation using the
                  interest rates currently offered for deposits of similar
                  remaining maturities.

                  Advances from the Federal Home Loan Bank: The fair value of
                  these advances are estimated using the rates currently offered
                  for similar advances with similar remaining maturities.

                  Commitments to extend credit: For fixed-rate and
                  adjustable-rate loan commitments, the fair value estimate
                  considers the difference between current levels of interest
                  rates and committed rates. At June 30, 2002 and 2001, the
                  difference between the fair value and notional amount of loan
                  commitments was not material.

















                                       29
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

       Fair Value of Financial Instruments (continued)

       Based on the foregoing methods and assumptions, the carrying value and
       fair value of the Corporation's financial instruments at June 30 were as
       follows:

<TABLE>
<CAPTION>
                                                                 2002                                2001
                                                      Carrying         Fair              Carrying         Fair
                                                        value          value               value          value
                                                                           (In thousands)
<S>                                                      <C>            <C>                 <C>           <C>
       Financial assets
         Cash and cash equivalents and
           certificates of deposit                    $  7,804       $  7,804            $  4,649       $  4,649
         Investment securities                          20,866         20,866              20,772         20,772
         Mortgage-backed securities                      7,091          7,091               8,716          8,716
         Loans receivable                              109,015        107,842             103,308        105,299
         Federal Home Loan Bank stock                    1,017          1,017                 788            788
                                                       -------        -------             -------        -------

                                                      $145,793       $144,620            $138,233       $140,224
                                                       =======        =======             =======        =======

       Financial liabilities
         Deposits                                     $126,872       $125,920            $120,725       $120,362
         Federal Home Loan Bank advances                 4,223          4,172               4,257          4,245
         Escrow deposits                                   162            162                 171            171
                                                       -------        -------             -------        -------

                                                      $131,257       $130,254            $125,153       $124,778
                                                       =======        =======             =======        =======
</TABLE>

       Cash and Cash Equivalents

       For purposes of reporting cash flows, cash and cash equivalents include
       cash and due from banks and interest-bearing deposits due from other
       financial institutions with original maturities of less than ninety days.

       Advertising

       Advertising costs are expensed when incurred. The Corporation's
       advertising expense totaled $48,000, $49,000 and $46,000 for the fiscal
       years ended June 30, 2002, 2001 and 2000, respectively.

       Reclassifications

       Certain prior year amounts have been reclassified to conform to the 2002
       consolidated financial statement presentation.








                                       30
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES

    The amortized cost, gross unrealized gains, gross unrealized losses and
    estimated fair values of investment securities at June 30, 2002 and 2001 are
    summarized as follows:

<TABLE>
<CAPTION>
                                                                                 2002
                                                                       Gross              Gross       Estimated
                                                    Amortized       unrealized         unrealized       fair
                                                      cost             gains             losses         value
                                                                           (In thousands)
<S>                                                    <C>             <C>                <C>            <C>
    Available for sale:
      U.S. Government agency obligations             $19,402          $  174              $ -          $19,576
      Municipal obligations                               40              -                 -               40
      FHLMC stock                                         15             933                -              948
      Corporate equity securities                        263              62                23             302
                                                      ------           -----               ---          ------

                                                     $19,720          $1,169              $ 23         $20,866
                                                      ======           =====               ===          ======

                                                                                 2001
                                                                       Gross              Gross       Estimated
                                                    Amortized       unrealized         unrealized       fair
                                                      cost             gains             losses         value
                                                                           (In thousands)
    Available for sale:
      U.S. Government agency obligations             $19,359          $   89              $ 41         $19,407
      FHLMC stock                                         16           1,073                -            1,089
      Corporate equity securities                        283              14                21             276
                                                      ------           -----               ---          ------

                                                     $19,658          $1,176              $ 62         $20,772
                                                      ======           =====               ===          ======
</TABLE>

    The amortized cost and estimated fair value of U.S. Government agency
    obligations by contractual term to maturity at June 30 are shown below:

<TABLE>
<CAPTION>
                                                                  2002                           2001
                                                                      Estimated                        Estimated
                                                   Amortized            fair          Amortized          fair
                                                     cost               value           cost             value
                                                                            (In thousands)
<S>                                                   <C>               <C>               <C>             <C>
    Due in three years or less                       $   250          $   251           $    -         $    -
    Due after three years through
      five years                                       9,858            9,908             2,000          2,002
    Due after five years                               9,334            9,457            17,359         17,405
                                                      ------           ------            ------         ------

                                                     $19,442          $19,616           $19,359        $19,407
                                                      ======           ======            ======         ======
</TABLE>

    At June 30, 2002, the Corporation had pledged investment securities totaling
    $7.1 million to secure public and other deposits. At June 30, 2001, the
    Corporation had pledged $5.0 million of investment securities to secure
    public deposits.



                                       31
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

    The amortized cost, gross unrealized gains, gross unrealized losses and
    estimated fair values of mortgage-backed securities at June 30, 2002 and
    2001 are summarized as follows:
<TABLE>
<CAPTION>
                                                                                    2002
                                                                              Gross          Gross     Estimated
                                                          Amortized        unrealized     unrealized     fair
                                                            cost              gains         losses       value
    Available for sale:                                                        (In thousands)
<S>                                                          <C>              <C>             <C>         <C>
      Federal Home Loan Mortgage
        Corporation participation certificates              $1,441            $ 35           $ -        $1,476
      Government National Mortgage
        Association participation certificates               2,355              97             -         2,452
      Federal National Mortgage Association
        participation certificates                           2,373              15              3        2,385
      Collateralized mortgage obligations                      780              -               2          778
                                                             -----             ---            ---        -----

         Total mortgage-backed securities                   $6,949            $147           $  5       $7,091
                                                             =====             ===            ===        =====
</TABLE>

<TABLE>
<CAPTION>
                                                                                    2001
                                                                              Gross          Gross     Estimated
                                                          Amortized        unrealized     unrealized     fair
                                                            cost              gains         losses       value
    Available for sale:                                                        (In thousands)
<S>                                                           <C>              <C>            <C>         <C>
      Federal Home Loan Mortgage
        Corporation participation certificates              $  772            $ 22           $ -        $  794
      Government National Mortgage
        Association participation certificates               3,207              42             13        3,236
      Federal National Mortgage Association
        participation certificates                             475               9             -           484
      Collateralized mortgage obligations                    4,196              18             12        4,202
                                                             -----             ---            ---        -----

         Total mortgage-backed securities                   $8,650            $ 91           $ 25       $8,716
                                                             =====             ===            ===        =====
</TABLE>





















                                       32
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE B - INVESTMENTS AND MORTGAGE-BACKED SECURITIES (continued)

    The amortized cost of mortgage-backed securities, by contractual terms to
    maturity, are shown below. Expected maturities will differ from contractual
    maturities because borrowers may generally prepay obligations without
    prepayment penalties.
<TABLE>
<CAPTION>
                                                                                   June 30,
                                                                          2002                2001
                                                                                (In thousands)
<S>                                                                       <C>                 <C>
    Due within three years                                              $   36              $   23
    Due in three to five years                                              25                  80
    Due in five to ten years                                             1,266                 324
    Due in ten to twenty years                                             870               1,202
    Due after twenty years                                               4,752               7,021
                                                                         -----               -----

                                                                        $6,949              $8,650
                                                                         =====               =====
</TABLE>

    Proceeds from sales of investment and mortgage-backed securities amounted to
    $31,000, $119,000 and $1.0 million during the years ended June 30, 2002,
    2001 and 2000, respectively, and resulted in gross realized gains totaling
    $31,000, $117,000 and $9,000, for those respective periods.


NOTE C - LOANS RECEIVABLE

    The composition of the loan portfolio at June 30 was as follows:
<TABLE>
<CAPTION>
                                                                         2002                2001
                                                                               (In thousands)
<S>                                                                     <C>                 <C>
    Residential real estate
      One- to four- family                                           $ 73,300            $ 71,817
      Multi-family                                                      4,717               3,452
      Construction                                                      1,342               1,649
    Nonresidential real estate and land                                12,436              11,684
    Consumer and other                                                 19,617              17,688
                                                                      -------             -------
                                                                      111,412             106,290
    Less:
      Undisbursed portion of loans in process                           1,365               2,065
      Deferred loan origination fees                                      177                 204
      Allowance for loan losses                                           855                 713
                                                                      -------             -------

                                                                     $109,015            $103,308
                                                                      =======             =======
</TABLE>









                                       33
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE C - LOANS RECEIVABLE (continued)

    The Savings Bank's lending efforts have historically focused on one- to
    four-family and multi-family residential real estate loans, which comprised
    approximately $78.0 million, or 72%, of the total loan portfolio at June 30,
    2002, and $74.9 million, or 72%, of the total loan portfolio at June 30,
    2001. Generally, such loans have been underwritten on the basis of no more
    than an 80% loan-to-value ratio, which has historically provided the Savings
    Bank with adequate collateral coverage in the event of default.
    Nevertheless, the Savings Bank, as with any lending institution, is subject
    to the risk that real estate values could deteriorate in its primary lending
    area of southeastern Ohio, thereby impairing collateral values. However,
    management believed that residential real estate values in the Savings
    Bank's primary lending area are presently stable.

    In the normal course of business, the Savings Bank has made loans to some of
    its directors, officers and employees. In the opinion of management, such
    loans are consistent with sound lending practices and are within applicable
    regulatory lending limitations. The aggregate dollar amount of loans
    outstanding to directors and officers totaled approximately $810,000 and
    $663,000 at June 30, 2002 and 2001, respectively.


NOTE D - ALLOWANCE FOR LOAN LOSSES

    The activity in the allowance for loan losses is summarized as follows for
the years ended June 30:
<TABLE>
<CAPTION>

                                                                 2002           2001           2000
                                                                          (In thousands)
<S>                                                              <C>            <C>             <C>
    Balance at beginning of year                                 $713           $723           $733
    Allowance resulting from acquisition of
      Waverly Building and Loan Company                           160             -              -
    Provision for losses on loans                                  70              1              1
    Charge-offs of loans                                          (88)           (11)           (11)
                                                                  ---            ---            ---

    Balance at end of year                                       $855           $713           $723
                                                                  ===            ===            ===
</TABLE>

    As of June 30, 2002, the Savings Bank's allowance for loan losses was solely
    general in nature, and is includible as a component of regulatory risk-based
    capital, subject to certain percentage limitations.

    Nonperforming loans totaled approximately $1.2 million, $618,000 and
    $281,000 at June 30, 2002, 2001 and 2000, respectively.

    During the years ended June 30, 2002, 2001 and 2000, interest income of
    approximately $44,000, $26,000 and $11,000, respectively, would have been
    recognized had such nonperforming and nonaccrual loans been performing in
    accordance with contractual terms.











                                       34
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE E - OFFICE PREMISES AND EQUIPMENT

    Office premises and equipment at June 30 were comprised of the following:

<TABLE>
<CAPTION>
                                                                        2002                2001
                                                                              (In thousands)
<S>                                                                      <C>                <C>
    Land and improvements                                             $  389              $  389
    Office buildings and improvements                                  1,622               1,622
    Furniture, fixtures and equipment                                    767                 756
                                                                       -----               -----
                                                                       2,778               2,767
      Less accumulated depreciation and
        amortization                                                   1,501               1,373
                                                                       -----               -----

                                                                      $1,277              $1,394
                                                                       =====               =====
</TABLE>































                                       35
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE F - DEPOSITS

Deposits consist of the following major classifications at June 30:
<TABLE>
<CAPTION>
Deposit type and weighted-
average interest rate                                                               2002                  2001
                                                                                           (In thousands)
<S>                                                                                <C>                    <C>
NOW accounts
  2002 - .92%                                                                   $  8,297
  2001 - 1.82%                                                                                        $  8,429
Passbook
  2002 - 1.76%                                                                    10,919
  2001 - 2.94%                                                                                           8,004
Money market deposit accounts
  2002 - 2.15%                                                                    21,920
  2001 - 3.33%                                                                                          18,292
                                                                                 -------               -------
Total demand, transaction and
  passbook deposits                                                               41,136                34,725

Certificates of deposit
  Original maturities of:
    Less than 12 months
      2002 - 2.59%                                                                 6,634
      2001 - 5.05%                                                                                       7,739
    12 months to 24 months
      2002 - 4.40%                                                                48,387
      2001 - 6.15%                                                                                      47,621
    30 months to 36 months
      2002 - 4.42%                                                                 4,462
      2001 - 5.51%                                                                                       5,621
    More than 36 months
      2002 - 4.56%                                                                 1,979
      2001 - 5.92%                                                                                         526
  Individual retirement accounts
    2002 - 4.35%                                                                  15,856
    2001 - 6.22%                                                                                        16,030
  Jumbo accounts
    2002 - 3.61%                                                                   8,418
    2001 - 5.16%                                                                                         8,463
                                                                                 -------               -------
Total certificates of deposit                                                     85,736                86,000
                                                                                 -------               -------

Total deposit accounts                                                          $126,872              $120,725
                                                                                 =======               =======
</TABLE>

At June 30, 2002 and 2001, the Corporation had certificate of deposit accounts
with balances greater than $100,000 totaling $15.3 million and $14.1 million,
respectively.





                                       36
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE F - DEPOSITS (continued)

    Interest expense on deposits for the year ended June 30 is summarized as
follows:
<TABLE>
<CAPTION>
                                                             2002           2001           2000
                                                                      (In thousands)
<S>                                                          <C>            <C>            <C>
    Passbook                                               $  260         $  226         $  230
    NOW and money market deposit
      accounts                                                567            800            611
    Certificates of deposit                                 4,104          5,007          4,192
                                                            -----          -----          -----

                                                           $4,931         $6,033         $5,033
                                                            =====          =====          =====
</TABLE>

    Maturities of outstanding certificates of deposit at June 30 are summarized
    as follows:

<TABLE>
<CAPTION>
                                                               2002           2001
                                                                  (In thousands)
<S>                                                            <C>            <C>
    Less than one year                                      $59,243        $59,377
    One to three years                                       23,857         26,221
    Over three years                                          2,636            402
                                                             ------         ------

                                                            $85,736        $86,000
                                                             ======         ======
</TABLE>

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

    Advances from the Federal Home Loan Bank, collateralized at June 30, 2002 by
    pledges of certain residential mortgage loans totaling $5.3 million and the
    Savings Bank's investment in Federal Home Loan Bank stock, are summarized as
    follows:

<TABLE>
<CAPTION>
                                           Maturing
                                          year ending                                          June 30,
    Interest rate                          June 30,                                   2002                2001
                                                                                        (Dollars in thousands)
<S>                                         <C>                                       <C>                 <C>
    1.89%                                   2004                                    $1,000              $1,000
    1.87% - 3.16%                           2008                                     2,223               2,257
    1.89%                                   2009                                     1,000               1,000
                                                                                     -----               -----

                                                                                    $4,223              $4,257
                                                                                     =====               =====

           Weighted-average interest rate                                             1.95%               3.78%
                                                                                      ====                ====
</TABLE>








                                       37
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE H - FEDERAL INCOME TAXES

    Federal income taxes differ from the amounts computed at the statutory
    corporate tax rate for the years ended June 30 as follows:
<TABLE>
<CAPTION>

                                                                            2002           2001           2000
                                                                                     (In thousands)
<S>                                                                         <C>            <C>             <C>
    Federal income taxes computed at
      statutory rate                                                        $623           $542           $513
    Increase (decrease) in taxes resulting from:
      Low income housing investment tax credits                              (78)           (78)           (79)
      Nontaxable interest income                                              (3)            (3)            (3)
      Other                                                                    6             (1)            (5)
                                                                             ---            ---            ---
    Federal income tax provision per consolidated
      financial statements                                                  $548           $460           $426
                                                                             ===            ===            ===
</TABLE>

    The composition of the Corporation's net deferred tax asset (liability) at
    June 30 was as follows:

<TABLE>
<CAPTION>
                                                                                           2002           2001
                                                                                               (In thousands)
<S>                                                                                        <C>           <C>
     Taxes (payable) refundable on temporary
     differences at estimated corporate tax rate:
       Deferred tax assets:
         General loan loss allowance                                                       $291           $242
         Deferred compensation                                                              527            525
         Stock benefit plans                                                                 68             20
         Book/tax depreciation                                                               16             25
                                                                                            ---            ---
           Total deferred tax assets                                                        902            812

       Deferred tax liabilities:
         Percentage of earnings bad debt deduction                                          (75)          (113)
         Deferred loan origination costs                                                   (140)          (116)
         Federal Home Loan Bank stock dividends                                            (243)          (183)
         Unrealized gain on securities designated as
           available for sale                                                              (438)          (401)
                                                                                            ---            ---
           Total deferred tax liabilities                                                  (896)          (813)
                                                                                            ---            ---

           Net deferred tax asset (liability)                                              $  6           $ (1)
                                                                                            ===            ===
</TABLE>

    Prior to fiscal 1997, the Savings Bank was allowed a special bad debt
    deduction, generally limited to 8% of otherwise taxable income, and subject
    to certain limitations based on aggregate loans and deposit account balances
    at the end of the year. If the amounts that qualified as deductions for
    federal income taxes are later used for purposes other than bad debt losses,
    including distributions in liquidation, such distributions will be subject
    to federal income taxes at the then current corporate income tax rate.
    Retained earnings at June 30, 2002 includes approximately $2.2 million for
    which federal income taxes have not been provided. The amount of
    unrecognized deferred tax liability relating to the cumulative bad debt
    deduction was approximately $660,000 at June 30, 2002. The Savings Bank is
    required to recapture as taxable income approximately $780,000 of its tax





                                       38
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE H - FEDERAL INCOME TAXES (continued)

    bad debt reserve, which represents the post-1987 additions to the reserve,
    and will be unable to utilize the percentage of earnings method to compute
    its bad debt deduction in the future. The Savings Bank has provided deferred
    taxes for this amount and will continue to amortize the recapture of the
    bad debt reserve in taxable income over a six year period, which commenced
    in fiscal 1998.


NOTE I - LOAN COMMITMENTS

    The Savings Bank is a party to financial instruments with off-balance-sheet
    risk in the normal course of business to meet the financing needs of its
    customers, including commitments to extend credit. Such commitments involve,
    to varying degrees, elements of credit and interest-rate risk in excess of
    the amount recognized in the consolidated statement of financial condition.
    The contract or notional amounts of the commitments reflect the extent of
    the Savings Bank's involvement in such financial instruments.

    The Savings Bank's exposure to credit loss in the event of nonperformance by
    the other party to the financial instrument for commitments to extend credit
    is represented by the contractual notional amount of those instruments. The
    Savings Bank uses the same credit policies in making commitments and
    conditional obligations as those utilized for on-balance-sheet instruments.

    At June 30, 2002, the Savings Bank had outstanding commitments to originate
    loans totaling approximately $499,000. In addition, the Savings Bank had
    unused lines of credit for home equity loans and commercial loans totaling
    $5.1 million and $6.3 million, respectively. Further, the Savings Bank had
    outstanding commercial letters of credit totaling $268,000. In the opinion
    of management, all loan commitments equaled or exceeded prevalent market
    interest rates as of June 30, 2002, and will be funded from normal cash flow
    from operations.


NOTE J - REGULATORY CAPITAL

    The Savings Bank is subject to minimum regulatory capital standards
    promulgated by the Office of Thrift Supervision (the "OTS"). Failure to meet
    minimum capital requirements can initiate certain mandatory -- and possibly
    additional discretionary -- actions by regulators that, if undertaken, could
    have a direct material effect on the consolidated financial statements.
    Under capital adequacy guidelines and the regulatory framework for prompt
    corrective action, the Savings Bank must meet specific capital guidelines
    that involve quantitative measures of the Savings Bank's assets,
    liabilities, and certain off-balance-sheet items as calculated under
    regulatory accounting practices. The Savings Bank's capital amounts and
    classification are also subject to qualitative judgments by the regulators
    about components, risk weightings, and other factors.














                                       39
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE J - REGULATORY CAPITAL (continued)

    The minimum capital standards of the OTS generally require the maintenance
    of regulatory capital sufficient to meet each of three tests, described
    below as the tangible capital requirement, the core capital requirement and
    the risk-based capital requirement. The tangible capital requirement
    provides for minimum tangible capital (defined as shareholders' equity less
    all intangible assets) equal to 1.5% of adjusted total assets. The core
    capital requirement provides for minimum core capital (tangible capital plus
    certain forms of supervisory goodwill and other qualifying intangible
    assets) generally equal to 4.0% of adjusted total assets, except for those
    associations with the highest examination rating and acceptable levels of
    risk. The risk-based capital requirement provides for the maintenance of
    core capital plus general loss allowances equal to 8.0% of risk-weighted
    assets. In computing risk-weighted assets, the Savings Bank multiplies the
    value of each asset on its statement of financial condition by a defined
    risk-weighting factor, e.g., one- to four-family residential loans carry a
    risk-weighting factor of 50%.

    During fiscal 2002, the Savings Bank was notified by the OTS that it was
    categorized as "well-capitalized" under the regulatory framework for prompt
    corrective action. To be categorized as "well-capitalized" the Savings Bank
    must maintain minimum capital ratios as set forth in the following tables.

    As of June 30, 2002 and 2001, management believes that the Savings Bank met
    all capital adequacy requirements to which it was subject.
<TABLE>
<CAPTION>
                                                                As of June 30, 2002
                                                                                                 To be "well-
                                                                                              capitalized" under
                                                                     For capital               prompt corrective
                                             Actual                adequacy purposes          action provisions
                                         Amount      Ratio         Amount     Ratio            Amount      Ratio
                                                               (Dollars in thousands)
<S>                                       <C>        <C>            <C>        <C>              <C>         <C>
    Tangible capital                    $13,461      9.1%        =>$2,214    =>1.5%          =>$7,379     => 5.0%

    Core capital                        $13,461      9.1%        =>$5,903    =>4.0%          =>$8,854     => 6.0%

    Risk-based capital                  $14,316     16.5%        =>$6,930    =>8.0%          =>$8,662     =>10.0%
</TABLE>

<TABLE>
<CAPTION>
                                                                As of June 30, 2001
                                                                                                 To be "well-
                                                                                              capitalized" under
                                                                     For capital               prompt corrective
                                             Actual                adequacy purposes          action provisions
                                         Amount      Ratio         Amount     Ratio            Amount      Ratio
                                                               (Dollars in thousands)
<S>                                       <C>         <C>           <C>        <C>              <C>          <C>
    Tangible capital                    $11,728      8.4%        =>$2,098    =>1.5%          =>$6,994     => 5.0%

    Core capital                        $11,728      8.4%        =>$5,595    =>4.0%          =>$8,393     => 6.0%

    Risk-based capital                  $12,441     15.9%        =>$6,248    =>8.0%          =>$7,810     =>10.0%
</TABLE>







                                       40
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE J - REGULATORY CAPITAL (continued)

    The Savings Bank's management believes that, under the current regulatory
    capital regulations, the Savings Bank will continue to meet its minimum
    capital requirements in the foreseeable future. However, events beyond the
    control of the Savings Bank, such as increased interest rates or a downturn
    in the economy in the Savings Bank's market area, could adversely affect
    future earnings and, consequently, the ability to meet future minimum
    regulatory capital requirements.


NOTE K - STOCK OPTION PLAN

    During fiscal 1996 the Board of Directors adopted the ASB Financial Corp.
    Stock Option and Incentive Plan (the "Plan") that provided for the issuance
    of 225,423 shares, as adjusted, of authorized but unissued shares of common
    stock at fair value at the date of grant. In fiscal 1996, the Corporation
    granted 197,521 options which have an adjusted exercise price of $7.64. The
    number of options granted and the exercise price have been adjusted to give
    effect to the return of capital and special dividend distributions paid by
    the Corporation. The Plan provides that one-fifth of the options granted
    become exercisable on each of the first five anniversaries of the date of
    grant.

    The Corporation accounts for the Plan in accordance with SFAS No. 123,
    "Accounting for Stock-Based Compensation," which contains a fair value-based
    method for valuing stock-based compensation that entities may use, which
    measures compensation cost at the grant date based on the fair value of the
    award. Compensation is then recognized over the service period, which is
    usually the vesting period. Alternatively, SFAS No. 123 permits entities to
    continue to account for stock options and similar equity instruments under
    Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
    Issued to Employees." Entities that continue to account for stock options
    using APB Opinion No. 25 are required to make pro forma disclosures of net
    earnings and earnings per share, as if the fair value-based method of
    accounting defined in SFAS No. 123 had been applied.

    The Corporation applies APB Opinion No. 25 and related Interpretations in
    accounting for the Plan. Accordingly, no compensation cost has been
    recognized for the Plan. Had compensation cost for the Corporation's stock
    option plan been determined based on the fair value at the grant dates for
    awards under the Plan consistent with the accounting method utilized in SFAS
    No. 123, the Corporation's net earnings and earnings per share would have
    been reported as the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                  2002              2001           2000
                                                                  (In thousands, except per share data)
<S>                                  <C>                          <C>               <C>            <C>
    Net earnings                   As reported                  $1,513            $1,134         $1,084
                                                                 =====             =====          =====

                                     Pro-forma                  $1,511            $1,111         $1,032
                                                                 =====             =====          =====

    Earnings per share
      Basic                        As reported                   $1.00              $.75           $.70
                                                                  ====               ===            ===

                                     Pro-forma                   $1.00              $.73           $.67
                                                                  ====               ===            ===

      Diluted                      As reported                    $.97              $.73           $.70
                                                                   ===               ===            ===

                                     Pro-forma                    $.97              $.71           $.67
                                                                   ===               ===            ===
</TABLE>




                                       41
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE K - STOCK OPTION PLAN (continued)

    The fair value of each option grant is estimated on the date of grant using
    the modified Black-Scholes options-pricing model with the following
    assumptions used for grants during fiscal 2001 and 1996: dividend yield of
    4.9% and 2.2%, respectively; expected volatility of 20.0% for both years; a
    risk-free interest rate of 5.0% and 5.5%, respectively; and an expected life
    of ten years for all grants.

    A summary of the status of the Corporation's Plan as of June 30, 2002, 2001
    and 2000, and changes during the periods ending on those dates is presented
    below:

<TABLE>
<CAPTION>
                                                      2002                    2001                   2000
                                                         Weighted-                 Weighted-             Weighted-
                                                          average                   average               average
                                                         exercise                  exercise              exercise
                                               Shares      price       Shares        price     Shares      price
<S>                                             <C>         <C>         <C>          <C>         <C>        <C>
    Outstanding at beginning of year          226,672     $7.70       164,557       $10.08    170,627      $10.08
    Adjustment for special dividend
      distributions                                -          -        52,115        (2.44)        -            -
    Granted                                        -          -        10,000         8.75         -            -
    Exercised                                 (13,757)     7.64            -            -      (6,070)      10.08
    Forfeited                                      -          -            -            -          -            -
                                              -------      ----       -------        -----    -------       -----

    Outstanding at end of year                212,915     $7.69       226,672       $ 7.70    164,557      $10.08
                                              =======      ====       =======        =====    =======       =====

    Options exercisable at year-end           204,915     $7.65       216,672       $ 7.64    125,052      $10.08
                                              =======      ====       =======        =====    =======       =====

    Weighted-average fair value of
      options granted during the year                     $   -                     $ 1.34                 $    -
                                                           =====                     =====                  =====
</TABLE>

    The following information applies to options outstanding at June 30, 2002:

    Number outstanding                                                 212,915
    Range of exercise prices                                     $7.64 - $8.75
    Weighted-average exercise price                                      $7.69
    Weighted-average remaining contractual life                      3.9 years














                                       42
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE L - CONDENSED FINANCIAL STATEMENTS OF ASB FINANCIAL CORP.

    The following condensed financial statements summarize the financial
    position of the Corporation as of June 30, 2002 and 2001, and the results of
    its operations and its cash flows for the fiscal years ended June 30, 2002,
    2001 and 2000.

                               ASB FINANCIAL CORP.
<TABLE>
<CAPTION>
                        STATEMENTS OF FINANCIAL CONDITION
                             June 30, 2002 and 2001
                                 (In thousands)
     ASSETS                                                                              2002             2001
<S>                                                                                      <C>             <C>
    Interest-bearing deposits in American Savings Bank, fsb                           $   678          $   568
    Interest-bearing deposits in other financial institutions                             500              500
    Investment securities                                                               1,218            1,211
    Loans receivable                                                                      338              489
    Loan receivable from ESOP                                                             259              399
    Investment in American Savings Bank, fsb                                           14,265           12,477
    Prepaid expenses and other                                                             95              145
                                                                                       ------           ------

          Total assets                                                                $17,353          $15,789
                                                                                       ======           ======

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Checks issued in excess of bank balance                                           $ 1,625          $ 1,033
    Dividends payable                                                                     198              185
    Other liabilities                                                                      53               53
    Deferred federal income taxes                                                          23               15
                                                                                       ------           ------
          Total liabilities                                                             1,899            1,286

    Shareholders' equity
      Common stock and additional paid-in capital                                       8,619            8,482
      Retained earnings                                                                 9,152            8,393
      Shares acquired by stock benefit plans                                             (537)            (781)
      Treasury shares                                                                  (2,630)          (2,370)
      Unrealized gains on securities designated as available for sale, net                850              779
                                                                                       ------           ------
          Total shareholders' equity                                                   15,454           14,503
                                                                                       ------           ------

          Total liabilities and shareholders' equity                                  $17,353          $15,789
                                                                                       ======           ======
</TABLE>

                               ASB FINANCIAL CORP.
<TABLE>
<CAPTION>
                             STATEMENTS OF EARNINGS
                     Year ended June 30, 2002, 2001 and 2000
                                 (In thousands)
                                                                              2002           2001         2000
<S>                                                                            <C>            <C>         <C>
    Revenue
      Interest income                                                       $  185         $  170       $   82
      Equity in earnings of American Savings Bank, fsb                       1,458          1,157        1,171
                                                                             -----          -----        -----
          Total revenue                                                      1,643          1,327        1,253

    General and administrative expenses                                        101            188          225
                                                                             -----          -----        -----

    Earnings before income taxes (credits)                                   1,542          1,139        1,028

    Federal income taxes (credits)                                              29              5          (56)
                                                                             -----          -----        -----

          NET EARNINGS                                                      $1,513         $1,134       $1,084
                                                                             =====          =====        =====
</TABLE>




                                       43
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE L - CONDENSED FINANCIAL STATEMENTS OF ASB FINANCIAL CORP. (continued)

                               ASB FINANCIAL CORP.
<TABLE>
<CAPTION>
                            STATEMENTS OF CASH FLOWS
                     Year ended June 30, 2002, 2001 and 2000
                                 (In thousands)
                                                                              2002           2001         2000
<S>                                                                           <C>             <C>        <C>
    Cash provided by (used in) operating activities:
      Net earnings for the year                                             $1,513         $1,134       $1,084
      Adjustments to reconcile net earnings to net
      cash provided by (used in) operating activities:
        Amortization of premiums and discounts on loans
          and investment securities - net                                       (2)             3           -
        (Undistributed earnings of) excess of distributions
          from consolidated subsidiary                                      (1,458)        (1,157)       1,828
        Increase (decrease) in cash due to changes in:
          Prepaid expenses and other assets                                     50             27          104
          Deferred federal income taxes                                         (1)           (20)          -
          Other liabilities                                                     13             65            8
                                                                             -----          -----        -----
          Net cash provided by operating activities                            115             52        3,024

    Cash flows provided by (used in) investing activities:
      Proceeds from repayment of loan                                          140            140          140
      Proceeds from return of capital on investment securities                  21             -            -
      Loan principal repayments                                                151             11           -
      Loan disbursements                                                        -            (500)          -
                                                                             -----          -----        -----
          Net cash provided by (used in) investing activities                  312           (349)         140

    Cash flows provided by (used in) financing activities:
      Checks issued in excess of bank balance                                  592          1,033           -
      Proceeds from exercise of stock options                                  105             -            61
      Payment of dividends on common stock                                    (754)          (611)      (2,123)
      Purchase of treasury shares                                             (260)          (278)        (949)
                                                                             -----          -----        -----
          Net cash provided by (used in) financing activities                 (317)           144       (3,011)
                                                                             -----          -----        -----

    Net increase (decrease) in cash and cash equivalents                       110           (153)         153

    Cash and cash equivalents at beginning of year                           1,068          1,221        1,068
                                                                             -----          -----        -----

    Cash and cash equivalents at end of year                                $1,178         $1,068       $1,221
                                                                             =====          =====        =====

    Supplemental disclosure of cash flow information:
      Dividend received from subsidiary in the form of
        investment securities designated as available for sale              $   -          $   -        $1,000
                                                                             =====          =====        =====
</TABLE>



                                       44
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE L - CONDENSED FINANCIAL STATEMENTS OF ASB FINANCIAL CORP. (continued)

    Regulations of the Office of Thrift Supervision (OTS) impose limitations on
    the payment of dividends and other capital distributions by savings
    associations. Generally, the Savings Bank's payment of dividends is limited,
    without prior OTS approval, to net earnings for the current calendar year
    plus the two preceding calendar years, less capital distributions paid over
    the comparable time period. Insured institutions are required to file an
    application with the OTS for capital distributions in excess of this
    limitation.


NOTE M - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

    The following table summarizes the Corporation's quarterly results for the
    fiscal years ended June 30, 2002 and 2001. Certain amounts, as previously
    reported, have been reclassified to conform to the 2002 presentation.
<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                   September 30,      December 31,      March 31,     June 30,
    2002:                                                   (In thousands, except per share data)
<S>                                                         <C>              <C>            <C>           <C>
    Total interest income                                 $2,571            $2,360         $2,316       $2,296
    Total interest expense                                 1,552             1,334          1,117        1,047
                                                           -----             -----          -----        -----

    Net interest income                                    1,019             1,026          1,199        1,249
    Provision for losses on loans                             -                 22             23           25
    Other income                                             123               147            103          113
    General, administrative and other expense                750               702            800          825
                                                           -----             -----          -----        -----

    Earnings before income taxes and
      extraordinary item                                     392               449            479          512
    Federal income taxes                                     109               136            150          153
                                                           -----             -----          -----        -----

    Net earnings before extraordinary item                   283               313            329          359
    Extraordinary item - negative goodwill arising
      from Waverly acquisition - net of tax                   -                 -              -           229
                                                           -----             -----          -----        -----

    Net earnings                                          $  283            $  313         $  329       $  588
                                                           =====             =====          =====        =====


    Earnings per share
      Basic                                                 $.19              $.21           $.21         $.39
                                                             ===               ===            ===          ===

      Diluted                                               $.18              $.21           $.21         $.37
                                                             ===               ===            ===          ===
</TABLE>










                                       45
<PAGE>


                               ASB FINANCIAL CORP.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                          June 30, 2002, 2001 and 2000


NOTE M - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (continued)
<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                   September 30,      December 31,      March 31,     June 30,
    2001:                                                   (In thousands, except per share data)
<S>                                                         <C>               <C>            <C>          <C>
    Total interest income                                 $2,548            $2,577         $2,590       $2,547
    Total interest expense                                 1,569             1,653          1,605        1,552
                                                           -----             -----          -----        -----

    Net interest income                                      979               924            985          995
    Provision for losses on loans                             -                 -               1           -
    Other income                                             107               125            129          134
    General, administrative and other expense                701               690            722          670
                                                           -----             -----          -----        -----

    Earnings before income taxes                             385               359            391          459
    Federal income taxes                                     107                98            107          148
                                                           -----             -----          -----        -----

    Net earnings                                          $  278            $  261         $  284       $  311
                                                           =====             =====          =====        =====

    Earnings per share
      Basic                                                 $.18              $.18           $.19         $.20
                                                             ===               ===            ===          ===

      Diluted                                               $.18              $.17           $.18         $.20
                                                             ===               ===            ===          ===
</TABLE>































                                       46
<PAGE>


                               ASB FINANCIAL CORP.
                             DIRECTORS AND OFFICERS

==============================================================================

Robert M. Smith                                        Director and President
President and Chief Executive Officer
American Savings Bank, fsb

Gerald R. Jenkins                                      Director
Retired President and Chief Executive Officer
American Savings Bank, fsb

William J. Burke                                       Director
Director and Chief Executive Officer
OSCO Industries, Inc.

Lee O. Fitch                                           Director
Shareholder and Director
Miller, Searl & Fitch, L.P.A.

Louis M. Schoettle, M.D.                               Director
Physician
Retired

Jack A. Stephenson                                     Vice President
Vice President
American Savings Bank, fsb

Michael L. Gampp                                       Chief Financial Officer
Chief Financial Officer and Vice President
American Savings Bank, fsb

M. Kathryn Fish                                        Secretary
Secretary
American Savings Bank, fsb

Carlisa R. Baker                                       Treasurer
Treasurer
American Savings Bank, fsb

                           AMERICAN SAVINGS BANK, fsb
                             DIRECTORS AND OFFICERS

==============================================================================

Robert M. Smith                      Director, President and CEO

Gerald R. Jenkins                    Director

William J. Burke                     Director

Lee O. Fitch                         Director

Louis M. Schoettle, M.D.             Director

Jack A. Stephenson                   Vice President

Michael L. Gampp                     Chief Financial Officer and Vice President

Carlisa R. Baker                     Treasurer

M. Kathryn Fish                      Secretary


                                       47
<PAGE>


                              SHAREHOLDER SERVICES

==============================================================================

Illinois Stock Transfer Company serves as transfer agent and dividend
distributing agent for ASB's shares. Communications regarding change of address,
transfer of shares, lost certificates and dividends should be sent to:

                         Illinois Stock Transfer Company
                           209 West Jackson Boulevard
                                    Suite 903
                          Chicago, Illinois 60606-6905
                                  (312)427-2953


                                 ANNUAL MEETING

==============================================================================

The Annual  Meeting of  Shareholders  of ASB  Financial  Corp.  will be held on
October 23, 2002, at 11:00 a.m., Eastern Time, at the Shawnee State Park Resort
and Conference Center, 4404B State Route 125, West  Portsmouth,  Ohio 45663.
Shareholders are cordially invited to attend.


                          ANNUAL REPORT ON FORM 10-KSB

==============================================================================

A copy of ASB's Annual Report on Form 10-KSB, as filed with the Securities and
Exchange Commission, will be available at no charge to shareholders upon written
request to:

                           American Savings Bank, fsb
                             503 Chillicothe Street
                             Portsmouth, Ohio 45662
                      Attention: Robert M. Smith, President























                                       48