Exhibit 13

                                     ASB
                                  FINANCIAL
                                    CORP.




                                    2003
                                   ANNUAL
                                   REPORT
                                     TO
                                SHAREHOLDERS


<PAGE>


Dear Fellow Shareholder:

We are pleased to present ASB Financial Corp.'s Annual Report to
Shareholders covering the fiscal year ended June 30, 2003. Our total assets
grew during fiscal 2003 to $152.8 million, a record level for your
Corporation. Similarly, our loan and deposit portfolios also attained
record levels at $115.0 million and $130.8 million, respectively.

The adherence to our operating plan, along with the June 2002 acquisition
of the Waverly Building and Loan Company, culminated in a year of record
earnings performance for ASB Financial during fiscal 2003. Net earnings for
the fiscal year ended June 30, 2003, totaled $2.1 million, or $1.30 per
diluted share, which represents an increase of $548,000, or 36.2%, compared
to net earnings reported for fiscal 2002.

The increase in net earnings for the fiscal year ended June 30, 2003 was
due primarily to a $1.2 million, or 26.6%, increase in net interest income
and a $259,000 increase in other income, which were partially offset by a
$200,000, or 6.5%, increase in general, administrative and other expense, a
$179,000 increase in provision for losses on loans, and a $298,000 increase
in the provision for federal income taxes. Earnings per share increased by
34.0% through a combination of increased earnings and the effects of a
continuation of the share repurchase plan during fiscal 2003. Additionally,
for the fourth straight year, the Company has increased its quarterly
dividend by $.01 per share to $.14, reflecting a 7.7% increase in dividends
paid to our shareholders.

The Board and management of your Corporation determined that ASB Financial
had more capital than we could effectively utilize in the near future.
Since dividends are another method of rewarding our shareholders, your
Corporation declared and paid a $1.00 per share special dividend on April
30, 2003. Our earnings performance and dividend strategy have served us
well, as ASB Financial's stock price has outperformed most of our peers
during the past year.

As always, we remain committed to maximizing the return on your investment
and thank you for your continued support of ASB Financial Corp.

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 federal savings bank. 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 in 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 Cities of Portsmouth and 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. Funds for lending and other investment activities are
obtained primarily from 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.


<PAGE>  2


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

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

There were 1,655,497 common shares of ASB outstanding on September 8, 2003,
held of record by approximately 750 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 2003 and 2002.

<TABLE>
<CAPTION>

                                                      Cash dividends
Quarter ended            High close     Low close        declared


                        <c>           <c>              <c>
Fiscal 2003
  September 30, 2002       $11.59        $10.70           $0.13
  December 31, 2002        $14.90        $10.70           $0.13
  March 31, 2003           $17.50        $14.25           $0.13
  June 30, 2003            $17.25        $14.05           $1.14

Fiscal 2002
  September 30, 2001       $10.98        $10.00           $0.12
  December 31, 2001        $10.96        $ 9.51           $0.12
  March 31, 2002           $10.85        $10.02           $0.12
  June 30, 2002            $11.61        $10.25           $0.13
</TABLE>

The income of ASB on an unconsolidated basis 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.


<PAGE>  3


                            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:                                                   2003        2002        2001        2000        1999
                                                                                     (In thousands)


                                                             <c>         <c>         <c>         <c>         <c>
Total amount of:
  Assets                                                        $152,755    $148,272    $140,987    $131,898    $123,248
  Cash and cash equivalents (1)                                    7,610       7,704       4,649       5,069       7,566
  Certificates of deposit in other financial institutions            173         100           -           -         293
  Investment securities available for sale - at market            13,005      20,866      20,772      19,127      19,387
  Mortgage-backed securities available for sale - at market       12,130       7,091       8,716       8,616      10,232
  Loans receivable - net                                         114,974     109,015     103,308      94,744      82,430
  Deposits                                                       130,780     126,872     120,725     110,007     100,954
  Advances from the FHLB                                           4,188       4,223       4,257       7,790       5,823
  Shareholders' equity, restricted                                16,359      15,454      14,503      12,581      15,040

<FN>
--------------------
<F1>  Consists of cash and due from banks and interest-bearing deposits in
      other financial institutions.
</FN>
</TABLE>

<TABLE>
<CAPTION>

Selected consolidated operating                                       Year ended June 30,
data:                                                     2003      2002       2001      2000      1999
                                                             (In thousands, except per share data)


                                                     <c>       <c>       <c>        <c>       <c>
Interest income                                         $9,576    $9,543    $10,262    $9,257    $8,580
Interest expense                                         3,888     5,050      6,379     5,427     5,112
                                                        ------    ------    -------    ------    ------
Net interest income                                      5,688     4,493      3,883     3,830     3,468
Provision for (recoveries of) losses on loans              249        70          1         1        (1)
                                                        ------    ------    -------    ------    ------
Net interest income after provision for (recoveries
 of) losses on loans                                     5,439     4,423      3,882     3,829     3,469
Other income                                               745       486        495       354       330
General, administrative and other expense                3,277     3,077      2,783     2,673     2,286
                                                        ------    ------    -------    ------    ------
Earnings before income taxes and extraordinary
 item                                                    2,907     1,832      1,594     1,510     1,513
Federal income taxes                                       846       548        460       426       433
                                                        ------    ------    -------    ------    ------
Earnings before extraordinary item                       2,061     1,284      1,134     1,084     1,080
Extraordinary item - negative goodwill arising from
 Waverly acquisition - net of tax                            -       229          -         -         -
                                                        ------    ------    -------    ------    ------
Net earnings                                            $2,061    $1,513    $ 1,134    $1,084    $1,080
                                                        ======    ======    =======    ======    ======

Earnings per share
  Basic                                                 $ 1.32    $ 1.00    $   .75    $  .70    $  .68
                                                        ======    ======    =======    ======    ======
  Diluted                                               $ 1.30    $  .97    $   .73    $  .70    $  .67
                                                        ======    ======    =======    ======    ======
</TABLE>


<PAGE>  4


<TABLE>
<CAPTION>

                                                                       Year ended June 30,
Selected financial ratios:                                2003      2002       2001      2000      1999


                                                     <c>       <c>       <c>        <c>       <c>
Return on average assets                                  1.36%     1.06%       .83%      .86%      .90%
Average interest rate spread during period                3.50      2.84       2.46      2.74       2.54
Net interest margin                                       3.81      3.23       2.94      3.15       3.04
Return on average equity                                 12.61     11.48       8.22      8.21       7.22
Equity to total assets at end of period                  10.71     10.42      10.29      9.54      12.20
Average interest-earning assets to average interest-
 bearing liabilities                                    112.16    110.90     109.93    109.25     111.02
Net interest income to general, administrative and
 other expense                                          173.57    146.02     139.53    143.28     151.71
General, administrative and other expense to average
 total assets                                             2.16      2.16       2.05      2.13       1.91
Nonperforming assets to total assets                       .80       .48        .44       .21        .31
Loan loss allowance to nonperforming loans               82.77    120.93     115.37    257.30     193.40
Dividend payout ratio                                   115.91     49.00      60.00    201.43      58.82
</TABLE>


<PAGE>  5


                    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, 2002 TO JUNE 30, 2003

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

ASB's total assets amounted to $152.8 million at June 30, 2003, an increase
of $4.5 million, or 3.0%, over 2002 levels. The increase in assets was
comprised primarily of a $6.0 million increase in loans and a $5.0 million
increase in mortgage-backed securities, which were partially offset by a
$7.9 million decrease in investment securities. The increase in assets was
funded by growth in deposits of $3.9 million and an increase in
shareholders' equity of $905,000.

Cash and interest-bearing deposits totaled $7.6 million at June 30, 2003, a
decrease of $94,000, or 1.2%, from 2002 levels. Investment securities
totaled $13.0 million at June 30, 2003, a decrease of $7.9 million, or
37.7%, compared to the balance at June 30, 2002. Mortgage-backed securities
totaled $12.1 million at June 30, 2003, an increase of $5.0 million, or
71.1%, year to year. During fiscal 2003, purchases of investment and
mortgage-backed securities totaling $27.5 million were more than offset by
maturities, sales and principal repayments of securities totaling $29.8
million.

Loans receivable increased by $6.0 million, or 5.5%, to a total of $115.0
million at June 30, 2003, compared to $109.0 million at June 30, 2002. Loan
disbursements of $42.8 million and purchases of $2.8 million exceeded
principal repayments of $39.3 million during fiscal 2003. The volume of
loan disbursements and purchases in fiscal 2003 exceeded that of fiscal
2002 by $9.0 million, or 26.2%. Growth in loans secured by residential real
estate totaled $6.6 million, or 8.8%, and growth in loans secured by
nonresidential real estate totaled $3.2 million, or 25.8%, while the
consumer loan portfolio decreased by $4.2 million, or 21.5%, year to year.


<PAGE>  6


At June 30, 2003, American's allowance for loan losses was $1.0 million,
representing .86% of total loans and 82.77% of nonperforming loans. At June
30, 2002, American's allowance for loan losses was $855,000, representing
..77% of total loans and 120.9% of nonperforming loans. Nonperforming loans
totaled $1.2 million and $707,000 at June 30, 2003 and 2002, respectively.
At June 30, 2003, nonperforming loans were comprised of $924,000 of loans
secured by one- to four-family residential real estate, $150,000 of
commercial loans and $145,000 of consumer and other loans. Management
believes that American's nonperforming loans are adequately collateralized
and anticipates no loss on such loans. Although management believes that
its allowance for loan losses at June 30, 2003, was adequate based on the
available facts and circumstances, there can be no assurances that
additions to the allowance will not be necessary in future periods, which
could adversely affect ASB's results of operations.

Deposits increased by $3.9 million, or 3.1%, to a total of $130.8 million
at June 30, 2003. The increase in deposits consisted primarily of an $8.4
million increase in money market deposit accounts, which was partially
offset by a $4.7 million decrease in certificates of deposit year to year.
Growth in deposits was generally used to fund new loan originations.

Shareholders' equity totaled $16.4 million at June 30, 2003, an increase of
$905,000, or 5.9%, over June 30, 2002 levels. The increase resulted
primarily from net earnings of $2.1 million, proceeds from stock option
exercises of $1.2 million and the effects of $312,000 of amortization
related to stock benefit plans, which were partially offset by dividends
paid of $2.4 million, a $177,000 decrease in unrealized gains on available
for sale securities and treasury stock purchases of $76,000. During fiscal
2003, the Corporation paid quarterly dividends totaling $.53 per share and
a special dividend of $1.00 per share.


                       COMPARISON OF OPERATING RESULTS
                 FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

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

General. Net earnings amounted to $2.1 million for the fiscal year ended
June 30, 2003, an increase of $548,000, or 36.2%, over fiscal 2002. The
increase in earnings resulted primarily from a $1.2 million increase in net
interest income and a $259,000 increase in other income, which were
partially offset by a $179,000 increase in the provision for losses on
loans, a $200,000 increase in general, administrative and other expense, a
$298,000 increase in the provision for federal income taxes and the
nonrecurring effects of the 2002 recognition of after-tax negative goodwill
resulting from the Waverly acquisition totaling $229,000. The level of
income and expense for 2003 includes the effects of the acquisition of
Waverly, which was acquired in June 2002 in a transaction accounted for
using the purchase method of accounting.

Net Interest Income. Total interest income was $9.6 million for the fiscal
year ended June 30, 2003, an increase of $33,000, or .3%, over fiscal 2002.
Interest income on loans totaled $8.2 million in fiscal 2003, an increase
of $330,000, or 4.2%. This increase was due primarily to a $7.4 million, or
7.0%, increase in the weighted-average balance of loans outstanding, which
was partially offset by a 19 basis point decrease in the average yield, to
7.26% for the fiscal year ended June 30, 2003. Interest income on mortgage-
backed securities decreased by $29,000, or 7.0%, as a result of a 204 basis
point decrease in the average yield, which was partially offset by a $2.9
million, or 41.5%, increase in the weighted-average balance outstanding
year to year. Interest income on investment securities and interest-bearing
deposits decreased by $268,000, or 21.8%, due primarily to a 103 basis
point decrease in the average yield, to 3.71% for fiscal 2003.

Interest expense totaled $3.9 million for the fiscal year ended June 30,
2003, a decrease of $1.2 million, or 23.0%, from the $5.1 million total
recorded in fiscal 2002. Interest expense on deposits decreased by $1.1
million, or 22.6%, due primarily to a 113 basis point decrease in the
weighted-average cost of deposits, to 2.97% for fiscal 2003, which was
partially offset by an $8.4 million, or 7.0%, increase in the weighted-
average balance outstanding year to year. Interest expense on borrowings
decreased by $48,000, or 40.3%, due primarily to a 73 basis point decrease
in the average cost of borrowings, to 1.63% in fiscal 2003 and a


<PAGE>  7


$685,000, or 13.6%, decrease in the weighted-average balance outstanding
year to year. Decreases in the average yields on interest-earning assets
and the average costs of interest-bearing liabilities were due primarily to
the overall decrease in interest rates in the economy.

As a result of the foregoing changes in interest income and interest
expense, net interest income increased by $1.2 million, or 26.6%, to a
total of $5.7 million for the fiscal year ended June 30, 2003, compared to
$4.5 million in fiscal 2002. The interest rate spread increased by 66 basis
points to 3.50% in fiscal 2003 from 2.84% in fiscal 2002, and the net
interest margin increased by 58 basis points to 3.81% in fiscal 2003 from
3.23% in fiscal 2002.

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 recorded a $249,000 provision for losses on loans
during the fiscal year ended June 30, 2003, an increase of $179,000, or
255.7%, over fiscal 2002. The fiscal 2003 provision was predicated
primarily upon the growth in loans, 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 $745,000 for the fiscal year ended June
30, 2003, an increase of $259,000, or 53.3%, over the $486,000 recorded in
fiscal 2002. The increase resulted from a $125,000 increase in gain on sale
of investment securities year to year and an increase of $134,000, or
29.5%, in other operating income. The increase in other operating income
was comprised primarily of increases in fees on loans and deposits
transactions.

General, Administrative and Other Expense. General, administrative and
other expense totaled $3.3 million for the fiscal year ended June 30, 2003,
an increase of $200,000, or 6.5%, over the total recorded in fiscal 2002.
The increase resulted primarily from increases of $149,000, or 9.5%, in
employee compensation and benefits, $15,000, or 3.8%, in data processing
costs, $10,000, or 1.2%, in other operating expense, and $18,000, or 16.2%,
in franchise taxes. The increase in employee compensation and benefits was
due primarily to the addition of five employees at the new Waverly office
and normal merit increases, which were partially offset by a $45,000
decline in expense related to stock benefit plans and an increase in
deferred loan costs associated with the increase in lending volume year to
year. The increase in data processing was due primarily to advanced system
upgrades, as well as increased costs related to American's growth in loans
and deposits. The increase in franchise taxes was due primarily to growth
in equity year to year. The increase in other operating expense was due
primarily to increased expense associated with the debit card program and
pro-rata increases in operating costs due to the Corporation's overall
growth year to year.

Federal Income Taxes. The provision for federal income taxes totaled
$846,000 for the fiscal year ended June 30, 2003, an increase of $298,000,
or 54.4%, over the $548,000 recorded in fiscal 2002. The increase was due
primarily to the $1.1 million, or 58.7%, increase in pre-tax earnings,
which was partially offset by a $100,000 new markets tax credit. ASB's
effective tax rates were 29.1% and 29.9% for the fiscal years ended June
30, 2003 and 2002, respectively.


<PAGE>  8


                       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 was $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 decline 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 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.

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.


<PAGE>  9


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, which were partially offset by a decrease 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.


<PAGE>  10


                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,
                                               2003                              2002                              2001
                                 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)


                              <c>          <c>       <c>        <c>          <c>       <c>        <c>          <c>       <c>
Interest-earning assets:
  Loans receivable               $113,396     $8,231     7.26%     $106,024     $7,901     7.45%     $ 98,713     $8,169     8.28%
  Mortgage-backed
   securities                       9,828        384     3.91         6,947        413     5.95         8,338        556     6.67
  Investment securities and
   other interest-earning
   assets                          25,929        961     3.71        25,930      1,229     4.74        25,244      1,537     6.09
                                 --------     ------   ------      --------     ------   ------      --------     ------   ------

    Total interest-earning
     assets                       149,153      9,576     6.42       138,901      9,543     6.87       132,295     10,262     7.76

Non-interest-earning assets         2,219                             3,728                             3,780
                                 --------                          --------                          --------

Total assets                     $151,372                          $142,629                          $136,075
                                 ========                          ========                          ========

Interest-bearing liabilities:
  Deposits                       $128,626      3,817     2.97      $120,212      4,931     4.10      $115,126      6,033     5.24
  Borrowings                        4,354         71     1.63         5,039        119     2.36         5,217        346     6.63
                                 --------     ------   ------      --------     ------   ------      --------     ------   ------
    Total interest-bearing
     liabilities                  132,980      3,888     2.92       125,251      5,050     4.03       120,343      6,379     5.30
                                              ------   ------                   ------   ------                   ------   ------

Non-interest-bearing
 liabilities                                   2,051                             4,199                             1,933
                                              ------                            ------                            ------

    Total liabilities             135,031                           129,450                           122,276

Shareholders' equity               16,341                            13,179                            13,799
                                 --------                          --------                          --------

    Total liabilities and
     shareholders' equity        $151,372                          $142,629                          $136,075
                                 ========                          ========                          ========

Net interest income                           $5,688                            $4,493                            $3,883
                                              ======                            ======                            ======

Interest rate spread                                     3.50%                             2.84%                             2.46%
                                                       ======                            ======                            ======

Net interest margin (net
 interest income as a
 percent of average
 interest-earning assets)                                3.81%                             3.23%                             2.94%
                                                       ======                            ======                            ======

Average interest-earning
 assets to average interest-
 bearing liabilities                                   112.16%                           110.90%                           109.93%
                                                       ======                            ======                            ======
</TABLE>


<PAGE>  11


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 June 30,
                                                   2003 vs. 2002                  2002 vs. 2001
                                                 Increase                        Increase
                                                (decrease)                      (decrease)
                                                  due to                          due to
                                            Volume      Rate      Total     Volume      Rate      Total
                                                                   (In thousands)


                                          <c>      <c>        <c>         <c>      <c>        <c>
Interest-earning assets:
  Loans receivable                           $579     $ (249)    $  330      $582     $ (850)    $ (268)
  Mortgage-backed securities                  181       (210)       (29)      (87)       (56)      (143)
  Investment securities and interest -
   bearing assets                               -       (268)      (268)       40       (348)      (308)
                                             ----     ------     ------      ----     ------     ------

      Total interest-earning assets           760       (727)        33       535     (1,254)      (719)
                                             ----     ------     ------      ----     ------     ------

Interest-bearing liabilities:
  Deposits                                    378     (1,492)    (1,114)      257     (1,359)    (1,102)
  Borrowings                                  (16)       (32)       (48)      (11)      (216)      (227)
                                             ----     ------     ------      ----     ------     ------

      Total interest-bearing liabilities      362     (1,524)    (1,162)      246     (1,575)    (1,329)
                                             ----     ------     ------      ----     ------     ------

      Increase in net interest income                            $1,195                          $  610
                                                                 ======                          ======
</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, 2003 and 2002, 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. Decreases of greater than 100 basis points are not
presented at June 30, 2003 and 2002, due to the low interest rate environment
in existence at those dates.


<PAGE>  12


<TABLE>
<CAPTION>

                                               At June 30, 2003            At June 30, 2002
                                           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

          
                  <c>             <c>          <c>           <c>           <c>
          +300                 (6)%             9.26%       (256)bp        8.61%        (377)bp
          +200                 (6)             10.45        (137)         10.01         (237)
          +100                 (6)             11.42         (40)         11.35         (103)
             -                  -              11.82           -          12.38            -
          -100                  6              11.60         (22)         12.55           17
</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 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 do not all reprice simultaneously
and 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 such changes. 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 deviate
significantly from those assumed in calculating the table.


<PAGE>  13


                       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,
2003, 2002, and 2001:

<TABLE>
<CAPTION>

                                                              Year ended June 30,
                                                           2003       2002      2001
                                                                 (In thousands)


                                                       <c>        <c>       <c>
Net cash from operating activities                        $2,229     $1,932    $1,536
Net cash from investing activities                        (4,828)       647    (8,250)
Net cash from financing activities                         2,505        476     6,294
                                                          ------     ------    ------
Net change in cash and cash equivalents                      (94)     3,055      (420)
Cash and cash equivalents at the beginning of the year     7,704      4,649     5,069
                                                          ------     ------    ------
Cash and cash equivalents at the end of the year          $7,610     $7,704    $4,649
                                                          ======     ======    ======
</TABLE>

At June 30, 2003, American had outstanding commitments of approximately $2.0
million to originate loans. Additionally, American was obligated under unused
lines and letters of credit totaling $7.0 million. In the opinion of
management, all loan commitments had interest rates which equaled or exceeded
market interest rates as of June 30, 2003, 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, 2003, 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, 2003, 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 under OTS regulations.

<TABLE>
<CAPTION>

                                    June 30, 2003
                                                                      Excess of
                                                                 regulatory capital
                           Regulatory            Current            over current
                            capital            requirement           requirement
                       -----------------    -----------------    ------------------
                       Amount    Percent    Amount    Percent    Amount     Percent
                                          (Dollars in thousands)


                   <c>         <c>       <c>        <c>       <c>         <c>
Tangible capital      $12,853      8.6%     $2,260     1.5%      $10,593     7.1%

Core capital          $12,853      8.6%     $6,028     4.0%      $ 6,825     4.6%

Risk-based capital    $14,669     15.8%     $7,422     8.0%      $ 7,247     7.8%
</TABLE>


<PAGE>  14


                       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


<PAGE>  15


                                                [GRANT THORNTON LETTERHEAD]




             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, 2003 and 2002, 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, 2003. 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, 2003 and 2002, and the results of its
operations and its cash flows for each of the three years in the period
ended June 30, 2003, in conformity with accounting principles generally
accepted in the United States of America.


/s/ Grant Thornton LLP

Cincinnati, Ohio
August 12, 2003


<PAGE>  16


                             ASB FINANCIAL CORP.

               CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                           June 30, 2003 and 2002
                      (In thousands, except share data)

<TABLE>
<CAPTION>

        ASSETS                                                                  2003         2002


                                                                         <c>          <c>
Cash and due from banks                                                     $  2,932     $  1,428
Interest-bearing deposits in other financial institutions                      4,678        6,276
                                                                            --------     --------
      Cash and cash equivalents                                                7,610        7,704

Certificates of deposit in other financial institutions                          173          100
Investment securities available for sale - at market                          13,005       20,866
Mortgage-backed securities available for sale - at market                     12,130        7,091
Loans receivable - net                                                       114,974      109,015
Office premises and equipment - at depreciated cost                            1,829        1,277
Federal Home Loan Bank stock - at cost                                         1,061        1,017
Accrued interest receivable on loans                                             308          216
Accrued interest receivable on mortgage-backed securities                         62           41
Accrued interest receivable on investments and
 interest-bearing deposits                                                       230          293
Prepaid expenses and other assets                                              1,050          646
Prepaid federal income taxes                                                     164            -
Deferred federal income taxes                                                    159            6
                                                                            --------     --------

      Total assets                                                          $152,755     $148,272
                                                                            ========     ========

      LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                    $130,780     $126,872
Advances from the Federal Home Loan Bank                                       4,188        4,223
Advances by borrowers for taxes and insurance                                    177          162
Accrued interest payable                                                          72           85
Other liabilities                                                              1,179        1,307
Accrued federal income taxes                                                       -          169
                                                                            --------     --------
      Total liabilities                                                      136,396      132,818

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; 1,905,614 and
   1,760,681 shares issued at June 30, 2003 and 2002, respectively                 -            -
  Additional paid-in capital                                                   9,895        8,619
  Retained earnings, restricted                                                8,782        9,152
  Shares acquired by stock benefit plans                                        (285)        (537)
  Accumulated comprehensive income, unrealized gains on securities
   designated as available for sale, net of related tax effects                  673          850
  Less 243,267 and 232,819 shares of treasury stock at
   June 30, 2003 and 2002, respectively - at cost                             (2,706)      (2,630)
                                                                            --------     --------
      Total shareholders' equity                                              16,359       15,454
                                                                            --------     --------

      Total liabilities and shareholders' equity                            $152,755     $148,272
                                                                            ========     ========
</TABLE>


      The accompanying notes are an integral part of these statements.


<PAGE>  17


                             ASB FINANCIAL CORP.

                     CONSOLIDATED STATEMENTS OF EARNINGS

              For the years ended June 30, 2003, 2002 and 2001
                    (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                 2003       2002        2001


                                                            <c>        <c>        <c>
Interest income
  Loans                                                        $8,231     $7,901     $ 8,169
  Mortgage-backed securities                                      384        413         556
  Investment securities                                           936      1,221       1,533
  Interest-bearing deposits and other                              25          8           4
                                                               ------     ------     -------
      Total interest income                                     9,576      9,543      10,262

Interest expense
  Deposits                                                      3,817      4,931       6,033
  Borrowings                                                       71        119         346
                                                               ------     ------     -------
      Total interest expense                                    3,888      5,050       6,379

      Net interest income                                       5,688      4,493       3,883

Provision for losses on loans                                     249         70           1
                                                               ------     ------     -------

      Net interest income after provision
       for losses on loans                                      5,439      4,423       3,882

Other income
  Gain on sale of investment securities                           156         31         117
  Other operating                                                 589        455         378
                                                               ------     ------     -------
      Total other income                                          745        486         495

General, administrative and other expense
  Employee compensation and benefits                            1,725      1,576       1,508
  Occupancy and equipment                                         198        190         178
  Franchise taxes                                                 129        111         166
  Data processing                                                 410        395         348
  Other operating                                                 815        805         583
                                                               ------     ------     -------
      Total general, administrative and other expense           3,277      3,077       2,783
                                                               ------     ------     -------

      Earnings before income taxes and extraordinary item       2,907      1,832       1,594

Federal income taxes
  Current                                                         908        595         494
  Deferred                                                        (62)       (47)        (34)
                                                               ------     ------     -------
      Total federal income taxes                                  846        548         460
                                                               ------     ------     -------

      Earnings before extraordinary item                        2,061      1,284       1,134

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

      NET EARNINGS                                             $2,061     $1,513     $ 1,134
                                                               ======     ======     =======

      EARNINGS PER SHARE
        Basic                                                  $ 1.32     $ 1.00     $   .75
                                                               ======     ======     =======

        Diluted                                                $ 1.30     $  .97     $   .73
                                                               ======     ======     =======
</TABLE>

      The accompanying notes are an integral part of these statements.


<PAGE>  18


                             ASB FINANCIAL CORP.

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

              For the years ended June 30, 2003, 2002 and 2001
                               (In thousands)

<TABLE>
<CAPTION>

                                                                  2003       2002       2001


                                                             <c>        <c>        <c>
Net earnings                                                    $2,061     $1,513     $1,134

Other comprehensive income, net of tax:
  Unrealized holding gains (losses) on securities during the
   period, net of taxes (benefits) of $(38), $47 and $746
   in 2003, 2002 and 2001, respectively                            (74)        91      1,448

Reclassification adjustment for realized gains
 included in earnings, net of taxes of $53, $11 and $40
 in 2003, 2002 and 2001, respectively                             (103)       (20)       (77)
                                                                ------     ------     ------

Comprehensive income                                            $1,884     $1,584     $2,505
                                                                ======     ======     ======

Accumulated comprehensive income                                $  673     $  850     $  779
                                                                ======     ======     ======
</TABLE>

      The accompanying notes are an integral part of these statements.


<PAGE>  19


                             ASB FINANCIAL CORP.

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

              For the years ended June 30, 2003, 2002 and 2001
                      (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                                            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


                                       <c>       <c>         <c>         <c>                <c>             <c>         <c>
Balance at June 1, 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

Amortization of expense related to
 stock benefit plans                         -          60           -          252                  -               -         312
Net earnings for the year ended
 June 30, 2003                               -           -       2,061            -                  -               -       2,061
Cash dividends of $1.53 per share            -           -      (2,431)           -                  -               -      (2,431)
Purchase of treasury shares - at cost        -           -           -            -                  -             (76)        (76)
Issuance of shares under
 stock option plan                           -       1,216           -            -                  -               -       1,216
Unrealized losses on securities
 designated as available for sale,
 net of related tax effects                  -           -           -            -               (177)              -        (177)
                                          ----      ------      ------      -------            -------         -------     -------

Balance at June 30, 2003                  $  -      $9,895      $8,782      $  (285)           $   673         $(2,706)    $16,359
                                          ====      ======      ======      =======            =======         =======     =======
</TABLE>

      The accompanying notes are an integral part of these statements.


<PAGE>  20


                             ASB FINANCIAL CORP.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

              For the years ended June 30, 2003, 2002 and 2001
                               (In thousands)

<TABLE>
<CAPTION>

                                                                       2003        2002        2001


                                                                 <c>         <c>         <c>
Cash flows from operating activities:
  Net earnings for the year                                         $ 2,061     $ 1,513     $ 1,134
  Adjustments to reconcile net earnings to net cash
   from operating activities:
    Amortization of discounts and premiums on loans,
     investments and mortgage-backed securities - net                   614          13          35
    Amortization of deferred loan origination fees                      (62)        (62)        (51)
    Amortization of expense related to stock benefit plans              312         276         306
    Depreciation and amortization                                       127         128         122
    Provision for losses on loans                                       249          70           1
    Gain on sale of investment securities                              (156)        (31)       (117)
    Federal Home Loan Bank stock dividends                              (44)        (44)        (55)
    Loss on sale of real estate acquired through foreclosure              4           -           -
    Increase (decrease) in cash, net of acquisition of Waverly
    Building and Loan Company, due to changes in:
      Accrued interest receivable on loans                              (92)        (35)       (125)
      Accrued interest receivable on mortgage-backed securities         (21)          9           9
      Accrued interest receivable on investments and
       interest-bearing deposits                                         63           6          60
      Prepaid expenses and other assets                                (290)        142         (20)
      Accrued interest payable                                          (13)        (44)        139
      Other liabilities                                                (128)        (52)        (57)
      Federal income taxes
        Current                                                        (333)         90         189
        Deferred                                                        (62)        (47)        (34)
                                                                    -------     -------     -------
          Net cash provided by operating activities                   2,229       1,932       1,536

Cash flows from investing activities:
  Proceeds from maturity of investment securities                    18,229      23,885       7,986
  Proceeds from sale of investment securities                         6,629          31         119
  Purchase of investment securities                                 (17,573)    (23,914)     (7,911)
  Purchase of mortgage-backed securities                             (9,963)     (3,011)     (1,260)
  Principal repayments on mortgage-backed securities                  4,896       4,706       1,480
  Purchase of loans                                                  (2,750)     (2,000)     (2,872)
  Loan principal repayments                                          38,907      34,588      23,005
  Loan disbursements                                                (42,821)    (34,533)    (28,647)
  Purchase of office premises and equipment                            (679)        (11)       (150)
  Proceeds from sale of real estate acquired through foreclosure        370           -           -
  Increase in certificates of deposit in other financial
   institutions - net                                                   (73)          -           -
  Net cash received through acquisition of Waverly Building
   and Loan Company                                                       -         906           -
                                                                    -------     -------     -------
          Net cash provided by (used in) investing activities        (4,828)        647      (8,250)
                                                                    -------     -------     -------

          Net cash provided by (used in) operating and
           investing activities (subtotal carried forward)           (2,599)      2,579      (6,714)
                                                                    -------     -------     -------
</TABLE>


<PAGE>  21


                             ASB FINANCIAL CORP.

              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

              For the years ended June 30, 2003, 2002 and 2001
                               (In thousands)

<TABLE>
<CAPTION>

                                                                       2003        2002        2001


                                                                 <c>         <c>         <c>
Net cash provided by (used in) operating and
           investing activities (subtotal brought forward)          $(2,599)    $ 2,579     $(6,714)

Cash flows from financing activities:
  Net increase in deposit accounts                                    3,816    1,428    10,718
  Proceeds from Federal Home Loan Bank advances                       2,400    8,300    3,000
  Repayment of Federal Home Loan Bank advances                       (2,435)    (8,334)    (6,533)
  Advances by borrowers for taxes and insurance                          15    (9)    (2)
  Proceeds from issuance of shares under stock option plan            1,216    105    -
  Purchase of treasury stock                                            (76)    (260)    (278)
  Dividends paid on common stock                                     (2,431)     (754)     (611)
                                                                    -------     -------     -------
          Net cash provided by financing activities                   2,505     476     6,294
                                                                    -------     -------     -------

Net increase (decrease) in cash and cash equivalents                    (94)    3,055    (420)

Cash and cash equivalents at beginning of year                        7,704    4,649     5,069
                                                                    -------     -------     -------

Cash and cash equivalents at end of year                            $ 7,610     $ 7,704     $ 4,649
                                                                    =======     =======     =======

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Federal income taxes                                            $   688     $   390     $   435
                                                                    =======     =======     =======

    Interest on deposits and borrowings                             $ 3,781     $ 5,094     $ 6,339
                                                                    =======     =======     =======

Supplemental disclosure of noncash investing activities:
  Unrealized gains (losses) on securities designated as
   available for sale, net of related tax effects                   $  (177)    $    71     $ 1,371
                                                                    =======     =======     =======

  Transfers from loans to real estate acquired through
   foreclosure                                                      $   374     $     -     $     -
                                                                    =======     =======     =======

  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.


<PAGE>  22


                             ASB FINANCIAL CORP.

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        June 30, 2003, 2002 and 2001


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, ASB Community Development Corporation
      and A.S.L. Services, Inc., the Savings Bank's wholly-owned
      subsidiaries. ASB Community Development Corporation was formed in
      March 2003 for the purpose of participating in a federal program
      designed to promote lending in new markets, which in turn will
      provide federal income tax credits to the Savings Bank. All
      significant intercompany balances and transactions have been
      eliminated.


<PAGE>  23


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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, 2003 and 2002, 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.


<PAGE>  24


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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:

<TABLE>
<CAPTION>

                                                   2003      2002
                                                   (In thousands)

      
                                          <c>       <c>
      Impaired loans with related allowance        $384      $396
      Impaired loans with no related allowance        -         -
                                                   ----      ----

            Total impaired loans                   $384      $396
                                                   ====      ====
</TABLE>


<PAGE>  25


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Allowance for Loan Losses (continued)
      -------------------------

<TABLE>
<CAPTION>

                                                       2003    2002    2001
                                                          (In thousands)

      
                                              <c>     <c>     <c>
      Allowance on impaired loans
        Beginning balance                              $ 46    $ 46    $ 46
        Provision                                         -       -       -
                                                       ----    ----    ----
        Ending balance                                 $ 46    $ 46    $ 46
                                                       ====    ====    ====

      Average balance of impaired loans                $436    $446    $452
      Interest income recognized on impaired loans     $ 20    $ 30    $ 36
</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


<PAGE>  26


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

      utilized to the extent of management's 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
      $36,000 for each of the fiscal years ended June 30, 2003, 2002 and
      2001, 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 $165,000, $190,000 and $162,000 for the
      fiscal years ended June 30, 2003, 2002 and 2001, respectively.

      During fiscal 2003, the Corporation initiated a defined contribution
      401(k) plan which provides matching contributions to employees'
      elective salary deferrals. Substantially all employees over the age
      of 21 are eligible to participate. Expense related to the 401(k) plan
      totaled approximately $8,000 for the fiscal year ended June 30, 2003.

      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 $80,000, $100,000 and $93,000 for
      the fiscal years ended June 30, 2003, 2002 and 2001, respectively. As
      of June 30, 2003, 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 three fiscal years.


<PAGE>  27


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Earnings Per Share
      ------------------

      Basic earnings per share for the fiscal years ended June 30, 2003,
      2002 and 2001 is based upon the weighted-average shares outstanding
      during the year, less 8,128, 21,979 and 34,918 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>

                                                2003         2002         2001

      
                                     <c>          <c>          <c>
      Weighted-average common shares
       outstanding (basic)                    1,561,513    1,512,553    1,515,886
      Dilutive effect of assumed exercise
       of stock options                          27,860       53,177       41,191
                                              ---------    ---------    ---------
      Weighted-average common shares
       outstanding (diluted)                  1,589,373    1,565,730    1,557,077
                                              =========    =========    =========
</TABLE>

      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:


<PAGE>  28


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Stock Option Plan (continued)
      -----------------

<TABLE>
<CAPTION>

                                                  2003           2002           2001
                                                (In thousands, except per share data)

      
                   <c>                 <c>            <c>            <c>
      Net earnings          As reported         $2,061         $1,513         $1,134
                                                ======         ======         ======

                              Pro-forma         $2,050         $1,511         $1,111
                                                ======         ======         ======

      Earnings per share
        Basic               As reported         $ 1.32         $ 1.00         $  .75
                                                ======         ======         ======

                              Pro-forma         $ 1.31         $ 1.00         $  .73
                                                ======         ======         ======

        Diluted             As reported         $ 1.30         $  .97         $  .73
                                                ======         ======         ======

                              Pro-forma         $ 1.29         $  .97         $  .71
                                                ======         ======         ======
</TABLE>

      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 2003 and 2001:
      dividend yield of 2.9% and 4.9%, respectively; expected volatility of
      20.0% for both years; a risk-free interest rate of 3.4% and 5.0%,
      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,
      2003, 2002 and 2001, and changes during the periods ending on those
      dates is presented below:

<TABLE>
<CAPTION>

                                                   2003                     2002                    2001
                                                       Weighted-                Weighted-               Weighted-
                                                        average                  average                 average
                                                       exercise                 exercise                exercise
                                           Shares        price       Shares       price       Shares      price

      
                                 <c>           <c>         <c>           <c>        <c>         <c>
      Outstanding at beginning of year     212,915      $ 7.69      226,672       $7.70      164,557     $10.08
      Adjustment for special dividend
       distributions                             -           -            -           -       52,115      (2.44)
      Granted                                9,712       16.50            -           -       10,000       8.75
      Exercised                           (144,933)       7.64      (13,757)       7.64            -          -
      Forfeited                                  -           -            -           -            -          -
                                          --------      ------      -------       -----      -------     ------

      Outstanding at end of year            77,694      $ 8.89      212,915       $7.69      226,672     $ 7.70
                                          ========      ======      =======       =====      =======     ======

      Options exercisable at year-end       61,982      $ 7.71      204,915       $7.65      216,672     $ 7.64
                                          ========      ======      =======       =====      =======     ======

      Weighted-average fair value of
       options granted during the year                  $ 5.28                     N/A                   $ 1.34
                                                        ======                    =====                  ======
</TABLE>


<PAGE>  29


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Stock Option Plan (continued)
      -----------------

      The following information applies to options outstanding at June 30,
      2003:

      Number outstanding                                             67,982
      Range of exercise prices                                  $7.64-$8.75
      Number outstanding                                              9,712
      Range of exercise prices                                       $16.50
      Weighted-average exercise price                                 $8.89
      Weighted-average remaining contractual life                 4.0 years

      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, 2003 and 2002:

            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.

            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.


<PAGE>  30


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Fair Value of Financial Instruments (continued)
      -----------------------------------

            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, 2003 and 2002, the difference
            between the fair value and notional amount of loan commitments
            was not material.

      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>

                                                   2003                    2002
                                           Carrying      Fair      Carrying      Fair
                                            value       value       value       value
                                                          (In thousands)

      
                                  <c>         <c>         <c>         <c>
      Financial assets
        Cash and cash equivalents and
         certificates of deposit           $  7,783    $  7,783    $  7,804    $  7,804
        Investment securities                13,005      13,005      20,866      20,866
        Mortgage-backed securities           12,130      12,130       7,091       7,091
        Loans receivable                    114,974     117,421     109,015     107,842
        Federal Home Loan Bank stock          1,061       1,061       1,017       1,017
                                           --------    --------    --------    --------

                                           $148,953    $151,400    $145,793    $144,620
                                           ========    ========    ========    ========

      Financial liabilities
        Deposits                           $130,780    $131,630    $126,872    $125,920
        Federal Home Loan Bank advances       4,188       4,184       4,223       4,172
        Escrow deposits                         177         177         162         162
                                           --------    --------    --------    --------

                                           $135,145    $135,991    $131,257    $130,254
                                           ========    ========    ========    ========
</TABLE>


<PAGE>  31


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      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 $73,000, $48,000 and $49,000 for the
      fiscal years ended June 30, 2003, 2002 and 2001, respectively.

      Effects of Recent Accounting Pronouncements
      -------------------------------------------

      In August 2001, the Financial Accounting Standards Board ("FASB")
      issued Statement of Financial Accounting Standards ("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,
      without material effect on the Corporation's financial condition or
      results of operations.

      In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
      Associated with Exit or Disposal Activities." SFAS No. 146 provides
      financial accounting and reporting guidance for costs associated with
      exit or disposal activities, including one-time termination benefits,
      contract termination costs other than for a capital lease, and costs
      to consolidate facilities or relocate employees. SFAS No. 146 is
      effective for exit or disposal activities initiated after December
      31, 2002. Management adopted SFAS No. 146 effective January 1, 2003,
      without material effect on the Corporation's financial condition or
      results of operations.

      In October 2002, the FASB issued SFAS No. 147, "Accounting for
      Certain Financial Institutions: An Amendment of FASB Statements No.
      72 and 144 and FASB Interpretation No. 9," which removes acquisitions
      of financial institutions from the scope of SFAS No. 72, "Accounting
      for Certain Acquisitions of Banking and Thrift Institutions," except
      for transactions between mutual enterprises. Accordingly, the excess
      of the fair value of liabilities assumed over the fair value of
      tangible and intangible assets acquired in a business combination
      should be recognized and accounted for as goodwill in accordance with
      SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill
      and Other Intangible Assets."


<PAGE>  32


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Effects of Recent Accounting Pronouncements (continued)
      -------------------------------------------

      SFAS No. 147 also requires that the acquisition of a less-than-whole
      financial institution, such as a branch, be accounted for as a
      business combination if the transferred assets and activities
      constitute a business. Otherwise, the acquisition should be accounted
      for as the acquisition of net assets.

      SFAS No. 147 also amends the scope of SFAS No. 144, "Accounting for
      the Impairment or Disposal of Long-Lived Assets," to include long-
      term customer relationship assets of financial institutions
      (including mutual enterprises) such as depositor- and borrower-
      relationship intangible assets and credit cardholder intangible
      assets.

      The provisions of SFAS No. 147 related to unidentifiable intangible
      assets and the acquisition of a less-than-whole financial institution
      are effective for acquisitions for which the date of acquisition is
      on or after October 1, 2002. The provisions related to impairment of
      long-term customer relationship assets are effective October 1, 2002.
      Transition provisions for previously recognized unidentifiable
      intangible assets are effective on October 1, 2002, with earlier
      application permitted.

      The Corporation adopted SFAS No. 147 effective October 1, 2002,
      without material effect on the its financial condition or results of
      operations.

      In December 2002, the FASB issued SFAS No. 148, "Accounting for
      Stock-Based Compensation - Transition and Disclosure." SFAS No. 148
      amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
      provide alternative methods of transition for a voluntary change to
      the fair value based method of accounting for stock-based employee
      compensation. In addition, SFAS No. 148 amends the disclosure
      requirements of SFAS No. 123 to require prominent disclosures in both
      annual and interim financial statements about the method of
      accounting for stock-based employee compensation and the effect of
      the method used on reported results. SFAS No. 148 is effective for
      fiscal years beginning after December 15, 2002. The interim
      disclosure provisions are effective for financial reports containing
      financial statements for interim periods beginning after December 15,
      2002. The Corporation adopted the disclosure provisions of SFAS No.
      148 effective March 31, 2002. Management does not expect SFAS No. 148
      to have a material effect on the its financial position or results of
      operations.

      In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN
      45"), "Guarantor's Accounting and Disclosure Requirements for
      Guarantees, Including Indirect Guarantees of Indebtedness of Others."
      FIN 45 requires a guarantor entity, at the inception of a guarantee
      covered by the measurement provisions of the interpretation, to
      record a liability for the fair value of the obligation undertaken in
      issuing the guarantee. The Corporation has financial letters of
      credit which require the Corporation to make payment if the
      customer's financial condition deteriorates, as defined in the
      agreements. FIN 45 requires the Corporation to record an initial
      liability, generally equal to the fees received for these letters of
      credit when guaranteeing obligations. FIN 45 applies prospectively to
      letters of credit the Corporation issues or modifies subsequent to
      December 31, 2002.


<PAGE>  33


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Effects of Recent Accounting Pronouncements (continued)
      -------------------------------------------

      The Corporation defines the initial fair value of these letters of
      credit as the fee received from the customer. The maximum potential
      undiscounted amount of future payments of these letters of credit as
      of June 30, 2003 are $312,000 and they expire through January 2004.
      Amounts due under these letters of credit would be reduced by any
      proceeds that the Corporation would be able to obtain in liquidating
      the collateral for the loans, which varies depending on the customer.

      In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN
      46"), "Consolidation of Variable Interest Entities." FIN 46 requires
      a variable interest entity to be consolidated by a company if that
      company is subject to a majority of the risk of loss from the
      variable interest entity's activities or entitled to receive a
      majority of the entity's residual returns, or both. FIN 46 also
      requires disclosures about variable interest entities that a company
      is not required to consolidate, but in which it has a significant
      variable interest. The consolidation requirements of FIN 46 apply
      immediately to variable interest entities created after January 31,
      2003. The consolidation requirements apply to existing entities in
      the first fiscal year or interim period beginning after June 15,
      2003. Certain of the disclosure requirements apply in all financial
      statements issued after January 31, 2003, regardless of when the
      variable interest entity was established. The Corporation adopted the
      disclosure provisions of FIN 46 effective January 31, 2003, and does
      not expect FIN 46 to have a material effect on its financial
      statements.

      In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
      133 on Derivative Instruments and Hedging Activities" which clarifies
      certain implementation issues raised by constituents and amends SFAS
      No. 133, "Accounting for Derivative Instruments and Hedging
      Activities," to include the conclusions reached by the FASB on
      certain FASB Staff Implementation Issues that, while inconsistent
      with Statement 133's conclusions, were considered by the Board to be
      preferable; amends SFAS No. 133's discussion of financial guarantee
      contracts and the application of the shortcut method to an interest-
      rate swap agreement that includes an embedded option and amends other
      pronouncements.

      The guidance in Statement 149 is generally effective for new
      contracts entered into or modified after June 30, 2003 and for
      hedging relationships designated after that date.

      Management does not expect SFAS No. 149 to have a material effect on
      the Corporation's financial position or results of operations.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
      Financial Instruments with Characteristics of both Liabilities and
      Equity," which changes the classification in the statement of
      financial position of certain common financial instruments from
      either equity or mezzanine presentation to liabilities and requires
      an issuer of those financial statements to recognize changes in fair
      value or redemption amount, as applicable, in earnings. SFAS No. 150
      requires an issuer to classify certain financial instruments as
      liabilities, including mandatorily redeemable preferred and common
      stocks.


<PAGE>  34


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Effects of Recent Accounting Pronouncements (continued)
      -------------------------------------------

      SFAS No. 150 is effective for financial instruments entered into or
      modified after May 31, 2003 and, with one exception, is effective at
      the beginning of the first interim period beginning after June 15,
      2003 (July 1, 2003 as to the Corporation). The effect of adopting
      SFAS No. 150 must be recognized as a cumulative effect of an
      accounting change as of the beginning of the period of adoption.
      Restatement of prior periods is not permitted. Management does not
      expect SFAS No. 150 to have a material effect on the Corporation's
      financial statements.

      Reclassifications
      -----------------

      Certain prior year amounts have been reclassified to conform to the
      2003 consolidated financial statement presentation.


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, 2003 and 2002
   are summarized as follows:

<TABLE>
<CAPTION>

                                                                  2003
                                                          Gross         Gross       Estimated
                                           Amortized    unrealized    unrealized      fair
                                              cost        gains         losses        value
                                                             (In thousands)

   
                                      <c>           <c>             <c>        <c>
   Available for sale:
     U.S. Government agency obligations     $11,932       $   90          $ -        $12,022
     Municipal obligations                      203            5            -            208
     FHLMC stock                                 15          760            -            775
                                            -------       ------          ---        -------

                                            $12,150         $855          $ -        $13,005
                                            =======         ====          ===        =======

<CAPTION>

                                                                  2002
                                                          Gross         Gross       Estimated
                                           Amortized    unrealized    unrealized      fair
                                              cost        gains         losses        value
                                                             (In thousands)

   
                                      <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
                                            =======       ======          ===        =======
</TABLE>


<PAGE>  35


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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

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

<TABLE>
<CAPTION>

                                             2003                      2002
                                                 Estimated                 Estimated
                                    Amortized       fair      Amortized       fair
                                      cost         value        cost         value
                                                     (In thousands)

   
                               <c>          <c>          <c>          <c>
   Due in three years or less        $   250      $   252      $   250      $   251
   Due after three years through
    five years                         3,723        4,291        9,858        9,908
   Due after five years                8,162        7,687        9,334        9,457
                                     -------      -------      -------      -------

                                     $12,135      $12,230      $19,442      $19,616
                                     =======      =======      =======      =======
</TABLE>

   At June 30, 2003 and 2002, the Corporation had pledged investment
   securities totaling $6.3 million and $7.1 million, respectively, to
   secure public and other deposits.

   The amortized cost, gross unrealized gains, gross unrealized losses and
   estimated fair values of mortgage-backed securities at June 30, 2003 and
   2002 are summarized as follows:

<TABLE>
<CAPTION>

                                                                       2003
                                                               Gross         Gross       Estimated
                                                Amortized    unrealized    unrealized      fair
                                                   cost        gains         losses        value
                                                                  (In thousands)

   
                                           <c>           <c>             <c>        <c>
   Available for sale:
     Federal Home Loan Mortgage
      Corporation participation certificates    $ 3,593        $ 43            $ -        $ 3,636
     Government National Mortgage
      Association participation certificates      1,817          69              -          1,886
     Federal National Mortgage Association
      participation certificates                  6,468          51              -          6,519
     Collateralized mortgage obligations             89           -              -             89
                                                -------        ----            ---        -------

           Total mortgage-backed securities     $11,967        $163            $ -        $12,130
                                                =======        ====            ===        =======
</TABLE>


<PAGE>  36


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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

<TABLE>
<CAPTION>

                                                                       2002
                                                               Gross         Gross       Estimated
                                                Amortized    unrealized    unrealized      fair
                                                   cost        gains         losses        value
                                                                  (In thousands)

   
                                           <c>           <c>             <c>        <c>
   Available for sale:
     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>

   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,
                                                 2003       2002
                                                (In thousands)

   
                                        <c>         <c>
   Due within three years                     $    14     $   36
   Due in three to five years                     532         25
   Due in five to ten years                     1,356      1,266
   Due in ten to twenty years                   2,296        870
   Due after twenty years                       7,769      4,752
                                              -------     ------

                                              $11,967     $6,949
                                              =======     ======
</TABLE>

   Proceeds from sales of investment securities amounted to $6.6 million,
   $31,000 and $119,000 during the fiscal years ended June 30, 2003, 2002
   and 2001, respectively, and resulted in gross realized gains totaling
   $156,000, $31,000 and $117,000, for those respective periods.


<PAGE>  37


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE C - LOANS RECEIVABLE

   The composition of the loan portfolio at June 30 is as follows:

<TABLE>
<CAPTION>

                                                     2003         2002
                                                    (In thousands)

   
                                           <c>          <c>
   Residential real estate
     One- to four- family                        $ 75,737     $ 73,300
     Multi-family                                   6,224        4,717
     Construction                                   3,996        1,342
   Nonresidential real estate and land             15,643       12,436
   Consumer and other                              15,408       19,617
                                                 --------     --------
                                                  117,008      111,412

   Less:
     Undisbursed portion of loans in process          843        1,365
     Deferred loan origination fees                   182          177
     Allowance for loan losses                      1,009          855
                                                 --------     --------

                                                 $114,974     $109,015
                                                 ========     ========
</TABLE>

   The Savings Bank's lending efforts have historically focused on one- to
   four-family and multi-family residential real estate loans, which
   comprised approximately $82.0 million, or 70%, of the total loan
   portfolio at June 30, 2003, and $78.0 million, or 70%, of the total loan
   portfolio at June 30, 2002. 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 believes 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 makes 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
   $911,000 and $810,000 at June 30, 2003 and 2002, 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>

                                                 2003     2002     2001
                                                    (In thousands)

   
                                         <c>        <c>      <c>
   Balance at beginning of year                $  855     $713     $723
   Allowance resulting from acquisition of
    Waverly Building and Loan Company               -      160        -
   Provision for losses on loans                  249       70        1
   Charge-offs of loans                           (95)     (88)     (11)
                                               ------     ----     ----

   Balance at end of year                      $1,009     $855     $713
                                               ======     ====     ====
</TABLE>


<PAGE>  38


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE D - ALLOWANCE FOR LOAN LOSSES (continued)

   As of June 30, 2003, 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, $707,000 and
   $618,000 at June 30, 2003, 2002 and 2001, respectively.

   Interest income that would have been recognized had such nonperforming
   and nonaccrual loans been performing in accordance with contractual
   terms totaled approximately $58,000, $44,000 and $26,000 for the years
   ended June 30, 2003, 2002 and 2001, respectively.


NOTE E - OFFICE PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>

                                             2003       2002
                                            (In thousands)

   
                                     <c>        <c>
   Land and improvements                   $  639     $  389
   Construction in progress                   348          -
   Office buildings and improvements        1,648      1,622
   Furniture, fixtures and equipment          822        767
                                           ------     ------
                                            3,457      2,778
     Less accumulated depreciation and
      amortization                          1,628      1,501
                                           ------     ------

                                           $1,829     $1,277
                                           ======     ======
</TABLE>

   During 2003, the Savings Bank began construction on a new office
   building in Waverly, Ohio, which will replace the leased facility
   currently in use. The office is scheduled to open in August 2003. Total
   expenditures are estimated to be $800,000 for the project, $600,000 of
   which had been paid at June 30, 2003.


<PAGE>  39


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE F - DEPOSITS

   Deposits consist of the following major classifications at June 30:

<TABLE>
<CAPTION>

   Deposit type and weighted-
    average interest rate                              2003         2002
                                                      (In thousands)

   
                                             <c>          <c>
   NOW accounts
     2003 - .22%                                   $  8,463
     2002 - .92%                                                $  8,297
   Passbook
     2003 - 1.10%                                    10,963
     2002 - 1.76%                                                 10,919
   Money market deposit accounts
     2003 - 1.17%                                    30,319
     2002 - 2.15%                                                 21,920
                                                   --------     --------
   Total demand, transaction and
    passbook deposits                                49,745       41,136

   Certificates of deposit
    Original maturities of:
     Less than 12 months
       2003 - 1.79%                                   3,958
       2002 - 2.59%                                                6,634
     12 months to 24 months
       2003 - 3.07%                                  47,058
       2002 - 4.40%                                               48,387
     30 months to 36 months
       2003 - 4.10%                                   2,754
       2002 - 4.42%                                                4,462
     More than 36 months
       2003 - 4.50%                                   4,922
       2002 - 4.56%                                                1,979
     Individual retirement accounts
       2003 - 3.49%                                  16,114
       2002 - 4.35%                                               15,856
     Jumbo accounts
       2003 - 2.94%                                   6,229
       2002 - 3.61%                                                8,418
                                                   --------     --------
   Total certificates of deposit                     81,035       85,736
                                                   --------     --------

   Total deposit accounts                          $130,780     $126,872
                                                   ========     ========
</TABLE>

   At June 30, 2003 and 2002, the Savings Bank had certificate of deposit
   accounts with balances greater than $100,000 totaling $12.8 million and
   $15.3 million, respectively.


<PAGE>  40


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE F - DEPOSITS (continued)

   Interest expense on deposits for the year ended June 30 is summarized as
   follows:

<TABLE>
<CAPTION>

                                           2003       2002       2001
                                                (In thousands)

   
                                   <c>        <c>        <c>
   Passbook                              $  221     $  260     $  226
   NOW and money market deposit
    accounts                                482        567        800
   Certificates of deposit                3,114      4,104      5,007
                                         ------     ------     ------

                                         $3,817     $4,931     $6,033
                                         ======     ======     ======
</TABLE>

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

<TABLE>
<CAPTION>

                                  2003        2002
                                 (In thousands)

   
                         <c>         <c>
   Less than one year          $13,442     $59,243
   One to three years           58,677      23,857
   Over three years              8,916       2,636
                               -------     -------

                               $81,035     $85,736
                               =======     =======
</TABLE>

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

   Advances from the Federal Home Loan Bank, collateralized at June 30,
   2003 by pledges of certain residential mortgage loans totaling $5.2
   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,                   2003            2002
                                                    (Dollars in thousands)

   
                       <c>                    <c>             <c>
   1.24%                     2004                   $1,000          $1,000
   1.00% - 3.16%             2008                    2,188           2,223
   1.24%                     2009                    1,000           1,000
                                                    ------          ------

                                                    $4,188          $4,223
                                                    ======          ======

         Weighted-average interest rate               1.33%          1.95%
                                                      ====           ====
</TABLE>


<PAGE>  41


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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>

                                                       2003    2002    2001
                                                         (In thousands)

   
                                                <c>      <c>     <c>
   Federal income taxes computed at statutory rate    $ 988    $623    $542
   Increase (decrease) in taxes resulting from:
     Low income housing investment tax credits          (78)    (78)    (78)
     Community development tax credit                  (100)      -       -
     Nontaxable interest income                          (3)     (3)     (3)
     Other                                               39       6      (1)
                                                      -----    ----    ----
   Federal income tax provision per consolidated
    financial statements                              $ 846    $548    $460
                                                      =====    ====    ====
</TABLE>

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

<TABLE>
<CAPTION>

                                                                        2003      2002
                                                                        (In thousands)

   
                                                                  <c>       <c>
   Taxes (payable) refundable on temporary
    differences at estimated corporate tax rate:
     Deferred tax assets:
       General loan loss allowance                                      $343      $291
       Deferred compensation                                             529       527
       Stock benefit plans                                                26        68
       Book/tax depreciation                                               4        16
                                                                        ----      ----
         Total deferred tax assets                                       902       902

   Deferred tax liabilities:
     Percentage of earnings bad debt deduction                           (38)      (75)
     Deferred loan origination costs                                    (101)     (140)
     Federal Home Loan Bank stock dividends                             (259)     (243)
     Unrealized gains on securities designated as available for sale    (345)     (438)
           Total deferred tax liabilities                               (743)     (896)
                                                                        ----      ----

           Net deferred tax asset                                       $159      $  6
                                                                        ====      ====
</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, 2003
   includes approximately $2.1 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, 2003. The Savings Bank is required to recapture as taxable
   income approximately $780,000 of its tax 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.


<PAGE>  42


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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, 2003, the Savings Bank had outstanding commitments to
   originate loans totaling approximately $2.0 million. In addition, the
   Savings Bank had unused lines of credit for home equity loans and
   commercial loans totaling $2.3 million and $4.4 million, respectively.
   Further, the Savings Bank had outstanding commercial letters of credit
   totaling $312,000. In the opinion of management, all loan commitments
   equaled or exceeded prevalent market interest rates as of June 30, 2003,
   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.

   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%.


<PAGE>  43


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE J - REGULATORY CAPITAL (continued)

   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, 2003 and 2002, management believes that the Savings Bank
   met all capital adequacy requirements to which it was subject.

<TABLE>
<CAPTION>

                                                        As of June 30, 2003
                                                                                      To be "well-
                                                                                   capitalized" under
                                                      For capital                  prompt corrective
                              Actual               adequacy purposes               action provisions
                         ----------------    ----------------------------    -----------------------------
                          Amount    Ratio        Amount          Ratio           Amount          Ratio
                                                       (Dollars in thousands)

   
                   <c>        <c>      <c>              <c>            <c>              <c>
   Tangible capital      $12,853     8.6%    > or = $2,260    > or = 1.5%    > or = $7,535    > or =  5.0%

   Core capital          $12,853     8.6%    > or = $6,028    > or = 4.0%    > or = $9,042    > or =  6.0%

   Risk-based capital    $14,669    15.8%    > or = $7,422    > or = 8.0%    > or = $9,278    > or = 10.0%

<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)

   
                   <c>        <c>      <c>              <c>            <c>              <c>
   Tangible capital      $13,461     9.1%    > or = $2,214    > or = 1.5%    > or = $7,379    > or =  5.0%

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

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

   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.


<PAGE>  44


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE K - CONDENSED FINANCIAL STATEMENTS OF ASB FINANCIAL CORP.

   The following condensed financial statements summarize the financial
   position of the Corporation as of June 30, 2003 and 2002, and the
   results of its operations and its cash flows for the fiscal years ended
   June 30, 2003, 2002 and 2001.

<TABLE>
<CAPTION>

                                       ASB FINANCIAL CORP.
                                STATEMENTS OF FINANCIAL CONDITION
                                      June 30, 2003 and 2002
                                          (In thousands)

   ASSETS                                                                       2003        2002

   
                                                                       <c>         <c>
   Interest-bearing deposits in American Savings Bank, fsb                   $   706     $   678
   Interest-bearing deposits in other financial institutions                   1,869         500
   Investment securities                                                           -       1,218
   Loans receivable                                                              164         338
   Loan receivable from ESOP                                                      98         259
   Investment in American Savings Bank, fsb                                   13,526      14,265
   Prepaid expenses and other                                                    229          95
                                                                             -------     -------

         Total assets                                                        $16,592     $17,353
                                                                             =======     =======

   LIABILITIES AND SHAREHOLDERS' EQUITY

   Checks issued in excess of bank balance                                   $     -     $ 1,625
   Dividends payable                                                             233         198
   Other liabilities                                                               -          53
   Deferred federal income taxes                                                   -          23
                                                                             -------     -------
         Total liabilities                                                       233       1,899

   Shareholders' equity
     Common stock and additional paid-in capital                               9,895       8,619
     Retained earnings                                                         8,782       9,152
     Shares acquired by stock benefit plans                                     (285)       (537)
     Treasury shares                                                          (2,706)     (2,630)
     Unrealized gains on securities designated as available for sale, net        673         850
                                                                             -------     -------
         Total shareholders' equity                                           16,359      15,454
                                                                             -------     -------

         Total liabilities and shareholders' equity                          $16,592     $17,353
                                                                             =======     =======
</TABLE>

                                ASB FINANCIAL CORP.
                               STATEMENTS OF EARNINGS
                      Year ended June 30, 2003, 2002 and 2001
                                   (In thousands)

<TABLE>
<CAPTION>

                                                           2003      2002      2001
   
                                                   <c>       <c>       <c>
   Revenue
     Interest income                                     $  117    $  185    $  170
     Gain on sale of investments                             95         -         -
     Equity in earnings of American Savings Bank, fsb     2,001     1,458     1,157
                                                         ------    ------    ------
         Total revenue                                    2,213     1,643     1,327

   General and administrative expenses                      120       101       188
                                                         ------    ------    ------

   Earnings before income taxes                           2,093     1,542     1,139

   Federal income taxes                                      32        29         5
                                                         ------    ------    ------

         NET EARNINGS                                    $2,061    $1,513    $1,134
                                                         ======    ======    ======
</TABLE>


<PAGE>  45


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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

<TABLE>
<CAPTION>

                                      ASB FINANCIAL CORP.
                                   STATEMENTS OF CASH FLOWS
                            Year ended June 30, 2003, 2002 and 2001
                                         (In thousands)

                                                                    2003       2002       2001

   
                                                            <c>        <c>        <c>
   Cash flows from operating activities:
     Net earnings for the year                                    $2,061     $1,513     $1,134
     Adjustments to reconcile net earnings to net
      cash provided by (used in) operating activities:
       Gain on sale of investments                                   (95)         -          -
       Amortization of premiums and discounts on loans
        and investment securities - net                                -         (2)         3
       (Undistributed earnings of) excess distributions
        from consolidated subsidiary                                 999     (1,458)    (1,157)
       Increase (decrease) in cash due to changes in:
         Prepaid expenses and other assets                          (134)        50         27
         Deferred federal income taxes                                 -         (1)       (20)
         Other liabilities                                           (97)        13         65
                                                                  ------     ------     ------
           Net cash provided by operating activities               2,734        115         52

   Cash flows provided by (used in) investing activities:
     Proceeds from repayment of loan                                 161        140        140
     Proceeds from return of capital on investment securities          -         21          -
     Proceeds from sale of investment securities                   1,244          -          -
     Loan principal repayments                                       942        151         11
     Loan disbursements                                             (768)         -       (500)
                                                                  ------     ------     ------
           Net cash provided by (used in) investing activities     1,579        312       (349)

   Cash flows provided by (used in) financing activities:
     Checks issued in excess of bank balance                      (1,625)       592      1,033
     Proceeds from exercise of stock options                       1,216        105          -
     Payment of dividends on common stock                         (2,431)      (754)      (611)
     Purchase of treasury shares                                     (76)      (260)      (278)
                                                                  ------     ------     ------
           Net cash provided by (used in) financing activities    (2,916)      (317)       144
                                                                  ------     ------     ------

   Net increase (decrease) in cash and cash equivalents            1,397        110       (153)

   Cash and cash equivalents at beginning of year                  1,178      1,068      1,221
                                                                  ------     ------     ------

   Cash and cash equivalents at end of year                       $2,575     $1,178     $1,068
                                                                  ======     ======     ======
</TABLE>


<PAGE>  46


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


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

   OTS regulations 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 L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

   The following table summarizes the Corporation's quarterly results for
   the fiscal years ended June 30, 2003 and 2002. Certain amounts, as
   previously reported, have been reclassified to conform to the 2003
   presentation.

<TABLE>
<CAPTION>

                                                                  Three Months Ended
                                                September 30,    December 31,    March 31,    June 30,
   2003:                                                 (In thousands, except per share data)

   
                                                 <c>             <c>          <c>         <c>
   Total interest income                               $2,474          $2,416       $2,304      $2,382
   Total interest expense                               1,079             993          919         897
                                                       ------          ------       ------      ------

   Net interest income                                  1,395           1,423        1,385       1,485
   Provision for losses on loans                            -             124           45          80
   Other income                                           133             147          179         286
   General, administrative and other expense              837             675          841         924
                                                       ------          ------       ------      ------

   Earnings before income taxes                           691             771          678         767
   Federal income taxes                                   203             255          173         215
                                                       ------          ------       ------      ------

   Net earnings                                        $  488          $  516       $  505      $  552
                                                       ======          ======       ======      ======

   Earnings per share
     Basic                                             $  .32          $  .35       $  .32      $  .33
                                                       ======          ======       ======      ======

     Diluted                                           $  .31          $  .34       $  .32      $  .33
                                                       ======          ======       ======      ======
</TABLE>


<PAGE>  47


                             ASB FINANCIAL CORP.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        June 30, 2003, 2002 and 2001


NOTE L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (continued)

<TABLE>
<CAPTION>

                                                                  Three Months Ended
                                                September 30,    December 31,    March 31,    June 30,
   2002:                                                 (In thousands, except per share data)

   
                                                 <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       $  .22      $  .38
                                                       ======          ======       ======      ======

     Diluted                                           $  .18          $  .20       $  .21      $  .38
                                                       ======          ======       ======      ======
</TABLE>


<PAGE>  48


                             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

Christopher H. Lute                                 Director
Director and Chief Executive Officer
Lute Supply, Inc.

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

Christopher Lute                   Director

Jack A. Stephenson                 Vice President

Michael L. Gampp                   Chief Financial Officer and Vice President

Carlisa R. Baker                   Treasurer

M. Kathryn Fish                    Secretary


<PAGE>  49


                            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 22, 2003, 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, excluding exhibits, 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


<PAGE>  50