LOGANSPORT FINANCIAL CORP.

                            SHAREHOLDER ANNUAL REPORT

                                      1996


<PAGE>


                                TABLE OF CONTENTS

                                                                          Page
President's Message to Shareholders...............................          2
Selected Consolidated Financial Data..............................          3
Management's Discussion and Analysis..............................          4
Independent Auditor's Report......................................         15
Consolidated Statement of Financial Condition.....................         16
Consolidated Statement of Income..................................         17
Consolidated Statement of Changes in Stockholders' Equity.........         18
Consolidated Statement of Cash Flows..............................         19
Notes to Consolidated Financial Statements........................         20
Shareholder Information...........................................         36
Directors and Officers............................................         37



                             DESCRIPTION OF BUSINESS

     Logansport Financial Corp. (the "Company"), an Indiana corporation,  became
a unitary  savings and loan holding  company upon the  conversion  of Logansport
Savings Bank,  FSB (the "Bank") from a federal  mutual savings bank to a federal
stock savings bank in June, 1995. The Company and the Bank conduct business from
a  single  office  in  Logansport,   Cass  County,  Indiana.  The  Bank  is  and
historically  has been among the top real estate mortgage lenders in Cass County
and is the oldest financial  institution  headquartered in Cass County. The Bank
offers a variety of retail  deposit  and  lending  services.  The Company has no
other business activity than being the holding company for the Bank. The Company
is the sole shareholder of the Bank.


<PAGE>

Dear Shareholder:

We are pleased to present to you the 1996 Annual Report of Logansport  Financial
Corp.

During  1996,  the  first  full  year of  operations,  our goal was to  maximize
shareholder value. We took a number of actions to move toward attainment of that
goal. On December 10, 1996, each shareholder received a $3.00 per share one-time
special  cash  distribution.  The Company  obtained  from the  Internal  Revenue
Service a Private  Letter Ruling  allowing this  non-taxable  return of capital.
This  distribution  allows  shareholders to defer federal and state income taxes
until  sale of  their  stock,  provides  immediate  cash for  reinvestment,  and
improves the  Company's  return on equity.  On October 28, 1996,  we commenced a
stock  repurchase  program  and this was  completed  by year  end.  The  Company
repurchased  66,125  shares of common stock in the open market.  The open market
purchases  have the  effect  of  enhancing  the book  value  per  share  and the
potential  for  growth  in  earnings  per  share  of  the  Company's   remaining
outstanding  shares.  Both of these  actions  were taken to improve the value of
your investment in Logansport Financial Corp.

The Board of Directors has paid a $.10 per share  quarterly  dividend  since our
conversion to a stock  institution and remains  committed to regular,  quarterly
dividends for our  shareholders.  In 1996,  $.32 of the $.40 per share paid will
qualify as a return of capital.  Dividends received in future years are expected
to be fully taxable.

Our  growth  during  1996 has been  excellent.  Total  assets for the year ended
December 31, 1996 were $77.7  million  compared to $74.7 million at December 31,
1995.  This growth needs to be considered in  conjunction  with the fact that we
distributed  almost $4.0  million to  shareholders  in  December.  Our net loans
totaled  $56.8  million at December 31,  1996,  an increase of $7.1 million over
1995. This increase in loans is a significant  contributing factor to our strong
earnings. Excellent loan service in both our mortgage and consumer loan products
has become  our niche in a very  competitive  marketplace.  Our return on assets
continued to be strong at 1.18% and is keeping pace with our growth in assets.

The  one-time  special  assessment  to  recapitalize  the  Savings   Association
Insurance  Fund  resulted in a pretax  charge to earnings of $335,000  ($202,000
after  tax-effected).  This, of course,  had a  significant  impact on earnings.
However,  Logansport  Financial Corp.'s earnings in 1996 still exceeded those in
1995. We are proud of that  accomplishment  and with this issue now behind us we
look  forward to 1997 and lower  insurance  costs which  should  translate  into
additional earnings.

We are  proud  of  the  performance  of  Logansport  Financial  Corp.  in  1996.
Consistent earnings, strong capital, and excellent asset quality have positioned
us for  continued  growth in 1997.  We are  grateful  for your  support and look
forward to a long and mutually beneficial relationship.


                                                        Sincerely,




                                                        /s/ Thomas G. Williams
                                                        Thomas G. Williams
                                                        President

<PAGE>

                                       SELECTED CONSOLIDATED FINANCIAL DATA
                                   OF LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY


<TABLE>
<CAPTION>
                                                                            AT  DECEMBER 31,
                                               1996             1995              1994             1993              1992
                                               --------------------------------------------------------------------------
                                                                         (Dollars in thousands)
Balance Sheet Data:
<S>                                         <C>               <C>              <C>               <C>               <C>    
Total assets ...........................    $77,668           $74,647          $59,351           $56,229           $49,164
Loans receivable, net ..................     56,802            49,707           44,020            37,851            34,801
Mortgage- and other asset-backed securities                     6,674            7,468             1,229             2,784
3,522
Cash and cash equivalents...............      3,759             3,243            1,645             2,700             2,530
Other investment securities.............      7,629            11,285           10,009            10,718             6,457
Interest-bearing time deposits in other
   financial institutions...............        100               100              ---               ---               ---
Deposits................................     57,396            52,461           51,202            49,558            43,337
Borrowings..............................      3,400             1,000            1,000               ---               ---
Stockholders' equity....................     15,427            20,454            6,833             6,397             5,620
</TABLE>

<TABLE>
<CAPTION>

                                                                         YEAR ENDED DECEMBER 31,
                                               1996             1995              1994             1993              1992
                                               --------------------------------------------------------------------------
                                                                         (Dollars in thousands)
Summary of Operating Results:
<S>                                          <C>             <C>              <C>               <C>               <C>     
Interest income ........................     $5,653          $  4,775         $  4,031          $  4,033          $  3,967
Interest expense .......................      2,719             2,468            2,043             1,984             2,141
                                         ----------        ----------        ---------         ---------         ---------
   Net interest income..................      2,934             2,307            1,988             2,049             1,826
Provision for loan losses...............         12                20                6               161                98
                                         ----------        ----------        ---------         ---------         ---------
   Net interest income after provision for
      loan losses.......................      2,922             2,287            1,982             1,888             1,728
Other income:
   Service charges on deposit accounts..         67                47               35                26                19
   Investment securities gains (losses).        (47)                3              ---                22                12
   Other................................         62               129               44                37                41
                                         ----------        ----------        ---------         ---------         ---------
      Total other income................         82               179               79                85                72
Other expense:
   Salaries and employee benefits.......        619               492              459               410               323
   Occupancy and equipment..............         81                81               84                69                74
   Deposit insurance premium............        449               116              114                83                88
   Other................................        435               343              300               256               322
                                         ----------        ----------        ---------         ---------         ---------
        Total other expense.............      1,584             1,032              957               818               807
                                         ----------        ----------        ---------         ---------         ---------
Income before income taxes and cumulative
   effect of change in
   accounting principle                       1,420             1,434            1,104             1,155               993
Income tax expense......................        507               526              370               422               418
Cumulative effect of change
     in accounting principle............        ---               ---              ---                44               ---
                                         ----------        ----------        ---------         ---------         ---------
   Net income........................... $      913        $      908        $     734         $     777         $     575
                                         ==========        ==========        =========         =========         =========
Net income per share.................... $      .69  $           --- (1)           ---               ---               ---
Cash dividends per share
   Regular..............................        .40               --- (1)          ---               ---               ---
   Special (2)..........................       3.00               ---              ---               ---               ---
Supplemental Data:
Return on assets (3) ...................         1.18%            1.34%            1.27%             1.45%             1.22%
Return on equity (4)....................         4.76             6.33            10.78             12.92             10.74
Interest rate spread (5) ...............         2.80             2.77             3.32              3.75              3.70
Net yield on interest-earning assets (6)                          3.99             3.64              3.67              4.07
4.11
Other expenses to average assets .......         2.04             1.53             1.65              1.52              1.71
Net interest income to other expenses...         1.85x            2.24x            2.08x             2.50x             2.26x
Equity-to-assets (7)....................        19.86            27.40            11.51             11.38             11.43
Average interest-earning assets to average
   interest-bearing liabilities.........         1.33x            1.23x            1.10x             1.08x             1.09x
Non-performing assets to total assets...          .52              .42              .82              1.38              1.27
Non-performing loans to total loans.....          .71              .63              .76              1.57              1.22
Loan loss allowance to total loans, net.          .41              .45              .47               .53               .25
Loan loss allowance to non-performing loans     58.12            71.61            61.13             33.67             20.28
Dividend payout ratio...................        57.97(8)           --- (1)          ---               ---               ---
Net charge-offs to average loans .......         (*)              (*)               (*)               .13               .07
</TABLE>

(1)  Information prior to 1996 is not meaningful.

(2)  Special one-time cash distribution  which qualified as a non-taxable return
     of capital pursuant to an IRS Private Letter Ruling.

(3)  Net income divided by average total assets.

(4)  Net income divided by average total equity.

(5)  Interest rate spread is calculated by subtracting combined weighted average
     interest rate cost from combined  weighted average interest rate earned for
     the period indicated.

(6)  Net interest income divided by average interest-earning assets.

(7)  Total equity divided by assets.

(8)  Excludes special one-time $3.00 per share cash distribution.

(*)  Less than .01%
<PAGE>

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

General

         The  Company  was formed as part of the  conversion  of the Bank from a
federal  mutual savings bank to a federal stock savings bank which was completed
June 13, 1995. Since the Company only recently began operations,  certain of the
financial  information presented herein prior to June 13, 1995 relates primarily
to the Bank, a wholly owned  subsidiary  of the Company.  All  references to the
Company at or before  June 13,  1995 refer to the Bank only.  The Company has no
other activity other than being the holding company for the Bank.

         The principal business of savings associations, including the Bank, has
historically consisted of attracting deposits from the general public and making
loans  secured  by  residential  and other real  estate.  The Bank and all other
savings   associations  are  significantly   affected  by  prevailing   economic
conditions,  as well as government  policies and regulations  concerning,  among
other things,  monetary and fiscal affairs,  housing and financial institutions.
Deposit flows are  influenced by a number of factors,  including  interest rates
paid on competing  investments,  account maturities and level of personal income
and savings.  In addition,  deposit growth is affected by how customers perceive
the stability of the financial  services  industry amid various  current  events
such as  regulatory  changes,  failures  of  other  financial  institutions  and
financing of the deposit  insurance fund.  Lending  activities are influenced by
the demand for and supply of housing lenders, the availability and cost of funds
and various  other items.  Sources of funds for lending  activities  of the Bank
include  deposits,  payments  on loans,  borrowings  and  income  provided  from
operations.  The Bank's  earnings are primarily  dependent upon its net interest
income, the difference between interest income and interest expense.

         Interest  income is a function of the balances of loans and investments
outstanding  during a given  period  and the  yield  earned  on such  loans  and
investments.  Interest  expense is a  function  of the  amount of  deposits  and
borrowings  outstanding  during the same period and interest  rates paid on such
deposits and borrowings. The Bank's earnings are also affected by provisions for
loan losses, service charges, operating expenses and income taxes.

Asset/Liability Management

         The Bank, like other savings associations,  is subject to interest rate
risk to the degree that its  interest-bearing  liabilities,  primarily  deposits
with short- and  medium-term  maturities,  mature or reprice at different  rates
than its interest-earning assets. Management of the Bank believes it is critical
to manage the  relationship  between interest rates and the effect on the Bank's
net portfolio value ("NPV"). This approach calculates the difference between the
present  value of  expected  cash flows from  assets  and the  present  value of
expected  cash flows from  liabilities,  as well as cash flows from  off-balance
sheet contracts.  Management of the Bank's assets and liabilities is done within
the  context  of the  marketplace,  regulatory  limitations  and  within  limits
established  by the Board of  Directors  on the amount of change in NPV which is
acceptable given certain interest rate changes.

         The Office of Thrift Supervision ("OTS") issued a regulation, effective
January  1,  1994,  which uses a net market  value  methodology  to measure  the
interest rate risk exposure of thrift  institutions.  Under OTS regulations,  an
institution's  "normal"  level of interest  rate risk in the event of an assumed
change in interest rates is a decrease in the institution's NPV in an amount not
exceeding 2% of the present  value of its assets.  Beginning  September 1, 1994,
thrift  institutions  with  over  $300  million  in  assets  or less  than a 12%
risk-based  capital  ratio are  required  to file OTS  Schedule  CMR.  Data from
Schedule  CMR is used by the OTS to  calculate  changes in NPV (and the  related
"normal"  level of interest rate risk) based upon certain  interest rate changes
(discussed  below).  Institutions  which  do  not  meet  either  of  the  filing
requirements  are  not  required  to  file  OTS  Schedule  CMR,  but  may  do so
voluntarily. The Bank does not currently meet either of these requirements,  but
it does  voluntarily  file Schedule CMR.  Presented  below,  as of September 30,
1996, the latest  available,  is an analysis  performed by the OTS of the Bank's
interest rate risk as measured by changes in NPV for instantaneous and sustained
parallel shifts in the yield curve, in 100 basis point  increments,  up and down
400 basis points and in accordance with OTS  regulations.  As illustrated in the
table,  the Bank's NPV is more sensitive to rising rates than  declining  rates.
This occurs principally  because,  as rates rise, the market value of the Bank's
investments, adjustable-rate mortgage loans (many of which have maximum per year
adjustments of 1%), fixed-rate loans and mortgage-backed securities declines due
to the rate increase.  The value of the Bank's deposits and borrowings change in
approximately the same proportion in rising or falling rate scenarios.
<PAGE>
<TABLE>
<CAPTION>

      Change                                Net Portfolio Value                                NPV as % of PV of Assets
     In Rates              $ Amount              $ Change              % Change              NPV Ratio              Change
--------------------------------------------------------------------------------------------------------------------------
                                          (Dollars in thousands)
<S>                          <C>               <C>                         <C>                 <C>                  <C>    
        + 400 bp *           $13,120           $(4,845)                    (27%)                18.28%              (486bp)
        + 300 bp              14,496            (3,469)                    (19%)                19.75               (339bp)
        + 200 bp              15,807            (2,158)                    (12%)                21.09               (205bp)
        + 100 bp              17,000              (965)                     (5%)                22.25                (89bp)
            0 bp              17,965                ---                      ---                23.14                   ---
        - 100 bp              18,733                768                       4%                23.80                 67bp 
        - 200 bp              19,340              1,375                       8%                24.30                116bp 
        - 300 bp              20,065              2,100                      12%                24.89                175bp 
        - 400 bp              20,951              2,986                      17%                25.61                247bp 
</TABLE>


          Interest Rate Risk Measures: 200 Basis Point (bp) Rate Shock

        Pre-Shock NPV Ratio: NPV as % of PV of Assets.............       23.14%
        Exposure Measure: Post-Shock NPV Ratio....................       21.09%
        Sensitivity Measure: Change in NPV Ratio..................      (205bp)

*  Basis points

         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 to  repricing,  they may react in  different  degrees to
changes in market interest  rates.  Also, the interest rates on certain types of
assets and  liabilities  may fluctuate in advance of changes in market  interest
rates,  while  interest  rates on other  types may lag behind  changes in market
rates.  Additionally,  certain  assets,  such  as  adjustable-rate  loans,  have
features which restrict changes in interest rates on a short-term basis and over
the life of the  asset.  Further,  in the event of a change in  interest  rates,
expected rates of prepayments on loans and early  withdrawals from  certificates
could likely deviate significantly from those assumed in calculating the table.


<PAGE>

Average Balances and Interest Rates and Yields

         The following  table  presents for the periods  indicated the month-end
average  balances  of each  category of the Bank's  interest-earning  assets and
interest-bearing  liabilities,  and the average yields earned and interest rates
paid on such balances.  Such yields and costs are determined by dividing  income
or expense by the average  balance of assets or liabilities,  respectively,  for
the periods presented.

<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                           --------------------------------------------------------------------------------------
                                                       1996                         1995                            1994
                                           ---------------------------    ------------------------        -----------------------
                                           Average             Yield/     Average           Yield/        Average          Yield/
                                           Balance   Interest   Cost      Balance Interest   Cost         Balance Interest  Cost
                                           -------   --------   ----      ------- --------   ----         ------- --------  ----
                                                                      (Dollars in thousands)
Assets:
Interest-earning assets:
<S>                                         <C>         <C>     <C>     <C>       <C>        <C>       <C>          <C>       <C>  
   Interest-earning deposits..............  $3,192      $160    5.01%   $  2,542  $   146    5.74%     $  1,215     $   56    4.61%
   Mortgage- and other asset-backed
     securities (1).......................   7,916       510    6.44       3,566      227     6.37        1,898        154     8.11
   Other investment securities (1)........   9,965       587    5.89      11,490      701     6.10       11,156        752     6.74
   Loans receivable (2)...................  53,409     4,421    8.28      46,746    3,724     7.97       40,782      3,098     7.60
   Stock in FHLB of Indianapolis..........     376        29    7.71         338       27     7.99          303         17     5.61
                                            ------     -----              ------    -----                ------      -----     
     Total interest-earning assets........  74,858     5,707    7.62      64,682    4,825     7.46       55,354      4,077     7.37
Non-interest earning assets, net of
   allowance for loan losses and
   unrealized loss on securities available
   for sale   ............................   2,709                         2,822                          2,599             
                                           -------                       -------                        -------                  
     Total assets......................... $77,567                       $67,504                        $57,953                  
                                           =======                       =======                        =======                  
Liabilities and stockholders' equity:
Interest-bearing liabilities:
   Savings accounts.......................$  3,298       100    3.03    $  3,986      121    3.04      $  3,465        105     3.03
   NOW and money
     market accounts......................  18,751       769    4.10      16,791      698    4.16        16,220        553     3.41
   Certificates of deposit................  32,432     1,744    5.38      31,352    1,617    5.16        30,637      1,379     4.50
   Borrowings  ...........................   1,889       106    5.61         501       32    6.39           167          6     3.59
                                            ------     -----              ------    -----                ------      -----     
     Total interest-bearing liabilities...  56,370     2,719    4.82      52,630    2,468    4.69        50,489      2,043     4.05
Other liabilities.........................   2,016                           529                            654             
                                           -------                       -------                        -------                  
     Total liabilities....................  58,386                        53,159                         51,143                  
Stockholders' equity
   Common stock, retained earnings
     and unearned compensation............  19,350                        14,579                          6,824             
   Unrealized loss on securities
     available for sale...................    (169)                         (234)                           (14)            
                                           -------                       -------                        -------                  
     Total stockholders' equity...........  19,181                        14,345                          6,810
                                           -------                       -------                        -------                  
     Total liabilities and stockholders'
       equity ............................ $77,567                       $67,504                        $57,953                  
Net interest-earning assets............... $18,488                       $12,052                       $  4,865
                                            ------     -----              ------    -----                ------      -----     
Net interest income.......................            $2,988                       $2,357                         $  2,034
                                                      ======                       ======                         ========
Interest rate spread (3) .................                      2.80%                        2.77%                             3.32%
                                                                ====                         ====                              ==== 
Net yield on weighted average
   interest-earning assets (4)............                      3.99%                        3.64%                             3.67%
                                                                ====                         ====                              ==== 
Average interest-earning assets to
   average interest-bearing liabilities...  132.80%                       122.90%                        109.64%
Adjustment of interest on tax-exempt
   securities to a tax-equivalent basis...               $54                          $50                              $46
</TABLE>

(1)      Includes securities  available for sale at amortized cost prior to SFAS
         No. 115 adjustments.
(2)      Total loans less loans in process.
(3)      Interest  rate spread is  calculated by  subtracting  weighted  average
         interest  rate cost from weighted  average  interest rate yield for the
         period indicated.
(4)      The net yield on weighted average interest-earning assets is calculated
         by dividing net interest  income by weighted  average  interest-earning
         assets for the period indicated.


<PAGE>

Interest Rate Spread

         The Company's  results of operations have been determined  primarily by
net interest income and, to a lesser extent,  fee income,  miscellaneous  income
and general and  administrative  expenses.  Net interest income is determined by
the interest rate spread  between the yields earned on  interest-earning  assets
and the rates paid on  interest-bearing  liabilities and by the relative amounts
of interest-earning assets and interest-bearing liabilities.

         The following table sets forth the weighted average effective  interest
rate  earned by the Bank on its loan and  investment  portfolios,  the  weighted
average  effective cost of the Company's  deposits and borrowings,  the interest
rate  spread  of  the   Company,   and  the  net  yield  on   weighted   average
interest-earning  assets  for the  periods  and as of the  date  shown.  Average
balances are based on month-end average balances.

<TABLE>
<CAPTION>
                                                       At December 31,                    Year Ended December 31,
                                                            1996                  1996             1995              1994
                                                       ------------------        -----------------------------------------

Weighted average interest rate earned on:
<S>                                                         <C>                    <C>              <C>              <C>  
   Interest-earning deposits...................             5.19%                  5.01%            5.74%            4.61%
   Mortgage- and other asset-backed
     securities................................             7.55                   6.44             6.37             8.11
   Other investment securities.................             6.06                   5.89             6.10             6.74
   Loans receivable............................             8.21                   8.28             7.97             7.60
   Stock in FHLB of Indianapolis...............             7.89                   7.71             7.99             5.61
     Total interest-earning assets.............             7.81                   7.62             7.46             7.37

Weighted average interest rate cost of:
   Savings accounts............................             3.00                   3.03             3.04             3.03
   NOW and money market accounts...............             4.09                   4.10             4.16             3.41
   Certificates of deposit.....................             5.44                   5.38             5.16             4.50
   Borrowings..................................             6.56                   5.61             6.39             3.59
     Total interest-bearing liabilities........             4.94                   4.82             4.69             4.05

Interest rate spread (1).......................             2.87                   2.80             2.77             3.32
Net yield on weighted average
   interest-earning assets (2).................              N/A                   3.99             3.64             3.67
</TABLE>

(1)  Interest rate spread is calculated by subtracting weighted average interest
     rate cost  from  weighted  average  interest  rate  earned  for the  period
     indicated.  Interest rate spread figures must be considered in light of the
     relationship   between   the   amounts  of   interest-earning   assets  and
     interest-bearing  liabilities.  Since the Company's interest-earning assets
     exceeded its interest-bearing liabilities for each of the three years shown
     above, a positive interest rate spread resulted in net interest income.

(2)  The net yield on weighted average  interest-earning assets is calculated by
     dividing net interest income by weighted  average  interest-earning  assets
     for the period indicated.  No net yield percentage is presented at December
     31, 1996,  because the  computation of net yield is applicable  only over a
     period rather than at a specific date.

         The following  table  describes the extent to which changes in interest
rates and  changes in volume of  interest-related  assets and  liabilities  have
affected the Company's interest income and expense during the periods indicated.
For each category of interest-earning  assets and interest-bearing  liabilities,
information  is provided on changes  attributable  to (1) changes in rate (i.e.,
changes in rate  multiplied  by old  volume)  and (2)  changes in volume  (i.e.,
changes in volume multiplied by old rate). Changes attributable to both rate and
volume have been  allocated  proportionally  to the change due to volume and the
change due to rate.

<TABLE>
<CAPTION>
                                                                   Increase (Decrease) in Net Interest Income
                                                                 Total Net           Due to              Due to
                                                                  Change              Rate               Volume
                                                                  ------              ----               ------
                                                                                 (In thousands)
Year  ended  December  31,  1996 
compared  to  Year  ended  December  31,  1995
Interest-earning assets:
<S>                                                             <C>              <C>                    <C>   
   Interest-earning deposits..............................      $   14           $    (20)              $   34
   Mortgage- and other asset-backed securities............         283                  3                  280
   Other investment securities............................        (114)               (24)                 (90)
   Loans receivable.......................................         697                150                  547
   Stock in FHLB of Indianapolis..........................           2                 (1)                   3
                                                                 -----            -------                -----
     Total................................................         882                108                  774
                                                                 -----            -------                -----
Interest-bearing liabilities:
   Savings accounts.......................................         (21)               ---                  (21)
   NOW and money market accounts..........................          71                 (9)                  80
Certificates of deposit...................................         127                 70                   57
   Borrowings.............................................          74                 (4)                  78
                                                                 -----            -------                -----
     Total................................................         251                 57                  194
                                                                 -----            -------                -----
Change in net interest income
   (fully taxable equivalent basis).......................         631                 51                  580
Tax equivalent adjustment.................................          (4)                 1                   (5)
                                                                 -----            -------                -----
Change in net interest income.............................       $ 627            $    52                $ 575
                                                                 =====            =======                =====

Year  ended  December  31,  1995  
compared  to  Year  ended  December  31,  1994
Interest-earning assets:
   Interest-earning deposits..............................         $90                $17                  $73
   Mortgage- and other asset-backed securities............          73                (39)                 112
   Other investment securities............................         (51)               (73)                  22
   Loans receivable.......................................         626                156                  470
   Stock in FHLB of Indianapolis..........................          10                  8                    2
                                                                 -----            -------                -----
     Total................................................         748                 69                  679
                                                                 -----            -------                -----
Interest-bearing liabilities:
   Savings accounts.......................................          16                ---                   16
   NOW and money market accounts..........................         145                125                   20
Certificates of deposit...................................         238                205                   33
   FHLB advances..........................................          26                  7                   19
                                                                 -----            -------                -----
     Total................................................         425                337                   88
                                                                 -----            -------                -----
Change in net interest income
   (fully taxable equivalent basis).......................         323               (268)                 591
Tax equivalent adjustment.................................          (4)                 1                   (5)
                                                                 -----            -------                -----
Change in net interest income.............................       $ 319             $ (267)               $ 586
                                                                 =====             ======                =====
</TABLE>

<PAGE>

Comparison of Years Ended December 31, 1996 and 1995

         General.  The Company's total assets were $77.7 million at December 31,
1996, an increase of $3.0 million or 4.0%. In December of 1996,  $3.9 million of
capital was  distributed  to  shareholders  and  resulted in a decrease in total
assets and a reduction in the percentage of increase for the year ended December
31, 1996. The percentage of interest-earning assets to total assets was 96.0% at
December 31, 1996 and 95.3% at December 31, 1995.

          At December  31,  1996,  the total of  securities  was $ 14.3  million
compared to $18.8  million at December  31,  1995,  a decrease of $4.5  million.
Funds from  maturing  securities,  payments on mortgage  and other  asset-backed
securities,  and security  sales were  partially  used to fund the growth in the
loan portfolio and the special cash  distribution to  shareholders.  At December
31, 1996,  the Company held $348,000 of corporate  obligations  all of which was
debt of domestic  corporations  rated AA or better by  Moody's.  The Company has
$3.1 million of structured  notes,  consisting of FHLB and other federal  agency
securities, in its investment portfolio at December 31, 1996.

         Total loans  increased  $7.1 million from December 31, 1995 to December
31, 1996, an increase of 14.2%. Most of the increase occurred in the one-to-four
family mortgages and consumer loans. One-to-four family mortgage loans increased
by $4.5 million and consumer  loans by $1.9 million.  The increase was funded by
the decrease in investment securities and the increase in deposits.

         Deposits  increased  by $4.9  million to $57.4  million at December 31,
1996 from $52.5 million at December 31, 1995. Non-interest bearing deposits, NOW
accounts,  passbook  savings and money market savings  increased by $1.9 million
while  certificates  of deposits  increased  by $3.0  million.  Borrowings  also
increased  by $2.4 million  during the year,  of which $1.4 million was borrowed
from another bank and repaid in early 1997.

         Equity capital decreased by $5.0 million during 1996 with the return of
capital  distribution,   a  5%  stock  repurchase  program,   regular  quarterly
dividends,  the  funding  of the  Company's  RRP plan,  and an  increase  in the
unrealized  losses on available for sale  securities.  The special one-time cash
distribution of $3.9 million on 1,310,000 shares was paid in December, 1996. The
Company received a Private Letter Ruling from the Internal Revenue Service which
qualified most of the 1996 cash distributions to shareholders, including regular
quarterly dividends and the one-time special cash distribution,  as a nontaxable
return of capital.  Under the stock repurchase program,  the Company repurchased
66,125  shares for $.8  million.  In 1996,  the Bank adopted a  Recognition  and
Retention Plan for the employees and directors. The Bank contributed $.6 million
to the plan for the  purchase  of stock  awarded.  Net income for the year ended
December 31, 1996 was $913,000.  This compares to net income of $908,000 for the
year ended  December  31, 1995.  An increase in net  interest  income was offset
primarily by an increase in other expenses,  including the one-time special SAIF
Assessment.

         Interest Income (fully taxable  equivalent  basis). the Company's total
interest  income was $5.7 million for the year ended  December 31, 1996 compared
to $4.8 million  during 1995,  an increase of $.9 million.  Interest  income for
1996 compared to 1995  increased  $108,000 due to higher rates earned on assets,
primarily loans.  However, the largest percentage of the increase,  or $774,000,
was due to an increase in the volume of average  interest  earnings assets which
grew by $10.2 million.  The increase in average  interest  earnings  assets from
$64.7  million in 1995 to $74.9  million in 1996,  combined  with  improved loan
rates,  contributed  to an  increase in the  average  yield on interest  earning
assets of 7.62% in 1996 compared to 7.46% in 1995.  Average loan yield and yield
on asset-backed  securities improved while yield on other investment  securities
and interest-earning deposits declined.

         Interest  Expense.  Interest expense increased by $251,000 for the year
ended  December 31, 1996  compared to 1995.  This  increase was the result of an
increase in the average  balance of the deposit  liabilities by $3.7 million and
the increase in the average cost of these  liabilities by 13 basis points,  from
4.69% during 1995 to 4.82% in 1996.  Local  competition  resulted in pressure to
maintain competitive rates,  however, the interest rate spread improved slightly
in 1996.

          Net Interest  Income (fully taxable  equivalent  basis).  Net interest
income  increased  by $.6  million  for 1996 to  approximately  $3.0  million as
compared   with  $2.4   million  in  1995.   Net  yield  on   weighted   average
interest-earning  assets  increased  to 3.99%  in 1996  from  3.64% in  1995.The
Company  increased  its yield on earning  assets  more than its cost of funds in
1996 and this coupled with the increase in total average  earning  assets caused
the significant improvement.

         Provision for losses on loans.  The  Company's  provision for losses on
loans for the year ended  December  31,  1996 and 1995 was  $12,000  and $20,000
respectively.  This provision and the related increase in the allowance for loan
losses were considered adequate based on the condition of the loan portfolio and
the  Company's  loan loss history.  There were  recoveries of $1,270 in 1996, no
chargeoffs  in 1996 and  chargeoffs  of $3,622 in 1995.  The Company  provides a
general  allowance  that reflects an estimate of inherent  losses based upon the
types and categories of outstanding  loans as well as problem loans. At December

<PAGE>

31, 1996 and 1995,  the  allowance was $236,000 and  $223,000,  respectively,  a
ratio of 0.41% and 0.45% of total  loans at each date.  Non-performing  loans at
these dates were $406,000 and $311,000, respectively. The ratio of allowance for
loan losses to non-performing loans decreased from 71.6% at December 31, 1995 to
58.1% at December 31, 1996.  Based on management's  review of the loan portfolio
during these years,  the allowance for loan losses at December 31, 1996 and 1995
is considered to be adequate to cover losses inherent in the loan portfolio.

         Other Income.  The Company's  other income for the year ended  December
31,  1996  and 1995 was  $82,000  and  $179,000,  respectively.  The year  ended
December 31, 1995 included a $90,000 recovery on investments  previously written
off while 1996 included only $17,000 of additional  recovery.  During 1996,  the
Company recorded $47,000 of net losses on sales of securities.  Structured notes
of $3.0  million  were sold at a net loss and the proceeds  were  reinvested  in
higher  yielding   securities,   primarily   mortgage  and  other   asset-backed
securities.  This  strategy  resulted in a higher  yield in  mortgage  and other
asset-backed  securities for the year and a  corresponding  increase in interest
income.  Service  charges  on  deposit  accounts  increased  by  $20,000 in 1996
compared  to 1995.  Income on the cash  surrender  value of life  insurance  was
$34,000 in 1996 and $25,000 in 1995.

         Other Expenses.  Operating expenses were $1,584,000 in 1996 compared to
$1,032,000 in 1995, an increase of $552,000 or 53.5%. Salaries and payroll taxes
increased by $162,000 as a result of additional personnel,  merit pay increases,
implementation  of the RRP Plan,  and  higher  costs of other  fringe  benefits.
Pension  plan  expense  decreased  by $36,000  resulting  in a net  increase  in
salaries and employee  benefits of $126,000.  Deposit  insurance costs increased
$335,000 due to the SAIF  Assessment.  This is a one-time  occurrence and should
result in a decline in deposit  insurance costs in future years. Data processing
fees decreased $2,000 for the year.  Various other operating  expenses increased
by $93,000.  Expenses related to being a public company such as accounting fees,
legal fees,  filing fees,  annual  report and meeting  costs and transfer  agent
costs  accounted  for $57,000 of the  increase.  The balance of the increase was
related to additional  operating costs associated with increased account volume,
new services, and advertising.

         Income Tax Expense. Income tax expense for the years ended December 31,
1996 and 1995 was $507,000 and $526,000. Pretax income declined slightly in 1996
over 1995 and this resulted in a corresponding decrease in income tax expense.

Comparison of Years Ended December 31, 1995 and 1994

         General.  The Company's total assets were $74.6 million at December 31,
1995, an increase of $15.3 million, or 25.8%, from $59.4 million at December 31,
1994. The stock conversion  contributed  $12.6 million of the increase,  deposit
growth $1.3 million, and earnings and recovery of unrealized losses on available
for sale securities  generated the balance.  The percentage of interest-earnings
assets to total  assets was 95.3% at December 31, 1995 and 94.5% at December 31,
1994.

         At  December  31,  1995,  investment  securities,  all  of  which  were
classified  as  available  for sale,  totaled  $18.8  million  compared to $11.2
million at  December  31,  1994,  an increase  of $7.6  million.  There was also
significant growth in the loan portfolio.  Net loans increased $5.7 million from
December 31, 1994 to December 31, 1995, an increase of 12.9%.  Commercial  paper
contributed  $0.9 million to total loans at December  31, 1995.  At December 31,
1994,  the Company's  investments  included  revenue bonds with a remaining book
value of $90,000. These bonds had been written down from $370,000 to $185,000 in
1991 and 1992 due to their credit quality.  During 1995, payments of $180,000 in
principal  were   received.   This  resulted  in  recoveries  of  $90,000  being
recognized.  Additional  receipts of $18,000  relating to these  securities were
recorded as interest  income.  Additional  recoveries  are  anticipated,  but no
estimate of amounts is  available.  The Company  held $1.7  million of corporate
obligations at December 31, 1995. These obligations included $577,000 in revenue
bonds with a Moody's ratings of A or better and debt of domestic corporations in
the  amount of $1.1  million,  also with  ratings of A or  better.  The  Company
believes that there is no  significant  risk of future losses in this portion of
its  investment  portfolio at December 31, 1995 based upon credit  quality,  and
acquires  such  obligations  from  time to  time to  improve  the  yield  on its
investment portfolio.

         Deposits  increased  by $1.3  million to $52.5  million at December 31,
1995 from $51.2 million at December 31, 1994. NOW accounts, passbook savings and
money market savings  increased by $1.6 million while  certificates  of deposits
declined by $0.3 million.

         Equity capital  increased $13.6 million during 1995 attributable to the
proceeds of the conversion, the addition of earnings, and the market recovery of
available for sale  securities.  Unrealized  gains in state and municipal bonds,
asset-backed  securities  and marketable  equity  securities  offset  unrealized
losses  attributable  to federal agency  securities,  including FHLB  structured
notes, at December 31, 1995.


<PAGE>

         Net income for the year ended  December  31,  1995 was  $908,000.  This
compares to net income of $734,000 for the year ended  December  31,  1994.  Net
interest income increased  $319,000.  Increases in other expenses and provisions
for loan  losses in 1995 were offset by  recoveries  on  previously  written-off
securities.

         Interest Income (fully taxable  equivalent  basis). The Company's total
interest  income was $4.8 million for the year ended  December 31, 1995 compared
to $4.1 million during 1994, an increase of $748,000.  Interest  income for 1995
compared  to 1994  increased  $69,000  due to higher  rates  earned  on  assets,
primarily loans.  However, the largest percentage of the increase,  or $679,000,
was due to an increase in the volume of  interest-earning  assets  which grew by
$9.3 million. The increase in interest-earning assets from $55.4 million in 1994
to $64.7 million in 1995,  combined with improved loan rates,  contributed to an
increase  in the  average  yield  on  interest-earning  assets  of 7.46% in 1995
compared  to 7.37% in 1994.  Average  loan  yield  improved  while the yields on
investment  securities,  including mortgage- and other asset-backed  securities,
declined. At December 31, 1995, the Company had $6.2 million of structured notes
in its investment portfolio.

         Interest  Expense.  Interest expense increased by $425,000 for the year
ended  December 31, 1995  compared to 1994.  This  increase was the result of an
increase  in the average  balance of the  interest-bearing  liabilities  of $2.1
million and the  increase in the average cost of these  liabilities  by 64 basis
points,  from 4.05% during 1994 to 4.69% in 1995. Local competition  resulted in
pressure  to  maintain  competitive  rates and an  interest  rate  spread  which
declined in 1995.

         Net Interest  Income (fully  taxable  equivalent  basis).  Net interest
income increased by $323,000 for 1995 to approximately  $2.4 million as compared
with  $2.0  million  in 1994.  Net  yield on  interest-earning  assets  declined
slightly  to 3.64% in 1995  from  3.67% in  1994.  The  Company's  cost of funds
increased more quickly than its yield on earnings assets.  This was offset by an
increase in volume as average net interest-earning assets increased $7.2 million
as proceeds of the conversion were invested.

         Provision for Losses on Loans.  The  Company's  provision for losses on
loans for the year ended  December 31, 1995 was $20,000.  This provision and the
related increase in the allowance for loan losses were considered adequate based
on total chargeoffs of $3,000 in 1995. The provision for loan losses in 1994 was
$6,000,  and chargeoffs were $1,000.  The Company  provides a general  allowance
that reflects an estimate of inherent losses based upon the types and categories
of outstanding loans as well as problem loans. At December 31, 1995 and 1994 the
allowance was $223,000 and $206,000, respectively, a ratio of 0.45% and 0.47% of
total loans.  Nonperforming  loans at these dates were  $311,000  and  $337,000,
respectively.  The ratio of  allowance  for loan losses to  nonperforming  loans
increased  from 61.1% at December 31, 1994 to 71.6% at December 31, 1995.  Based
on management's  review of the loan portfolio  during these years, the allowance
for loan losses at December 31, 1995 and 1994 was  considered  to be adequate to
cover losses inherent in the loan portfolio.

         Other Income.  The Company's  other income for the years ended December
31, 1995 and 1994 was $179,000 and $79,000,  respectively.  The overall increase
was primarily due to a $90,000  recovery on investments  previously  written off
and a $12,000  increase in service  charges on deposit  accounts.  Income on the
cash surrender value of life insurance was $25,000 in 1995 and $27,000 in 1994.

         Other Expenses.  Operating expenses were $1,032,000 in 1995 compared to
$957,000 in 1994,  an increase of $75,000 or 7.8%.  Salaries  and payroll  taxes
increased  by  $47,000  as a  result  of  additional  personnel  and  merit  pay
increases. Pension plan expense decreased by $14,000 resulting in a net increase
in salaries and employee  benefits of $33,000.  Data  processing  fees increased
$26,000  for the  year.  This  increase  was  attributable  to price  increases,
increases  in the  volume  of  accounts,  and  additional  services  offered  to
customers such as voice response access for account balances. The other expenses
category  increased by $16,000.  Expenses related to being a public company such
as accounting fees, legal fees,  filing fees, and transfer agent costs accounted
for much of the increase.

         Income Tax Expense. Income tax expense for the years ended December 31,
1995 and 1994 was $526,000 and  $370,000.  Pretax income  increased  $330,000 in
1995 from 1994,  and this  resulted  in a  corresponding  increase in income tax
expense.

Liquidity and Capital Resources

         The  Company's  primary  sources of funds are  deposits,  proceeds from
principal and interest payments of loans, and proceeds from maturing securities.
While maturities and scheduled amortization of loans are a predictable source of
funds,  deposit  flows and mortgage  prepayments  are  generally  influenced  by
general interest rates, economic conditions, and competition.

         As a  result  of the  conversion  in 1995,  the  Company  received  net
proceeds of $12.7 million, which were primarily invested in loans and investment
securities.  There  was  an  outflow  of  funds  during  1996  for  the  capital
distribution of $3.9 million to shareholders and the repurchase of the Company's
common  stock for  approximately  $.8  million,  in  addition  to  regular  cash
dividends.
<PAGE>

         The primary  investing  activity of the Company is the  origination  of
mortgage loans and the purchase of investment securities. During the years ended
December 31, 1996, 1995, and 1994, the Company originated  mortgage loans in the
amounts of $13.2  million,  $8.6 million,  and $9.2 million,  respectively.  The
Company  originated  consumer  loans  of $6.1  million,  $4.8  million  and $4.8
million,  respectively.  The Company also purchased loans,  excluding commercial
paper,  of  $1.0  million  in 1996  and  1995  and $.3  million  in  1994.  Loan
repayments, excluding commercial paper, totaled $12.4 million, $9.3 million, and
$9.1 million for 1996, 1995, and 1994, respectively.

         During the years ended  December 31, 1996,  1995, and 1994, the Company
purchased investment  securities in the amounts of $8.7 million,  $13.6 million,
and $2.6 million,  respectively.  Sales or maturities of such securities held by
the Company and payments on  mortgage-backed  or other  asset-backed  securities
were $12.8  million,  $6.6 million,  and $4.3 million for 1996,  1995, and 1994,
respectively.

         Deposits  grew by $1.3 million  from  December 31, 1994 to December 31,
1995, and by $4.9 million from December 31, 1995 to December 31, 1996.

         The Company  experienced  an increase in cash and cash  equivalents  to
$3.2 million at December  31, 1995 from $1.6 million at December 31, 1994.  From
December 31, 1995 to December 31, 1996, cash and cash  equivalents  increased by
$.5 million.

         At  December  31,  1996 and 1995,  the  Company  had  outstanding  loan
commitments  and  standby  letters  of credit  totaling  $2.3  million  and $2.0
million,  respectively.  The Company  anticipates  that it will have  sufficient
funds  available to meet its current loan  commitments.  Certificates of deposit
which are  scheduled  to mature in one year or less from  December  31, 1996 and
1995  totaled  $19.9  million  and  $18.9  million,  respectively.   Based  upon
historical  deposit flow data, the Company's  competitive  pricing in its market
and management's  experience,  management believes that a significant portion of
such deposits will remain with the Company.

         Liquidity  management  is both a daily and  long-term  function  of the
Company's  management  strategy.  In the event that the Company  should  require
funds  beyond its  ability to generate  them  internally,  additional  funds are
available  through the use of FHLB advances,  and also may be available  through
sales of securities,  although no sales of securities  are planned.  At December
31, 1996 and 1995, the Company had outstanding  FHLB advances of $ 2 million and
$1 million, respectively.

         Federal  regulations   require  FHLB-member  savings   associations  to
maintain an average daily balance of liquid assets equal to a monthly average of
not less than a specified  percentage of its net  withdrawable  savings deposits
plus short-term  borrowings.  Liquid assets include cash, certain time deposits,
certain bankers' acceptances, specified U.S. government, state or federal agency
obligations, certain corporate debt securities, commercial paper, certain mutual
funds, certain mortgage-related  securities,  and certain first lien residential
mortgage loans.  This liquidity  requirement may be changed from time-to-time by
the OTS to any amount  within the range of 4% to 10%, and is currently 5%. Also,
a  savings   association   currently  must  maintain  short-term  liquid  assets
constituting  at least  1% of its  average  daily  balance  of net  withdrawable
deposit accounts and current  borrowings.  Monetary penalties may be imposed for
failure to meet these liquidity requirements.  As of December 31, 1996, the Bank
had liquid assets of $7.9 million, and a regulatory liquidity ratio of 14.2%, of
which 56.5% constituted short-term investments.

         Pursuant  to  OTS  capital   regulations,   savings  associations  must
currently meet a 1.5% tangible capital requirement, a 3% leverage ratio (or core
capital)  requirement,  and a total risk-based  capital to risk-weighted  assets
ratio of 8%. At December 31, 1996, the Bank's tangible  capital ratio was 21.9%,
its leverage ratio was 21.9%, and its risk-based capital to risk-weighted assets

<PAGE>

ratio  was  41.1%.   Therefore,   at  December  31,  1996,  the  Bank's  capital
significantly  exceeded all of the Capital Requirements currently in effect. The
following table provides the minimum  regulatory  capital  requirements  and the
Bank's capital ratios as of December 31, 1996:

<TABLE>
<CAPTION>
                                                                        At December 31, 1996
                                                 -------------------------------------------------------------------------------
                                                       OTS Requirement                        The Bank's Capital Level
                                                 --------------------------         --------------------------------------------
                                                   % of                               % of                              Amount
Capital Standard                                  Assets            Amount          Assets(1)          Amount          of Excess
----------------                                  ------            ------          ---------          ------          ---------
                                                                             (Dollars in thousands)
<S>                                                 <C>              <C>             <C>               <C>               <C>    
Tangible capital............................        1.5%             $1,166          21.9%             $17,018           $15,852
Core capital (2)............................        3.0               2,332          21.9               17,018            14,686
Risk-based capital..........................        8.0               3,356          41.1               17,254 (3)        13,898
</TABLE>
--------------
(1)      Tangible  and core capital  levels are shown as a  percentage  of total
         assets;  risk-based  capital  levels  are  shown  as  a  percentage  of
         risk-weighted assets.

(2)      The  OTS  has  proposed  and  is  expected  to  adopt  a  core  capital
         requirement  for  savings  associations  comparable  to  that  recently
         adopted by the Comptroller of the Currency for national banks.  The new
         regulation,  as proposed,  would require at least 3% of total  adjusted
         assets for savings  associations that received the highest  supervisory
         rating  for safety and  soundness,  and 4% to 5% for all other  savings
         associations.  The final form of such new OTS core capital  requirement
         may differ from that which has been proposed. The Bank expects to be in
         compliance with such new requirements.

(3)      The Bank's  risk-based  capital includes  $236,000 of general valuation
         allowances.

         As of  December  31,  1996,  management  is not  aware  of any  current
recommendations by regulatory authorities which, if they were to be implemented,
would have, or are reasonably  likely to have, a material  adverse effect on the
Bank's liquidity, capital resources or results of operations.

Impact of Inflation

         The audited financial  statements  presented elsewhere herein have been
prepared in accordance  with generally  accepted  accounting  principles.  These
principles  require the measurement of financial  position and operating results
in terms of  historical  dollars,  without  considering  changes in the relative
purchasing power of money over time due to inflation.

Current Accounting Issues

         Mortgage  Servicing  Rights.  During  1995,  the  Financial  Accounting
Standards Board ("FASB") issued SFAS No. 122,  Accounting for Mortgage Servicing
Rights.  SFAS No. 122 pertains to mortgage  banking  enterprises  and  financial
institutions  that  conduct  operations  that are  substantially  similar to the
primary operations of mortgage banking enterprises.  SFAS No. 122 eliminates the
accounting  distinction  between  mortgage  servicing  rights that are  acquired
through  loan  origination   activities  and  those  acquired  through  purchase
transactions.  Under SFAS No. 122,  if a mortgage  banking  enterprise  sells or
securitizes loans and retains the mortgage servicing rights, the enterprise must
allocate the total cost of the mortgage loans to the mortgage  servicing  rights
and the loans  (without the rights) based on their relative fair values if it is
practicable to estimate those fair values. If it is not practicable,  the entire
cost should be allocated  to the mortgage  loans and no cost should be allocated
to the mortgage service rights.  An entity would measure  impairment of mortgage
servicing  rights and loans  based on the excess of the  carrying  amount of the
mortgage servicing rights portfolio over the fair value of that portfolio.

         SFAS No. 122 is to be applied  prospectively  in fiscal years beginning
after December 15, 1995, to transactions  in which an entity  acquires  mortgage
servicing  rights and to  impairment  evaluations  of all  capitalized  mortgage
servicing  rights.  The  adoption  of SFAS No.  122 had no impact in 1996 on the
Company's financial condition and results of operations.

         Stock-Based Compensation.  The FASB has issued No. SFAS 123, Accounting
for Stock-based Compensation. SFAS No. 123 establishes a fair value based method
of accounting  for  stock-based  compensation  plans.  The FASB  encourages  all
entities to adopt this method for  accounting for all  arrangements  under which
employees  receive shares of stock or other equity  instruments of the employer,
or the employer incurs liabilities to employees in amounts based on the price of
its stock.

         Due the extremely  controversial  nature of this project,  SFAS No. 123
permits a company  to  continue  the  accounting  for  stock-based  compensation
prescribed in Accounting  Principles Board Opinion No. 25,  Accounting for Stock
Issued to Employees.  If a company elects that option,  pro forma disclosures of
net income (and EPS, if  presented)  are required in the notes to the  financial
statements  as if the  provisions  of SFAS  No.  123 had  been  used to  measure
stock-based  compensation.  The disclosure  requirements  of Opinion No. 25 have
been superseded by the disclosure requirements of this Statement. Once an entity
adopts the fair value based method for accounting for these  transactions,  that
election cannot be reversed.

         Equity  instruments  granted or  otherwise  transferred  directly to an
employee by a principal  stockholder are stock-based employee compensation to be
accounted  for in accordance  with either  Opinion 25 or SFAS No. 123 unless the
transfer  clearly  is for a purpose  other  than  compensation.  The  accounting
requirements of SFAS No. 123 became effective for  transactions  entered into in
fiscal years beginning after December 15, 1995, and the disclosure  requirements
became  effective  for financial  statements  for fiscal years  beginning  after

<PAGE>
December 15, 1995.  Pro forma  disclosures  required for entities  that elect to
continue to measure  compensation cost using Opinion 25 must include the effects
of all awards granted in fiscal years beginning after December 15, 1994.  During
the initial  phase-in  period,  the effects of applying  this  Statement are not
likely to be  representative  of the effects on  reported  net income for future
years because  options vest over several years and additional  awards  generally
are made each year.

         The Company  adopted  SFAS No. 123 for 1996,  and elected to report the
pro forma  disclosures  of net  income  and  earnings  per share in the notes to
financial statements.

         Transfers  and  Servicing of Financial  Assets and  Extinguishments  of
Liabilities.  SFAS No. 125,  Accounting for Transfers and Servicing of Financial
Assets and  Extinguishments  of  Liabilities,  breaks  new  ground in  resolving
long-standing  questions about whether  transactions  should be accounted for as
secured borrowings or as sales. The Statement provides consistent  standards for
distinguishing  transfers of financial assets that are sales from transfers that
are considered secured borrowings.

         A  transfer  of  financial  assets in which the  transferor  surrenders
control  over  those  assets  is  accounted  for as a sale  to the  extent  that
consideration  other than  beneficial  interests  in the  transferred  assets is
received in exchange.  The transferor has surrendered  control over  transferred
assets only if all of the following conditions are met:

         o        The   transferred   assets   have  been   isolated   from  the
                  transferor--put   presumptively   beyond   the  reach  of  the
                  transferor  and its  creditors,  even in  bankruptcy  or other
                  receivership.

         o        Each  transferee  obtains the  right--free of conditions  that
                  constrain it from taking advantage of that right--to pledge or
                  exchange  the  transferred  assets,  or  the  transferee  is a
                  qualifying   special-purpose   entity   and  the   holders  of
                  beneficial  interest in that entity  have the  right--free  of
                  conditions  that constrain them from taking  advantage of that
                  right--to pledge or exchange those interests.

         o        The transferor  does not maintain  effective  control over the
                  transferred assets through an agreement that both entitles and
                  obligates  the  transferor to repurchase or redeem them before
                  their  maturity,  or an agreement that entitles the transferor
                  to  repurchase  or redeem  transferred  assets are not readily
                  obtainable.

         This Statement provides detailed  measurement  standards for assets and
liabilities  included in these  transactions.  It also  includes  implementation
guidance for assessing  isolation of  transferred  assets and for accounting for
transfers of partial interest,  servicing of financial  assets,  securitization,
transfers  or sales  type and direct  financing  lease  receivables,  securities
lending transactions, repurchase agreements, "wash sales," loan syndications and
participation,   risk   participation   in   banker's   acceptances,   factoring
arrangements,  transfers of  receivables  with  recourse and  extinguishment  of
liabilities.

         The Statements  supersede FASB  Statements  No. 76,  Extinguishment  of
Debt,  and No. 77,  Reporting by Transferors  for Transfers of Receivables  with
Recourse, and No. 122, Accounting for Mortgage Servicing Rights, and amends FASB
Statement  No.  115,  Accounting  for  Certain  Investments  in Debt and  Equity
Securities,  in addition to clarifying or amending a number of other  statements
and technical bulletins.

         Except as amended by Statement No. 127, this Statement is effective for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring after December 31, 1996 and is to be applied prospectively. Earlier or
retroactive application is not permitted.

         The FASB was made aware that the volume of certain transactions and the
related  changes  to  information  systems  and  accounting  processes  that are
necessary to comply with the  requirements  of  Statement  No. 125 would make it
extremely difficult,  if not impossible,  for some affected enterprises to apply
the  transfer  and   collateral   provisions  of  Statement  No.  125  to  those
transactions  as soon as January 1, 1997.  As a result,  SFAS No. 127 defers for
one year the effective date (a) of paragraph 15 of Statement No. 125 and (b) for
repurchase agreement, dollar-roll, securities lending, and similar transactions,
of paragraphs 9-12 and 237(b) of Statement No. 125.

         Statement  No.  127  provides  additional  guidance  on  the  types  of
transactions  for  which  the  effective  date of  Statement  No.  125 has  been
deferred.  It also  requires  that if it is not possible to determine  whether a
transfer occurring during calendar-year 1997 is part of a repurchase  agreement,
dollar-roll, securities lending, or similar transaction, then paragraphs 9-12 of
Statement No. 125 should be applied to that transfer.

         All  provisions  of  Statement  No. 125 should  continue  to be applied
prospectively, and earlier or retroactive application is not permitted.
<PAGE>

                          Independent Auditor's Report




To the Board of Directors
Logansport Financial Corp.
Logansport, Indiana


We have audited the consolidated  statement of financial condition of Logansport
Financial Corp. and subsidiary as of December 31, 1996 and 1995, and the related
consolidated  statements  of income,  changes in  stockholders'  equity and cash
flows for each of the three years in the period ended  December 31, 1996.  These
consolidated  financial  statements  are  the  responsibility  of the  Company'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  generally   accepted  auditing
standards.  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 described above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Logansport  Financial Corp. and subsidiary as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended  December 31, 1996, in conformity  with  generally  accepted
accounting principles.

As discussed in the notes to the consolidated financial statements,  the Company
changed its method of accounting for investments in securities in 1994.



GEO. S. OLIVE & CO. LLC


Indianapolis, Indiana
January 23, 1997

<PAGE>

                                     LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
                                   Consolidated Statement of Financial Condition


<TABLE>
<CAPTION>
December 31                                                                1996                1995
------------------------------------------------------------------------------------------------------
Assets
<S>                                                                     <C>               <C>        
   Cash                                                                 $    997,552      $ 1,267,791
   Short-term interest-bearing deposits                                    2,761,126        1,974,788
                                                                         -----------      -----------
      Total cash and cash equivalents                                      3,758,678        3,242,579
   Interest-bearing deposits                                                 100,000          100,000
   Investment securities--available for sale                              14,303,105       18,753,096
   Loans                                                                  57,038,066       49,930,050
   Allowance for loan losses                                                (235,970)        (222,700)
                                                                         -----------      -----------
      Net loans                                                           56,802,096       49,707,350
   Premises and equipment                                                    476,325          432,176
   Federal Home Loan Bank of Indianapolis stock, at cost                     386,500          348,200
   Cash value of life insurance                                            1,040,242        1,005,686
   Interest receivable                                                       447,085          466,466
   Deferred income tax benefit                                               312,197          117,213
   Other assets                                                               42,265          474,542
                                                                         -----------      -----------
      Total assets                                                       $77,668,493      $74,647,308
                                                                         ===========      ===========

Liabilities
   Deposits
      Noninterest-bearing                                               $    631,122     $    469,024
      Interest-bearing                                                    56,765,078       51,991,956
                                                                         -----------      -----------
         Total deposits                                                   57,396,200       52,460,980
   Short-term borrowings                                                   3,400,000        1,000,000
   Interest payable                                                           84,490           64,163
   Other liabilities                                                       1,360,915          667,895
                                                                         -----------      -----------
         Total liabilities                                                62,241,605       54,193,038
                                                                         -----------      -----------
Commitments and Contingencies

Stockholders' Equity
   Preferred stock, no-par value
      Authorized and unissued--2,000,000 shares
   Common stock, no-par value
      Authorized--5,000,000 shares
      Issued and outstanding--1,256,375 and 1,322,500 shares                7,518,062       12,670,006
   Retained earnings--substantially restricted                              8,587,979        7,774,213
   Unearned compensation                                                    (522,382)
   Net unrealized gain (loss) on securities available for sale              (156,771)          10,051
                                                                         -----------      -----------
         Total stockholders' equity                                       15,426,888       20,454,270
                                                                         -----------      -----------
         Total liabilities and stockholders' equity                      $77,668,493      $74,647,308
                                                                         ===========      ===========
</TABLE>


   See notes to consolidated financial statements.

<PAGE>

                    LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
                        Consolidated Statement of Income

<TABLE>
<CAPTION>


Year Ended December 31                                         1996              1995             1994
----------------------------------------------------------------------------------------------------------
Interest Income
<S>                                                          <C>              <C>               <C>       
   Loans receivable                                          $4,420,668       $3,724,129        $3,098,456
   Investment securities
     Taxable                                                    917,529          760,351           756,506
     Tax-exempt                                                 125,765          117,422           103,038
   Other interest and dividend income                           189,293          172,763            73,562
                                                             ----------       ----------        ----------
       Total interest income                                  5,653,255        4,774,665         4,031,562
                                                             ----------       ----------        ----------
Interest Expense
   Deposits                                                   2,613,552        2,435,953         2,037,337
   Short-term borrowings                                        106,037           31,900             6,063
                                                             ----------       ----------        ----------
       Total interest expense                                 2,719,589        2,467,853         2,043,400
                                                             ----------       ----------        ----------
Net Interest Income                                           2,933,666        2,306,812         1,988,162
   Provision for losses on loans                                 12,000           20,000             5,964
                                                             ----------       ----------        ----------
Net Interest Income After Provision for Losses on Loans       2,921,666        2,286,812         1,982,198

Other Income
   Service charges on deposit accounts                           67,208           47,088            35,015
   Net realized gains (losses) on sales of securities           (47,238)           3,095
   Recoveries on previously written-off securities               17,291           89,683
   Other income                                                  45,247           39,405            43,801
                                                             ----------       ----------        ----------
       Total other income                                        82,508          179,271            78,816
                                                             ----------       ----------        ----------
Other Expenses
   Salaries and employee benefits                               618,793          492,322           459,086
   Net occupancy expenses                                        39,115           34,341            29,111
   Equipment expenses                                            42,221           46,450            54,811
   Deposit insurance expense                                    449,429          116,224           113,616
   Computer processing fees                                      91,076           92,910            66,836
   Other expenses                                               343,224          249,840           233,997
                                                             ----------       ----------        ----------
       Total other expenses                                   1,583,858        1,032,087           957,457
                                                             ----------       ----------        ----------
Income Before Income Tax                                      1,420,316        1,433,996         1,103,557
   Income tax expense                                           507,363          526,142           369,634
                                                             ----------       ----------        ----------
Net Income                                                   $  912,953       $  907,854        $  733,923
                                                             ==========       ==========        ==========

Earnings Per Share                                                 $.69

Weighted Average Shares Outstanding                           1,316,372
</TABLE>

See notes to consolidated financial statements.

<PAGE>

                    LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
            Consolidated Statement of Changes in Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                         Net Unrealized
                                                                                         Gain (Loss) on
                                       Common Stock                                        Securities
                                     Shares                  Retained        Unearned       Available
                                   Outstanding    Amount     Earnings      Compensation     For Sale       Total
-------------------------------------------------------------------------------------------------------------------
<S>                               <C>         <C>          <C>             <C>           <C>          <C>        
Balances, January 1, 1994                                   $6,396,936                                 $ 6,396,936
   Net income for 1994                                         733,923                                     733,923
   Cumulative effect of change
      in method of accounting
      for securities                                                                      $123,354         123,354
   Net change in unrealized gain
      (loss) on securities
      available for sale                                                                  (420,719)       (420,719)
                                   ---------   -----------  ----------      --------      ---------    -----------
Balances, December 31, 1994                                  7,130,859                    (297,365)      6,833,494
   Net income for 1995                                         907,854                                     907,854
   Common stock issued in
      conversion, net of costs     1,322,500   $12,670,006                                              12,670,006
   Cash dividends ($.20 per share)                            (264,500)                                   (264,500)
   Net change in unrealized gain
      (loss) on securities available
      for sale                                                                             307,416         307,416
                                   ---------   -----------  ----------      --------      ---------    -----------
Balances, December 31, 1995        1,322,500    12,670,006   7,774,213                      10,051      20,454,270
   Net income for 1996                                         912,953                                     912,953
   Regular cash dividends
      ($.40 per share)                            (423,200)    (99,187)                                   (522,387)
   Special cash distribution
      ($3.00 per share)                         (3,930,000)                                             (3,930,000)
   Contribution for unearned
      compensation                                                         $(614,567)                     (614,567)
   Amortization of unearned
      compensation                                                            92,185                        92,185
   Purchase of stock                 (66,125)     (798,744)                                               (798,744)
   Net change in unrealized
      gain (loss) on securities
      available for sale                                                                  (166,822)       (166,822)
                                   ---------   -----------  ----------      --------      ---------    -----------
Balances, December 31, 1996        1,256,375   $ 7,518,062  $8,587,979      (522,382)     $(156,771)   $15,426,888
                                   =========   ===========  ==========      ========      =========    ===========
</TABLE>

See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
                                     LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
                                       Consolidated Statement of Cash Flows

Year Ended December 31                                          1996              1995              1994
-----------------------------------------------------------------------------------------------------------
Operating Activities
<S>                                                        <C>                <C>               <C>       
   Net income                                              $    912,953       $  907,854        $  733,923
   Adjustments to reconcile net income to net cash
      provided by operating activities
      Provision for loan losses                                  12,000           20,000             5,964
      Securities (gains) losses                                  47,238           (3,095)
      Gain on sale of foreclosed real estate                       (869)         (12,144)
      Investment securities (accretion) amortization, net        54,374          (21,422)           23,556
      Depreciation                                               38,432           45,543            51,048
      Amortization of unearned compensation                      92,185
      Deferred income tax                                       (85,564)           7,174           (34,651)
      Change in
         Interest receivable                                     19,381         (109,842)           22,708
         Interest payable                                        20,327           17,837             5,027
         Cash surrender value life insurance                    (34,556)         (25,006)          (27,260)
      Other adjustments                                          29,613          254,722            (1,696)
                                                             ----------      ----------         ----------
         Net cash provided by operating activities            1,105,514        1,081,621           778,619
                                                             ----------      ----------         ----------
Investing Activities
   Net change in interest-bearing deposits                                      (100,000)
   Purchases of securities available for sale                (8,011,623)      (8,056,729)       (1,513,625)
   Proceeds from maturities of securities available for sale  5,847,904        3,939,484            92,980
   Purchases of securities held to maturity                                   (5,530,959)       (1,088,056)
   Proceeds from maturities of securities held to maturity                     1,558,611         4,256,619
   Proceeds from sales of securities                          7,338,154          708,095
   Purchase of Federal Home Loan Bank stock                     (38,300)         (40,900)          (18,200)
   Net change in loans                                       (7,105,635)      (5,688,663)       (6,175,045)
   Proceeds from foreclosed real estate sales                                      8,500
   Purchase of premises and equipment                           (82,582)         (62,578)          (32,371)
   Other investing activities                                      (242)         (15,393)
         Net cash used by investing activities               (2,052,324)     (13,280,532)       (4,477,698)
                                                             ----------      -----------        ----------
Financing Activities
   Net change in
      Noninterest-bearing, interest-bearing demand
         and savings deposits                                 1,927,086        1,585,557           (10,985)
      Certificates of deposit                                 3,008,134         (326,703)        1,654,764
      Short-term borrowings                                   1,400,000
   Proceeds from Federal Home Loan Bank advances              6,000,000        1,000,000         1,000,000
   Payment of Federal Home Loan Bank advances                (5,000,000)      (1,000,000)
   Dividends                                                 (4,459,000)        (132,250)
   Purchase of stock                                           (798,744)
   Contribution for unearned compensation                      (614,567)
   Sale of stock, net of costs                                                12,670,006
                                                             ----------      ----------         ----------
         Net cash provided by financing activities            1,462,909       13,796,610         2,643,779
                                                             ----------      ----------         ----------

Net Change in Cash and Cash Equivalents                         516,099        1,597,699        (1,055,300)

Cash and Cash Equivalents, Beginning of Year                  3,242,579        1,644,880         2,700,180
                                                             ----------      ----------         ----------
Cash and Cash Equivalents, End of Year                       $3,758,678      $3,242,579         $1,644,880
                                                             ==========      ==========         ==========

Additional Cash Flows and Supplementary Information
   Interest paid                                             $2,699,262       $2,450,016        $2,038,374
   Income tax paid                                              628,968          411,900           492,628
   Dividends payable at end of year                             125,637          132,250
   Due from broker for called securities                                         400,000
   Due to broker for purchased securities                       706,000
</TABLE>

See notes to consolidated financial statements.

<PAGE>

                    LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements
                       (Table Dollar Amounts in Thousands)


NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of Logansport Financial Corp. ("Company"),
and its wholly owned subsidiary,  Logansport Savings Bank, FSB ("Bank"), conform
to generally accepted accounting  principles and reporting practices followed by
the thrift industry. The more significant of the policies are described below.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

The  Company  is a  thrift  holding  company  whose  principal  activity  is the
ownership and  management of the Bank.  The Bank operates under a federal thrift
charter and provides full banking services. As a federally-chartered thrift, the
Bank is subject to the  regulation of the Office of Thrift  Supervision  and the
Federal Deposit Insurance Corporation.

The Bank  generates  mortgage and  consumer  loans and  receives  deposits  from
customers  located  primarily  in Cass  County,  Indiana.  The Bank's  loans are
generally  secured by specific  items of collateral  including real property and
consumer assets.

Consolidation--The consolidated financial statements include the accounts of the
Company and the Bank after elimination of all material intercompany transactions
and accounts.

Investment  Securities--The  Company adopted  Statement of Financial  Accounting
Standards  ("SFAS")  No. 115,  Accounting  For Certain  Investments  in Debt and
Equity Securities, on January 1, 1994.

Debt  securities  are  classified  as held to maturity  when the Company has the
positive intent and ability to hold the securities to maturity.  Securities held
to maturity are carried at amortized cost.

Debt  securities  not  classified  as held to  maturity  and  marketable  equity
securities are classified as available for sale.  Securities  available for sale
are carried at fair value with unrealized  gains and losses reported  separately
in stockholders' equity, net of tax.

Amortization  of premiums and  accretion  of discounts  are recorded as interest
income from  securities.  Realized gains and losses are recorded as net security
gains  (losses).  Gains and losses on sales of securities  are determined on the
specific-identification method.

At January 1, 1994,  investment securities with an approximate carrying value of
$5,816,700  were  reclassified  as  available  for sale.  This  reclassification
resulted  in an  increase  in  total  stockholders'  equity,  net of  taxes,  of
$123,354.


<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Loans are  carried  at the  principal  amount  outstanding.  Interest  income is
accrued on the principal  balances of loans. The accrual of interest on impaired
loans is discontinued when, in management's  opinion, the borrower may be unable
to meet payments as they become due. When interest accrual is discontinued,  all
unpaid accrued interest is reversed.  Interest income is subsequently recognized
only to the  extent  cash  payments  are  received.  Loan  origination  fees are
generally  charged in amounts that do not materially  exceed the direct costs of
underwriting  and  closing  loans,  and  therefore,  no  deferred  loan fees are
recorded.

Allowance for loan losses is maintained to absorb potential loan losses based on
management's  continuing  review and  evaluation  of the loan  portfolio and its
judgment  as to  the  impact  of  economic  conditions  on  the  portfolio.  The
evaluation by management includes consideration of past loss experience, changes
in the composition of the portfolio,  the current  condition and amount of loans
outstanding,  and the probability of collecting all amounts due.  Impaired loans
are  measured by the present  value of expected  future cash flows,  or the fair
value of the collateral of the loan, if collateral dependent.

The  determination  of the adequacy of the allowance for loan losses is based on
estimates  that are  particularly  susceptible  to  significant  changes  in the
economic  environment  and market  conditions.  Management  believes  that as of
December  31,  1996,  the  allowance  for  loan  losses  is  adequate  based  on
information  currently available.  A worsening or protracted economic decline in
the area within which the Company  operates  would  increase the  likelihood  of
additional  losses due to credit and market  risks and could create the need for
additional loss reserves.

Premises  and  equipment  are carried at cost net of  accumulated  depreciation.
Depreciation is computed using the straight-line  and accelerated  methods based
principally on the estimated useful lives of the assets. Maintenance and repairs
are expensed as incurred while major additions and improvements are capitalized.
Gains and losses on dispositions are included in current operations.

Federal Home Loan Bank stock is a required  investment for institutions that are
members of the Federal Home Loan Bank system.  The  required  investment  in the
common stock is based on a predetermined formula.

Foreclosed  real  estate  is  carried  at the lower of cost or fair  value  less
estimated selling costs.  When foreclosed real estate is acquired,  any required
adjustment is charged to the allowance for loan losses. All subsequent  activity
is included in current operations.

Income tax in the consolidated  statement of income includes deferred income tax
provisions or benefits for all significant  temporary differences in recognizing
income and expenses for financial reporting and income tax purposes.

Earnings per share for 1996 was computed based upon the weighted  average common
shares  outstanding  during the period  subsequent to the Bank's conversion to a
stock  savings  bank on June 13,  1995.  Net income per share for the year ended
December 31, 1995, is not meaningful.

<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


INVESTMENT SECURITIES
<TABLE>
<CAPTION>
                                                                              1996
                                                 ------------------------------------------------------------
                                                                     Gross            Gross
                                                 Amortized        Unrealized       Unrealized           Fair
December 31                                        Cost              Gains           Losses             Value
--------------------------------------------------------------------------------------------------------------
Available for sale
<S>                                               <C>                <C>                <C>            <C>    
   Federal agencies                               $  5,245           $   1              $366           $ 4,880
   State and municipal                               2,194              48                               2,242
   Mortgage and other asset-backed
      securities                                     6,768               8               102             6,674
   Marketable equity securities                          6             153                                 159
   Corporate obligations                               350                                 2               348
                                                   -------            ----              ----           -------
Total investment securities                        $14,563            $210              $470           $14,303
                                                   =======            ====              ====           =======
</TABLE>



<TABLE>
<CAPTION>
                                                                              1995
                                                 ------------------------------------------------------------
                                                                     Gross            Gross
                                                 Amortized        Unrealized       Unrealized           Fair
December 31                                        Cost              Gains           Losses             Value
---------------------------------------------------------------------------------------------------------------
Available for sale
<S>                                                <C>               <C>                <C>           <C>     
   Federal agencies                                $ 7,424           $  23              $272          $  7,175
   State and municipal                               2,229              67                 2             2,294
   Mortgage and other asset-backed
      securities                                     7,422              49                 3             7,468
   Marketable equity securities                          6             114                                 120
   Corporate obligations                             1,655              45                 4             1,696
                                                   -------            ----              ----           -------
         Total investment securities               $18,736            $298              $281           $18,753
                                                   =======            ====              ====           =======
</TABLE>


The amortized  cost and fair value of securities  available for sale at December
31, 1996, by contractual  maturity,  are shown below.  Expected  maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties. <PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)

                                                          1996
                                                Amortized          Fair
Maturity Distribution at December 31              Cost             Value
---------------------------------------------------------------------------
Within one year                                 $ 1,463            $ 1,462
One to five years                                 2,351              2,281
Five to ten years                                 3,411              3,152
After ten years                                     564                575
                                                -------            -------
                                                  7,789              7,470
Marketable equity securities                          6                159
Mortgage-backed and 
     other asset-backed securities                6,768              6,674
                                                -------            -------
      Totals                                    $14,563            $14,303
                                                =======            =======

Securities with a carrying value of $11,268,000 and $11,642,000  were pledged at
December 31, 1996 and 1995 to secure FHLB advances.

Proceeds from sales of  securities  available for sale during 1996 and 1995 were
$7,338,154 and $708,095.  Gross gains of $19,553 and $3,095 in 1996 and 1995 and
gross losses of $66,791 in 1996 were realized on those sales.

On November 30, 1995, the Company  transferred  certain  securities from held to
maturity to available for sale in accordance with a transition  reclassification
allowed by the Financial  Accounting  Standards  Board.  Such  securities  had a
carrying value of $10,267,223 and a fair value of $10,391,280.

During the fourth quarter of 1994, the Company  transferred  investments  with a
carrying  value  of  $1,774,000  from  the  available-for-sale  category  to the
held-to-maturity  category.  Accordingly,  the  difference  between the carrying
value and par value will be amortized to maturity.  The net  unrealized  loss on
these  investments of $101,262 at December 31, 1994,  included in the unrealized
loss on securities available for sale on the statement of financial condition as
part of stockholders'  equity,  was also to be amortized to maturity in an equal
offsetting amount.  During 1995, these investments were included in the transfer
of   certain   securities   from   the   held-to-maturity    category   to   the
available-for-sale  category as allowed by the  Financial  Accounting  Standards
Board.

Certain corporate  obligations  previously included in securities  available for
sale  were  written  down in prior  years by a total  of  $185,000  due to their
deteriorated  credit quality.  Recoveries of  approximately  $17,000 and $90,000
were recorded in 1996 and 1995 for principal  payments received in excess of the
carrying value.

The tax expense  (benefit) for securities  gains (losses) was $(18,771) for 1996
and $1,226 for 1995.


<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)

LOANS AND ALLOWANCE


December 31                                       1996             1995
-------------------------------------------------------------------------
Real estate mortgage loans
   One-to-four family                            $41,109          $36,608
   Multi-family                                    2,370            1,915
   Commercial                                      2,701            1,620
Construction loans                                   994              907
Consumer loans                                     9,864            8,002
Commercial paper                                                      878
                                                   -----            -----
                                                 $57,038          $49,930
                                                 =======          =======

Year Ended December 31                 1996             1995             1994
------------------------------------------------------------------------------
Allowance for loan losses
   Balances, January 1                 $223             $206              $201
   Provision for loan losses             12               20                 6
   Loans recovered (charged off)          1               (3)               (1)
                                       ----             ----              ----
Balances, December 31                  $236             $223              $206
                                       ====             ====              ====


PREMISES AND EQUIPMENT


December 31                                              1996             1995
------------------------------------------------------------------------------
Land                                                     $203             $148
Buildings and land improvements                           443              423
Furniture and equipment                                   264              258
                                                         ----             ----
         Total cost                                       910              829
Accumulated depreciation                                 (434)            (397)
                                                         ----             ----
         Net                                             $476             $432
                                                         ====             ====

<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)

DEPOSITS


December 31                                        1996             1995
--------------------------------------------------------------------------
Demand deposits                                   $20,294          $18,290
Savings deposits                                    3,119            3,196
Certificates of $100,000 or more                    4,358            3,643
Other certificates                                 29,625           27,332
                                                   ------           ------

     Total deposits                               $57,396          $52,461
                                                  =======          =======

Certificates maturing in 
years ending after December 31, 1996:

1997                                              $19,939
1998                                               11,706
1999                                                1,083
2000                                                  708
2001                                                  519
Thereafter                                             28
                                                  -------
                                                  $33,983
                                                  =======

SHORT-TERM BORROWINGS

December 31                                             1996             1995
-------------------------------------------------------------------------------
Federal Home Loan Bank advances                         $2,000           $1,000
Note payable                                             1,400
                                                        ------           ------
Total short-term borrowings                             $3,400           $1,000
                                                        ======           ======


The  weighted  average  interest  rate on the  advances  was  5.38% and 6.02% at
December  31,  1996 and 1995.  The  advances  at  December  31,  1996 are due in
January, 1997.

The Federal  Home Loan Bank  advances  are secured by  first-mortgage  loans and
investment securities totaling $49,412,000. Advances are subject to restrictions
or penalties in the event of prepayment.

The note  payable to another  bank was due on March 5, 1997.  It was  secured by
100% of the Bank's  common stock,  and interest was at the prime rate.  The note
was repaid on January 16,  1997,  from the  proceeds  of a Bank  dividend to the
Company.

<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)

INCOME TAX

<TABLE>
<CAPTION>

Year Ended December 31                                             1996             1995             1994
------------------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>               <C> 
Income tax expense
   Currently payable
     Federal                                                       $457             $395              $299
     State                                                          136              124               106
   Deferred
     Federal                                                        (69)               7               (25)
     State                                                          (17)                               (10)
                                                                   ----             ----              ----
       Total income tax expense                                    $507             $526              $370
                                                                   ====             ====              ====

Reconciliation of federal statutory to actual tax expense
   Federal statutory income tax at 34%                             $483             $488              $375
   Tax exempt interest                                              (37)             (35)              (31)
   Nontaxable income                                                (12)              (9)               (9)
   Effect of state income taxes                                      79               82                63
   Other                                                             (6)                               (28)
                                                                   ----             ----              ----
       Actual tax expense                                          $507             $526              $370
                                                                   ----             ----              ----
     Effective income tax rate                                     35.7%            36.7%             33.5%
                                                                   ====             ====              ==== 
</TABLE>


A cumulative deferred tax asset is included in other assets at December 31, 1996
and 1995. The components of the asset are as follows at:

<TABLE>
<CAPTION>
     December 31                                                                1996             1995
------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>   
     Differences in depreciation methods                                       $  (9)           $ (10)
     Differences in accounting for investment writedown                           33               40
     Differences in accounting for loan losses                                    27               12
     Compensation                                                                 72               23
     Differences in accounting for supplemental retirement plan                  101               74
     State income tax                                                            (21)             (15)
     Other                                                                         7
     Unrealized (gain) loss on securities available for sale                     102               (7)
                                                                                $312             $117
                                                                                ====             ====

     Assets                                                                     $342             $149
     Liabilities                                                                 (30)             (32)
                                                                                ----             ----
                                                                                $312             $117
                                                                                ====             ====
</TABLE>


No valuation allowance was necessary during any time in 1996, 1995 or 1994.

<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


Retained earnings include approximately  $1,531,000 for which no deferred income
tax  liability  has been  recognized.  This amount  represents  an allocation of
income to bad debt  deductions  as of December 31, 1987 for tax  purposes  only.
Reduction  of amounts so allocated  for purposes  other than tax bad debt losses
including  redemption  of bank  stock or  excess  dividends,  or loss of  "bank"
status, would create income for tax purposes only, which income would be subject
to the then-current  corporate  income tax rate. The unrecorded  deferred income
tax  liability  on the  above  amount at  December  31,  1996 was  approximately
$521,000.

EQUITY CHANGES

The Bank converted from a mutual federal savings bank to a stock federal savings
bank (the  "Conversion")  on June 13, 1995 and issued all of its common stock to
the Company.  Concurrently  with the  Conversion,  the Company issued  1,322,500
shares of Company common stock, with no par value. Net proceeds of the Company's
stock issuance, after costs, were $12,670,006.

In  September,  1996,  the Board of Directors  declared a one-time  special cash
distribution  of $3.00 per share to the holders of the  Company's  common stock.
The special  one-time cash  distribution of $3,930,000 on 1,310,000  outstanding
shares was paid on December 10, 1996 to  stockholders  of record on November 25,
1996.  The Company  received a Private  Letter Ruling from the Internal  Revenue
Service which  qualified most of the 1996 cash  distributions  to  stockholders,
including   regular   quarterly   dividends   and  the  one-time   special  cash
distribution, as a nontaxable return of capital.  Accordingly,  $3.32 per share,
or  $4,353,200,  has been charged to common stock,  and the remaining  amount of
distributions of $99,187 has been charged to retained earnings.

In October,  1996, the Company announced its intention to repurchase,  from time
to time,  on the open market up to 5% of the Company's  common stock,  or 66,125
shares.  During the remainder of 1996,  the Company  purchased the 66,125 shares
pursuant to this program for $798,744.

DEPOSIT INSURANCE EXPENSE

The Bank's deposits are presently insured by the Savings  Association  Insurance
Fund (the "SAIF"). A  recapitalization  plan for the SAIF was signed into law on
September 30, 1996, which provided for a special  assessment on all SAIF-insured
institutions  to enable the SAIF to achieve its required level of reserves.  The
assessment  of .065% was effected  based on deposits as of March 31,  1995.  The
Company's  special  assessment  totaled  $334,660 before taxes,  and was charged
against current year income and included with deposit insurance expense.

<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)

COMMITMENTS AND CONTINGENT LIABILITIES


In  the  normal  course  of  business  there  are  outstanding  commitments  and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements.  The
Bank's exposure to credit loss in the event of nonperformance by the other party
to the  financial  instruments  for  commitments  to extend  credit and  standby
letters of credit is represented by the  contractual or notional amount of those
instruments.  The Bank uses the same credit policies in making such  commitments
as it does for  instruments  that are  included in the  statement  of  financial
condition.

Financial  instruments  whose  contract  amount  represents  credit risk were as
follows:


December 31                                         1996              1995
---------------------------------------------------------------------------
Mortgage loan commitments                           $1,126             $947
Consumer loan commitments, 
     principally home equity lines of credit           438              272
Standby letters of credit                              759              759

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash  requirements.  The Bank evaluates each customer's  credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's  credit
evaluation.  Collateral held varies,  but may include  residential  real estate,
income-producing commercial properties, or other assets of the borrower. Standby
letters of credit are  conditional  commitments  issued by the Bank to guarantee
the performance of a customer to a third party.

In June,  1995, the Company entered into three-year  agreements (with provisions
for  extensions)  with  two  of its  key  employees  which  provide  for  salary
continuation  for a three-year  period under certain  circumstances  following a
change of control of the Company, as defined. Under the terms of the agreements,
these payments could occur if, following a change of control,  such officers are
terminated  other  than for  cause  or  unreasonable  changes  are made in their
employment relationships.

In November,  1996,  the Bank agreed,  subject to certain  conditions  under the
agreement,  to invest approximately  $1,525,000 in 1997 in a limited partnership
organized to build and operate an affordable housing project.

The  Company  and Bank are also  subject  to claims  and  lawsuits  which  arise
primarily in the ordinary  course of business.  It is the opinion of  management
that the  disposition  or  ultimate  determination  of such  possible  claims or
lawsuits will not have a material  adverse  effect on the financial  position of
the Company.



<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


RESTRICTION ON DIVIDENDS

The  Company is not  subject to any  regulatory  restrictions  on the payment of
dividends  to  its  stockholders.  The  Office  of  Thrift  Supervision  ("OTS")
regulations  provide  that a savings  association  which meets  fully  phased-in
capital  requirements (those in effect on December 31, 1994) and is subject only
to "normal supervision" may pay out, as a dividend, 100 percent of net income to
date over the calendar  year and 50 percent of surplus  capital  existing at the
beginning of the calendar year without  supervisory  approval,  but with 30 days
prior notice to the OTS. Any additional  amount of capital  distributions  would
require prior regulatory approval. A savings association failing to meet current
capital standards may only pay dividends with supervisory approval.

At December 31, 1996, total stockholders' equity of the Bank was $16,861,000, of
which approximately $7,320,000 was available for the payment of dividends.

At the time of Conversion,  a liquidation  account was  established in an amount
equal to the Bank's net worth as reflected in the latest  statement of condition
used in its final  conversion  offering  circular.  The  liquidation  account is
maintained  for the benefit of eligible  deposit  account  holders who  maintain
their deposit account in the Bank after  Conversion.  In the event of a complete
liquidation (and only in such event),  each eligible deposit account holder will
be entitled to receive a liquidation  distribution from the liquidation  account
in the  amount of the then  current  adjusted  subaccount  balance  for  deposit
accounts  then  held,  before  any  liquidation  distribution  may  be  made  to
stockholders.  Except for the repurchase of stock and payment of dividends,  the
existence of the liquidation account will not restrict the use or application of
net worth. The initial balance of the liquidation account was $7,025,000.

REGULATORY CAPITAL

The Bank is subject to various regulatory capital  requirements  administered by
the federal banking agencies.  Failure to meet minimum capital  requirements can
initiate  actions by the regulatory  agencies that, if undertaken,  could have a
material effect on the Company's  financial  statements.  Under capital adequacy
guidelines and the regulatory  framework for prompt corrective  action, the Bank
must meet specific capital guidelines that involve quantitative  measures of the
Bank's assets,  liabilities,  and certain  off-balance-sheet items as calculated
under  regulatory   accounting   practices.   The  Bank's  capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

At December 31, 1996, the Bank meets all capital adequacy  requirements to which
it is  subject,  and the most recent  notification  from the  regulatory  agency
categorized  the Bank as well  capitalized  under the  regulatory  framework for
prompt  corrective  action.  There have been no  conditions or events since that
notification that management believes have changed this categorization.


<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The actual and required capital amounts and ratios are as follows:

<TABLE>
<CAPTION>
                                                                            1996
                                                                   Required for Adequate        To Be Well
                                                   Actual                 Capital 1            Capitalized 1
                                             ------------------       -----------------       -----------------
December 31                                   Amount      Ratio       Amount      Ratio       Amount      Ratio
-----------                                   ------      -----       ------      -----       ------      -----

Total risk-based capital1
<S>                                         <C>           <C>         <C>         <C>         <C>        <C>  
   (to risk-weighted assets)                $ 17,254      41.1%       $3,356      8.0%        $4,195     10.0%
Core capital1
   (to adjusted tangible assets)              17,018      21.9%        2,332      3.0%         4,664      6.0%
Core capital1
   (to adjusted total assets)                 17,018      21.9%        2,332      3.0%         3,886      5.0%
1As defined by regulatory agencies
</TABLE>

The Bank's tangible  capital at December 31, 1996 was  $17,018,000  which amount
was 21.9% of tangible assets and exceeded the required ratio of 1.5%.

BENEFITS PLANS

The  Company  is  a  participant  in a  pension  fund  known  as  the  Financial
Institutions Retirement Fund ("FIRF"). This plan is a multi-employer plan. There
was no pension  expense  for 1996.  Pension  expense was $35,787 and $48,627 for
1995 and 1994. This plan provides pension benefits for  substantially all of the
Company's eligible employees.

The Bank has purchased  life insurance on certain  officers and  directors.  The
insurance has an approximate cash value of $1,040,242 and $1,005,686 at December
31, 1996 and 1995. The Bank has approved compensation  arrangements that provide
retirement  benefits to certain  officers  and  deferral  of fees for  directors
covered by the keyman  policies.  The  benefit  arrangement  for one  individual
provides that the individual provide consulting  services to the Bank during the
five-year  period  following  retirement.  The  benefits  to be paid,  excluding
amounts attributable to consulting,  are being accrued from the date of approval
of the arrangements to the date that full  eligibility is attained.  The accrual
of benefits totaled $87,077, $76,054 and $66,246 for 1996, 1995, and 1994.

The Bank adopted the Logansport  Savings Bank, FSB Employee Stock Ownership Plan
and Trust Agreement  ("ESOP")  effective July 1, 1995, for eligible employees of
the Bank. The ESOP will be funded by discretionary  employer  contributions made
in cash,  which will be invested in shares of the  Company's  common  stock.  No
contributions were made to the ESOP in 1996 or 1995.

In April, 1996, the Company's stockholders approved the Logansport Savings Bank,
FSB  Recognition  and Retention Plan and Trust (RRP).  The RRP may acquire up to
52,900  shares of the  Company's  common  stock,  an amount equal to 4.0% of the
number of shares  issued in the  Conversion,  for awards to  management.  Shares
awarded  to  management  under  the RRP vest at a rate of 20% at the end of each
full twelve months of service with the Bank after the date of grant.  During the
quarter ended June 30, 1996,  the Bank  contributed  $614,567 to the RRP for the
purchase of 46,675  shares of the  Company's  common stock awarded to management
and  recorded  the  amount as  unearned  compensation.  Amortization  expense of
unearned compensation under the RRP was $92,185 for 1996.


<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


STOCK OPTION PLAN

In April,  1996, the Company's  stockholders  approved the Logansport  Financial
Corp. Stock Option Plan (Stock Option Plan), which reserved for issuance 132,250
shares, an amount equal to 10% of the shares issued in the Conversion. Under the
Stock  Option  Plan,  which  is  accounted  for in  accordance  with  Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees,
and related interpretations,  the Company granted directors,  officers and other
key employees stock option awards which vest and become fully exercisable at the
end of five years of continued  employment.  The exercise  price of each option,
which has a ten-year life, was equal to the market price of the Company's  stock
on the date of grant; therefore, no compensation expense was recognized.

In April,  1996, the Company granted stock option awards for 108,691 shares with
an  exercise  price  of  $12.50.  As a  result  of  the  one-time  special  cash
distribution  of $3.00 per share in late 1996,  the number of shares awarded and
exercise price were adjusted to 129,340  shares and $10.53 to ensure  equivalent
economic consequences to option holders following the distribution.

No  options  were   exercisable   or   forfeited  at  December  31,  1996.   The
weighted-average  fair value of options  granted during 1996 was $1.81,  and the
options outstanding have a weighted-average  remaining  contractual life of 9.25
years. There were 2,910 shares available for grant at December 31, 1996.

SFAS No. 123,  Stock-Based  Compensation,  is effective for the Company in 1996.
This  Statement  establishes  a  fair  value  based  method  of  accounting  for
stock-based  compensation plans.  Although the Company has elected to follow APB
No. 25, SFAS No. 123 requires pro forma  disclosures  of net income and earnings
per share as if the  Company  had  accounted  for its stock  options  under that
Statement.  The fair value of each option grant was  estimated on the grant date
using an option-pricing model with the following assumptions:


Risk-free interest rate                                          6.50%
Dividend yield                                                   3.67%
Expected volatility factor of market price of common stock      11.50%
Weighted-average expected life of the options                       7 years

Under  SFAS No.  123,  compensation  cost is  recognized  in the  amount  of the
estimated  fair value of the options and  amortized to expense over the options'
vesting  period.  The pro forma  effect on net income and  earnings per share of
this Statement are as follows:

Net income                           As reported            $913
                                     Pro forma               883

Earnings per share                   As reported             .69
                                     Pro forma               .67



<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


FAIR VALUES OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instrument:

Cash  and  Cash  Equivalents--The  fair  value  of  cash  and  cash  equivalents
approximates carrying value.

Interest-Bearing   Deposits--The   fair  value  of   interest-bearing   deposits
approximates carrying value.

Securities  and  Mortgage-backed  Securities--Fair  values  are  based on quoted
market prices.

Loans--For both short-term loans and variable-rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying
values. The fair values for other loans are estimated using discounted cash flow
analyses and interest rates currently being offered for loans with similar terms
to borrowers of similar credit quality.

Interest  Receivable/Payable--The  fair  value  of  interest  receivable/payable
approximates carrying values.

FHLB  Stock--Fair  value of FHLB  stock is based on the price at which it may be
resold to the FHLB.

Due From Broker--Fair value approximates carrying value.

Deposits--The fair values of  noninterest-bearing,  interest-bearing  demand and
savings  accounts are equal to the amount payable on demand at the balance sheet
date. The carrying amounts for variable rate, fixed-term certificates of deposit
approximate  their  fair  values at the  balance  sheet  date.  Fair  values for
fixed-rate  certificates  of deposit are estimated  using a discounted cash flow
calculation  that applies interest rates currently being offered on certificates
to a schedule of aggregated expected monthly maturities on such time deposits.

Federal Home Loan Bank Advances--Fair value approximates carrying value.

Due to Broker--Fair value approximates carrying value.

<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


The estimated fair values of the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                   1996                                    1995
                                        -------------------------               --------------------------
                                        Carrying            Fair                Carrying           Fair
December 31                              Amount             Value                Amount            Value
----------------------------------------------------------------------------------------------------------
Assets
<S>                                       <C>              <C>                    <C>              <C>   
   Cash and cash equivalents              $3,759           $3,759                 $3,243           $3,243
   Interest-bearing deposits                 100              100                    100              100
   Securities available for sale          14,303           14,303                 18,753           18,753
   Loans, net                             56,802           57,310                 49,707           50,453
   Interest receivable                       447              447                    466              466
   Stock in FHLB                             387              387                    348              348
   Due from broker                                                                   400              400

Liabilities
   Deposits                               57,396           57,257                 52,461           52,602
   Short-term borrowings                   3,400            3,398                  1,000            1,000
   Interest payable                           84               84                     64               64
   Due to broker                             706              706
</TABLE>

CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)


Presented  below is condensed  financial  information as to financial  position,
results of operations and cash flows of the Company:

<TABLE>
<CAPTION>
                                              Condensed Balance Sheet

December 31                                                                       1996             1995
----------------------------------------------------------------------------------------------------------
Assets
<S>                                                                            <C>              <C>      
   Cash and cash equivalents                                                   $      89        $     591
   Investment securities available for sale                                                         2,454
   Loans--commercial paper                                                                            878
   Investment in subsidiary                                                       16,861           16,671
   Other assets                                                                        5               15
                                                                                 -------          -------
     Total assets                                                                $16,955          $20,609
                                                                                 =======          =======

Liabilities
   Short-term borrowings                                                        $  1,400
   Other                                                                             128        $     155
     Total liabilities                                                             1,528              155
                                                                                 -------          -------
Stockholders' Equity
   Common stock                                                                    7,518           12,670
   Retained earnings                                                               8,588            7,774
   Unearned compensation                                                            (522)
   Net unrealized gain (loss) on securities available for sale                      (157)              10
                                                                                 -------          -------
     Total stockholders' equity                                                   15,427           20,454
                                                                                 -------          -------
     Total liabilities and stockholders' equity                                  $16,955          $20,609
                                                                                 =======          =======
</TABLE>


<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


                                           Condensed Statement of Income

<TABLE>
<CAPTION>
Year Ended December 31                                                   1996                      1995
----------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                         <C> 
Income                                                                    $174                        $120

Expenses                                                                   100                          28
                                                                          ----                        ----
Income before income tax and equity
   in undistributed income of subsidiary                                    74                          92
   Income tax expense                                                       30                          36
                                                                          ----                        ----
Income before equity in undistributed
   income of subsidiary                                                     44                          56
   Equity in undistributed income of subsidiary                            869                         852
                                                                          ----                        ----
Net Income                                                                $913                        $908
                                                                          ====                        ====

                                         Condensed Statement of Cash Flows

Year Ended December 31                                                   1996                      1995
------------------------------------------------------------------------------------------------------------
Operating Activities
   Net income                                                             $913                        $908
   Adjustments to reconcile net income to net
     cash provided by operating activities                                (866)                       (852)
                                                                         -----                       -----
     Net cash provided by operating activities                              47                          56
                                                                         -----                       -----
Investing Activities
   Purchases of securities available for sale                           (1,638)                     (2,431)
   Proceeds from maturities of securities available for sale             2,245                         246
   Proceeds from sales of securities available for sale                  1,824
   Purchases of securities held to maturity                                                           (253)
   Net change in loans                                                     878                        (878)
                                                                         -----                       -----
     Net cash provided (used) by investing activities                    3,309                      (3,316)
                                                                         -----                       -----
Financing Activities
   Net change in short-term borrowings                                   1,400
   Sale of stock, net of costs                                                                      12,670
   Dividends                                                            (4,459)                       (132)
   Purchase of stock                                                      (799)
   Capital contribution to subsidiary                                                               (8,687)
                                                                         -----                       -----
     Net cash provided (used) by financing activities                   (3,858)                      3,851
                                                                         -----                       -----
Net Change in Cash and Cash Equivalents                                   (502)                        591

Cash and Cash Equivalents at Beginning of Year                             591
                                                                         -----                       -----
Cash and Cash Equivalents at End of Year                                 $  89                        $591
                                                                          ====                        ====
</TABLE>


<PAGE>

LOGANSPORT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Table Dollar Amounts in Thousands)


QUARTERLY DATA (UNAUDITED)

     Summarized  quarterly  financial  data  for  1996  and  1995 is as  follows
(dollars in thousands, except for per share data):

<TABLE>
<CAPTION>
                                                                First        Second        Third       Fourth
                                                               Quarter       Quarter      Quarter      Quarter
                                                               -------       -------      -------      -------
1996
<S>                                                              <C>          <C>          <C>          <C>   
   Total interest income                                         $1,339       $1,403       $1,453       $1,458
   Total interest expense                                           641          653          684          741
   Net interest income                                              698          750          769          717
   Provision for loan losses                                          3            3            3            3
   Net income                                                       274          283           81          275
   Earnings per share                                               .21          .21          .06          .21
   Dividends declared per share                                     .10          .10          .10          .10
   Special cash distribution declared per share                                              3.00

1995
   Total interest income                                         $1,051       $1,132       $1,265       $1,327
   Total interest expense                                           586          635          614          633
   Net interest income                                              465          497          651          694
   Provision for loan losses                                          3            3            3           11
   Net income                                                       179          165          262          302
   Earnings per share                                                                         .20          .23
   Dividends declared per share                                                               .10          .10
</TABLE>


                             SHAREHOLDER INFORMATION
Market Information

     The common  stock of the Company is traded on the National  Association  of
Securities  Dealers  Automated  Quotation  System,  Small Cap Market,  under the
symbol "LOGN." As of February 14, 1997, there were 893 shareholders of record of
the Company's Common Stock.

                                           Stock Price               Per Share
Quarter Ended                         High            Low           Dividends
------------------------------------------------------------------------------
September 30, 1995                 $ 12 1/2          $11 1/4           $0.10
December 31, 1995                    13 1/4           12               $0.10
March 31, 1996                       13 1/4           12 3/8           $0.10
June 30, 1996                        13 3/4           12 3/8           $0.10
September 30, 1996                   14 3/4           12 1/2           $0.10
December 31, 1996                    14 3/4           11 1/4           $3.10*

*    This includes a $3.00 per share one-time  special cash  distribution  which
     qualified  as a  non-taxable  return of capital  pursuant to an IRS Private
     Letter Ruling.

Transfer Agent and Registrar

     The Fifth Third Bank of Cincinnati,  Ohio ("Fifth  Third") is the Company's
stock  transfer  agent  and  registrar.  Fifth  Third  maintains  the  Company's
shareholder  records.  To change name,  address or ownership of stock, to report
lost certificates, or to consolidate accounts, contact:
     Fifth Third Bank
     Corporate Trust Operations
     Mail Drop 1090D2
     38 Fountain Square
     Cincinnati, Ohio  45263
     (800) 837-2755

General Counsel

     Barnes & Thornburg
     1313 Merchants Bank Building
     11 South Meridian Street
     Indianapolis, Indiana  46204

Independent Auditor

     Geo. S. Olive & Co. LLC
     201 North Illinois Street
     Indianapolis, Indiana  46204

Shareholder & General Inquiries

     The  Company  is  required  to file an  Annual  Report on Form 10-K for its
fiscal year ended December 31, 1996 with the Securities and Exchange Commission.
Copies of this annual report may be obtained without charge upon written request
to:

     Dottye Robeson
     Logansport Financial Corp.
     723 East Broadway, Box 569
     Logansport, Indiana  46947
     (219) 722-3855

Office Location
     723 East Broadway
     Logansport, Indiana  46947
     (219) 722-3855

                             DIRECTORS AND OFFICERS
Directors

     Norbert E.  Adrian  (age 67)  retired as the  General  Manager of  Rockwell
International  ("Rockwell")  in 1984  after  12 years of  service.  Rockwell  is
located in Logansport,  Indiana, and manufactures custom automotive parts. Prior
to his employment with Rockwell,  Mr. Adrian was employed by the accounting firm
of Bailey, Cord and Williams.

     Donald G. Pollitt (age 69) is the former Business and Promotion  Manager of
the Logansport  Pharos-Tribune  and a former President of the Rolling Hills Golf
Course in Logansport, Indiana.

     Susanne  S.  Ridlen  (age 57) has served as an  adjunct  faculty  member of
Indiana  University  Kokomo ("IUK") since 1969. Ms. Ridlen also currently serves
as a member of the Boards of Directors of the Logansport Art Association and the
Cass County Children's Home in Logansport, Indiana.

     William  Tincher,  Jr. (age 57) has served as Plant  Manager for the Modine
Manufacturing  Company  ("Modine") since 1977.  Modine is located in Logansport,
Indiana, and manufactures automotive cooling systems.

     David  G.  Wihebrink  (age  49) has  served  as Vice  President  and  Chief
Financial Officer of TM Morris Manufacturing Co., Inc.  ("Morris"),  since 1988.
Morris is located in Logansport,  Indiana, and manufactures lead wire assemblies
and wiring  harnesses and stampings.  Prior to his employment  with Morris,  Mr.
Wihebrink  was a member of the  accounting  firm  Smith,  Thompson  &  Wihebrink
(Logansport)  for 15 years.  Mr.  Wihebrink also currently serves as a member of
the Board of Directors of the Neal House retirement home in Logansport, Indiana.

     Thomas G. Williams  (age 64) has served as President of Logansport  Savings
Bank, FSB since 1971.

     Charles  J. Evans (age 51) has  served as Vice  President  and Senior  Loan
Officer of Logansport Savings Bank, FSB since 1980.

         LOGANSPORT FINANCIAL CORP.              LOGANSPORT SAVINGS BANK, FSB

         Officers                                Officers

         THOMAS G. WILLIAMS                      THOMAS G. WILLIAMS
         President and Chief                     President
         Executive Officer

         CHARLES J. EVANS                        CHARLES J. EVANS
         Vice President                          Vice President

         DOTTYE ROBESON                          DIANNE HOFFMAN
         Secretary/Treasurer                     Secretary/Treasurer

                                                 DOTTYE ROBESON
                                                 Chief Financial Officer