<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                                   FORM 10-K
 
      /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                            EXCHANGE ACT OF 1934
 
                       For the fiscal year ended September 30, 1997
 
                                       OR
 
      / /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
 
    For the transition period from__________________   to____________________
 
                            Commission File No.: 0-26242
 
                       Fort Thomas Financial Corporation
               (Exact name of registrant as specified in its charter)
 
                Ohio                                    61-1278396)
     ---------------------------                 ----------------------
    (State or other jurisdiction                     (I.R.S. Employer
  of incorporation or organization)                Identification Number)
                                                    
 25 North Fort Thomas Avenue
   Fort Thomas, Kentucky                                 41075
 ---------------------------                     ----------------------
       (Address)                                       (Zip Code)

 
    Registrant's telephone number, including area code: (606) 441-3302
 
    Securities registered pursuant to Section 12(b) of the Act:
                           Not Applicable
 
    Securities registered pursuant to Section 12(g) of the Act
 
              Common Stock (par value $.01 per share)
            ------------------------------------------
                            (Title of Class)
 
    Indicate by check mark whether the Registrant (1) has filed all reports 
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during 
the preceding 12 months (or for such shorter period that the Registrant was 
required to file such reports), and (2) has been subject to such filing 
requirements for the past 90 days. Yes_X__  No___
 
    Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of Registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-K or any amendment to this Form 10-K. /X/
 
    As of December 22, 1997, the aggregate value of the 1,378,147 shares of 
Common Stock of the Registrant issued and outstanding on such date, which 
excludes 100,319 shares held by all directors and officers of the Registrant 
as a group, was approximately $20.5 million. This figure is based on the last 
sales price of $14.875 per share of the Registrant's Common Stock on December 
18, 1997.
 
    Number of shares of Common Stock outstanding as of December 22, 1997: 
1,478,466
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    List hereunder the following documents incorporated by reference and the
Part of the Form 10-K into which the document is incorporated.

(1) Portions of the Annual Report to Stockholders for the year ended 
September 30, 1997 are incorporated into Part II, Items 5 through 8 of this 
Form 10-K.

(2) Portions of the definitive proxy statement for the 1997 Annual Meeting of 
Stockholders are incorporated into Part III, Items 9 through 13 of this Form 
10-K.

<PAGE>

PART I
 
ITEM 1. BUSINESS
 
GENERAL
 
FORT THOMAS FINANCIAL CORPORATION
 
    Fort Thomas Financial Corporation (the "Company") is an Ohio corporation 
organized in March 1995 by Fort Thomas Savings Bank, F.S.B. (the "Bank") for 
the purpose of becoming a unitary holding company of the Bank. The only 
significant assets of the Company are the capital stock of the Bank, the 
Company's loan to the Employee Stock Ownership Plan ("ESOP"), and the portion 
of the net proceeds retained by the Company in connection with the Bank's 
conversion to stock form (the "Conversion"). The business and management of 
the Company consists of the business and management of the Bank. The Company 
does not own or lease any property, but instead uses the premises, equipment 
and furniture of the Bank. At the present time, the Company does not employ 
any persons other than officers of the Bank, and the Company utilizes the 
support staff of the Bank from time to time. Additional employees will be 
hired as appropriate to the extent the Company expands or changes its 
business in the future.
 
    The Company's executive office is located at the home office of the Bank 
at 25 North Fort Thomas Avenue, Fort Thomas, Kentucky 41075, and its 
telephone number is (606) 441-3302.
 
FORT THOMAS SAVINGS BANK, F.S.B.
 
    The Bank is a federally chartered stock savings bank which conducts 
business through two full service offices located in Campbell County, 
Kentucky. The Bank was originally chartered under Kentucky law in 1910 as a 
building and loan association and, as of September 29, 1994, converted itself 
into a federally chartered mutual savings and loan association known as "Fort 
Thomas Federal Savings and Loan Association." In connection with the 
Conversion, the Bank became known as "Fort Thomas Savings Bank, F.S.B."
 
    The Bank is primarily engaged in attracting deposits from the general 
public through its branch offices and using such deposits primarily to 
originate loans secured by first liens on single-family (one-to-four units) 
residential properties and to a significantly lesser extent, multi-family 
(over four units) residential properties, construction loans on primarily 
residential properties and consumer loans. To a limited extent, the Bank also 
invests in securities issued by the United States ("U.S.") Government and 
agencies thereof. The Bank derives its income principally from interest 
earned on loans and investments and, to a lesser extent, from fees received 
in connection with the origination of loans and for other services. The 
Bank's primary expenses are interest expense on deposits and general 
operating expenses. Funds for activities are provided primarily by deposits, 
borrowing, amortization and prepayments of outstanding loans and other 
sources.

<PAGE>


    The Bank is subject to regulation by the Office of Thrift Supervision 
(the "OTS"), as its chartering authority and primary regulator, and by the 
Federal Deposit Insurance Corporation (the "FDIC"), which insures the Bank's 
deposits up to applicable limits. The Bank also is subject to certain reserve 
requirements established by the Federal Reserve Board and is a member of the 
Federal Home Loan Bank ("FHLB") of Cincinnati, which is one of the 12 banks 
which comprise the FHLB System.

    The Bank's executive offices are located at 25 North Fort Thomas Avenue, 
Fort Thomas, Kentucky 41075, and its telephone number is (606) 441-3302.
 
LENDING ACTIVITIES
 
    GENERAL. At September 30, 1997, the Bank's total portfolio of loans 
receivable ("total loan portfolio"), amounted to $90.6 million or 92.5% of 
the Bank's $97.9 million of total assets at such time. The Bank has 
traditionally concentrated its lending activities on conventional first 
mortgage loans secured by single-family residential property. At September 
30, 1997, $74.5 million or 82.2% of the Bank's total loan portfolio consisted 
of one-to-four family residential loans, including second mortgage loans. To 
a much lesser extent, the Bank also originates multi-family residential 
loans, land and construction loans and consumer loans. At September 30, 1997, 
such loan categories amounted to $11.0 million, $3.9 million and $1.2 
million, respectively, or 12.2%, 4.3% and 1.4% of the total loan portfolio, 
respectively. The Bank does not offer loans which are insured by the Federal 
Housing Administration ("FHA") nor partially guaranteed by the Office of 
Veterans Affairs ("VA").

                                    -2-

<PAGE>
 
    LOAN PORTFOLIO COMPOSITION.  The following table sets forth the composition
of the Bank's loan portfolio by type of loan at the dates indicated.
<TABLE>
                                                                                         SEPTEMBER 30,
                                                              -------------------------------------------------------------------
                                                                      1996                  1996                  1995
                                                              --------------------  --------------------   --------------------
                                                               AMOUNT     PERCENT    AMOUNT     PERCENT    AMOUNT     PERCENT
                                                              ---------  ---------  ---------  ---------  ---------  ---------
<CAPTION>
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                           <C>        <C>        <C>        <C>        <C>        <C>
Real estate loans:
  One-to-four family residential............................  $  74,471      82.20% $  62,632      77.41% $  57,775      77.81%
  Multi-family residential..................................     11,015      12.16     11,138      13.77      7,915      10.67
  Land and construction:
    Residential.............................................      3,885       4.29      5,737       7.09      7,140       9.62
    Commercial..............................................     --         --            255       0.32        255       0.34
                                                              ---------  ---------  ---------  ---------  ---------  ---------
    Total real estate loans.................................     89,371      98.64     79,762      98.58     73,085      98.44
                                                              ---------  ---------  ---------  ---------  ---------  ---------

Consumer:
  Savings account...........................................        702       0.77        632       0.78        651       0.88
  Other.....................................................        528       0.58        516       0.64        503       0.68
                                                              ---------  ---------  ---------  ---------  ---------  ---------
    Total consumer loans....................................      1,230       1.36      1,148       1.42      1,154       1.56
                                                              ---------  ---------  ---------  ---------  ---------  ---------
    Total loans.............................................     90,601     100.00%    80,910     100.00%    74,217     100.00%
                                                              ---------  ---------  ---------  ---------  ---------  ---------
                                                              ---------  ---------  ---------  ---------  ---------  ---------
Less:
  Loans in process..........................................      1,048                 1,884                 2,191
  Unearned discounts........................................      --                    --                   --
  Deferred loan fees........................................        625                   673                   631
  Allowance for loan losses.................................        476                   366                   239
                                                              ---------             ---------             ---------
    Loans receivable, net...................................  $  88,452             $  77,987             $  71,156
                                                              ---------             ---------             ---------
                                                              ---------             ---------             ---------
</TABLE>
 
                                    -3-
<PAGE>

    CONTRACTUAL MATURITIES.  The following table sets forth the scheduled 
contractual maturities of the Bank's loans at September 30, 1997. Demand 
loans, loans having no stated schedule of repayments and no stated maturity 
and overdraft loans are reported as due in one year or less. Adjustable-rate 
loans are reported on a repricing basis rather than on a contractual basis. 
The amounts shown for each period do not take into account loan prepayments 
and normal amortization of the Bank's loan portfolio.

<TABLE>
                                                               REAL ESTATE LOANS
                                                       ------------------------------------
                                                       ONE-TO-FOUR   MULTI-      LAND AND      CONSUMER
                                                        FAMILY(1)    FAMILY    CONSTRUCTION      LOANS       TOTAL
                                                       -----------  ---------  -------------  -----------  ---------
                                                                               (IN THOUSANDS)
<CAPTION>
<S>                                                    <C>          <C>        <C>            <C>          <C>
Amounts due in:
  One year or less...................................   $  44,876   $   7,188    $   3,885     $   1,042   $  56,991
  After one year through three years.................      12,343       1,982       --                56      14,381
  After three years through five years...............       3,339         746       --                62       4,147
  After five years through ten years.................       3,883         691       --                57       4,631
  After ten years through fifteen years..............       7,119         408       --                13       7,540
  Over fifteen years.................................       2,911      --           --            --           2,911
                                                       -----------  ---------    ----------    -----------  ---------
    Total............................................   $  74,471   $  11,015    $   3,885     $   1,230   $  90,601
                                                       -----------  ---------    ----------    -----------  ---------
                                                       -----------  ---------    ----------    -----------  ---------
Interest rate terms on amounts due after one year:
  Fixed..............................................   $  16,356   $   1,220    $  --         $     188   $  17,764
  Adjustable.........................................      13,239       2,607       --              --        15,846
                                                       -----------  ---------    ----------      ---------  ---------
    Total............................................   $  29,595   $   3,827    $  --         $     188   $  33,610
                                                       -----------  ----------   ----------      ---------  ----------
                                                       -----------  ----------   ----------      ---------  ----------
</TABLE>
 
------------------------
(1) Includes second mortgages on one-to-four family residential loans.
 
    ORIGINATION, PURCHASE AND SALE OF LOANS. The lending activities of the 
Bank are subject to the written, non-discriminatory, underwriting standards 
and loan origination procedures established by the Bank's Board of Directors 
and management. Loan originations are obtained by a variety of sources, 
including builders, existing customers, and walk-in customers. Property 
valuations are always performed by independent outside appraisers approved by 
the Bank's Board of Directors. Hazard insurance is required on all security 
property. The entire Board of Directors meets on a weekly basis to approve 
all new loans.
 
    Historically, the Bank has not been an active purchaser of loans. The 
Bank did not purchase any loans during fiscal 1996, 1995 or 1994. Although 
the Bank emphasizes the origination of ARMs, the Bank also offers fixed rate 
loans with terms up to 15 years. The Bank does not originate 30 year fixed 
rate loans. With the exception of certain loans sold in 1993 which have an 
aggregate outstanding principal balance at September 30, 1997 of $442,000, 
all fixed rate loans sold by the Bank have been sold without any recourse to 
the Bank by the purchaser in the event of default on the loan by the 
borrower. Loans are sold by the Bank primarily to the Federal Home Loan 
Mortgage Corporation ("FHLMC"). 

                                    -4-

<PAGE>


Loans are sold to the FHLMC pursuant to forward sales commitments and, 
therefore, an increase or decrease in interest rates after loan origination 
and prior to sale does not adversely affect the Bank's income at the time of 
sale. The Bank did not sell any loans during fiscal 1997, 1996 or fiscal 1995.
 
    The following table shows origination and sale activity of the Bank with 
respect to its loans during the periods indicated. The Bank has not purchased 
any loans during the periods reported.

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED SEPTEMBER 30,
                                                                                   -------------------------------
                                                                                     1997       1996       1995
                                                                                   ---------  ---------  ---------
                                                                                           (IN THOUSANDS)
<S>                                                                                <C>        <C>        <C>
Real estate loan originations:
  One-to-four family residential.................................................  $  17,528  $  14,668  $  14,711
  Multi-family residential.......................................................      1,495      3,679        889
  Land and construction:
    Residential..................................................................      5,125      4,242      5,193
    Commercial...................................................................      1,136        824     --
                                                                                   ---------  ---------  ---------
    Total real estate loan originations..........................................     25,284     23,413     20,793
                                                                                   ---------  ---------  ---------
Total consumer loan originations.................................................        470        343        345
                                                                                   ---------  ---------  ---------
    Total loan originations......................................................     25,754     23,756     21,138
                                                                                   ---------  ---------  ---------
Less:
  Principal loan repayments......................................................     15,814     16,588     13,699
  Sales of whole loans...........................................................     --         --         --
  Transferred to other real estate owned.........................................         64     --         --
  Loans in process...............................................................       (836)      (307)       401
  Other, net(1)..................................................................        247        644         32
                                                                                   ---------  ---------  ---------
  Net increase (decrease)........................................................  $  10,465  $   6,831  $   7,006
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
</TABLE>
 
------------------------
 
(1) Includes changes related to amortization of deferred loan fees, the
    allowance for loan losses and other miscellaneous adjustments.

                                    -5-
<PAGE>


    LOANS-TO-ONE BORROWER. A savings institution generally may not make loans 
to one borrower and related entities in an amount which exceeds 15% of its 
unimpaired capital and surplus, although loans in an amount equal to an 
additional 10% of unimpaired capital and surplus may be made to a borrower if 
the loans are fully secured by readily marketable securities. At September 
30, 1997, the Bank's limit on loans-to-one borrower was approximately $2.4 
million.
 
    ONE-TO-FOUR FAMILY RESIDENTIAL REAL ESTATE LOANS. The Bank has 
historically concentrated its lending activities on the origination of loans 
secured by first mortgage liens on existing one-to-four family residences. At 
September 30, 1997, $74.5 million or 82.2% of the Bank's total loan portfolio 
consisted of one-to-four family residential real estate loans. The Bank 
originated $17.5 million, $14.7 million and $14.7 million of one-to-four 
family residential loans in fiscal 1997, 1996 and 1995, respectively, and 
intends to continue to emphasize the origination of permanent loans secured 
by first mortgage liens on one-to-four family residential properties in the 
future. Of the $74.5 million of such loans at September 30, 1997, $55.2 
million or 74.1% had adjustable-rates of interest and $19.3 million or 25.9% 
had fixed-rates of interest.
 
    The Bank currently originates for its portfolio one-to-four family 
residential mortgage loans which typically provide for an interest rate which 
adjusts every year in accordance with a designated index (the weekly average 
yield on U.S. Treasury securities adjusted to a constant comparable maturity 
of one year) plus a margin. Such loans are typically based on a 25 or 30-year 
amortization schedule. The Bank does not offer "teaser" rates, and the amount 
of any increase or decrease in the interest rate after the initial one year 
period is presently limited to 1% per year, with a limit of 5% over the life 
of the loan. The Bank also originates residential mortgage loans with an 
interest rate which is fixed for three years and adjusts every year after the 
initial three-year period. The amount of any increase or decrease in the 
interest rate after the initial three-year period is presently limited to 2% 
per year, with a limit of 5% over the life of the loan. The Bank's 
adjustable-rate loans currently being originated are not assumable and do not 
contain prepayment penalties. The Bank underwrites its adjustable rate loans 
on the basis of the borrowers ability to pay at the initial rate or at the 
rate after the first adjustment.
 
    Adjustable-rate loans decrease the risks associated with changes in 
interest rates but involve other risks, primarily because as interest rates 
rise, the payment by the borrower rises to the extent permitted by the terms 
of the loan, thereby increasing the potential for default. At the same time, 
the marketability of the underlying property may be adversely affected by 
higher interest rates. The Bank believes that these risks, which have not had 
a material adverse effect on the Bank to date, generally are less than the 
risks associated with holding fixed-rate loans in an increasing interest rate 
environment.
 
    The Bank's fixed rate loans are originated primarily with terms of 15 
years and the Bank does not originate fixed rate loans with a term exceeding 
20 years. The Bank also offers, but does not emphasize, second mortgage loans 
with fixed rates of interest and terms of one to 15 years. The Bank does not 
require that it hold the first mortgage on the secured property, however, the 
balance on all mortgages on the secured property generally cannot 

                                    -6-

<PAGE>

exceed 80% of the value of the secured property. At September 30, 1997, 
second mortgage loans amounted to $4.7 million or 5.4% of the total loan 
portfolio.
 
    The Bank is permitted to lend up to 100% of the appraised value of the 
real property securing a residential loan; however, if the amount of a 
residential loan originated or refinanced exceeds 90% of the appraised value, 
the Bank is required by federal regulations to obtain private mortgage 
insurance on the portion of the principal amount that exceeds 80% of the 
appraised value of the security property. Pursuant to underwriting guidelines 
adopted by the Board of Directors, the Bank will lend up to 95% of the 
appraised value of the property securing a one-to-four family residential 
loan, and generally requires borrowers to obtain private mortgage insurance 
on the portion of the principal amount of the loan that exceeds 80% of the 
appraised value of the security property. However, the Bank's residential 
mortgage loans typically do not exceed 80% of the appraised value of the 
security property. At September 30, 1997, the Bank had $4.9 million of loans 
with a loan-to-value ratio in excess of 80% of appraised value.
 
    MULTI-FAMILY RESIDENTIAL REAL ESTATE LOANS. The Bank originates mortgage 
loans for the acquisition and refinancing of existing multi-family 
residential properties. At September 30, 1997, $11.0 million or 12.2% of the 
Bank's total loan portfolio consisted of loans secured by existing 
multi-family residential real estate properties. The majority of the Bank's 
multi-family residential loans are secured by apartment buildings. All of the 
Bank's multi-family real estate loans are secured by property located in the 
Bank's primary market area.
 
    Multi-family loans are made on terms up to 25 years. Although the Bank 
will originate these loans with fixed interest rates, the majority of these 
loans have interest rates which adjust in accordance with a designated index 
(the weekly average yield on U.S. Treasury securities adjusted to a constant 
comparable maturity of one year). Loan to value ratios on the Bank's 
multi-family real estate loans are currently limited to 75%. It is also the 
Bank's general policy to obtain corporate or personal guarantees, as 
applicable, supported by financial statements, on its multi-family 
residential real estate loans from the principals of the borrower.
 
    Multi-family real estate lending entails significant additional risks as 
compared with one-to-four family residential property lending. Such loans 
typically involve large loan balances to single borrowers or groups of 
related borrowers. The payment experience on such loans is typically 
dependent on the successful operation of the real estate project. The success 
of such projects is sensitive to changes in supply and demand conditions in 
the market for multi-family real estate as well as economic conditions 
generally. At September 30, 1997, the Bank had $360,000 of nonperforming 
multi-family real estate loans. See "-- Asset Quality."
 
    LAND AND CONSTRUCTION LENDING.  The Bank also originates residential land
and construction loans, although the Bank has originated multi-family
construction and land acquisition and development loans to a limited degree.
Land and construction loans are classified as either residential or multi-family
at the time of origination, depending on the

                                    -7-

<PAGE>

nature of the property securing the loan. The Bank's construction lending 
activities are limited to the Bank's primary market area. At September 30, 
1997, land and construction loans amounted to $3.9 million or 4.3% of the 
Bank's total loan portfolio, all of which consisted of residential 
construction loans. The Bank's residential and multi-family construction 
loans generally have fixed interest rates for a term of one year, with 
payments being made monthly on an interest-only basis. Construction loans are 
made with a maximum loan to value ratio of 80%.
 
    With limited exceptions, the Bank's construction loans are made to 
individual homeowners and a limited number of local real estate builders and 
developers for the purpose of constructing primarily one-to-four family 
residential homes. Upon application, credit review and analysis of personal 
and corporate financial statements, the Bank will make loans to local 
builders. These loans may be used for the purpose of construction of 
speculative (or unsold) residential properties. Once approved for a 
construction loan, draws are granted on a percentage of completion basis. The 
Bank also inspects construction projects as draws are requested.
 
    Construction lending is generally considered to involve a higher level of 
risk as compared to one-to-four family residential lending, due to the 
concentration of principal in a limited number of loans and borrowers and the 
effects of general economic conditions on developers and builders. Moreover, 
a construction loan can involve additional risks because of the inherent 
difficulty in estimating both a property's value at completion of the project 
and the estimated cost (including interest) of the project. The nature of 
these loans is such that they are generally more difficult to evaluate and 
monitor. In addition, speculative construction loans to a builder involve 
projects which are not pre-sold and thus pose a greater potential risk to the 
Bank than construction loans to individuals on their personal residences.
 
    The Bank has attempted to minimize the foregoing risks by, among other 
things, limiting the extent of its construction lending generally and by 
limiting its construction lending to primarily residential properties. In 
addition, the Bank has adopted underwriting guidelines which impose stringent 
loan-to-value, debt service and other requirements for loans which are 
believed to involve higher elements of credit risk, by limiting the 
geographic area in which the Bank will do business and by working with 
builders with whom it has established relationships. At September 30, 1997, 
the Bank had $309,000 of nonperforming land and construction loans. See 
"--Asset Quality."
 
    CONSUMER LOANS.  The Bank offers consumer loans in order to provide a 
full range of financial services to its customers. The consumer loans offered 
by the Bank include deposit account secured loans and unsecured loans. 
Consumer loans amounted to $1.2 million or 1.4% of the total loan portfolio 
at September 30, 1997, $702,000 of which consisted of loans secured by 
deposit accounts. Such loans are originated for up to 90% of the account 
balance, with a hold placed on the account restricting the withdrawal of the 
account balance.

                                    -8-

<PAGE>


    LOAN FEE INCOME.  In addition to interest earned on loans, the Bank 
receives income from fees in connection with loan originations, loan 
modifications, late payments, prepayments and for miscellaneous services 
related to its loans. Income from these activities varies from period to 
period depending upon the volume and type of loans made and competitive 
conditions.
 
    The Bank charges loan origination fees which are calculated as a 
percentage of the amount borrowed. Loan origination and commitment fees and 
all incremental direct loan origination costs are deferred and recognized 
over the contractual remaining lives of the related loans on a level yield 
basis. Discounts and premiums on loans purchased are accreted and amortized 
in the same manner. In accordance with FASB No. 91, the Bank recognized 
approximately $292,000 during fiscal 1997 in connection with loan 
refinancing, payoffs and ongoing amortization of outstanding loans.
 
ASSET QUALITY
 
    Loans are placed on non-accrual status when, in the judgment of 
management, the probability of collection of interest is deemed to be 
insufficient to warrant further accrual. When a loan is placed on non-accrual 
status, previously accrued but unpaid interest is deducted from interest 
income. The Bank does not accrue interest on real estate loans past due 90 
days or more. Loans may be reinstated to accrual status when all payments are 
brought current and, in the opinion of management, collection of the 
remaining balance can be reasonably expected.
 
    Real estate acquired by the Bank as a result of foreclosure or by 
deed-in-lieu of foreclosure is classified as other real estate owned until 
sold. Pursuant to a statement of position ("SOP 92-3") issued by the American 
Institute of Certified Public Accountants in April 1992, which provides 
guidance on determining the balance sheet treatment of foreclosed assets in 
annual financial statements for periods ending on or after December 15, 1992, 
there is a rebuttable presumption that foreclosed assets are held for sale 
and such assets are recommended to be carried at the lower of fair value 
minus estimated costs to sell the property, or cost (generally the balance of 
the loan on the property at the date of acquisition). After the date of 
acquisition, all costs incurred in maintaining the property are expensed and 
costs incurred for the improvement or development of such property are 
capitalized up to the extent of their net realizable value. The Bank's 
accounting for its real estate acquired by foreclosure complies with the 
guidance set forth in SOP 92-3.
 
    The Bank is required to account for certain loan modifications or 
restructurings as "troubled debt restructurings." In general, the 
modification or restructuring of a debt constitutes a troubled debt 
restructuring if the Bank for economic or legal reasons related to the 
borrower's financial difficulties grants a concession to the borrower that 
the Bank would not otherwise consider. Debt restructurings or loan 
modifications for a borrower do not necessarily always constitute troubled 
debt restructurings, however, and troubled debt restructurings do not 
necessarily result in non-accrual loans. The Bank did not have any troubled 
debt restructurings as of September 30, 1997.

                                    -9-
<PAGE>
 
    DELINQUENT LOANS.  The following table sets forth information concerning 
delinquent loans at September 30, 1997 in dollar amounts and as a percentage 
of each category of the Bank's loan portfolio at such date. The amounts 
presented represent the total outstanding principal balances of the related 
loans, rather than the actual payment amounts which are past due.

<TABLE>
<CAPTION>
                                          ONE-TO-FOUR
                                             FAMILY                      LAND AND
                                          RESIDENTIAL   MULTI-FAMILY   CONSTRUCTION     CONSUMER       TOTAL
                                          ------------  -------------  -------------  ------------   --------------
                                          AMOUNT   %    AMOUNT    %    AMOUNT    %    AMOUNT    %    AMOUNT    %
                                          ------  ----  ------   ----  ------   ----  ------   ----  ------  ------
<S>                                       <C>     <C>   <C>      <C>   <C>      <C>   <C>      <C>   <C>     <C>
                                                                   (DOLLARS IN THOUSANDS)
Loans delinquent for:
  30--89 days                             $1,641  2.20%  $598    5.43%  $ 96    2.47%  $--       --% $2,335    2.58%
  90 days and over                         1,266  1.70    360    3.27    309    7.95     2     0.16   1,937     2.14
                                         -------         -----           ----          -----         ------
    Total delinquent loans                $2,907         $958           $405           $ 2           $4,272
                                          -------        -----           ----          -----         ------
                                          -------        -----           ----          -----         ------


</TABLE>
 
 
                                    -10-
<PAGE>
    The following table sets forth the amounts and categories of the Bank's
non-performing assets at the dates indicated.


<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                       -------------------------------
                                                                                         1997       1996       1995
                                                                                       ---------  ---------  ---------
                                                                                             (DOLLARS IN THOUSANDS)
<S>                                                                                    <C>        <C>        <C>
Nonaccruing loans:
  One-to-four family residential.....................................................  $   1,266  $     917  $     911
  Multi-family residential...........................................................        360         56     --
  Land and construction..............................................................        309         90        334
  Consumer...........................................................................     --         --         --
Accruing consumer loans 90 days or more delinquent:..................................          2        117     --
                                                                                       ---------  ---------  ---------
    Total nonperforming loans........................................................      1,937      1,180      1,245
                                                                                       ---------  ---------  ---------
  Real estate acquired through foreclosure...........................................     --         --         --
                                                                                       ---------  ---------  ---------
Total nonperforming assets...........................................................  $   1,937  $   1,180  $   1,245
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
Total nonperforming loans as a percentage of total net loans.........................       2.19%      1.51%      1.75%
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
Total nonperforming assets as a percentage of total assets...........................       1.98%      1.34%      1.44%
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
</TABLE>
 
    The $1.3 million of nonaccruing one-to-four family residential loans at 
September 30, 1997 consisted of 38 loans secured by one-to-four family 
residential property located in the Bank's market area. The largest of such 
loans at such date amounted to approximately $134,000 and the average loan 
balance was approximately $51,000. Substantially all of such loans are 
extended to separate borrowers.
 
    CLASSIFIED ASSETS.  Federal regulations require that each insured savings 
association classify its assets on a regular basis. In addition, in 
connection with examinations of insured institutions, federal examiners have 
authority to identify problem assets and, if appropriate, classify them. 
There are three classifications for problem assets: "substandard," "doubtful" 
and "loss." Substandard assets have one or more defined weaknesses and are 
characterized by the distinct possibility that the insured institution will 
sustain some loss if the deficiencies are not corrected. Doubtful assets have 
the weaknesses of substandard assets with the additional characteristic that 
the weaknesses make collection or liquidation in full on the basis of 
currently existing facts, conditions and values questionable, and there is a 
high possibility of loss. An asset classified loss is considered 
uncollectible and of such little value that continuance as an asset of the 
institution is not warranted. At September 30, 1997, the Bank had $2.6 
million of classified assets, $2.6 million of which were classified 
substandard and $2,000 of which were classified loss.

                                    -11-

<PAGE>

     ALLOWANCE FOR LOAN LOSSES.  It is management's policy to maintain an 
allowance for estimated losses based on the perceived risk of loss in the 
loan portfolio. In assessing risk, management considers historical loss 
experience, the volume and type of lending conducted by the Bank, industry 
standards, past due loans, general economic conditions and other factors 
related to the collectibility of the loan portfolio. The allowance is 
increased by provisions for loan losses which are charged against income.
 
    Although management uses the best information available to make 
determinations with respect to the provisions for loan losses, additional 
provisions for loan losses may be required to be established in the future 
should economic or other conditions change substantially. In addition, the 
OTS and the FDIC, as an integral part of their examination process, 
periodically review the Bank's allowance for possible loan losses. Such 
agencies may require the Bank to recognize additions to such allowance based 
on their judgments about information available to them at the time of their 
examination.
 
                                     -12-
<PAGE>
    The following table summarizes changes in the allowance for loan losses and
other selected statistics for the periods presented.
 
<TABLE>
<CAPTION>
                                                                                      YEAR ENDED SEPTEMBER 30,
                                                                                   -------------------------------
                                                                                     1997       1996       1995
                                                                                   ---------  ---------  ---------
<S>                                                                                <C>        <C>        <C>

Average loans receivable, net....................................................  $  83,912  $  73,875  $  67,248
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
Allowance for possible loan losses, beginning of year............................  $     366  $     239  $     233
Charge-offs(1)...................................................................        (27)    --            (19)
Recoveries(1)....................................................................     --              1     --
Provision for loan losses........................................................        137        126         25
                                                                                   ---------  ---------  ---------
Allowance for loan losses, end of period.........................................  $     476  $     366  $     239
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
Net loans (charged-off) recovered to average loans, net..........................      (0.03)%       --%     (0.03)%
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
Allowance for loan losses to total loans.........................................       0.53%      0.45%      0.32%
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
Allowance for loan losses to total nonperforming loans...........................      24.57%     31.02%     19.20%
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
Net loans (charged-off) recovered to allowance for loan losses...................      (5.67)%      0.27%     (7.95)%
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
</TABLE>
 
------------------------
(1) All charge-offs and recoveries relate to single-family loans.

                                    -13-

<PAGE>


  The following table presents the allocation of the allowance for loan losses
to the total amount of loans in each category listed at the dates indicated.

<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,
                                      ------------------------------------------------------------------
                                              1997                   1996                   1995
                                      --------------------   --------------------   --------------------
                                               % OF LOANS             % OF LOANS             % OF LOANS
                                                 IN EACH                IN EACH                IN EACH
                                               CATEGORY TO            CATEGORY TO            CATEGORY TO
                                      AMOUNT   TOTAL LOANS   AMOUNT   TOTAL LOANS   AMOUNT   TOTAL LOANS
                                      ------   -----------   ------   -----------   ------   -----------
                                                            (DOLLARS IN THOUSANDS)
<S>                                   <C>      <C>           <C>      <C>           <C>      <C>
One-to-four family residential......   $316        82.2%      $226        78.5%      $154        64.4%
Multi-family real estate............    100        12.2         80        14.0         50        21.0
Land and construction...............     50         4.3         25         7.2         25        10.5
Consumer............................     10         1.4         35         0.3         10         4.1
                                      ------      -----      ------      -----      ------      -----
  Total.............................   $476       100.0%      $366       100.0%      $239       100.0%
                                      ------      -----      ------      -----      ------      -----
                                      ------      -----      ------      -----      ------      -----
</TABLE>
 
 
    INVESTMENT SECURITIES.  The investment policy of the Bank, as established by
the Board of Directors, is designed primarily to provide and maintain liquidity
and to generate a favorable return on investments without incurring undue
interest rate risk, credit risk, and investment portfolio asset concentrations.
The Bank's investment policy is currently implemented by Larry N. Hatfield, the
Bank's President and reviewed and evaluated by the Board of Directors.
 
    The Bank is authorized to invest in obligations issued or fully guaranteed
by the U.S. Government, certain federal agency obligations, certain time
deposits, negotiable certificates of deposit issued by commercial banks and
other insured financial institutions, investment grade corporate debt securities
and other specified investments.
 
    The following table sets forth certain information relating to the Company's
investment securities portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30,
                                                       ----------------------------------------------------------------------
                                                                1997                    1996                    1995
                                                       ----------------------  ----------------------  ----------------------
                                                        CARRYING     MARKET     CARRYING     MARKET     CARRYING     MARKET
                                                          VALUE       VALUE       VALUE       VALUE       VALUE       VALUE
                                                       -----------  ---------  -----------  ---------  -----------  ---------
<S>                                                    <C>          <C>        <C>          <C>        <C>          <C>
U.S. Government and agency securities................   $   2,990       2,984   $   4,003   $   3,980   $   5,001   $   5,000
Mortgage-backed securities...........................         797         798         818         816         972         971
FHLB stock...........................................         785         785         700         700         651         651
                                                       -----------  ---------  -----------  ---------  -----------  ---------
    Total............................................   $   4,572   $   4,567   $   5,521   $   5,497   $   6,624   $   6,622
                                                       -----------  ---------  -----------  ---------  -----------  ---------
                                                       -----------  ---------  -----------  ---------  -----------  ---------
</TABLE>
 
                                    -14-

<PAGE>

    Information regarding the contractual maturities and weighted average 
yield of the Company's investment securities portfolio at September 30, 1997 
is presented below. The actual maturity of the Company's investment 
securities may differ from contractual maturity since certain of the 
Company's investment securities are subject to call provisions which allow 
the issuer to accelerate the maturity date of the security.

<TABLE>
<CAPTION>
                                                                                   AT SEPTEMBER 30, 1997
                                                            -------------------------------------------------------------------
                                                                                           AFTER FIVE
                                                              ONE YEAR     AFTER ONE TO        TO          OVER 10
                                                               OF LESS      FIVE YEARS      10 YEARS        YEARS       TOTAL
                                                            -------------  -------------  -------------  -----------  ---------
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                         <C>            <C>            <C>            <C>          <C>
U.S. Government and agency securities, excluding FHLB
  stock...................................................    $  --          $   2,990      $  --         $  --       $   2,990
Mortgage-backed securities................................       --                798         --            --             798
                                                              --------        --------      --------      --------    ---------
  Total...................................................    $  --          $   3,788      $  --         $  --       $   3,788
                                                              --------        --------      --------      --------    ---------
                                                              --------        --------      --------      --------    ---------
Weighted average yield....................................       --%              6.45%        --%           --%           6.45%
</TABLE>
 
    The Company generally holds its investments to maturity.  The Bank 
acquires investment securities with the intent and has the ability to hold 
such investment securities to maturity. Investment securities are carried at 
cost (as adjusted for amortization of premiums and discounts) because it is 
management's intention to hold them to maturity. The Bank to date has not 
engaged and does not intend to engage in the immediate future in trading 
investment securities. As of September 30, 1997, the Company had no 
investment securities classified as available for sale and $798,000 of 
mortgage-backed securities classified as available for sale. The Company had 
aggregate net unrealized gains of approximately $1,000 as of September 30, 
1997 with respect to its mortgage-backed securities classified as available 
for sale. At September 30, 1997, investments in the debt and/or equity 
securities of any one issuer did not exceed more than 10% of the Company's 
stockholders' equity.
 
SOURCES OF FUNDS
 
    GENERAL. Deposits are the primary source of the Bank's funds for lending 
and other investment purposes. In addition to deposits, the Bank derives 
funds from loan principal repayments, prepayments and advances from the FHLB 
of Cincinnati. Loan repayments are a relatively stable source of funds, while 
deposit inflows and outflows are significantly influenced by general interest 
rates and money market conditions. Borrowings may be used on a short-term 
basis to compensate for reductions in the availability of funds from other 
sources. They may also be used on a longer term basis for general business 
purposes.
 
    DEPOSITS.  The Bank's deposit products include a broad selection of deposit
instruments, including NOW accounts, money market accounts, regular savings
accounts and

                                    -15-

<PAGE>

term certificate accounts. Deposit account terms vary, with the principal 
differences being the minimum balance required, the time periods the funds 
must remain on deposit and the interest rate.
 
    The Bank considers its primary market area to be Campbell County, 
Kentucky. The Bank utilizes traditional marketing methods to attract new 
customers and savings deposits. The Bank does not advertise for deposits 
outside of its primary market area or utilize the services of deposit 
brokers, and management believes that an insignificant number of deposit 
accounts were held by non-residents of Kentucky at September 30, 1997.
 
    The Bank has been competitive in the types of accounts and in interest 
rates it has offered on its deposit products but does not necessarily seek to 
match the highest rates paid by competing institutions. Although market 
demand generally dictates which deposit maturities and rates will be accepted 
by the public, the Bank intends to continue to promote longer term deposits 
to the extent possible and consistent with its asset and liability management 
goals.
 
    The following table shows the distribution of, and certain other 
information relating to, the Bank's deposits by type of deposit as of the 
dates indicated.

<TABLE>
<CAPTION>
                                                                                       SEPTEMBER 30,
                                                              ----------------------------------------------------------------
                                                                      1997                  1996                  1995
                                                              --------------------  --------------------  --------------------
                                                               AMOUNT     PERCENT    AMOUNT     PERCENT    AMOUNT     PERCENT
                                                              ---------  ---------  ---------  ---------  ---------  ---------
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                           <C>        <C>        <C>        <C>        <C>        <C>
Passbook and statement savings accounts.....................  $   7,563      10.52% $   8,393      13.17% $   7,859      13.10%
Money market accounts.......................................      2,685       3.74      2,691       4.22      3,002       5.00
Certificates of deposit.....................................     58,660      81.63     49,647      77.90     46,682      77.81
NOW and Super NOW accounts..................................      2,950       4.11      3,000       4.71      2,455       4.09
                                                              ---------  ---------  ---------  ---------  ---------  ---------
  Total deposits at end of period...........................  $  71,858     100.00% $  63,731     100.00% $  59,998     100.00%
                                                              ---------  ---------  ---------  ---------  ---------  ---------
                                                              ---------  ---------  ---------  ---------  ---------  ---------
</TABLE>
                                   -16-

<PAGE>
 
    The following table sets forth the net savings flows of the Bank during the
periods indicated.
<TABLE>
<CAPTION>
                                                                                          YEAR ENDED SEPTEMBER 30,
                                                                                       -------------------------------
                                                                                        1997       1996       1995
                                                                                       ---------  ---------  ---------
                                                                                               (IN THOUSANDS)
<S>                                                                                    <C>        <C>        <C>
Increase (decrease) before interest credited.........................................  $   4,919  $   1,291  $   2,585
Interest credited....................................................................      3,208      2,442      2,286
                                                                                       ---------  ---------  ---------
Net savings increase (decrease)......................................................  $   8,127  $   3,733  $   4,871
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
</TABLE>
 
    The following table sets forth maturities of the Bank's certificates of 
deposit of $100,000 or more at September 30, 1997 by time remaining to 
maturity.
 

<TABLE>
<CAPTION>
                                                                                                       AMOUNTS IN
                                                                                                        THOUSANDS
                                                                                                       -----------
<S>                                                                                                    <C>
Three months or less.................................................................................   $   1,450
Over three months through six months.................................................................         754
Over six months through 12 months....................................................................       1,602
Over 12 months.......................................................................................       3,619
                                                                                                       -----------
  Total..............................................................................................   $   7,425
                                                                                                       -----------
                                                                                                       -----------
</TABLE>
 
    The following table presents, by various interest rate categories, the 
amount of certificates of deposit at September 30, 1997 and 1996, and the 
amounts at September 30, 1997 which mature during the periods indicated.

<TABLE>
<CAPTION>
                                               AMOUNTS AT SEPTEMBER 30, 1997
                         September 30,              MATURING WITHIN
                         -------------     ------------------------------------------------
 CERTIFICATES OF
    DEPOSIT              1997       1996     ONE YEAR    TWO YEARS   THREE YEARS  THEREAFTER
----------------      ---------  ---------  ---------  -----------  -----------  -----------
                                            (IN THOUSANDS)
<S>                <C>         <C>        <C>        <C>          <C>          <C>          <C>
4.0% or less          $      82   $     55   $     82   $  --        $  --        $  --
4.01% to 6.0%            24,478     25,816     21,201       2,110          346          821
6.01% to 8.0%            34,100     23,776     13,172      11,871        5,923        3,134
8.01% to 10.0%            --         --         --          --           --           --
                       ---------  ---------  ---------  -----------  -----------      -----
Total certificate 
accounts..........     $ 58,660   $ 49,647   $  34,455  $  13,981    $   6,269     $  3,955
                       ---------  ---------  ---------  -----------  -----------      -----
                       ---------  ---------  ---------  -----------  -----------      -----
</TABLE>
 
                                    -17-

<PAGE>

    The following table presents the average balance of each deposit type and
the average rate paid on each deposit type for the periods indicated.
<TABLE>
<CAPTION>
                                                                   SEPTEMBER 30,
                                               ------------------------------------------------------
                                                     1997               1996               1995
                                               ----------------   ----------------   ----------------
                                                        AVERAGE            AVERAGE            AVERAGE
                                               AVERAGE   RATE     AVERAGE   RATE     AVERAGE   RATE
                                               BALANCE   PAID     BALANCE   PAID     BALANCE   PAID
                                               -------  -------   -------  -------   -------  -------
                                                                   (Dollars in Thousands)
<S>                                            <C>      <C>       <C>      <C>       <C>      <C>
Passbook and statement savings accounts......  $7,888    2.73%    $8,074    2.78%    $8,938    2.78%
Money market accounts........................   2,638    2.74      2,797    2.74      3,737    2.74
Certificates of deposit......................  54,312    6.01     48,096    6.11     42,205    5.43
NOW and Super NOW accounts...................   2,732    2.27      2,521    2.16      2,409    2.21
Noninterest-bearing deposits.................     193    --          157    --          136    --
                                               -------  -------   -------  -------   -------  -------
  Total deposits.............................  $67,763   5.40%    $61,644   5.35%    $57,425   4.69%
                                               -------  -------   -------  -------   -------  -------
                                               -------  -------   -------  -------   -------  -------
</TABLE>
 
    BORROWING.  The Bank may obtain advances from the FHLB upon the security of
the common stock it owns in that bank and certain of its residential mortgage
loans, provided certain standards related to creditworthiness have been met.
Such advances are made pursuant to several credit programs, each of which has
its own interest rate and range of maturities. Such advances are generally
available to meet seasonal and other withdrawals of deposit accounts and to
permit increased lending. At September 30, 1997, the Bank had $8.8 million of
advances from the FHLB of Cincinnati.

    The following table sets forth certain information regarding borrowed funds
at or for the dates indicated:
<TABLE>
<CAPTION>
                                                                                          AT OR FOR THE YEAR ENDED
                                                                                                SEPTEMBER 30,
                                                                                       -------------------------------
                                                                                         1997       1996       1995
                                                                                       ---------  ---------  ---------
                                                                                              (DOLLARS IN THOUSANDS)
<S>                                                                                    <C>        <C>        <C>
FHLB advances:
  Average balance outstanding........................................................  $   8,937  $   3,926  $   7,650
  Maximum amount outstanding at any month-end during the period......................  $   9,701  $   4,504  $   9,526
  Balance outstanding at end of period...............................................  $   8,846  $   4,454  $   3,651
  Weighted average interest rate during the period...................................       5.85%      5.46%      5.74%
  Weighted average interest rate at end of period....................................       5.76%      5.51%      5.42%
</TABLE>
 
 
                                    -18-
<PAGE>
<TABLE>
<CAPTION>
                                                         AT OR FOR THE YEAR ENDED
                                                               SEPTEMBER 30,
                                                     ---------------------------------
                                                        1997       1996        1995
                                                      ---------  ---------     -----
                                                         (DOLLARS IN THOUSANDS)
<S>                                                     <C>        <C>       <C>
Other borrowings:
  Average balance outstanding.......................    $ 192      $   265   $  --
  Maximum amount outstanding at any 
    month-end during the period.....................    $  --      $ 2,300   $  --
  Balance outstanding at end of period..............    $  --      $ 2,300   $  --
  Weighted average interest rate 
    during the period...............................     8.25%        8.25%     --%
  Weighted average interest rate at 
    end of period...................................       --%        8.25%     --%
</TABLE>
 
EMPLOYEES
 
    The Bank had 18 full-time employees and four part-time employees at
September 30, 1997. None of these employees is represented by a collective
bargaining agent, and the Bank believes that it enjoys good relations with its
personnel.
 
SUBSIDIARIES
 
    The Bank had no subsidiaries as of September 30, 1997.
 
COMPETITION
 
    The Bank faces strong competition both in attracting deposits and making
real estate loans. Its most direct competition for deposits has historically
come from other savings associations, credit unions and commercial banks located
in northern Kentucky, including many large financial institutions which have
greater financial and marketing resources available to them. In addition, during
times of high interest rates, the Bank has faced additional significant
competition for investors' funds from short-term money market securities, mutual
funds and other corporate and government securities. The ability of the Bank to
attract and retain savings deposits depends on its ability to generally provide
a rate of return, liquidity and risk comparable to that offered by competing
investment opportunities.
 
    The Bank experiences strong competition for real estate loans principally
from other savings associations, commercial banks and mortgage banking
companies. The Bank 

                                   -19-
<PAGE>

competes for loans principally through the interest rates and loan fees it 
charges and the efficiency and quality of services it provides borrowers. 
Competition may increase as a result of the continuing reduction of 
restrictions on the interstate operations of financial institutions.
 
                                   REGULATION
 
    Set forth below is a brief description of those laws and regulations which,
together with the descriptions of laws and regulations contained elsewhere
herein, are deemed material to an investor's understanding of the extent to
which the Company and the Bank are regulated. The description of the laws and
regulations hereunder and elsewhere herein does not purport to be complete and
is qualified in its entirety by reference to applicable laws and regulations.
 
THE COMPANY
 
    GENERAL. The Company, as a savings and loan holding company within the 
meaning of the HOLA, has registered with the OTS and is subject to OTS 
regulations, examinations, supervision and reporting requirements. As a 
subsidiary of a savings and loan holding company, the Bank is subject to 
certain restrictions in its dealings with the Company and affiliates thereof.

    ACTIVITIES RESTRICTIONS.  There are generally no restrictions on the
activities of a savings and loan holding company which holds only one subsidiary
savings institution. Such financial institution holding companies are the only
such companies which may engage in any commercial, securities and insurance
activities. However, Congressional legislative proposals, which have been
introduced and are under consideration, would either limit unitary savings and
loan holding companies to the same activity limits as are imposed on other
financial institution holding companies or would permit certain bank holding
companies to engage in commercial activities and expanded securities and
insurance activities. The Company cannot predict if, and in what form, these
proposals might become law. However, the broad latitude to engage in activities
under current law is restricted if the Director of the OTS determines that there
is reasonable cause to believe that the continuation by a savings and loan
holding company of an activity constitutes a serious risk to the financial
safety, soundness or stability of its subsidiary savings institution. If this is
the case, the Director may impose such restrictions as deemed necessary to
address such risk, including limiting (i) payment of dividends by the savings
institution; (ii) transactions between the savings institution and its
affiliates; and (iii) any activities of the savings institution that might
create a serious risk that the liabilities of the holding company and its
affiliates may be imposed on the savings institution. Notwithstanding the above
rules as to permissible business activities of unitary savings and loan holding
companies, if the savings institution subsidiary of such a holding company fails
to meet the QTL test, as discussed under "--The Bank--Qualified Thrift Lender
Test," then such unitary holding company also shall become subject to the
activities restrictions applicable to multiple savings and loan 

                                    -20-
<PAGE>

holding companies and, unless the savings institution requalifies as a QTL 
within one year thereafter, shall register as, and become subject to the 
restrictions applicable to, a bank holding company. See "--The Bank-- 
Qualified Thrift Lender Test."
 
    If the Company were to acquire control of another savings institution, other
than through merger or other business combination with the Bank, the Company
would thereupon become a multiple savings and loan holding company. Except where
such acquisition is pursuant to the authority to approve emergency thrift
acquisitions and where each subsidiary savings institution meets the QTL test,
as set forth below, the activities of the Company and any of its subsidiaries
(other than the Bank or other subsidiary savings institutions) would thereafter
be subject to further restrictions. Among other things, no multiple savings and
loan holding company or subsidiary thereof which is not a savings institution
shall commence or continue for a limited period of time after becoming a
multiple savings and loan holding company or subsidiary thereof any business
activity, upon prior notice to, and no objection by the OTS, other than: (i)
furnishing or performing management services for a subsidiary savings
institution; (ii) conducting an insurance agency or escrow business; (iii)
holding, managing, or liquidating assets owned by or acquired from a subsidiary
savings institution; (iv) holding or managing properties used or occupied by a
subsidiary savings institution; (v) acting as trustee under deeds of trust; (vi)
those activities authorized by regulation as of March 5, 1987 to be engaged in
by multiple savings and loan holding companies; or (vii) unless the Director of
the OTS by regulation prohibits or limits such activities for savings and loan
holding companies, those activities authorized by the FRB as permissible for
bank holding companies. Those activities described in (vii) above also must be
approved by the Director of the OTS prior to being engaged in by a multiple
savings and loan holding company.
 
    LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.  Transactions between 
savings institutions and any affiliate are governed by Sections 23A and 23B 
of the Federal Reserve Act. An affiliate of a savings institution is any 
company or entity which controls, is controlled by or is under common control 
with the savings institution. In a holding company context, the parent 
holding company of a savings institution (such as the Company) and any 
companies which are controlled by such parent holding company are affiliates 
of the savings institution. Generally, Sections 23A and 23B (i) limit the 
extent to which the savings institution or its subsidiaries may engage in 
"covered transactions" with any one affiliate to an amount equal to 10% of 
such institution's capital stock and surplus, and contain an aggregate limit 
on all such transactions with all affiliates to an amount equal to 20% of 
such capital stock and surplus and (ii) require that all affiliate 
transactions be on terms substantially the same, or at least as favorable, to 
the institution or subsidiary as those provided to a non-affiliate. The term 
"covered transaction" includes the making of loans, purchase of assets, 
issuance of a guarantee and other similar transactions. In addition to the 
restrictions imposed by Sections 23A and 23B, no savings institution may (i) 
loan or otherwise extend credit to an affiliate, except for any affiliate 
which engages only in activities which are permissible for bank holding 
companies, or (ii) purchase or invest in any stocks, bonds, debentures, notes 
or 

                                    -21-
<PAGE>

similar obligations of any affiliate, except for affiliates which are 
subsidiaries of the savings institution.
 
    In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders of savings institutions and their holding companies. Under Section
22(h), loans to a director, an executive officer and to a greater than 10%
stockholder of a savings institution, and certain affiliated interests of
either, may not exceed, together with all other outstanding loans to such person
and affiliated interests, the savings institution's loans to one borrower limit.
Section 22(h) also requires that loans to directors, executive officers and
principal stockholders be made on terms substantially the same as offered in
comparable transactions to other persons and also requires prior board approval
for certain loans. In addition, the aggregate amount of extensions of credit by
a savings institution to all insiders cannot exceed the institution's unimpaired
capital and surplus. Furthermore, Section 22(g) places additional restrictions
on loans to executive officers. At September 30, 1997, the Bank was in
compliance with the above restrictions.
 
    RESTRICTIONS ON ACQUISITIONS.  Except under limited circumstances, savings
and loan holding companies are prohibited from acquiring, without prior approval
of the Director of the OTS, (i) control of any other savings institution or
savings and loan holding company or substantially all the assets thereof or (ii)
more than 5% of the voting shares of a savings institution or holding company
thereof which is not a subsidiary. Except with the prior approval of the
Director of the OTS, no director or officer of a savings and loan holding
company or person owning or controlling by proxy or otherwise more than 25% of
such company's stock, may acquire control of any savings institution, other than
a subsidiary savings institution, or of any other savings and loan holding
company.
 
    The Director of the OTS may only approve acquisitions resulting in the
formation of a multiple savings and loan holding company which controls savings
institutions in more than one state if (i) the multiple savings and loan holding
company involved controls a savings institution which operated a home or branch
office located in the state of the institution to be acquired as of March 5,
1987; (ii) the acquiror is authorized to acquire control of the savings
institution pursuant to the emergency acquisition provisions of the Federal
Deposit Insurance Act ("FDIA"); or (iii) the statutes of the state in which the
institution to be acquired is located specifically permit institutions to be
acquired by the state-chartered institutions or savings and loan holding
companies located in the state where the acquiring entity is located (or by a
holding company that controls such state-chartered savings institutions).
 
    Under the Bank Holding Company Act of 1956, the FRB is authorized to approve
an application by a bank holding company to acquire control of a savings
institution. In addition, a bank holding company that controls a savings
institution to merge or consolidate the assets and liabilities of the savings
institution with, or transfer assets and liabilities to, 

                                    -22-
<PAGE>

any subsidiary bank which is a member of the BIF with the approval of the 
appropriate federal banking agency and the FRB. As a result of these 
provisions, there have been a number of acquisitions of savings institutions 
by bank holding companies in recent years.
 
THE BANK
 
    GENERAL. The OTS has extensive authority over the operations of federally 
chartered savings institutions. As part of this authority, savings 
institutions are required to file periodic reports with the OTS and are 
subject to periodic examinations by the OTS and the FDIC. The investment and 
lending authority of savings institutions are prescribed by federal laws and 
regulations, and such institutions are prohibited from engaging in any 
activities not permitted by such laws and regulations. Those laws and 
regulations generally are applicable to all federally chartered savings 
institutions and may also apply to state-chartered savings institutions. Such 
regulation and supervision is primarily intended for the protection of 
depositors.
 
    The OTS' enforcement authority over all savings institutions and their
holding companies was substantially enhanced by FIRREA. This enforcement
authority includes, among other things, the ability to assess civil money
penalties, to issue cease and desist or removal orders and to initiate
injunctive actions. In general, these enforcement actions may be initiated for
violations of laws and regulations and for engaging in unsafe or unsound
practices. Other actions or inactions may provide the basis for an enforcement
action, including misleading or untimely reports filed with the OTS. FIRREA
significantly increased the amount of and grounds for civil money penalties.
 
    INSURANCE OF ACCOUNTS.  The deposits of the Bank are insured to the maximum
extent permitted by the SAIF, which is administered by the FDIC, and are backed
by the full faith and credit of the U.S. Government. As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by, FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from engaging in
any activity the FDIC determines by regulation or order to pose a serious threat
to the FDIC. The FDIC also has the authority to initiate enforcement actions
against savings institutions, after giving the OTS an opportunity to take such
action.
 
    The deposits of the Bank are currently insured by the SAIF. Both the SAIF
and the BIF, the federal deposit insurance fund that covers commercial bank
deposits, are required by law to attain and thereafter maintain a reserve ration
of 1.25% of insured deposits. The BIF had achieved a fully funded status in
contrast to the SAIF and, therefore, the FDIC substantially reduced the average
deposit insurance premium paid by commercial banks to a level significantly
below the average premium paid by savings institutions.
 
    The underfunded status of the SAIF resulted in the introduction of federal
legislation intended to, among other things, recapitalize the SAIF and address
the resulting premium disparity. On September 30, 1997, The Omnibus
Appropriations Act was signed into law. 

                                    -23-
<PAGE>

The legislation authorized a one-time charge on SAIF insured deposits at a 
rate of 65.7 basis points per $100.00 of March 31, 1995 deposits. As a 
result, the Bank's assessment amounted to $375,000 ($248,000 net of tax). 
Additional provisions of the Act include new BIF and SAIF premiums and the 
merger of BIF and SAIF. The new BIF and SAIF premiums will include a premium 
for repayment of the Financing Corporation("FICO") bonds plus any regular 
insurance assessment, currently nothing for the lowest risk category 
institutions. Until full pro-rata FICO sharing is in effect, the FICO 
premiums for BIF and SAIF will be 1.3 and 6.4 basis points, respectively, 
beginning January 1, 1997. Full pro-rata FICO sharing is to begin no later 
than January 1, 2000. The BIF and SAIF are to be merged on January 1, 1999, 
provided the bank and savings association charters are merged by that date. 
While the one-time special assessment had a significant impact on the fiscal 
1996 earnings, the resulting lower annual premiums will benefit future 
earnings.
 
    The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals,
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Bank's deposit insurance.
 
    REGULATORY CAPITAL REQUIREMENTS.  Federally insured savings institutions are
required to maintain minimum levels of regulatory capital. The OTS has
established capital standards applicable to all savings institutions. These
standards generally must be as stringent as the comparable capital requirements
imposed on national banks. The OTS also is authorized to impose capital
requirements in excess of these standards on individual institutions on a
case-by-case basis.
 
    Current OTS capital standards require savings institutions to satisfy three
different capital requirements. Under these standards, savings institutions must
maintain "tangible" capital equal to at least 1.5% of adjusted total assets,
"core" capital equal to at least 3.0% of adjusted total assets and "total"
capital (a combination of core and "supplementary" capital) equal to at least
8.0% of "risk-weighted" assets. For purposes of the regulation, core capital
generally consists of common stockholders' equity (including retained earnings),
noncumulative perpetual preferred stock and related surplus, minority interests
in the equity accounts of fully consolidated subsidiaries, certain
nonwithdrawable accounts and pledged deposits and "qualifying supervisory
goodwill." Tangible capital is given the same definition as core capital but
does not include qualifying supervisory goodwill and is reduced by the amount of
all the savings institution's intangible assets, with a limited exception for
purchased mortgage servicing rights. The Bank had no goodwill or other
intangible assets at September 30, 1997. Both core and tangible capital are
further reduced by an amount 

                                    -24-
<PAGE>

equal to a savings institution's debt and equity investments in subsidiaries 
engaged in activities not permissible for national banks (other than 
subsidiaries engaged in activities undertaken as agent for customers or in 
mortgage banking activities and subsidiary depository institutions or their 
holding companies). These adjustments do not affect the Bank's regulatory 
capital.
 
    In determining compliance with the risk-based capital requirement, a savings
institution is allowed to include both core capital and supplementary capital in
its total capital, provided that the amount of supplementary capital included
does not exceed the savings institution's core capital. Supplementary capital
generally consists of hybrid capital instruments; perpetual preferred stock
which is not eligible to be included as core capital; subordinated debt and
intermediate-term preferred stock; and general allowances for loan losses up to
a maximum of 1.25% of risk-weighted assets. In determining the required amount
of risk-based capital, total assets, including certain off-balance sheet items,
are multiplied by a risk weight based on the risks inherent in the type of
assets. The risk weights assigned by the OTS for principal categories of assets
are (i) 0% for cash and securities issued by the U.S. Government or
unconditionally backed by the full faith and credit of the U.S. Government; (ii)
20% for securities (other than equity securities) issued by U.S.
Government-sponsored agencies and mortgage-backed securities issued by, or fully
guaranteed as to principal and interest by, the FNMA or the FHLMC, except for
those classes with residual characteristics or stripped mortgage-related
securities; (iii) 50% for prudently underwritten permanent one- to four-family
first lien mortgage loans not more than 90 days delinquent and having a
loan-to-value ratio of not more than 80% at origination unless insured to such
ratio by an insurer approved by the FNMA or the FHLMC, qualifying residential
bridge loans made directly for the construction of one- to four-family
residences and qualifying multi-family residential loans; and (iv) 100% for all
other loans and investments, including consumer loans, commercial loans, and
one- to four-family residential real estate loans more than 90 days delinquent,
and for repossessed assets.

                                    -25-
<PAGE>

    At September 30, 1997, the Bank exceeded all of its regulatory capital 
requirements, with tangible, core and risk-based capital ratios of 16.94%, 
16.94% and 24.32%, respectively. The following table sets forth the Bank's 
compliance with each of the above-described capital requirements as of 
September 30, 1997.

<TABLE>
<CAPTION>
                                      TANGIBLE     CORE     RISK-BASED
                                       CAPITAL    CAPITAL   CAPITAL(1)
                                      ---------  ---------  -----------
                                            (DOLLARS IN THOUSANDS)
<S>                                   <C>        <C>        <C>
Regulatory capital.................   $  14,509  $  14,509   $  14,509
Additional Capital Items:..........          --         --         476
                                      ---------  ---------  -----------
  A regulatory capital
  Regulatory Capital...............      14,509     14,509      14,985
Minimum required 
  regulatory capital...............       1,285      2,569       4,929
                                      ---------  ---------  -----------
Excess regulatory capital..........   $  13,224  $  11,940   $  10,056
                                      ---------  ---------  -----------
                                      ---------  ---------  -----------
Regulatory capital as a 
  percentage.....................         16.94%     16.94%      24.32%
Minimum capital required 
  as a percentage................          1.50       3.00        8.00
                                      ---------  ---------  -----------
Regulatory capital as a 
  percentage in excess of 
  requirements....................        15.44%     13.94%      16.32%
                                      ---------  ---------  -----------
                                      ---------  ---------  -----------
</TABLE>
 
    LIQUIDITY REQUIREMENTS.  All savings institutions are required to maintain
an average daily balance of liquid assets equal to a certain percentage of the
sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings institutions. At the present time, the required minimum
liquid asset ratio is 5%. At September 30, 1997, the Bank's liquidity ratio was
5.45%.
 
    CAPITAL DISTRIBUTIONS. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt and
other transactions charged to the capital account of a savings institution to
make capital distributions. Generally, the regulation creates a safe harbor for
specified levels of capital distributions from institutions meeting at least
their minimum capital requirements, so long as such institutions notify the OTS
and receive no objection to the distribution from the OTS. Savings institutions
and 

                                    -26-
<PAGE>

distributions that do not qualify for the safe harbor are required to obtain
prior OTS approval before making any capital distributions.
 
    Generally, a savings institution that before and after the proposed
distribution meets or exceeds its fully phased-in capital requirements (Tier 1
institutions) may make capital distributions during any calendar year equal to
the higher of (i) 100% of net income for the calendar year-to-date plus 50% of
its "surplus capital ratio" at the beginning of the calendar year or (ii) 75% of
net income over the most recent four-quarter period. The "surplus capital ratio"
is defined to mean the percentage by which the institution's ratio of total
capital to assets exceeds the ratio of its fully phased-in capital requirement
to assets. "Fully phased-in capital requirement" is defined to mean an
institution's capital requirement under the statutory and regulatory standards
applicable on September 30, 1996, as modified to reflect any applicable
individual minimum capital requirement imposed upon the institution. Failure to
meet fully phased-in or minimum capital requirements will result in further
restrictions on capital distributions, including possible prohibition without
explicit OTS approval. At September 30, 1997, the Bank was a Tier 1 institution
for purposes of this regulation. See "--Regulatory Capital Requirements."
 
    In order to make distributions under these safe harbors, Tier 1 and Tier 2
institutions must submit written notice to the OTS 30 days prior to making the
distribution. The OTS may object to the distribution during that 30-day period
based on safety and soundness concerns. In addition, a Tier 1 institution deemed
to be in need of more than normal supervision by the OTS may be downgraded to a
Tier 2 or Tier 3 institution as a result of such a determination.

    QUALIFIED THRIFT LENDER TEST.  In general , savings associations are
required to maintain at least 65% of their portfolio assets in certain qualified
thrift investments (which consist primarily of loans and other investments
related to residential real estate and certain other assets). A savings
association that fails the qualified thrift lender test is subject to
substantial restrictions on activities and to other significant penalties.
 
    Recent legislation permits a savings association to qualify as a qualified
thrift lender not only by maintaining 65% of portfolio assets in qualified
thrift investments (the "QTL test") but also in the alternative, by qualifying
under the Code as a "domestic building and loan association." The Bank is a
domestic building and loan association as defined in the Code.
 
    Recent legislation also expands the QTL test to provide savings associations
with greater authority to lend and diversify their portfolios. In particular,
credit card and educational loans may now be made by savings associations
without regard to any percentage-of-assets limit, and commercial loans may be
made in an amount up to 10 percent of total assets, plus an additionally 10
percent for small business loans. Loans for personal, family and household
purposes (other than credit card, small business and educational loans) are now
included without limit with other assets that, in the aggregate, 

                                    -27-
<PAGE>

may account for up to 20% of total assets. At September 30, 1997, under the 
expanded QTL test, approximately 93.6% of the Bank's portfolio assets were 
qualified thrift investments.
 
    FEDERAL HOME LOAN BANK SYSTEM.  The Bank is a member of the FHLB of
Cincinnati, which is one of 12 regional FHLBs that administers the home
financing credit function of savings institutions. Each FHLB serves as a reserve
or central bank for its members within its assigned region. It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB System. It makes loans to members (i.e., advances) in accordance with
policies and procedures established by the Board of Directors of the FHLB. At
September 30, 1997, the Bank had $8.8 million of FHLB advances.
 
    As a member, the Bank is required to purchase and maintain stock in the FHLB
of Cincinnati in an amount equal to at least 1% of its aggregate unpaid
residential mortgage loans, home purchase contracts or similar obligations at
the beginning of each year. At September 30, 1997, the Bank had $785,000 in FHLB
stock, which was in compliance with this requirement.
 
    The FHLBs are required to provide funds for the resolution of troubled
savings institutions and to contribute to affordable housing programs through
direct loans or interest subsidies on advances targeted for community investment
and low- and moderate-income housing projects. These contributions have
adversely affected the level of FHLB dividends paid and could continue to do so
in the future. These contributions also could have an adverse effect on the
value of FHLB stock in the future.
 
                                    TAXATION
 
FEDERAL TAXATION
 
    GENERAL. The Company and the Bank are subject to the generally applicable 
corporate tax provisions of the Code, and the Bank is subject to certain 
additional provisions of the Code which apply to thrift and other types of 
financial institutions. The following discussion of federal taxation is 
intended only to summarize certain pertinent federal income tax matters 
material to the taxation of the Company and the Bank and is not a 
comprehensive discussion of the tax rules applicable to the Company and the 
Bank.
 
    FISCAL YEAR.  The Company and the Bank file a federal income tax return on
the basis of a fiscal year ending on September 30.

    BAD DEBT RESERVES.  Savings institutions, such as the Bank, which meet
certain definitional tests primarily relating to their assets and the nature of
their businesses, historically were permitted to establish a reserve for bad
debts and to make annual additions to the reserve. Under new legislation passed
in August 1996, the special bad debt deduction was repealed for thrift
institutions. The legislation also requires thrifts to recapture, over 

                                    -28-
<PAGE>

a six-year period, bad debt reserves added since 1988. As the Bank has provided
for a deferred tax liability for special bad debt deductions since 1988, the
legislation is not expected to have a material effect on the results of its
operations.
 
    DISTRIBUTIONS.  If the Bank were to distribute cash or property to its sole
stockholder, and the distribution was treated as being from its accumulated bad
debt reserves, the distribution will cause the Bank to have additional taxable
income. A distribution is deemed to have been made from accumulated bad debt
reserves to the extent that (a) the reserves exceed the amount that would have
been accumulated on the basis of actual loss experience, and (b) the
distribution is a "non-qualified distribution." A distribution with respect to
stock is a non-qualified distribution to the extent that, for federal income tax
purposes, (i) it is in redemption of shares, (ii) it is pursuant to a
liquidation of the institution, or (iii) in the case of a current distribution,
together with all other such distributions during the taxable year, it exceeds
the institution's current and post-1951 accumulated earnings and profits. The
amount of additional taxable income created by a non-qualified distribution is
an amount that when reduced by the tax attributable to it is equal to the amount
of the distribution.
 
    MINIMUM TAX.  The Code imposes an alternative minimum tax at a rate of 20%.
The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent such AMTI is in excess of an exemption
amount. The Code provides that an item of tax preference is the excess of the
bad debt deduction allowable for a taxable year pursuant to the percentage of
taxable income method over the amount allowable under the experience method.
Other items of tax preference that constitute AMTI include (a) tax-exempt
interest on newly issued (generally, issued on or after August 8, 1986) private
activity bonds other than certain qualified bonds and (b) 75% of the excess (if
any) of (i) adjusted current earnings as defined in the Code, over (ii) AMTI
(determined without regard to this preference and prior to reduction by net
operating losses).

    NET OPERATING LOSS CARRYOVERS. A financial institution may carry back net
operating losses ("NOLs") to the preceding three taxable years and forward to
the succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At September 30, 1997, the Bank had no NOL
carryforwards for federal income tax purposes.
 
    CAPITAL GAINS AND CORPORATE DIVIDENDS-RECEIVED DEDUCTION. Corporate net
capital gains are taxed at a maximum rate of 34%. The corporate
dividends-received deduction is 80% in the case of dividends received from
corporations with which a corporate recipient does not file a consolidated tax
return, and corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received or accrued on
their behalf. However, a corporation may deduct 100% of dividends from a member
of the same affiliated group of corporations.

                                    -29-
<PAGE>

    OTHER MATTERS.  Federal legislation is introduced from time to time that
would limit the ability of individuals to deduct interest paid on mortgage
loans. Individuals are currently not permitted to deduct interest on consumer
loans. Significant increases in tax rates or further restrictions on the
deductibility of mortgage interest could adversely affect the Bank.
 
    The Bank's federal income tax returns for the tax years ended September 30,
1992 forward are open under the statute of limitations and are subject to review
by the IRS.

STATE TAXATION

    The State of Kentucky imposes no income or franchise taxes on savings
institutions. However, the Company (on an unconsolidated basis) must pay a
Kentucky state income tax, as well as a tax on capital. The tax on income is
4.0% for the first $25,000 of taxable income, 5.0% for the next $25,000, 6.0%
for the next $50,000, 7.0% for the next $150,000 and 8.25% for all income over
$250,000. The tax on capital is .0021 times the capital employed.
 
    The Bank is subject to an annual Kentucky ad valorem tax. Assessed at the
beginning of each calendar year, this tax is 0.1% of the Bank's savings
accounts, common stock, capital and retained income with certain deductions
allowed for amounts borrowed by depositors and for securities guaranteed by the
U.S. government or certain of its agencies. During the year ended September 30,
1997, the amount of such expense for the Bank was $73,000.
 
    The Company is subject to an Ohio franchise tax based on its net worth plus
certain reserve amounts. Total net worth for this purpose is reduced by certain
exempted assets. The resultant net worth is taxed at a rate of 1.5% for the 1997
return, which is based on net worth as of December 31, 1997.
 
ITEM 2. PROPERTIES.
 
    At September 30, 1997, the Bank conducted its business from its executive
offices in Fort Thomas, Kentucky and one full service branch office, both of
which are located in Campbell County, Kentucky.

                                    -30-
<PAGE>

    The following table sets forth certain information with respect to the
Bank's office properties at September 30, 1995.
 
<TABLE>
<CAPTION>
                                           NET BOOK       ASSESSED
                                           VALUE OF         VALUE
                                         PREMISES AND        FOR
                                         FIXED ASSETS,    PROPERTY     AMOUNT OF
DESCRIPTION/ADDRESS      LEASED/OWNED         NET           TAXES      DEPOSITS
-----------------------  -------------   -------------    --------     ---------
                                                (IN THOUSANDS)
<S>                      <C>             <C>              <C>          <C>
Main Office 
  (2 Buildings) 
  Fort Thomas, KY        Owned           $  228           $  904       $ 49,737

Branch Office 
  Alexandria, KY         Owned              342              347         22,121
                                         ------           ------       --------
            Totals                       $  570           $1,251       $ 71,858
                                         ------           ------       --------
                                         ------           ------       --------
</TABLE>
 
ITEM 3. LEGAL PROCEEDINGS.
 
    The Company is not involved in any pending legal proceedings other than
nonmaterial legal proceedings occurring in the ordinary course of business.
 
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
 
    Not Applicable.

PART II.
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
  STOCKHOLDER MATTERS.
 
    The information required herein, to the extent applicable, is incorporated
by reference from page 51 of the Company's 1997 Annual Report to Stockholders
("1997 Annual Report").
 
ITEM 6. SELECTED FINANCIAL DATA.
 
    The information required herein is incorporated by reference from page 3 of
the 1997 Annual Report.

                                    -31-
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
  RESULTS OF OF OPERATIONS.
 
    The information required herein is incorporated by reference from pages 4 to
17 of the 1997 Annual Report.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
    The information required herein is incorporated by reference from pages 18
to 50 of the 1997 Annual Report.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
  ACCOUNTING AND FINANCIAL DISCLOSURE.
 
    Not Applicable.
 
PART III.
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
    The information required herein is incorporated by reference from pages 2 to
4 of the definitive proxy statement of the Company for the Annual Meeting of
Stockholders to be held on January 26, 1998 ("Definitive Proxy Statement").
 
ITEM 11. EXECUTIVE COMPENSATION.
 
    The information required herein is incorporated by reference from pages 6 to
9 of the Definitive Proxy Statement.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT.
 
    The information required herein is incorporated by reference from pages 4
and 5 of the Definitive Proxy Statement.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
    The information required herein is incorporated by reference from page 9 of
the Definitive Proxy Statement.

                                    -32-
<PAGE>

PART IV.
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 
        (a) DOCUMENTS FILED AS PART OF THIS REPORT
 
        (1) The following financial statements are incorporated by reference
    from Item 8 hereof (see Exhibit 13):
 
        Independent Auditors' Report 
        Consolidated Statements of Financial Condition at September 30, 
          1997 and 1996 
        Consolidated Statements of Income for the years ended 
          September 30, 1997, September 30, 1996 and September 30,
          1995 
        Consolidated Statements of Changes in Stockholders' Equity for 
          the years ended September 30, 1997, September 30, 1996 and 
          September 30, 1995.
        Consolidated Statements of Cash Flows for the years ended 
          September 30, 1997, September 30, 1996 and September 30, 1995. 
        Notes to Consolidated Financial Statements. 

        (2) All schedules for which provision is made in the applicable 
    accounting regulation of the SEC are omitted because of the absence of 
    conditions under which they are required or because the required
    information is included in the financial statements and related notes
    thereto. 

        (3) The following exhibits are filed as part of this Form 10-K and
    this list includes the Exhibit Index.

                                    -33-
<PAGE>

                                EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>   <C>                                                                    <C>
 2.1  Plan of Conversion                                                     *
 3.1  Amended and Restated Articles of Incorporation of Fort Thomas 
        Financial Corporation                                                **
 3.2  Code of Regulations of Fort Thomas Financial Corporation               *
 3.3  Bylaws of Fort Thomas Financial Corporation                            *
 4.0  Stock Certificate of Fort Thomas Financial Corporation                 ***
10.5  Employment Agreement between Fort Thomas Financial Corporation and 
        Larry N. Hatfield                                                    *
10.6  Employment Agreement between Fort Thomas Financial Corporation and 
        J. Michael Lonnemann                                                 *
13.0  1997 Annual Report to Stockholders                                     ****
22.0  Subsidiaries of the Registrant--Reference is made to 
        "Item 1 Business--Subsidiaries" for the required information
</TABLE>

------------------------
 
(*)   Incorporated herein by reference from the Company's Registration Statement
    on Form S-1 filed with the SEC on March 7, 1995.
 
(**)  Incorporated herein by reference from the Company's Registration Statement
    on Form 8-A filed with the SEC on June 14, 1995.
 
(***) Incorporated herein by reference from the Company's Form 10-K for fiscal
    1995.
 
(****)Filed with the Company's Definitive Proxy Statement.
 
                                    -34-
<PAGE>

                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.
 
                                FORT THOMAS FINANCIAL CORPORATION
 
                                BY:  /s/ Larry N. Hatfield
                                     -----------------------------------------
                                     Larry N. Hatfield 
                                     President and Chief Executive Officer
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ Larry N. Hatfield       
------------------------------                      December 27, 1997
Larry N. Hatfield
President and Chief
  Executive Officer

/s/ Robert L. Grimm        
------------------------------                      December 27, 1997
Robert L. Grimm
Chairman of the Board

/s/ Harold A. Luersen       
------------------------------                     December 27, 1997
Harold A. Luersen
Director

/s/ Don J. Beckmeyer      
------------------------------                     December 27, 1997
Don J. Beckmeyer
 Director

<PAGE>

/s/ J. Steven Mclane       
------------------------------                     December 27, 1997
J. Steven Mclane
Director 

/s/ J. Michael Lonnemann     
------------------------------                     December 27, 1997
J. Michael Lonnemann         
Vice President and Secretary 
(Principal accounting officer)