EXHIBIT 13


<PAGE>







Letter to Stockholders
NCF Financial Corporation
Bardstown, Kentucky


Dear Fellow Shareholders:

         More than two years have now passed since NCF Financial Corporation was
formed,  and this second year has resulted in many positive changes.  Our wholly
owned subsidiary,  Nelson County Federal Savings and Loan, became a full service
commercial bank on April 2, 1997, as we completed a charter  conversion  process
that  formally  began in  October  of 1996.  We are now NCF Bank and Trust  Co.,
offering a full array of banking  services  from our new  building on John Rowan
Boulevard.  This new facility  will allow us to better serve our customers as we
expand  services  to meet all of their  banking  needs.  We have  received  many
complements  on the design of the new building,  and have found the new location
to be a very positive move.

         This annual report  details the financial  performance of NCF Financial
and its  banking  affiliate,  NCF Bank and  Trust  Co.,  and  compares  the 1997
performance to that of prior years.  As you know,  Nelson County Federal Savings
and Loan was required,  along with all the 1,900 plus savings  institutions  who
are members of the S.A.I.F. portion of the Federal Deposit Insurance Corporation
(F.D.I.C.), to pay into the deposit fund, a one time special premium assessment.
Our assessment,  charged directly to the bank's first quarter 1997 earnings, was
$151,771.  The impact of this non-reoccurring charge on 1997 consolidated income
was over $100,000 after tax. Without this one time assessment,  our income would
have been at a record level of $427,661.

         We now move into our third year with great  enthusiasm as we create the
new image for NCF Bank and Trust Co. Your ongoing support is always appreciated,
and your comments and suggestions  are most welcome.  Please  remember,  banking
with NCF Bank - "your  bank" - pays you  dividends.  Tell your  friends to visit
your new bank at 106 A. West John Rowan Blvd.,  Bardstown,  KY 40004, or call us
at (502)348-9278.

                                             Sincerely,


                                             /s/A.E. Bowling
                                             NCF Financial Corporation
                                             A.E. Bowling, Chairman & President


                                       1
<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

BUSINESS OF THE COMPANY
-----------------------

         NCF Financial  Corporation (the Corporation) is a Delaware  corporation
organized in June of 1995 for the purpose of becoming the holding company of NCF
Bank and Trust Co. (the Bank),  formerly  Nelson County Federal  Savings Bank in
connection  with the conversion  from the mutual to stock form of ownership (the
Conversion). On October 12, 1995, the Bank completed the Conversion and became a
wholly owned  subsidiary of the  Corporation.  The Corporation is a bank holding
company  regulated by the Board of Governors of the Federal  Reserve  System and
the primary business of the Company is the business of the Bank.

BUSINESS OF THE BANK
--------------------

         The  Bank  is  a  state  chartered  commercial  bank  headquartered  in
Bardstown,  Kentucky and was originally  founded as a mutual institution in 1925
under the name of "Nelson County  Building and Loan  Association."  In 1995, the
Bank  became a  federal  stock  savings  and loan  association  and in July 1996
changed its name to "Nelson County Federal  Savings  Bank."  Effective  April 2,
1997,  the Bank was approved as a commercial  state bank and changed its name to
"NCF Bank and Trust Co." The Bank's deposits have been federally  insured by the
Savings  Association  Insurance  Fund  (SAIF) and its  predecessor,  the Federal
Savings and Loan Insurance Corporation,  since 1973, and the Bank is a member of
the  Federal  Home Loan Bank (the  FHLB)  System.  The Bank has one  subsidiary,
Nelson Service  Corporation (NSC), which has no operating activity other than to
own stock in a third party service bureau.

         The Bank is primarily  engaged in attracting  deposits from the general
public   and   using   those   funds  to   originate   real   estate   loans  on
one-to-four-family  residences and to a lesser extent, residential construction,
multi-family  real  estate  and  consumer  loans.  In  addition,  the Bank holds
interest  earning  deposits  in other  financial  institutions  and  invests  in
mortgage-backed   securities  and  investment  securities.  The  Bank  does  not
typically   originate   fixed-rate  loans  of  any  kind,   relying  instead  on
adjustable-rate  loans that annually  reprice.  For its mortgage loan portfolio,
the Bank originates and retains  adjustable-rate  loans and does not purchase or
sell mortgage loans.

         The Bank is subject to examination and comprehensive  regulation by the
Commonwealth  of Kentucky and its  deposits  are insured by the Federal  Deposit
Insurance  Corporation  (FDIC) under the SAIF.  The Bank is a member of and owns
capital stock in the FHLB of  Cincinnati,  which is one of the 12 regional banks
in the FHLB System.

         The principal  sources of funds for the Bank's  lending  activities are
deposits  and the  amortization,  repayment  and  maturity  of  loans,  and FHLB
advances.  Principal  sources  of income  are  interest  on loans and  principal
expense is interest paid on deposits.

MARKET PRICE OF THE REGISTRANT'S COMMON STOCK
---------------------------------------------

         The  Corporation's  stock is  traded  under  the  symbol  "NCFD" on the
over-the-counter  market and trades may be quoted on the "Pink Sheets". The most
recent trade of which management of the Corporation is aware occurred at $14.375
per share in July,  1997.  The stock was first  issued on  October  12,  1995 at
$10.00 per share. Regular semi-annual  dividends of .15 per share have been paid
to shareholders since May 15, 1996. The Corporation intends to continue to pay a
regular   semi-annual   dividend.   Payment  of  dividends  is  subject  to  the
restrictions  described  in  Note  8 of  the  Notes  to  Consolidated  Financial
Statements.  The following chart shows the range of high and low bid information
during each  quarter for the past two fiscal  years.  These  quotations  reflect
inter-dealer  prices without retail mark-up or mark-down or commission,  and may
not represent actual trades.

Quarterly Stock Prices
----------------------
<TABLE>
<CAPTION>
                                              September 30    December 31    March 31    June 30
                                              ------------    -----------    --------    -------
<S>                                              <C>            <C>           <C>        <C>   
         Year Ended June 30, 1997:
           High                                  $14.50         $13.375       $14.50     $14.50
           Low                                   $13.375        $13.375       $13.50     $14.00
           Dividends                             $  -           $  .15        $  -       $  .15

         Year Ended June 30, 1996:
           High                                    n/a          $14.50        $13.50     $13.75
           Low                                     n/a          $11.25        $12.00     $13.00
           Dividends                               n/a          $  -          $  -       $  .15
</TABLE>
                                       2
<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
                 ----------------------------------------------

Financial Condition Data:

The following  table sets forth  certain  information  concerning  the financial
position of the Corporation at the dates indicated.
<TABLE>
<CAPTION>
                                                                           At June 30,
                                                     --------------------------------------------------------
                                                      1997        1996        1995        1994        1993
                                                      ----        ----        ----        ----        ----
Total amount of:                                                      (Dollars in Thousands)
<S>                                                  <C>         <C>         <C>         <C>         <C>    
  Assets ..........................................  $34,403     $34,905     $28,722     $27,555     $26,638
  Loans receivable, net ...........................   27,046      28,861      26,574      22,582      23,241
  Cash and interest-bearing deposits ..............    5,195       5,163       1,201       4,160       2,457
  Mortgage-backed securities ......................      132         143         182         274         434
  Savings deposits ................................   21,969      22,741      23,172      23,080      22,475
  FHLB advances ...................................     -           -            700        -           -
  Net worth - substantially restricted ............   12,050      11,803 (1)   4,636       4,320       3,996

Number of:
  Real estate loans outstanding ...................      830         849         846         824         861
  Savings deposit accounts ........................    2,286       2,352       2,473       2,341       2,429
  Full service offices ............................        1           1           1           1           1
</TABLE>

(1) Includes net proceeds from stock issuance on October 12, 1995 of $6,835,737.

Operating Data:

The following table summarizes the Corporation's  results of operations for each
of the periods indicated.
<TABLE>
<CAPTION>
                                                                       Year Ended June 30,
                                                     --------------------------------------------------------
                                                      1997        1996        1995        1994        1993
                                                      ----        ----        ----        ----        ----
                                                                      (Dollars in Thousands)

<S>                                                  <C>         <C>         <C>         <C>         <C>    
Interest income ...................................  $ 2,573     $ 2,523     $ 2,030     $ 1,891     $ 1,981
Interest expense ..................................    1,043       1,122       1,007         848         985
Net interest income before provision
 for loan losses ..................................    1,530       1,401       1,023       1,043         996
Provision for loan losses .........................       16          61          20          50          19
Net interest income after provision
 for loan losses ..................................    1,514       1,340       1,003         993         977
Other income ......................................       20          23          18          24          21
Other expense .....................................    1,028 (3)     762         533         482         464
Income before federal income tax and
 cumulative effect adjustment .....................      506         601         488         535         534
Federal income tax expense ........................      178         203         171         184         181
Net income before cumulative effect adjustment ....      328         398         317         351         353
Cumulative effect of accounting change ............     -           -           -             27 (2)    -
                                                     -------     -------     -------     -------     -------
Net income ........................................  $   328     $   398     $   317     $   324     $   353
                                                     =======     =======     =======     =======     =======
</TABLE>

(2)  lAccounting  change under Statement of Financial  Accounting  Standards No.
     109, "Accounting for Income Taxes."
(3)  Includes one-time FDIC insurance premium assessment of $153,000.

<TABLE>
<CAPTION>
Other Data:
<S>                                                  <C>         <C>         <C>          <C>         <C>                    
Dividends per share ...............................  $   .30         .15        n/a         n/a         n/a
Dividend payout ratio .............................    68.18%      41.67%       n/a         n/a         n/a
Return on assets (net income divided by
 average total assets) ............................      .93%       1.16%       1.08%       1.18%       1.29%
Return on equity (net income divided by
 average equity) ..................................     2.74%       4.20%       6.97%       7.71%       9.23%
Equity to assets (average equity divided
 by average total assets) .........................    33.77%      27.55%      15.50%      15.37%      14.03%
Book value per share ..............................  $ 15.20       15.32        n/a         n/a         n/a
</TABLE>
                                       3
<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------




MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION
-----------------------------------------------------

         The  management of NCF Financial  Corporation  is  responsible  for the
preparation of the financial  statements and all other information in the Annual
Report.  The financial  statements  were prepared in accordance  with  generally
accepted accounting principles appropriate in our circumstances.

         The  accounting  system and  internal  accounting  controls  in use are
designed to provide reasonable assurance that the financial records are reliable
for preparing  financial  statements and maintaining  accounting for assets, and
that assets are safeguarded against loss from unauthorized use or disposition.

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

         Comparisons of operating  results for the years ended June 30, 1997 and
1996.

         General - NCF Financial  Corporation (the Corporation) is the parent to
its wholly-owned subsidiary,  NCF Bank and Trust Co. (the Bank). The Corporation
generates interest income from interest-earning deposits,  however, it's primary
source of net income is that which is generated by the Bank.

         Stock Issuance - On October 12, 1995, the Bank successfully completed a
conversion  from a mutual  to stock  form of  ownership.  In this  process,  the
Corporation  issued  770,500 shares of common stock in exchange for net proceeds
of $7,335,737 after conversion costs of $369,263.

         Results of Operations - Net income for the year ended June 30, 1997 was
$327,661 as compared to $397,790 for the year ended June 30, 1996. This decrease
of $70,129 or 17.6% is largely  attributable  to the charge to earnings  for the
one-time  FDIC  assessment  of  $101,000,  net of tax,  however,  the  following
discussion  outlines  the factors  contributing  to the change in net income for
1997.

         Net Interest Income - Net interest income  increased by $129,434 during
fiscal 1997 to  $1,529,958  as  compared  to  $1,400,524  in fiscal  1996.  This
increase was due to both the increase in volume of  interest-earning  assets and
the decline in interest-bearing  liabilities. The Corporation experienced a full
year of investing the net proceeds of the prior year stock issuance,  therefore,
average  interest-earning  assets  increased by  approximately  $715,000  during
fiscal 1997 when compared to fiscal 1996.  Also, the Bank  experienced a decline
in average  interest-bearing  liabilities of approximately $1,019,000 during the
same period. 

         Provision  for loan  losses -  Management  periodically  evaluates  the
adequacy of the  allowance  for loan  losses  based on the Bank's past loan loss
experience,  known and inherent risks in the portfolio,  adverse situations that
may effect the borrower's  ability to repay and other factors.  The Bank has not
experienced any loan losses in the last several years, however,  during the year
ended  June 30,  1997,  the Bank  provided  $16,000  for  loan  losses  based on
management's  decision  to expand  consumer  lending.  The Bank  experienced  an
increase in real estate acquired through  foreclosure during the year ended June
30, 1997 of $724,486.  These  properties  were considered  non-performing  loans
throughout  most of the  fiscal  year,  resulting  in  approximately  $97,500 of
interest  income that would have been  recorded if they had been  performing  in
accordance with their contractual terms.  Management does not believe additional
loan loss provisions are required for the real estate owned and these properties
have been  recorded  at the lower of cost or fair value less  estimated  selling
costs.  The  allowance  for loan loss at June 30, 1997 is equal to .62% of loans
which the Bank feels is comparable  to the coverage  ratio of other Banks in its
region.  At  June  30,  1997,  95.6%  of  total  loans  were  collateralized  by
one-to-four-family dwellings on real estate located in the market area.

         Other Income - Other income  decreased  from $23,341 to $19,645  during
the year  primarily  due to a decrease in customer  charges for late payments on
loans.


                                        4
<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------


         Other  Expenses - Other  expenses  increased  $265,780 or 34.9%  during
fiscal  1997 from  $762,317  to  $1,028,097.  Included  in this  increase  was a
$107,728  increase  in  compensation  and  employee  benefits  primarily  due to
accruals for the Management Stock Bonus Plan. Also, the Bank incurred a one-time
charge to earnings for FDIC premiums of  approximately  $153,000 (see "Impact of
New Legislation" for further discussion).

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         The Bank's primary source of funds for meeting its liquidity  needs are
customer   deposits,   principal   and   interest   payments   from   loans  and
mortgage-backed   securities  and  earnings  from  operations  retained  by  the
Corporation.  The Bank  uses its  capital  resources  principally  to fund  loan
origination and to meet short and long-term liquidity needs. The Bank expects to
be able to fund its commitments on a timely basis. Bank management believes that
any excess  liquidity  is necessary  in order to meet the  additional  personnel
needs of customers as the Bank begins to implement new products and services.

         The Bank had leverage,  Tier I and risk-based  capital ratios of 26.7%,
52.5% and  53.5%,  respectively  at June 30,  1997,  which  exceeded  the FDIC's
respective  minimum  requirements  of 4%,  4% and 8%,  respectively.  

IMPACT  OF INFLATION AND CHANGING PRICES
----------------------------------------

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

         The Bank has an  asset  and  liability  structure  that is  essentially
monetary in nature. As a result,  interest rates have a more significant  impact
on the Bank's  performance  than the  effects of  general  levels of  inflation.
Periods of high inflation are often  accompanied by relatively  higher  interest
rates and periods of low inflation are accompanied by relatively  lower interest
rates.  As market interest rates rise or fall in relation to the rates earned on
the  Bank's  loans and  investments,  the  value of these  assets  decreases  or
increases respectively.

IMPACT OF NEW LEGISLATION
-------------------------

         The Small  Business  Job  Protection  Act passed by Congress in August,
1996  included a provision  that repealed the  percentage of taxable  income bad
debt  deduction for federal  income tax  purposes.  The Bank used this method to
determine  its bad debt  deduction  when  computing  federal taxes in applicable
years.  This  legislation  also  requires  recapture  of the  excess of bad debt
reserves over the base year reserves  (December 31, 1987).  For years subsequent
to the base year,  deferred  taxes have been  recorded by the Bank for an amount
equal to the excess of the bad debt reserves over the base year  reserves;  thus
no additional tax provision is required as a result of this  legislation.  Under
the  legislation,  the Bank may use the  experience  method to calculate the bad
debt deduction for federal income tax purposes. The legislation is effective for
tax years beginning after December 31, 1995.

         The  Deposit  Insurance  Funds Act of 1996 was passed by  Congress  and
signed  into law by the  President  on  September  30,  1996.  This  legislation
includes  provisions  designed to  recapitalize  SAIF and  required  all insured
savings  institutions  to pay a special  assessment of 65.7 cents for every $100
(0.657%)  of  applicable  deposits  held as of March 31,  1995.  The Bank took a
charge in the year ended June 30, 1997 in the first  quarter of $101,000  net of
taxes,  or $.13 per share, as required by this  legislation.  As a result of the
recapitalization,  the FDIC lowered SAIF  premiums  for most  institutions  from
$0.23 per $100 of  insured  deposits  to $0.064  per $100 of  insured  deposits,
thereby  lowering the Bank's federal deposit  insurance rates by 72%,  effective
January 1, 1997, which will enhance earnings in future periods.

                                        5

<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------




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

         Comparisons of Operating  Results for the years ended June 30, 1996 and
1995.

         Results of Operations - Net income for the year ended June 30, 1996 was
$397,790 as compared to $316,553 for the year ended June 30, 1995. This increase
of $81,237 or 25.7% is largely  attributable  to the  interest  earnings  on the
funds  received  from the stock  issuance,  however,  the  following  discussion
outlines the factors contributing to the increase in net income for 1996.

         Net Interest Income - Net interest income  increased by $377,943 during
fiscal 1996 to  $1,400,524  as  compared  to  $1,022,581  in fiscal  1995.  This
increase was primarily due to the increase in volume of interest-earning  assets
resulting from the stock issuance.  Interest-earning deposits increased by $3.97
million and net loans increased by $2.29 million.

         Provision  for loan  losses -  Management  periodically  evaluates  the
adequacy of the  allowance  for loan  losses  based on the Bank's past loan loss
experience,  known and inherent risks in the portfolio,  adverse situations that
may effect the borrower's  ability to repay and other factors.  The Bank has not
experienced any loan losses in the last several years, however,  during the year
ended June 30, 1996,  the Bank  provided  $61,000 for loan losses  following the
regulatory  examination process. The allowance for loan loss at June 30, 1996 is
equal to .55% of loans which the Bank feels is closer to the  coverage  ratio of
other  Banks  in its  region.  At  June  30,  1996,  94%  of  total  loans  were
collateralized  by  one-to-four-family  dwellings on real estate  located in the
market area.

         Other Income - Other income  increased  from $18,311 to $23,341  during
the year  primarily due to an increase in customer  charges for late payments on
loans.

         Other  Expenses - Other  expenses  increased  $228,976 or 42.9%  during
fiscal 1996 from $533,341 to $762,317.  Included in this increase was a $145,308
increase in  compensation  and  employee  benefits due to accruals for the newly
adopted  Supplemental  Executive  Retirement  Plan,  Directors  Consultation and
Retirement Plan and the Employee Stock  Ownership  Plan. The Bank  experienced a
decline of $13,528 in annual  salaries and  benefits  that were also in place in
1995.  (See  Note 9 of the  Notes  to  Consolidated  Financial  Statements).  An
additional reason for the change in other expenses was the result of an increase
in legal and  accounting  fees of $65,068 due to additional  regulatory  filings
after the stock issuance.


                                        6

<PAGE>
WHELAN, DOERR, PIKE & PAWLEY, PSC                          R. Donald Whelan, CPA
[LOGO]                                                     William M. Doerr, CPA
CERTIFIED PUBLIC ACCOUNTANTS                                  J. Alton Pike, CPA
                                                          J. Gregory Pawley, CPA
--------------------------------------------------------------------------------




                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



Board of Directors
NCF Financial Corporation and Subsidiaries
Bardstown, Kentucky



We have audited the  accompanying  consolidated  balance sheets of NCF Financial
Corporation  and  Subsidiaries  as of June 30,  1997 and 1996,  and the  related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the  two-year  period ended June 30,  1997.  These  consolidated
financial statements are the responsibility of the Corporation's management. Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits. The financial  statements of the Corporation for
the year ended June 30, 1995 were audited by other  auditors  whose report dated
August 17, 1995, expressed an unqualified opinion on those statements.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of NCF  Financial
Corporation  and  Subsidiaries  as of June 30, 1997 and 1996, and the results of
their  operations  and their  cash  flows for each of the years in the  two-year
period ended June 30, 1997, in conformity  with  generally  accepted  accounting
principles.




/s/Whelan, Doerr, Pike & Pawley, PSC
Certified Public Accountants
Elizabethtown, Kentucky
July 31, 1997

<TABLE>
<CAPTION>
<S>            <C>                <C>                            <C>              <C>
P.O. Box 668 - 1002 N. Mulberry - Elizabethtown, KY 42702-0668 - (502) 765-4188 - FAX (502) 737-0988
</TABLE>
--------------------------------------------------------------------------------
         4602 Southern Parkway - Louisville, KY 40214 - (502) 361-4630

<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------

<TABLE>
<CAPTION>
                                                                                     June 30,
                                                                           ----------------------------
                                                                               1997            1996
                                                                           ------------     -----------
                                     ASSETS
                                     ------

<S>                                                                         <C>             <C>        
Cash and due from banks                                                     $   200,370     $   195,210
Interest-earning deposits                                                     4,994,761       4,967,748
Loans receivable, net (Notes 1 and 2)                                        27,046,450      28,861,111
Mortgage-backed securities (market value - 1997 -
 $153,435, and 1996 - $164,993 (Notes 1 and 3)                                  132,357         143,347
Real estate owned (Note 1)                                                      724,486          -
Premises and equipment, net (Notes 1 and 4)                                     518,898          50,823
Investment in Federal Home Loan Bank stock                                      441,700         412,100
Interest receivable                                                             245,089         219,856
Deferred tax asset                                                               57,602           3,922
Other assets                                                                     40,893          50,628
                                                                            -----------     -----------

       TOTAL ASSETS                                                         $34,402,606     $34,904,745
                                                                            ===========     ===========



                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------


LIABILITIES:
------------
  Savings deposits (Notes 1 and 5)                                          $21,969,434     $22,741,108
  Accrued expenses and other liabilities                                        379,555         246,856
  Income taxes payable (Notes 1 and 6)                                            3,342         113,680
                                                                            -----------     -----------

       TOTAL LIABILITIES                                                     22,352,331      23,101,644

COMMITMENTS (Note 2)                                                             -               -

STOCKHOLDERS' EQUITY (Note 7):
------------------------------
  Serial preferred stock, $.01 par value per
   share; 100,000 shares authorized and unissued                                 -               -
  Common stock, $.10 par value per share;
    authorized 1,400,000 shares; issued and
    outstanding, 792,609 shares in 1997 and
    770,500 shares in 1996                                                       79,261          77,050
  Additional paid-in capital                                                  7,580,976       7,269,787
  Retained earnings-substantially restricted                                  5,017,571       4,918,436
  Unearned employee stock ownership plan                                       (412,500)       (462,172)
  Unearned stock compensation plan                                             (215,033)         -
                                                                            -----------     -----------

       TOTAL STOCKHOLDERS' EQUITY                                            12,050,275      11,803,101
                                                                            -----------     -----------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $34,402,606     $34,904,745
                                                                            ===========     ===========
</TABLE>

                See notes to consolidated financial statements.

                                        8
<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------
<TABLE>
<CAPTION>
                                                                            Years Ended June 30,
                                                                   ---------------------------------------

                                                                      1997          1996           1995
                                                                   ----------    ----------     ----------

<S>                                                                <C>           <C>            <C>       
INTEREST INCOME:
----------------
  Loans                                                            $2,249,202    $2,245,497     $1,895,727
  Mortgage-backed securities                                           19,725        20,115         28,056
  Interest-earning deposits                                           303,799       257,541        106,416
                                                                   ----------    ----------     ----------

     TOTAL INTEREST INCOME                                          2,572,726     2,523,153      2,030,199

INTEREST EXPENSE:
-----------------
  Deposit accounts                                                  1,042,768     1,105,006        980,945
  Federal Home Loan Bank advances                                       -            17,623         26,673
                                                                   ----------    ----------     ----------

     TOTAL INTEREST EXPENSE                                         1,042,768     1,122,629      1,007,618
                                                                   ----------    ----------     ----------

     NET INTEREST INCOME                                            1,529,958     1,400,524      1,022,581

Provision for loan losses (Notes 1 and 2)                              16,000        61,000         20,000
                                                                   ----------    ----------     ----------

Net interest income after provision for loan losses                 1,513,958     1,339,524      1,002,581

OTHER INCOME:
-------------
  Loan fees and service charges                                        19,645        23,341         15,975
  Other                                                                 -             -              2,336
                                                                   ----------    ----------     ----------

     TOTAL OTHER INCOME                                                19,645        23,341         18,311

OTHER EXPENSES:
---------------
  Compensation and employee benefits                                  579,190       471,462        326,154
  Net occupancy expense                                                34,333        26,388         23,617
  Deposit insurance premiums                                          190,154        57,374         52,540
  Data processing                                                      37,557        34,203         34,029
  State franchise and other taxes                                      46,498        27,565         26,256
  Professional fees                                                    57,832        77,543         12,475
  Other operating expenses                                             82,533        67,782         58,270
                                                                   ----------    ----------     ----------

     TOTAL OTHER EXPENSES                                           1,028,097       762,317        533,341
                                                                   ----------    ----------     ----------

Income before income taxes                                            505,506       600,548        487,551

Income taxes (Notes 1 and 6)                                          177,845       202,758        170,998
                                                                   ----------    ----------     ----------

NET INCOME                                                         $  327,661    $  397,790     $  316,553
                                                                   ==========    ==========     ==========

NET INCOME PER SHARE OF COMMON STOCK (Note 7)                      $      .44    $      .34
                                                                   ==========    ==========

PROFORMA NET INCOME PER SHARE OF COMMON STOCK (Note 7)                           $      .66
                                                                                 ==========
</TABLE>

                See notes to consolidated financial statements.

                                        9
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                -----------------------------------------------
<TABLE>
<CAPTION>
                                                                                   Unearned
                                                                                   Employee      Unearned
                                  Common                Additional                   Stock        Stock
                                  Stock      Common      Paid-in      Retained     Ownership   Compensation
                                  Shares     Stock       Capital      Earnings       Plan          Plan          Total
                                  -------    -------    ----------   ----------    ---------    ---------     -----------
<S>                               <C>        <C>        <C>          <C>           <C>          <C>           <C>        
BALANCE, July 1, 1994                -       $  -       $    -       $4,319,668    $    -       $    -        $ 4,319,668

Net income                           -          -            -          316,553         -            -            316,553
                                  -------    -------    ----------   ----------    ---------    ---------     -----------

BALANCE, June 30, 1995               -          -            -        4,636,221         -            -          4,636,221

Net income                           -          -            -          397,790         -            -            397,790

Net proceeds from sale
 of common stock                  770,500     77,050     7,258,687        -         (500,000)        -          6,835,737

Fair value of shares committed
 to be released from ESOP plan       -          -           11,100        -           37,828         -             48,928

Cash dividend paid                   -          -            -         (115,575)        -            -           (115,575)
                                  -------    -------    ----------   ----------    ---------    ---------     -----------

BALANCE, June 30, 1996            770,500     77,050     7,269,787    4,918,436     (462,172)        -         11,803,101

Net income                           -          -            -          327,661         -            -            327,661

Issuance of shares for stock
 compensation plan                 23,115      2,312       298,183        -             -        (300,495)          -

Compensation expense under
 stock compensation plan           (1,006)      (101)       (7,409)       -             -          85,462          77,952

Fair value of shares committed
 to be released from ESOP plan       -          -           20,415        -           49,672         -             70,087

Cash dividends paid                  -          -            -         (228,526)        -            -           (228,526)
                                  -------    -------    ----------   ----------    ---------    ---------     -----------

BALANCE, June 30, 1997            792,609    $79,261    $7,580,976   $5,017,571    $(412,500)   $(215,033)    $12,050,275
                                  =======    =======    ==========   ==========    =========    =========     ===========
</TABLE>

                See notes to consolidated financial statements.

                                       10
<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
<TABLE>
<CAPTION>

                                                                                       Years Ended June 30,
                                                                           -------------------------------------------
                                                                               1997            1996           1995
                                                                           -----------     -----------     -----------
<S>                                                                        <C>             <C>             <C>        
OPERATING ACTIVITIES:
---------------------
  Net income                                                               $   327,661     $   397,790     $   316,553
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Depreciation                                                                15,868          16,808          14,378
    Provision for loan losses                                                   16,000          61,000          20,000
    Deferred income taxes (benefit)                                            (53,680)        (53,922)          -
    FHLB dividends received in stock                                           (29,600)        (27,500)        (23,400)
    Amortization of deferred loan origination fees, net                           (545)         (1,815)         (1,255)
    Accretion of discounts on mortgage-backed securities                          (248)           (884)         (1,868)
    Increase (decrease) in allowance for uncollectible
     interest                                                                   97,534          15,735            (586)
    Increase in interest receivable                                           (122,767)       (116,785)        (28,754)
    Decrease (increase) in other assets                                          9,735          11,913         (14,918)
    Increase in accrued expenses and other liabilities                         132,699          86,196          55,358
    (Decrease) increase in current income taxes payable                       (110,338)        110,680           3,000
    ESOP and stock compensation plan expense                                   148,039          48,928           -
                                                                           -----------     -----------     -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                      430,358         548,144         338,508

INVESTING ACTIVITIES:
---------------------
  Principal payments on mortgage-backed securities                              11,238          39,486          94,250
  Net decrease (increase) in loans originated                                1,074,720      (2,346,092)     (4,011,667)
  Acquisition of premises and equipment                                       (483,943)         (3,000)        (38,163)
                                                                           -----------     -----------     -----------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                            602,015      (2,309,606)     (3,955,580)

FINANCING ACTIVITIES:
---------------------
  Net (decrease) increase in deposits                                         (771,674)       (431,320)         92,775
  Advances (repayments) from FHLB                                                -            (700,000)        700,000
  Stock conversion cost                                                          -            (234,187)       (135,076)
  Initial stock offering                                                         -           7,705,000           -
  Dividends paid                                                              (228,526)       (115,575)          -
  ESOP loan                                                                      -            (500,000)          -
                                                                           -----------     -----------     -----------

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                         (1,000,200)      5,723,918         657,699
                                                                           -----------     -----------     -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                32,173       3,962,456      (2,959,373)

CASH AND CASH EQUIVALENTS, beginning of year                                 5,162,958       1,200,502       4,159,875

CASH AND CASH EQUIVALENTS, end of year                                     $ 5,195,131     $ 5,162,958     $ 1,200,502
                                                                           ===========     ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       11
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    ------------------------------------------

     The  following is a description of the more significant accounting policies
     which NCF Financial  Corporation  follows in preparing and  presenting  its
     consolidated financial statements:

     1.   Principles of  Consolidation - The consolidated  financial  statements
          include the accounts of NCF "Financial  Corporation (the  Corporation)
          and its  wholly-owned  subsidiary,  NCF Bank and Trust Co. (the "Bank)
          and  its   wholly-owned   subsidiary,   Nelson  Service   Corporation.
          Intercompany  balances and  "transactions  have been  eliminated.  The
          impact  of  Nelson  Service  Corporation  (NSC)  on the  "consolidated
          financial  statements is insignificant.  NSC has no operating activity
          other than to own "stock in a third-party service bureau.

     2.   Loans  Receivable  - Loans  receivable  are  carried  at their  unpaid
          principal  balance less net  deferred  "loan fees and  allowances  for
          losses.

          The Bank  maintains  allowances for losses on loans when a significant
          and  probable  decline in value  "occurs and for losses on real estate
          acquired in settlement of loans.  Loan loss provisions are "charged to
          income when,  in the opinion of  management,  such losses for which no
          provision  has been "made are  expected  to be  incurred.  Interest on
          loans that are contractually past due more than 90 "days is charged to
          an allowance and recognized as a reduction in interest income.

          The  allowance for loan losses is based upon an evaluation of the loan
          portfolio.  The evaluation  "considers such factors as the delinquency
          status of loans,  current  economic  conditions,  the net  "realizable
          value of the underlying security and prior loan loss experience.

          Recovery of the carrying value of loans is dependent to some extent on
          future  economic,  operating "and other  conditions that may be beyond
          the Bank's  control.  Unanticipated  future  adverse  changes in "such
          conditions  could result in material  adjustments  to  allowances  and
          therefore, the future results "of operations.

          The Financial  Accounting  Standards Board (FASB) issued Statement No.
          114,  "Accounting by Creditors "for Impairment of a Loan". It requires
          that  impaired  loans  be  measured  based  on the  present  value  of
          "expected  future  cash  flows  discounted  at  the  loan's  effective
          interest  rate or, as a practical  "matter,  at the loan's  observable
          market  value  or  fair  value  of  the  collateral  if  the  loan  is
          "collateral  dependent.  The Statement applies to financial statements
          for fiscal years  beginning  "after December 15, 1994. The adoption of
          this  statement did not affect the level of the overall  "allowance or
          the  operating  results.  The Bank defines the  population of impaired
          loans to be all "non-accrual loans.

          Loan fees resulted from the  origination  of certain  mortgage  loans.
          Such fees are  deferred  "("deferred  loan fees") and  reflected  as a
          reduction of the carrying value of mortgage loans.  The "deferred fees
          are amortized using the interest method over the contractual  lives of
          the loans.

          The  Bank  does  not  charge  any  loan  fees in  connection  with the
          origination  of  current   mortgage  loan   "production.   Also,  loan
          origination  costs  such as  attorney  and  appraisal  fees  are  paid
          directly by "the  borrower.  The only cost incurred by the Bank is the
          time required to process the loan  "application and minimal  supplies.
          Management  has  determined  that  capitalization  of  these  costs is
          "immaterial  with respect to the Bank's yield on mortg loans. The Bank
          continues to have deferred "loan  origination  fees for loans prior to
          July 1,  1988 and some  loans  originated  in 1992  which  are  "being
          amortized to income on the interest level yield method.

                                       12

<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
     --------------------------------------------------------

          The  Bank's  primary  lending  area is Nelson  County,  Kentucky.  The
          economy within this market area is "economically diverse,  including a
          variety  of  manufacturing  industries.  The  Bank's  primary  lending
          "activity is the origination of residential  real estate loans secured
          by first mortgage for the "purpose of acquisition or  construction  of
          one-to-four family residential properties.

     3.   Securities - The  Corporation  records  securities  under Statement of
          Financial Accounting Standards "No. 115 (SFAS No. 115) "Accounting for
          Certain  Investments in Debt and Equity  Securities",  which "requires
          the    classification    of   securities   into   three    categories:
          held-to-maturity,   "available-for-sale,  or  trading.  Based  upon  a
          periodic review of the investment portfolio, debt "securities in which
          the  Corporation  has a  positive  intent  and  ability  to  hold  are
          classified as  "held-to-maturity  and are carried at cost adjusted for
          the  amortization of premiums and discounts "using the interest method
          over the  terms of the  securities.  Gains  and  losses on the sale of
          "investment    securities   are   determined    using   the   specific
          identification method.

          Debt and equity  securities which do not fall into this category,  nor
          held for the  purpose of selling "in the near term are  classified  as
          available-for-sale.  Unrealized  holding  gains  and  losses,  net  of
          "income tax, on  available-for-sale  securities  are reported as a net
          amount  in  a  separate  component  of  "stockholders'   equity  until
          realized.  No securities have been classified as trading securities or
          "available-for-sale.

     4.   Real  Estate  Owned  -  Real  estate   properties   acquired   through
          foreclosure  and in  settlement  of loans "are  stated at the lower of
          cost or  fair  value  less  estimated  selling  costs  at the  date of
          "foreclosure.  The excess of cost over fair  value less the  estimated
          costs to sell at the time of  "foreclosure is charged to the allowance
          for loan losses.  Costs relating to development  and  "improvement  of
          property are  capitalized,  whereas costs relating to holding property
          are not "capitalized and are charged against operations in the current
          period.

     5.   Premises and  Equipment - Premises and  equipment  are carried at cost
          less  accumulated  depreciation.  "Depreciation  is  computed  by  the
          straight-line method over the estimated useful lives of the assets.

     6.   Federal Home Loan Bank Stock -  Investment  in stock of a Federal Home
          Loan Bank is required by law of "every  federally  insured savings and
          loan or savings  bank.  The  investment  is carried at cost. No "ready
          market exists for the stock, and it has no quoted market value.

     7.   Income Taxes - Deferred  income taxes have been provided on income and
          expenses reported for "financial  statement  purposes in periods which
          differ from those in which they are reported for "income tax purposes.

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

     9.   Cash  Flows  - For  purposes  of the  statement  of  cash  flows,  the
          Corporation  considers all highly "liquid debt  instruments  purchased
          with a maturity of three months or less to be cash equivalents.  "Cash
          and cash equivalents include cash on hand and amounts due from banks.

     10.  Advertising  Costs - The Corporation  expenses all  advertising  costs
          when they are incurred.

     11.  Reclassifications  -  Certain  amounts  for 1996 and  1995  have  been
          reclassified to conform to the presentation "for 1997.

                                       13
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


2.  LOANS RECEIVABLE
    ----------------

        Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
                                                                                June 30,
                                                                       ---------------------------
                                                                          1997            1996
                                                                       -----------     -----------
<S>                                                                    <C>             <C>        
            Real estate first mortgage loans:
             One-to-four family                                        $23,438,389     $25,661,820
             Construction                                                3,672,475       3,314,295
             Multi-family residential                                      460,436         150,982
             Non-residential                                               629,057         314,843
                                                                       -----------     -----------

             Total real estate loans                                    28,200,357      29,441,940

            Consumer loans:
             Loans secured by deposit accounts                             102,857          69,466
             Other                                                          59,929          -
                                                                       -----------     -----------

             Total consumer loans                                          162,786          69,466
                                                                       -----------     -----------

             Total loans                                                28,363,143      29,511,406

            Less:
             Undisbursed portion of loans in process                     1,132,277         481,334
             Net deferred loan origination fees                              7,208           7,753
             Allowance for loan losses                                     177,208         161,208

                                                                         1,316,693         650,295
                                                                       -----------     -----------

                                                                       $27,046,450     $28,861,111
                                                                       ===========     ===========
</TABLE>

         Management  of the Bank  believes  that its allowance for losses on its
loan  portfolio  are  adequate.  However,  the  estimates  used by management in
determining  the adequacy of such  allowances  are  susceptible  to  significant
changes due primarily to changes in economic and market conditions. In addition,
various regulatory agencies  periodically review the Bank's allowance for losses
as an integral part of their  examination  processes.  Such agencies may require
the Bank to recognize  additions to the allowances  based on their  judgments of
information available to them at the time of their examinations.

         The changes in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>

                                                                            Years Ended June 30,
                                                                          ------------------------
                                                                            1997            1996
                                                                          --------        --------

<S>                                                                       <C>             <C>     
            Beginning balance                                             $161,208        $100,208
            Provision for loan losses                                       16,000          61,000
            Net charge-offs                                                   -               -
                                                                          --------        --------

            Ending balance                                                $177,208        $161,208
                                                                          ========        ========
</TABLE>


         The  Bank  had   outstanding   commitments   for   mortgage   loans  of
approximately $450,000 and $300,000 at June 30, 1997 and 1996, respectively. The
commitments to originate loans at June 30, 1997 and 1996, were entirely composed
of variable rate loans.

         The Bank did not  participate  in the  servicing of loans for others on
any of the dates presented in these financial statements.

                                       14
<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


2.  LOANS RECEIVABLE - (Continued)
    ------------------------------

        Information about the Bank's investment in impaired loans is as follows:
<TABLE>
<CAPTION>

                                                                                       June 30,
                                                                                 ---------------------
                                                                                   1997         1996
                                                                                 --------     --------
<S>                                                                              <C>          <C>     
             Impaired loans with no related allowances                           $191,000     $755,000
                                                                                 ========     ========
</TABLE>

<TABLE>
<CAPTION>

                                                                           Year Ended June 30,
                                                                   -----------------------------------
                                                                     1997          1996         1995
                                                                   --------      --------      -------

<S>                                                                <C>           <C>           <C>    
             Average impaired loans outstanding                    $903,000      $828,000      $73,000
                                                                   ========      ========      =======

             Interest income recognized                            $   -         $    704      $  -
                                                                   ========      ========      =======

             Interest income received                              $   -         $    704      $  -
                                                                   ========      ========      =======
</TABLE>

         Non-performing  loans were  $191,000  and $755,000 at June 30, 1997 and
1996,  respectively.  Interest income in the amount of $97,534, $16,439 and $704
for the year ended June 30, 1997, 1996 and 1995,  respectively,  would have been
recorded on non-performing  loans if they had been performing in accordance with
their contractual terms.

3.  MORTGAGE-BACKED SECURITIES
    --------------------------

        The amortized  cost basis and fair valuesof  mortgage-backed  securities
are summarized as follows:
<TABLE>
<CAPTION>
                                                     Amortized      Gross         Gross
                                                       Cost       Unrealized    Unrealized     Fair
                                                       Basis        Gains         Losses       Value
                                                     --------      -------        ---         --------
<S>                                                  <C>           <C>            <C>         <C>     
             Securities held-to-maturity:
               June 30, 1997:
                 GNMA Certificates                   $132,357      $21,078        $  -        $153,435
                                                     ========      =======        ===         ========

               June 30, 1996:
                 GNMA Certificates                   $143,347      $21,646        $  -        $164,993
                                                     ========      =======        ===         ========
</TABLE>


         There were no sales  during the years  ended  June 30,  1997,  1996 and
1995.













4.  PREMISES AND EQUIPMENT
    ----------------------

         Premises and equipment consist of the following: 

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                                 ---------------------
                                                                                   1997         1996
                                                                                 --------     --------

<S>                                                                              <C>          <C>     
             Land and improvements                                               $  9,750     $  9,750
             Office buildings and improvements                                    559,026       85,770
             Furniture, fixtures and equipment                                    133,147      122,460
             Automobiles                                                           28,864       28,864

                                                                                  730,787      246,844
             Less accumulated depreciation                                        211,889      196,021
                                                                                 --------     --------

                                                                                 $518,898     $ 50,823
                                                                                 ========     ========
</TABLE>

                                       15
<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

4.  PREMISES AND EQUIPMENT - (Continued)
    ------------------------------------

         On February 1, 1996, the Bank leased land under a twenty year operating
lease agreement. The lease includes options to extend the terms of the lease for
an additional ten years. Rental expense was $9,600 and $4,000 for the year ended
June 30, 1997 and 1996,  respectively.  Future  minimum  commitments  under this
non-cancelable lease are:

              Year Ended
               June 30,
               --------

              1998                                                   $  9,600
              1999                                                      9,600
              2000                                                      9,600
              2001                                                     10,600
              2002                                                     12,000
              Thereafter                                              211,720
                                                                      -------

              Total                                                  $263,120
                                                                     ========

5.  SAVINGS DEPOSITS
    ----------------
<TABLE>
<CAPTION>
        Deposits at June 30 are summarized as follows:

                                     Weighted
                                   Average Rate                  1997                         1996
                                   ------------        -----------------------      -----------------------
                                  1997      1996          Amount       Percent         Amount       Percent
                                  ----      ----       -----------    --------      -----------    --------

<S>                               <C>       <C>        <C>            <C>         <C>              <C>  
        Demand & NOW Accounts     2.63%     2.90%      $  1,370,818      6.24%       $ 1,123,564      4.94%
        Money Market              2.90      2.90          1,495,144      6.80          1,466,484      6.45
        Passbook Savings          3.08      3.06          2,870,799     13.07          2,960,115     13.02
                                                       -----------     ------        -----------    ------ 

                                                          5,736,761     26.11          5,550,163     24.41
        Certificates of Deposit
           3.01% - 4.00%                                     85,252       .39             58,695       .26
           4.01% - 5.00%                                  9,402,342     42.80          6,200,845     27.27
           5.01% - 6.00%                                  6,031,037     27.45          9,563,514     42.05
           6.01% - 7.00%                                    714,042      3.25          1,367,891      6.01
                                                        -----------    ------        -----------    ------ 

                                                         16,232,673     73.89         17,190,945     75.59
                                                       -----------    ------        -----------    ------ 

                                                       $21,969,434    100.00%       $22,741,108    100.00%
                                                        ===========   ======        ===========    ====== 
</TABLE>

<TABLE>
<CAPTION>

        At June 30, 1997, scheduled maturities of certificates of deposit are as
follows:
                                                            Amount       Average Rate    Percent
                                                            ------       ------------    -------

<S>                                                       <C>                <C>         <C>   
           1998                                           $12,400,240        5.23%        76.39%
           1999                                             3,494,382        5.67         21.53
           2000                                               222,575        5.70          1.37
           2001                                               106,476        5.52           .66
           2002                                                 -             -             -
           Thereafter                                           9,000        5.14           .05

                                                          $16,232,673                    100.00%
</TABLE>
                                       16
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

5.  SAVINGS DEPOSITS - (Continued)
    ------------------------------

         The average  interest rate on the savings deposit  portfolio,  computed
without effect of compounding daily interest, at June 30, 1997 and 1996 is 4.70%
and 4.83%, respectively.

         The Bank had  certificates of deposit with balances of $100,000 or more
of $1,437,802 and $1,485,562 at June 30, 1997 and 1996, respectively.

<TABLE>
<CAPTION>

         A summary of interest expense on deposits is as follows:

                                                                           Years Ended June 30,
                                                                  --------------------------------------

                                                                     1997            1996         1995
                                                                  ----------      ----------    --------

<S>                                                               <C>             <C>           <C>     
           Passbook Savings                                       $   85,372      $   85,817    $105,576
           Money Market & NOW Accounts                                75,127          75,748      91,917
           Certificates of Deposit                                   882,269         943,441     783,452
                                                                  ----------      ----------    --------

                                                                  $1,042,768      $1,105,006    $980,945
                                                                  ==========      ==========    ========
</TABLE>

6.  INCOME TAXES

        The Corporation and its subsidiaries file a consolidated  federal income
tax  return and income tax is  apportioned  among all  companies  based on their
taxable income or loss. Income tax expense is summarized as follows:

<TABLE>
<CAPTION>
                                                                            Years Ended June 30,
                                                                    ------------------------------------

                                                                      1997          1996          1995
                                                                    --------      --------      --------

<S>                                                                 <C>           <C>           <C>     
           Current                                                  $231,525      $256,680      $170,998
           Deferred benefit                                          (53,680)      (53,922)         -
                                                                    --------      --------      --------

           Total                                                    $177,845      $202,758      $170,998
                                                                    ========      ========      ========
</TABLE>


        The  effective tax rate differs from the federal  statutory  rate of 34%
due to the following:

<TABLE>
<CAPTION>
                                                                              Years Ended June 30,
                                                                    ------------------------------------

                                                                       1997          1996           1995
                                                                    --------      --------      --------

<S>                                                                    <C>           <C>           <C>   
           Statutory tax rate                                          34.0%         34.0%         34.00%
           Increase (decrease) resulting from:
             Other - net                                                1.2           (.2)          1.07
                                                                       ----          ----          -----
           Effective tax rate                                          35.2%         33.8%         35.07%
                                                                       ====          ====          ===== 
</TABLE>

                                       17

<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

6.  INCOME TAXES - (Continued)
    --------------------------

        Temporary  differences between the financial statements carrying amounts
and tax bases of assets and liabilities  that give rise to significant  portions
of deferred income taxes, relate to the following:

<TABLE>
<CAPTION>
                                                                               June 30,
                                                                         --------------------
                                                                           1997        1996
                                                                         --------     -------
<S>                                                                      <C>          <C>    
  Deferred tax assets:
            Deferred loan origination fees                               $  2,450     $ 2,636
                                                                         --------     -------
            Bad debt reserves                                              34,079      28,327
            Reserve for uncollectible interest                             38,751       5,589
            Post-retirement benefits                                       73,559      39,919
                                                                         --------     -------

                                                                          148,839      76,471

           Deferred tax liabilities:
            Basis difference in FHLB stock                                 79,288      69,224
            Depreciation differences                                       11,949       3,325
                                                                         --------     -------

                                                                           91,237      72,549
                                                                         --------     -------

           Net deferred tax asset                                        $ 57,602     $ 3,922
                                                                         ========     =======
</TABLE>

          The Bank's annual  addition to its reserve for bad debts allowed under
          the Internal Revenue Code may differ  significantly  from the bad debt
          experience  used  for  financial  statement  purposes.  Such  bad debt
          deductions  for income tax purposes are included in taxable  income of
          later years only if the bad debt reserves are used for purposes  other
          than to absorb bad debt losses.  Since the Bank does not intend to use
          the  reserve for  purposes  other than to absorb  losses,  no deferred
          income taxes have been provided on the amount of bad debt reserves for
          tax purposes  that arose in tax years  beginning  before  December 31,
          1987, in accordance with SFAS No. 109. Therefore, retained earnings at
          June 30, 1997 and 1996 includes approximately $1,174,000, representing
          such bad debt  deductions for which no deferred income taxes have been
          provided.  In August,  1996,  legislation  was passed by Congress that
          repealed  the  percentage  of taxable  income bad debt  deduction  and
          requires  recapture of the excess of bad debt  reserves  over the base
          year reserve as of December 31, 1987. For years subsequent to the base
          year,  deferred  taxes have been  recorded;  thus, no  additional  tax
          provision is required as a result of this legislation.

7.  STOCKHOLDERS' EQUITY
    --------------------

     1.   Stock Conversion - Effective October 12, 1995, the Bank converted from
          a  federally-chartered  mutual  "savings  and  loan  association  to a
          federally-chartered  capital  stock savings and loan  association.  In
          "connection  with the conversion,  770,500 shares of common stock were
          sold at $10.00 per share.  Net  "proceeds  from the sale of stock were
          $7,335,737 after conversion costs of $369,263.

     2.   Net  Worth/Dividend  Restrictions  - For the  purpose of  granting  to
          eligible  savings  account  holders a "priority in the event of future
          liquidation,  the Savings  Bank  established  a special  account in an
          "amount equal to its total  retained  income of $4,636,221 at June 30,
          1995. In the event of future "liquidation (and only in such an event),
          an  eligible  account  holder  who  continues  to  maintain a "savings
          account  will be entitled to receive a  distribution  from the special
          account.  The total  "amount of the special  account  decreases  in an
          amount  proportionately  corresponding  to  decreases  in "the savings
          account balances of eligible account holders on each subsequent annual
          determination "date.
                                       18

<PAGE>
                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

7.  STOCKHOLDERS' EQUITY - (Continued)
    ----------------------------------

          The Savings Bank may not declare or pay a cash  dividend on any of its
          capital stock if the effect  "thereof would cause the net worth of the
          Savings  Bank  to be  reduced  below  the  amount  required  for  "the
          liquidation account.

          Additionally,   federal   regulations   limit   dividend  and  capital
          distributions  during a calendar  year to "the greater of: 100 percent
          of the Bank's  current net income plus the amount that would reduce by
          "one-half  its surplus  capital ratio at the beginning of the calendar
          year;  or  75  percent  of  its  net  "income  over  the  most  recent
          four-quarter period.

     3.   Earnings  Per Share - Net  income  per share of common  stock from the
          date of  conversion,  October 12,  "1995 to June 30, 1996 and for June
          30,  1997,  is computed  by dividing  net income for the period by the
          "weighted  average  number  of  shares  of  common  stock  issued  and
          outstanding for the period.  Common "stock  equivalents  have not been
          used in  computing  net income per share  because  their effect is not
          "material.

          A proforma  net income of $.66 per share of common  stock for the year
          ended June 30,  1996 has been  "calculated  as if the  770,500  common
          shares  were  issued  on July 1,  1995.  Adjustments  were made to net
          "income  by  assuming  that  the  net  proceeds  were   available  for
          investment by the Savings Bank at the "weighted  average interest rate
          on all  interest-earning  assets from July 1, 1995 through October 12,
          "1995.

     4.   Regulatory  Capital  Requirements  - The Bank is  subject  to  various
          regulatory  capital  requirements  "administered  by the state banking
          agencies.  Failure to meet minimum capital  requirements can "initiate
          certain mandatory, and possibly additional  discretionary,  actions by
          the state banking  "agencies that, if undertaken,  could have a direct
          material  effect on the  Corporation's  financial  "statements.  Under
          capital  adequacy  guidelines and the regulatory  framework for prompt
          corrective  "action, a bank must meet specific capital guidelines that
          involve quantitative  measures of a bank's "assets,  liabilities,  and
          certain   off-balance  sheet  items  as  calculated  under  regulatory
          accounting  "practices.  The  amounts and  classification  of a bank's
          capital  are also  subject  to  qualitative  "judgments  by the  state
          banking agencies about components, risk weightings, and other factors.
          "Qualitative  measures  established  by regulation  to ensure  capital
          adequacy and to be classified as ""well capitalized"  require the Bank
          to  maintain  minimum  amounts  and ratios of  risk-based,  Tier I and
          "leverage  capital  as set  forth  in the  following  table.  In their
          evaluation of capital  adequacy,  the  "regulators  assess exposure to
          declines in the economic value of the Bank's capital adequacy, as well
          "as  exposure  to  declines  in the  economic  value of capital due to
          changes in  interest  rates.  As of "June 30,  1997,  the most  recent
          notification from state banking agencies categorized the Bank as "well
          "capitalized"  under the  regulatory  framework for prompt  corrective
          action.  There are no conditions  or "events  since that  notification
          that management believes have changed the Bank's category.
<TABLE>
<CAPTION>
                                                                                           To Be Considered
                                                                                           Well Capitalized
                                                                                             Under Prompt
                                                                          For Capital         Correction
                                                        Actual         Adequacy Purposes   Action Provisions
                                                  ------------------   -----------------   -----------------
        As of June 30, 1997:                        Amount     Ratio     Amount     Ratio    Amount     Ratio
                                                    ------     -----     ------     -----    ------     -----
<S>                                               <C>          <C>     <C>          <C>    <C>          <C>  
          Total risk-based capital (to risk-
           weighted assets)                       $8,785,000   53.5%   $1,312,800   8.0%   $1,641,000   10.0%
          Tier I capital (to risk-weighted
           assets)                                $8,608,000   52.5%   $  656,400   4.0%   $  984,600    6.0%
          Tier I leverage (to average assets)     $8,608,000   26.7%   $1,292,000   4.0%   $1,615,000    5.0%

        As of June 30, 1996:
          Total risk-based capital (to risk-
           weighted assets)                       $8,376,000   40.7%   $1,647,600   8.0%   $2,059,500   10.0%
          Tier I capital (to risk-weighted
           assets)                                $8,215,000   39.9%   $  823,800   4.0%   $1,235,700    6.0%
          Tier I leverage (to average assets)     $8,215,000   23.9%   $1,373,720   4.0%   $1,717,150    5.0%

</TABLE>
                                       19
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



8.  EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS
    ---------------------------------------------------

     1.   Pension  Plan - The Savings  Bank is a  participant  in the  Financial
          Institutions Retirement Fund "(FIRF), a multi-employer defined benefit
          pension plan covering substantially all employees. "Employees are 100%
          vested at the completion of five years of  participation  in the plan.
          The  Savings  "Bank's  policy is to  contribute  annually  the minimum
          funding  amounts.  Employer  contributions  charged "to operations for
          1996 were $3,264.  The plan was fully  funded for 1997 and 1995,  thus
          requiring no "contributions.

     2.   Employee  Stock  Ownership  Plan - Savings  Bank - Effective  October,
          1995, the Board of Directors of the "Bank formally  adopted the Nelson
          County  Federal  Employee Stock  Ownership Plan (ESOP).  Employees are
          "eligible to  participate  in the ESOP upon  completion of one year of
          service.  Employees are vested in  "accordance  with a schedule  which
          provides for 100% vesting upon completion of five years of service.

          In October,  1995, the plan borrowed  $500,000 from the Corporation to
          purchase 50,000 shares of the  "Corporation's  common stock.  The loan
          matures in October,  2005 and interest is payable  annually at a "rate
          of 6.0%. The obligation of the ESOP to repay the debt is guaranteed by
          the Savings Bank; "therefore, the unpaid balance of the borrowings has
          been eliminated under principles of "consolidation in the accompanying
          consolidated balan sheets.

          The Bank makes  annual  contributions  to the ESOP equal to the ESOP's
          debt service.  In addition,  all  "dividends  received by the ESOP are
          used to pay debt service.  The ESOP shares  initially were pledged "as
          collateral  for its debt.  As the debt is repaid,  shares are released
          from  collateral  and  allocated  "to  active  employees,  based  on a
          principal  plus  interest  formula.  The Bank accounts for its ESOP in
          "accordance with Statement of Position 93-6.  Accordingly,  the shares
          pledged as  collateral  are  "reported as unearned  ESOP shares in the
          statement of  financial  position as a deduction  from  "stockholders'
          equity.  As shares are  released  from  collateral,  the Bank  reports
          compensation expense "equal to the current market price of the shares.
          Only shares  released for allocation are treated as  "outstanding  for
          earnings-per-share  computations.  Only  dividends  that  are  paid on
          shares  released  for  "allocation  are  recorded  as a  reduction  to
          retained  earnings.  The dividends on  unreleased  shares used "to pay
          debt service are reported as a reduction to debt service expense. ESOP
          compensation  expense "was $67,962 and $41,428 for the year ended June
          30, 1997 and 1996, respectively.  The ESOP shares as "of June 30, 1997
          were as follows:


               Allocated shares                                 8,737
               Shares released for allocation                      13
               Unreleased shares                               41,250
                                                             --------

               Total ESOP shares                               50,000
                                                             ========

               Fair value of unreleased shares               $577,500
                                                             ========

                                       20
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



8.  EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS - (Continued)
    -----------------------------------------------------------------

     3.   Stock Option Plan - Under the 1995 Stock Option Plan, the  Corporation
          may  grant  either  incentive  or  "non-incentive   stock  options  to
          officers,  directors  and key  employees  for an  aggregate  of 77,050
          "shares of the Corporation's common stock at not less than fair market
          value at the date such  options "are  granted.  The option to purchase
          shares  expires  ten years after the date of grant.  The  "Corporation
          applies  APB  Opinion  No.  25,   "Accounting   for  Stock  Issued  to
          Employees". Accordingly, no "compensation cost has been recognized for
          its plan. Had compensation  cost for the  Corporation's  "Stock Option
          Plan been  determined  based on the fair value at the grant  dates for
          awards  under the "plan  consistent  with the method of SFAS No.  123,
          "Accounting  for Stock-Based  Compensation",  the  "Corporation's  net
          income  and  earnings  per  share  would  have  been  restated  to the
          pro-forma amounts "indicated below:

<TABLE>
<CAPTION>
                                                                                     Years Ended
                                                                                       June 30,
                                                                                 ---------------------
                                                                                   1997         1996
                                                                                 --------     --------

<S>                                                                              <C>          <C>     
               Net income:  As reported                                          $327,661     $397,790
                            Pro-forma                                            $264,114     $386,730

               Earnings per share:  As reported                                  $    .44     $    .34
                                    Pro-forma                                    $    .35     $    .33

</TABLE>

          A summary of the Corporation's Stock Option Plan is presented below:

<TABLE>
<CAPTION>
                                                               June 30, 1997           June 30, 1996
                                                           ---------------------   ---------------------
                                                           Number of    Exercise    Number of   Exercise
                                                            Options      Price       Options     Price
                                                            ------       ------      ------      ------

<S>                                                        <C>          <C>         <C>          <C> 
           Outstanding at beginning of year                 57,784       $13.92        -         $  -
           Granted                                            -             -        57,784       13.92
           Exercised                                          -             -          -            -
                                                            ------       ------      ------      ------

           Outstanding at end of year                       57,784       $13.92      57,784      $13.92
                                                            ======       ======      ======      ======

           Options exercisable at year end                  14,636                     -
                                                            ======                   ======        

           Fair value of options granted
            during the year                                 $ n/a                    $  6.96
                                                            =======                  =======
</TABLE>


          All options were  granted with an exercise  price of $13.92 and have a
          remaining contractual maturity "of 8.8 years at June 30, 1997.

          The fair value of each stock  option  granted is estimated on the date
          of  grant  using  the  Black-Scholes  "option-pricing  model  with the
          following  assumptions for grants in 1996: 1) expected dividend yields
          "at 2.16%, 2) risk-free interest rates at 7.5%, 3) expected volatility
          at 11%, and 4) expected life of "options at 10 years.










     4.   Management  Stock Bonus Plan - The Management  Stock Bonus Plan (MSBP)
          will be issued up to 30,820  "shares of the  Corporation to be awarded
          to  directors,  officers  and key  employees as an  encouragement  "to
          remain in the  employment  or service of the Bank.  Upon granting of a
          MSBP award,  20% shall be "earned on the one-year  anniversary  of the
          award and an additional 20% annually  thereafter.  Since the "stock is
          issued in the plan before some or all of the services  are  performed,
          part of the "consideration  for stock issued is unearned  compensation
          and  is  shown  as a  separate  reduction  of  "stockholders'  equity.
          Compensation  expense  will be  recognized  pro rata  over the  period
          during  which "the  shares are  earned.  As of June 30,  1997,  23,115
          shares have been granted.  Compensation expense "during the year ended
          June 30, 1997 and 1996 was $92,036 and $-0-, respectively.

                                       21

<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


8.  EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS - (Continued)
    -----------------------------------------------------------------

    5.  Post-Retirement Benefits -


     1.   Supplemental  Executive  Retirement Plan (SERP) - Effective January 1,
          1996, the Bank approved the SERP for the President and Chief Executive
          Officer.  Upon  retirement,  the Bank  will pay a  monthly  retirement
          benefit  in excess  of the FIRF  plan,  not  exceeding  2% times  such
          participant's  average monthly compensation  multiplied by total years
          of service.  Under Statement of Financial Accounting Standards No. 106
          (FASB 106), "Employers  Accounting for Post-Retirement  Benefits Other
          Than  Pensions",  the Bank has recorded plan expense of $95,895 during
          the year  ended June 30,  1996 as the  present  value of the  expected
          post-retirement benefit obligation.  The plan is currently not funded.
          During the year ended June 30, 1997,  the Bank recorded a reduction of
          $25,099 to the present value of the expected  post-retirement  benefit
          obligation.

     2.   Directors   Consultation   and  Retirement  Plan  (Directors  Plan)  -
          Effective  March 1, 1996,  the Bank  approved  the  Directors  Plan to
          provide each director with 15 years of service and a retirement age of
          65, a monthly  benefit equal to the directors  fees in effect prior to
          retirement.  Benefits do not vest fully  until  three years  following
          plan  implementation.  Under  FASB  106,  the Bank has  recorded  plan
          expense of $126,842  and  $21,513  during the year ended June 30, 1997
          and  1996,  respectively,   as  the  present  value  of  the  expected
          post-retirement benefit obligation.  The plan is currently not funded,
          however,  $2,800 in benefits  were paid during the year ended June 30,
          1997.

9.  CASH FLOW ACTIVITIES
    --------------------

     The following  information is presented as supplemental  disclosures to the
     statement of cash flows,  as required by Statement of Financial  Accounting
     Standards No. 95.

     Cash paid during the year ended June 30 for:

<TABLE>
<CAPTION>

                                                    1997           1996          1995
                                                 ----------     ----------     --------

<S>                                              <C>            <C>            <C>     
                 Interest expense                $1,057,530     $1,145,780     $958,072
                                                 ==========     ==========     ========

                 Income taxes                    $  341,863     $  131,600     $170,388
                                                 ==========     ==========     ========
</TABLE>


      Supplemental disclosure of non-cash activities:
<TABLE>
<CAPTION>

                 Transfer from loans to real estate
                  acquired through foreclosure
<S>                                                            <C>            <C>            <C>  
                  or in-substance foreclosure                  $  724,486     $    -         $   -
                                                               ==========     =====          ==== 
</TABLE>

                                       22
<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

10.  CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
     -----------------------------------------------------

     The  following  condensed  statements  summarize  the  financial  position,
     operating  results  and cash  flows of NCF  Financial  Corporation  (Parent
     Company only).


                   Condensed Statements of Financial Condition
<TABLE>
<CAPTION>

                                                                                 June 30,
                                                                       ----------------------------
                                                                          1997             1996
                                                                       -----------      -----------

                 Assets

<S>                                                                    <C>              <C>        
                 Cash and interest earning deposits                    $ 3,077,172      $ 3,077,144
                 Investment in subsidiary                                9,235,797        8,677,019
                 Other assets                                              392,750          526,368
                                                                       -----------      -----------

                                                                       $12,705,719      $12,280,531
                                                                       ===========      ===========

                 Liabilities and Stockholders' Equity

                 Other liabilities                                     $    27,910      $    15,258
                 Stockholders' equity                                   12,677,809       12,265,273
                                                                       -----------      -----------

                                                                       $12,705,719      $12,280,531
                                                                       ===========      ===========
</TABLE>


                         Condensed Statements of Income
<TABLE>
<CAPTION>

                                                                                Years Ended
                                                                                 June 30,
                                                                       ----------------------------
                                                                          1997             1996
                                                                       -----------      -----------

<S>                                                                    <C>              <C>   
                 Cash dividends from subsidiary                        $     -          $    -
                                                                       -----------      -----------
                 Interest income                                           181,250          121,425
                                                                           181,250          121,425
                 Other expenses                                            (66,226)         (72,577)
                                                                       -----------      -----------

                 Net income before income tax expense                      115,024           48,848

                 Income tax expense                                        (32,741)         (15,258)
                                                                       -----------      -----------

                 Income before equity in undistributed net
                  income of subsidiaries                                    82,283           33,590

                 Equity in undistributed net income of subsidiaries        245,378          229,205
                                                                       -----------      -----------

                 Net income                                            $   327,661      $   262,795
                                                                       ===========      ===========

</TABLE>

                                       23
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



10.  CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) - (Continued)
     -------------------------------------------------------------------

                                
                       Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                             Years Ended
                                                                                               June 30,
                                                                                      ---------------------------
                                                                                         1997            1996
                                                                                      ----------      -----------

<S>                                                                                   <C>             <C>        
                      Operating Activities:
                        Net income                                                    $  327,661      $   262,795
                        Adjustments to reconcile net income to
                         cash provided by operating activities:
                          Earnings from investment in subsidiary                        (245,378)        (229,205)
                          Decrease (increase) in other assets                             23,619          (26,368)
                          Increase in other liabilities                                   12,652           15,258
                                                                                      ----------      -----------
                      Net cash provided by operating activities                          118,554           22,480

                      Investing Activities:
                        Investment in subsidiary                                           -           (3,665,498)
                        ESOP loan                                                        110,000         (500,000)
                                                                                      ----------      -----------

                      Net cash provided by (used in) investing activities                110,000       (4,165,498)

                      Financing Activities:
                        Proceeds from stock issuance, net                                  -            7,335,737
                        Dividends paid                                                  (228,526)        (115,575)
                                                                                      ----------      -----------

                      Net cash (used in) provided by financing activities               (228,526)       7,220,162

                      Net increase in cash                                                    28        3,077,144

                      Cash, beginning of year                                          3,077,144            -
                                                                                      ----------      -----------

                      Cash, end of year                                               $3,077,172      $ 3,077,144
                                                                                      ==========      ===========

</TABLE>
                                       24
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------






11.  FAIR VALUES OF FINANCIAL INSTRUMENTS
     ------------------------------------

     Statement of Financial  Accounting  Standards No. 107,  "Disclosures  about
     Fair Value of Financial  Instruments",  requires  disclosure  of fair value
     information about financial  instruments,  whether or not recognized in the
     balance sheet, for which it is practicable to estimate that value. In cases
     where  quoted  market  prices are not  available,  fair values are based on
     estimates  using  present  value  or  other  valuation  techniques.   Those
     techniques are significantly  affected by the assumptions  used,  including
     the discount rate and estimates of future cash flows.  In that regard,  the
     derived fair value  estimates  cannot be  substantiated  by  comparison  to
     independent  markets  and, in many cases could not be realized in immediate
     settlement of the instrument. Accordingly, the aggregate fair value amounts
     presented  are not  intended  to  represent  the  underlying  value  of the
     Corporation.

     The methods and assumptions  used by the Corporation in estimating its fair
     value disclosures for financial instruments are presented below:

     1.   Cash and Interest Earning Deposits - The carrying amounts for cash and
          interest earning deposits approximates their fair values.

     2.   Mortgage-Backed Securities - Fair values for investment securities are
          based upon quoted market  prices,  where  available.  If quoted market
          prices  are not  available,  fair  values  are based on quoted  market
          prices of comparable instruments.

     3.   Loans, net - For variable rate loans that reprice  frequently and with
          no  significant  change  in  credit  risk,  fair  values  are based on
          carrying  amounts.  The  fair  values  of other  types  of  loans  are
          estimated by discounting the future cash flows using current  interest
          rates at which similar  loans would be made to borrowers  with similar
          credit quality and for the same remaining maturities.

     4.   Deposits - The fair values for demand  deposits,  savings accounts and
          certain money market deposits are the amounts payable on demand at the
          reporting date. The carrying amounts for  variable-rate,  money market
          accounts and certificates of deposit  approximate their fair values at
          the reporting date. Fair values for fixed-rate certificates of deposit
          are estimated  using a discounted cash flow  calculation  that applies
          interest rates  currently  being offered on certificates to a schedule
          of aggregated expected monthly maturities on time deposits.

     5.   Advances  from Federal Home Loan Bank - The fair values for  long-term
          debt are estimated using  discounted cash flow analyses,  based on the
          Corporation's current incremental borrowing rates for similar types of
          borrowing arrangements.

     6.   Commitments to Extend Credit and Standby  Letters of Credit - The fair
          values  of  commitments  to  extend  credit is  estimated  using  fees
          currently  charged  to enter  into  similar  agreements,  taking  into
          account  the  remaining  terms  of  the  agreements  and  the  present
          creditworthiness  of the customer.  For fixed-rate  loan  commitments,
          fair value also  considers the  difference  between  current levels of
          interest  rates and the  committed  rates.  The fair values of standby
          letters  of credit are based on fees  currently  charged  for  similar
          agreements  or on the  estimated  cost to terminate  them or otherwise
          settle the obligations with the counter parties at the reporting date.
          The value of these financial  instruments was not material at June 30,
          1997 and 1996.

                                       25
<PAGE>

                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------
        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


11.  FAIR VALUES OF FINANCIAL INSTRUMENTS - (Continued)
     --------------------------------------------------

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

<TABLE>
<CAPTION>

                                                            June 30, 1997                  June 30, 1996
                                                      --------------------------     --------------------------

                                                        Carrying        Fair           Carrying        Fair
                                                         Value          Value           Value          Value
                                                      -----------    -----------     -----------    -----------

        Financial assets:
<S>                                                   <C>            <C>             <C>            <C>        
          Cash and interest bearing deposits          $ 5,195,131    $ 5,195,131     $ 5,162,958    $ 5,162,958
          Mortgage-backed securities                  $   132,357    $   153,435     $   143,347    $   164,993
          Loans, net                                  $27,046,450    $27,632,602     $28,861,111    $29,237,496

        Financial liabilities:
          Deposits                                    $21,969,434    $21,973,758     $22,741,108    $22,737,575
</TABLE>



12.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
     -------------------------------------------------

     The Bank is a party to financial instruments with off-balance-sheet risk in
     the normal course of business to meet the financing needs of its customers.
     These financial  instruments  include  commitments to extend credit.  Those
     instruments   involve,   to  varying   degrees,   elements  of  credit  and
     interest-rate risk in excess of the amount recognized in the balance sheet.
     The contract or notional amounts of those instruments reflect the extent of
     the Bank's involvement in particular classes of financial instruments.

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

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there is no  violation of any  condition  established  in the  contract.
     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do not necessarily  represent future cash requirements.  The Bank evaluates
     each customer's credit worthiness. The amount of collateral obtained, if it
     is deemed  necessary  by the Bank upon  extension  of  credit,  is based on
     management's credit evaluation of the counterpart.

     The Bank's only financial instruments with  off-balance-sheet  risk at June
     30, 1997 and 1996 are outlined in Note 2.

                                       26
<PAGE>

                     [CRISP HUGHES & CO., L.L.P LETTERHEAD]


                          Independent Auditors' Report


Board of Directors
Nelson County Federal Savings and Loan Association
Bardstown, Kentucky


We have audited the  accompanying  consolidated  balance  sheet of Nelson County
Federal Savings and Loan Association (Association) and Subsidiary as of June 30,
1995, and the related consolidated  statements of income, retained earnings, and
cash flows for the year ending June 30, 1995. These financial statements are the
responsibility of the Association's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of the Association and
Subsidiary as of June 30, 1995,  and the results of their  operations  and their
cash flows for the year ending  June 30,  1995,  in  conformity  with  generally
accepted accounting principles.

                                               /s/ Crisp Hughes & Co., L.L.P.

Asheville, North Carolina
September 15, 1997


      32 Orange Street . P.O. Box 3049 . Asheville, North Carolina 28802 .
                      (704) 254-2254 . FAX (704) 254-6859
         Other Offices: Boone, Burnsville, Sylva, NC and Greenville, SC

     Member of: The American Institute of Certified Public Accountants, The
  Continental Association of CPA Firms, Inc., The Intercontinental Accounting
    Associates and The North Carolina and South Carolina Associates of CPAs


                                       27

<PAGE>


                   NCF FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------

                             CORPORATE INFORMATION
                             ---------------------




SUBSIDIARIES:    NCF Bank and Trust Co.
                 Nelson Service Corporation

MAIN OFFICE:     106A W. John Rowan Blvd.
                 Bardstown, KY  40004

DIRECTORS:       A.E. Bowling
                 President, Chairman of the Board

                 Dan Biggs
                 Vice-President

                 John S. Tharp
                 Assistant Secretary
                 Retired; Insurance and Real Estate

                 Paul Barnes, DMD
                 Dentist

                 Robert C. Hurst
                 Pharmacist, Hurst Discount Drug, Inc.

                 Guthrie M. Wilson, III
                 Auto Dealer, Wilson Brothers, Inc.

DIRECTOR
 EMERITUS:       Ben T. Guthrie
                 Retired

OFFICERS:        A.E. Bowling
                 President

                 Dan Biggs
                 Vice-President

                 Patricia Thomas
                 Secretary and Treasurer

AUDITORS:        Whelan, Doerr, Pike & Pawley, PSC
                 Elizabethtown, KY

LEGAL COUNSEL:   Malizia, Spidi, Sloane & Fisch, P.C.
                 Washington, DC


ANNUAL MEETING:  The annual meeting of stockholders will be held  at  10:00 a.m.
                 on  October  30,  1997,  at  Hampton  Inn, 985  Chambers Blvd.,
                 Bardstown, Kentucky.


                                       28