<PAGE>   1







                                 EXHIBIT 28.1
            The Definitive Proxy Statement of the Company for the
Annual Meeting of Shareholders to be held April 23, 1997 and Appendix A thereto
                                      


<PAGE>   2
                             HAVERFIELD CORPORATION
                                 Terminal Tower
                          50 Public Square, Suite 444
                           Cleveland, Ohio 44113-2203






March 17, 1997





Dear Shareholder:

You are cordially invited to attend the 1997 Annual Meeting of Shareholders (the
"Annual Meeting") of Haverfield Corporation, which will be held in the English
Oak Room, Tower City on the Avenue, 230 Huron Road, N.W., Cleveland, Ohio, on
April 23, 1997 at 9:00 a.m. local time.

As described in the accompanying Notice and Proxy Statement, you are being asked
to elect three directors for three-year terms expiring in 2000, and to ratify
the appointment of Deloitte & Touche LLP as independent auditors for 1997. Your
Board unanimously recommends that you vote "FOR" these proposals.

As part of our continuing effort to improve the quality and effectiveness of our
financial communications, we again have included Haverfield Corporation's
Management's Discussion and Analysis and audited financial statements for 1996
as Appendix A to the Proxy Statement which is being mailed to all shareholders
of record as of February 28, 1997.

We urge you to mark, sign and date your proxy card today and return it in the
envelope provided, even if you plan to attend the Annual Meeting. This will not
prevent you from voting in person, but will assure that your vote is counted if
you are unable to attend.

We are pleased, as always, with the continued support and interest that
shareholders have displayed in the affairs of Haverfield Corporation.

Sincerely,



/s/ William A. Valerian
-----------------------
William A Valerian
Chairman of the Board, President and Chief Executive Officer

<PAGE>   3



                             HAVERFIELD CORPORATION
                                 Terminal Tower
                          50 Public Square, Suite 444
                           Cleveland, Ohio 44113-2203
                                 (216) 348-2800

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                                 April 23,1997

Notice is hereby given that the 1997 Annual Meeting of Shareholders (the "Annual
Meeting") of Haverfield Corporation ("Haverfield" or the "Company") will be held
in the English Oak Room, Tower City on the Avenue, 230 Huron Road, N.W.,
Cleveland, Ohio, on April 23, 1997 at 9:00 a.m. local time for the purpose of
considering and acting upon:

1.   The election of three directors to serve for a term of three years expiring
     in 2000.

2.   The ratification of the appointment of Deloitte & Touche LLP as the 
     Company's independent auditors for the fiscal year ending December 31, 
     1997.

3.   The transaction of such other business as may properly come before the 
     Annual Meeting or any adjournments thereof. The Board of Directors is not 
     aware of any other business to come before the Annual Meeting.

Pursuant to the Company's Code of Regulations, the Board of Directors has fixed
the close of business on February 28, 1997 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. Only holders of record of Haverfield Common Stock as of the close of
business on that date have the right to receive notice of and to vote at the
Annual Meeting and any adjournments thereof.

                                          By Order of the Board of Directors,

                                          /s/ Nancy M. Czupik
                                            -------------------
                                          Nancy M. Czupik
Cleveland, Ohio                           Corporate Counsel and Secretary
March 17, 1997


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




IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE VOTE, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. THIS WILL NOT PREVENT YOU FROM VOTING IN
PERSON IF YOU ARE PRESENT AT THE ANNUAL MEETING. 
<PAGE>   4


                               TABLE OF CONTENTS

                                                                        PAGE
--------------------------------------------------------------------------------

Solicitation, Voting and Revocability of Proxies                         1

Beneficial Ownership                                                     2

Section 16(a) Disclosure                                                 3

The Board of Directors and its Committees                                3

Remuneration and Other Information                                       7

Ratification of Independent Auditors                                    15

1998 Shareholders' Proposals                                            15

Appendix A - Financial Information                                     A-1

<PAGE>   5


                             HAVERFIELD CORPORATION
                                 Terminal Tower
                          50 Public Square, Suite 444
                           Cleveland, Ohio 44113-2203
                                 (216)348-2800

                                PROXY STATEMENT

                         ANNUAL MEETING OF SHAREHOLDERS

                                 April 23,1997

                SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

This proxy statement (the "Proxy Statement") is furnished, commencing on March
17,1997, to shareholders, together with the enclosed proxy, in connection with
the solicitation on behalf of the Board of Directors (the "Board") of Haverfield
Corporation ("Haverfield" or the "Company") of proxies to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") on April 23, 1997 and at all
adjournments thereof. Only holders of Haverfield's common stock, par value $.01
per share ("Haverfield Common Stock"), of record at the close of business on
February 28, 1997 will be entitled to notice of and to vote at the Annual
Meeting. On that date, there were 1,906,349 shares of Haverfield Common Stock
outstanding. The Company has no other class of equity securities outstanding.
Each share of Haverfield Common Stock is entitled to one vote on each matter to
be considered.

The Annual Meeting has been called for the following purposes: (1) to elect
three directors to serve for a three-year term expiring in 2000; (2) to ratify
the appointment by the Board of the firm of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997; and (3) to
transact such other business as may properly come before the Annual Meeting or
any adjournments thereof.

The enclosed proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted FOR the proposals set forth in the proxy and
described herein. The Board knows of no other matters which will be presented at
the Annual Meeting. However, if other matters properly come before the Annual
Meeting or any adjournments thereof; the person or persons voting the proxies
will vote them in accordance with their best judgment on such matters.

Any shareholder giving a proxy has the power to revoke it at any time before it
is exercised by (i) filing written notice thereof with the Secretary of the
Company, Nancy M. Czupik, Haverfield Corporation, Terminal Tower, 50 Public
Square, Suite 444, Cleveland, Ohio 44113-2203; (ii) submitting a duly executed
proxy bearing a later date; or (iii) appearing at the Annual Meeting and giving
the Secretary notice of his or her intention to vote in person. However, your
mere presence at the Annual Meeting will not operate to revoke your proxy.
Proxies solicited hereby may be exercised only at the Annual Meeting and any
adjournments thereof and will not be used for any other meeting.

The cost of solicitation of proxies will be borne by Haverfield. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Haverfield Common Stock. In addition to solicitation by
mail, directors, officers and employees of the Company and its subsidiaries may
solicit proxies personally or by telephone without additional compensation.


                                       1
<PAGE>   6


                              BENEFICIAL OWNERSHIP


Persons and groups owning in excess of 5% of Haverfield Common Stock are
required to file certain reports regarding such ownership with Haverfield and
the Securities and Exchange Commission (the "SEC"). The Company's directors and
executive officers are also required to file certain reports regarding their
ownership of Haverfield Common Stock with the SEC and the National Association
of Securities Dealers, Inc. Copies of those reports must also be furnished to
the Company. A person is considered the beneficial owner of Haverfield Common
Stock with respect to which such person has or shares voting or investment power
or has the right to acquire ownership at any time within 60 days, including,
without limitation, through the exercise of a stock option, warrant or right, or
the conversion of a security.
<TABLE>
<CAPTION>

                                         NUMBER OF SHARES BENEFICIALLY           PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER    OWNED AS OF FEBRUARY 28, 1997 (1)       COMMON STOCK
------------------------------------    ---------------------------------       ------------

           PERSONS AND GROUPS OWNING IN EXCESS OF 5% OF HAVERFIELD COMMON STOCK

<S>                                              <C>                                <C>  
Richard M. Osborne, Trust                        190,219                            9.98%
Turkey Vulture Fund XIII, Ltd.
7001 Center Street
Mentor, Ohio 44060

Haverfield Corporation                          138, 714(2)                         7.28%
Employee Stock Ownership Plan
Harry F. Brockman, Trustee
Terminal Tower
50 Public Square, Suite 444
Cleveland, Ohio 44113-2203

William A. and Diane C. Valerian                 140,726(3)                         7.22%
18 Lyman Circle
Shaker Heights, Ohio 44122

Peter E. and Patricia J. Shimrak                 100,716(4)                         5.28%
17897 Captain's Cove
Lakewood, Ohio 44107

Directors and executive officers as              425,891(5)                        21.41%
a group (13 individuals)

            EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE

William A. Valerian                              140,726(3)                         7.22%

Richard C. Ebner                                  49,209(6)                         2.54%

Ennio F. Izzo                                      3,880(7)                           *

-----------------------
<FN>

*Percentage of shares beneficially owned is less than one percent.
</TABLE>


1.   Information with respect to beneficial ownership is based on filings made
     pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
     Act"). With respect to shares beneficially held by the Haverfield
     Corporation Employee Stock Ownership Plan ("ESOP"), including shares 
     beneficially held by the ESOP for participants therein, the information 
     provided is as of December 31, 1996.

2.   Although the ESOP may be deemed to share dispositive power over the shares
     of Haverfield Common Stock which it holds, the trustee disclaims beneficial
     ownership of such shares. The ESOP provides that the shares of Haverfield 
     Common Stock held thereby are voted by the trustee at the direction of 
     either the participants or

                                       2

<PAGE>   7


     the Committee, depending on whether or not the shares have been allocated 
     to participant accounts. See "Remuneration and Other Information - 
     Haverfield Corporation Employee Stock Ownership Plan."

3.   Includes 85,547 shares held jointly by Mr. Valerian and his wife, Diane,
     and 185 shares held by Mr. Valerian as custodian for his son, Peter. Also
     includes 42,915 shares issuable upon the exercise of stock options and
     12,079 shares beneficially held under the Company's ESOP. Mr. and Mrs.
     Valerian disclaim beneficial ownership of any shares held by their two
     eldest sons (both of whom are over 21 years of age; one of which resides
     separately from his parents).

4.   Includes 85,067 shares held jointly by Mr. Shimrak and his wife, Patricia,
     and 15,649 shares beneficially held under the Company's ESOP. Mr. and Mrs.
     Shimrak disclaim beneficial ownership of any shares held by their children
     (all of whom are over 21 years of age and reside separately from their
     parents).

5.   Includes 82,845 shares issuable upon the exercise of stock options and
     51,020 shares beneficially held under the Company's ESOP.

6.   Includes 28,504 shares issuable upon the exercise of stock options and
     6,689 shares beneficially held under the Company's ESOP.

7.   Includes 3,718 shares issuable upon the exercise of stock options and 162
     shares beneficially held under the Company's ESOP.

                            SECTION 16(A) DISCLOSURE

Section 16(a) of the Exchange Act requires the Company's executive officers and
directors, and persons who own more than ten percent of Haverfield's Common
Stock, to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that during fiscal 1996
all filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with; except that Ms.
Culbertson had three late filings involving the Company's dividend reinvestment
plan, which was rectified through a filing made in March, 1997.


                   THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board and its committees are comprised of the same seven individuals who
serve on the Board of Directors and its committees of the Company's wholly-owned
subsidiary, Home Bank, F.S.B. (the "Bank"). The Board, which is responsible for
the overall affairs of the Company, conducts its business through regular and
special meetings and through activities of its committees. During the year ended
December 31, 1996, the Board held a total of thirteen meetings. No director
attended fewer than 75% of the meetings held by the Board and the committees of
the Board on which he served.

The Executive Committee is authorized to exercise all the authority of the Board
unless otherwise provided in Haverfield's Code of Regulations. It acts upon
matters requiring Board action during the intervals between Board meetings. The
Executive Committee consists of Messrs. Valerian (Chairman), Gaul, Magnotto,
Mooney, Pomeroy and Shimrak. The Executive Committee of the Company did not meet
during 1996.

The Audit Committee recommends the appointment of the independent public
accountants, reviews and approves the audit plan and fee estimate of the
independent public accountants, appraises the effectiveness of the internal and
external audit efforts, evaluates the adequacy and effectiveness of accounting
policies, internal controls and financial and accounting management, assesses
the impact of significant regulatory changes and accounting developments,
reviews and approves the annual financial statements, reviews potential
conflict-of-interest situations where


                                       3
<PAGE>   8

appropriate, and supervises and directs any special projects or investigations
considered necessary. In addition, the Audit Committee has the responsibility of
overseeing that an appropriate review of all related party transactions is
conducted on an ongoing basis. The members of the Audit Committee are Messrs.
Magnotto (Chairman), Gaul, Mooney and Shimrak. The Audit Committee of the
Company met four times during 1996.

The Compensation Committee, composed entirely of independent directors, is
responsible for the review of and the recommendation to the Board concerning
executive compensation, bonuses and incentives. The Compensation Committee also
functions as administrator of the Company's stock option plans. These matters
are also part of the business of the Bank and, accordingly, are addressed by the
Compensation Committees of the Boards of both the Company, which met twice
during 1996, and the Bank, which met four times during 1996. The membership of
these two committees is identical, consisting of Messrs. Pomeroy (Chairman),
Gaul, Mooney and Magnotto.

The whole Board performs the functions of a nominating committee. Although the
Board will consider nominees recommended by shareholders, it has not actively
solicited recommendations from shareholders of the Company for nominees.
Haverfield's Code of Regulations provides, however, that shareholders may make
nominations for election to the Board by submitting such nominations in writing
to the Secretary of the Company not less than forty-five days nor more than
ninety days prior to the date of the Annual Meeting, unless less than sixty
days' prior notice of the meeting date is given to shareholders or prior public
disclosure of the date of the meeting is made, in which case such nominations to
be timely must be so received not later than the close of business on the
fifteenth day following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made. The Company's Code of Regulations
also provides that any shareholder recommendation for a director-nominee must
contain background information concerning the recommended nominee, including
name, age, business and home address, relationships with the shareholder making
the recommendation, educational background, description of the nominee's
principal occupation and business experience for the last five years,
directorships or trusteeships in public companies, the reasons the person is
being recommended, a statement that such person would be able to serve as a
director, the number of shares of The Company Common Stock which are
beneficially owned by the nominee, and any other information relating to the
nominee that is required to be disclosed pursuant to the Exchange Act. Any such
shareholder recommendation must also include the name and address, as they
appear on the Company's books, of such shareholder and the number of shares of
Haverfield Common Stock which are beneficially owned by such shareholder. The
Company is not required to include such nominations in its proxy statement;
however, if such a nomination is made, ballots will be provided for use by
shareholders at the Annual Meeting bearing the name of such nominee or nominees.


                             ELECTION OF DIRECTORS
                                  (Proposal 1)

The Board is divided into two classes, each with a separate term of office of
three years. Under Ohio law, each class of directors must contain at least three
members. The authorized number of directors has been fixed at seven. Therefore,
Haverfield has only two classes of directors whose terms, as of the 1997 Annual
meeting, expire in 1997 and 1998. Because directors are elected for three-year
terms, once in every three years no directors will be elected by shareholders,
at least as long as the Board remains at its current size. The proxies will be
voted for the election as directors of the nominees for terms expiring in 2000
as listed below. All nominees for election as director are members of the Board.
Each of the nominees elected will hold office until expiration of his term of
office or until election of his successor. Should any nominee become unable to
accept nomination or election, the proxies will be voted for the election of
such person, if any, as shall be recommended by the Board. The Board has no
reason to believe that the persons listed as nominees will be unable to serve.



                                       4
<PAGE>   9

The following table lists, as of February 28, 1997, as to each director of the
Company, the principal occupation or employment, age, the year in which each
first became a director and the number and percentage of shares of Haverfield
Common Stock beneficially owned. With respect to shares beneficially held under
the Company's ESOP, the information is as of December 31, 1996. Except as
otherwise indicated, each continuing director has had the same principal
occupation or employment during the past five years.
<TABLE>
<CAPTION>

                                                                          NUMBER AND PERCENTAGE OF
                 PRINCIPAL OCCUPATION DURING                 DIRECTOR     SHARES BENEFICIALLY OWNED
NAME AND AGE          PAST FIVE YEARS                          SINCE       AS OF FEBRUARY 28, 1997
------------      --------------------------                   -----       -----------------------

                 NOMINEES FOR THREE-YEAR TERM EXPIRING IN 2000

<S>                   <C>                                          <C>          <C>          <C>
Michael T. Gaul       President of four privately held manu-       1994         2,310        *
(Age 50)              facturing companies - Ohio Cutter
                      Grinding Co., Inc.; C&W Grinding Co.,
                      Inc.; Trident Tube, Inc.; and Kelly
                      Creswell Co.

David A. Nolan        President of the Greater Cleveland           1996         1,000        *
(Age 42)              Convention and Visitors Bureau
                      since 1994; previously President and
                      CEO for the Greater Milwaukee
                      Convention and Visitors Bureau

William A. Valerian   Chairman of the Board, President             1989       140,726(1)     7.22%
(Age 53)              and Chief Executive Officer of the
                      Company since 1996; previously 
                      President and Chief Executive
                      Officer of the Company
                      and the Bank.

                CONTINUING DIRECTORS WHOSE TERM EXPIRES IN 1998

Mark R. Magnotto      Area Vice President, Insurance               1989        60,356(2)      3.21%
(Age 56)              Company of North America.

Robert M. Mooney      Private Investor, PMG Partners.              1995         6,800          *
(Age 50)

Jacques C. Pomeroy    President, The Pomeroy Agency, Inc.          1989        11,000          *
(Age 61)

Peter E. Shimrak      Chairman of the Board of the Bank.           1989       100,716(3)      5.28%
(Age 64)

-----------------------
<FN>

*Percentage of shares beneficially owned is less than one percent.

1.   Includes 85,547 shares held jointly by Mr. Valerian and his wife, Diane,
     and 185 shares held by Mr. Valerian as custodian for his son, Peter. Also
     includes 42,915 shares issuable upon the exercise of stock options and
     12,079 shares beneficially held under the Company's ESOP. Mr. and Mrs.
     Valerian disclaim beneficial ownership of any shares held by their two
     eldest sons (both of whom are over 21 years of age; one of which resides
     separately from his parents).
</TABLE>


                                       5
<PAGE>   10

2.   Includes 60,062 shares held jointly by Mr. Magnotto and his wife, Pam, and
     294 shares held solely in the name of Pam Magnotto. Mr. and Mrs. Magnotto
     disclaim beneficial ownership of any shares held by their children (all of
     whom are over 21 years of age and reside separately from their parents).

3.   Includes 85,067 shares held jointly by Mr. Shimrak and his wife, Patricia,
     and 15,649 shares beneficially held under the Company's ESOP. Mr. and Mrs.
     Shimrak disclaim beneficial ownership of any shares held by their children
     (all of whom are over 21 years of age and reside separately from their
     parents).


BOARD OF DIRECTORS COMPENSATION
--------------------------------------------------------------------------------
Because the business of the Company currently consists primarily of the business
of the Bank, it is currently the policy of the Company that no separate fees are
paid to the directors of the Company, all of whom are also directors of the Bank
and receive fees as such. Mr. Shimrak received $1,250 per month for performance
of his duties as Chairman of the Board of the Bank, received no separate fees
for Board meetings, but was paid $250 for each Committee meeting attended.
During 1996, each member of the Board (other than directors who are executive
officers of the Company, which directors receive no director fees) received from
the Bank a stipend of $500 per month, provided at least 80% of the last 12 Board
of Directors' meetings, including the most recent regular monthly meeting, were
attended. In addition, Directors are paid $400 for each meeting of the Board of
Directors attended, and are paid $250 for each Committee meeting attended.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
--------------------------------------------------------------------------------
Messrs. Pomeroy, Gaul and Magnotto have obtained loans from the Company.
Management believes that these loans were made in the ordinary course of
business on substantially the same terms including interest rates and collateral
as those prevailing at the time for comparable transactions with unaffiliated
borrowers of comparable credit and did not involve more than the normal risk of
collectibility or present other unfavorable features.

DIRECTORS' STOCK OPTION PLAN
--------------------------------------------------------------------------------
The Board of Directors of the Bank adopted and the Bank's shareholders approved
at their 1989 annual meeting the Directors' Stock Option Plan (the "Directors'
Plan") to assist the Bank and its subsidiaries in attracting and retaining
directors of exceptional ability. When the Company became the parent thrift
holding company of the Bank on August 23, 1989, the Company succeeded to the
Bank's obligations under the Directors' Plan. A Committee of not less than two
Directors of the Company, none of whom are eligible to receive benefits under
the Directors' Plan, administers the Directors' Plan.

Each non-employee director or member of any advisory board of the Company or any
subsidiary is eligible to receive options under the Directors' Plan. An
aggregate of 108,900 shares of authorized but unissued Haverfield Common Stock
has been reserved for issuance under the Directors' Plan pursuant to the
exercise of stock options. No options have been granted under the Directors'
Plan. The number of shares is subject to adjustment in the event of a stock
split, stock dividend, merger, consolidation or certain other corporate
transactions or changes in capitalization.

All options granted under the Directors' Plan will have an exercise price per
share equal to the fair market value of a share of Haverfield Common Stock on
the date the option is granted. Each option will become exercisable in three
equal annual installments commencing one year after the date it is granted. Any
option granted under the Directors' Plan if not exercised will expire ten years
after the date of grant. All options will be nontransferable other than by will
or the laws of descent and distribution, and during the non-employee director's
lifetime may be exercised by such director. The purchase price for shares of
Haverfield Common Stock acquired pursuant to the exercise of an option shall be
paid in cash or by check. Options will generally terminate (i) one year after a
non-employee director's directorship terminates due to death or disability, (ii)
three months after the non-employee director's directorship terminates if such
termination is for other than death, disability or cause (as defined in the
Directors' Plan), (iii) upon the termination of the director's directorship for
any other reason, except that a director who becomes a director emeritus
immediately following the expiration of his term will not be considered to have
terminated his directorship, or (iv) ten years after date of grant.


                                       6
<PAGE>   11

Upon a Change in Control (as defined in the Directors' Plan), all outstanding
options under the Directors' Plan will, for a period of 60 days following the
Change in Control, become immediately and fully exercisable and the
non-employee director may, during the 60-day period following the Change in
Control, surrender any option (or portion thereof) which was granted more than
six months prior to such surrender for a cash payment in respect of each share
covered by the option or portion thereof surrendered equal to the excess over
the option price of the greater of the highest price at which the Haverfield
Common Stock traded during the 60-day period preceding the date of the Change in
Control or the highest price per share paid in connection with the transaction
constituting or resulting from the Change in Control.


                       REMUNERATION AND OTHER INFORMATION

COMPENSATION COMMITTEE REPORT
--------------------------------------------------------------------------------
The report of the Compensation Committee and the stock performance graph shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 or the Exchange Act, except as to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.

The Compensation Committee of the Board is composed entirely of outside
directors and is responsible for developing and making recommendations to the
Board with respect to the Company's executive compensation policies. In
addition, the Compensation Committee, pursuant to authority delegated by the
Board, determines on an annual basis the compensation to be paid to the Chief
Executive Officer. All decisions by the Compensation Committee relating to the
compensation of the Chief Executive Officer are reviewed by the full Board. The
Compensation Committee has access to national compensation surveys and regional
compensation information on executives in companies both larger and smaller than
the Company. All of these independent sources are used by the Compensation
Committee in reviewing compensation.

The objectives of the Company's executive compensation program are to:
-    Support the achievement of desired Company performance.
-    Provide compensation that will attract and retain superior talent and
     reward reward performance.
-    Align the executive officers' interests with the success of the Company by
     making a portion of their compensation dependent upon corporate
     performance.

The executive compensation program is comprised of base salary, annual cash
incentive compensation, long-term incentive compensation in the form of stock
options, and various benefits, including medical and ESOP plans generally
available to all employees of the Company. It provides an overall level of
compensation opportunity that is competitive within the banking industry, as
well as with a broader group of companies of comparable size and complexity. The
Company has no defined benefit pension plan. The Compensation Committee believes
that a significant portion of the total compensation program should be subject
to specific annual performance criteria. Consequently, the incentive bonus
portion of the compensation package payable to the Company's executive officers
is a significant portion of their compensation package.

Executive officers are paid a base salary which generally ranks them below
executives in similar positions for corporations of similar size in the banking
industry. In determining salaries, the Compensation Committee also takes into
account individual experience and performance and specific issues particular to
the Company. The Executive Incentive Compensation Plan provides these
individuals direct financial incentive to increase their compensation to much
more competitive levels with others with similar responsibility in other public
companies, but only if favorable financial results are achieved. Individual
performance may also be taken into account in determining incentive awards, but
no incentive compensation is paid unless a predetermined threshold for return on
average assets has been reached. Threshold, target and maximum goals for Company
performance are set at the beginning of each fiscal year. In determining
incentive awards for 1996, the Compensation Committee excluded the one-time
nonrecurring Savings Association Insurance Fund ("SAIF") assessment which
affected all savings institutions. The Company's assessment totaled $2.0
million. The


                                       7
<PAGE>   12

Compensation Committee surveyed other financial institutions who also excluded
the one-time assessment from their calculations.

The stock option plan is the Company's long-term incentive plan for the benefit
of executive officers and full-time employees. The objectives of the program are
to align executive and shareholder long-term interests by creating a strong and
direct link between executive pay and shareholder return, and to enable
executives to develop and maintain a significant, long-term stock ownership in
Haverfield Common Stock. Stock options are granted at an option price equal to
the fair market value of Haverfield Common Stock on the date of grant. Awards
are made at a level calculated to be competitive within the banking industry as
well as a broader group of companies of comparable size and complexity.

Mr. Valerian has been President and Chief Executive Officer since 1990. He was
elected Chairman of the Board of the Company in 1996. In January 1996, Mr.
Valerian received a base salary increase of 4.0% and an automobile allowance of
$600 per month. Mr. Valerian's incentive award for fiscal 1996 determined in
accordance with the Executive Incentive Compensation Plan was $93,450. This
figure is based on a detailed formula including return on assets, return on
equity, net interest margin to earning assets, the Company's efficiency ratio,
earnings per share, and the Company's capital position. The above criteria, as
well as other indicators of Haverfield's performance, are used in determining
the incentive awards for other executive officers.

The Compensation Committee believes Mr. Valerian and the executive officers have
managed the Company well in a challenging business climate. The stock options
granted to these individuals during 1996 are consistent with the design of the
overall program and are shown in the Summary Compensation Table.

                             Compensation Committee
                             ----------------------

                               JACQUES C. POMEROY
                                MICHAEL T. GAUL
                                MARK R. MAGNOTTO
                                ROBERT M. MOONEY

PERFORMANCE GRAPH
--------------------------------------------------------------------------------
Set forth below is a line graph comparing the cumulative total shareholder
return on Haverfield's Common Stock for the last five fiscal years with the
cumulative total return on the NASDAQ Market Index and the SIC Code 6035 -
Savings Institutions, Federally Chartered Index over the same period (assuming
investment of $100 in Haverfield's Common Stock and each Index on January 1,
1992, and reinvestment of all dividends).


                                    [GRAPH]

<TABLE>
<CAPTION>
            Haverfield           Savings Institutions          NASDAQ
            Corporation          Federally Chartered           Market
            -----------          --------------------          ------
<S>        <C>                         <C>                     <C>
1991       $100.00                     $100.00                 $100.00
1992        144.86                      132.44                  100.98
1993        204.11                      161.07                  121.13
1994        184.09                      152.57                  127.17
1995        195.96                      239.38                  164.96
1996        286.59                      306.10                  204.98
</TABLE>

Source: Media General Financial Services

                                       8
<PAGE>   13

There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted in the graph above.
The Company will not make nor endorse any predictions as to future stock
performance.

REMUNERATION OF EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
Because the business of the Company currently consists primarily of the business
of the Bank, it is currently the policy of the Company that no separate cash
compensation is paid to the executive officers of the Company, all of whom are
executive officers of the Bank and receive compensation as such. The following
table sets forth all compensation paid or awarded by the Bank for the three
years ended December 31, 1996 to the Chief Executive Officer and all other
executive officers whose aggregate remuneration exceeded $100,000:
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
                                                                               LONG-TERM COMPENSATION
                                                                             ---------------------------
                                           ANNUAL COMPENSATION                 AWARDS          PAYOUTS
                                           -------------------               -------------     -------
                                                          OTHER                     NUMBER                 ALL
                                                          ANNUAL       RESTRICTED    OF                    OTHER
                                                          COMPEN-        STOCK     OPTIONS      LTIP     COMPEN-
NAME OF INDIVIDUALS     YEAR     SALARY      BONUS(1)     SATION(2)      AWARDS    AWARDED(3)   PAYOUTS  SATION(4)
-------------------     ----     ------      --------     ---------      ------    ----------   -------  ---------

<S>                    <C>      <C>          <C>             <C>         <C>      <C>             <C>    <C>    
William A. Valerian     1996    $182,298      $93,450         -           -        10,000          -      $13,065
President and Chief     1995    $168,369      $69,375         -           -        10,000          -      $12,617
Executive Officer       1994    $161,899            -         -           -         2,675          -      $15,747
(Age 53)

Richard C. Ebner        1996    $101,250      $47,750         -           -         5,000          -      $ 5,446
Executive Vice          1995    $ 97,354      $40,075         -           -         5,000          -      $ 5,164
President, Chief        1994    $ 93,615            -         -           -         1,784          -      $18,130
Operating Officer,
Chief Financial
Officer and Treasurer
(Age 46)

Ennio F. Izzo (5)       1996    $ 82,683      $21,750         -           -         3,718          -      $   194
Vice President,         1995    $ 60,150      $10,000         -           -           -            -            -
Lending                 1994           -            -         -           -           -            -            -
(Age 57)

-----------------
<FN>
(1)  The amounts indicated were awarded under the Executive Incentive
     Compensation Plan.

(2)  Certain executive officers receive other annual compensation in the form of
     perquisites, the amount of which does not exceed established reporting
     thresholds and which therefore are not included herein.

(3)  The number of options indicated were awarded under the Company's stock
     option plan.

(4)  Includes split dollar life insurance premium and Company ESOP
     contributions. Also includes country club initiation dues for Mr. Ebner in
     1994.

(5)   Mr. Izzo was hired on April 3, 1995.
</TABLE>

EXECUTIVE INCENTIVE COMPENSATION PLAN
--------------------------------------------------------------------------------
In November 1983, the Board of Directors of the Bank adopted a Management
Incentive Compensation Plan (the "Plan"), which was amended in April 1986, based
on beliefs and guiding principles designed to align compensation with business
strategy, Company values and management initiatives. The Plan rewards executives
for long-term strategic management and the enhancement of shareholder value
through delivering appropriate ownership in the Company, integrates compensation
programs with the Company's annual strategic planning and measurement


                                       9
<PAGE>   14


processes, supports a performance-oriented environment that rewards performance
with respect to Company goals, and attracts and retains key executives critical
to the long-term success of the Company. Eligibility for participation in the
Plan is limited to those senior level executives and others recommended by the
Chief Executive Officer who are responsible for directing functions which have
a significant bearing on the growth and profitability of the Company and its
subsidiaries. The incentive rewards are based on the Company's annual return on
assets, as well as other indicators of the Company's performance. For 1996,
Haverfield's financial performance indicators excluded the one-time SAIF
assessment in determining the incentive awards. The Compensation Committee
determines the aggregate amount of such cash distributions as well as the
specific cash distribution to the Chief Executive Officer. The Chief Executive
Officer allocates the remainder of the approved cash distributions to
participants. The Compensation Committee is not required to award the entire
incentive compensation fund and any unawarded portion will not be carried
forward to future years. The Plan can be amended or terminated by the Board at
any time.

EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
--------------------------------------------------------------------------------
Employment Agreement. In August, 1996, the Company and the Bank entered into an
employment agreement with William A. Valerian pursuant to which he serves as
president and chief executive officer of the Bank and, if he continues to be
elected, as an officer and director of the Company. The initial term of the
agreement is three years, but the term of the agreement may be extended upon the
first and each subsequent anniversary of the agreement for an additional year by
the Board of Directors of the Bank. Mr. Valerian's minimum base salary under the
agreement is $175,000. The agreement provides, among other things, for
participation in stock options, Executive Incentive Compensation Plan, group
life insurance, medical coverage, education and other retirement or employee
benefits applicable to executive personnel.

The agreement provides for termination upon the occurrence of certain events
that constitute cause and in certain events specified by federal regulations.
The agreement is also terminable by the Bank without cause whereupon Mr.
Valerian would be entitled to the full amount of salary remaining under the term
of the agreement. The agreement provides for payments to Mr. Valerian upon the
occurrence of certain events constituting a change in control of the Company or
of the Bank if employment is terminated involuntarily in connection with such
change of control other than for cause. Such termination payments are also
provided on a similar basis in connection with a voluntary termination of
employment following a change in control. The amount of these payments equals
2.99 times the average annual compensation which was includable in Mr.
Valerian's gross income for federal income tax purposes with respect to the five
most recent tax years ending prior to the change in control.

CHANGE IN CONTROL AGREEMENTS. In August, 1996, the Company and the Bank entered
into severance agreements with Messrs. Ebner and Izzo (the "Severance
Agreements") which provide for payments only in the event of termination of
employment during the term of the Severance Agreements following a change of
control. The Severance Agreements also provide for benefits if the officer
resigns during the term of the Severance Agreements following a change of
control for good reason, including reduction in compensation, benefits or
responsibilities, or relocation by more than 30 miles of the primary worksite of
the officer. Benefits under the Severance Agreements are equal to the officer's
salary and bonus in effect for the immediate fiscal year of the Bank preceding
the change of control. The Severance Agreements provide for no benefits in the
event the officer is terminated for cause, in certain events specified under
federal regulations, or if the officer is terminated without cause, dies, or
becomes permanently disabled prior to a change of control. The initial term of
the Severance Agreements is for a one-year period, which may be extended upon
each subsequent anniversary of the Severance Agreements for an additional year
by the Board of Directors of the Bank.

HAVERFIELD CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
--------------------------------------------------------------------------------
The Company's ESOP, which incorporates both discretionary employer contributions
and a 401(k) employee salary reduction feature, was approved by the shareholders
of the Company at the 1991 Annual Meeting. The Company's matching contribution
equals fifty percent (50%) of the employee's deferred compensation. The ESOP
covers employees who have attained age 21 and have completed one year of service
with the Company, the Bank or Home Financial, Inc. The assets of the ESOP are
invested primarily in shares of Haverfield



                                       10

<PAGE>   15



Common Stock. A Registration Statement with respect to 363,000 shares of
Haverfield Common Stock was filed with the SEC in connection with Haverfield
Common Stock held by the ESOP which may be issued to participants.

Haverfield or its subsidiaries may, in any plan year, make discretionary
contributions in either shares of Haverfield Common Stock or cash. During the
year ended December 31, 1996, Haverfield and its subsidiaries made cash
contributions, including the Company's matching contribution, in the amount of
$31,073 to the ESOP. From time to time, the ESOP may purchase additional shares
of Haverfield Common Stock for the benefit of plan participants through
purchases of outstanding shares in the market or upon the sale of treasury
shares by the Company. Such purchases, if made, may be funded through
borrowings by the ESOP or further contributions from the Company or its
subsidiaries. The timing and amount of future purchases, contributions and
borrowings will be affected by various factors, including the requirements of
the Office of Thrift Supervision and other regulations as to ESOP purchases,
requirements of the Employee Retirement Income Security Act of 1974, as amended,
the Internal Revenue Code of 1986, as amended (the "Code"), market conditions
and the earnings and financial condition of the Company. During 1996, a total of
8,913 shares of Haverfield Common Stock were purchased by the ESOP.

Discretionary contributions to the ESOP and shares of Haverfield's Common Stock
are allocated among the participants in proportion to their compensation. All
participants must be employed on the last day of the plan year to be entitled to
share in an allocation with respect to such plan year. Forfeitures are
reallocated among remaining participants in the same manner as contributions. A
participant who has attained the age of 55 and completed ten years of
participation in the ESOP may direct that a percentage of the value of his or
her account balance be distributed in cash. The contributions to be made by the
Company and its subsidiaries to the ESOP are not fixed, so benefits payable
under the ESOP cannot be accurately estimated. Participants in the ESOP are
always 100% vested in that part of their account attributable to the
compensation they have deferred through the 401(k) feature of the ESOP.
Participants are not vested in the employer contribution portion of their
accounts until after five years of service, at which time they are 100% vested.
Participants also become fully vested at age 65 or upon their death or
disability. Vested benefits are payable upon the participant's death or other
termination of employment and are generally to be paid in shares of Haverfield
Common Stock.

A Committee appointed by the Board of the Company administers the ESOP, and Mr.
Harry F. Brockman acts as trustee. As trustee of the Company's ESOP, Mr.
Brockman receives an annual fee of $1 per $1,000 of Plan assets subject to a
minimum of $1,800 per year. Under the ESOP, participants may direct the voting
of all shares of Haverfield Common Stock allocated to their accounts.
Unallocated shares are voted according to the instructions of the Committee. In
addition, the ESOP provides that the trustee will respond to a tender or
exchange offer with regard to allocated shares of Haverfield Common Stock in
accordance with the instructions of the participants to whom such shares have
been allocated and shall respond with regard to unallocated shares in the same
proportion as the trustee responds with regard to allocated shares for which
instructions were received. As of December 31, 1996, a total of 117 officers and
employees were participants in the ESOP.

The Board may amend or revise the ESOP, except that no such amendment shall be
effective if it: authorizes or permits any part of the assets held in the ESOP
(other than such part as is required to pay taxes and administration expenses)
to be used for or diverted to any purpose other than for the exclusive benefit
of the participants or their beneficiaries or estates; causes any reduction in
the amount credited to the account of any participant; or causes or permits any
portion of the assets of the ESOP to revert to or become property of the
Company.

MANAGEMENT STOCK OPTION PLAN
--------------------------------------------------------------------------------
As a performance incentive and to encourage ownership of Haverfield Common
Stock, the Board adopted a stock option plan for the benefit of executive
officers and other employees of the Company and its subsidiaries whether or not
directors of Haverfield or its subsidiaries. Directors who are not executive
officers are not eligible to participate in the Company's stock option plan. The
Board, the Compensation Committee and management believe that significant stock
ownership is a major incentive in building shareholders' wealth and aligning the
interests of employees and shareholders. To encourage growth in shareholder
value and focus attention on managing the Company as an owner with an equity
position in the business, senior executives



                                       11


<PAGE>   16



who are in a position to make a substantial contribution to the long-term
success of the Company should have a significant stake in its on-going success.
The 1985 Option Plan, which was approved by the shareholders at their 1985
annual meeting, terminated on July 23, 1995; however, 46,127 stock options
remain outstanding. No options have been repriced or otherwise adjusted or
amended in the past 10-year period.

The 1995 Stock Option Plan was approved by the shareholders at their 1995 annual
meeting. The maximum number of shares reserved for purchase pursuant to the
exercise of options granted under the 1995 Stock Option Plan is 164,000 shares,
subject to modification or adjustment to reflect changes in Haverfield's
capitalization as, for example, in the case of a merger, reorganization or stock
split. Authorized but unissued shares or shares previously issued and reacquired
by the Company may be used to satisfy an exercise of an option under the
Company's stock option plan, resulting in an increase in the number of shares
outstanding, which will have a dilutive effect on the holdings of existing
shareholders.

The Company's stock option plan is administered by the Compensation Committee of
the Board, all of whom are non-employee members of the Board, and all of whom
are "disinterested directors", as such term is defined under Rule 16b-3 of the
Exchange Act. The Compensation Committee is given absolute discretion under the
Company's stock option plan to select the persons to whom rights will be granted
and to determine the number of rights to be granted to each. Grants of options
under the Company's stock option plan are designed to be either incentive stock
options under Section 422A of the Code, or non-statutory stock options.

Under the 1995 Stock Option Plan, non-statutory stock options may be granted at
a purchase price which shall not be less than 65% of the fair market value of
Haverfield Common Stock on the date of grant. Incentive stock options may be
granted at a purchase price which shall not be less than 100% of the fair market
price on the date of grant, provided that grantee does not possess more than 10%
of the total combined voting power of the Company (as determined pursuant to
Section 424(d) of the Code). If the grantee does possess more than 10% of the
total combined voting power of all classes of Haverfield Common Stock, the
purchase price per share of Haverfield Common Stock deliverable upon the
exercise of each incentive stock option shall not be less than 110% of the fair
market value of Haverfield Common Stock on the date of grant.

The terms of both non-statutory stock options and incentives stock options shall
be determined by the Compensation Committee; however, no grant will be
exercisable, in whole or in part, more than 10 years from the date of grant. If
at the time an incentive stock option is granted to an employee who is deemed to
beneficially own more than 10% of the total combined voting power of the Company
as defined under Section 424(d) of the Code, then the term of such grant shall
not exceed 5 years from the date of grant. However, in the event of a change in
control of the Company, all non-statutory and incentive stock options shall
become immediately exercisable. Unless otherwise determined by the Compensation
Committee at the time of grant, termination of a participant's employment for
any reason other than disability, change of control, or death, will result in
both non-statutory and incentive stock to expire upon termination. Unless
otherwise determined by the Compensation Committee at the time of grant, in the
event of death or disability of any participant, all non-statutory options held
by the participant, whether or not exercisable at the time, shall be exercisable
by the participant or his legal representative or beneficiary for one year or
such longer period as determined by the Compensation Committee following the
date of such event, provided that in no event shall the period extend beyond the
expiration of the non-statutory stock option term. In the event of a
participant's death or disability, all incentive stock options held by the
participant, whether or not exercisable at such time, shall be exercisable by
the participant or the participant's legal representative or beneficiary for one
year following the date of the participant's death or cessation of employment
due to disability. Upon termination of the participant's employment due to a
change in control, all incentive stock options held by such participant, whether
or not exercisable at such time, shall be exercisable for a period of one year
following the date of such participant's cessation of employment but in no
event, shall the exercisable period extend beyond the expiration of the
incentive stock option term.

The following table presents individual grants of options that were made under
the 1995 Stock Option Plan during 1996 to each of the named executives in the
Summary Compensation Table. This table is intended to allow shareholders to
ascertain the relationship between the number and size of option grants made
during 1996, the exercise price and the market price on the date of grant, and
the expiration date of the grants.



                                       12
<PAGE>   17
<TABLE>
<CAPTION>

                             OPTION GRANTS IN THE LAST FISCAL YEAR(1)
                                                                                       
                                                                                         POTENTIAL
                                                                                         REALIZABLE 
                                             INDIVIDUAL GRANTS                            VALUE AT
                        --------------------------------------------------------           ASSUMED
                                                 OF TOTAL                               ANNUAL RATES
                                                  OPTIONS                               OF STOCK PRICE
                                     NUMBER      GRANTED TO EXERCISE                     APPRECIATION
                          DATE        OF         EMPLOYEES  OR BASE                    FOR OPTION TERM
                           OF      OPTIONS           IN      PRICE    EXPIRATION       -----------------
NAME                     GRANT     GRANTED(2)   FISCAL YEAR PER SHARE    DATE          5%            10%
----                     -----     ----------   ---------------------    ----          --            ---

<S>                     <C>          <C>           <C>       <C>       <C>          <C>          <C>     
William A. Valerian     12/18/96     10,000        48.27%    $19.25    12/18/06     $120,276     $304,803
Richard C. Ebner        12/18/96      5,000        24.13%    $19.25    12/18/06     $ 60,138     $152,402
Ennio F. Izzo           05/22/96      1,718         8.29%    $18.00    05/22/06     $ 19,448     $ 49,285
Ennio F. Izzo           12/18/96      2,000         9.65%    $19.25    12/18/06     $ 24,055     $ 60,961

--------------------
</TABLE>

1.   The 1995 Stock Option Plan is administered by the Compensation Committee of
     the Board which has the authority to determine the individuals to whom and
     the terms at which option grants shall be made, certain terms of the
     options, and the number of shares to be subject to each option. The
     exercise or base price per share is the fair market value of Haverfield
     Common Stock on the date of the grant, and the term of the option is 10
     years.

2.   All grants in 1996 were incentive stock options.


The following tabulation shows, as to all persons named in the Summary
Compensation Table, the following information with respect to the exercise of
stock options during 1996 by each of the named executive officers and the fiscal
year-end value of unexercised options.

<TABLE>
<CAPTION>

   AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
                                     VALUES

                        NUMBER OF
                         SHARES                         NUMBER OF          VALUE OF UNEXERCISED
                        ACQUIRED        VALUE     UNEXERCISED OPTIONS AT  IN-THE-MONEY OPTIONS AT
NAME                 ON EXERCISE(1)   REALIZED(2)  DECEMBER 31, 1996(3)    DECEMBER 31, 1996(4)
----                 --------------   -----------  --------------------    --------------------

<S>                      <C>          <C>                <C>                      <C>     
William A. Valerian      12,947       $105,368           42,915                   $267,574
Richard C. Ebner          4,840       $ 39,390           28,504                   $208,721
Ennio F. Izzo                 -              -            3,718                    $ 1,933

----------------------
</TABLE>

1.   All of the options exercised during 1996 were held by the named executive
     officer since 1986.

2.   Value realized is calculated based on the difference between the option
     exercise price and the average high and low market price on the date of
     exercise.

3.   All unexercised options are incentive stock options that are exercisable.

4.   Based on December 31, 1996 closing stock price of $19.125 per share minus
     the exercise or base price.


                                       13
<PAGE>   18

CERTAIN TRANSACTIONS
--------------------------------------------------------------------------------
The Bank offers loans to its officers, directors and employees. All loans to
directors and executive officers were current as of December 31, 1996. Loans are
made on substantially the same terms and conditions as those prevailing at the
time for comparable transactions with unaffiliated persons. Pursuant to the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, which
became effective on August 9, 1989, loans made by the Bank to its executive
officers and directors must comply with the requirements of Section 22(b) of the
Federal Reserve Act. Among other things, Section 22(h) prohibits the Bank from
making a loan to any executive officer or director on preferential terms, i.e.,
terms that would not be offered to an unaffiliated borrower of comparable credit
standing seeking a comparable loan. The management of the Bank believes that all
loans made since August 9, 1989, to the Company's directors and executive
officers were made in the ordinary course of business on substantially the same
terms including interest rates and collateral as those prevailing at the time
for comparable transactions with unaffiliated borrowers of comparable credit and
did not involve more than the normal risk of collectibility or present other
unfavorable features.

Prior to August 9, 1989, directors, officers and employees executed a note at
the rate then being offered by the Bank to the general public. The actual
payment rate for adjustable loans, however, is adjusted annually based on a
designated index for so long as the director, officer or employee continues
employment or service with the Bank and, in the case of directors and executive
officers, does not modify the existing note. It is the belief of management that
these loans neither involve more than normal risk of collectibility nor present
other unfavorable features.

The table below sets forth certain information with respect to directors and
executive officers for loans made from the Bank prior to August 9, 1989 that
have preferential rates and whose total loans from the Bank exceeded an
aggregate of $60,000 during the year ended December 31, 1996.

<TABLE>
<CAPTION>

                                                                       Highest Principal
                                                                        Balance During         Principal
                        Nature of         Year    Payment   Note        The Year Ended       Balance as of
Name                    Indebtedness(i)   Made    Rate(2)   Rate (3)   December 31, 1996   December 31, 1996
----                    ---------------   ----    -------   --------   -----------------   -----------------

<S>                     <C>                <C>      <C>       <C>            <C>                 <C>    
Marlene D. Culbertson   Mortgage          1989     5.42%     9.88%           $72,415             $70,533

Richard C. Ebner        Mortgage          1985     5.10      7.75             47,453              40,918
                        Equity LOC        1985     7.51      9.51             62,354              61,282
                        MasterCard        1985     7.51      9.51              5,314                 137

Mark R. Magnotto        Mortgage          1987     7.04      8.25            157,273                   -

Peter E. Shimrak        Mortgage          1986     5.70      7.25            195,032             191,126
                        Equity LOC        1987     7.42      9.42            100,872              98,948
                        Savings           1986     6.33      8.33             16,000              16,000
                        Savings           1986     6.00      8.00             54,535              54,535
                        MasterCard        1987     7.42      9.42              5,034               4,552

Edward R. Turza         Savings           1986     3.48      5.48              3,400               3,400

William A. Valerian     Equity LOC        1985     7.51      9.51             98,764              94,051
                        MasterCard        1985     7.51      9.51              5,739               3,642

----------------------
</TABLE>

1.   All mortgage loans are secured by first liens on residences. The equity LOC
     and MasterCard are secured.

2.   Payment rate on adjustable first mortgage loans, equity LOC and MasterCard
     loans adjust annually based on a designated index.

3.   The note rate represents that rate which would be offered to the general
     public.



                                       14
<PAGE>   19

CONSULTING AGREEMENT
--------------------------------------------------------------------------------
Peter E. Shimrak, a director of the Company and Chairman of the Board of the
Bank, entered into a Consulting Agreement (the "Consulting Agreement") effective
August 1, 1996, which, in addition to the $1,250 per month which Mr. Shimrak
receives as Chairman of the Board of the Bank, provides that he shall receive an
hourly charge for his consulting services in the amount of $50 per hour. The
maximum hours to be actually billed to the Bank on a monthly basis may not
exceed twenty (20) hours. In addition, Mr. Shimrak is also entitled to receive
certain commission based compensation for business activities conducted on
behalf of the Bank. The term of the Consulting Agreement is one year. During
1996, Mr. Shimrak was paid $6,714 under the Consulting Agreement.


                 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
                                    AUDITORS
                                  (Proposal 2)

The Board, acting upon the recommendation of its Audit Committee, has appointed
Deloitte & Touche LLP as auditors to audit the financial statements of the
Company and its subsidiaries for the year 1997. Deloitte & Touche LLP has
conducted the annual audit of the Company and its subsidiaries since 1982.
Although shareholder approval of this appointment is not required by law or
binding on the Board, the Board believes that shareholders should be given this
opportunity to express their views. If the shareholders do not ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditors, the
Board will consider this vote in determining whether or not to continue the
engagement of Deloitte & Touche LLP.

A representative of Deloitte & Touche LLP will be present at the meeting with an
opportunity to make a statement if he desires to do so and to respond to
appropriate questions.

The affirmative vote of the holders of a majority of the shares of Haverfield
Common Stock present in person or by proxy and entitled to vote at the meeting
will be required for such ratification.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1997.


                          1998 SHAREHOLDERS' PROPOSALS

Any shareholder proposal intended for inclusion in the proxy statement and form
of proxy related to Haverfield's annual meeting of shareholders expected to be
held on or about April 22, 1998 must be received by the Company by November 18,
1997 pursuant to the proxy solicitation regulations of the SEC. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Exchange Act. It is urged that any such proposals be sent by certified mail,
return receipt requested.

                                        By Order of the Board of Directors,


                                        /s/ Nancy M. Czupik
                                        -------------------------------
                                        Nancy M. Czupik
                                        Corporate Counsel and Secretary

Cleveland, Ohio
March 17, 1997




                                       15
<PAGE>   20

                                   APPENDIX A
                    Haverfield Corporation and Subsidiaries
                         Index to Financial Information

                                                                       PAGE
--------------------------------------------------------------------------------
Market and Dividend Information                                         A-1
Form 10-K Copies Available                                              A-1
Consolidated Financial Highlights                                       A-2
Management's Discussion and Analysis                                    A-3
Report of Management                                                    A-17
Report of Independent Auditors                                          A-18
Consolidated Statements of Financial Condition                          A-19
Consolidated Statements of Income                                       A-20
Consolidated Statements of Cash Flows                                   A-21
Consolidated Statements of Shareholders' Equity                         A-22
Notes to Consolidated Financial Statements                              A-23


                        MARKET AND DIVIDEND INFORMATION

Haverfield Common Stock trades on the Nasdaq National Market tier of The Nasdaq
Stock Market under the symbol HVFD. At December 31, 1996, the number of
shareholders of record was 416. A summary of the trading ranges and cash
dividends paid on Haverfield Common Stock during each quarter of 1996 and 1995
is presented below.
<TABLE>
<CAPTION>

                                   1996                             1995
                    ---------------------------------  -------------------------------
                        Sales Price   Cash Dividends    Sales Price    Cash Dividends
                      High       Low       Paid        High      Low         Paid

<S>                  <C>        <C>       <C>         <C>       <C>        <C>  
First Quarter        $15.00     $13.50    $.135       $14.32    $12.95     $.127
Second Quarter       $19.25     $14.75    $.135       $13.64    $11.82     $.127
Third Quarter        $19.25     $17.00    $.135       $14.75    $12.27     $.127
Fourth Quarter       $19.75     $18.25    $.135       $14.75    $13.50     $.135

</TABLE>



Information describing the Haverfield Corporation Dividend Investment Service
can be obtained from: Richard C. Ebner, Treasurer, Haverfield Corporation,
Terminal Tower, 50 Public Square, Suite 444, Cleveland, Ohio 44113-2203.

                           FORM 10-K COPIES AVAILABLE

UPON RECEIPT OF A WRITTEN REQUEST TO RICHARD C. EBNER, TREASURER, HAVERFIELD
CORPORATION, TERMINAL TOWER, 50 PUBLIC SQUARE, SUITE 444, CLEVELAND, OHIO 44113-
2203, HAVERFIELD WILL FURNISH TO ANY SHAREHOLDER WITHOUT CHARGE A COPY OF THE
ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS UNLESS SPECIFICALLY REQUESTED, FOR
THE YEAR ENDED DECEMBER 31, 1996.




                                      A-1
<PAGE>   21

                       CONSOLIDATED FINANCIAL HIGHLIGHTS
                 (Dollars in thousands, except per share data)
================================================================================

<TABLE>
<CAPTION>
                                        1996(1)        1995        1994           1993        1992
                                        -------        ----        ----           ----        ----
<S>                                     <C>          <C>          <C>          <C>          <C>     
AT DECEMBER 31:
Total assets                            $346,856     $354,505     $316,768     $310,410     $317,640
Net loans                                293,792      283,560      279,680      248,005      236,319
Cash and investments                      42,401       59,327       24,997       33,783       50,099
Mortgage-backed securities                 2,010        2,754        3,101        5,961       13,138
Deposits                                 279,073      317,779      279,269      268,012      284,163
Borrowed money                            30,000            -        2,000        6,348        2,000
Shareholders' equity                      28,352       28,058       26,868       22,510       18,761
Amount of loans serviced for others      132,693      139,498      161,968      177,763      183,592
Number of offices                             10           10           11           10           10

YEAR ENDED DECEMBER 31:
Interest income                          $27,292      $26,505      $21,784     $ 22,964      $25,156
Interest expense                          14,742       15,195       11,057       11,150       13,988
Provision for loan losses                    309          123           97          897          750
Noninterest income                         2,005        2,204        2,160        3,735        2,799
Noninterest expense                       11,962       10,376       10,421       11,321        9,928
Provision for income taxes                   777        1,020          669        1,138        1,318
Extraordinary item, net of tax                 -            -            -            -          (67)
Net income                                 1,507        1,995        1,700        2,193        1,904

PER SHARE DATA:
Net income:
 Primary                                 $   .79    $    1.06      $  1.03     $   1.45      $  1.35
 Fully-diluted                               .79         1.06          .96         1.33         1.35
Shareholders' equity                       14.87        14.90        14.25        14.15        13.23
Tangible shareholders' equity              14.86        14.82        13.73        13.11        11.43
Cash dividends declared and paid             .54          .52          .51          .48          .44
Dividend payout ratio                      68.35%       49.06%       49.56%       33.30%       32.02%

SELECTED RATIOS:
Return on average assets                     .44%         .58%         .55%         .73%         .65%
Return on average equity                    5.21%        7.13%        6.96%       10.32%       10.25%
Average equity to average assets            8.50%        8.17%        7.83%        7.09%        6.30%
Weighted-average yield on interest
 earning assets                             8.19%        7.92%        7.18%        7.91%        8.77%
Weighted-average cost of interest
 bearing liabilities                        4.83%        4.93%        3.92%        4.10%        5.17%
Interest rate spread                        3.36%        2.99%        3.26%        3.81%        3.60%
Net interest margin                         3.76%        3.38%        3.54%        4.07%        3.90%
Shareholders' equity to total assets        8.17%        7.91%        8.48%        7.25%        5.91%

-----------------------------
<FN>
(1)  The year 1996 was significantly affected by the one-time, nonrecurring
     charge associated with the recapitalization of the Savings Association
     Insurance Fund ("SAIF"), which, after tax, totaled $1.3 million or $.68 per
     share. Excluding this nonrecurring SAIF assessment, earnings for the year
     ended December 31, 1996 totaled $2.8 million or $1.47 per share. Excluding
     the nonrecurring SAIF assessment, 1996 earnings produced a return on
     average assets of.82% and a return on average equity of 9.68%.


</TABLE>


                                      A-2
<PAGE>   22

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion and analysis is intended to assist readers in
understanding the results of operations and changes in financial position for
the past three years. It should be read in conjunction with the audited
financial statements, accompanying footnotes and supplemental financial data
presented elsewhere in this Appendix A to the Proxy Statement


GENERAL OVERVIEW
--------------------------------------------------------------------------------
Haverfield Corporation ("the Company") is a unitary savings and loan holding
company owning all the outstanding common stock of Home Bank, F.S.B. Effective
February 23, 1995, the Company changed the name of its banking subsidiary from
Home Federal Savings Bank, Northern Ohio to Home Bank, F.S.B. ("Banking
subsidiary" or the "Bank"). The financial statements and statistical data
presented herein are the financial statements and data for the Company on a
consolidated basis.

The operations of the Company and its Banking subsidiary are significantly
influenced by general economic conditions, monetary and fiscal policies of the
federal government, and policies of regulatory authorities, including the
Federal Reserve Board, the Securities and Exchange Commission, the Office of
Thrift Supervision (the "OTS"), the Federal Deposit Insurance Corporation (the
"FDIC") and the Office of the Comptroller of Currency. Deposit flows and cost of
funds are influenced by interest rates on competing investments and general
market rates of interest. Lending activities are affected by the demand for
mortgage financing and for consumer and other types of loans, which in turn are
affected by the interest rates at which such financing may be offered and other
factors affecting the supply of housing and the availability of funds.

The Company's net income for the year ended December 31, 1996 was $1,507,000 or
$.79 per share, compared with $1,995,000 or $1.06 per share for the year ended
December 31, 1995. The decrease in 1996 compared to 1995 was mainly due to the
one time, after tax charge associated with the recapitalization of the Savings
Association Insurance Fund ("SAIF"), which totaled $1.3 million or $.68 per
share. Excluding the nonrecurring SAIF assessment, earnings for the twelve
months ended December 31, 1996 totaled $2,802,000 or $1.47 per share. The
increase in earnings, excluding the SAIF assessment, is mainly attributable to
an 11.0% increase in net interest income and a 3.6% decrease in noninterest
expense. The Company's net interest margin increased to 3.76% compared to 3.38%
for the same period in 1995. Excluding the nonrecurring SAIF assessment, 1996
earnings produced a return on average assets of.82% and a return on average
equity of 9.68%.

The Company's net income in 1995 increased 17.4% over 1994. The Company's net
income for the year ended December 31, 1995 was $1,995,000 or $1.06 per share,
compared with $1,700,000 or $1.03 per share for the year ended December 31, 
1994. The increase in 1995 compared to 1994 was due to the improvement in net 
interest income, which increased from $10,727,000 in 1994 to $11,310,000 in 1995
primarily due to the effects of increases in volume, partially offset by lower
net interest margin.


NET INTEREST INCOME
--------------------------------------------------------------------------------
Net interest income, the primary component of the Company's earnings, is
influenced by the distribution and volume of the assets and liabilities, and the
difference, or spread, between the yields earned and the rates paid on those
assets and liabilities.

For 1996, net interest income was $12.6 million, compared to $11.3 million in
1995. The increase in 1996 resulted from an increase in the yield on
interest-earning assets of 27 basis points, while the cost of interest-bearing
liabilities decreased 10 basis points.

For 1995, net interest income totaled $11.3 million compared to $10.7 million in
1994. The general level of interest rates increased during 1995, causing
interest-bearing liabilities, particularly deposits, to reprice more quickly
than interest-earning as sets, resulting in a decrease of 27 basis points in the
interest rate spread. The decline in the interest rate spread was offset by
increased volume of the assets and liabilities which contributed $887,000 to the
increase in net interest income.



                                      A-3
<PAGE>   23

An analysis of net interest income is presented in the following table. For each
major category of interest-earning assets and interest-bearing liabilities, the
average balance of funds employed during the period indicated is shown along
with the interest earned or paid on that balance for the period and the weighted
average rate earned or paid for that category. Average balances are determined
on a daily basis.
<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                                  -------------------------------------------------------------------------------------
                                             1996                          1995                         1994
                                  ----------------------------  --------------------------  ---------------------------
                                  Average              Average  Average            Average  Average             Average
                                  Balance   Interest    Rate    Balance  Interest   Rate    Balance   Interest   Rate
                                  -------   --------    ----    -------  --------   ----    -------   --------   ----
                                        (Dollars in thousands)
<S>                              <C>         <C>        <C>    <C>        <C>       <C>    <C>         <C>       <C>  
Interest-earning assets:
 Loans(1)                        $290,294    $24,529    8.45%  $284,385   $23,313   8.20%  $273,927    $20,472   7.47%
 Investment securities
  and other                        40,637      2,572    6.33     47,301     2,952   6.24     25,395      1,011   3.98
 Mortgage-backed
  securities                        2,414        191    7.91      2,991       240   8.02      4,031        301   7.47
                                 --------     ------    ----   --------    ------   ----   --------     ------   ----
 Total interest-earning assets    333,345     27.292    8.19    334,677    26.505   7.92    303,353     21.784   7.18
                                              ------    ----               ------   ----                ------   ----
Noninterest-earning assets          7,736                         7,870                       8,577    
                                 --------                      --------                    --------    
 Total assets                    $340,581                      $342,547                    $311,930
                                 ========                      ========                    ========

Interest-bearing liabilities:
 Deposits
  Passbook/statement
    accounts                     $ 42,227      1,042    2.47   $ 50,308     1,241   2.47%  $ 61,460      1,524   2.48%
  NOW accounts                     24,684        212     .86     24,699       245    .99     26,481        285   1.08
  Money market fund
   accounts                        58,741      2,873    4.89     41,762     2,138   5.12     38,697      1,404   3.63
  Certificates of deposit         165,832      9,805    5.91    191,049    11,514   6.03    149,693      7,401   4.94
                                 --------    -------    ----   --------   -------   ----   --------    -------   ----
 Total deposits                   291,484     13,932    4.78    307,818    15,138   4.92    276,331     10,614   3.84

 FHLB advances                     13,986        810    5.79        575        57   9.91      2,148        213   9.92
 Long-term borrowings                   -          -       -          -         -      -      3,323        230   6.92
                                 --------    -------    ----   --------   -------   ----   --------    -------   ----
 Total interest-bearing
  liabilities                     305,470     14,742    4.83    308,393    15,195   4.93    281,802     11,057   3.92
                                             -------    ----              -------   ----               -------   ----
Noninterest-bearing
  liabilities                       6,178                         6,174                       5,700
                                 --------                      --------                    --------
 Total liabilities                311,648                       314,567                     287,502
Shareholders' equity               28,933                        27,980                      24,428
                                 --------                      --------                    --------
 Total liabilities and  
  shareholders' equity           $340,581                      $342,547                    $311,930
                                 ========                      ========                    ========

Net interest income/interest
 rate spread                                 $12,550   3.36%              $11,310   2.99%              $10,727   3.26%
                                             =======   ====               =======   ====               =======   ==== 

Net interest margin                                    3.76%                        3.38%                        3.54%
                                                       ====                         ====                         ==== 

---------------------------
<FN>
(1)  The average balance of loans includes the principal balance of nonaccrual
     loans. Interest income includes amortization of deferred loan fees of
     $249,000, $167,000 and $188,000 in 1996, 1995, and 1994, respectively.

</TABLE>


                                      A-4
<PAGE>   24

The effect on net interest income due to changes in interest rates and changes
in the amounts of interest-earning assets and interest-bearing liabilities is
shown in the following table. Changes in interest due to both rate and volume
have been allocated to change due to volume and change due to rate in proportion
to the absolute amounts of the change in each.
<TABLE>
<CAPTION>

                                                             Change Due To
                                          Total           -------------------
                                          Change             Volume         Rate
                                          ------             ------         ----
                                                        (In thousands)
<S>                                       <C>               <C>          <C>    

1996 CHANGE FROM 1995
Interest income:
 Loans                                    $ 1,216           $   160      $ 1,056
 Investment securities and other             (380)             (421)          41
 Mortgage-backed securities                   (49)              (46)          (3)
                                          -------           -------      -------
  Total                                       787              (307)       l,094
                                          -------           -------      -------
Interest expense:
 Deposits                                  (1,206)             (789)        (417)
 FHLB advances                                753               787          (34)
                                          -------           -------      -------
  Total                                      (453)               (2)        (451)
                                          -------           -------      -------
 Change in net interest income            $ 1,240           $  (305)     $ 1,545  
                                          =======           =======      =======  

1995 CHANGE FROM 1994
Interest income:
 Loans                                    $ 2,841           $   720      $ 2,121
Investment securities and other             1,941             1,171          770
 Mortgage-backed securities                   (61)              (82)          21
                                          -------           -------      -------
  Total                                     4,721             1,809        2,912
                                          -------           -------      -------
Interest expense:
 Deposits                                   4,524             1,308        3,216
 FHLB advances                               (156)             (156)           -
 Long-term borrowings                        (230)             (230)           -
                                          -------           -------      -------
  Total                                     4,138               922        3,216
                                          -------           -------      -------
 Change in net interest income            $   583           $   887      $  (304)
                                          =======           =======      ======= 


</TABLE>


ASSET/LIABILITY MANAGEMENT
--------------------------------------------------------------------------------
As with most financial institutions, the Company's interest income and cost of
funds are significantly affected by general economic conditions and by policies
of regulatory authorities. The function of asset/liability management is to
monitor the maturities and repricing schedules of the components of the
balance sheet, and to initiate actions to minimize the Company's vulnerability
to changing interest rates while maximizing current and expected net interest
yield. Asset/liability management seeks to ensure that assets and liabilities
respond to interest rate changes in a similar time frame. The less-than-one-year
period is monitored closely because it is in this time frame that the greatest
exposure to sudden rate movements occurs. The Company's objective with regard to
asset/liability management is to attempt to minimize the impact of interest rate
risk in the ensuing one-year time frame.

The Board of Directors establishes policies and objectives with regard to
asset/liability management while senior management oversees the implementation
of such policies. The Pricing Committee of the Bank meets weekly to review and
establish rates on loan and deposit products, as well as to establish strategies
to monitor the flow of funds and coordinate the sources, uses and pricing of
those funds. The Company does not use derivative financial instruments in its
asset/liability strategy.

Interest rate sensitivity arises from differences between the dollar amounts of
assets and liabilities which mature or reprice within a time period. These
differences, or "gaps", provide an indication of the extent to which net
interest income is affected by interest rate movements in future periods. Net
interest income is also affected by changes in the slope of the yield curve and
by the price sensitivity of assets and liabilities which may have different
effects on profit volatility - factors which cannot be quantified from gap data
alone. For example, a decline in short-term market rates may not result in
corresponding declines in the rates paid on consumer deposits. Interest rate
sensitivity gap data does not provide an absolute measure of net interest income
vulnerability; however, it is useful for identifying trends of changing interest
rate sensitivity over time within an institution, and for providing comparisons
between institutions. Although the interest rate sensitivity gap is subject to a
number of assumptions and is only one of a number of


                                      A-5
<PAGE>   25

measurements, management believes the measure is an important indication of the
Company's exposure to interest rate risk and the related volatility of net
interest income in a changing interest rate environment, However, even a perfect
interest rate sensitivity gap of 0% (i.e., where the repricing of
interest-earning assets and interest-bearing liabilities is perfectly matched)
does not assure a stable net interest margin in a period of changing interest
rates. Depending on which indices are affected and when the interest-earning
assets and interest-bearing liabilities reprice, the change in interest rates
may have a favorable or unfavorable impact on net interest income.

The following table sets forth at December 31, 1996 the amounts of
interest-earning assets and interest-bearing liabilities scheduled to mature or
reprice within a specified period. No prepayment assumptions or deposit decay
rates have been incorporated.

<TABLE>
<CAPTION>
                                                       Scheduled Maturity or Repricing
                                --------------------------------------------------------------------
                                6 Months    6 Months    1 Year     3 Years        More
                                   or          to          to        to           than
                                  Less       1 Year     3 Years    5 Years      5 Years       Total
                                  ----       ------     -------    -------      -------       -----
                                                            (In thousands)
<S>                              <C>         <C>         <C>        <C>        <C>          <C>     
INTEREST-EARNING ASSETS:
Real estate loans:
 Conventional:
  Fixed-rate                  $     976     $  2,979    $  8,666   $  9,479    $ 49,670     $ 71,770
  Adjustable-rate                26,328       77,588      56,479      7,137           -      167,532
 Construction                     2,772            -       1,500          -           -        4,272
Land loans                        2,372          530         780          -           -        3,682
Consumer loans                   34,852        9,355         522        195         104       45,028
Business loans                    5,170        1,471          14         65           -        6,720
Loans in process,
 allowance for loan losses
 and net deferred loan fees           -            -           -          -       (5212)      (5,212)
                              ---------     --------    --------   --------    --------     --------
Total loans (1)                  72,470       91,923      67,961     16,876      44,562      293,792
Investment securities and other   4,902            -       1,498     10,429      20,083       36,912
Mortgage-backed
 securities                          25           75         201        201       1,508        2,010
                              ---------     --------    --------   --------    --------     --------
Total interest-earning assets $  77,397     $ 91,998    $ 69,660   $ 27,506    $ 66,153     $332,714
                              =========     ========    ========   ========    ========     ========

INTEREST-BEARING LIABILITIES:
Deposits:
 Passbook and NOW
  accounts(2)                 $       -     $      -    $      -   $      -    $ 56,493     $ 56,493
 Money market fund
  accounts                       62,263            -           -          -           -       62,263
 Certificates of deposit         38,981       56,895      40,484     10,408       6,434      153,202
                              ---------     --------    --------   --------    --------     --------
Total deposits                  101,244       56,895      40,484     10,408      62,927      271,958
FHLB advances                    27,000            -       3,000          -           -       30,000
                              ---------     --------    --------   --------    --------     --------
Total interest-bearing
 liabilities                  $ 128,244     $ 56,895    $ 43,484   $ 10,408    $ 62,927     $301,958
                              =========     ========    ========   ========    ========     ========
GAP                           $ (50,847)    $ 35,103    $ 26,176   $ 17,098    $  3,226     $ 30,756
Cumulative GAP                $ (50,847)    $(15,744)   $ 10,432   $ 27,530    $ 30,756

-------------------
<FN>
(1)  Contractual maturities of loans do not reflect the actual term of the
     Company's loan portfolio. The average life of mortgage loans is
     substantially less than their contractual terms because of loan prepayments
     and due-on-sale clauses.

(2)  Management believes that a significant amount of passbook and NOW accounts
     are core deposits.

</TABLE>




                                      A-6
<PAGE>   26

The Company is negatively mismatched on a one-year basis at December 31, 1996,
because more liabilities than assets are expected to mature or reprice in the
next twelve months. A negative mismatch implies that a decrease in interest rate
levels may have a positive impact on the Company's results of operations, while
an increase in interest rate levels may have the opposite effect. The Company
will continue to actively manage its interest rate sensitivity position to
maintain a reasonable balance between earnings and exposure to interest rate
fluctuations.


PROVISION FOR LOAN LOSSES
--------------------------------------------------------------------------------
The provision for loan losses represents a charge against current earnings in
order to maintain the allowance for loan losses at a level believed adequate by
management to absorb potential losses in the loan portfolio. Management's
determination of the adequacy of the allowance is based upon an ongoing review
and analysis of the risk characteristics of the loan portfolio, historical
charge-offs and recoveries, current economic conditions, volume, growth and
composition of the loan portfolio, and other relevant factors. In 1996, based on
management's assessment of the adequacy of the allowance, the provision for loan
losses was $309,000, compared to $123,000 in 1995 and $97,000 in 1994 primarily
due to increased charge-offs and increased nonperforming loans. A significant
portion of the provision in 1995 and 1994 was for the purpose of maintaining the
general loan loss reserve. which covers potential losses inherent in the
portfolio which have not been specifically identified.

See "Credit Risk Management" for a discussion of the adequacy of the Company's
allowance for loan losses.


NONINTEREST INCOME
--------------------------------------------------------------------------------
In 1996, noninterest income totaled $2.0 million, compared to $2.2 million in
1995 and $2.2 million in 1994. Included in the noninterest income category are
the following items: (i) service fees and other charges, (ii) servicing income,
(iii) gain on the sale of loans, and (iv) other income.

In 1996, service fees and other charges increased to $1.3 million, compared to
$1.2 million in 1995 and $971,000 in 1994. This increase resulted from a
revision of the service charges earned on certain deposit accounts and certain
automated teller machine transactions. Other income for 1995 includes a pre-tax
gain of $309,000 realized during the fourth quarter in connection with the sale
of the Bank's Madison Avenue office. This gain was largely offset by a reduction
in fee income earned by the Bank's financial services subsidiary, Home
Financial, Inc.

Servicing income was $454,000 in 1996, compared to $536,000 in 1995 and $634,000
in 1994. This decline is attributable to the decrease in the average balance of
loans serviced for others from $171.4 million in 1994 to $151.2 million in 1995
and to $130.4 million in 1996, due to loan repayments and no additional loan
sales in 1996 or 1995. Although the Company may resume its involvement in the
secondary market, on April 1, 1994, the Company changed its policy with regard
to current originations of fixed-rate loans to hold them for portfolio
investment; previously, such loans had been designated as held for sale. As
such, no loans were sold during 1996 and 1995. The volume of loans sold was
$23.7 million in 1994. Substantially all of the residential mortgage loans,
whether fixed-rate or adjustable-rate, are originated under terms, conditions,
and documentation which enable them to be sold in the secondary market. Under
its loan sale agreements, the Company continues to collect payments on loans as
they become due, to inspect the security property when appropriate, to make
certain insurance and tax payments on behalf of borrowers, and to otherwise
service the loans. The Company pays the purchaser under its participation and
sales agreements an agreed yield on the loans or participation interest in loans
sold. Amounts not paid to the purchaser are retained and recognized as servicing
income. Servicing income includes servicing fees from investors and certain
charges collected from borrowers, such as late payment fees. Servicing income is
partially offset by amortization expense representing the estimated diminution
in value over time of the Company's purchased mortgage servicing rights.
Although the rights to service loans can be sold in the secondary market to
generate additional revenue, the Company did not sell loan servicing rights
during 1996, 1995 or 1994.


                                      A-7
<PAGE>   27


NONINTEREST EXPENSE
--------------------------------------------------------------------------------
Noninterest expense totaled $12.0 million in 1996, compared to $10.4 million in
1995 and $10.4 million in 1994. The increase in 1996 is mainly attributable to
the one time nonrecurring charge associated with the recapitalization of the
SAIF which totaled $2.0 million. Excluding the nonrecurring SAIF assessment,
noninterest expense for 1996 would have totaled $10.0 million, a 3.6% reduction
from 1995. Other expenses increased to $2.3 million in 1996 from $2.1 million in
1995 and $1.9 million in 1994. The composition of other expenses is as follows:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                                  ------------------------
                                                  1996      1995      1994
                                                  ----      ----      ----
                                                        (In thousands)
<S>                                               <C>       <C>       <C>  
Business and management development               $ 114     $ 163     $ 113
Examination/audit expense                           190       224       245
OTS assessment                                       86        82        79
Postage                                             149       148       133
Supplies                                            126       114       159
Telephone                                           148       134       154
Franchise/sales tax                                 388       365       355
Director fees                                        98        92        90
Consulting fees                                     213        52        53
Legal fees                                          177       145        85
Provision for HUD indemnification claim             100         -         -
Recovery of credit loss - standby letter of credit (322)        -         -
Loss (gain) on sale of real estate owned             25        (2)     (150)
Provision for real estate owned losses               80        51         1
Miscellaneous expenses                              771       531       586
                                                 ------    ------    ------
                                                 $2,343    $2,099    $1,903
                                                 ======    ======    ======
</TABLE>

Other expenses increased $244,000 due to a $100,000 loss provision recorded in
connection with an indemnification claim, an increase of $161,000 in consulting
fees as a result of a recently completed revenue enhancement study, costs
incurred in connection with the establishment of a new retail banking facility,
and general increases in the prices of goods and services, partially offset by a
$322,000 recovery of a credit loss provision.

During the first quarter of 1996, the Housing and Urban Development ("HUD")
Mortgagee Review Board proposed that the Bank indemnify HUD for HUD/FHA
insurance claims and associated costs paid against insured properties affected
by the indictment and guilty plea of a former loan originator of the Bank on
charges of fraud relating to loan activities from 1991. A settlement of these
claims was reached under which the Bank paid $545,000 to HUD in July, 1996. The
Bank submitted a proof of loss to its insurer who, less the policy deductible,
reimbursed the Bank in the fourth quarter of 1996.

The Bank was a 19.6% participant in a standby letter of credit totaling $10.2
million. This standby letter of credit was issued to guarantee the payment of
principal and interest on multi-family housing revenue bonds, issued to finance
a 240-unit apartment complex in Stone Mountain, Georgia. The Bank had
outstanding commitments under this standby letter of credit of $2.1 million at
December 31, 1995 and a $322,000 liability for credit loss for this standby
letter of credit. On July 15, 1996, this standby letter of credit was called and
the entire $2.1 million plus interest was advanced. The property was sold in
August, 1996, and the Bank received $1.7 million in cash and a second mortgage
position for $416,000. Since there was no longer any commitment outstanding
under the letter of credit and the Bank did not suffer any loss on the
transaction, the $322,000 liability for credit loss was recognized as a
recovery.

INCOME TAXES
--------------------------------------------------------------------------------
The Company has provided $777,000 for federal income taxes in 1996, $1,020,000
in 1995 and $669,000 in 1994. Changes from year to year are primarily due to
changes in the level of pre-tax income. The 1994 provision reflects the receipt
of a favorable "no change" letter from the Internal Revenue Service regarding
the 1991 tax year, which allowed the Company to reduce its tax liabilities for
certain estimated contingent items. Refer to Note 13 in the consolidated
financial statements for additional analysis of the tax position of the Company.



                                      A-8
<PAGE>   28

REVIEW OF MAJOR ASSET PORTFOLIOS
--------------------------------------------------------------------------------
The Company's total assets decreased $7.6 million from $354.5 million at
December 31, 1995 to $346.9 million at December 31, 1996. Although loans
increased $10.2 million, other earning assets decreased $15.5 million. The
following table shows each individual asset category as a percent of total
assets.

<TABLE>
<CAPTION>
                                                           December 31,
                                        -----------------------------------------------
                                                  1996                    1995
                                        ------------------------  ---------------------
                                                    Percent of              Percent of
                                        Balance       Assets      Balance      Assets
                                        -------       ------      -------      ------
                                                     (Dollars in thousands)
<S>                                   <C>             <C>       <C>            <C>       
Due from banks-interest bearing        $   100            -      $    100          -
Federal funds sold                       2,822           .8%        4,396        1.2%
Investment securities                   33,990          9.8        47,184       13.3
Mortgage-backed securities               2,010           .6         2,754         .8
Loans-net                              293,792         84.7       283,560       80.0
                                      --------        -----      --------      -----
Total earning assets                   332,714         95.9       337,994       95.3
Cash                                     5,489          1.6         7,647        2.2
Premises and equipment                   4,176          1.2         3,953        1.1
Accrued interest and other assets         4477          1.3         4,911        1.4
                                      --------        -----      --------      -----
                                      $346,856        100.0%     $354,505      100.0%
                                      ========        =====      ========      ===== 
</TABLE>

The largest asset portfolio is loans. The following table reflects the
composition of the loan portfolio by type of loan at the dates indicated.


<TABLE>
<CAPTION>

                                                                       December 31,
                                               ----------------------------------------------------------
                                               1996        1995         1994          1993         1992
                                               ----        ----         ----          ----         ----

Real estate loans:                                                   (In thousands)
<S>                                         <C>          <C>          <C>           <C>          <C>     
 Conventional:
  One-to-four units                         $194,804     $194,894     $204,807      $174,250     $156,275
  Over four units                             14,254       12,551       10,354        12,516       12,528
 Construction:
  Residential                                  1,272        1,616        3,490         3,859        2,993
  Commercial                                   3,000            -            -           650          650
 Commercial real estate                       30,244       30,736       30,876        33,478       39,047
 Land                                          3,682        4,461        3,359         1,611          801
Consumer loans                                45,028       40,055       31,431        27,554       30,129
Business loans                                 6,720        4,758        1,673           999            -
                                            --------     --------     --------      --------     --------       
                                             299,004      289,071      285,990       254,917      242,423
                                            --------     --------     --------      --------     --------       
Less:
Undisbursed portion of loans in process       (1,293)      (1,711)      (2,640)       (3,594)      (3,019)
Unearned income on consumer loans                 (6)         (18)         (40)          (69)        (115)
Amount due other financial institutions
 relating to wrap-around mortgage loans         (114)        (145)        (175)         (297)        (472)
Net deferred loan fees                          (877)        (903)        (790)         (340)        (777)
Allowance for loan losses                     (2,922)      (2,734)      (2,665)       (2,612)      (1,721)
                                            --------     --------     --------      --------     --------       
                                              (5,212)      (5,511)      (6,310)       (6,912)      (6,104)
                                            --------     --------     --------      --------     --------       
Total loans held for investment             $293,792     $283,560     $279,680      $248,005     $236,319
                                            ========     ========     ========      ========     ========
Loans held for sale                         $      -     $      -     $      -      $ 13,386     $  7,750
                                            ========     ========     ========      ========     ========
</TABLE>

                                       A-9
<PAGE>   29


The following table shows the change in the Company's net loan portfolio,
including loans held for sale, for the periods indicated.


<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                               -----------------------------------------------------------
                                                 1996        1995        1994       1993           1992
                                                 ----        ----        ----       ----           ----
Loans originated:                                                         (In thousands)
<S>                                            <C>        <C>        <C>           <C>           <C>     
Real estate loans:
 Loans for purchase of existing property       $65,517    $63,262    $101,399     $ 173,931      $154,791
 Construction                                    3,322      1,211       5,916         6,845         5,429
Loans refinanced                                 7.171      7,587      12,372        19,163        18,942
                                               -------    -------    --------     ---------      -------- 
Total real estate loans originated              76,010     72,060     119,687       199,939       179,162
Business loans originated                        4,860      3,724         679         1,000             -
Other originations (1)                           3,691      3,523       3,266         3,443         3,507
                                               -------    -------    --------     ---------      -------- 
 Total loans originated                         84,561     79,307     123,632       204,382       182,669
Loans purchased                                 10,401        855         364           854         1,026
Loans sold                                           -          -     (23,717)      (79,600)      (73,671)
Loan principal payments                        (84,299)   (76,229)    (81,528)     (107,144)      (91,777)
Other decreases                                   (431)       (53)       (462)       (1,170)         (888)
                                               -------    -------    --------     ---------      -------- 
Change in net loan portfolio including
 loans held for sale                           $10,232    $ 3,880    $ 18,289     $  17,322      $ 17,359
                                               =======    =======    ========     =========      ========
-----------------------------
<FN>

(1)  Other loans consist of MasterCard, property improvement, student, and
     savings account loans.

</TABLE>

CREDIT RISK MANAGEMENT
--------------------------------------------------------------------------------
The Company has consistently maintained a conservative posture with respect to
credit risk. The Company has no investment securities that are less than
investment grade, no foreign loans, nor significant loan concentrations to any
one borrower; The Company's credit policies emphasize evaluation of a borrower's
financial condition before a loan is approved and close monitoring of loan
repayment after credit is extended. Most loan delinquencies that occur are
remedied within 90 days as a result of actions taken by the Company's collection
staff. If a mortgage loan delinquency exceeds 90 days, measures are instituted
to enforce collection, including the commencement of a foreclosure action. Loss
experience as a result of foreclosure with respect to residential loans
originated by the Company has historically been very low. See Note 1 and Note 6
to the Consolidated Financial Statements for additional information on impaired
loans and the Company's policies related to such loans.


Net charge-offs (recoveries) as a percentage of average loans by portfolio type
are shown in the following table:

<TABLE>
<CAPTION>
                                            Year Ended December 31,
                                 -------------------------------------------
                                  1996     1995     1994      1993     1992
                                  ----     ----     ----      ----     ----
<S>                             <C>        <C>      <C>      <C>       <C>  
Residential real estate         (.002)%    .004%    .002%    (.007)%   .012%
Commercial real estate              -         -        -         -    1.918%
Business                          .412%       -        -         -
Consumer                          .236%    .114%    .126%      .054%   .080%
Net charge-offs/
 average loans outstanding        .042%    .019%    .016%      .002%   .380%
</TABLE>


                                      A-10
<PAGE>   30


The table below sets forth the amounts and categories of risk elements in the
loan portfolio. For all years presented, there has been no troubled debt
restructuring which involved forgiving a portion of interest or principal on any
loans or making loans at rates materially less than market rates. Repossessed
assets include assets acquired in settlement of loans. See Note 1 to the
Consolidated Financial Statements for a discussion of the Company's policy for
classifying loans as nonperforming.

<TABLE>
<CAPTION>
                                                                       December 31,
                                                  ------------------------------------------------------
                                                   1996       1995        1994        1993       1992
                                                   ----       ----        ----        ----       ----
                                                                      (Dollars in thousands) 
<S>                                              <C>         <C>         <C>         <C>         <C>   
Non-accruing loans:
 Residential real estate                         $  773      $1,002      $1,091      $  591      $1,093
 Commercial real estate                             514          99         170           -         582
 Business                                         1,170           -           -           -           -
 Consumer                                           240         202          54         280         273
                                                 ------      ------      ------      ------      ------
  Total                                           2,697       1,303       1,315         871       1,948
                                                 ------      ------      ------      ------      ------

Accruing loans delinquent more than 90 days:
 Residential real estate                              -           -           -           -           -
 Commercial real estate                               -           -           -           -           -
 Business               
 Consumer                                             5          21          44          11          13
                                                 ------      ------      ------      ------      ------
  Total                                               5          21          44          11          13
                                                 ------      ------      ------      ------      ------
Total nonperforming loans                         2,702       1,324       1,359         882       1,961
                                                 ------      ------      ------      ------      ------

Repossessed assets:
 Residential real estate                              -         197         695         567         208
 Commercial real estate                               -         540           -         103         922
 Business                                             -           -           -           -           -
 Consumer                                             -           -           -           -           -
                                                 ------      ------      ------      ------      ------
  Total                                               -         737         695         670       1,130
                                                 ------      ------      ------      ------      ------
Total nonperforming assets                       $2,702      $2,061      $2,054      $1,552      $3,091
                                                 ======      ======      ======      ======      ======

Nonperforming loans as a percent of
 total loans                                        .90%        .46%        .48%        .35%        .81%
                                                    ===         ===         ===         ===         === 

Nonperforming assets as a percent of
 total assets                                       .78%        .58%        .65%        .50%        .97%
                                                    ===         ===         ===         ===         === 
</TABLE>


The loans included above are secured by real estate or other collateral which
limits the Company's exposure to loss. At December 31, 1996, there were no
commitments to lend additional funds to borrowers with nonperforming loans. As
of December 31, 1996, there were no concentrations of loans in any types of
industries which exceeded 10% of the total loans that are not included as a loan
category in the table above.

In addition to the loans disclosed in the table above, the Company's Banking
subsidiary has a $1.0 million loan secured by a strip shopping center located in
Northeast Ohio. The shopping center has experienced higher-than-expected
vacancies, and the cash flow from the property has not been sufficient to meet
the principal and interest due on the loan. The borrower has maintained the loan
current throughout 1996. The borrower is working to cure the vacancies; however,
continued high vacancies and cash flow shortages could cause management to place
this loan on nonaccrual status.


                                      A-l1
<PAGE>   31

The ratio of nonperforming loans to total loans increased from December 31, 1995
to December 31, 1996. This increase is primarily due to a business loan being
placed on nonaccrual status. The Bank is working with the customer to cure this
delinquency.

The ratio of nonperforming loans to total loans decreased significantly from
December 31, 1992 to December 31, 1993. This improvement resulted mainly from 
the increased effectiveness of the Company's collections efforts. Repossessed 
assets also decreased significantly during 1993, as a commercial property with a
carrying value of $573,000 was disposed of. The improvement in the ratio of
nonperforming assets to total assets from December 31, 1992 to December 31, 1993
reflects both the increased effectiveness of the Company's collections efforts
and the successful disposal of its largest foreclosed property.

A summary of the potential income from nonperforming loans based on their
original terms, the actual interest income recorded and the interest foregone
is set forth below:

<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                         ---------------------------------------
                                         1996     1995     1994    1993     1992
                                         ----     ----     ----    ----     ----
                                                        (In thousands)

<S>                                       <C>     <C>      <C>      <C>     <C> 
Income potential based on original terms  $81     $131     $130     $99     $191
Income recorded                             -        -        -       -        1
                                          ---     ----     ----     ---     ----
Interest foregone                         $81     $131     $130     $99     $190
                                          ===     ====     ====     ===     ====

Activity in the loan loss allowance over the past five years is presented below.

                                                                 Year Ended December 31,
                                              ----------------------------------------------------------------------
                                              1996          1995             1994           1993            1992
                                              ----          ----             ----           ----            ----
                                                                (Dollars in thousands)
<S>                                      <C>             <C>             <C>             <C>             <C>      
Balance at beginning of year             $   2,734       $   2,665       $   2,612       $   1,721       $   1,839
Provision for loan losses                      309             123              97             897             750
Charge-offs:
 Residential real estate                        (1)             (8)             (4)              -             (27)
 Commercial real estate                          -               -               -               -            (824)
 Business                                      (16)              -               -               -
 Consumer                                     (128)            (52)            (40)            (18)            (26)
                                         ---------       ---------       ---------       ---------       ---------
Total charge-offs                             (145)            (60)            (44)            (18)           (877)
                                         ---------       ---------       ---------       ---------       ---------
Recoveries:
 Residential real estate                         5               -               -              12               9
 Commercial real estate                          -               -               -               -               -
 Business                                        -               -               -               -               -
 Consumer                                       19               6               -               -               -
                                         ---------       ---------       ---------       ---------       ---------
Total recoveries                                24               6               -              12               9
                                         ---------       ---------       ---------       ---------       ---------
Net (charge-offs) recoveries                  (121)            (54)            (44)             (6)           (868)
                                         ---------       ---------       ---------       ---------       ---------
Balance at end of year                   $   2,922       $   2,734       $   2,665       $   2,612       $   1,721
                                         =========       =========       =========       =========       =========
Average loans                            $ 290,294       $ 284,385       $ 273,927       $ 255,661       $ 228,417
Loans at end of period                     299,004         289,071         285,990         254,918         242,423

Allowance/average loans                       1.01%            .96%            .97%           1.02%            .75%
Allowance/end-of-period loans                  .98%            .95%            .93%           1.02%            .71%
Net charge-offs/allowance                     4.14%           1.98%           1.65%            .23%          50.44%
Net charge-offs/provision for
 loan losses                                 39.16%           3.90%          45.36%            .67%         115.73%
Allowance/nonperforming loans               108.14%         206.50%         196.10%         296.15%          87.76%
Allowance/nonperforming assets              108.14%         132.65%         129.75%         168.30%          55.68%
</TABLE>


                                      A-12
<PAGE>   32

An allocation of the ending allowance for loan losses by major loan type
follows:

<TABLE>
<CAPTION>
                                                  December 31,
                              --------------------------------------------------
                                1996      1995       1994        1993      1992
                                ----      ----       ----        ----      ----
                                                 (In thousands)
<S>                           <C>        <C>        <C>        <C>        <C>   
Residential real estate       $1,353     $1,251     $1,293     $  935     $  510
Commercial real estate           729        665        643        684       1,00
Business                         274         87          -          -          -
Consumer                         206        179        143        114        184
Unallocated                      360        552        586        879         18
                              ------     ------     ------     ------     ------
                              $2,922     $2,734     $2,665     $2,612     $1,721
                              ======     ======     ======     ======     ======
</TABLE>

The above allocation is made for analytical purposes. General reserves are
available to absorb losses from any segment of the portfolio.

The amount of the allowance for loan losses is based on management's analysis
of risks inherent in the various segments of the loan portfolio, management's
assessment of known or potential problem credits which have come to management's
attention during the ongoing analysis of credit quality, historical loss
experience, current economic conditions and other factors. If actual
circumstances and losses differ substantially from management' 5 assumptions and
estimates, such allowance for loan losses may not be sufficient to absorb all
future losses, and net earnings could be significantly and adversely affected.
Loan loss estimates are reviewed periodically, and adjustments, if any, are
reported in earnings in the period in which they become known. In addition, the
Company maintains a portion of the allowance to cover potential losses inherent
in the portfolio which have not been specifically identified.

Although management believes that it uses the best information available to make
such determinations and that the allowance for loan losses is adequate at
December 31, 1996, future adjustments to reserves may be necessary, and net
income could be significantly affected, if circumstances and/or economic
conditions differ substantially from the assumptions used in making the initial
determinations. Any downturn in the Ohio real estate market could result in the
Company experiencing increased levels of nonperforming assets and charge-offs,
significant provisions for loan losses and significant reductions in income.
Additionally, various regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowance for loan
losses. Such agencies may require the recognition of additions to the allowance
based on their judgments of information available to them at the time of their
examination.


DEPOSITS
--------------------------------------------------------------------------------
The Company's deposits decreased $38.7 million from $317.8 million at December
31, 1995 to $279.1 million at December 31, 1996. The Company had no brokered
deposits at December 31, 1996, 1995 and 1994. The following table sets forth the
distribution of deposits at the dates indicated.

<TABLE>
<CAPTION>
                                         December 31 1996       December 31, 1995     December 31, 1994
                                         ----------------       -----------------     -----------------
                                                     %of                   %of                     %of
                                        Balance    Deposits   Balance    Deposits    Balance    Deposits
                                        -------    --------   -------    --------    -------    --------
                                                            (Dollars in thousands)

<S>                                     <C>            <C>    <C>            <C>    <C>            <C> 
Noninterest-bearing NOW accounts        $ 7,115        2.5%   $ 11,072       3.5%   $ 11,286       4.0%
NOW accounts                             17,188        6.2      13,804       4.3      14,344       5.1
Passbook/statement accounts              39,305       14.1      45,564      14.3      56,533      20.2
Money market fund accounts               62,263       22.3      53,876      17.0      36,342      13.1
                                       --------      -----    --------     -----    --------     -----
Total non-certificate accounts          125,871       45.1     124,316      39.1     118,505      42.4
                                       --------      -----    --------     -----    --------     -----
Certificate accounts:
 Time deposits ($100,000 and over)       10,860        3.9       7,825       2.5       7,792       2.8
 7-31 day accounts                           27        -            27       -            47       -
 32-91 day accounts                       1,162         .4       1,312        .4         920        .3
 92-182 day accounts                      9,643        4.5      14,178       4.5      14,348       5.2
 Greater than 6 months through 1
  year accounts                          42,786       17.0      54,131      17.0      33,294      11.9
 Greater than 1 year to 2 1/2 year
  accounts                               29,187       13.5      42,974      13.5      53,229      19.1
 2 1/2 year and over accounts            59,537       23.0      73,016      23.0      51,134      18.3
                                       --------      -----    --------     -----    --------     -----
Total certificate accounts              153,202       54.9     193,463      60.9     160,764      57.6
                                       --------      -----    --------     -----    --------     -----
 Total deposits                        $279,073      100.0%   $317,779     100.0%   $279,269     100.0%
                                       ========      =====    ========     =====    ========     ===== 
</TABLE>

                                      A-13

<PAGE>   33

The following table provides the maturity distribution of time deposits in
amounts of $100,000 or more at December 31,1996,1995 and 1994.

<TABLE>
<CAPTION>
                                                          December 31,
                                                1996        1995          1994
                                                ----        ----          ----
                                                       (In thousands)
<S>                                         <C>            <C>          <C>   

Time remaining to maturity:
Three months or less                         $ 3,445        $2,771       $3,015
Three through six months                       2,696         1,000          901
Six through twelve months                      2,168         1,100          723
Over twelve months                             2,551         2,954        3,153
                                               -----         -----        -----
Total                                        $10,860        $7,825       $7,792
                                             =======        ======       ======
</TABLE>


CAPITAL AND DIVIDENDS
--------------------------------------------------------------------------------
Federal regulations prescribe three separate regulatory capital requirements for
savings associations: (i) a risk-based capital requirement, (ii) a leverage
limit (core capital requirement), and (iii) a tangible capital requirement.
Under the risk-based requirement, assets are risk-weighted from 0% to 100% with
cash and other non-risk assets requiring no risk weighting, certain
mortgage-backed securities 20%, qualifying (borne) mortgage loans 50% and
commercial loans, other non-residential loans and real estate owned 100%. The
risk-based regulation requires that risk-based capital be maintained in an
amount equal to at least 8% of risk-weighted assets. The leverage limit requires
that core capital, which is generally defined as shareholders' equity minus
non-qualifying intangible assets, be maintained in an amount not less than 3% of
adjusted total assets. Under the tangible capital requirement, tangible capital,
defined as core capital minus all intangible assets (other than a limited amount
of purchased mortgage servicing rights), must be maintained in an amount equal
to at least 1.5% of adjusted total assets. The Company's Banking subsidiary was
in compliance with these regulatory capital regulations on December 31, 1996 and
1995. See note 12 to the Consolidated Financial Statements.

At December 31, 1996, shareholders' equity totaled $28.4 million, an increase of
$294,000 over year-end 1995. The primary sources of this increase was the
retention of earnings.

Dividends have been increased each year since 1985, and amounted to $.54 per
share in 1996 for a dividend payout ratio of 68.35%. This increase reflects the
Company's policy of seeking to ensure a dividend return to its shareholders that
is reflective of the Company's capital position and earnings growth.


LIQUIDITY
--------------------------------------------------------------------------------
The Company's liquidity is a measure of its ability to fund loans, withdrawals
of deposits and other cash outflows in a cost-effective manner. Deposits,
scheduled amortization and prepayments of loan principal, maturities of
investment securities and mortgage-backed securities, borrowings, and funds
provided by operations are the principal sources of funds. While loan payments
and maturing investment and mortgage-backed securities are relatively
predictable sources of funds, deposit flows and loan prepayments are greatly
influenced by general interest rates, economic conditions and competition.

As presented in the Consolidated Statements of Cash Flows, operating activities,
including net income, generally provide cash.

The primary investing activity during each period was lending. New loan
originations were funded by significant principal repayments and maturities on
loans and investment securities, which totaled $110.3 million in 1996, $95.6
million in 1995 and $85.9 million in 1994).

Under financing activities, cash was used in 1996 primarily to fund a net
decrease in certificate of deposit accounts, while cash was provided by
borrowings. In 1995 and 1994, funds were provided by net increases in
certificate of deposit accounts.

Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments. If
the Company requires funds beyond its ability to generate them internally,
borrowing agreements exist with the Federal Home Loan Bank of Cincinnati (the
"FHLB"), which provide an additional source of funds. Under these borrowing
agreements, the maximum level of advances available is generally limited to


                                      A-14

<PAGE>   34


25% of the Company's Banking subsidiary's total assets; however, the FHLB may
approve advances in excess of this limit based upon the Bank meeting all of its
regulatory capital requirements. At December 31, 1996, the Company had $30.0
million in outstanding borrowings from the FHLB.

Currently, the Company anticipates that it will have sufficient funds to meet
its existing loan commitments. At December 31, 1996, the commitments to
borrowers for unused lines of credit and to originate loans totaled $75.5
million. Certificates of deposit which were scheduled to mature in one year or
less at December 31, 1996 totaled $95.4 million.

As a member of the FHLB, the Company's Banking subsidiary is required to
maintain specific levels of "liquid" investments. Regulations currently in
effect require liquid assets of not less than 5% of net withdrawable accounts
plus short-term borrowings to assure that demands for repayment of debt and
withdrawals are met. This requirement may be changed from time to time to
reflect current economic conditions. The Company's Banking subsidiary was in
compliance with these regulations at December 31, 1996 and anticipates remaining
in compliance. It is the intention of the Company's cash management efforts to
keep liquidity levels within regulatory guidelines, but at minimal levels in
order to maximize interest income from investing in loans versus lower yielding
short-term investment securities.

In June, 1996, the Company renewed a one-year secured revolving credit facility
from a third-party lender in the amount of $l.0 million. The interest rate
associated with this credit facility is based on the prime rate. The Company has
not drawn on this credit facility.


IMPACT OF INFLATION AND CHANGING PRICES
--------------------------------------------------------------------------------
The consolidated financial statements and related data contained herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars. Changes in the relative purchasing power of money over time
due to inflation are not recognized in the financial statements.

Unlike most industrial companies, substantially all the assets and liabilities
of a financial institution are monetary in nature. As a result, interest rate
fluctuations generally have a more significant and direct impact on a financial
institution's performance than do the effects of inflation. To the extent
inflation affects interest rates, real estate values and other costs, the
Company's lending activities are impacted. Changes in inflation may cause
changes in interest rates. Significant increases in interest rates make it more
difficult for potential borrowers to qualify for business and mortgage loans. As
a result, the volume and related income on loan originations may be reduced.
Significant decreases in interest rates may result in higher loan prepayment
activity, although such conditions may enable potential borrowers to qualify for
a relatively high mortgage loan balance.


FOURTH QUARTER RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
The Company's net income for the three months ended December 31, 1996 was
$830,000 or $.43 per share compared with $699,000 or $.37 per share for the
three months ended December 31, 1995. The 18.7% increase in 1996 compared to 
1995 was due to an increase in net interest income to $3,155,000 for the three 
months ended December 31, 1996, compared to $2,952,000 for the three months     
ended December 31, 1995 resulting from an improvement in the spread between 
the ratio of interest-earning assets to total assets and the ratio of
interest-bearing liabilities to total liabilities. In addition, noninterest
income for the fourth quarter of 1996 decreased $318,000 over the fourth
quarter of 1995, due mainly to the gain on the sale of the Bank's Madison
Avenue office in December 1995. Noninterest expense decreased $488,000 or 18.3%
compared to the same period in 1995, principally due to an insurance recovery
received in the fourth quarter of 1996.


                                      A-15
<PAGE>   35

QUARTERLY FINANCIAL DATA (UNAUDITED)
--------------------------------------------------------------------------------
The following is a summary of selected quarterly financial data for the periods
indicated.
<TABLE>
<CAPTION>


                                                           1996
                                      ------------------------------------------
                                       First     Second      Third        Fourth
                                      Quarter    Quarter    Quarter(1)   Quarter
                                      -------    -------    -------      -------
                                          (In thousands, except per share data)

<S>                                    <C>        <C>        <C>          <C>   
Interest income                        $6,869     $6,694     $ 6,806      $6,923
Net interest income                     3,065      3,193       3,137       3,155
Provision for loan losses                  34         34          34         207
Noninterest income                        521        462         534         488
Noninterest expense                     2,585      2,651       4,547       2,179
Net income (loss)                         638        640        (601)        830
Net income (loss) per share            $  .34     $  .33       $(.31)     $  .43
---------------------
<FN>

(1)  Included in noninterest expense is a one-time, nonrecurring charge
     associated with the recapitalization of the Savings Association Insurance
     Fund ("SAIF") in the amount of $1,962. Excluding the nonrecurring SAIF
     assessment, earnings for the third quarter of 1996 totaled $693 or $.37 per
     share.
</FN>

                                                            1995
                                      ------------------------------------------
                                       First     Second      Third      Fourth
                                      Quarter    Quarter     Quarter    Quarter
                                      -------    -------     -------    -------
                                         (In thousands, except per share data)

Interest income                       $5,953      $6,666      $6,873      $7,013
Net interest income                    2,787       2,817       2,754       2,952
Provision for loan losses                 31          30          30          32
Noninterest income                       478         472         448         806
Noninterest expense                    2,667       2,577       2,465       2,667
Net income                               374         453         469         699
Net income per share                  $  .20      $  .24      $  .25      $  .37

</TABLE>





                                      A-16
<PAGE>   36

                              REPORT OF MANAGEMENT


The management of Haverfield Corporation is responsible for the preparation,
content and integrity of the financial statements and related information
contained in Appendix A to the Proxy Statement. The financial statements have
been prepared in accordance with generally accepted accounting principles and,
as such, include amounts based on informed judgments and estimates made by
management.

The management of Haverfield Corporation is also responsible for maintaining a
system of internal controls designed to provide reasonable assurance as to the
protection of assets and integrity of financial statements. This system of
controls includes written policies and procedures including a code of conduct to
foster a strong ethical climate, proper delegation of authority and
organizational division of responsibility and the careful selection and training
of qualified personnel. In addition, an effective internal audit function
periodically tests the system of internal controls. Management believes that the
system of internal controls provides reasonable assurance that financial
transactions are recorded properly to permit the preparation of reliable
financial statements. The system contains monitoring mechanisms, and actions are
taken to correct deficiencies identified.

There are inherent limitations in the effectiveness of any system of internal
control, including the possibility of human error and the circumvention or
overriding of controls. Accordingly, even an effective internal control system
can provide only reasonable assurance with respect to financial statement
preparation. Further, because of changes in conditions, the effectiveness of an
internal control system may vary over time.

The accounting policies and system of internal controls, including the
recommendation of the independent auditors, are under the general oversight of
the Board of Directors, acting through the Audit Committee. The Auditor of
Haverfield Corporation, who reports directly to the Audit Committee, conducts an
extensive program of audits and risk asset reviews that tests the system of
internal controls. The Audit Committee meets periodically with management, the
independent auditors, and the internal auditors to ensure that they are carrying
out their responsibilities. The Audit Committee is also responsible for
performing an oversight role by reviewing and monitoring the financial,
accounting and auditing procedures of Haverfield Corporation in addition to
reviewing the financial reports. The independent auditors and the internal
auditors have full and free access to the Audit Committee, with or without the
presence of management, to discuss the adequacy of the internal control
structure for financial reporting and any other matters which they believe
should be brought to the attention of the Audit Committee.


William A. Valerian                          Richard C. Ebner
President and Chief Executive Officer        Executive Vice President, Chief
                                             Operating Officer, Chief Financial
                                             Officer and Treasurer



                                      A-17
<PAGE>   37

                         REPORT OF INDEPENDENT AUDITORS


The Shareholders and Board of Directors
Haverfield Corporation



We have audited the accompanying consolidated statements of financial condition
of Haverfield Corporation and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of Haverfield's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Haverfield Corporation and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.



/s/ Deloitte & Touche LLP
-------------------------

Cleveland, Ohio
January 28, 1997


                                      A-18
<PAGE>   38

                             HAVERFIELD CORPORATION
                 Consolidated Statements of Financial Condition
                 (Dollars in thousands, except per share data)
================================================================================
<TABLE>
<CAPTION>


                                                                        December 31,
                                                                   -----------------------
                                                                      1996          1995
                                                                   -----------------------
<S>                                                                 <C>           <C>    
ASSETS
Cash and due from banks                                             $ 5,489       $ 7,647
Due from banks - interest bearing                                       100           100
Federal funds sold                                                    2,822         4,396    
Investment securities:
 Available for sale, at fair value (Amortized cost of $34,367
  in 1996 and $47,034 in 1995)                                        33,990       47,184
Mortgage-backed securities:
 Available for sale, at fair value (Amortized cost of $1,937
  in 1996 and $2,672 in 1995)                                          2,010        2,754
Loans (net of allowance for loan losses of $2,922 in 1996
 and S2,734 in 1995)                                                 293,792      283,560
Premises and equipment                                                 4,176        3,953
Accrued interest and other assets                                      4,477        4,911
                                                                    --------     --------
Total                                                               $346,856     $354,505
                                                                    ========     ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
 Deposits:           
  Passbook/statement accounts                                       $ 39,305     $ 45,564
  Noninterest-bearing NOW accounts                                     7,115       11,072
  Interest-bearing NOW accounts                                       17,188       13,804
  Money market fund accounts                                          62,263       53,876
  Certificates of deposit                                            153,202      193,463
                                                                    --------     --------
  Total deposits                                                     279,073      317,779
 Advances from Federal Home Loan Bank                                 30,000            -
 Advances by borrowers for taxes and insurance                         6,207        5,740
 Accrued interest and other liabilities                                3,224        2,928
                                                                    --------     --------
Total liabilities                                                    318,504      326,447
                                                                    --------     --------

Shareholders' Equity:
 Preferred stock; 1,000,000 shares authorized; 
  none issued                                                              -            -
 Common stock, par value $.01 per share; 5,000,000 
  shares authorized; issued: 1,915,892 shares in 1996 
  and 1,894,475 shares in 1995                                            19           19
 Capital in excess of par value                                       16,510       16,353
 Retained earnings                                                    12,146       11,669
 Net unrealized appreciation
  (depreciation) in the fair value of securities
  (net of tax of $(103) in 1996 and $79 in 1995)                        (201)         153
 Common shares in treasury, at cost (9,543 shares in 1996 and
   11,790 shares in 1995)                                               (122)        (136)
                                                                    --------     --------
Total shareholders' equity                                            28,352       28,058
                                                                    --------     --------
Total                                                               $346,856     $354,505
                                                                    ========     ========

<FN>

See notes to consolidated financial statements.
</TABLE>


                                      A-19
<PAGE>   39

                             HAVERFIELD CORPORATION
                       Consolidated Statements of Income
                 (Dollars in thousands, except per share data)
================================================================================

<TABLE>
<CAPTION>
                                              Year Ended December 31,
                                      -------------------------------------
                                         1996            1995         1994
                                         ----            ----         ----
<S>                                    <C>             <C>          <C>    
INTEREST INCOME
Loans                                  $24,529         $23,313      $20,472
Investment securities and other          2,572           2,952        1,011
Mortgage-backed securities                 191             240          301
                                       -------         -------      -------
Total interest income                   27,292          26,505       21,784
                                       -------         -------      -------

INTEREST EXPENSE
Deposits                                13,932          15,138       10,614
Advances from Federal Home Loan Bank       810              57          213
Long-term borrowings                         -               -          230
                                       -------         -------      -------
 Total interest expense                 14,742          15,195       11,057
                                       -------         -------      -------
Net interest income                     12,550          11,310       10,727
Provision for loan losses                  309             123           97
                                       -------         -------      -------
Net interest income after
 provision for loan losses              12,241          11,187       10,630
                                       -------         -------      -------

NONINTEREST INCOME
Service fees and other charges           1,288           1,184          971
Servicing income                           454             536          634
Gain on sale of loans                        -               -           80
Other income                               263             484          475
                                       -------         -------      -------
 Total noninterest income                2,005           2,204        2,160
                                       -------         -------      -------

NONINTEREST EXPENSE
Employee compensation and benefits       3,810           3,965        4,280
Occupancy and equipment                  2,077           1,896        1,992
Advertising                                454             477          374
Insurance premiums                       2,739             761          718
Amortization of intangibles                189             827          808
Data processing fees                       350             351          346
Other expenses                           2,343           2,099        1,903
                                       -------         -------      -------
        Total noninterest expense       11,962          10,376       10,421
                                       -------         -------      -------
Income before income taxes               2,284           3,015        2,369
Provision for income taxes                 777            1020          669
                                       -------         -------      -------
Net income                             $ 1,507         $ 1,995      $ 1,700
                                       =======         =======      =======
EARNINGS PER COMMON SHARE
Primary                                $   .79         $  1.06      $  1.03
                                       =======         =======      =======
Fully diluted                          $   .79         $  1.06      $   .96
                                       =======         =======      =======


<FN>

See notes to consolidated financial statements.
</TABLE>


                                      A-20
<PAGE>   40

<TABLE>
<CAPTION>


                             HAVERFIELD CORPORATION
                     Consolidated Statements of Cash Flows
                             (Dollars in thousands)
                                                                   Year Ended December 31,
                                                             ---------------------------------
                                                               1996        1995         1994
                                                               ----        ----         ----
<S>                                                          <C>         <C>          <C>    
OPERATING ACTIVITIES:
Net income                                                    $ 1,507    $ 1,995     $ 1,700
Adjustments to reconcile net income to net cash provided
 by operating activities:
 Provision for loan losses                                        309        123          97
 Net gain on sale of loans                                          -          -         (80)
 Net gain on sale of premises and equipment                        (1)      (309)         (3)
 Amortization of intangibles                                      189        827         808
 Depreciation                                                     721        782         803
 Amortization of deferred loan fees                              (249)      (167)       (188)
 Provision for deferred taxes                                     233        (69)       (192)
 Federal Home Loan Bank stock dividends                          (188)      (169)       (129)
 Net change in other assets and other liabilities                (415)       390      (4,374)
 Net change in accrued interest receivable and accrued
  interest payable                                                307       (981)       (405)
 Proceeds from sale of loans originated for resale                  -     23,797
 Disbursements on loans originated for resale                       -    (12,784)
 Other                                                             57       (232)       (574)
                                                             --------   --------   ---------
  Net cash provided by operating activities                     2,470      2,190       8,476
                                                             --------   --------   ---------

INVESTING ACTIVITIES:
Disbursements on loans originated                             (84,562)   (79,307)   (110,460)
Proceeds from:
 Loan repayments and maturities                                84,299     76,229      81,528
 Mortgage-backed security repayments and maturities               732        450       2,580
 Investment security calls and maturities                      26,000     19,400       4,405
 Sale of premises and equipment                                     5        464           3
 Sale of real estate owned                                        617          2         456
Purchases of:
 Loans                                                        (10,401)      (855)       (364)
 Investment securities                                        (13,097)   (54,514)     (7,375)
 Premises and equipment                                          (953)      (570)     (1,066)
Decrease in due from banks - interest bearing                     100      1,100
Decrease in federal funds sold                                  1,575      2,504      12,300
Net cash and cash equivalents received in connection with
 the acquisition of certain assets and liabilities of other
 financial institutions                                             -          -       3,832
Other                                                             254         83         165
                                                             --------   --------   ---------
        Net cash provided by (used in) investing activities     4,469    (36,014)    (12,896)      
                                                             --------   --------   ---------

FINANCING ACTIVITIES:
Net increase (decrease) in passbook/statement, NOW,
 and money market fund accounts                                 1,555      5,811     (12,180)
Net increase (decrease) in certificates of deposit            (40,260)    32,698      19,329
Net increase (decrease) in mortgage escrow deposits               467       (295)         62
Proceeds from exercise of stock options                           175         16          23
Proceeds from borrowings                                       41,000          -           -
Repayments of borrowings                                      (11,000)    (2,016)       (387)
Payment of cash dividends                                      (1,030)      (975)       (858)
Purchase of treasury shares                                        (4)       (63)         (7)
                                                             --------   --------   ---------
  Net cash provided by (used in) financing activities          (9,097)    35,176       5,982
                                                             --------   --------   ---------
Net increase (decrease) in cash and due from banks             (2,158)     1,352       1,562
Cash and due from banks at beginning of year                    7,647      6.295       4,733
                                                             --------   --------   ---------
Cash and due from banks at end of year                       $  5,489   $  7,647   $   6,295
                                                             ========   ========   =========

<FN>


See notes to consolidated financial statements.

</TABLE>

                                      A-21

<PAGE>   41

                             HAVERFIELD CORPORATION
                Consolidated Statements of Shareholders' Equity
                 (Dollars in thousands, except per share data)

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


<TABLE>
<CAPTION>
                                                                           Net
                                                   Capital             Unrealized    Borrowings
                                                     in                Appreciation     of
                                                   Excess             (Depreciation)  Employee   Common
                                                     of                 in the Fair    Stock     Shares     Total
                                          Common    Par     Retained      Value of   Ownership    in     Shareholders'
                                          Stock     Value   Earnings     Securities    Plan     Treasury    Equity
                                          -----     -----   --------     ----------    ----     --------    ------
<S>                                      <C>       <C>        <C>         <C>          <C>       <C>        <C>    
BALANCE, JANUARY 1, 1994                 $   14    $10,097    $12,323     $ 219        $ (106)    $ (37)  $  22,510
Net income                                                      1,700                                         1,700
Issuance of 2,200 common shares upon
 exercise of stock options                              23                                                       23
Issuance of 268,157 common shares
 upon redemption of convertible
 subordinated debt                            3      3,703                                                    3,706
Net unrealized depreciation in the
 fair value of securities                                                  (283)                               (283)
Dividends paid - $.51  per share                                 (858)                                         (858)
Purchase of 2,029 treasury shares                                                                   (36)        (36)
Repayments of borrowings of ESOP                                                          106                   106
                                         ------    -------    -------     -----        ------     -----   ---------
BALANCE, DECEMBER 31, 1994                   17     13,823     13,165       (64)            -       (73)     26,868
Net income                                                      1,995                                         1,995
Issuance of 172,030 shares as a
 10% stock dividend                           2      2,514     (2,516)                                            -
Issuance of 2,310 common shares upon
 exercise of stock options                              16                                                       16
Net unrealized appreciation in the
 fair value of securities                                                   217                                 217
Dividends paid - $.52 per share                                  (975)                                         (975)
Purchase of 5,021 treasury shares                                                                   (63)        (63)
                                         ------    -------    -------     -----        ------     -----   ---------
BALANCE, DECEMBER 31, 1995                   19     16,353     11,669       153             -      (136)     28,058
Net income                                                      1,507                                         1,507
Issuance of 23,906 common shares upon
 exercise of stock options                             157                                           18         175
Net unrealized depreciation
 in the fair value of securities                                           (354)                               (354)
Dividends paid - $.54 per share                                (1,030)                                       (1,030)
Purchase of 242 treasury shares                                                                      (4)         (4)
                                         ------    -------    -------     -----        ------     -----   ---------
BALANCE, DECEMBER 31, 1996               $   19    $16,510    $12,146     $(201)       $     -    $(122)  $  28,352
                                         ======    =======    =======     =====        =======    =====   =========
</TABLE>




See notes to consolidated financial statements.


                                      A-22

<PAGE>   42


                   HAVERFIELD CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Haverfield Corporation ("Haverfield" or the
"Company") conform to generally accepted accounting principles and prevailing
practices within the banking and thrift industry. A summary of the more
significant policies follows:

NATURE OF OPERATIONS - Haverfield is a unitary savings and loan holding company
whose principal operating subsidiary is Home Bank, F.S.B. ("Banking subsidiary"
or the "Bank"). Effective February 23, 1995, the Bank changed its corporate name
from "Home Federal Savings Bank, Northern Ohio" to Home Bank, F.S.B. The Company
is principally engaged in the business of attracting deposits from the general
public and using such deposits, together with borrowings and other funds, to
make loans secured by real estate, various types of consumer loans and
commercial loans in its market area. The Company's principal market area
consists of suburban communities of Cleveland, and the Company's business is
conducted through its corporate office located in Cleveland, Ohio and ten branch
offices located in Beachwood, Brooklyn, Cleveland, Euclid, Lakewood, Mayfield
Village, Mentor, Rocky River, University Heights, and Westlake, Ohio. Loans and
deposits are primarily generated from the areas where its banking offices are
located. The Company's income is derived predominately from interest on loans
and investments and, to a lesser extent, noninterest income. The Company's
principal expenses are interest paid on deposits and borrowings, and normal
operating costs. The Company's operations are principally in the savings
industry, which constitutes a single industry segment. The Bank's subsidiaries
engage in real estate development activities and investment counseling which are
not material to its operations as a whole and are not significant enough to
constitute a business segment.

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

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Company, the Bank, and its wholly-owned subsidiaries. All
material intercompany accounts and transactions have been eliminated. Certain
amounts previously reported in the prior years consolidated financial statements
have been reclassified to conform with the current presentation.

INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES - Securities are classified
as either trading, available for sale or held to maturity. Securities classified
as trading would be carried at estimated market value with the adjustment, if
any, reflected in the statement of income. Securities classified as available
for sale are also carried at estimated market value; however, the adjustment, if
any, is reflected in shareholders' equity. Securities held to maturity are
carried at amortized cost. Gains or losses on the sale of securities,
representing the difference between net proceeds and carrying value, are
recorded in noninterest income on the trade date using the specific
identification method.

Loans - At the time of origination or purchase, loans are classified as held for
sale or held for investment, based upon management's intent. Critical to the
proper classification of, and accounting for, loans held for investment is the
intent and ability to hold them to maturity. Loans held for sale are accounted
for at the lower of cost or market, with any unrealized loss included in income.
Loans held for investment are stated at the principal amount outstanding
adjusted for amortization of premiums and accretion of discounts using the
interest method. Interest is accrued as earned. Transfers of loans held for sale
to the investment portfolio are recorded at the lower of cost or market value on
the transfer date.

A loan is classified as nonaccrual when collectability is in doubt (this is
generally when the borrower is 90 days past due on contractual principal or
interest payments). A loan may be considered impaired, but remain on accrual
status, when the borrower demonstrates (by continuing to make payments) a
willingness to keep the loan current. When a loan is placed on nonaccrual
status, unpaid interest is reversed and an allowance is established by a charge
to interest income equal to all accrued interest. Income is subsequently
recognized only to the extent that cash payments are received.



                                      A-23

<PAGE>   43


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
===============================================================================


Loans are returned to accrual status when, in management's judgment, the
borrower has the ability and intent to make periodic principal and interest
payments (this generally requires that the loan be brought current in accordance
with its original contractual terms).

A loan is considered to be impaired when, based on current information and
events, it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement. In general, the Bank
considers a loan on income-producing properties to be impaired when the debt
service ratio is less than 1.0. Loans on non-income producing properties are
considered impaired whenever fair value is less than book value. The Bank
performs a review of all loans over $500,000 to determine if the impairment
criteria have been met. If the impairment criteria have been met, a reserve is
calculated. For loans which are individually not significant ($500,000 or less)
and represent homogeneous populations, the Bank evaluates impairment based on
the level and extent of delinquencies. Such loans include all mortgage loans
secured by 14 family residential property, all consumer loans, and certain
multi-family real estate loans, nonresidential real estate loans, business loans
and leases. The Bank charges principal off at the earlier of (1) when a total
loss of principal has been deemed to have occurred as a result of the book value
exceeding the fair value or net realizable value or (2) when collection efforts
have ceased.

NONPERFORMING LOANS - Loans considered to be nonperforming include nonaccrual,
accruing loans delinquent 90 days or more, and restructured loans. Loans are
classified as nonaccrual when, in management's judgment, the borrower no longer
has the ability and intent to make periodic interest and principal payments.
Loans are classified as accruing loans delinquent 90 days or more when the loan
is 90 days or more past due, is fully secured, and, in management's judgment,
the borrower has the ability and intent to make periodic interest and principal
payments. Loans are classified as restructured when concessions are made to
borrowers with respect to the principal balance, interest rate or the term due
to the inability of the borrower to meet the obligation under the original
terms.

LOAN FEES - Loan origination fees received for loans held for investment, net of
certain direct origination costs, are deferred and amortized to interest income
over the contractual life of the loan using the level yield method. Loan
origination fees received for loans held for sale, net of certain direct
origination costs, are deferred and recognized as an adjustment of the basis on
sale of the loans. Fees received for loan commitments that are expected to be
drawn, based on the Bank's experience with similar commitments, are deferred and
amortized over the life of the loan using the level yield method. Fees for other
loan commitments are deferred and amortized over the loan commitment period on a
straight-line basis. Unamortized deferred loan fees related to loans paid off
are included in interest income in the period the loan is paid off. Amortization
of net deferred fees is discontinued for loans that are deemed to be
nonperforming.

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is established at an
amount necessary to reduce the recorded balances of loans receivable to their
estimated net realizable value, and is increased by charges to income and
decreased by charge-offs (net of recoveries). The allowance for loan losses is
based on management's estimate of the value of the collateral, considering the
current and currently anticipated future operating or sales conditions, as well
as the Bank's past loan loss experience, known and inherent risks in the
portfolio, adverse situations which may affect the borrower's ability to repay,
and current economic conditions. Consequently, these estimates are particularly
susceptible to changes that could result in a material adjustment to results of
operations. Recovery of the carrying value of such loans is dependent on
economic, operating, and other conditions that are beyond the control of the
Company. In the opinion of management, the allowance for loan losses is recorded
in accordance with generally accepted accounting principles.

REAL ESTATE OWNED - Real estate owned consists of property acquired in
settlement of foreclosed loans. Real estate owned is carried at the lower of
fair value less estimated costs to sell or cost. Costs relating to the
development and improvement of property are capitalized, whereas those relating
to holding and maintaining the property are charged to expense. See Note 8 to
the consolidated financial statements.

PREMISES AND EQUIPMENT - Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation is computed using the
straight-line method over the useful lives of the related assets for financial
reporting purposes. For tax purposes, depreciation on certain assets is computed
using accelerated methods.


                                      A-24

<PAGE>   44

                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================

INTANGIBLE ASSETS - Cost in excess of fair value of net assets acquired is being
amortized to expense using the interest method over a period of three years. The
amortization periods for intangible assets are continually monitored to
determine if events and circumstances require such periods to be reduced.

FEDERAL INCOME TAXES - The Company and its subsidiaries file a consolidated
income tax return on a calendar-year basis. Deferred income taxes reflect the
temporary tax consequences on future years of differences between the tax and
financial statement basis of assets and liabilities at the balance sheet date.
On August 20, 1996, legislation was signed into law which repealed the
percentage of taxable income method tax bad debt deduction available for thrift
institutions. This repeal is effective for the Company's taxable year beginning
January 1, 1996. In addition, the legislation requires the Company to include in
taxable income its bad debt reserves in excess of its base year reserve over a
6-8 year period depending upon the maintenance of certain loan origination
levels. The recapture amount of $1.2 million will result in payments totalling
$400,000, which has previously been accrued. Since the percentage of taxable
income method tax bad debt deduction and the corresponding increase in the tax
bad debt reserve in excess of the base year have been treated as temporary
differences pursuant to Statement of Financial Accounting Standards ("SFAS") No.
109, this change in tax law will have no effect on the Company's future
consolidated statement of operations.

EARNINGS PER COMMON SHARE - Primary earnings per common share was computed using
the weighted average number of common shares outstanding for the period. The
weighted average shares used in the computation of primary earnings per common
share was 1,901,094 shares, 1,883,795 shares, and 1,662,019 shares during the
years ended December 31, 1996, 1995 and 1994, respectively.

Fully diluted earnings per common share was computed giving appropriate
consideration to the dilutive effect of stock options and, for 1994, shares
issuable upon conversion of the 6.50% Convertible Subordinated Debentures. In
computing fully diluted earnings per common share for 1994, net income has been
adjusted to eliminate interest expense associated with the debentures, net of
estimated income taxes.

CONSOLIDATED STATEMENTS OF CASH FLOWS - For purposes of reporting cash flows,
cash and cash equivalents include cash and due from banks. Federal Reserve Board
regulations require depository institutions to maintain certain minimum reserve
balances. Included in cash and demand deposits were required deposits at the
Federal Reserve of $685,000 and $658,000 at December 31, 1996 and 1995,
respectively.

Income tax payments of $1,100,000, 1,000,000 and $1,050,000 were made in 1996,
1995 and 1994, respectively. Interest paid on deposits and other borrowings
totaled $14,665,000, $15,270,000 and $11,211,000 in 1996, 1995 and 1994,
respectively. There were no mortgage loans exchanged for mortgage-backed
securities in 1996, 1995 or 1994. There were no transfers from loans to real
estate owned in 1996. Transfers from loans to real estate owned for 1995 and
1994) were $168,000 and $750,000, respectively. There were no loans made to
finance the sale of real estate owned during 1996 or 1995. Loans made to finance
the sale of real estate owned for 1994 totaled $388,000.

NEW ACCOUNTING STANDARDS - The Company maintains compensation plans which
provide for grants of stock options to officers. The Company currently follows
Accounting Principles Board Opinion No.25 ("Opinion 25"), Accounting for Stock
Issued to Employees in accounting for its plans. In October 1995, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 123 entitled Accounting for
Stock-Based Compensation which encourages, but does not require, companies to
use a fair value based method of accounting for stock-based employee
compensation plans. Under this method, compensation cost is measured as of the
date stock awards are granted based on the fair value rather than the intrinsic
value of the award, and such cost is recognized over the service period, which
is usually the vesting period. The Company has elected to continue using the
intrinsic value based method under Opinion 25. Pro forma disclosures of net
income, as if the fair value based method had been applied, have been included
in Note 14.

In June 1996, the FASB issued SFAS No. 125 Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. SFAS 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. Those standards are based
on consistent application of a financial-components approach that focuses on
control. Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes the financial


                                      A-25
<PAGE>   45


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================

assets when control has been surrendered, and derecognizes liabilities when
extinguished. This Statement provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. SFAS 125 is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after December 31, 1996, and
will be applied prospectively. The FASB has issued SFAS No. 127 that defers the
effective date of certain provisions of SFAS 125 related to secured borrowings
and collateral, repurchase agreements, dollar-rolls, securities lending, and
similar transactions until after December 31, 1997. Management intends to adopt
these statements when they become effective. The impact of adopting these
statements on the financial condition and results of operations of the Company
is not expected to be significant.


2. INVESTMENT SECURITIES
Amortized cost, estimated market values and weighted average end-of-period
yields of investment securities by contractual maturity are summarized as
follows:

<TABLE>
<CAPTION>

                                                             December 31,
                                    ----------------------------------------------------------------
                                                  1996                             1995
                                    ------------------------------   -------------------------------
                                    Amortized     Market             Amortized     Market
                                       Cost       Value      Yield    Cost         Value      Yield
                                    ------------------------------   -------------------------------
                                                         (Dollars in thousands)
<S>                                  <C>        <C>         <C>       <C>        <C>         <C>  
U.S. Government obligations:
 Due in 1 year or less                $ 2,497    $ 2,499     5.82%     $ 2,000    $ 2,016     5.81%
 Due after 1 year through 5 years       9,490      9,411     6.68%      23,977     24,055     6.81%
 Due after 5 years through 10 years    19,479     19,180     6.93%      18,443     18,499     6.97%
                                       ------     ------                ------     ------
Total                                  31,466     31,090     6.76%      44,420     44,570     6.83%
                                       ------     ------                ------     ------

Marketable equity securities              100         99     6.38%           -          -        -
Federal Home Loan Bank stock            2,801      2,801     7.00%       2,614      2,614     7.00%
                                       ------     ------                ------     ------
Total                                 $34,367    $33,990     6.78%     $47,034    $47,184     6.84%
                                       ======     ======                ======     ======
</TABLE>

All investment securities are classified as available for sale at December 31,
1996 and 1995. There were no sales of investment securities in 1996, 1995 or
1994. There were no obligations or investments of any one issuer, other than the
federal government or an agency of the federal government, with an aggregate
carrying value in excess of 10% of the Company's shareholders' equity at
December 31, 1996. The Company's Banking subsidiary, as a member of the Federal
Home Loan Bank system, is required to maintain an investment in capital stock of
the Federal Home Loan Bank in an amount equal to the greater of 1% of its
outstanding home loans or 5% of advances from the Federal Home Loan Bank. No
ready market exists for this stock, and it has no quoted market value. For
presentation purposes, such stock is assumed to have a market value which is
equal to the price at which it may be resold to the Federal Home Loan Bank. The
Company's Banking subsidiary is contractually prohibited from disposing of the
stock in any other manner. The Federal Home Loan Bank stock does not have a
contractual maturity.

At December 31, 1996, investment securities totaling $2.0 million were pledged
as collateral for deposits, and investment securities totaling $1.5 million were
pledged as collateral for a revolving credit facility extended to the Company by
a third-party lender. The Federal Home Loan Bank stock was pledged as collateral
for the advances from the Federal Home Bank of Cincinnati.





                                      A-26

<PAGE>   46


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Gross unrealized gains and losses are summarized as follows:

<TABLE>
<CAPTION>

                                              December 31,
                             -------------------------------------------------
                                      1996                      1995
                             -----------------------   -----------------------
                                Gross       Gross         Gross       Gross
                             Unrealized   Unrealized   Unrealized   Unrealized
                                Gains       Losses        Gains       Losses
                             -----------------------   -----------------------
                                               (In thousands)

<S>                              <C>        <C>           <C>          <C>
U.S. Government obligations       $2         $378          $175         $25
Marketable equity securities       -            1             -           -
Federal Home Loan Bank stock       -            -             -           -
                                  --         ----          ----         ---
Total                             $2         $379          $175         $25
                                  ==         ====          ====         ===
</TABLE>


3. MORTGAGE-BACKED SECURITIES
Loans may be exchanged for mortgage-backed securities guaranteed by government
agencies. Although long-term and fixed-rate in nature, mortgage-backed
securities are more liquid than real estate loans since a large and active
secondary market exists. Mortgage-backed securities are generally subject to the
risk that mortgages collateralizing the securities may prepay more rapidly or
more slowly than expected, thereby affecting the yield of the securities and
future cash flows. There were no mortgage loans exchanged for mortgage-backed
securities in 1996, 1995 or 1994. At December 31, 1996, and 1995, all
mortgage-backed securities are classified as available for sale. There were no
sales of mortgage-backed securities in 1996, 1995 or 1994.

Amortized cost, estimated market values and weighted average end-of-period
yields of mortgage-backed securities by contractual maturity are summarized as
follows:


<TABLE>
<CAPTION>

                                                             December 31,
                                    ----------------------------------------------------------------
                                                  1996                             1995
                                    ------------------------------   -------------------------------
                                    Amortized     Market             Amortized     Market
                                       Cost       Value      Yield    Cost         Value      Yield
                                    ------------------------------   -------------------------------
                                                         (Dollars in thousands)
<S>                                  <C>        <C>         <C>       <C>        <C>         <C>  
Pass-through certificates:
 Federal Home Loan Mortgage Corporation:
  Due after 5 years through 10 years  $    10    $    10     7.50%     $    14    $    14     7.50%
  Due after 10 years                    1,751      1,822     8.60%       2,085      2,168     8.62%
                                       ------     ------                ------     ------
 Total                                  1,761      1,832     8.59%       2,099      2,182     8.61%
                                       ------     ------                ------     ------

Government National Mortgage Association:
 Due after 1 year through 5 years           -          -        -            1          1     8.35%
 Due after 5 years through 10 years       176        178     9.02%         250        249     9.20%
                                       ------     ------                ------     ------
Total                                     176        178     9.02%         251        250     9.20%
                                       ------     ------                ------     ------

Collateralized mortgage obligations:
  Due in 1 year or less                     -          -        -          201        201     5.47%
  Due after l0 years                        -          -        -          121        121     5.68%
                                       ------     ------                ------     ------
 Total                                      -          -        -          322        322     5.55%
                                       ------     ------                ------     ------
Total                                  $1,937     $2,010     8.63%      $2,672     $2,754     8.30%
                                       ======     ======                ======     ======

</TABLE>




                                      A-27

<PAGE>   47


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Gross unrealized gains and losses are summarized as follows:

<TABLE>
<CAPTION>
                                              December 31,
                             -------------------------------------------------
                                      1996                      1995
                             -----------------------   -----------------------
                                Gross       Gross         Gross       Gross
                             Unrealized   Unrealized   Unrealized   Unrealized
                                Gains       Losses        Gains       Losses
                             -----------------------   -----------------------
                                               (In thousands)

<S>                             <C>          <C>           <C>         <C>
Pass-through certificates:
 Federal Home Loan Mortgage
  Corporation                    $71          $ -           $83         $ -
 Government National Mortgage
  Association                      2            -             -           1
                                 ---          ---           ---          --
Total                            $73          $ -           $83          $1
                                 ===          ===           ===          ==
</TABLE>


At December 31, 1996, mortgage-backed securities totaling $841,000 were pledged
as collateral for public funds on deposit with the Company's Banking subsidiary.


4. LOANS
The composition of the loan portfolio is as follows:

<TABLE>
<CAPTION>
                                                       December 31,
                                                  --------------------
                                                  1996            1995
                                                  ----            ----
                                                      (In thousands)
<S>                                            <C>             <C>     
Real estate - mortgage                          $239,302        $238,181
Real estate - construction                         4,272           1,616
Land                                               3,682           4,461
Business loans                                     6,720           4,758
Consumer and other loans                          45,028          40,055
                                                --------        --------
                                                 299,004         289,071
LESS:
Undisbursed portion of loans in process           (1,293)         (1,711)
Unearned income on consumer loans                     (6)            (18)
Amount due other financial institutions
 relating to wrap-around mortgage loans             (114)           (145)
Net deferred loan fees                              (877)           (903)
Allowance for loan losses                         (2,922)         (2,734)
                                                --------        --------
                                                $293,792        $283,560
                                                ========        ========
</TABLE>


The loan portfolio is comprised primarily of residential and, to a lesser
extent, commercial real estate loans granted to customers residing in
northeastern Ohio. Although the Company has a diversified loan portfolio, its
debtors' ability to honor their contracts is substantially dependent upon the
general economic conditions of the region. Real estate loans to one borrower
cannot exceed 15% of unimpaired capital and surplus. This 15% limitation results
in a dollar limitation of approximately $4.0 million at December 31, 1996. The
Company's Banking subsidiary is in compliance with this regulation.

At December 31, 1996 and 1995, no real estate loans were held for sale.





                                      A-28


<PAGE>   48


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Commercial real estate loans totaled $33.2 million and $30.7 million at December
31, 1996 and 1995, respectively. These loans are considered by management to be
of somewhat greater risk of uncollectibility due to the dependency on income
production or future development of the real estate. All real estate
collateralizing the commercial real estate loans is located in Ohio. The
following table presents information as to the number and type of commercial
real estate loans in the loan portfolio.

<TABLE>
<CAPTION>
                                    December 31, 1996      December 31, 1995
                                   -------------------    -------------------
                                   Number     Principal   Number     Principal
Security Type                      of Loans   Balance     of Loans   Balance
-------------                      --------   -------     --------   -------
                                           (Dollars in thousands)

<S>                                  <C>     <C>            <C>     <C>    
Combination retail/residential        103     $14,818        122     $17,522
Stores and/or shopping centers          9       3,650          8       3,319
Office                                 14      10,379          9       5,980
Warehouse                               2       1,014          3       1,907
Church                                  2         594          3         666
Other                                   8       2,789          6       1,342
                                      ---     -------        ---     -------
                                      138     $33,244        151     $30,736
                                      ===     =======        ===     =======
</TABLE>

The Company's Banking subsidiary's aggregate commercial real estate loans may
not exceed 400% of its capital as determined under the regulatory capital
standards. At December 31, 1996, the Company estimates that it would be
permitted under this limitation to add an additional $62.9 million of commercial
real estate loans to its existing portfolio.

Both adjustable and fixed interest rate loans are originated. The
adjustable-rate loans have interest rate adjustment limitations and are
generally indexed to the weekly U.S. Treasury constant maturity index. The
composition of these loans was as follows:

<TABLE>
<CAPTION>
              Fixed Rate                          Adjustable Rate
--------------------------------------   ------------------------------------
                         Book Value      Term to Rate             Book Value
Term to Maturity      at December 31,    Adjustment            at December 31,
----------------      ---------------    ----------            ---------------
                      1996       1995                          1996       1995
                      ----       ----                          ----       ----
                      (In thousands)                            (In thousands)

<S>                <C>        <C>       <C>               <C>        <C>     
1 mo. - 1 yr.      $   887   $    43     1 mo. - 1 yr.     $154,558   $181,976
1 yr. - 2 yr.          181        55     1 yr. - 2 yr.       24,654     14,366
2 yr. - 3 yr.          210       177     2 yr. - 3 yr.       36,861     23,621
3 yr. - 5 yr.        1,712     1,171     3 yr. - 5 yr.        8,930      6,845
5 yr. - 10 yr.      24,524    24,619
10 yr. - 20 yr.     16,729    12,461
Over 20 years       29,758    23,737
                   -------   -------                       --------   --------
                   $74,001   $62,263                       $225,003   $226,808
                   =======   =======                       ========   ========
</TABLE>










                                      A-29

<PAGE>   49


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Commitments to purchase or sell loans are summarized below:



<TABLE>
<CAPTION>
                                                       December 31,
                                                  --------------------
                                                  1996            1995
                                                  ----            ----
                                                      (In thousands)
<S>                                               <C>             <C>     
Commitments to sell loans                          $ -             $ -
Commitments to purchase loans                      411             357
</TABLE>


Substantially all commitments disclosed in the table above are for fixed rate
loans.

In the ordinary course of business, the Company's Banking subsidiary has granted
loans to directors and executive officers, and to their associates. These loans
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated persons except that certain persons receive a reduction in the
interest rate for loans granted prior to August 9, 1989. The Company's Banking
subsidiary also grants mortgage loans to non-executive officers and employees at
rates based on a designated index. Of the 1996 and 1995 loans outstanding, none
were nonperforming. A summary of the aggregate activity related to loans to
directors and executive officers is shown below:

<TABLE>
<S>                                   <C>       
Balance at January 1, 1996             $2,431,000
Additions                                 804,000
Repayments                                916,000
                                       ----------
Balance at December 31, 1996           $2,319,000
                                       ==========
</TABLE>


5. LOANS SERVICED FOR OTHERS
At December 31, 1996, 1995 and 1994, loans serviced for others amounted to 
$132.7 million, $139.5 million and $162.0 million, respectively. The majority 
of these loans are serviced for the Federal National Mortgage Association. 
Servicing loans for others generally consists of collecting mortgage payments, 
maintaining escrow accounts, disbursing payments to investors and foreclosure 
processing. In connection with loans serviced for others, borrowers' escrow 
balances of $2,354,000, $2,215,000 and $2,428,000 were held at December 31, 
1996, 1995 and 1994, respectively.


6. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses were as follows:

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                             --------------------------
                                               1996      1995      1994
                                               ----      ----      ----
                                                    (In thousands)
<S>                                         <C>       <C>       <C>   
Beginning balance                            $2,734    $2,665    $2,612
Provision for loan losses                       309       123        97
Loans charged off:
 Mortgage loans                                  (1)       (8)       (4)
 Business loans                                 (16)        -         -
 Consumer loans                                (128)      (52)      (40)
Recoveries:
 Mortgage loans                                   5         -         -
 Consumer loans                                  19         6         -
                                             ------    ------    ------
Ending balance                               $2,922    $2,734    $2,665
                                             ======    ======    ======
</TABLE>



                                      A-30

<PAGE>   50


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Impaired loans at December 31, 1996 totaled $4,391,000 and was comprised of
$3,391,000 in loans with no related allowances and $1,045,000 of loans gross of
related allowances of $45,000. Impaired loans at December 31, 1995 totaled
$3,107,000 and was comprised of $2,099,000 in loans with no related allowances
and $1,088,000 of loans gross of related allowances of $80,000. The average
recorded investment in impaired loans during 1996, 1995, and 1994 was
$3,749,000, $4,481,000, and $4,641,000, respectively, while interest income
recognized on impaired loans during those periods was approximately $357,000,
$435,000 and $394,000, respectively.


7. PREMISES AND EQUIPMENT
The composition of premises and equipment is as follows:


<TABLE>
<CAPTION>
                                                       December 31,
                                                  --------------------
                                                  1996            1995
                                                  ----            ----
                                                      (In thousands)
<S>                                            <C>             <C>     
Land and improvements                           $  673          $  669
Buildings and improvements                       1,704           1,658
Furniture and fixtures                           4,749           5,023
Leasehold improvements                           1,892           1,799
                                                ------          ------
                                                 9,018           9,149
Accumulated depreciation and amortization        4,842           5,196
                                                ------          ------
                                                $4,176          $3,953
                                                ======          ======
</TABLE>

In May, 1995, the Company's Banking subsidiary entered into a sale agreement on
its Madison office. The sale of the office was consummated in December, 1995,
and resulted in an after-tax gain of $204,000.

At December 31, 1996, the Company's Banking subsidiary was obligated under a
number of noncancelable leases for land and buildings. Minimum future rental
commitments under these lease agreements at December 31, 1996 are as follows:
$579,000 in 1997, $562,000 in 1998, $535,000 in 1999, $531,000 in 2000, $493,000
in 2001 and 4.1 million for years after 2001. Most of the operating leases
permit renewal of the leases at rentals specified by the lease agreements.
Rental expense under all leases aggregated $664,000 in 1996, $617,000 in 1995
and $569,000 in 1994.


8. ACCRUED INTEREST AND OTHER
Accrued interest receivable and other assets consists of the following:


<TABLE>
<CAPTION>
                                                       December 31,
                                                  --------------------
                                                  1996            1995
                                                  ----            ----
                                                      (In thousands)
<S>                                            <C>             <C>     
Accrued interest receivable                     $2,372          $2,602
Purchased mortgage servicing rights                191               -
Real estate owned                                    -             737
Cost in excess of fair value of net assets
 acquired                                           21             166
Other assets                                     1,893           1,406
                                                ------          ------
                                                $4,477          $4,911
                                                ======          ======
</TABLE>


Purchased mortgage servicing rights represent the cost of purchasing rights to
service loans. All such recorded rights relate to residential mortgage loans.
Servicing rights are presented net of accumulated amortization, which is
recorded in proportion to, and over the period of, net servicing income.
Servicing income is partially offset by this am-





                                      A-31
<PAGE>   51


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


ortization expense. The carrying value of purchased mortgage servicing rights is
periodically evaluated to determine that it is not greater than fair value. An
allowance is established in the event the recorded value exceeds the fair value
of the rights. No such allowance was required at December 31, 1996.

The balance of the allowance for losses on real estate owned was $57,000 and
$109,000 at December 31, 1996 and 1995, respectively. The provision for loss on
real estate owned was $80,000, $51,000 and $1,000 for 1996, 1995 and 1994,
respectively.


Accrued interest payable and other liabilities consists of the following:


<TABLE>
<CAPTION>
                                          December 31,
                                         --------------
                                          1996     1995
                                         ------  ------
                                          (In thousands)

<S>                                       <C>     <C>  
Accrued interest payable                  $ 753   $ 676
Collections on loans serviced               376     465
Other liabilities                         2,095   1,787
                                         ------  ------
                                         $3,224  $2,928
                                         ======  ======
</TABLE>



9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the ordinary course of business, various commitments and contingent
liabilities arise, including commitments to originate real estate loans and
commitments to extend credit. Commitments to borrowers to originate loans and
for unused lines of credit are summarized below: 

<TABLE>
<CAPTION>
                                          December 31,
                                        ----------------
                                          1996    1995
                                         (In thousands) 
<S>                                     <C>      <C>   
Commitments to originate:
  Fixed rate loans                      $ 3,415  $  856
  Variable rate loans                     1,367   2,765
Unused lines of credit                   70,712  57,134
</TABLE>


Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since some of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Company upon the credit extension, is based on
management's credit evaluation of the counter-party. The commitment amount
represents the amount of credit risk, however, the Company generally extends
credit on a secured basis. Collateral held usually includes residential and
commercial real estate.





                                      A-32

<PAGE>   52


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


10. DEPOSITS
The following table as of December 3l, 1996 presents, by various rate 
categories, the amounts of certificates of deposit maturing during the periods 
indicated:


<TABLE>
<CAPTION>
                          Accounts Maturing in the Twelve Months Ended December 31,
                          ---------------------------------------------------------
                                                                      2002 &
                      1997    1998      1999      2000     2001       Later      Total
                      ----    ----      ----      ----     ----       -----      -----
                                           (Dollars in thousands)

<S>                <C>      <C>        <C>      <C>       <C>        <C>      <C>      
1.001 to 2.000%    $     -  $     -    $    -   $     -   $     -    $ 2,551   $  2,551
2.001 to 3.000%        133        -         -         -         -          -        133
3.001 to 4.000%      4,617      501         -         -         -          -      5,118
4.001 to 5.000%     31,494      879       638        43         1        104     33,159
5.001 to 6.000%     39,289    7,002     3,279     2,356       206      1,020     53,152
6.001 to 7.000%     17,915    3,496     1,902     1,032       110        464     24,919
7.001 to 8.000%      1,882   18,364     3,068     5,704       599      2,238     31,855
8.001 to 9.000%         29      583       539       340         -          -      1,491
9.001 to 10.000%         4      415       339         -         -          -        758
10.001 to 11.000%       31        -         -         -         -          -         31
11.001 and over          -        -         -         9         9         17         35
                   -------  -------    ------   -------   -------    -------  ---------
                   $95,394  $31,240    $9,765   $ 9,484   $   925    $ 6,394  $ 153,202
                   =======  =======    ======   =======   =======    =======  =========
</TABLE>


Deposits are obtained primarily from persons who are residents of Ohio,
particularly the Cleveland area. The Company does not advertise for deposits
outside of Ohio, and management believes that an insignificant amount of the
deposits are from non-residents of Ohio at December 31, 1996.


11. ADVANCES FROM FEDERAL HOME LOAN BANK
Advances from the Federal Home Loan Bank of Cincinnati (the "FHLB") at December
31, 1996 consist of:

<TABLE>
<CAPTION>
Maturity Date            Balance          Rate
-------------            -------          ----
                     (In thousands)
<S>                       <C>             <C>  
June 20, 1997           $ 2,000           5.55%
September 23, 1997        2,000           5.65%
June 23, 1998             1,500           6.45%
July 2, 1998              4,000           5.75%
July 15, 1998             4,000           5.75%
July 17, 1998             4,000           5.75%
July 24, 1998             4,000           5.75%
August 23, 1998           2,000           5.75%
September 23, 1998        5,000           5.75%
September 23, 1998        1,500           6.55%
                        -------
                        $30,000
                        =======
</TABLE>

No advances were outstanding from the FHLB at December 31, 1995. At December 31,
1994, a $2 million advance with an interest rate of 10.30% and a maturity date
of June 26, 1995 was outstanding. This advance was repaid, including a
prepayment penalty of $16,000 on April 4, 1995. The Bank has pledged qualifying
collateral, primarily mortgage loans, with a market value of at least 150% of
the amount of the advances.




                                      A-33
<PAGE>   53


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


12. REGULATORY CAPITAL
The Company's Banking subsidiary is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Company's financial statements. The regulations
require the the Company's Banking subsidiary to meet specific capital adequacy
guidelines that involve quantitative measures of the Bank's assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory accounting
practices. The Bank's capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company's Banking subsidiary to maintain minimum amounts and ratios
(set forth in the tables below) of tangible, core and total risk-based capital.
Prompt Corrective Action regulations require specific supervisory actions as
capital levels decrease.

As of December 31, 1996, the most recent notification from the Office of Thrift
Supervision categorized the Company's Banking subsidiary as well capitalized
under the regulatory framework for Prompt Corrective Action. To be categorized
as well capitalized, the Company's Banking subsidiary must maintain minimum
total risked-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in
the tables below. There are no conditions or events since that notification that
have changed the Bank's category.


<TABLE>
<CAPTION>
                                                            As of December 31, 1996
                                                ---------------------------------------------------
                                                                                     To Be Well
                                                                                  Capitalized Under
                                                                  For Capital     Prompt Corrective
                                                    Actual     Adequacy Purposes  Action Provisions
                                                    ------     -----------------  -----------------
                                                Amount  Ratio    Amount  Ratio     Amount   Ratio
                                                ------  -----    ------  -----     ------   -----
                                                             (Dollars in thousands)
<S>                                            <C>      <C>      <C>      <C>      <C>      <C>   
Total capital (to risk-weighted assets)        $26,888  11.04%   $19,483  8.00%    $24,354  10.00%
Tier 1 capital (to risk-weighted assets)        24,030   9.87%         -     -      14,612   6.00%
Tier I capital (to adjusted tangible assets)    24,030   6.95%    10,377  3.00%     17,296   5.00%
Tangible capital (to tangible assets)           24,030   6.95%     5,189  1.50%          -      -
</TABLE>


<TABLE>
<CAPTION>
                                                            As of December 3l, 1995
                                               ----------------------------------------------------
                                                                                      To Be Well
                                                                                  Capitalized Under
                                                                  For Capital     Prompt Corrective
                                                    Actual     Adequacy Purposes  Action Provisions
                                                    ------     -----------------  -----------------
                                                Amount  Ratio    Amount  Ratio      Amount  Ratio
                                                ------  -----    ------  -----      ------  -----
                                                             (Dollars in thousands)
<S>                                            <C>      <C>      <C>      <C>      <C>     <C>   
Total capital (to risk-weighted assets)        $26,122  11.39%   $18,345  8.00%    $22,931 10.00%
Tier 1 capital (to risk-weighted assets)        23,496  10.25%         -     -      13,759  6.00%
Tier 1 capital (to adjusted tangible assets)    23,496   6.66%    10,591  3.00%     17,660  5.00%
Tangible capital (to tangible assets)           23,496   6.66%     5,296  1.50%          -     -
</TABLE>





                                      A-34

<PAGE>   54


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Management believes, as of December 31, 1996, that the Bank meets all capital
requirements to which it is subject. Events beyond management's control, such as
fluctuations in interest rates or a downturn in the local economy of
northeastern Ohio where the Company has most of its loans, could adversely
affect future earnings and, consequently, the Bank's ability to meet its future
capital requirements.


13. FEDERAL INCOME TAXES
The provision for income taxes consists of the following components:

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                        --------------------------------------
                                         1996            1995             1994
                                         ----            ----             ----
                                                    (In thousands)
<S>                                    <C>             <C>              <C>    
Current income taxes                   $   544         $ 1,089          $   861
Deferred income taxes                      233             (69)            (192)
                                       -------         -------          -------
                                       $   777         $ 1,020          $   669
                                       =======         =======          =======
</TABLE>


A reconciliation from the statutory income tax rate to the effective
consolidated income tax rate is as follows:

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                    ----------------------------
                                                    1996        1995        1994
                                                    ----        ----        ----
<S>                                                 <C>         <C>         <C>  
Federal income tax rate                             35.0%       35.0%       35.0%
Increase (decrease) resulting from:
 Benefit of graduated rates                         (1.0)       (1.0)       (1.0)
 IRS examination                                       -           -        (6.1)
 Other                                                .3         (.2)         .3
                                                    ----        ----        ---- 
Effective consolidated income tax rate              34.3%       33.8%       28.2%
                                                    ====        ====        ==== 
</TABLE>





                                      A-35

<PAGE>   55


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


The lower effective income tax rate in 1994 resulted from receipt of a favorable
"no change" letter from the Internal Revenue Service regarding the 1991 tax
year, which allowed the Company to reduce its tax liabilities for certain
estimated contingent items. Significant components of the deferred tax assets
and liabilities are as follows:


<TABLE>
<CAPTION>
                                                             December 31,
                                                  ----------------------------------
                                                    1996         1995         1994
                                                    ----         ----         ----
                                                             (In thousands) 
<S>                                               <C>          <C>          <C>     
Deferred tax assets:
 Book loss reserves                               $(1,013)     $(1,076)     $(1,036)
 Deferred loan fees                                  (298)        (307)        (268)
 Reserve for uncollected interest                     (33)         (76)         (58)
 Excess servicing fees                                (78)         (81)        (144)
 Mark-to-market accounting                           (103)          --          (33)
 Other                                               (160)         (67)         (20)
                                                  -------      -------      ------- 
  Total deferred tax assets                        (1,685)      (1,607)      (1,559)
                                                  -------      -------      ------- 

Deferred tax liabilities:
 FHLB stock dividend                                  403          339          282
 Tax bad debt reserves                                418          429          338
 Mark-to-market accounting                             --           79           --
 Difference between book and tax depreciation           2           27           19
 Purchase accounting                                   46           19          182
 Other                                                153           --           --   
                                                  -------      -------      ------- 
  Total deferred tax liabilities                    1,022          893          821
                                                  -------      -------      ------- 
Net deferred tax liability (asset)                $  (663)     $  (714)     $  (738)
                                                  =======      =======      ======= 
</TABLE>




14.     MANAGEMENT OPTION PLAN
The Company's stock option plan is administered by the Compensation Committee of
the Board of Directors, which is given absolute discretion under the Company's
stock option plan to select certain officers to whom rights will be granted, and
to determine the number of rights to be granted to each. Two kinds of rights
are contained in the Company's stock option plan and are available for grant:
incentive stock options and nonqualified compensatory stock options. No
compensatory stock options have been granted. A summary of incentive stock
option transactions is as follows:

<TABLE>
<CAPTION>
                     Stock Options    Option Price
                     -------------    ------------
<S>                     <C>         <C>
January 1, 1994          67,177     $ 6.612-15.227
 Granted                  5,797             14.318
 Exercised               (2,420)      7.851-11.157
 Lapsed or cancelled     (1,100)            15.227
                         ------     --------------
December 31, 1994        69,454       6.612-14.545
 Granted                 19,000             13.875
 Exercised               (2,420)             6.612
                         ------     --------------
December 31, 1995        86,034       6.612-14.545
 Granted                 20,718      18.000-19.250
 Exercised              (23,906)      6.612-14.545
                         ------     --------------
December 31, 1996        82,846     $ 6.818-19.250
                         ======     ==============
</TABLE>





                                      A-36



<PAGE>   56


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


The 1985 Stock Option Plan terminated on July 23, 1995; however, 44,128 stock
options remain outstanding. The 1995 Stock Option Plan has 164,000 shares of
authorized but unissued common stock reserved for future issuance pursuant to
the exercise of stock options, subject to modification or adjustment to reflect
changes in the capitalization of the Company as, for example, in the case of a
merger, reorganization, or stock split. The exercise price of options granted
may not be less than the fair market value of the common stock at the date of
grant.

The following summarizes the pro forma net income as if the fair value method of
accounting for stock-based compensation plans (as described in SFAS No. 123) had
been utilized:

<TABLE>
<CAPTION>
                                Year Ended December 31,
                                -----------------------
                                 1996           1995
                                 ----           ----
                         (In thousands, except per share data)
<S>                           <C>            <C>      
As Reported:
 Net income                   $   1,507      $   1,995
 Earnings per common share          .79           1.06
Proforma:
 Net income                       1,418          1,940
 Earnings per common share          .75           1.03
</TABLE>

The fair value of the 1996 and 1995 option grants were estimated using the Black
Scholes Options Pricing Method using the following assumptions: Volatility of
4O% for both years, dividend yield of 2.81% and 3.50%, risk-free interest rate 
of 5.87% and 6.49%, and an expected life of 9 for both years. The fair value of
options granted during 1996 and 1995 was $135,000 and $83,000, respectively. The
weighted average remaining contractual life of options outstanding at December
31, 1996 was 6.5 years.


15. EMPLOYEE STOCK OWNERSHIP PLAN
Contributions to the employee stock ownership plan ("ESOP") by the Company are
made at the discretion of the Company. For the years ended December 31, 1996,
1995 and 1994, contributions in the amount of $31,000, $18,000, and $91,000,
respectively, were expensed as costs of the ESOP.

At December 31, 1996, the ESOP held approximately 7.3% of the total outstanding
shares of the Company.


16. FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair value estimates are made at a discrete point in time based on relevant
market information and information about the financial instruments. Because no
market exists for a significant portion of the Company's financial instruments,
fair value estimates are based on judgments regarding future expected loss
experience, current economic conditions, and risk characteristics of various
financial instruments. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the
estimates.

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

Cash and short-term investments, accrued interest receivable, advances by
borrowers for taxes and insurance, and other liabilities. The carrying amounts
reported in the consolidated statement of financial condition are a reasonable
estimate of fair value.

Investment securities and mortgage-backed securities - Fair values for
securities are based on quoted market prices or dealer quotes. If quoted market
prices are not available, fair value is estimated using quoted market prices for
securities with similar coupons, maturities and credit ratings.





                                      A-37


<PAGE>   57


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


Loans held for investment - The fair value is based on the estimated future cash
flows, discounted at current market rates for similar loans.

Time deposits - The fair value is estimated using current market rates for
certificate of deposits of similar remaining maturities.

Other deposits - The fair values disclosed for deposit liabilities with no
stated maturity, including passbook/statement accounts, NOW accounts and money
market fund accounts, are the amounts payable on demand at year-end, which is
their carrying amounts.

Advances from Federal Home Loan Bank - The fair value is estimated by
discounting the future cash flows at the rate currently available on borrowings
with similar characteristics.

Off-balance sheet financial instruments - The fair value of the off-balance
sheet financial instruments, including commitments to originate loans, is
considered to be equivalent to the value of the current fees charged to enter
into the commitments. At December 31, 1996 and 1995, those fees were
approximately $44,000, and $33,000, respectively.

The following table presents the estimated fair values of the Company's
financial instruments:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                  ------------------------------------------------
                                                            1996                     1995
                                                  ---------------------     ----------------------
                                                  Carrying                  Carrying
                                                   Amount     Fair Value     Amount     Fair Value
                                                   ------     ----------     ------     ----------
                                                                   (In thousands)
<S>                                               <C>          <C>          <C>          <C>     
Financial assets:
 Cash and short-term investments                  $  8,411     $  8,411     $ 12,143     $ 12,143
 Investment securities                              33,990       33,990       47,184       47,184
 Mortgage-backed securities                          2,010        2,010        2,754        2,754
 Loans held for investment                         293,792      294,135      283,560      284,782
 Accrued interest receivable                         2,372        2,372        2,602        2,602


Financial liabilities:
 Time deposits                                     153,202      154,001      193,463      194,737
 Other deposits                                    125,871      125,871      124,316      124,316
 Advances from Federal Home Loan Bank               30,000       30,133            -            -
 Advances by borrowers for taxes and insurance       6,207        6,207        5,740        5,740
 Other liabilities                                   1,129        1,129        1,141        1,141
</TABLE>





                                      A-38

<PAGE>   58


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


17. HAVERFIELD CORPORATION (Parent Company Only)

                       STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                 ------------------
                                                                                 1996          1995
                                                                                 ----          ----
                                                                    (Dollars in thousands, except per share data)
<S>                                                                            <C>           <C>     
ASSETS:
Cash and cash equivalents                                                      $  3,554      $  3,197
Investment securities, at fair value (Amortized cost
 of $1,497 in 1996 and $1,493 in 1995)                                            1,498         1,514
Investment in Home Bank, F.S.B                                                   23,869        23,802
Other assets                                                                         15            15
                                                                               --------      --------
                                                                               $ 28,936      $ 28,528
                                                                               ========      ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Other liabilities                                                              $    584      $    470
Preferred stock; 1,000,000 shares authorized; none issued                             -             -
Common stock, par value $.01 per share; 5,000,000 shares authorized;
 issued: 1,915,892 shares in 1996 and 1,894,475 shares in 1995                       19            19
Capital in excess of par value                                                   16,510        16,353
Retained earnings                                                                12,146        11,669
Net unrealized appreciation (depreciation) in the fair value of securities
 (net of tax of $(103) in 1996 and $79 in 1995)                                     (201)         153
Common shares in treasury, at cost (9,543 shares in 1996
and 11,790 shares in 1995)                                                         (122)         (136)
                                                                               --------      --------
                                                                               $ 28,936      $ 28,528
                                                                               ========      ========
</TABLE>

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                                     ----------------------------
                                                      1996       1995        1994
                                                      ----       ----        ----
                                                             (In thousands)
<S>                                                  <C>        <C>        <C>   
INCOME:
Dividends from subsidiary                            $1,400     $1,400     $1,550
Interest on investment securities                        90         56         42
                                                     ------     ------     ------
Total income                                          1,490      1,456      1,592
                                                     ------     ------     ------

EXPENSE:
Interest on long-term borrowings                          -          -        230
Employee compensation and benefits                       31         18         91
Advertising                                              93         53         46
Other expenses                                          267        257        328
                                                     ------     ------     ------
Total expense                                           391        328        695
                                                     ------     ------     ------
Income before income taxes                            1,099      1,128        897
Provision for income taxes                                -          -          -
                                                     ------     ------     ------
Income before equity in undistributed net income
 of subsidiary                                        1,099      1,128        897
Equity in undistributed net income of subsidiary        408        867        803
                                                     ------     ------     ------
Net income                                           $1,507     $1,995     $1,700
                                                     ======     ======     ======
</TABLE>





                                      A-39

<PAGE>   59


                    HAVERFIELD CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
================================================================================


                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                             -------------------------
                                                             1996      1995       1994
                                                             ----      ----       ----
                                                                   (In thousands)
<S>                                                         <C>       <C>        <C>   
OPERATING ACTIVITIES:
Net income                                                  $1,507    $1,995     $1,700
Adjustments to reconcile net income to net cash provided 
 by operating activities:
Equity in undistributed net earnings of subsidiary            (408)     (867)      (803)
Net change in other assets and other liabilities               104       133         32
Other operating flows                                           13       (14)       (63)
                                                            ------    ------     ------
  Net cash provided by operating activities                  1,216     1,247        866
                                                            ------    ------     ------

INVESTING ACTIVITIES:
Purchases of investment securities                               -    (1,492)         -
Maturities of investment securities                              -     1,000          -
Proceeds from ESOP loan repayments                               -         -         30
                                                            ------    ------     ------
  Net cash provided by (used in) investing activities            -      (492)        30
                                                            ------    ------     ------

FINANCING ACTIVITIES:
Proceeds from exercise of stock options                        175        16         23
Repayments of borrowings                                         -         -       (387)
Payment of cash dividends
Purchase of treasury shares                                 (1,030)     (975)      (858)
                                                                (4)      (63)        (7)
                                                            ------    ------     ------
  Net cash used in financing activities                       (859)   (1,022)    (1,229)
                                                            ------    ------     ------
Increase (decrease) in cash and cash equivalents               357      (267)      (333)
Cash and cash equivalents at beginning of year               3,197     3,464      3,797
                                                            ------    ------     ------
Cash and cash equivalents at end of year                    $3,554    $3,197     $3,464
                                                            ======    ======     ======
</TABLE>



18. SAVINGS ASSOCIATION INSURANCE FUND ASSESSMENT
On September 30, 1996, the President signed into law an omnibus appropriations
act for fiscal year 1997 that included, among other things, the recapitalization
of the Savings Association Insurance Fund ("SAIF") in a section entitled the
Deposit Insurance Funds Act of 1996. The Act included a provision whereby all
insured depository institutions would be charged a one-time special assessment
on their SAIF assessable deposits as of March 31, 1995. The Company recorded a
pretax charge of $2.0 million ($1.3 million after tax), which represented 65.7
basis points of the March 31, 1995 assessable deposits. This charge was recorded
upon enactment on September 30, 1996, and later paid on November 27, 1996. The
deposit insurance rate that had been in effect prior to this recapitalization
has been reduced to 6.5 basis points of insured deposits.





                                      A-40