<PAGE>   1
                                                                      Exhibit 13





                                     MARKET
                                    FINANCIAL
                                   CORPORATION




                                      1999
                                     ANNUAL
                                     REPORT
                                       TO
                                  SHAREHOLDERS



<PAGE>   2

Dear Shareholder,

                  On behalf of the directors, officers, and employees of Market
Financial Corporation ("Market") and its wholly-owned subsidiary, Market Bank, I
am pleased to present our third Annual Report to Shareholders for the fiscal
year ended September 30, 1999.

                  Market's net earnings for fiscal 1999 totaled a record
$698,000, representing a 26% increase over the $552,000 in net earnings for
fiscal 1998. The $146,000 increase in net earnings for the year ended September
30, 1999 was primarily attributable to an after-tax gain on sale of investments
of approximately $306,000, which was partially offset by a decrease in net
interest income of $221,000, or 10.3%. Market's decreased net interest income
level was primarily the result of a $4.7 million decrease in interest-earning
assets following the $3.50 per share cash distribution on April 30, 1998.

                  In fiscal 1999, we reduced our excess capital position through
a share repurchase program, completing the first 5% stock repurchase of 66,786
shares and purchasing 9,500 shares of the second 5% repurchase, for a total of
76,286 shares. The repurchase of shares, totaling $838,000, should have a future
beneficial effect on Market's return on equity.

                  We continue to consider growth in the loan and savings
portfolios to be a critical operating objective. We are pleased to report that
our loan portfolio increased by $2.4 million, or 7.3%, during fiscal 1999, while
our savings deposits grew by $2.2 million, or 5.7%. We are looking forward to
the opening of our main office addition in Mount Healthy, which includes an ATM
and a drive-thru facility to be opened in early calendar year 2000. We are also
opening an ATM in our North Bend branch office. Both additions should enhance
the growth of our deposit portfolio and increase our ability to serve our
customers.

                  I would like to thank you, our shareholders, for the support
you placed in us through your investment in Market Financial Corporation. The
directors, officers, and employees are committed to increasing the value of your
investment in the future.

                               Very truly yours,
                               Market Financial Corporation




                               John T. Larimer




<PAGE>   3


                    BUSINESS OF MARKET FINANCIAL CORPORATION

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

Market Financial Corporation ("MFC"), a unitary savings and loan holding company
incorporated under the laws of the State of Ohio, owns all of the issued and
outstanding common stock of Market Bank ("Market"), a savings and loan
association incorporated under the laws of the State of Ohio. In March 1997, MFC
acquired all of the common stock issued by Market upon its conversion from a
mutual savings association to a stock savings association (the "Conversion").
Since its formation, MFC's activities have been limited primarily to holding the
common shares of Market.

Market is a stock savings and loan association principally engaged in the
business of making permanent first mortgage loans secured by one- to four-family
residential real estate located in Market's primary market area of Hamilton
County, Ohio, and portions of the contiguous counties. Market also originates a
limited number of loans for the construction of residential real estate and
loans secured by multifamily real estate (over four units) and nonresidential
real estate. In addition to real estate lending, Market originates a limited
number of loans secured by deposits at Market. For liquidity and interest rate
risk management purposes, Market invests in U.S. Government and agency
obligations, interest-bearing deposits in other financial institutions and
mortgage-backed securities. Funds for lending and investment activities are
obtained primarily from deposits, which are insured up to applicable limits by
the Federal Deposit Insurance Corporation ("FDIC"), and loan repayments. Market
conducts business from its main office located at 7522 Hamilton Avenue,
Cincinnati, Ohio, and its full-service branch office at 125 Miami Avenue, North
Bend, Ohio.

As a savings and loan holding company, MFC is subject to regulation, supervision
and examination by the Office of Thrift Supervision of the United States
Department of the Treasury (the "OTS"). As a savings and loan association
incorporated under the laws of the State of Ohio, Market is subject to
regulation, supervision and examination by the OTS and the Ohio Division of
Financial Institutions (the "Division"). Market is also a member of the Federal
Home Loan Bank (the "FHLB") of Cincinnati.


                              MARKET PRICE OF MFC'S
                  COMMON SHARES AND RELATED SHAREHOLDER MATTERS
================================================================================

There were 1,259,439 common shares of MFC outstanding on December 10, 1999, held
of record by approximately 525 shareholders. The number of shareholders does not
reflect all of the persons or entities who may hold stock in nominee or "street"
name through brokerage firms or others. Price information with respect to MFC's
common shares is quoted on the Nasdaq Small-Cap Market ("Nasdaq") under the
symbol "MRKF." The table below sets forth the high and low bid prices for the
common shares of MFC, together with dividends declared per share, for each
quarter of the 1999 and 1998 fiscal years. Price quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.

                                       1
<PAGE>   4

<TABLE>
<CAPTION>
                                                                                            Cash dividends DECLARED
                                          High Ask                      Low Bid                    Per Share
                                          --------                      -------                    ---------
<S>                                      <C>                          <C>                   <C>
FISCAL 1999
    Quarter ended:
     December 31, 1998                      $12.63                      $10.00                        $ .07
     March 31, 1999                          12.38                        8.38                          .07
     June 30, 1999                           10.38                        8.25                          .07
     September 30, 1999                      13.75                        9.00                          .07

FISCAL 1998
    Quarter ended:
     December 31, 1997                      $16.80                      $14.75                        $ .07
     March 31, 1998                          17.75                       15.38                          .07
     June 30, 1998                           20.81                       12.75                         3.57
     September 30, 1998                      14.00                       10.75                          .07
</TABLE>

      The earnings of MFC consist primarily of dividends from Market. In
      addition to certain federal income tax considerations, regulations issued
      by the OTS impose limitations on the payment of dividends and other
      capital distributions by savings associations. Under the regulations, a
      savings association that, immediately prior to, and on a pro-forma basis
      after giving effect to a proposed capital distribution, has total capital
      (as defined by OTS regulations) that is equal to or greater than the
      amount of its "well-capitalized" capital requirement, is generally
      permitted, without OTS approval (but subsequent to 30 days' prior notice
      of the planned dividend to the OTS) to make capital distributions during a
      calendar year in an amount not to exceed its net income for that year to
      date plus its retained income for the preceding two years. Savings
      associations which have total capital in excess of the "well-capitalized"
      capital requirement, and which have been notified by the OTS that they are
      in need of more than normal supervision will be subject to greater
      restrictions on dividends. In addition, a savings association that fails
      to meet current minimum capital requirements is prohibited from making any
      capital distributions without the prior approval of the OTS. Market
      currently meets the definition of a "well-capitalized" institution and,
      unless the OTS determines that Market is an institution requiring more
      than normal supervision, may pay dividends in accordance with the
      foregoing provisions of the OTS regulations.

                                       2
<PAGE>   5


                              SELECTED CONSOLIDATED
                      FINANCIAL INFORMATION AND OTHER DATA

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

The following table sets forth certain information concerning the consolidated
financial condition, earnings and other data regarding MFC at the dates and for
the periods indicated.

<TABLE>
<CAPTION>
                                                                             At September 30,
                                                         ------------------------------------------------------------
SELECTED FINANCIAL CONDITION:                            1999           1998         1997         1996        1995
                                                         ----           ----         ----         ----        ----
                                                                              (In thousands)

<S>                                                      <C>          <C>           <C>         <C>          <C>
Total amount of:
    Assets                                               $55,451      $54,608       $56,121     $45,547      $45,734
    Cash and cash equivalents                              2,291        5,381         2,248       4,082        4,013
    Certificates of deposit in other financial
     institutions                                            290        3,790         6,690       7,040        7,139
    Investment securities held to maturity - at           12,800        9,300        17,257       9,062        7,984
     cost
    Investment securities designated as available
     for sale - at market                                  1,116        1,448         1,029         712          504
    Mortgage-backed securities held to maturity  -
     at cost                                               2,047          859         1,268       1,549        2,211
    Loans receivable - net                                35,219       32,816        26,502      21,996       23,018
    Deposits                                              39,907       37,745        35,303      37,282       38,056
    Unrealized gains on securities designated as
     available for sale - net (1)                            722          937           660         451          314
    Shareholders' equity-restricted (2) (3)               14,575       15,078        19,895       7,514        7,153
</TABLE>


<TABLE>
<CAPTION>
                                                                            Year Ended September 30,
                                                      ----------------------------------------------------------------
SELECTED OPERATING DATA:                                 1999           1998         1997        1996         1995
                                                         ----           ----         ----        ----         ----
                                                                              (In thousands)

<S>                                                       <C>         <C>           <C>         <C>          <C>
Interest income                                           $3,733      $ 3,885       $ 3,513     $ 3,261      $ 3,182
Interest expense                                           1,803        1,734         1,689       1,758        1,622
                                                          ------      -------       -------     -------      -------
Net interest income                                        1,930        2,151         1,824       1,503        1,560
Provision for losses on loans                                  -            -              -         13            -
                                                          ------      -------       -------     -------      -------
Net interest income after provision for losses on
  loans                                                    1,930        2,151         1,824       1,490        1,560
Gain on sale of investments                                  463            -             -           -            -
Other operating income                                        11            7             6           7            8
General, administrative and other expense                  1,346        1,322         1,069       1,153          861
                                                           -----      -------       -------     -------       ------
Earnings before income taxes                               1,058          836           761         344          707
Federal income taxes                                         360          284           259         120          240
                                                          ------      -------       -------     -------      -------
Net earnings                                              $  698      $   552       $   502     $   224      $   467
                                                          ======      =======       =======     =======      =======
---------------------------
</TABLE>

(1)      Market adopted Statement of Financial Accounting Standards ("SFAS") No.
         115, "Accounting for Certain Investments in Debt and Equity
         Securities," on October 1, 1994. As of and subsequent to that date,
         Market carries securities designated as available for sale at fair
         value.

(2)      See Notes H, J, L and M of the Notes to Consolidated Financial
         Statements regarding restrictions on equity.

(3)      Consists solely of retained earnings at September 30, 1996 and 1995.

                                       3
<PAGE>   6

<TABLE>
<CAPTION>
                                                            At or for the Year Ended September 30,
                                                   -----------------------------------------------------------
SELECTED FINANCIAL RATIOS AND OTHER DATA:           1999          1998         1997        1996        1995
                                                    ----          ----         ----        ----        ----
<S>                                               <C>         <C>           <C>         <C>          <C>
Performance ratios:
   Return on average assets (1)(2)(3)                1.27%        1.00%         0.99%       0.49%        1.03%
   Return on average equity (2)(3)(4)                4.71         3.16          3.66        3.05         6.91
   Interest rate spread (5)                          2.58         2.60          2.42        2.66         2.93
   Net interest margin (6)                           3.70         4.07          3.67        3.36         3.55
   Operating expenses to average assets (2) (3)      2.45         2.39          2.10        2.53         1.89
   Equity to assets (7)                             26.28        27.61         35.45       16.50        15.64

Asset quality ratios:
   Nonperforming assets to total assets              0.21         0.31          0.34        0.31           -
   Nonperforming loans to total loans                0.34         0.52          0.72        0.63           -
   Allowance for losses on loans to total loans      0.15         0.16          0.20        0.24         0.17
   Allowance for losses on loans to
     nonperforming loans                            43.70        30.41         27.23       37.41        N/M(8)
   Average interest-earning assets to average
     interest-bearing liabilities                  132.17       144.88        136.77      117.78       116.62

Other data:
   Number of full service offices                       2            2             2           2           2
-------------------------
</TABLE>

(1)      Net earnings divided by average assets.

(2)      Based on arithmetic average of beginning and ending balances.

(3)      Excluding the effect of the one-time Savings Association Insurance Fund
         (the "SAIF") recapitalization assessment, the return on average assets,
         the return on average equity and the operating expenses to average
         assets ratios would have been .85%, 5.21% and 1.99%, respectively, for
         the fiscal year ended September 30, 1996.

(4)      Net earnings divided by average equity capital.

(5)      Average yield on interest-earning assets less average cost of
         interest-bearing liabilities.

(6)      Net interest income as a percentage of average interest-earning assets.

(7)      At the end of the respective periods.

(8)      Not meaningful, as Market had no nonperforming loans at September 30,
         1995.


                                       4
<PAGE>   7


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

================================================================================
                                     GENERAL

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

The following discussion and analysis of the financial condition and results of
operations of MFC and Market should be read in conjunction with and with
reference to the consolidated financial statements, and the notes thereto,
included in this Annual Report.

MFC was incorporated for the purpose of owning all of Market's outstanding stock
upon conversion to stock form. As a result, the discussion that follows focuses
on Market's financial condition and results of operations.

In addition to the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the operations of Market and MFC's actual
results could differ significantly from those discussed in the forward-looking
statements. Some of the factors that could cause or contribute to such
differences are discussed herein but also include changes in the economy and
interest rates in the nation and MFC's market area.

Without limiting the generality of the foregoing, some of the statements in the
following referenced sections of this discussion and analysis are forward
looking and are, therefore, subject to certain risks and uncertainties:

         1.       Management's analysis of the interest rate risk of Market as
                  set forth under "Asset and Liability Management;"

         2.       Management's discussion of the liquidity of Market's assets
                  and the regulatory capital of Market as set forth under
                  "Liquidity and Capital Resources;"

         3.       Management's determination of the amount and adequacy of the
                  allowance for loan losses as set forth under "Changes in
                  Financial Condition," and "Comparison of Operating Results for
                  the Years Ended September 30, 1999 and 1998;"

         4.       Management's estimate as to the effects of recent accounting
                  pronouncements as set forth under "Recent Accounting
                  Pronouncements;"

         5.       Management's determination of the effect of the
                  Gramm-Leach-Bliley Act on the business of MFC and Market as
                  set forth under "Potential Impact Of Current Legislation on
                  Future Results of Operation;" and

         6.       Management's determination of the effect of the year 2000 on
                  MFC's information technology systems as set forth under "Year
                  2000 Compliance Matters."


                                       5
<PAGE>   8


                         CHANGES IN FINANCIAL CONDITION

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

         MFC's assets at September 30, 1999, totaled approximately $55.5
million, an $843,000, or 1.5%, increase over the $54.6 million total at
September 30, 1998. The increase was funded through growth in deposits and net
earnings for the year including gains on sale of securities designated as
available for sale.

         Liquid assets (cash and cash equivalents, certificates of deposit and
investment securities) totaled $16.5 million at September 30, 1999, a decrease
of $3.4 million from the total at September 30, 1998. Net proceeds from the
decline in liquid assets were primarily used to fund net loan originations of
$2.4 million and purchase mortgage-backed securities of $1.5 million.

         Loans receivable totaled $35.2 million at September 30, 1999, an
increase of $2.4 million, or 7.3%, over September 30, 1998. This increase
resulted primarily from loan originations of $11.6 million, which exceeded
principal repayments of $9.2 million. Market's allowance for loan losses totaled
$52,000 at September 30, 1999 and 1998. The allowance represented .15% and .16%
of total loans at September 30, 1999 and 1998, respectively. Nonperforming loans
totaled $119,000 and $171,000, or .34% and .52% of total loans at September 30,
1999 and 1998, respectively.

         Although management believes that its allowance for loan losses at
September 30, 1999, was adequate based upon the available facts and
circumstances, there can be no assurances that additions to such allowance will
not be necessary in future periods, which could adversely affect Market's
results of operations.

         Deposits totaled $39.9 million at September 30, 1999, an increase of
$2.2 million, or 5.7%, over the total at September 30, 1998. Demand accounts
increased by approximately $601,000, and certificates of deposit increased by
$1.6 million during the year ended September 30, 1999. At September 30, 1999,
certificates of deposit that will mature within one year accounted for 54.4% of
Market's deposit liabilities. Proceeds from the increase in deposits were used
to fund loan originations, purchase office premises and repay other borrowed
money.

         Shareholders' equity totaled $14.6 million at September 30, 1999, a
decrease of $503,000, or 3.3%, from September 30, 1998. The decrease was due
primarily to a purchase of 76,286 treasury shares totaling $838,000, coupled
with dividends paid of $364,000, which were partially offset by net earnings of
$698,000.

         Market is required to meet each of three minimum capital standards
promulgated by the Office of Thrift Supervision (the "OTS"), hereinafter
described as the tangible capital requirement, the core capital requirement and
the risk-based capital requirement. The tangible capital requirement provides
for the maintenance of shareholders' equity less all intangible assets equal to
1.5% of adjusted total assets. The core capital requirement provides for the
maintenance of tangible capital plus certain forms of supervisory goodwill equal
to 3% of adjusted total assets, while the risk-based capital requirement
mandates maintenance of core capital plus general loan loss allowances equal to
8% of risk-weighted assets as defined by OTS regulations. As of September 30,
1999, Market's tangible and core capital totaled $12.4 million, or 22.8% of


                                       6
<PAGE>   9

adjusted total assets, which exceeded the minimum requirements of $815,000 and
$1.6 million, by $11.6 million and $10.7 million, respectively. As of September
30, 1999, Market's risk-based capital was $12.4 million, or 45.4% of
risk-weighted assets, exceeding the minimum requirement by $10.2 million.


                         COMPARISON OF OPERATING RESULTS
                 FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998

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

GENERAL. Net earnings totaled $698,000 for the year ended September 30, 1999, a
$146,000, or 26.4%, increase over the $552,000 of net earnings recorded for the
year ended September 30, 1998. The increase in earnings resulted primarily from
a $467,000 increase in other income, which was partially offset by a $221,000
decrease in net interest income and a $76,000 increase in the provision for
federal income taxes.

NET INTEREST INCOME. Total interest income amounted to $3.7 million for the year
ended September 30, 1999, a $152,000, or 3.9%, decrease from the comparable 1998
period. The decrease resulted primarily from a decrease in the investment
securities portfolio due to a $4.7 million special cash distribution to
shareholders paid in April 1998. Interest income on investment securities
decreased due primarily to a decrease of $1.8 million, to $11.5 million, of
weighted average balances outstanding during fiscal 1999, which was coupled with
a 57 basis point (100 basis points equals one percent) decrease in the
weighted-average yield. Interest income on interest-bearing deposits totaled
$343,000 in fiscal 1999, a decrease of $140,000, or 29.0%, from fiscal 1998. The
decrease resulted primarily from a decrease of $2.1 million in weighted-average
balances outstanding, coupled with a 20 basis point decrease in the
weighted-average yield, from 6.07% in fiscal 1998 to 5.87% in fiscal 1999.
Interest income on mortgage-backed securities decreased by $6,000, or 5.9%,
during fiscal 1999, compared to 1998, as a result of a decline of 105 basis
points in the weighted-average yield, from 8.81% in fiscal 1998 to 7.76% in
fiscal 1999. Interest income on loans increased $179,000, or 7.4%, primarily due
to a $3.1 million increase in weighted average balances outstanding during
fiscal 1999, which was partially offset by a decline of 20 basis points in the
weighted-average yield, from 7.90% in fiscal 1998 to 7.70% in fiscal 1999.

Interest expense on deposits totaled $1.8 million for fiscal 1999, an increase
of $57,000, or 3.3%, over the comparable 1998 period. This increase was due
primarily to an increase of $2.8 million in the weighted average balance
outstanding, which was partially offset by a 20 basis point decrease in the
average cost of deposits from 4.74% in fiscal 1998 to 4.54% in fiscal 1999.
Interest expense on other borrowings increased by $12,000, or 133.3%, primarily
due to the increase in the weighted average balance outstanding of $126,000,
coupled with a 106 basis point increase in the weighted average cost, from 7.44%
in fiscal 1998 to 8.50% in fiscal 1999.

As a result of the foregoing changes in interest income and interest expense,
net interest income decreased by $221,000, or 10.3%, for fiscal 1999, compared
to fiscal 1998. The interest rate spread decreased by two basis points, from
2.60% in fiscal 1998 to 2.58% in fiscal 1999 and the net interest margin
decreased by 37 basis points, from 4.07% in fiscal 1998 to 3.70% in fiscal 1999.



                                       7
<PAGE>   10

PROVISION FOR LOSSES ON LOANS. A provision for losses on loans is charged to
earnings to bring the total allowance to a level considered appropriate by
management based on historical experience, the volume and type of lending
conducted by Market, the status of past due principal and interest payments,
general economic conditions, particularly as such conditions relate to Market's
market area, and other factors related to the collectibility of Market's loan
portfolio. As a result of such analysis, management decided no additional
provision for losses on loans was necessary during the year ended September 30,
1999. There can be no assurance, however, that the allowance for loan losses of
Market will be adequate to cover losses on nonperforming assets in the future.

OTHER INCOME. Other operating income, primarily service fees on money orders and
travelers' checks, totaled $11,000 and $7,000 for the years ended September 30,
1999 and 1998, respectively. Gains on sale of securities during fiscal 1999
reflected a $463,000 increase over fiscal 1998. The sale of investment
securities during fiscal 1999 reflected management's decision to redeploy price
appreciation on securities to higher yielding earning assets.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and other
expense increased by $24,000, or 1.8%, for the year ended September 30, 1999,
compared to fiscal 1998. The increase resulted primarily from a $28,000, or
3.6%, increase in employee compensation and benefits, due to normal merit
increases and expenses related to stock benefit plans.

FEDERAL INCOME TAXES. The provision for federal income taxes totaled $360,000
for the year ended September 30, 1999, compared to $284,000 for the 1998 fiscal
year. The $76,000, or 26.8%, increase resulted from a $222,000, or 26.6%,
increase in earnings before taxes. The effective tax rate was 34.0% for each of
the years ended September 30, 1999 and 1998.


                         COMPARISON OF OPERATING RESULTS
                 FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997

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

GENERAL. Net earnings totaled $552,000 for the year ended September 30, 1998, a
$50,000, or 10.0%, increase over the $502,000 of net earnings recorded for the
year ended September 30, 1997. The increase in earnings resulted primarily from
a $327,000 increase in net interest income, which was partially offset by a
$253,000 increase in general, administrative and other expense and a $25,000
increase in the provision for federal income taxes.

NET INTEREST INCOME. Total interest income amounted to $3.9 million for the year
ended September 30, 1998, a $372,000, or 10.6%, increase over the comparable
1997 period. The increase in total interest income was attributable to an
increase of $437,000, or 22.1%, in interest income on loans, due primarily to an
increase of $5.6 million, to $30.5 million, of weighted-average balances
outstanding during fiscal 1998, which was partially offset by a 2 basis point
decrease in the weighted-average yield. Interest income on investment securities
and interest-bearing deposits totaled $1.4 million in fiscal 1998, a decrease of
$41,000, or 2.9%, from fiscal 1997. The decrease resulted primarily from a
decrease of $2.2 million in weighted-average balances outstanding, which was
partially offset by a 44 basis point increase in the weighted-



                                       8
<PAGE>   11

average yield, from 6.04% in fiscal 1997 to 6.48% in fiscal 1998. Interest
income on mortgage-backed securities decreased by $24,000, or 19.2%, during
fiscal 1998, as compared to 1997, as a result of a decline of $255,000 in the
weighted-average balances outstanding, coupled with a decrease of 11 basis
points in the weighted-average yield, from 8.92% in fiscal 1997 to 8.81% in
fiscal 1998.

Interest expense on deposits totaled $1.7 million for fiscal 1998, an increase
of $36,000, or 2.1%, from the comparable 1997 period. This increase was due
primarily to a 10 basis point increase in the average cost of deposits, from
4.64% in fiscal 1997 to 4.74% in fiscal 1998.

As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $327,000, or 17.9%, for fiscal 1998, compared
to fiscal 1997. The interest rate spread increased by 18 basis points, from
2.42% in fiscal 1997 to 2.60% in fiscal 1998 and the net interest margin
increased by 40 basis points, from 3.67% in fiscal 1997 to 4.07% in fiscal 1998.

PROVISION FOR LOSSES ON LOANS. Based on an analysis of historical experience,
the volume and type of lending conducted by Market, the status of past due
principal and interest payments, general economic conditions, particularly as
such conditions relate to Market's market area, and other factors related to the
collectibility of Market's loan portfolio, management decided no additional
provision for losses on loans was necessary during the year ended September 30,
1998.

OTHER OPERATING INCOME. Other operating income, primarily service fees on money
orders and travelers' checks, totaled $7,000 and $6,000 for the years ended
September 30, 1998 and 1997, respectively.

GENERAL, ADMINISTRATIVE AND OTHER EXPENSE. General, administrative and other
expense increased by $253,000, or 23.7%, for the year ended September 30, 1998,
compared to fiscal 1997. The increase resulted primarily from a $119,000, or
18.1%, increase in employee compensation and benefits, due to normal merit
increases and expenses related to stock benefit plans, an $87,000, or 89.7%,
increase in franchise taxes due to an increase in shareholders' equity as a
result of the proceeds from the stock conversion in 1997, and a $43,000, or
25.7%, increase in other operating expenses primarily due to operating expenses
of MFC in the 1998 period.

FEDERAL INCOME TAXES. The provision for federal income taxes totaled $284,000
for the year ended September 30, 1998, compared to $259,000 for the 1997 fiscal
year. The $25,000, or 9.7%, increase resulted from a $75,000, or 9.9%, increase
in earnings before taxes. The effective tax rate was 34.0% for each of the years
ended September 30, 1998 and 1997.


                                       9
<PAGE>   12

                  AVERAGE BALANCE, YIELD, RATE AND VOLUME DATA

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

The following table sets forth certain information relating to MFC's average
balance sheet information and reflects the average yield on interest-earning
assets and the average cost of interest-bearing liabilities for the periods
indicated. Such yields and costs are derived by dividing income or expense by
the average monthly balance of interest-earning assets or interest-bearing
liabilities, respectively, for the periods presented. Average balances are
derived from month-end balances, which include nonaccruing loans in the loan
portfolio, net of the allowance for loan losses.

<TABLE>
<CAPTION>
                                                                Year Ended September 30,
                            ----------------------------------------------------------------------------------------------------
                                         1999                              1998                            1997
                            ------------------------------- --------------------------------- ----------------------------------
                              Average    Interest   Average   Average    Interest    Average    Average     Interest   Average
                            outstanding   earned/    yield/ outstanding   earned/     yield/  outstanding   earned/     yield/
                              balance      paid       rate     balance     paid        rate      balance      paid       rate
                            -----------  --------   ------- -----------  --------    -------  -----------   --------   --------
                                                                  (Dollars in thousands)
<S>                           <C>          <C>         <C>     <C>         <C>         <C>       <C>         <C>         <C>
Interest-earning assets:
  Loans receivable            $33,643      $2,590      7.70%   $30,524     $2,411      7.90%     $24,921     $1,974      7.92%
  Mortgage-backed securities    1,224          95      7.76      1,147        101      8.81        1,402        125      8.92
  Investment securities        11,456         705      6.15     13,249        890      6.72       11,812        708      5.99
  Other interest-earning        5,845         343      5.87      7,954        483      6.07       11,598        706      6.09
   assets                     -------      ------      ----    -------     ------      ----       ------     ------      ----

    Total interest-earning     52,168       3,733      7.15     52,874      3,885      7.35       49,733      3,513      7.06
     assets

Non-interest-earning assets     3,481                            2,559                             2,210
                              -------                          -------                           -------

    Total assets              $55,649                          $55,433                           $51,943
                              =======                          =======                           =======

Interest-bearing
liabilities:
  Passbook and club accounts  $10,136         277      2.73     $9,875        279      2.83      $10,421        300      2.88
  Money market demand           2,039          55      2.70      2,254         64      2.84        2,872         81      2.82
  accounts
  Certificates of deposit      27,048       1,450      5.36     24,246      1,382      5.70       23,069      1,308      5.67
  Borrowings                      247          21      8.50        121          9      7.44            -          -         -
                              --------   --------      ----    --------    ------      ----      -------     ------      ----
    Total interest-bearing
     liabilities               39,470       1,803      4.57     36,496      1,734      4.75       36,362      1,689      4.64
                                            -----      ----                ------      ----                  ------      ----

Non-interest-bearing            1,300                            1,113                               909
  liabilities                 -------                          -------                           -------

    Total liabilities          40,770                           37,609                            37,271

Shareholders' equity           14,879                           17,824                            14,672
                              -------                          -------                            ------

    Total liabilities and
     shareholders' equity     $55,649                          $55,433                           $51,943
                              =======                          =======                           =======

  Net interest income and
   spread                                  $1,930      2.58%               $2,151      2.60%                 $1,824      2.42%
                                           ======      ====                ======      ====                  ======      ====

  Net interest margin (net
   interest income as a
   percent of average
   interest-earning assets)                            3.70%                           4.07%                             3.67%
                                                       ====                            ====                              ====

Average interest-earning
  assets to
  interest-bearing liabilities                       132.17%                         144.88%                           136.77%
                                                     ======                          ======                            ======
</TABLE>



                                       10
<PAGE>   13


The table below describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected Market's interest income and expense during the years indicated.
For each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume
(changes in volume multiplied by prior year rate), (ii) changes in rate (changes
in rate multiplied by prior year volume) and (iii) total changes in rate and
volume. The combined effects of changes in both volume and rate, which cannot be
separately identified, have been allocated proportionately to the change due to
volume and the change due to rate.

<TABLE>
<CAPTION>
                                                                Year ended September 30,
                                                   --------------------------------------------------
                                                   1999 vs. 1998                        1998 vs. 1997
                                          ------------------------------    --------------------------------
                                               Increase                          Increase
                                           (decrease) due to                 (decrease) due to
                                           -----------------                 -----------------
                                           Volume      Rate       Total       Volume      Rate       Total
                                           ------      ----       -----       ------      ----       -----
                                                                    (In thousands)
<S>                                        <C>         <C>        <C>         <C>        <C>        <C>
Interest income attributable to:
    Loans receivable                       $  240      $(61)      $ 179       $ 442      $  (5)     $ 437
    Mortgage-backed securities                  6       (12)         (6)        (22)        (2)       (24)
    Investment securities                    (109)      (76)       (185)         96         86        182
    Interest-bearing deposits                (124)      (16)       (140)       (221)        (2)      (223)
                                           ------     -----     -------     -------      -----      -----
Total interest income                          13      (165)       (152)        295         77        372
Interest expense attributable to:
    Deposits                                  152       (95)         57          33          3         36
    Borrowings                                 11         1          12           9          -          9
                                           ------     -----     -------     -------      -----      -----
Total interest expense                        163       (94)         69          42          3         45
                                           ------     -----     -------     -------      -----      -----
   Increase (decrease) in net interest
    income                                  $(150)     $(71)      $(221)      $ 253        $74      $ 327
                                            =====      ====       ======      =====        ===      =====
</TABLE>


                         ASSET AND LIABILITY MANAGEMENT

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

Market, like other financial institutions, is subject to interest rate risk to
the extent that its interest-earning assets reprice differently than its
interest-bearing liabilities. As part of its effort to monitor and manage
interest rate risk, Market uses the "net portfolio value" ("NPV") methodology
adopted by the OTS as part of its capital regulations. Although Market is not
currently subject to the NPV regulation because such regulation does not apply
to institutions with less than $300 million in assets and risk-based capital in
excess of 12%, the application of the NPV methodology illustrates certain
aspects of Market's interest rate risk.

Generally, NPV is the discounted present value of the difference between
incoming cash flows on interest-earning and other assets and outgoing cash flows
on interest-bearing and other liabilities. The application of the methodology
attempts to quantify interest rate risk as the change in the NPV which would
result from a theoretical 200 basis point change in market interest rates. Both
a 200 basis point increase in market interest rates and a 200 basis point
decrease in market interest rates are considered. If the NPV would decrease more
than 2% of the



                                       11
<PAGE>   14

present value of the institution's assets with either an increase or a decrease
in market rates, the institution must deduct 50% of the amount of the decrease
in excess of such 2% in the calculation of the institution's risk-based capital.
See "Liquidity and Capital Resources."

At September 30, 1999, 2% of the present value of Market's assets was
approximately $1.1 million. Because the interest rate risk of a 200 basis point
increase in market interest rates (which was greater than the interest rate risk
of a 200 basis point decrease) was $3.0 million at September 30, 1999, Market
would have been required to deduct approximately $950,000 (50% of the $1.9
million difference) from its capital in determining whether Market met its
risk-based capital requirement. Regardless of such restriction, however,
Market's risk-based capital at September 30, 1999, would still have exceeded the
regulatory requirement by $9.3 million.

Presented below, as of September 30, 1999, and September 30, 1998, is an
analysis of Market's interest rate risk as measured by changes in NPV for
instantaneous and sustained parallel shifts of 100 basis points in market
interest rates. During both of these periods, Market has operated within the
policy limits set by the Board of Directors of Market as the maximum change in
NPV that the Board of Directors deems advisable in the event of various changes
in interest rates.

                                          September 30, 1999
                                  ---------------------------------
    Change in interest rate         $ change             % change
           (Basis Points)            in NPV               in NPV
    ------------------------      -----------          ------------
                             (Dollars in thousands)

              +300                  $(4,478)               (33)%
              +200                   (2,959)               (22)
              +100                   (1,417)               (10)
                 0                        -                  -
              -100                    1,026                  7
              -200                    1,736                 13
              -300                    2,405                 18


                                          September 30, 1999
                                  ---------------------------------
    Change in interest rate         $ change             % change
           (Basis Points)            in NPV               in NPV
    ------------------------      -----------          ------------
                             (Dollars in thousands)
              +300                   (3,439)               (21)
              +200                   (2,172)               (13)
              +100                     (993)                (6)
                 0                        -                  -
              -100                      730                  4
              -200                    1,488                  9
              -300                    2,358                 14

As illustrated in the tables, NPV is more sensitive to rising rates than
declining rates. Such difference in sensitivity occurs principally because, as
rates rise, borrowers do not prepay fixed-rate loans as quickly as they do when
interest rates are declining. Thus, in a rising interest rate



                                       12
<PAGE>   15

environment, because Market has a significant amount of fixed-rate loans in its
loan portfolio, the amount of interest Market would receive on its loans would
increase relatively slowly as loans are slowly prepaid and new loans are made at
higher rates. Moreover, the interest Market would pay on its deposits would
increase rapidly because Market's deposits generally have shorter periods to
repricing. The assumptions used in calculating the amounts in this table are OTS
assumptions.

As with any method of measuring interest rate risk, certain shortcomings are
inherent in the NPV approach. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Also, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Further, in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed securities and
early withdrawal levels from certificates of deposit would likely deviate
significantly from those assumed in making the risk calculations.

In a rising interest rate environment, Market's net interest income could be
expected to be negatively affected. Moreover, rising interest rates could
negatively affect Market's earnings due to diminished loan demand.


                                       13
<PAGE>   16

                         LIQUIDITY AND CAPITAL RESOURCES

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

Liquidity refers to the ability of Market to generate sufficient cash to fund
current loan demand, meet deposit withdrawals and pay operating expenses.
Liquidity is influenced by financial market conditions, fluctuations in interest
rates, general economic conditions and regulatory requirements. Market's liquid
assets, primarily represented by cash and cash equivalents and interest-bearing
deposits in other financial institutions, are a result of its operating,
investing and financing activities. These activities are summarized in the
following table for the years ended September 30, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                              Year ended September 30,
                                                   1999               1998               1997
                                                   ----               ----               ----
                                                                 (In thousands)

<S>                                                 <C>                <C>               <C>
Net cash from operating activities                  $  514             $  798            $   517
Net cash from (used in) investing activities        (3,841)             4,938            (12,041)
Net cash from (used in) financing activities           237             (2,603)             9,690
                                                    ------             ------            -------
Net change in cash and cash equivalents             (3,090)             3,133             (1,834)
Cash and cash equivalents at the beginning           5,381              2,248              4,082
   of the year                                      ------             ------            -------

Cash and cash equivalents at the end of the         $2,291             $5,381            $ 2,248
   year                                             ======             ======            =======

</TABLE>

Market's principal sources of funds are deposits, loan and mortgage-backed
securities repayments, maturities of securities and other funds provided by
operations. Market also has the ability to borrow from the FHLB of Cincinnati.
While scheduled loan repayments and maturing investments are relatively
predictable, deposit flows and early loan and mortgage-backed security
prepayments are influenced to a greater degree by interest rates, general
economic conditions and competition. Market maintains investments in liquid
assets based upon management's assessment of (i) the need for funds, (ii)
expected deposit flows, (iii) the yields available on short-term liquid assets
and (iv) the objectives of Market's asset and liability management program.

At September 30, 1999, Market's certificates of deposit totaled approximately
$27.6 million, or 69.1% of total deposits. Of such amount, approximately $21.7
million in certificates of deposit mature within one year. Based on past
experience and Market's prevailing pricing strategies, management believes that
a substantial percentage of such certificates will be renewed with Market at
maturity. If Market is unable to renew the maturing certificates for any reason,
however, borrowings of up to $9.0 million are available from the FHLB of
Cincinnati.

OTS regulations presently require Market to maintain an average daily balance of
liquid assets, which may include, but are not limited to, investments in U.S.
Treasury and federal agency obligations and other investments in an amount equal
to 4% of the sum of Market's average daily



                                       14
<PAGE>   17

balance of net withdrawable deposit accounts and borrowings payable in one year
or less. The liquidity requirement, which may be changed from time to time by
the OTS to reflect changing economic conditions, is intended to provide a source
of relatively liquid funds upon which Market may rely if necessary to fund
deposit withdrawals or other short-term funding needs. At September 30, 1999,
Market's regulatory liquidity ratio was 39.7%. At such date, Market had
commitments to originate loans totaling $88,000 and undisbursed loans in process
of $17,000 and no commitments to purchase or sell loans. Market considers its
liquidity and capital resources sufficient to meet its outstanding short-term
and long-term needs. See Note I to the Consolidated Financial Statements.

Market is required by applicable law and regulations to meet certain minimum
capital standards. Such capital standards include a tangible capital
requirement, a core capital requirement or leverage ratio and a risk-based
capital requirement. Market exceeded all of its regulatory capital requirements
at September 30, 1999.

The tangible capital requirement requires a savings and loan association to
maintain "tangible capital" of not less than 1.5% of the association's adjusted
total assets. Tangible capital is defined in OTS regulations as core capital
minus any intangible assets.

"Core capital" is comprised of common shareholders' equity (including retained
earnings), noncumulative preferred stock and related surplus, minority interests
in consolidated subsidiaries, certain nonwithdrawable accounts, pledged deposits
of mutual associations and intangible assets, primarily consisting of certain
purchased mortgage servicing rights. OTS regulations require a savings and loan
association to maintain core capital of at least 3% of the association's total
assets. The OTS has proposed to increase such requirement to 4% - 5%, except for
those associations with the highest examination rating and acceptable levels of
risk.

OTS regulations require that a savings and loan association maintain "risk-based
capital" in an amount not less than 8% of its risk-weighted assets. Risk-based
capital is defined as core capital plus certain additional items of capital,
which in the case of Market includes a general loan loss allowance of $52,000 at
September 30, 1999.

The following table summarizes Market's regulatory capital requirements and
actual capital at September 30, 1999:

<TABLE>
<CAPTION>
                                                            Current            Excess of actual
                                                            -------           capital over current     Applicable
                                  Actual capital          requirement              requirement         asset total
                                  --------------          -----------              -----------         -----------
September 30, 1999            Amount       Percent      Amount    Percent     Amount     Percent
------------------            ------       -------      ------    -------     ------     -------
                                                           (Dollars in thousands)

<S>                           <C>            <C>        <C>         <C>       <C>          <C>           <C>
Tangible capital              $12,379        22.8%      $  815      1.5%      $11,564      21.3%         $54,357
Core capital                   12,379        22.8        1,631      3.0        10,748      19.8           54,357
Risk-based capital             12,431        45.4        2,190      8.0        10,241      37.4           27,381
</TABLE>

                                       15
<PAGE>   18

At September 30, 1999, Market had entered into a commitment to make improvements
to its main office and to construct a building addition on the properties
adjacent to the main office for approximately $566,000.


     POTENTIAL IMPACT OF CURRENT LEGISLATION ON FUTURE RESULTS OF OPERATION

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

         On November 12, 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was
enacted into law. The GLB Act makes sweeping changes in the financial services
in which various types of financial institutions may engage. The Glass-Steagall
Act, which had generally prevented banks from affiliating with securities and
insurance firms, was repealed. A new "financial holding company," which owns
only well capitalized and well managed depository institutions, will be
permitted to engage in a variety of financial activities, including insurance
and securities underwriting and agency activities.

         The GLB Act permits unitary savings and loan holding companies in
existence on May 4, 1999, including MFC, to continue to engage in all activities
that they were permitted to engage in prior to the enactment of the Act. Such
activities are essentially unlimited, provided that the thrift subsidiary
remains a qualified thrift lender. Any thrift holding company formed after May
4, 1999, will be subject to the same restrictions as a multiple thrift holding
company. In addition, a unitary thrift holding company in existence on May 4,
1999, may be sold only to a financial holding company engaged in activities
permissible for multiple savings and loan holding companies.

   The GLB Act is not expected to have a material effect on the activities in
which the MFC and Market currently engage, except to the extent that competition
with other types of financial institutions may increase as they engage in
activities not permitted prior to enactment of the GLB Act.


                   EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

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

         In June 1996, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 established standards for reporting and
display of comprehensive income and its components (revenue, expenses, gains and
losses) in a full set of general-purpose financial statements. SFAS No. 130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. It does not require a specific format for that financial statement
but requires that an enterprise display an amount representing total
comprehensive income for the period in the financial statement.

         SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other



                                       16
<PAGE>   19

comprehensive income separately from retained earnings and additional paid-in
capital. SFAS No. 130 is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods is required.
Management adopted SFAS No. 130 effective October 1, 1998, as required, without
material effect on MFC's consolidated financial statements.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 significantly changes
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about reportable segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS No. 131 uses a "management approach" to disclose financial and descriptive
information about the way that management organizes the segments within the
enterprise for making operating decisions and assessing information. For many
enterprises, the management approach will likely result in more segments being
reported. In addition, SFAS No. 131 requires significantly more information to
be disclosed for each reportable segment than is presently being reported in
annual financial statements and also requires that selected information be
reported in interim financial statements. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997. Management adopted SFAS No. 131
effective October 1, 1998, as required, without material effect on MFC's
consolidated financial statements.

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires entities to recognize all
derivatives in their financial statements as either assets or liabilities
measured at fair value. SFAS No. 133 also specifies new methods of accounting
for hedging transactions, prescribes the items and transactions that may be
hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.

         The definition of a derivative financial instrument is complex, but in
general it is an instrument with one or more underlyings, such as an interest
rate or foreign exchange rate, that is applied to a notional amount, such as an
amount of currency, to determine the settlement amount(s). It generally requires
no significant initial investment and can be settled net or by delivery of an
asset that is readily convertible to cash. SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.

         SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to transfer
held-to-maturity debt securities to the available-for-sale or trading category
without calling into question their intent to hold other debt securities to
maturity in the future. SFAS No. 133 is not expected to have a material impact
on MFC's financial statements.


                                       17
<PAGE>   20

                          YEAR 2000 COMPLIANCE MATTERS

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

         As with most providers of financial services, Market's operations are
heavily dependent on information technology systems. Market has addressed the
potential problems associated with the possibility that the computers that
control or operate Market's information technology and infrastructure may not be
programmed to read four-digit date codes and, upon arrival of the year 2000, may
recognize the two-digit code "00" as the year 1900, causing systems to fail to
function or to generate erroneous data.

         Market has appointed a Year 2000 Coordinator who, with support and
oversight from management and the Boards of Directors of both Market and MFC,
has analyzed the risk of potential problems that might arise from the failures
of computers and microprocessors to recognize the Year 2000, and developed a
plan to mitigate such risks. The Year 2000 Coordinator submits monthly and
quarterly progress reports to the Boards of Directors. The impact upon MFC's
results of operation, liquidity and capital resources will be immaterial;
however, approximately $16,000 has been budgeted to ensure Year 2000 compliance.
Through September 1999, Year 2000 expenditures have totaled approximately
$5,000.

         The Year 2000 Coordinator has determined that the greatest potential
impact upon Market and MFC is the risk related to vendors used by Market,
particularly its data processing service bureau. STARCOM is the system used by
the service bureau (NCR) to process account data and generate necessary reports.
NCR has stated in its October 31, 1998 Quarterly Update Letter (a "Year 2000
Readiness Disclosure") that the STARCOM system is Year 2000 qualified per their
Year 2000 Qualification Requirements Definition document.

         Management and the Boards of Directors of Market and MFC have reviewed
the reports regarding Year 2000 testing results to date and have taken
appropriate remedial measures without material cost. No assurance can be given,
however, that significant expense will not be incurred in future periods. In the
unlikely event that Market is ultimately required to purchase replacement
computer systems, programs and equipment, or incur substantial expense to make
Market's current systems, programs and equipment year 2000 compliant, Market's
net earnings and financial condition could be adversely affected.

         The Year 2000 Coordinator has written a contingency plan to provide
options for the Boards of Directors and management in order to ensure that
Market's core business functions can continue to operate in the event of a Year
2000 problem.

         In addition to possible expense related to its own systems, Market
could incur losses if loan payments are delayed due to year 2000 problems
affecting any major borrowers in Market's primary market area. Because Market's
loan portfolio is highly diversified with regard to individual borrowers and
types of businesses and Market's primary market area is not significantly
dependent upon one employer or industry, Market does not expect any significant
or prolonged difficulties that will affect net earnings or cash flow.

         In addition, financial institutions may experience increases in problem
loans and credit losses in the event that borrowers fail to prepare properly for
Year 2000, and higher funding



                                       18
<PAGE>   21

costs could result if consumers react to publicity about the issue by
withdrawing deposits. MFC could also be materially adversely affected if other
third parties, such as governmental agencies, clearing houses, telephone
companies, utilities and other service providers fail to prepare properly.



                                       19
<PAGE>   22

                         REPORT OF INDEPENDENT CERTIFIED
                             PUBLIC ACCOUNTANTS AND
                        CONSOLIDATED FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                                                          PAGE

<S>                                                                                                         <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                          21

FINANCIAL STATEMENTS
     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                                         22
     CONSOLIDATED STATEMENTS OF EARNINGS                                                                    23
     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                                        24
     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                                                        25
     CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                  26
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                             27
</TABLE>


                                       20
<PAGE>   23

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Market Financial Corporation

We have audited the accompanying consolidated statements of financial condition
of Market Financial Corporation as of September 30, 1999 and 1998, and the
related consolidated statements of earnings, comprehensive income, shareholders'
equity, and cash flows for each of the years ended September 30, 1999, 1998 and
1997. These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Market Financial
Corporation as of September 30, 1999 and 1998, and the consolidated results of
its operations and its cash flows for each of the years ended September 30,
1999, 1998 and 1997, in conformity with generally accepted accounting
principles.


/s/ Grant Thornton LLP


Cincinnati, Ohio
November 22, 1999

                                       21
<PAGE>   24

                          MARKET FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                  September 30,
                        (In thousands, except share data)

<TABLE>
<CAPTION>
          ASSETS                                                                                 1999              1998

<S>                                                                                           <C>               <C>
Cash and due from banks                                                                       $   644           $   615
Federal funds sold                                                                              1,392             4,493
Interest-bearing deposits in other financial institutions                                         255               273
                                                                                               ------            ------
          Cash and cash equivalents                                                             2,291             5,381

Certificates of deposit in other financial institutions                                           290             3,790
Investment securities held to maturity - at amortized cost, approximate market
  value of $12,529 and $9,394 at September 30, 1999 and 1998                                   12,800             9,300
Investment securities designated as available for sale - at market                              1,116             1,448
Mortgage-backed securities held to maturity - at cost, approximate market
  value of $2,067 and $902 at September 30, 1999 and 1998                                       2,047               859
Loans receivable - net                                                                         35,219            32,816
Office premises and equipment - at depreciated cost                                               819               127
Federal Home Loan Bank stock - at cost                                                            449               419
Accrued interest receivable                                                                       320               319
Prepaid expenses and other assets                                                                 100               149
                                                                                               ------            ------

          Total assets                                                                        $55,451           $54,608
                                                                                               ======            ======

     LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                                      $39,907           $37,745
Other borrowed money                                                                               -                725
Advances by borrowers for taxes and insurance                                                      59                57
Accrued interest payable                                                                           98                95
Other liabilities                                                                                 160               175
Accrued federal income taxes                                                                       45                18
Deferred federal income taxes                                                                     607               715
                                                                                               ------            ------
          Total liabilities                                                                    40,876            39,530

Commitments                                                                                        -                 -

Shareholders' equity
  Preferred stock - 1,000,000 shares without par value authorized;
    no shares issued                                                                               -                 -
  Common stock - 4,000,000 shares without par value authorized;
    1,335,725 shares issued                                                                        -                 -
  Additional paid-in capital                                                                    8,187             8,191
  Retained earnings - substantially restricted                                                  7,984             7,650
  Shares acquired by stock benefit plans                                                       (1,480)           (1,700)
  Less 76,286 shares of treasury stock - at cost                                                 (838)               -
  Accumulated comprehensive income, unrealized gains on securities
    designated as available for sale, net of related tax effects                                  722               937
                                                                                               ------            ------
          Total shareholders' equity                                                           14,575            15,078
                                                                                               ------            ------

          Total liabilities and shareholders' equity                                          $55,451           $54,608
                                                                                               ======            ======
</TABLE>


The accompanying notes are an integral part of these statements.


                                       22
<PAGE>   25

                          MARKET FINANCIAL CORPORATION

                       CONSOLIDATED STATEMENTS OF EARNINGS

                            Year ended September 30,
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                   1999        1998         1997
<S>                                            <C>         <C>          <C>
Interest income
  Loans                                        $  2,590    $  2,411     $  1,974
  Mortgage-backed securities                         95         101          125
  Investment securities                             705         890          708
  Interest-bearing deposits and other               343         483          706
                                               --------    --------     --------
          Total interest income                   3,733       3,885        3,513

Interest expense
  Deposits                                        1,782       1,725        1,689
  Borrowings                                         21           9         --
                                               --------    --------     --------
          Total interest expense                  1,803       1,734        1,689
                                               --------    --------     --------

          Net interest income                     1,930       2,151        1,824

Other income
  Gain on sale of investments                       463        --           --
  Other operating                                    11           7            6
                                               --------    --------     --------
          Total other income                        474           7            6

General, administrative and other expense
  Employee compensation and benefits                806         778          659
  Occupancy and equipment                           121         122          111
  Federal deposit insurance premiums                 23          28           35
  Franchise taxes                                   191         184           97
  Other operating                                   205         210          167
                                               --------    --------     --------
          Total general, administrative and
            other expense                         1,346       1,322        1,069
                                               --------    --------     --------

          Earnings before income taxes            1,058         836          761

Federal income taxes
  Current                                           359         301           88
  Deferred                                            1         (17)         171
                                               --------    --------     --------
          Total federal income taxes                360         284          259
                                               --------    --------     --------

          NET EARNINGS                         $    698    $    552     $    502
                                               ========    ========     ========

          EARNINGS PER SHARE
            Basic                              $    .58    $    .45          N/A
                                               ========    ========     ========

            Diluted                            $    .57    $    .45          N/A
                                               ========    ========     ========
</TABLE>


The accompanying notes are an integral part of these statements.



                                       23
<PAGE>   26

                          MARKET FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                            Year ended September 30,
                                 (In thousands)


<TABLE>
<CAPTION>
                                                        1999       1998      1997

<S>                                                   <C>        <C>       <C>
Net earnings                                          $  698     $  552    $  502

Other comprehensive income, net of tax:
  Unrealized holding gains on securities during
    the period, net of tax of $47, $143 and
    $108 in 1999, 1998 and 1997, respectively             91        277       209

Reclassification adjustment for realized gains
  included in earnings, net of tax of $157 in 1999      (306)      --        --
                                                      ------     ------    ------

Comprehensive income                                  $  483     $  829    $  711
                                                      ======     ======    ======

Accumulated comprehensive income                      $  722     $  937    $  660
                                                      ======     ======    ======
</TABLE>



The accompanying notes are an integral part of these statements.


                                       24
<PAGE>   27


                          MARKET FINANCIAL CORPORATION

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                  Years ended September 30, 1999, 1998 and 1997
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                   UNREALIZED GAINS          SHARES
                                                                                                      ON SECURITIES        ACQUIRED
                                                                       ADDITIONAL                     DESIGNATED AS        BY STOCK
                                                            COMMON        PAID-IN      RETAINED           AVAILABLE         BENEFIT
                                                             STOCK        CAPITAL      EARNINGS            FOR SALE           PLANS

<S>                                                           <C>        <C>             <C>                   <C>          <C>
Balance at October 1, 1996                                    $ -        $     -         $7,063                $451         $    -

Net proceeds from issuance of common shares                     -          12,832            -                   -               -
Disbursement of loan to ESOP                                    -              -             -                   -           (1,069)
Cash dividends of $.07 per share                                -              -            (93)                 -               -
Unrealized gains on securities designated as available
  for sale, net of related tax effects                          -              -             -                  209              -
Net earnings for the year ended September 30, 1997              -              -            502                  -               -
                                                               ---        -------        ------                  --          ------

Balance at September 30, 1997                                   -          12,832         7,472                 660          (1,069)

Purchase of shares for stock benefit plans                      -              -             -                   -             (729)
Amortization of expense related to stock benefit plans          -              34            -                   -               98
Cash distributions of $3.78 per share                           -          (4,675)         (374)                 -               -
Unrealized gains on securities designated as available
  for sale, net of related tax effects                          -              -             -                  277              -
Net earnings for the year ended September 30, 1998              -              -            552                  -               -
                                                               ---        -------        ------                  --          ------

Balance at September 30, 1998                                   -           8,191         7,650                 937          (1,700)

Purchase of treasury stock                                      -              -             -                   -               -
Amortization of expense related to stock benefit plans          -              (4)           -                   -              220
Cash dividends of $.28 per share                                -              -           (364)                 -               -
Realized gains on securities designated as available for
  sale, net of related tax effects                              -              -             -                 (306)             -
Unrealized gains on securities designated as available
  for sale, net of related tax effects                          -              -             -                   91              -
Net earnings for the year ended September 30, 1999              -              -            698                  -               -
                                                               ---        -------        ------                  --          ------

Balance at September 30, 1999                                 $ -        $  8,187        $7,984                $722         $(1,480)
                                                               ===        =======         =====                 ===          ======
</TABLE>

<TABLE>
<CAPTION>
                                                                       TREASURY
                                                                          STOCK        TOTAL

<S>                                                                       <C>       <C>
Balance at October 1, 1996                                                $  -      $  7,514

Net proceeds from issuance of common shares                                  -        12,832
Disbursement of loan to ESOP                                                 -        (1,069)
Cash dividends of $.07 per share                                             -           (93)
Unrealized gains on securities designated as available
  for sale, net of related tax effects                                       -           209
Net earnings for the year ended September 30, 1997                           -           502
                                                                            ---     --------

Balance at September 30, 1997                                                -        19,895

Purchase of shares for stock benefit plans                                   -          (729)
Amortization of expense related to stock benefit plans                       -           132
Cash distributions of $3.78 per share                                        -        (5,049)
Unrealized gains on securities designated as available
  for sale, net of related tax effects                                       -           277
Net earnings for the year ended September 30, 1998                           -           552
                                                                            ---     --------

Balance at September 30, 1998                                                -        15,078

Purchase of treasury stock                                                 (838)        (838)
Amortization of expense related to stock benefit plans                       -           216
Cash dividends of $.28 per share                                             -          (364)
Realized gains on securities designated as available for
  sale, net of related tax effects                                           -          (306)
Unrealized gains on securities designated as available
  for sale, net of related tax effects                                       -            91
Net earnings for the year ended September 30, 1999                           -           698
                                                                            ---     --------

Balance at September 30, 1999                                             $(838)    $ 14,575
                                                                           ====      =======
</TABLE>



The accompanying notes are an integral part of these statements.


                                       25
<PAGE>   28

                          MARKET FINANCIAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                            Year ended September 30,
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               1999         1998         1997

<S>                                                                        <C>          <C>          <C>
Cash flows from operating activities:
  Net earnings for the year                                                $    698     $    552     $    502
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Amortization of premiums and discounts on
      investments and mortgage-backed securities, net                             2            1          (36)
    Depreciation and amortization                                                30           36           31
    Amortization of deferred loan origination fees                               (3)          (3)          (3)
    Amortization of expense related to stock benefit plans                      216          132         --
    Gain on sale of investment securities designated as available
      for sale                                                                 (463)        --           --
    Federal Home Loan Bank stock dividends                                      (30)         (29)         (26)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                                (1)         201         (181)
      Accrued interest payable                                                    3           (4)         (18)
      Prepaid expenses and other assets                                          49          (79)         126
      Other liabilities                                                         (15)          38         (136)
      Federal income taxes
        Current                                                                  27          (30)          87
        Deferred                                                                  1          (17)         171
                                                                           --------     --------     --------
         Net cash provided by operating activities                              514          798          517

Cash flows provided by (used in) investing activities:
  Purchase of investment securities designated as held to maturity          (11,000)      (6,600)     (14,057)
  Proceeds from maturity of investment securities                             7,500       14,560        5,900
  Proceeds from sale of investment securities designated as
    available for sale                                                          471         --           --
  Purchase of mortgage-backed securities designated as held to maturity      (1,486)        --           --
  Principal repayments on mortgage-backed securities                            296          405          279
  Loan disbursements                                                        (11,582)     (12,494)      (7,732)
  Principal repayments on loans                                               9,182        6,183        3,229
  Purchase of office premises and equipment                                    (722)         (16)         (10)
  Decrease in certificates of deposit in other
    financial institutions - net                                              3,500        2,900          350
                                                                           --------     --------     --------
         Net cash provided by (used in) investing activities                 (3,841)       4,938      (12,041)

Cash flows provided by (used in) financing activities:
  Net increase (decrease) in deposits                                         2,162        2,442       (1,979)
  Proceeds from other borrowed money                                            180          725         --
  Repayment of other borrowed money                                            (905)        --           --
  Advances by borrowers for taxes and insurance                                   2            8           (1)
  Shares acquired for stock benefit plans                                      --           (729)        --
  Purchase of treasury stock                                                   (838)        --           --
  Net proceeds from issuance of common shares                                  --           --         12,832
  Disbursement of loan to ESOP                                                 --           --         (1,069)
  Capital distributions and dividends paid on common stock                     (364)      (5,049)         (93)
                                                                           --------     --------     --------
         Net cash provided by (used in) financing activities                    237       (2,603)       9,690
                                                                           --------     --------     --------

         Net increase (decrease) in cash and cash equivalents
           (balance carried forward)                                         (3,090)       3,133       (1,834)
                                                                           --------     --------     --------
</TABLE>


                                       26
<PAGE>   29


                          MARKET FINANCIAL CORPORATION

                CONSOLDIATED STATEMENTS OF CASH FLOWS (CONTINUED)

                            Year ended September 30,
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                          1999         1998        1997

<S>                                                                   <C>          <C>         <C>
         Net increase (decrease) in cash and cash
           equivalents (balance brought forward)                      $ (3,090)    $  3,133    $ (1,834)

Cash and cash equivalents at beginning of year                           5,381        2,248       4,082
                                                                      --------     --------    --------

Cash and cash equivalents at end of year                              $  2,291     $  5,381    $  2,248
                                                                      ========     ========    ========


Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Federal income taxes                                              $    264     $    340    $   --
                                                                      ========     ========    ========

    Interest on deposits and borrowings                               $  1,800     $  1,738    $  1,707
                                                                      ========     ========    ========


Supplemental disclosure of noncash investing activities:
  Unrealized gains on securities designated as available for sale,
    net of related tax effects                                        $     91     $    277    $    209
                                                                      ========     ========    ========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       27
<PAGE>   30

                          MARKET FINANCIAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES

    On April 16, 1996, the Board of Directors of Market Bank, formerly known as
    The Market Building and Saving Company (the "Company"), unanimously adopted
    a Plan of Conversion to convert the Company from a mutual savings and loan
    association under Ohio law to a stock savings and loan association under
    Ohio law with the concurrent formation of a newly chartered holding company,
    Market Financial Corporation (the "Corporation"). The conversion was
    accomplished through amendment of the Company's Articles of Incorporation
    and the sale of the Corporation's common shares in an amount equal to the
    pro forma market value of the Company after giving effect to the conversion.
    A subscription offering of the shares of the Corporation to the Company's
    members and to an employee stock benefit plan was conducted.

    The conversion was completed on March 27, 1997, and resulted in the issuance
    of 1,335,725 common shares of the Corporation which, after consideration of
    offering expenses totaling approximately $525,000 and shares purchased by
    the ESOP of approximately $1.1 million, resulted in net proceeds of $11.8
    million.

    The Corporation is a savings and loan holding company whose activities are
    primarily limited to holding the stock of the Company. Future references to
    the Corporation or the Company are utilized herein as the context requires.
    The Company conducts a general banking business in southwestern Ohio which
    consists of attracting deposits from the general public and applying those
    funds to the origination of loans for consumer and residential purposes. The
    Company's profitability is significantly dependent on net interest income,
    which is the difference between interest income generated from
    interest-earning assets (i.e. loans and investments) and the interest
    expense paid on interest-bearing liabilities (i.e. customer deposits and
    borrowed funds). Net interest income is affected by the relative amount of
    interest-earning assets and interest-bearing liabilities and the interest
    received or paid on these balances. The level of interest rates paid or
    received by the Company can be significantly influenced by a number of
    environmental factors, such as governmental monetary policy, that are
    outside of management's control.

    The consolidated financial information presented herein has been prepared in
    accordance with generally accepted accounting principles ("GAAP") and
    general accounting practices within the financial services industry. In
    preparing financial statements in accordance with GAAP, management is
    required to make estimates and assumptions that affect the reported amounts
    of assets and liabilities and the disclosure of contingent assets and
    liabilities at the date of the financial statements and revenues and
    expenses during the reporting period. Actual results could differ from such
    estimates.

    The following is a summary of significant accounting policies which have
    been consistently applied in the preparation of the accompanying
    consolidated financial statements.



                                       28
<PAGE>   31


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    1.  PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of the
    Corporation and its wholly-owned subsidiary, the Company. All significant
    intercompany balances and transactions have been eliminated.

    2.  INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES

    The Corporation accounts for investment and mortgage-backed securities in
    accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
    "Accounting for Certain Investments in Debt and Equity Securities." SFAS No.
    115 requires that investments be categorized as held-to-maturity, trading,
    or available-for-sale. Securities classified as held-to-maturity are carried
    at cost only if the Corporation has the positive intent and ability to hold
    these securities to maturity. Trading securities and securities
    available-for-sale are carried at fair value with resulting unrealized gains
    or losses charged to operations or shareholders' equity, respectively.

    The Corporation's shareholders' equity reflected unrealized gains on
    securities designated as available for sale, net of applicable tax effects,
    totaling approximately $722,000 and $937,000 at September 30, 1999 and 1998,
    respectively.

    Realized gains and losses on the sale of investment and mortgage-backed
    securities are recognized using the specific identification method.

    3.  LOANS RECEIVABLE

    Loans are stated at the principal amount outstanding, adjusted for deferred
    loan origination fees and the allowance for loan losses. Interest is accrued
    as earned unless the collectibility of the loan is in doubt. Uncollectible
    interest on loans that are contractually past due is charged off, or an
    allowance is established based on management's periodic evaluation. The
    allowance is established by a charge to interest income equal to all
    interest previously accrued, and income is subsequently recognized only to
    the extent that cash payments are received until, in management's judgment,
    the borrower's ability to make periodic interest and principal payments has
    returned to normal, in which case the loan is returned to accrual status.

    The Company accounts for loan origination fees in accordance with SFAS No.
    91, "Accounting for Nonrefundable Fees and Costs Associated with Originating
    or Acquiring Loans and Initial Direct Costs of Leases". Pursuant to the
    provisions of SFAS No. 91, origination fees received from loans, net of
    direct origination costs, are deferred and amortized to interest income
    using the level yield method, giving effect to actual loan prepayments.
    Additionally, SFAS No. 91 generally limits the definition of loan
    origination costs to direct costs attributable to originating a loan, i.e.,
    principally actual personnel costs.


                                       29
<PAGE>   32


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    4.  ALLOWANCE FOR LOAN LOSSES

    It is the Company's policy to provide valuation allowances for estimated
    losses on loans based on past loss experience, current trends in the level
    of delinquent and specific problem loans, loan concentrations, changes in
    the composition of the loan portfolio, adverse situations that may affect
    the borrower's ability to repay, the estimated value of any underlying
    collateral and current and anticipated economic conditions in the primary
    lending areas. When the collection of a loan becomes doubtful, or otherwise
    troubled, the Company records a charge-off equal to the difference between
    the fair value of the property securing the loan and the loan's carrying
    value. Major loans and major lending areas are reviewed periodically to
    determine potential problems at an early date. The allowances are increased
    by charges to earnings and decreased by charge-offs (net of recoveries).

    The Company accounts for impaired loans in accordance with SFAS No. 114,
    "Accounting by Creditors for Impairment of a Loan," which requires that
    impaired loans be measured based upon the present value of expected future
    cash flows discounted at the loans' effective interest rate or, as an
    alternative, at the loans' observable market price or fair value of the
    collateral.

    A loan is defined under SFAS No. 114 as impaired when, based on current
    information and events, it is probable that a creditor will be unable to
    collect all amounts due according to the contractual terms of the loan
    agreement. In applying the provisions of SFAS No. 114, the Company considers
    its investment in one- to four-family residential loans and consumer
    installment loans to be homogeneous and therefore excluded from separate
    identification for evaluation of impairment. With respect to the Company's
    investment in nonresidential and multifamily residential real estate loans,
    and its evaluation of impairment thereof, such loans are generally
    collateral dependent and, as a result, are carried as a practical expedient
    at the lower of cost or fair value. Collateral dependent loans which are
    more than ninety days delinquent are considered to constitute more than a
    minimum delay in repayment and are evaluated for impairment under SFAS No.
    114 at that time.

    At September 30, 1999 and 1998, the Company had no loans that would be
    defined as impaired under SFAS No. 114.



                                       30
<PAGE>   33

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    5.  OFFICE PREMISES AND EQUIPMENT

    Office premises and equipment are carried at cost and include expenditures
    which extend the useful lives of existing assets. Maintenance, repairs and
    minor renewals are expensed as incurred. For financial reporting,
    depreciation is provided on the straight-line method over the useful service
    lives of the assets, estimated to be thirty to forty years for the
    buildings, thirty years for building improvements and five to ten years for
    furniture and equipment.
    An accelerated depreciation method is used for tax reporting purposes.

    6.  REAL ESTATE ACQUIRED THROUGH FORECLOSURE

    Real estate acquired through foreclosure is carried at the lower of the
    loan's unpaid principal balance (cost) or fair value less estimated selling
    expenses at the date of acquisition. A loan loss provision is recorded for
    any write down in the loan's carrying value to fair value at the date of
    acquisition. A real estate loss provision is recorded if the properties'
    fair value subsequently declines below the value determined at the recording
    date. In determining the lower of cost or fair value at acquisition, costs
    relating to development and improvement of property are capitalized. Costs
    relating to holding real estate acquired through foreclosure, net of rental
    income, are charged against earnings as incurred.

    7.  FEDERAL INCOME TAXES

    The Corporation accounts for federal income taxes in accordance with the
    provisions of SFAS No. 109, "Accounting for Income Taxes". Pursuant to the
    provisions of SFAS No. 109, a deferred tax liability or deferred tax asset
    is computed by applying the expected statutory tax rates to net taxable or
    deductible differences between the tax basis of an asset or liability and
    its reported amount in the financial statements that will result in taxable
    or deductible amounts in future periods. Deferred tax assets are recorded
    only to the extent that the amount of net deductible temporary differences
    or carryforward attributes may be utilized against current period earnings,
    carried back against prior years' earnings, offset against taxable temporary
    differences reversing in future periods, or utilized to the extent of
    management's estimate of future taxable income. A valuation allowance is
    provided for deferred tax assets to the extent that the value of net
    deductible temporary differences and carryforward attributes exceeds
    management's estimates of taxes payable on future taxable income. Deferred
    tax liabilities are provided on the total amount of net temporary
    differences taxable in the future.

    The Corporation's principal temporary differences between pretax financial
    income and taxable income result primarily from the practice of preparing
    tax returns on the cash basis of accounting, while the consolidated
    financial statements are prepared on the accrual basis of accounting, and
    from different methods of accounting for deferred loan origination fees,
    Federal Home Loan Bank stock dividends and the Company's general loan loss
    allowance. A temporary difference is also recognized for depreciation
    utilizing accelerated methods for federal income tax purposes.


                                       31
<PAGE>   34


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    8.  BENEFIT PLANS

    The Corporation has an Employee Stock Ownership Plan ("ESOP") which provides
    retirement benefits for substantially all employees who have completed one
    year of service and have attained the age of 21. The Corporation accounts
    for the ESOP in accordance with Statement of Position ("SOP") 93-6,
    "Employers' Accounting for Employee Stock Ownership Plans". SOP 93-6
    requires that compensation expense recorded by employers equal the fair
    value of ESOP shares allocated to participants during a given fiscal year.
    Expense related to the ESOP totaled approximately $101,000, $139,000 and
    $97,000 for the fiscal years ended September 30, 1999, 1998 and 1997,
    respectively.

    During fiscal 1998, the Corporation established a Recognition and Retention
    Plan ("RRP") which provides for the issuance of shares to members of the
    board of directors, management and employees. Upon shareholder approval, the
    RRP purchased 53,429 shares of the Corporation's common stock in the open
    market. At September 30, 1999, 53,429 shares had been awarded and 9,088
    shares were vested. Common stock awarded under the RRP vests ratably over a
    five year period, commencing with the date of the award. Expense recognized
    under the RRP totaled approximately $124,000 and $36,000 for the fiscal
    years ended September 30, 1999 and 1998, respectively.

    The Company previously had a defined benefit pension plan which covered
    substantially all employees who had completed one year of service. This plan
    was terminated in fiscal 1997 upon receipt of all required regulatory
    approvals. The pension plan was funded with an annuity policy using the
    individual level premium method. It was the Company's policy to fund pension
    costs accrued up through the date of termination. Annual pension expense for
    the fiscal year ended September 30, 1997, totaled approximately $3,000. The
    required disclosure under SFAS No. 87, "Accounting for Pensions," has not
    been provided herein based on materiality.

    9.  CASH AND CASH EQUIVALENTS

    For purposes of reporting cash flows, cash and cash equivalents includes
    cash and due from banks, federal funds sold and interest-bearing deposits in
    other financial institutions with original terms to maturity of less than
    ninety days.

    10.  ADVERTISING

    Advertising costs are expensed when incurred.



                                       32
<PAGE>   35


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    11.  EARNINGS PER SHARE AND DIVIDENDS PER SHARE

    Basic earnings per share is computed based upon the weighted-average shares
    outstanding during the period, less shares in the Corporation's ESOP that
    are unallocated and not committed to be released. Weighted-average common
    shares outstanding, which gives effect to 84,096 and 95,863 unallocated ESOP
    shares, totaled 1,208,530 and 1,239,862 for the fiscal years ended September
    30, 1999 and 1998, respectively.

    Diluted earnings per share is computed taking into consideration common
    shares outstanding and dilutive potential common shares to be issued under
    the Corporation's stock option plan. Weighted-average common shares at
    deemed outstanding for purposes of computing diluted earnings per share
    totaled 1,215,305 and 1,239,862 for the fiscal years ended September 30,
    1999 and 1998, respectively. Incremental shares related to the assumed
    exercise of stock options included in the calculation of diluted earnings
    per share totaled 6,775 for the fiscal year ended September 30, 1999.
    Options to purchase 113,526 shares of common stock with a weighted-average
    exercise price of $13.50 were outstanding at September 30, 1998, but were
    excluded from the computation of common stock equivalents because their
    exercise price was higher than the average market price of the common
    shares.

    The provisions of SFAS No. 128, "Earnings Per Share," are not applicable to
    the year ended September 30, 1997, as the conversion from mutual to stock
    form was completed in March 1997.

    During fiscal 1998, the Corporation declared dividends of $3.78 per common
    share. Of this amount, $3.50 per share was paid in April 1998 from funds
    retained by the Corporation in the conversion to stock form and was deemed
    by management to constitute a return of excess capital. Accordingly, the
    Corporation charged the return of capital distribution to additional
    paid-in-capital. All of the 1998 fiscal year distributions constituted a
    tax-free return of capital.

    12.  FAIR VALUE OF FINANCIAL INSTRUMENTS

    SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
    requires disclosure of the fair value of financial instruments, both assets
    and liabilities whether or not recognized in the consolidated statement of
    financial condition, for which it is practicable to estimate that value. For
    financial instruments where quoted market prices are not available, fair
    values are based on estimates using present value and other valuation
    methods.

    The methods used are greatly affected by the assumptions applied, including
    the discount rate and estimates of future cash flows. Because of the
    judgment and subjective considerations required in determining appropriate
    and reasonable assumptions, the derived fair value estimates cannot be
    substantiated by comparison to independent markets. Further, the amounts
    which could be realized in immediate settlement of the instruments could
    vary significantly from the fair value estimate depending upon bulk versus
    individual settlements or sales as well as other factors. SFAS No. 107
    excludes certain financial instruments and all nonfinancial instruments from
    its disclosure requirements. Accordingly, the aggregate net fair value
    amounts presented do not represent the underlying value of the Company.


                                       33
<PAGE>   36

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    12.  FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

    The following methods and assumptions were used by the Company in estimating
    its fair value  disclosures for financial  instruments at September 30, 1999
    and 1998:

                  CASH AND CASH EQUIVALENTS: The carrying amounts presented in
                  the consolidated statements of financial condition for cash
                  and cash equivalents are deemed to approximate fair value.

                  CERTIFICATES OF DEPOSIT IN OTHER FINANCIAL INSTITUTIONS: The
                  carrying amounts presented in the consolidated statements of
                  financial condition for certificates of deposit in other
                  financial institutions are deemed to approximate fair value.

                  INVESTMENT AND MORTGAGE-BACKED SECURITIES: For investment and
                  mortgage-backed securities, fair value is deemed to equal the
                  quoted market price.

                  LOANS RECEIVABLE: The loan portfolio has been segregated into
                  categories with similar characteristics, such as one- to
                  four-family residential, multi-family residential and
                  nonresidential real estate. These loan categories were further
                  delineated into fixed-rate and adjustable-rate loans. The fair
                  values for the resultant loan categories were computed via
                  discounted cash flow analysis, using current interest rates
                  offered for loans with similar terms to borrowers of similar
                  credit quality. For loans on deposit accounts, and consumer
                  and other loans, fair values were deemed to equal the historic
                  carrying values. The historical carrying amount of accrued
                  interest on loans is deemed to approximate fair value.

                  FEDERAL HOME LOAN BANK STOCK: The carrying amount presented in
                  the consolidated statements of financial condition is deemed
                  to approximate fair value since a quoted market price is not
                  available on Federal Home Loan Bank stock.

                  DEPOSITS: The fair value of passbook and club accounts, and
                  money market demand accounts are deemed to approximate the
                  amount payable on demand at September 30, 1999 and 1998,
                  respectively. Fair values for fixed-rate certificates of
                  deposit have been estimated using a discounted cash flow
                  calculation using the interest rates currently offered for
                  deposits of similar remaining maturities.

                  OTHER BORROWED MONEY: The fair value of variable rate
                  borrowings is deemed to approximate the carrying value at
                  September 30, 1998.


                                       34
<PAGE>   37

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

    12.  FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

                  COMMITMENTS TO EXTEND CREDIT: For fixed-rate and
                  adjustable-rate loan commitments, the fair value estimate
                  considers the difference between current levels of interest
                  rates and committed rates. The difference between the fair
                  value and notional amount of outstanding loan commitments at
                  September 30, 1999 and 1998 was not material.

    Based on the foregoing methods and assumptions, the carrying value and fair
value of the Company's financial instruments at September 30 are as follows:

<TABLE>
<CAPTION>
                                                                              1999                         1998
                                                                   CARRYING         FAIR          CARRYING         FAIR
                                                                      VALUE        VALUE             VALUE        VALUE
                                                                                      (In thousands)
<S>                                                                <C>          <C>               <C>          <C>
    Financial assets:
      Cash and cash equivalents                                    $  2,291     $  2,291          $  5,381     $  5,381
      Certificates of deposit in other financial institutions           290          290             3,790        3,790
      Investment securities held to maturity                         12,800       12,529             9,300        9,394
      Investment securities designated as available for sale          1,116        1,116             1,448        1,448
      Mortgage-backed securities                                      2,047        2,067               859          902
      Loans receivable - net                                         35,219       33,824            32,816       33,843
      Federal Home Loan Bank stock                                      449          449               419          419
                                                                     ------       ------            ------       ------

                                                                    $54,212      $52,566           $54,013      $55,177
                                                                     ======       ======            ======       ======

    Financial liabilities:
      Deposits                                                      $39,907       39,958           $37,745      $37,873
      Other borrowed money                                               -            -                725          725
      Advances by borrowers for taxes and insurance                      59           59                57           57
                                                                     ------       ------            ------       ------

                                                                    $39,966      $40,017           $38,527      $38,655
                                                                     ======       ======            ======       ======
</TABLE>

13.  RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the fiscal 1999
consolidated financial statement presentation.


                                       35
<PAGE>   38

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES

    The amortized cost and estimated fair values of investment securities at
    September 30 are summarized below. Certain securities with maturities of one
    to ten years are subject to call provisions and, therefore, may not be held
    to maturity.

<TABLE>
<CAPTION>
                                                                            1999                           1998
                                                                               ESTIMATED                      ESTIMATED
                                                                AMORTIZED           FAIR         AMORTIZED         FAIR
                                                                     COST          VALUE              COST        VALUE
                                                                                       (In thousands)

<S>                                                              <C>            <C>                 <C>        <C>
    HELD TO MATURITY:
      U.S. Government agency obligations
        Due within:
          One year                                               $  1,800       $  1,805            $4,000     $  4,026
          One to three years                                           -              -              1,800        1,832
          Three to five years                                       8,500          8,269             1,500        1,525
          Five to ten years                                         2,500          2,455             2,000        2,011
                                                                  -------        -------             -----      -------

         Total investment securities
           held to maturity                                        12,800         12,529             9,300        9,394

    AVAILABLE FOR SALE:
      FHLMC stock                                                      21          1,116                29        1,448
                                                                ---------        -------           -------      -------

         Total investment securities                              $12,821        $13,645            $9,329      $10,842
                                                                   ======         ======             =====       ======
</TABLE>

    At September 30, 1999, the cost carrying value of the Company's held to
    maturity investment portfolio exceeded the estimated fair value by $271,000,
    consisting of gross unrealized losses totaling $279,000 and gross unrealized
    gains of $8,000.

    At September 30, 1998, the market value appreciation of the Company's held
    to maturity investment portfolio in excess of the cost carrying value
    totaled $94,000, consisting solely of gross unrealized gains.

    Mortgage-backed securities at September 30, 1999, were comprised of
    Government National Mortgage Association ("GNMA") and Federal Home Loan
    Mortgage Corporation Gold program participation certificates.
    Mortgage-backed securities at September 30, 1998, were comprised solely of
    GNMA participation certificates. At September 30, 1999, the market value
    appreciation of the Company's mortgage-backed securities in excess of cost
    was approximately $20,000, comprised of gross unrealized gains of $29,000
    and gross unrealized losses of $9,000. At September 30, 1998, the market
    value appreciation of the Company's mortgage-backed securities in excess of
    cost was approximately $43,000, comprised of gross unrealized gains.
    Maturities of mortgage-backed securities are due ratably over the next
    twenty fiscal years based on the contractual repayment terms of the
    underlying loans.

                                       36
<PAGE>   39

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE C - LOANS RECEIVABLE

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

<TABLE>
<CAPTION>
                                                                                      1999                1998
                                                                                             (In thousands)

<S>                                                                                   <C>              <C>
    Real estate mortgage loans
      One- to four-family                                                             $30,959          $29,225
      Multifamily                                                                       2,049            1,507
      Nonresidential                                                                    1,737            1,879
      Land                                                                                138               -
      Construction                                                                        346              150
    Passbook loans                                                                         26              106
    Deferred loan origination costs                                                        33                1
                                                                                       ------           ------
                                                                                       35,288           32,868
    Less:
      Undisbursed portion of loans in process                                              17               -
      Allowance for loan losses                                                            52               52
                                                                                       ------           ------

                                                                                      $35,219          $32,816
                                                                                       ======           ======
</TABLE>

    As depicted above, the Company's lending efforts have historically focused
    on residential real estate loans, which comprised approximately $33.3
    million, or 95%, of the total loan portfolio at September 30, 1999 and $30.9
    million, or 94%, of the total loan portfolio at September 30, 1998.
    Generally, such loans have been underwritten on the basis of no more than an
    80% loan-to-value ratio, which has historically provided the Company with
    adequate collateral coverage in the event of default. Nevertheless, the
    Company, as with any lending institution, is subject to the risk that
    residential real estate values could deteriorate in its primary lending area
    of southwestern Ohio, thereby impairing collateral values. However,
    management is of the belief that real estate values in the Company's primary
    lending area are presently stable.

    The Company, in the ordinary course of business, has granted loans to some
    of its directors, officers, employees and their related interests. Related
    party 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 and do not involve more than normal risk
    of collectibility. The aggregate dollar amount of these loans was
    approximately $531,000 and $705,000 at September 30, 1999 and 1998,
    respectively.

    Additionally, the Company has paid a retainer of $20,000 to a related party
    for legal services, principally related to the loan origination function,
    during each of the fiscal years ended September 30, 1999 and 1998.
    Management believes that the fees paid for such services are at, or below,
    the comparable cost of such services from unrelated parties.


                                       37
<PAGE>   40


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE D - ALLOWANCE FOR LOAN LOSSES

    The activity in the allowance for loan losses is summarized as follows for
the years ended September 30:

<TABLE>
<CAPTION>
                                                                            1999           1998           1997
                                                                                   (In thousands)

<S>                                                                        <C>            <C>            <C>
    Beginning balance                                                      $  52          $  52          $  52
    Provision for loan losses                                                 -              -              -
                                                                              --             --             --

    Ending balance                                                         $  52          $  52          $  52
                                                                            ====           ====           ====
</TABLE>

    At September 30, 1999 and 1998, the Company's allowance for losses on loans
    was comprised primarily of a general loan loss allowance, which is
    includible as a component of regulatory risk-based capital.

    Nonperforming loans totaled approximately $119,000, $171,000 and $191,000 at
September 30, 1999, 1998 and 1997, respectively.

    As of and for the year ended September 30, 1999, the Company had no loans
    which would be defined as impaired under SFAS No. 114. As a result, there
    was no interest income recognized or received on impaired loans for the year
    ended September 30, 1999.


NOTE E - OFFICE PREMISES AND EQUIPMENT

    Office premises and equipment at September 30 are comprised of the
following:

<TABLE>
<CAPTION>
                                                                                      1999                1998
                                                                                             (In thousands)

<S>                                                                                <C>                   <C>
    Land                                                                           $   607               $  40
    Buildings and improvements                                                         264                 161
    Furniture and equipment                                                            299                 246
                                                                                    ------                 ---
                                                                                     1,170                 447
      Less accumulated depreciation                                                    351                 320
                                                                                    ------                 ---

                                                                                   $   819                $127
                                                                                    ======                 ===
</TABLE>

    At September 30, 1999, the Company had entered into a commitment to make
    improvements to its main office and to construct a building addition on the
    properties adjacent to its main office for approximately $566,000.


                                       38
<PAGE>   41

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE F - DEPOSITS

    Deposits consist of the following major classifications at September 30:

<TABLE>
<CAPTION>
    DEPOSIT TYPE AND
    WEIGHTED-AVERAGE                                  1999                         1998
    INTEREST RATE                             AMOUNT          %           AMOUNT            %
                                                          (Dollars in thousands)
<S>                                         <C>          <C>             <C>          <C>
Passbook accounts - 2.67% in 1999
  and 2.83% in 1998                         $ 10,453          26.2%      $  9,510          25.2%
Club accounts - 5.07% in 1999 and 1998            58            .1             51            .1
Money market demand accounts -
  2.67% in 1999 and 2.83% in 1998              1,829           4.6          2,178           5.8
                                            --------      --------       --------      --------
     Total demand accounts                    12,340          30.9         11,739          31.1

Certificates of deposit -
  5.40% in 1999 and 5.89% in 1998             27,567          69.1         26,006          68.9
                                            --------      --------       --------      --------

     Total deposits                         $ 39,907         100.0%      $ 37,745         100.0%
                                            ========      ========       ========      ========
</TABLE>


    At September 30, 1999 and 1998, the Company had deposit accounts with
balances greater than $100,000 totaling $3.3 million and $2.7 million,
respectively.

    Interest expense on deposits for the fiscal years ended September 30 is
summarized as follows:

<TABLE>
<CAPTION>
                                                                                1999             1998              1997
                                                                                            (In thousands)

<S>                                                                          <C>              <C>               <C>
    Passbook and club accounts                                               $   277          $   279           $   300
    Money market accounts                                                         55               64                81
    Certificates of deposit                                                    1,450            1,382             1,308
                                                                               -----            -----             -----

                                                                              $1,782           $1,725            $1,689
                                                                               =====            =====             =====
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                                 1999              1998
                                                                                                      (In thousands)

<S>                                                                                          <C>               <C>
    Less than six months                                                                     $  9,691          $  8,655
    Six months to one year                                                                     12,029            11,364
    One year to three years                                                                     5,847             5,987
                                                                                              -------           -------

                                                                                              $27,567           $26,006
                                                                                               ======            ======
</TABLE>

                                       39
<PAGE>   42

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE G - OTHER BORROWED MONEY

    Other borrowed money at September 30, 1998 consisted of a one year,
    unsecured note from another financial institution bearing interest at the
    prime rate, or 8.50%, at September 30, 1998. The note matured in July 1999.


NOTE H - FEDERAL INCOME TAXES

    The provision for federal income taxes on earnings for the years ended
    September 30, 1999, 1998 and 1997, does not differ materially from that
    computed at the statutory corporate tax rate.

    The composition of the Corporation's net deferred tax liability at September
    30 is as follows:

<TABLE>
<CAPTION>
                                                                                           1999           1998
    TAXES (PAYABLE) REFUNDABLE ON TEMPORARY
    DIFFERENCES AT ESTIMATED CORPORATE TAX RATE:                                             (In thousands)

<S>                                                                                      <C>            <C>
    Deferred tax assets:
      General loan loss allowance                                                        $   18         $   17

    Deferred tax liabilities:
      Unrealized gains on securities designated as
        available for sale                                                                 (373)          (482)
      Difference between cash and accrual basis of accounting                               (97)          (116)
      Federal Home Loan Bank stock dividends                                                (89)           (78)
      Difference between book and tax depreciation                                          (29)           (33)
      Percentage of earnings bad debt deduction                                              (4)            (5)
      Deferred loan origination costs                                                       (33)           (18)
                                                                                            ---            ---
         Total deferred tax liabilities                                                    (625)          (732)
                                                                                            ---            ---

         Net deferred tax liability                                                       $(607)         $(715)
                                                                                           ====           ====
</TABLE>

    The Company was allowed a special bad debt deduction based on a percentage
    of earnings, generally limited to 8% of otherwise taxable income, or the
    amount of qualifying and nonqualifying loans outstanding and subject to
    certain limitations based on aggregate loans and savings account balances at
    the end of the calendar year. If the amounts that qualified as deductions
    for federal income tax purposes are later used for purposes other than for
    bad debt losses, including distributions in liquidation, such distributions
    will be subject to federal income taxes at the then current corporate income
    tax rate. Retained earnings at September 30, 1999 includes approximately
    $1.3 million for which federal income taxes have not been provided. The
    amount of the unrecognized deferred tax liability relating to the cumulative
    percentage of earnings bad debt deduction totaled approximately $430,000 at
    September 30, 1999. The Company is required to recapture as taxable income
    approximately $22,000 of its tax bad debt reserve, which represents the
    post-1987 additions to the reserve, and will be unable to utilize the
    percentage of earnings method to compute its bad debt deduction in the
    future. The Company has provided deferred taxes for this amount and began to
    amortize the recapture of the bad debt reserve into taxable income over a
    six year period, commencing in fiscal 1997.


                                       40
<PAGE>   43


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE I - COMMITMENTS

    The Company is a party to financial instruments with off-balance-sheet risk
    in the normal course of business to meet the financing needs of its
    customers including commitments to extend credit. Such commitments involve,
    to varying degrees, elements of credit and interest-rate risk in excess of
    the amount recognized in the consolidated statement of financial condition.
    The contract or notional amounts of the commitments reflect the extent of
    the Company's involvement in such financial instruments.

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

    At September 30, 1999 and 1998, the Company had outstanding commitments of
    approximately $88,000 and $967,000 to originate fixed-rate residential real
    estate loans at interest rates ranging from 7.00% to 8.25%. In the opinion
    of management, the loan commitments equaled or exceeded prevalent market
    interest rates as of those dates, and such commitments have been
    underwritten on the same basis as the existing loan portfolio. Management
    believes that all commitments will be funded through cash flow from
    operations and existing excess liquidity. Fees received in connection with
    these commitments have not been recognized in earnings.

    Commitments to extend credit are agreements to lend to a customer as long as
    there is no violation of any condition established in the contract.
    Commitments generally have fixed expiration dates or other termination
    clauses and may require payment of a fee. Since many of the commitments may
    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 it is deemed necessary by the Company upon extension
    of credit, is based on management's credit evaluation of the counterparty.
    Collateral on loans may vary but the preponderance of loans granted
    generally include a mortgage interest in real estate as security.


NOTE J - REGULATORY CAPITAL

    The Company is subject to minimum regulatory capital standards promulgated
    by the Office of Thrift Supervision (the "OTS"). Failure to meet minimum
    capital requirements can initiate certain mandatory -- and possibly
    additional discretionary -- actions by regulators that, if undertaken, could
    have a direct material effect on the consolidated financial statements.
    Under capital adequacy guidelines and the regulatory framework for prompt
    corrective action, the Company must meet specific capital guidelines that
    involve quantitative measures of the Company's assets, liabilities, and
    certain off-balance-sheet items as calculated under regulatory accounting
    practices. The Company's capital amounts and classification are also subject
    to qualitative judgments by the regulators about components, risk
    weightings, and other factors.


                                       41
<PAGE>   44

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE J - REGULATORY CAPITAL (continued)

    The minimum capital standards of the OTS generally require the maintenance
    of regulatory capital sufficient to meet each of three tests, hereinafter
    described as the tangible capital requirement, the core capital requirement
    and the risk-based capital requirement. The tangible capital requirement
    provides for minimum tangible capital (defined as shareholders' equity less
    all intangible assets) equal to 1.5% of adjusted total assets. The core
    capital requirement provides for minimum core capital (tangible capital plus
    certain forms of supervisory goodwill and other qualifying intangible
    assets) equal to 3.0% of adjusted total assets. An OTS proposal, if adopted
    in present form, would increase the core capital requirement to a range of
    4.0% - 5.0% of adjusted total assets for substantially all savings
    associations. Management anticipates no material change to the Company's
    excess regulatory capital position as a result of this proposed change in
    the regulatory capital requirement. The risk-based capital requirement
    currently provides for the maintenance of core capital plus general loss
    allowances equal to 8.0% of risk-weighted assets. In computing risk-weighted
    assets, the Company multiplies the value of each asset on its statement of
    financial condition by a defined risk-weighting factor, e.g., one- to
    four-family residential loans carry a risk-weighted factor of 50%.

    As of September 30, 1999 and 1998, management believes that the Company met
    all capital adequacy requirements to which it was subject.

<TABLE>
<CAPTION>
                                                AS OF SEPTEMBER 30, 1999


                                                                FOR CAPITAL
                         ACTUAL                              ADEQUACY PURPOSES
                     AMOUNT    RATIO                AMOUNT                            RATIO
                                                       (Dollars in thousands)
<S>                 <C>        <C>     <C>                               <C>
Tangible capital    $12,379    22.8%   greater than or equal to $  815   greater than or equal to 1.5%

Core capital        $12,379    22.8%   greater than or equal to $1,631   greater than or equal to 3.0%

Risk-based capital  $12,431    45.4%   greater than or equal to $2,190   greater than or equal to 8.0%
</TABLE>

<TABLE>
<CAPTION>
                                          AS OF SEPTEMBER 30, 1999
                                               TO BE "WELL-
                                            CAPITALIZED" UNDER
                                            PROMPT CORRECTIVE
                                            ACTION PROVISIONS
                                 AMOUNT                           RATIO
                                         (Dollars in thousands)
<S>                 <C>                                  <C>
Tangible capital     greater than or equal to $2,718     greater than or equal to  5.0%

Core capital         greater than or equal to $3,261     greater than or equal to  6.0%

Risk-based capital   greater than or equal to $2,738     greater than or equal to 10.0%
</TABLE>

<TABLE>
<CAPTION>
                                                AS OF SEPTEMBER 30, 1998


                                                                FOR CAPITAL
                          ACTUAL                             ADEQUACY PURPOSES
                      AMOUNT    RATIO           AMOUNT                                RATIO
                                                          (Dollars in thousands)

<S>                  <C>        <C>      <C>                                <C>
Tangible capital     $13,619    25.6%    greater than or equal to $  797    greater than or equal to 1.5%

Core capital         $13,619    25.6%    greater than or equal to $1,595    greater than or equal to 3.0%

Risk-based capital   $13,669    59.6%    greater than or equal to $1,835    greater than or equal to 8.0%
</TABLE>


<TABLE>
<CAPTION>
                                          AS OF SEPTEMBER 30, 1998
                                                TO BE "WELL-
                                             CAPITALIZED" UNDER
                                             PROMPT CORRECTIVE
                                             ACTION PROVISIONS
                                 AMOUNT                           RATIO
                                           (Dollars in thousands)

<S>                  <C>                                 <C>
Tangible capital     greater than or equal to $2,658     greater than or equal to  5.0%

Core capital         greater than or equal to $3,190     greater than or equal to  6.0%

Risk-based capital   greater than or equal to $2,294     greater than or equal to 10.0%
</TABLE>



                                       42
<PAGE>   45

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE J - REGULATORY CAPITAL (continued)

    The Company's management believes that, under the current regulatory capital
    regulations, the Company will continue to meet its minimum capital
    requirements in the foreseeable future. However, events beyond the control
    of the Company, such as increased interest rates or a downturn in the
    economy in the Company's market area, could adversely affect future earnings
    and, consequently, the ability to meet future minimum regulatory capital
    requirements.


NOTE K - STOCK OPTION PLAN

    During fiscal 1998 the Board of Directors adopted the Market Financial
    Corporation 1998 Stock Option and Incentive Plan (the "Plan") that provided
    for the issuance of 133,572 shares of authorized, but unissued shares of
    common stock at fair value at the date of grant. In June 1998, the
    Corporation granted options to purchase 113,526 shares at the fair value of
    $13.50 per share, all of which were fully exercisable at the grant date,
    with an expiration term of ten years. During fiscal 1999, the Corporation
    cancelled these options and granted 125,668 shares at the stock's fair value
    of $9.69 per share. The issuance of new options was effected to reflect the
    Company's $3.50 cash distribution in fiscal 1998 and essentially placed the
    optionees in equivalent economic position after the distribution.

    In 1998, the Corporation adopted SFAS No. 123, "Accounting for Stock-Based
    Compensation," which contains a fair value-based method for valuing
    stock-based compensation that entities may use, which measures compensation
    cost at the grant date based on the fair value of the award. Compensation is
    then recognized over the service period, which is usually the vesting
    period. Alternatively, SFAS No. 123 permits entities to continue to account
    for stock options and similar equity instruments under Accounting Principles
    Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."
    Entities that continue to account for stock options using APB Opinion No. 25
    are required to make pro forma disclosures of net earnings and earnings per
    share, as if the fair value-based method of accounting defined in SFAS No.
    123 had been applied.

    The Corporation applies APB Opinion No. 25 and related Interpretations in
    accounting for its stock option plan. Accordingly, no compensation cost has
    been recognized for the Plan. Had compensation cost for the Corporation's
    stock option plan been determined based on the fair value at the grant dates
    for awards under the Plan consistent with the accounting method utilized in
    SFAS No. 123, the Corporation's net earnings and earnings per share would
    have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                                                                        1999           1998

<S>                                                                                     <C>            <C>
    Net earnings (In thousands)                           As reported                   $698           $552
                                                                                         ===            ===

                                                            Pro-forma                   $463           $321
                                                                                         ===            ===
    Earnings per share
      Basic                                               As reported                   $.58           $.45
                                                                                         ===            ===

                                                            Pro-forma                   $.38           $.26
                                                                                         ===            ===

      Diluted                                             As reported                   $.57           $.45
                                                                                         ===            ===

                                                            Pro-forma                   $.38           $.26
                                                                                         ===            ===
</TABLE>


                                       43
<PAGE>   46

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE K - STOCK OPTION PLAN (continued)

    The fair value of each option grant is estimated on the date of grant using
    the modified Black-Scholes options-pricing model with the following
    weighted-average assumptions used for grants in fiscal 1999 and 1998:
    dividend yield of 4.0%, expected volatility of 20.0%, a risk-free interest
    rate of 6.5% and expected lives of ten years.

    A summary of the status of the Corporation's stock option plan as of and for
the fiscal years ended September 30, 1999 and 1998, are presented below:

<TABLE>
<CAPTION>
                                                                   1999                               1998
                                                                         WEIGHTED-                            WEIGHTED-
                                                                           AVERAGE                              AVERAGE
                                                                          EXERCISE                             EXERCISE
                                                          SHARES             PRICE             SHARES             PRICE

<S>                                                      <C>              <C>                 <C>                <C>
    Outstanding at beginning of year                     113,526          $13.5000                 -             $   -
    Granted                                              125,558            9.6875            113,526             13.50
    Exercised                                                 -                 -                  -                 -
    Cancelled                                            113,526           13.5000                 -                 -
                                                         -------           -------            -------             -----

    Outstanding at end of year                           125,558          $ 9.6875            113,526            $13.50
                                                         =======           =======            =======             =====

    Options exercisable at year-end                      125,558          $ 9.6875            113,526            $13.50
                                                         =======           =======            =======             =====

    Weighted-average fair value of options
      granted during the year                                             $ 2.8300                               $ 3.08
                                                                           =======                                =====
</TABLE>


    The following information applies to options outstanding at September 30,
1999:

<TABLE>
<S>                                                                                                          <C>
    Number outstanding                                                                                          125,558
    Range of exercise prices                                                                                    $9.6875
    Weighted-average exercise price                                                                             $9.6875
    Weighted-average remaining contractual life                                                              8.75 years
</TABLE>



                                       44
<PAGE>   47

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE L - CORPORATE REORGANIZATION TO STOCK FORM

    In April 1996, the Company's Board of Directors adopted an overall plan of
    conversion and reorganization (the "Plan") whereby the Company would convert
    to the stock form of ownership, followed by the issuance of all the
    Company's outstanding stock to a newly formed holding company, Market
    Financial Corporation. Pursuant to the Plan, as amended, the Company offered
    for sale up to 1,335,725 common shares at $10.00 per share to its
    depositors, members of the community, and a newly formed ESOP. The offering
    was completed in March 1997, with the issuance of 1,335,725 common shares
    which, after consideration of expenses totaling approximately $525,000,
    resulted in net capital proceeds of $12.8 million.

    At the completion of the conversion to stock form, the Company established a
    liquidation account in the amount of retained earnings contained in the
    final offering circular. The liquidation account will be maintained for the
    benefit of eligible savings account holders who maintain deposit accounts in
    the Company after conversion.

    In the event of a complete liquidation (and only in such event), each
    eligible member will be entitled to receive a liquidation distribution from
    the liquidation account in the amount of the then current adjusted balance
    of deposit accounts held, before any liquidation distribution may be made
    with respect to common stock. Except for the repurchase of stock and payment
    of dividends by the Company, the existence of the liquidation account will
    not restrict the use or application of such retained earnings.

    The Company may not declare, pay a cash dividend on, or repurchase any of
    its common stock, if the effect thereof would cause retained earnings to be
    reduced below either the amount required for the liquidation account or the
    regulatory capital requirements for SAIF insured institutions.



                                       45
<PAGE>   48

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE M - CONDENSED FINANCIAL STATEMENTS OF MARKET FINANCIAL CORPORATION

    The following condensed financial statements summarize the financial
    position of Market Financial Corporation as of September 30, 1999 and 1998,
    and the results of its operations and its cash flows for the periods ended
    September 30, 1999, 1998 and 1997.

                          MARKET FINANCIAL CORPORATION
                        STATEMENTS OF FINANCIAL CONDITION
                                  September 30,
                                 (In thousands)
<TABLE>
<CAPTION>
    ASSETS                                                                                       1999              1998

<S>                                                                                           <C>               <C>
    Interest-bearing deposits in Market Bank                                                  $   512           $   213
    Interest-bearing deposits in other financial institutions                                       1                 1
    Loan receivable from ESOP                                                                     874               971
    Investment in Market Bank                                                                  13,101            14,556
    Accrued interest receivable                                                                    46                51
    Prepaid expenses and other assets                                                               1                29
    Prepaid federal income taxes                                                                   82                34
                                                                                               ------            ------

          Total assets                                                                        $14,617           $15,855
                                                                                               ======            ======

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Other borrowed money                                                                      $    -            $   725
    Other liabilities                                                                              39                40
    Deferred federal income taxes                                                                   3                12
                                                                                               ------            ------
          Total liabilities                                                                        42               777

    Shareholders' equity
      Common stock and additional paid-in capital                                               8,187             8,191
      Retained earnings                                                                         7,984             7,650
      Shares acquired by stock benefit plans                                                   (1,480)           (1,700)
      Less 76,286 shares of treasury stock - at cost                                             (838)               -
      Unrealized gains on securities designated as available for sale, net                        722               937
                                                                                               ------            ------
          Total shareholders' equity                                                           14,575            15,078
                                                                                               ------            ------

          Total liabilities and shareholders' equity                                          $14,617           $15,855
                                                                                               ======            ======
</TABLE>


                                       46
<PAGE>   49


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE M - CONDENSED FINANCIAL STATEMENTS OF MARKET FINANCIAL CORPORATION
(continued)

                          MARKET FINANCIAL CORPORATION
                             STATEMENTS OF EARNINGS
                           Period ended September 30,
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                         1999         1998         1997
<S>                                                                                     <C>           <C>          <C>
    Revenue
      Interest income                                                                   $  68         $157         $113
      Equity in earnings of Market Bank                                                   855          600          314
                                                                                          ---          ---          ---
          Total revenue                                                                   923          757          427

    Interest expense                                                                       22            9           -

    General and administrative expenses                                                   284          221           74
                                                                                          ---          ---         ----

    Earnings before income taxes (credits)                                                617          527          353

    Federal income taxes (credits)                                                        (81)         (25)          13
                                                                                         ----         ----         ----

          NET EARNINGS                                                                   $698         $552         $340
                                                                                          ===          ===          ===
</TABLE>



                                       47
<PAGE>   50

                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE M - CONDENSED FINANCIAL STATEMENTS OF MARKET FINANCIAL CORPORATION
(continued)

                          MARKET FINANCIAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                           Period ended September 30,
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                    1999           1998           1997
<S>                                                             <C>            <C>            <C>
Cash provided by (used in) operating activities:
  Net earnings for the year                                     $    698       $    552       $    340
  Adjustments to reconcile net earnings to net
  cash provided by (used in) operating activities
    Undistributed earnings of consolidated subsidiary               (855)          (600)          (314)
    Dividend received from subsidiary                              2,200           --             --
    Amortization of expense related to stock benefit plans           111           --             --
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                      5            (13)           (38)
      Prepaid expenses and other assets                               28            (30)          --
      Other liabilities                                               (1)            38              2
      Prepaid federal income taxes                                   (48)           (47)            13
      Deferred federal income taxes                                   (9)            12           --
                                                                --------       --------       --------
      Net cash provided by (used in) operating activities          2,129            (88)             3

Cash flows provided by (used in) investing activities:
  Investment in Market Bank                                         --             --           (6,416)
  Disbursement of loan to ESOP                                      --             --           (1,069)
  Repayment of loan to ESOP                                           97             98           --
                                                                --------       --------       --------
      Net cash provided by (used in) investing activities             97             98         (7,485)

Cash flows provided by (used in) financing activities:
  Proceeds from other borrowed money                                 180            725           --
  Repayment of other borrowed money                                 (905)          --             --
  Shares acquired for stock benefit plans                           --             (729)          --
  Net proceeds from issuance of common shares                       --             --           12,832
  Purchase of treasury stock                                        (838)          --             --
  Capital distributions and dividends paid on common stock          (364)        (5,049)           (93)
                                                                --------       --------       --------
      Net cash provided by (used in) financing activities         (1,927)        (5,053)        12,739
                                                                --------       --------       --------

Net increase (decrease) in cash and cash equivalents                 299         (5,043)         5,257

Cash and cash equivalents at beginning of period                     214          5,257           --
                                                                --------       --------       --------

Cash and cash equivalents at end of period                      $    513       $    214       $  5,257
                                                                ========       ========       ========
</TABLE>


                                       48
<PAGE>   51


                          MARKET FINANCIAL CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        September 30, 1999, 1998 and 1997


NOTE M - CONDENSED FINANCIAL STATEMENTS OF MARKET FINANCIAL CORPORATION
(continued)

    The Company is subject to regulations imposed by the OTS regarding the
    amount of capital distributions payable by the Company to the Corporation.
    Generally, the Company's payment of dividends is limited, without prior OTS
    approval, to net income for the current calendar year plus the two preceding
    calendar years, less capital distributions paid over the comparable time
    period. Insured institutions are required to file an application with the
    OTS for capital distributions in excess of this limitation. During fiscal
    1999, the Company received OTS approval to make up to $2.2 million in
    capital distributions during fiscal 2000.



                                       49
<PAGE>   52

                          MARKET FINANCIAL CORPORATION
                                       AND
                                   MARKET BANK
                             DIRECTORS AND OFFICERS


================================================================================
                  BOARD OF DIRECTORS OF
               MARKET FINANCIAL CORPORATION

                   Robert Gandenberger
                   Supervisor - Retired
        Hamilton County of Ohio Recorder's Office

                     John T. Larimer
                        President
               Market Financial Corporation
                       Market Bank

                   Rae Skirvin Larimer
                         Attorney

                       Edgar H. May
                    Partner - Retired
                    Ed May Realty Co.

                     R. C. Meyerenke
                Managing Officer - Retired
                       Market Bank

                     Wilbur H. Tisch
                   President - Retired
                   General Metal Works

                    Kathleen A. White
                Real Estate Title Examiner

                       OFFICERS OF
               MARKET FINANCIAL CORPORATION

                     John T. Larimer
                        President

                      R.C. Meyerenke
                        Treasurer

                   Rae Skirvin Larimer
                        Secretary

                     Julie M. Bertsch
                 Chief Financial Officer



                  BOARD OF DIRECTORS OF
                       MARKET BANK

                     John T. Larimer
                        President
               Market Financial Corporation
                       Market Bank

                     L. Craig Martin
                        President
                  Environmentrics, Inc.

                       Edgar H. May
                    Partner - Retired
                    Ed May Realty Co.

                     R. C. Meyerenke
                Managing Officer - Retired
                       Market Bank

                    Una Schaeperklaus
                        Secretary
                       Market Bank







                       OFFICERS OF
                       MARKET BANK

                     John T. Larimer
              President and Managing Officer

                     R. C. Meyerenke
                        Treasurer

                    Una Schaeperklaus
                        Secretary

                     Julie M. Bertsch
                 Chief Financial Officer



                                       50
<PAGE>   53

                              SHAREHOLDER SERVICES

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

The Fifth Third Bank serves as transfer agent and dividend distributing agent
for MFC's shares. Communications regarding change of address, transfer of
shares, lost certificates and dividends should be sent to:

                              The Fifth Third Bank
                            Stock Transfer Department
                                Mail Drop 10AT66
                            38 Fountain Square Plaza
                             Cincinnati, Ohio 45263
                                 (513) 579-5320
                                 (800) 837-2755


                                 ANNUAL MEETING

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

The 2000 Annual Meeting of Shareholders of Market Financial Corporation will be
held on January 25, 2000, at 10:00 a.m., Eastern Time, at Shuller's Wigwam
Restaurant, 6210 Hamilton Avenue, Cincinnati, Ohio 45224. Shareholders are
cordially invited to attend.


                          ANNUAL REPORT ON FORM 10-KSB

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

A copy of MFC's Annual Report on Form 10-KSB, as filed with the Securities and
Exchange Commission, will be available at no charge to shareholders upon request
to:

                          Market Financial Corporation
                              7522 Hamilton Avenue
                             Cincinnati, Ohio 45231
                              Attention: President


                                       51