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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

|x|   Annual report under Section 13 or 15(d) of the Securities Exchange Act of
      1934 For the fiscal year ended December 31, 2003
                                     -----------------

| |   Transition report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934 For the transition period from _______________ to _______________

Commission file number 333-43361
                       ------------

                          WESTERN RESERVE BANCORP, INC.
                 (Name of Small Business Issuer in Its Charter)

                  Ohio                                           31-1566623
--------------------------------------------            ------------------------
    (State or Other Jurisdiction of                           (I.R.S. Employer
     Incorporation or Organization)                          Identification No.)

4015 Medina Road, Suite 100, Medina, Ohio                          44256
--------------------------------------------            ------------------------
(Address of Principal Executive Offices)                         (Zip Code)

                                 (330) 764-3131
                              ---------------------
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:
                                      None.

         Securities registered under Section 12(g) of the Exchange Act:
                                      None

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the Issuer was required to file such reports), and
(2) has been subject to such filing requirements for past 90 days.

                                 Yes |x| No | |

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |x|

The Issuer's gross revenues for its most recent fiscal year were $5,714,539.

The aggregate market value of the voting stock held by non-affiliates of the
Issuer as of March 29, 2004 was approximately $8,500,518 (which excludes 61,109
shares held by directors and executive officers). As of said date, the Issuer
had 388,052 shares of Common Stock issued and outstanding.

                      Documents incorporated by reference:

Parts I and II:   Portions of Registrant's 2003 Annual Report to Shareholders

Part III:         Portions of Registrant's 2003 Proxy Statement for the Annual
                  Meeting of Shareholders to be held April 28, 2004

    Transitional Small Business Disclosure Format (check one): Yes | | No |x|


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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

The Company, an Ohio corporation incorporated on February 25, 1997, is a bank
holding company that owns all of the capital stock of the Western Reserve Bank,
an Ohio state-chartered bank located in Medina, Ohio (the "Bank"). From the date
of the Company's inception through October 1998, the Company and the Bank
conducted no business other than matters incidental to their organization and
opening for business. On February 24, 1998, the Company commenced an initial
public offering (the "Offering") of up to 500,000 shares of its Common Stock
pursuant to a Registration Statement on Form SB-2 filed with the Securities and
Exchange Commission ("SEC") on February 12, 1998, as amended. The Offering was
concluded on July 1, 1998. A total of 320,267 shares of the Company's common
stock were sold, with proceeds, net of offering costs, of $6,368,499.
Approximately $5,800,000 of the proceeds was used to provide initial
capitalization for the Bank. The Bank commenced business on November 6, 1998.

During 2000, the Company sold an additional 67,785 shares of common stock in an
intra-state offering exempt from the Securities Act of 1933 pursuant to Section
3(a)(11) and Rule 147 promulgated thereunder. A registration statement was filed
with the Ohio Division of Securities on Form 6(A)(1) on September 11, 2000. The
Offering resulted in proceeds, net of offering costs, of approximately
$1,577,000.

The Company and the Bank currently maintain their offices at 4015 Medina Road,
Suite 100, Medina, Ohio 44256.

The Company's telephone number is (330) 764-3131, and its web site is
www.westernreservebank.com.

BUSINESS STRATEGY

In the mid- to late-1990s, many of the financial institutions in the Medina
County market area had been acquired by large regional organizations
headquartered outside of the area. As a result, the organizers believed that the
competitive and economic environment was right for a new, independent, locally
owned and managed bank to serve the financial needs of the residents and
businesses in the Medina area. The Company is a bank holding company within the
meaning of the Bank Holding Company Act of 1956, as amended. Currently, the only
business the Company is engaged in is the ownership of its wholly owned bank
subsidiary, Western Reserve Bank. However, in the future, the holding company
structure could provide flexibility for the expansion of the Company's business
through additional banking-related services which commercial banks are currently
unable to provide under present law.

The Bank offers a broad range of deposit services for consumers and businesses,
including noninterest-bearing and interest-bearing checking accounts, savings
and money market accounts, time certificates of deposit and individual
retirement accounts. The Bank engages in a full line of lending activities,
including all types of commercial loans to businesses, consumer loans to
individuals for household, family and other personal expenditures, and real
estate loans including first mortgage loans, home equity loans and construction
loans. The Bank offers both fixed rate and variable rate residential mortgage
loans. Generally, the Bank does not keep longer-term fixed rate mortgages in its
portfolio, but rather works with a mortgage company to assist the Bank's
customers in obtaining fixed rate mortgage loans. The Bank also offers other
services, including credit, debit and ATM cards with access to regional and
national automated teller networks, a courier service for business deposits,
cash management services, safe deposit boxes, cashiers checks, traveler's checks
and an ATM.

Under applicable law, the Bank is permitted to make loans to individual
borrowers in aggregate amounts of up to 15 percent of the sum of the Bank's
total capital and allowance for loan losses. At December 31, 2003, the Bank's
legal lending limit was approximately $1,560,000. The Board of Directors has
established an "in-house" lending limit of $1,000,000, although, under certain
circumstances, the Board Loan Committee can authorize, on a case-by-case basis,
lending relationships in excess of this "in-house" limit. The Board may from
time to time raise or lower the "in-house" limit as it deems appropriate to
comply with safe and sound banking practices and respond to overall economic
conditions. The Company believes that the Bank's legal lending limit is adequate
to satisfy the credit needs of most of its clients. For credit needs that exceed
the Bank's legal lending limit, the Bank has the ability to


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participate with other banks to meet the credit need. In such instances, the
Bank intends to be the lead bank in the loan arrangement.

The Bank's market area is competitive. There are at least twenty commercial
banks, savings institutions and credit unions with multiple offices in the
Bank's primary service area of Medina County. In recent years, several banks and
savings institutions headquartered outside of Medina County acquired or opened
new branches in the Medina area. However, in the past few years, many of the
area's financial institutions have been acquired by large regional organizations
headquartered outside of the Medina area. As a result of such consolidation, the
organizers of the Company believed that the competitive and economic environment
was right for a new, independent, locally owned and managed bank such as Western
Reserve Bank to serve the financial needs of Medina area residents and
businesses. The rapid growth of the Bank in the five years since it opened has
confirmed that belief. The Bank also faces competition from finance companies,
insurance companies, mortgage companies, securities brokerage firms, money
market funds, loan production offices and other providers of financial services.

EMPLOYEES

At December 31, 2003, the Bank has 25 full-time-equivalent employees (22
full-time and 6 part-time). None of its employees is covered by a collective
bargaining agreement. The Company considers its employee relations to be
excellent.

SUPERVISION AND REGULATION

GENERAL

Financial institutions and their holding companies are extensively regulated
under federal and state law. As a result, the growth and earnings performance of
the Company can be affected not only by management decisions and general
economic conditions, but also by the requirements of applicable state and
federal statutes and regulations and the policies of various governmental
regulatory authorities including, but not limited to, the Board of Governors of
the Federal Reserve System (the "FRB"), the Federal Deposit Insurance
Corporation (the "FDIC"), the Ohio Division of Financial Institutions (the
"Division"), the Internal Revenue Service (the "IRS"), the state taxing
authorities and the Securities and Exchange Commission (the "SEC"). The effect
of such statutes, regulations and policies can be significant, and cannot be
predicted with a high degree of certainty.

Federal and state laws and regulations generally applicable to financial
institutions such as the Company and the Bank regulate, among other things, the
scope of business, investments, reserves against deposits, capital levels
relative to operations, the nature and amount of collateral for loans, the
establishment of branches, mergers, consolidations and dividends. The system of
supervision and regulation applicable to the Company and the Bank establishes a
comprehensive framework for their respective operations and is intended
primarily for the protection of the FDIC's deposit insurance funds and the
depositors, rather than the shareholders, of financial institutions.

The following references to material statutes and regulations affecting the
Company and the Bank are brief summaries thereof and do not purport to be
complete. As such, they are qualified in their entirety by reference to such
statutes and regulations. Any change in applicable law or regulations may have a
material effect on the business of the Company and the Bank.

THE COMPANY

General. The Company, as the sole stockholder of the Bank, is a bank holding
company. As a bank holding company, the Company is registered with, and is
subject to regulation by, the FRB under the Bank Holding Company Act of 1956
(the "BHCA") as amended. In accordance with FRB policy, the Company is expected
to act as a source of financial strength to the Bank and to commit resources to
support the Bank. Under the BHCA, the Company is subject to periodic examination
by the FRB and is required to file with the FRB periodic reports of its
operations and such additional information as the FRB may require. The Company
is also subject to regulation by the Division under Ohio law.

Investments and Activities. Under the BHCA, a bank holding company must obtain
FRB approval before acquiring substantially all the assets of any bank or bank
holding company or ownership or control of any voting shares of any


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bank or bank holding company if, after such acquisition, it would own or
control, directly or indirectly, more than five percent (5%) of the voting
shares of such bank or bank holding company.

The BHCA also prohibits the Company, with certain limited exceptions, from
acquiring direct or indirect ownership or control of more than 5% of the voting
shares of any company which is not a bank or bank holding company, and from
engaging in any business other than that of banking, managing and controlling
banks or furnishing services to banks and their subsidiaries. The principal
exception to this prohibition allows bank holding companies to engage in, and to
own shares of companies engaged in, certain businesses found by the FRB to be
"so closely related to banking ... as to be a proper incident thereto." Under
current regulations of the FRB, the Company is permitted to engage in, among
other activities, such banking-related activities as making or servicing loans
or certain types of leases; engaging in certain insurance and discount brokerage
activities; performing certain data processing services; acting in certain
circumstances as a fiduciary or investment or financial advisor; and making
investments in certain corporations or projects designed primarily to promote
community welfare. The Company has no present plans to engage in such
activities.

Bank holding companies are restricted in, and subject to, limitations regarding
transactions with subsidiaries and other affiliates. In addition, bank holding
companies and their subsidiaries are prohibited from engaging in certain
"tie-in" arrangements in connection with any extensions of credit, leases, sales
of property or furnishing of services.

The Gramm-Leach-Bliley Act (better known as the Financial Services Modernization
Act of 1999) which was effective March 11, 2000, permits bank holding companies
to become financial holding companies and thereby affiliate with securities
firms and insurance companies and engage in other activities that are financial
in nature. A bank holding company may become a financial holding company if each
of its subsidiary banks is well capitalized under the Financial Services
Modernization Act of 1999 prompt corrective action provisions, is well managed,
and has at least a satisfactory rating under the Community Reinvestment Act, by
filing a declaration that the bank holding company wishes to become a financial
holding company. No regulatory approval will be required for a financial holding
company to acquire a company, other than a bank or savings association, engaged
in activities that are financial in nature or incidental to activities that are
financial in nature, as determined by the Federal Reserve Board. The Financial
Services Modernization Act defines "financial in nature" to include securities
underwriting, dealing and market making; sponsoring mutual funds and investment
companies; insurance underwriting and agency; merchant banking activities; and
activities that the Federal Reserve Board has determined to be closely related
to banking.

In addition to repealing the historical restrictions on affiliations among
banks, securities firms, insurance companies and other financial service
providers, the Financial Services Modernization Act also operates to:

      -     provide a uniform framework for the functional regulation of the
            activities of financial institutions and their holding companies;

      -     broaden the activities that may be conducted by national banks (and
            derivatively, state banks), banking subsidiaries of bank holding
            companies, and their financial subsidiaries;

      -     require all financial institutions to provide notice of their
            privacy policies at specified times to their retail customers and
            consumers of their financial products or services, and permit retail
            customers and consumers, under certain circumstances, to prohibit
            financial institutions from sharing their nonpublic personal
            information with other parties;

      -     establish guidelines for safeguarding the security, confidentiality
            and integrity of customer information;

      -     adopt a number of provisions related to the capitalization,
            membership, corporate governance, and other measures designed to
            modernize the Federal Home Loan Bank system;

      -     modify the laws governing the implementation of the Community
            Reinvestment Act of 1977; and

      -     address a variety of other legal and regulatory issues affecting
            both day-to-day operations and long-term activities of financial
            institutions.

Capital Requirements. Bank holding companies are required to maintain minimum
levels of capital in accordance with FRB capital adequacy guidelines. If capital
falls below minimum guideline levels, a bank holding company, among other
things, may be denied approval to acquire or establish additional banks or
non-bank businesses.

The FRB's capital guidelines establish the following minimum regulatory capital
requirements for bank holding companies: a risk-based requirement expressed as a
percentage of total risk-weighted assets, and a leverage requirement expressed
as a percentage of total assets. The risk-based requirement consists of a
minimum ratio of


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total capital to total risk-weighted assets of 8%, at least one-half of which
must be Tier 1 capital. The leverage requirement consists of a minimum ratio of
Tier 1 capital to total assets of 3% for the most highly rated companies, with
minimum requirements of 4% to 5% for all others. For purposes of these capital
standards, Tier 1 capital consists primarily of permanent stockholders' equity
less intangible assets (other than certain mortgage servicing rights and
purchased credit card relationships) and total capital means Tier 1 capital plus
certain other debt and equity instruments which do not qualify as Tier 1 capital
and a portion of the Bank's allowance for loan and lease losses.

The risk-based and leverage standards described above are minimum requirements,
and higher capital levels will be required if warranted by the particular
circumstances or risk profiles of individual banking organizations. For example,
the FRB's capital guidelines contemplate that additional capital may be required
to take adequate account of, among other things, interest rate risk, or the
risks posed by concentrations of credit, nontraditional activities or securities
trading activities. Further, any banking organization experiencing or
anticipating significant growth would be expected to maintain capital ratios,
including tangible capital positions (i.e., Tier 1 capital less all intangible
assets), well above the minimum levels.

Under the FRB's guidelines, the capital standards described above apply on a
consolidated basis to bank holding companies that have more than $150 million in
total consolidated assets, but generally apply on a bank-only basis to bank
holding companies, like the Company, that have less than $150 million in total
consolidated assets.

Dividends. The ability of the Company to obtain funds for the payment of
dividends and for other cash requirements will be largely dependent on the
amount of dividends which may be declared by its subsidiary, the Bank.
Generally, an Ohio-chartered member bank may not declare a dividend without the
approval of both the Division and the FRB if the total of dividends declared by
such bank in a calendar year exceeds the lesser of its undivided profits or the
total of its net income for that year, combined with its retained net income
from the preceding two years. In addition, state-chartered banks are subject to
dividend regulation by the primary federal bank regulatory agency in connection
with general supervisory authority as it relates to a bank's requirement to
maintain adequate capital (See "Capital" above.) Furthermore, as part of the
Bank's approval by regulatory agencies, it was prohibited from paying dividends
to the Company for a period of three years after inception without prior written
non-objection by the Federal Reserve Bank. The Bank does not expect to pay
dividends to the Company in the foreseeable future.

The Sarbanes-Oxley Act of 2002. On July 30, 2002, President Bush signed into law
the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), which addresses new
requirements for public companies in the areas of financial disclosure,
corporate governance, auditing and accounting. Beginning August 29, 2002, the
Company's Chief Executive Officer and Chief Financial Officer were required to
certify that the Company's quarterly and annual reports filed with the SEC do
not contain any untrue statement of a material fact. Additionally, the Chief
Executive Officer and Chief Financial Officer are required to certify that the
Company has effective disclosure controls and procedures. See Item 8A, "Controls
and Procedures," for more information regarding the Company's evaluation of its
disclosure controls and procedures. The SEC adopted additional rules to
implement the provisions of Sarbanes-Oxley in the fall of 2003, including
disclosure of audit committee financial experts, a code of ethics for senior
officers, pro forma financial information, auditor independence and attorney
conduct. In response to the requirements of the SEC regulations, the Company's
Board of Directors examined its corporate governance and made certain revisions
and improvements. Certain members of the Board of Directors discussed on a
number of occasions with outside counsel to the Company a number of policies,
charters and guidelines. After significant discussion at multiple meetings, the
Board of Directors, on December 18, 2003, adopted charters for the Audit
Committee, the Compensation Committee and the newly created Nominating and
Governance Committee. The charters for these three committees are designed to
help the committees function more efficiently and with greater independence from
the Board of Directors, which was one of the primary goals in the adoption of
Sarbanes-Oxley. The members of each of these three committees are currently and,
under the terms of the respective charters, will continue to be "independent"
pursuant to standards adopted by NASDAQ. Further, the Board of Directors has
determined that under the NASDAQ "independence" standards, a majority of the
members of the Board of Directors is currently independent.

The Board of Directors also has adopted a Code of Business Conduct and Ethics
(the "Code"). While Sarbanes-Oxley mandates the adoption of a code of ethics for
the most senior executive officers of all public companies, the Code adopted by
the Company's Board of Directors is broader in the activities covered and
applies to all officers, directors and employees of the Company and the Bank.
The administration of the Code has been delegated to the Nominating and
Governance Committee of the Board of Directors, a Committee comprised entirely
of "independent directors." The Code addresses topics such as compliance with
laws and regulations, honest and ethical conduct,


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conflicts of interest, confidentiality and protection of Company assets, fair
dealing and accurate and timely periodic reports, and also provides for
enforcement mechanisms.

THE BANK

General. The Bank is an Ohio-chartered bank and member of the Federal Reserve
System. The Bank is therefore regulated by the Division as well as the Board of
Governors of the Federal Reserve System. The regulatory agencies have the
authority to regularly examine the Bank and the Bank will be subject to the
regulations promulgated by its supervisory agencies. In addition, the deposits
of the Bank are insured by the FDIC to the fullest extent permitted by law and,
therefore, the Bank is subject to FDIC regulations.

Deposit Insurance. As an FDIC-insured institution, the Bank is required to pay
deposit insurance premium assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance premiums based upon
their respective levels of capital and results of supervisory evaluations.
Institutions classified as well-capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that are less than
adequately capitalized (as defined by the FDIC) and considered of substantial
supervisory concern pay the highest premium. Risk classification of all insured
institutions is made by the FDIC for each semi-annual assessment period. For the
year ended December 31, 2003, Bank Insurance Fund ("BIF") assessments ranged
from 0% of deposits to 0.27% of deposits. For the semi-annual assessment period
beginning January 1, 2004, BIF assessment rates will continue to range from 0%
of deposits to 0.27% of deposits. Because the bank is "well capitalized" for
purposes of its deposit insurance premiums, it expects its FDIC BIF premium to
continue to be the statutory minimum.

The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution has
engaged or is engaging in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC may also suspend deposit insurance temporarily during
the hearing process for a permanent termination of insurance if the institution
has no tangible capital. Management of the Company is not aware of any activity
or condition that could result in termination of the deposit insurance of the
Bank.

FICO Assessments. Since 1987, a portion of the deposit insurance assessments
paid by Savings Association Insurance Fund ("SAIF") members has been used to
cover interest payments due on the outstanding obligations of the Financing
Corporation ("FICO"), the entity created to finance the recapitalization of the
Federal Savings and Loan Insurance Corporation, the SAIF's predecessor insurance
fund. Pursuant to federal legislation enacted September 30, 1996, commencing
January 1, 1997, both SAIF members and BIF members became subject to assessments
to cover the interest payments on outstanding FICO obligations. Such FICO
assessments are in addition to amounts assessed by the FDIC for deposit
insurance. During the year ended December 31, 2003 the FICO assessment rate for
both BIF and SAIF members was approximately 0.0157% of deposits. During the year
ended December 31, 2003 the Bank paid approximately $11,500 in FICO assessments.
For the first quarter of 2004, the annualized FICO assessment rate will be
0.0154%. Management expects the amounts paid for FICO assessments will increase
as the Bank's deposits continue to increase.

Capital Requirements. The Federal Reserve, Division and FDIC require banks and
holding companies to maintain minimum capital ratios. The "risk-adjusted"
capital guidelines for the Bank and the Company involve a mathematical process
of assigning various risk weights to different classes of assets, then
evaluating the sum of the risk-weighted balance sheet structure against the
Bank's and Company's capital base. The rules set the minimum guidelines for the
ratio of capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) at 8%. Tier 1 Capital is
comprised of common equity, retained earnings, and a limited amount of perpetual
preferred stock less certain intangible items. At least half of the total
capital is to be Tier 1 Capital. The remainder may consist of a limited amount
of subordinated debt, other preferred stock, and a portion of the loan loss
reserves (not to exceed 1.25% of risk-weighted assets). The Bank anticipates
maintaining capital at a level sufficient to be classified as "well capitalized"
pursuant to the Federal Reserve guidelines.

In addition, the federal banking regulatory agencies have adopted leverage
capital guidelines for banks and bank holding companies. Under these guidelines,
banks and bank holding companies must maintain a minimum ratio of three percent
(3%) Tier 1 Capital to total assets. However, most banking organizations are
expected to maintain


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capital ratios well in excess of the minimum level and generally must keep their
Tier 1 ratio at or above 5%. The Bank intends to maintain capital well above the
regulatory minimum.

The capital requirements described above are minimum requirements. Higher
capital levels will be required if warranted by the particular circumstances or
risk profiles of individual institutions. For example, the regulations provide
that additional capital may be required to take adequate account of, among other
things, interest rate risk or the risks posed by concentrations of credit,
nontraditional activities or securities trading activities.

As of December 31, 2003, the Bank exceeded its minimum regulatory capital
requirements with a total risk-based capital ratio of 10.6%, a Tier 1 risk-based
capital ratio of 7.7% and a leverage ratio of 7.1%. As a result of the
Corporation's equity offering in the second half of 2000, the Bank, on January
2, 2001, issued $1,500,000 of subordinated debt to the Corporation. This debt is
treated as Tier 2 capital (subject to certain limitations) for the Bank's
risk-based capital calculations.

The Bank has grown rapidly in its five-year history, and continued rapid growth
will require it to consider capital strategies to support that growth. In 2003,
the Company obtained a $3,000,000 line of credit through an unaffiliated
financial institution. As of December 31, 2003, the Company had borrowed
$500,000 on the line of credit, all of which has been infused into the Bank as
additional capital. By borrowing against the line of credit and then investing
the funds into the Bank as capital, the Bank is able to manage its capital
ratios. Other strategies that the Company continues to evaluate include selling
more common stock, issuing trust preferred securities, issuing subordinated debt
at the Bank level, or additional borrowing.

In addition to the minimum regulatory capital requirements discussed above,
provisions contained in the Federal Deposit Insurance Corporation Improvement
Act ("FDICIA") expressly provide for certain supervisory actions which are
directly keyed to the capital levels of an insured depository institution. These
"prompt corrective action" provisions impose progressively more restrictive
constraints on operations, management and capital distributions of a particular
institution as its regulatory capital decreases. Using Tier 1 risk-based, total
risk-based, and Tier 1 leverage capital ratios as the relevant measures, FDIC
insured depository institutions are grouped into one of the following five
prompt corrective action capital categories: well capitalized, adequately
capitalized; undercapitalized; significantly undercapitalized; and critically
undercapitalized. An institution is considered well capitalized if it has a
total risk-based capital ratio of at least 10%, a Tier 1 risk-based capital
ratio of at least 6% and a Tier 1 leverage capital ratio of at least 5%,
provided, however, such institution is not subject to a written advisement,
order or capital directive to meet and maintain a specific capital level for any
particular capital measure. An adequately capitalized institution must have a
total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio
of at least 4% and a Tier 1 leverage capital ratio of at least 4% (3% if the
institution has achieved the highest composite rating in its most recent
examination). At December 31, 2002, the Bank satisfied all requirements for
inclusion in the "well capitalized" category.

Dividends. Ohio law and FRB provisions prohibit the Bank from paying dividends
in an amount greater than the lesser of its undivided profits or the total of
its net income for that year, combined with its retained net income from the
preceding two years, without the prior approval of both the Division and the
FRB. As of December 31, 2003, the Bank has approximately $1,092,000 available to
be paid as dividends to the Company. The payment of dividends by any financial
institution or its holding company is also affected by the requirement to
maintain adequate capital pursuant to applicable capital adequacy guidelines and
regulations, and a financial institution generally is prohibited from paying any
dividends if, following payment thereof, the institution would be
under-capitalized. As described above, the Bank exceeded its minimum capital
requirements under applicable guidelines as of December 31, 2003.

Additional Regulation. The Bank is also subject to federal regulation as to such
matters as the maintenance of required reserves against deposits, limitations in
connection with affiliate transactions, limitations as to the nature and amount
of its loans and investments, regulatory approval of any merger or
consolidation, issuance or retirement by the Bank of its own securities and
other aspects of banking operations. In addition, the activities and operations
of the Bank are subject to a number of additional detailed, complex and
sometimes overlapping laws and regulations. These include state usury and
consumer credit laws, state laws relating to fiduciaries, the Federal
Truth-in-Lending Act and Regulation Z, the Federal Equal Credit Opportunity Act
and Regulation B, the Fair Credit Reporting Act, the Truth in Savings Act, the
Community Reinvestment Act, antiredlining legislation and antitrust laws.

Branching Authority. Ohio banks, such as the Bank, have the authority under Ohio
law to establish branches anywhere in the State of Ohio, subject to receipt of
all required regulatory approvals.


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In May 1997 Ohio adopted the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Act") which allows banks to establish
interstate branch networks through acquisitions of other banks, subject to
certain conditions, including certain limitations on the aggregate amount of
deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. The establishment of de novo interstate
branches or the acquisition of individual branches of a bank in another state
(rather than the acquisition of an out-of-state bank in its entirety) is allowed
by the Riegle-Neal Act and authorized by Ohio law.

The Bank has two limited-hours branches within local retirement communities. The
first is at the Western Reserve Masonic Community, a retirement and lifetime
care community located at 4931 Nettleton Road, Medina. The second is at Camelot
Place, an assisted living facility located at 49 Leisure Lane, Medina.

Management and the Board have, on an ongoing basis, evaluated selected growth
opportunities, including branching. Several criteria were considered to be
essential for an expansion, including: the area must have a large deposit base;
the community must have a strong community identity; there should not be another
community bank located in the same area; and there must be significant
opportunities for profit. After extensive study and evaluation, the Board
authorized the Bank to pursue expansion into the Brecksville, Ohio market area.
In December 2003, the Ohio Division of Financial Institutions approved the
Bank's application to establish a banking office in Brecksville. This office
will have a Regional President, and will offer all of the services and amenities
that are offered in the Medina banking office. There will also be a local
advisory board of directors to offer guidance and assistance.

An investor group has purchased a building at 8747 Brecksville Road, and is
finalizing plans for its complete remodeling. There will be approximately 11,000
square feet in the building, and the Bank will be the anchor tenant, leasing
approximately 5,000 square feet. The City of Brecksville has granted its
approval for the project, and construction should begin in March 2004. The Bank
expects to open The Western Reserve Bank of Brecksville in the fall of 2004.

In conjunction with the Bank's expected growth in both Medina and Brecksville,
the Company is considering an offering of additional Western Reserve Bancorp,
Inc. common stock in mid-2004.

Pending Legislation. Congress regularly considers legislation that may have an
impact upon the operation of the Company and the Bank. At this time, the Company
is unable to predict whether any proposed legislation will be enacted and,
therefore, is unable to predict the impact such legislation may have on the
operations of the Company and the Bank.


                                     Page 8
<PAGE>

ITEM 1. BUSINESS-STATISTICAL DISCLOSURE

I.    DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
      RATES AND INTEREST DIFFERENTIAL

      A.    The following are the average balance sheets for the years ending
            December 31:

<TABLE>
<CAPTION>
                                                                   2003
                                                  ---------------------------------------
                                                  Average                         Average
                                                  Balance         Interest         Rate
                                                  -------         --------         ----
<S>                                             <C>               <C>             <C>
ASSETS
Interest-earning assets
     Federal funds sold and other short-term
        Funds                                   $  4,342,398      $   44,457        1.02%
     Securities available for sale (at cost)       1,748,694          69,110        3.95
     Federal Reserve Bank stock                      173,467          10,403        6.00
     Federal Home Loan Bank stock                    190,663           7,626        4.00
     Loans receivable and held for sale (1)       84,946,590       5,113,721        6.02
                                                ------------      ----------
        Total interest-earning assets             91,401,812       5,245,317        5.74
Noninterest-earning assets
     Cash and due from banks                       1,798,639
     Unrealized gain (loss) on available-
       for-sale securities                            29,224
     Allowance for loan losses                    (1,243,004)
     Premises and equipment, net                     713,840
     Accrued interest receivable and
       other assets                                  976,239
                                                ------------
                                                $ 93,676,750
                                                ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
     Interest-bearing transaction accounts      $  5,171,521          36,625        0.71%
     Savings and money market accounts            26,376,390         207,613        0.79
     Certificates of deposit and IRAs             40,021,146       1,281,809        3.20
     Short-term borrowings                            84,501             333        0.39
     Other borrowings                                129,167           4,198        3.25
     Federal Home Loan Bank advances               3,200,000         135,010        4.22
                                                ------------      ----------
        Total interest-bearing liabilities        74,982,725       1,665,588        2.22
                                                                  ----------
Noninterest-bearing liabilities
     Demand deposits                              10,251,709
     Accrued interest payable and
       other liabilities                             209,380
                                                ------------
                                                  85,443,814
Shareholders' equity                               8,232,936
                                                ------------
                                                $ 93,676,750
                                                ============

Net interest income/spread                                        $3,579,729        3.52%
                                                                  ==========      ======

Net interest income as a percent
  of average interest earning assets                                                3.92%
                                                                                  ======

Average interest earning assets to
  interest bearing liabilities                         121.9%
                                                ============
</TABLE>

(1)   Includes loan fees of $144,475.


                                     Page 9
<PAGE>

I.    DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
      RATES AND INTEREST DIFFERENTIAL (Continued)

<TABLE>
<CAPTION>
                                                                   2002
                                                  ---------------------------------------
                                                  Average                         Average
                                                  Balance         Interest         Rate
                                                  -------         --------         ----
<S>                                             <C>               <C>             <C>
ASSETS
Interest-earning assets
     Federal funds sold and other short-term
        Funds                                   $  3,873,609      $   60,843        1.57%
     Securities available for sale (at cost)       2,961,610         141,112        4.76
     Federal Reserve Bank stock                      169,533          10,168        6.00
     Federal Home Loan Bank stock                    142,591           6,605        4.63
     Loans receivable and held for sale (1)       66,678,668       4,410,699        6.61
                                                ------------      ----------
        Total interest-earning assets             73,826,011       4,629,427        6.27
Noninterest-earning assets
     Cash and due from banks                       1,639,819
     Unrealized gain (loss) on available-
       for-sale securities                            29,239
     Allowance for loan losses                      (917,892)
     Premises and equipment, net                     733,518
     Accrued interest receivable and
       other assets                                  642,630
                                                ------------
                                                $ 75,953,325
                                                ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
     Interest-bearing transaction accounts      $  4,517,865          54,239        1.20%
     Savings and money market accounts            29,795,433         426,491        1.43
     Certificates of deposit and IRAs             22,204,834         872,200        3.92
     Short-term borrowings                           217,222           2,042        0.94
     Federal Home Loan Bank advances               2,710,959         114,545        4.22
                                                ------------      ----------
        Total interest-bearing liabilities        59,446,313       1,469,517        2.47
                                                                  ----------
Noninterest-bearing liabilities
     Demand deposits                               8,577,222
     Accrued interest payable and
       other liabilities                             242,758
                                                ------------
                                                  68,266,293
Shareholders' equity                               7,687,032
                                                ------------
                                                $ 75,953,325
                                                ============

Net interest income/spread                                        $3,159,910        3.80%
                                                                  ==========      ======

Net interest income as a percent
  of average interest earning assets                                                4.28%
                                                                                  ======

Average interest earning assets to
  interest bearing liabilities                         124.2%
                                                ============
</TABLE>

(1)   Includes loan fees of $102,936.


                                    Page 10
<PAGE>

I.    DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
      RATES AND INTEREST DIFFERENTIAL (Continued)

      B.    The following tables set forth the effect of volume and rate changes
            on interest income and expense for the periods indicated. For
            purposes of these tables, changes in interest due to volume and rate
            were determined as follows:

            Volume Variance - change in volume multiplied by the previous year's
            rate.

            Rate Variance - change in rate multiplied by the previous year's
            volume.

            Rate/Volume Variance - change in volume multiplied by the change in
            rate. This variance was allocated to volume variance and rate
            variance in proportion to the relationship of the absolute dollar
            amount of the change in each.

                    Summary of Changes in Net Interest Income

<TABLE>
<CAPTION>
                                                         2003 vs. 2002                                 2002 vs. 2001
                                                   Increase (Decrease) Due to                   Increase (Decrease) Due to
                                           ----------------------------------------     ----------------------------------------
                                             Volume           Rate           Net          Volume           Rate            Net
                                             ------           ----           ---          ------           ----            ---
<S>                                        <C>            <C>            <C>            <C>            <C>            <C>
Interest income:
   Loans receivable                        $1,126,576     $ (423,554)    $  703,022     $1,411,026     $ (792,617)    $  618,409
   Federal funds sold                          (5,053)       (20,189)       (25,242)       (30,566)       (97,886)      (128,452)
   Interest-bearing deposits in
       financial institutions                   8,858             (2)         8,856             40             --             40
   Securities available-for-sale              (50,833)       (21,169)       (72,002)       (37,035)       (27,831)       (64,866)
   Federal Reserve Bank stock                     235             --            235            896             --            896
   Federal Home Loan Bank stock                 2,011           (990)         1,021          2,697         (2,329)           368
                                           ----------     ----------     ----------     ----------     ----------     ----------
     Total interest-earning assets          1,081,794       (465,904)       615,890      1,347,058       (920,663)       426,395

Interest expense:
   Interest-bearing transaction
        accounts                                7,008        (24,622)       (17,614)        24,452        (25,606)        (1,154)
   Savings and money market                   (44,465)      (174,414)      (218,879)        56,670       (687,055)      (630,385)
   Certificates of deposit and IRAs           594,791       (185,182)       409,609        419,028       (241,435)       177,593
   Short-term funds                              (881)          (828)        (1,709)           518         (4,944)        (4,426)
   Other borrowings                             4,198             --          4,198             --             --             --
   FHLB borrowings                             20,633           (167)        20,466        114,545             --        114,545
                                           ----------     ----------     ----------     ----------     ----------     ----------
     Total interest-bearing liabilities       581,284       (385,213)       196,071        615,213       (959,040)      (343,827)
                                           ----------     ----------     ----------     ----------     ----------     ----------
Change in net interest income              $  500,510     $  (80,691)    $  419,819     $  731,845     $  (38,377)    $  770,222
                                           ==========     ==========     ==========     ==========     ==========     ==========
</TABLE>


                                    Page 11
<PAGE>

II.   INVESTMENT PORTFOLIO

      The amortized cost and estimated fair values of securities available for
      sale at December 31, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>
                                       Gross           Gross                         Weighted
                      Amortized      Unrealized      Unrealized        Fair          Average
                        Cost           Gains           Losses          Value          Yield
                        ----           -----           ------          -----          -----
<S>                  <C>            <C>             <C>             <C>              <C>
2003
U.S. Agencies        $   758,810    $    18,791     $        --     $   777,601        3.75%
Mortgage-backed          955,881          1,215            (935)        956,161        3.77%
                     -----------    -----------     -----------     -----------

                     $ 1,714,691    $    20,006     $      (935)    $ 1,733,762        3.76%
                     ===========    ===========     ===========     ===========

2002
U.S. Agencies        $ 2,018,035    $    43,216     $        --     $ 2,061,251        4.72%
Mortgage-backed          803,650          2,454          (2,500)        803,604        3.57%
                     -----------    -----------     -----------     -----------
                     $ 2,821,685    $    45,670     $    (2,500)    $ 2,864,855        4.40%
                     ===========    ===========     ===========     ===========
</TABLE>

                       Maturities of Investment Securities

<TABLE>
<CAPTION>
                                              Weighted
                              Fair            Average
                              Value            Yield
                              -----            -----
<S>                        <C>                <C>
U.S. Agencies
   Due in one year
     or less               $  261,162          3.70%

   Due in one to
     five years               516,439          3.78%

   Due in five to
     ten years                     --

Mortgage-backed               956,161          3.77%
                           ----------
                           $1,733,762          3.76%
                           ==========
</TABLE>

      Actual maturities may differ from contractual maturities because issuers
      may have the right to call or prepay obligations.

III.  LOAN PORTFOLIO

      A.    Types of Loans - Total loans on the balance sheet are comprised of
            the following classifications at December 31, 2003 and 2002.

<TABLE>
<CAPTION>
                                                        2003             2002
                                                        ----             ----
<S>                                                 <C>              <C>
Commercial                                          $84,199,271      $64,169,224
Home equity lines of credit                           8,415,148        7,482,574
Residential mortgage and construction                 1,390,523        1,264,597
Consumer installment                                  1,248,743        1,505,334
Credit card and other                                   294,601          228,232
                                                    -----------      -----------
                                                    $95,548,286      $74,649,961
                                                    ===========      ===========
</TABLE>


                                    Page 12
<PAGE>

      Concentrations of Credit Risk: Western Reserve Bank grants commercial,
      residential real estate mortgage and installment loans to businesses and
      individuals mainly in Medina and contiguous counties in Ohio. Commercial
      loans include loans collateralized by business assets. At December 31,
      2003, commercial loans secured by real estate make up approximately 57.4%
      of the loan portfolio. Other commercial loans to businesses comprise 30.7%
      of total loans, and are expected to be repaid from cash flows from
      operations of the businesses. Variable rate home equity lines of credit
      make up approximately 8.8% of the loan portfolio and are collateralized by
      residential real estate. Residential mortgage and construction loans are
      1.5% of the loan portfolio and are secured primarily by first mortgages on
      residential property. Installment and credit card loans to individuals
      make up approximately 1.6% of the loan portfolio and are primarily
      collateralized by consumer assets or are unsecured. At December 31, 2003,
      approximately 3.0% of the Bank's total loan portfolio was unsecured.

B.    Maturities and Sensitivities of Loans to Changes in Interest Rates - The
      following table shows the maturity distribution and sensitivity to changes
      in interest rates of loans outstanding as of December 31, 2003. Fixed rate
      loans are presented based on their maturity date, and variable rate loans
      with floating or adjustable interest rates are included based on their
      earliest repricing opportunity.

          Loan Maturities and Sensitivity to Changes in Interest Rates

<TABLE>
<CAPTION>
                                  Within          1-5           After
                                  1 year         years         5 years         Total
                                  ------         -----         -------         -----
<S>                            <C>            <C>            <C>            <C>
Commercial                     $61,900,466    $20,393,476    $ 1,905,329    $84,199,271
Home equity lines of credit      8,415,148             --             --      8,415,148
Residential mortgage
   and construction                375,802        670,074        344,647      1,390,523
Consumer installment               730,279        335,124        183,340      1,248,743
Credit card and other              294,601             --             --        294,601
                               -----------    -----------    -----------    -----------
                               $71,716,296    $21,398,674    $ 2,433,316    $95,548,286
                               ===========    ===========    ===========    ===========
</TABLE>

      Of the loans due after one year, approximately $17,346,000 have variable
      interest rates, and $6,486,000 have fixed interest rates.

C.    Risk Elements

      1.    Nonaccrual, Past Due, Restructured and Impaired Loans - The
            following schedule summarizes nonaccrual, past due, restructured and
            impaired loans at December 31.

<TABLE>
<CAPTION>
                                                                           2003            2002
                                                                           ----            ----
<S>                                                                     <C>            <C>
            (a) Loans accounted for on a nonaccrual basis               $1,126,175     $  340,776
            (b) Accruing loans which are contractually past due 90
                  days or more as to interest or principal payments             --             --
            (c) Loans not included in (a) or (b) which are
                  "Troubled Debt Restructurings" as defined by
                  Statement of Financial Accounting Standards No. 15            --             --
            (d) Other loans defined as "impaired"                          183,346         48,075
                                                                        ----------     ----------
                                                                        $1,309,521     $  388,851
                                                                        ==========     ==========
                Percentage of allowance to non-performing loans                115%           268%
                                                                        ==========     ==========
</TABLE>


                                    Page 13
<PAGE>

III.  LOAN PORTFOLIO (CONTINUED)

            Management believes the allowance for loan losses at December 31,
            2003 is adequate to absorb any losses on nonperforming loans, as the
            allowance balance is maintained by management at a level considered
            adequate to cover losses that are currently anticipated based on
            loss experience of comparable companies, general economic
            conditions, information about specific borrower situations including
            their financial position and collateral values, and other factors
            and estimates which are subject to change over time.

<TABLE>
<CAPTION>
                                                                            2003
                                                                            ----
<S>                                                                      <C>
            Gross interest income that would have been recorded in
            2003 on nonaccrual loans outstanding at December 31,
            2003 if the loans had been current, in accordance with
            their original terms and had been outstanding throughout
            the period or since origination if held for part of the
            period                                                       $38,033
            Interest income actually recorded on nonaccrual loans
            and included in net income for the period                          0

            Interest income not recognized during the period              38,033
</TABLE>

            Discussion of the Nonaccrual Policy

            The accrual of interest income is discontinued when the collection
            of a loan or interest, in whole or in part, is doubtful. When
            interest accruals are discontinued, interest income accrued in the
            current period is reversed. In general, while loans which are past
            due 90 days or more as to interest or principal payments are
            considered for nonaccrual status, management may elect to continue
            the accrual of interest when the estimated net realizable value of
            collateral, in management's judgment, is sufficient to cover the
            principal balance and accrued interest.

      2.    Potential Problem Loans

            As of December 31, 2003, in addition to the $1,309,521 of loans
            reported under Item III, C.1., there are $-0- in other outstanding
            loans where known information about possible credit problems of the
            borrowers causes management to have serious doubts as to the ability
            of such borrowers to comply with the present loan repayment terms
            and which may result in disclosure of such loans pursuant to Item
            III. C.1 at some future date. There were no loans classified for
            regulatory purposes as loss, doubtful or substandard that have not
            been disclosed in Section 1 above.

      3.    Foreign Loans Outstanding

            None

      4.    Loan Concentrations

            As of December 31, 2003, commercial loans to entities classified as
            real estate holding companies comprise $21,149,000, or 22.1% of the
            total loan portfolio. However, this category includes a significant
            proportion of loans for buildings that are owner-occupied, and that
            are classified as real estate holding companies solely because the
            owner of the operating company has formed a real estate holding
            company for the single purpose of owning the building that they then
            lease to their operating company.

D.    Other Interest-Bearing Assets

      There are no other interest-bearing assets as of December 31, 2003 that
      would be required to be disclosed under Item III. C.1 or 2 if such assets
      were loans.


                                    Page 14
<PAGE>

IV.   SUMMARY OF LOAN LOSS EXPERIENCE

      A.    The following schedule presents an analysis of the allowance for
            loan losses, average loan data and related ratios for the years
            ended December 31:

<TABLE>
<CAPTION>
                                                     2003              2002
                                                     ----              ----
<S>                                              <C>               <C>
LOANS
   Loans outstanding at end of period            $ 95,548,288      $ 74,649,961
                                                 ============      ============

   Average loans outstanding during period       $ 84,946,590      $ 66,542,909
                                                 ============      ============

ALLOWANCE FOR LOAN LOSSES
   Balance at beginning of period                $  1,042,309      $    754,679

   Loans charged-off
      Commercial                                           --            59,495
      Residential mortgage and construction                --                --
      Consumer installment                                 --                --
      Credit card                                          --             9,307
                                                 ------------      ------------
                                                           --            68,802
   Recoveries of loans previously charged-off
      Commercial                                       24,979            51,258
      Residential mortgage and construction                --                --
      Consumer installment                              4,300             3,378
      Credit card                                          --             4,792

                                                 ------------      ------------
                                                       29,279            59,428
                                                 ------------      ------------
Net loans charged-off (recoveries)                    (29,279)            9,374
Provision for loan losses                             431,100           297,004
                                                 ------------      ------------

Balance at end of period                         $  1,502,688      $  1,042,309
                                                 ============      ============

Ratio of net charge-offs during the period to
  average loans outstanding during the period           (0.03)%            0.21%
                                                 ============      ============
</TABLE>

      The allowance for loan losses balance and the provision for loan losses
      are judgmentally determined by management based upon periodic reviews of
      the loan portfolio. In addition, management considered the level of
      charge-offs on loans as well as the fluctuations of charge-offs and
      recoveries on loans including the factors which caused these changes.
      Estimating the risk of loss and the amount of loss is necessarily
      subjective. Accordingly, the allowance is maintained by management at a
      level considered adequate to cover losses that are currently probable
      based on past loss experience, general economic conditions, information
      about specific borrower situations including their financial position and
      collateral values and other factors and estimates which are subject to
      change over time.


                                    Page 15
<PAGE>

IV.   SUMMARY OF LOAN LOSS EXPERIENCE (Continued)

      B.    The following schedule is a breakdown of the allowance for loan
            losses allocated by type of loan and related ratios.

<TABLE>
<CAPTION>
                                                                   Percentage of Loans in
                                                                      Each Category to
                                           Allowance Amount             Total Loans
                                       ------------------------    ----------------------
                                          2003          2002         2002          2002
                                       ----------    ----------    --------      --------
<S>                                    <C>           <C>           <C>           <C>
Commercial                             $1,428,543    $  971,776        88.1%         86.0%
Home equity lines of credit                42,076        37,413         8.8          10.0
Residential mortgage & construction         4,918         4,084         1.5           1.7
Installment and credit card
     loans to individuals                  27,058        29,007         1.6           2.3
Unallocated                                    93            29         0.0           0.0
                                       ----------    ----------    --------      --------
Total                                  $1,502,688    $1,042,309       100.0%        100.0%
                                       ==========    ==========    ========      ========
</TABLE>

            While management's periodic analysis of the adequacy of the
            allowance for loan losses may allocate portions of the allowance for
            specific problem loan situations, the entire allowance is available
            for any loan charge-offs that occur.

V.    DEPOSITS

      The average amount of deposits and average rates paid are summarized as
      follows for the year ended December 31:

<TABLE>
<CAPTION>
                                                  2003                        2002
                                                  ----                        ----
                                         Average       Average        Average       Average
                                         Amount         Rate          Amount         Rate
                                         ------         ----          ------         ----
<S>                                    <C>             <C>         <C>              <C>
Noninterest bearing demand deposits    $10,251,709      0.00%      $ 8,577,222       0.00%
Interest bearing demand deposits         5,171,521      0.71         4,517,865       1.20
Savings and money market accounts       26,376,390      0.79        29,795,433       1.43
Certificates of deposit and IRAs        40,021,146      3.20        22,204,834       3.92
                                       -----------                 -----------
                                       $81,820,766      1.86       $65,095,354       2.07
                                       ===========                 ===========
</TABLE>

      At December 31, 2003, the Bank had $18,033,417 of time certificates of
      deposit of $100,000 or more outstanding. Remaining maturities of these
      time deposits are as follows:

<TABLE>
<S>                                    <C>
Three months or less                   $ 5,865,690
Over three through six months            2,997,519
Over six through twelve months           3,114,140
Over twelve months                       6,056,068
                                       -----------
                                       $18,033,417
                                       ===========
</TABLE>


                                    Page 16
<PAGE>

VI.   RETURN ON EQUITY AND ASSETS

      The ratio of net income to average shareholders' equity and average total
      assets and certain other ratios are as follows:

<TABLE>
<CAPTION>
                                                             2003             2002
                                                             ----             ----
<S>                                                     <C>              <C>
Average total assets                                    $ 93,677,000     $ 75,953,000
Average shareholders' equity                            $  8,233,000     $  7,687,000
Net income                                              $    623,060     $    574,298
Return on average total assets                                  0.67%            0.76%
Return on average shareholders' equity                          7.57%            7.47%
Cash dividends declared                                 $       0.00     $       0.00
Dividend payout percentage                                       n/a              n/a
Average shareholders' equity to average total assets            8.79%           10.12%
</TABLE>

VII.  SHORT-TERM BORROWINGS

      The Company did not have any reportable categories of short-term
      borrowings during or at the end of the reported periods.

ITEM 2. DESCRIPTION OF PROPERTY

The Company leases premises for the Bank's main office at 4015 Medina Road,
Suite 100, Medina, Ohio, which also serve as the Company's corporate
headquarters. The leased premises consist of approximately 7,884 square feet of
a three-story multi-tenant brick building constructed in 1998 with ample
parking. The building is located on State Route 18, a major thoroughfare in
Medina, approximately 1.5 miles west of Interstate 71 and 1 mile east of
downtown Medina.

During 2002, the Bank leased additional office space in an adjacent building in
the same office complex to accommodate the growth of the commercial lending
department. There are approximately 2,500 square feet in this area.

The leases for the main office and lending department have a primary term of ten
years with options for two five-year extensions. The annual lease payment was
$139,884 for 2003 and $117,521 for 2002, and is subject to increases each
subsequent year. The facility is leased under an operating lease from a member
of the Board of Directors. Refer to Note 5 on page 16 of the Company's 2003
Annual Report to Shareholders (incorporated herein by reference) for additional
discussion about the lease.

The Bank has five interior teller stations (two of which are sit-down teller
desks, and three of which are traditional stand-up teller counters), a two-lane
drive-through, a drive-up ATM and a night depository facility.

The Bank occupies a small office inside Western Reserve Masonic Community, a
retirement community at 4931 Nettleton Road, Medina. The Bank also occupies a
small office inside Camelot Place, an assisted living facility located at 49
Leisure Lane, Medina. The Bank operates a full-service, limited-hours branch at
each location. Rent for both offices is de minimis.

As discussed on page 8 under the caption "Branching Authority," the Company
expects to enter into a lease in 2004 for its office in Brecksville, Ohio.

ITEM 3. LEGAL PROCEEDINGS

The Company is not aware of any legal proceedings against it or the Bank.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of 2003.


                                    Page 17
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's Common Stock was held by approximately 425 holders of record as of
December 31, 2003, and is quoted on the OTC "pink sheets." It has not yet been
assigned a symbol. To date there has been no regular and liquid market for the
common stock, and there can be no assurance that a regular and liquid trading
market will develop in the foreseeable future.

During 2003, there were five transactions of the Company's common stock reported
by the market maker in the Company's stock. Each of these transactions was at
$26.00 per share. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission. Certain other private transactions may have
occurred during the periods indicated of which the Company has no knowledge.

No cash or other dividends were declared or paid since the Company's inception
on February 25, 1997. The Company expects that all Company and Bank earnings, if
any, will be retained to finance the growth of the Company and the Bank and that
no cash dividends will be paid for the foreseeable future. If and when dividends
are declared, the Company will probably be largely dependent upon dividends paid
by the Bank for funds to pay dividends on the Common Stock. It is also possible,
however, that the Company could pay dividends in the future generated from
investment income and other activities of the Company.

Under Ohio law, the Bank will be restricted as to the maximum amount of
dividends it may pay on its Common Stock. For additional discussion regarding
dividend restrictions, please refer to the discussion regarding Supervision and
Regulation in Part I of this Form 10-KSB.

The Company has a nonqualified stock option plan that provides for up to 100,000
shares of the Company's common stock to be available for grant to officers,
employees, directors and others. The exercise price is at least the market price
at date of grant. The maximum option term is ten years, and options vest over
three years as follows: 25% one year from the grant date, 50% after two years,
and 100% after three years. As of December 31, 2003, the following equity
securities are authorized for issuance under the plan:

                      Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                    Number of securities      Weighted-average       Number of securities
                                      to be issued upon       exercise price of       remaining available
                                         exercise of         outstanding options,     for future issuance
                                    outstanding options,     warrants and rights         under equity
                                     warrants and rights                              compensation plans
                                                                                     (excluding securities
                                                                                      reflected in column
                                                                                             (a))
                                            (a)                      (b)                     (c)
                                    --------------------     -------------------     ---------------------
<S>                                 <C>                      <C>                     <C>
Equity compensation plans
   approved by security holders                 0                      n/a                       0

Equity compensation plans not              92,412                   $23.08                   7,588
   approved by security holders
                                           ------                   ------                   -----
Total                                      92,412                   $23.08                   7,588
                                           ======                   ======                   =====
</TABLE>

The Plan provides for adjustment of the number of shares in the event the
outstanding shares of stock of the Company are changed into or exchanged for a
different number or kind of shares by reason of any merger, consolidation,
reorganization, recapitalization, combination, stock split or stock dividend.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION

The information on pages 29-39 of the Company's 2003 Annual Report to
Shareholders under the caption "Management's Discussion and Analysis" is
incorporated by reference.


                                    Page 18
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

The following financial statements and related notes from the 2003 Annual Report
to Shareholders are incorporated by reference:

<TABLE>
<CAPTION>
                                                                   Annual Report
                                                                      Page No.
                                                                      --------
<S>                                                                <C>
Report of Independent Auditors                                            3
Consolidated Balance Sheets                                               4
Consolidated Statements of Income                                         5
Consolidated Statements of Changes in Shareholders' Equity                6
Consolidated Statements of Cash Flows                                     7
Notes to Consolidated Financial Statements                             8-27
</TABLE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of Western Reserve
Bancorp, Inc.'s management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-14(c)/15d-14(d) under the Securities Exchange
Act of 1934). Based on their evaluation, the Company's Chief Executive Officer
and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures are, to the best of their knowledge, effective to ensure
that information required to be disclosed by Western Reserve Bancorp, Inc. in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of their evaluation,
there were no significant changes in Western Reserve Bancorp, Inc.'s internal
controls or in other factors that could significantly affect these controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

A.    Directors. The information on pages 5-7 of the Company's 2003 Proxy
      Statement under the caption "Election of Directors" is incorporated by
      reference.

B.    Executive Officers. The information on page 12 of the Company's 2003 Proxy
      Statement regarding the Executive Officers of the Company is incorporated
      by reference.

C.    "Audit Committee Financial Expert." The Company's Board of Directors has
      determined that C. Richard Lynham, Chairman of the Audit Committee, is a
      "financial expert" as defined under the regulations promulgated under the
      Sarbanes-Oxley Act and is "independent" in accordance with Rule 4200(1) of
      the National Association of Securities Dealers ("NASD") listing standards.

D.    Code of Ethics. As noted above in Part I, Item 1, the Company has adopted
      a Code of Ethics and Business Conduct applicable to the senior financial
      officers of the Company and the Bank. A copy of the Code of Ethics and
      Business Conduct is available free of charge upon request. Shareholders
      desiring a copy of the Code should address written requests to Ms. Cynthia
      A. Mahl, Senior Vice President, Chief Financial Officer and Secretary,
      Western Reserve Bancorp, Inc., 4015 Medina Road, P.O. Box 585, Medina,
      Ohio 44258-0585. A copy of the Company's Code is attached to this Form
      10-KSB as Exhibit 14.


                                    Page 19
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The information on pages 12-14 of the 2003 Proxy Statement under the caption
"Compensation of Executive Officers" is incorporated by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information on page 5 of the 2003 Proxy Statement, under the caption
"Beneficial Ownership" is incorporated by reference.

The information on page 7 of the 2003 Proxy Statement under the caption
"Election of Directors" is incorporated by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information on page 14 of the 2003 Proxy Statement under the caption
"Transactions with Management and Others" is incorporated by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)      Index to Financial Statements--See Part II, Item 7, Financial
            Statements

(a)(2)      Schedule of Exhibits--The Exhibit Index that immediately follows the
            signature page to this Form 10-KSB is incorporated by reference. The
            exhibits required to be filed with this Form 10-KSB are included
            with this Form 10-KSB and are located immediately following the
            Exhibit Index to this Form 10-KSB.

(b)         Reports on Form 8-K--The Company did not file any Current Reports on
            Form 8-K during the fourth quarter of 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information on page 11 of the 2003 Proxy Statement under the caption "Audit
Fees" is incorporated by reference.


                                    Page 20
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, as amended, the
Issuer caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 30, 2004.

                                  WESTERN RESERVE BANCORP, INC.

                                  By: /s/ Edward J. McKeon
                                      Edward J. McKeon, President, Chief
                                      Executive Officer and Director

                                  By: /s/ Cynthia A. Mahl
                                      Cynthia A. Mahl, Senior Vice President,
                                      Principal Financial and Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Issuer and in the capacities noted below and
on March 30, 2004.

    /s/ P.M. Jones                          /s/ Edward J. McKeon
    P.M. Jones, Chairman of the Board       Edward J. McKeon, President, Chief
                                            Executive Officer and Director

    /s/ Roland H. Bauer                     /s/ Bijay K. Jayaswal
    Roland H. Bauer, Director               Bijay K. Jayaswal, Director

    /s/ Ray E. Laribee                      /s/ C. Richard Lynham
    Ray E. Laribee, Director                C. Richard Lynham, Director

    /s/ R. Hal Nichols                      /s/ Rory H. O'Neil
    R. Hal Nichols, Director                Rory H. O'Neil, Director

    /s/ Michael R. Rose                     /s/ Glenn M. Smith
    Michael R. Rose, Director               Glenn M. Smith, Director

    /s/ Thomas A. Tubbs
    Thomas A. Tubbs, Director


                                    Page 21
<PAGE>

                          WESTERN RESERVE BANCORP, INC.
                                  EXHIBIT INDEX

  Exhibit No.                Description of Exhibits

      3.1         Articles of Incorporation of Western Reserve                 *
                  Bancorp, Inc.

      3.2         Code of Regulations of Western Reserve Bancorp,              *
                  Inc.

      4.1         Stock Certificate of Western Reserve Bancorp, Inc.           *

      10.1        Employment Agreement of Edward J. McKeon, Dated              *
                  December 14, 2001

      10.2        Lease Agreement by and between Michael Rose DBA              *
                  Washington Properties and Western Reserve
                  Bancorp, Inc.

      10.3        Western Reserve Bancorp, Inc. 1998 Stock Option              *
                  Plan, Amended and Restated as of April 20, 2000

      10.4        Agreement by and between Western Reserve Bancorp,            *
                  Inc. and Brian K. Harr, dated June 18 2001, as
                  amended February 20, 2002

      10.5        Agreement by and between Western Reserve Bancorp,            *
                  Inc. and Cynthia A. Mahl, dated June 18 2001, as
                  amended February 20, 2002

      10.6        Loan Agreement between Western Reserve Bancorp,              *
                  Inc. and TCF National Bank, dated May 5, 2003

      10.7        Western Reserve Bank Supplemental Executive                  *
                  Retirement Plan, dated May 15, 2003

      10.8        Western Reserve Bancorp, Inc. Employee Stock                 *
                  Purchase Plan

      13.1        2003 Annual Report to Shareholders (Except for
                  sections incorporated by reference into this Form
                  10-KSB, the Annual Report to Shareholders shall
                  not be deemed to be "filed" with the Commission.)

      14          Western Reserve Bancorp, Inc. Code of Ethics and
                  Business Conduct

      21.1        Subsidiary of Western Reserve Bancorp, Inc .

      31.1        Certification under Section 302 of the
                  Sarbanes-Oxley Act by Edward J. McKeon, President
                  and Chief Executive Officer

      31.2        Certification under Section 302 of the
                  Sarbanes-Oxley Act by Cynthia A. Mahl, Senior Vice
                  President and Chief Financial Officer

      32.1        Certification under Section 906 of the
                  Sarbanes-Oxley Act by Edward J. McKeon, President
                  and Chief Executive Officer

      32.2        Certification under Section 906 of the
                  Sarbanes-Oxley Act by Cynthia A. Mahl, Senior Vice
                  President and Chief Financial Officer

      99.3        Proxy Statement and form of proxy for the Annual             *
                  Meeting of Shareholders to be held April 28,
                  2004. (Except for sections incorporated by
                  reference into this Form 10-KSB, the proxy
                  materials shall not be deemed to be filed with the
                  Commission.)

*     Previously filed and incorporated herein by reference.


                                    Page 22