<PAGE>
                     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, 2002

[ ]   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)

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


          4015 Medina Road, Suite 100, Medina, Ohio                                      44256
--------------------------------------------------------------       ------------------------------------------------
          (Address of Principal Executive Offices)                                     (Zip Code)
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                                 (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 $4,875,977.

The aggregate market value of the voting stock held by non-affiliates of the
Issuer as of March 14, 2003 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 2002 Annual Report to Shareholders
Part III:         Portions of Registrant's 2002 Proxy Statement for the Annual
                  Meeting of Shareholders to be held April 23, 2003

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


                                  Page 1 of 93
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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 their 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 current 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 makes both fixed rate and variable rate residential mortgage
loans. Generally, the Bank keeps the variable rate and short-term fixed rate
mortgages in its portfolio, but sells substantially all of the long-term
fixed-rate loans (with servicing released) to a bank that specializes in serving
the community bank mortgage market. 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, 2002, the Bank's
legal lending limit was approximately $1,321,000. The Board of Directors has
established an "in-house" lending limit of $1,000,000. 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


                                  Page 2 of 93
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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 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 four 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.

Management continues to evaluate selected growth opportunities, which could
include branching. However, any such decision would require that the opportunity
meet strict criteria for potential growth and profitability.

EMPLOYEES

At December 31, 2002, the Bank has 23 full-time-equivalent employees (16
full-time and 10 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.


                                  Page 3 of 93
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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 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 Federal Deposit Insurance
Corporation 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:


                                  Page 4 of 93
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      -     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 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


                                  Page 5 of 93
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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 are 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 14, "Controls
and Procedures," for more information regarding the Company's evaluation of its
disclosure controls and procedures. The SEC is in the process of adopting
additional rules to implement the provisions of Sarbanes-Oxley, including
disclosure of audit committee financial experts, a code of ethics for senior
officers, pro forma financial information, auditor independence and attorney
conduct.

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, 2002, Bank Insurance Fund ("BIF") assessments ranged
from 0% of deposits to 0.27% of deposits. For the semi-annual assessment period
beginning January 1, 2003, 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, 2002 the FICO assessment rate for
both BIF and SAIF members was approximately 0.0171% of deposits. During the year
ended December 31, 2002 the Bank paid approximately $9,900 in FICO assessments.
For the first quarter of 2003, the annualized FICO assessment rate will be
0.0168%.


                                  Page 6 of 93
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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 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 of the
FDIC 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, 2002, the Bank exceeded its minimum regulatory capital
requirements with a total risk-based capital ratio of 11.7%, a Tier 1 risk-based
capital ratio of 8.5% and a leverage ratio of 7.6%. 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's Tier 1 risk-based capital and
leverage ratios are expected to continue to decrease as the Bank increases its
assets through normal banking operations in 2003 and beyond.

As the Bank continues to grow, management expects its risk-based capital ratios
to continue to decrease. The Company is evaluating the growth trends and
alternative mechanisms for supporting that growth, which could include selling
more stock, issuing trust preferred securities, or borrowing.

Pursuant to the Federal Reserve Bank's approval of Western Reserve Bank's
application for membership in the Federal Reserve System, the Bank was required
to maintain its ratio of Tier 1 tangible capital to total assets at a minimum of
9.0% for its first three years of operation. At December 31, 2001, that ratio
was 9.12%. This requirement was in place until November 2001.

In addition to the minimum regulatory capital requirements discussed above,
provisions contained in the Federal Deposit Insurance Act ("FDIA") 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


                                  Page 7 of 93
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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, 2002, the Bank has approximately $452,000 available to
be paid as dividends to the Company by the Bank. 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, 2002. Through
November 2001, as a condition of its approval to commence operations, the Bank
was prohibited from paying dividends to the Corporation for a period of three
(3) years from its opening without prior written non-objection from the Board of
Governors of the Federal Reserve.

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.

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. The
Camelot Place office opened in June 2002.

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 of 93
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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>
                                                      ----------------------------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 9 of 93
<PAGE>
I.    DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
      RATES AND INTEREST DIFFERENTIAL (Continued)

<TABLE>
<CAPTION>
                                                      ----------------------------2001--------------------------
                                                        Average                                        Average
                                                        Balance                 Interest                 Rate
                                                        -------                 --------                 ----
<S>                                                   <C>                      <C>                     <C>
Interest-earning assets
     Federal funds sold                               $ 4,769,723              $  189,255                3.97%
     Securities available for sale (at cost)            3,685,133                 205,978                5.59
     Federal Reserve Bank stock                           154,627                   9,272                6.00
     Federal Home Loan Bank stock                          92,650                   6,237                6.73
     Loans receivable (1)                              46,718,034               3,792,290                8.12
                                                      -----------              ----------
        Total interest-earning assets                  55,420,167               4,203,032                7.58
Noninterest-earning assets
     Cash and due from banks                            1,451,275
     Unrealized gain (loss) on available-
       for-sale securities                                  8,444
     Allowance for loan losses                           (609,116)
     Premises and equipment, net                          693,000
     Accrued interest receivable and
       other assets                                       620,965
                                                      -----------
                                                      $57,584,735
                                                      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
     Interest-bearing transaction accounts            $ 2,875,675                  55,393                1.93%
     Savings and money market accounts                 28,200,672               1,056,876                3.75
     Certificates of deposit and IRAs                  12,598,750                 694,607                5.51
     Short-term funds                                     199,830                   6,468                3.24
                                                      -----------              ----------
        Total interest-bearing liabilities             43,874,927               1,813,344                4.13%
Noninterest-bearing liabilities
     Demand deposits                                    6,406,081
     Accrued interest payable and
       other liabilities                                  212,616
                                                      -----------
                                                       50,493,624
Shareholders' equity                                    7,091,111
                                                      -----------
                                                      $57,584,735
                                                      ===========

Net interest income/spread                                                     $2,389,688                3.45%
                                                                               ==========              ======

Net interest income as a percent
  of average interest earning assets                                                                     4.31%
                                                                                                       ======

Average interest earning assets to
  interest bearing liabilities                              126.3%
                                                            =====
</TABLE>

(1) Includes loan fees of $61,132.


                                 Page 10 of 93
<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>
                                                        2002 vs. 2001                                2001 vs. 2000
                                                  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                       $1,411,026     $ (792,617)     $ 618,409     $1,339,370     $ (422,024)    $  917,346
   Federal funds sold                        (30,566)       (97,886)      (128,452)        89,013        (83,660)         5,353
   Interest-bearing deposits in
       financial institutions                     40             --             40            (34)            --            (34)
   Securities available-for-sale             (37,035)       (27,831)       (64,866)      (129,926)       (15,044)      (144,970)
   Federal Reserve Bank stock                    896             --            896            191             --            191
   Federal Home Loan Bank stock                2,697         (2,329)           368          1,600           (502)         1,098
                                          ----------     ----------      ---------     ----------     ----------     ----------
     Total interest-earning assets         1,347,058       (920,663)       426,395      1,300,214       (521,230)       778,984

Interest expense:
   Interest-bearing transaction accounts      24,452        (25,606)        (1,154)         4,458         (1,487)         2,971
   Savings and money market                   56,670       (687,055)      (630,385)       288,856       (443,980)      (155,124)
   Certificates of deposit and IRAs          419,028       (241,435)       177,593        356,813        (18,701)       338,112
   Short-term funds                              518         (4,944)        (4,426)        (2,976)        (4,230)        (7,206)
   FHLB borrowings                           114,545             --        114,545             --             --             --
                                          ----------     ----------      ---------     ----------     ----------     ----------
     Total interest-bearing liabilities      615,213       (959,040)      (343,827)       647,151       (468,398)       178,753
                                          ----------     ----------      ---------     ----------     ----------     ----------
Change in net interest income             $  731,845     $   38,377      $ 770,222     $  653,063     $  (52,832)    $  600,231
                                          ==========     ==========      =========     ==========     ==========     ==========
</TABLE>


                                 Page 11 of 93
<PAGE>
II.    INVESTMENT PORTFOLIO

       The amortized cost and estimated fair values of securities available for
       sale at December 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                     Gross          Gross                        Weighted
                    Amortized      Unrealized     Unrealized         Fair         Average
                      Cost           Gains          Losses           Value         Yield
                   -----------    -----------     -----------     -----------    ---------
<S>                <C>            <C>             <C>             <C>            <C>
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%
                   ===========    ===========     ===========     ===========

2001
U.S. Agencies      $ 1,502,074    $    16,569     $        --     $ 1,518,643      5.66%
Mortgage-backed      1,500,993          9,245          (3,192)      1,507,046      4.84%
                   -----------    -----------     -----------     -----------
                   $ 3,003,067    $    25,814     $    (3,192)    $ 3,025,689      5.25%
                   ===========    ===========     ===========     ===========
</TABLE>

                       Maturities of Investment Securities

<TABLE>
<CAPTION>
                                                          Weighted
                                        Fair              Average
                                        Value              Yield
                                        -----              -----
<S>                                  <C>                   <C>
U.S. Agencies
  Due in one year or less            $        --
  Due in one to five years             2,061,251           4.72%
  Due in five to ten years                    --
Mortgage-backed                          803,604           3.57%
                                     -----------
                                     $ 2,864,855           4.40%
                                     ===========
</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, 2002 and 2001.

<TABLE>
<CAPTION>
                                                         2002           2001
                                                         ----           ----
<S>                                                  <C>            <C>
            Commercial                               $ 64,169,224   $ 45,058,966
            Home equity lines of credit                 7,482,574      5,723,908
            Residential mortgage and construction       1,264,597      1,635,610
            Consumer installment                        1,505,334      2,576,416
            Credit card and other                         228,232        223,128
                                                     ------------   ------------
                                                     $ 74,649,961   $ 55,218,028
                                                     ============   ============
</TABLE>


                                 Page 12 of 93
<PAGE>
III.  LOAN PORTFOLIO (CONTINUED)

      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,
      2002, commercial loans secured by real estate make up approximately 55.4%
      of the loan portfolio. Other commercial loans to businesses comprise 30.6%
      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 10.0% of the loan portfolio and are collateralized
      by residential real estate. Residential mortgage and construction loans
      are 1.7% of the loan portfolio and are secured primarily by first
      mortgages on residential property. Installment and credit card loans to
      individuals make up approximately 2.3% of the loan portfolio and are
      primarily collateralized by consumer assets or are 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,
            2002. 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                         $ 29,308,877     $ 33,058,782       $ 1,801,565     $ 64,169,224
          Home equity lines of credit           7,482,574               --                --        7,482,574
          Residential mortgage
             and construction                     315,885          813,861           134,851        1,264,597
          Consumer installment                    857,273          444,326           203,735        1,505,334
          Credit card and other                   228,232               --                --          228,232
                                             ------------     ------------      ------------     ------------
                                             $ 38,192,841     $ 34,316,969      $  2,140,151     $ 74,649,961
                                             ============     ============      ============     ============
</TABLE>

            Of the loans due after one year, approximately $29,162,000 have
            variable interest rates, and $7,295,000 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>
                                                                                      2002            2001
                                                                                      ----            ----
<S>                                                                                <C>             <C>
                  (a)  Loans accounted for on a nonaccrual basis                   $ 340,776       $ 408,531
                  (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"                              48,075         143,841
                                                                                   ---------       ---------

                                                                                   $ 388,851       $ 552,372
                                                                                   =========       =========

                       Percentage of allowance to non-performing loans                   268%            137%
                                                                                         ===             ===
</TABLE>


                                 Page 13 of 93
<PAGE>
III.  LOAN PORTFOLIO (CONTINUED)

                  Management believes the allowance for loan losses at December
                  31, 2002 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>
                                                                                          2002
                                                                                          ----
<S>                                                                                      <C>
            Gross interest income that would have been recorded in 2002 on
            nonaccrual loans outstanding at December 31, 2002 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                                                           $11,042

            Interest income actually recorded on nonaccrual loans and included
            in net income for the period                                                       0

            Interest income not recognized during the period                               8,335
</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, 2002, in addition to the $388,851 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


                                 Page 14 of 93
<PAGE>
            4.    Loan Concentrations

                  As of December 31, 2002, commercial loans to entities
                  classified as real estate holding companies comprise
                  $16,230,000 of the total loan portfolio.

      D.    Other Interest-Bearing Assets

           There are no other interest-bearing assets as of December 31, 2002
           that would be required to be disclosed under Item III. C.1 or 2 if
           such assets were loans.

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>
                                                                                    2002                2001
                                                                                    ----                ----
<S>                                                                             <C>                 <C>
            LOANS
                 Loans outstanding at end of period                             $  74,649,961       $ 55,218,028
                                                                                =============       ============

                 Average loans outstanding during period                        $  66,542,909       $ 46,718,034
                                                                                =============       ============

           ALLOWANCE FOR LOAN LOSSES
                Balance at beginning of period                                  $     754,679       $    514,109

                Loans charged-off
                     Commercial                                                        59,495            188,547
                     Residential mortgage and construction                                 --                 --
                     Consumer installment                                                  --             14,713
                     Credit card                                                        9,307              9,490
                                                                                -------------       ------------
                                                                                       68,802            212,750
                Recoveries of loans previously charged-off
                     Commercial                                                        51,258            110,842
                     Residential mortgage and construction                                 --                 --
                     Consumer installment                                               3,378              5,297
                     Credit card                                                        4,792                 --
                                                                                -------------       ------------
                                                                                       59,428            116,139
                                                                                -------------       ------------
           Net loans charged-off                                                        9,374             96,611
           Provision for loan losses                                                  297,004            337,181
                                                                                -------------       ------------

           Balance at end of period                                             $   1,042,309       $    754,679
                                                                                =============       ============

           Ratio of net charge-offs during the period to
                average loans outstanding during the period                             0.01%               0.21%
                                                                                =============       ============
</TABLE>


                                 Page 15 of 93
<PAGE>
IV.   SUMMARY OF LOAN LOSS EXPERIENCE (Continued)

            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.

      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
                                                     ------------------------------      -------------------------
                                                         2002              2001              2002         2001
                                                     ------------      ------------        --------     --------
<S>                                                  <C>               <C>                     <C>          <C>
            Commercial                               $    971,776      $    675,059            86.0%        81.6%
            Home equity lines of credit                    37,413            28,620            10.0         10.4
            Residential mortgage & construction             4,084             6,223             1.7          2.9
            Installment and credit card
                 loans to individuals                      29,007            44,726             2.3          5.1
            Unallocated                                        29                51             0.0          0.0
                                                     ------------      ------------        --------     --------
            Total                                    $  1,042,309      $    754,679           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>
                                                                         2002                         2001
                                                                         ----                         ----
                                                                  Average     Average          Average    Average
                                                                  Amount       Rate            Amount      Rate
                                                                  ------       ----            ------      ----
<S>                                                           <C>              <C>         <C>             <C>
       Noninterest bearing demand deposits                    $   8,577,222    0.00%       $   6,406,081   0.00%
       Interest bearing demand deposits                           4,517,865    1.20            2,875,675   1.93
       Savings and money market accounts                         29,795,433    1.43           28,200,672   3.75
       Certificates of deposit and IRAs                          22,204,834    3.92           12,598,750   5.51
                                                              -------------                -------------
                                                              $  65,095,354    2.07        $  50,081,178   3.62
                                                              =============                =============
</TABLE>

      At December 31, 2002, the Bank had $10,850,784 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                                   $   2,940,829
       Over three through six months                              3,147,844
       Over six through twelve months                               520,477
       Over twelve months                                         4,241,634
                                                              -------------
                                                              $  10,850,784
                                                              =============
</TABLE>


                                 Page 16 of 93
<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>
                                                                       2002              2001
                                                                       ----              ----
<S>                                                                <C>               <C>
        Average total assets                                       $ 75,953,000      $ 57,585,000
        Average shareholders' equity                               $  7,687,000      $  7,091,000
        Net income                                                 $    574,298      $    692,133 *
        Return on average total assets                                     0.76%             1.20%*
        Return on average shareholders' equity                             7.47%             9.76%*
        Cash dividends declared                                          $ 0.00            $ 0.00
        Dividend payout percentage                                          n/a               n/a
        Average shareholders' equity to average total assets              10.12%            12.31%
</TABLE>

      * In 2001, the ROA would have been 0.47%, while the ROE would have been
      3.80%, excluding the benefit of recognizing the deferred tax asset of
      $421,603.

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.

The lease for the building has a primary term of ten years with options for two
five-year extensions. The annual lease payment was $117,521 for 2002 and
$112,004 for 2001, 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 2002 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. 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 2,080 square feet in this area.

The Bank leases 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.

ITEM 3. LEGAL PROCEEDINGS

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


                                 Page 17 of 93
<PAGE>
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 2002.

                                     PART II

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

The Company's Common Stock was held by approximately 436 holders of record as of
December 31, 2002, and is quoted on the OTC Bulletin Board. 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 2002, there were three transactions of the Company's common stock
reported by the market maker in the Company's stock. One transaction, in January
2002, was at $25.00 per share, while the later transactions, one in September
and one in December, were 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, 2002, 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
Equity compensation plans not                     90,912                  $23.03                   9,088
   approved by security holders
Total                                             90,912                  $23.03                   9,088
</TABLE>


                                 Page 18 of 93
<PAGE>
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 29-37 of the Company's 2002 Annual Report to
Shareholders under the caption "Management's Discussion and Analysis" is
incorporated by reference.

ITEM 7. FINANCIAL STATEMENTS

The following financial statements and related notes from the 2002 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.


                                 Page 19 of 93
<PAGE>
                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

A.    Directors. The information on pages 6-8 of the Company's 2002 Proxy
      Statement under the caption "Election of Directors" is incorporated by
      reference.

B.    Executive Officers. The Company's executive officers who are not also
      directors are as follows:

Brian K. Harr, age 39, Senior Vice President of the Company and Senior Vice
President, Senior Lender of the Bank, served as Vice President, Business Banking
Manager of Bank One, Charleston, West Virginia from October, 1997 until joining
the company in September 1998. Prior to that assignment, Mr. Harr served as
Assistant Vice President, Relationship Manager for Bank One, Columbus, Ohio from
October 1994 until October 1997.

Cynthia A. Mahl, age 42, Senior Vice President, Secretary and Treasurer of the
Company and Senior Vice President, Secretary, Treasurer, Chief Financial Officer
and Senior Operations Officer of the Bank, was employed by PremierBank & Trust
located in Elyria, Ohio since 1985. From 1993 she served as its Vice President
and Controller until joining the Company in June 1998.

ITEM 10. EXECUTIVE COMPENSATION

The information on pages 11-13 of the 2002 Proxy Statement under the caption
"Compensation of Executive Officers" is incorporated by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information on page 5 of the 2002 Proxy Statement, under the caption
"Beneficial Ownership" in incorporated by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information on page 13 of the 2002 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 2002.


                                 Page 20 of 93
<PAGE>
ITEM 14. 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.


                                 Page 21 of 93
<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 20, 2003.

                                 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 20, 2003.

    /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 22 of 93
<PAGE>
                         WESTERN RESERVE BANCORP, INC.
                                  FORM 10-KSB
                          YEAR ENDED DECEMBER 31, 2002


                                 CERTIFICATIONS

I, Edward J. McKeon, President and Chief Executive Officer, certify that:

1)    I have reviewed this annual report on Form 10-KSB of Western Reserve
      Bancorp, Inc.;

2)    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3)    Based on my knowledge, the financial statements and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results or operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4)    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this report
            is being prepared;
      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this report (the "Evaluation Date"); and
      c)    presented in this report our conclusions about the effectiveness of
            the disclosure controls and procedures based on our evaluation as of
            the Evaluation Date.

5)    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6)    The registrant's other certifying officers and I have indicated in this
      report whether or not there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.

By:     /s/ Edward J. McKeon                                Date: March 28, 2003
        Edward J. McKeon, President and CEO


                                 Page 23 of 93
<PAGE>
                         WESTERN RESERVE BANCORP, INC.
                                  FORM 10-KSB
                          YEAR ENDED DECEMBER 31, 2002


                                 CERTIFICATIONS

I, Cynthia A. Mahl, Senior Vice President and Chief Financial Officer, certify
that:

1)    I have reviewed this annual report on Form 10-KSB of Western Reserve
      Bancorp, Inc.;

2)    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3)    Based on my knowledge, the financial statements and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results or operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4)    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this report
            is being prepared;
      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this report (the "Evaluation Date"); and
      c)    presented in this report our conclusions about the effectiveness of
            the disclosure controls and procedures based on our evaluation as of
            the Evaluation Date.

5)    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6)    The registrant's other certifying officers and I have indicated in this
      report whether or not there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.

By:      /s/ Cynthia A. Mahl                                Date: March 28, 2003
         Cynthia A. Mahl, Senior Vice President and CFO


                                 Page 24 of 93
<PAGE>
                         WESTERN RESERVE BANCORP, INC.
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                                                        Sequential
  Exhibit No.                                 Description of Exhibits                                  Page Number
<S>                 <C>                                                                                <C>
      3.1           Certificate of Incorporation of Western Reserve Bancorp, Inc.                           *

      3.2           Bylaws 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,             26-37
                    dated June 18 2001, as amended February 20, 2002

      10.5          Agreement by and between Western Reserve Bancorp, Inc. and Cynthia A. Mahl,           38-49
                    dated June 18 2001, as amended February 20, 2002

      13.1          2002 Annual Report to Shareholders (Except for sections incorporated by               50-90
                    reference into this Form 10-KSB, the Annual Report to Shareholders shall not
                    be deemed to be "filed" with the Commission.)

      21.1          Subsidiary of Western Reserve Bancorp, Inc .                                            91

      99.1          Certification of Financial Results by Edward J. McKeon, President and Chief             92
                    Executive Officer

      99.2          Certification of Financial Results by Cynthia A. Mahl, Senior Vice President            93
                    and Chief Financial Officer

      99.3          Proxy Statement and form of proxy for the Annual Meeting of Shareholders to             *
                    be held April 23, 2003.  (Except for sections incorporated by reference into
                    this Form 10-KSB, the proxy materials shall not be deemed to be filed with
                    the Commission.)
</TABLE>


* Previously filed and incorporated herein by reference.


                                 Page 25 of 93