<PAGE>   1

                                                         Exhibit 13


                            Strongsville Savings Bank



MARKET INFORMATION

The capital stock of Emerald Financial Corp. (Emerald or Company) began trading
under the symbol "EMLD" on the National Association of Securities Dealers
Automated Quotation System (NASDAQ) National Market System on March 7, 1997.
Emerald is a unitary thrift holding company whose subsidiary is The Strongsville
Savings Bank (Bank). The reorganization resulting in Emerald becoming the
holding company of the Bank was completed on March 6, 1997. Prior to completion
of the holding company reorganization, the Bank's capital stock traded under the
Symbol "SSBK" on the National Association of Securities Dealers Automated
Quotation System (NASDAQ) Small-Cap Issues. As of January 31, 1997, there were
approximately 420 holders of record of the Company's capital stock. Emerald
offers a Dividend Reinvestment Program (DRIP) to shareholders of record. For
information regarding the Company's DRIP, contact Key Services Corporation at
(216) 689-5372.



The following table sets forth the high and low prices of the Company's capital
stock and cash dividends per share for the periods shown. The prices reflect
inter-dealer quotations without retail markup, markdown or commissions, and do
not necessarily represent actual transactions.



<TABLE>
<CAPTION>
                                                                 DIVIDENDS
   YEAR      PERIOD                 HIGH             LOW      PAID PER SHARE
   -------------------------------------------------------------------------

  <S>      <C>                   <C>            <C>               <C>      
  1994     FIRST QUARTER         $  20.50       $  16.50           7.5(cent)
           SECOND QUARTER           19.25          16.50           7.5(cent)
           THIRD QUARTER            20.00          18.00           7.5(cent)
           FOURTH QUARTER           20.00          16.50           9.0(cent)
                                                                  ----------
                                                                  31.5(cent)
                                                                  ==========

  1995     FIRST QUARTER            18.00          17.00           9.0(cent)
           SECOND QUARTER           19.00          17.00           9.0(cent)
           THIRD QUARTER            19.50          18.00           9.0(cent)
           FOURTH QUARTER           19.50          18.00          11.0(cent)
                                                                  ----------
                                                                  38.0(cent)
                                                                  ==========

  1996     FIRST QUARTER            20.00          18.50          11.0(cent)
           SECOND QUARTER           21.75          19.50          12.0(cent)
           THIRD QUARTER            22.50          20.50          12.0(cent)
           FOURTH QUARTER           22.50          21.00          12.0(cent)
                                                                  ----------
                                                                  47.0(cent)
                                                                  ==========
</TABLE>


ANNUAL MEETING

The Annual Meeting of Emerald Financial Corp. will be held on April 24, 1997 at
10:30 AM at Quality Catering Party Center, 9200 Pearl Road, Strongsville, Ohio.


                                       2
<PAGE>   2



                                                  SELECTED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                                YEAR ENDED DECEMBER 31
                                                        1996          1995           1994            1993           1992
=============================================================================================================================
                                                                   (Dollars in Thousands, Except Per Share Data)
<S>                                                 <C>           <C>           <C>             <C>             <C>       
SUMMARY OF OPERATIONS
Interest income                                     $   39,858    $   35,410    $    27,122     $    23,646     $   23,806
Interest expense                                        24,494        21,342         14,113          11,818         13,577
-----------------------------------------------------------------------------------------------------------------------------
   Net interest income                                  15,364        14,068         13,009          11,828         10,229
Provision for loan losses                                  305           238             92              77            296
-----------------------------------------------------------------------------------------------------------------------------
Net interest income after
   provision for loan losses                            15,059        13,830         12,917          11,751          9,933
Net gain on sale of assets                               1,091           997            228           1,799          1,735
Other noninterest income                                 1,344         1,055            966           1,063          1,069
Amortization of goodwill                                   134           143            151             158            165
Other noninterest expense                                9,390         8,483          7,219           5,971          5,565
One-time SAIF assessment                                 2,481          --             --              --             --   
-----------------------------------------------------------------------------------------------------------------------------
Income before federal income taxes                       5,489         7,256          6,741           8,484          7,007
Federal income taxes                                     1,941         2,539          2,331           2,915          2,430
-----------------------------------------------------------------------------------------------------------------------------
Net income                                          $    3,548    $    4,717    $     4,410     $     5,569     $    4,577
=============================================================================================================================
SUMMARY OF FINANCIAL CONDITION

Total assets                                        $  567,490    $  492,097    $   419,258     $   332,729     $  294,091
Investment securities                                   69,680        75,949         79,700          61,909         34,509
Total gross loans                                      457,919       364,766        306,921         263,364        233,688
Loans--net                                             425,855       336,351        281,843         242,395        216,890
Mortgage-backed securities                              52,180        52,005         37,274          12,426         17,071
Goodwill                                                   786           920          1,062           1,213          1,371
Deposits                                               493,471       432,563        363,050         294,750        269,733
Advances from Federal Home Loan Bank                    25,234        13,333         15,583            --             --   
Shareholders' equity                                    43,158        41,091         37,153          33,578         20,980
=============================================================================================================================
PER SHARE INFORMATION

Net income                                          $     1.40    $     1.86    $      1.74     $      2.73     $     2.43
Earnings before effect of one-time
    SAIF assessment                                       2.05          1.86           1.74            2.73           2.43
Dividends paid                                            0.47          0.40          0.315            0.28           0.26
Book value                                               17.05         16.24          14.68           13.27          11.12
Tangible book value (1)                                  16.78         15.87          14.26           12.79          10.40


OTHER STATISTICAL AND OPERATING DATA

Return on average assets (ROAA)                           0.68%         1.03%          1.18%           1.79%          1.64%
ROAA before effect of one-time
    SAIF assessment                                       0.99          --             --              --             --
Return on average equity (ROAE)                           8.38         12.07          12.47           22.15          24.09
ROAE before effect of one-time
    SAIF assessment                                      12.25          --             --              --             --
Net yield on average interest-earning assets (2)          3.00          3.15           3.58            3.91           3.80
Interest rate spread during period (3)                    2.62          2.76           3.24            3.64           3.55
Other noninterest expense to average assets (4)           1.79          1.85           1.93            1.92           2.00
Dividend payout ratio excluding one-time
    SAIF assessment                                      22.94         21.46          18.08           10.41          10.72
Total allowance for loan losses to
   nonperforming loans                                   83.76         56.91         120.11          315.80         252.06
Total allowance for loan losses to total loans            0.33          0.35           0.34            0.35           0.33
Nonperforming loans to total loans                        0.40          0.61           0.28            0.11           0.13
Nonperforming assets to total assets                      0.30          0.42           0.19            0.08           0.15
Net charge-offs (recoveries) to average loans (5)         0.01          0.01          (0.01)          (0.02)          0.07
Number of full-service offices                              14            12             10               9              9

Weighted average common
   shares outstanding                                2,530,800     2,530,800      2,530,800       2,042,066      1,886,800


CAPITAL RATIOS

Equity to assets:
    Average for the period                                8.06%         8.52%          9.46%           8.08%          6.82%

    At period end                                         7.61          8.35           8.86           10.09           7.13
Tangible capital (1)                                      7.49          8.14           8.64            9.76           6.70

Core capital                                              7.49          8.14           8.87           10.10           7.12
Risk-based capital                                       12.93         13.51          14.22           14.99          11.77
=============================================================================================================================
<FN>
(1) Tangible book value and tangible capital each represent shareholders' equity less goodwill.
(2) Net interest income divided by average interest-earning assets.
(3) The difference between the weighted average yield on interest-earning assets and the weighted
    average rate paid on interest-bearing liabilities.
(4) Goodwill amortization is excluded from the numerator of this ratio.
(5) Net charge-offs during the period to average loans outstanding during the period.
</TABLE>

                                       6
<PAGE>   3
                            Strongsville Savings Bank


MANAGEMENT'S DISCUSSION AND ANALYSIS

Emerald Financial Corp. (Emerald or Company), a unitary thrift holding company,
became the holding company of The Strongsville Savings Bank (Strongsville
Savings or Bank) in a tax-free exchange of shares of the Bank for shares of
Emerald on March 6, 1997. As a result, Emerald owns and operates the Bank. All
references to the Company or Emerald, unless otherwise indicated, refer to the
Bank and its subsidiary on a consolidated basis.

Strongsville Savings takes great pride in its history of providing friendly and
professional service to its customers. Our commitment to providing customers
with the financial products and services they need and want has brought success
to Strongsville Savings and to our customers. We help our customers achieve
their financial goals by providing a variety of products including two new
products introduced during 1996: The Emerald Reserve Account and The Emerald
Basic Checking Account. The Emerald Reserve Account is a line of credit which
enables customers to utilize the equity in their homes to finance their needs
and dreams. The Emerald Basic Checking Account provides customers with a
fee-free checking account. The Bank also offers its traditional product line
which includes NOW accounts, IRA accounts and a variety of term deposit,
passbook and other deposit vehicles. Many customers have enjoyed the American
dream of home-ownership with mortgage loan financing from Strongsville Savings.
We also offer loans for residential construction and development, commercial
property and many other purposes.

Strongsville Savings' franchise is strong--with a network of 14 Community
Financial Centers (Offices) throughout Southwestern Cuyahoga County, Lorain
County and Medina County. Our goal is to position our full service Offices in
communities poised for growth. Our customer service approach has proved
successful as evidenced by our strong growth at each Office. We expect the
tradition to continue through our close attention to the marketplace, to our
customers and to their financial needs.


FINANCIAL CONDITION

The Company's total assets were $567.5 million at December 31, 1996,
representing an increase of $75.4 million or 15.3% over the previous year total
assets of $492.1 million. The Company's 26.6% loan growth was funded by
increases in deposits and Federal Home Loan Bank advances and by decreases in
investments. Strongsville Savings' deposits increased 14.1% during 1996 from
$432.6 million to $493.5 million.






                                       7
<PAGE>   4
The composition of Strongsville Savings' assets and liabilities at year end 1996
and 1995 are displayed below.

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

          DECEMBER 31, 1996

             TOTAL ASSETS
               [GRAPH]

<TABLE>
<S>                      <C>
TOTAL LOANS - NET        75%
OTHER                     2%
CASH & INVESTMENTS       23%
</TABLE>


TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
               [GRAPH]

<TABLE>
<S>                      <C>
TOTAL DEPOSITS           87%
OTHER                     5%
SHAREHOLDERS' EQUITY      8%
</TABLE>

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

          DECEMBER 31, 1995

             TOTAL ASSETS
               [GRAPH]

<TABLE>
<S>                      <C>
TOTAL LOANS - NET        68%
OTHER                     2%
CASH & INVESTMENTS       30%
</TABLE>


TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
               [GRAPH]

<TABLE>
<S>                      <C>
TOTAL DEPOSITS           88%
OTHER                     4%
SHAREHOLDERS' EQUITY      8%
</TABLE>

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



Shareholders' equity increased $2.1 million, or 5.0%, to $43.2 million during
1996, primarily through the retention of net income of $3.5 million offset by
dividends of $1.2 million.

Strongsville Savings' dividend payments have increased over the past five years
as noted below. The Bank paid quarterly dividends totaling 47(cent) per share
for 1996, an increase of 17.5% over the 40(cent) per share paid in 1995. On
December 18,1996, the Board of Directors approved a first quarter 1997 dividend
of 12(cent) per share, or 48(cent) per share, annualized.


                    DIVIDENDS PER SHARE
                         [GRAPH]

<TABLE>
<S>                                               <C>     
1992                                              $0.26   
1993                                              $0.28   
1994                                              $0.315  
1995                                              $0.40   
1996                                              $0.47   
</TABLE>                                          



                                       8
<PAGE>   5
                            Strongsville Savings Bank


The Bank's capital exceeded all regulatory capital requirements for both capital
adequacy and to be considered well-capitalized under the regulatory framework
for prompt corrective action. The graph below illustrates the capital required
by federal regulations and the Bank's ability to meet and exceed those
requirements at December 31, 1996, 1995 and 1994.

The Bank has endeavored to leverage its capital as much as possible to generate
earnings for its shareholders. In addition to the Bank's ability to exceed
regulatory capital requirements, the chart below illustrates management's
strategy to leverage capital by investing excess capital in earning assets.

                                    [GRAPH]
<TABLE>
<CAPTION>
                                               1994          1995          1996
<S>                                           <C>           <C>           <C>   
Tangible Capital
to Adjusted total Assets
     Required                                   1.5%          1.5%          1.5%
     Actual                                    8.64%         8.14%         7.49%

Core Capital
to Adjusted Total Assets
     Required                                   3.0%          3.0%          3.0%
     Actual                                    8.87%         8.14%         7.49%

Risk-Based Capital
to Adjusted Total Assets
     Required                                   8.0%          8.0%          8.0%
     Actual                                   14.22%        13.51%        12.93%
</TABLE>


RESULTS OF OPERATIONS


Strongsville Savings strives to produce strong, stable core earnings from
operations. Core earnings consist of net interest income and recurring,
noninterest income, reduced by recurring noninterest expenses. During 1996 the
Congress passed legislation to recapitalize the Savings Association Insurance
Fund (SAIF) of the Federal Deposit Insurance Corporation (FDIC). This
legislation required thrifts, such as the Bank, to pay a one-time special
assessment of 65.7(cent) per $100 of deposits as of March 31, 1995. This
one-time SAIF assessment is considered a nonrecurring expense, and resulted in a
pre-tax charge to earnings of $2.5 million. Recurring, noninterest income
excludes gains (losses) on sales of loans and other assets.



           Core earnings before federal income tax for the three years
                    ended December 31, 1996 are noted below:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                          DECEMBER 31
                                                 1996         1995         1994
================================================================================
                                                          (In Millions)
<S>                                            <C>          <C>          <C>    
Net interest income                            $  15.4      $  14.1      $  13.0
Less provision for loan losses                     0.3          0.2          0.1
--------------------------------------------------------------------------------
                                                  15.1         13.9         12.9
Noninterest income (recurring)                     1.3          1.1          1.0
Noninterest expense (recurring)                    9.5          8.6          7.4
--------------------------------------------------------------------------------
CORE EARNINGS                                  $   6.9      $   6.4      $   6.5
================================================================================
</TABLE>



Strongsville Savings' net interest income has advanced steadily over the past
three years, primarily due to growth in the portfolio of interest earning
assets. Over the past three years, the Bank's franchise has also grown from nine
Offices in 1993 to fourteen in 1996. This franchise expansion has increased
certain noninterest expenses, such as human resources and occupancy. The Bank
anticipated these increases and determined that the benefits of market presence,
market penetration and future earnings growth exceeded the rise in operating
expenses.


                                       9
<PAGE>   6
NET INTEREST INCOME


Net interest income is the chief component of net income. Net interest income is
the difference between interest income on interest-earning assets and interest
expense on interest-bearing liabilities. Interest-bearing liabilities include
deposit accounts and FHLB advances that provide funds to invest in
interest-earning assets. Net interest income is determined by changes in the
composition of interest-earning assets and interest-bearing liabilities and
fluctuations in the levels of interest rates.

Interest rates in general declined slightly during 1996, following two years of
generally increasing rates. Yields on interest-earning assets declined 14 basis
points during 1996, while costs on interest-bearing liabilities remained stable
at 5.16% in 1996 and 1995.


INTEREST INCOME


Strongsville Savings' primary source of income is interest income from its loan
portfolio and other interest-earning assets. The Bank's commitment to providing
residential home loans is evident by its $338.3 million portfolio of permanent
and construction, single-family, residential mortgage loans. The Bank's
interest-earning assets include the residential mortgage loan portfolio, the
residential acquisition and development loan portfolio, the other loan
portfolios and the investment securities and mortgage-backed securities
portfolios.

Strongsville Savings' interest income was $39.9 million in 1996, $35.4 million
in 1995 and $27.1 million in 1994, representing annual increases of 12.6% and
30.6% for the years ended December 31, 1996 and 1995, respectively. These
increases are attributable to a combination of the effects of increases in
volume and changes in rate that are set forth in Table II. Average
interest-earning assets were $512.2 million with an average yield of 7.8% in
1996, $447.2 million with an average yield of 7.9% in 1995 and $363.6 million
with an average yield of 7.5% in 1994. See Table I for more details regarding
average interest-earning assets and their yields.


INTEREST EXPENSE


Strongsville Savings' primary source of funding for interest-earning assets is
retail deposits. Management believes that by providing friendly and professional
service, the Bank has achieved deposit growth during a period characterized by
disintermediation. As financial institutions often struggle to retain retail
deposits, the Bank has been able to increase deposits by 14.1% during 1996.
Management has dedicated resources to focus employees' attention on providing
excellent customer service and understanding the attributes of the Bank's
products. Savings counselors, tellers and other employees are encouraged to
cross-sell the Bank's products and services to current and future customers.
Management believes the Bank has a stable deposit base because the base consists
of retail deposits in communities we have made a commitment to serve.

Strongsville Savings' interest expense was $24.5 million in 1996, $21.3 million
in 1995 and $14.1 million in 1994. The change in interest expense was primarily
a result of the growth in deposits, principally in certificates of deposit.
Changes in interest rates did not contribute to the change during 1996, as the
average cost of interest-bearing liabilities remained unchanged at 5.16% during
1996 and 1995. During 1995, however, the average cost of interest-bearing
liabilities increased 94 basis points from its 1994 level. See tables I and II
for more information regarding average balances, average rates and changes in
interest expense attributable to changes in volume and changes in rates.








                                       10
<PAGE>   7
                            Strongsville Savings Bank



Table I presents information regarding the average balances of interest-earning
assets and interest-bearing liabilities, the total dollar amount of interest
income from interest-earning assets and their average yields, and the total
dollar amount of interest expense on interest-bearing liabilities and their
average rates. The table also presents net interest income, interest rate
spread, net interest margin and the ratio of average interest-earning assets to
average interest-bearing liabilities. Interest rate spread represents the
difference between the weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities, and net interest margin
represents net interest income as a percent of average interest-earning assets.
Average balance calculations were based on daily balances. Assets available for
sale are included in the major asset category as if they were held-to-maturity.



<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TABLE I                                                               YEAR ENDED DECEMBER 31
                                                  1996                            1995                              1994
                                     AVERAGE               YIELD/    AVERAGE                 YIELD/    AVERAGE               YIELD/
                                     BALANCE    INTEREST   RATE      BALANCE    INTEREST     RATE      BALANCE    INTEREST   RATE
====================================================================================================================================
                                                                      (Dollars in Thousands)
<S>                                  <C>        <C>        <C>       <C>        <C>          <C>       <C>        <C>        <C>  
INTEREST-EARNING ASSETS
Loans receivable, net (1)            $394,329   $ 32,442     8.23%   $305,605   $ 26,424       8.65%   $256,529   $ 22,040     8.59%
Investment securities                  63,189      3,836     6.07      80,822      4,982       6.16      72,550      3,391     4.67
Mortgage-backed securities             44,792      3,110     6.94      45,399      3,192       7.03      21,126      1,230     5.82
Other interest-earning assets           9,937        470     4.73      15,364        812       5.29      13,371        461     3.45
------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets         512,247     39,858     7.78     447,190     35,410       7.92     363,576     27,122     7.46
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets             12,808                          11,787                            10,166               
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                         $525,055                        $458,977                          $373,742               
====================================================================================================================================
INTEREST-BEARING LIABILITIES
Deposits (2)                          457,974     23,516     5.13    $399,460     20,428       5.11    $328,326     13,762     4.19
Advances from FHLB                     16,303        978     6.00      14,420        914       6.34       6,035        351     5.82
------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities    474,277     24,494     5.16     413,880     21,342       5.16     334,361     14,113     4.22
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities         8,434                           6,013                             4,013               
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity                   42,344                          39,084                            35,368               
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY                $525,055                        $458,977                          $373,742               
====================================================================================================================================
Net interest income                             $ 15,364                        $ 14,068                          $ 13,009    
Interest rate spread                                         2.62%                             2.76%                           3.24%
Net interest margin                                          3.00%                             3.15%                           3.58%
Ratio of average
  interest-earning
  assets to average
  interest-bearing
 liabilities                                               108.01%                           108.05%                         108.74%
====================================================================================================================================


<FN>
(1)  Average balances include non-accrual loans. Interest income includes
     deferred loan fee amortization of $1,650,000, $1,676,000 and $1,560,000 for
     the years ended December 31, 1996, 1995 and 1994, respectively.

(2)  Deposits include noninterest-bearing demand accounts, which were
     $11,535,000, $11,728,000 and $10,159,000 at December 31, 1996, 1995 and
     1994, respectively.
</TABLE>



                                       11
<PAGE>   8


Table II presents certain information regarding changes in interest income and
interest expense of the Bank for the years ended December 31, 1996, 1995 and
1994. The table shows the changes in interest income and expense, by major
category, attributable to changes in the average balance (volume) and changes in
interest rates. The net change not attributable to either rate or volume is
allocated on a pro-rata basis to the change in rate or volume. Assets available
for sale are included in the major asset category as if they were
held-to-maturity.



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
TABLE II                          1996 COMPARED TO 1995           1995 COMPARED TO 1994
                                   INCREASE (DECREASE)             INCREASE (DECREASE)
                                    DUE TO CHANGES IN:             DUE TO CHANGES IN:

                                VOLUME      RATE       TOTAL     VOLUME    RATE      TOTAL
===========================================================================================
                                                       (In Thousands)
<S>                              <C>       <C>         <C>       <C>       <C>       <C>   
INTEREST INCOME ON
 INTEREST-EARNING ASSETS

Loans, net                       $7,227    ($1,209)    $6,018    $4,230     $ 154    $4,384
Investment securities            (1,074)       (72)    (1,146)      419     1,172     1,591
Mortgage-backed
  securities                        (42)       (40)       (82)    1,661       301     1,962
Other                              (263)       (79)      (342)       77       274       351
-------------------------------------------------------------------------------------------
  Total                           5,848     (1,400)     4,448     6,387     1,901     8,288
-------------------------------------------------------------------------------------------
INTEREST EXPENSE ON
 INTEREST-BEARING LIABILITIES

Deposits                          3,007         81      3,088     3,311     3,355     6,666
Borrowings                          110        (46)        64       351       212       563
-------------------------------------------------------------------------------------------
  Total                           3,117         35      3,152     3,662     3,567     7,229
-------------------------------------------------------------------------------------------
CHANGE IN NET INTEREST INCOME    $2,731    ($1,435)    $1,296    $2,725   ($1,666)   $1,059
===========================================================================================
</TABLE>

PROVISIONS FOR LOAN LOSSES


The provision for loan losses represents a charge to income for possible credit
losses. The Bank maintains the level of the allowance for loan losses at an
amount adequate to absorb potential losses inherent in the loan portfolio. A
quarterly review of the adequacy of the allowance for loan losses considers
growth in the loan portfolio, potential losses identified by the portfolio
review process, and the Bank's historical loan loss experience. In addition, the
Bank considers economic conditions, including the overall level of interest
rates and the general trend of the national economy, local economy and housing
markets. The allowance is determined in accordance with generally accepted
accounting principles.

The provision for loan losses was $305,000 in 1996, $238,000 in 1995 and $92,000
in 1994. The provision for 1996 was increased primarily as a result of growth in
the overall loan portfolio. The provisions for the three years ended December
31, 1996, reflect generally stable economic conditions in the Strongsville
Savings' market area, as well as the high credit quality of the Bank's loan
portfolio. The allowance for loan losses throughout 1996, 1995 and 1994 was
commensurate with management's estimate of the credit risk in the loan
portfolio.




                                       12

<PAGE>   9
                            Strongsville Savings Bank


NONINTEREST INCOME


Noninterest income is comprised mainly of fees the Bank earns from services
performed for customers and for servicing loans sold to the secondary market.
Loan servicing and other fee income were $1,303,000 in 1996, $1,001,000 in 1995
and $933,000 in 1994. The increases are due principally to growth in the Bank's
loan portfolio and changes in loans serviced for investors.

Gains on the sale of loans to the secondary market and gains on sales of
securities and other assets are included in noninterest income. This is the
component of noninterest income with the greatest level of variation. Gains on
sales of loans experience variations due to the number of loans the Bank sells
to the secondary market and to the price offered by the secondary market for
such loans. The Bank sells loans to the secondary market, in conjunction with
certain fixed-rate loan programs, to provide funding, and as an interest rate
risk management tool. The Bank recorded gains on loan sales of $711,000 in 1996,
$964,000 in 1995 and $228,000 in 1994.

In 1995 the Bank adopted Statement of Financial Accounting Standards (SFAS) No.
122, Accounting for Mortgage Servicing Rights, which enabled the Bank to
capitalize the fair market value of originated mortgage servicing rights for
loans sold. The Bank realized gains on loan sales of $282,000 in 1996 and
$281,000 in 1995 (pre-tax) as a result of adopting SFAS No. 122.


NONINTEREST EXPENSES


Strongsville Savings has made a commitment to expand its franchise value by
blanketing its market area with easy access Community Financial Centers. We
believe the expansion of the Bank's financial network will benefit current and
future customers by bringing our Offices close to their homes. There are
operating costs involved in franchise expansion; however, we believe the
benefits of expanding to provide full coverage to our targeted market are worth
the investment. We have added five Offices in the past three years, and deposits
at these Offices stood at $66.2 million at December 31, 1996.

As Strongsville Savings grows and expands its franchise and services into more
communities, management has worked hard to control costs. The Bank's ratio of
noninterest expense (excluding the one-time SAIF assessment) to average assets
was 1.79% in 1996, 1.85% in 1995 and 1.93% in 1994. The common industry
benchmark for this ratio is 2.00% or less. According to SNL Securities Thrift
Performance as of September 30, 1996, industry averages were 2.23% for the
twelve months ended September 30, 1996, and 2.26% and 2.27% for the years ended
December 31, 1995 and 1994, respectively.

Noninterest expense was $9,524,000 in 1996, $8,626,000 in 1995 and $7,370,000 in
1994. The increases were primarily due to the Bank's franchise expansion program
which added two Community Financial Centers in 1996, bringing the three year
total to five new Offices. Human resources, occupancy and deposit insurance
premiums increased as a result of the franchise expansion. Other increases were
related to investment in technology, higher franchise taxes and general price
increases.

Congress passed legislation to recapitalize the SAIF fund of the FDIC during
1996 that required thrift institutions, such as Strongsville Savings, to pay a
one-time assessment to recapitalize the SAIF fund of the FDIC of 65.7(cent) per
$100 of deposits as of March 31, 1995. The Bank recognized a charge to earning
of $2.5 million (pre-tax) as a result. Deposit insurance premiums are expected
to decline sharply in 1997 as a result of a lower premium schedule issued by the
FDIC following the SAIF fund recapitalization. Prior to this recapitalization,
the Bank's deposit insurance premiums were 23(cent) per $100 of deposits; under
the new premium schedule, Strongsville Savings expects to pay 6.48(cent) per
$100 of deposits in 1997. This represents an anticipated cost reduction of
$672,000 or 71.9% based on 1996 deposit levels.




                                       13
<PAGE>   10

FEDERAL INCOME TAXES


The Bank provided for federal income taxes as follows: $1,941,000 in 1996,
$2,539,000 in 1995 and $2,331,000 in 1994. The changes in the level of the
Bank's provision for federal income taxes were primarily due to changes in the
level of pre-tax income. The effective tax rates for the periods were 35.9% in
1996, 35.0% in 1995 and 34.5% in 1994.



LENDING ACTIVITIES


The cornerstone of Strongsville Savings' lending activities is providing
mortgage loans to homeowners. The Bank principally originates conventional first
mortgage loans secured by residential real estate. In December 1996, the Bank
introduced the Emerald Reserve Account (the Emerald Line), a line of credit
which enables our customers to utilize the equity in their homes to fund
improvements, education or whatever they choose. The Emerald Line's interest
rate is based on the Bank's prime rate. Loans made to homeowners on
owner-occupied, one-to-four-family residences typically have low credit risk
because the borrower occupies the home. Credit risk management is also enhanced
by the historically stable real estate values in Northeastern Ohio.

Strongsville Savings has developed a niche in the residential construction loan
market. The Bank makes residential land development loans to local builders and
developers with whom strong business relationships have been developed. These
loans are made on land zoned for residential use which will be developed into
residential building lots. In addition, the Bank provides construction loans to
builders for the construction of homes, most of which are pre-sold, and to
individuals for the construction of their homes.

Management considers these development and construction loans as having somewhat
greater credit risk than conventional residential mortgage loans because there
is uncertainty related to the completion of projects within their time and cost
budgets. Strongsville Savings' management constantly monitors these loans and
reviews the progress of each with the borrowers and contractors to manage and
mitigate the risk involved.

Management believes that loans secured by commercial property may present a
higher degree of credit risk than residential loans. The factors that tend to
increase the credit risk of these loans include the concentration of principal
in a limited number of loans and borrowers, the effects of general economic
conditions on income-producing properties and the increased difficulty of
evaluating and monitoring such properties. Furthermore, the repayment of loans
secured by commercial real estate is typically dependent upon the cash flows of
the related business enterprise. The Bank has instituted procedures to monitor
the cash flows of its commercial real estate loan customers.




  The following table illustrates the composition of the Bank's loan portfolio:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                       DECEMBER 31
LOAN COMPOSITION                         1996             1995            1994
==============================================================================
                                                     (In Millions)
<S>                                  <C>              <C>             <C>     
REAL ESTATE LOANS
 One-to-four-family                  $  302.1         $  225.9        $  194.6
 Multi-family & commercial               48.1             43.6            39.8
 Construction                            39.6             33.9            34.4

RESIDENTIAL ACQUISITION
 & DEVELOPMENT                           54.7             48.5            29.1

OTHER LOANS                              13.4             12.9             9.0
------------------------------------------------------------------------------
    TOTAL LOANS                      $  457.9         $  364.8        $  306.9
==============================================================================
</TABLE>


                                       14
<PAGE>   11
                            Strongsville Savings Bank


         Loan originations by type were as follows for the years ended:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                 YEAR ENDED DECEMBER 31
LOAN ORIGINATIONS                        1996             1995            1994
==============================================================================
                                                    (In Millions)
<S>                                  <C>             <C>              <C>     
REAL ESTATE LOANS
 One-to-four-family                  $  154.5        $    86.0        $   63.1
 Multi-family & commercial                8.6              5.2             2.7
 Construction                            50.5             43.6            50.2

RESIDENTIAL ACQUISITION
 & DEVELOPMENT                           39.9             43.2            30.5

OTHER LOANS                               7.2              8.9             5.7
------------------------------------------------------------------------------
    TOTAL LOAN ORIGINATIONS          $  260.7        $   186.9        $  152.2
==============================================================================
</TABLE>


ASSET QUALITY

Management has designed stringent underwriting standards to minimize credit risk
in the Bank's loan portfolio. All loans are subject to these standards, which
include evaluating each applicant's ability to make periodic payments, his or
her equity in the property, and the value of the underlying collateral.
Management monitors the loan portfolio to determine that the level of credit
risk remains stable and acceptable.

The Bank defines non-performing loans as those loans where there is an
indication that the borrower no longer has the ability to repay. Generally,
these loans are more than 90 days delinquent. Non-performing assets include
non-performing loans and in-substance foreclosed loans. The Bank's
non-performing assets have consistently been below peer group averages. The
Bank's ratio of non-performing assets to total assets was 0.30%, 0.42% and 0.19%
at December 31, 1996, 1995 and 1994, respectively. According to the SNL
Securities Thrift Performance as of September 30, 1996, the industry average
ratio of non-performing assets to total assets was 0.65% at September 30, 1996
and 0.63% and 0.82% at December 31, 1995 and 1994, respectively.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                                     DECEMBER 31
NON-PERFORMING ASSETS                   1996            1995              1994
===============================================================================
                                                 (Dollars in Thousands)
<S>                                   <C>              <C>                <C>  
Total non-performing loans            $ 1,699          $ 2,052            $ 789
Other non-performing assets              --               --                -- 
-------------------------------------------------------------------------------
Total non-performing assets           $ 1,699          $ 2,052            $ 789
===============================================================================
Non-performing assets to
  total assets                           0.30%            0.42%            0.19%

Allowance for loan losses to
  non-performing loans                  83.76%           56.91%          120.11%

Net charge-offs (recoveries) to average
 loans outstanding for the year          0.01%            0.01%           (0.01%)
===============================================================================
</TABLE>


At December 31, 1996, non-performing loans included twelve residential loans
totaling $1,241,000, four construction loans totaling $453,000, and two consumer
loans totaling $5,000. The ratio of net charge-offs to average loans outstanding
illustrates the Bank's commitment to minimizing credit risk through its strict
underwriting standards and collection procedures.

At December 31, 1996, there were two loans secured by funeral homes to a single
borrower totaling $1.1 million which are not included in the table above.
Indications of possible cash flow problems have caused management concern
regarding the borrower's ability to comply with present loan repayment terms and
may result in the classification of these loans as non-performing in the future.
Based on written opinions from an independent fee appraiser, the collateral
value of the properties are sufficient to cover the total outstanding debt.



                                       15

<PAGE>   12
ASSET AND LIABILITY MANAGEMENT


The Bank's asset and liability management program is intended to minimize the
impact of significant changes in interest rates on net interest income.
Management believes the keys to successful interest rate and credit risk
management include the monitoring and management of interest rate sensitivity
and the quality of assets, discussed above. Interest rate risk is the risk that
net interest income or net portfolio value will decline significantly in periods
of changing interest rates.

Strongsville Savings has endeavored to buffer net income from the effect of
changes in interest rates by reducing the maturity or repricing mismatch between
its interest-earning assets and interest-bearing liabilities. The Bank's
strategy includes originating adjustable rate mortgage (ARM) loans, selling
certain fixed-rate residential mortgage loans to the Federal Home Loan Mortgage
Corporation (Freddie Mac) and investing in securities with short to medium
terms. This strategy has resulted in an investment of $193.7 million, or 42.3%
of the Bank's total mortgage loan portfolio in ARM loans at December 31, 1996.
The Bank originated $97.7 million, $95.7 million and $66.4 million in ARM loans
in 1996, 1995 and 1994, respectively. Although the Bank is committed to
originating ARM loans, management believes that discounted "teaser" rate loans
diminish the effectiveness of ARM loans for managing interest rate risk;
therefore the Bank does not offer teaser rate loans.

Strongsville Savings sold $53.8 million in long-term, fixed-rate loans to
Freddie Mac during 1996, $42.6 million in 1995 and $21.6 million in 1994. The
Bank only sells loans to the secondary market on a non-recourse basis with
servicing retained.

The Bank's investment portfolio consists primarily of investment grade corporate
debt, government agency debt and mortgage-backed securities issued by government
agencies. Substantially all of the corporate debt and government agency debt
matures in three years or less.

The Bank's strategy to reduce the maturity or repricing mismatch between its
interest rate sensitive assets and liabilities includes reducing the terms to
maturity of its long-term, interest-earning assets, as noted above, and
lengthening the terms to repricing or maturity of its interest-bearing
liabilities. At December 31, 1996, the Bank's long-term, fixed-rate deposits
with terms exceeding three years were $54.7 million.

A common industry measure of a financial institution's general sensitivity to
interest rates is called the gap (GAP). The GAP represents the difference
between the Bank's interest-earning assets and interest-bearing liabilities
maturing within certain time frames, as a percent of the Bank's total assets.
Table III illustrates the Bank's interest rate GAP at December 31, 1996.



                                       16
<PAGE>   13
                            Strongsville Savings Bank



Table III illustrates the maturities or repricing of the Bank's assets and
liabilities at December 31, 1996 based on information from the financial model
used by Strongsville Savings concerning prepayments and decay rates of major
asset and liability categories.


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
TABLE III                                                               DECEMBER 31, 1996

MATURING OR                          WITHIN          6-12          1-3         3-5          5-10       10 OR      TOTAL
REPRICING PERIODS                    6 MONTHS        MONTHS        YEARS       YEARS        YEARS      MORE
                                                                      (Dollars in Thousands)
=========================================================================================================================
<S>                                   <C>           <C>           <C>         <C>          <C>        <C>         <C>    
INTEREST-EARNING
 ASSETS

  Adjustable-rate mortgage loans      $23,490       $18,567       $21,537     $   --       $  --      $  --       $63,594
  Fixed-rate mortgage loans            16,787        15,834        55,260       43,256      71,789     42,826     245,752
  Other loans                          77,809        15,287        22,896        2,989       2,549        365     121,895
    Investments                        62,833        36,950        21,129        4,466       2,015      1,517     128,910
-------------------------------------------------------------------------------------------------------------------------
  Total                               180,919        86,638       120,822       50,711      76,353     44,708     560,151
-------------------------------------------------------------------------------------------------------------------------

INTEREST-BEARING
 LIABILITIES
  Certificate of deposit accounts     150,926       121,187        61,588       54,658        --         --       388,359
  Money market deposit accounts         3,245         2,656         6,603        2,964       2,088        326      17,882
  NOW and passbook accounts            10,141         8,782        24,838       13,972      13,700      4,262      75,695
  Advances from FHLB                   21,530           520         1,676        1,508        --         --        25,234
-------------------------------------------------------------------------------------------------------------------------
      Total                           185,842       133,145        94,705       73,102      15,788      4,588     507,170
-------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SENSITIVITY GAP          (4,923)      (46,507)       26,117      (22,391)     60,565     40,120     $52,981
----------------------------------------------------------------------------------------------------------------  =======
CUMULATIVE GAP                        ($4,923)     ($51,430)     ($25,313)    ($47,704)    $12,861    $52,981            
=============================================================================================================

CUMULATIVE INTEREST RATE
  SENSITIVITY GAP AS A PERCENT
  OF TOTAL ASSETS AT
  DECEMBER 31, 1996                     (0.87%)       (9.06%)       (4.46%)      (8.41%)      2.27%      9.34%           
-------------------------------------------------------------------------------------------------------------------------
CUMULATIVE INTEREST RATE
  SENSITIVITY GAP AS A PERCENT
  OF TOTAL ASSETS AT
  DECEMBER 31, 1995                      5.23%        (0.38%)        2.56%       (6.37%)      2.63%     10.02%           
=========================================================================================================================
</TABLE>





The table presents the repricing dates of the Bank's interest-earning assets and
interest-bearing liabilities at December 31, 1996. The annual prepayment and
decay rates used in this table are obtained from an independent analysis
service. Annual prepayment assumptions for 1996 range from 7% to 18% on
fixed-rate mortgage loans, 10% to 24% on ARM loans, 12% to 19% on
non-residential real estate mortgage loans, and 12% to 21% on other loans.
Annual prepayment assumptions for 1995 ranged from 8% to 21% on fixed-rate
mortgage loans, 18% to 28% on ARM loans, 9% to 22% on non-residential real
estate mortgage loans, and 5% to 7% on other loans. The NOW, money market
deposit and passbook accounts' decay rates for 1996 were assumed to vary across
time horizons from 0% to 37% in 1996 and 0% to 33% in 1995. 

The method used to analyze interest-rate sensitivity in Table III has a
number of limitations. Certain assets and liabilities may react differently to
changes in interest rates even though they reprice or mature in the same or
similar time periods. The interest rates on certain assets and liabilities may
change at different times from changes in market rates, with some changing in
advance of changes in market rates, and some lagging behind changes in market
rates. Also, certain assets, e.g. ARM loans, often have provisions that may
limit changes in interest rates each time the interest rate changes, and on a
cumulative basis over the life of the loan. Additionally, the actual prepayments
and withdrawals experienced in the event of a change in interest rates could
deviate significantly from those assumed in calculating the data shown in the
table. Finally, the ability of some borrowers to service their debt may decrease
in the event of an interest rate increase.








                                       17

<PAGE>   14
LIQUIDITY


The Bank is required to maintain an average daily balance of liquid assets
(cash; certain time deposits; bankers' acceptances; specified United States
Government, state or federal agency obligations; shares of certain mutual funds
and certain corporate debt securities and commercial paper) equal to a monthly
average of not less than specified percentages of its net withdrawable deposit
accounts plus short-term borrowings. The average eligible liquidity at December
31, 1996 was 16.07%, which exceeded the 5.0% requirement. The Bank's short-term
liquidity at December 31, 1996, was 8.21%, which exceeded the 1.0% requirement.

Financial institutions, such as Strongsville Savings, must ensure that
sufficient funds are available to meet deposit withdrawals, loan commitments and
expenses. Management of the Bank's cash flows requires the anticipation of
deposit flows and loan payments. The Bank's primary sources of funds are
deposits and principal and interest payments on loans. The Bank uses funds from
deposit inflows and principal and interest payments on loans primarily to
originate loans, and to purchase short-term investment securities and
interest-earning deposits.

At December 31, 1996, loans-in-process to be funded over a future period of time
totaled $26.7 million, and loan commitments or loans committed but not closed
totaled $34.8 million. There were no commitments to purchase or sell loans at
December 31, 1996. Funding for these amounts is expected to be provided by the
sources described above. Management believes the Bank has adequate resources to
meet its normal funding requirements.

The Bank is a party to a credit agreement with the Federal Home Loan Bank (FHLB)
of Cincinnati whereby The Bank can obtain advances. The Bank had $25.2 million
in advances outstanding from FHLB of Cincinnati at December 31, 1996.


IMPACT OF INFLATION AND CHANGING PRICES

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

Changes in the general level of prices for goods and services have a relatively
minor impact on the Bank's total expenses because the Bank's primary assets and
liabilities are monetary in nature. Increases in operating expenses such as
salaries and maintenance are in part attributable to inflation. However,
interest rates have a far more significant effect than inflation on the
performance of financial institutions, including the Bank.



NEW ACCOUNTING PRONOUNCEMENTS

See the Notes to the Consolidated Financial Statements, Note 1, caption New
Accounting Standards for a discussion of accounting and reporting developments
affecting the Bank.


                                       18
<PAGE>   15






                         CONSOLIDATED FINANCIAL STATEMENTS



                  Consolidated Statements of
                  Financial Condition
                                             21

                  Consolidated Statements of Income
                                             22

                  Consolidated Statements of Cash Flows
                                             23

                  Consolidated Statements of
                  Shareholders' Equity
                                             24

                  Notes to Consolidated Financial Statements
                                             25 - 38

                  Independent Auditors' Report
                                             39

<PAGE>   16

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                             (Dollars In Thousands)


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                                                      DECEMBER 31
                                                                    1996        1995
=====================================================================================
<S>                                                            <C>          <C>     
ASSETS
           CASH AND CASH EQUIVALENTS
              Cash and deposits with banks                     $   3,146    $  3,574
              Interest-bearing deposits with banks                 4,406      11,935

           INVESTMENT SECURITIES
              Held-to-maturity (fair values of $47,496
                and $49,640 at December 31,1996 and
                1995, respectively)                               47,684      49,354
              Available for sale (at fair value)                  21,996      26,595

           MORTGAGE-BACKED SECURITIES
              Held-to-maturity (fair values of $33,104
                and $37,819 at December 31, 1996 and
                1995, respectively)                               32,536      37,256
              Available for sale (at fair value)                  19,644      14,749

           LOANS -- NET
              (including allowance for loan losses of $1,423
              and $1,168 at December 31, 1996 and
              1995, respectively)                                425,060     331,017


           LOANS HELD FOR SALE                                       795       5,334
           ACCRUED INTEREST RECEIVABLE                             3,238       3,299
           FEDERAL HOME LOAN BANK STOCK-- AT COST                  2,831       2,407
           PREMISES AND EQUIPMENT-- NET                            3,939       4,334
           PREPAID EXPENSES AND OTHER ASSETS                       2,215       2,243
-------------------------------------------------------------------------------------
TOTAL ASSETS                                                   $ 567,490    $492,097
=====================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
           LIABILITIES
              Deposits                                         $ 493,471    $432,563
              Advances from Federal Home Loan Bank                25,234      13,333
              Advance payments by borrowers for
               taxes and insurance (escrow)                        1,502       1,222
              Deferred federal income tax                          1,584       1,583
              Accrued interest payable                               586         425
              Accounts payable and other accrued expenses          1,955       1,880
-------------------------------------------------------------------------------------
           TOTAL LIABILITIES                                     524,332     451,006
-------------------------------------------------------------------------------------
           SHAREHOLDERS' EQUITY
              Common stock, no par value; 10,000,000
               shares authorized, 2,530,800 shares
               issued and outstanding                              9,831       9,831
              Retained earnings (substantially restricted)        33,422      31,064
              Net unrealized gains (losses) in the fair
                value of securities                                  (95)        196
-------------------------------------------------------------------------------------
            TOTAL SHAREHOLDERS' EQUITY                            43,158      41,091
-------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                     $ 567,490    $492,097
=====================================================================================
</TABLE>

See notes to consolidated financial statements.

                                       21
<PAGE>   17

                        CONSOLIDATED STATEMENTS OF INCOME

                  (Dollars in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
                                                       YEAR ENDED DECEMBER 31
                                                   1996         1995         1994
===================================================================================
<S>                                            <C>          <C>          <C>       
INTEREST INCOME
    Loans                                      $   32,442   $   26,424   $   22,040
    Investment securities                           3,836        4,982        3,391
    Mortgage-backed securities                      3,110        3,192        1,230
    Other investments                                 470          812          461
-----------------------------------------------------------------------------------
                                                   39,858       35,410       27,122
-----------------------------------------------------------------------------------

INTEREST EXPENSE
    Deposits                                       23,516       20,428       13,762
    Advances from Federal Home Loan Bank              978          914          351
-----------------------------------------------------------------------------------
                                                   24,494       21,342       14,113
-----------------------------------------------------------------------------------
    Net interest income                            15,364       14,068       13,009
-----------------------------------------------------------------------------------

PROVISION FOR LOAN LOSSES                             305          238           92
-----------------------------------------------------------------------------------
    Net interest income after
       provision for loan losses                   15,059       13,830       12,917
                                                                                   

NONINTEREST INCOME
    Gain on sale of loans and other assets          1,091          997          228
    Loan servicing fees                               623          464          545
    Service fees and other charges                    680          537          388
    Other                                              41           54           33
-----------------------------------------------------------------------------------
                                                    2,435        2,052        1,194
-----------------------------------------------------------------------------------

NONINTEREST EXPENSE
    Salaries and employee benefits                  3,716        3,487        2,935
    Net occupancy and equipment                     1,549        1,392        1,112
    Federal deposit insurance premium                 935          850          703
    Franchise tax                                     560          491          443
    Other                                           2,764        2,406        2,177
-----------------------------------------------------------------------------------
        Non-interest expense before one-time
           SAIF assessment                          9,524        8,626        7,370
        One-time SAIF assessment                    2,481         --           --   
-----------------------------------------------------------------------------------
                                                   12,005        8,626        7,370
-----------------------------------------------------------------------------------
    Income before federal income taxes              5,489        7,256        6,741

FEDERAL INCOME TAXES                                1,941        2,539        2,331
-----------------------------------------------------------------------------------

NET INCOME                                     $    3,548   $    4,717   $    4,410
===================================================================================
EARNINGS PER COMMON SHARE                      $     1.40   $     1.86   $     1.74

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                       2,530,800    2,530,800    2,530,800
===================================================================================
</TABLE>


See notes to consolidated financial statements.

                                       22
<PAGE>   18

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In Thousands)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                                                               YEAR ENDED DECEMBER 31
                                                            1996        1995        1994
==========================================================================================
<S>                                                       <C>         <C>         <C>     
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                            $  3,548    $  4,717    $  4,410
    Adjustments to reconcile net income
      to net cash provided by (used in)
      operating activities:
        Provision for loan losses                              305         238          92
        Gain on sale of loans and other assets              (1,091)       (997)       (228)
        Amortization of deferred yield items                (2,780)     (2,484)     (2,103)
        Proceeds from sale of loans originated for sale     54,222      38,351      21,551
        Disbursements on loans originated for sale         (49,251)    (43,258)     (7,795)
        Depreciation and amortization                          815         821         741
        Effect of change in accrued
          interest receivable and payable                      222        (595)       (583)
        Deferred federal income taxes                          151         597       1,192
        Other                                                 (282)        (84)     (2,057)
------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES          5,859      (2,694)     15,220
------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Net increase in loans                                  (89,255)    (50,416)    (50,965)
    Purchases of:
      Mortgage-backed securities and loans                 (19,887)    (22,284)    (29,383)
      Investment securities                                (44,020)    (59,176)    (58,689)
      Federal Home Loan Bank Stock                            (239)       (437)       --
      Premises and equipment                                  (566)     (1,489)       (746)
    Proceeds from:
      Investment security maturities                        50,224      60,528      36,833
      Mortgage-backed security principal
        repayments and maturities                           10,639       7,103       4,534
      Sales of available for sale securities                 6,744       2,518       3,995
      Sales of premises and equipment                          645        --          --   
      Sales of loans                                          --         4,725        --   
    Other                                                     --            11          27
------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                      (85,715)    (58,917)    (94,394)     
------------------------------------------------------------------------------------------
       Net increase in deposits                             60,908      69,513      68,300
       Proceeds from advances from
         Federal Home Loan Bank (FHLB)                      73,650       2,000      16,000
       Payments on advances from FHLB                      (61,749)     (4,250)       (417)
       Payment of dividends on common stock                 (1,190)     (1,013)       (797)
       Increase (decrease) in escrow                           280         221        (147)
------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                   71,899      66,471      82,939
------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                     (7,957)      4,860       3,765

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR          15,509      10,649       6,884
------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR              $  7,552    $ 15,509    $ 10,649
==========================================================================================
</TABLE>


See notes to consolidated financial statements.

                                       23
<PAGE>   19

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                  (Dollars in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
                                             NET UNREALIZED
                                             GAIN (LOSS)                          TOTAL
                                   COMMON    IN THE FAIR VALUE    RETAINED        SHAREHOLDERS'
                                   STOCK     OF SECURITIES        EARNINGS        EQUITY
==============================================================================================
<S>                                <C>          <C>               <C>             <C>         
Balance, January 1, 1994           $9,831       $ --              $ 23,747        $ 33,578    
                                                                                              
Dividends-- $0.315 per share         --           --                  (797)           (797)   
                                                                                              
Net unrealized (loss) in the                                                                  
 fair value of securities            --           (38)                --               (38)   
                                                                                              
Net income                           --           --                 4,410           4,410    
----------------------------------------------------------------------------------------------
Balance, December 31, 1994          9,831         (38)              27,360          37,153    
                                                                                              
Dividends-- $0.40 per share          --           --                (1,013)         (1,013)   
                                                                                              
Net unrealized gain in the                                                                    
 fair value of securities            --           234                 --               234    
                                                                                              
Net income                           --           --                 4,717           4,717    
----------------------------------------------------------------------------------------------
Balance, December 31, 1995          9,831         196               31,064          41,091    
                                                                                              
Dividends-- $0.47 per share          --           --                (1,190)         (1,190)   
                                                                                              
Net unrealized (loss) in the                                                                  
 fair value of securities            --          (291)                --              (291)   
                                                                                              
Net income                           --           --                 3,548           3,548    
----------------------------------------------------------------------------------------------
Balance, December 31, 1996         $9,831       $ (95)            $ 33,422        $ 43,158    
==============================================================================================
</TABLE>



See notes to consolidated financial statements.



                                       24
<PAGE>   20

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          NATURE OF OPERATIONS

          The Strongsville Savings Bank conducts its principal activities from
          its Community Financial Centers located in southwestern Cuyahoga,
          Lorain and Medina counties. The Bank's principal activities include
          residential lending and retail banking. Emerald Financial Corporation
          (Emerald or Company) is a unitary thrift holding company whose wholly
          owned subsidiary is The Strongsville Savings Bank (Bank). Emerald
          became the Bank's holding company in a tax-free exchange of shares of
          the Bank for shares of Emerald consummated on March 6, 1997.

          BASIS OF PRESENTATION

          The consolidated financial statements include the accounts of the Bank
          and its subsidiary. All material intercompany transactions and
          balances have been eliminated. Certain prior period data has been
          reclassified to conform to current year presentation.

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make assumptions
          and estimates that affect the amounts reported in the financial
          statements and accompanying notes. Actual results could differ from
          those estimates.

          INVESTMENT AND MORTGAGE-BACKED SECURITIES

          Securities are classified as held-to-maturity, available for sale or
          trading. Only those securities classified as held-to-maturity are
          reported at amortized cost. Management has the intent and ability to
          hold securities classified as held-to-maturity, to maturity.
          Securities classified as available for sale and trading are reported
          at their fair values. Unrealized gains and losses, net of deferred
          income taxes, on available for sale securities are included in
          shareholders' equity. Unrealized gains and losses, net of deferred
          income taxes, on trading securities are included in income. Realized
          securities gains or losses are reported in the Consolidated Statements
          of Income. The cost of securities sold is based on the specific
          identification method.

          On December 30, 1995, management took a permitted one-time opportunity
          to re-evaluate securities classification under SFAS No. 115 and
          reclassified securities with an amortized cost of $40,047,000 from
          held-to-maturity to available for sale. The unrealized gain at the
          time of the transfer was $297,000.

          LOANS

          Interest income on loans is based on the principal balance
          outstanding. Interest is accrued as earned unless there is a distinct
          indication that the borrower's cash flow or collateral may not be
          sufficient to meet his/her contractual obligations. Loans are also
          placed on nonaccrual status when principal or interest is past due
          more than ninety days, unless the loan is well secured by real estate.
          When a loan is placed on nonaccrual status, all previously accrued and
          unpaid interest is charged against income. Interest is subsequently
          recognized only to the extent that cash payments are received. When
          the borrower has demonstrated that he/she has the intent and ability
          to make scheduled principal and interest payments, the loan may be
          returned to accrual status.

          Loan origination fees, net of certain direct loan origination costs,
          are deferred and amortized over the life of the related loans as a
          yield adjustment for loans originated for investment. Loan origination
          fees, net of certain direct loan origination costs, are deferred and
          recognized as a basis adjustment for loans originated for sale. Loan
          commitment fees are deferred and recognized as yield adjustments over
          the estimated life of the related loans.

          Residential mortgage loans held for sale are valued at the lower of
          aggregate cost or market value and were $795,000 at December 31, 1996.
          Gains or losses on sales are recognized in noninterest income or
          noninterest expense, respectively, upon delivery.


                                       25
<PAGE>   21

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          The Bank adopted SFAS No. 122, Accounting for Mortgage Servicing
          Rights, effective January 1, 1995, which requires an entity that sells
          or securitizes loans with servicing rights retained to allocate the
          total cost of the mortgage loans to the mortgage servicing rights and
          the loans based on their relative fair values. The resulting
          capitalized mortgage servicing rights must be assessed for impairment
          periodically based on fair value, with any impairment recognized
          through a valuation allowance. The effect of adopting SFAS No. 122 in
          1995 was to increase the gain on sales of loans by $281,000 (pre-tax).

          The Bank adopted SFAS No. 114, Accounting by Creditors for Impairment
          of a Loan, as amended by SFAS No. 118, Accounting by Creditors for
          Impairment of a Loan--Income Recognition and Disclosure, effective
          January 1, 1995. This statement requires that impaired loans be
          measured based on the present value of expected future cash flows
          discounted at the loan's effective interest rates or the fair value of
          the underlying collateral. The statement also specifies alternative
          methods for recognizing interest income on loans that are impaired, or
          for which there are credit concerns. For purposes of applying this
          standard, impaired loans have been defined as all non one-to-four
          family residential mortgage loans greater than $500,000 on nonaccrual
          status. The Bank's policy for income recognition was not affected by
          the adoption of SFAS Nos. 114 and 118. The adoption of this statement
          did not have a material impact on the Bank's 1995 consolidated
          financial statements.

          ALLOWANCE FOR LOAN LOSSES

          The allowance for loan losses is maintained at a level management
          considers adequate to absorb potential loan losses. Loans charged-off
          are charged to, and recoveries are credited to, the allowance.
          Provisions for loan losses are based on management's review of the
          historical loan loss experience, known and inherent risks in the
          portfolio, current economic conditions and such other factors that, in
          management's judgment, are relevant.

          PREMISES AND EQUIPMENT

          Bank premises and equipment, including leasehold improvements, are
          stated at cost less accumulated depreciation and amortization.
          Depreciation is computed on the straight-line method over the
          estimated useful lives of the related assets. Amortization of
          leasehold improvements is computed on the straight-line method over
          the lives of the related leases or the useful lives of the related
          assets, whichever is shorter. Maintenance, repairs and minor
          improvements are charged to operating expenses as incurred.

          INTANGIBLE ASSETS

          Cost in excess of the fair value of net assets acquired (goodwill) is
          stated net of accumulated amortization and is included in prepaid
          expenses and other assets in the Consolidated Statements of Financial
          Condition. Goodwill for acquisitions after September 30, 1982 is being
          charged to operations over the estimated remaining life of the
          long-term interest-bearing assets acquired using the level-yield
          method. Goodwill for acquisitions before October 1, 1982 is being
          charged to operations over twenty-five years using the straight-line
          method.

          EARNINGS PER SHARE

          Net income per share is calculated by dividing net income for the
          period by the weighted average number of shares of common stock
          outstanding during the period. Net income per share has not been
          adjusted for the effect of stock options as the dilutive effect is
          less than 3% in any year.

          SHAREHOLDERS' EQUITY

          The Bank paid dividends of $1,190,000 in 1996 and $1,013,000 in 1995.
          The Bank's ability to make capital distributions is restricted by OTS
          regulations. As a Tier 1 Association under OTS regulations, the Bank
          is granted the greatest flexibility in capital distributions. The Bank
          is authorized to distribute the greater of: (1) 100% of year-to-date
          net income plus 50% of excess capital at the beginning of the year or
          (2) 75% of net income over the most recent four-quarter period.
          Dividend payments were limited to $11,934,000 at December 31, 1996.

                                       26

<PAGE>   22

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          STATEMENT OF CASH FLOWS

          The Bank considers all cash and deposits with banks maturing in three
          months or less to be cash equivalents for the Statement of Cash Flows.

          Income tax payments of $1,863,000, $1,718,000 and $1,989,000 were made
          for the years ended December 31, 1996, 1995 and 1994, respectively.
          Interest paid totaled $24,333,000, $21,217,000 and $13,925,000 for the
          years ended December 31, 1996, 1995 and 1994, respectively. Transfers
          from loans to real estate owned were $696,000 and $113,000 during the
          years ended December 31, 1996 and 1994, respectively. Loans made to
          finance the sale of real estate owned were $600,000 and $100,000
          during the years ended December 31, 1996 and 1994, respectively. There
          were no transfers from loans to real estate owned during the year
          ended December 31, 1995, nor any loans made to finance the sale of
          real estate owned.

          NEW ACCOUNTING STANDARDS

          SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but
          does not require, adoption of a fair-value-based accounting method for
          employee stock-based compensation arrangements and was effective
          January 1, 1996. Management has elected to continue to use the
          Accounting Principles Board Opinion 25, Accounting for Stock Issued to
          Employees, intrinsic value method for measurement and recognition of
          stock-based compensation. There were no options granted in 1996 or in
          1995, therefore no pro-forma disclosures have been included.

          SFAS No. 125, Accounting for Transfers and Servicing of Financial
          Assets and Extinguishments of Liabilities, provides accounting and
          reporting standards for transfers and servicing of financial assets
          and extinguishment of liabilities based on the consistent application
          of a financial-components approach. Under the financial-components
          approach, after a transfer of financial assets, an entity recognizes
          the financial and servicing assets it controls and the liabilities it
          has incurred, derecognizes financial assets when control has been
          surrendered, and derecognizes liabilities when extinguished. This
          statement is effective January 1, 1997. SFAS No. 127, defers the
          effective date of certain provisions of statement 125 until January 1,
          1998. Management has not completed the process of evaluating this
          statement and, therefore, has not determined the impact, if any, that
          adopting this statement will have on the financial position and
          results of operations of the Bank.

2. INVESTMENT SECURITIES

     Amortized cost, fair values, maturities and yields for held-to-maturity
                     securities are summarized as follows:


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                      DECEMBER 31, 1996
                                                                                                          WEIGHTED
                                          AMORTIZED           GROSS           GROSS            FAIR       AVERAGE
                                          COST           UNREALIZED GAIN   UNREALIZED LOSS     VALUE      YIELD
==================================================================================================================
                                                                    (Dollars in Thousands)
<S>                                       <C>                 <C>            <C>               <C>           <C>  
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
  Due in one year or less                 $   19,100          $ --           $    --           $19,100       5.36%
  Due after one year through five years          201            --                 3               198       4.76
------------------------------------------------------------------------------------------------------------------
                                              19,301            --                 3            19,298       5.35
------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS
  Due in one year or less                     20,972            68                15            21,025       6.43
  Due after one year through five years        5,857             2                19             5,840       5.80
------------------------------------------------------------------------------------------------------------------
                                              26,829            70                34            26,865       6.29
------------------------------------------------------------------------------------------------------------------
OTHER
  Due in one year or less                        815            --               162               653       7.23
  Due after one year through five years          739             2                61               680       7.24
------------------------------------------------------------------------------------------------------------------
                                               1,554             2               223             1,333       7.24
------------------------------------------------------------------------------------------------------------------
TOTAL                                     $   47,684          $ 72           $   260           $47,496       5.94%
==================================================================================================================
</TABLE>



                                       27
<PAGE>   23

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. INVESTMENT SECURITIES

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                           DECEMBER 31, 1995
                                                                                                         WEIGHTED
                                               AMORTIZED        GROSS          GROSS           FAIR      AVERAGE
                                               COST       UNREALIZED GAIN  UNREALIZED LOSS     VALUE     YIELD
===================================================================================================================
                                                                         (Dollars in Thousands)
<S>                                            <C>              <C>           <C>              <C>       <C>  
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
  Due in one year or less                      $ 1,200          $ --          $    --          $ 1,200   5.95%
-------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS
  Due in one year or less                       20,388            56               31           20,413   5.95
  Due after one year through five years         23,845           277               36           24,086   6.36
-------------------------------------------------------------------------------------------------------------------
                                                44,233           333               67           44,499   6.17
-------------------------------------------------------------------------------------------------------------------
OTHER
  Due in one year or less                           23            --               --               23   6.12
  Due after one year through five years          3,898            21                1            3,917   7.55
-------------------------------------------------------------------------------------------------------------------
                                                 3,921            21                1            3,941   7.55
-------------------------------------------------------------------------------------------------------------------
TOTAL                                          $49,354          $354          $    68          $49,640   6.27%
===================================================================================================================
</TABLE>


At December 31, 1996 and 1995, securities with a book value of $ 7,928,000 and $
1,200,000, respectively, were pledged as collateral for public funds and
treasury, tax and loan deposits.


    Amortized cost, fair values, maturities and yields for available for sale
                     securities are summarized as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                      DECEMBER 31, 1996
                                                                                                         WEIGHTED
                                              AMORTIZED        GROSS         GROSS           FAIR        AVERAGE
                                              COST       UNREALIZED GAIN  UNREALIZED LOSS    VALUE       YIELD
===================================================================================================================
                                                                    (Dollars in Thousands)
<S>                                           <C>              <C>          <C>              <C>         <C>  
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
  Due in one year or less                     $ 1,100          $--          $     2          $ 1,098     5.45%
  Due after one year through five years        15,834           16               65           15,785     5.96
-------------------------------------------------------------------------------------------------------------------
                                               16,934           16               67           16,883     5.93
-------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS
  Due in one year or less                       4,086           --                9            4,077     5.61
  Due after one year through five years         1,041           --                5            1,036     5.99
-------------------------------------------------------------------------------------------------------------------
                                                5,127           --               14            5,113     5.69
-------------------------------------------------------------------------------------------------------------------
TOTAL                                         $22,061          $16          $    81          $21,996     5.87%
===================================================================================================================

<CAPTION>
                                                                      DECEMBER 31, 1995
===================================================================================================================
                                                                    (Dollars in Thousands)
<S>                                           <C>              <C>          <C>              <C>         <C>  
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
  Due in one year or less                     $ 3,039          $ 5          $    --          $ 3,044     5.67%
  Due after one year through five years        22,509           49                6           22,552     6.45
-------------------------------------------------------------------------------------------------------------------
                                               25,548           54                6           25,596     6.36
-------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS
  Due in one year or less                       1,000           --                1              999     5.50
-------------------------------------------------------------------------------------------------------------------
TOTAL                                         $26,548          $54          $     7          $26,595     6.32%
===================================================================================================================
</TABLE>


There were no sales of securities held-to-maturity in 1996, 1995, or 1994. Sales
of securities available for sale resulted in gross realized gains of $26,000 in
1995 and in losses of $31,000 in 1994. There were no sales of securities
available for sale in 1996.



                                       28
<PAGE>   24

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. MORTGAGE-BACKED SECURITIES

          Amortized cost and fair values of mortgage-backed securities
                     held-to-maturity are summarized below:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                            DECEMBER 31, 1996
                                                            GROSS        GROSS
                                                AMORTIZED   UNREALIZED   UNREALIZED   FAIR
                                                COST        GAIN         LOSS         VALUE
=============================================================================================
                                                            (In Thousands)
<S>                                             <C>         <C>          <C>          <C>    
MORTGAGE POOL SECURITIES
    Federal Home Loan Mortgage
      Corporation participation certificates    $ 4,291     $   54       $    16      $ 4,329
       Federal National Mortgage Association        941         --            12          929
    Government National Mortgage                               
      Association                                 6,109        225            --        6,334
    Other                                         5,235         --             6        5,229
---------------------------------------------------------------------------------------------
                                                 16,576        279            34       16,821
---------------------------------------------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT TRUSTS                            
  & COLLATERALIZED MORTGAGE OBLIGATIONS                           
    Federal Home Loan Mortgage                                    
      Corporation participation certificates    $ 3,302         46            --        3,348
    Federal National Mortgage Association         6,531        193            --        6,724
    Other                                         6,127         88             4        6,211
---------------------------------------------------------------------------------------------
                                                 15,960        327             4       16,283
---------------------------------------------------------------------------------------------
TOTAL                                           $32,536     $  606       $    38      $33,104
=============================================================================================

<CAPTION>
--------------------------------------------------------------------------------------------
                                                             DECEMBER 31, 1995
                                                           GROSS        GROSS
                                               AMORTIZED   UNREALIZED   UNREALIZED   FAIR
                                               COST        GAIN         LOSS         VALUE
============================================================================================
                                                             (In Thousands) 
<S>                                            <C>         <C>          <C>          <C>    
MORTGAGE POOL SECURITIES
    Federal Home Loan Mortgage
      Corporation participation certificates   $ 4,026     $   12       $    11      $ 4,027
    Government National Mortgage                               
      Association                                7,194        234            --        7,428
    Other                                        6,619         --            15        6,604
--------------------------------------------------------------------------------------------
                                                17,839        246            26       18,059
--------------------------------------------------------------------------------------------
REAL ESTATE MORTGAGE INVESTMENT TRUSTS                            
  & COLLATERALIZED MORTGAGE OBLIGATIONS                           
    Federal Home Loan Mortgage                                    
      Corporation participation certificates   $ 3,887         54            --        3,941
    Federal National Mortgage Association        6,652        179            --        6,831
    Other                                        8,878        110            --        8,988
--------------------------------------------------------------------------------------------
                                                19,417        343            --       19,760
--------------------------------------------------------------------------------------------
TOTAL                                          $37,256     $  589       $    26      $37,819
============================================================================================
</TABLE>



                                       29
<PAGE>   25

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Amortized cost and fair values of mortgage-backed securities available
                         for sale are summarized below:


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                   DECEMBER 31, 1996
                                                                GROSS         GROSS
                                                   AMORTIZED    UNREALIZED    UNREALIZED    FAIR
                                                   COST         GAIN          LOSS          VALUE
===================================================================================================
                                                                    (In Thousands)
<S>                                                <C>          <C>           <C>           <C>    
MORTGAGE POOL SECURITIES
    Federal Home Loan Mortgage
          Corporation participation certificates   $ 1,649      $  --         $   7         $ 1,642
---------------------------------------------------------------------------------------------------
                                                     1,649         --             7           1,642
---------------------------------------------------------------------------------------------------
 REAL ESTATE MORTGAGE INVESTMENT TRUSTS
 & COLLATERALIZED MORTGAGE OBLIGATIONS
    Federal Home Loan Mortgage
          Corporation participation certificates    12,821          7            62          12,766
    Federal National Mortgage Association            5,252         10            26           5,236 
---------------------------------------------------------------------------------------------------
                                                    18,073         17            88          18,002
---------------------------------------------------------------------------------------------------
Total                                              $19,722      $  17         $  95         $19,644
===================================================================================================


<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                    DECEMBER 31, 1995
                                                                GROSS         GROSS              
                                                   AMORTIZED    UNREALIZED    UNREALIZED    FAIR
                                                   COST         GAIN          LOSS          VALUE
===================================================================================================
                                                                    (In Thousands)
<S>                                                <C>          <C>           <C>           <C>    
MORTGAGE POOL SECURITIES
    Federal Home Loan Mortgage
          Corporation participation certificates   $ 3,292      $  35         $  10         $ 3,317
    Federal National Mortgage Association            3,723        144            --           3,867
---------------------------------------------------------------------------------------------------
                                                     7,015        179            10           7,184
---------------------------------------------------------------------------------------------------
 REAL ESTATE MORTGAGE INVESTMENT TRUSTS
 & COLLATERALIZED MORTGAGE OBLIGATIONS
    Federal Home Loan Mortgage
          Corporation participation certificates     4,236         73            13           4,296
    Federal National Mortgage Association            3,248         37            16           3,269
---------------------------------------------------------------------------------------------------
                                                     7,484        110            29           7,565
---------------------------------------------------------------------------------------------------
Total                                              $14,499      $ 289         $  39         $14,749
===================================================================================================
</TABLE>


There were no sales of mortgage-backed securities held-to-maturity in 1996, 1995
or 1994. Sales of mortgage-backed securities available for sale resulted in
gross realized gains of $83,000 in 1996. There were no sales of mortgage-backed
securities available for sale in 1995 or 1994.

The Bank's portfolio of privately issued mortgage-backed securities are backed
by mortgages on residential and multi-family properties. These securities are of
investment grade.




                                       30
<PAGE>   26

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. LOANS

     The primary goal of the Bank's lending activities is to provide residential
     real estate mortgage loans to homeowners in its lending area. The Bank's
     fourteen Community Financial Centers are located in Strongsville, Hinckley,
     Berea, North Royalton, Medina Township, Wellington, Parma Heights,
     Westlake, North Ridgeville, Brecksville, Broadview Heights, Columbia
     Station, Avon and Brunswick.


          The composition of the overall loan portfolio is as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------
                                                     DECEMBER 31
                                                  1996       1995
===================================================================
<S>                                             <C>        <C>     
REAL ESTATE MORTGAGE LOANS
  PERMANENT FIRST MORTGAGE LOANS
    One-to-four family                          $301,284   $220,490
    Multi-family                                   1,049      1,183
    Commercial                                    46,883     42,098
    Land                                             195        358

  CONSTRUCTION FIRST MORTGAGE LOANS
    Acquisition and development (residential)     54,670     48,538
    One-to-four family                            37,049     26,960
    Multi-family                                     240      2,660
    Commercial                                     2,376      4,233
-------------------------------------------------------------------
      Total mortgage loans                       443,746    346,520

OTHER LOANS
    Commercial                                     4,250      3,955
    Consumer installment                           9,117      8,895
-------------------------------------------------------------------
      Total loans                                457,113    359,370

LESS
    Undisbursed portion of
      loans in process                            26,676     23,639
    Deferred loan fees and discounts               3,954      3,546
    Allowance for loan losses                      1,423      1,168
-------------------------------------------------------------------
      TOTAL LOANS HELD FOR INVESTMENT -- NET    $425,060   $331,017
===================================================================
REAL ESTATE MORTGAGE LOANS
    HELD FOR SALE                               $    806   $  5,396

    Less deferred loan fees                           11         62
-------------------------------------------------------------------
      TOTAL LOANS HELD FOR SALE -- NET          $    795   $  5,334
===================================================================
</TABLE>



     Adjustable-rate mortgage and other loans represent $193,674,000 and
     $171,322,000 of the loans included in the table above at December 31, 1996
     and 1995, respectively. The Bank had commitments to lend $34,800,000 at
     December 31, 1996; $17,457,000 of these commitments were for
     adjustable-rate loans. The Bank had commitments to lend $26,353,000 at
     December 31, 1995; $7,279,000 of these commitments were for adjustable-rate
     loans. Adjustable-rate loans generally reprice with the prime rate or the
     one or three year constant maturity treasury rate.

     The Bank sells loans to the secondary market in conjunction with certain
     loan programs, to provide funding and as a tool for managing interest rate
     risk. Loans are sold to the secondary market without recourse and with
     servicing retained. The Bank was servicing loans for investors totaling
     $192,578,000 and $159,482,000 at December 31, 1996 and 1995, respectively.
     Custodial escrow balances maintained in connection with loans serviced for
     investors were $2,057,000 and $1,866,000 at December 31, 1996 and 1995,
     respectively.

     Residential acquisition and development loans are extended to local
     builders and developers with whom the Bank has generally had long-standing
     business relationships. These loans are secured by land zoned for
     residential development located in the Bank's market area.

     Under federal regulations, real estate loans to one borrower cannot exceed
     15% of unimpaired capital and surplus without a waiver of this requirement
     from the Office of Thrift Supervision. The Bank obtained such a waiver
     which increases the limit on loans to one borrower for residential real
     estate to 30% of unimpaired capital and surplus.





                                       31
<PAGE>   27

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Bank's commercial real estate loan portfolio includes permanent and
construction loans. Because commercial real estate loans are dependent on income
production or future development for repayment, management believes these loans
present somewhat greater risk of default than conventional mortgage loans. The
Bank's commercial real estate loan portfolio consists of loans collateralized by
property located in the Bank's primary lending area. The Bank's aggregate
commercial real estate loans may not exceed 400% of its core capital. The Bank
could lend an additional $120,609,000 before reaching the $169,868,000 limit.


The following table summarizes the Bank's commercial real estate and commercial
              construction loan portfolios by type of collateral.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                       DECEMBER 31
                                            1996                       1995
                                   AMOUNT            %        AMOUNT           %
====================================================================================
<S>                                <C>              <C>      <C>             <C>   
PERMANENT                  
 Industrial/warehouse              $ 5,883          11.94%   $  8,055        17.39%
 Retail                             11,436          23.22      11,811        25.49
 Office buildings                    6,693          13.59       7,144        15.42
 Churches                            1,748           3.55       1,320         2.85
 Other                              21,123          42.88      13,768        29.72
------------------------------------------------------------------------------------
                                   $46,883          95.18      42,098        90.87
------------------------------------------------------------------------------------
CONSTRUCTION               
 Office buildings                      365          0.74          915         1.97
 Churches                              400          0.81        1,500         3.24
 Other                               1,611          3.27        1,818         3.92
------------------------------------------------------------------------------------
                                     2,376          4.82        4,233         9.13
------------------------------------------------------------------------------------
TOTAL                              $49,259        100.00%    $ 46,331       100.00%
====================================================================================
</TABLE>


            Activity in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                YEAR ENDED DECEMBER 31
                                        1996            1995            1994
====================================================================================
                                                   (In Thousands)  
<S>                                <C>              <C>              <C>   
Balance, beginning of year         $  1,168         $    948         $  840
Provision charged to expense            305              238             92
Loans charged off                       (60)             (21)           (13)
Recoveries                               10                3             29 
------------------------------------------------------------------------------------
BALANCE, END OF YEAR               $  1,423         $  1,168         $  948
====================================================================================
</TABLE>


Nonaccrual loans totaled $604,000 and $146,000 at December 31, 1996 and 1995,
respectively. Interest income that would have been recorded under the original
terms of all nonaccrual loans during each period and the interest income
actually recognized for each period are summarized below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                       YEAR ENDED DECEMBER 31
                                               1996            1995           1994
====================================================================================
                                                   (In Thousands)  
<S>                                          <C>            <C>              <C>  
Interest income that would have
  been recorded                              $ 101          $    49          $  25
Interest income recognized                       9               37             12
------------------------------------------------------------------------------------
Interest income foregone                     $  92          $    12          $  13
====================================================================================
</TABLE>


The Bank is not committed to lend additional funds to debtors whose loans have
been placed on nonaccrual. There were no loans considered impaired at December
31, 1996 or 1995, or during the years then ended.


                                       32
<PAGE>   28


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



5. BANK PREMISES AND EQUIPMENT

                Premises and equipment consist of the following:


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                                                    DECEMBER 31
                                                             1996                1995
===============================================================================================
                                                                  (In Thousands)
                  <S>                                      <C>                 <C>    
                  Land                                     $   612             $   672
                  Buildings and improvements                 3,051               3,355
                  Furniture, fixtures and equipment          3,361               3,117
-----------------------------------------------------------------------------------------------
                                                             7,024               7,144
                  Less accumulated depreciation
                  and amortization                           3,085               2,810
-----------------------------------------------------------------------------------------------
                  TOTAL                                    $ 3,939             $ 4,334
===============================================================================================
</TABLE>

During 1996, the Bank sold certain real estate, a portion of which is being
leased back. The sale resulted in a pre-tax gain of $298,000. Depreciation and
amortization expense related to Bank premises and equipment was $682,000 in
1996, $678,000 in 1995 and $591,000 in 1994.

The Bank has entered into a number of noncancelable operating leases with
respect to office space. Rental expense for all leases was $251,000 in 1996,
$178,000 in 1995 and $110,000 in 1994.


  The following is a schedule of future minimum annual lease commitments as of
                               December 31, 1996:
<TABLE>
<CAPTION>
===============================================================================================
                                                                (In Thousands)
<S>                                                               <C>     
                 1997                                             $    284
                 1998                                                  284
                 1999                                                  274
                 2000                                                  239
                 2001                                                  232
                 Thereafter                                          1,055
-----------------------------------------------------------------------------------------------
                 TOTAL PAYMENTS                                   $  2,368
===============================================================================================
</TABLE>

6. DEPOSITS

              Deposits by interest rate are summarized as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                                       DECEMBER 31
                                          1996                                    1995
------------------------------------------------------------------------------------------------------
                             WEIGHTED                                WEIGHTED
                              AVERAGE                                 AVERAGE
   TYPE OF ACCOUNT             COST       AMOUNT        %              COST       AMOUNT          %
======================================================================================================
                                                  (Dollars in Thousands)
<S>                            <C>     <C>           <C>               <C>      <C>            <C>    
Passbook accounts              2.90%   $  46,034       9.33%           2.88%    $  47,423       10.96%
NOW accounts                   2.02       29,661       6.01            2.02        26,025        6.02
Commercial accounts
  (non-interest bearing)        --        11,535       2.34            --          11,728        2.71
Money Market deposit accounts  2.53       17,882       3.62            2.53        23,014        5.32
------------------------------------------------------------------------------------------------------
    Subtotal                   2.27      105,112      21.30            2.29       108,190       25.01
------------------------------------------------------------------------------------------------------
Certificate of Deposit accounts:
  4.50% and less               2.54        1,849       0.37            3.03         4,454        1.03
  4.51% to 5.50%               5.34      116,857      23.68            5.27        77,802       17.99
  5.51% to 6.50%               6.03      187,013      37.90            6.03       120,175       27.78
  6.51% to 7.50%               7.32       73,823      14.96            7.22       108,282       25.03
  7.51% and greater            8.85        8,817       1.79            9.01        13,660        3.16
------------------------------------------------------------------------------------------------------
  Subtotal                     6.11      388,359      78.70            6.33       324,373       74.99
------------------------------------------------------------------------------------------------------
TOTAL                          5.29%   $ 493,471     100.00%           5.32%    $ 432,563      100.00%
======================================================================================================
</TABLE>




                                       33
<PAGE>   29

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Included in the preceding table, at December 31, 1996, the Bank had $78,612,000
in certificates of deposit with balances of $100,000 or more. The Bank does not
enter into brokered deposit arrangements and had no brokered deposits at
December 31, 1996 or 1995.



          The summary of certificates of deposit by maturity follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                             DECEMBER 31, 1996
==================================================================================================
                                                               (In Thousands)
                    <S>                                       <C>         
                    Within 6 months                           $     67,050
                    6 months to 12 months                           86,311
                    12 months to 30 months                          99,135
                    Over 30 months                                 135,863
--------------------------------------------------------------------------------------------------
                    TOTAL                                      $   388,359
==================================================================================================
</TABLE>



          The following is a summary of interest expense on deposits:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                    YEAR ENDED DECEMBER 31
                                                              1996           1995        1994   
==================================================================================================
                                                                      (In Thousands)
                    <S>                                   <C>           <C>          <C>            
                    Passbook accounts                     $  1,328      $   1,132    $    768       
                    NOW accounts                               505            442         412   
                    Money market deposit accounts              499            673         991   
                    Certificate of deposit accounts         21,184         18,181      11,591      
--------------------------------------------------------------------------------------------------
                    TOTAL                                 $ 23,516      $  20,428    $ 13,762       
==================================================================================================
</TABLE>



7.  ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank (FHLB) consist of $21.0 million with a
weighted average variable rate of 5.57% and $4.2 million with a weighted average
fixed rate of 6.96% at December 31, 1996.

Although individual loans are not specifically pledged, the FHLB requires that
the Bank have mortgage loans which are, among other things, clear of pledges,
liens and encumbrances and equal to at least 150% of the advances from the FHLB.
The stock of the FHLB owned by the Bank is also pledged as collateral for these
borrowings.

    Scheduled payments on FHLB advances at December 31,1996 are as follows:
<TABLE>
<CAPTION>
==================================================================================================
                                                                 (In Thousands)
                    <S>                                            <C>       
                    1997                                           $   1,040
                    1998                                               1,043
                    1999                                               3,139
                    2000                                              18,549
                    2001                                               1,463
--------------------------------------------------------------------------------------------------
                    TOTAL PAYMENTS                                 $  25,234
==================================================================================================
</TABLE>




                                       34
<PAGE>   30
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.  FEDERAL INCOME TAXES

The Bank and its wholly owned subsidiary file a consolidated federal income tax
return.

       A summary of the provision for federal income taxes is as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                 YEAR ENDED DECEMBER 31
                                                           1996           1995           1994
=========================================================================================================================
                                                                    (In Thousands)
                           <S>                          <C>              <C>          <C>     
                           Current                      $  1,790         $ 1,942      $  1,139
                           Deferred                          151             597         1,192
-------------------------------------------------------------------------------------------------------------------------
                           TOTAL                        $  1,941         $ 2,539      $  2,331
=========================================================================================================================
</TABLE>


    A reconciliation between the statutory income tax rate and the effective
                  consolidated income tax rate is as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                        DECEMBER 31
                                                     1996                   1995                   1994
                                              AMOUNT        %       AMOUNT         %       AMOUNT        %
=========================================================================================================================
                                                                 (Dollars in Thousands)
                  <S>                        <C>         <C>        <C>          <C>      <C>           <C>  
                  Tax at statutory rate      $ 1,836     34.0%      $ 2,467      34.0%    $  2,292      34.0%
                  Other                          105      1.9            72       1.0           39       0.5
-------------------------------------------------------------------------------------------------------------------------
                  EFFECTIVE INCOME TAX
                    PROVISION                $ 1,941     35.9%      $ 2,539      35.0%    $  2,331      34.5%
=========================================================================================================================
</TABLE>


  The tax effects of significant items comprising the Bank's net deferred tax
                           liability are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                  DECEMBER 31
                                                            1996                1995
=========================================================================================================================
                                                                (In Thousands)
                  <S>                                     <C>                 <C>     
                  Loan loss allowances                    $   646             $   732 
                  FHLB stock dividends                        407                 344 
                  Deferred loan origination fees              344                 213 
                  Depreciation and amortization               137                 141 
                  Mortgage servicing rights                   148                  85 
                  Mark-to-market accounting                   (48)                 83 
                  Other                                       (50)                (15)
-------------------------------------------------------------------------------------------------------------------------
                  TOTAL                                   $ 1,584             $ 1,583 
=========================================================================================================================
</TABLE>


The Bank's tax bad-debt deduction prior to 1996 was determined under Section 593
of the Internal Revenue Code, and was the greater of the amounts using the
percentage-of-taxable-income accounting method or the specific charge-off
accounting method. During 1996, legislation was passed that repealed Section 593
of the Internal Revenue Code, thereby eliminating the
percentage-of-taxable-income accounting method after 1995. The excess reserves
between 1988 and 1995 are required to be recaptured into taxable income over a
six year period beginning in 1996. This recapture may be delayed for a one or
two-year period subject to meeting certain residential loan requirements.
Management estimates that recapture of this amount will begin in 1998 because
they expect to meet the residential loan tests required for deferral. The
recapture has no effect on the Bank's statement of operations because taxes were
provided in prior years in accordance with SFAS No. 109, Accounting for Income
Taxes. The recapture amount of $3.3 million will result in payments of $1.1
million. The Pre-1988 reserve provisions are subject only to recapture
requirements in the case of certain excess distributions to, and redemptions of
shareholders or if the Bank no longer qualifies as a "bank." Tax bad debt
deductions accumulated prior to 1988 by the Bank are approximately $2.4 million.
No deferred income taxes have been provided on these bad debt deductions and no
recapture of these amounts is anticipated.


                                       35
<PAGE>   31
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



9. LONG TERM INCENTIVE PLAN

     Options have been granted under The Strongsville Savings Bank 1994
     Long-Term Incentive Plan (Plan) to key employees and directors of the Bank.
     Options awarded under the plan are vested one year after the date granted.
     At December 31, 1996, there were 209,000 options outstanding with an
     average option price of $18.44. The expiration dates of the stock options
     outstanding at December 31, 1996 are January 11, 1999 for 4,000 options
     granted at $18.25, January 11, 2004 for 166,000 options granted at $18.25
     and October 18, 2004 for 39,000 options granted at $19.25. At December 31,
     1996, 209,000 options were exercisable and 41,000 shares were available for
     granting additional options.

10. EMPLOYEE BENEFIT PLANS

     The Bank has a profit-sharing retirement plan covering substantially all
     employees. The Bank's contribution to the plan is discretionary and is
     determined annually by the Board of Directors. Contributions were $139,000
     in 1996, $173,000 in 1995 and $148,000 in 1994.

     The Bank also has a qualified, tax-exempt profit-sharing plan with a cash
     or deferred feature qualifying under Section 401(k) of the Internal Revenue
     Code. The Bank provides matching contributions of up to 3% of qualifying
     employees' annual eligible compensation. Contributions were $79,000 in
     1996, $68,000 in 1995 and $59,000 in 1994.

     The Bank also has a nonqualified, unfunded Supplemental Executive
     Retirement Plan (SERP) that provides certain officers with retirement
     benefits. Pension costs of $100,000 and $116,000 were charged to
     noninterest expense in 1996 and 1995, respectively.

11. SAVINGS ASSOCIATION INSURANCE FUND ASSESSMENT 

     On September 30, 1996, the President signed into law an omnibus
     appropriations act for fiscal year 1997 that included, among other things,
     the recapitalization of the Savings Association Insurance Fund (SAIF) in a
     section entitled the Deposit Insurance Funds Act of 1996. The Act included
     a provision where all insured depository institutions would be charged a
     one-time special assessment on their SAIF assessable deposits as of March
     31, 1995. The Bank recorded a pre-tax charge of $2,481,000, which
     represented 65.7 basis points of the March 31, 1995 assessable deposits.
     This charge was recorded upon enactment on September 30, 1996, and later
     paid on November 29, 1996.


12. REGULATORY CAPITAL REQUIREMENTS


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

     Quantitative measures established by regulation to ensure capital adequacy
     require the Bank to maintain minimum amounts and ratios (set forth in the
     tables below) of tangible, core and total risk-based capital. Prompt
     corrective action regulations require specific supervisory actions as
     capital levels decrease. To be considered adequately capitalized under the
     regulatory framework for prompt corrective action, the Bank must maintain
     minimum Tier 1 leverage, Tier 1 risk-based and total risk-based capital
     ratios as set forth in the following tables.



                                       36
<PAGE>   32
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                       AS OF DECEMBER 31, 1996
                                                                                               TO BE WELL CAPITALIZED
                                                                            FOR CAPITAL        UNDER PROMPT CORRECTIVE
                                                           ACTUAL         ADEQUACY PURPOSES       ACTION PROVISIONS
----------------------------------------------------------------------------------------------------------------------------
                                                    AMOUNT    RATIO     AMOUNT    RATIO            AMOUNT    RATIO
============================================================================================================================
                                                                         (Dollars in Thousands)
<S>                                                 <C>        <C>      <C>          <C>           <C>         <C>  
     Total capital (to risk-weighted assets)        $43,885    12.93%   $27,139      8.0%          $33,924     10.0%
     Tier 1 capital (to risk-weighted assets)        42,467    12.51      N/A        N/A            20,354      6.0
     Tier 1 capital (to adjusted tangible assets)    42,467     7.49     17,006      3.0            28,344      5.0
     Tangible capital (to tangible assets)           42,467     7.49      8,503      1.5               N/A      N/A
============================================================================================================================


<CAPTION>
                                                                         AS OF DECEMBER 31, 1995
============================================================================================================================
                                                                         (Dollars in Thousands)
<S>                                                 <C>        <C>      <C>          <C>            <C>         <C>  
     Total capital (to risk-weighted assets)        $41,126    13.51%   $24,355      8.0%           $30,444     10.0%
     Tier 1 capital (to risk-weighted assets)        39,975    13.13      N/A        N/A             18,266      6.0
     Tier 1 capital (to adjusted tangible assets)    39,975     8.14     14,729      3.0             24,549      5.0
     Tangible capital (to tangible assets)           39,975     8.14      7,365      1.5                N/A      N/A
============================================================================================================================
</TABLE>

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

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




13. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair values of financial instruments were based on various assumptions
     and estimates as of a point in time. They represent liquidation values and
     could differ significantly from amounts that may be realized in a current
     market exchange. The fair values indicated below should not be construed as
     the underlying value of the Bank.


     The following table presents the estimates of fair value of financial
     instruments, except for investment and mortgage-backed securities which are
     disclosed in Notes 2 and 3:


<TABLE>
<CAPTION>
============================================================================================================================
                                                                DECEMBER 31, 1996             DECEMBER 31, 1995
                                                             CARRYING          FAIR         CARRYING       FAIR
                                                             VALUE             VALUE        VALUE          VALUE
============================================================================================================================
                                                                                 (In Thousands)
                           <S>                              <C>             <C>           <C>             <C>       
                           ASSETS

                             Cash and cash equivalents      $   7,552       $   7,552     $   15,509      $   15,509
                             Loans held for sale                  795             805          5,334           5,397
                             Loans                            425,060         420,412        331,017         334,889
                             Accrued interest receivable        3,238           3,238          3,299           3,299
                             Federal Home Loan
                               Bank stock                       2,831           2,831          2,407           2,407

                           LIABILITIES

                             Deposits                         493,471         494,358        432,563         435,711
                             Advances from Federal Home
                               Loan Bank                       25,234          25,196         13,333          13,232
                             Advance payments by borrowers for
                               taxes and insurance              1,502           1,502          1,222           1,222
                             Accrued interest payable             586             586            425             425
============================================================================================================================
</TABLE>





                                       37
<PAGE>   33
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

CASH AND CASH EQUIVALENTS, ACCRUED INTEREST RECEIVABLE, ADVANCE PAYMENTS BY
BORROWERS FOR TAXES AND INSURANCE AND ACCRUED INTEREST PAYABLE.
The carrying amount is a reasonable estimate of fair value.

INVESTMENT AND MORTGAGE-BACKED SECURITIES
Fair values are based on quoted market prices, dealer quotes and prices obtained
from independent pricing services.

LOANS HELD FOR INVESTMENT
Fair values are estimated by discounting the future cash flows using the current
rates for loans of similar credit risk and maturities.

LOANS HELD FOR SALE
Fair values are based on actual sales prices for loans subject to sales
commitments. Fair values of loans not subject to sales commitments are based on
the market price of loans with similar characteristics.

FEDERAL HOME LOAN BANK STOCK
Fair value is estimated to be the carrying value which is par. All transactions
in the capital stock of the Federal Home Loan Bank of Cincinnati are executed at
par.

DEPOSITS
Fair value of demand deposit accounts is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using rates currently offered for deposits of similar remaining
maturities.

ADVANCES FROM THE FEDERAL HOME LOAN BANK
Fair value is estimated by discounting the future cash flows at the rate
currently available on borrowings with similar characteristics.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The fair value of off-balance sheet financial instruments, including commitments
to originate loans, is considered to be equivalent to the value of the current
fees charged to enter into such commitments. At December 31, 1996 and 1995 those
fees were approximately $379,000 and $476,000, respectively.


                                       38

<PAGE>   34

                                                    INDEPENDENT AUDITORS' REPORT
                                   To the Board of Directors and Shareholders of
                                    The Strongsville Savings Bank and Subsidiary

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

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

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

As discussed in Note 1 to the consolidated financial statements, in 1995 the
Bank changed its method of accounting for mortgage servicing rights to adopt
Statement of Financial Accounting Standards No. 122, Accounting for Mortgage 
Servicing Rights.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Cleveland, Ohio
January 25, 1997




                                       39