UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                   Annual report pursuant to Section 13 of the
                   Securities Exchange Act of 1934, as amended

                  For the fiscal year ended September 30, 1999

                          Commission File No.: 1-12141

                         DELPHOS CITIZENS BANCORP, INC.
             (exact name of registrant as specified in its charter)

            DELAWARE                                     34-1840187
         (State or other jurisdiction of         (I.R.S. Employer I.D. No.)
         incorporation or organization)

                    114 EAST 3RD STREET, DELPHOS, OHIO 45833
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (419) 692-2010
        Securities registered pursuant to Section 12(b) of the Act: NONE
           Securities registered pursuant to Section 12(g)of the Act:


                     COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of class)


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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K.  [ ]


         The aggregate market value of the voting stock held by non-affiliates
of the registrant, I.E., persons other than the directors and executive officers
of the registrant, was $25,317,801, based upon the last sales price as quoted on
The Nasdaq Stock Market for December 9, 1999.

The number of shares of Common Stock outstanding as of December 9, 1999:
1,584,783.

                      DOCUMENTS INCORPORATED BY REFERENCE.

         PORTIONS OF THE DEFINITIVE PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 26, 2000 ARE INCORPORATED HEREIN BY REFERENCE
TO PART III OF THIS FORM 10-K.


<PAGE>

<TABLE>
<CAPTION>



                                                       INDEX
                                                                                                             PAGE
                                                       PART I

<S>          <C>                                                                                           <C>
Item 1.      Business....................................................................................      3

Item 2.      Properties..................................................................................     28

Item 3.      Legal Proceedings...........................................................................     28

Item 4.      Submission of Matters to a Vote of Security Holders.........................................     28


                                                      PART II

Item 5.      Market for Registrant's Common Equity and Related Stockholder Matters.......................     29

Item 6.      Selected Financial Data.......................................................................   30

Item 7.      Management's Discussion and Analysis of Financial Condition
                and Results of Operations..................................................................   32

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk....................................   40

Item 8.      Financial Statements and Supplementary Data...................................................   42

Item 9.      Changes in and Disagreements with Accountants
                on Accounting and Financial Disclosure.....................................................   71


                                                     PART III

Item 10.     Directors and Executive Officers of the Registrant............................................   71

Item 11.     Executive Compensation........................................................................   71

Item 12.     Security Ownership of Certain Beneficial Owners and Management................................   71

Item 13.     Certain Relationships and Related Transactions................................................   72


                                                      PART IV


Item 14.     Exhibits, Financial Statement Schedules and Reports
                on Form 8-K................................................................................   72

</TABLE>




<PAGE>


         PART I

ITEM 1.  BUSINESS.

GENERAL

         Delphos Citizens Bancorp, Inc. (the "Company") completed its initial
public offering of 2,047,631 shares of common stock on November 20, 1996, in
connection with the conversion of Citizens Federal Savings and Loan Association
of Delphos, now known as Citizens Bank of Delphos (the "Bank"). The Company
received $20,476,310 from this initial public offering before offering expenses
of $672,482. The Company utilized $9,940,000 of the net proceeds of the initial
public offering to acquire all of the issued and outstanding stock of the Bank.
The Company, as a unitary savings and loan holding company, is subject to
regulation by the Office of Thrift Supervision (the "OTS"), the Federal Deposit
Insurance Corporation (the "FDIC") and the Securities and Exchange Commission
(the "SEC"). The Company's executive offices are located at the home office of
the Bank at 114 East 3rd Street, Delphos, Ohio 45833.

         The Bank's principal business is to operate a community-oriented
savings bank. The Bank attracts retail deposits from the general public in the
area surrounding its office and invests those deposits, together with funds
generated from operations, primarily in fixed-rate one- to four-family
residential mortgage loans and investment and mortgage-backed securities. The
Bank invests, on a limited basis, in multi-family mortgage, commercial real
estate, construction and land and consumer loans. The Bank's revenues are
derived principally from interest on its mortgage loans, and interest and
dividends on its investment and mortgage-backed securities. The Bank's primary
sources of funds are deposits and principal and interest payments on loans and
securities.

MARKET AREA AND COMPETITION

         The Bank's primary deposit gathering area is concentrated in Delphos
and the other communities surrounding its office, while its lending activities
primarily include areas throughout Allen, Putnam and Van Wert Counties in
Northwestern Ohio. The tri-county area includes the city of Lima, Ohio, which
has a population of approximately 45,000 and is located approximately 15 miles
southeast of Delphos in Allen County.

         The Bank's market area is located within 250 miles of several of the
largest metropolitan areas in the United States, including, Chicago, Detroit,
Pittsburgh, Cleveland, Cincinnati, and Indianapolis. There are approximately 150
manufacturing firms located in the tri-county area and manufacturing accounts
for one-third of the employment sector. Wholesale and retail trade is the second
largest employment sector in the tri-county area, accounting for 24% of
employment. The City of Lima has experienced increases in unemployment in recent
years due to the closing of several large industrial plants.

         The Bank's primary market area is a competitive market for financial
services and the Bank faces significant competition both in making loans and in
attracting deposits. The Bank faces direct competition from a number of
financial institutions operating in its market area, many with a state-wide or
regional presence, and in some cases, a national presence. Many of these
financial institutions are significantly larger and have greater financial
resources than the Bank. The Bank's competition for loans comes principally from
savings institutions, mortgage banking companies, commercial banks and credit
unions. Its most direct competition for deposits has historically come from
savings institutions and commercial banks. In addition, the Bank faces
increasing competition for deposits and other financial products from non-bank
institutions such as brokerage firms and insurance companies in such areas as
short-term money market funds, corporate and government securities funds, mutual
funds and annuities. Competition may also increase as a result of the lifting of
restrictions on the interstate operations of financial institutions.

                                       3
<PAGE>

LENDING ACTIVITIES

         LOAN PORTFOLIO COMPOSITION. The Bank's loan portfolio consists
primarily of conventional first mortgage loans secured by one- to four-family
residences. At September 30, 1999, the Bank had gross loans receivable of $117.2
million, of which $99.5 million were one- to four-family, residential mortgage
loans, or 85.0% of the Bank's gross loans receivable. The remainder of the
portfolio consists of: $2.3 million of multi-family mortgage loans, or 1.9% of
gross loans receivable; $6.6 million of commercial real estate loans, or 5.6% of
gross loans receivable; $5.4 million of construction and land loans, or 4.6% of
gross loans receivable; and consumer loans of $3.4 million, or 2.9% of gross
loans receivable. At that same date, 85.6% of the Bank's loan portfolio had
fixed interest rates. The Bank had no loans held for sale at September 30, 1999.

         The types of loans that the Bank may originate are subject to federal
and state law and regulations. Interest rates charged by the Bank on loans are
affected by the demand for such loans and the supply of money available for
lending purposes and the rates offered by competitors. These factors are, in
turn, affected by, among other things, economic conditions, fiscal policies of
the federal government, the monetary policies of the Federal Reserve Board, and
legislative tax policies.

         The following table sets forth the composition of the Bank's loan
portfolio in dollar amounts and as a percentage of the portfolio at the dates
indicated.

<TABLE>
<CAPTION>
                                                              AT SEPTEMBER 30,
                           ----------------------------------------------------------------------------------------
                                  1999             1998              1997              1996             1995
                           ----------------------------------------------------- ----------------------------------
                                     PERCENT          PERCENT           PERCENT           PERCENT          PERCENT
                                       OF                OF               OF                OF               OF
                            AMOUNT    TOTAL   AMOUNT   TOTAL    AMOUNT   TOTAL   AMOUNT    TOTAL   AMOUNT   TOTAL
                           --------- ------- -------- -------- -------- -------- -------- ------- -------- --------
                                                           (DOLLARS IN THOUSANDS)
Real estate:

<S>                        <C>        <C>     <C>       <C>     <C>      <C>     <C>       <C>     <C>      <C>
One- to four-family.....   $ 99,540   84.97%  $87,614   83.54%  $73,716  84.10%  $62,282   82.33%  $56,556  83.28%
Multi-family............      2,276     1.94    1,881     1.79    1,288    1.47    1,506     1.99    1,521    2.24
Commercial real estate..      6,562     5.60    6,959     6.64    6,273    7.16    4,969     6.57    3,901    5.74
Construction and land...      5,413     4.62    6,119     5.83    3,781    4.31    4,871     6.44    3,808    5.61
Consumer................      3,360     2.87    2,306     2.20    2,593    2.96    2,024     2.76    2,128    3.13
                              -----     ----    -----    -----    -----   ------   -----    -----    -----    ----
Gross loans receivable..    117,151   100.00% 104,879   100.00%  87,651  100.00%  75,652   100.00%  67,914  100.00%
                                      ======            ======           ======            ======           ======
Undisbursed loan funds..     (3,717)           (6,224)           (3,188)          (4,718)           (3,732)
Deferred loan origination
  fees..................        (28)              (51)              (72)             (53)              (47)
Allowance for
  estimated loan losses.       (133)             (118)             (106)             (94)              (92)
                              ------           ------            ------            -----            ------

Loans receivable, net...   $113,273           $98,486           $84,285          $70,787           $64,043
                           ========           =======           =======          =======           =======

</TABLE>


                                       4
<PAGE>


         LOAN MATURITY. The following table shows the contractual maturity of
the Bank's gross loans receivable at September 30, 1999. There were no loans
held for sale at September 30, 1999. The table does not include any principal
prepayment assumptions.

<TABLE>
<CAPTION>


                                                                        AT SEPTEMBER 30, 1999
                                              ----------------------------------------------------------------------
                                               ONE- TO              COMMERCIAL                               GROSS
                                                FOUR-     MULTI-       REAL       CONSTRUCTION               LOANS
                                               FAMILY     FAMILY      ESTATE        AND LAND    CONSUMER   RECEIVABLE
                                              ---------- --------- ------------- ------------- ---------- -----------
                                                                           (IN THOUSANDS)
Amounts due:
<S>                                              <C>         <C>        <C>           <C>        <C>        <C>
   One year or less.........................     $3,353      $ 914      $1,304        $1,589     $2,641     $ 9,801

   After one year:
      More than one year to three years.....      7,848        274       1,803           642        248      10,815
      More than three years to five years...      1,357         --          89           127        243       1,816
      More than five years to 10 years......      9,346        427         434            19        154      10,380
      More than 10 years to 20 years........     40,830        184          --           336         74      41,424
      More than 20 years                         36,806        477       2,932         2,700         --      42,915
                                                 ------      -----       -----         -----     ------     -------
         Total due after September 30, 2000.     96,187      1,362       5,258         3,824        719     107,350
                                                 ------      -----       -----         -----     ------     -------

         Gross loans receivable.............    $99,540     $2,276      $6,562        $5,413     $3,360    $117,151
                                                =======     ======      ======        ======     ======    ========
</TABLE>


         The following table sets forth at September 30, 1999, the dollar amount
of gross loans receivable contractually due after September 30, 2000, and
whether such loans have fixed interest rates or adjustable interest rates.

<TABLE>
<CAPTION>


                                                   DUE AFTER SEPTEMBER 30, 2000
                                               -------------------------------------
                                                FIXED      ADJUSTABLE      TOTAL
                                               ---------   ------------  -----------
                                                          (IN THOUSANDS)
<S>                                             <C>             <C>         <C>
Real estate loans:
      Residential:
          One- to four-family.......            $88,519         $7,668      $96,187
          Multi-family..............              1,088            274        1,362
      Commercial real estate........                642          4,416        5,258
      Construction and land.........              3,824             --        3,824
Consumer............................                719             --          719
                                                -------        -------     --------
             Total..................            $94,992        $12,358     $107,350
                                                =======        =======     ========
</TABLE>


                                       5
<PAGE>


         ORIGINATION AND PURCHASE OF LOANS. The Bank's mortgage lending
activities are conducted through its home office. Although the Bank may
originate both adjustable-rate and fixed-rate mortgage loans, a substantial
majority of the Bank's loan originations have been fixed-rate mortgage loans.
The Bank's ability to originate loans is dependent upon the relative customer
demand for fixed-rate or adjustable-rate mortgage loans, which is affected by
the current and expected future level of interest rates. The Bank has not
emphasized the origination of adjustable-rate mortgage loans due to the
relatively low demand for such loans in the Bank's primary market area. The Bank
retains for its portfolio all of the mortgage loans that it originates. At
September 30, 1999, there were no loans categorized as held for sale. In
addition, the Bank also emphasizes the origination of construction loans secured
primarily by owner-occupied properties. From time to time the Bank has
participated in loans originated by other institutions based upon the Bank's
investment needs and market opportunities.

         The following tables set forth the Bank's loan originations and
principal repayments for the periods indicated:

<TABLE>
<CAPTION>


                                                                                FOR THE YEAR ENDED SEPTEMBER 30,
                                                                        --------------------------------------------
                                                                           1999            1998            1997
                                                                        ------------    ------------    ------------
                                                                                      (IN THOUSANDS)

<S>                                                                         <C>             <C>             <C>
Beginning balance, net....................................                  $98,486         $84,285         $70,787
         Loans originated:
                  One- to four-family.....................                  $36,487          36,092          19,706
                  Multi-family............................                      917             666              --
                  Commercial real estate..................                    3,026           2,762           1,815
                  Construction and land...................                    7,857           9,635           5,736
                  Consumer................................                    3,684           1,996           2,954
                                                                           --------         -------         -------
                           Total loans originated.........                   51,971          51,151          30,211
         Principal repayments.............................                  (39,652)        (33,923)        (18,212)
         Transfer to REO..................................                      (46)             --              --
         Change in undisbursed loan funds (1).............                    2,506          (3,035)          1,530
         Change in unearned origination fees..............                       23              20            (19)
         Change in allowance for estimated loan losses....                      (15)            (12)           (12)
                                                                           --------         -------        -------
Ending balance, net.......................................                 $113,273         $98,486        $84,285
                                                                           ========         =======        =======
</TABLE>

(1) Represents change in loans in process from first day to last day of the
period.



                                       6
<PAGE>


         ONE- TO FOUR-FAMILY MORTGAGE LENDING. The primary lending activity of
the Bank has been and continues to be the origination of permanent conventional
mortgage loans secured by one- to four-family residences located in the Bank's
primary market area, which the Bank retains in its portfolio. The Bank's loans
generally do not conform to secondary market standards because the Bank does not
require title insurance or a survey. Management believes that the Bank's policy
of not selling the loans that it originates provides the Bank with a competitive
advantage in the origination of loans in its primary market area. Loan
originations are obtained from the Bank's loan officers and their contacts with
the local real estate industry, existing or past customers, and members of the
local communities. The Bank primarily originates fixed-rate loans, but also
offers adjustable-rate mortgage ("ARM") loans. At September 30, 1999, one- to
four-family mortgage loans totaled $99.5 million, or 85.0% of total loans at
such date. Of the Bank's mortgage loans secured by one- to four-family
residences, $89.5 or 90.0%, were fixed-rate loans.

         The Bank's policy is to originate one- to four-family residential
mortgage loans in amounts up to 80% of the appraised value of the property
securing the loan, up to 85% of the appraised value if the loan is co-signed by
a person approved by the Board of Directors and up to 95% of the appraised value
if private mortgage insurance is obtained. Mortgage loans originated by the Bank
generally include due-on-sale clauses which provide the Bank with the
contractual right to deem the loan immediately due and payable in the event the
borrower transfers ownership of the property without the Bank's consent.
Due-on-sale clauses are an important means of adjusting the rates on the Bank's
fixed-rate mortgage loan portfolio and the Bank exercises its rights under these
clauses. The residential mortgage loans originated by the Bank are generally for
terms to maturity of up to 30 years.

         The Bank offers several adjustable rate loan programs with terms of up
to 30 years and interest rates that adjust either annually or every three years.
Of the Bank's mortgage loans secured by one- to four-family residences, $10.0
million, or 10.0%, had adjustable rates. The Bank's one year ARM loan has a
maximum adjustment limitation of 1.5% per year and a 5.0% lifetime cap on
adjustments. The Bank's three-year ARM loan has a maximum adjustment limitation
of 2.0% per change and a 5.0% lifetime cap. The index for substantially all of
the Bank's ARM loans is the Federal Home Loan Bank System's National Average
Mortgage Rate for Previously-Occupied Homes.

         The volume and types of ARM loans originated by the Bank have been
affected by such market factors as the level of interest rates, consumer
preferences, competition and the availability of funds. In recent years, demand
for ARM loans in the Bank's primary market area has been weak due to the low
interest rate environment and consumer preference for fixed-rate loans.
Consequently, in recent years the Bank has not originated a significant amount
of ARM loans as compared to its originations of fixed-rate loans. The ARM loans
offered by the Bank do not provide for initial deep discount interest rates or
for negative amortization. Although the Bank will continue to offer ARM loans,
there can be no assurance that in the future the Bank will be able to originate
a sufficient volume of ARM loans to constitute a significant portion of the
Bank's loan portfolio.

         MULTI-FAMILY LENDING. On a limited basis, the Bank originates
multi-family mortgage loans generally secured by properties located in the
Bank's primary market area. In reaching its decision on whether to make a
multi-family loan, the Bank considers a number of factors including: the net
operating income of the mortgaged premises before debt service and depreciation;
the debt service ratio (the ratio of net operating income to debt service); and
the ratio of loan amount to appraised value. Pursuant to the Bank's current
underwriting policies, a multi-family mortgage loan may be made in an amount up
to 80% of the appraised value of the underlying property. In addition, the Bank
generally requires a debt service ratio of 120%. Properties securing a
multi-family loan are appraised by an independent appraiser.

         When evaluating a multi-family loan, the Bank also considers the
financial resources and income level of the borrower, the borrower's experience
in owning or managing similar property, and the Bank's lending experience with
the borrower. The Bank's underwriting policies require that the borrower be able
to demonstrate strong management skills and the ability to maintain the property
from current rental income. The borrower is required to present evidence of the
ability to repay the mortgage and a satisfactory credit history. In making its
assessment of the creditworthiness of the borrower, the Bank generally reviews
the financial statements, employment and credit history of the borrower, as well
as other related documentation.

                                       7
<PAGE>

         Loans secured by multi-family residential properties generally involve
a greater degree of risk than one- to four-family residential mortgage loans.
Because payments on loans secured by multi-family properties are often dependent
on successful operation or management of the properties, repayment of such loans
may be subject to a greater extent to adverse conditions in the real estate
market or the economy. The Bank seeks to minimize these risks through its
underwriting policies, which require such loans to be qualified at origination
on the basis of the property's income and debt coverage ratio.

         The Bank's multi-family loan portfolio at September 30, 1999 totaled
$2.3 million or 1.9% of gross loans receivable. The Bank's largest multi-family
loan at September 30, 1999, had an outstanding balance of $437,000 is secured by
15 units and is current as to the repayment of principal and interest.

         COMMERCIAL REAL ESTATE LENDING. On a limited basis, the Bank originates
and participates in commercial real estate loans that are generally secured by
properties used for business or religious purposes such as farms, churches,
nursing homes, small office buildings or retail facilities located in its
primary market area. The Bank's underwriting procedures provide that commercial
real estate loans may be made in amounts up to 80% of the appraised value of the
property. The Bank's underwriting standards and procedures are similar to those
applicable to its multi-family loans, whereby the Bank considers the net
operating income of the property, the debt service ratio and the borrower's
expertise, credit history and profitability. The largest commercial real estate
loan in the Bank's portfolio at September 30, 1999 was a $2.0 million
participation loan and is secured by a nursing home. The loan was current and
performing in accordance with its contractual terms at September 30, 1999. At
September 30, 1999 the Bank's commercial real estate loan portfolio was $6.6
million, or 5.6% of gross loans receivable.

         Loans secured by commercial real estate properties, similar to
multi-family loans, are generally larger and involve a greater degree of risk
than one- to four-family residential mortgage loans. Because payments on loans
secured by commercial real estate properties are often dependent on successful
operation or management of the properties, repayment of such loans may be
subject to a great extent to adverse conditions in the real estate market or the
economy. The Bank seeks to minimize these risks through its underwriting
standards.

         CONSTRUCTION AND LAND LENDING. The Bank generally originates
construction and land development loans to contractors and individuals in its
primary market area. The Bank's construction loans primarily are made to finance
the construction of owner-occupied one- to four-family residential properties
and to a significantly lesser extent, real estate developments. The Bank's
construction loans to individuals are primarily fixed-rate loans with maturities
of six months which, upon completion of construction, convert to permanent loans
with maturities of up to 30 years. The Bank's policies provide that construction
loans may be made in amounts up to 80% of the appraised value of the property
for construction of one- to four-family residences. The Bank requires an
independent appraisal of the property. Loan proceeds are disbursed in increments
as construction progresses and as inspections warrant. The Bank requires regular
inspections to monitor the progress of construction. Land loans are determined
on an individual basis, but generally they do not exceed 80% of the actual cost
or current appraised value of the property, which ever is less. The largest
construction and land loan in the Bank's portfolio at September 30, 1999 had a
balance of $340,000 and is secured by 32 undeveloped lots. This loan is
currently performing in accordance with its terms. At September 30, 1999, the
Bank had $5.4 million of construction and land loans totaling 4.6% of the Bank's
gross loans receivable.

         Construction and land financing is considered to involve a higher
degree of credit risk than long-term financing on improved, owner-occupied real
estate. Risk of loss on a construction loan is dependent largely upon the
accuracy of the initial estimate of the property's value at completion of
construction or development compared to the estimated cost (including interest)
of construction. If the estimate of value proves to be inaccurate, the Bank may
be confronted with a project, when completed, having a value which is
insufficient to assure full repayment.

         CONSUMER AND OTHER LENDING. The Bank's originated consumer loans
generally consist of automobile loans, second mortgage loans, home equity loans,
mobile home loans and loans secured by deposits. At September 30, 1999, the
Bank's consumer loan portfolio was $3.4 million, or 2.9% of gross loans
receivable.

                                       8
<PAGE>

         LOAN APPROVAL PROCEDURES AND AUTHORITY. The Board of Directors
establishes the lending policies of the Bank. Loans in amounts up to $25,000 may
be approved by the Bank's loan officers. Loans in excess of $25,000 and up to
$200,000 must be approved by the Loan Committee, which consists of two senior
officer/directors and one outside director. Loans in excess of $200,000 must be
approved by the Board of Directors. Pursuant to OTS regulations, loans to one
borrower cannot exceed 15% of the Bank's unimpaired capital and surplus. The
Bank will not make loans to one borrower that are in excess of regulatory
limits.

         DELINQUENCIES AND CLASSIFIED ASSETS. The Board of Directors performs a
monthly review of all delinquent loans 30 days or more past due. The procedures
taken by the Bank with respect to delinquencies vary depending on the nature of
the loan and period of delinquency. When a borrower fails to make a required
payment on a loan, the Bank takes a number of steps to have the borrower cure
the delinquency and restore the loan to current status. The Bank sends the
borrower a written notice of non-payment after the loan is first past due. In
the event payment is not then received, additional letters are sent and phone
calls are made. If management believes that the loan is well-secured, the Bank
generally will try to work with the borrower to have the loan brought current.
If the loan is still not brought current and it becomes necessary for the Bank
to take legal action, the Bank will commence foreclosure proceedings against any
real property that secures the loan. If a foreclosure action is instituted and
the loan is not brought current, paid in full, or refinanced before the
foreclosure sale, the real property securing the loan is foreclosed upon and
sold at sheriff's sale.

         Federal regulations and the Bank's Classification of Assets Policy
require that the Bank utilize an internal asset classification system as a means
of reporting problem and potential problem assets. The Bank has incorporated the
OTS internal asset classifications as a part of its credit monitoring system.
The Bank currently classifies problem and potential problem assets as
"Substandard" or "Loss" assets. An asset is considered "Substandard" if it is
inadequately protected by the current net worth and paying capacity of the
obligor or of the collateral pledged, if any. "Substandard" assets include those
characterized by the "distinct possibility" that the insured institution will
sustain "some loss" if the deficiencies are not corrected. Assets classified as
"Loss" are those considered "uncollectible" and of such little value that their
continuance as assets without the establishment of a specific loss allowance is
not warranted. Assets which do not currently expose the insured institution to
sufficient risk to warrant classification in one of the aforementioned
categories but possess weaknesses are required to be designated "Special
Mention."

         When an insured institution classifies one or more assets, or portions
thereof, as Substandard, under current OTS policy the Bank is required to
consider establishing a general valuation allowance in an amount deemed prudent
by management. The general valuation allowance, which is a regulatory term,
represents a loss allowance which has been established to recognize the inherent
credit risk associated with lending and investing activities, but which, unlike
specific allowances, has not been allocated to particular problem assets. When
an insured institution classifies one or more assets, or portions thereof, as
"Loss," it is required either to establish a specific allowance for losses equal
to 100% of the amount of the asset so classified or to charge off such amount.

         A savings institution's determination as to the classification of its
assets and the amount of its valuation allowances is subject to review by the
OTS which can order the establishment of additional general or specific loss
allowances. The OTS, in conjunction with the other federal banking agencies, has
adopted an interagency policy statement on the allowance for loan and lease
losses. The policy statement provides guidance for financial institutions on
both the responsibilities of management for the assessment and establishment of
adequate allowances and guidance for banking agency examiners to use in
determining the adequacy of general valuation allowances. Generally, the policy
statement recommends that institutions have effective systems and controls to
identify, monitor and address asset quality problems; that management has
analyzed all significant factors that affect the collectibility of the portfolio
in a reasonable manner; and that management has established acceptable allowance
evaluation processes that meet the objectives set forth in the policy statement.
As a result of the declines in local and regional real estate market values and
the significant losses experienced by many financial institutions, there has
been a greater level of scrutiny by regulatory authorities of the loan
portfolios of financial institutions undertaken as part of the examination of
institutions by the OTS and the FDIC. While the Bank believes that it has
established an adequate allowance for estimated loan losses, there can be no
assurance that regulators, in reviewing the Bank's loan portfolio, will not
request the Bank to materially increase its allowance for loan losses, thereby
negatively affecting the Bank's financial condition and earnings. Although
management believes that an adequate allowance for loan losses has been
established, actual losses


                                       9
<PAGE>


are dependent upon future events and, as such, further additions to the level of
allowances for estimated loan losses may become necessary.

         The Bank's management reviews and classifies the Bank's assets
quarterly and reports the results of its review to the Board of Directors. The
Bank classifies assets in accordance with the management guidelines described
above. REO is classified as Substandard. At September 30, 1999, the Bank had
$660,000 of assets classified as Substandard and no assets classified as Loss.

         NON-PERFORMING ASSETS. The following table sets forth information
regarding non-accrual loans, accruing loans which are contractually past due 90
days or more and REO. For the years ended September 30, 1999, 1998, 1997, 1996
and 1995 , respectively, the amount of interest income that would have been
recognized on nonaccrual loans if such loans had continued to perform in
accordance with their contractual terms was $0, $0, $0, $5,280 and $5,780, none
of which was recognized.

<TABLE>
<CAPTION>


                                                                               AT SEPTEMBER 30,
                                                           ---------------------------------------------------------
                                                             1999        1998        1997       1996        1995
                                                           ----------  ----------  ---------  ----------  ----------
                                                                           (DOLLARS IN THOUSANDS)
Non-accrual loans:
         Residential real estate:
<S>                                                              <C>          <C>        <C>        <C>         <C>
                  One- to four-family................            $--          $--        $--        $567        $226
                  Multi-family.......................             --           --         --          --          --
         Commercial real estate......................             --           --         --          11         117
         Construction and land.......................             --           --         --           5          --
         Consumer....................................             --           --         --          --          12
                                                              ------       ------     ------      ------      ------
                  Total non-accrual loans............             --           --         --         583         355
         Loans contractually past due more
            than 90 days and accruing interest.......            379          825        572          --          --
                                                              ------       ------     ------      ------      ------
                  Total non-performing loans.........            379          825        572         583         355
REO, net.............................................             --           --         --          --          --
                                                              ------       ------     ------      ------      ------
                  Total non-performing assets........           $379         $825       $572        $583        $355
                                                              ======       ======     ======      ======      ======
Allowance for loan losses as a
         percent of gross loans receivable...........           0.11%        0.11%      0.13%       0.13%       0.14%
Allowance for loan losses as a percent of
         total non-performing loans(1)...............          35.09        14.30      18.60       16.19       26.02
Non-performing loans as a percent of
         gross loans receivable(1)...................           0.32         0.79       0.68        0.82        0.55
Non-performing assets as a percent of total assets (1)          0.30         0.71       0.53        0.63        0.40


</TABLE>

(1)    Non-performing assets consist of non-performing loans and REO.
       Non-performing loans consist of all accruing loans 90 days or more past
       due and all non-accrual loans.


         Loans now current but where some concerns exist as to the ability of
the borrower to comply with present loan repayment terms, exclusive of
nonperforming loans, were not significant at September 30, 1999 and 1998. These
loans are closely monitored by management and the classification of these loans
does not imply that management expects losses on the loans, but believes that a
higher level of scrutiny is prudent under the circumstances.

         At September 30, 1999 and 1998, the Company had no interest-bearing
assets other than loans which would have been reported as nonaccrual or
delinquent.



                                       10
<PAGE>


         The following table sets forth delinquencies in the Bank's loan
portfolio as of the dates indicated:

<TABLE>
<CAPTION>

                                           AT SEPTEMBER 30, 1999                     AT SEPTEMBER 30, 1998
                                   ---------------------------------------- ----------------------------------------
                                       60-89 DAYS      90 DAYS OR MORE (1)      60-89 DAYS      90 DAYS OR MORE (1)
                                   ------------------- -------------------- ------------------- --------------------
                                             PRINCIPAL           PRINCIPAL            PRINCIPAL           PRINCIPAL
                                    NUMBER   BALANCE    NUMBER    BALANCE    NUMBER   BALANCE    NUMBER    BALANCE
                                   OF LOANS  OF LOANS  OF LOANS  OF LOANS   OF LOANS  OF LOANS  OF LOANS  OF LOANS
                                   --------- --------- --------- ---------- --------- --------- --------- ----------
                                                                (DOLLARS IN THOUSANDS)

<S>                                       <C>    <C>          <C>     <C>       <C>       <C>        <C>      <C>
One- to four-family...........            6      $186         9       $335        --       $--        20       $783
Multi-family..................           --        --        --         --        --        --        --         --
Commercial real estate........           --        --         1         30        --        --         2         38
Construction and land.........           --        --        --         --        --        --        --         --
Consumer......................            2         7         2         14         7        31         1          4
                                       ----      ----      ----       ----      ----      ----      ----       ----

Total.........................            8      $193        12       $379         7       $31        23       $825
                                       ====      ====      ====       ====      ====      ====      ====       ====
Delinquent loans to gross
   loans receivable...........                   0.16                 0.32                0.03%                0.79%



                                            AT SEPTEMBER 30, 1997
                                   ----------------------------------------
                                       60-89 DAYS      90 DAYS OR MORE (1)
                                   ------------------- --------------------
                                             PRINCIPAL           PRINCIPAL
                                    NUMBER   BALANCE    NUMBER    BALANCE
                                   OF LOANS  OF LOANS  OF LOANS  OF LOANS
                                   --------- --------- --------- ----------
                                           (DOLLARS IN THOUSANDS)

One- to four-family...........            4       $36        15       $476
Multi-family..................           --        --        --         --
                                         --        --         1         10
Construction and land.........           --        --        --         --
                                         --        --         2         86
                                       ----      ----      ----       ----
Total.........................            4       $36        18       $572
                                       ====      ====      ====       ====
Delinquent loans to gross
   loans receivable...........                   0.04%                0.68%
</TABLE>


1)    Loans 90 days or more past due are included in non-accrual loans.  See
      "Non-performing Assets."

                                       11
<PAGE>

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of the
risks inherent in the Bank's loan portfolio and the general economy. The
allowance for loan losses is maintained at an amount management considers
adequate to cover estimated losses in loans receivable which are deemed probable
and estimable. The allowance is based upon a number of factors, including
current economic conditions, actual loss experience and industry trends. In
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses. Such agencies
may require the Bank to make additional provisions for loan losses based upon
information available at the time of the review. As of September 30, 1999, the
Bank's allowance for loan losses was 0.11% of gross loans receivable. The Bank
had non-performing loans of $379,000 and $825,000 at September 30, 1999 and
September 30, 1998, respectively. At September 30, 1999, the Bank had no loans
classified as "impaired." The Bank will continue to monitor and modify its
allowances for loan losses as conditions dictate.

         The following table sets forth activity in the Bank's allowance for
loan losses for the periods set forth in the table.

<TABLE>
<CAPTION>



                                                                    AT OR FOR THE YEAR ENDED SEPTEMBER 30,
                                                           ---------------------------------------------------------
                                                             1999        1998       1997        1996        1995
                                                           ----------  ---------- ----------  ----------  ----------
                                                                            (DOLLARS IN THOUSANDS)

<S>                                                             <C>         <C>        <C>          <C>         <C>
Balance at beginning of period.................                 $118        $106       $ 94         $92         $92
Provision for loan losses......................                   30          12         12           2          --
Charge-offs:
         Real Estate:
                  One- to four-family..........                   --          --         --          --          --
                  Multi-family.................                   --          --         --          --          --
                  Commercial real estate.......                   --          --         --          --          --
                  Construction and land........                   --          --         --          --          --
         Consumer..............................                  (15)         --         --          --          --
Recoveries.....................................                   --          --         --          --          --
                                                                ----        ----       ----        ----        ----
Balance at end of period.......................                 $133        $118       $106         $94         $92
                                                                ====        ====       ====         ===         ===
Net charge-offs to average gross loans receivable               0.01          --         --          --          --

</TABLE>



                                       12
<PAGE>
        The following tables set forth the amount of the Bank's allowance for
loan losses, the percent of the allowance for loan losses to the total allowance
and the percent of gross loans to gross loans receivable in each of the
categories listed at the dates indicated.

<TABLE>
<CAPTION>
                                                           AT SEPTEMBER 30,
                       ---------------------------------------------------------------------------------------
                                  1999                         1998                        1997
                       ---------------------------- ---------------------------- -----------------------------
                                          PERCENT                      PERCENT                      PERCENT
                                          OF GROSS                     OF GROSS                     OF GROSS
                                          LOANS IN                     LOANS IN                     LOANS IN
                                PERCENT     EACH             PERCENT     EACH            PERCENT      EACH
                                   OF     CATEGORY              OF     CATEGORY             OF      CATEGORY
                               ALLOWANCE  TO GROSS          ALLOWANCE  TO GROSS         ALLOWANCE   TO GROSS
                                TO TOTAL   LOANS             TO TOTAL    LOANS           TO TOTAL     LOANS
                        AMOUNT ALLOWANCE RECEIVABLE  AMOUNT ALLOWANCE RECEIVABLE AMOUNT ALLOWANCE  RECEIVABLE
                     --------- --------- ----------  ------ --------- ---------- ------ ---------  ----------
                                                     (DOLLARS IN THOUSANDS)
<S>                        <C>    <C>       <C>        <C>    <C>      <C>       <C>     <C>       <C>
One- to four-
   family.............     $93    69.92%    84.97%     $82    69.47%    83.54%    $75     70.75%     84.10%
Multi-family..........       6     4.51      1.94       5      4.24      1.79       5      4.72       1.47

Commercial real estate       9     6.77      5.60      10      8.47      6.64      10      9.43       7.16

Construction and land.       6     4.51      4.62       7      5.84      5.83       6      5.66       4.31
Consumer..............       4     3.01      2.87       3      2.54      2.20      --        --       2.96
Unallocated...........      15    11.28       --       11      9.44        --      10      9.44         --
                          ----    -----     -----   -----      ----     -----    -----     ----       ----
Total allowance
   for loan losses....    $133   100.00%   100.00%   $118    100.00%   100.00%    $106   100.00%    100.00%
                          ====   ======    ======    ====    ======    ======     ====   ======     ======


                        ----------------------------   ----------------------------
                                   1996                          1995
                        ----------------------------   ----------------------------
                                            PERCENT                       PERCENT
                                           OF GROSS                       OF GROSS
                                           LOANS IN                       LOANS IN
                                 PERCENT     EACH               PERCENT     EACH
                                   OF     CATEGORY                OF      CATEGORY
                               ALLOWANCE  TO GROSS             ALLOWANCE  TO GROSS
                                TO TOTAL    LOANS              TO TOTAL    LOANS
                        AMOUNT ALLOWANCE RECEIVABLE    AMOUNT ALLOWANCE  RECEIVABLE
                        ------ --------- ----------   ------- ---------  ----------
One- to four-
   family..............    $65   69.15%    82.33%        $63     68.21%    83.28%
Multi-family...........     2     2.13      1.99          3       3.25      2.24

Commercial real estate.     5     5.32      6.57          4       5.03      5.74

Construction and land..     5     5.32      6.44          6       6.25      5.61
Consumer...............     5     5.32      2.67          5       5.26      3.13
Unallocated............    12    12.76         --        11      12.00        --
                         ----    -----      -----      -----      -----    -----
Total allowance
   for loan losses.....   $94   100.00%   100.00%        $92     100.00%  100.00%
                          ===   ======     ======        ===     ======   ======
</TABLE>

                                       13
<PAGE>

REAL ESTATE OWNED

         At September 30, 1999, the Bank had no REO. If the Bank acquires any
REO, it is initially recorded at fair value less costs to sell and thereafter
REO is recorded at the lower of the recorded investment in the loan or the fair
value of the related assets at the date of foreclosure, less costs to sell.
Thereafter, REO is valued at the lower of the recorded investment or the fair
value of the property less costs to sell. If there is a further deterioration in
value, the Bank provides for a specific valuation allowance.

INVESTMENT ACTIVITIES

         Federally chartered savings institutions have the authority to invest
in various types of liquid assets, including United States Treasury obligations,
securities of various federal agencies, certificates of deposit of insured banks
and savings institutions, bankers' acceptances and federal funds. Subject to
various restrictions, federally chartered savings institutions may also invest
their assets in commercial paper, investment-grade corporate debt securities and
mutual funds whose assets conform to the investments that a federally chartered
savings institution is otherwise authorized to make directly. Additionally, the
Bank must maintain minimum levels of investments that qualify as liquid assets
under OTS regulations. See "Regulation and Supervision--Federal Savings
Institution Regulation--Liquidity." Historically, the Bank has maintained liquid
assets above the minimum OTS requirements and at a level considered to be more
than adequate to meet its normal daily activities.

         The investment policy of the Company as established by the Board of
Directors attempts to provide and maintain liquidity, generate a favorable
return on investments without incurring undue interest rate and credit risk, and
complement the Company's lending activities. The Company's policies generally
limit investments to government and federal agency securities. The Company's
policies provide the authority to invest in U.S. Treasury and federal agency
securities meeting the Company's guidelines and in mortgage-backed securities
guaranteed by the U.S. government and agencies thereof. At September 30, 1999,
the Company had investment and mortgage-backed securities with a carrying value
of $8.7 million and a market value of $8.8 million. At September 30, 1999, the
Company had $1.9 million in mortgage-backed securities classified as available
for sale and $6.8 million in investment and mortgage-backed securities
classified as held to maturity. At September 30, 1999, $4.2 million of the
Company's mortgage-backed securities had adjustable rates.

         At September 30, 1999, all of the Company's mortgage-backed securities
were insured or guaranteed by either the GNMA, FNMA or FHLMC. Investments in
mortgage-backed securities involve a risk that actual prepayments will be
greater than estimated prepayments over the life of the security which may
require adjustments to the amortization of any premium or accretion of any
discount relating to such instruments thereby reducing or increasing,
respectively, the net yield on such securities. There is also the risk
associated with the necessity to reinvest the cash flows from such securities at
market interest rates which may be lower than the interest rates received on
such securities. In addition, the market value of such securities may be
adversely affected by changes in interest rates.


                                       14
<PAGE>


         The following table sets forth certain information regarding the
carrying and fair values of the Company's investment securities and
mortgage-backed securities at the dates indicated:



<TABLE>
<CAPTION>


                                                                        AT SEPTEMBER 30,
                                           -------------------------------------------------------------------------
                                                   1999                      1998                     1997
                                           ----------------------   -----------------------  -----------------------
                                           AMORTIZED      FAIR      AMORTIZED      FAIR      AMORTIZED      FAIR
                                             COST        VALUE        COST        VALUE        COST        VALUE
                                           ----------   ---------   ---------   -----------  ----------  -----------
                                                                            (IN THOUSANDS)
<S>                                           <C>         <C>         <C>           <C>         <C>           <C>
Securities:
   Available for sale:
      FNMA certificates.............          $1,302      $1,261      $3,915        $3,889          --           --
                                            --------     -------     -------    ----------    --------    ---------
      GNMA certificates.............             613         603         690           711         739          739
                                            --------     -------     -------    ----------    --------    ---------
         Total available for sale...           1,915       1,864       4,605         4,600         739          739
                                            --------     -------     -------    ----------    --------    ---------
   Held to maturity:
      U.S. Treasury.................              --          --          --            --       4,996        4,999
      GNMA certificates.............           6,752       6,878       8,897         9,256      11,218       11,634
      FHLMC certificates............              53          55         107           112         149          156
                                            --------     -------     -------    ----------    --------    ---------
         Total held to maturity.....           6,805       6,933       9,004         9,368      16,363       16,789
      FHLB stock....................           1,250       1,250         922           922         834          834
                                            --------     -------     -------    ----------    --------   ----------
         Total securities...........          $9,970     $10,047     $14,531       $14,890     $17,936      $18,362
                                            ========     =======     =======       =======     =======      =======

</TABLE>

         As of September 30, 1999, the Company did not have any security
concentrations which exceeded 10% of total securities.



                                       15
<PAGE>



         The table below sets forth certain information regarding the carrying
value, weighted average yields and contractual maturities of the Company's
investment securities and mortgage-backed securities as of September 30, 1999.


<TABLE>
<CAPTION>


                                                                     AT SEPTEMBER 30, 1999
                                                -------------------------------------------------------------------
                                                                         MORE THAN ONE          MORE THAN FIVE
                                                 ONE YEAR OR LESS      YEAR TO FIVE YEARS     YEARS TO TEN YEARS
                                                --------------------  ---------------------  ---------------------
                                                           WEIGHTED               WEIGHTED               WEIGHTED
                                                CARRYING   AVERAGE    CARRYING    AVERAGE    CARRYING    AVERAGE
                                                 VALUE      YIELD      VALUE       YIELD      VALUE       YIELD
                                                --------   ---------  ---------   ---------  ---------   ---------
                                                                                            (DOLLARS IN THOUSANDS)
<S>                                                 <C>                   <C>                     <C>
Mortgage-backed securities:
   Available for sale:
      FNMA................................          $ --         --%      $ --          --%       $ --         --%
      GNMA................................            --         --         --          --          --         --
                                                --------              --------                --------
         Total available for sale.........            --         --         --          --          --         --
                                                --------              --------                --------
   Held to maturity:
      GNMA................................             1       8.00         10        8.19          --         --
      FHLMC...............................            --         --         35        8.25           3       8.50
                                                --------              --------                --------
         Total held to maturity...........             1       8.00         45        8.23           3       8.50
                                                --------              --------                --------
        Total mortgage-backed securities..          $  1       8.00%      $ 45        8.23%       $  3       8.50%
                                                ========              ========                ========

<CAPTION>
                                                           AT SEPTEMBER 30, 1999
                                               --------------------------------------------

                                                MORE THAN TEN YEARS           TOTAL
                                                ---------------------  --------------------
                                                            WEIGHTED              WEIGHTED
                                                CARRYING    AVERAGE    CARRYING   AVERAGE
                                                 VALUE       YIELD      VALUE      YIELD
                                                ---------   ---------  ---------  ---------

<S>                                                <C>          <C>      <C>          <C>
Mortgage-backed securities:
   Available for sale:
      FNMA................................         $1,261       5.29%    $1,261       5.29%
      GNMA................................            603       6.97        603       6.97
                                                  -------               --------
         Total available for sale.........          1,864       5.83      1,864       5.83
                                                  -------               --------
   Held to maturity:
      GNMA................................          6,741       7.36      6,752       7.36
      FHLMC...............................             15      12.34         53       9.45
                                                  -------               -------
         Total held to maturity...........          6,756       7.37      6,805       7.37
                                                  -------               -------
        Total mortgage-backed securities..         $8,620       7.04%    $8,669       7.04%
                                                  =======               =======
</TABLE>


                                       16
<PAGE>


SOURCES OF FUNDS

         GENERAL. Deposits, loan repayments and prepayments and cash flows
generated from operations are the primary sources of the Bank's funds for use in
lending, investing and for other general purposes.

         DEPOSITS. The Bank offers a variety of deposit accounts with a range of
interest rates and terms. The Bank's deposits consist of savings accounts, NOW
accounts, money market accounts and certificates of deposit. For the year ended
September 30, 1999, certificates of deposit constituted 74.6% of total average
deposits. The term of the certificates of deposit offered by the Bank vary from
six months to five years and the offering rates are established by the Bank on a
weekly basis. Once a certificate account is established, no additional amounts
are permitted to be deposited in that account, with the exception of Individual
Retirement Account certificates. Specific terms of an individual account vary
according to the type of account, the minimum balance required, the time period
funds must remain on deposit and the interest rate, among other factors. The
flow of deposits is influenced significantly by general economic conditions,
changes in money market rates, prevailing interest rates and competition. At
September 30, 1999, the Bank had $40.7 million of certificate accounts maturing
in less than one year. The Bank's deposits are obtained predominantly from the
area in which its banking office is located. The Bank relies primarily on a
willingness to pay market-competitive interest rates to attract and retain these
deposits. Accordingly, rates offered by competing financial institutions
significantly affect the Bank's ability to attract and retain deposits.

         The following table presents the deposit activity of the Bank for the
periods indicated:

<TABLE>
<CAPTION>
                                                                             FOR THE YEAR ENDED SEPTEMBER 30,
                                                                       ---------------------------------------------
                                                                           1999            1998           1997
                                                                       -------------   -------------  --------------
                                                                                      (IN THOUSANDS)
<S>                                                                         <C>             <C>             <C>
Beginning balance....................................                       $79,074         $77,373         $79,831
Net deposits (withdrawals)...........................                        (5,842)         (2,138)         (5,235)
Interest credited on deposit accounts................                         3,609           3,839           2,777
                                                                            -------         -------         -------
Ending balance.......................................                       $76,841         $79,074         $77,373
                                                                            =======         =======         =======
</TABLE>

         At September 30, 1999, the Bank had approximately $5.0 million in
certificate accounts in amounts of $100,000 or more maturing as follows:

<TABLE>
<CAPTION>

                                                                                      WEIGHTED
 MATURITY PERIOD                                                  AMOUNT            AVERAGE RATE
-------------------                                         --------------------   ---------------
                                                           (DOLLARS IN THOUSANDS)
<S>                                                                <C>                   <C>
Three months or less.......................                        $ 100                 5.34%
Over three through six months..............                        1,504                 5.14
Over six through 12 months.................                        1,450                 5.08
Over 12 months.............................                        1,924                 5.28
                                                                   -----                 ----
      Total................................                       $4,978                 5.18%
                                                                  ======                =====
</TABLE>



                                       17
<PAGE>


         The following table sets forth the distribution of the Bank's deposit
accounts for the periods indicated.

<TABLE>
<CAPTION>




                                                                  FOR THE YEAR ENDED SEPTEMBER 30,
                                            ------------------------------------------------------------------------
                                                    1999                     1998                     1997
                                            ----------------------  -----------------------  -----------------------
                                                         PERCENT                 PERCENT                  PERCENT
                                             AMOUNT     OF TOTAL      AMOUNT     OF TOTAL     AMOUNT      OF TOTAL
                                            ----------  ----------  ----------- -----------  ----------  -----------
                                                                        (DOLLARS IN THOUSANDS)
<S>                                            <C>         <C>          <C>         <C>         <C>          <C>
Savings accounts...................            $8,898      11.58%       $8,553      10.82%      $7,810       10.09%
Money market accounts..............             5,178        6.74        5,329        6.74       5,802         7.50
NOW accounts.......................             5,006        6.52        4,765        6.02       4,690         6.06
Non-interest bearing accounts......               446        0.58          689        0.87       1,397         1.81
                                            ----------  ----------  ----------- -----------  ----------  -----------
      Total........................            19,528       25.42       19,336       24.45      19,699        25.46
Certificate accounts:
   4.00% to 4.99%..................            24,449       31.82        2,070        2.62
   5.00% to 5.99%..................            32,473       42.26       52,404       66.27      43,757        56.55
   6.00% to 6.99%..................               342        0.44        5,214        6.60      13,814        17.85
   7.00% to 7.99%..................                 5        0.01           10        0.01          66         0.09
   8.00% to 8.99%..................                43        0.05           40        0.05          37         0.05
                                            ----------  ----------  ----------- -----------  ----------  -----------
      Total certificate accounts...            57,312       74.58       59,738       75.55      57,674        74.54
                                            ----------  ----------  ----------- -----------  ----------  -----------
      Total deposits...............           $76,841      100.00%      $79,074     100.00%    $77,373       100.00%
                                            ==========  ==========  =========== ===========  ==========  ===========

</TABLE>



                                       18
<PAGE>

         The following table presents, by various rate categories, the amount of
certificate accounts outstanding at the dates indicated and the periods to
maturity of the certificate accounts outstanding at September 30, 1999.

<TABLE>
<CAPTION>
                                       PERIOD TO MATURITY FROM SEPTEMBER 30, 1999                  AT SEPTEMBER 30,
                        ------------------------------------------------------------------------- -----------------
                                     ONE TO      TWO TO   THREE TO   FOUR TO  MORE THAN
                        LESS THAN      TWO        THREE     FOUR      FIVE       FIVE
                        ONE YEAR      YEARS       YEARS    YEARS      YEARS     YEARS     TOTAL     1998      1997
                        --------- ----------  ---------  ---------   -------- ---------  -------  -------   -------
                                                              (IN THOUSANDS)
Certificate accounts:
<S>                         <C>       <C>          <C>         <C>       <C>        <C>    <C>      <C>       <C>
   4.00 to 4.99%.......  $21,480     $2,454       $ 515       $ --      $ --       $ --  $24,449   $2,070        --
   5.00 to 5.99%.......   18,837     11,456         614        515     1,051         --   32,473   52,404   $43,757
   6.00 to 6.99%.......      342         --          --         --        --         --      342    5,214    13,814
   7.00 to 7.99%.......        5         --          --         --        --         --        5       10        66
   8.00 to 8.99%.......       --         --          --         43        --         --       43       40        37
                         -------    -------      ------       ----    ------       ----  -------  -------   -------
      Total............  $40,664    $13,910      $1,129       $558    $1,051       $ --  $57,312  $59,738   $57,675
                         =======    =======      ======       ====    ======       ====  =======  =======   =======

</TABLE>


                                       19
<PAGE>

         BORROWINGS. The Bank utilizes borrowings from the FHLB as an
alternative to retail deposits to fund its operations as part of its operating
strategy. These FHLB borrowings are collateralized primarily by certain of the
Bank's mortgage-related securities and secondarily by the Bank's investment in
capital stock of the FHLB. FHLB borrowings are made pursuant to several
different credit programs, each of which has its own interest rate and range of
maturities. The maximum amount that the FHLB will advance to member
institutions, including the Bank, fluctuates from time to time in accordance
with the policies of the FHLB. See "Regulation and Supervision--Federal Home
Loan Bank System." At September 30, 1999, the Bank had $25.0 million in
outstanding FHLB borrowings, compared to $10.0 million at September 30, 1998.

         The following table sets forth certain information regarding the Bank's
borrowed funds at or for the periods ended on the dates indicated.

<TABLE>
<CAPTION>
                                                                                      AT OR FOR THE YEARS
                                                                                      ENDED SEPTEMBER 30,
                                                                            ----------------------------------------
                                                                               1999          1998          1997
                                                                            ------------  ------------  ------------
                                                                                      (DOLLARS IN THOUSANDS)
<S>                                                                             <C>            <C>              <C>
Average balance outstanding...................                                  $16,307        $3,773           $--
Maximum amount outstanding at any
    month-end during the period...............                                   25,000        10,000         1,000
Balance outstanding at end of period..........                                   25,000        10,000         1,000
Weighted average interest rate
    during the period.........................                                     5.28          5.14          6.53
Weighted average interest rate at
    end of period.............................                                     5.19          5.40          6.53

</TABLE>


SUBSIDIARY ACTIVITIES

         The Bank has one wholly-owned subsidiary, Delphos Service Corporation,
which currently does not conduct any activities.

PERSONNEL

         As of September 30, 1999, the Company had 19 full-time employees and
eight part-time employees. The employees are not represented by a collective
bargaining unit and the Bank considers its relationship with its employees to be
good.


                                       20
<PAGE>


                           REGULATION AND SUPERVISION


GENERAL

         The Company, as a savings and loan holding company, is required to file
certain reports with, and otherwise comply with the rules and regulations of the
Office of Thrift Supervision ("OTS") under the Home Owners' Loan Act, as amended
(the "HOLA"). In addition, the activities of savings institutions, such as the
Bank, are governed by the HOLA and the Federal Deposit Insurance Act ("FDI
Act").

         The Bank is subject to extensive regulation, examination and
supervision by the OTS, as its primary federal regulator, and the FDIC, as the
deposit insurer. The Bank is a member of the Federal Home Loan Bank ("FHLB")
System and its deposit accounts are insured up to applicable limits by the
Savings Association Insurance Fund ("SAIF") managed by the FDIC. The Bank must
file reports with the OTS and the FDIC concerning its activities and financial
condition in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with, or acquisitions of, other savings
institutions. The OTS and/or the FDIC conduct periodic examinations to test the
Bank's safety and soundness and compliance with various regulatory requirements.
This regulation and supervision establishes a comprehensive framework of
activities in which an institution can engage and is intended primarily for the
protection of the insurance fund and depositors. The regulatory structure also
gives the regulatory authorities extensive discretion in connection with their
supervisory and enforcement activities and examination policies, including
policies with respect to the classification of assets and the establishment of
adequate loan loss reserves for regulatory purposes. Any change in such
regulatory requirements and policies, whether by the OTS, the FDIC or the
Congress, could have a material adverse impact on the Company, the Bank and
their operations. Certain of the regulatory requirements applicable to the Bank
and to the Company are referred to below or elsewhere herein. The description of
statutory provisions and regulations applicable to savings institutions and
their holding companies set forth in this Form 10-K does not purport to be a
complete description of such statutes and regulations and their effects on the
Bank and the Company.

HOLDING COMPANY REGULATION

         The Company is a non-diversified unitary savings and loan holding
company within the meaning of the HOLA. As a unitary savings and loan holding
company, the Company generally is not restricted under existing laws as to the
types of business activities in which it may engage, provided that the Bank
continues to be a qualified thrift lender ("QTL"). See "Federal Savings
Institution Regulation--QTL Test." Upon any non-supervisory acquisition by the
Company of another savings institution or savings bank that meets the QTL test
and is deemed to be a savings institution by the OTS, the Company would become a
multiple savings and loan holding company (if the acquired institution is held
as a separate subsidiary) and would be subject to extensive limitations on the
types of business activities in which it could engage. The HOLA limits the
activities of a multiple savings and loan holding company and its non-insured
institution subsidiaries primarily to activities permissible for bank holding
companies under Section 4(c)(8) of the Bank Holding Company Act ("BHC Act"),
subject to the prior approval of the OTS, and certain activities authorized by
OTS regulation, and no multiple savings and loan holding company may acquire
more than 5% of the voting stock of a company engaged in impermissible
activities.

         The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring more than 5% of
the voting stock of another savings institution or holding company thereof
without prior written approval of the OTS or acquiring or retaining control of a
depository institution that is not insured by the FDIC. In evaluating
applications by holding companies to acquire savings institutions, the OTS must
consider the financial and managerial resources and future prospects of the
company and institution involved, the effect of the acquisition on the risk to
the insurance funds, the convenience and needs of the community and competitive
factors.

         The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, subject to two exceptions: (i) the approval of
interstate supervisory acquisitions by savings and loan holding companies and
(ii) the acquisition of a savings institution in


                                       21
<PAGE>

another state if the laws of the state of the target savings institution
specifically permit such acquisitions. The states vary in the extent to which
they permit interstate savings and loan holding company acquisitions.

         Although savings and loan holding companies are not subject to specific
capital requirements or specific restrictions on the payment of dividends or
other capital distributions, HOLA does prescribe such restrictions on subsidiary
savings institutions as described below. The Bank must notify the OTS 30 days
before declaring any dividend to the Company. In addition, the financial impact
of a holding company on its subsidiary institution is a matter that is evaluated
by the OTS and the agency has authority to order cessation of activities or
divestiture of subsidiaries deemed to pose a threat to the safety and soundness
of the institution.

FEDERAL SAVINGS INSTITUTION REGULATION

         CAPITAL REQUIREMENTS. The OTS capital regulations require savings
institutions to meet three minimum capital standards: a 1.5% tangible capital
ratio, a 4% leverage (core) capital ratio (3% for savings associations that
receive the highest examination rating on the CAMELS financial institution
rating system) and an 8% risk-based capital ratio. In addition, the prompt
corrective action standards discussed below also establish, in effect, a minimum
2% tangible capital standard, and, together with the risk-based capital standard
itself, a 4% Tier I risk-based capital standard. Core capital is defined as
common stockholders' equity (including retained earnings), certain noncumulative
perpetual preferred stock and related surplus, and minority interests in equity
accounts of consolidated subsidiaries less intangibles other than certain
mortgage servicing rights and credit card relationships. The OTS regulations
also require that, in meeting the tangible, leverage (core) and risk-based
capital standards, institutions must generally deduct investments in and loans
to subsidiaries engaged in activities as principal that are not permissible for
a national bank.

         The risk-based capital standard for savings institutions requires the
maintenance of Tier I (core) and total capital (which is defined as core capital
and supplementary capital) to risk-weighted assets of at least 4% and 8%,
respectively. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, are multiplied by a risk-weight
factor of 0% to 100%, as assigned by the OTS capital regulation based on the
risks OTS believes are inherent in the type of asset. The components of Tier I
(core) capital are equivalent to those discussed earlier. The components of
supplementary capital currently include cumulative preferred stock, long-term
perpetual preferred stock, mandatory convertible securities, subordinated debt
and intermediate preferred stock, the allowance for loan and lease losses
limited to a maximum of 1.25% of risk-weighted assets, and up to 45% of
unrealized gains on available-for-sale equity securities with readily
determinable fair market values. Overall, the amount of supplementary capital
included as part of total capital cannot exceed 100% of core capital.

         The OTS regulatory capital requirements also incorporate an interest
rate risk component. Savings institutions with "above normal" interest rate risk
exposure are subject to a deduction from total capital for purposes of
calculating their risk-based capital requirements. A savings institution's
interest rate risk is measured by the decline in the net portfolio value of its
assets (I.E., the difference between incoming and outgoing discounted cash flows
from assets, liabilities and off-balance sheet contracts) that would result from
a hypothetical 200 basis point increase or decrease in market interest rates
divided by the estimated economic value of the institution's assets. In
calculating its total capital under the risk-based capital rule, a savings
institution whose measured interest rate risk exposure exceeds 2% must deduct an
amount equal to one-half of the difference between the institution's measured
interest rate risk and 2%, multiplied by the estimated economic value of the
institution's assets. The Director of the OTS may waive or defer a savings
institution's interest rate risk component on a case-by-case basis. A savings
institution with assets of less than $300 million and risk-based capital ratios
in excess of 12% is not subject to the interest rate risk component, unless the
OTS determines otherwise. For the present time, the OTS has deferred
implementation of the interest rate risk component. At September 30, 1999, the
Bank met each of its capital requirements and it is anticipated that the Bank
will not be subject to the interest rate risk component.


                                       22
<PAGE>



         The following table presents the Bank's capital position at September
30, 1999.

<TABLE>
<CAPTION>


                                                                                                   CAPITAL
                                                                             EXCESS       --------------------------
                                                ACTUAL       REQUIRED     (DEFICIENCY)       ACTUAL       REQUIRED
                                               CAPITAL       CAPITAL         AMOUNT         PERCENT       PERCENT
                                              -----------   -----------   --------------  ------------  ------------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                              <C>           <C>              <C>             <C>           <C>
Tangible...................                      $12,311       $ 1,924          $10,387         9.60%         1.50%
Core (Leverage)............                       12,311         5,131            7,180          9.60          4.00
Risk-based.................                       12,444         5,512            6,932         18.06          8.00

</TABLE>


         PROMPT CORRECTIVE REGULATORY ACTION. Under the OTS prompt corrective
action regulations, the OTS is required to take certain supervisory actions
against undercapitalized institutions, the severity of which depends upon the
institution's degree of undercapitalization. Generally, a savings institution
that has a ratio of total capital to risk weighted assets of less than 8%, a
ratio of Tier I (core) capital to risk-weighted assets of less than 4% or a
ratio of core capital to total assets of less than 4% (3% or less for
institutions with the highest examination rating) is considered to be
"undercapitalized." A savings institution that has a total risk-based capital
ratio less than 6%, a Tier 1 capital ratio of less than 3% or a leverage ratio
that is less than 3% is considered to be "significantly undercapitalized" and a
savings institution that has a tangible capital to assets ratio equal to or less
than 2% is deemed to be "critically undercapitalized." Subject to a narrow
exception, the banking regulator is required to appoint a receiver or
conservator for an institution that is "critically undercapitalized." The
regulation also provides that a capital restoration plan must be filed with the
OTS within 45 days of the date a savings institution receives notice that it is
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Compliance with the plan must be guaranteed by any parent
holding company. In addition, numerous mandatory supervisory actions become
immediately applicable to an undercapitalized institution, including, but not
limited to, increased monitoring by regulators and restrictions on growth,
capital distributions and expansion. The OTS could also take any one of a number
of discretionary supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and directors.

         INSURANCE OF DEPOSIT ACCOUNTS. Deposits of the Bank are presently
insured by the Savings Association Insurance Fund. The Federal Deposit Insurance
Corporation maintains a risk-based assessment system by which institutions are
assigned to one of three categories based on their capitalization and one of
three subcategories based on examination ratings and other supervisory
information. An institution's assessment rate depends upon the categories to
which it is assigned. Assessment rates for Savings Association Insurance Fund
member institutions are determined semiannually by the Federal Deposit Insurance
Corporation and currently range from zero basis points for the healthiest
institutions to 27 basis points for the riskiest.

         In addition to the assessment for deposit insurance, institutions are
required to pay on bonds issued in the late 1980s by the Financing Corporation
to recapitalize the predecessor to the Savings Association Insurance Fund.
During 1998, Financing Corporation payments for Savings Association Insurance
Fund members approximated 6.10 basis points, while Bank Insurance Fund members
paid 1.22 basis points. By law, there will be equal sharing of Financing
Corporation payments between the members of both insurance funds on the earlier
of January 1, 2000 or the date the two insurance funds are merged.

         The Bank's assessment rate for fiscal 1999 ranged from 5.80 to 6.10
basis points and the premium paid for this period was $52,000. A significant
increase in SAIF insurance premiums would likely have an adverse effect on the
operating expenses and results of operations of the Bank.

         Under the FDI Act, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations or has violated


                                       23
<PAGE>

any applicable law, regulation, rule, order or condition imposed by the FDIC or
the OTS. The management of the Bank does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

         FINANCIAL INSTITUTION MODERNIZATION LEGISLATION. Recently enacted
federal legislation designed to modernize the regulation of the financial
services industry expands the ability of bank holding companies to affiliate
with other types of financial services companies such as insurance companies and
investment banking companies. However, the legislation provides that companies
that acquire control of a single savings association after May 4, 1999 (or that
filed an application for that purpose after that date) are not entitled to the
unrestricted activities formerly allowed for a unitary savings and loan holding
company. Rather, these companies will have authority to engage in the activities
permitted "a financial holding company" under the new legislation, including
insurance and securities-related activities, and the activities currently
permitted for multiple savings and loan holding companies, but generally not in
commercial activities. The authority for unrestricted activities is
grandfathered for unitary savings and loan holding companies, such as the
Company, that existed before May 4, 1999. However, the authority for
unrestricted activities would not apply to any company that acquired the
Company.

         LOANS TO ONE BORROWER. Under the HOLA, savings institutions are
generally subject to the limits on loans to one borrower applicable to national
banks. Generally, savings institutions may not make a loan or extend credit to a
single or related group of borrowers in excess of 15% of its unimpaired capital
and surplus. An additional amount may be lent, equal to 10% of unimpaired
capital and surplus, if such loan is secured by readily-marketable collateral,
which is defined to include certain financial instruments and bullion. At
September 30, 1999, the Bank's limit on loans to one borrower was $2.2 million.
At September 30, 1999, the Bank's largest aggregate outstanding balance of loans
to one borrower was $2 million.

         QTL TEST. The HOLA requires savings institutions to meet a QTL test.
Under the QTL test, a savings and loan association is required to either
maintain at least 65% of its "portfolio assets" (total assets less: (i)
specified liquid assets up to 20% of total assets; (ii) intangibles, including
goodwill; and (iii) the value of property used to conduct business) in certain
"qualified thrift investments" (primarily residential mortgages and related
investments, including certain mortgage-backed securities) in at least 9 months
out of each 12 month period or qualify as a "domestic building and loan
association" under the Internal Revenue Code of 1986, as amended.

         A savings institution that fails the QTL test is subject to certain
operating restrictions and may be required to convert to a bank charter. As of
September 30, 1999, the Bank maintained 96.57% of its portfolio assets in
qualified thrift investments and, therefore, met the QTL test.

         LIMITATION ON CAPITAL DISTRIBUTIONS. OTS regulations impose limitations
upon all capital distributions by a savings institution, including cash
dividends, payments to repurchase its shares and payments to Stockholders of
another institution in a cash-out merger. The rule effective through the first
quarter of 1999 established three tiers of institutions based primarily on an
institution's capital level. A Tier I institution exceeded all capital
requirements before and after a proposed capital distribution and has not been
advised by the OTS that it needs more than normal supervision. A Tier I
institution could, after first giving notice to but without obtaining approval
of the OTS, make capital distributions during the calendar year equal to the
greater of 100% of its net earnings to date during the calendar year plus the
amount that would have reduced by one-half the excess capital over its capital
requirements at the beginning of the calendar year, or 75% of its net income for
the previous four quarters. Any additional capital distributions required prior
regulatory approval.

         Effective April 1, 1999, the OTS' capital distribution regulation
changed. Under the new regulation, an application to and the prior approval of
the OTS is required before any capital distribution if the institution does not
meet the criteria for "expedited treatment" of applications under OTS
regulations (generally, compliance with all capital requirements and examination
ratings in one of two top categories), the total capital distributions for the
calendar year exceed net income for that year plus the amount of retained net
income for the preceding two years, the institution would be undercapitalized
following the distribution or the distribution would otherwise be contrary to a
statute, regulation or agreement with OTS. If an application is not required,
the institution must still give advance notice to OTS of the capital
distribution. If the Bank's capital fell below its regulatory requirements or if
the OTS notified it that it was in


                                       24
<PAGE>

need of more than normal supervision, the Bank's ability to make capital
distributions could be restricted. In addition, the OTS could prohibit a
proposed capital distribution, which would otherwise be permitted by the
regulation if the OTS determines that the distribution would be an unsafe or
unsound practice.

         LIQUIDITY. The Bank is required to maintain an average daily balance of
specified liquid assets equal to a monthly average of not less than a specified
percentage of its net withdrawable deposit accounts plus short-term borrowings.
This liquidity requirement is currently 4%. The Bank's liquidity ratio for
September 30, 1999 was 12.21%, which exceeded the applicable requirements. The
Bank has never been subject to monetary penalties for failure to meet its
liquidity requirements.

         ASSESSMENTS. Savings institutions are required to pay assessments to
the OTS to fund the agency's operations. The general assessments, paid on a
semi-annual basis, are computed upon the savings institution's total assets,
including consolidated subsidiaries, as reported in the Bank's latest quarterly
thrift financial report. The assessments paid by the Bank for the fiscal year
ended September 30, 1999 totaled $33,700.

         BRANCHING. OTS regulations permit nationwide branching by federally
chartered savings institutions to the extent allowed by federal statute. This
permits federal savings institutions to establish interstate networks and to
geographically diversify their loan portfolios and lines of business. The OTS
authority preempts any state law purporting to regulate branching by federal
savings institutions.

         TRANSACTIONS WITH RELATED PARTIES. The Bank's authority to engage in
transactions with related parties or "affiliates" (E.G., any company that
controls or is under common control with an institution, including the Company
and its non-savings institution subsidiaries) is limited by Sections 23A and 23B
of the Federal Reserve Act ("FRA"). Section 23A limits the aggregate amount of
covered transactions with any individual affiliate to 10% of the capital and
surplus of the savings institution. The aggregate amount of covered transactions
with all affiliates is limited to 20% of the savings institution's capital and
surplus. Certain transactions with affiliates are required to be secured by
collateral in an amount and of a type described in Section 23A and the purchase
of low quality assets from affiliates is generally prohibited. Section 23B
generally provides that certain transactions with affiliates, including loans
and asset purchases, must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the
institution as those prevailing at the time for comparable transactions with
non-affiliated companies. In addition, savings institutions are prohibited from
lending to any affiliate that is engaged in activities that are not permissible
for bank holding companies and no savings institution may purchase the
securities of any affiliate other than a subsidiary.

         The Bank's authority to extend credit to executive officers, directors
and 10% shareholders ("insiders"), as well as entities such persons control, is
governed by Sections 22(g) and 22(h) of the FRA and Regulation O thereunder.
Among other things, such loans are required to be made on terms substantially
the same as those offered to unaffiliated individuals and to not involve more
than the normal risk of repayment. Recent legislation created an exception for
loans made pursuant to a benefit or compensation program that is widely
available to all employees of the institution and does not give preference to
insiders over other employees. Regulation O also places individual and aggregate
limits on the amount of loans the Bank may make to insiders based, in part, on
the Bank's capital position and requires certain board approval procedures to be
followed.

         ENFORCEMENT. Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to bring actions
against the institution and all institution-affiliated parties, including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers and/or
directors to institution of receivership, conservatorship or termination of
deposit insurance. Civil penalties cover a wide range of violations and can
amount to $25,000 per day, or even $1 million per day in especially egregious
cases. Under the FDI Act, the FDIC has the authority to recommend to the
Director of the OTS enforcement action to be taken with respect to a particular
savings institution. If action is not taken by the Director, the FDIC has
authority to take such action under certain circumstances. Federal law also
establishes criminal penalties for certain violations.

                                       25
<PAGE>

         STANDARDS FOR SAFETY AND SOUNDNESS. The federal banking agencies have
adopted Interagency Guidelines Prescribing Standards for Safety and Soundness
("Guidelines") and a final rule to implement safety and soundness standards
required under the FDI Act. The Guidelines set forth the safety and soundness
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. The
standards set forth in the Guidelines address internal controls and information
systems; internal audit system; credit underwriting; loan documentation;
interest rate risk exposure; asset growth; asset quality; earnings; and
compensation, fees and benefits. Most recently, the agencies issued guidelines
on Year 2000 computer compliance. If the appropriate federal banking agency
determines that an institution fails to meet any standard prescribed by the
Guidelines, the agency may require the institution to submit to the agency an
acceptable plan to achieve compliance with the standard, as required by the FDI
Act. The final rule establishes deadlines for the submission and review of such
safety and soundness compliance plans when such plans are required.

FEDERAL RESERVE SYSTEM

         The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations generally require that reserves be maintained against aggregate
transaction accounts as follows: for that portion of transaction accounts
aggregating $44.3 million or less (subject to adjustment by the Federal Reserve
Board) the reserve requirement is 3%; and for accounts aggregating greater than
$44.3 million, the reserve requirement is $1.33 million plus 10% (subject to
adjustment by the Federal Reserve Board between 8% and 14%) against that portion
of total transaction accounts in excess of $44.3 million. The first $5.0 million
of otherwise reservable balances (subject to adjustments by the Federal Reserve
Board) are exempted from the reserve requirements. The Bank is in compliance
with the foregoing requirements. The balances maintained to meet the reserve
requirements imposed by the Federal Reserve Board may be used to satisfy
liquidity requirements imposed by the OTS.

COMMUNITY REINVESTMENT ACT

         Under the Community Reinvestment Act, as implemented by OTS
regulations, a savings association has a continuing and affirmative obligation
consistent with its safe and sound operation to help meet the credit needs of
its entire community, including low and moderate income neighborhoods. The
Community Reinvestment Act does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the Community
Reinvestment Act. The Community Reinvestment Act requires the OTS, in connection
with its examination of an institution, to assess the institution's record of
meeting the credit needs of its community and to take such record into account
in its evaluation of applications by such institution. The Community
Reinvestment Act requires public disclosure of an institution's Community
Reinvestment Act rating. Citizens Bank of Delphos' latest Community Reinvestment
Act rating, received from the OTS was "Satisfactory."

                                       26
<PAGE>

                           FEDERAL AND STATE TAXATION

FEDERAL TAXATION

         GENERAL. The Company and the Bank report their income on a consolidated
basis and the accrual method of accounting, and are subject to federal income
taxation in the same manner as other corporations with some exceptions,
including particularly the Bank's reserve for bad debts discussed below. The
following discussion of tax matters is intended only as a summary and does not
purport to be a comprehensive description of the tax rules applicable to the
Bank or the Company. The Bank has not been audited by the IRS recently, and
therefore the 1996 through 1998 returns are open for audit. For its 1999 taxable
year, the Bank is subject to a maximum federal income tax rate of 34%.

         BAD DEBT RESERVES. For fiscal years beginning prior to December 31,
1995, thrift institutions which qualified under certain definitional tests and
other conditions of the Internal Revenue Code of 1986 (the "Code") were
permitted to use certain favorable provisions to calculate their deductions from
taxable income for annual additions to their bad debt reserve. A reserve could
be established for bad debts on qualifying real property loans (generally
secured by interests in real property improved or to be improved) under (i) the
Percentage of Taxable Income Method (the "PTI Method") or (ii) the Experience
Method. The reserve for nonqualifying loans was computed using the Experience
Method.

         The Small Business Job Protection Act of 1996 (the "1996 Act"), which
was enacted on August 20, 1996, requires savings institutions to recapture
(I.E., take into income) certain portions of their accumulated bad debt
reserves. The 1996 Act repeals the reserve method of accounting for bad debts
effective for tax years beginning after 1995. Thrift institutions that would be
treated as small banks are allowed to utilize the Experience Method applicable
to such institutions, while thrift institutions that are treated as large banks
(those generally exceeding $500 million in assets) are required to use only the
specific charge-off method. Thus, the PTI Method of accounting for bad debts is
no longer available for any financial institution.

         A thrift institution required to change its method of computing
reserves for bad debts will treat such change as a change in method of
accounting, initiated by the taxpayer, and having been made with the consent of
the IRS. Any Section 481(a) adjustment required to be taken into income with
respect to such change generally will be taken into income ratably over a
six-taxable year period, beginning with the first taxable year beginning after
1995, subject to the residential loan requirement.

         Under the residential loan requirement provision, the recapture
required by the 1996 Act will be suspended for each of two successive taxable
years, beginning with the Bank's first taxable year beginning after 1995, in
which the Bank originates a minimum of certain residential loans based upon the
average of the principal amounts of such loans made by the Bank during its six
taxable years preceding its 1996 taxable year.

         Under the 1996 Act, for its current and future taxable years, the Bank
is not permitted to make additions to its tax bad debt reserves under the PTI
Method. In addition, the Bank is required to recapture (I.E., take into income)
over a six year period the excess of the balance of its tax bad debt reserves as
of December 31, 1995 over the balance of such reserves as of December 31, 1987.
As a result of such recapture, the Bank will incur an additional tax liability
of approximately $211,000 which is generally expected to be taken into income
beginning in 1998 over a six-year period.

         DISTRIBUTIONS. Under the 1996 Act, if the Bank makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Bank's unrecaptured tax bad debt reserves (including the
balance of its reserves as of December 31, 1987) to the extent thereof, and then
from the Bank's supplemental reserve for losses on loans, to the extent thereof,
and an amount based on the amount distributed (but not in excess of the amount
of such reserves) will be included in the Bank's taxable income. Non-dividend
distributions include distributions in excess of the Bank's current and
accumulated earnings and profits, as calculated for federal income tax purposes,
distributions in redemption of stock, and distributions in partial or complete
liquidation. Dividends paid out of the Bank's current or accumulated earnings
and profits will not be so included in the Bank's income.

                                       27
<PAGE>

         The amount of additional taxable income triggered by a non-dividend is
an amount that, when reduced by the tax attributable to the income, is equal to
the amount of the distribution. Thus, if the Bank makes a non-dividend
distribution to the Company, approximately one and one-half times the amount of
such distribution (but not in excess of the amount of such reserves) would be
includable in income for federal income tax purposes, assuming a 34% federal
corporate income tax rate. The Bank does not intend to pay dividends that would
result in a recapture of any portion of its bad debt reserves.

STATE AND LOCAL TAXATION

         The Company is subject to the Ohio corporation franchise tax, which, as
applied to the Company, is a tax measured by both net earnings and net worth.
The rate of tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio
taxable income and 8.5% of computed Ohio taxable income in excess of $50,000 and
(ii) 0.4% times taxable net worth. Under these alternative measures of computing
tax liability, the states to which a taxpayer's adjusted total net income and
adjusted total net worth are apportioned or allocated are determined by complex
formulas. The minimum tax is $50 per year.

         A special litter tax is also applicable to all corporations, including
the Company, subject to the Ohio corporation franchise tax other than "financial
institutions." If the franchise tax is paid on the net income basis, the litter
tax is equal to .11% of the first $50,000 of computed Ohio taxable income and
 .22% of computed Ohio taxable income in excess of $50,000. If the franchise tax
is paid on the net worth basis, the litter tax is equal to .014% times
taxable-net-worth.

         Certain holding companies, such as the Company, will qualify for
complete exemption from the net worth tax if certain conditions are met. The
Company will most likely meet these conditions, and thus, calculate its Ohio
franchise tax on the net income basis.

         The Bank is a "financial institution" for State of Ohio tax purposes.
As such, it is subject to the Ohio corporate franchise tax on "financial
institutions," which is imposed annually at a rate of 1.4% for 1999 and 1.3% for
2000 and thereafter of the Bank's apportioned book net worth, determined in
accordance with Generally Accepted Accounting Principles ("GAAP"), less any
statutory deduction. As a "financial institution," the Bank is not subject to
any tax based upon net income or net of its imposed by the State of Ohio.

ITEM 2.  PROPERTIES.

         The Bank conducts its business through a single banking office located
at 114 East 3rd Street in Delphos, Ohio. The Company believes that the current
facilities are adequate to meet the present and immediately foreseeable needs of
the Bank and the Company. The Bank's office was constructed in 1955 and was most
recently remodeled in 1993. The Bank's office had a net book value of $535,000
at September 30, 1999.

ITEM 3.  LEGAL PROCEEDINGS.

         At September 30, 1999, the Company was not involved in any pending
legal proceedings. However, from time to time, the Company is involved in legal
proceedings occurring in the ordinary course of business.

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

         None.


                                       28
<PAGE>

                                     PART II


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

         The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "DCBI." The stock began trading on November 21, 1996. As of
December 13, 1999, there were approximately 1,242 recordholders of the Common
Stock of the Company, which includes shares held in street name. The following
table discloses the high and low bids for the Common Stock for each quarterly
period indicated.

<TABLE>
<CAPTION>

                                                     HIGH                      LOW
                                                     ----                      ---
<S>                                                <C>                      <C>
September 30, 1999                                 $18.50                   $17.00
June 30, 1999                                      $18.00                   $14.25
March 31, 1999                                     $18.50                   $16.00
December 31, 1998                                  $19.00                   $16.00

September 30, 1998                                 $19.44                   $15.38
June 30, 1998                                      $22.25                   $19.00
March 31, 1998                                     $24.25                   $19.63
December 31, 1997                                  $20.75                   $17.00
</TABLE>


         The following table lists the dividends declared and paid by the
Company.

<TABLE>
<CAPTION>
     1999                DIVIDEND (1)           DECLARED             PAID
                        ---------------        -----------        -----------
<S>                                             <C>                <C>
                            $.06                10-29-98           11-24-98
                             .06                01-27-99           02-24-99
                             .06                04-27-99           05-24-99
                             .06                07-28-99           08-25-99

     1998                DIVIDEND (1)           DECLARED             PAID
                        ---------------        -----------        -----------

                            $.06                10-28-97           11-18-97
                             .06                01-27-98           02-19-98
                             .06                04-30-98           05-21-98
                             .06                08-05-98           08-26-98
</TABLE>

(1)    Per share.

                                       29
<PAGE>

ITEM. 6  SELECTED FINANCIAL DATA.

         The selected consolidated financial and other data of the Company set
forth below is derived in part from, and should be read in conjunction with, the
Consolidated Financial Statements of the Company and Notes thereto. See Item 8
"Financial Statements and Supplementary Data."

<TABLE>
<CAPTION>

                                                                           AT SEPTEMBER 30,
                                                    ----------------------------------------------------------------
                                                       1999         1998         1997         1996          1995
                                                    -----------  -----------   ----------   ----------   -----------
                                                                            (IN THOUSANDS)
<S>                                                   <C>          <C>          <C>           <C>          <C>
SELECTED BALANCE SHEET DATA:
Total assets.....................................     $128,228     $115,901     $107,796      $92,235      $ 88,022
Cash and cash equivalents........................        3,700        1,618        4,400        4,695         4,257
Investment securities (1)........................           --           --        4,996          500           500
Mortgage-backed securities (1)...................        8,669       13,605       12,107       14,214        17,421
FHLB stock--at cost..............................        1,250          922          834          778           726
Loans receivable, net (2)........................      113,273       98,486       84,285       70,787        64,043
Deposits.........................................       76,841       79,074       77,373       79,831        76,664
FHLB advances....................................       25,000       10,000        1,000           --            --
Total equity.....................................       25,487       26,060       28,716       11,425        10,799


                                                                   FOR THE YEAR ENDED SEPTEMBER 30,
                                                    ----------------------------------------------------------------
                                                       1999         1998         1997         1996          1995
                                                    -----------  -----------   ----------   ----------   -----------
                                                                            (IN THOUSANDS)
Selected Operating Data:
Interest income..................................       $8,743       $8,284       $7,638       $6,697        $6,217
Interest expense.................................        4,484        4,040        3,772        3,996         3,601
                                                        ------       ------       ------        -----         -----
Net interest income..............................        4,259        4,244        3,866        2,701         2,616
Provision for loan losses........................           30           12           12            2            --
                                                        ------       ------       ------        -----         -----

   Net interest income after
      provision for loan losses..................        4,229        4,232        3,854        2,699         2,616
Non-interest income..............................          434          432          229          232           151
Non-interest expense.............................        2,025        1,927        1,871        1,954         1,342
                                                        ------       ------       ------        -----         -----
Income before income taxes.......................        2,640        2,737        2,212          977         1,425
Income taxes.....................................          937        1,085          686          333           481
                                                        ------       ------       ------        -----         -----
Net income.......................................       $1,703       $1,652       $1,526        $ 644         $ 944
                                                        ======       ======       ======        =====         =====
Earnings per common share (3):
   Basic.........................................         1.14         0.97         0.75           --            --
   Diluted.......................................         1.12         0.95         0.75           --            --
Cash dividends declared for common
   share (3).....................................         0.24         0.24           --           --            --
</TABLE>
                                       30
<PAGE>

<TABLE>
<CAPTION>
                                                                         AT OR FOR THE YEAR ENDED
                                                                               SEPTEMBER 30,
                                                        ------------------------------------------------------------
                                                          1999         1998        1997        1996         1995
                                                        ----------  ----------- -----------  ----------  -----------
<S>                                                         <C>          <C>         <C>         <C>          <C>
SELECTED FINANCIAL RATIOS AND OTHER
DATA(4):
PERFORMANCE RATIOS:
         Return on average assets.......................    1.40%        1.50%       1.42%       0.71%        1.10%
         Return on average equity.......................     6.57         5.87        5.31        5.59         8.94
         Average equity to average assets...............    21.27        25.48       25.37       12.68        12.30
         Equity to total assets at end of period........    19.88        22.48       26.64       12.39        12.27
         Dividend payout ratio (3)......................    24.12        27.56          --          --           --
         Average interest rate spread (5)...............     2.63         2.72        2.67        2.51         2.54
         Net interest margin (6)........................     3.58         3.94        3.83        3.06         3.10
         Average interest-earning assets to average
                  interest-bearing liabilities..........   125.37       132.61      131.00      112.32       112.20
         Efficiency ratio (7)...........................    43.12        41.21       45.68       66.61        51.29
         Non-interest expense to average assets.........     1.66         1.75        1.71        2.15         1.56
REGULATORY CAPITAL RATIOS (8):
         Tangible capital...............................     9.60        10.67       13.89       12.40        12.27
         Core capital...................................     9.60        10.67       13.89       12.40        12.27
         Risk-based capital.............................    18.06        20.83       28.63       27.25        27.90
ASSET QUALITY RATIOS:
         Non-performing loans as a percent of gross
                  loans receivable (9)(10)..............     0.32         0.79        0.68        0.82         0.55
         Non-performing assets as a percent of
                  total assets (10).....................     0.30         0.71        0.53        0.63         0.40
         Allowance for loan losses as a percent of
                  gross loans receivable (9)............     0.11         0.11        0.13        0.13         0.14
         Allowance for loan losses as a percent of
                  non-performing loans (10).............    35.09        14.30       18.60       16.19        26.02
</TABLE>

(1)     The Company adopted Statement of Financial Accounting Standards ("SFAS")
        No. 115, "Accounting for Certain Investments in Debt and Equity
        Securities" ("SFAS No. 115"), effective as of October 1, 1995. Prior to
        the adoption of SFAS No. 115, investment securities and mortgage-backed
        securities held for sale were carried at the lower of amortized cost or
        market value, as adjusted for amortization of premiums and accretion of
        discounts over the remaining terms of the securities from the dates of
        purchase.
(2)     Loans receivable are shown net of loans in process, net deferred loan
        origination fees and the allowance for loan losses.
(3)     Earnings per common share and cash dividends per common share are not
        applicable for years prior to the conversion on November 20, 1996.
(4)     Asset Quality Ratios and Regulatory Capital Ratios are end of period
        ratios. With the exception of end of period ratios, all ratios are based
        on average monthly balances during the indicated periods and are
        annualized where appropriate.
(5)     The average interest rate spread represents the difference between the
        weighted average yield on interest-earning assets and the weighted
        average cost of interest-bearing liabilities.
(6)     The net interest margin represents net interest income as a percent of
        average interest-earning assets.
(7)     The efficiency ratio represents non-interest expense as a percent of net
        interest income before provision for loan losses and non-interest
        income.
(8)     For definitions and further information relating to the Bank's
        regulatory capital requirements, See "Regulation and
        Supervision--Federal Savings Institution Regulation--Capital
        Requirements."
(9)     Gross loans receivable are stated at unpaid principal balances.
(10)    Non-performing assets consist of non-performing loans and real estate
        owned ("REO"). Non-performing loans consist of all loans 90 days or more
        past due and all other non-accrual loans. See "Lending
        Activities--Non-Performing Assets" and "--Real Estate Owned."

                                       31
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         AVERAGE BALANCE SHEETS. The following table sets forth certain
information relating to the Company at September 30, 1999, and for the years
ended September 30, 1999, 1998 and 1997. The yields and costs are derived by
dividing income or expense by the average balance of assets or liabilities,
respectively, for the periods shown. Average balances are derived from average
month-end balances. Management does not believe that the use of average monthly
balances instead of average daily balances has caused any material differences
in the information presented. Average balances of loans receivable include loans
on which the Company has discontinued accruing interest. The yields and costs
include amortized and deferred fees and costs which are considered adjustments
to yields.

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED SEPTEMBER 30,
                                                                    --------------------------------------------------------------
                                              AT SEPTEMBER 30, 1999              1999                           1998
                                              --------------------- -------------------------------------------------------------
                                                                                         AVERAGE                        AVERAGE
                                                           YIELD/    AVERAGE              YIELD/   AVERAGE               YIELD/
                                               BALANCE      COST     BALANCE   INTEREST    COST    BALANCE    INTEREST    COST
                                              ----------- --------- ---------- --------- --------  ---------- --------- ---------
                                                                                                      (DOLLARS IN THOUSANDS)
<S>                                            <C>        <C>       <C>         <C>      <C>      <C>         <C>        <C>
ASSETS:
         Interest-earning assets:
                  Interest-earning deposits in
                     other banks ...............  $  847     5.25%     $  620      $ 50     8.06%    $ 2,427     $ 159     6.55%

                  Investment securities, net(1).   1,250      5.46      1,017        68      6.69        884        62      7.01

                  Loans receivable, net (2)..... 113,273      7.15    106,619     7,881      7.39     91,126     7,049      7.74
                  Mortgage-backed securities,
                     net(1) ....................   8,669      7.04     10,662       744      6.98     13,291     1,014      7.63
                                                --------     -----   --------     -----      ----   --------     -----     -----
                        Total interest-earning
                          assets ............... 124,039      7.11    118,918     8,743      7.35    107,728     8,284      7.69

         Non-interest-earning assets............   4,189                2,965                          2,646
                                                --------             --------                       --------
                        Total assets ...........$128,228             $121,883                       $110,374
                                                ========             ========                       ========

LIABILITIES AND EQUITY:
         Interest-bearing liabilities:
                  Passbook savings accounts.....   8,897      2.69      8,791       231      2.63    $ 8,147       232      2.85
                  Money market accounts.........   5,178      3.08      5,366       160      2.98      5,516       168      3.05
                  NOW accounts                     5,007      1.80      5,974        91      1.52      5,527        84      1.52
                  Certificate accounts..........  57,312      5.22     58,419     3,141      5.28     58,275     3,362      5.77
                  FHLB advances                   25,000      5.19     16,307       861      5.28      3,773       194      5.14
                                                --------     -----   --------     -----      ----   --------     -----     -----
                           Total
                             interest-bearing
                             liabilities ....... 101,394      4.71     94,857     4,484      4.73     81,238     4,040      4.97
                                                                                  -----                          -----
         Non-interest-bearing liabilities.......   1,346                1,097                          1,014
                                                --------             --------                       --------
                            Total liabilities .. 102,740               95,954                         82,252

         Equity ................................  25,488               25,929                         28,122
                                                --------             --------                       --------

                           Total liabilities
                             and equity ........$128,228             $121,883                       $110,374
                                                ========             ========                       ========

         Net interest income before provision
           for estimated loan losses............                                 $4,259                         $4,244
                                                                               ========                       ========

         Net interest rate spread(3)............                                            2.63%                          2.72%
                                                                                            ====                           ====
         Net interest margin(4) ................                                            3.58%                          3.94%
                                                                                            ====                           ====
         Ratio of interest-earning assets to
           interest-bearing liabilities ........  122.33%              125.37%                        132.61%
                                                ========             ========                       =========



<CAPTION>
                                                   YEAR ENDED SEPTEMBER 30,
                                                  ------------------------------
                                                               1997
                                                  ------------------------------
                                                                       AVERAGE
                                                   AVERAGE              YIELD/
                                                   BALANCE   INTEREST    COST
                                                  ---------- --------- ---------
                                                       (DOLLARS IN THOUSANDS)
<S>                                               <C>         <C>       <C>
ASSETS:
         Interest-earning assets:
                  Interest-earning deposits in
                     other banks ...............    $ 7,993     $ 452     5.65%

                  Investment securities, net(1).      2,975       242      8.13

                  Loans receivable, net (2).....     76,727     5,944      7.75
                  Mortgage-backed securities,
                     net(1) ....................     13,181     1,000      7.54
                                                   --------    ------     -----
                        Total interest-earning
                          assets ...............    100,876     7,638      7.57

         Non-interest-earning assets............      3,488
                                                   --------
                        Total assets ...........   $104,364
                                                   ========

LIABILITIES AND EQUITY:
         Interest-bearing liabilities:
                  Passbook savings accounts.....    $ 8,470     $ 237      2.80
                  Money market accounts.........      6,218       192      3.09
                  NOW accounts                        5,439        84      1.54
                  Certificate accounts..........     56,876     3,259      5.73
                  FHLB advances                          --        --        --
                                                   --------    ------     -----
                           Total
                             interest-bearing
                             liabilities .......     77,003     3,772      4.90
                                                               ------
         Non-interest-bearing liabilities.......        886
                                                   --------
                            Total liabilities ..     77,889

         Equity ................................     26,475
                                                   --------

                           Total liabilities
                             and equity ........   $104,364
                                                   ========

         Net interest income before provision
           for estimated loan losses............               $3,866
                                                             ========

         Net interest rate spread(3)............                          2.67%
                                                                          ====
         Net interest margin(4) ................                          3.83%
                                                                          ====
         Ratio of interest-earning assets to
           interest-bearing liabilities ........     131.00%
                                                   =========

</TABLE>

(1)  Includes unamortized discounts and premiums.
(2)  Amount is net of loans in process, net deferred loan origination fees and
     allowance for loan losses and includes non-performing loans.
(3)  Net interest rate spread represents the difference between the yield on
     interest-earning assets and the cost of interest-bearing liabilities.
(4)  Net interest margin represents net interest income divided by average
     interest-earning assets.


                                       32
<PAGE>

         RATE/VOLUME ANALYSIS. The following table presents the extent to which
changes in interest rates and changes in the volume of interest-earning assets
and interest-bearing liabilities have affected the Company's interest income and
interest expense during the periods indicated. Information is provided in each
category with respect to: (i) changes attributable to changes in volume (changes
in volume multiplied by prior rate); (ii) changes attributable to changes in
rate (changes in rate multiplied by prior volume); and (iii) the net change. The
changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate.

<TABLE>
<CAPTION>
                                                        YEAR ENDED SEPTEMBER 30, 1999       YEAR ENDED SEPTEMBER 30, 1998
                                                                 COMPARED TO                         COMPARED TO
                                                        YEAR ENDED SEPTEMBER 30, 1998       YEAR ENDED SEPTEMBER 30, 1997
                                                      ----------------------------------  ----------------------------------
                                                       INCREASE (DECREASE)                 INCREASE (DECREASE)
                                                              DUE TO                             DUE TO
                                                      -----------------------             ----------------------
                                                        VOLUME       RATE        NET       VOLUME       RATE        NET
                                                      ----------- ----------- ----------  ---------- ----------- -----------
                                                                                                   (IN THOUSANDS)
<S>                                                       <C>           <C>      <C>         <C>            <C>      <C>
INTEREST-EARNING ASSETS:
         Interest-earning deposits in other banks ...     $(139)        $ 30     $(109)      $(355)         $62      $(293)
         Investment securities, net .................          9         (3)          6       (150)        (30)       (180)
         Loans receivable, net ......................      1,156       (324)        832       1,114         (9)       1,105
         Mortgage-backed securities, net ............      (189)        (81)      (270)           8           6          14
                                                         --------    --------    -------     -------      ------     -------
                  Total change in interest income ...        837       (378)        459         617          29         646
                                                         --------    --------    -------     -------      ------     -------

INTEREST-BEARING LIABILITIES:
         Passbook savings accounts ..................         18        (19)          1         (9)           4         (5)
         Money market accounts ......................        (5)         (3)        (8)        (21)         (3)        (24)
         NOW accounts ...............................          7          --          7           1         (1)           0
         Certificate accounts .......................          8       (229)      (221)          81          22         103
         FHLB advances ..............................        662           5        667         194          --         194
                                                         --------    --------    -------     -------      ------     -------
                  Total change in interest expense ..        690       (246)        444         245          23         268
                                                         --------    --------    -------     -------      ------     -------
Net change in net interest income ...................      $ 147      $(132)       $ 15       $ 372         $ 6       $ 378
                                                         ========    ========    =======     =======      ======     =======


<CAPTION>


                                                           YEAR ENDED SEPTEMBER 30, 1997
                                                                    COMPARED TO
                                                           YEAR ENDED SEPTEMBER 30, 1996
                                                         -----------------------------------
                                                          INCREASE (DECREASE)
                                                                 DUE TO
                                                         -----------------------
                                                           VOLUME       RATE        NET
                                                         ----------- ----------- -----------
                                                                    (IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
INTEREST-EARNING ASSETS:
         Interest-earning deposits in other banks ...         $ 252       $(27)       $ 225
         Investment securities, net .................           133          33         166
         Loans receivable, net ......................           682          34         716
         Mortgage-backed securities, net ............         (179)          13       (166)
                                                              ------      ------      ------

                  Total change in interest income ...           888          53         941
                                                              ------      ------      ------

INTEREST-BEARING LIABILITIES:
         Passbook savings accounts ..................           (2)        (11)        (13)
         Money market accounts ......................          (69)         (1)        (70)
         NOW accounts ...............................            15        (19)         (4)
         Certificate accounts .......................          (12)       (125)       (137)
         FHLB advances ..............................
                                                              ------      ------      ------
                  Total change in interest expense ..          (68)       (156)       (224)
                                                              ------      ------      ------
Net change in net interest income ...................         $ 956        $209      $1,165
                                                              ======      ======      ======
</TABLE>

                                       33
<PAGE>

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

GENERAL

         Operating results of the Company are affected by general economic
conditions, monetary and fiscal policies of federal agencies and policies of
agencies regulating financial institutions. The Company's cost of funds is
influenced by interest rates on competing investments and general market rates
of interest. Lending activities are influenced by demand for real estate loans
and other types of loans which, in turn, is affected by the interest rates at
which such loans are made, general economic conditions and availability of funds
for lending activities.

         The Company's net income is primarily dependent on its net interest
income (the difference between interest income generated on interest-earning
assets and interest expense incurred on interest-bearing liabilities). Net
income is also affected by provisions for loan losses, service charges, gains on
sale of assets and other income, noninterest expense and income taxes. The
Company's net income was $1,703,000 and $1,652,000 for the years ended September
30, 1999 and 1998.

INTEREST INCOME

         Interest income increased $459,000, or 5.2%, from $8.3 million for the
year ended September 30, 1998 to $8.8 million for the year ended September 30,
1999. The increase in interest income resulted primarily from an increase in
interest and fees on loans. Such increase was due to higher average loan
balances related to the origination of new one- to four-family real estate
loans. This increase was partially offset by a decrease in interest and
dividends on securities and interest-bearing deposits. The decrease in these
investments resulted from a decrease in the volume of securities and deposits in
 the current year as the majority of the proceeds from principal payments have
been reinvested in higher yielding loans.

INTEREST EXPENSE

         Interest expense increased $444,000, or 11.0%, from $4.0 million for
the year ended September 30, 1998 to $4.5 million for the year ended September
30, 1999. The increase in interest expense was primarily due to an increase in
the volume of FHLB advances during 1999. The Company began using FHLB advances
in fiscal 1998 to fund the Bank's loan growth. This increase was partially
offset by a decrease in interest expense on deposits due to a lower cost of
funds on certificates of deposit.

NET INTEREST INCOME

         Net interest income is the largest component of the Company's income
and is affected by the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
increased slightly by $15,000 to $4.3 million for the year ended September 30,
1999. The Bank's continued growth is reflected by an increase in average
interest-earning assets. However, net interest income does not correspond to
this growth as interest-bearing liabilities have repriced more quickly than
their interest-earning assets. This trend is evidenced by the decrease in the
net interest rate spread from 2.72% for the year ended September 30, 1998 to
2.63% for the year ended September 30, 1999.

         The Company remains liability sensitive, whereby its interest-bearing
liabilities will generally reprice more quickly than its interest-earning
assets. Therefore, the Company's net interest margin will generally increase in
periods of falling interest rates in the market and will decrease in periods of
increasing interest rates. Accordingly, in a rising interest rate environment,
the Company may need to increase rates to attract and retain deposits. Due to
the negative gap position, the rise in interest rates may not have such an
immediate impact on interest-earning assets. This lag could negatively affect
net income.

                                       34
<PAGE>

PROVISION FOR LOAN LOSSES

         Provisions for loan losses totaled $30,000 for the year ended September
30, 1999 compared to $12,000 for the year ended September 30, 1998. The
provision for loan losses is based on management's assessment of risk factors
affecting the allowance for loan losses. The allowance for loan losses was
approximately .11% and .12% of total loans as of September 30, 1999 and 1998.
Management believes the allowance for loan loss is adequate to absorb probable
losses; however, future additions to the allowance may be necessary based on
changes in economic conditions.

NON-INTEREST INCOME

         Non-interest income totaled $434,000 for the year ended September 30,
1999 as compared to $432,000 for the year ended September 30, 1998. Non-interest
income increased slightly due to a gain recognized on the sale of real estate
owned, partially offset by a decrease in other income.

NON-INTEREST EXPENSE

         Non-interest expense increased $96,000, or 5.0% , from $1.9 million for
the year ended September 30, 1998 to $2.0 million for the year ended September
30, 1999. The increase was primarily due to an increase in compensation and
benefits and data processing services, partially offset by a decrease in
franchise taxes. The increase in salary and benefits was due to annual merit
raises and additional RRP expense recognize from an increase in stock prices.
The decrease in franchise taxes for fiscal 1999 resulted from a decrease in
equity of the Company due to the stock repurchase.

INCOME TAXES

         The change in income tax expense is primarily attributable to the
change in net income before income taxes. Income tax expense totaled $937,000,
or an effective rate of 35.5% for the year ended September 30, 1999, compared to
$1,085,000, or an effective rate of 39.6% for the year ended September 30, 1998.

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

GENERAL

         Net earnings for the year ended September 30, 1998 were $1,652,000, and
increase of $126,000, or 8.3%, from $1,526,000 for the year ended September 30,
1997. The increase in net earnings between the two years resulted from a
$378,000 increase in net interest income and a $203,000 increase in other income
which were partially offset by increases of $57,000 and $399,000 in other
expenses and tax expense, respectively.

INTEREST INCOME

         Interest income increased by $646,000, or 8.5%, from $7.6 million for
the year ended September 30, 1997 to $8.3 million for the year ended September
30, 1998. The increase in interest income resulted primarily from the $6.9
million increase in average interest earnings assets. The increase in average
earning assets is due to the increase in the loan portfolio which was partially
offset by a decrease in the average balance of interest-earning deposits in
banks and mortgage-backed securities.

INTEREST EXPENSE

         Interest expense increased $268,000, or 7.1%, from $3.8 million for the
year ended September 30, 1997 to $4.0 million for the year ended September 30,
1998. The increase in interest expense was due primarily to a $4.2 million
increase in the average balance of interest-bearing liabilities. The increase in
average balances was primarily from an increase in the use of Federal Home Loan
Bank Advances as an alternative funding source and to a lesser extent an
increase in the average balance of certificates of deposits. While the increase
in interest expense was primarily volume


                                       35
<PAGE>

related, interest expense also increased due to an increase in rates paid on
interest-bearing liabilities, primarily certificates of deposit.

NET INTEREST INCOME

         Net interest income increased by $378,000 from $3.9 million for the
year ended September 30, 1997 to $4.2 million for the year ended September 30,
1998. The increase in net interest income reflects continued growth in the
Bank's average balance of interest-earning assets and partially offset by an
increase in the average balance of interest-bearing liabilities. The net
interest margin increased from 3.83% for the year ended September 30, 1997 to
3.94% for the year ended September 30, 1998, due primarily to the increase in
the ratio of interest-earning assets to interest-bearing liabilities.

PROVISION FOR LOAN LOSSES

         The Bank made a $12,000 provision for loan losses during both the year
ended September 30, 1998 and 1997. The amount of the Bank's provision for loan
losses is based upon management's periodic analysis of the adequacy of the
allowance for loan losses. The Bank has historically experienced very low levels
of loan losses and had no charge-offs during 1998 or 1997.

NON-INTEREST INCOME

         Non-interest income increased by $203,000 from $229,000 for the year
ended September 30, 1997 to $432,000 for the year ended September 30, 1998. The
increase in non-interest income between the two periods resulted primarily from
an increase in service charges and fees on loans. The increase in loan fee
income was significantly influenced by the increased volume of loan origination
activity experienced during the year. The increased loan volume was
significantly influenced by the historically low long term interest rates which
influenced both new home purchases and mortgage refinancing activity. Management
anticipates that fee income from loans will decrease when loan refinancing
activity returns to more historically lower levels.

NON-INTEREST EXPENSE

         Non-interest expense increased by $57,000, or 3.0%, from $1.87 million
for the year ended September 30, 1997 to $1.93 million for the year ended
September 30, 1998. The increase was primarily due to a $62,000 increase in
franchise tax expense resulting from the increased equity of the company and
bank subsidiary and a $54,000 increase in data processing expense. The decrease
in compensation and benefits is due to the higher ESOP expense in 1997 because
of the additional ESOP contribution in fiscal 1997. The decrease in ESOP expense
was partially offset by an increase in salary expense from annual merit
increases and an increase in RRP expense due to the full year impact of the RRP
plan.

INCOME TAXES

         The Company's income tax expense increased from $686,000 for the year
ended September 30, 1997 to $1,085,000 for the year ended September 30, 1998.
The increase in income tax expense between the two fiscal years resulted
primarily from an increase in income before taxes.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998

GENERAL

         The Company's assets totaled $128.2 million at September 30, 1999, an
increase of $12.3 million, or 10.6%, from $115.9 million at September 30, 1998.
The growth in assets was primarily in loans, partly offset by a decrease in
securities. Such loan growth was funded by borrowed funds and the decrease in
securities.

                                       36
<PAGE>

SECURITIES

         Total securities decreased $4.9 million from $13.6 million at September
30, 1998, to $8.7 million at September 30, 1999. The decrease was due to
maturities and principal payments being reinvested in higher yielding loans.

LOANS

         Net loans increased $14.8 million, or 15.0%, from $98.5 million at
September 30, 1998 to $113.3 million at September 30, 1999. The growth in loans
was primarily in one- to four-family real estate loans, which increased $11.9
million, or 13.6%, during the period. Much of the growth occurred during the
first two quarters of 1999 resulting from customers refinancing their higher
rate loans during a lower interest rate period. As interest rates have increased
since March 31, 1999, growth has slowed. Changes in other types of loans were
not significant.

DEPOSITS

         Total deposits decreased $2.2 million, or 2.8%, from $79.1 million at
September 30, 1998 to $76.8 million at September 30, 1999. The decrease
primarily resulted from a decrease in certificates of deposit of $2.4 million.

BORROWINGS

         Borrowings from the FHLB totaled $25.0 million at September 30, 1999,
an increase of $0.6 million from September 30, 1998. Management has increased
its use of FHLB advances as an alternative source of funds in order to continue
to meet loan demand and greater leverage the capital of the Company.

EQUITY

         Shareholders' equity totaled $25.5 million at September 30, 1999, a
decrease of $0.6 million from $26.1 million at September 30, 1998. Equity as a
percentage of assets decreased from 22.5% at September 30, 1998 to 19.9% at
September 30, 1999. The decrease was primarily the result of the overall growth
of the Company and the purchase of 117,799 shares of its common stock on the
secondary market.


LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary sources of funds are deposits, principal and
interest payments on loans and securities, and proceeds from the maturation of
securities. While maturities and scheduled amortization of loans and securities
are predictable sources of funds, deposit flows and mortgage prepayments are
greatly influenced by general interest rates, economic conditions and
competition. The Company's bank subsidiary maintains a liquidity ratio above the
regulatory requirement. This requirement, which may be varied at the direction
of the OTS depending upon economic conditions and deposit flows, is based upon a
percentage of deposits and short-term borrowings. The required ratio is
currently 4%. The Bank's average regulatory liquidity ratios were 12.2% and
16.2%, for the years ended September 30, 1999 and 1998, respectively. The Bank's
regulatory liquidity ratio increased immediately after the consummation of the
Conversion because the bulk of the net conversion proceeds was initially
invested in short-term investment securities and subsequently decreased as the
proceeds were used to fund loan growth.

         The Company's cash flows are comprised of three primary
classifications: cash flows from operating activities, investing activities and
financing activities. Cash flows provided by operating activities were $2.0
million, $1.9 million and $1.6 million for the years ended September 30, 1999,
1998 and 1997, respectively. Net cash from investing activities consisted
primarily of disbursements for loan originations and the purchase of investments
and mortgage-backed securities, offset by principal collections on loans and
proceeds from maturation of investments and paydowns on mortgage-backed
securities. Net cash from financing activities consisted primarily of activity
in deposit accounts, increases in FHLB advances, cash dividends paid and
treasury stock transactions. The net decrease in deposits was


                                       37
<PAGE>

$2.2 million for the fiscal year ended September 30, 1999, while there was a net
increase in deposits of $1.7 million for the fiscal year ended September 30,
1998 and a net decrease in deposits of $2.5 million for the fiscal year ended
September 30, 1997.

         At September 30, 1999, the Company's bank subsidiary exceeded all of
its regulatory capital requirements with a tangible capital level of $12.3
million, or 9.6%, of adjusted total assets, which is above the required level of
$1.9 million, or 1.5%; core capital of $12.3 million, or 9.6%, of adjusted total
assets, which is above the required level of $3.8 million, or 3.0%; and
risk-based capital of $12.4 million, or 18.0%, of risk-weighted assets, which is
above the required level of $5.5 million, or 8.0%.

         The Bank's most liquid assets are cash and short-term investments. The
levels of these assets are dependent on the Bank's operating, financing, lending
and investing activities during any given period. At September 30, 1999, cash
and short-term investments totaled $3.7 million. The Bank has other sources of
liquidity if a need for additional funds arises, including securities maturing
within one year and the repayment of loans. The Bank may also utilize FHLB
advances or the sale of securities available for sale as a source of funds. At
September 30, 1999, the Bank had $25.0 million of advances outstanding from the
FHLB and $1.9 million of mortgage-backed securities available for sale.

         At September 30, 1999, the Bank had outstanding commitments to
originate mortgage loans of $2.9 million compared to $5.1 million at September
30, 1998. The Bank anticipates that it will have sufficient funds available to
meet its current loan origination commitments. Certificate accounts which are
scheduled to mature in less than one year from September 30, 1999 totaled $40.7
million. The Bank expects that a substantial portion of the maturing certificate
accounts will be retained by the Bank at maturity. However, if a substantial
portion of these deposits are not retained, the Bank may utilize Federal Home
Loan Bank advances, or raise interest rates on deposits to attract new accounts,
which may result in higher levels of interest expense.

IMPACT OF INFLATION AND CHANGING PRICES

         The Financial Statements and Notes thereto presented herein have been
prepared in accordance with GAAP, which require the measurement of financial
position and operating results in terms of historical dollar amounts without
considering the changes in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of the
Bank's operations. Unlike industrial companies, nearly all of the assets and
liabilities of the Bank are monetary in nature. As a result, interest rates have
a greater impact on the Bank's performance than do the effects of general levels
of inflation. Interest rates do not necessarily move in the same direction or to
the same extent as the price of goods and services.

IMPACT OF NEW ACCOUNTING STANDARDS

         Recent pronouncements by the Financial Accounting Standards Board
("FASB") will have an impact on financial statement issued in subsequent
periods. Set forth below are summaries of such pronouncements.

         SFAS No. 125, "ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL
ASSETS AND EXTINGUISHMENTS OF LIABILITIES," was issued in 1996. It revises the
accounting for transfers of financial assets, such as loans and securities, and
for distinguishing between sales and secured borrowings. SFAS No. 125 was
originally effective for some transactions occurring after December 31, 1996,
and was effective for other in 1998. SFAS No. 127, "DEFERRAL OF THE EFFECTIVE
DATE OF CERTAIN PROVISIONS OF FASB STATEMENT NO. 125," which was issued in
December 1996, defers for one year the effective date of provisions relating to
securities lending, repurchase agreements and other similar transactions. The
impact of partial adoption in 1997 was not material to the 1997 financial
statements and the impact of the complete adoption in 1998 was not material to
the 1998 financial statements.

         In June 1997, the FASB issued SFAS No. 130, "REPORTING COMPREHENSIVE
INCOME." This Statement establishes standards for reporting and displaying of
comprehensive income and its components (revenue, expenses, gains and losses) in
a full set of general-purpose financial statements. This Statement requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement


                                       38
<PAGE>

that is displayed with the same prominence as other financial statements. Income
tax effects must also be shown. This Statement was effective for fiscal years
beginning after December 15, 1997 and was adopted by the Company during the
fiscal year ended September 30, 1999.

         In June 1997, the FASB issued SFAS No. 131, "DISCLOSURES ABOUT SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION." SFAS No. 131 establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
This statement was effective for financial statements for periods beginning
after December 15, 1997. The Company has determined that no additional
disclosures are required under this Statement.

         In June 1998, the FASB issued SFAS No. 133, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES." SFAS No. 133 addresses the accounting for
derivative instruments and certain derivative instruments embedded in other
contracts, and hedging activities. The statement standardizes the accounting for
derivative instruments by requiring that an entity recognize those items as
assets or liabilities in the statement of financial position and measure them at
fair value. This statement is effective for all fiscal years beginning after
June 15, 2000.

YEAR 2000

         The Year 2000 issue is the result of many computer programs being
written using two digits rather than four to define an applicable year. The
Company's hardware, data-driven automated equipment, or computer programs that
have date sensitive software, may recognize a date using "00"as the year 1900
rather than the Year 2000. This faulty recognition could result in a system
failure or miscalculation causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in normal
business activities.

         The Company has conducted a comprehensive review of all of its
information technology and noninformation technology systems to identify
potential Year 2000 problems and in the process has identified mission critical
applications. An application, system or vendor is considered mission critical if
it is vital to the successful continuance of core business activity or is an
application that interfaces with a mission critical system. The Company
evaluated its Year 2000 preparedness based on the guidelines issued by the
Federal Financial Institutions Examination Council (FFIEC) outline. The
following five phases were identified by the FFIEC: Awareness, Assessment,
Renovation, Validation and Implementation. All of these phases had been
completed as of June 30, 1999. Year 2000 compliance testing for the Company's
primary outsourced information systems application was completed during August
1998. Based on this testing, management believes that this system is Year 2000
ready. However, management believes it is not possible to predict potential
complications as a result of Year 2000 issues nor estimate the potential lost
revenue.

         The Company has developed and approved their contingency plan. Pursuant
to the contingency plan a paper copy of all information for all mission critical
operations will be made prior to December 31, 1999. Paper copies will be made at
two different times to insure that any Year 2000 related problems that arise do
not interfere with the production or accuracy of the information. This paper
accounting will allow the Company to manually post any transactions made to a
customer's account during any, "down" time. Mission critical operations are
defined as savings deposit and withdrawals, loan payments, cash ordering with
the Federal Reserve Bank, and maintaining our settlement account. The back up
plan was successfully tested in September, 1999. The company currently has spent
over $65,000 related to Year 2000 issues. At this time, management does not
believe that there will be a significant negative impact to earnings due to this
issue. The Year 2000 problem could have a material impact on the operation of
the Company if not properly addressed, but management anticipates that the
issues or problems arising from or related to the Year 2000 will be resolved and
thus will not have a significant impact on the Company's delivery of products
and services, or its core operations. The Bank continues to work on informing
their customers of the Bank's preparedness. An awareness campaign was held in
the months of July and October re-affirming the Bank is prepared for the Year
2000. In addition, the Bank intends to maintain additional cash reserves during
the latter part of 1999 to meet any increased customer needs.

                                       39
<PAGE>

FORWARD LOOKING STATEMENTS

         Certain statements contained in this report that are not historical
facts are forward looking statements that are subject to certain risks and
uncertainties. When used herein, the terms "anticipates", "plans", "expects",
"believes", and similar expressions as they relate to the Company or its
management are intended to identify such forward looking statements. The
Company's actual results, performance or achievements may materially differ from
those expressed or implied in the forward looking statements. Risks and
uncertainties that could cause or contribute to such material differences
include, but are not limited to, general economic conditions, interest rate
environment, competitive conditions in the financial services industry, changes
in law, unforeseen business risks related to Year 2000 computer systems issues,
government policies and regulations, and rapidly changing technology affecting
financial services.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company, like other financial institutions, is subject to direct
and indirect market risk. Direct market risk exists from changes in interest
rates. To the extent that interest-bearing assets and interest-bearing
liabilities mature at different intervals, changes in market interest rates can
result in increases or decreases in net interest income. This is also known as
interest rate risk. Indirect market risk exists to the extent that the Company
has a concentration of loans secured by similar assets and the market for those
assets deteriorates. The Company's primary risk of decline in the value of
collateral relates to the fact that a substantial portion of the Company's loans
are secured by residential real estate located within the local market area of
the Company. The Company manages the risk of decline in the value of the
collateral by requiring minimum loan to value ratios for the real estate loans
it originates. In addition, the Company always gives consideration to the credit
worthiness of the borrower in addition to depending on the value of the
collateral when underwriting loans. Direct exposure to interest rate risk is
more significant than indirect market risk and the Company monitors this risk
through a periodic quantitative analysis.

         The principal objective of the Bank's interest rate risk management
function is to evaluate the interest rate risk included in certain balance sheet
accounts, determine the level of risk appropriate given the Bank's business
focus, operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with Board approved guidelines.
Through such management, the Bank seeks to reduce the vulnerability of its
operations to changes in interest rates. The Bank monitors its interest rate
risk as such risk relates to its operating strategies. The Bank's Board of
Directors reviews on a quarterly basis the Bank's asset/liability position,
including simulations of the effect on the Bank's capital of various interest
rate scenarios.

         NET PORTFOLIO VALUE. The Bank's interest rate sensitivity is monitored
by management through the use of a model which estimates the change in net
portfolio value ("NPV") over a range of interest rate scenarios. NPV is the
present value of expected cash flows from assets, liabilities and off-balance
sheet contracts. An NPV Ratio, in any interest rate scenario, is defined as the
NPV in that scenario divided by the market value of assets in the same scenario.
The Sensitivity Measure is the decline in the NPV Ratio, in basis points, caused
by a 200 basis point (one basis point equals 0.01%) increase or decrease in
rates, whichever produces a larger decline. The higher an institution's
Sensitivity Measure is, the greater its exposure to interest rate risk is
considered to be. The Bank utilizes a market value model prepared by the OTS
(the "OTS NPV model"), which is prepared quarterly, based on the Bank's
quarterly Thrift Financial Reports filed with the OTS. The OTS NPV model
measures the Bank's interest rate risk by approximating the Bank's NPV under
various market interest rate scenarios which range from a 300 basis point
increase to a 300 basis point decrease in market interest rates.

         The following table shows the NPV and projected change in the NPV of
the Bank at September 30, 1999 assuming an instantaneous and sustained change in
market interest rates of 100, 200 and 300 basis points, as calculated by the
OTS. The table indicates that the structure of the Bank's assets and liabilities
would result in a decline in the Bank's NPV in a rising rate environment.
Specifically, the table indicates that, at September 30, 1999, the Bank's NPV
was $15.1 million (or 11.6% of the market value of portfolio assets) and that,
based upon the assumptions utilized, an immediate increase in market interest
rates of 200 basis points would result in a $5.8 million or 38% decline in the
Bank's NPV and would result in a 399 basis point or 34.4% decline in the Bank's
NPV ratio to 7.6%.

                                       40
<PAGE>

<TABLE>
<CAPTION>

1999                                            NET PORTFOLIO VALUE                      NPV AS % OF PORTFOLIO
                                                                                            VALUE OF ASSETS
                                        ------------------------------------         -------------------------------
                                              (DOLLARS IN THOUSANDS)
  CHANGE             $ AMOUNT             $ CHANGE              % CHANGE                NPV             % CHANGE
 IN RATES                                                                              RATIO
------------       --------------       --------------        --------------         -----------     ---------------
<S>                       <C>                <C>                      <C>                 <C>                 <C>
   300 bp                 $6,310             $(8,768)                 (58)%               5.34%               54.1%
   200 bp                  9,328              (5,750)                  (38)                7.64                34.4
   100 bp                 12,349              (2,730)                  (18)                9.81                15.7
  Static                  15,079                                                          11.64
 (100) bp                 16,934                1,856                    12               12.79                 9.9
 (200) bp                 17,829                2,750                    18               13.28                14.1
 (300) bp                 18,475                3,396                    23               13.59                16.8


1998                                            NET PORTFOLIO VALUE                      NPV AS % OF PORTFOLIO
                                                                                            VALUE OF ASSETS
                                        ------------------------------------         -------------------------------
                                              (DOLLARS IN THOUSANDS)
  CHANGE             $ AMOUNT             $ CHANGE              % CHANGE                NPV             % CHANGE
 IN RATES                                                                              RATIO
------------       --------------       --------------        --------------         -----------     ---------------

   300 bp                 $7,907             $(7,404)                 (48)%               7.13%               44.3%
   200 bp                 10,805              (4,506)                  (29)                9.46                26.2
   100 bp                 13,405              (1,906)                  (12)               11.43                10.8
  Static                  15,311                                                          12.81
 (100) bp                 16,271                  959                     6               13.46                 5.1
 (200) bp                 17,205                1,894                    12               14.08                 9.9
 (300) bp                 18,547                3,235                    21               14.97                16.9
</TABLE>


         Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in NPV requires the making of
certain assumptions that may tend to oversimplify the manner in which actual
yields and costs respond to changes in market interest rates. First, the models
assume that the composition of the Bank's interest sensitive assets and
liabilities existing at the beginning of a period remains constant over the
period being measured. Second, the models assume that a particular change in
interest rates is reflected uniformly across the yield curve regardless of the
duration to maturity or repricing of specific assets and liabilities. Third, the
models do not take into account the impact of the Bank's business or strategic
plans on the structure of interest-earning assets and interest-bearing
liabilities. Accordingly, although the NPV measurement provides an indication of
the Bank's interest rate risk exposure at a particular point in time, such
measurement is not intended to and does not provide a precise forecast of the
effect of changes in market interest rates on the Bank's net interest income and
will differ from actual results. The results of this modeling are monitored by
management and presented to the Board of Directors quarterly.

                                       41
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





                                       42
<PAGE>


                                          DELPHOS CITIZENS BANCORP, INC.

                                                   Delphos, Ohio

                                         CONSOLIDATED FINANCIAL STATEMENTS
                                         September 30, 1999, 1998 and 1997





                                                     CONTENTS




<TABLE>
<CAPTION>
<S>                                                                                                              <C>
REPORT OF INDEPENDENT AUDITORS..............................................................................     43


FINANCIAL STATEMENTS

     Consolidated Statements of Financial Condition.........................................................     44

     Consolidated Statements of Income......................................................................     45

     Consolidated Statements of Comprehensive Income........................................................     46

     Consolidated Statements of Shareholders' Equity........................................................     47

     Consolidated Statements of Cash Flows..................................................................     51

     Notes to Consolidated Financial Statements.............................................................     54
</TABLE>

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


                                       43
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
Delphos Citizens Bancorp, Inc.
Delphos, Ohio


We have audited the accompanying consolidated statements of financial condition
of Delphos Citizens Bancorp, Inc. as of September 30, 1999 and 1998, and the
related consolidated statements of income, comprehensive income, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended September 30, 1999. These financial statements are the responsibility of
the Company'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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Delphos Citizens
Bancorp, Inc. as of September 30, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1999, in conformity with generally accepted accounting principles.



                                                /s/Crowe, Chizek and Company LLP
                                                Crowe, Chizek and Company LLP

Columbus, Ohio
October 29, 1999

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


                                       44
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           September 30, 1999 and 1998

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------


                                                                                     1999                1998
                                                                                     ----                ----
<S>                                                                             <C>                <C>
ASSETS
     Cash and amounts due from depository institutions                          $     2,853,171    $      1,193,373
     Interest-bearing deposits in other financial institutions                          847,106             424,953
                                                                                ---------------    ----------------
         Total cash and cash equivalents                                              3,700,277           1,618,326
     Securities available for sale                                                    1,864,283           4,600,317
     Securities held to maturity (Estimated fair value
       of $6,932,862 in 1999 and $9,368,774 in 1998)                                  6,804,708           9,004,455
     Federal Home Loan Bank stock                                                     1,250,000             921,600
     Loans, net                                                                     113,272,857          98,485,733
     Premises and equipment, net                                                        662,283             656,229
     Accrued interest receivable                                                        573,048             505,510
     Other assets                                                                       100,110             108,615
                                                                                ---------------    ----------------

         Total assets                                                           $   128,227,566    $    115,900,785
                                                                                ===============    ================

LIABILITIES
     Deposits
         Demand and NOW accounts                                                $     5,452,072    $      5,454,642
         Money market accounts                                                        5,177,858           5,329,269
         Savings and club                                                             8,898,411           8,552,628
         Certificates of deposit                                                     57,312,249          59,737,852
                                                                                ---------------    ----------------
              Total deposits                                                         76,840,590          79,074,391
     Federal Home Loan Bank advances                                                 25,000,000          10,000,000
     Escrow accounts                                                                    306,750             266,287
     Accrued interest payable                                                            52,734              38,682
     Other liabilities                                                                  540,085             461,527
                                                                                ---------------    ----------------
         Total liabilities                                                          102,740,159          89,840,887

SHAREHOLDERS' EQUITY
     Preferred Stock, no par value, 1,000,000 shares authorized,
       none outstanding
     Common stock, $.01 par value, 4,000,000 shares authorized,
       2,047,631 shares issued                                                           20,476              20,476
     Additional paid-in capital                                                      20,055,178          19,968,236
     Retained earnings                                                               15,458,050          14,166,061
     Treasury stock, at cost 409,439  shares in 1999
       and 291,640 shares in 1998                                                    (7,746,503)         (5,637,646)
     Unearned employee stock ownership plan shares                                   (1,271,197)         (1,367,136)
     Unearned recognition and retention plan shares                                    (995,176)         (1,087,120)
     Accumulated other comprehensive income                                             (33,421)             (2,973)
                                                                                ---------------    ----------------
         Total shareholders' equity                                                  25,487,407          26,059,898
                                                                                ---------------    ----------------

              Total liabilities and shareholders' equity                        $   128,227,566    $    115,900,785
                                                                                ===============    ================
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       45
<PAGE>


                         DELPHOS CITIZENS BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------


                                                                     1999              1998               1997
                                                                     ----              ----               ----
<S>                                                            <C>                <C>               <C>
INTEREST INCOME
     Loans, including fees                                     $    7,880,950     $    7,048,979    $     5,943,627
     Securities                                                       744,504          1,013,701          1,185,434
     FHLB stock dividends                                              68,230             62,495             56,309
     Interest-bearing deposits                                         49,676            158,662            452,155
                                                               --------------     --------------    ---------------
                                                                    8,743,360          8,283,837          7,637,525

INTEREST EXPENSE
     Deposits                                                       3,622,880          3,846,120         3,771,889
     FHLB advances                                                    861,185            194,214
                                                               --------------     --------------    ---------------
                                                                    4,484,065          4,040,334          3,771,889
                                                               --------------     --------------    ---------------

NET INTEREST INCOME                                                 4,259,295          4,243,503          3,865,636

Provision for loan losses                                              30,000             12,000             12,000
                                                               --------------     --------------    ---------------

NET INTEREST INCOME AFTER
  PROVISION FOR LOAN LOSSES                                         4,229,295          4,231,503          3,853,636
                                                               --------------     --------------    ---------------

NON-INTEREST INCOME
     Service charges and other fees                                   379,050            381,092            186,162
     Gain on sale of real estate owned                                  8,532                 --                 --
     Other income                                                      46,360             51,004             42,591
                                                               --------------     --------------    ---------------
                                                                      433,942            432,096            228,753

NON-INTEREST EXPENSE
     Compensation and benefits                                        981,175            938,888            953,502
     Occupancy expense                                                110,887             91,713             87,077
     Data processing services                                         208,267            175,430            120,668
     State franchise taxes                                            214,284            236,907            174,849
     Federal deposit insurance premiums                                52,510             52,005             74,379
     Other expenses                                                   456,823            431,847            459,741
                                                               --------------     --------------    ---------------
                                                                    2,023,946          1,926,790          1,870,216
                                                               --------------     --------------    ---------------

INCOME BEFORE INCOME TAX                                            2,639,291          2,736,809          2,212,173

Income tax expense                                                    936,700          1,084,678            686,150
                                                               --------------     --------------    ---------------

NET INCOME                                                     $    1,702,591     $    1,652,131    $     1,526,023
                                                               ==============     ==============    ===============

Earnings per common share
         Basic                                                 $         1.14     $          .97    $           .75
         Diluted                                               $         1.12     $          .95                .75
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       46
<PAGE>


                         DELPHOS CITIZENS BANCORP, INC.
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------


                                                                   1999               1998                1997
                                                                   ----               ----                ----
<S>                                                          <C>                      <C>           <C>
NET INCOME                                                   $    1,702,591           1,652,131     $     1,526,023

Other comprehensive income
     Unrealized holding gains (losses) on
       available for sale securities
       arising during the period                                    (46,134)             (4,730)             27,098
     Tax effect                                                      15,686               1,608              (9,213)
                                                             --------------      --------------     ---------------
         Other comprehensive income, net of tax                     (30,448)             (3,122)             17,885
                                                             --------------      --------------     ---------------

COMPREHENSIVE INCOME                                         $    1,672,143      $    1,649,009     $     1,543,908
                                                             ==============      ==============     ===============
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       47
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                 Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------

                                              Additional                                   Unearned       Unearned
                                    Common      Paid-in     Retained      Treasury           ESOP            RRP
                                     Stock      Capital     Earnings        Stock           Shares         Shares
                                     -----      -------     --------        -----           ------         ------
<S>                                <C>       <C>           <C>           <C>            <C>               <C>
Balance at October 1, 1996         $    --   $       --    $11,443,182   $       --     $         --      $         --

Net income for the year
  ended September 30, 1997                                   1,526,023

Proceeds from sale of stock,
  net of issuance costs             20,476    19,783,352

Shares purchased under
  employee stock ownership plan                                                             (1,630,970)

Commitment to release employee
  stock ownership plan shares                     71,355                                       167,894

Shares purchased under
  recognition and retention plan                                                                           (1,270,735)

Shares earned under
  recognition and retention plan                                                                               84,716

Purchase 87,936 shares
  of treasury stock at cost                                               (1,479,065)

Change in other
  comprehensive income
                                   -------   -----------   -----------   -----------    --------------    -----------

Balance at September 30, 1997      $20,476   $19,854,707   $12,969,205   $(1,479,065)   $   (1,463,076)   $(1,186,019)
                                   =======   ===========   ===========   ===========    ==============    ===========



<CAPTION>
------------------------------------------------------------
                                     Accumulated
                                        Other
                                    Comprehensive
                                       Income        Total
                                       ------        -----
<S>                                  <C>        <C>
Balance at October 1, 1996           $(17,736)  $ 11,425,446

Net income for the year
  ended September 30, 1997                         1,526,023

Proceeds from sale of stock,
  net of issuance costs                           19,803,828

Shares purchased under
  employee stock ownership plan                   (1,630,970)

Commitment to release employee
  stock ownership plan shares                        239,249

Shares purchased under
  recognition and retention plan                  (1,270,735)

Shares earned under
  recognition and retention plan                      84,716

Purchase 87,936 shares
  of treasury stock at cost                       (1,479,065)

Change in other
  comprehensive income                 17,885         17,885
                                     --------   ------------

Balance at September 30, 1997        $    149   $ 28,716,377
                                     ========   ============
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)


                                       48

<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)
                 Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                    Additional                                          Unearned       Unearned
                                        Common        Paid-in         Retained         Treasury           ESOP            RRP
                                         Stock        Capital         Earnings           Stock           Shares         Shares
                                         -----        -------         --------           -----           ------         ------

<S>                                   <C>          <C>             <C>              <C>             <C>                  <C>
Balance at September 30, 1997         $  20,476    $  19,854,707   $  12,969,205    $  (1,479,065)  $  (1,463,076)    $ (1,186,019)

Net income for the year
  ended September 30, 1998                                             1,652,131

Cash dividends - $.24 per share                                         (455,275)

Commitment to release employee
  stock ownership plan shares                             95,041                                           95,940

Shares purchased under
  recognition and retention plan                                                                                           (30,357)

Shares earned under
  recognition and retention plan                          18,488                                                           129,256

Purchase 203,704 shares
  of treasury stock at cost                                                            (4,158,581)

Change in other
  comprehensive income
                                      ---------    -------------   -------------    -------------   -------------    -------------

Balance at September 30, 1998         $  20,476    $  19,968,236   $  14,166,061    $  (5,637,646)  $  (1,367,136)     $(1,087,120)
                                      =========    =============   =============    =============   =============    =============

<CAPTION>

                                      --------------------------------
                                           Other
                                       Comprehensive
                                          Income           Total
                                          ------           -----

<S>                                       <C>             <C>
Balance at September 30, 1997          $       149     $  28,716,377

Net income for the year
  ended September 30, 1998                                 1,652,131

Cash dividends - $.24 per share                             (455,275)

Commitment to release employee
  stock ownership plan shares                                190,981

Shares purchased under
  recognition and retention plan                             (30,357)

Shares earned under
  recognition and retention plan                             147,744

Purchase 203,704 shares
  of treasury stock at cost                               (4,158,581)

Change in other
  comprehensive income                      (3,122)           (3,122)
                                       -----------   ---------------

Balance at September 30, 1998          $    (2,973)    $   26,059,89
                                       ============  ===============
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)



                                       49
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)
                 Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------

                                                    Additional                                          Unearned       Unearned
                                        Common        Paid-in         Retained         Treasury           ESOP            RRP
                                         Stock        Capital         Earnings           Stock           Shares         Shares
                                         -----        -------         --------           -----           ------         ------
<S>                                   <C>          <C>             <C>              <C>             <C>              <C>
Balance at September 30, 1998         $  20,476    $  19,968,236   $  14,166,061    $  (5,637,646)  $  (1,367,136)   $ (1,087,120)

Net income for the year
  ended September 30, 1998                                             1,702,591

Cash dividends - $.24 per share                                         (410,602)

Commitment to release employee
  stock ownership plan shares                             73,453                                           95,939

Shares purchased under
  recognition and retention plan                                                                                          (43,488)

Shares earned under
  recognition and retention plan                          13,489                                                          135,432

Purchase 117,799 shares
  of treasury stock at cost                                                            (2,108,857)

Change in other
  comprehensive income
                                      ---------    -------------   -------------    -------------   -------------    -------------

Balance at September 30, 1998         $  20,476    $  20,055,178   $  15,458,050    $  (7,746,503)  $  (1,271,197)   $   (995,176)
                                      =========    =============   =============    =============   =============    =============

<CAPTION>


                                      -----------------------------
                                         Accumulated
                                            Other
                                        Comprehensive
                                           Income           Total
                                           ------           -----
<S>                                    <C>             <C>
Balance at September 30, 1998          $      (2,973)  $  26,059,898

Net income for the year
  ended September 30, 1998                                 1,702,591

Cash dividends - $.24 per share                             (410,602)

Commitment to release employee
  stock ownership plan shares                                169,392

Shares purchased under
  recognition and retention plan                             (43,488)

Shares earned under
  recognition and retention plan                             148,921

Purchase 117,799 shares
  of treasury stock at cost                               (2,108,857)

Change in other
  comprehensive income                       (30,448)        (30,448)
                                       ------------      -----------

Balance at September 30, 1998          $     (33,421)    $25,487,407
                                        ============     ===========
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)


                                       50
<PAGE>
                         DELPHOS CITIZENS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                              Years Ended September 30,
                                                                   1999               1998                1997
                                                            ---------------     ---------------    ----------------
<S>                                                         <C>                 <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                             $     1,702,591     $     1,652,131      $    1,526,023
     Adjustments to reconcile net income to
       net cash provided by operating activities:
         Amortization of deferred loan
           origination fees and costs                               (16,319)            (20,042)             17,800
         Amortization of premiums and
           accretion of discounts, net                              (14,310)            (23,649)            (30,820)
         Provision for loan losses                                   30,000              12,000              12,000
         Depreciation                                                53,048              39,292              49,298
         Gain on sale of real estate owned                           (8,532)                 --                  --
         Federal Home Loan Bank stock dividends                     (68,000)            (46,900)            (56,100)
         Compensation expense on ESOP shares                        169,392             190,981             239,249
         Compensation expense on RRP shares                         135,432             129,256              84,716
         Deferred tax expense (benefit)                             (20,936)             22,339             126,133
         Net change in accrued interest receivable
           and other assets                                         (59,033)           (100,856)             62,970
         Net change in accrued interest payable
           and other liabilities                                    142,721              31,297            (438,101)
                                                            ---------------     ---------------    ----------------
              Net cash from operating activities                  2,046,054           1,881,998           1,593,168
                                                            ---------------     ---------------    ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Securities available for sale
         Purchases                                                       --          (4,698,308)                 --
         Proceeds from principal payments                         2,688,402             831,779              65,345
     Securities held to maturity
         Purchases                                                       --                  --          (4,985,938)
         Proceeds from maturities
           and principal payments                                 2,215,555           7,383,372           2,590,730
     Purchases of Federal Home Loan Bank stock                     (260,400)            (40,900)                 --
     Net increase in loans                                      (14,847,272)        (14,192,653)        (13,527,987)
     Proceeds from sale of real estate owned                         54,999                  --                  --
     Premises and equipment expenditures                            (59,102)            (34,818)            (25,247)
                                                            ---------------     ---------------    ----------------
         Net cash from investing activities                     (10,207,818)        (10,751,528)        (15,883,097)
                                                            ---------------     ---------------    ----------------
</TABLE>


--------------------------------------------------------------------------------
                                   (Continued)


                                       51
<PAGE>
                         DELPHOS CITIZENS BANCORP, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 Years ended September 30, 1999, 1998 and 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------

                                                                          Years Ended September 30,
                                                                 1999                1998                1997
                                                            ---------------     ---------------    ----------------
<S>                                                         <C>                 <C>                <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Net change in deposits                                 $    (2,233,801)    $     1,701,422    $     (2,457,866)
     Net change in escrow accounts                                   40,463              30,197              29,910
     Advances from FHLB                                          23,000,000          10,000,000           1,000,000
     Principal payment on FHLB advances                          (8,000,000)         (1,000,000)                 --
     Net proceeds from sale of stock                                     --                  --          18,172,858
     RRP shares purchased                                           (43,488)            (30,357)         (1,270,735)
     Cash dividends paid                                           (410,602)           (455,275)                 --
     Purchase of treasury stock                                  (2,108,857)         (4,158,581)         (1,479,065)
                                                            ---------------     ---------------    ----------------
         Net cash from financing activities                      10,243,715           6,087,406          13,995,102
                                                            ---------------     ---------------    ----------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                           2,081,951          (2,782,124)           (294,827)

Cash and cash equivalents at beginning
  of year                                                         1,618,326           4,400,450           4,695,277
                                                            ---------------     ---------------    ----------------


CASH AND CASH EQUIVALENTS AT END OF YEAR                    $     3,700,277     $     1,618,326    $      4,400,450
                                                            ===============     ===============    ================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash paid during the year for
         Interest                                           $     4,470,013     $     4,034,845    $      3,773,787
         Income taxes                                               936,702             890,000             502,000
     Noncash activities
         Transfers of loans to real estate owned                     46,467                  --                  --
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       52

<PAGE>



                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the
accounts of Delphos Citizens Bancorp, Inc. (Company) and its wholly owned
subsidiary Citizens Bank of Delphos (Bank). All significant intercompany
balances and transactions have been eliminated.

Nature of Operations: The Company is engaged in the business of banking with
operations conducted through its office located in Delphos, Ohio. The Company
originates and holds primarily residential and consumer loans to customers
throughout the Allen and Van Wert County area in Northwest Ohio, which generates
the majority of the Company's income. The Company's primary deposit products are
interest-bearing checking accounts and certificates of deposit. There are no
branch operations.

Business Segments: While the Company's chief decision-makers monitor the revenue
streams of the Company's various products and services, operations are managed
and financial performance is evaluated on a company-wide basis. Accordingly, all
of the Company's banking operations are considered by management to be
aggregated in one reportable segment.

Use of Estimates: To prepare financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future
results could differ. The allowance for loan losses, fair values of financial
instruments and status of contingencies are particularly subject to change.

Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, deposits with financial institutions and
overnight deposits. Net cash flows are reported for loan and deposit
transactions.

Securities: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported in other comprehensive income.
Trading securities are carried at fair value, with changes in unrealized holding
gains and losses included in income. Other securities such as Federal Home Loan
Bank stock is carried at cost.

Interest income includes amortization of purchase premiums and discounts. Gains
and losses are based on the amortized cost of the security sold. Securities are
written down to fair value when a decline in fair value is not temporary.

Loans: Loans are reported principal balances outstanding, net of deferred loan
fees, loans in process and costs and an allowance for loan losses.

Interest income is reported on the interest method and includes the amortization
of net deferred loan fees and costs over the loan term. Interest income is not
reported when full loan repayment is in doubt, typically when payments are past
due over 90 days (180 days for residential mortgages). Payments received on such
loans are reported as principal reductions.


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

                                   (Continued)
                                       53


<PAGE>


                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance for loan losses: The allowance for losses on loans is a valuation
allowance for probable credit losses, increased by the provision for loan losses
and decreased by charge-offs less recoveries. Management estimates the allowance
balance required based on past loan loss experience, known and inherent risks in
the portfolio, information about specific borrower situations and estimated
collateral values, economic conditions and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available
for any loan that, in management's judgment, should be charged-off.

Loan impairment is reported when full payment under the loan terms is not
expected. The carrying values of impaired loans are reduced to the present value
of expected future cash flows, or to the fair value of collateral if the loan is
collateral dependent, by allocating a portion of the allowance for loan losses
to such loans. If these allocations cause the allowance for loan losses to
require an increase, such increase is reported as part of the provision for loan
losses.

Loan impairment is evaluated in total for smaller-balance loans of similar
nature such as residential first mortgage loans secured by 1-4 family
residences, residential construction loans, home equity and other consumer
loans. Commercial loans and mortgage loans secured by other properties are
evaluated individually for impairment. Loans are evaluated for impairment when
payments are delayed, typically 90 days or more, or when the internal grading
system indicates a doubtful classification. The carrying values of impaired
loans are periodically adjusted to reflect cash payments, revised estimates of
future cash flows and increases in the present value of expected cash flows due
to the passage of time. Cash payments representing interest income are reported
as such. Other cash payments are reported as reductions in carrying value, while
increases or decreases due to changes in future payments and due to the passage
of time are reported as part of the provision for loan losses.

Real Estate Owned: Real estate acquired through or in lieu of loan foreclosure
is recorded at the lower of cost or fair value, less estimated costs to sell.
Any reduction in fair value is reflected in a valuation allowance account
established by a charge to income. Costs incurred to carry the real estate are
charged to expense.

Premises and Equipment: Premises and equipment are carried at cost less
accumulated depreciation. Depreciation expense is calculated using straight line
and accelerated methods over the estimated useful lives of the assets.
Maintenance and repairs are charged to expense as incurred and improvements are
capitalized.

Income Taxes: Income tax expense is the sum of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax bases of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.

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

                                   (Continued)
                                       54

<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Common Share: Basic earnings per share ("EPS") is based on net
income divided by the weighted average number of shares outstanding during the
period. Unreleased Employee Stock Ownership Plan ("ESOP") shares are not
considered to be outstanding shares for the purpose of determining the weighted
average number of shares used in the earnings per common share calculations.
Recognition and Retention Plan ("RRP") shares are considered outstanding as they
become vested. Diluted EPS includes the dilutive effect of stock options granted
and nonvested RRP shares using the treasury stock method.

The weighted average number of common shares outstanding for basic and diluted
earnings per share computations were as follows:

<TABLE>
<CAPTION>
                                                                              1999           1998           1997
                                                                              ----           ----           ----
<S>                                                                     <C>            <C>             <C>
NUMERATOR:
     Net income                                                         $  1,702,591   $  1,652,131    $  1,406,783

DENOMINATOR:
     Weighted-average common shares outstanding (Basic)                    1,499,868      1,710,894       1,873,242
     Effect of stock options                                                  14,354         29,448              --
     Effect of unearned RRP shares                                             5,190             --              --
                                                                        ------------   ------------    ------------
      Weighted-average common shares outstanding (Diluted)                 1,519,412      1,740,342       1,873,242
                                                                        ============   ============    ============
</TABLE>

Basic and diluted earnings per common share for the year ended September 30,
1997 were computed based on earnings from the period November 20, 1996
(conversion date), to September 30, 1997, divided by the weighted average number
of common shares outstanding for the period.

Stock Options: Expense for employee compensation under the stock option plan is
based on APB No. 25, with expense reported only if options are granted below
market price at grant date. Pro forma disclosures of net income and earnings per
share are provided as if the fair value method of SFAS No. 123 were used for
stock-based compensation. Any tax benefit realized by the Company from the
exercise of non-qualified stock options is added to paid-in capital.

Comprehensive Income: Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available for sale, which is also recognized as a separate
component shareholders' equity. The accounting standard that requires reporting
comprehensive income first applies for fiscal years beginning after December 15,
1997, with prior information restated to be comparable.

Dividend Restriction: Banking regulations require maintaining certain capital
levels and may limit the dividends paid by the Bank to the holding company or by
the holding company to shareholders.

Concentration of Credit Risk: The Bank grants loans to customers located
primarily in Allen and Van Wert counties. Although the Company has a diversified
loan portfolio, a substantial portion of its debtors' ability to repay their
loans is dependent on the economy in Allen and Van Wert counties.

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

                                   (Continued)
                                       55
<PAGE>


                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
described in a separate note. Fair value estimates involve uncertanties and
matters of significant judgement regarding interest rates, credit risk,
prepayments and other factors, especially in the absence of broad markets for
particular items. Changes in assumptions or in market conditions could
significantly affect the estimates.

Reclassifications: Certain previously reported consolidated financial statement
amounts have been reclassified to conform to the 1999 presentation.


NOTE 2 - SECURITIES

The amortized cost and fair values of securities were as follows:

<TABLE>
<CAPTION>
                                                                 Gross              Gross
                                             Amortized        Unrealized         Unrealized             Fair
                                               Cost              Gains              Loss                Value
                                             ---------        ----------         ----------             -----
<S>                                     <C>                 <C>               <C>                <C>
SEPTEMBER 30, 1999

Available for sale
     Ginnie Mae Certificates            $       612,628     $        1,928    $       (11,486)   $       603,070
     Fannie Mae Certificates                  1,302,293                 --            (41,080)         1,261,213
                                        ---------------     --------------    ---------------    ---------------

         Total                          $     1,914,921     $        1,928    $       (52,566)   $     1,864,283
                                        ===============     ==============    ===============    ===============

Held to maturity
     Ginnie Mae Certificates            $     6,751,603     $      156,048    $       (29,891)   $     6,877,760
     Freddie Mac Certificates                    53,105              1,997                 --             55,102
                                        ---------------     --------------    ---------------    ---------------

         Total                          $     6,804,708     $      158,045    $       (29,891)   $     6,932,862
                                        ===============     ==============    ===============    ===============

SEPTEMBER 30, 1998

Available for sale
     Ginnie Mae Certificates            $       690,113     $       21,140    $            --    $       711,253
     Fannie Mae Certificates                  3,914,708                 --            (25,644)         3,889,064
                                        ---------------     --------------    ----------------   ---------------

         Total                          $     4,604,821     $       21,140    $       (25,644)   $     4,600,317
                                        ===============     ==============    ===============    ===============

Held to maturity
     Ginnie Mae Certificates            $     8,896,968     $      359,445    $            --    $     9,256,413
     Freddie Mac Certificates                   107,487              4,874                 --            112,361
                                        ---------------     --------------    ---------------    ---------------

         Total                          $     9,004,455     $      364,319    $            --    $     9,368,774
                                        ===============     ==============    ===============    ===============
</TABLE>


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

                                   (Continued)
                                       56

<PAGE>


                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 2 - SECURITIES (Continued)

The amortized cost and fair value of securities held to maturity and available
for sale at September 30, 1999 by contractual maturity are shown below. Expected
maturities may differ from the contractual maturities because borrowers may have
the right to call or prepay the obligations with or without prepayment
penalties.

<TABLE>
<CAPTION>
                                                   Held to maturity                     Available for sale
                                             Amortized           Fair             Amortized             Fair
                                               Cost              Value              Cost                Value
                                             ---------          ------            ---------             -----
<S>                                     <C>                 <C>               <C>                <C>
Due in less than one year               $           780     $          780    $            --    $            --
Due from one to five years                       44,776             45,254                 --                 --
Due from five to ten years                        2,599              2,599                 --                 --
Due after ten years                           6,756,553          6,884,228          1,914,921          1,864,283
                                        ---------------     --------------    ---------------    ---------------

                                        $     6,804,708     $    6,932,861    $     1,914,921    $     1,864,283
                                        ===============     ==============    ===============    ===============
</TABLE>

There were no sales of securities during the years ended September 30, 1999,
1998 and 1997.


NOTE 3 - LOANS

Year end loans were as follows:

<TABLE>
<CAPTION>
                                                                                     1999                1998
                                                                                     ----                ----
<S>                                                                             <C>                <C>
Real estate loans
     One- to four-family                                                        $    99,540,099    $     87,613,784
     Multi-family                                                                     2,276,434           1,880,756
     Commercial real estate                                                           6,562,409           6,958,869
     Construction and land                                                            5,413,046           6,119,065
                                                                                ---------------    ----------------
                                                                                    113,791,988         102,572,474
Less:
     Mortgage loans in process                                                       (3,717,498)         (6,215,469)
     Net deferred loan origination fees                                                 (28,205)            (51,075)
                                                                                ---------------    ----------------
                                                                                    110,046,285          96,305,930

Consumer and other loans
     Manufactured homes                                                                 116,985             113,623
     Home equity loans                                                                2,326,539           1,061,317
     Unsecured loans                                                                    133,286             268,197
     Other consumer loans                                                               783,365             863,100
                                                                                ---------------    ----------------
                                                                                      3,360,175           2,306,237
Less:  Non-mortgage loans in process                                                       (110)             (8,074)
                                                                                ---------------    ----------------
                                                                                      3,360,065           2,298,163

Less:  Allowance for loan losses                                                       (133,493)           (118,360)
                                                                                ---------------    ----------------

                                                                                $   113,272,857    $     98,485,733
                                                                                ===============    ================

</TABLE>

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

                                   (Continued)
                                       57
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 3 - LOANS (Continued)

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                                                                            1999            1998           1997
                                                                            ----            ----           ----

<S>                                                                      <C>            <C>             <C>
Balance at beginning of period                                           $   118,360    $   106,360     $    94,360
Provision charged to income                                                   30,000         12,000          12,000
Charge-offs                                                                  (14,867)            --              --
                                                                         -----------    -----------     -----------

Balance at end of period                                                 $   133,493    $   118,360     $   106,360
                                                                         ===========    ===========     ===========

</TABLE>

As of and for the years ended September 30, 1999, 1998 and 1997, there were no
impaired loans.

Certain directors and executive officers of the Corporation and the Bank and
their related interests were loan customers of the Bank. A summary of activity
on related party loans during 1999 was as follows:


     Beginning balance - October 1, 1998                $    260,693
     New loans                                               123,000
     Repayments                                              (81,312)
                                                        ------------

     Ending balance - September 30, 1999                $    302,381
                                                        ============


NOTE 4 - PREMISES AND EQUIPMENT

Year end premises and equipment were as follows:
                                                    1999            1998
                                                    ----            ----

Land                                           $    175,654    $     175,654
Building and improvements                           643,190          643,190
Furniture and equipment                             321,807          355,519
                                               ------------     ------------
                                                  1,140,651        1,174,363

Accumulated depreciation                           (478,368)        (518,134)
                                               ------------     ------------

                                               $    662,283     $    656,229
                                               ============     ============


NOTE 5 - DEPOSITS

The aggregate amount of certificates of deposit with a minimum denomination of
$100,000 was $4,978,000 at September 30, 1999 and $5,975,000 at September 30,
1998. Deposits in excess of $100,000 are not insured by the FDIC.


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

                                   (Continued)
                                       58
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 5 - DEPOSITS (Continued)

At September 30, 1999, scheduled maturities of certificates of deposits were as
follows:

         Year Ending September 30:
                  2000                                      $    40,663,584
                  2001                                           13,910,027
                  2002                                            1,129,463
                  2003                                              558,005
                  2004                                            1,051,170
                                                            ---------------

                                                            $    57,312,249
                                                            ===============

NOTE 6 - FEDERAL HOME LOAN BANK ADVANCES

The Bank is a member of the Federal Home Loan Bank ("FHLB") of Cincinnati. As a
member, the Bank has the ability to obtain advances from the FHLB. The Bank had
variable rate borrowings totaling $15,000,000, with interest rates ranging from
5.15% to 5.77% at September 30, 1999 and $5,000,000, with interest rates ranging
from 5.60% to 5.83% at September 30, 1998. The Bank had fixed rate borrowings
totaling $10,000,000 at September 30, 1999, with interest rates ranging from
4.61% to 5.12% at September 30, 1999 and $5,000,000, with an interest rate of
5.12% at September 30, 1998.

The maximum month-end balance of FHLB advances outstanding was $25,000,000 in
1999 and $10,000,000 in 1998. Average balances of borrowings outstanding during
fiscal 1999 and 1998 were $16,307,000 and $3,773,000. Qualifying first mortgage
loans and FHLB stock owned by the Bank totaling $37,500,000 and $1,250,000 at
September 30, 1999 and $15,000,000 and $921,600 at September 30, 1998 were
pledged as collateral for FHLB advances.

Annual principal payments of $15,000,000 are due in fiscal 2000, $5,000,000 in
fiscal 2008 and $5,000,000 in fiscal 2009.


NOTE 7 - INCOME TAXES

Income taxes consisted of the following as of September 30:

<TABLE>
<CAPTION>
                                                        1999             1998              1997
                                                        ----             ----              ----

<S>                                                <C>              <C>               <C>
       Current                                     $     944,147    $   1,043,851     $     560,017
       Tax effect of vesting RRP shares                   13,489           18,488                --
       Deferred                                          (20,936)          22,339           126,133
                                                   -------------    -------------     -------------

                                                   $     936,700    $   1,084,678     $     686,150
                                                   =============    =============     =============

</TABLE>

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

                                   (Continued)
                                       59
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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



NOTE 7 - INCOME TAXES (Continued)

The sources of year-end gross deferred tax assets and liabilities were as
follows:

<TABLE>
<CAPTION>
                                                                         1999             1998
                                                                         ----             ----
<S>                                                                <C>               <C>
      Deferred tax assets
          Deferred loan fees                                       $       4,283     $       5,732
          Non-accrual interest                                             4,531             7,112
          ESOP expense                                                    24,465            24,465
          Recognition and retention plan                                  14,299            14,299
          Unrealized loss on securities available for sale                17,217             1,532
                                                                   -------------     -------------
                                                                          64,795            53,140
      Deferred tax liabilities
          Bad debt deduction                                            (160,433)         (206,743)
          FHLB stock dividends                                          (187,340)         (164,220)
          Depreciation expense                                            (6,046)           (7,822)
                                                                   -------------     -------------
                                                                        (353,819)         (378,785)
                                                                   -------------     -------------
          Net deferred tax liability                               $    (289,024)    $    (325,645)
                                                                   =============-    =============
</TABLE>

A reconciliation of the financial statement income tax expense and the amounts
computed by using the statutory rate follows:

<TABLE>
<CAPTION>
                                                               1999             1998              1997
                                                               ----             ----              ----

<S>                                                       <C>              <C>               <C>
         Income tax computed at the
           statutory rate                                 $     897,359    $     930,515     $     752,139
         Tax effect of other items                               39,341          154,163           (65,898)
                                                          -------------    -------------     -------------

                                                          $     936,700    $   1,084,678     $     686,150
                                                          =============    =============     =============


         Statutory tax rate                                        34.0%            34.0%             34.0%
                                                          =============    =============     =============
         Effective tax rate                                        35.5%            39.6%             31.0%
                                                          =============    =============     =============
</TABLE>

Prior to enactment of legislation discussed below, thrifts which met certain
test relating to the composition of assets had been permitted to establish
reserves for bad debts and to make annual additions thereto which could, within
specified formula limits, be taken as a deduction in computing taxable income
for federal income tax purposes. The amount of the bad debt reserve deduction
for "nonqualifying loans" was computed under the experience method. The amount
of bad debt reserve deduction for "qualifying real property loans" could be
computed under either the experience method or the percentage of taxable income
method, based on an annual election.


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

                                   (Continued)
                                       60
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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



NOTE 7 - INCOME TAXES (Continued)

In August 1996, legislation was enacted that repeals the percentage of taxable
income method of accounting used by many thrifts to calculate their bad debt
reserve for federal income tax purposes. As a result, thrifts such as the Bank
must recapture that portion of the reserve that exceeds the amount that could
have been taken under the experience method for tax years beginning after
December 31, 1987. The legislation also requires thrifts to account for bad
debts for federal income tax purposes on the same basis as commercial banks for
tax years beginning after December 31, 1995. The recapture will occur over a
six-year period, the commencement of which will be delayed until the first
taxable year beginning after December 31, 1997, provided the institution meets
certain residential lending requirements. At September 30, 1999 and 1998, the
Bank had $605,357 and $726,429 in bad debt reserves subject to recapture for
federal income tax purposes. The deferred tax liability related to the recapture
has been previously established. In fiscal 1999, $121,072 bad debt reserves were
recaptured.

Retained earnings at September 30, 1999 and 1998, includes approximately
$1,860,000 for which no provision for federal income taxes has been made. This
amount represents the qualifying and nonqualifying tax bad debt reserve as of
December 31, 1987 which is the Company's base year for purposes of calculating
the bad debt deduction for tax purposes. The related amount of unrecognized
deferred tax liability was $631,000 at September 30, 1999 and 1998. If this
portion of retained earnings is used in the future for any purpose other than to
absorb bad debts, it will be added to future taxable income.


NOTE 8 - COMMITMENTS, OFF-BALANCE-SHEET RISK AND CONTINGENCIES

Various contingent liabilities are not reflected in the consolidated financial
statements, including claims and legal actions arising in the ordinary course of
business. In the opinion of management, after consultation with legal counsel,
the ultimate disposition of these matters is not expected to have a material
effect on financial condition or results of operations of the Corporation.

Some financial instruments are used in the normal course of business to meet
financing needs of customers. These financial instruments include commitments to
extend credit and standby letters of credit. These involve, to varying degrees,
credit risk more than the amounts reported in the financial statements.

Exposure to credit loss if the other party does not perform is represented by
the contractual amount for commitments to extend credit and standby letters of
credit. The same credit policies are used for commitments and conditional
obligations as are used for loans. The amount of collateral obtained, if deemed
necessary, on extension of credit is based on management's credit evaluation and
generally consists of residential or commercial real estate. Lines of credit are
primarily home equity lines collateralized by second mortgages on 1-4 family
residential real estate and commercial lines of credit collateralized by
business assets.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee.

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

                              (Continued)
                                                                             61.
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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


NOTE 8 - COMMITMENTS, OFF-BALANCE-SHEET RISK AND CONTINGENCIES (Continued)

As of September 30, 1999, the Company had commitments to make loans at market
rates of $2,945,000. Of these commitments, $688,000 had fixed rates ranging from
7.50% to 8.50%, and $2,257,000 had variable rates. The commitment period ranged
from 30 to 90 days. As of September 30, 1998, the Company had commitments to
make loans at market rates of $5,074,000. Since loan commitments may expire
without being used, the amount does not necessarily represent future cash
commitments.

At September 30, 1999 and 1998, compensating balances of $308,000 and $200,000
were required as deposits with the Federal Reserve. These balances do not earn
interest.

The Corporation and the Bank have entered into an employment agreement with the
executive officer of the Corporation and the Bank. The agreement provides for a
term of three years and a salary and performance review by the Board of
Directors not less than annually, as well as inclusion of the employee in any
formally established employee benefit, bonus, pension and profit-sharing plans
for which management personnel are eligible.


NOTE 9 - PROFIT SHARING

The Company provides a 401(k) profit sharing plan covering all eligible
employees. Employees are eligible to participate in the plan if they have been
employed by the Company for one-half year and have attained age twenty and
one-half. Employees can defer up to 10% of their compensation into the plan, not
to exceed. The Company can make a matching discretionary contribution equal to a
percentage of up to 6% of the employee's salary reduction. The Company may also
make special discretionary contributions equal to a percentage of the employee's
compensation. The contribution expense included in compensation and benefits was
$18,543, $5,474, and $13,365 for 1999, 1998 and 1997.


NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN

Effective December 31, 1996, the Company established an Employee Stock Ownership
Plan ("ESOP") for the benefit of employees 21 and older and who have completed
at least one year of service and 1,000 hours of work. Contributions under the
ESOP are conditioned upon the ESOP being qualified under Sections 401 and 501 of
the Internal Revenue Code of 1986, as amended (the "Code").

To fund the plan, the ESOP borrowed $1,630,970 from the company for the purposes
of purchasing 163,097 shares of stock at $10 per share in the conversion.
Principal and interest payments on the loan are due in annual installments which
began December 31, 1996, with the final payments of principal and interest being
due and payable at maturity on December 31, 2013. Interest is payable during the
term of the loan at a fixed rate of 8.25%. The loan is collateralized by the
shares of the Company's common stock purchased with the proceeds. As the Bank
periodically makes contributions to the ESOP to repay the loan, shares will be
allocated to participants on the basis of the ratio of each year's principal and
interest payments to the total of all principal and interest payments.

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

                              (Continued)
                                                                             62.
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997

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



NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN (Continued)

The shares pledged as collateral are reported as unearned ESOP shares in the
consolidated balance sheet. As shares are committed to be released from
collateral, the company reports compensation expense equal to the current market
price of the shares, and the shares become outstanding for earnings-per-share
computations. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings, while dividends on unallocated ESOP shares are recorded as a
reduction of debt. ESOP compensation was $169,392, $190,981 and $239,249 for
1999, 1998 and 1997. The ESOP shares at September 30, 1999 and 1998 were as
follows:

<TABLE>
<CAPTION>
                                                                               1999              1998
                                                                               ----              ----

<S>                                                                              <C>                <C>
Allocated shares                                                                 28,782             19,188
Shares committed to be released                                                   7,196              7,196
Unreleased shares                                                               127,119            136,713
                                                                         --------------     --------------
Total ESOP shares                                                               163,097            163,097
                                                                         ==============     ==============

Fair value of unreleased shares                                          $    2,161,023     $    2,204,497
                                                                         ==============     ==============
</TABLE>


NOTE 11 - STOCK OPTION AND INCENTIVE PLAN

In 1997, the shareholders approved a Stock Option plan reserving 203,871 shares
of common stock for the granting of options to certain officers and directors of
the Bank and Company. The option period expires 10 years from the date of grant.
Vesting of options granted to officers and directors is determined at the time
of the grant, generally four to five years after the date of the grant.

A summary of activity in the plan is as follows.

<TABLE>
<CAPTION>
                                                1999                    1998                         1997
                                      ------------------------  ------------------------  -------------------------
                                                      Weighted                  Weighted                  Weighted
                                                       Average                   Average                   Average
                                                      Exercise                  Exercise                  Exercise
                                        Shares          Price      Shares         Price      Shares         Price
                                        ------        --------     ------       --------     ------       --------
<S>                                       <C>        <C>            <C>         <C>                       <C>
Outstanding - beginning of year           117,225    $   14.29      112,128     $  14.00           --     $      --
Granted                                        --           --        5,097        20.75      112,128         14.00
Exercised                                      --           --           --           --           --            --
Forfeited                                      --           --           --           --           --            --
                                      -----------    ---------  -----------     --------  -----------     ---------
Outstanding - end of year                 117,225    $   14.29      117,225     $   14.29     112,128     $   14.00
                                      ===========    =========  ===========     ========= ===========     =========
Options exercisable at year end            46,125    $   14.19       22,426     $   14.00          --     $      --
                                      ===========    =========  ===========     ========= ===========     =========
Weighted average fair value of
  options granted during year                        $      --                  $    5.14                 $    3.83
                                                     =========                  =========                 =========
</TABLE>

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

                                   (Continued)
                                       63

<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------

NOTE 11 - STOCK OPTION AND INCENTIVE PLAN (Continued)

Options outstanding at year end 1999 were as follows.

<TABLE>
<CAPTION>

                                                                   Weighted Average
                                                                       Remaining
              Exercise                   Shares                        Contract                   Shares
                Price                  Outstanding                   Life (Months)              Exercisable
           --------------           -----------------           ----------------------       -----------------

          <S>                        <C>                          <C>                         <C>

             $   14.00                    112,128                         92                        44,851
                 20.75                      5,097                        104                         1,274
                                      -----------                      -----                    ----------
                                          117,225                         93                        46,125
                                      ===========                      =====                    ==========
</TABLE>

Had compensation cost for stock options been measured using SFAS No. 123, net
income and earnings per share would have been the pro forma amounts indicated
below. In future years, the proforma effect is expected to increase as
additional options are granted.
<TABLE>
<CAPTION>

                                                               1999             1998              1997
                                                               ----             ----              ----

<S>                                                    <C>                  <C>            <C>

Net income as reported                                    $   1,702,591    $   1,652,131     $   1,526,023
Pro forma net income                                          1,636,274        1,593,977         1,507,127
Basic earnings per share as reported                              1.14               .97               .75
Pro forma basic earnings per share                                1.09               .93               .74
Diluted earnings per share as reported                            1.12               .95               .75
Pro forma diluted earnings per share                              1.08               .92               .73
</TABLE>

The pro forma effects are computed using option-pricing models, using the
following assumptions as of the grant date.

                                           1999         1998             1997
                                           ----         ----             ----

Risk-free interest rate                     --           5.72%           6.67%
Expected life                               --        7 years          7 years
Expected volatility of stock price          --          37.52%           8.40%
Expected dividends                          --           1.50%           1.50%


NOTE 12 - RECOGNITION AND RETENTION PLAN

A Recognition and Retention Plan ("RRP") was approved by the shareholders of the
Company and the Board of Directors on May 28, 1997. The RRP is being used as a
means of providing directors and certain key employees of the Bank with an
ownership interest in the Company in a manner designed to reward and retain such
directors and key employees. The Company contributed $1,270,735 to enable the
RRP to purchase 81,549 shares in the open market during the year ended September
30, 1997. The Board granted 43,222 shares to directors, officers and employees
on May 28, 1997. The shares vest at a rate of 20% per year on the anniversary
date of the grant. The Board granted an additional 2,378 shares in 1998 and
those shares vest at a rate of 25% per year on the anniversary date of the
grant. Compensation expense, which is based on the cost of the shares, was
$135,432, $129,256 and $84,716 for 1999, 1998 and 1997. The unamortized unearned
compensation value of the RRP is shown as a reduction to shareholders' equity.
-------------------------------------------------------------------------------
                                  (Continued)


                                       64
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------


NOTE 13 - REGULATORY MATTERS

On November 20, 1996, the Bank converted from a mutual to stock savings and loan
association, the Bank established a liquidation account which was equal to its
total net worth as of the date of the latest balance sheet appearing in the
final conversion prospectus. The liquidation account will be maintained for the
benefit of eligible depositors who continue to maintain their accounts at the
Bank after the Conversion. The liquidation account will be reduced annually to
the extent that eligible depositors have reduced their qualifying deposits.
Subsequent increases will not restore an eligible account holder's interest in
the liquidation account. In the event of a complete liquidation, each eligible
depositor will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held. The Bank may not pay dividends that would reduce
shareholders' equity below the required liquidation account balance.

The Bank is subject to various regulatory capital requirements administered by
the federal regulatory agencies. Failure to meet minimum capital requirements
can initiate certain mandatory actions that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital 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 amounts and
classifications are also subject to qualitative judgments by the regulators
about the Bank's components, risk weightings and other factors. At September 30,
1999 and 1998, management believes the Bank is in compliance with all regulatory
capital requirements. Based upon the computed regulatory capital ratios, the
Bank is considered well capitalized under the Federal Deposit Insurance Act at
September 30, 1999 and 1998.

At September 30, 1999 and 1998, the Bank's actual capital levels (in thousands)
and minimum required levels were:

<TABLE>
<CAPTION>
                                                                                                 Minimum Required
                                                                   Minimum Required           To Be Well Capitalized
                                                                      For Capital             Under Prompt Corrective
                                               Actual              Adequacy Purposes            Action Regulations
                                        -----------------       ----------------------         --------------------
                                      Amount         Ratio      Amount           Ratio         Amount       Ratio
                                     -------         -----      -------        --------       --------     -------
<S>                                 <C>            <C>         <C>            <C>          <C>            <C>

1999
-----
Total capital
   (to risk weighted assets)        $    12,444       18.06%    $    5,512        8.00%     $     6,890    10.00%
Tier 1 (core) capital
   (to risk weighted assets)             12,311       17.87          2,756        4.00            4,134     6.00
Tier 1 (core) capital
   (to adjusted total assets)            12,311        9.60          3,848        3.00            6,413     5.00
Tangible capital
   (to adjusted total assets)            12,311        9.60          1,924        1.50              N/A      N/A

</TABLE>
-------------------------------------------------------------------------------
                                  (Continued)

                                       65
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------


NOTE 13 - REGULATORY MATTERS (Continued)

<TABLE>
<CAPTION>

                                                                                                 Minimum Required
                                                                   Minimum Required           To Be Well Capitalized
                                                                      For Capital             Under Prompt Corrective
                                               Actual              Adequacy Purposes            Action Regulations
                                   --------------------------  ------------------------        ----------------------
                                      Amount         Ratio      Amount           Ratio         Amount       Ratio
                                   ----------       ---------   -------         --------       -------      ------
<S>                                 <C>             <C>        <C>             <C>         <C>             <C>

1998
------
Total capital
   (to risk weighted assets)        $    12,485       20.83%    $    4,795        8.00%     $     5,994    10.00%
Tier 1 (core) capital
   (to risk weighted assets)             12,367       20.63          2,397        4.00            3,596     6.00
Tier 1 (core) capital
   (to adjusted total assets)            12,367       10.67          3,477        3.00            5,795     5.00
Tangible capital
   (to adjusted total assets)            12,367       10.67          1,738        1.50              N/A     N/A
</TABLE>


As of September 30, 1999, 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 risk-based, Tier 1 risk based and Tier 1 leverage
ratios as set forth in the table. No conditions or events have occurred
subsequent to September 30, 1999 that management believes would change the
Bank's capital category.

Federal regulations limit all capital distributions, including cash dividends,
by savings banks. The regulation establishes a tiered system of restrictions,
with the greatest flexibility afforded to thrifts which are both
well-capitalized and given favorable qualitative examination ratings.


NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values and estimated fair values of financial instruments at
year-end were:

<TABLE>
<CAPTION>


                                                          1999                                1998
                                               -------------------------           -----------------------------
                                                               Estimated                              Estimated
                                               Carrying          Fair             Carrying              Fair
                                                 Value           Value              Value               Value
                                              ---------       ---------          ---------           -----------
<S>                                     <C>                  <C>             <C>                <C>

FINANCIAL ASSETS
     Cash and cash equivalents          $     3,700,277     $    3,700,000    $     1,618,326    $     1,618,000
     Securities available for sale            1,864,283          1,864,000          4,600,317          4,600,000
     Securities held to maturity              6,804,708          6,933,000          9,004,455          9,369,000
     FHLB Stock                               1,250,000          1,250,000            921,600            922,000
     Loans, net                             113,272,857                            98,485,733         98,530,000
     Accrued interest receivable                573,048            573,000            505,510            506,000

</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                       66
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

<TABLE>
<CAPTION>


                                                          1999                                1998
                                              --------------------------        --------------------------------
                                                               Estimated                              Estimated
                                               Carrying          Fair             Carrying              Fair
                                                Value           Value              Value                Value
                                              ---------        --------          --------              --------
<S>                                           <C>              <C>              <C>                  <C>


FINANCIAL LIABILITIES
     Deposits                           $   (76,840,590)    $  (76,843,000)   $   (79,074,391)   $   (79,321,000)
     FHLB advances                          (25,000,000)       (24,712,000)       (10,000,000)       (10,000,000)
     Accrued interest payable                   (52,734)           (53,000)           (38,682)           (39,000)

</TABLE>


The following methods and assumptions were used to estimate fair values for
financial instruments. The carrying amount is considered to estimate fair value
for cash and short term instruments, demand deposits, short term borrowings,
accrued interest, variable rate loans or deposits that reprice frequently and
fully. The fair values of securities are based on quoted market prices or, if no
quotes are available, on the rate and term of the security and on information
about the issuer. For fixed rate loans or deposits and for variable rate loans
or deposits with infrequent repricing or repricing limits, the fair value is
estimated by discounted cash flow analysis using current market rates for the
estimated life and credit risk. Fair values for impaired loans are estimated
using discounted cash flow analyses or underlying collateral values, where
applicable. The fair value of debt is based on currently available rates for
similar financing. The fair value of off-balance-sheet items is based on the
fees or cost that would currently be charged to enter into or terminate such
arrangements and such amounts are not material.

While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that were the Company to have
disposed of such items at September 30, 1999 and 1998 the estimated fair values
would necessarily have been achieved at that date, since market values may
differ depending on various circumstances. The estimated fair values at
September 30, 1999 and 1998 should not necessarily be considered to apply at
subsequent dates.

Other assets and liabilities of the Company may have value, but are not included
in the above disclosures, such as property and equipment. Also, nonfinancial
instruments typically not recognized in these financial statements nevertheless
may have value, but are not included in the above disclosures. These include,
among other items, the estimated earnings power of core deposit accounts, the
earnings potential of loan servicing rights, the value of a trained work force,
customer goodwill and similar items.

--------------------------------------------------------------------------------
                                  (Continued)

                                       67
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------


NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of the Company is as follows:

                            Condensed Balance Sheets
                           September 30, 1999 and 1998
<TABLE>
<CAPTION>


                                                          1999                 1998
                                                          ----                 ----
 <S>                                                <C>                  <C>

  ASSETS
  Cash and due from banks                           $    11,740,735    $     12,130,709
  Investment in subsidiary                               12,293,855          12,366,331
  Loan receivable from ESOP                               1,343,152           1,439,091
  Accrued interest receivable and other assets              109,665             123,767
                                                    ---------------    ----------------

       Total assets                                 $    25,487,407    $     26,059,898
                                                    ===============    ================


  Total shareholders' equity                        $    25,487,407    $     26,059,898
                                                    ===============    ================
</TABLE>



                         Condensed Statements of Income
                   Years Ended September 30, 1999 and 1998 and
                         Period Ended September 30, 1997
<TABLE>
<CAPTION>


                                                                      1999              1998               1997
                                                                      ----              ----               ----
<S>                                                          <C>                  <C>             <C>

INTEREST AND DIVIDEND INCOME
     Dividends from subsidiary bank                            $    2,000,000     $    2,500,000    $     7,000,000
     Deposits in subsidiary bank                                       39,263            110,524            100,492
     Securities                                                            --             69,486            185,322
     Loan to ESOP                                                     112,789            165,581            109,931
                                                               --------------     --------------    ---------------
                                                                    2,152,052          2,845,591          7,395,745

Other expenses                                                         91,420             95,467             30,723
                                                               --------------     --------------    ---------------

INCOME BEFORE TAXES AND EQUITY IN UNDISTRIBUTED
  EARNINGS OF SUBSIDIARY                                            2,060,632          2,750,124          7,365,022

Income tax expense                                                     22,700            179,845             30,000
                                                               --------------     --------------    ---------------

INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF
  SUBSIDIARY                                                        2,037,932          2,570,279          7,335,022

Equity in undistributed earnings of
  (excess distribution from) subsidiary                              (335,341)          (918,148)        (5,928,239)
                                                               --------------     --------------    ---------------

NET INCOME                                                     $    1,702,591     $    1,652,131    $     1,406,783
                                                               ==============     ==============    ===============
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)


                                       68
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------


NOTE 15 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)

                                        Condensed Statements of Cash Flows
                                    Years Ended September 30, 1999 and 1998 and
                                          Period Ended September 30, 1997
<TABLE>



<S>                                                          <C>                <C>                <C>
                                                                      1999               1998              1997
                                                                      ----               ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                    $    1,702,591     $    1,652,131    $      1,406,783
Adjustments to reconcile net income to cash
  provided by operations:
     Equity in undistributed income of
       (excess distribution from) subsidiary                         335,341            918,149           5,928,239
     Other                                                            39,102             85,940            (174,925)
                                                              --------------     --------------    ----------------
         Net cash from operating activities                        2,077,034          2,656,220           7,160,097

CASH FLOWS FROM INVESTING ACTIVITIES
Securities held to maturity
     Purchases                                                            --                 --          (4,985,938)
     Proceeds from maturities                                             --          5,000,000                  --
Net change in receivable from subsidiary                                  --          1,270,734                  --
Net change in loan to ESOP                                            95,939          7,095,940          (8,535,031)
Injection of capital into subsidiary                                      --                 --          (8,310,158)
                                                              --------------     --------------    ----------------
     Net cash from investing activities                               95,939         13,366,674         (21,831,127)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of stock                                           --                 --          18,172,858
Cash dividends paid                                                 (410,602)          (455,275)                 --
RRP shares purchased                                                 (43,488)           (30,357)         (1,270,735)
Purchase of treasury stock                                        (2,108,857)        (4,158,581)         (1,479,065)
                                                              --------------     --------------    ----------------
     Net cash from financing activities                           (2,562,947)        (4,644,213)         15,423,058
                                                              --------------     --------------    ----------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                             (389,974)        11,378,681             752,028

Cash and cash equivalents at beginning of year                    12,130,709            752,028                  --
                                                              --------------     --------------    ----------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                      $   11,740,735     $   12,130,709    $        752,028
                                                              ==============     ==============    ================
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)

                                       69
<PAGE>

                         DELPHOS CITIZENS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 30, 1999, 1998 and 1997
-------------------------------------------------------------------------------


NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a consolidated summary of quarterly information:

<TABLE>
<CAPTION>


                                                                       Quarter Ended
                                                   December 31        March 31             June 30       September 30
                                                  -------------      ----------        -------------   ---------------
                                                      (Dollars in thousands, except per share data)

<S>                                             <C>              <C>               <C>             <C>

         1999
         -----
Interest income                                    $      2,142    $       2,173    $      2,192    $      2,236
Net interest income                                       1,038            1,081           1,083           1,057
Provision for loan losses                                     3                9               9               9
Net income                                                  441              424             440             398
Earnings per share
         Basic                                     $        .29    $        .28     $        .30    $        .27
         Diluted                                            .29             .28              .29             .27

         1998
         -----
Interest income                                    $      2,061    $       2,027    $      2,081    $      2,115
Net interest income                                       1,073            1,054           1,055           1,062
Provision for loan losses                                     3                3               3               3
Net income                                                  400              410             400             442
Earnings per share
         Basic                                     $        .22    $        .24     $        .24    $        .26
         Diluted                                            .22             .23              .23             .27

</TABLE>
--------------------------------------------------------------------------------
                                  (Continued)

                                       70
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The name, age, position, term of office as officer and period during
which he or she has served as an officer is provided below for each executive
officer of the Registrant and the Bank.

         Joseph R. Reinemeyer, Chairman of the Board, President, Chief Executive
Officer of the Registrant and the Bank; joined the Bank in 1975. Prior to
holding these positions, Mr. Reinemeyer served as Executive Vice President and
Managing Officer of the Bank from 1982 to 1996, and he is 50 years old.

         Nancy C.  Rumschlag has served as Vice  President of the Registrant and
the Bank since 1991. Ms.  Rumschlag has served as a director since 1987, and she
is 49 years old.

         David Roach, an outside director,  is President of Vogel Roach Corp., a
radio broadcast  company.  Mr. Roach has served as a director since 1997. He has
worked at Vogel Roach  Corp.  Since  1972,  and he is 49 years old.

         P. Douglas Harter, an outside director, is Associate of Harter and Son
Funeral Home. Mr. Harter has served as director since 1969, and he is 52 years
old.

         Robert L.  Dillhoff,  an  outside  director,  is the  District  Highway
Management Administrator for the Ohio Department of Transportation. Mr. Dillhoff
has served as a director since 1991, and he is 52 years old.

         Gary Ricker, who is an executive officer, but not a director, joined
the Bank in 1987 as Secretary and Treasurer. He is also a Loan Officer for the
Bank. He is 45 years old.

         Other information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on January 26, 2000
on pages 5 and 6.


ITEM 11.  EXECUTIVE COMPENSATION.

         The information relating to executive compensation is incorporated by
reference to the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on January 26, 2000, on pages 8 through 13 (excluding
the Report of the Compensation Committee on pages 8 through 9 and the Stock
Performance Graph on page 10).

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information relating to security ownership of certain beneficial
owners and management is incorporated herein by reference to the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held on January 26,
2000, on pages 3 and 5 through 6.

                                       71

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information relating to certain relationships and related
transactions is incorporated by reference to the Registrant's Proxy Statement
for the Annual Meeting of Stockholders to be held on January 26, 2000 on pages
13 and 14.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

         (a)      1.       Financial Statements

                           These documents are listed in the Index to
                           Consolidated Financial Statements under Item 8.

                  2.       Financial Statement Schedules

                           Financial Statement Schedules have been omitted
                           because they are not applicable or the required
                           information is shown in the Consolidated Financial
                           Statements or Notes thereto.

                  3.       Exhibits Required by Securities and Exchange
                           Commission Regulation S-K


         3.1      Certificate of Incorporation of Delphos Citizens Bancorp,
                  Inc. (1)
         3.2      Bylaws of Delphos Citizens Bancorp, Inc. (1)
         4.0      Stock Certificate of Delphos Citizens Bancorp, Inc. (1)
         10.1     Form of Employment Agreement between Citizens Bank of Delphos
                  and the President and Chief Executive Officer (1)
         10.2     Amendment to Employment Agreement between Delphos Citizens
                   Bancorp, Inc. and the President and Chief Executive Officer
                  (filed herewith)
         10.3     1999 Stock-Based Incentive Plan (2)
         21.0     Subsidiary information is incorporated herein by reference to
                  "Part I--Subsidiary Activities."
         23.0     Consent of Crowe, Chizek and Company LLP (filed herewith)
         27.0     Financial Data Schedule (filed herewith)

         (b) Reports on Form 8-K Filed During the Quarter Ended September 30,
1999

                  None.

-----------------------------------
(1)    Incorporated herein by reference from the Exhibits to the Registration
       Statement on Form S-1, as amended, filed on August 22, 1997, Registration
       No. 333-10639.
(2)    Incorporated by reference from the Registrant's Proxy Statement for the
       Registrant's 1997 Annual Meeting of Stockholders filed with the
       Commission on April 16, 1997.
                                       72

<PAGE>

                                   SIGNATURES

       Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                         DELPHOS CITIZENS BANCORP, INC.



                                         By:  /s/ Joseph R. Reinemeyer
                                         ------------------------------
                                         Joseph R. Reinemeyer
Dated: December 20, 1999                 Chairman of the Board, President,
                                         and Chief Executive Officer


         Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>

         Name                             Title                                               Date
        ------                          --------                                            ---------

<S>                                    <C>                                            <C>

/s/Joseph R. Reinemeyer                                                                  December 20, 1999
-----------------------
Joseph R. Reinemeyer                 Chairman of the Board, President and
                                          Chief Executive Officer
                                          (Principal Executive and
                                          Accounting Officer)

/s/Nancy C. Rumschlag
----------------------                                                                   December 20, 1999
Nancy C. Rumschlag                        Vice President and Director



/s/P. Douglas Harter
---------------------                                                                    December 20, 1999
P. Douglas Harter                         Director



/s/Robert L. Dillhoff                                                                    December 20, 1999
-----------------------
Robert L. Dillhoff                        Director



/s/David Roach
---------------------                                                                    December 20, 1999
David Roach                               Director

</TABLE>