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

                       ANNUAL REPORT Pursuant to SECTION 13 or 15(d) of
                             THE SECURITIES EXCHANGE ACT of 1934
 
                         For the fiscal year ended December 31, 1998
                              Commission File Number 0-21809
                              ------------------------------

                              HOME CITY FINANCIAL CORPORATION
                       (name of small business issuer in its charter)

                Ohio                                   34-1839475
    (State or other Jurisdiction                       (IRS Employer
    of incorporation or organization)                  Identification Number)

    63 West Main Street, Springfield, Ohio                       45502
   (Address of principal executive offices)                    (zip code)
 
                           Issuer's telephone number  (937)324-573

         Securities registered under Section 12(b) of the Exchange Act:      
                                  not applicable
         Securities registered under Section 12(g) of the Exchange Act:
                             Common Shares (No Par Value),
                            Preferred Shares (No Par Value)

     Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 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 ___

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

     State issuer's revenues for the most recent fiscal year.  $6,906,000

     State the aggregate market value of the voting and non-voting common 
equity held by non-affiliates computed by reference to the price at which the 
common equity was sold, or the average bid and asked prices of such common 
equity, as of a specified date within the past 60 days:  As of March 12, 1999, 
859,390 common  shares of the Registrant were outstanding.  The aggregate 
market value of the shares held by non-affiliates was $10,504,384 based upon 
the closing sale price of $16.00  per share as quoted by The Nasdaq Stock 
Market.

     Documents Incorporated by Reference

     The following sections of the definitive Proxy Statement for the 1999 
Annual Meeting of Shareholders of Home City Financial Corporation are 
incorporated by reference into Part III of this Form 10-KSB:

     1.   Proposal One - Election of Directors
     2.   Section 16(a) Beneficial Ownership Reporting Compliance
     3.   Compensation of Directors and Executive Officers
     4.   Voting Securities and Ownership of Certain Beneficial Owners and 
          Management

          Transitional Small Business Disclosure Format     YES ___  NO _X_
<PAGE>

PART I


ITEM 1.  Description of Business

General

     Home City Financial Corporation ("HCFC"), a unitary savings and loan 
holding company incorporated under the laws of the State of Ohio, owns all of 
the issued and outstanding common shares of Home City Federal Savings Bank of 
Springfield ("Home City"or the "Bank"), a savings association chartered under 
the laws of the United States.  In December 1996, HCFC acquired all of the 
common shares issued by Home City upon its conversion from a mutual savings 
association to a stock savings association (the "Conversion").  Since its 
formation, HCFC's activities have been limited primarily to holding the common 
shares of Home City and investing excess funds from the Conversion in 
investment securities and savings deposits in Home City.

     Home City is a stock savings bank principally engaged in the business of 
making permanent first and second mortgage loans secured by one- to 
four-family residential real estate and nonresidential real estate located in 
Home City's primary lending area and investing in U.S. Government and federal 
agency obligations, interest-bearing deposits in other financial institutions, 
mortgage-backed securities and municipal securities.  Home City also 
originates loans for the construction of residential real estate and loans 
secured by multifamily real estate (over four units), commercial loans and 
consumer loans.  The origination of commercial and consumer loans, both 
secured and unsecured, constitutes a growing portion of Home City's lending 
activities.  Funds for lending and investment activities are obtained 
primarily from deposits, which are insured up to applicable limits by the 
Federal Deposit Insurance Corporation (the "FDIC"), repayments of loans and 
mortgage-backed and related securities, advances from the Federal Home Loan 
Bank (the "FHLB") and other short-term borrowings.  Home City conducts 
business from its office located in Springfield, Ohio.  Home City's primary 
lending area consists of Clark County, Ohio, and adjacent counties. 

     As a savings and loan holding company, HCFC is subject to regulation, 
supervision and examination by the Office of Thrift Supervision of the United 
States Department of the Treasury (the "OTS").  As a savings association 
chartered under the laws of the United States, Home City is subject to 
regulation, supervision and examination by the OTS and the FDIC.  Home City is 
also a member of the FHLB of Cincinnati.
     
Market Area 

     Home City conducts business from its main office, located in Springfield, 
Ohio.  Springfield is located 25 miles east of Dayton, 40 miles west of 
Columbus and 80 miles north of Cincinnati.  Home City's primary market area 
consists of Clark County, Ohio, and adjacent counties.  Clark County, Ohio is 
characterized by slightly lower than Ohio average levels of income and housing 
values and an improving lower unemployment level.  Its strongest employment 
categories are wholesale/retail trade, services and manufacturing, with 
smaller numbers of residents employed in the finance, insurance and real 
estate industry categories.

Forward-Looking Statements

     When used in this Form 10-KSB, the words or phrases "will likely result," 
"are expected to," "will continue," "is anticipated," "estimated," 
"projected," or similar expressions are intended to identify "forward-looking 
statements" within the meaning of the Private Securities Litigation Reform Act 
of 1995.  Such statements are subject to certain risks and uncertainties, 
including changes in economic conditions in  Home City's market area, changes 
in policies by regulatory agencies, fluctuations in interest rates, demand for 
loans in Home City's market area and competition, that could cause actual 
results to differ materially from historical earnings and those presently 
anticipated or projected.  Factors listed above could affect HCFC's financial 
performance and could cause HCFC's actual results for future periods to differ 
materially from any statements expressed with respect to future periods.  See 
Exhibit 99.2 hereto, "Safe Harbor Under the Private Securities Litigation 
Reform Act of 1995," which is incorporated herein by reference.

     HCFC does not undertake, and specifically disclaims any obligation, to 
publicly revise any forward-looking statements to reflect events or 
circumstances after the date of such statements or to reflect the occurrence 
of anticipated or unanticipated events.

Change in Fiscal Year

     In December 1997, the Boards of Directors of HCFC and Home City 
determined to change the fiscal year end of HCFC and Home City from June 30 to 
December 31 in order to have their fiscal year ends coincide with those of  
the financial institutions to which their performance is compared.

Lending Activities

     General.  Home City's primary lending activity is the origination of 
conventional mortgage loans and home equity loans secured by one- to 
four-family homes and nonresidential real estate located in Home City's 
primary lending area.  Loans for the construction of one- to four-family homes 
and mortgage loans on multifamily properties containing five units or more  
are also offered by Home City.  Home City does not originate loans insured by 
the Federal Housing Administration or loans guaranteed by the Veterans 
Administration.  In addition to mortgage lending, Home City makes commercial 
loans secured by assets of the borrower other than real estate and secured and 
unsecured consumer loans.  Home City does not originate its loans in 
accordance with traditional secondary market guidelines.

     Loan Portfolio Composition.  The following table presents certain 
information with respect to the composition of Home City's loan portfolio at 
the dates indicated:
<TABLE>
<CAPTION>

                               At December 31,                At December 31,
                               ---------------                ---------------
                                    1998                            1997
                               ---------------                ----------------
                                                            Percent               Percent
                                                            of total              of total
                                                Amount        loans     Amount     loans
                                                ------        -----     ------     -----
<S>                                           <C>             <C>      <C>        <C>                 
Residential real estate loans:                    
     One- to four-family (first mortgage)      $42,521        53.00%   $40,409     62.48%
     Multifamily                                 2,485         3.10      2,756      4.26   
     Home equity (second mortgage)               1,965         2.45      1,553      2.40   
Nonresidential real estate loans                10,347        12.90     10,315     15.95   
Land loans                                       2,002         2.49      1,866      2.89   
Construction loans                               4,561         5.68      3,079      4.76   
                                                ------        -----     ------     ------
                    
          Total real estate loans               63,881        79.62     59,978      92.74   
                    
Commercial loans                                11,122        13.86        493       0.76   
Consumer loans:                    
     Loans on deposits                             115         0.15        166       0.26   
     Other consumer loans                        5,111         6.37      4,035        .24   
                                                ------        -----     ------      -----
                    
          Total consumer loans                   5,226         6.52%     4,201        6.50   
                                                ------       ------     ------      -------
Total loans                                     80,229       100.00%    64,672      100.00%
                                                             ======                 =======
     Less:                    
     Unearned and deferred income, net            (499)                   (499)     
     Loans in process                           (2,258)                 (1,186)     
     Allowance for loan losses                    (486)                   (452)     
                                                 ------                 - ------
Net loans                                      $76,986                 $62,535     
                                               =======                  =======
<PAGE>
                    
     Loan Maturity Schedule.  The following table sets forth certain 
information as of December 31, 1998, regarding the dollar amount of loans 
maturing in Home City's portfolio based on their contractual terms to 
maturity.  Demand loans and loans having no stated schedule of repayments and 
no stated maturity are reported as due in one year or less.

</TABLE>
<TABLE>
<CAPTION>
     
                          Due during the             Due 4-5           Due 6-10      Due 11-15     Due more than 15     
                      year ending December 31,      years after       years after    years after      years after     
                      -----------------------       -----------       -----------    -----------      -----------
                     1999       2000       2001       12/31/98         12/31/98       12/31/98         12/31/98      Total
                     ----       ----       ----       --------         --------       --------         --------      -----
                                                        (Dollars in thousands)
<S>                 <C>       <C>        <C>        <C>             <C>            <C>                <C>           <C>
Mortgage loans:                                        
     Residential     $1,924    $  403     $  424     $   340         $  7,904       $28,252            $5,689        $44,936
     Nonresidential     316       382        316         316            3,798         8,435             2,625         16,188
Consumer loans          317       251        449       1,160              808         2,241                 0          5,226
Commercial loans      3,245       608        416       1,496            3,187         1,978               192         11,122
                      -----      ------    ------      ------          -------        ------             ------       ------
                                        
     Total loans     $5,802    $1,644     $1,605      $3,312          $15,697       $40,906            $8,506        $77,472
                     ======    ======     ======      ======          =======       =======            ======        =======
</TABLE>

     Of the loans due more than one year after December 31, 1998, loans with 
aggregate balances of $43.6 million have fixed rates of interest, and loans 
with aggregate balances of $28.1 million have adjustable interest rates.

     One- to Four-family Residential Real Estate Loans.  The primary lending 
activity of Home City has been the origination of permanent conventional loans 
secured by one- to four-family residences, primarily single-family residences, 
located within Home City's designated lending area.  Home City also originates 
loans for the construction of one- to four-family residences and home equity 
loans.  Each of such loans is secured by a mortgage on the underlying real 
estate and improvements thereon, if any.

     OTS regulations limit the amount that Home City may lend in relationship 
to the appraised value of the real estate and improvements at the time of loan 
origination.  In accordance with such regulations, Home City makes fixed-rate 
first mortgage loans on single-family or duplex, owner occupied residences up 
to 95% of the value of the real estate and improvements (the "Loan-to-Value 
Ratio" or "LTV").  Low-to-moderate income loans are granted up to 95% on 
single-family or duplex, owner occupied residences.  Home equity loans secured 
by first or second mortgages are made with a maximum combined LTV for the 
first and second mortgages of 100%.  Home City makes adjustable-rate first 
mortgage loans for investment purposes on one- to four-family, non-owner 
occupied residences in amounts up to 75% LTV.  Home City generally requires 
private mortgage insurance ("PMI") for the amount of loans in excess of 80% of 
the value of the real estate securing such loans.  PMI is required for the 
amount of any loan in excess of 85% of the value of the real estate and 
improvements for low-to-moderate income loans.  Fixed-rate residential real 
estate loans are offered by Home City for terms of up to 15 years.

     Home City has been originating adjustable-rate mortgage loans ("ARMs") 
for several years.  ARMs are offered by Home City for terms of up to 30 years 
and with various alternative features.  The interest rate adjustment periods 
on the ARMs are either one year, three years or a fixed rate for 5 to 10 years 
followed by one-year adjustment periods.  The interest rate adjustments on 
ARMs presently originated by Home City are tied to changes in the weekly 
average yield on the one- and three-year U.S. Treasury constant maturities 
index, respectively.  Rate adjustments are computed by adding a stated margin, 
typically 2.75%, to the index.  The maximum allowable adjustment at each 
adjustment date had been 1% with a maximum adjustment of 3% over the term of 
the loan, although Home City now offers an ARM with a 2% maximum adjustment at 
each adjustment date and a maximum adjustment of 6% over the term of the 
loan.  The initial rate is dependent, in part, on how often the rate can be 
adjusted.  Home City also offers ARMs on one- to four-family properties with a 
margin of 3.75% over the index and 2% and 6% maximum adjustments at each 
adjustment date and over the term of the loan, respectively.  Home City 
originates ARMs which have initial interest rates slightly lower than the sum 
of the index plus the margin.  Such loans are subject to increased risk of 
delinquency or default due to increasing monthly payments as the interest 
rates on such loans increase to the fully-indexed level, although such 
increase is generally lower than industry standards and is considered in Home 
City's underwriting of any such loans with a one- to three-year adjustment 
period. 

     The aggregate amount of Home City's one- to four-family residential real 
estate loans equaled approximately $42.5 million at December 31, 1998, and 
represented 53.00% of loans at such date.  The largest individual loan balance 
on a one- to four-family loan at such date was $267,000.  At such date, loans 
secured by one- to four-family residential real estate with outstanding 
balances of $186,000, or 0.43% of its one- to four-family residential real 
estate loan balance, were more than 90 days delinquent or nonaccruing.  See 
"Delinquent Loans, Non-performing Assets and Classified Assets."

     Multifamily Residential Real Estate Loans.  In addition to loans on one- 
to four-family properties, Home City makes loans secured by multifamily 
properties containing over four units.  Such loans are made with adjustable 
interest rates, a maximum LTV of 75% and a maximum term of 15 years.

     Multifamily lending is generally considered to involve a higher degree of 
risk because the loan amounts are larger and the borrower typically depends 
upon income generated by the project to cover operating expenses and debt 
service.  The profitability of a project can be affected by economic 
conditions, government policies and other factors beyond the control of the 
borrower.  Home City attempts to reduce the risk associated with multifamily 
lending by evaluating the creditworthiness of the borrower and the projected 
income from the project and by obtaining personal guarantees on loans made to 
corporations and partnerships.  Home City currently requires that borrowers 
agree to submit financial statements, rent rolls and tax returns annually to 
enable Home City to monitor the loans.

     At December 31, 1998, loans secured by multifamily properties totaled 
approximately $2.5 million, or 3.10% of Home City's total loan portfolio, all 
of which were secured by property located within Home City's primary market 
area, and all of which were performing in accordance with their terms.  The 
largest loan secured by a multifamily property had a balance at December 31, 
1998, of approximately $638,000.

     Home Equity Loans.  Home City offers home equity loans secured by first 
or second mortgages on one- to four-family residential real estate located in 
Clark County, Ohio, and adjacent counties.  Such loans are made for various 
purposes, including home improvement, debt consolidation and consumer 
purchases.  The interest rates on loans secured by such mortgages are 
adjustable, with a maximum combined LTV for the first and second mortgages of 
100%.

     At December 31, 1998, home equity loans totaled approximately $2.0 
million, or 2.45% of Home City's total loan portfolio.  All of such loans were 
secured by property located within Home City's primary market area and all 
were performing in accordance with their terms.  The balance of the largest 
single home equity loan was $125,000 at December 31, 1998.

     Nonresidential Real Estate Loans.  Home City also makes loans secured by 
nonresidential real estate consisting of retail stores, office buildings and 
businesses.  Such loans generally are originated with terms of up to 15 
years,  a minimum loan amount of $10,000 and a maximum loan amount of $1.5 
million.  Such loans have a maximum LTV of 75%. 

     Nonresidential real estate lending is generally considered to involve a 
higher degree of risk than residential lending due to the relatively larger 
loan amounts and the effects of general economic conditions on the successful 
operation of income-producing properties.  If the cash flow on the property is 
reduced, for example, as leases are not obtained or renewed, the borrower's 
ability to repay may be impaired.  Home City has endeavored to reduce such 
risk by evaluating the credit history and past performance of the borrower, 
the location of the real estate, the quality of the management constructing 
and operating the property, the debt service ratio, the quality and 
characteristics of the income stream generated by the property and appraisals 
supporting the property's valuation.  Home City also requires personal 
guarantees on such loans.

     At December 31, 1998, Home City had a total of $10.3 million invested in 
nonresidential real estate loans, all of which were secured by property 
located within Home City's primary market area.  Such loans comprised 
approximately 12.90% of Home City's total loans at such date.  At such date, 
Home City had no nonresidential loans  that were 90 days delinquent or 
non-accruing.  See "Delinquent Loans, Non-performing Assets and Classified 
Assets."

<PAGE>

     Federal regulations limit the amount of nonresidential mortgage loans 
which an association may make to 400% of its tangible capital.  At December 
31, 1998, Home City's nonresidential mortgage loans totaled 87.21% of Home 
City's tangible capital.

     Land Loans.  Home City makes two varieties of land loans.  Loans are made 
for the acquisition of land to be developed for construction.  Such loans are 
usually made for relatively short periods of time, generally not more than 
three years, with fixed interest rates.  Loans are also made to borrowers who 
purchase and hold land for various reasons, such as the future construction of 
a residence.  Such loans are generally originated with fixed interest rates 
and terms of up to 15 years.  Land loans are secured by the land being 
purchased with the loan proceeds and have maximum LTVs of 75% to 80%.

     At December 31, 1998, land loans totaled approximately $2.0 million, or 
2.49% of Home City's total loan portfolio. The largest land loan at December 
31, 1998, had a balance of approximately $467,000.  All of such loans were 
secured by property located within Home City's primary market area, of which 
no loans were more than 90 days delinquent or non-accruing.  See "Delinquent 
Loans, Non-performing Assets and Classified Assets."

     Construction Loans.  Home City makes loans for the construction of 
residential and nonresidential real estate.  Such loans are structured as 
permanent loans with fixed rates of interest and for terms of up to 15 years 
or adjustable rates of interest and terms up to 30 years.  Most of the 
construction loans originated by Home City historically were made to 
owner-occupants for the construction of single-family homes by a general 
contractor.

     Construction loans generally involve greater underwriting and default 
risks than do loans secured by mortgages on existing properties due to the 
concentration of principal in a limited number of loans and borrowers and the 
effects of general economic conditions on real estate developments, 
developers, managers and builders.  In addition, such loans are more difficult 
to evaluate and monitor.  Loan funds are advanced upon the security of the 
project under construction, which is more difficult to value before the 
completion of construction.  Moreover, because of the uncertainties inherent 
in estimating construction costs, it is relatively difficult to evaluate 
accurately the LTV and the total loan funds required to complete a project.  
In the event a default on a construction loan occurs and foreclosure follows, 
Home City must take control of the project and attempt either to arrange for 
completion of construction or dispose of the unfinished project.  Additional 
risk exists with respect to loans made to developers who do not have a buyer 
for the property, as the developer may lack funds to pay the loan if the 
property is not sold upon completion.  Home City attempts to reduce such risks 
on loans to developers by requiring personal guarantees and reviewing current 
personal financial statements and tax returns and other projects undertaken by 
the developers.

     At December 31, 1998, a total of $4.6 million, or approximately 5.68% of 
Home City's total loans, consisted of construction loans.  All of Home City's 
construction loans are secured by property located within Home City's primary 
market area, and the economy of such lending area has been relatively stable.  
At December 31, 1998, all of such loans were performing in accordance with 
their terms.

     Commercial Loans.  In fiscal year 1998, Home City implemented a 
commercial loan program, which includes extending loans to finance commercial 
and industrial business activities, including equipment financing, commercial 
lines of credit and working capital.  The loans may be secured by 
nonresidential real estate or by assets of the borrower other than real 
estate, such as equipment or accounts receivable. Such loans are structured on 
either a fixed-rate short-term basis or on an adjustable-rate basis tied to 
prime rate as reported in the Wall Street Journal.  Commercial loans are 
orginated with terms up to 15 years and a maximum amount up to the Bank's 
legal lending limit to one borrower.  The LTV may range from 50% to 90% 
depending on the purpose of the loan and the assets pledged to secure the 
credit.  At December 31, 1998, Home City had commercial loans in the aggregate 
amount of $11.1 million, or approximately 13.86% of Home City's total loans, 
each of which was performing in accordance with its terms.

     Unlike residential mortgage loans, which generally are granted on the 
basis of the borrower's ability to repay the debt from employment and other 
income and which are secured by real property, the value of which tends to be 
more easily ascertainable, business loans are of higher risk and typically are 
granted on the basis of the borrower's ability to repay the debt from the cash 
flow of the underlying business.  In addition, it is generally the practice of 
Home City to request additional collateral in the form of personal 
guarantees.  Additional collateral may include, on occasion, a lien on the 
<PAGE>

business owner's personal residence.  Nonetheless, the availability of funds 
for the repayment of business loans generally is dependent on the success of 
the business itself.

     Consumer Loans.  Home City makes various types of consumer loans, 
including unsecured loans and loans secured by deposits.  Such loans are made 
only at fixed rates of interest for terms of up to 15 years.  Home City has 
been attempting to increase its consumer loan portfolio as part of its 
interest rate risk management efforts and because a higher rate of interest is 
received on consumer loans.  See  "MANAGEMENT'S DISCUSSION AND ANALYSIS OR 
PLAN OF OPERATION."

     Consumer loans may entail greater credit risk than do residential 
mortgage loans.  The risk of default on consumer loans increases during 
periods of recession, high unemployment and other adverse economic 
conditions.  Although Home City has not had significant delinquencies on 
consumer loans, no assurance can be provided that delinquencies will not 
increase.

     At December 31, 1998, Home City had approximately $5.2 million, or 6.52% 
of its total loans, invested in consumer loans, and no such loans were more 
than 90 days delinquent or nonaccruing. See "Delinquent Loans, Non-performing 
Assets and Classified Assets."

     Loan Solicitation and Processing.  Loan originations are developed from a 
number of sources, including continuing business with depositors, borrowers 
and real estate developers, periodic newspaper solicitations by Home City's 
lending staff and walk-in customers.

     Loan applications for permanent mortgage loans are taken by loan 
personnel.  Home City obtains a credit report, verification of employment and 
other documentation concerning the credit-worthiness of the borrower.  Home 
City limits the ratio of mortgage loan payments to the borrower's income to 
25% and the ratio of the borrower's total debt payments to income to 35-42%.  
An appraisal of the fair market value of the real estate on which Home City 
will be granted a mortgage to secure the loan is prepared by an independent 
fee appraiser approved by the Board of Directors.  

     Unless Home City is aware of factors that may lead to an environmental 
concern, Home City generally does not require any form of specific 
environmental study at the time a loan secured by one- to four-family 
residential real estate is made.  If, however, Home City is aware of any such 
factor at the time of loan origination, Home City requires the completion and 
satisfactory review of a Phase I Environmental Assessment before such loan is 
made.  For loans secured by multifamily and nonresidential real estate, a 
Phase I Environmental Assessment is generally completed and satisfactorily 
reviewed before the loan is made.

     Upon the completion of the appraisal and the receipt of information on 
the borrower, the application for a loan is submitted to various management 
officials for approval or rejection if the loan amount does not exceed 
$400,000.  If the loan amount exceeds $400,000, or if the application does not 
conform in all respects with Home City's underwriting guidelines, the 
application is submitted to the Executive Loan Committee or the Board of 
Directors for review and for final disposition.  If a mortgage loan 
application is approved, an attorney's opinion of title is obtained on the 
title to the real estate which will secure the mortgage loan.  Borrowers are 
required to carry satisfactory fire and casualty insurance and flood 
insurance, if applicable, and to name Home City as an insured mortgagee.

     The procedure for approval of construction loans is the same as for 
permanent mortgage loans, except that an appraiser evaluates the building 
plans, construction specifications and estimates of construction costs.  Home 
City also evaluates the feasibility of the proposed construction project and 
the experience and record of the builder.  Consumer loans are underwritten on 
the basis of the borrower's credit history and an analysis of the borrower's 
income and expenses, ability to repay the loan and the value of the 
collateral, if any.  Commercial loans are underwritten on the basis of the 
source of the cash flow required to service the debt and the value of the 
security for the loan.

     Home City's loans carry no prepayment penalties, but do provide the 
entire balance of the loan is due upon sale of the property securing the 
loan.  Home City generally enforces such due-on-sale provisions.
<PAGE>
     
     Loan Originations, Purchases and Sales.  Home City originates a slightly 
greater number of fixed-rate  loans than adjustable-rate loans.  See 
"DESCRIPTION OF BUSINESS - Loan Maturity Schedule."  Home City occasionally 
participates in loans by other institutions. 

     The following table presents Home City's mortgage loan origination and 
participation activity for the years indicated:

                                                          December 31,     

                                                  1998                 1997
                                                  ----                 ----
                                                  (Dollars in thousands)
Loans originated:          
     One- to four-family residential (1)          $17,108            $14,850
     Multifamily residential                          222                100
     Nonresidential                                 5,390              4,350
     Commercial                                    11,676                251
     Consumer                                       3,407              3,081
     Loans Purchased                                    0                374
                                                   ------            -------
          
          Total loans originated                   37,803             23,006
          
Reductions:          
     Principal repayments                         (23,318)           (10,791)
     Sales of loans                                     0                  0
     Decrease in other items, net (2)                 (34)              (237)
                                                   -------           -------
          
          Net increase                            $14,451            $11,978
                                                  =======            =======
--------------------------------------
     (1)  Includes construction loans.

     (2)  Consists of unearned and deferred fees, costs and the allowance for 
          loan losses.

     OTS regulations generally limit the aggregate amount that a savings 
association may lend to any one borrower to an amount equal to 15% of the 
association's total capital under the regulatory capital requirements plus any 
additional loan reserve not included in total capital.  A savings association 
may lend to one borrower an additional amount not to exceed 10% of total 
capital plus additional reserves if the additional amount is fully secured by 
certain forms of "readily marketable collateral."  Real estate is not 
considered "readily marketable collateral."  In addition, the regulations 
require that loans to certain related or affiliated borrowers be aggregated 
for purposes of such limits.  An exception to these limits permits loans to 
one borrower of up to $500,000 "for any purpose."

     Based on such limits, Home City was able to lend approximately $1.9 
million to one borrower at December 31, 1998.  The largest amount Home City 
had outstanding to one borrower at December 31, 1998, was $1.7 million.  Such 
loans were secured by commercial and agricultural use properties.  All of such 
loans were current at December 31, 1998.

     The aggregate amount of commercial loans that Home City may have 
outstanding may not exceed 20% of Home City's total assets, and any amount in 
excess of 10% of its total assets must be used only for small business loans.

     Delinquent Loans, Non-performing Assets and Classified Assets.  When a 
borrower fails to make a required payment on a loan, Home City attempts to 
cause the delinquency to be cured by contacting the borrower.  In most cases, 
delinquencies are cured promptly.

     When a loan is fifteen days or more delinquent, the borrower is sent a 
delinquency notice.  When a loan is thirty days delinquent, Home City 
generally telephones the borrower.  Depending upon the circumstances, Home 
City may also inspect the property and inform the borrower of the availability 
of credit counseling from Home City and counseling agencies.  Before a loan 
becomes 90 days delinquent, Home City will make further contact with the 
borrower and, depending upon the circumstances, may arrange appropriate 
<PAGE>

alternative payment arrangements.  After a loan becomes 90 days delinquent, 
Home City may refer the matter to an attorney for foreclosure.  A decision as 
to whether and when to initiate foreclosure proceedings is based on such 
factors as the amount of the outstanding loan in relation to the original 
indebtedness, the extent of the delinquency and the borrower's ability and 
willingness to cooperate in curing delinquencies.  If a foreclosure occurs, 
the real estate is sold at public sale and may be purchased by Home City.

     Real estate acquired, or deemed acquired, by Home City as a result of 
foreclosure proceedings is classified as real estate owned ("REO") until it is 
sold.  When property is so acquired, or deemed to have been acquired, it is 
initially recorded by Home City at the lower of cost or fair value of the real 
estate, 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 other real estate are charged to expense.

     Home City places a loan on nonaccrual status when the principal and 
interest is delinquent 90 days or more and deducts from income the interest 
previously accrued.

     The following table reflects the amount of loans in a delinquent status 
as of the dates indicated:
<TABLE>
<CAPTION>
                                     December 31,                           December 31,
                           --------------------------------         ------------------------
                                        1998                                    1997 
                                  -----------------                       ----------------

                                                     Percent                          Percent
                                                     of total                         of total
                                Number     Amount     loans     Number     Amount       loans
                                ------     ------     -----     ------     ------       -----
<S>                             <C>        <C>        <C>       <C>        <C>        <C>  
Loans delinquent for (1):                              
     30-59 days                     29     $1,635      2.11%        21     $   567     0.90%
     60-89 days                     19        877      1.13         15         574     0.91
     90 days and over               10        192      0.25         15          59     0.41
                                    --     ------      ----         --      -----      ----
Total delinquent loans              58     $2,704      3.49%        51      $1,400     2.22%
                                    ==     ======      =====        ===     ======     =====
-----------------------------

(1)  The number of days a loan is delinquent is measured from the day the 
     payment was due under the terms of the loan agreement.

     The following table sets forth information with respect to the nonaccrual
     status of Home City's loans that are 90 days or more past due and other 
     non-performing assets at the dates indicated:

                                                              December 31,
                                                        ----------------------
                                                   1998        1997       1996
                                                   ----        ----       ----
                                                       (Dollars in thousands)
Loans accounted for on a nonaccrual basis:               
     Real estate:               
          Residential                              $186        $259       $132
            Nonresidential                            0           0         99
                                                   ----        ----       ----
               
          Total non-performing loans                186         259        231
               
Real estate owned                                     0           0          0
                                                    ---         ---       ----
          Total non-performing assets              $186        $259       $231
                                                    ===         ===        ===
               
          Total loan loss allowance                $486        $452       $399
               
          Total non-performing assets as               
            a percentage of total assets           0.22%       0.36%     0.34%
               
Loan loss allowance as a percent               
     of non-performing loans                      261.29%     174.52%  172.73%  
<PAGE>

     During the fiscal year ended December 31, 1998, $16,000 in interest
income was recognized and an additional $23,000 would have been recorded as
interest income on nonaccruing loans had such loans been accruing pursuant to 
contractual terms.  During such period, Home City had no restructured loans 
within the meaning of SFAS No. 115.  There are no loans which are not 
currently classified as nonaccrual, more than 90 days past due or restructured 
but which may be so classified in the near future because management has 
concerns as to the ability of the borrowers to comply with repayment terms.  
For additional information, see Note D of the Notes to Financial Statements.

     OTS regulations require that each thrift institution classify its own
assets on a regular basis.  Problem assets are classified as "substandard," 
"doubtful," or "loss."  "Substandard" assets have one or more defined 
weaknesses and are characterized by the distinct possibility that the insured 
institution will sustain some loss if the deficiencies are not corrected.  
"Doubtful" assets have the same weaknesses as "substandard" assets, with the 
additional characteristics that (i) the weaknesses make collection or 
liquidation in full on the basis of currently existing facts, conditions and 
values questionable and (ii) there is a high possibility of loss.  An asset 
classified "loss" is considered uncollectible and of such little value that 
its continuance as an asset of the institution is not warranted.  The 
regulations also contain a "special mention" category, consisting of assets 
which do not currently expose an institution to a sufficient degree of risk to 
warrant classification but which possess credit deficiencies or potential 
weaknesses deserving management's close attention.

     Generally, Home City classifies as "substandard" all loans that are 
delinquent more than 90 days, unless management believes the delinquency 
status is short-term due to unusual circumstances.  Loans delinquent fewer 
than 90 days may also be classified if the loans have the characteristics 
described above rendering classification appropriate.

     The aggregate amount of Home City's classified assets at the dates 
indicated were as follows:

                                                         December 31,
                                                --------------------------
                                                1998       1997       1996
                                                ----       ----       ----
                                                   (Dollars in thousands)
Classified assets:               
     Substandard                                $366       $377       $497
     Doubtful                                      0         16          0
     Loss                                         47         77        101
                                                 ---        ---        ---
          Total classified assets               $413       $470       $598
                                                 ===        ===        ===

     Federal examiners are authorized to classify an association's assets.  If 
an association does not agree with an examiner's classification of an asset, 
it may appeal this determination to the Regional Director of the OTS.  Home 
City had no disagreements with the examiners regarding the classification of 
assets at the time of the last examination.

     OTS regulations require that Home City establish prudent general 
allowances for loan losses for any classified as substandard or doubtful.  If 
an asset, or portion thereof, is classified as loss, Home City must either 
establish specific allowances for losses in the amount of 100% of the portion 
of the asset classified loss, or charge-off such amount.

     Allowance for Loan Losses.  Home City maintains an allowance for loan 
losses based upon a number of relevant factors, including but not limited to, 
trends in the level of non-performing assets and classified loans, current and 
anticipated economic conditions in the primary lending area, past loss 
experience, possible losses arising from specific problem assets and changes 
in the composition of the loan portfolio.

     The single largest component of Home City's loan portfolio consists of 
one- to four-family residential real estate loans.  Substantially all of these 
loans are secured by residential real estate and required down payments of 20% 
of the lower of the sales price or appraisal value of the real estate.  In 
addition, these loans are secured by property in Home City's lending area of a 
100-mile radius from Springfield, Ohio.  Home City's practice of making loans 
only in their market area and requiring a 20% down payment have contributed to 
a low historical charge-off history.

     In addition to one- to four-family residential real estate loans, Home 
City makes additional real estate loans including home equity, multifamily 
residential real estate, nonresidential real estate and construction loans.  
These loans are secured by property in Home City's lending area and also 
require the borrower to provide a down payment.  Home City also makes 

<PAGE>

commercial and consumer loans.  Although these types of loans are considered 
to involve a higher degree of risk than loans secured by one- to four-family 
residential real estate, Home City has experienced  charge-offs only from 
loans secured by one- to four-family residential real estate.

     The allowance for loan losses is reviewed quarterly by the Board of 
Directors.  The review process includes a credit analysis of loans on the 
"watch list," past due loans, new significant borrowings and random samples of 
new loans made.  The analysis of loans secured by multifamily and 
nonresidential real estate and commercial loans includes a review of tax 
returns and financial statements, and the review of all loans includes an 
estimation of the value of the collateral.  The amounts of provisions for loan 
losses for the periods shown in the table below were determined based upon 
such loan review, past loss experience, anticipated growth and prevailing 
economic conditions.  While the Board of Directors believes that it uses the 
best information available to determine the allowance for loan losses, 
unforeseen market conditions could result in material adjustments, and net 
earnings could be significantly adversely affected, if circumstances differ 
substantially from the assumptions used in making the final determination.

     The following table sets forth an analysis of Home City's allowance for 
loan losses for the periods indicated:

                                                      (Dollars in thousands)
          
                                                       1998             1997
                                                       ----             ----
     Balance at beginning of year                    $  452            $ 400
          
Charge-offs                                             (39)             (39)
Recoveries                                               12               48
Provision for loan losses (charged to operations)        61               43
                                                        ---              ---
Balance at end of year                               $  486           $  452
                                                        ===              ===
          
Ratio of net charge-offs (recoveries) to average net          
     loans outstanding during the year                 0.04%           (0.02%)

Ratio of allowance for loan losses to total loans      0.63%            0.72%

     For the fiscal year ended December 31, 1998, $45,000 of the allowance for 
loan losses was allocated to loans secured by nonresidential real estate, 
$210,000 was allocated to loans secured by one- to four-family real estate, 
$91,000 was allocated to consumer loans, and $59,000 was allocated to 
commercial loans.  For the fiscal year ended December 31, 1997, $42,000 of the 
allowance for loan losses was allocated to loans secured by nonresidential 
real estate, $198,000 was allocated to loans secured by one- to four-family 
real estate, and $60,000 was allocated to consumer loans. 

Mortgage-Backed and Related Securities

     Home City maintains a portfolio of mortgage-backed securities in the form 
of Government National Mortgage Association ("GNMA") participation 
certificates.  Mortgage-backed securities generally entitle Home City to 
receive a portion of the cash flows from an identified pool of mortgages.  
GNMA securities are backed by Federal Housing Authority-insured and Veterans 
Administration-guaranteed loans, and are generally considered among the 
highest quality investments with minimal credit risk.  The timely payment of 
principal and interest on these securities is guaranteed by the GNMA and 
backed by the full faith and credit of the U.S. Government.

<PAGE>

     The following tables set forth the composition of Home City's 
mortgage-backed securities at the dates indicated:

</TABLE>
<TABLE>
<CAPTION>
                                            December 31, 1998           December 31, 1997
                                            -----------------           -----------------
                                                          (Dollars in thousands)
                                            Amortized     Fair     Amortized     Fair
                                              cost        value      cost        value
                                              ----        -----      ----        -----
<S>                                         <C>         <C>        <C>          <C>
     GNMA certificates                       $558        $559       $703         $700
                                             ----        ----       ----         ----
          Total mortgage-baced
            and related securities           $558        $559       $703         $700
                                             ====        ====       ====         ====
</TABLE>
     The following table sets forth information regarding scheduled 
maturities, amortized costs, market value and weighted- average yields of
Home City's mortgage-backed and related securities at December 31, 1998.  
Expected maturities will differ from contractual maturities due to scheduled 
repayments and because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.  The following table does not 
take into consideration the effects of scheduled repayments or the effects of 
possible prepayments.
<TABLE>
<CAPTION>

                                                                         
                                                            At December 31, 1998                                     
               ---------------------------------------------------------------------------------------------------------------
                        
               One year or less       After one to             After five to      After ten years      Total mortgage-backed
                                       five years                ten years                             securities portfolio
               ----------------        ----------                ---------        ---------------         --------------
              Carrying   Average    Carrying   Average   Carrying   Average    Carrying   Average   Carrying   Market   Average
               value      yield      value      yield     value      yield       value     yield     value     value     yield
               -----      -----      -----      -----     -----      -----       -----     -----     -----     -----     -----
                                                         (Dollars in thousands)                                              
<S>            <C>        <C>       <C>        <C>       <C>       <C>          <C>         <C>      <C>       <C>       <C>  
GNMA                                                                                                           
 certificates   $ 0         00%       $   0      00%      $ 559      6.79%       $  0        00%      $ 559     $ 559       6.79%
                ---         ---       -----      ---      -----      -----       -----       ---      -----     -----      -----
                                                                                                                     
     Total      $ 0         00%       $   0      00%      $ 559      6.79%       $  0        00%      $ 559     $ 559       6.79%
                ===         ===       =====      ===      =====      =====       ====        ===      =====     =====       =====
                                                       
                                                       
For additional information, see Note C of the Notes to Consolidated Financial 
Statements.

Investment Activities

     OTS regulations require that Home City maintain a minimum amount of 
liquid assets, which may be invested in U.S. Treasury obligations, securities 
of various federal agencies, certificates of deposit at insured banks, 
bankers' acceptances and federal funds.  Home City is also permitted to make 
investments in certain commercial paper, corporate debt securities rated in 
one of the four highest rating categories by one or more nationally recognized 
statistical rating organizations, and mutual funds, as well as other 
investments permitted by federal regulations.  See "REGULATION" and 
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION."



     The following table sets forth information concerning Home City's 
investments at the dates indicated:

</TABLE>
<TABLE>
<CAPTION>
                                        At December 31, 1998                           At December 31, 1997           
                                  -----------------------------------------     -------------------------------------
                                  Carrying    % oftotal     Market     % of     Carrying     % of     Market    % of
                                  value       total         value      total    value        total    value     total            
                                  -----       ----          -----      -----    -----        -----    -----     -----
<S>                               <C>         <C>           <C>        <C>      <C>
Interest-bearing demand
     deposits in other
     financial institutions      $763         17.04%        $763       17.05%    $591        10.31%    $591     10.32%
Federal funds sold                  0             0            0           0      100         1.74      100      1.75   
Time deposits in other
     financial institutions        24          0.54           21        0.47       23          0.40      18      0.31   
Investment securities:                                        
     U.S. government and
          federal agencies      1,501         33.51        1,501       33.53    3,098         54.05   3,098     54.09
     Municipal securities (1)     779         17.39          779       17.40      930         16.22     930     16.24
Equity securities:                                        
     FHLMC stock                  779         17.39          779       17.40      503          8.78     503      8.78
     Service corporation (2)       28          0.62           28        0.63       29          0.51      29      0.51
     Joint venture (3)              4          0.09            4        0.09       20          0.35      20      0.35
     FHLB stock                   601         13.42          601       13.43      438          7.64     438      7.65 
                               ------        ------       ------      ------   ------        ------   -----    ------
Total investments              $4,479        100.00%      $4,476      100.00%  $5,732        100.00% $5,727    100.00%
                               ======        ======       ======      ======   ======        ======  ======    =======
</TABLE>

(1)  Bonds issued by local school districts.
(2)  Home City  owns 100% of Homciti Service Corp., whose assets consist of 
     common shares of Intrieve, Incorporated, a data service provider, and a 
     0.875% ownership in a joint venture which owns The Springfield Inn, a
     hotel in Springfield, Ohio.
(3)  Home City has a 50% ownership interest in a joint venture that is 
     primarily involved in the development of low income housing.

     The following tables set forth the contractual maturities, carrying 
values, market values and average yields for Home City's investment securities
at December 31, 1998:
<TABLE>
<CAPTION>
                                                              At December 31, 1998
                                  ------------------------------------------------------------------------------
                                  One year or less          After one to five years           After five years    
                                  ----------------          -----------------------           ----------------
                                Carrying       Average      Carrying      Average           Carrying     Average
                                 value          yield        value         yield             value        yield
                                 -----          -----        -----         -----             -----        -----
                                                              (Dollars in thousands)          
                                 <C>            <C>          <C>           <C>              <C>           <C>
                              
Investment securities:                              
     U.S. government and federal                              
          agency securities        $ 499          4.86%        $1,002       5.75%            $ --              --
     Municipal securities            510          4.32            136       5.15              133            5.22%
     Equity securities: (1)                              
          FHLMC stock                 --            --             --        --               779            0.74  
           Service corporation        --            --             --        --                28              --
          Joint venture               --            --             --        --                 4              --
                                  -------         -----        -------     -----              ----           -----
Total investments                 $ 1,009         4.59%        $ 1,138      5.68%           $ 944            1.34%
                                  =======         =====        =======      ====            =====            =====
----------------------------
</TABLE>

(1)  By their nature, equity securities have no maturity date.

<PAGE>

<TABLE>
<CAPTION>
                                                    At December 31, 1998
                                       -------------------------------------------
                                       Average                           Weighted-
                                        life     Carrying      Market     average
                                      in years    value        value      yield
                                      --------    -----        -----      -----
                                                        (Dollars in thousands)
<S>                                   <C>         <C>          <C>        <C>                     
Investment securities:                    
     U.S. government and federal                    
          agency securities             1.44       $ 1,501      $ 1,501     5.46%
     Municipal securities               2.36           779          779     4.62%
     Equity securities (1)                             811          811     0.71%
                                                    ------       ------
                    
          Total                                    $ 3,091      $ 3,091
                                                    =======      =======
-------------------------
</TABLE>

(1)  By their nature, equity securities have no maturity date.

Deposits and Borrowings

     General.  Deposits have traditionally been the primary source of Home 
City's funds for use in lending and other investment activities.  In addition 
to deposits, Home City derives funds from FHLB advances, interest payments and 
principal repayments on loans and mortgage-backed and related securities, 
income on earning assets, service charges and gains on the sale of assets.  
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION."  Loan 
payments are a relatively stable source of funds, while deposit inflows and 
outflows fluctuate more in response to general interest rates and money market 
conditions. 

     Deposits.  Deposits are attracted principally from within Home City's 
primary market area through the offering of a broad selection of deposit 
instruments, including NOW accounts, money market accounts, statement savings 
accounts, passbook savings accounts and term certificate accounts.  Home City 
also offers individual retirement accounts ("IRA"), both in passbook and 
certificate form.  Interest rates paid, maturity terms, service fees and 
withdrawal penalties for the various types of accounts are established 
periodically by the management of Home City based on Home City's liquidity 
requirements, growth goals and interest rates paid by competitors.  Home City 
utilizes brokers to attract deposits on a limited basis.  Brokered deposits 
approximated $1.5 million at December 31, 1998.

     At December 31, 1998, Home City's certificates of deposit totaled $46.4 
million, or 76.65% of total deposits.  Of such amount, approximately $21.2 
million in certificates of deposit mature within one year.  Based on past 
experience and Home City's prevailing pricing strategies, management believes 
that a substantial percentage of such certificates will renew with Home City 
at maturity.  If there is a significant deviation from historical experience, 
Home City can utilize borrowings from the FHLB and commercial banks as 
alternatives to this source of funds.
<PAGE>

     The following table sets forth the dollar amount of deposits in the 
various types of savings programs offered by Home City at the dates indicated:

                                                 At December 31,
                                  ----------------------------------------------
                                         1998                     1997 
                                  ------------------     -----------------------
                                             Percent                 Percent
                                             of total                of total
                                  Amount     deposits     Amount     deposits
                                  ------     --------     ------     --------
                                                (Dollars in thousands)
                    
Transaction accounts:                    
Demand                            $  1,605     2.65%       $  763      1.48%
NOW accounts (1)                     1,439     2.38           774      1.50   
Passbook savings accounts (2)       11,084    18.32         7,863     15.21   
                                    ------    -----         -----     -----
                     
   Total transaction accounts       14,128    23.35         9,400     18.19   
                    
Certificates of deposit:                    
     4.01 - 6.00%                   22,157    36.62        14,742     28.52   
     6.01 - 8.00%                   24,214    40.03        27,547     53.29   
                                    ------    -----        ------     -----
                    
   Total certificates of deposit    46,371    76.65        42,289     81.81   
                                   -------   ------        ------     -----
Total deposits (3)                 $60,499   100.00%      $51,689    100.00%
                                   =======   =======      =======    ======
                        
(1)  Home City's weighted-average interest rate paid on NOW accounts 
     fluctuates with the general movement of interest rates. At December 31,
     1998 and 1997, the weighted-average rates on NOW accounts were 2.08% 
     and 1.79%, respectively.

(2)  Home City's weighted-average rate on passbook savings accounts fluctuates 
     with the general movement of interest rates.  The weighted-average 
     interest rate on passbook accounts was 2.79% and 2.37% at December 31,
     1998 and 1997, respectively.

(3)  IRAs are included in the various certificates of deposit balances.  IRAs 
     totaled $6.6 million and $6.4 million as of December 31, 1998 and 1997, 
     respectively.


     The following table shows rate and maturity information for Home City's 
certificates of deposit as of December 31, 1998:
<TABLE>
<CAPTION>
                                                      Amount Due 
                                               Over          Over          
                                   Up to       1 year to     2 years to     Over     
          Rate                     1 year      2 years       3 years        3 years     Total
                                                 (Dollars in thousands)
<S>                                <C>         <C>           <C>            <C>         <C>
     4.01 - 6.00%                   $13,743      $ 5,852      $1,735         $   827     $22,157
     6.01 - 8.00%                     7,420       15,685         624             485      24,214
                                    -------       ------       ------        -------     -------
                               
  Total certificates of deposit     $21,163      $21,537      $2,359          $1,312     $46,371
                                    =======      =======      ======          ======     =======
</TABLE>
<PAGE>

     The following table presents the amount of Home City's certificates of 
deposit of $100,000 or more by the time remaining until maturity as of 
December 31, 1998: 


     Maturity                                          Amount
     --------                                          ------
                                                (Dollars in thousands)
     
Three months or less                                   $1,519
Over 3 months to 6 months                               1,161
Over 6 months to 12 months                              1,724
Over 12 months                                          4,595
                                                        -----
     Total                                             $8,999
                                                       ======

     The following table sets forth Home City's deposit account balance 
activity for the years indicated:

                                                Year ended December 31,
                                                -----------------------
                                                 1998              1997
                                                 ----              ----
                                                 (Dollars in thousands)
     
Beginning balance                               $51,689          $49,559
          
Deposits                                         76,525           39,199
Withdrawals                                     (70,664)         (39,812)
                                                --------         --------
Net increase (decrease) before          
     interest credited                            5,861             (613)
          
Interest credited                                 2,949            2,743
                                                -------          -------
Ending balance                                  $60,499          $51,689
                                                =======          =======

     Net increase                              $  8,810         $  2,130
          
     Percentage increase                          17.04%            4.30%

     Borrowings.  The FHLB System functions as a central reserve bank 
providing credit for its member institutions and certain other financial 
institutions.  See "REGULATION - Federal Home Loan Banks."  As a member in 
good standing of the FHLB of Cincinnati, Home City is authorized to apply for 
advances from the FHLB of Cincinnati, provided certain standards of credit 
worthiness have been met.  Under current regulations, an association must meet 
certain qualifications to be eligible for FHLB advances.  The extent to which 
an association is eligible for such advances will depend on whether it meets 
the Qualified Thrift Lender Test (the "QTL Test").  See "REGULATION - 
Qualified Thrift Lender Test."  If an association meets the QTL Test, it will 
be eligible for 100% of the advances it would otherwise be eligible to 
receive.  If an association does not meet the QTL Test, it will be eligible 
for such advances only to the extent it holds specified QTL Test assets.  At 
December 31, 1998, Home City was in compliance with the QTL Test.
<PAGE>

     Home City obtained advances from the FHLB of Cincinnati, as set forth in 
the following table:

                                                 Years ended December 31,
                                                 -----------------------
                                                1998                  1997
                                                ----                  ----
                                                   (Dollars in thousands)
          
Average balance outstanding                     $8,316              $4,265    
          
Maximum amount outstanding at any month end          
     during the year                           $11,571              $5,712 
          
Balance outstanding at end of year             $11,571              $5,712  
          
Weighted-average interest rate during the year    5.85%               6.41% 
          
Weighted-average interest rate at end of year     5.48%               6.24% 

     The maximum amount of FHLB advances Home City was able to receive at 
December 31, 1998, was $12.0 million.

Subsidiaries

      Home City owns all of the outstanding shares of Homciti Service 
Corp., an Ohio corporation ("Homciti").  Homciti owns common stock in 
Intrieve, Incorporated ("Intrieve"), a data processing company which services 
Home City, and an 0.875% ownership interest in a joint venture which owns the 
Springfield Inn, a local hotel.  At December 31, 1998, the aggregate value of 
the Intrieve stock and the joint venture investment equaled approximately 
$32,000.

Competition

     Home City competes for deposits with other savings associations, 
commercial banks and credit unions and with the issuers of commercial paper 
and other securities, such as shares in money market mutual funds.  The 
primary factors in competing for deposits are interest rates and convenience 
of office location.  In making loans, Home City competes with other savings 
associations, commercial banks, consumer finance companies, credit unions, 
leasing companies, mortgage companies and other lenders.  Home City competes 
for loan originations primarily through the interest rates and loan fees 
offered and through the efficiency and quality of services provided.  
Competition is affected by, among other things, the general availability of 
lendable funds, general and local economic conditions, current interest rate 
levels and other factors which are not readily predictable.  Three savings 
associations, seven banks and seven credit unions have offices in Clark 
County.  At June 30, 1998, Home City had approximately 4.48% of all financial 
institution deposits in Clark County.

     The size of financial institutions competing with Home City is likely to 
increase as a result of changes in statutes and regulations eliminating 
various restrictions on interstate and inter-industry branching and 
acquisitions.  Such increased competition may have an adverse effect upon Home 
City.

Personnel

     As of December 31, 1998, Home City had twenty-one full-time employees and 
two part-time employees.  Home City believes that relations with its employees 
are good.  Home City offers health and life insurance benefits.  None of the 
employees of Home City is represented by a collective bargaining unit.

Regulation

     General.  As a savings association organized under the laws of the United 
States, Home City is subject to regulatory oversight by the OTS.  The OTS is 
an office in the Department of the Treasury and is responsible for the 
regulation and supervision of all savings associations the deposits of which 
are insured by the FDIC in the SAIF and all federally-chartered savings 
institutions.  The OTS issues regulations governing the operation of savings 
associations, regularly examines such institutions and imposes assessments on 
savings associations based on their asset size to cover the costs of this 
supervision and examination.  It also promulgates regulations that prescribe 
the permissible investments and activities of federally-chartered savings 
associations, including the type of lending that such associations may engage 
in and the investments in real estate, subsidiaries and securities they may 
make.  The OTS also may initiate enforcement actions against savings 
associations and certain persons affiliated with them for violations of laws 
or regulations or for engaging in unsafe or unsound practices.  If the grounds 
provided by law exist, the OTS may appoint a conservator or receiver for a 
savings association.
<PAGE>
     Because Home City's deposits are insured by the FDIC, Home City is also 
subject to examination and regulation by the FDIC.  Home City must file 
periodic reports with the OTS concerning its activities and financial 
condition.  Examinations are conducted periodically by the OTS to determine 
whether Home City is in compliance with various regulatory requirements and is 
operating in a safe and sound manner.  Home City is a member of the FHLB of 
Cincinnati. 

     HCFC is also subject to regulation, examination and oversight by the OTS 
as the holding company of Home City and is required to submit periodic reports 
to the OTS.

     Legislation to recapitalize the Savings Association Insurance Fund 
("SAIF") became effective September 30, 1996.  See "Deposit Insurance."  
Congress is considering proposed legislation that may subject Home City to 
additional regulation, examination and oversight and may subject HCFC to more 
restrictive holding company requirements, including greater activity and 
capital requirements than currently imposed on it.

     Regulatory Capital Requirements.  Home City is required by OTS 
regulations to meet certain minimum capital requirements.  These requirements 
call for tangible capital of 1.5% of adjusted total assets, core capital 
(which for Home City is equal to tangible capital) of 3% of adjusted total 
assets, and risk-based capital (which for Home City consists of core capital 
and general valuation allowances) equal to 8% of risk-weighted assets.  Assets 
and certain off-balance-sheet items are weighted at percentage levels ranging 
from 0% to 100% depending on their relative risk.    

     Effective April 1, 1999, the core capital requirement will be at least 
four percent of adjusted total assets for any savings association that does 
not have the highest composite examination rating from the OTS and may be 
higher if warranted for a particular association.  Home City's core capital 
ratio at December 31, 1998, was 13.91%.   For information concerning Home 
City's capital, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF  
OPERATION - Liquidity and Capital Resources."

      The OTS has adopted regulations governing prompt corrective action to 
resolve the problems of capital deficient and otherwise troubled savings 
associations.  At each successively lower capital category, an institution is 
subject to more restrictive and numerous mandatory or discretionary regulatory 
actions or limits, and the OTS has less flexibility in determining how to 
resolve the problems of the institution.  In addition, the OTS can downgrade 
an association's designation notwithstanding its capital level, based on less 
than satisfactory examination ratings in areas other than capital or, after 
notice and an opportunity for hearing, if the institution is deemed to be in 
an unsafe or unsound condition or to be engaging in an unsafe or unsound 
practice.  Each undercapitalized association must submit a capital restoration 
plan to the OTS within 45 days after it becomes undercapitalized.  Such 
institution will be subject to increased monitoring and asset growth 
restrictions and will be required to obtain prior approval for acquisitions, 
branching and engaging in new lines of business.  A critically 
undercapitalized institution must be placed in conservatorship or receivership 
within 90 days after reaching such capitalization level, except under limited 
circumstances.  Home City's capital at December 31, 1998, met the standards 
for the highest level, a " well-capitalized association".

     Limitations on Capital Distributions.  The OTS imposes various 
restrictions or requirements on the ability of associations to make capital 
distributions according to ratings of associations based on their capital 
level and supervisory condition.  Capital distributions, for purposes of such 
regulation, include, without limitation, payments of cash dividends, 
repurchases and certain other acquisitions by an association of its shares and 
payments to stockholders of another association in an acquisition of such 
other association.  See "MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER 
MATTERS."
<PAGE>
     Qualified Thrift Lender Test.  Savings associations are required to 
maintain a specified level of investments in assets that are designated as 
qualifying thrift investments ("QTIs").  Prior to September 30, 1996, the QTL 
Test required savings associations to maintain a specified level of 
investments in assets that are designated as QTIs, which are generally related 
to domestic residential real estate and manufactured housing and include stock 
issued by any FHLB, the FHLMC or the FNMA.  Under this test  65% of an 
institution's "portfolio assets" (total assets less goodwill and other 
intangibles, property used to conduct business and 20% of liquid assets) must 
consist of QTIs on a monthly average basis in 9 out of every 12 months.  
Congress created a second QTL Test, effective September 30, 1996, pursuant to 
which a savings association may also qualify as a QTL thrift if at least 60% 
of the association assets (on a tax basis) consist of specified assets 
(generally loans secured by residential real estate or deposits, educational 
loans, cash and certain governmental obligations). The OTS may grant 
exceptions to the QTL Test under certain circumstances.  If a savings 
association fails to meet the QTL Test, the association and its holding 
company will be subject to certain operating restrictions.  A savings 
association that fails to meet the QTL Test will not be eligible for FHLB 
advances to the fullest possible extent.  See "Federal Home Loan Banks."  At 
December 31, 1998, Home City had QTIs equal to approximately 69.5% of its 
total portfolio assets.

     Transactions with Insiders and Affiliates.  Loans to executive officers, 
directors and principal shareholders and their related interests must conform 
to the lending limits on loans to one borrower and the total of such loans 
cannot exceed an association's total regulatory capital plus additional loan 
reserves (or 200% of such capital amount for qualifying institutions with less 
than $100 million in deposits).  Most loans to directors, executive officers 
and principal shareholders must be approved in advance by a majority of the 
"disinterested" members of the board of directors of the association with any 
"interested" director not participating.  All loans to directors, executive 
officers and principal shareholders must be made on terms substantially the 
same as offered in comparable transactions to the general public or as offered 
to all employees in a company-wide benefit program, and loans to executive 
officers are subject to additional limitations.  Home City was in compliance 
with such restrictions at December 31, 1998.

     Savings associations must also comply with Sections 23A and 23B of the 
Federal Reserve Act (the "FRA") pertaining to transactions with affiliates.  
An affiliate of a savings association is any company or entity that controls, 
is controlled by or is under common control with the savings association.  
HCFC is an affiliate of Home City.  Generally, Sections 23A and 23B of the FRA 
limit the extent to which the savings institution or its subsidiaries may 
engage in specified transactions with affiliates and require that all such 
transactions be on terms substantially the same, or at least as favorable to 
the institution, as those provided in transactions with a non-affiliate.  Home 
City was in compliance with these requirements and restrictions at December 
31, 1998.

     Holding Company Regulation. HCFC is a savings and loan holding company 
within the meaning of the Home Owners' Loan Act (the "HOLA").  As such, HCFC 
has registered with the OTS and is subject to OTS regulations, examination, 
supervision and reporting requirements, in addition to the reporting 
requirements of the Securities and Exchange Commission (the "SEC"). 

     HCFC is a unitary savings and loan holding company, (i.e., it owns only 
one savings association).  There are generally no restrictions on the 
activities of a unitary savings and loan holding company, and such companies 
are the only financial institution holding companies that may engage in 
commercial, securities and insurance activities without limitation.  Congress 
is considering, however,  limiting unitary savings and loan holding companies 
to the same activities as other financial institution holding companies or 
permitting certain bank holding companies to engage in commercial activities 
and expanded securities and insurance activities.  HCFC cannot predict if and 
in what form these proposals might become law.  The broad latitude to engage 
in activities under current law can be restricted, however, if the OTS 
determines that there is reasonable cause to believe that the continuation by 
a savings and loan holding company of an activity constitutes a serious risk 
to the financial safety, soundness or stability of its subsidiary savings 
association.  Notwithstanding the foregoing rules as to permissible business 
activities of a unitary savings and loan holding company, if the savings 
association subsidiary of a holding company fails to meet the QTL Test, then 
such unitary holding company would become subject to the activities 
restrictions applicable to multiple holding companies.  At December 31, 1998, 
Home City met the QTL Test.  See "Qualified Thrift Lender Test."
<PAGE>
     Deposit Insurance.  The FDIC is an independent federal agency that 
insures the deposits, up to prescribed statutory limits, of federally insured 
banks and thrifts and safeguards the safety and soundness of the bank and 
thrift industries.  The FDIC administers two separate insurance funds, the BIF 
for commercial banks and state savings banks and the SAIF for savings 
associations and banks that have acquired deposits from savings associations.  
The FDIC is required to maintain designated levels of reserves in each fund. 

     Home City is a member of the SAIF and its deposit accounts are insured by 
the FDIC up to the prescribed limits.  The FDIC has examination authority over 
all insured depository institutions, including Home City, and has authority to 
initiate enforcement actions against federally-insured savings associations if 
the FDIC does not believe the OTS has taken appropriate action to safeguard 
safety and soundness and the deposit insurance fund.

     The FDIC is authorized to establish separate annual assessment rates for 
deposit insurance for members of the BIF and members of the SAIF.  The FDIC 
may increase assessment rates for either fund if necessary to restore the 
fund's ratio of reserves to insured deposits to the target level within a 
reasonable time and may decrease such rates if such target level has been 
met. 

     Federal legislation, which was effective September 30, 1996, provided for 
the recapitalization of the SAIF by means of a special assessment of $.657 per 
$100 of SAIF deposits held at March 31, 1995, in order to increase SAIF 
reserves to the level required by law.  Certain banks holding SAIF deposits 
were required to pay the same special assessment on 80% of deposits at March 
31, 1995.  In addition, the cost of prior thrift failures is now being shared 
by both the SAIF and the BIF.  Home City had $40.1 million in deposits at 
March 31, 1995.  Home City paid a special assessment of $263,000  on November 
27, 1996, which was recorded as of September 30, 1996. 

     Reserve Requirements.  FRB regulations require savings associations to 
maintain reserves against their transaction accounts (primarily NOW accounts) 
of 3% of deposits in net transaction accounts for that portion of accounts up 
to $46.5 million (subject to an exemption of up to $4.9 million), and to 
maintain reserves of 10% of deposits in net transaction accounts against that 
portion of total transaction accounts in excess of $46.5 million.  These 
percentages are subject to adjustment by the FRB.  At December 31, 1998, Home 
City was in compliance with its reserve requirements.

     Federal Home Loan Banks.  The FHLBs, under the regulatory oversight of 
the Federal Housing Financing Board, provide credit to their members in the 
form of advances.  Home City is a member of the FHLB of Cincinnati and must 
maintain an investment in the capital stock of the FHLB of Cincinnati in an 
amount equal to the greater of 1.0% of the aggregate outstanding principal 
amount of Home City's residential mortgage loans, home purchase contracts and 
similar obligations at the beginning of each year, or 5% of its advances from 
the FHLB.  Home City is in compliance with this requirement with an investment 
in FHLB of Cincinnati stock of $601,000 at December 31, 1998. 

     FHLB advances to members such as Home City who meet the QTL Test are 
generally limited to the lower of (i) 25% of the member's assets or (ii) 20 
times the member's investment in FHLB stock.  At December 31, 1998, Home 
City's maximum limit on advances was approximately $12.0 million and Home 
City's advances totaled $11.6 million.  The granting of advances is subject 
also to the FHLB's collateral and credit underwriting guidelines.

     Upon the origination or renewal of a loan or advance, the FHLB of 
Cincinnati is required by law to obtain and maintain a security interest in 
collateral in one or more of the following categories:  fully disbursed, whole 
first mortgage loans on improved residential property or securities 
representing a whole interest in such loans; securities issued, insured or 
guaranteed by the United States government or an agency thereof; deposits in 
any FHLB; or other real estate related collateral (up to 30% of the member 
association's capital) acceptable to the applicable FHLB, if such collateral 
has a readily ascertainable value and the FHLB can perfect its security 
interest in the collateral.

     Each FHLB is required to establish standards of community investment or 
service that its members must maintain for continued access to long-term 
advances from the FHLBs.  The standards take into account a member's 
performance under the Community Reinvestment Act and its record of lending to 
first-time home buyers.  All long-term advances by each FHLB must be made only 
to provide funds for residential housing finance.
<PAGE>

Taxation

     Federal Taxation.  HCFC and Home City each are subject to the federal tax 
laws and regulations which apply to corporations generally.  In addition to 
the regular income tax, HCFC and Home City may be subject to alternative 
minimum tax.  An alternative minimum tax is imposed at a minimum tax rate of 
20% on "alternative minimum taxable income" (which is the sum of a 
corporation's regular taxable income, with certain adjustments, and tax 
preference items), less any available exemption.  Such tax preference items 
include interest on certain tax-exempt bonds issued after August 7, 1986.  In 
addition, 75% of the amount by which a corporation's "adjusted current 
earnings" exceeds its alternative minimum taxable income computed without 
regard to this preference item and prior to reduction by net operating losses, 
is included in alternative minimum taxable income.  Net operating losses can 
offset no more than 90% of alternative minimum taxable income.  The 
alternative minimum tax is imposed to the extent it exceeds the corporation's 
regular income tax.  Payments of alternative minimum tax may be used as 
credits against regular tax liabilities in future years.  The Taxpayer Relief 
Act of 1997 repealed the alternative minimum tax for certain "small 
corporations" for tax years beginning after December 31, 1997.  A corporation 
initially qualifies as a small corporation if it had average gross receipts of 
$5 million or less for the three tax years ending with its first tax year 
beginning after December 31, 1996.  Once a corporation is recognized as a 
small corporation, it will continue to be exempt from the alternative minimum 
tax for as long as its average gross receipts for the prior three-year period 
does not exceed $7.5 million.  In determining if a corporation meets this 
requirement, the first year that it achieved small corporation status is not 
taken into consideration.  HCFC and Home City have both qualified as small 
corporations.  Both corporations' average gross receipts were less than $7.5 
million for the year ending December 31, 1998.

     Certain thrift institutions such as Home City were, prior to the 
enactment of the Small Business Jobs Protection Act, which was signed into law 
on August 21, 1996, allowed deductions for bad debts under methods more 
favorable to those granted to other taxpayers.  Qualified thrift institutions 
could compute deductions for bad debts using either the specific charge-off 
method of Section 166 of the Code or the reserve method of Section 593 of the 
Code.

     Under Section 593, a thrift institution annually could elect to deduct 
bad debts under either (i) the "percentage of taxable income" method 
applicable only to thrift institutions, or (ii) the "experience" method that 
also was available to small banks.  Under the "percentage of taxable income" 
method, a thrift institution generally was allowed a deduction for an addition 
to its bad debt reserve equal to 8% of its taxable income (determined without 
regard to this deduction and with additional adjustments).  Under the 
experience method, a thrift institution was generally allowed a deduction for 
an addition to its bad debt reserve equal to the greater of (i) an amount 
based on its actual average experience for losses in the current and five 
preceding taxable years, or (ii) an amount necessary to restore the reserve to 
its balance as of the close of the base year.  A thrift institution could 
elect annually to compute its allowable addition to bad debt reserves for 
qualifying loans either under the experience method or the percentage of 
taxable income method.  For tax years 1993, 1992 and 1991, Home City used the 
percentage of taxable income method because such method provided a higher bad 
debt deduction than the experience method.

     The Small Business Jobs Protection Act eliminated the percentage of 
taxable income reserve method of accounting for bad debts by thrift 
institutions, effective for taxable 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 are required to use only the specific 
charge-off method. 

     A thrift institution required to change its method of computing reserves 
for bad debt will treat such change as a change in the method of accounting, 
initiated by the taxpayer, and having been made with the consent of the 
Secretary of the Treasury.  Any adjustments under Section 481(a) of the Code 
required to be recaptured with respect to such change generally will be 
determined solely with respect to the "applicable excess reserves" of the 
taxpayer.  The amount of the applicable excess reserves will be taken into 
account ratably over a six-taxable-year period, beginning with the first 
taxable year beginning after 1995, subject to the residential loan requirement 
described below.  In the case of a thrift institution that becomes a large 
bank, the amount of the institution's applicable excess reserves generally is 
the excess of (i) the balances of its reserve for losses on qualifying real 
property loans (generally loans secured by improved real estate) and its 
reserve for losses on nonqualifying loans (all other types of loans) as of the 
close of its last taxable year beginning before January 1, 1996, over (ii) the 
balances of such reserves as of the close of its last taxable year beginning 
before January 1, 1988 (i.e., the "pre-1988 reserves").  In the case of a 
<PAGE>
thrift institution that becomes a small bank, like Home City, the amount of 
the institution's applicable excess reserves generally is the excess of (i) 
the balances of its reserve for losses on qualifying real  property loans and 
its reserve for losses on nonqualifying loans as of the close of its last 
taxable year beginning before January 1, 1996, over (ii) the greater of the 
balance of (a) its pre-1988 reserves or (b) what the thrift's reserves would 
have been at the close of its last year beginning before January 1, 1996, had 
the thrift always used the experience method.

     For taxable years that begin after December 31, 1995, and before January 
1, 1998, if a thrift meets the residential loan requirement for a tax year, 
the recapture of the applicable excess reserves otherwise required to be taken 
into account as a Code Section 481(a) adjustment for the year will be 
suspended.  A thrift meets the residential loan requirement if, for the tax 
year, the principal amount of residential loans made by the thrift during the 
year is not less then its base amount.  The "base amount" generally is the 
average of the principal amounts of the residential loans made by the thrift 
during the six most recent tax years beginning before January 1, 1996.  A 
residential loan is a loan as described in Section 7701(a)(19)(C)(v) 
(generally a loan secured by residential real and church property and certain 
mobile homes), but only to the extent that the loan is made to the owner of 
the property to acquire, construct or improve the property.

     The balance of the pre-1988 reserves is subject to the provisions of 
Section 593(e) as modified by the Small Business Jobs Protection Act, which 
require recapture in the case of certain excessive distributions to 
shareholders.  The pre-1988 reserves may not be utilized for payment of cash 
dividends or other distributions to a shareholder (including distributions in 
dissolution or liquidation) or for any other purpose (except to absorb bad 
debt losses).  Distribution of a cash dividend by a thrift institution to a 
shareholder is treated as made:  first, out of the institution's post-1951 
accumulated earnings and profits; second, out of the pre-1988 reserves; and 
third, out of such other accounts as may be proper.  To the extent a 
distribution by Home City to HCFC is deemed paid out of its pre-1988 reserves 
under these rules, the pre-1988 reserves would be reduced and Home City's 
gross income for tax purposes would be increased by the amount which, when 
reduced by the income tax, if any, attributable to the inclusion of such 
amount in its gross income, equals the amount deemed paid out of the pre-1988 
reserves.  As of December 31, 1998, Home City's pre-1988 reserves for tax 
purposes totaled approximately $1.1 million.  Home City believes it had 
approximately $5.4 million of accumulated earnings and profits for tax 
purposes as of December 31, 1998, which would be available for dividend 
distributions, provided regulatory restrictions applicable to the payment of 
dividends are met.  No representation can be made as to whether Home City will 
have current or accumulated earnings and profits in subsequent years.

     The tax returns of Home City have been audited or closed without audit 
through fiscal year 1994.  In the opinion of management, any examination of 
open returns would not result in a deficiency which could have a material 
adverse effect on the financial condition of Home City.

     Ohio Taxation. HCFC is subject to the Ohio corporation franchise tax, 
which, as applied to HCFC, is a tax measured on either net earnings or 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 taxable income in excess of 
$50,000 or (ii) 0.04% times taxable net worth. 

     A special litter tax is also applicable to all corporations, including 
HCFC, 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 0.11% of the first $50,000 of computed Ohio taxable 
income and 0.22% 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 
0.014% times taxable net worth.

     Due to legislative changes enacted July 1, 1997, HCFC may elect to be a 
"qualifying holding company" and as such be exempt from the net worth tax. To 
be exempt it must satisfy all the requirements of the enacted law which 
includes related member adjustments that could affect the taxable net worth of 
HCFC's subsidiary Home City.

     Home City 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% of Home City's book 
net worth determined in accordance with GAAP, less statutory deductions. This 
rate is scheduled to decrease in the year 2000.  As a "financial institution," 
Home City is not subject to any tax based upon net income or net profits 
imposed by the State of Ohio. 
<PAGE>     
Impact of Recent Accounting Pronouncements

     SFAS No. 128, "Earnings Per Share."  In February 1997, the Financial 
Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings Per 
Share."  This statement established standards for computing and presenting 
earnings per share ("EPS") and applies to entities with publicly held common 
stock or potential common stock.  This statement simplifies the standards for 
computing earnings per share previously in APB Opinion No. 15, "Earnings Per 
Share", and makes them comparable to international EPS standards.  It replaces 
the presentation of primary EPS with presentation of basic EPS.  It also 
requires dual presentation of basic and diluted EPS on the face of the income 
statement for all entities with complex capital structures and requires a 
reconciliation of the numerator and the denominator of the basic EPS 
computation to the numerator and denominator of the diluted EPS computation.  
This statement is effective for financial statements issued for periods ending 
after December 15, 1997, including interim periods; earlier application is not 
permitted.  This statement requires restatement of all prior period EPS data 
presented. 

     SFAS No. 130, "Reporting Comprehensive Income."  In June 1997, the FASB 
issued SFAS No. 130, "Reporting Comprehensive Income."  This statement 
establishes standards for reporting and display of comprehensive income and 
its components (revenues, 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 that is displayed 
with the same prominence as other financial statements.  This statement does 
not require a specific format for the financial statement but requires that an 
enterprise display an amount representing total comprehensive income for the 
period in that financial statement.

     The statement also requires that an enterprise (a) classify items of 
other comprehensive income by their nature in a financial statement and (b) 
display the accumulated balance of other comprehensive income separately from 
retained earnings and additional paid-in capital in the equity section of 
statements of financial position.

     This statement is effective for fiscal years beginning after December 15, 
1997.  Reclassification of financial statements for earlier periods provided 
for comparative purposes is required.

     SFAS No. 131, "Disclosures about Segments of an Enterprise and Related 
Information."  In June 1997, the FASB issued SFAS No. 131, "Disclosures about 
Segments of an Enterprise and Related Information."  This statement 
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 requires that a public business enterprise report 
financial and descriptive information about its reportable segments and 
requires that a public business enterprise report a measure of segment profit 
or loss, certain specific revenue and expense items, and segment assets.  It 
also requires a reconciliation of segment information presented to 
corresponding amounts in the enterprise's general-purpose financial 
statements.

     This statement is effective for financial statements for periods 
beginning after December 15, 1997.  In the initial year of application, 
comparative information for earlier years is to be restated.  This statement 
need not be applied to interim financial statements in the initial year of its 
application, but comparative information for interim periods in the initial 
year of application is to be reported in financial statements for interim 
periods in the second year of application.

Impact of Inflation and Changing Prices 

     The consolidated financial statements and notes thereto included herein 
have been prepared in accordance with GAAP, which requires HCFC to measure 
financial position and operating results in terms of historical dollars, with 
the exception of investment securities available-for-sale, which are carried 
at fair value.  Changes in the relative value of money due to inflation or 
recession are generally not considered.

     In management's opinion, changes in interest rates affect the financial 
condition of a financial institution to a far greater degree than changes in 
<PAGE>
the rate of inflation.  While interest rates are greatly influenced by changes 
in the rate of inflation, they do not change at the same rate or in the same 
magnitude as the rate of inflation.  Rather, interest rate volatility is based 
on changes in the expected rate of inflation, as well as changes in monetary 
and fiscal policies.


ITEM 2. Properties

     Home City's only office for serving customers is located at 63 West Main 
Street, Springfield, Ohio 45502.  The 5,839 square foot building is owned by 
Home City.  Home City also leases administrative office space across the 
street.  HCFC operates out of Home City's offices.


ITEM 3. Legal Proceedings

     On September 23, 1996, a civil suit was filed in the Common Pleas Court 
of Clark County, Ohio, against Home City, Douglas L. Ulery, President of Home 
City, and two other individuals (the "Other Individuals") by a Springfield, 
Ohio, church (the "church"), which obtained a mortgage loan from Home City, 
and two members of the Church.  Among other allegations in the lawsuit, the 
plaintiffs allege that the Other Individuals wrongfully represented to Mr. 
Ulery that they were the newly elected officers of the Church; that Mr. Ulery 
allowed the Other Individuals access to confidential information about the 
Church; and that, as a result, Church membership and income decreased.  The 
plaintiffs are seeking damages in an amount not less than $10,000.  Home City 
and Mr. Ulery filed an Answer to the Complaint on October 24, 1996, denying 
the substantive allegations contained in the Complaint and raising a number of 
affirmative defenses.

     Neither Home City nor HCFC is presently involved in any other legal 
proceedings of a material nature.  From time to time, Home City is party to 
legal proceedings incidental to its business to enforce its security interest 
in collateral pledged to secure loans made by Home City.


ITEM 4. Submission of Matters to a Vote of Security Holders

     Not Applicable.
<PAGE>

PART II


ITEM 5. Market for Common Equity and Related Stockholder Matters

     There were 859,390 common shares of HCFC outstanding on December 31, 
1998, held of record by  approximately 363 shareholders.  Price information 
with respect to HCFC's common shares is quoted on The Nasdaq SmallCap Market 
("Nasdaq") under the symbol "HCFC."  The high and low trading prices for the 
common shares of HCFC, as quoted by Nasdaq, by quarter are shown below.  HCFC 
declared a cash dividend of $0.09 per share on each of February 23, 1998, May 
27, 1998, and July 27, 1998, as well as $0.10 per share on October 26,1998.  
On April 22, 1998, the Board of Directors of HCFC declared a special cash 
distribution in the amount of $3.50 per share.

<TABLE>
<CAPTION>
             March 31, 1998     June 30, 1998     September 30,1998     December 31,1998
             --------------     -------------     -----------------     ----------------
<S>            <C>               <C>                   <C>                 <C>
High            $19.250           $23.000               $15.500             $15.000
Low             $18.250           $14.750               $11.000             $11.500
Dividend                    
  Declared        $0.09             $0.09                 $0.09               $0.10
Capital                    
  Distribution                      $3.50          
                    
             March 31, 1997     June 30, 1997     September 30,1997     December 31,1997
             --------------     -------------     -----------------     ----------------
High            $14.250           $14.438               $16.250             $18.500
Low             $12.000           $12.750               $14.188             $15.250
Dividend                    
  Declared        $0.08             $0.08                 $0.08               $0.09
</TABLE>

     The income of HCFC consists of dividends that may periodically be 
declared and paid by the Board of Directors of Home City on the common shares 
of Home City held by HCFC and earnings on the net proceeds retained by HCFC 
from the sale of HCFC's common shares in connection with the Conversion.  In 
addition to certain federal income tax considerations, OTS regulations impose 
limitations on the payment of dividends and other capital distributions by 
savings associations.

     Under OTS regulations applicable to converted savings associations, Home 
City is not permitted to pay a cash dividend on its common shares if the 
regulatory capital of Home City would, as a result of the payment of such 
dividend, be reduced below the amount required for the liquidation account 
(which was established for the purpose of granting a limited priority claim on 
the assets of Home City, in the event of a complete liquidation, to those 
members of Home City before the Conversion who maintain a savings account at 
Home City after the Conversion) or applicable regulatory capital requirements 
prescribed by the OTS.

     OTS regulations applicable to all savings associations provide that a 
savings association that immediately prior to, and on a pro forma basis after 
giving effect to, a proposed capital distribution (including a dividend) has 
total capital (as defined by OTS regulations) that is equal to or greater than 
the amount of its capital requirements is generally permitted without OTS 
approval (but subsequent to 30 days' prior notice to the OTS) to make capital 
distributions, including dividends, during a calendar year in an amount not to 
exceed the greater of (1) 100% of its net earnings to date during the calendar 
year, plus an amount equal to one-half the amount by which its total capital 
to assets ratio exceeded its required capital to assets ratio at the beginning 
of the calendar year, or (2) 75% of its net earnings for the most recent 
four-quarter period.  Savings associations with total capital in excess of the 
capital requirements that have been notified by the OTS that they are in need 
of more than normal supervision will be subject to restrictions on dividends.  
A savings association that fails to meet current minimum capital requirements 
is prohibited from making any  capital distributions  without prior approval 
of the OTS.  Home City currently meets all of its regulatory capital 
requirements and, unless the OTS determines that Home City is an institution 
requiring more than normal supervision, Home City may pay dividends in 
accordance with the foregoing provisions of the OTS regulations.
<PAGE>

General

     Home City Federal Savings Bank of Springfield ("Home City" or the 
"Company") converted from a mutual federal savings bank to a stock federal 
savings bank (the "Conversion") on December 30, 1996.  In connection with the 
Conversion, 952,200 common shares of Home City Financial Corporation ("HCFC" 
or the "Corporation") were sold, generating net proceeds of $8.3 million after 
Conversion expenses.  Of this amount, $4.6 million was utilized to purchase 
100% of the common shares of the Company, and the balance was utilized to 
purchase investments, loan funds to the Home City Financial Corporation 
Employee Stock Ownership Plan (the "ESOP") and for other purposes.  

     At the time of the Conversion the fiscal year end for  both HCFC and Home 
City was June 30.  In December 1997 the Board of Directors resolved that the 
fiscal year end of both corporations be changed to December 31 from June 30.   
The following discussion and analysis of the financial condition and results 
of operations of HCFC and Home City should be read in conjunction with and 
with reference to the consolidated financial statements, and the notes 
thereto, presented in the Annual Report.  Audited consolidated financial 
statements for the years ended December 31, 1998 and 1997, have been included 
in the Annual Report for comparison purposes.

     HCFC was incorporated for the purpose of owning all of the outstanding 
common shares of Home City  following the Conversion.  As a result, the 
discussion and analysis that follows pertains primarily to the financial 
condition of HCFC on a consolidated basis and to the results of operations of 
Home City.

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

     Without limiting the generality of the foregoing, the following 
statements in the referenced sections of this discussion and analysis may be 
deemed forward-looking and are, therefore, subject to such risks and 
uncertainties:

1.  Management's determination of the amount of the allowance for loan losses  
    as set forth under the captions "Financial Condition" and "Comparison of
    Results of Operations for the Fiscal Years Ended December 31, 1998 and 
    1997;"

2.  The liquidity of Home City's assets and the regulatory capital of Home 
    City as set forth under "Liquidity and Capital Resources;"

3.  Management's analysis of the interest rate risk of Home City as set 
    forth under "Asset and Liability Management;" and

4.  The anticipated effect of legislation that may be enacted as set forth 
    under "Impact of Pending Legislation."
     
Financial Condition

     The Corporation's consolidated total assets amounted to $85.4 million at 
December 31, 1998, an increase of $13.5 million, or 18.79%, over the $71.9 
million in total assets at December  31, 1997.  Such increase in assets was 
funded primarily by the $8.8 million net increase in deposits, $5.9 million 
net increase in advances from the Federal Home Loan Bank (the "FHLB"), $1.8 
million increase in short-term borrowing, and undistributed net earnings of 
$621,000.

     Cash and cash equivalents, time deposits and investment securities 
totaled $5.0 million at December 31, 1998, a decrease of $1.1 million, or 
17.91%, from December 31, 1997.  During the year  ended December 31, 1998, 
$2.2 million of investment securities matured, which consisted primarily of 
United States Government agency obligations totaling $2.0 million, and 
tax-free securities totaling $218,000.  The proceeds were used primarily to 
fund the increased demand for loans and the repurchase of common shares.

     Mortgage-backed securities totaled $559,000 at December 31, 1998, a 
decrease of $141,000 from December 31, 1997.  Due to the composition of the 
mortgage-backed securities portfolio coupled with the current loan demand, no 
additional purchases were made.  
<PAGE>

     Loans receivable totaled $77.5 million at December 31, 1998, an increase 
of $14.5 million, or 23.00%, from the $63.0 million total at December 31, 
1997.  During the year ended December 31, 1998, loan disbursements amounted to 
$37.8 million.  Such disbursements were partially offset by principal 
repayments of $23.3 million.

     Home City's allowance for loan losses totaled $486,000 at December 31, 
1998, which represented 0.63% of total loans and 261.29% of non-performing 
loans.  At December 31, 1997, the allowance for loan losses totaled $452,000, 
which represented 0.72% of total loans and 174.52% of non-performing loans.

     Non-performing loans were $186,000 and $259,000 at December 31, 1998 and 
1997, respectively, and represented 0.22% and 0.36% of total assets at each 
date.  The decrease at December 31, 1998, was due primarily to $266,000 in 
loans that were paid off, $4,000 in principal reductions, $634,000 in loans 
that became classified as non-performing, and $438,000 in loans that became 
classified as performing, for a net  reduction of $74,000.  All loans 
classified as non-performing at December 31, 1998, were either under a workout 
plan or  being refinanced elsewhere, the underlying collateral was in the 
process of being sold or foreclosure action was being initiated.  Although 
management believes that its allowance for loan losses at December 31, 1998, 
was adequate based upon the facts and circumstances available to it, there can 
be no assurance that additions to such allowance will not be necessary in 
future periods, which could affect the Corporation's results of operations.

     Deposits totaled $60.5 million at December 31, 1998, an increase of $8.8 
million, or 17.04%, from  $51.7 million at December 31, 1997.  The increase is 
consistent with the deposit growth trends that the Company has been 
experiencing over the past several years.  Home City has generally not engaged 
in sporadic increases or decreases in interest rates paid or offered the 
highest rates available in its deposit market.  Advances from the FHLB 
increased from $5.7 million at December 31, 1997, to $11.6 million at December 
31, 1998, an increase of 102.57%, as advances were used to fund loan 
originations.  Short-term commercial lines of credit were utilized temporarily 
to fund the 1998 stock repurchase.

Comparison of Results of Operations for the Fiscal Years Ended December 31, 
1998 and 1997.

     General.  Net income for the year ended December 31, 1998, was $951,000, 
an increase of $63,000, or 7.09%, over the $888,000 in net income recorded in 
1997.  The increase in net income resulted primarily from a $476,000 increase 
in net interest income and  a $9,000 increase in noninterest income, which was 
partially offset by a $309,000 increase in noninterest expense and an increase 
in the provision for federal income taxes of $95,000.

     Net Interest Income.  Net interest income totaled $3.3 million for the  
year ended December 31, 1998, an increase of $476,000, or 16.73%, over the 
$2.8 million recorded in 1997.  Interest income on loans increased by $1.3 
million, or 23.80%, during 1998 due primarily to an increase in the average 
balance of the loans outstanding of $13.9 million, or 24.31%, being partially 
offset by a 4 basis point (100 basis points equals one percent) decrease in 
yield from 9.25% in 1997 to 9.21% in 1998.  Interest income on mortgage-backed 
securities decreased by $24,000, or 40.00%, due primarily to a $292,000, or 
32.02%, decrease in the average balance of mortgage-backed securities 
outstanding, coupled with a decrease in the weighted-average yield 
year-to-year, from 6.55% in fiscal 1997 to 5.85% in 1998.  Interest income on 
investment securities decreased by $184,000, or 49.33%, for the  year ended 
December 31, 1998, compared to fiscal 1997, as the average balance decreased 
by $3.0 million year to year and the related yield decreased by 21 basis 
points to 5.61% in 1998.  Interest income on interest-bearing deposits and 
federal funds sold decreased by $84,000 and $22,000, respectively, for the  
year ended December 31, 1998, compared to 1997.  The average balance of 
interest-bearing deposits decreased $1.6 million, or 74.36%.  The average 
balance invested in federal funds sold decreased by $419,000, or 86.39%, 
compared to 1997.  The yield on interest-bearing deposits decreased 53 basis 
points to 4.46%, while the yield on federal funds sold decreased 3 basis 
points to 5.22%.

     Interest expense on deposits increased by $205,000, or 7.47%, during 
1998, due primarily to an increase in the average balance of deposits 
outstanding of $5.2 million, or 10.38%, coupled with a decrease in the 
weighted-average rate from 5.52% in 1997 to 5.38% in 1998.  Interest expense 
on FHLB advances and short-term borrowings increased by $265,000, or 97.07%, 
primarily due to an increase in the average balance outstanding of $4.8 
million, or 111.93%, coupled with a decrease in weighted-average rate from 
6.41% in 1997 to 5.95% in 1998.

     As a result of the foregoing changes in interest income and interest 
expense the interest rate spread increased by 39 basis points, to 3.52% for 
1998, as compared to 3.13% for 1997, while the net interest margin increased 
by 15  basis points to 4.38% for the year ended December 31, 1998. 

     Provision for Loan Losses.  Home City maintains an allowance for loan 
losses in an amount that, in management's judgment, is adequate to absorb 
<PAGE>
reasonably foreseeable losses inherent in the loan portfolio.  The provision 
for loan losses is determined by management as the amount to be added to the 
allowance for loan losses, after net charge-offs have been deducted, to bring 
the allowance to a level that is considered adequate to absorb losses inherent 
in the loan portfolio in accordance with generally accepted accounting 
principles ("GAAP").  The amount of the provision is based on management's 
regular review of the loan portfolio and consideration of such factors as 
historical loss experience, generally prevailing economic conditions, changes 
in the size and composition of the loan portfolio and considerations relating 
to specific loans, including the ability of the borrower to repay the loan and 
the estimated value of the underlying collateral.  Although management 
utilizes its best judgment and information available, the ultimate adequacy of 
the allowance is dependent upon a variety of factors, including the 
performance of Home City's loan portfolio, the economy, changes in real estate 
values and interest rates and regulatory requirements regarding asset 
classifications.  As a result of its analysis, management concluded that the 
allowance was adequate as of December 31, 1998.  There can be no assurance 
that the allowance will be adequate to cover future losses on non-performing 
assets.

     Home City had net charge-offs of $27,000 during the  year ended December 
31, 1998, and net recoveries of  $9,000 during the year ended December 31, 
1997.  Home City's charge-off history is a product of a variety of factors, 
including Home City's underwriting guidelines and the composition of its loan 
portfolio.  Loans secured by real estate made up 86% of Home City's loan 
portfolio, and loans secured by first mortgages on one- to four-family 
residential real estate made up 53% of total loans at December 31,1998.  Such 
loans typically present less risk to a lender than loans not secured by real 
estate.  Substantially all of Home City's loans are secured by properties in 
its primary market area.  The provision for loan losses was $61,000 and 
$43,000 for the  years ended December 31, 1998 and 1997, respectively.  The 
ratio of non-performing loans to total loans decreased to 0.21% in 1998 from 
0.32% in  1997.  At December 31, 1998 and 1997, Home City had a ratio of 
allowance for loan losses to total loans of 0.63% and 0.72%, respectively, and 
ratios of allowance for loan losses to non-performing loans of 296.34% and 
226.00%.  Due to such ratios of non-performing loans to total loans, 
historical charge-offs, delinquency history, and the addition of commercial 
and consumer installment lending, the provisions of $61,000 and $43,000 made 
in 1998 and 1997 were deemed appropriate by management to absorb reasonably 
foreseeable loan losses.

      Noninterest Income.  Noninterest income totaled $98,000 for the year 
ended December 31, 1998, an increase of $9,000, or 10.11%, from the $89,000 
recorded in 1997.  The increase resulted primarily from increases of $11,000 in 
income from life insurance policies, an increase of $3,000 in service charges 
on deposit accounts, a $20,000 decrease in net losses recognized on the sale 
of securities, and a decrease of $25,000 in other miscellaneous fee income.

      Noninterest Expense.  Noninterest expense increased by $309,000, or 
18.70%, to a total of $2.0 million for the  year ended December 31, 1998, as 
compared to 1997.  Salaries and employee benefit expenses increased $192,000, 
or 22.35%, primarily as a result of additional staffing and the adoption of 
employee benefit programs, $29,000, or 26.36%,  in occupancy and equipment 
expense, and $56,000, or 42.42%,  in other operating expenses.   The increase 
in salaries and employee benefits resulted primarily from costs associated with 
staff additions, the Home City Financial Corporation Employee Stock Ownership 
Plan, the Home City Financial Corporation Recognition and Retention Plan,  and 
normal merit increases for existing employees.  The increase in the remaining 
items of noninterest expense was due primarily to additional taxes, data 
processing and other expenses related to the reporting requirements of a 
public company.

     Federal Income Taxes.  The provision for federal income taxes totaled 
$447,000 for the year ended December 31, 1998, an increase of $95,000, or 
26.99%, from the $352,000 provision recorded in fiscal 1997. HCFC's effective 
tax rate increased to 31.97% in 1998 from 28.39% in 1997 which was primarily 
the result of tax-exempt income from investments and deferred loan costs.
<PAGE>

Yields Earned and Rates Paid

     The following table presents certain information relating to HCFC's 
average balance sheet information and reflects the average yield on 
interest-earning assets and the average cost of customer deposits and FHLB 
advances for the periods indicated.  Such yields and costs are derived by 
dividing annual income or expense by the average monthly balance of 
interest-earning assets or customer deposits and FHLB advances, respectively, 
for the years presented.  Average balances are derived from daily balances, 
which included nonaccruing loans in the loan portfolio, net of the allowance 
for loan losses.
<TABLE>
<CAPTION>
                                              Year ended December 31,                              
     
                                                         1998                                       1997
                                          --------------------------------       ------------------------------------   
                                          Average       Interest                 Average         Interest
                                        outstanding      earned/     Yield/      outstanding      earned/      Yield/
                                          balance         paid        rate         balance         paid         rate
                                          -------         ----        ----         -------         ----         ----
<S>                                     <C>              <C>         <C>         <C>             <C>           <C>
                                                               (Dollars in thousands)
Interest-earning assets:                              
     Interest-bearing demand deposits     $   537        $    24      4.51%      $   840           $   40       4.71%
    Federal funds sold                         66              3      5.22           485               25       5.25   
    Time deposits                              23              1      1.25         1,344               69       5.17  
   Investment securities (1)                3,372            189      5.61         6,420              373       5.82   
    Mortgage-backed and related securities    620             36      5.85           912               60       6.55   
    Loans receivable (2)                   71,172          6,555      9.21        57,253            5,295       9.25   
       Total interest-earning assets (3)   75,790          6,808      8.98        67,254            5,862       8.72   
                                                                                                                     
Noninterest-earning assets:                                                                                          
     Less: Allowance for loan losses         (460)                                  (444)                            
     Other non-earning assets               3,792                                  2,638                             
                                           ------                                 ------                             
                                                                                                                    
       Total assets                       $79,122                                $69,448                            
                                           ======                                 ======                             
                                                                                                                    
Interest-bearing liabilities:                                                                                       
     NOW accounts                       $     704       $     15      2.08%      $   349           $    6      1.79%
     Money market accounts                    291              9      3.08           330               11      3.43   
     Passbook accounts                      9,223            257      2.79         7,840              186      2.37   
     Certificates of deposit               44,628          2,667      5.98        41,170            2,540      6.17   
                                           ------          -----                 -------           ------      
       Total deposits                      54,846          2,948      5.38        49,689            2,743      5.52
     Notes payable                            723             51      7.02             0                0         0   
     FHLB advances                          8,316            487      5.85         4,265              273      6.41   
                                           ------           ----                 -------           ------
                                                                                                            
Total interest-bearing liabilities         63,885          3,486      5.46%       53,954            3,016      5.59%
                                                                                                                      
Noninterest-bearing liabilities             3,181                                  1,363                              
                                           ------                                -------                              
      Total liabilities                    67,066                                 55,317                              
                              
Total shareholders' equity                 12,056                                 14,131                             
                                           ------                                -------                              
                                                                                                                      
      Total liabilities and shareholders'                                                                             
        equity                            $79,122                               $69,448                               
                                           ======                               =======                               
                                                                                                                      
Net interest income; net interest rate spread             $3,322     3.52%      $ 2,846                        3.13%
                                                           =====                 ======
Net interest margin (4)                                              4.38%                                     4.23%
                                                                     ====                                      ====

Average interest-earning assets to interest-bearing liabilities    118.63%                                   124.65%
                                                                   ======                                    ======
</TABLE>

(1)  Includes $40,000 and $38,000 of nontaxable municipal income recorded in 
     1998 and 1997, respectively.  The tax-equivalent yield on investments is 
     6.22% and 6.13% for 1998 and 1997, respectively.

(2)  Calculated net of deferred loan fees, loan discounts, loans in process 
     and allowance for loan losses.

(3)  Tax-equivalent yield on interest-earning assets is 9.01% and 8.75% for 
     1998 and 1997, respectively.

(4)  Net interest income as a percent of average interest-earning assets.
<PAGE>
    The table below describes the extent to which changes in interest 
rates and changes in volume of interest-earning assets and interest-bearing 
liabilities have affected HCFC's interest income and expense during the years
indicated.  For each category of interest-earning assets and interest-bearing 
liabilities, information is provided on changes attributable to (i) changes in
volume (change in volume multiplied by prior year rate), (ii) changes in rate 
(change in rate multiplied by prior year volume) and (iii) total changes in 
rate and volume.  The combined effects of changes in both volume and rate, 
which cannot be separately identified, have been allocated proportionately to 
the change due to volume and the change due to rate:
<TABLE>
<CAPTION>
                                                               Year ended December 31,
                                                               -----------------------
                                                  1998 vs. 1997                         1997 vs. 1996                    
                   
                                                      Increase                               Increase             
                                                     (decrease)                             (decrease)     
                                                       due to                                 due to                   
                                                  -----------------                     ---------------------
                                                  Volume       Rate        Total        Volume           Rate       Total  
                                                  ------       ----        -----        -------          ----       -----   
                                                                          (Dollars in thousands)                
<S>                                            <C>          <C>         <C>           <C>              <C>         <C>      
Interest income attributable to:                                                                                            
     Interest-bearing demand deposits           $    (14)     $  (2)       $   (16)     $      8         $   (1)     $    7 
     Federal funds sold                              (22)         0            (22)          (17)             1         (16)
     Time deposits                                   (67)        (1)           (68)           11              0          11 
     Investment securities                          (177)        (7)          (184)          232             25         257 
     Mortgage-backed and related securities          (19)        (5)           (24)         (143)            (2)       (145)
     Loans receivable                              1,285        (25)         1,260           977            (72)        905 
                                                   ------       ----         -----         -----            ---       ----- 
          Total interest income                      986        (40)           946         1,068            (49)      1,019 
                                                                                                                
Interest expenses attributable                                                                                              
to:                                                                                                             
     NOW accounts                                      6          3              9             2              0           2

     Money market accounts                            (1)        (1)            (2)            8              0           8
     Passbook savings accounts                        33         38             71           (44)           (10)        (54)
     Certificates of deposit                         212        (85)           127           227             (4)        223 
     Notes payable                                    51          0             51             0              0           0 
     FHLB advances                                   256        (42)           214           100             (9)         91 
                                                     ---        ---            ---           ---            ---         --- 
          Total interest expense                     557        (87)           470           293            (23)        270 
                                                     ---        ---            ---           ---            ---         --- 
                                             
     Increase (decrease) in net interest income    $ 429      $  47           $476         $ 775         $  (26)      $ 749
                                                     ===        ===            ===           ===            ====        ===
</TABLE>
Asset and Liability Management

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

     Generally, NPV is the discounted present value of the difference between 
incoming cash flows on interest-earning and other assets and outgoing cash 
flows on interest-bearing and other liabilities.  The application of the 
methodology attempts to quantify interest rate risk as the change in the NPV 
that would result from a theoretical 200 basis point (100 basis points equal 
one percent) change in market interest rates.  Both a 200 basis point increase 
in market interest rates and a 200 basis point decrease in market interest 
rates are considered.  If the NPV would decrease more than 2% of the economic 
value of the institution's assets with either an increase or decrease in 
market rates, the institution must deduct 50% of the amount of the decrease in 
excess of such 2% in the calculation of the institution's risk-based capital.  
See "Liquidity and Capital Resources."

     At December 31, 1998, 2% of the economic value of Home City's assets was 
approximately $1.7 million.  Because the interest rate risk of a 200 basis 
point increase in market rates was a $923,000 decrease in NPV at December 31, 
1998, Home City would not have been required to deduct from its capital in 
determining whether Home City met its risk-based capital requirement.
<PAGE>
     Presented below, as of December 31, 1998, is an analysis of Home City's 
interest rate risk as measured by changes in NPV for instantaneous and 
sustained parallel shifts of 100 basis points in market interest rates.  The 
table also contains the policy limits set by the Board of Directors of Home 
City as the maximum changes in NPV that the Board of Directors deems 
advisable in the event of various changes in interest rates.  Such limits 
have been established with consideration of the dollar impact of various rate 
changes and Home City's strong capital position.

     As illustrated in the table, Home City's NPV is slightly more sensitive 
to rising rates than declining rates.  Such difference in sensitivity occurs 
principally because, as rates rise, borrowers do not prepay fixed-rate loans 
as quickly as they do when interest rates are declining.  As a result, in a 
rising interest rate environment, the amount of interest Home City would 
receive on its loans would increase relatively slowly as loans are slowly 
repaid and new loans at higher rates are made.  Moreover, the interest Home 
City would pay on its deposits would increase rapidly because Home City's 
deposits generally have shorter periods to repricing.  Because Home City has 
not originated loans in accordance with traditional secondary market 
guidelines, the sale of fixed-rate loans may be difficult.  In addition, 
increases in interest rates can also result in the flow of funds away from 
savings institutions into direct investments or other investment vehicles, 
such as mutual funds, which may pay higher rates of return than savings 
institutions.  Assumptions used in calculating the amounts in this table are 
OTS assumptions.
           
                                                     At December 31, 1998
                                                     --------------------
Change in interest rate          Board limit       $ change        % change     
    (basis points)                % change          in NPV           in NPV
-----------------------          -----------       --------        --------
                                             (Dollars in thousands)          
                              
        +400                        (60)%          $(2,488)          (16)%     
        +300                        (45)            (1,654)          (11)     
        +200                        (25)              (923)           (6)     
        +100                        (10)              (359)           (2)     
           0                          0                  0             0     
        -100                        (10)               442             3     
        -200                        (25)               954             6     
        -300                        (45)             1,519            10     
        -400                        (60)             1,930            12 
    
     The NPV table indicates that at each 100 basis point increment, the 
change in Home City's NPV that would have been caused by an increase in 
interest rates was within the policy limits set by the Board of Directors.  
The Board of Directors considers the results of each quarterly analysis and 
factors the information into its decisions in adjusting the pricing of loans 
and deposits in the future.

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

     If interest rates continue to rise from the recent levels, Home City's 
net interest income will be negatively affected.  Moreover, rising interest 
rates may negatively affect Home City's earnings due to diminished loan 
demand.
<PAGE>
Liquidity and Capital Resources

     Home City's liquidity, primarily represented by cash and cash 
equivalents, is a result of its operating, investing and financing 
activities.  These activities are summarized below for the years presented:

                                                       Year ended December 31,
                                                       -----------------------
                                                       1998             1997
                                                       ----              ----
                                                        (Dollars in thousands)

Net income                                              $951            $888
Adjustments to reconcile net income to net cash                    
     from operating activities                           299              15
                                                     -------         -------
Net cash provided by operating activities              1,250             903
Net cash used in investing activities                (12,871)        (11,832)
Net cash provided by financing activities             12,013           2,608
                                                     -------         ------- 
Net change in cash and cash equivalents                  392          (8,321)
Cash and cash equivalents at beginning of year         1,518           9,839
                                                     -------         -------
Cash and cash equivalents at end of year             $ 1,910        $  1,518
                                                     =======         =======
<PAGE>

     Home City's principal sources of funds are deposits, loan and 
mortgage-backed securities repayments, maturities of securities and other funds 
provided by operations.  Home City also borrows from the FHLB of Cincinnati.  
While scheduled loan repayments and maturing investments are relatively 
predictable, deposit flows and early loan and mortgage-backed security 
prepayments are more influenced by interest rates, general economic conditions 
and competition.  Home City maintains investments in liquid assets based upon 
management's assessment of (i) the need for funds, (ii) expected deposit 
flows, (iii) the yields available on short-term liquid assets and (iv) the 
objectives of the asset/liability management program.  In the ordinary course 
of business, part of such liquid investment portfolio is composed of deposits 
at correspondent banks.  Although the amount on deposit at such banks often 
exceeds the $100,000 limit covered by FDIC insurance, Home City monitors the 
capital of such institutions to ensure that such deposits do not expose Home 
City to undue risk of loss.

     OTS regulations presently require Home City to maintain an average daily 
balance of liquid assets, which may include, but are not limited to, 
investments in United States Treasury, federal agency obligations and other 
investments having maturities of five years or less in an amount equal to 4% 
of the sum of Home City's average daily balance of net withdrawable deposit 
accounts and borrowings payable in one year or less.  The liquidity 
requirement, which may be changed from time to time by the OTS to reflect 
changing economic conditions, is intended to provide a source of relatively 
liquid funds upon which Home City may rely if necessary to fund deposit 
withdrawals or other short-term funding needs.  At December 31, 1998, Home 
City's regulatory liquidity ratio was 5.29%.  At such date, Home City had 
commitments to originate loans totaling $9.5 million and no commitments to 
purchase or sell loans.  Home City considers its liquidity and capital 
reserves sufficient to meet its outstanding short- and long-term needs.  
Adjustments to liquidity and capital reserves may be necessary, however, if 
loan demand increases more than expected or if deposits decrease 
substantially.  See Note Q of the Notes to Consolidated Financial Statements.

     Home City is required by applicable law and regulation to meet certain 
minimum capital standards.  Such capital standards include a tangible capital 
requirement, a core capital requirement or leverage ratio and a risk-based 
capital requirement.  See "REGULATION - OTS Regulations -- Regulatory Capital 
Requirements."  Home City exceeded all of its capital requirements at December 
31, 1998 and 1997.

     Savings associations are required to maintain "tangible capital" of not 
less than 1.5% of the association's adjusted total assets.  Tangible capital 
is defined in OTS regulations as core capital less intangible assets.

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

     OTS regulations require that savings associations maintain "risk-based 
capital" in an amount not less than 8% of risk-weighted assets.  Assets are 
weighted at percentage levels ranging from 0% to 100% depending on their 
relative risk.  Risk-based capital is defined as core capital plus certain 
additional items of capital, which in the case of Home City includes a general 
loan loss allowance of $486,000 at December 31, 1998.

     The following table summarizes Home City's regulatory capital requirements 
and actual capital (see Note P of the Notes to Consolidated Financial 
Statements for a reconciliation of capital under GAAP and regulatory capital 
amounts) at December 31, 1998:
<TABLE>
<CAPTION>
                                                                    Excess of actual          
                                                                  capital over current        
                         Actual capital    Current requirement         requirement             
                         --------------    -------------------    -------------------             
                                                                                          Applicable
                      Amount     Percent    Amount     Percent    Amount      Percent    asset total
                      ------     -------    ------     -------    ------      -------    -----------
                                                    (Dollars in thousands)                          
<S>                  <C>         <C>        <C>       <C>        <C>         <C>           <C>      
Tangible capital     $11,864      13.91%     $1,279    1.50%      $10,585     12.41%        $85,292 
Core capital          11,864      13.91       2,559    3.00         9,305     10.91          85,292 
Risk-based capital    12,350      21.93       4,504    8.00         7,846     13.93          56,305 

</TABLE>

At December 31, 1998, Home City had no material commitments for capital 
expenditures.
<PAGE>

Impact of Pending Legislation

     For several years, Congress has been considering various changes to 
the bank and savings association charters, the activities in which banks and 
savings associations and their holding companies and subsidiaries may engage
and the authority of various regulatory authorities over the financial
institutions and their holding companies and subsidiaries.  HCFC cannot
predict at this time whether and when Congress will actually adopt such 
"financial modernization legislation" or in what form it will be adopted. 
It is expected, however, that the range of activities in which banks and their
afilliated companies may engage will be expanded, and it is possible that
the range of activities in which HCFC and Home City may engage will be
restricted.  It is not anticipated that the current activities of HCFC or
Home City will be materially affected by any such legislation.

     Legislation to recapitalize the SAIF, which was enacted in 1996, 
provided that the SAIF and the Bank Insurance Fund (the "BIF") would be 
merged if the federal savings association charter was eliminated.  Although
the elimination of the federal savings association charter has not occured
and is not now expected in the near future, Congress is still discussing the
merger of the SAIF and the BIF.  Although the merger could be expected to
change the deposit insurance premiums paid by Home City, the effect on
Home City and HCFC cannot be predicted at this time.

Year 2000 Readiness

     As for all financial institutions, the Bank's operations rely extensively
on computer systems.  The Bank has been addressing the possibility that some
computer systems might not recognize the Year 2000 ("Y2K") correctly.  In
1997 the Board of Directors appointed a Year 2000 Committee to assess the
issue and develop and implement plans for preventing any potential problems. 
The Year 2000 Committee reports to the Board on its progress monthly.  
The Committee developed an Action Plan Year 2000, which was presented to and 
approved by the Board in 1997, subsequently updated and approved in December
1998.

     The Bank relies primarily on third-party vendors for its computer output
and processing, as well as other significant functions and services, such
as those related to securities and wire transfers.  The Year 2000 Committee
is working with these vendors to assess their Y2K readiness.  Based upon this
ongoing assessment, the Board of Directors believes that with planned
modifications to existing software and hardware and planed conversations to
new software and hardware, the third-party vendors are taking the approrpriate
steps to ensure that critical systems will function properly.  The Bank's 
<PAGE>
most important third-party vendors have reported near completion of Y2K
readiness both internally and in their interface with the Bank.  Any other
planned modifications and conversions are scheduled to be completed and
tested by June 30, 1999.

     All of the Bank's personal computers ("PC's) and related software
have been inventoried and tested for Y2K capabilities.  Those PC's identified
as not being Y2K compatible have been replaced at a cost for the new
hardware and software of approximately $38,000.  All other Y2K preparedness
costs are not expected to be material.  The Bank has not identified any
significant Y2K problems with the Bank's equipment or systems other than those 
that are information technology related.

     If the modifications and conversions by both third-party vendors and
the Bank are not completed on a timely basis or if they fail to function
properly, the operations and financial condition of the Bank could be
materially adversely affected.  The Bank is developing a remediation 
contingency plan for continued operations in the event of any such
systems failures.

     In addition, financial institutions may experience increases in
problem loans and credit losses in the event that borrowers fail to 
prepare properly for Y2K, and higher funding costs could result if
consumers react to publicity about the issue by withdrawing deposits.
The Bank is assessing such risks among its customers and developing
a proactive approach to create customer awareness as to the Bank's
Y2K preparedness.  The Bank could also be materially adversely affected
if other third parties, such as governmental agencies, clearing-houses,
telephone companies, utilities and other service providers fail to
prepare properly.  The Bank is therefore attempting to assess these
risks and develop a business resumption contingency plan to accomodate
any problems of this nature.

     The Bank expects to continue reviewing, enhancing and validating
both the plan for remediation and the plan for business resumption
throughout 1999 with the goal of June 30, 1999, for completion of all
major aspectsof those plans.  The Bank's Y2K preparedness has been
periodically reviewed by the Office of Thrift Supervision, its primary
regulator, and has also been reviewed by the Bank's external auditors
in an engagement specifically related to Y2K compliance issues.

     Any forward-looking statements made in the foregoing Y2K 
discussion speak only as of the date of this document and express the
expectations of the Bank at this time.  Any forward-looking statements
are subject to risks and uncertainties, and the preparedness of the 
Bank and its vendors is subject to change due to unanticipated events,
such as the unexpected inability of the Bank's vendors to implement
their plans.

    The discussion constitutes a Year 2000 Readiness Disclosure within
the meaning of the Year 2000 Readiness and Disclosure Act of 1998.

<PAGE>

ITEM 7.  Financial Statements

                            INDEPENDENT AUDITOR'S REPORT



The Board of Directors and Shareholders
Home City Financial Corporation
Springfield, Ohio



     We have audited the consolidated balance sheets of Home City Financial 
Corporation and subsidiaries as of December 31, 1998 and 1997, and  the 
related consolidated statements of income, shareholders' equity, and cash 
flows for the years then ended.  These consolidated financial statements are 
the responsibility of the Corporation'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 financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of Home 
City Financial Corporation and subsidiaries as of  December 31, 1998 and 1997, 
and the consolidated results of their operations and their cash flows for the 
years then ended, in conformity with generally accepted accounting principles.

          





                                        Robb, Dixon,
                                     Francis, Davis, Oneson
                                         & Company

Granville, Ohio
February 8, 1999

<PAGE>

              Home City Financial Corporation - Consolidated Balance Sheets
<TABLE>
<CAPTION>
  
                                                        (Dollars in thousands)

                                                                   December 31,    
                                                              ---------------------
                                                               1998             1997  
                                                               ----             ----  
<S>                                                          <C>              <C>  
                                                                                      
ASSETS                                                                                
Cash and cash equivalents                                                             
  Cash and due from banks                                     $  1,147         $   827
  Interest-bearing demand deposits in other banks                  763             591
     Federal funds sold                                              0             100
                                                                 -----           -----
          Total cash and cash equivalents                        1,910           1,518
                                                                                      
Time deposits with original maturities of 90 days or more           24              23
Investment securities available-for-sale, at fair value          3,091           4,580
Mortgage-backed securities available-for-sale, at fair value       559             700
Loans, net                                                      76,986          62,535
Stock in Federal Home Loan Bank                                    601             438
Accrued interest receivable                                        440             409
Properties and equipment                                           584             493
Cash surrender value of life insurance                           1,129           1,085
Other assets                                                        31              73
                                                                 -----           -----
          TOTAL ASSETS                                         $85,355         $71,854
                                                                ======          ======
                                                                                      
LIABILITIES AND SHAREHOLDERS' EQUITY                                                  
Liabilities                                                                           
Deposits                                                       $60,499         $51,689
Federal Home Loan Bank Advances                                 11,571           5,712
Notes payable                                                    1,800               0
Accrued interest payable                                           115              79
Advance payments by borrowers for taxes and insurance               74              71
Deferred income taxes                                              112              68
Other liabilities                                                  314             231
                                                                ------          ------
          TOTAL LIABILITIES                                     74,485          57,850
                                                                                      
Shareholders' equity

Preferred shares, no par value; 1,000,000 shares               
authorized; none issued                                               0              0
Common shares, no par value; 5,000,000 shares               
authorized; 952,200 shares issued                                     0              0
Additional paid-in capital                                        6,013          9,150
Retained earnings, substantially restricted                       6,658          6,037
Treasury shares, at cost                                         (1,304)          (711)
Accumulated other comprehensive income                              517            332
Common shares purchased by:               
Employee Stock Ownership Plan                                      (609)          (686)
Recognition and Retention Plan                                     (405)          (118)
                                                                 ------         ------
               
TOTAL SHAREHOLDERS' EQUITY                                       10,870         14,004
                                                                 ------         ------
               
     TOTAL LIABILITIES AND SHAREHOLDERS'                             
EQUITY                                                          $85,355        $71,854
                                                                 ======         ======
</TABLE>
               
          
------------------------

See accompanying notes.

          Home City Financial Corporation - Consolidated Statements of Income
               
<TABLE>
<CAPTION>
               
                                                                (Dollars in thousands)
               
                                                               Year ended December 31,
                                                               -----------------------
                                                                      1998        1997
                                                                      ----        ----       
<S>                                                              <C>           <C>         
               
INTEREST  INCOME               
Loans                                                             $  6,555     $ 5,295
Mortgage-backed securities                                              36          60
Investment securities                                                  189         373
Interest-bearing deposits and federal funds sold                        28         134
                                                                     -----       -----
          TOTAL INTEREST INCOME                                      6,808       5,862
               
INTEREST EXPENSE               
Deposits                                                             2,948       2,743
Borrowed funds                                                         538         273
                                                                    ------      ------
          TOTAL INTEREST EXPENSE                                     3,486       3,016
                                                                    ------      ------
               
     NET INTEREST INCOME                                             3,322       2,846
Provision for loan losses                                               61          43
                                                                    ------      ------
     NET INTEREST INCOME AFTER PROVISION               
          FOR LOAN LOSSES                                            3,261       2,803
               
NON INTEREST INCOME               
Service charges on deposits                                             10           7
Life insurance                                                          67          56
Gain (loss) on sale of securities, net                                   2         (18)
Other income                                                            19          44
                                                                    ------      ------
               
     TOTAL NONINTEREST INCOME                                           98          89
               
NONINTEREST EXPENSE               
Salaries and employee benefits                                       1,051         859
Supplies, telephone and postage                                         51          45
Occupancy and equipment                                                139         110
FDIC deposit insurance                                                  34          32
Data processing                                                         98          80
Legal, accounting and examination                                      219         220
Franchise taxes                                                        181         174
Other expense                                                          188         132
                                                                    ------      ------
     TOTAL NONINTEREST EXPENSE                                       1,961       1,652
                                                                    ------      ------
               
     NET INCOME BEFORE FEDERAL INCOME               
          TAX EXPENSE                                                1,398       1,240
               
Federal income tax expense                                             447         352
                                                                     ------     ------
               
     NET INCOME                                                     $  951      $  888
                                                                    ======      ====== 
               
Earnings per common share - basic                         
                                                                     $1.17       $1.06
Earnings per common share - diluted                                  $1.04       $0.97

</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>                                                                      
                                              Number of Shares                 
                           --------------------------------------------------- 
                                                        Common       Common   
                                                        shares       shares   
                           Common      Common           purchased    purchased
                           shares      shares           by ESOP      by RRP   
                            ------     ------           -------      ------   
<S>                        <C>       <C>               <C>         <C>       
December 31, 1996           952,200         0           (76,176)          0
Net income                                                                    
Other comprehensive income                                                     
 Change in unrealized                                                         
 gain (loss) on securities                                                   
 available-for-sale, net of                                                   
 deferred income                                                              
 tax of $59                                                                    
                                                                               
Comprehensive income                                                           
                                                                             
Purchase of treasury shares           (47,610)                                
Shares allocated under                                                        
 Employee Stock                                                               
  Ownership Plan                                          7,618                
Purchse of common shares                                                      
 by Recognition and                                                           
 Retention Plan                                                      (6,800) 
Dividends declared                                                          
 ($.33 per share)                                                             
                            -------    -------           -------      ------
December 31, 1997           952,000   (47,610)          (68,558)     (6,800)
                                                                            
Net income                                                                   
Other comrephensive income                                                     
 Change in unrealized                                                        
 gain (loss) on securities                                                    
 available-for-sale, net of                                                   
 deferred income                                                              
 tax of $97                                                                    
Comprehensive income                                                          
Purchase of treasury shares           (45,200)                               
Purchase of common shares                                                   
 by Recognition and                                                          
 Retention Plan                                                     (17,002)
Shares allocated under                                                       
 Employee Stock                                                             
 Ownership Plan                                           7,618             
Shares eared under Recognition                                               
 and Retention Plan                                                   4,761
Capital distribution                                                       
 ($3.50 per share)                                                         
Dividends declared                                                         
 ($.37 per share)                                                           
                            -------    ------            ------      ------
December 31, 1998           952,000    92,810           (60,940)    (19,041)
                        =======           ======         ======      ======

</TABLE>                                      
Continued on next page
<PAGE>
<TABLE>
<CAPTION>
                                                              (Dollars in thousands)
                                                                     Amounts
                              -----------------------------------------------------------------------------------------------
                                                                                                                             
                                                                             Accum-                                          
                                                                             ulated                                          
                                                                             other         Common         Common             
                                    Additional                               compre-       shares         shares       Compre-
                                    paid-in       Retained      Treasury     hensive       purchased      purchased    hensive 
                                    capital       earnings      shares       income        by ESOP        by RRP       income
                                    -------       --------      ------       ------        -------        ------       -------
<S>                                <C>           <C>           <C>          <C>           <C>            <C>          <C>      
December 31, 1996                   $ 9,075       $  5,455      $    0       $  216        $  (762)       $    0               
                                                                                                                               
Net income                                             888                                                             $   888
Other comprehensive income                                                                                                     
 Change in unrealized                                                                                                          
 gain (loss) on securities                                                                                                     
 available-for-sale, net of                                                                                                    
 deferred income                                                                                                               
 tax of $59                                                                     116                                        116
                                                                                                                        ------
Comprehensive income                                                                                                   $ 1,004
                                                                                                                        ======
Purchase of treasury shares                                       (711)                                                        
Shares allocated under                                                                                                         
 Employee Stock                                                                                                                
 Ownership Plan                          75                                                     76                             
Purchase of common shares                                                                                                      
 by Recognition and                                                                                                            
 Retention Plan                                                                                             (118)              
Dividends declared                                                                                                             
 ($.33 per share)                                     (306)                                                                        
                                    -------       --------      ------       ------        -------         -----              
December 31, 1997                     9,150          6,037        (711)         332           (686)         (118)             
                                                                                                                              
Net income                                                                                                                    
Other comprehensive income                             951                                                             $   951
 Change in unrealized                                                                                                         
 gain (loss) on securities                                                                                                    
 available-for-sale, net of                                                                                                   
 deferred income                                                                                                              
 tax of $97                                                                                                                   
                                                                                185                                        185
                                                                                                                        ------
Comprehensive incomes                                                                                                  $ 1,136
                                                                                                                        ======
Purchase of treasury shares                                       (593)       
Purchase of common shares                                                     
 by Recognition and                                                           
 Retention Plan                                                                                             (370)             
Shares allocated under Employee Stock                                   
 Ownership Plan                          36                                                    77           
Shares earned under Recogntion                                                                                
 and Retention Plan                      (7)                                                                  83              
Capital distribution                                                                                                          
 ($3.50 per share)                   (3,166)                                                                                 
Dividends declared                                                                                                            
 ($.37 per share)                                     (330)                                                                   
                                    -------       --------      ------       ------        ------          -----             
December 31, 1998                   $ 6,013       $  6,658     ($1,304)      $  517         ($609)         ($405)


</TABLE>
<PAGE>

      Home City Financial Corporation - Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                (Dollars in thousands)     
               
                                                                Year ended December 31, 
                                                                -----------------------
                                                                1998             1997
                                                                ----             ----
<S>                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES               
Net income                                                           $   951           $888
Adjustments to reconcile net income to net cash               
     provided by operating activities:               
          Premium amortization, net of discount accretion                  2             (9)
Provision for loan losses                                                 61             43
(Gain) loss on sale of securities                                         (2)            18
Depreciation                                                              50             42
Deferred income taxes                                                     (9)           (69)
Life insurance income, net of expenses                                   (44)           (15)
Employee Stock Ownership Plan compensation expense                       113            151
          Recognition and Retention Plan compensation expense             76              0
     FHLB stock dividends                                                (34)           (30)
     Net change in:               
          Accrued interest receivable                                    (31)           (95)
          Accrued interest payable                                        36             14
          Other assets                                                     9             26
          Other liabilities                                               72            (61)
                                                                       -----         ------
     Net cash provided by operating activities                         1,250            903
                                                                       -----         ------
               
CASH FLOWS FROM INVESTING ACTIVITIES               
Net increase in time deposits                                              1            337
Purchases of securities available-for-sale                            (1,070)        (7,220)
Proceeds from sales of securities available-for-sale                     617            401
Proceeds from maturities of securities available-for-sale              2,220          4,706
Proceeds from sales of mortgage-backed securities available-for-sale       0          1,891
Collections on mortgage-backed securities available-for-sale             143            123
Net increase in loans                                                (14,512)       (12,020)
Purchases of properties and equipment                                   (141)           (50)
Purchase of FHLB stock                                                  (129)             0
                                                                      -------       -------
     Net cash used in investing activities                            (12,871)      (11,832)
                                                                      --------      -------
               
CASH FLOWS FROM FINANCING ACTIVITIES               
Net increase in deposits                                                8,810         2,129
Net increase (decrease) in short-term FHLB advances                      (473)        2,000
Proceeds from new long-term FHLB advances                               6,875             0
Payments on long-term FHLB advances                                      (543)         (388)
Net increase in advance payments by borrowers               
for taxes and insurance                                                     3             2
Net proceeds from notes payable                                         1,800             0
Distribution of capital                                                (3,166)            0
Purchase of common shares by Recognition and Retention Plan              (370)         (118)
Purchase of treasury shares                                              (593)         (711)
Cash dividends paid                                                      (330)         (306)
                                                                       -------       ------
     Net cash provided by financing activities                         12,013         2,608
               
     Net increase (decrease) in cash and cash equivalents                 392        (8,321)
               
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                          1,518         9,839
                                                                       ------        ------
               
CASH AND CASH EQUIVALENTS AT END OF YEAR                               $1,910        $1,518
                                                                       ======        ======
</TABLE>
               
----------------------
See accompanying notes
<PAGE>
Home City Financial Corporation Notes to Consolidated Financial Statements




NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations
Home City Financial Corporation (the "corporation") is a financial services 
company which was organized in August of 1996 and is a unitary savings and 
loan holding company.  The principal assets of the corporation are the capital 
stock of Home City Federal Savings Bank of Springfield (the "bank") and a loan 
made to the Home City Financial Corporation Employee Stock Ownership Plan (the 
"ESOP") for the purchase of common shares of the corporation.  The bank 
provides a variety of financial services to individuals and corporate 
customers, through its office in Springfield, Ohio, which is primarily a small 
industrial area.  The bank's primary deposit products are savings accounts and 
certificates of deposit.  Its primary lending products are single-family 
residential loans, commercial loans and consumer loans.  The bank owns 100% of 
its subsidiary, Homciti Service Corp., which invests in stock of the bank's 
data service provider, and a local joint venture, in both of which it has 
minority interests.

The accounting and reporting policies of the corporation and its subsidiaries 
conform to generally accepted accounting principles and general practices 
within the financial services industry.  The more significant accounting 
policies are summarized below.

Basis of Consolidation
The consolidated financial statements include the accounts of the corporation 
and all subsidiaries.  Significant inter-company accounts and transactions 
have been eliminated.

Use of Estimates
The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements and 
the reported amounts of revenues and expenses during the reporting period.  
Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change 
relate to the determination of the allowance for losses on loans.  In 
connection with the determination of the allowance for loan losses, management 
obtains independent appraisals for significant properties.  

A majority of the bank's loan portfolio consists of single-family residential 
loans in the Springfield, Ohio area.  The regional economy depends heavily on 
some 200 diversified industries.  Accordingly, the ultimate collectibility of 
a substantial portion of the bank's loan portfolio is susceptible to changes 
in local market conditions.

While management uses available information to recognize losses on loans, 
future additions to the allowance for loan losses may be necessary based on 
changes in local economic conditions.  In addition, regulatory agencies, as an 
integral part of their examination process, periodically review the bank's 
allowance for losses on loans.  Such agencies may require the bank to 
recognize additions to the allowance based on their judgments about 
information available to them at the time of their examination.  Because of 
these factors, it is reasonably possible that the allowance for loan losses 
may change materially in the near term.  However, the amount of the change 
that is reasonably possible cannot be estimated.
                                                       
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the corporation 
considers cash and due from banks, interest-bearing demand deposits in other 
banks and federal funds sold to be cash equivalents.  The following are 
supplemental disclosures for the consolidated statements of cash flows for the 
years ended December 31, 1998 and 1997:

                                                       (Dollars in thousands)
                                                      1998                1997
          
Cash paid during the year for interest               $3,450             $3,002
Cash paid during the year for income taxes              459                395

Investment Securities
All investment and mortgage-backed securities are classified as 
available-for-sale.  Mortgage-backed securities represent participating 
interests in pools of long-term first mortgage loans originated and serviced 
by issuers of the securities.  Unrealized holding gains and losses, net of
deferred tax, on available-for-sale securities are reported as a net amount 
in a separate component of equity until realized.  Gains and losses on the 
sale of available-for-sale securities are determined using the specific-
identification method.  The amortization of premiums and the accretion of
discounts are recognized in interest income using methods approximating the 
interest method over the period to maturity.  No investment securities are 
considered derivative securities.

Loans
Loans are stated at unpaid principal balances, less the allowance for loan 
losses, net deferred loan fees and loans-in-process.  Interest income is 
recognized on an accrual basis.  Loans are placed on nonaccrual status when 
principal or interest is delinquent for 90 days or more.  Any unpaid interest 
previously accrued on those loans is reversed from income.  Interest income on 
nonaccrual loans is recognized only to the extent of interest payments 
received.

Effective January 1, 1995, the corporation adopted Statement of Financial 
Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan 
and Statement of Financial Accounting Standards No. 118, Accounting by 
Creditors for Impairment of a Loan - Income Recognition and Disclosures ("SFAS 
No. 114 and 118").  Under the corporation's credit policies and practices, all 
loans with specific reserves meet the definition of impaired loans under SFAS 
No. 114 and 118.  Loan impairment is measured based on the present value of 
expected future cash flows discounted at the loan's effective interest rate 
or, as a practical expedient, at the observable market price of the loan or 
the fair value of the collateral if the loan is collateral dependent.  The 
adoption of SFAS No. 114 and 118 did not have a material effect on the 
corporation's financial position or results of operations.

Loan origination fees, as well as certain direct origination costs, are 
deferred and amortized as a yield adjustment over the contractual lives of the 
related loans using the interest method. Amortization of deferred loan fees is 
discontinued when a loan is placed on nonaccrual status.

Allowance for Loan Losses
The allowance for loan losses is maintained at a level which, in management's 
judgment, is adequate to absorb credit losses inherent in the loan portfolio.  
The amount of the allowance is based on management's evaluation of the 
collectibility of the loan portfolio, including the nature of the portfolio, 
credit concentrations, trends in historical loss experience, specific impaired 
loans, and economic conditions.  The allowance is increased by a provision for 
loan losses, which is charged to expense, and reduced by charge-offs, net of 
recoveries.

Properties  and Equipment
Properties and equipment are stated at cost less accumulated depreciation.  
Depreciation of property and equipment is computed principally on the 
straight-line method over their estimated useful lives.  The estimated lives 
of buildings and improvements ranged from 10 to 50 years.  The estimated lives 
of equipment ranged from 5 to 25 years.

Real Estate Owned
Real estate owned is stated at fair value less estimated costs to sell.  When 
a property is acquired, the excess of the recorded investment in the property 
over fair value, if any, is charged to the allowance for loan losses.  
Subsequent declines in the estimated fair value, net operating results and 
gains or losses on disposition of the property are included in other expenses.

Derivative Financial Instruments 
The corporation has no derivative financial instruments.

Income Taxes
The corporation, bank and service corporation each file separate tax returns 
using a calendar year end.   The effects of current or deferred taxes are 
recognized as a current and deferred tax liability or asset based on current 
tax laws.  Accordingly, income tax expense in the consolidated statements of 
income includes charges or credits to properly reflect the current and 
deferred tax asset or liability.  

Earnings per Share
The weighted-average number of shares of common stock used in calculating 
earnings per share was determined by reducing outstanding shares by treasury  
shares,  unallocated ESOP shares and unvested Recognition and Retention Plan 
(the "RRP") shares.  The effect of stock options on weighted-average shares 
outstanding is calculated using the Treasury Stock method.  Fully diluted 
<PAGE>
shares outstanding include the maximum dilutive effect of stock issuable upon 
exercise of common stock options and unallocated ESOP and RRP shares of common 
stock.  Earnings per share information for periods prior to 1997 are not 
presented because the bank did not complete its Reorganization until December 
30, 1996.

Reclassifications
Certain amounts have been reclassified to conform with the 1998 presentation.
                                             
NOTE B - BUSINESS COMBINATION

In September 1996, the bank's Board of Directors adopted a Plan of Conversion 
(the "conversion") whereby the bank would convert to the stock form of 
ownership, followed by the issuance of all the bank's outstanding common stock 
to a newly formed holding company, Home City Financial Corporation.

On December 30, 1996, the bank completed its conversion to the stock form of 
ownership, and issued all of the bank's outstanding common shares to the 
corporation.

In connection with the conversion, the corporation sold 952,200 shares at a 
price of $10.00 per share, which, after consideration of offering expenses 
totaling approximately $437,000 and shares purchased by employee benefit plans 
totaling $762,000, resulted in net cash proceeds of approximately $8.3 
million.

At the date of the conversion, the bank established a liquidation account in 
an amount equal to retained earnings reflected in the balance sheet used in 
the conversion offering circular.  The liquidation account is maintained for 
the benefit of eligible savings account holders who maintained deposit 
accounts in the bank after conversion.



NOTE C - INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost of securities available-for-sale and their approximate fair 
values are as follows:
<TABLE>
<CAPTION>
                                                                (Dollars  in thousands)                                
                                                                                                                       
                                At December 31, 1998                           At December 31, 1997      
                    --------------------------------------------  -------------------------------------------
                                                                                                                       
                                   Gross        Gross                              Gross        Gross                  
                    Amortized  unrealized  unrealized     Fair    Amortized  unrealized  unrealized     Fair       
                      Cost       gains       losses       Value     cost       gains        losses     Value      
                    ---------  ----------  ----------    -------  ---------  ----------  ----------   -------
<S>                <C>        <C>         <C>           <C>      <C>        <C>         <C>          <C>        
Investment securities                                                                                                  
U.S.                                                                                                                    
government          $       0  $        0  $        0    $     0  $     598  $        2  $        0   $   600
                                                                                                                        
Federal                                                                                                                
agencies                1,500           2          (1)     1,501      2,500           0          (3)    2,497
                                                                                                                       
State &                                                                                                                
municipal                                                                                                               
securities                764          15           0        779        917          14          (1)      930
                                                                                                             
Equity                                                                                                       
securities                 45         766           0        811         61         492           0       553
                    ---------  ----------  ----------    -------  ---------  ----------  ----------   -------
                                                                                                             
Total                   2,309         783          (1)     3,091      4,076         508          (4)    4,580
                    ---------  ----------  ----------    -------  ---------  ----------  ----------   -------
                                                                                                             
Mortgage-backed securities                                                                                   
                                                                                                             
GNMA's                    558           1           0        559        703           0          (3)      700
                    ---------  ---------- -----------    -------  ---------  ----------  ----------   -------
                                                                                                                         
Total               $   2,867  $      784 $        (1)   $ 3,650  $   4,779  $      508  $       (7)  $ 5,280
                    =========  ========== ===========    =======  =========  ==========  ==========   =======
</TABLE>
<PAGE>


The amortized cost and estimated fair value of investment and mortgage-backed 
securities available-for-sale at December 31, 1998, respectively, by 
contractual maturity, are as follows:
<TABLE>
<CAPTION>
                                                         (Dollars in thousands)
          
                                                     Investment          Mortgage-backed
                                                     securities             securities
                                                     ----------             ----------
                                              Amortized       Fair     Amortized     Fair
Amounts maturing in :                           cost          value       cost       value   
                                                ----          -----       ----       -----
<S>                                            <C>        <C>            <C>        <C>       
One year or less                               $1,007     $1,010          $    0     $   0
After one year through five years               1,130      1,137               0         0
After five years through ten years                127        133             558       559
Equity securities                                  45        811               0         0
                                               ------      -----           -----     -----
Total                                          $2,309      $3,091          $ 558     $ 559
                                               ======      ======          =====     =====
</TABLE>
<PAGE>
Expected maturities will differ from contractual maturities because borrowers 
may have the right to call or prepay obligations without call or prepayment
penalties.

Investment securities with carrying values of approximately $2,838,000 and 
$500,000 were pledged at December 31, 1998 and 1997, respectively, to secure 
certain deposits.

During 1998, the corporation sold securities available-for-sale for total 
proceeds of approximately $617,000, resulting in gross realized gains of 
approximately $2,000 and no gross realized losses.  During 1997, the 
corporation sold securities available-for-sale for total proceeds of 
approximately $2,292,000 resulting in gross realized gains of approximately 
$1,000 and gross realized losses of approximately $19,000.


NOTE D - LOANS

Loans at December 31, 1998 and 1997, are summarized as follows:

                                                        (Dollars in thousands)
               
                                                        1998            1997
                                                        ----            ----
Loans secured by real estate:               
One-to-four-family residential properties             $42,485         $40,669
Multifamily (5 or more) residential properties          2,463           2,731
Nonresidential properties                               9,894          10,124
Land                                                    1,721           1,690
Construction                                            4,561           3,079
Consumer                                                5,226           4,201
Commercial                                             11,122             493
                                                       ------          ------
Total                                                  77,472          62,987
Allowance for loan losses                                (486)           (452)
                                                       ------          ------
Net loans                                             $76,986         $62,535
                                                       ======          ======

An  analysis of the allowance for loan losses is as follows:

                                                        (Dollars in thousands)
          
                                                         1998            1997
                                                         ----            ----
          
Balance, beginning of year                               $452            $400
          
Provision for loan losses                                  61              43
Loans charged off                                         (40)            (39)
Recoveries                                                 13              48
                                                          ----            ----
         
Balance, end of year                                      $486           $452 

At December 31, 1998 and 1997, the total recorded investment in impaired
loans, all of which had allowances determined in accordance with SFAS No. 114
and No. 118, amounted to approximately $54,000 and $95,000, respectively.  
The average recorded investment in impaired loans amounted to approximately 
$68,000 and $179,000 for the years ended December 31, 1998 and 1997, 
respectively.  The allowance for loan losses related to impaired loans amounted
to approximately $54,000 and $8,000 at December 31, 1998 and 1997, 
respectively.  Interest income on impaired loans of $16,000 and $6,000 was 
recognized for cash payments received for the years ended December 31, 1998 
and 1997.

In addition, at December 31, 1998 and  1997, the bank had other nonaccrual 
loans of approximately $164,000 and $200,000, respectively, for which 
impairment had not been recognized.

The bank has no commitments to loan additional funds to the borrowers of 
impaired or nonaccrual loans.

At December 31, 1998  and 1997, the bank serviced loans for others with 
principal balances of $2,132,000 and $2,395,000, respectively.

In the ordinary course of business, the bank has and expects to continue to 
have transactions, including borrowings, with its officers, directors, 
shareholders, and their affiliates.  In the opinion of management, such 
transactions were on substantially the same terms, including interest rates 
and collateral, as those prevailing at the time of comparable transactions 
with other persons and did not involve more than a normal risk of
collectibility or present any other unfavorable features to the bank. 
All loans to such borrowers are summarized as follows:

                                                                                
                                                      (Dollars in thousands)
          
                       Balance, December 31, 1997        $1,504     
          
                       New loans                             23     
                       Payments                            (561)     
                                                          ------
                       Balance, December 31, 1998          $966     
                                                          ======
<PAGE>


NOTE E - PROPERTIES AND EQUIPMENT
 
A summary of properties and equipment at December 31, 1998 and 1997, follows:
 
                                                   (Dollars in thousands)
               
                                                     1998              1997
               
Land                                                $ 118            $  113
Buildings and improvements                            437               437
Equipment                                             464               328
                                                    -----             -----
                                                    1,019               878

Accumulated depreciation                             (435)             (385)
                                                    -----             -----
Total                                               $ 584             $ 493
                                                    =====             =====

NOTE F  - CASH SURRENDER VALUE OF LIFE INSURANCE

In September 1995, the bank purchased life insurance policies on each of its 
outside directors.  The bank is the beneficiary of such policies.  At December 
31, 1998 and 1997, there were no notes payable to the insurance company.



NOTE G - DEPOSITS

Deposit account balances at December 31,  1998 and 1997, are summarized as 
follows:
                                                          (Dollars in thousands)
               
                                            1998                    1997
                                      Amount     Percent    Amount     Percent
Noninterest-bearing accounts       $   1,605       2.7%     $ 763        1.5%
NOW and money market accounts          1,439       2.4        774        1.5
Savings accounts                      11,084      18.3      7,863       15.2
Certificates of deposit               46,371      76.6     42,289       81.8
                                      ------      ----     ------       ----
Totals                               $60,499     100.0%   $51,689      100.0%
                                     =======     ======   =======      ======

The aggregate amount of jumbo certificates of deposit, each with a minimum 
denomination of $100,000, was approximately $8,999,000 and $7,879,000  at 
December 31, 1998 and 1997, respectively.  Deposits in excess of $100,000 are 
not insured by the FDIC.

At December 31, 1998, the scheduled maturities of certificates of deposit are 
as follows:
          
                                               (Dollars in thousands)
               
                      1999                              $21,163     
                      2000                               21,537     
                      2001                                2,359     
                      2002                                1,179     
                      2003 and thereafter                   133     
                                                        -------             
                      Total                             $46,371     
                                                        =======
The bank held related party deposits of approximately $553,000 and $532,000 at 
December 31, 1998 and 1997, respectively.
<PAGE>

NOTE H - FEDERAL HOME LOAN BANK ADVANCES

Federal Home Loan Bank advances are comprised of the following at December 31:
<TABLE>
<CAPTION>
                                                                 (Dollars in thousands)
                                                         Current          
                                                         interest                
                                                           rate                     Balance
                                                           ----                     -------             
<S>                                                        <C>          <C>       <C>           <C>
Variable-rate advances, with monthly interest payments:               
       Advance due in 1998                                  5.87%        $              0         $2,000   
       Advance due in 1999                                  5.02          1,526         0   
       Advance due in 2003                                  4.64          1,500         0   
       Advance due in 2008                                  5.28          5,000         0   
               
Fixed-rate advances, with monthly principal and interest 
payments:               
       Advance due in 2000                                  5.46            234         0   
       Advance due in 2001                                  6.30            197       258   
       Advance due in 2003                                  5.91            233       280   
       Advance due in 2004                                  8.35            360       420   
       Advance due in 2005                                  8.32            673       766   
       Advance due in 2006                                  6.35          1,261     1,379   
       Advance due in 2010                                  3.30            587       609   
                                                                        -------    ------
               
Total Federal Home Loan Bank advances                       5.48%       $11,571    $5,712
                                                                        =======    ====== 
</TABLE>

FHLB advances are collateralized by all shares of  FHLB stock owned by the 
bank (totaling $601,000) and by 100% of the bank's qualified mortgage loan 
portfolio (totaling approximately $42,485,000).  Based on the carrying amount 
of FHLB stock owned by the bank, total FHLB advances are limited to 
approximately $12,028,000.

The aggregate minimum future annual principal payments on FHLB advances are 
$2,131,000 in 1999, $479,000 in 2000, $436,000 in 2001, $388,000 in 2002, and 
$8,137,000 after 2002.

NOTE I - NOTES PAYABLE

Notes payable are comprised of the following at December 31:
<TABLE>
<CAPTION>
                                                             (Dollars in thousands)
                                                         Current          
                                                         interest    
                                                         rate             Balance
                                                         ----     -----------------------
<S>                                                      <C>      <C>           <C>      
               
                      Note due February 26, 1999          6.50     $1,500        $ 0   
                      Note due June 26, 1999              6.50        300          0   
                                                                   ------        ---
                      Total notes payable                 6.50%    $1,800        $ 0     
                                                                   ======        ====
</TABLE>

The corporation's indebtedness is to a bank under notes that have floating 
interest rates which are tied to prime.  The notes are unsecured.

<PAGE>


NOTE J - FEDERAL INCOME TAXES

The consolidated provision for income taxes for the following years consists 
of the following:
  
                                                        (Dollars in thousands)
     
                                                         1998            1997
                                                         ----            ----
                         Federal income tax expense          
                         Current tax expense             $456            $421
                         Deferred tax expense              (9)            (69)
                                                         ----            ----  
                         Total                           $447            $352
                                                          ====           ====

A cumulative net deferred tax liability is included in other liabilities at 
December 31, 1998 and 1997.  The components of the deferred tax accounts are 
as follows:

                                                         (Dollars in thousands)
     
                                                          1998         1997
                                                          ----         ----
     Deferred tax liability          
     Accumulated depreciation                           $   32       $   27
     Net deferred loan costs                                28           37
     Net unrealized gain on securities available-for-sale  267          170
     Other                                                   5           33
                                                         -----        -----
     Total deferred tax liability                          332          267
          
     Deferred tax asset          
     Nonaccrual loan interest                               (5)          (8)
     Allowance for loan losses                            (130)        (110)
     Employee benefits                                     (85)         (81)
                                                         ------        -----
     Total deferred tax asset                             (220)        (199)
                                                         ------        -----
     Total net deferred tax liability                    $ 112        $  68
                                                         =====         =====
A reconciliation of the federal income tax rate to effective income tax rates 
for the years ended December 31:

                                                          1998          1997
                                                          ----          ----
          
     Federal income tax rate                              34.0%         34.0%
     Adjusted for:          
          Tax-exempt income                               (1.9)         (3.2)
Other                                                     (0.1)         (2.4)
                                                          -----         -----
Effective tax rate                                        32.0%         28.4%
                                                          =====         =====

Included in retained earnings at December 31, 1998,  and 1997, is 
approximately  $1,084,000 in bad debt reserves for which no deferred federal 
income tax liability has been recorded.  These amounts represent allocations 
of income to bad debt deductions for tax purposes before 1988. Reduction of 
these reserves for purposes other than tax bad debt losses or adjustments 
arising from carryback of net operating losses would create income for tax 
purposes, which would be subject to the then-current corporate income tax 
rate.  The unrecorded deferred liability on these amounts was approximately 
$368,000.



NOTE K - DIVIDEND RESTRICTION

The bank, as a federally chartered savings bank, is subject to the dividend 
restrictions of the Office of Thrift Supervision (the "OTS").  Under 
regulations of the OTS applicable to converted savings associations, the bank 
is not permitted to pay a cash dividend on its capital stock 
<PAGE>
if its regulatory capital would, as a result of the payment of such dividend, 
be reduced below the amount required for the Liquidation Account or the 
applicable regulatory capital requirements prescribed by the OTS.  

As disclosed in NOTE P, the bank meets the requirements for a Tier I 
association and has not been notified of any need for more than normal 
supervision.  As a subsidiary of the corporation, the bank is required to give 
the OTS 30 days notice prior to paying any dividend on its common shares.  The 
OTS may object to the dividend during that 30-day period based on safety and 
soundness concerns.  Moreover, the OTS may prohibit any capital distribution 
otherwise permitted by regulation if the OTS determines that such distribution 
would constitute an unsafe or unsound practice.



NOTE L - EARNINGS PER SHARE

Earnings per share (EPS) is computed in accordance with SFAS No. 128, Earnings 
per share, which was adopted by the corporation as of December 31, 1997.  EPS 
for periods prior to 1997 are not presented because the bank did not complete 
its Reorganization until December 30, 1996.  Diluted EPS is computed using the 
treasury stock method, giving effect to potential additional common shares 
that were outstanding during the period.  Potential dilutive common shares 
include shares held by the corporation's ESOP that are committed for release,  
shares awarded but not released under the corporation's RRP and stock options 
granted under the Stock Option Plan.  Following is a summary of the effect of 
diluted securities in the weighted-average number of shares (denominator) for 
the basic and diluted EPS calculations.  There are no adjustments to net 
income.

                                                        1998         1997
                                                        ----         ----
          
Weighted-average common shares outstanding - basic     812,070     831,527
          
Effect of dilutive securities on number of shares          
          
RRP shares                                              17,027         532
ESOP shares                                             68,558      76,155
Stock options                                           19,869       3,800
                                                       -------      ------
Total dilutive securities                              105,454      80,487
                                                       -------      ------
          
Weighted-average common shares outstanding - diluted   917,524     912,014


NOTE M   EMPLOYEE BENEFITS

401(k) Profit Sharing Plan
In 1994, the bank initiated a 401(k) Profit Sharing Plan.  The plan covers all 
of the bank's employees who are over 21 years old with at least one year of 
service.  Participants may make salary savings contributions up to 15% of 
their compensation, 50% of which will be matched by the bank, up to 6% of each 
employee's salary.  401(k) profit sharing expense  for the years ended 
December 31, 1998 and 1997, was $10,000 and $11,000, respectively.

Pension Plan
In connection with the Financial Institutions' Retirement Fund, the bank 
participates with other companies in the financial institution industry in a 
defined benefit plan.  The plan covers all of the bank's employees who are 
over 21 years old with at least one year of service.  Pension expense for the 
years ended December 31, 1998 and 1997, was $28,000 and $13,000, respectively.

Incentive Compensation Plan
The bank has an incentive compensation plan that covers all employees who are 
normally scheduled to work 1,040 hours or more per year.  The bank's 
contributions pursuant to the plan are based on a formula contained in the 
plan which incorporates factors relating to the bank's performance and are 
contingent upon the bank's attainment of certain levels of earnings, as 
defined in the plan.  Incentive compensation plan expense for the years ended 
December 31, 1998 and 1997, was $46,000 and $7,000, respectively.
<PAGE>


NOTE N - STOCK REPURCHASE PROGRAM

During 1998, the corporation received regulatory approval to repurchase up to 
5% of its outstanding shares.  During the year ended December 31, 1998, 45,200 
common shares were purchased at an average price of $13.13.  During 1997, the 
corporation previously received regulatory approval to repurchase 5% of its 
outstanding shares.  During the year ended December 31, 1997, 47,610 common 
shares were purchased at an average price of $14.93.
 
Repurchased shares are treated as treasury shares and are available for 
general corporate purposes, including issuance in connection with stock-based 
compensation plans.



NOTE O - STOCK-BASED COMPENSATION PLANS
Employee Stock Ownership Plan (ESOP)
As part of the conversion transaction (see NOTE B), an ESOP was established 
for the benefit of employees of the corporation and bank, age 21 or older, who 
have completed at least one year of full-time service.  The ESOP borrowed 
$762,000 from the corporation and used those funds to acquire 76,176 common 
shares of the corporation at $10 per share.

Shares issued to the ESOP are allocated to ESOP participants based on 
principal payments made by the ESOP on the loan.  The loan is secured by 
shares purchased with the loan proceeds and will be repaid by the ESOP with 
funds from the corporation's discretionary contributions to the ESOP and 
earnings on ESOP assets.  Principal payments are scheduled to occur in even 
annual amounts over a ten year period.  However, in the event contributions 
exceed the minimum debt service requirements, additional principal payments 
will be made.   During each of 1998 and 1997, 7,618 common shares were 
allocated among the participants.  ESOP compensation expense for the years 
ended December 31, 1998 and  1997, was $113,000 and $151,000, respectively.  
Shares held by the ESOP at December 31, 1998 and 1997, are as follows:

                                                         1998        1997
                                                         ----        ----
          
Allocated shares                                       15,236          7,618
Unallocated shares                                     60,940         68,558
                                                       ------         ------
          
Total ESOP shares                                      76,176         76,176
                                                       ======         ======
          
Fair value of unallocated shares                     $823,000     $1,268,000
                                           
Recognition and Retention Plan  ("RRP")  
A recognition and retention plan was approved by the shareholders of the 
corporation at the October 20, 1997, Annual Meeting.  The RRP is a restricted 
stock award plan.  The RRP is administered by a committee of directors of the 
corporation.  The committee selects recipients and terms of awards pursuant to 
the plan.  Total shares made available under the plan was 38,088.

RRP awards vest in five equal annual installments, subject to the continuous 
employment of the recipients as defined under such plans.   Compensation 
expense for the RRP is based upon market price at the date of grant and is 
recognized on a pro rata basis over the vesting period of the awards.   RRP 
expense for the years  ended December 31, 1998 and  1997, was $76,000 and $0, 
respectively.  The unamortized unearned compensation value of the RRP is shown 
as a reduction to shareholders' equity in the accompanying consolidated 
balance sheets.

Stock Option Plan ("SOP")
A stock option plan was approved by the shareholders of the corporation at the 
October 20, 1997, Annual Meeting.  The SOP is administered by a committee of 
directors of the corporation.  The committee selects recipients and terms of 
awards pursuant to the plan.  The maximum number of common shares which may be 
issued under the SOP is 131,422 shares.  The maximum term of each option is 
ten years from the date of grant.  The initial awards were granted on October 
20, 1997, at the fair value of the common stock on that date ($16.125).  Due 
to the capital distribution in 1998, the number of shares granted was 
increased from 71,415 to 98,565, and the exercise price was decreased from 
$16.125 to $11.70.  The initial awards vest in equal installments over a 
five-year period from the grant date and expire during October 2007.  Unvested 
options become immediately exercisable in the event of death or disability.

<PAGE>
Option activity under the SOP is as follows:
                                                                    Weighted-
                                                  Number of         average
                                                   shares       exercise price
Outstanding December 31, 1996                           0             $0.00
        Granted                                    98,565             11.70
        Exercised                                       0              0.00
        Canceled                                        0              0.00
Outstanding December 31, 1997                      98,565             11.70
        Granted                                         0              0.00
        Exercised                                       0              0.00
        Canceled                                        0              0.00
Outstanding, December 31, 1998                     98,565            $11.70

At December 31, 1998, 32,857 shares were available for future grants under the 
SOP.

Additional information regarding options outstanding as of December 31, 1998, 
is as follows:

                                                    Weighted-average
          Exercise     Options        Options          remaining
           price      outstanding     exercisable     contractual life
               
          $11.70        98,565          19,711            8.8 years

SFAS No. 123, Accounting for Stock-Based Compensation, which became effective 
for 1996, requires pro forma disclosures for companies that do not adopt its 
fair value accounting method for stock-based employee compensation.  
Accordingly, the following pro forma information presents net income and 
earnings per share had the standard's fair value method been used to measure 
compensation cost for the SOP.  In future years, the pro forma effect of not 
applying this standard is expected to increase as additional options are 
granted.  

The corporation's calculations were made using the Black-Scholes option 
pricing model with the following weighted-average assumptions:

                                                           October 1997
                                                               grant
           Risk-free interest rate                              6.23%
           Expected dividend                                    2.54%
           Expected lives, in years                            10         
           Expected volatility                                 23.96%

The weighted-average grant-date fair value of options granted during October 
1997 was $3.88.  The corporation's calculations are based on a multiple option 
valuation approach and forfeitures are recognized as they occur.  Had 
compensation cost for these awards been determined with SFAS No. 123, the 
corporation's net income and earnings per share would have been reduced to the 
following pro forma amounts:

                                                        (Dollars in thousands,
                                                         except per share data)
          
                                                       Year ended December 31,
                                                       -----------------------
Net income:                                            1998              1997
----------                                             ----              ----
                                         
            As reported                                 $951             $888
            Pro forma                                   $901             $880
Earnings per common share - basic          
            As reported                                $1.17            $1.06
            Pro forma                                  $1.11            $1.05
Earnings per common share - diluted          
            As reported                                $1.04            $0.97
            Pro forma                                  $0.98            $0.96

<PAGE>
NOTE P - REGULATORY MATTERS

Home City is subject to various regulatory capital requirements administered 
by the OTS.  Failure to meet minimum capital requirements can initiate certain 
mandatory requirements - and possibly additional discretionary - actions by 
regulators that, if undertaken, could have a direct material effect on Home 
City Financial Corporation'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.  Home City's capital amounts 
and classifications are also subject to qualitative judgments by regulators 
about components, risk-weighting, and other factors.

Quantitative measures established by regulation to ensure capital adequacy 
require the bank to maintain minimum amounts and ratios of tangible capital of 
not less than 1.5% of adjusted total assets, total capital to risk-weighted 
assets of not less than 8.0%, and core capital equal to 3.0% of adjusted total 
assets (as defined in the regulations).  Management believes, as of December 
31, 1998, that Home City meets all capital adequacy requirements to which it 
is subject.

At December 31, 1998, the most recent notification from the OTS categorized 
Home City as "Well Capitalized" under the framework for prompt corrective 
action.  To be considered well capitalized under Prompt Corrective Action 
Provisions, the bank must maintain total risk-based, Tier I risk-based, and 
Tier I leverage ratios as set forth in the following table.  There are no 
conditions or events since that notification that management believes have 
changed Home City's categorization.

The bank is required to report capital ratios unconsolidated with HCFC.  The 
bank's actual capital amounts and ratios are presented in the following 
tables:

                                                        (Dollars in thousands)
          
                                                    Risk-based          Tier I
                                                    capital             capital
                                                    -------             -------
          
Equity per GAAP                                      $12,414           $12,414
Less unrealized gain on securities available-for-sale,          
     net of applicable income taxes                     (517)             (517)
Less advance to subsidiary                               (33)              (33)
Plus allowance for loan losses                           486               N/A
                                                       ------          --------
          
Regulatory capital                                    $12,350          $11,864
                                                      =======          =======

<TABLE>
<CAPTION>
                                                        (Dollars in thousands)
                                                                                           To be well
                                                                  Minimum required      capitalized under
                                                                      for capital         Prompt Corrective
                                             Actual                adequacy purposes     Action Provisions
                                             ------                -----------------     -----------------
                                     Amount        Ratio        Amount        Ratio        Amount        Ratio
                                     ------        -----        ------        -----        ------        -----
<S>                                  <C>           <C>         <C>            <C>          <C>           <C>             
As of December 31, 1998:                              
Total Risk-Based Capital                              
(to Risk-Weighted Assets)           $12,350         21.9%       $4,504         8.0%        $5,631        10.0%    
Tier I Capital                              
(to Risk-Weighted Assets)            11,864         21.1           N/A          N/A         3,378         6.0       
Tier I Capital                              
(to Total Assets)                    11,864         13.9         2,559         3.0          4,265         5.0       
Tangible Capital                              
(to Total Assets)                    11,864         13.9         1,279         1.5            N/A         N/A       
                              
As of December 31, 1997:                              
Total Risk-Based Capital                              
(to Risk-Weighted Assets)           $11,253         26.6%       $3,386         8.0%        $4,232        10.0%    
     Tier I Capital                              
(to Risk-Weighted Assets)            10,801         25.5           N/A         N/A          2,539         6.0       
Tier I Capital                              
(to Total Assets)                    10,801         15.2         2,132         3.0          3,553         5.0       
Tangible Capital                              
(to Total Assets)                    10,801         15.2         1,066         1.5            N/A         N/A
</TABLE>
<PAGE>

NOTE Q - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, the bank has various outstanding commitments 
and contingent liabilities, such as commitments to extend credit and standby 
letters of credit, which are not included in the accompanying consolidated 
financial statements.  The bank's exposure to credit loss in the event of 
nonperformance by the other party to the financial instruments for commitments 
to extend credit and standby letters of credit is represented by the 
contractual or notional amount of those instruments.  The bank uses the same 
credit policies in making such commitments as it does for instruments that are 
included in the consolidated balance sheet.

The bank had outstanding commitments to originate loans as follows:
                    
<TABLE>
<CAPTION>
                              
                                     At December 31, 1998                    At December 31, 1997      
                                     --------------------                    ---------------           
                                 Fixed-     Adjustable-              Fixed-     Adjustable-                  
                                  rate         rate         Total     rate         rate        Total        
                                 ------     -----------     -----    ------     -----------    -----
<S>                             <C>        <C>             <C>      <C>        <C>            <C>     
Undisbursed balance                                                                                         
     of loans closed -                                                                                      
     mortgage loans              $1,865      $   393        $2,258   $1,150     $   37         $1,187
First mortgage                                                                                              
     loans                        1,933          508         2,441    1,026        536          1,562
Consumer and                                                                                         
     other loans                    100            0           100        0          0              0
Open-end consumer lines               0        1,476         1,476        0        498            498
Commercial lines                      0        3,192         3,192        0          0              0
                                 ------      -------        ------    -----     -----------   -------       ------
Total                            $3,898      $ 5,569        $9,467   $2,176     $1,071         $3,247
                                 ======      =======        ======   ======     ===========   =======
</TABLE>
                              
Commitments to extend credit are agreements to lend to a customer as long as 
there is no violation of any condition established in the contract.  
Commitments generally have fixed expiration dates or other termination clauses 
and may require payment of a fee.  Since many of the commitments are expected 
to expire without being drawn upon, the total commitment amounts do not 
necessarily represent future cash requirements.  Management evaluates each 
customer's creditworthiness on a case-by-case basis.  The amount and type of 
collateral obtained, if deemed necessary by the bank upon extension of credit, 
is based on management's credit evaluation.  Collateral held varies but may 
include accounts receivable, inventory, property and equipment, and 
income-producing commercial properties.

The bank has not been required to perform on any financial guarantees during 
the past three years.  The bank has not incurred any losses on its commitments 
during the past three years.

The bank maintains deposit accounts at four banks.  Accounts at each 
institution are insured by the Federal Deposit Insurance Corporation (FDIC) up 
to $100,000.  Account balances at two of these institutions exceeded FDIC 
insurance limits.  The amount in excess of the FDIC limit totaled $1,583,000.


NOTE R - FAIR VALUES OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires 
disclosure of fair value information about financial instruments, whether or 
not recognized in the statement of financial condition.  In cases where quoted 
market prices are not available, fair values are based on estimates using 
present value or other valuation techniques.  Those techniques are 
significantly affected by the assumptions used, including the discount rate 
and estimates of future cash flows.  In that regard, the derived fair value 
estimates cannot be substantiated by comparison to independent markets and, in 
many cases, could not be realized in immediate settlement of the instruments.  
SFAS No. 107 excluded certain financial instruments from its disclosure 
requirements.  Accordingly, the aggregate fair value amounts presented do not 
represent the underlying value of the corporation.

The following methods and assumptions were used by the bank in estimating its 
fair value disclosures for financial instruments:

Cash and cash equivalents:  The carrying amounts reported in the statement of 
financial condition for cash and  cash equivalents approximate those assets' 
fair values.

<PAGE>

Time deposits:  Fair values for time deposits are estimated using a discounted 
cash flow analysis that applies interest rates currently being offered on 
certificates to a schedule of aggregated contractual maturities on such  time 
deposits.

Investment securities:  Fair values for investment securities are based on 
quoted market prices, where available.  If quoted market prices are not 
available, fair values are based on quoted market prices of comparable 
instruments.

Loans:  For adjustable-rate loans that reprice frequently and with no 
significant change in credit risk, fair values are based on carrying amounts.  
The fair values for other loans (for example, fixed-rate commercial real 
estate and rental property mortgage loans and commercial and industrial loans) 
are estimated using discounted cash flow analysis, based on interest rates 
currently being offered for loans with similar terms to borrowers of similar 
credit quality.  Loan fair value estimates include judgments regarding future 
expected loss experience and risk characteristics.  Fair values for impaired 
loans are estimated using discounted cash flow analysis or underlying 
collateral values, where applicable. 

Deposits:  The fair values disclosed for demand deposits are, by definition, 
equal to the amount payable on demand at the reporting date (that is, their 
carrying amounts).  The carrying amounts of variable-rate, fixed-term 
money-market accounts and certificates of deposit approximate their fair 
values.  Fair values for fixed-rate certificates of deposit are estimates 
using a discounted cash flow calculation that applies interest rates currently 
offered on certificates to a schedule of aggregated contractual expected 
monthly maturities on time deposits. 

Accrued interest: The carrying amount of accrued interest approximates fair 
value.

Borrowed funds: The fair values for borrowed funds are estimated using a 
discounted cash flow calculation that applies interest rates currently being 
offered on like-type borrowed funds.

The estimated fair values of the corporation's financial instruments are as 
follows:

                                                       (Dollars in thousands)
                              
                                                             December 31,
                                                             -----------
                                              1998                  1997
                                      Carrying     Fair     Carrying     Fair
                                       amount      value     amount      value
                                       ------      -----     ------      -----
Financial assets:                              
Cash and cash equivalents               $1,910     $1,910    $1,518     $1,518
Time deposits                               24         21        23         18
Investment securities                    3,091      3,091     4,580      4,580
Mortgage-backed securities                 559        559       700        700
Loans                                   76,986     80,430    62,535     63,176
Accrued interest receivable                440        440       409        409
Life insurance                           1,129      1,129     1,085      1,085
                              
Financial liabilities:                              
Deposits                                60,499     60,372    51,689     51,828
       Notes payable                     1,800      1,800         0          0
Advances from FHLB                      11,571     11,378     5,712      5,617
Accrued interest payable                   115        115        79         79

The carrying amounts in the preceding table are included in the balance sheet 
under the applicable captions.  The contract or notional amounts of the bank's 
financial instruments with off-balance sheet risk are disclosed in NOTE Q.  No 
derivatives were held by the bank for trading purposes.  It is not practical 
to estimate the value of Federal Home Loan Bank stock because it is not 
marketable.  The carrying amount of that investment is reported in the 
consolidated balance sheet.
<PAGE>

NOTE S - PARENT COMPANY FINANCIAL INFORMATION

Condensed financial information for Home City Financial Corporation (parent 
company only) follows:

                                  Balance Sheets

                                                     (Dollars in thousands)
               
                                                           December 31,
                                                           -----------
                                                           1998          1997
                                                           ----          ----
Assets               
Interest-bearing savings deposit with subsidiary bank  $    151        $   147
Interest-bearing time deposit with subsidiary bank            0          2,027
Investment in subsidiary bank                            12,414         11,213
Investment securities available-for-sale                      0            601
Other assets                                                113             37
                                                        -------        -------
Total assets                                            $12,678        $14,025
                                                        =======        =======
               
Liabilities and Shareholders' Equity               
Notes payable                                          $  1,800        $     0
Accrued expense and other liabilities                         8             21
                                                        -------        -------
     Total liabilities                                    1,808             21
               
Shareholders' equity                                     10,870         14,004
                                                        -------        -------
Total liabilities and shareholders' equity              $12,678        $14,025
                                                        =======        =======


                                  Statements of Income

                                                        (Dollars in thousands)
               
                                                             Year ended
                                                             December 31,
                                                             ------------
                                                           1998           1997
                                                           ----           ----
Income               
Interest income                                           $   127     $   230  
Other income                                                    3           1  
                                                           ------      ------
Total income                                                  130         231  
               
Expense               
Interest expense                                               51           0  
Other expense                                                 156         227  
                                                           ------      ------
     Total expense                                            207         227  
                                                           ------      ------
               
Income (loss) before income taxes and undistributed               
     earnings of subsidiary                                   (77)          4  
               
Income tax benefit                                            (15)        (10) 
                                                            ------     ------
Income (loss) before undistributed earnings of subsidiary     (62)         14  
               
Undistributed earnings of subsidiary                        1,013         874  
                                                            -----       -----
Net income                                                 $  951      $  888  
                                                           ======      ======
<PAGE>

                              Statements of Cash Flows

                                                        (Dollars in thousands)  
          
                                                               Year ended
                                                               December 31,
                                                               ------------
                                                           1998           1997
                                                           ----           ----
Cash flows from operating activities               
Net income                                                 $   951     $   888
Adjustments to reconcile net income to net cash               
flows from operating activities:               
Undistributed earnings of subsidiary                        (1,013)       (874)
Discount accretion                                               0          (1)
Gain on sale of securities available-for-sale                   (2)         (1)
Deferred income taxes                                           (9)        (22)
Compensation expense for ESOP                                  113         151
Compensation expense for RRP                                    76           0
Net increase in other assets                                   (67)        (12)
Net decrease in other liabilities                              (13)       (122)
                                                            -------     ------
               
 Net cash provided by operating activities                      36           7
                                                            -------     ------
               
Cash flows from investing activities               
Net (increase) decrease in time deposits                     2,027      (2,027)
Purchase of securities available-for-sale                        0      (2,996)
Sale of securities available-for-sale                          600         400
Maturities of securities available-for-sale                      0       2,000
                                                            ------      ------
               
 Net cash flows provided by (used in) investing activities   2,627      (2,623)
                                                            ------      -------
Cash flows from financing activities               
Net proceeds from notes payable                              1,800           0
Distribution of capital                                     (3,166)          0
Purchase of treasury shares                                   (593)       (711)
Purchase of common shares by RRP                              (370)       (118)
Cash dividends paid                                           (330)       (306)
                                                            -------     -------
     Net cash used in financing activities                  (2,659)     (1,135)
               
Net increase (decrease) in cash and cash equivalents             4      (3,751)
Cash and cash equivalents at beginning of year                 147       3,898
                                                            -------     -------
               
Cash and cash equivalents at end of year                    $  151     $   147
                                                            ======     ========
<PAGE>
NOTE T - QUARTERLY FINANCIAL DATA (Unaudited)

<TABLE>
<CAPTION>
                                                                                
                                              (Dollars in thousands, except per share data)
                    
                                              First     Second     Third     Fourth
                                              Quarter   Quarter    Quarter   Quarter
                                              -------   ------     ------    -------
<S>                                           <C>       <C>        <C>       <C> 
Year ended December 31, 1998:                    
Interest income                               $1,580     $1,669     $1,770     $1,789
Interest expense                                 792        839        913        942
                                              ------     ------     ------     ------
Net interest income                              788        830        857        847
                    
Provision for loan losses                         12         20         21          8
Other income                                      18         19         27         34
Other expense                                    482        474        493        512
Provision for income taxes                       100        115        120        112
                                              ------     ------     ------     ------
Net income                                    $  212     $  240     $  250     $  249
                                              ======     ======     ======     ======
                    
Earnings per share- basic                     $ 0.26     $ 0.29     $ 0.31     $ 0.31
Earnings per share - diluted                  $ 0.23     $ 0.26     $ 0.27     $ 0.28
Weighted-average common                    
shares outstanding                           829,232     817,462    812,230    786,530
                    
Year ended December 31, 1997:                    
Interest income                              $ 1,388     $ 1,415     $ 1,512   $ 1,547
Interest expense                                 733         748         771       764
                                             -------     -------     -------   -------
Net interest income                              655         667         741       783
                    
Provision for loan losses                         20           0           8        15
Other income                                      31          23          18        17
Other expense                                    399         403         384       466
Provision for income taxes                        89          71         124        68
                                             -------     -------     -------   -------
Net income                                   $   178     $   216     $   243   $   251
                                             =======     =======     =======   =======
                    
Earnings per share - basic                   $  0.22     $  0.25     $  0.29   $  0.30
Earnings per share- diluted                  $  0.21     $  0.23     $  0.27   $  0.26
Weighted-average common                    
shares outstanding                           876,024     876,024     839,507   826,334

</TABLE>
<PAGE>
ITEM 8. Changes in and Disagreements with Accountants on Accounting and 
        Financial Disclosure.

        None

                                      PART  III
ITEM 9.  Directors, Executive Officers, Promoters and Control 
         Persons; Compliance with Section 16 (a) of the Exchange Act 
         of the Registrant

     The information set forth under the caption "PROPOSAL ONE - ELECTION OF 
DIRECTORS" and "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" of 
the Definitive Proxy Statement of the Corporation dated March 12, 1999, filed 
with the United States Securities and Exchange Commission (the "Proxy 
Statement") is incorporated by reference herein.

ITEM 10.  Executive Compensation

     The information set forth under the caption "COMPENSATION OF DIRECTORS AND 
EXECUTIVE OFFICERS" of the Proxy Statement is incorporated by reference 
herein.

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management

     The information set forth under the caption "VOTING SECURITIES AND 
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" of the Proxy Statement 
is incorporated by reference herein.

ITEM 12.  Certain Relationships and Related Transactions

     The information set forth under the caption "COMPENSATION OF DIRECTORS 
AND EXECUTIVE OFFICERS - Certain Transactions with Home City" of the Proxy 
Statement is incorporated by reference herein.

ITEM 13.  Exhibits and Reports on Form 8-K


     (a) Exhibits

         3.1  Articles of Incorporation (Incorporated by reference)
         3.2  Code of Regulations (Incorporated by reference)
        10.1  Employment Agreement with Mr. Ulery (Incorporated by 
              reference)
        10.2  Home City Financial Corporation 1997 Stock Option and 
              Incentive Plan (Incorporated by reference)
        10.3  Home City Financial Corporation Recognition and Retention 
              Plan and Trust Agreement (Incorporated by reference)
        21    Subsidiaries (Incorporated by reference)
        27    Financial Data Schedule
        99.1  Proxy Statement ( Incorporated by reference)
        99.2  Safe Harbor Under the Private Securities Litigation Reform 
              Act of 1995

     (b)  Reports on Form 8-K

          HCFC has not filed any reports on Form 8-K during the last quarter 
of 1998.
<PAGE>

SIGNATURES

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


     HOME CITY FINANCIAL CORPORATION


     /s/ Douglas L. Ulery
     ---------------------------          

     Douglas L. Ulery
     President and Chief Executive Officer


     In accordance with the Exchange Act, this report has been signed below by 
the following persons on behalf of the registrant and in the capacities on the 
dates indicated.

         
     /s/ John D. Conroy                               /s/ P. Clark Engelmeier
     -------------------------                        ----------------------
     John D. Conroy                                   P. Clark Engelmeier
     Director                                         Chairman of the Board
     
     -------------------------                        -----------------------
     Date                                             Date

   
     /s/ James Foreman                                /s/ Terry A. Hoppes
     -------------------------                        ----------------------
     James Foreman                                    Terry A.  Hoppes
     Director                                         Director

     -------------------------                        ---------------------- 
     Date                                             Date


     /s/ Douglas L. Ulery                             /s/ Charles A. Mihal
     -------------------------                        ----------------------  
     Douglas L. Ulery                                 Charles A. Mihal
     Director                                         Treasurer and Chief 
     President and Chief Executive Officer            Financial Officer
         
     --------------------------                       -----------------------
     Date                                             Date

<PAGE>

                                      INDEX TO EXHIBITS


EXHIBIT
NUMBER            DESCRIPTION

          
3.1     Articles of Incorporation             Incorporated by reference to the 
        of Home City Financial Corporation    Registrant's Quarterly Report on
                                              Form 10-QSB for the Quarter 
                                              Ended March 31, 1997 (the "March
                                              31, 1997, 10-QSB"), Exhibit 3(i)

3.2    Code of Regulations of Home City       Incorporated by reference to the 
       Financial Corporation                  Registrant's Financial Corporation
                                              March 31, 1997, 10-QSB, Exhibit
                                              3 (ii)
     
10.1   Employment Agreement with              Incorporated by reference to the 
       Mr. Ulery                              Registrant's Form 10-KSB for the 
                                              Year Ended June 30, 1997 (the 
                                              "June 30, 1997, 10-KSB") 
                                              Exhibit 10.1

10.2   Home City Financial Corporation        Incorporated by reference to the 
       1997 Stock Option and Incentive        Registrant's 1997 Definitive 
       Plan                                   Proxy Statement dated September 
                                              19, 1997, Exhibit A

10.3   Home City Financial Corporation        Incorporated by reference to the
       Recognition and Retention Plan         Registrant's 1997 Definitive 
       and Trust Agreement                    Proxy Statement dated September
                                              19, 1997, Exhibit B     

21   Subsidiaries of Home City                Incorporated by reference to the 
     Financial Corporation                    June 30, Financial Corporation
                                              1997, 10-KSB, Exhibit 21

27   Financial Data Schedule
 
99.1 Proxy Statement                          Incorporated by reference to 
                                              the definitive Proxy Statement 
                                              of the Registrant for the 1999
                                              Annual Meeting of Shareholders 
                                              of Home City Financial 
                                              Corporation, filed with the 
                                              Securities and Exchange
                                              Commission

99.2 Safe Harbor Under the Private
     Securities Litigation Reform 
     Act of 1995
<PAGE>