EXHIBIT 99.2
**Safe Harbor Under the Private Securities Litigation Reform Act of 1995**
     The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a “safe harbor” forforward-looking statements to encourage companies to provide prospective information about theircompanies, so long as those statements are identified as forward-looking and are accompanied bymeaningful cautionary statements identifying important factors that could cause actual results todiffer materially from those discussed in the statement. Home City Financial Corporation (“HCFC”)desires to take advantage of the “safe harbor” provisions of the Act. Certain information,particularly information regarding future economic performance and finances and plans andobjectives of management, contained or incorporated by reference in HCFC’s Annual Report on Form10-KSB for the fiscal year ended December 31, 2004, is forward-looking. In some cases, informationregarding certain important factors that could cause actual results of operations or outcomes ofother events to differ materially from any such forward-looking statement appears together withsuch statement. In addition, forward-looking statements are subject to other risks anduncertainties affecting the financial institutions industry, including, but not limited to, thefollowing:
Interest Rate Risk
     HCFC’s operating results are dependent to a significant degree on its net interest income,which is the difference between interest income from loans, investments and other interest-earningassets and interest expense on deposits, borrowings and other interest-bearing liabilities. Theinterest income and interest expense of HCFC change as the interest rates on interest-earningassets and interest-bearing liabilities change. Interest rates may change because of generaleconomic conditions, the policies of various regulatory authorities and other factors beyond HCFC’scontrol. In a rising interest rate environment, loans tend to prepay slowly and new loans athigher rates increase slowly, while interest paid on deposits increases rapidly because the termsto maturity of deposits tend to be shorter than the terms to maturity or prepayment of loans. Suchdifferences in the adjustment of interest rates on assets and liabilities may negatively affectHCFC’s income.
Possible Inadequacy of the Allowance for Loan Losses
     HCFC maintains an allowance for loan losses based upon a number of relevant factors,including, but not limited to, trends in the level of nonperforming assets and classified loans,current and anticipated economic conditions in the primary lending area, past loss experience,possible losses arising from specific problem loans and changes in the composition of the loanportfolio. While the Board of Directors of HCFC believes that it uses the best informationavailable to determine the allowance for loan losses, unforeseen market conditions could result inmaterial adjustments, and net earnings could be significantly adversely affected if circumstancesdiffer substantially from the assumptions used in making the final determination.
     Loans not secured by one to four-family residential real estate are generally considered toinvolve greater risk of loss than loans secured by one to four-family residential real estate due,in part, to the effects of general economic conditions. The repayment of multifamily residential,nonresidential real estate and commercial loans generally depends upon the cash flow from theoperation of the property or business, which may be negatively affected by national and localeconomic conditions. Construction
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loans may also be negatively affected by such economic conditions, particularly loans made todevelopers who do not have a buyer for a property before the loan is made. The risk of default onconsumer loans increases during periods of recession, high unemployment and other adverse economicconditions. When consumers have trouble paying their bills, they are more likely to pay mortgageloans than consumer loans. In addition, the collateral securing such loans, if any, may decreasein value more rapidly than the outstanding balance of the loan.
Competition
Home City Federal Savings Bank of Springfield (“Home City”) competes for deposits with othersavings associations, commercial banks and credit unions and issuers of commercial paper and othersecurities, such as shares in money market mutual funds. The primary factors in competing fordeposits are interest rates and convenience of office location. In making loans, Home Citycompetes with other savings associations, commercial banks, consumer finance companies, creditunions, leasing companies, mortgage companies and other lenders. Competition is affected by, amongother things, the general availability of lendable funds, general and local economic conditions,current interest rate levels and other factors that are not readily predictable. The size offinancial institutions competing with Home City is likely to increase as a result of changes instatutes and regulations eliminating various restrictions on interstate and inter-industrybranching and acquisitions. Such increased competition may have an adverse effect upon Home City.
Legislation and Regulation that may Adversely Affect HCFC’s Earnings
     Home City is subject to extensive regulation by the Office of Thrift Supervision (the “OTS”)and the Federal Deposit Insurance Corporation (the “FDIC”) and is periodically examined by suchregulatory agencies to test compliance with various regulatory requirements. As a savings and loanholding company, HCFC is also subject to regulation and examination by the OTS. Such supervisionand regulation of HCFC and Home City are intended primarily for the protection of depositors andnot for the maximization of shareholder value and may affect the ability of the company to engagein various business activities. The assessments, filing fees and other costs associated withreports, examinations and other regulatory matters are significant and may have an adverse effecton HCFC’s net earnings.
     The FDIC is authorized to establish separate annual assessment rates for deposit insurance ofmembers of the Bank Insurance fund (the “BIF”) and the Savings Association Insurance Fund (the“SAIF”). The FDIC has established a risk-based assessment system for both SAIF and BIF members.Under such system, assessments may vary depending on the risk the institution poses to its depositinsurance fund. Such risk level is determined by reference to the institution’s capital level andthe FDIC’s level of supervisory concern about the institution.
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