<PAGE>

                    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, 2002
                         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)

        2454 North Limestone Street                               45503
  (Address of principal executive offices)                     (zip code)

                    Issuer's telephone number (937) 390-0470

         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)

      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. |X|

      State issuer's revenues for the most recent fiscal year. $10,896,000

      State the aggregate market value of the voting and nonvoting 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 4, 2003, 784,400 common
shares of the Registrant were outstanding. The aggregate market value of the
shares held by non-affiliates was $7,505,532 based upon the closing sale price
of $12.66 per share as quoted by The Nasdaq Stock Market.

      DOCUMENTS INCORPORATED BY REFERENCE

      The following sections of the definitive Proxy Statement for the 2003
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.    Compensation of Directors and Executive Officers
      3.    Voting Securities and Ownership of Certain Beneficial Owners and
            Management
      4.    Section 16(a) Beneficial Ownership Reporting Compliance

      Transitional Small Business Disclosure Format YES | |  NO |X|


                                      -1-
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

      Home City Financial Corporation, a unitary savings and loan holding
company incorporated in 1996 under the laws of the State of Ohio ("HCFC"), owns
all of the issued and outstanding common shares of Home City Federal Savings
Bank of Springfield, a savings association chartered under the laws of the
United States ("Home City"). 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. In December 2000, HCFC incorporated Home City Insurance Agency, Inc.
("HCIA"), as a wholly-owned subsidiary, which acquired the business of a local
insurance agency. The business of HCIA was sold in December 2002.

      Home City is a savings association 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 two offices 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 two offices, 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 average levels of income and housing values and a higher
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.


                                      -2-
<PAGE>

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.

      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, some of the
forward-looking statements included herein are the statements under the
following headings and regarding the following matters:

      1.    Financial Condition. Management's statements regarding the amount
            and adequacy of the allowance for loan losses at December 31, 2002.

      2.    Comparison of Results of Operations for the Fiscal Years Ended
            December 31, 2002 and 2001 - Provision for Loan Losses. Management's
            statements regarding the adequacy of the allowance for loan losses
            at December 31, 2002.

      3.    Liquidity and Capital Resources. Management's belief that liquidity
            and capital reserves are sufficient to meet its outstanding short-
            and long-term needs.

      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.

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 strict accordance with traditional
secondary market guidelines.


                                      -3-
<PAGE>

      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,
                                                 -----------------------------------------------------------
                                                          2002                           2001
                                                          ----                           ----
                                                                (Dollars in thousands)

                                                                   Percent of                    Percent of
                                                 Amount           total loans     Amount         total loans
                                                 ------           -----------     ------         -----------
<S>                                             <C>                  <C>         <C>                <C>
Residential real estate loans:
       One- to four-family (first mortgage)     $  62,981            49.24%      $ 58,089           50.09%
       Multifamily                                  7,359             5.75          6,747            5.82
       Home equity (second mortgage)                3,695             2.88          3,337            2.88
Nonresidential real estate loans                   32,040            25.05         29,754           25.66
Land loans                                            856             0.67            720            0.62
Construction loans                                  3,238             2.53          1,477            1.27
                                                ---------           ------       --------          ------

              Total real estate loans             110,169            86.12        100,124           86.34

Commercial loans:
       Secured, other than by real estate          12,662             9.90         11,821           10.20
       Other, unsecured credit lines                1,389             1.09             86            0.07
                                                ---------           ------       --------          ------

              Total commercial loans               14,051            10.99         11,907           10.27

Consumer loans:
       Loans on deposits                               67             0.05            166            0.14
       Other consumer loans                         3,631             2.84          3,768            3.25
                                                ---------           ------       --------          ------

Total consumer loans                                3,698             2.89          3,934            3.39
                                                ---------           ------       --------          ------

Total loans                                       127,918           100.00%       115,965          100.00%
                                                                    ======                         ======
       Less:
       Allowance for loan losses                     (503)                           (592)
                                                ---------                        --------
Net loans                                       $ 127,415                        $115,373
                                                =========                        ========
</TABLE>

      LOAN MATURITY SCHEDULE. The following table sets forth certain information
as of December 31, 2002, 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>
<CAPTION>
                                                                                                              Due more
                                        Due during the           Due 4-5      Due 6-10       Due 11-15       than 15
                                  year ending December 31,     years after   years after    years after    Years after
                                  ------------------------     -----------   -----------    -----------    -----------
                              2003         2004         2005    12/31/02      12/31/02        12/31/02       12/31/02        Total
                              ----         ----         ----    --------      --------        --------       --------        -----
                                                                  (Dollars in thousands)
<S>                         <C>           <C>          <C>     <C>           <C>            <C>            <C>              <C>
Mortgage loans:
Residential                 $ 4,209       $  117       $  922     $3,591       $18,493         $38,905         $7,798       $ 74,035
Nonresidential                4,375        3,070        2,746      2,167        12,007          10,305          1,464         36,134
Consumer loans                  420          226          360        920           712             996             64          3,698
Commercial loans              8,117          324          868      2,645         1,430             667              0         14,051
                            -------       ------       ------     ------       -------         -------         ------       --------

    Total loans             $17,121       $3,737       $4,896     $9,323       $32,642         $50,873         $9,326       $127,918
                            =======       ======       ======     ======       =======         =======         ======       ========
</TABLE>

      Of the loans due more than one year after December 31, 2002, loans with
aggregate balances of $82.2 million have fixed rates of interest, and loans with
aggregate balances of $28.6 million have adjustable interest rates.


                                      -4-
<PAGE>

      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 primarily 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 generally made with a maximum combined
LTV for the first and second mortgage of 89%. Home City makes adjustable-rate
first mortgage loans for investment purposes on one- to four-family, non-owner
occupied residences primarily in amounts up to 80% LTV. Home City may require
private mortgage insurance ("PMI") for the amount of loans in excess of 80% of
the value of the real estate securing such 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 or three years, followed by one- or three-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. Rate adjustments are
computed by adding a stated margin, typically 2.75%, to the index. The maximum
allowable adjustment at each adjustment date is 2% with 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 3.0% over the index and 2% and 6%
maximum adjustments at each adjustment date and over the term of the loan. 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 $63.0 million at December 31, 2002, and
represented 49.24 % of loans at such date. The largest individual loan balance
on a one- to four-family loan at such date was $672,944. At such date, loans
secured by one- to four-family residential real estate with outstanding balances
of $173,000, or 0.27%, of Home City's 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 20 years or with a fixed rate, a
maximum LTV of 75% and a maximum term of up to seven 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


                                      -5-
<PAGE>

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, 2002, loans secured by multifamily properties totaled
approximately $7.4 million, or 5.75% of Home City's total loan portfolio, all of
which were secured by property located within Home City's primary market area.
At such date, all such loans were performing in accordance with their terms. See
"Delinquent Loans, Non-performing Assets and Classified Assets." The largest
loan secured by a multifamily property had a balance at December 31, 2002, of
approximately $1.7 million.

      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, generally with
a maximum combined LTV for the first and second mortgage of 89%.

      At December 31, 2002, home equity loans totaled approximately $3.7
million, or 2.88% of Home City's total loan portfolio. All of such loans were
secured by property located within Home City's primary market area. At such
date, all such loans were performing in accordance with their terms. See
"Delinquent Loans, Non-performing Assets and Classified Assets." The balance of
the largest single home equity loan was $347,000 at December 31, 2002.

      NONRESIDENTIAL REAL ESTATE LOANS. Home City also makes loans secured by
nonresidential real estate consisting of retail stores, office buildings and
businesses. (The "nonresidential real estate loans" category does not include
loans made for commercial purposes that are secured by real estate, which are
described under the heading "Commercial Loans.") Nonresidential real estate
loans generally are originated with terms of up to 20 years and a maximum loan
amount of $1.7 million. Such loans generally have a maximum LTV of 80%.

      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, 2002, Home City had a total of $32.0 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
25.05% of Home City's total loans at such date. At such date, all such loans
were performing in accordance with their terms. See "Delinquent Loans,
Non-performing Assets and Classified Assets." The balance of the largest
nonresidential real estate loan was $1.5 million.

      Federal regulations limit the amount of nonresidential mortgage loans
which an association may make to 400% of its tangible capital. At December 31,
2002, Home City's nonresidential mortgage loans totaled 288.47% of Home City's
tangible capital.

      LAND LOANS. Home City makes two varieties of land loans. First, 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. Second, loans are also


                                      -6-
<PAGE>

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 65% to 80%.

      At December 31, 2002, land loans totaled approximately $856,000, or 0.67%
of Home City's total loan portfolio. The largest land loan at December 31, 2002,
had a balance of approximately $180,978. 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 of up to 30 years. Most of the
construction loans originated by Home City have been 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, 2002, a total of $3.2 million, or approximately 2.53% 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, 2002, all of such loans were performing in accordance with their
terms.

      COMMERCIAL LOANS. Home City also originates loans for commercial purposes.
Such loans are primarily of two types: those secured by nonresidential real
estate and those secured by assets of the borrower other than real estate, such
as equipment or receivables.

      Various chattels, other than real estate, secured commercial loans
totaling $32.0 million or approximately 25.05% of Home City's total loans at
December 31, 2002. The real estate securing commercial loans at December 31,
2002, was comprised of warehouses, office buildings and industrial buildings.
This type of loan is made with terms of up to 20 years and a maximum loan amount
of $1.7 million and may have a maximum LTV of 80% or more. These loans are made
with adjustable interest rates, with the interest rates based on prime or one-,
three- or five-year U.S. Treasury obligations.

      The borrowers of commercial loans totaling $14.1 million at December 31,
2002, were classified as "small business borrowers." These loans were primarily
secured by accounts receivable, inventory and equipment. The commercial loans
secured other than by real estate are made with terms of up to seven


                                      -7-
<PAGE>

years, a maximum loan amount of $1.7 million and a maximum LTV of 75%. These
loans are made with adjustable interest rates, with the interest rates based on
prime or prime plus a specified percentage above prime.

      Commercial lending entails significant risks. The loans are subject to
greater risk of default during periods of adverse economic conditions.
Particularly with respect to loans secured by equipment, inventory, accounts
receivable and other non-real estate assets, the collateral may not be
sufficient to ensure full payment in the event of default. Home City tries to
minimize such risks through its prudent underwriting, which includes guidelines
to determine the acceptability of the collateral to be pledged. An evaluation is
made of the real estate, if any, accounts receivable, inventory and equipment
securing the loan as to their value, marketability, strength of brand names,
stability of conditions and environmental impact in order to mitigate or
minimize the risk of loss. Loan advance amounts are established in accordance
with the type of collateral asset. Credit guidelines have been established
relative to debt service coverage, leveraging, established profitability,
guarantor strength, liquidity and sales concentration. The guarantee of the
principals will generally be required on all loans made to closely held business
entities and affiliates. The credit information required includes fully
completed financial statements, two years' federal income tax returns, a current
credit report and, generally, a formal business plan. Adequate insurance,
appropriate regulatory disclosures and both a preliminary and final lawyer's
title opinion or title insurance are required when real estate is involved.

      At December 31, 2002, Home City had commercial loans in the aggregate
amount of $14.1 million, or approximately 10.99% of Home City's total loans. At
such date, all such loans were performing in accordance with their terms. See
"Delinquent Loans, Non-performing Assets and Classified Assets." The total
indebtedness of the largest single borrower within the commercial portfolio was
$1.6 million at December 31, 2002.

      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, although during 2002 consumer loans decreased as a percent of Home City's
loan portfolio.

      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, 2002, Home City had approximately $3.7 million, or 2.89%
of its total loans, invested in consumer loans. At such date, all such loans
were performing in accordance with their terms. See "Delinquent Loans,
Non-performing Assets and Classified Assets." The balance of the largest
consumer loan was $87,555 at December 31, 2002.

      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
generally 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.


                                      -8-
<PAGE>

      Unless Home City is aware of factors which 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.

      LOAN ORIGINATIONS, PURCHASES AND SALES. Home City originates a greater
number of fixed-rate loans than adjustable -rate loans. See "DESCRIPTION OF
BUSINESS - Loan Maturity Schedule." Home City occasionally will participate in
loans originated by other institutions. During 2002 and 2001 Home City did not
participate in any loans originated by other institutions. Although Home City
generally does not sell loans, it sold a participation in one such loan to
remain within the loans to one borrower limitation.


                                      -9-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                           December 31,
                                                                     ------------------------
                                                                       2002            2001
                                                                       ----            ----
                                                                      (Dollars in thousands)
<S>                                                                  <C>             <C>
      Loans originated:
           One- to four-family residential real estate (1)           $ 27,828        $ 23,500
           Multifamily residential real estate                            900           1,504
           Nonresidential real estate                                  13,348          10,241
           Commercial                                                  14,291          19,921
           Consumer                                                     2,945           2,289
                                                                     --------        --------

                Total loans originated                               $ 59,312        $ 57,455

      Loans purchased                                                       0               0

      Reductions:
           Principal repayments                                       (46,773)        (53,042)
           Sales of loans                                                (797)              0
           Increase in other items, net (2)                               300             155
                                                                     --------        --------

                Net increase                                         $ 12,042        $  4,568
                                                                     ========        ========
</TABLE>

----------
(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 $1.7
million to one borrower at December 31, 2002. The largest amount Home City had
outstanding to one borrower at December 31, 2002, was $1.6 million. Such loans
were secured by commercial real estate properties. All of such loans were
current at December 31, 2002.

      The aggregate amount of commercial loans not primarily secured by real
estate that Home City may have outstanding may not exceed 20% of Home City's
total assets, and any amount in excess of 10% of total assets must be for small
business loans. At December 31, 2002, Home City was in compliance with those
limitations.

      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


                                      -10-
<PAGE>

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
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, 2002                December 31, 2001
                                             -----------------                -----------------

                                                              Percent                               Percent
                                                             of total                               of total
                                      Number      Amount       loans      Number      Amount         loans
                                      ------      ------       -----      ------      ------         -----
                                                                (Dollars in thousands)
<S>                                   <C>         <C>        <C>          <C>         <C>           <C>
Loans delinquent for (1):
    30-59 days                          25        $1,111       0.87%        44        $1,752          1.51%
    60-89 days                          10           290       0.23         12           533          0.46
    90 days and over                     5           423       0.33         31         1,488          1.28
                                        --        ------       ----         --        ------          ----
Total delinquent loans                  40        $1,824       1.43%        87        $3,773          3.25%
                                        ==        ======       ====         ==        ======          ====
</TABLE>

----------
(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.


                                      -11-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                 December 31,
                                                        ------------------------------
                                                        2002         2001         2000
                                                        ----         ----         ----
                                                             (Dollars in thousands)
<S>                                                     <C>         <C>           <C>
Loans accounted for on a nonaccrual basis:
    Real estate:
        Residential                                     $173        $  613        $ 72
        Nonresidential                                     0           760           0
    Commercial                                             0           104           0
    Consumer                                               0            11           0
                                                        ----        ------        ----
            Subtotal non-accrual loans                  $173        $1,488        $ 72

Loans 90 days or more past due and still accruing        250             0           0
                                                        ----        ------        ----
            Total non-performing loans                  $423        $1,488        $ 72

Real estate owned                                        145             0           0
                                                        ----        ------        ----
            Total non-performing assets                 $568        $1,488        $ 72
                                                        ====        ======        ====

            Total loan loss allowance                   $503        $  592        $532

            Total non-performing assets as
              a percentage of total assets              0.38%         1.03%       0.06%

Loan loss allowance as a percent
    of non-performing loans                             88.56%       39.78%     738.89%
</TABLE>

      During the fiscal year ended December 31, 2002, $67,000 in interest income
was recognized and an additional $8,000 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 4 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


                                      -12-
<PAGE>

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:

<TABLE>
<CAPTION>
                                                            December 31,
                                                   -----------------------------
                                                   2002         2001        2000
                                                   ----         ----        ----
                                                       (Dollars in thousands)
<S>                                               <C>          <C>          <C>
Classified assets:
    Substandard                                   $2,166       $2,229       $905
    Doubtful                                          32            0          0
                                                  ------       ------       ----
        Total classified assets                   $2,198       $2,229       $905
                                                  ======       ======       ====
</TABLE>

      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 assets 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 commercial and
consumer loans. These types of loans are considered to involve a higher degree
of risk than 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


                                      -13-
<PAGE>

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 years indicated:

<TABLE>
<CAPTION>
                                                                    (Dollars in thousands)
                                                                      2002          2001
                                                                      ----          ----
<S>                                                                  <C>           <C>
      Balance at beginning of year                                   $ 592         $ 588
      Charge-offs:
          Residential loans                                          $(193)        $(161)
          Consumer loans                                               (66)            0
          Commercial loans                                            (231)            0
                                                                     -----         -----
              Subtotal charge-offs                                   $(490)        $(161)
      Recoveries                                                        25            25
                                                                     -----         -----
          Net (charge-offs) recoveries                               $(465)        $(136)
      Provision for loan losses (charged to operations)                376           140
                                                                     -----         -----
      Balance at end of year                                         $ 503         $ 592
                                                                     =====         =====
      Ratio of net (charge-offs) recoveries to average net
          loans outstanding during the year                           0.39%         0.12%
      Ratio of allowance for loan losses to total loans               0.39%         0.51%
</TABLE>

      The following table sets forth the allocation of Home City's allowance for
loan losses at the dates indicated:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   ------------
                                                             (Dollars in thousands)
                                                                 2002       2001
<S>                                                              <C>        <C>
            Allowance for loan losses:

                Residential loans                                $194       $255
                Consumer loans                                     40         43
                Commercial loans                                  269        288
                                                                 ----       ----
                                                                  503        511
                Unallocated                                         0          6
                                                                 ----       ----
            Total allowance for loan losses                      $503       $592
                                                                 ====       ====
</TABLE>

MORTGAGE-BACKED SECURITIES

      Home City maintains a portfolio of mortgage-backed securities in the form
of Government National Mortgage Association ("GNMA "), Federal Home Loan
Mortgage Corporation ("FHLMC") and Federal National Mortgage Association
("FNMA") participation certificates. Mortgage-backed securities generally
entitle Home City to receive a portion of the cash flows from an identified pool
of mortgages. GNMA, FHLMC and FNMA are government agencies. GNMA securities are
backed by Federal Housing Authority-insured and Veterans
Administration-guaranteed loans. The timely payment of principal and interest on
GNMA, FHLMC and FNMA securities is guaranteed by the respective agencies.


                                      -14-
<PAGE>

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

<TABLE>
<CAPTION>
                                                December 31, 2002         December 31, 2001
                                                -----------------         -----------------
                                                          (Dollars in thousands)

                                              Amortized      Fair       Amortized      Fair
                                                 Cost        value         cost        value
                                                 ----        -----         ----        -----
<S>                                           <C>            <C>        <C>            <C>
            GNMA, FHLMC and FNMA
            certificates                        $3,409       $3,432       $9,664       $9,603
                                                ------       ------       ------       ------
               Total mortgage-backed
                  securities                    $3,409       $3,432       $9,664       $9,603
                                                ======       ======       ======       ======
</TABLE>

      The following table sets forth information regarding scheduled maturities,
amortized costs, market value and weighted-average yields of Home City's
mortgage-backed securities at December 31, 2002. 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, 2002
                   -----------------------------------------------------------------------------------------------------------------
                                           After one to           After five to                            Total mortgage-backed
                    One year or less        five years              ten years          After 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,
FHLMC &
FNMA
  certificates       $  0       0%       $732        0.50%      $  0         0%       $2,700      4.07%   $3,432     $3,432    3.30%
                     ----       -        ----        ----       ----         -        ------      ----    ------     ------    ----

Total                $  0       0%       $732        0.50%      $  0         0%       $2,700      4.07%   $3,432     $3,432    3.30%
                     ====       =        ====        ====       ====         =        ======      ====    ======     ======    ====
</TABLE>

For additional information, see Note 3 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."


                                      -15-
<PAGE>

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

<TABLE>
<CAPTION>
                                                  At December 31,                                     At December 31,
                                                       2002                                                 2001
                                ------------------------------------------------      ---------------------------------------------
                                Carrying        % of         Market         % of      Carrying         % of        Market      % of
                                  value        total          value        total         value        total         value     total
                                  -----        -----          -----        -----         -----        -----         -----     -----
                                                                          (Dollars in thousands)
<S>                             <C>            <C>          <C>            <C>          <C>            <C>         <C>         <C>
Interest-bearing demand
   deposits in other
   financial                    $ 3,289        32.78%       $ 3,289        32.78%       $  638         7.12%       $  638      7.12%
   institutions
Federal funds sold                1,614        16.08          1,614        16.08         2,239        24.99         2,239     24.99
Time deposits in other
   financial institutions            24          .24             24          .24            24         0.27            24      0.27
Investment securities:
   U.S. government and
   federal agencies               1,589        15.84          1,589        15.84           356         3.97           356      3.97
Municipal securities (1)            499         4.97            499         4.97         1,237        13.81         1,237     13.81
Equity securities:
   FHLMC stock                        0            0              0            0         1,499        16.73         1,499     16.73
   FHLB stock                     2,177        21.69          2,177        21.69         2,079        23.20         2,079     23.20
   FNMA preferred stock             843         8.40            843         8.40           888         9.91           888      9.91
                                -------       ------        -------       ------        ------       ------        ------    ------
Total investments               $10,035       100.00%       $10,035       100.00%       $8,960       100.00%       $8,960   100.00%
                                =======       ======        =======       ======        ======       ======        ======    ======
</TABLE>

----------
(1)   Bonds issued mainly by local school districts and municipalities.

      The following tables set forth the contractual maturities, carrying
values, market values and average yields for Home City's investment securities
at December 31, 2002.

<TABLE>
<CAPTION>
                                                                                     At December 31, 2002
                                                 -----------------------------------------------------------------------------------
                                                    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)
<S>                                              <C>            <C>            <C>             <C>           <C>             <C>
Investment securities:
   U.S. government and federal
      agency securities                            $  199          1.17%          $1,091          2.45%          $299          2.63%
   Municipal securities                               100          4.00%               0             0%           399          4.65%
   Equity securities: (1)
      FNMA preferred stock                            843          3.93%               0             0%             0             0%
                                                   ------          ----           ------          ----           ----          ----
Total investments                                  $1,142          3.45%          $1,091          2.45%          $698          3.79%
                                                   ======          ====           ======          ====           ====          ====
</TABLE>

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


                                      -16-
<PAGE>

<TABLE>
<CAPTION>
                                                                At December 31, 2002
                                               -----------------------------------------------------
                                                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                          2.84        $1,589        $   1,589         2.32%
   Municipal securities                          6.43           499              499         4.52%
   Equity securities (1)                                        843              843         3.93%
                                                             ------        ---------
      Total                                                  $2,931        $   2,931         3.16%
                                                             ======        =========
</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 $794,000 at December 31, 2002.

      At December 31, 2002, Home City's certificates of deposit totaled $64.0
million, or 64.59% of total deposits. Of such amount, approximately $36.7
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.


                                      -17-
<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:

<TABLE>
<CAPTION>
                                                                      At December 31,
                                                     ------------------------------------------------
                                                           2002                       2001
                                                           ----                       ----
                                                                  Percent                    Percent
                                                                  of total                   of total
                                                     Amount       deposits      Amount       deposits
                                                     ------       --------      ------       --------
                                                                 (Dollars in thousands)
<S>                                                 <C>           <C>           <C>          <C>
      Transaction accounts:
      Demand                                        $ 5,468         5.52%       $ 3,230         3.35%
      NOW accounts (1)                                3,759         3.79          2,704         2.81
      Passbook/statement savings accounts (2)        25,867        26.10         17,304        17,95
                                                    -------       ------        -------       ------

                Total transaction accounts           35,094        35.41         23,238        24.11

      Certificates of deposit:

                1.01 - 2.00%                          5,647         5.70              0            0
                2.01 - 400%                          19,311        19.48          7.056         7.32
                4.01 - 6.00%                         30,312        30.58         35,683        37.01
                6.01 - 8.00%                          8,755         8.83         30,426        31.56
                                                    -------       ------        -------       ------

      Total certificates of deposit                  64,025        64.59         73,165        75.89
                                                    -------       ------        -------       ------
      Total deposits (3)                            $99,119       100.00%       $96,403       100.00%
                                                    =======       ======        =======       ======
</TABLE>

----------
(1)   Home City's weighted-average interest rate paid on NOW accounts fluctuates
      with the general movement of interest rates. At December 31, 2002 and
      2001, the weighted-average rates on NOW accounts were 1.01% and 1.99%,
      respectively.

(2)   Home City's weighted-average rate on passbook/statement savings accounts
      fluctuates with the general movement of interest rates. The
      weighted-average interest rate on passbook/statement savings accounts was
      2.40% and 3.22% at December 31, 2002 and 2001, respectively.

(3)   IRAs are included in the various certificates of deposit balances. IRAs
      totaled $7.6 million and $7.6 million as of December 31, 2002 and 2001,
      respectively.

      The following table shows rate and maturity information for Home City's
certificates of deposit as of December 31, 2002:

<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>
              1.01 - 2.00%                      $ 5,552       $    95       $    0       $    0       $ 5,647
              2.01 - 4.00%                        8,668         5,031        4,362        1,250        19,311
              4.01 - 6.00%                       14,661         4,173        4,548        6,930        30,312
              6.01 - 8.00%                        7,790           707          142          116         8,755
                                                -------       -------       ------       ------       -------

      Total certificates of deposit             $36,671       $10,006       $9,052       $8,296       $64,025
                                                =======       =======       ======       ======       =======
</TABLE>


                                      -18-
<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, 2002.

<TABLE>
<CAPTION>
                    Maturity                                Amount
                    --------                                ------
                                                    (Dollars in thousands)
<S>                                                 <C>
                    Three months or less                   $ 5,150
                    Over 3 months to 6 months                2,063
                    Over 6 months to 12 months               2,102
                    Over 12 months                           6,459
                                                           -------

                         Total                             $15,774
                                                           =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                         Year ended December 31,
                                                         -----------------------
                                                           2002             2001
                                                           ----             ----
                                                          (Dollars in thousands)
<S>                                                      <C>              <C>
            Beginning balance                            $ 96,403         $75,077

            New deposits received less withdrawals           (585)         17,051

            Interest credited                               3,301           4,275
                                                         --------         -------

            Ending balance                               $ 99,119         $96,403
                                                         ========         =======

               Net increase                              $  2,716         $21,326

               Percentage increase                           2.82%          28.41%
</TABLE>

      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 one of the Qualified Thrift Lender
Tests (the "QTL Tests"). See "REGULATION - Qualified Thrift Lender Test." If an
association meets one of the QTL Tests, it will be eligible for 100% of the
advances permitted. If an association does not meet one of the QTL Tests, it
will be eligible for such advances only to the extent it holds specified QTL
Test assets. At December 31, 2002, Home City met at least one of the QTL Tests.


                                      -19-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    Year ended December 31,
                                                                    -----------------------
                                                                      2002           2001
                                                                      ----           ----
                                                                     (Dollars in thousands)
<S>                                                                  <C>            <C>
            Average balance outstanding                              $36,273        $36,403

            Maximum amount outstanding at any month end
               during the year                                       $38,232        $37,566

            Balance outstanding at end of year                       $38,199        $35,315

            Weighted-average interest rate during the year              5.55%          5.81%

            Weighted-average interest rate at end of year               5.30%          5.64%
</TABLE>

      Based upon Home City's eligible mortgage collateral, total FHLB advances
are limited to approximately $43.5 million.

SUBSIDIARIES

      Home City owns all of the outstanding shares of Homciti Service
Corporation, an Ohio corporation ("Homciti"). Homciti owns common stock in
Intrieve, Incorporated ("Intrieve"), a data processing company which services
Home City, and a 0.875% ownership interest in a joint venture which owns the
Springfield Inn, a local hotel. At December 31, 2002, the aggregate value of the
Intrieve stock and the joint venture investment equaled approximately $28,000.

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.

PERSONNEL

      As of December 31, 2002, Home City had thirty-seven full-time employees
and five part-time employees. Management believes that relations with its
employees are good. HCFC offers health and life insurance benefits to all
eligible employees of Home City. None of the employees of Home City is
represented by a collective bargaining unit.


                                      -20-
<PAGE>

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 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.

      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.

      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 4% of adjusted total assets, except for
associations with the highest examination rating and acceptable levels of risk,
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.

      Home City's core capital ratio at December 31, 2002, was 7.4%. 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, 2002, met the standards for the highest level, a "well capitalized
association".


                                      -21-
<PAGE>

      LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various
restrictions or requirements on the ability of associations to make capital
distributions. 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 Shareholders of
another association in an acquisition of such other association.

      An application must be submitted and approval from the OTS must be
obtained by a subsidiary of a savings and loan holding company (i) if the
proposed distribution would cause total distributions for the calendar year to
exceed net income for that year to date plus the savings association's retained
net income for the preceding two years, (ii) if the savings association will not
be at least adequately capitalized following the capital distribution, or (iii)
if the proposed distribution would violate a prohibition contained in any
applicable statue, regulation or agreement between the savings association and
the OTS (or the FDIC), or a condition imposed on the savings association has not
received certain favorable examination ratings for the OTS. If a savings
association subsidiary of a holding company is not required to file an
application, it must file a notice with the OTS.

      QUALIFIED THRIFT LENDER TESTS. Savings associations must meet one of two
tests in order to be a qualified thrift lender ("QTL"). The first test requires
a savings association to maintain a specified level of investments in assets
that are designated as qualifying thrift investments ("QTIs"). Generally, QTIs
are assets related to domestic residential real estate and manufactured housing,
although they also include credit card, student and small business loans and
stock issued by any FHLB, the FHLMC or the FNMA. Under the QTL 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 QTI on a monthly average basis in nine out of every 12 months. The
second test permits a savings association to qualify as a QTL by meeting the
definition of "domestic building and loan association" under the Internal
Revenue Code of 1986, as amended (the "Code"). In order for an institution to
meet the definition of a "domestic building and loan association" under the
Code, at least 60% of its assets must consist of specified types of property,
including cash loans secured by residential real estate or deposits, educational
loans and certain governmental obligations. The OTS may grant exceptions to the
QTL Tests under certain circumstances. If a savings association fails to meet
either one of the QTL Tests, the association and its holding company become
subject to certain operating and regulatory restrictions and the savings
association will not be eligible for new FHLB advances. At December 31, 2002,
Home City had QTIs equal to approximately 65.9% 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, 2002.

      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


                                      -22-
<PAGE>

institution, as those provided in transactions with a non-affiliate. Home City
was in compliance with these requirements and restrictions at December 31, 2002.

      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. 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 one of the QTL Tests,
then such unitary holding company would become subject to the activities
restrictions applicable to multiple holding companies. At December 31, 2002,
Home City met at least one of the QTL Tests. See "Qualified Thrift Lender
Tests."

      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.

      RESERVE REQUIREMENTS. Federal Reserve Bank ("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 $42.1 million (subject to an exemption of up to $6.0
million), and to maintain reserves of 10% of deposits in net transaction
accounts against that portion of total transaction accounts in excess of
$42.1 million. These percentages are subject to adjustment by the FRB. At
December 31, 2002, Home City was in compliance with its reserve requirements
then in effect.


                                      -23-
<PAGE>

      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 $2,177,100 at December 31, 2002.

      FHLB advances to members such as Home City who meet one of the QTL Tests
are generally limited to the lower of (i) 50% of the member's assets or (ii) 20
times the member's investment in FHLB stock. At December 31, 2002, Home City's
maximum limit on advances was approximately $43.5 million and Home City's
advances totaled $38.2 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.

TAXATION

      FEDERAL TAXATION. HCFC and each of its consolidated subsidiaries are
subject to the federal tax laws and regulations which apply to corporations
generally. In addition to the regular income tax, HCFC and its subsidiaries 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.

      Certain thrift institutions such as Home City are allowed deductions for
bad debts under methods more favorable to those granted to other taxpayers.
Qualified thrift institutions may compute deductions for bad debts using either
the specific charge-off method of Section 166 of the Code or the experience
method of Section 585 of the Code. 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.


                                      -24-
<PAGE>

      Thrift institutions that are 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.

      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-1998 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,
2002, Home City's pre-1988 reserves for tax purposes totaled approximately $1.1
million. Home City believes it had approximately $6.3 million of accumulated
earnings and profits for tax purposes as of December 31, 2002, 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 HCFC and its consolidated subsidiaries have been
audited or closed without audit through fiscal year 1998. 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 consolidated financial
condition of HCFC.

      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.

      HCFC may elect to be a "qualifying holding company" and as such be exempt
from the net worth tax. A corporation franchise tax based solely on net earnings
would still apply. To be exempt HCFC must satisfy all the requirements of the
applicable statutes including making 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," imposed annually at a rate of 1.3% of Home City's book net worth
determined in accordance with GAAP, less statutory deductions. 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.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS.

      In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS 141), and
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). They also issued Statement of Financial Accounting
Standards No. 143, Accounting for Obligations Associated with the


                                      -25-
<PAGE>

Retirement of Long-Lived Assets (SFAS 143), and Statement Financial Accounting
Standards 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(SFAS No. 144), in August and October 2001, respectively.

      SFAS 141 requires all business combinations initiated after June 30, 2001
be accounted for under the purchase method. SFAS 141 supersedes APB Opinion No.
16, Business Combinations, and Statement of Financial Accounting Standards No
38, Accounting for Preacquisition Contingencies of Purchased Enterprises, and is
effective for all business combinations initiated after June 30, 2001.

      SFAS 142 addresses the financial accounting and reporting for acquired
goodwill and other intangible assets. Under the new rules, the company is no
longer required to amortize goodwill and other intangible assets with indefinite
lives, but will be subject to periodic testing for impairment. SFAS 142
supersedes APB Opinion No. 17, Intangible Assets. Effective January 1, 2002, the
Company adopted SFAS 142. At December 31, 2002, the Company had no goodwill or
other intangible assets.

      SFAS 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost. It also provides accounting guidance for legal obligations
associated with early retirement of tangible long-lived assets. SFAS is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted. The Company believes that the provisions of SFAS 143 have no material
impact on its consolidated results of operations and financial position upon
adoption.

      SFAS 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS 144
supersedes Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lives Assets and for Long-Lived Assets Disposed Of (SFAS
121), and APB Opinion No. 30, Reporting the Results of Operations - Reporting
the Effects of Disposal of a Segement of Business, and Extraordinary, Unusual
and Infrequently Occuring Events and Transactions. The provisions of SFAS 144
are effective in fiscal years beginning after December 15, 2001, with early
adoption permitted, and in general are to be applied prospectively. The Company
adopted SFAS 144 effective January 1, 2002.

IMPACT OF INFLATION AND CHANGING PRICES

      The financial statements and related data presented herein have been
prepared in accordance with GAAP, which require the measurement of financial
position and results of operations primarily in terms of historical dollars
without considering changes in the relative purchasing power of money over time
because of inflation.

      Virtually all assets and liabilities of HCFC are monetary in nature. As a
result, interest rates have a more significant impact on performance than the
effects of general levels of inflation.

ITEM 2. DESCRIPTION OF PROPERTY

      Home City's main office is located at 2454 North Limestone Street,
Springfield, Ohio 45503, which property is owned by Home City. HCFC operates out
of Home City's main office. HCFC reimburses Home City for the fair value of the
space occupied. Home City also has a branch office facility located at 63 West
Main Street, Springfield, Ohio 45502, its former main office location.


                                      -26-
<PAGE>

      The following table sets forth certain information at December 31, 2002,
regarding the ownership by Home City of the land, building, improvements, other
than real estate acquired through foreclosure or deed in lieu of foreclosure.

<TABLE>
<CAPTION>
                                                             Year         Square           Net
                      Location                              acquired     footage       book value
                      --------                              --------     -------       ----------
<C>                                                         <C>          <C>           <C>
63 West Main Street, Springfield, Ohio 45502                   1975        5,839       $  317,000
2454 North Limestone Street, Springfield, Ohio 45503           1999       13,000       $2,486,000
</TABLE>

      For additional information regarding Home City's properties and equipment,
see Notes 1 and 5 of Notes to Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

      Neither Home City nor HCFC is presently involved in any 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.


                                      -27-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

      There were 784,400 common shares of HCFC outstanding on December 31, 2002,
held of record by approximately 349 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 as well as the dividends
declared.

<TABLE>
<CAPTION>
                            March 31, 2002        June 30, 2002      September 30, 2002    December 31, 2002
                            --------------        -------------      ------------------    -----------------
<S>                         <C>                   <C>                <C>                   <C>
High                            $ 12.250             $ 12.460             $  11.650             $ 11.700
Low                             $ 10.300             $ 11.060             $  10.660             $  9.150
Dividend
  declared                      $  0.110             $  0.110             $   0.110             $  0.110
</TABLE>

<TABLE>
<CAPTION>
                            March 31, 2001        June 30, 2001      September 30, 2001    December 31, 2001
                            --------------        -------------      ------------------    -----------------
<S>                         <C>                   <C>                <C>                   <C>
High                            $ 11.000             $ 13.760             $  13.600             $ 13.000
Low                             $  9.375             $ 10.760             $  12.640             $ 11.740
Dividend
  declared                      $  0.110             $  0.110             $   0.110             $  0.110
</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.

An application must be submitted and approval from the OTS must be obtained (1)
if the proposed distribution would cause total distributions for the calendar
year to exceed net income for that date plus the bank's retained net income for
the preceding two years; (2) if the bank will not be at least adequately
capitalized following the capital distribution; (3) if the proposed
distribution would violate a prohibition contained in any applicable statute,
regulation or agreement between the bank and the OTS (or the FDIC), or a
condition imposed on the bank in an OTS-approved application or notice; or (4)
if the bank has not received certain favorable examination ratings from the OTS.


                                      -28-
<PAGE>

                      Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                                                       Number of securities
                                                                                                       remaining available for
                                   Number of securities to be        Weighted-average exercise         future issuance under
                                   issued upon exercise of           price of outstanding              equity compensation plan
                                   outstanding options,              options, warrants and             (excluding securities
Plan category                      warrants and rights               rights                            reflected in column (a))
                                   (a)                               (b)                               (c)
-------------                      -------------------               -------------------------         ------------------------
<S>                                <C>                               <C>                               <C>
Equity compensation plans
approved by security
holders                                   95,935                            $11.70                            48,187(1)

Equity compensation plans
not approved by security
holders                                       -0-                               -0-                               -0-

Total                                     95,935                            $11.70                            48,187(1)
</TABLE>

----------
(1)   Of the 48,187shares, 35,487 remain available for awards of options and
      12,700 remain available for awards under the Home City Financial
      Corporation Recognition and Retention Plan, which may purchase the shares
      on the open market rather than from unissued shares of HCFC.


                                      -29-
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

      Home City Federal Savings Bank of Springfield converted from a mutual
federal savings association to a stock federal savings association on December
30, 1996. In connection with the Conversion, 952,200 common shares of Home City
Financial 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 stock of Home City, 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.

      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.

      During 2002, HCFC did not initiate a repurchase program. During 2001, HCFC
repurchased 29,600 common shares at an average price of $12.82 per share.

      During the course of BKD's first audit of HCFC's financial statements,
HCFC was made aware of an error in how it had accrued for possible federal
income tax expense related to stock dividends received on its Federal Home Loan
Bank stock. As a result, retained earnings at December 31, 2000, was restated
from $7,934,000 to $7,783,000, and net income for 2001 was restated from
$782,000 to $702,000.

FORWARD-LOOKING STATEMENTS

      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, some of the
forward-looking statements included herein are the statements under the
following headings and regarding the following matters:

      1.    Financial Condition: Management's statements regarding the amount
            and adequacy of the allowance for loan losses at December 31, 2002.

      2.    Comparison of Results of Operations for the Fiscal Years Ended
            December 31, 2002 and 2001- Provision for Loan Losses: Management's
            statements regarding the adequacy of the allowance for loan losses
            at December 31, 2002.

      3.    Liquidity and Capital Resources: Management's belief that liquidity
            and capital reserves are sufficient to meet its outstanding short-
            and long-term needs.

FINANCIAL CONDITION

      HCFC's consolidated total assets amounted to $149.7 million at December
31, 2002, an increase of $5.5 million, or 3.87%, over the $144.2 million in
total assets at December 31, 2001. Such increase in assets was funded primarily
by the $2.7 million net increase in deposits, $2.9 million net increase in
advances from the Federal Home Loan Bank of Cincinnati (the "FHLB"), and
undistributed net earnings of $112,000.


                                      -30-
<PAGE>

      Cash and cash equivalents, time deposits and investment securities totaled
$12.4 million at December 31, 2002, a decrease of $6.2 million, or 33.14%, from
December 31, 2001. During the year ended December 31, 2002, only $25,000 of
investment securities matured. Those proceeds, together with $25.2 million
received from the sale of securities and paydown of mortgage-backed securities,
were used to purchase $18.1 million of somewhat lower yielding securities, but
with less interest rate risk, in order to manage the interest rate risk position
of the investment portfolio. The remainder of the proceeds helped fund the
increase in loans receivable.

      Net loans receivable totaled $127.4 million at December 31, 2002, an
increase of $12.0 million, or 10.44%, from the $115.4 million total at December
31, 2001. During the year ended December 31, 2002, loan originations amounted to
$59.3 million, with one- to four-family mortgage loans comprising $27.8 million
and commercial lending comprising $14.3 million. Such originations were
partially offset by principal repayments of $46.8 million.

      Home City's allowance for loan losses totaled $503,000 at December 31,
2002, which represented 0.39% of total loans and 88.56% of non-performing loans.
At December 31, 2001, the allowance for loan losses totaled $592,000, an amount
which represented 0.51% of total loans and 39.78% of non-performing loans. With
the continued slow pace of the economy and the resulting decline in market
values of equity securities, some borrowers have been faced with cash flow
problems. As a result, a number of borrowers have been unable to adhere to their
contractual repayment schedules, which directly relates to an individual credit
being classified as a problem or nonperforming loan. A major borrower's problem
loans caused HCFC to increase its loan loss provision, resulting in better
coverage of Home City's remaining non-performing loans when the problem loans
were written off as a loss in mid-2002. Management has increased its emphasis on
the consideration of both local and national economic factors in determining the
adequacy of the allowance for loan losses.

      Non-performing loans were $423,000 and $1,488,000 at December 31, 2002 and
2001, respectively, and represented 0.28% and 1.03% of total assets at such
dates. The $1.1 million net decrease at December 31, 2002, was due mainly to
loan charge-offs of $490,000 and transfers to real estate owned of approximately
$600,000. All loans classified as non-performing at December 31, 2002, 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, 2002, 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. Such additions could adversely affect HCFC's
results of operations.

      Deposits totaled $99.1 million at December 31, 2002, an increase of $2.7
million, or 2.82%, from $96.4 million at December 31, 2001. The increase is
significantly less than the deposit growth trends (averaging over 10%) that Home
City has been experiencing over the past several years and is attributed to the
concerted effort to diminish balances of brokered funds, which decreased by $2.8
million during 2002. While time deposits decreased by $9.1 million, other
deposits increased by $11.8 million. 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
$35.3 million at December 31, 2001, to $38.2 million at December 31, 2002, an
increase of 8.17%, as advances were used to fund loan originations.

      Shareholders' equity totaled $11.6 million at December 31, 2002, an
increase of $115,000, or 1.00%, from $11.4 million at December 31, 2001,
primarily due to undistributed net earnings of $112,000.

COMPARISON OF RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002
AND 2001

      GENERAL. Net income for the year ended December 31, 2002, was $457,000, a
decrease of $245,000, or 34.90%, from the $702,000 in net income recorded in
2001. The decrease in net income resulted primarily from additional provisions
for loan losses of $236,000, a $278,000 increase in noninterest expense and an
$11,000 decrease in noninterest income, which were partially offset by a
$136,000 increase in net interest income, a decrease of $124,000 in the
provision for federal income taxes from continuing operations and a $20,000
decrease in the net loss on discontinued operations.


                                      -31-
<PAGE>

      NET INTEREST INCOME. Net interest income totaled $3.8 million for the year
ended December 31, 2002, an increase of $136,000, or 3.71%, from the $3.7
million recorded in 2001. Interest income on loans decreased by $599,000, or
6.17%, during 2002 due primarily to a decrease in yield from 8.46% in 2001 to
7.59% in 2002, which was partially offset by an increase in the average balance
of the loans outstanding of $5.2 million, or 4.49%. Interest income on
investment securities increased by $149,000, or 37.63%, for the year ended
December 31, 2002, compared to fiscal 2001, as the average balance increased by
$6.2 million year-to-year and the related yield decreased by 131 basis points to
4.00% in 2002. Interest income on interest-bearing deposits decreased by $10,000
for the year ended December 31, 2002, compared to 2001. The average balance of
interest-bearing deposits decreased $274,000 or 68.33%. The yield on
interest-bearing deposits decreased 141 basis points to 1.41%. The average
investment in federal funds sold during 2002 was $1.3 million, compared to an
average investment of $2.3 million in 2001, which yielded 1.50% in 2002 as
compared to 3.22% in 2001.

      Interest expense on deposits decreased by $605,000, or 13.25%, during
2002, due primarily to a decrease in the weighted-average rate from 5.50% in
2001 to 4.24% in 2002, being offset partially by an increase in the average
balance of deposits outstanding of $10.3 million, or 12.34%. Interest expense on
FHLB advances and long-term borrowings decreased by $83,000, or 3.96%, primarily
due to a decrease in the weighted-average rate from 5.81% in 2001 to 5.55% in
2002, which was offset slightly by an increase in the average balance
outstanding of $180,000, or 0.50%.

      As a result of the foregoing changes in interest income and interest
expense, the interest rate spread decreased by 2 basis points, to 2.52% for
2002, as compared to 2.54% for 2001, while the net interest margin decreased by
12 basis points to 2.77% for the year ended December 31, 2002.

      PROVISION FOR LOAN LOSSES. Home City maintains an allowance for loan
losses in an amount that, in management's judgment, is adequate to absorb
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"). A discussion of Home City's policy for determining the
appropriate allowance is discussed below under "Critical Accounting Policies."
As a result of its analysis, management concluded that the allowance was
adequate as of December 31, 2002. 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 $465,000 and $136,000 during the years
ended December 31, 2002 and 2001, respectively. 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 86.12% of Home City's loan portfolio, and loans secured by first
mortgages on one- to four-family residential real estate made up 49.24% of total
loans at December 31, 2002. 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 $376,000 and $140,000 for the years
ended December 31, 2002 and 2001, respectively. The ratio of non-performing
loans to total assets decreased to 0.28% in 2002 from 1.03% in 2001. At December
31, 2002 and 2001, Home City had a ratio of allowance for loan losses to total
loans of 0.39% and 0.51%, respectively, and ratios of allowance for loan losses
to non-performing loans of 88.56% and 39.78%. Due to such ratios of
non-performing loans to total loans, historical charge-offs, delinquency
history, and the increase in commercial and consumer installment lending, the
provisions of $376,000 and $140,000 made in 2002 and 2001 were deemed
appropriate by management to absorb reasonably foreseeable loan losses.


                                      -32-
<PAGE>

      NONINTEREST INCOME. Noninterest income totaled $674,000 for the year ended
December 31, 2002, a decrease of $11,000, or 1.61%, from the $685,000 recorded
in 2001. The decrease resulted primarily from a decrease of $94,000 in net gains
recognized on the sale of securities. This was partially offset by increases of
$25,000 in income from life insurance, $4,000 in service charges on deposit
accounts and $77,000 in other miscellaneous income.

      NONINTEREST EXPENSE. Noninterest expense increased by $278,000, or 8.78%,
to a total of $3.4 million for the year ended December 31, 2002, as compared to
2001. The increases in most of the items of noninterest expense were due
primarily to expenses of the first full year of operations at the new main
office building. The significant increase in professional fees of $76,000, or
25.6%, was primarily due to increased consultant's fees for loan review and in
connection with real estate owned.

      FEDERAL INCOME TAXES. The provision for federal income taxes totaled
$129,000 for the year ended December 31, 2002, a decrease of $116,000, or
47.35%, from the $245,000 provision recorded in fiscal 2001. This increase was
primarily the result of a greater percentage of nontaxable income in 2002, which
resulted in an effective tax rate of 23.3% in 2002 versus 26.5% in 2001.

      CRITICAL ACCOUNTING POLICIES. The accounting and reporting policies of
Home City are in accordance with accounting principles generally accepted in the
United States and conform to general practices within the banking industry. Home
City's significant accounting policies are described in detail in the notes to
Home City's consolidated financial statements for the year ended December 31,
2002. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. The financial position and results of operations can be affected by
these estimates and assumptions and are integral to the understanding of
reported results. Critical accounting policies are those policies that
management believes are the most important to the portrayal of Home City's
financial condition and results, and they require management to make estimates
that are difficult, subjective, or complex.

      The policy of management with respect to the amount of the allowance for
loan losses is a critical accounting policy for Home City. Management evaluates
the adequacy of the allowance for loan losses each quarter 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.

      Some types of loans are inherently more risky than others. The allowance
for commercial loans, nonresidential real estate loans and multifamily real
estate loans, which generally carry more risk than single-family residential
real estate loans, is determined based upon the individual credit relationships
and national and local economic factors that could affect such borrowers, as
well as actual loss histories. The allowance recorded for homogeneous consumer
loans is based on an analysis of loan mix, risk characteristics of the
portfolio, fraud loss and bankruptcy experiences, and historical losses,
adjusted for current trends, for each homogeneous category or group of loans.
The allowance for one- to four-family residential real estate is based upon an
analysis of national and local economic conditions and loss histories. The
allowance for impaired loans is based on the collateral for collateral-dependent
loans or the discounted cash flows using the loan's effective interest rate.

      Although management utilizes its best judgment and information available,
the ultimate adequacy of the allowance is dependent upon a variety of factors.
Undetected losses are probable due to inherent delays in obtaining information
regarding a borrower's financial condition or changes in their unique business
conditions; the judgmental nature of individual loan evaluations, collateral
assessments and interpretations of economic trends; the volatility of economic
or customer-specific conditions affecting the identification and estimation of
losses for larger non-homogeneous credits; and the sensitivity of assumptions
utilized to establish allowances for homogeneous groups of loans.


                                      -33-
<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,
                                                           -------------------------------------------------------------------------
                                                                            2002                                  2001
                                                           -------------------------------------------------------------------------
                                                             Average      Interest                Average       Interest
                                                           outstanding     earned/     Yield/   outstanding      earned/      Yield/
                                                             balance        paid        rate      balance         paid        rate
                                                             -------        ----        ----      -------         ----        ----
                                                                                      (Dollars in thousands)
<S>                                                        <C>            <C>          <C>      <C>             <C>           <C>
Interest-earning assets:
  Interest-earning demand deposits                          $     127      $    2       1.41%     $     401      $    12       2.82%
  Federal funds sold                                            1,288          19       1.50          2,345           75       3.22
  Time deposits                                                    24           0       1.25             24            0       1.25
  Investment securities (1)                                    13,618         545       4.00          7,462          396       5.31
  Federal Home Loan Bank stock                                  2,116          98       4.62          1,981          134       6.73
  Loans receivable (2)                                        120,052       9,116       7.59        114,894        9,715       8.46
                                                            ---------      ------                 ---------      -------
    Total interest-earning assets (3)                         137,225       9,780       7.13        127,117       10,332       8.13

Noninterest-earning assets:
  Less: Allowance for loan losses                                (471)                                 (531)
  Other non-earning assets                                     10,324                                 9,216
                                                            ---------                             ---------
  Total assets                                              $ 147,078                             $ 135,802
                                                            =========                             =========

Interest-bearing liabilities:
  NOW accounts                                              $   2,814      $   28       1.01%     $   1,401      $    28       1.99%
  Money market accounts                                           695          13       1.86            450           15       3.27
  Passbook accounts                                            21,203         509       2.40         14,049          452       3.22
  Certificates of deposit                                      68,607       3,411       4.97         67,155        4,071       6.06
                                                            ---------      ------                 ---------      -------
    Total deposits                                             93,319       3,961       4.24         83,065        4,566       5.50

  Federal Home Loan Bank advances                              36,273       2,013       5.55         36,093        2,096       5.81
                                                            ---------      ------                 ---------      -------

    Total interest-bearing liabilities                        129,592       5,974       4.61        119,158        6,662       5.59

Noninterest-bearing liabilities                                 6,072                                 5,025
                                                            ---------                             ---------
    Total liabilities                                         135,664                               124,183

Total shareholders' equity                                     11,414                                11,619
                                                            ---------                             ---------
    Total liabilities and
      shareholders' equity                                  $ 147,078                             $ 135,802
                                                            =========                             =========

Net interest income; net interest rate spread                              $3,806       2.52%                    $ 3,670       2.54%
                                                                           ======     ======                     =======     ======

Net interest margin (4)                                                                 2.77%                                  2.89%
                                                                                      ======                                 ======
Average interest-earning assets to interest-bearing
  liabilities                                                                         105.89%                                106.68%
                                                                                      ======                                 ======
</TABLE>

----------

(1)   Includes $35,000 and $93,000 of nontaxable municipal income recorded in
      2002 and 2001, respectively. The tax-equivalent yield on investments is
      4.13% and 5.95% for 2002 and 2001, 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 7.14% and 8.23% for
      2002 and 2001, respectively.

(4)   Net interest income as a percent of average interest-earning assets.


                                      -34-
<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 periods
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,
                                                               --------------------------------------------------------------------
                                                                       2002 vs. 2001                         2001 vs. 2000
                                                               --------------------------------       -----------------------------
                                                                           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-earning demand deposits                             $  (6)      $    (4)      $ (10)      $    6      $  (7)      $  (1)
   Federal funds sold                                             (26)          (30)        (56)          71        (10)         61
   Time deposits                                                    0             0           0            0          0           0
   Investment securities                                          257          (108)        149          196          0         196
   Federal Home Loan Bank stock                                     8           (44)        (36)          33        (10)         23
   Loans receivable                                               426        (1,025)       (599)         903       (383)        520
                                                                -----       -------       -----       ------      -----       -----
Total interest income                                             659        (1,211)       (552)       1,209       (410)        799

Interest expenses attributable to:
   NOW accounts                                                    19           (19)          0            2        (11)         (9)
   Money market accounts                                            6            (8)         (2)           1         (1)          0
   Passbook savings accounts                                      191          (134)         57           60        (88)        (28)
   Certificates of deposit                                         86          (746)       (660)         674        (11)        663
   Federal Home Loan Bank advances                                 10           (93)        (83)         372        (73)        299
                                                                -----       -------       -----       ------      -----       -----
   Total interest expense                                         312        (1,000)       (688)       1,109       (184)        925
                                                                -----       -------       -----       ------      -----       -----

   Increase (decrease) in net interest income                   $ 347       $  (211)      $ 136       $  100      $(226)      $(126)
                                                                =====       =======       =====       ======      =====       =====
</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
adopted by the OTS.

      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 change in market interest rates. Both an increase in
market interest rates and a decrease in market interest rates are considered.

      Presented below, as of December 31, 2002, 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.


                                      -35-
<PAGE>

      As illustrated in the table, Home City's NPV is slightly more sensitive to
declining rates than rising rates. Differences in sensitivity occur 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.

<TABLE>
<CAPTION>
                                                   At December 31, 2002
     Change in interest            --------------------------------------------------------
            rate                   Board limit               $ change              % change
       (basis points)               % change                  in NPV                in NPV
       --------------               --------                  ------                ------
                                                     (Dollars in thousands)
<S>                                <C>                       <C>                   <C>
            +300                       (55)%                  $(555)                  (6)%
            +200                       (35)                      11                    0
            +100                       (20)                     259                    3
               0                         0)                       0)                   0
            -100                       (20)                    (842)                  (9)
            -200                       (35)                      --(1)                --(1)
            -300                       (55)                      --(1)                --(1)
</TABLE>

      ----------
      (1)   As a result of the low interest rate environment at December 31,
            2002, the OTS NPV Model did not produce results for a reduction of
            200 and 300 points.

      The NPV table indicates that at each 100 basis point increment, the change
in Home City's NPV that would have been caused by the respective interest rate
shock 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. In order
to maintain Home City's net interest margin, management is continually
developing and modifying its strategies to stimulate the demand for quality
loans and tailoring the types of loan products available that can be adjusted to
match the current market conditions. Additional alternative sources of funding
are being explored in anticipation of possible interest rate fluctuations.


                                      -36-
<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:

<TABLE>
                                                                                  Year ended December 31,
                                                                                  -----------------------
                                                                                2002                  2001
                                                                                ----                  ----
                                                                                   (Dollars in thousands)
<S>                                                                            <C>                 <C>
            Net income                                                         $   457             $    702
            Adjustments to reconcile net income to net cash
              from operating activities                                            831                 (165)
                                                                               -------             --------
            Net cash provided by operating activities                            1,288                  537
            Net cash used in investing activities                               (5,224)             (18,071)
            Net cash provided by financing activities                            4,987               20,951
                                                                               -------             --------
            Net change in cash and cash equivalents                              1,051                3,417
            Cash and cash equivalents at beginning of year                       5,010                1,593
                                                                               -------             --------
            Cash and cash equivalents at end of year                           $ 6,061             $  5,010
                                                                               =======             ========
</TABLE>

      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. 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 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 obligations, federal agency obligations and other investments
having maturities of five years or less, in an amount sufficient 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,
2002, Home City's regulatory liquidity ratio was 7.15% of its average daily
balances of net withdrawable deposit accounts and borrowings payable in one year
or less. At such date, Home City had commitments to originate loans totaling
$4.0 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 11 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. Home City exceeded all of its capital requirements at
December 31, 2002 and 2001.

      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 shareholders' 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 savings
associations to maintain core capital of at least 4% of the association's total
assets, except for those associations with the highest examination rating and
acceptable levels of risk, which may maintain a minimum of 3% core capital.


                                      -37-
<PAGE>

      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 $503,000 at December 31, 2002.

      The following table summarizes Home City's regulatory capital requirements
and actual capital (see Note 11 of the Notes to Consolidated Financial
Statements for regulatory capital amounts) at December 31, 2002:

<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                      $11,163          7.4%     $2,250         1.5%     $8,913         5.9%     $150,028
      Core capital                           11,163          7.4       6,001         4.0       5,162         3.4       150,028
      Risk-based capital                     11,666         10.4       8,950         8.0       2,716         2.4       111,881
</TABLE>

IMPACT OF INFLATION AND CHANGING PRICES

      The financial statements and related data presented he rein have been
prepared in accordance with GAAP, which require the measurement of financial
position and results of operations primarily in terms of historical dollars
without considering changes in the relative purchasing power of money over time
because of inflation.

      Virtually all assets and liabilities of HCFC are monetary in nature. As a
result, interest rates have a more significant impact on performance than the
effects of general levels of inflation.


                                      -38-
<PAGE>

ITEM 7. FINANCIAL STATEMENTS


                         INDEPENDENT ACCOUNTANTS' REPORT



Board of Directors
Home City Financial Corporation
Springfield, Ohio


      We have audited the accompanying consolidated balance sheet of Home City
Financial Corporation as of December 31, 2002, and the related consolidated
statements of income, shareholders' equity, and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements of Home City Financial Corporation as of December 31, 2001 and for
the year then ended, before they were retroactively restated for the matter
discussed in Note 2, were audited by other accountants whose report dated
January 31, 2002, expressed an unqualified opinion on those statements.

      We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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 audit provides a
reasonable basis for our opinion.

      In our opinion, the consolidated financial statements described above
present fairly, in all material respects, the consolidated financial position of
Home City Financial Corporation as of December 31, 2002, and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.


/s/ BKD, LLP

Cincinnati, Ohio
February 24, 2003


                                      -39-
<PAGE>
                          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, 2001 and 2000, 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 auditing standards generally
accepted in the United States of America. 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.

     As more fully described in Note 2, subsequent to the issuance of the
Corporation's December 31, 2001 consolidated financial statements and our
report thereon dated January 31, 2002, we became aware of certain computational
errors relating to accrued federal income tax expense. In our original opinion
report we expressed an unqualified opinion on the December 31, 2001
consolidated financial statements, and our opinion on the revised statements,
as expressed herein, remains unqualified.


                                   /s/ Dixon, Francis, Davis & Company
                                   ------------------------------------
                                   Dixon, Francis, Davis & Company

Granville, Ohio
January 31, 2002


                                      -40-
<PAGE>

         HOME CITY FINANCIAL CORPORATION - CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    (Dollars in thousands)
                                                                                          December 31,
                                                                                          ------------
                                                                                     2002           2001
                                                                                     ----           ----
                                                                                                 (Restated)
<S>                                                                                <C>           <C>
ASSETS
Cash and due from banks                                                            $   1,158      $   2,133
Interest-bearing demand deposits                                                       3,289            638
Federal funds sold                                                                     1,614          2,239
                                                                                   ---------      ---------
   Cash and cash equivalents                                                           6,061          5,010
                                                                                   ---------      ---------

Interest-bearing deposits                                                                 24             24
Available-for-sale securities                                                          6,363         13,583
Loans, net of allowance for loan losses of $503 and $592 at
   December 31, 2002 and 2001                                                        127,415        115,373
Premises and equipment                                                                 3,935          4,170
Federal Home Loan Bank stock                                                           2,177          2,079
Interest receivable                                                                      600            671
Cash surrender value of life insurance                                                 2,829          2,695
Other                                                                                    331            548
                                                                                   ---------      ---------

   TOTAL ASSETS                                                                    $ 149,735      $ 144,153
                                                                                   =========      =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
   Demand                                                                          $   5,468      $   3,230
   Savings, NOW and money market                                                      29,626         20,008
   Time                                                                               64,025         73,165
                                                                                   ---------      ---------
     Total deposits                                                                   99,119         96,403
                                                                                   ---------      ---------
Federal Home Loan Bank advances                                                       38,199         35,315
Long-term debt                                                                             0            307
Interest payable and other liabilities                                                   858            684
                                                                                   ---------      ---------

   TOTAL LIABILITIES                                                                 138,176        132,709
                                                                                   ---------      ---------

Shareholders' Equity
Preferred shares, no par value: authorized 1,000,000 shares; none issued
Common shares, no par value: authorized 5,000,000 shares; shares issued 952,200
Additional paid-in capital                                                             6,013          6,023
Retained earnings                                                                      8,246          8,134
Unearned Recognition and Retention Plan (RRP) shares                                    (111)          (178)
Unearned Employee Stock Ownership Plan (ESOP) shares                                    (305)          (381)
Accumulated other comprehensive income (loss)                                            (18)           112
Treasury shares, at cost; 167,800 shares                                              (2,266)        (2,266)
                                                                                   ---------      ---------

   TOTAL SHAREHOLDERS' EQUITY                                                         11,559         11,444
                                                                                   ---------      ---------

   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $ 149,735      $ 144,153
                                                                                   =========      =========
</TABLE>

See notes to consolidated financial statements.


                                      -41-
<PAGE>

      HOME CITY FINANCIAL CORPORATION - CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                   (Dollars in thousands)
                                                                         December 31,
                                                                         ------------
                                                                      2002        2001
                                                                      ----        ----
                                                                               (Restated)
<S>                                                                 <C>        <C>
INTEREST AND DIVIDEND INCOME
Loans                                                               $ 9,116     $  9,715
Securities                                                              545          396
Federal funds sold                                                       19           75
Dividends on Federal Home Loan Bank stock                                98          134
Deposits with financial institutions                                      2           12
                                                                    -------     --------

    TOTAL INTEREST AND DIVIDEND INCOME                                9,780       10,332
                                                                    -------     --------

INTEREST EXPENSE
Deposits                                                              3,961        4,566
Borrowings                                                            2,013        2,096
                                                                    -------     --------

    TOTAL INTEREST EXPENSE                                            5,974        6,662
                                                                    -------     --------

NET INTEREST INCOME                                                   3,806        3,670
Provision for Loan Losses                                               376          140
                                                                    -------     --------

    NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES               3,430        3,530
                                                                    -------     --------

NONINTEREST INCOME
Service charges on deposits                                              35           31
Net realized gains on sales of available-for-sale securities            332          426
Life insurance                                                          157          132
Other                                                                   150           96
                                                                    -------     --------

    TOTAL NONINTEREST INCOME                                            674          685
                                                                    -------     --------

NONINTEREST EXPENSE
Salaries and employee benefits                                        1,550        1,511
Net occupancy expense                                                   314          245
Equipment expense                                                       239          180
Data processing fees                                                    237          226
Professional fees                                                       373          297
Franchise taxes                                                         144          143
Other                                                                   589          566
                                                                    -------     --------

    TOTAL NONINTEREST EXPENSE                                         3,446        3,168
                                                                    -------     --------
</TABLE>

See notes to consolidated financial statements.

                                      -42-
<PAGE>

HOME CITY FINANCIAL CORPORATION - CONSOLIDATED STATEMENTS OF INCOME (continued)

<TABLE>
<CAPTION>
                                                                     (Dollars in thousands)
                                                                          December 31,
                                                                          ------------
                                                                        2002         2001
                                                                        ----         ----
                                                                                  (Restated)
<S>                                                                   <C>         <C>
Income from continuing operations before income tax                   $    658      $ 1,047

Provision for income taxes                                                 153          277
                                                                      --------      -------

Income from continuing operations                                          505          770
                                                                      --------      -------

Discontinued operations

   Loss from operations of discontinued insurance agency
      (including loss on disposal of $23,000)                              (72)        (100)

   Income tax benefit                                                      (24)         (32)
                                                                      --------      -------

   Loss on discontinued operations                                         (48)         (68)
                                                                      --------      -------

      NET INCOME                                                      $    457      $   702
                                                                      ========      =======

BASIC EARNINGS PER SHARE
Income from continuing operations                                     $   0.68      $  1.03
Discontinued operations                                                  (0.06)       (0.09)
                                                                      --------      -------

      NET INCOME                                                      $   0.62      $  0.94
                                                                      ========      =======

DILUTED EARNINGS PER SHARE
Income from continuing operations                                     $   0.68      $  1.03
Discontinued operations                                                  (0.06)       (0.09)
                                                                      --------      -------

   NET INCOME                                                         $   0.62      $  0.94
                                                                      ========      =======
</TABLE>

See notes to consolidated financial statements.


                                      -43-
<PAGE>

          HOME CITY FINANCIAL CORPORATION - CONSOLIDATED STATEMENTS OF
                              SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                        (Dollars in thousands)
                                                                                                   Accum-
                                                                                                   ulated
                                                                                                    Other
                                                                                                   Compre-
                                                     Additional              Unearned   Unearned   hensive
                                                      Paid-in    Retained     Compen-     ESOP      Income    Treasury
                                           Shares     Capital    Earnings     sation     Shares     (Loss)     Shares        Total
                                           ------     -------    --------     ------     ------     ------     ------        -----
<S>                                        <C>         <C>        <C>         <C>        <C>         <C>       <C>         <C>
Balance, January 1, 2001
  (as previously reported)                 952,200     $6,026     $7,934      $ (260)    $(457)      $449      $(1,886)    $ 11,806

Prior Period Adjustment                                             (151)                                                      (151)
                                           -------     ------     ------      ------     -----       ----      -------     --------
Balance, January 1, 2001 (restated)        952,200      6,026      7,783        (260)     (457)       449       (1,886)      11,655

Comprehensive income
  Net income (restated)                                              702                                                        702
  Change in unrealized gain
  (loss) on securities available
  for sale, net of reclassification
  adjustment and tax effect                                                                          (337)                     (337)
                                                                                                                           --------
    Total comprehensive income                                                                                                  365
                                                                                                                           --------
Dividends on common shares,
  $.44 per share                                                    (351)                                                      (351)
Purchase of shares (29,600 shares)                                                                                (380)        (380)
Amortization of unearned
compensation expense                                       (3)                    82                                             79
ESOP shares earned                                                                          76                                   76
                                           -------     ------     ------      ------     -----       ----      -------     --------

Balance, December 31, 2001                 952,200      6,023      8,134        (178)     (381)       112       (2,266)      11,444

Comprehensive income
  Net income                                                         457                                                        457
  Change in unrealized gain
  (loss) on securities available
  for sale, net of reclassification
  adjustment and tax effect                                                                          (130)                     (130)
                                                                                                                           --------
    Total comprehensive income                                                                                                  327
                                                                                                                           --------
Dividends on common shares,
  $.44 per share                                                    (345)                                                      (345)
Amortization of unearned
compensation expense                                                              67                                             67
ESOP shares earned                                        (10)                              76                                   66
                                           -------     ------     ------      ------     -----       ----      -------     --------

Balance, December 31, 2002                 952,200     $6,013     $8,246      $ (111)    $(305)      $(18)     $(2,266)    $ 11,559
                                           =======     ======     ======      ======     =====       ====      =======     ========
</TABLE>

See notes to consolidated financial statements.


                                      -44-
<PAGE>

HOME CITY FINANCIAL CORPORATION - CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                         (Dollars in thousands)
                                                                                        Year ended December 31,
                                                                                        -----------------------
                                                                                         2002             2001
                                                                                         ----             ----
                                                                                                       (Restated)
<S>                                                                                    <C>             <C>
OPERATING ACTIVITIES
Net income                                                                             $    457         $    702
Items not requiring (providing) cash
    Depreciation and amortization                                                           231              158
    Provision for loan losses                                                               376              140
    Amortization of premiums and discounts on securities                                    147               32
    Deferred income taxes                                                                    53              (78)
    Increase in cash surrender value of life insurance                                     (134)            (112)
    Employee Stock Ownership Plan compensation expense                                       66               76
    Recognition and Retention Plan compensation expense                                      67               79
    Net realized gains on available-for-sale securities                                    (332)            (426)
    Loss on disposal of fixed assets                                                         18                0
    FHLB stock dividends                                                                    (98)            (134)
Changes in
    Interest receivable                                                                      71               (1)
    Other assets                                                                            217              (45)
    Interest payable and other liabilities                                                  149              146
                                                                                       --------         --------
        Net cash provided by operating activities                                         1,288              537
                                                                                       --------         --------
INVESTING ACTIVITIES
    Purchases of available-for-sale securities                                          (18,077)         (15,852)
    Proceeds from maturities of available-for-sale securities                             2,362              861
    Proceeds from the sales of available-for-sale securities                             22,923            5,341
    Net change in loans                                                                 (12,418)          (4,568)
    Purchase of premises and equipment                                                      (14)          (2,177)
    Purchase of life insurance contracts                                                      0           (1,510)
    Purchase of Federal Home Loan Bank stock                                                  0             (166)
                                                                                       --------         --------
        Net cash used in investing activities                                            (5,224)         (18,071)
                                                                                       --------         --------

FINANCING ACTIVITIES
    Net increase in demand deposits, money market,
        NOW and savings accounts                                                         11,856            7,284
    Net increase (decrease) in certificates of deposit                                   (9,140)          14,042
    Proceeds from Federal Home Loan Bank advances                                         8,800           11,000
    Repayment of Federal Home Loan Bank advances                                         (5,916)         (10,636)
    Repayment of long-term debt                                                            (307)              (6)
    Purchase of treasury shares                                                               0             (380)
    Dividends paid                                                                         (345)            (351)
    Net increase (decrease) in advances from borrowers for taxes and insurance               39               (2)
                                                                                       --------         --------
        Net cash provided by financing activities                                         4,987           20,951
                                                                                       --------         --------
INCREASE IN CASH AND CASH EQUIVALENTS                                                     1,051            3,417
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                              5,010            1,593
                                                                                       --------         --------
CASH AND CASH EQUIVALENTS, END OF YEAR                                                 $  6,061         $  5,010
                                                                                       ========         ========
SUPPLEMENTAL CASH FLOWS INFORMATION
    Interest paid                                                                      $  5,564         $  6,658
    Income taxes paid (net of refunds)                                                      152              332
</TABLE>

See notes to consolidated financial statements.


                                      -45-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Home City Financial Corporation ("Company") is a thrift holding company whose
principal activity is the ownership and management of its wholly-owned
subsidiaries, Home City Federal Savings Bank of Springfield ("Bank") and Home
City Insurance Agency, Inc. ("Agency"). The Bank is primarily engaged in
providing a full range of banking and financial services to individual and
corporate customers in Clark County, Ohio. The Bank is subject to competition
from other financial institutions. The Bank is subject to the regulation of
certain federal and state agencies and undergoes periodic examinations by those
regulatory authorities. The Bank's wholly-owned subsidiary, Homciti Service
Corporation ("Service Corp."), holds stock of the Bank's data service provider
and a local joint venture, in both of which it has minority interests.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company, the
Agency, the Bank, and the Service Corp. All significant intercompany accounts
and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 loan losses. In connection with
the determination of the allowance for loan losses, management obtains
independent appraisals for significant properties.

CASH EQUIVALENTS

The Company considers all liquid investments with original maturities of three
months or less to be cash equivalents.

SECURITIES

All securities are classified as available for sale. Available-for-sale
securities, which include any security for which the Company has no immediate
plan to sell but which may be sold in the future, are carried at fair value.
Unrealized gains and losses are recorded, net of related income tax effects, in
other comprehensive income. Amortization of premiums and accretion of discounts
are recorded as interest income from securities. Realized gains and losses are
recorded as net security gains (losses). Gains and losses on sales of securities
are determined on the specific-identification method.

LOANS

Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or payoffs are reported at their outstanding principal
balances adjusted for any charge-offs, the allowance for loan losses, any
deferred fees or costs on originated loans and unamortized premiums or discounts
on purchased loans. Interest income is reported on the interest method and
includes amortization of net deferred loan fees and costs over the loan term.
Generally, loans are placed on non-accrual status at ninety days past due and
interest is considered a loss, unless the loan is well-secured and in the
process of collection.


                                      -46-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to income. Loan losses are
charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed. Subsequent recoveries, if any, are credited to the
allowance.

The allowance for loan losses is evaluated on a regular basis by management and
is based upon management's periodic review of the collectibility of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower's ability to repay, estimated
value of any underlying collateral and prevailing economic conditions. This
evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and events, it
is probable that the Bank will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment include
payment status, collateral value and the probability of collecting scheduled
principal and interest payments when due. Loans that experience insignificant
payment delays and payment shortfalls generally are not classified as impaired.
Management determines the significance of payment delays and payment shortfalls
on a case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrower's prior payment record and the amount of the
shortfall in relation to the principal and interest owed. Impairment is measured
on a loan-by-loan basis for commercial and construction loans by either the
present value of expected future cash flows discounted at the loan's effective
interest rate, the loan's obtainable market price or the fair value of the
collateral if the loan is collateral dependent.

Large groups of smaller balance homogenous loans are collectively evaluated for
impairment. Accordingly, the Bank does not separately identify individual
consumer and residential loans for impairment measurements.

PREMISES AND EQUIPMENT

Deprecia ble assets are stated at cost less accumulated depreciation.
Depreciation is charged to expense using the straight-line method over the
estimated useful lives of the assets.

FEDERAL HOME LOAN BANK STOCK

Federal Home Loan Bank stock is a required investment for institutions that are
members of the Federal Home Loan Bank system. The required investment in the
common stock is based on a predetermined formula.

FORECLOSED ASSETS HELD FOR SALE

Assets acquired through, or in lieu of, loan foreclosure are held for sale and
are initially recorded at fair value at the date of foreclosure, establishing a
new cost basis. Subsequent to foreclosure, valuations are periodically performed
by management and the assets are carried at the lower of carrying amount or fair
value less cost to sell. Revenue and expenses from operations and changes in the
valuation allowance are included in net income or expense from foreclosed
assets.

GOODWILL

Goodwill is annually tested for impairment. If the implied fair value of
goodwill is lower than its carrying amount, a goodwill impairment is indicated
and goodwill is written down to its implied fair value. Subsequent increases in
goodwill value are not recognized in the financial statements.


                                      -47-
<PAGE>


  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INTANGIBLE ASSETS

Intangible assets are being amortized on the straight-line basis over periods
ranging from 5 to 12.5 years. Such assets are periodically evaluated as to the
recoverability of their carrying value.

TREASURY SHARES

Treasury shares are stated at cost. Cost is determined by the first-in,
first-out method.

STOCK OPTIONS

Stock options are granted for a fixed number of shares to employees with an
exercise price equal to the fair value of the shares at the date of grant. The
Bank accounts for and will continue to account for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and, accordingly, recognizes no compensation expense for the stock option
grants.

<TABLE>
<CAPTION>
                                                                      (Dollars in thousands)
                                                                     Year ended December 31,
                                                                     -----------------------
                                                                       2002           2001
                                                                       ----           ----
<S>                                                                  <C>            <C>
Net income, as reported                                              $   457        $   702
Less: Total stock-based employee compensation cost determined
  under the fair value based method, net of income taxes                  58             70

                                                                     -------        -------
Pro forma net income                                                 $   399        $   632
                                                                     =======        =======

Earnings per share:
  Basic - as reported                                                $  0.62        $  0.94
                                                                     =======        =======
  Basic - pro forma                                                  $  0.54        $  0.85
                                                                     =======        =======
  Diluted - as reported                                              $  0.62        $  0.94
                                                                     =======        =======
  Diluted - pro forma                                                $  0.54        $  0.84
                                                                     =======        =======
</TABLE>

INCOME TAXES

Deferred tax assets and liabilities are recognized for the tax effects of
differences between the financial statement and tax bases of assets and
liabilities. A valuation allowance is established to reduce deferred tax assets
if it is more likely than not that a deferred tax asset will not be realized.
The Company files consolidated income tax returns with its subsidiaries.

EARNINGS PER SHARE

Earnings per share have been computed based upon the weighted-average common
shares outstanding during each year. Unearned ESOP shares and RRP shares which
have not vested have been excluded from the computation of average shares
outstanding.

RECLASSIFICATIONS

Certain reclassifications have been made to the 2001 financial statements to
conform to the 2002 financial statement presentation. These reclassifications
had no effect on net income.


                                      -48-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: RESTATEMENT OF PRIOR YEAR RETAINED EARNINGS

Retained earnings as of December 31, 2000 has been restated for computational
errors relating to accrued federal income tax expense. Previously reported net
income for the year ended December 31, 2001 has been restated for computational
errors relating to federal income tax expense in the amount of $80,000. Diluted
earnings per share have also been restated by excluding unearned ESOP shares
from weighted-average shares - diluted. The result of the two restatements is
that basic earnings per share was restated from $1.05 to $0.94 and diluted
earnings per share was restated from $0.97 to $0.94.

NOTE 3: SECURITIES

The amortized cost and approximate fair values of securities are as follows:

<TABLE>
<CAPTION>
                                                                        (Dollars in thousands)
                                                                         GROSS            GROSS
                                                       AMORTIZED      UNREALIZED       UNREALIZED      APPROXIMATE
                                                          COST          GAINS            LOSSES         FAIR VALUE
                                                          ----          -----            ------         ----------
<S>                                                    <C>            <C>              <C>             <C>
AVAILABLE-FOR-SALE SECURITIES
December 31, 2002
   U.S. government agencies                             $ 1,280         $  10           $      0          $ 1,290
   Mortgage-backed securities                             3,409            25                 (2)           3,432
   Other asset-backed securities                            301             0                 (2)             299
   State and political subdivisions                         489            10                  0              499
   Equity securities                                        910             0                (67)             843
                                                        -------         -----           --------          -------
    Total                                               $ 6,389         $  45           $    (71)         $ 6,363
                                                        =======         =====           ========          =======
December 31, 2001
   U.S. government agencies                             $   360         $   0           $     (4)         $   356
   Mortgage-backed securities                             9,664            30                (91)           9,603
   State and political subdivisions                       1,269             1                (33)           1,237
   Equity securities                                      2,120           292                (25)           2,387
                                                        -------         -----           --------          -------
    Total                                               $13,413         $ 323           $   (153)         $13,583
                                                        =======         =====           ========          =======
</TABLE>

The amortized cost and fair value of securities available for sale at December
31, 2002, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                                                          (Dollars in thousands)
                                                                                        AMORTIZED           FAIR
                                                                                           COST             VALUE
                                                                                           ----             -----
<S>                                                                                     <C>                 <C>
Within one year                                                                           $  299            $  299
One to five years                                                                          1,081             1,091
Five to ten years                                                                            389               399
                                                                                          ------            ------
                                                                                           1,769             1,789
Mortgage-backed securities                                                                 3,409             3,432
Other asset-backed securities                                                                301               299
Equity securities                                                                            910               843
                                                                                          ------            ------
  Totals                                                                                  $6,389            $6,363
                                                                                          ======            ======
</TABLE>

The carrying value of securities pledged as collateral, to secure public
deposits and for other purposes, was $399,000 at December 31, 2002, and
$1,550,000 at December 31, 2001.


                                      -49-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Gross gains of $393,000 and $429,000 and gross losses of $61,000 and $3,000
resulting from sales of available -for-sale securities were realized for 2002
and 2001, respectively. The tax expense for net gains on security transactions
for 2002 and 2001 was $113,000 and $145,000, respectively.

NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES
Categories of loans at December 31, include:

<TABLE>
<CAPTION>
                                                                                          (Dollars in thousands)
                                                                                         2002               2001
                                                                                         ----               ----
<S>                                                                                    <C>               <C>
Residential real estate
  One- to four-family residential                                                      $  62,981         $  58,089
  Multi-family residential                                                                 7,359             6,747
  Construction                                                                             3,238             1,477
Nonresidential real estate                                                                32,896            30,474
Commercial                                                                                14,051            11,907
Consumer and other                                                                         7,393             7,271
                                                                                       ---------         ---------
    Total loans                                                                          127,918           115,965

Less
  Allowance for loan losses                                                                 (503)             (592)
                                                                                       ---------         ---------

     Net loans                                                                         $ 127,415         $ 115,373
                                                                                       =========         =========
</TABLE>

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                                                                                          (Dollars in thousands)
                                                                                         2002               2001
                                                                                         ----               ----
<S>                                                                                    <C>               <C>
Balance, beginning of year                                                             $     592         $     588
Provision charged to expense                                                                 376               140
Losses charged off, net of recoveries of $25,000 for 2002, and $25,000 for 2001             (465)             (136)
                                                                                       ---------         ---------

Balance, end of year                                                                   $     503         $     592
                                                                                       =========         =========
</TABLE>

Impaired loans totaled $944,000 at December 31, 2002. An allowance for loan
losses of $37,000 relates to impaired loans of $177,000 at December 31, 2002. At
December 31, 2002 impaired loans of $767,000 had no related allowance for loan
losses.

Interest of $96,000 was recognized on average impaired loans of $976,000 for
2002. Interest of $74,000 was recognized on impaired loans on a cash basis
during 2002.

There were no impaired loans at December 31, 2001.

At December 31, 2002 and 2001, accruing loans delinquent 90 days or more totaled
$250,000 and $0, respectively. Non-accruing loans at December 31, 2002 and 2001
were $173,000 and $1,488,000, respectively.


                                      -50-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5: PREMISES AND EQUIPMENT

Major classifications of premises and equipment, stated at cost, are as follows:

<TABLE>
<CAPTION>
                                                       (Dollars in thousands)
                                                      2002                2001
                                                      ----                ----
<S>                                                 <C>                 <C>
Land                                                $   830             $   830
Buildings and improvements                            2,608               2,608
Equipment                                             1,560               1,597
                                                    -------             -------
                                                      4,998               5,035
Less accumulated depreciation                        (1,063)               (865)
                                                    -------             -------

    Net premises and equipment                      $ 3,935             $ 4,170
                                                    =======             =======
</TABLE>

NOTE 6: GOODWILL, OTHER INTANGIBLE ASSETS AND DISCONTINUED OPERATIONS

During 2002, the Company changed its method of accounting and financial
reporting for goodwill and other intangible assets by adopting the provisions of
Statement of Financial Accounting Standards No. 142. There was no material
impact of the adoption on the financial statements.

On December 1, 2000, the Company's new, wholly-owned subsidiary, Home City
Insurance Agency, Inc. (HCIA), acquired the book of business and certain other
assets of Rice Insurance Agency, Inc. (Rice Agency). The transaction was a
business combination accounted for as a purchase.

As a result of the acquisition, the Company recorded identifiable intangible
assets including a covenant not to compete valued at $313,000, trademark rights
valued at $15,000, and computer software contracts valued at $15,000. The
remaining value of the excess of the cost of the assets acquired over the fair
value of its net assets was $70,000 and was recorded as goodwill.

Amortization expense for the years ended December 31, 2002 and 2001, was $31,000
and $36,000, respectively.

On December 27, 2002, the Company sold the insurance agency business and
recognized a loss of $23,000. The purchaser assumed the note payable of
$301,000. All goodwill and other intangibles have been written-off. Revenues of
$442,000 and $351,000 are included in loss from discontinued operations in 2002
and 2001, respectively.

NOTE 7: INTEREST-BEARING DEPOSITS

Interest-bearing deposits in denominations of $100,000 or more were $15,774,000
on December 31, 2002, and $18,805,000 on December 31, 2001.

At December 31, 2002, the scheduled maturities of time deposits are as follows:

<TABLE>
<CAPTION>
                                            (Dollars in thousands)
<S>                                         <C>
2003                                               $ 36,671
2004                                                 10,006
2005                                                  9,052
2006                                                  6,422
2007                                                  1,874
                                                   --------

  Total                                            $ 64,025
                                                   ========
</TABLE>


                                      -51-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8: BORROWINGS

<TABLE>
<CAPTION>
Borrowings consisted of the following components at December 31:                 (Dollars in thousands)
                                                                                 2002            2001
                                                                                 ----            ----
<S>                                                                             <C>             <C>
Federal Home Loan Bank Advances                                                 $38,199         $35,315
Note payable (paid in 2002)                                                           0             307
                                                                                -------         -------

       Total                                                                    $38,199         $35,622
                                                                                =======         =======
</TABLE>

The Federal Home Loan Bank advances are secured by mortgage loans totaling
$53,715,000 at December 31, 2002. Advances, at interest rates from 1.40% to
8.35%, are subject to restrictions or penalties in the event of prepayment.

Aggregate annual maturities of Federal Home Loan Bank advances at December 31,
2002, are:

<TABLE>
<CAPTION>
                                           (Dollars in thousands)
<S>                                        <C>
                         2003                     $ 4,914
                         2004                         349
                         2005                         327
                         2006                         878
                         2007                       1,847
                         Thereafter                29,884
                                                  -------
                            Total                 $38,199
                                                  =======
</TABLE>

The Bank has unused letters of credit with the Federal Home Loan Bank
aggregating $1,590,000 expiring at various dates from February 4, 2003, through
December 8, 2003.

NOTE 9: INCOME TAXES

<TABLE>
<CAPTION>
The provision for income taxes includes these components at December 31:         (Dollars in thousands)
                                                                                  2002              2001
                                                                                  ----              ----
                                                                                                 (Restated)
<S>                                                                             <C>              <C>
Taxes currently payable                                                         $    100         $     355
Deferred income taxes                                                                 53               (78)
                                                                                --------         ---------

  Income tax expense from continuing operations                                 $    153         $     277
                                                                                ========         =========
</TABLE>

A reconciliation of income tax expense from continuing operations at the
statutory rate to the Company's actual income tax expense from continuing
operations is shown below:

<TABLE>
<CAPTION>
                                                                                 (Dollars in thousands)
                                                                                  2002             2001
                                                                                  ----             ----
                                                                                                (Restated)
<S>                                                                             <C>             <C>
Computed at the statutory rate (34%)                                            $    224         $    356
Increase (decrease) resulting from
   Tax exempt interest                                                               (12)             (31)
   Cash surrender value of life insurance                                            (44)             (38)
   Nondeductible expenses                                                              1                7
   Other                                                                             (16)             (17)
                                                                                --------         --------

      Actual tax expense from continuing operations                             $    153         $    277
                                                                                ========         ========
</TABLE>


                                      -52-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tax effects of temporary differences related to deferred taxes shown on the
balance sheets were:

<TABLE>
<CAPTION>
                                                                2002              2001
                                                                ----              ----
Deferred tax assets                                                            (Restated)
<S>                                                           <C>              <C>
   Allowance for loan losses                                  $    171         $    201
   Employee benefits                                               127               90
   Nonaccrual loan interest                                          1               15
   Other                                                            42               19
   Unrealized losses on available -for-sale securities               9                0
                                                              --------         --------
                                                                   350              325
                                                              --------         --------
Deferred tax liabilities
   Depreciation                                                    (62)             (55)
   Federal Home Loan Bank stock dividend                          (208)            (175)
   Deferred loan fees                                              (72)             (43)
   Unrealized gains on available -for-sale securities                0              (58)
                                                              --------         --------
                                                                  (342)            (331)
                                                              --------         --------
         Net deferred tax asset (liability)                   $      8         $     (6)
                                                              ========         ========
</TABLE>

Retained earnings at December 31, 2002 and 2001, include approximately
$1,084,000, for which no deferred federal income tax liability has been
recognized. These amounts represent an allocation of income to bad debt
deductions for tax purposes only. Reduction of amounts so allocated for purposes
other than tax bad debt losses or adjustments arising from carryback of net
operating losses would create income for tax purposes only, which would be
subject to the then-current corporate income tax rate. The deferred income tax
liabilities on the preceding amounts that would have been recorded if they were
expected to reverse into taxable income in the foreseeable future were
approximately $368,000 at December 31, 2002 and 2001.

NOTE 10: OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows:

<TABLE>
<CAPTION>
                                                                   (Dollars in thousands)
                                                                    2002           2001
                                                                    ----           ----
<S>                                                               <C>             <C>
Unrealized gains (losses) on securities available for sale        $   135         $   (85)
Reclassification for realized amount included in income               332             426
                                                                  -------         -------
Other comprehensive loss, before tax effect                          (197)           (511)
Tax benefit                                                           (67)           (174)
                                                                  -------         -------
Other comprehensive loss                                          $  (130)        $  (337)
                                                                  =======         =======
</TABLE>

NOTE 11: REGULATORY MATTERS

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

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below). Management believes, as of December 31, 2002 and 2001, that the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 2002, the most recent notification from Office of Thrift
Supervision categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well


                                      -53-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the Bank's
category.

The Bank's actual capital amounts and ratios are also presented in the table.

<TABLE>
<CAPTION>
                                                                   (Dollars in thousands)

                                                                                               TO BE WELL CAPITALIZED
                                                                          FOR CAPITAL         UNDER PROMPT CORRECTIVE
                                                 ACTUAL               ADEQUACY PURPOSES          ACTION PROVISIONS
                                                 ------               -----------------          -----------------
                                          AMOUNT        RATIO         AMOUNT       RATIO         AMOUNT       RATIO
                                          ------        -----         ------       -----         ------       -----
<S>                                       <C>           <C>           <C>          <C>           <C>          <C>
As of December 31, 2002
Total risk-based capital
  (to risk-weighted assets)               $11,666        10.4%        $8,950         8.0%       $11,188        10.0%

Tier I capital
  (to risk-weighted assets)                11,163        10.0            N/A         N/A          6,713         6.0

Tier I capital
  (to adjusted total assets)               11,163         7.4          6,001         4.0          7,501         5.0

Tangible capital
  (to adjusted tangible assets)            11,163         7.4          2,250         1.5            N/A         N/A

As of December 31, 2001 (restated)
Total risk-based capital
  (to risk-weighted assets)               $11,526        10.5%        $8,751         8.0%       $10,938        10.0%

Tier I capital
  (to risk-weighted assets)                10,934        10.0            N/A         N/A          6,563         6.0

Tier I capital
  (to adjusted total assets)               10,934         7.6          5,784         4.0          7,230         5.0

Tangible capital
  (to adjusted tangible assets)            10,934         7.6          2,169         1.5            N/A         N/A
</TABLE>

The Bank is subject to certain restrictions on the amount of dividends that it
may declare without prior regulatory approval. At December 31, 2002,
approximately $461,000 of retained earnings were available for dividend
declaration without prior regulatory approval.

NOTE 12: RELATED PARTY TRANSACTIONS

The Bank has entered into transactions with certain directors, executive
officers, significant shareholders and their affiliates or associates (related
parties). In management's opinion, such loans and other extensions of credit and
deposits were made in the ordinary course of business and were made on
substantially the same terms (including interest rates and collateral) as those
prevailing at the time for comparable transactions with other persons. Further,
in management's opinion, these loans did not involve more than normal risk of
collectibility or present other unfavorable features.


                                      -54-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The aggregate amount of loans, as defined, to such related parties were as
follows:

<TABLE>
<CAPTION>
                                                                 (Dollars in thousands)
<S>                                                              <C>
Balances, January 1, 2002                                               $ 1,940
New loans, including renewals                                               411
Payments, etc., including renewals                                         (436)
                                                                        -------
Balances, December 31, 2002                                             $ 1,915
                   === ====                                             =======
</TABLE>

Deposits from related parties held by the Bank at December 31, 2002 and 2001,
totaled $1,116,000 and $312,000, respectively.

NOTE 13: EMPLOYEE BENEFITS

The Company has a retirement savings 401(k) plan covering substantially all
employees. Employees may contribute up to 15% of their compensation with the
Company matching 75% of the employee's contribution on the first 6% of the
employee's compensation. Employer contributions charged to expense for 2002 and
2001 were $43,000 and $34,000, respectively.

As part of the conversion in 1996, the Company established an ESOP covering
substantially all employees of the Company and Bank. The ESOP acquired 76,176
common shares of the Company at $10 per share in the conversion with funds
provided by a loan from the Company. Accordingly, the $761,760 of common shares
acquired by the ESOP was shown as a reduction of shareholders' equity. Shares
are released to participants proportionately as the loan is repaid. Dividends on
allocated shares are recorded as dividends and charged to retained earnings.
Dividends on unallocated shares are used to repay the loan and are treated as
compensation expense. Compensation expense is recorded equal to the fair market
value of the shares when contributions, which are determined annually by the
Board of Directors of the Company and Bank, are made to the ESOP.

ESOP expense for the years ended December 31, 2002 and 2001, was $66,000 and
$76,000.

<TABLE>
<CAPTION>
                                                         (Dollars in thousands)
                                                           2002           2001
                                                           ----           ----
<S>                                                     <C>             <C>
Allocated shares                                          42,465          39,690
Shares released for allocation                             9,449           9,449
Unearned shares                                           35,959          45,408
                                                        --------        --------
   Total ESOP shares                                      87,873          94,547
                                                        ========        ========

Fair value of unearned shares at December 31            $421,000        $544,000
                                                        ========        ========
</TABLE>

The Company also has a Recognition and Retention Plan (RRP) which provides for
the award and issuance of up to 38,088 shares of the Company to members of the
Board of Directors and management. At December 31, 2002, 26,302 shares had been
awarded, of which 914 had been forfeited. Common shares awarded under the RRP
vests ratably over a five-year period, commencing with the date of the award.
Expense recognized under the RRP plan totaled approximately $67,000 and $79,000
for 2002 and 2001, respectively.


                                      -55-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14: STOCK OPTION PLAN

The Company has an option plan under which the Company may grant options that
vest over five years to selected employees for up to 131,422 common shares. The
exercise price of each option is intended to equal the fair value of the
Company's shares on the date of grant. An option's maximum term is ten years.

At December 31, 2002, the weighted average remaining contractual life of all
options was 4.8 years. A summary of the status of the plan at December 31, 2002
and 2001, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                         AT DECEMBER 31, 2002         AT DECEMBER 31, 2001
                                         --------------------         --------------------
                                                       Weighted                   Weighted
                                                       Average                    Average
                                                       Exercise                   Exercise
                                         Shares         Price         Shares        Price
                                         ------         -----         ------        -----
<S>                                      <C>           <C>            <C>         <C>
Outstanding, beginning of year           98,565         $11.70        98,565        $11.70

Granted                                       0                            0
Exercised                                     0                            0
Forfeited                                (2,630)         11.70             0
Expired                                       0                            0
                                         ------                       ------

Outstanding, end of year                 95,935          11.70        98,565         11.70
                                         ======                       ======

Options exercisable, end of year         95,935          11.70        80,159         11.70
                                         ======                       ======
</TABLE>


                                      -56-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15: EARNINGS PER SHARE

Earnings per share (EPS) were computed as follows (Dollars in thousands, except
per share data):

<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 2002
                                                             Income          Weighted-Average Shares       Per Share Amount
                                                             ------          -----------------------       ----------------
<S>                                                          <C>             <C>                           <C>
Basic earnings per share
    Income from continuing operations
        available to common shareholders                      $   505                  741,229                  $   0.68
Effect of dilutive securities                                                                                   ========
    Stock options and awards                                        0                        0
                                                              -------                  -------                  --------
Diluted earnings per share
    Income from continuing operations
        available to common shareholders and
        assumed conversions                                   $   505                  741,229                  $   0.68
                                                              =======                  =======                  ========
</TABLE>

Options to purchase 95,935 common shares at $11.70 per share were outstanding at
December 31, 2002, but were not included in the computation of diluted EPS
because the options' exercise price was greater than the average market price of
the common shares.

<TABLE>
<CAPTION>
                                                                     Year Ended December 31, 2001 (Restated)
                                                             Income          Weighted-Average Shares       Per Share Amount
                                                             ------          -----------------------       ----------------
<S>                                                          <C>             <C>                           <C>
Basic earnings per share
    Income from continuing operations
        available to common shareholders                      $   770                  744,992                  $   1.03
Effect of dilutive securities
    Stock options and awards                                        0                    4,522
Diluted earnings per share
    Income from continuing operations
        available to common shareholders
        and assumed conversions                               $   770                  749,514                  $   1.03
</TABLE>


                                      -57-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Company's financial
instruments. The fair values of certain of these instruments were calculated by
discounting expected cash flows, which involves significant judgments by
management and uncertainties. Fair value is the estimated amount at which
financial assets or liabilities could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. Because no
market exists for certain of these financial instruments and because management
does not intend to sell these financial instruments, the Company does not know
whether the fair values shown below represent values at which the respective
financial instruments could be sold individually or in the aggregate.

<TABLE>
<CAPTION>
                                                          (Dollars in thousand)
                                            AT DECEMBER 31, 2002            AT DECEMBER 31, 2001
                                            --------------------            --------------------
                                         Carrying            Fair        Carrying            Fair
                                           Amount           Value          Amount           Value
                                           ------           -----          ------           -----
<S>                                      <C>             <C>             <C>             <C>
Financial assets
  Cash and cash equivalents              $  6,061        $  6,061        $  5,010        $  5,010
  Interest-bearing deposits                    24              24              24              24
  Available-for-sale securities             6,363           6,363          13,583          13,583
  Loans, net                              127,415         133,767         115,373         116,218
  Federal Home Loan Bank stock              2,177           2,177           2,079           2,079
  Cash surrender value of life
    insurance                               2,829           2,829           2,695           2,695
  Interest receivable                         600             600             671             671

Financial liabilities
  Deposits                                 99,119         100,746          96,403          97,978
  Federal Home Loan Bank advances          38,199          40,877          35,315          35,246
  Long-term debt                                0               0             307             328
  Interest payable                            212             212             243             243
</TABLE>

For purposes of the above disclosures of estimated fair value, the following
assumptions were used as of December 31, 2002 and 2001. The estimated fair value
for cash and cash equivalents, interest-bearing deposits, FHLB stock, cash
surrender value of life insurance, accrued interest receivable, demand deposits,
savings accounts, NOW accounts, certain money market deposits, and interest
payable is considered to approximate cost. The estimated fair value for
securities is based on quoted market values for the individual securities or for
equivalent securities. The estimated fair value for loans receivable, including
loans held for sale, net, is based on estimates of the rate the Bank would
charge for similar loans at December 31, 2002 and 2001 applied for the time
period until the loans are assumed to reprice or be paid. The estimated fair
value for fixed-maturity time deposits as well as borrowings is based on
estimates of the rate the Bank would pay on such liabilities at December 31,
2002 and 2001, applied for the time period until maturity. The fair value of
commitments is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
present creditworthiness of the counterparties. For fixed-rate loan commitments,
fair value also considers the difference between current levels of interest
rates and the committed rates. The fair value of letters of credit and lines of
credit is based on fees currently charged for similar agreements or on the
estimated cost to terminate or otherwise settle the obligations with the
counterparties at the reporting date.


                                      -58-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17: COMMITMENTS AND CREDIT RISK

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 a portion of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. Each customer's creditworthiness is evaluated on a
case-by-case basis. The amount of collateral obtained, if deemed necessary, is
based on management's credit evaluation of the counterparty. Collateral held
varies, but may include accounts receivable, inventory, property, plant and
equipment, commercial real estate and residential real estate.

At December 31, 2002 and 2001, the Bank had outstanding commitments to originate
loans aggregating approximately $458,000 and $2,506,000, respectively. The
commitments extended over varying periods of time with the majority being
disbursed within a one-year period. Loan commitments at fixed rates of interest
amounted to $358,000 and $1,684,000 at December 31, 2002 and 2001, respectively,
with the remainder at floating market rates.

Letters of credit are conditional commitments issued by the Bank to guarantee
the performance of a customer to a third party. Those guarantees are primarily
issued to support public and private borrowing arrangements, including
commercial paper, bond financing and similar transactions. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loans to customers.

The Bank had total outstanding letters of credit amounting to $500,000 and $0 at
December 31, 2002 and 2001, respectively, with the former bearing a term of
seven months.

Lines of credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Lines of credit
generally have fixed expiration dates. Since a portion of the line may expire
without being drawn upon, the total unused lines do not necessarily represent
future cash requirements. Each customer's creditworthiness is evaluated on a
case-by-case basis. The amount of collateral obtained, if deemed necessary, is
based on management's credit evaluation of the counterparty. Collateral held
varies but may include accounts receivable, inventory, property, plant and
equipment, commercial real estate and residential real estate. Management uses
the same credit policies in granting lines of credit as it does for
on-balance-sheet instruments.

At December 31, 2002, the Bank had granted unused lines of credit to borrowers
aggregating approximately $5,483,000 and $3,757,000 for commercial lines and
open-end consumers lines, respectively. At December 31, 2001, unused lines of
credit to borrowers aggregated approximately $5,373,000 for commercial lines and
$3,240,000 for open-end consumer lines.


                                      -59-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

Presented below is condensed financial information as to financial position,
results of operations and cash flows of the Company:

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                (Dollars in thousands)
                                                                2002              2001
                                                                ----              ----
ASSETS                                                                        (Restated)
<S>                                                            <C>            <C>
  Cash                                                         $    216         $   140
  Investment in common stock of subsidiary Bank                  11,145          11,046
  Investment in insurance agency                                     37              83
  Advances to subsidiaries                                          109              35
  Other assets                                                       52             140
                                                               --------         -------

    Total assets                                               $ 11,559         $11,444
                                                               ========         =======

SHAREHOLDERS' EQUITY                                           $ 11,559         $11,444
                                                               ========         =======
</TABLE>

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                (Dollars in thousands)
                                                                 2002            2001
                                                                 ----            ----
<S>                                                            <C>            <C>
INCOME                                                                        (Restated)
Dividends from subsidiary Bank                                 $    330         $   635
Interest income                                                      36              45
                                                               --------         -------
Total income                                                        366             680
                                                               --------         -------
EXPENSES
Other expenses                                                      119             139
                                                               --------         -------
INCOME BEFORE INCOME TAX AND EQUITY IN
UNDISTRIBUTED INCOME OF SUBSIDIARIES                                247             541
  Income Tax Expense (Benefit)                                      (28)              3
                                                               --------         -------
INCOME BEFORE EQUITY IN
UNDISTRIBUTED INCOME OF SUBSIDIARIES                                275             538
Equity in Undistributed Income of Subsidiaries                      182             164
                                                               --------         -------
NET INCOME                                                     $    457         $   702
                                                               ========         =======
</TABLE>


                                      -60-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                      (Dollars in thousands)
                                                       2002          2001
                                                       ----          ----
<S>                                                    <C>        <C>
OPERATING ACTIVITIES                                              (Restated)
   Net income                                          $ 457         $ 702
   Items not requiring (providing) cash                   38           (10)
                                                       -----         -----
      Net cash provided by operating activities          495           692
                                                       -----         -----

INVESTING ACTIVITIES--ADVANCES TO SUBSIDIARIES           (74)            0
                                                       -----         -----

FINANCING ACTIVITIES
   Cash dividends paid                                  (345)         (351)
   Purchase of treasury stock                              0          (380)
                                                       -----         -----
      Net cash used in financing activities             (345)         (731)
                                                       -----         -----

NET CHANGE IN CASH AND CASH EQUIVALENTS                   76           (39)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR           140           179
                                                       -----         -----

CASH AND CASH EQUIVALENTS AT END OF YEAR               $ 216         $ 140
                                                       =====         =====
</TABLE>


                                      -61-
<PAGE>

  HOME CITY FINANCIAL CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19: QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables summarize selected quarterly results of operations without
adjustment for discontinued operations for 2002 and 2001.

<TABLE>
<CAPTION>
                                      (Dollars in thousands, except per share data)
December 31, 2002                    March           June       September      December
                                     -----           ----       ---------      --------
<S>                                 <C>             <C>         <C>            <C>
Interest and dividend income        $ 2,465         $2,507        $2,386        $2,422
Interest expense                      1,570          1,528         1,487         1,408
Net interest income                     895            979           899         1,014
Provision for loan losses                13            236            52            75
Noninterest income                      169            435           236           276
Noninterest expense                     999          1,006           955           981
Income tax expense                      (13)            33             1           108
Net income                               65            139           127           126

Earnings per share
  Basic                                0.09           0.19          0.17          0.17
  Diluted                              0.09           0.19          0.17          0.17

Dividends per share                    0.11           0.11          0.11          0.11
</TABLE>

<TABLE>
<CAPTION>
December 31, 2001 (Restated)         March           June       September      December
                                     -----           ----       ---------      --------
<S>                                 <C>             <C>         <C>            <C>
Interest and dividend income        $ 2,601         $2,609        $2,558        $2,641
Interest expense                      1,634          1,670         1,679         1,701
Net interest income                     967            939           879           940
Provision for loan losses                10             10             0           120
Noninterest income                      243            170           293           306
Noninterest expense                     865            872           971           942
Income tax expense                       67             38            15           125
Net income                              268            189           186            59

Earnings per share
  Basic                                0.35           0.25          0.25          0.08
  Diluted                              0.35           0.25          0.25          0.08

Dividends per share                    0.11           0.11          0.11          0.11
</TABLE>


                                      -62-
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

      On November 14, 2002, HCFC dismissed Dixon, Francis, Davis & Company
("DFD") as its independent certified public accountants retained to audit HCFC's
financial statements and retained BKD as its new independent certified public
accountants. The dismissal of DFD and the retention of BKD were approved by the
Audit Committee and the full Board of Directors of HCFC.

      The Board of Directors' decision to engage BKD was based on the breadth of
experience of BKD serving public companies and the service that BKD can provide
to HCFC. DFD's reports on the consolidated financial statements of HCFC for the
past two years did not contain any adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. During the last two fiscal years and the interim period through
September 30, 2002, there have not been any disagreements between HCFC and DFD
on any matter of accounting principles or practices, consolidated financial
statement disclosure or audit scope or procedure.


                                      -63-
<PAGE>

                                    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 14, 2003, 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 Definitive 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 Definitive 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 Definitive
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

            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)

            10.4  Asset Sale And Purchase Agreement (Incorporated by reference)

            21    Subsidiaries (Incorporated by reference)

            99.1  Proxy Statement (Incorporated by reference)

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

            99.3  Certification of Chief Executive Officer and Chief Financial
                  Officer

      (b)   Reports on Form 8-K

            A Form 8-K was filed for the event on November 14, 2002, regarding a
            change in independent auditor.


                                      -64-
<PAGE>

            A Form 8-K was filed for the event on December 10, 2002, regarding
            the announcement of the signing of an agreement for the acquisition
            of the business of Home City Insurance Agency, Inc. by Wallace &
            Turner, Inc.

ITEM 14. CONTROLS AND PROCEDURES

      The Chief Executive Officer and the Chief Financial Officer have reviewed,
as of a date within 90 days of this filing, the disclosure controls and
procedures that ensure that information relating to the Company required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported in a timely and proper manner. Based upon this review, the Company
believes that there are adequate controls and procedures in place. There are no
significant changes in the controls or other factors that could affect the
controls after the date of the evaluation.


                                      -65-
<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.

<TABLE>
<S>                                               <C>
      /s/ Glenn W. Collier                        /s/ John D. Conroy
      -------------------------------------       --------------------------------------
      Glenn W. Collier                            John D. Conroy
      Director                                    Chairman of the Board

      March 24, 2003                              March 24, 2003
      -------------------------------------       --------------------------------------
      Date                                        Date

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

      March 24, 2003                              March 24, 2003
      -------------------------------------       --------------------------------------
      Date                                        Date

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

      March 24, 2003                              March 24, 2003
      -------------------------------------       --------------------------------------
      Date                                        Date
</TABLE>


                                      -66-
<PAGE>

                                  CERTIFICATION

I, Douglas L. Ulery, President and Chief Executive Officer of Home City
Financial Corporation, certify, that:

1.    I have reviewed this annual report on Form 10-KSB of Home City Financial
      Corporation;

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

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

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

      a.    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others with those
            entities, particularly during the period in which the annual report
            is being prepared;

      b.    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this annual report (the "Evaluation Date"); and

      c.    presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

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

      a.    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize, and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b.    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls.

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.


/s/ Douglas L. Ulery
-------------------------------------
Douglas L. Ulery
President and Chief Executive Officer
March 24, 2003


                                      -67-
<PAGE>

                                  CERTIFICATION

I, Charles A. Mihal, Treasurer and Chief Financial Officer of Home City
Financial Corporation, certify, that:

1.    I have reviewed this annual report on Form 10-KSB of Home City Financial
      Corporation;

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

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

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

      a.    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others with those
            entities, particularly during the period in which the annual report
            is being prepared;

      b.    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this annual report (the "Evaluation Date"); and

      c.    presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

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

      a.    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize, and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b.    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls.

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.


/s/ Charles A. Mihal
-------------------------------------
Charles A. Mihal
Treasurer and Chief Financial Officer
March 24, 2003


                                      -68-
<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                   DESCRIPTION
<S>                      <C>                                      <C>
3.1                      Articles of Incorporation                Incorporated by reference to the 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              Incorporated by reference to the March 31,
                         City Financial Corporation               1997, 10-QSB, Exhibit 3 (ii)

10.1                     Employment Agreement with Mr.
                         Ulery

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

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

10.4                     Asset Sale And Purchase                  Incorporated by reference to Form 8-K filed
                         Agreement                                by Registrant on December 1, 2000, Exhibit 2

21                       Subsidiaries of Home City                Incorporated by reference to the December
                         Financial                                31, 2000, Form 10-KSB, Exhibit 21
                         Corporation

99.1                     Proxy Statement                          Incorporated by reference to the definitive
                                                                  Proxy Statement of the Registrant for the
                                                                  2003 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

99.3                     Certification Pursuant to 18
                         U.S.C. Section 1350, as Adopted
                         Pursuant to Section 906 of
                         the Sarbanes-Oxley Act of 2002
</TABLE>


                                      -69-